Theatre has recently been awarded its biggest ever subsidy by the Arts Council. Artistic director Do

Two separate events occurred within a week recently. The first, Richard Eyre's speech to the Theatre 2001 conference, an event of minor importance, generated a weird amount of heat. This perfectly judicious, mildly dyspeptic account of the state of theatre today set off a fusillade of leader comments, think pieces, news stories and round-tables. With trains crashing, countries flooding, genocide raging and the army moving on to Dartmoor to eliminate the hedgehogs, one would have thought there was more urgent news than the price of theatre programmes.

The second, the announcement of the Arts Council's increases in subsidy, to be phased in over the next two years - one of the most important days in the history of subsidised theatre - passed by almost unnoticed. The word "increase" doesn't quite do it justice. It is an exponential leap, a complete realignment, a jump from fast to plenty. The government is simply showering the theatre with cash. Hail, hail, Chris Smith and Gerry Robinson, one would have expected on many a front page, but no. All the announcement got was muted coverage a few pages in. We still have our problems with joy.

Most remarkable of all, this influx of moolah is going to the theatres. The government had promised the money for a long time, but few thought it would ever get past the Arts Council. Dark rumours about schemes, bursaries, strategy and priorities had emanated from that institution, and the presumption had been that only a little water would trickle through, most of irrigating the parched lands of bureaucracy. But it is a flood. Somebody has forced it through. Now this may seem perfectly logical - the Arts Council giving money to the artist - but in fact, it runs counter to the guiding philosophy of the past 20 years. To understand this paradox better, it is necessary to look a little more closely at the first event, Theatre 2001.

As usual, the fuss and flutter about Eyre's speech served as a smokescreen for the extraordinary thing about the conference - the audience. Theatre 2001 applied itself to several tasks with the usual blend of banality and grandiosity: why does theatre matter? How should we create the product? How do we develop the future leadership? Grand themes indeed, and the forum chosen was the usual smorgasbord of speeches, panels and public addresses. Four hundred or more delegates turned up to dream, imagine and legislate for a new theatre. And, among the delegates, there was not a single actor. Not a single writer. Not a single designer. A smattering of directors, and that's it.

A couple of actors and designers were wheeled out as panellists. And what did they see before them? An ocean of arts officers, administrators, artistic directors, executive producers, development officers, marketing managers, policy-makers and conference organisers. In short, everyone but the people who make theatre. This strikes me, an artistic director myself, as little short of obscene. Who are these people?

One of the most telling changes in the theatre ecology of the past 20 years (and, indeed, in most art forms) has been the growth of the arts admin industry. What began as a step-up for a stage manager, a publicist or a future producer has calcified into a specific career structure. There are now hundreds of college courses in arts admin, merrily pouring graduates into the workplace, eager to get their hands on some art and give it a bit of thorough managing.

Our theatre as we enjoy it is largely built on the back of gifted producer-administrators. Genista Mackintosh at the RSC and the National, Caro Newling at the Donmar, Vikki Heywood at the Royal Court, Caroline Maude at the Gate, and then the Young Vic, did as much as the men who danced around in front of them claiming all the credit, if not more, to achieve the golden eras that those theatres enjoyed. Without them, the theatres would be rather like skeleton-free bodies, a slump of flesh on the floor. During the two happiest periods of my career, at the Bush Theatre and now at the Oxford Stage Company, I have depended absolutely on excellent management teams - and merrily stolen the credit from them.

Those are the good administrators, of whom there are many more. And then there are the bad ones, of whom there are more still. Soft-spoken, sweetly smiling gauleiters with dangly earrings; podgy, bejumpered, proud-to-be-old-socialists with unconvincing beards; people who would run screaming in terror from the stage, yet are happy to bitch and slander actors and the difficulties; people who tell war stories of how they dealt with the creatives, the luvvies, the artistes, as if they were dealing with some evil subculture; people who will tell you that their mission in life is to respect and support the artist, without realising that the best way to achieve this would be to fuck off out of the way.

