By then the government had appointed Gerry Robinson as Arts Council chairman, a no-nonsense managerialist, who believed, like many in government at the time, that universally applicable management techniques were the answer to the council's problems.

However, the council is a unique body, designed to be kept away from government influence by the arm's-length principle, operating on the basis of expertise and public service. The combination with management consultancy proved toxic. Hard-hitting reforms drove out the Arts Council's expertise, while its immunity from oversight provided a veil behind which increasing sums were diverted from funding the arts to paying for bureaucratic salaries and office expenses.

The loss of expertise is shocking. A review commissioned by ACE reported in 2008: "There needs to be a significant reinvestment in arts skills and experience across the whole organisation." But such expertise is the sole justification for the council's existence — it has historically been granted funds and protected from oversight on the grounds that it will then be free to choose among applicants on an expert basis. Two bruising internal reorganisations of the Arts Council have left it ill equipped for its essential purpose. It is hard to see how tinkering any further can make things better. Funding will not become arts-centred again without completely rethinking how such funding is to be delivered.

The evidence of the Arts Council's increasing spend on administration costs only serves to emphasise the point. In 2005, the arts researcher Charles Morgan reported that over the previous six years, despite a cost-cutting reorganisation in 2001, Arts Council salaries had grown by 66 per cent and the chief executive's salary by 93 per cent. In November 2008, ACE was employing more press and communications officers than Sports England, UK Sport, the Museums and Libraries Archive and English Heritage combined. Overall, administration costs appear to have grown from some 4 per cent of the ACE budget in financial year 1994-1995 to 14 per cent by 2006-2007. Inevitably, arts practitioners are the losers, as less money flows through the system to reach its intended destination. Britain's arts funding is in urgent need of reform. The question is: will a new government have the courage to make the necessary changes? David Cameron looks likely to be our next Prime Minister, but his shadow arts team is often reluctant to rock the boat. The new Conservatives, it sometimes seems, are as keen to portray themselves as a safe pair of hands for the arts as New Labour once was for the economy.

What is needed is a bold new settlement for the arts in Britain, that encourages arts bodies to diversify their funding and secure endowments for their own independence, and simplifies the funding streams already in place, wasting less money and encouraging greater artistic freedom.To begin that process, we need a wide-ranging National Audit Office investigation into how taxpayers' money has been spent on questionable political goals on the basis of weak or twisted evidence. For instance, from 1990 to 1999, Britain erected more public statues than in the 80 years between 1910 and 1989, mostly aesthetically insignificant works put up in pursuit of poorlydefined instrumental goals such as civic cohesion, with little evidence of any meaningful social impact. Faced with such waste and distortion of purpose, we also need to look more closely at the US  model of funding through tax deductions and private giving. State funding is a recent innovation — and one that Keynes himself thought would soon become unnecessary.