Theatres, galleries and orchestras will be able to apply for emergency support from a £40 million rescue fund as part of a cultural “new deal” being launched by the Arts Council.

In an interview with The Times, Dame Liz Forgan, the new chairman of the council, said that many excellent organisations could go under unless they received extra money to help them through the recession.

Almost 900 bodies that receive regular funding from the Arts Council will be able to apply for an emergency grant of up to £3 million to make up any shortfall caused by falling private donations and box-office receipts or tougher restrictions from banks. The potential beneficiaries include the Royal National Theatre, the Royal Opera House, the Serpentine Gallery and the Royal Philharmonic Orchestra.

Dame Liz said that she wanted to emulate Franklin D Roosevelt, who made the arts a crucial part of his New Deal to help the United States out of the Great Depression in the 1930s. “We in the arts must not see ourselves as victims. We have to see ourselves as part of the recovery,” she said.

The Arts Council will urge the beneficiaries of its grants to offer training and employment to people aged 16 to 24 who have been out of work for more than nine months.

“There’s a real need for skills and hard work,” Dame Liz said. “You’re not going to make them produce a show at the National Theatre straight away but there are all kinds of technical jobs and front-of-house jobs that they could do. I don’t see why it shouldn’t be on quite a scale, I would hope thousands of people could benefit.”

Separately from the rescue package, the Arts Council is planning to release more small grants for individual artists, and to give money to people who want to set up workshops and galleries in empty high street stores.

Although the Arts Council had its £467 million annual budget from the Government cut by £4 million this week, Dame Liz said that it had decided to release more of the money it receives from the lottery over the next two years to ensure the survival of some of the country’s most important cultural institutions.

“I don’t think this is a crisis yet,” Dame Liz said. “But organisations can go under very quickly. We will give them cash. It’s not a bailout, we don’t like that word, but we thought it was our job if we possibly could to find the money to stand ready to help excellent organisations who, through no fault of their own, are seeing important work threatened.”

Research by the Arts Council has found that donations to the arts from wealthy individuals and corporations fell by 7 per cent last year and are likely to continue falling.

Dame Liz said that the arts were more important than ever in a downturn. “If there’s one thing that enrages me it’s the idea that the arts are a luxury,” she said. “The word summons up the vision of people swathed in mink getting out of Rolls-Royces. The reality of the arts is that it’s devoted people living on fourpence ha’penny who passionately love what they do.”

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