Select Committee on Culture, Media and Sport First Report


  63. Our principal conclusions and recommendations are as follows:

(i)    The claims of all of these concerning performances during the closure period have already been demonstrated to be unwarranted. No-one viewing the state of the companies in their current nomadic existence can agree with the claim by Sir Jeremy Isaacs that the closure plans were "admirable" or that Mr Cooper was right that the nomadic existence had "lots of advantages" which were being proved. (Para 21)

(ii)    We regard the lack of financial information available to the Board and the management of the Royal Opera House as deplorable. In the light of the fact that the House has received £98 million of taxpayers' money in the last five years, we are astonished that the Arts Council seems to have expressed no concern at this state of affairs. There is no evidence to suggest that the Arts Council even ascertained that this state of affairs existed. (Para 25)

(iii)    There is no future for the Royal Opera House unless someone accepts responsibility for the sorry train of events we have described. (Para 29)

(iv)    The Directors have chosen the standards against which they should be judged. The Committee believes that, as a body, the Board of Directors has fallen severely short of those standards. In addition, we question the vigilance of the Charity Commissioners. (Para 30)

(v)    We have been able to trace no consideration whatsoever of the touring option by the Board prior to December 1995. (Para 32)

(vi)    From our examination of the minutes of its meetings, we conclude that the Board of the Royal Opera House (with the exceptions of Mr Gavron and Mrs Duffield) and the Administration demonstrated incompetence in their handling of the closure plans in 1995. The disastrous misjudgements made then meant that the companies were condemned to a nomadic option which could have been avoided and which shows signs of being financially disastrous. The failures of the Board in 1995 are responsible in considerable measure for the House's current crisis. (Para 35)

(vii)    The lottery grant was a violation by the Arts Council of conditions which the Council itself had set. (Para 36)

(viii)    The Committee is concerned at the serious shortcoming in financial control of the lottery grant demonstrated in the Walker-Arnott Report. This state of affairs with regard to the lottery grant to the Royal Opera House also raises the question of to what extent financial control is satisfactory for the other lottery grants by the Arts Council. This matter appears to be ripe for inquiry by the National Audit Office. Furthermore, there are important lessons to be learnt about the responsibilities of those running other organisations in receipt of lottery money. (Para 37)

(ix)    We regard Mr Walker-Arnott's observation as a generous understatement of the Arts Council's slackness in monitoring the allocation and expenditure of public funds. (Para 38)

(x)    We applaud much of the work done by the Arts Council under Lord Gowrie's chairmanship. Nevertheless, in not satisfying itself that the Royal Opera House was taking the necessary steps to control its deficit and ensure its financial viability during the closure, the Arts Council did no service either to the Royal Opera House or to the public purse. (Para 38)

(xi)    When Lord Chadlington became Chairman in September 1996, there had been no Finance Director in post since that spring. All the preferred options for the closure period had fallen through. There was a deficit in 1995-96 of £3.1 million. For none of this can Lord Chadlington be blamed. However, we are not convinced of the adequacy of his efforts to alleviate the plight. In view of his criticisms of the adequacy of financial information and financial management, Lord Chadlington should have appointed a new Finance Director with greater urgency, instead of permitting nearly a year to elapse. We also believe that he was at fault in failing to review fully, and insist on revisions to, the plans for the closure period, a failure which ensured that a fragile financial position became acute. (Para 40)

(xii)    We found Ms Allen's convoluted explanation of her actions in late April and early May 1997 entirely unconvincing. (Para 45)

(xiii)    Given her experience of public office, Ms Allen's conduct in that period fell seriously below the standards to be expected of the principal officer of a public body whose loyalty should first and foremost be to the organisation which employs her. (Para 46)

