It is interesting to speculate what changes would be brought about if public arts subsidies were ended. Would the practitioners have to work harder to generate an audience that is enthusiastic enough about the art or music pay what it takes to support it? Would classical music lose a little of its ingrained snobbery because it has to compete directly with other forms for its audience? Would art exhibits live and die on their merits, and artists therefore be forced to consider their audiences more than they are now? And would all this make for better art/music, or worse?
I think this is probably a question that a lot of folks would disagree about. On the one hand, we worry that the unsubsidized arts would end up catering to the lowest common denominator, because that's the only way to compete with Madonna and Ricky Martin. On the other hand, we might all recognize that there's a lot of crap out there that only flourishes because it is subsidized (artistic merit being very much in the eye of the beholder). And besides, aren't there enough fans of classical music to support it?
In the US of A, many cities subsidize symphony orchestras, because it makes the host city more attractive to residents and tourists alike, which ultimately contributes to a healthy economy. And public radio and television also devote a significant amount of air time to musical forms other than classical, which is increasing more widespread appreciation of these forms (in my opinion). If state radio in Britain or other countries is still skewed towards classical music and away from other forms, perhaps it is just a little behind the curve.