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Dont they do a lot of good? I asked.

Of course they dont. They hardly do anything at all.

Then, I proposed, lets abolish them.

Now he was panicked. This was not the turn that he had expected the conversation to take. No, no, Prime Minister. They are symbols. You dont fund them for doing work. You fund them to show what you approve of. Most government expenditure is symbolic. The Arts Council is a symbol.

I told him it was no good. My mind was made up. He promptly suggested that I have a word with the Chief Associate Director of the National Theatre, who by chance had also been invited to this drinks do. I didnt want to face another salvo, but Humphrey told me that hes been trying to persuade this fellow Simon Monk to make the right sort of speech at the Awards Dinner.

Thats very good of you, Humphrey, I said gratefully.

Not at all. But you might have more success than I. So Humphreys persuasion had not borne fruit.

Well, before I had time to collect my thoughts I was face to face with this theatrical wizard. He was actually perfectly polite and seemed a little ill at ease. Small, thinning hair and without the beard that Id so often seen in the newspapers, he could almost have been a politician.

I was ill at ease too. So youll be introducing me at this Awards Dinner thing? I began.

Thats right, he replied, and fell silent. We half-smiled nervously at each other for what seemed like an eternity. It became clear that if I didnt speak the conversation might never resume.

Any idea of the sort of thing youll be saying?

I suppose it all depends really.

On -- er -- on ?

Oh the size of the grant.

Just what Id been warned. And I knew he had no idea what it was to be. [The Prime Minister was not aware of the discussion with Sir Humphrey about breadsticks in the NT Restaurant Ed.] So I told him the grant was still under discussion.

Of course, he agreed. But if it turns out to be generous it would give me a chance to say something about the way this Government has got its priorities right. Believing in Britains heritage, and what Britain stands for.

I hinted that he could say something of that sort anyway, even if I couldnt persuade the Arts Minister to cough up, but he indicated that this would be difficult.

Surely you wouldnt want to make it a political occasion? I said in a voice of disapproval.

Not for myself, no. But I have a duty to the profession. Hes good! And to the Arts, he continued. My colleagues would expect me to voice their feelings.

I tried to make him understand about money for inner cities, schools, hospitals, kidney machines. He acknowledged my problem and said he proposed to solve it by making a funny speech about the government.

This was grim news indeed. Humorous attacks are the most difficult to deal with. The one thing I cant afford is to look as though Im a bad sport or have no sense of humour -- the British public never forgive you for that.

[The following morning the Prime Minister received a letter from Simon Monk. Sir Humphrey preserved it in the Cabinet Office files, and we reproduce it below. It contained a serious threat Ed.]

NTNATIONAL THEATRE

Patron HM The Queen

December 6th

Dear Mr. Hacker,

I enclose a draft of a part of my speech, for your amusement. It will make good television, dont you think, in a light-hearted way? Of course, I hope I dont have to say all this, as I would rather not embarrass you. But I do hope you understand that if we dont get a substantial rise the National Theatre will collapse -- and there will be a huge empty building on the South Bank, a decaying monument to this countrys barbarism.

Yours sincerely

Simon Monk

The Olivier Theatre

The Lyttelton Theatre

The Cottesloe Theatre

enc.

Ladies gentlemen, I thought that tonight you might be amused by some of the other ways the government has spent your money.

The money it cant afford for the arts.

Did you know that in one year a London borough spent a million pounds on hotels for families while they had 4000 empty council houses?

Did you know that another council spends 100 per week on a toenail cutting administrator? And that one city in the UK was still employing four gas lamp lighters eight years after the last gas lamp was removed? That cost a quarter of a million!

Not to mention the Council that spent 730 to have two square yards of shrubbery weeded. And the government office block thats scheduled for demolition two weeks before its completed.

And finally, do you know where all the British Local Authorities held their conference on spending cuts? The Caf Royal! [An expensive and elegant restaurant in Regent Street, London Ed.]

[Hackers diary continues Ed.]

December 6th

I got a vile, threatening letter from that man Monk this morning. Not only was it full of examples of local authority waste, it threatened that the NT would shut down if I didnt hoick the grant up. This would be cataclysmic news for me, the pres would kill me!

I called Dorothy to discuss his draft speech. Her view of it was that the TV viewers wouldnt make the distinction between wastage by local or national government -- it's all public money, the taxpayer pays the rate-support grant. And therefore they would agree with Monk that if money is wasted like that it would be inexcusable to risk the closure of the NT on financial grounds.

I decided she was right. The fact is, the National Theatre is going to call my bluff.

What is your bluff? she asked.

My bluff is: Im willing to risk the National Theatres bluff.

Whats their bluff?

Their bluff is that they think Im bluffing, whereas

Whereas you are! she said.

I realised that I no longer knew who was bluffing whom. Dorothy thought it was obvious. I couldnt see it. [Perhaps it was a case of blind mans bluff. Or bland minds bluff Ed.]

My cassette recorder was on the desk, because I was about to dictate some notes for my memoirs and a couple of personal letters. Bernard offered to clarify the situation for me. He then spoke for several minutes but I was none the wiser. So I asked him to repeat his clarification into my cassette.

Prime Minister, he said, you think that the National Theatre thinks that you are bluffing and the National Theatre thinks that you think that they are bluffing, whereas your bluff is to make the National Theatre think that you are bluffing when youre not bluffing, or if you are bluffing, your bluff is to make them think youre not bluffing. And their bluff must be that theyre bluffing, because if theyre not bluffing theyre not bluffing.

I thanked him and resumed the intelligent part of conversation with Dorothy. She asked me what my policy actually is? Am I willing to risk their closure if I dont increase the grant?

I replied, flustered. I have already stated my policy. I think. All I can do is go on restating it until until

Until you know what it is? Bernard enquired, unhelpfully.

The point is, this situation is now a real hot potato. If I dont do something it could become a banana skin.

Bernard intervened. Excuse me, Minister, a hot potato cant become a banana skin. If you dont do anything a hot potato merely becomes a cold potato.

I wonder if Bernard ever realises how close to death he sometimes comes.

December 7th

Dorothy came to me with a plan. Not a good plan, not a great plan -- but a plan of sheer genius!

In a nutshell, she recommends calling their bluff. She says I should sell the National Theatre building. And the National Film Theatre. The South Bank is a prime site, overlooking St Pauls and Big Ben.

The site, she proposed, should be sold to a property developer. Her information is that it is worth about 35 million pounds on the market. This money could be put into an Arts Trust Fund, producing -- at an average of ten per cent per annum -- 3.5 million pounds a year.