Royal Opera House (Hansard, 18 December 1986)

§ Mr. Luce

The arrangements have evolved over several years in response to changes in circumstances.

Royal Opera House, Covent Garden Ltd., a body partly financed by the Arts Council of Great Britain out of a grant-in-aid from a Vote of the Office of Arts and Libraries, has completed the first phase of a scheme for the improvement and enlargement of the Royal Opera House 626W in Covent Garden (providing better facilities for artists and staff) and is currently planning a second phase to modernise the building. Government approval to proceed with the second phase has not yet been given, pending discussion of the latest financial projections. The Arts Council made a direct grant of £1 million towards the first phase of the scheme in 1979 but, by agreement between the parties and with the approval of my office, the major contribution from public funds is to come from the proceeds of an eventual sale of all or part of a site adjacent to the Opera House, which the Arts Council acquired several years ago for the purpose of facilitating the development.

This site was bought out of parliamentary funds by the Arts Council in 1975 for £3.1 million in order to provide an extension to the present building. The scope, cost and financing of the scheme being necessarily uncertain at that time, it was not considered appropriate to convey outright title to Royal Opera House, Covent Garden Ltd. There were, however, strong practical reasons for giving it some legal powers over the land, pending final dispositions, and these were provided in 1981 through the creation of a trust, known as the Royal Opera House Development Land Trust, the co-trustees of which are the Arts Council and Royal Opera House, Covent Garden Ltd.

The land trust deed, the terms of which were agreed by my predecessor, set out the rights and interests of the parties, and a framework for action, and its terms were designed to be adaptable to changed conditions as the project developed, and to provide safeguards for the public funds invested.

The land trust deed allowed for the possibility that part of the land should be used for the purpose of extending and improving the opera house and part should be commercially developed. Expenses incurred by Royal Opera House, Covent Garden Ltd. in connection with the land commercially developed would be a first charge on the proceeds of the sale of that land, but any excess of those proceeds over such costs would be paid to the Arts Council; expenditure on the improvements of the opera house itself would be borne by Royal Opera House, Covent Garden Ltd. alone. If any land was neither developed nor used for the improvement of the opera house, it would return to the sole ownership of the Arts Council. The value of the site was shown at cost price in the accounts of the Arts Council.

In 1985 it was agreed by the Arts Council and Royal Opera House, Covent Garden Ltd. that, in the light of the experience gained in the first part of the scheme, it would be possible to carry out the further improvement of the opera house only by either making a further call on public funds or drawing on the revenues and eventual proceeds of sale of the developed site. The Arts Council therefore sought and received my predecessor's approval to an agreement with Royal Opera House, Covent Garden Ltd., which would give the latter body a first-class claim on those revenues and proceeds of sale.

The relative interests of the two parties to the trust became such that it was no longer appropriate to show the value of the site in the accounts of the Arts Council. The asset has accordingly been written out of the Council's 1985–86 accounts, which now ascribe no value to the council's interest. Correspondingly, the asset has been written into the balance sheet of the trust (under whose 627W aegis the opera house development is nominally being conducted) at the 1975 cost price of £3.1 million, although it is likely to realise considerably more.