SCOTLAND'S new national arts quango faces losing hundreds of thousands of pounds because of "nutty" accounting rules, according to the man responsible for overseeing the creation of the body.
Creative Scotland, the arts agency expected to come into being next spring, will not qualify for the charitable status held for years by the two quangos it replaces.
Businessman Ewan Brown said: "It's money being mischannelled out of our system.
I think it's nutty that we are in this position, and it's an absolutely unintended consequence."
At a time of tightening budgets in the cash-strapped arts world, the new rules will cost Creative Scotland an estimated £300,000 a year, officials say. Culture minister Michael Russell yesterday called it "a shame".
The Scottish Charities and Trustee Investment Act of 2005 carried new rules under which organisations fail to meet the charity test when their constitutions allow ministerial control, for instance through the appointment of board members.
Creative Scotland replaces Scottish Screen – which lost its charitable status earlier this year – and the Scottish Arts Council.
"This is a new NDPB (non-departmental public body] with a very significant budget, the ability to look at all kinds of innovative funding," said Mr Brown. "If it's summarily not available, it's a missing chunk of money."
Mr Brown was speaking at a public meeting yesterday on the progress towards Creative Scotland after years of reviews, reports, and delays. It will come into being when the Public Services Reform Bill passes through parliament next spring.
The Scottish Government announced details of £5 million in new spending under its "Innovation Fund" for Creative Scotland.
The Odd Fellows Awards, devised by accordionist and composer Phil Cunningham, will offer cash to people who create "inspirational collaborations" across art forms.
Another £1.5m is for investing in digital media ventures, while the Own Art scheme of interest-free loans for art buyers has received £250,000 in funding.
The gathering at the Lyceum Theatre in Edinburgh was part of an effort by the Scottish Government to boost confidence in Creative Scotland. More meetings are planned.
Mr Russell said parliamentary debates were expected on the performance of Scotland's national arts companies, which are directly funded by the Scottish Government.
This autumn, his department will prepare a report for Holyrood on Scottish Opera, the National Theatre of Scotland, the Scottish Chamber Orchestra, the Royal Scottish National Orchestra and Scottish Ballet.
"Parliament will get a chance to see what the national companies are doing," he said. One issue will be the level of leadership the national companies show in their fields.
Mr Russell's predecessor, Linda Fabiani, suffered the humbling failure of last year's bill to establish Creative Scotland, widely seen as the reason for her sacking.
Asked whether he would resign if the Public Services Reform Bill failed next year, Mr Russell joked: "I think I'd have to go." He added: "The expectation is that the Creative Scotland part of this bill and the whole bill will be passed."
