A theatre company in south Wales has written to the Arts Council expressing dismay over moves to reverse a funding policy.

Spectacle Theatre in the Rhondda Valley is in line to receive a theatre in education contract under revised plans by the Arts Council.

But its decision to stick with the status quo - after sustained political pressure - has angered the Rhondda company, which stood to benefit from a three-year contract.

Spectacle had set up Theatre Works and entered working agreements and is demanding more money to honour the contracts or jobs will be put in doubt.

Inquiry call

An independent inquiry into the way the Arts Council of Wales is run was ordered by the Assembly earlier in the week.

The council had planned to reduce the number of theatre companies in Wales working with young people from eight to five.

But has now told the Assembly that the status quo remains and the drama strategy for theatre in education has been suspended for a year.

The move follows a widening row over funding, sparked by the proposed loss of Gwent Theatre's contract after 20 years.

But news that the cuts will not go ahead in 2000-2001 have been celebrated by staff at Gwent Theatre.

The original decision by the Arts Council for Wales provoked anger among politicians and educationalists.

Gwent Theatre appealed, but it has been told by the Arts Council that the decision cannot be overturned.

Management structures

Chair of the Arts Council for Wales Sybil Crouch told Assembly Members on Wednesday that theatre in education funding for this year would remain.

But funding for next year will be suspended, a meeting of the post-16 education committee was told.

"What this demonstrates is that the Arts Council for Wales is prepared to listen. I see that as a matter of strength," Ms Crouch said.

"This is not about individual organisations complaining if the Arts Council was to change its decisions every time there was a controversy, there would not be policies."

Education Secretary Tom Middlehurst said an independent body would be brought in to look at the management structures of the Arts Council for Wales.

Watchdog

Parliament's top watchdog had been asked to investigate the way the Arts Council for Wales is run following a long-running row over school theatre contracts.

Gwent Theatre is considering a legal challenge, but MPs - Don Touhig, Huw Edwards and Llew Smith - are calling for the Auditor General to look at the way the body operates.

"We're talking about a considerable amount of public money here and there are so many unanswered questions that I think it needs a top-level investigation," said Mr Edwards, MP for Monmouth.