Theatre education, says the consultative paper from the Arts Council, should be led by the artistic director, understood by the whole theatre staff and organised by an associate director or education officer with senior management status. It should be conducted by first-class practitioners. But the Arts Council fails to say how this could be funded. A spokeswoman said education could become a priority if “enough people tell us it should” and she invited theatre in education supporters to make their case.

Because of their strong community links, regional theatres have been at the forefront of placing education policies at the heart of their artistic vision, developing wide-ranging education programmes for different sectors of the community.

The paper notes “the disappearance of almost the entire portfolio of Theatre in Education companies, due in part to changes in funding patterns and in part to the development of other education activity”. It says it is not possible to recommend that there should be at least one specialist Theatre for Young People company in every authority, although it does emphasise the importance of TYP.

“It is vital that the work should be current, dealing with or interpreting ‘now’ issues, that it should raise questions that will inform the future and stimulate positive change. If the work is safe, challenging or predictable, it is dead,” it says.

The paper describes TYP as an art form that demands the highest professionalism of its participants. It is not a training ground for young actors.

“Youth theatre is more than just another leisure activity. It can and should be a dynamic social process that offers answers to the problems of communication and social integration that young people face. Youth theatre places young people at the centre of their own learning.”

The demands of the national curriculum, especially the compulsory teaching of Shakespeare, can lead to some exciting work, but for some children small-scale, cut-down productions can make a poor first impression, it warns.

This consultative document on publicly-funded drama in England is needed, says the council, because of the financial crisis facing theatres all over the country.

“There is a pressing need for action. Theatre is in mounting crisis. One of the nation’s greatest cultural assets, its provincial theatres, remains on the brink of an irreversible spiral of decline.”

The cycle of crisis management is difficult to break, but the council had a responsibility to develop a new strategy for the planning and distribution of funding.

Lord Gowrie, chairman of the council, said funding should respond to creative developments, rather than requiring artists to respond to the funding system. The paper was the first step in the process of creating a “new funding environment” for England’s subsidised theatre. The system must involve artists and practitioners at all stages of policy and decision-making, he said.

The council will be taking written responses until the end of July. In the meantime, meetings will be held by all the regional arts boards and a final White Paper will be issued to inform future planning.

Copies of the Green Paper are available from the Arts Council drama department, 14 Great Peter Street, London SW1 3NQ.