A quiet revolution is taking place at the top of some of the UK’s most important arts institutions.

This week Sir Nicholas Hytner announced that he is to step down as artistic director of the National Theatre in 2015, having presided over a decade of acclaimed success at the cultural institution. Nick Starr, the theatre’s executive director, is departing a year earlier.

Meanwhile British TV producer Sir Peter Bazalgette has just taken over as chair of Arts Council England, the national funding body for the arts. And the Royal Opera House – home to the Royal Ballet and the Royal Opera and the biggest funded institution of Arts Council England – has a new head, Alex Beard, formerly deputy director at the Tate.

The changes occur at a particularly challenging time for the arts world. Arts organisations have come under heavy funding pressure after the government cut grant-in-aid funding by 29.6 per cent over the four years to 2015. Local authorities, too, have been sharpening the axe for arts cuts to continue to fund their statutory responsibilities in basic services such as refuse collection and adult social care.

Sir Peter says this funding backdrop is increasing the need for “cultural entrepreneurs” who can marry both artistic and commercial success.

Both the National Theatre and the Royal Opera House received more than half their funding from the Arts Council 20 years ago, he says. Today that figure is below 30 per cent, in part because of their success in generating other revenue streams such as through corporate sponsorship or international sales of productions.

Britain’s elite arts organisations such as the Royal Opera House, National Theatre and ENO have suffered less than smaller bodies, particularly those in the regions. The heavyweights have found it easier to attract business and philanthropic donations, while Arts Council England, which distributes taxpayer funding, has limited to 15 per cent the cuts faced by its so-called national portfolio organisations.

But artistic success has been crucial too. The National Theatre’s enhanced reputation has been built by producing both popular and challenging theatre, through widely acclaimed productions such as Michael Morpurgo’s War Horse. That production alone has given the theatre an income stream worth more than its entire funding from Arts Council England.

Mr Beard has similar artistic credentials, say arts executives. During his 19 years at the Tate, he worked closely with Nicholas Serota, the gallery’s director, setting the business plan for the creation of Tate Modern, which has been widely credited for rejuvinating public interest in contemporary art.

“Alex Beard was astute at developing a popular institution. The Tate managed to make contemporary art sexy,” says Philip Spedding, chief executive of Arts & Business, a body that encourages the corporate sector to support art and culture. “If he can make opera sexy that will be ideal.”

Sir Peter Bazalgette, the new chairman of Arts Council England, has called for a “grand partnership” between arts bodies and councils, businesses and higher education. In this view, arts executives should use public funding as “seedcorn investment” to unlock more fruitful funding relationships.

With business investment in the arts falling in 2010-11 by 7 per cent – the fifth successive year of decline, according to Arts & Business – the task of bringing commerce closer to the arts will not be easy.

Those that will survive the best must maintain the courage “to take informed risks”, says Barbara Matthews, director of theatre at Arts Council England.

“We’re heading into uncharted waters. It’s going to get progressively harder to make the business sides run.”

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