The arts need money, stability and creativity if they are to be successful

Since time immemorial, arts organisations in Britain have suffered from a lack of financial stability. Year after year, they have had to battle for a renewal of their funding, expending huge amounts of time and energy on the fight to secure their futures. Inevitably, this makes forward planning well nigh impossible and leaves many of the country's most gifted artists permanently dangling on financial tenterhooks.

Since time immemorial, arts organisations in Britain have suffered from a lack of financial stability. Year after year, they have had to battle for a renewal of their funding, expending huge amounts of time and energy on the fight to secure their futures. Inevitably, this makes forward planning well nigh impossible and leaves many of the country's most gifted artists permanently dangling on financial tenterhooks.

So the Government's announcement that selected arts organisations will now receive guaranteed six-year grants is welcome. Chris Smith, the Culture Secretary, has consulted and listened, and has come up with a sane solution. While it did not take genius to see that the system needed to be changed, no Chancellor likes to make spending commitments far in advance.

However, financial security is not in itself a recipe for artistic creativity, even if that is a point that too few in the arts world acknowledge. The feather-bedding which has traditionally been enjoyed by theatres in much of continental Europe - in Germany, for example, there is a fully-funded opera house around every corner - has not acted as a guarantee of quality. Complacency is an ever-present danger.

It can be argued, too, that six years is too generous a timeframe. Much can change within six years; the departure or arrival of a new artistic or financial director can quickly make an enormous difference, for better or worse. The more modest period of three years - which has already been introduced for some arts funding in the past two years - will sometimes be sufficient to give the required stability without offering hostages to fortune: organisations may, after six years, bear little resemblance to the organisation that was initially given the grant.

But this is a step in the right direction. It enables theatres to make plans and permits the creation of long-term projects - a cycle of plays over several seasons, or the commissioning and performing of work by local authors, helping to nurture and sustain talent. It is also an important symbolic gesture, a sign that culture matters, and that arts spending is no longer an irritant to the custodians of the public purse.

The new system proposed in yesterday's consultative green paper, Culture and Creativity: the Next Ten Years (a terrible title, but never mind that) would mean that Premier Arts Companies (PACs - a terrible acronym, but never mind that) would be free of the constant interference that makes their lives so difficult now. There is a clear danger that the PACs will be restricted to the ranks of establishment arts companies - bodies like the Royal Shakespeare Company and the Royal National Theatre, who are in any case in no danger of falling by the financial wayside. But it need not be that way; with luck, it will not be if Mr Smith and his successors are prepared to be bold.

The financial horror story of the Royal Opera House in recent years serves as a reminder that mismanagement can be just as serious a problem with the large, old-established institutions as with the smaller outfits for whom flexibility remains the key. The £25m boost for new talent in regional theatres announced by the Arts Council this month - including a tripling of funds to small theatres like the Theatre by the Lake in Cumbria - indicates a desire to bring the artistic minnows in from the cold.

New Labour, despite its oft-proclaimed enthusiasm for the arts, has spent too much of its time in government trying to associate itself with the perceived glamour of celebrity rather than buckling down to the nitty-gritty of boosting the creative arts in this country. Yesterday's announcement is all the better for dealing with nuts and bolts.