If this was representative of a small caucus of discontent, it would be tolerable, normal even. But, by weight of sheer numbers - as evidenced by the conference - it has come to represent the majority. Once these people have acquired power, they are quick to extend it. The original single producer soon needs an assistant for his exceptional workload. Then he finds he has to subdivide his job ("It's ridiculous that one person should be expected to do all this. We need specialists"). Then the specialists need assistants. Then the marketing department starts to feel left out. Then the increase in paperwork demands an office manager. Then the person who started all this decides to take a more strategic position, and gets someone in to do what is left of their first job. And slowly these infrastructures, bureaucracies - call them what you will - grow and grow and grow, and slowly, what is left for actors, writers, and for what goes on stage, dwindles and dwindles. Cash, resources, energy, drive are all sucked away from the audience, and poured into ever-expanding and ever more useless offices.

At the top of the heap of the arts admin empire is the Arts Council - the Death Star, if you will - creating juggernaut-loads of paperwork to create more work for itself, and unnecessary work for others. Most companies now have one or two individuals whose prime role is to deal with the Arts Council. And dealing with the Arts Council is not easy, as it's an organisation that, in principle, one wants so passionately to defend, but which is so hugely disappointing in practice. For some reason, Arts Council officers seem to feel that by pinning on conference name badges they assume a divine power to meddle, dictate and pass magisterial comment in areas of which they have no understanding. And what is their invariable solution to any problem? "Have you thought about increasing the size of your staff?"

When I began at the Oxford Stage Company, there were ten permanent staff, including a receptionist, in a suite of offices whose annual rent could have covered about six fringe productions. On my first day at work, there were three incoming phone calls. All day. For ten people. It was three days until someone came to visit. I started to wonder about the receptionist. Because nothing was being produced for six months, no one had anything to do. At the end of the month, there was a company culture of going on meaningless work trips, so that people could claim the handsome expenses for such, to tide them over until their next pay cheque.

We set about changing things, working under the mantra "Put the money on the stage". We carried out the sad and grisly business of reducing the workforce, we moved our offices and we reorganised the budget, excising the most extraordinarily pointless collection of items. All the money was channelled towards what the audience would see. "Put the money on the stage," people would recite back to me with naughtily raised eyebrows, as if it was a rather novel and sinful thing for a theatre company to do.

Unfortunately, over the course of the next 18 months, I put rather too much money on the stage, and ended up digging the company into a not negligible hole. This was partly the result of my own rash and reckless decisions, and substantially because of other factors, which I won't rehearse here. But, having got into trouble, it was surprising how little support we received from the Arts Council when we tried to get out of it. Indeed, there was a strong impression of repressed glee that we were in a mess. "See, see, see what happens, without armies of staff, without big departments, without swanky offices, see!"

We managed to stick to our guns, keep our structure the same and, thanks to an excellent team, we have been able to present an extremely ambitious body of work, and wipe out the major part of our deficit. On Saturday 10 February this year, we presented seven performances of five different shows in three different parts of England, all to capacity houses. That's with a permanent staff of five people. The scale of this achievement seems to have caused the Arts Council nothing but further rage.

In the orgy of generosity that has recently broken out, the Arts Council has given us probably the smallest of all the recent rises, a comically disappointing 10 per cent. In the context of all the joy elsewhere, it is hard to find this act of vindictive bitterness anything but funny. Although it talks about the work, and issues press releases about backing talent, the Arts Council still appears to feel that its job is to give money to people who are nice to it. Amid the panoply of generous handouts, it is impossible not to leap with joy at the many cases of virtue rewarded. It is equally impossible not to burst out laughing at some of the more extraordinary cases of brown-nosing rewarded.

But no matter; whoever managed to steer this great and long-overdue lump sum past the grasping fingers of the bureaucrats should feel very happy. If it is Messrs Smith and Robinson, then they should congratulate themselves on doing more good for the theatre than anyone else has, in my lifetime.

There will be problems ahead. It will be hard for people immersed in a culture of complaint to stop moaning. It will be harder still for people who have been making a glass of white wine last an evening to cope with a bottle of champagne for breakfast. A sense of giddiness may well undo many. But hardest of all will be to make sure that all this new money, every penny of it, ends up where it should. On stage. In front of an audience. Because that's where it matters.

Dominic Dromgoole's The Full Room: an A-Z of contemporary playwriting is published by Methuen (£18.99)

This article first appeared in the 26 March 2001 issue of the New Statesman, How the rich rule politics again