Showstopper

Peter Longman, director of The Theatres Trust, a government-funded body that promotes the protection of theatres, points to the irony that funding has slumped at the same time as theatre audiences have reached an all-time high. "We estimate that £1bn is needed for refurbishment of theatres in the UK. Across the country there are proposals for developments but there simply isn't enough money to go round. Theatres in Brighton, Bristol, Glasgow, Sunderland, Oxford, Portsmouth and Leeds remain untouched because they can't find the money."

And it's not just theatre audiences that are suffering. In recent years, theatres have played an important role in kick-starting regeneration in deprived areas. "The Festival Theatre in Edinburgh was being used for bingo until a new stage and glass frontage was completed," says Longman. "It has boosted custom to the surrounding bars and restaurants and revived the area." The Theatres Trust is working on a theatre in Doncaster's Waterdale district, an area in need of regeneration. But this project, along with the refurbishment of London's Hackney Empire, will be the last major regeneration centred on theatre investment.

For most of the past decade, the bulk of capital funding for theatre projects has come from the Arts Council's share of lottery funds. But with fewer people playing the lottery, there is less money available overall. That trend has coincided with a policy decision to switch support from theatres to theatre companies. "There won't be any more big building projects," said an Arts Council spokesperson. "When we first distributed lottery money, it went to bricks and mortar stuff. It was specifically targeted at building projects." Now, the stress is on increasing the number of grants by decreasing their individual value. And the emphasis has changed from art buildings to arts projects such as touring companies.

The Arts Council funds theatre construction and restoration as part of its capital programme. The Theatres Trust's Longman used to be responsible for the building scheme at the Arts Council. "At its height, between 1995 and 1998, there was as much as £300m a year for arts buildings," he says. This was reduced to £40m for the second tranche of project awards. He expects the forthcoming proposal to be "£40-50m again", but points out that this will be spread over "the next three years for arts buildings". He calculates that the grant for buildings is one-sixth that of its peak. "It will now be heavily oversubscribed," he says.

The Arts Council confirms Longman's prediction: "The expected annual allocation of lottery funds is well below £5m per region – the honeymoon period is definitely over," said a spokesperson.

"The first round of lottery cash funded some really grand buildings; they were flagship projects," says Nick Thompson, a partner in the arts team at RHWL, architect for the redevelopment of London's Sadler's Wells. Other grandiose schemes funded under the first round of lottery cash included the £25m Royal Court Theatre and the £214m Royal Opera House, both in London. Although funding for the second round of projects was considerably less, grants were still big enough to pay for projects such as John McAslan's £25m refurbishment of the Roundhouse in Camden, north London and Herzog & de Meuron's £23m Laban Centre for contemporary dance in Deptford, south London.

RHWL is currently working on the last of the big arts schemes: the Coliseum – home of the English National Opera – and the Prince of Wales Theatre. Once these two projects are completed, there will be little else on a similar scale to take their place. "Lottery money has been spread too widely and too thin. There's no really worthwhile funding coming through for big projects," says Thompson. Theatres Trust's Longman cites the example of the Unicorn Children's Theatre, on the same site as London's City Hall, as an example of the impact reduced funding is having. He says the Unicorn Theatre had to lay off its design team as the theatre was only offered £5m by the Arts Council. "If they had applied three years ago, they would have received £15m," he says.

The Arts Council argues that the need for large new theatres no longer exists. "A huge number of buildings went up in the early years, but it would be crazy to keep building for the sake of it," says the spokesperson. That may be true, but the squeeze is now being felt by theatre owners who want to refurbish and modernise. "People love the magical auditoria designed by greats like Frank Matcham but many of them were not built to last," says Longman.

RHWL's Thompson predicts that without Arts Council funding, theatre development will shift from new-build projects to converting existing buildings, such as town halls. "Local authorities have started to realise that they need theatre venues. A few old halls have been contracted out to developers already."

Local authorities can sometimes strike a deal with developers by trading an arts facility for development rights on a valuable piece of land – Croydon's Fairfield Halls are a good example. This is feasible only in areas where land values are high, and many theatre owners are turning to alternative money pots such as the Heritage Lottery Fund. HLF funds are on offer to theatres with high heritage value with plans for sensitive reburbishments rather than full-scale modernisations. An HLF spokesperson says: "We can support a few arts buildings with capital grants but they must have a high heritage merit. We also receive joint applications with the Arts Council on buildings that are grade I or II* and give priority to public or charitable ownership buildings." According to Longman, more than £100m is being sought from the HLF at the moment. In such instances – for example the Hackney Empire or RHWL's Prince of Wales Theatre project – additional funding has to be found from private sources.

With the Arts Council unable or unwilling to fund large projects, the construction of landmark theatres is unlikely. The next generation of theatre projects will be more modest productions, funded by planning gain, committed communities or private donors.