More than 50 of Scotland's best-known arts organisations, including the Edinburgh festival and the Traverse theatre, face deep cuts in their grants from the new government arts agency, Creative Scotland.
The agency is to review its £18m core funding for 52 "foundation" arts and drama companies, theatres, cinemas and festivals from Shetland to Glasgow as the public sector braces itself for heavy and long-term cuts in government spending.
The warning came from Andrew Dixon, Creative Scotland's chief executive, in an interview with the Guardian. It comes as Edinburgh prepares for next month's annual festivals, when more than 2m tickets are likely to be sold during four weeks of theatre, music, dance, comedy, opera and book festival events.
The Edinburgh international festival, regarded as the world's premier arts festival, gets £2.3m a year in foundation funding, while the book festival, the world's largest, receives £202,000.
Creative Scotland was launched this month after the merger of the Scottish Arts Council and Scottish Screen, with a budget of £60m, after repeated delays and political rows that led to the sacking of a former arts minister.
Arts organisations across England face cuts of up to 25% over the next four years and thousands of job losses after ministers in Westminster ordered government departments to prepare for budget cuts between 25% and 40%. Scotland's five leading performing arts companies, including Scottish Opera, Scottish Ballet and the National Theatre of Scotland, could face 10% cuts in their £23m annual grants from the devolved government in Edinburgh over the next three years.
In Wales, the arts council announced in June it was stopping grants to 32 organisations next year, including the Hay book festival, Voluntary Arts Wales, Theatr Harlech and Pavilion Theatre Rhyl after being forced to slash its £23.5m funding.
Dixon, a former chief executive of Northern Arts in Newcastle upon Tyne, said he wanted to protect these groups but the coming months were going to be "very tough" for the agency. He admitted he had no idea yet what his budget would be next year or in 2012, but would begin a review of Creative Scotland's foundation funding for the 2012 financial year to help the sector weather the storm.
Although no specific companies had been or would be singled out for cuts, the groups which get foundation funding include most of Scotland's main theatres and arts centres, including the Traverse and Royal Lyceum in Edinburgh, the Tron and Citizens in Glasgow; venues such as the Tramway in Glasgow, the Fruitmarket in Edinburgh and Dundee Contemporary Arts; the Edinburgh international, book and film festivals. Foundation grants are also crucial to some of the most influential and valued regional and Gaelic arts organisations, including the Pier arts centre, Orkney, An Lanntair Gaelic arts centre, Stornoway, the Gaelic books council, and Fèisean nan Gàidheal, Skye.
"It has actually been a successful programme and, if anything, we will want to strengthen the foundations, but we have to strengthen them in a more tricky economic climate," Dixon said.
"We've just got to find some creative ways of weathering the storm and making every pound we put in go further, giving stability through a difficult period, in investing in excellence, in investing in quality and building audiences."
Dixon and Sir Sandy Crombie, the agency's chairman, told an arts industry audience last week that Creative Scotland would significantly overhaul the way it pays grants and funds the arts, and indicated that direct funding to help make new Scottish films would end.
The agency would devolve spending decisions to arts organisations, try to increase private funding and sponsorship, form alliances and share resources. It would no longer be "an organisation that just hands out money".
Dixon said Creative Scotland was well-prepared for spending cuts: the merger of the arts council and Scottish Screen had led to a 20% reduction in staff numbers. Arts organisations had also been asked over the past five months to plan for budget cuts. He was optimistic that his agency would survive the worst cuts. Ministers were supportive of the new body and knew there was significant evidence the arts were essential to the Scottish economy.
The Edinburgh international film festival last month had generated £8 for every £1 of grant aid.
"We are in quite a strong position," he said. "Nobody can be immune from cuts but I very much hope that the government here is going to want to ensure that Creative Scotland succeeds."
He added: "My plan is to convince the government that they need to continue in investing in Creative Scotland at the highest possible level. You can't special plead because everyone is in the same boat here but I think we've a success story here: you wouldn't want to turn the tap off when success if flowing."