(xiv)    Mr Smith had been Secretary of State for only four days when his meeting with Lord Chadlington and Mr Robert Gavron took place on 7 May 1997. He should have sought more information in advance about the matters to be raised at the meeting. There was a case for adjourning or postponing the meeting to satisfy himself of his own powers in relation to the appointment, which were non-existent, and the Arts Council's instructions on the method of appointment. Once he knew that Lord Chadlington wished to discuss with him the transfer of Ms Allen from the Arts Council of England to the Royal Opera House as Chief Executive he should have consulted further about the propriety of her departure from the Arts Council in these circumstances. We also note that, the outcome of the meeting should have been confirmed in written exchanges, in which case the subsequent problems might not have arisen. The different accounts of the meeting by the participants almost certainly arise from different impressions of what had been agreed rather than from any intention to mislead. Lord Chadlington, possibly through inadvertence, failed to make it explicit that Ms Allen would not take up her new post until September. This meeting was unsatisfactory for various reasons and all sides would have been better served if the Permanent Secretary had advised the Secretary of State as to his powers in relation to Ms Allen's appointment to the Royal Opera House, which were nil, and as to the matters of propriety. Both sides in this vital meeting came away with very different impressions of what had been agreed. (Para 49)

(xv)    The Committee was impressed with the objectives and many of the achievements of the Royal Opera House's educational programme. The Royal Opera House should attach the highest priority to seeking additional sponsorship for its educational activities following the redevelopment. We recommend that separately identified subsidy for the work of the House's Education Department, either from the Arts Council of England or possibly, when established, from the National Endowment for Science, Technology and the Arts, should be considered in a general review of the development of education in the arts. We also believe that State schools should be represented in the audience for schools matinées more nearly proportionately to their pupil populations. (Para 55)

(xvi)    Reduction in seat prices and means of ensuring the widest possible availability of lower price seats must be at the heart of the access policy to be produced by the Royal Opera House in the next few months. (Para 56)

(xvii)    Incremental change is no longer enough. The Royal Opera House is now faced with two options. (Para 57)

(xviii)  The first of these is privatisation, though under present United Kingdom tax law, which does not offer incentives to donors, this is inherently impractical. If this option is chosen, the Arts Council subsidy should be ended forthwith. The House could endeavour to finance itself by means comparable to the private donations which have staved off insolvency recently. In such circumstances, the House's status as a charitable organisation would also cease. A stock market flotation could also be considered. This would mark the end of the House's public accountability and the duties that go with it. (Para 58)

(xix)    There is another option, and this is the option which this Committee recommends. If the House is to continue to rely partly on public funds, the regime has to change radically and fundamentally. There have been many failures by the Board, despite the good performances of some Board members, which call into question the entitlement of the current Chairman, the current Chief Executive and the Board as a body to receive and administer public money. The current Board should dissolve itself, and the Chief Executive should resign, with immediate effect. The Secretary of State for Culture, Media and Sport must assume overall responsibility for running the Royal Opera House during the closure period and must be accountable for the financial solvency of the project. (Para 59)

(xx)    We further recommend that the Secretary of State should appoint an administrator to take the place of the Board and the Chief Executive of the Royal Opera House for the remainder of the closure period. The administrator should have the right to consult a small number of advisers, who could, if selected, include members of the current Board. His or her mission would not be to realise the assets of the House, but to ensure the long-term provision of international standard opera and ballet at Covent Garden (Para 60)

(xxi)    Should the Board and the Chief Executive decline to accept the Committee's recommendation that they resign, we recommend the Secretary of State make clear to the Arts Council that he expects them to cease payments of grant-in-aid to the Royal Opera House forthwith. (Para 61)

(xxii)    In the light of our recommendation that Ms Allen should resign as Chief Executive of the Royal Opera House, we would regard it as inappropriate for her to serve on Sir Richard Eyre's working group. (Para 62)

(xxiii)  We recommend that the Secretary of State publishes the report by Sir Richard Eyre's working group immediately upon its receipt and establishes a consultation period before reaching final decisions. (Para 62)

(xxiv)  Our recommendations should ensure that there is a reasonable prospect of there being a viable and well-run Royal Opera House about which Sir Richard Eyre can report. Without the actions we recommend, there will not be. (Para 62)

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