The Culture Minister talks to Phil Miller about the future of arts in Scotland while casting a critical eye over the Festival

It was a typical Monday at this year's Edinburgh Festival Fringe: dreich and raining outside, but packed to the rafters inside.

As Linda Fabiani, Scotland's Culture Minister, completed a busy morning's festival-going with The Herald, she reflected candidly on the three shows we saw, what she describes as the "cock-up" (albeit, not her own) of the failure to pass the Creative Scotland Bill earlier this year, and her determination to see the new arts funding body come to fruition.

She will receive the plans for the establishment of the new body, Creative Scotland, later this week and will consider its costs and arrangements in detail.

Meanwhile, she thinks we should all relax and enjoy the capital's annual arts festivals which she believes the country takes too much for granted.

"I think we do take it for granted in a way, and it's part of the whole other issue - that we in Scotland should be celebrating ourselves a little more," she said.

"Visitors come here and love it. I was meeting with cultural attaches the other night and they were raving about the festivals. And I met some really esteemed literary folks at a British Council event at the weekend and they are blown away by the Edinburgh International Book Festival. It's the biggest arts festival in the world, the best arts festival in the world: yet we just think about it as oh, it's the festival'.

Last week, the minister announced the latest block of funding from the new Expo Fund, which has been designed to help promote Scottish artists in all the festivals, and also contribute towards the national and international touring of some of these acts in the future.

"The Expo Fund is very definitely part of that thinking of celebrating Scotland, which is why I was absolutely determined to get some of that £6m money spent this year," she said.

The £200,000 announced last week will be used to set up a showcase, or series of shows, at the Fringe called Made in Scotland. Grants from the Expo Fund have already been given to the Edinburgh International Festival (£277,916), Edinburgh's Hogmanay (£225,000) and the Edinburgh International Film Festival (£60,000). Money has also gone to the book festival, so it can support a project involving John Burnside, Janice Galloway, AL Kennedy and Don Paterson.

This is Fabiani's second festival as Culture Minister and she says she has gone to see as many shows as she can.

So far, she has seen comedy at the Fringe, opera at the Edinburgh International Festival, and much else besides. She loved Scottish Opera's The Two Widows, and Mortal Engine, an experimental dance show, part of the EIF, which was at the Playhouse. She is less sure about her opinion on Dybbuk, a Polish theatre piece that she saw at the King's Theatre.

However the first night of the London Symphony Orchestra's Prokofiev series at the Usher Hall got a thumbs-up. She has a busy diary again this week, running up to the new production of the National Theatre of Scotland, 365, on Friday.

Yesterday, the minister and The Herald took in three shows in a packed morning - Rich Hall and George Orwell's Coming Up for Air at the Assembly Rooms, and Katie Stillman and Todd Yaniw performing at the Royal Overseas League's Bach for Breakfast series.

She laughed heartily through Rich Hall's ingenious short stories and recollections, and was impressed by Hal Cruttenden's acting in Coming Up for Air.

Ms Fabiani has met Jon Morgan, the director of the Fringe, to discuss problems associated with its box office system, and she said she thinks the Fringe have done "as much as they can" to address the issues. Mr Morgan last week said there would be an independent inquiry into the issue.

Ms Fabiani said she was unsure whether the credit crunch, or other factors, would harm this year's box office sa es.

She said: "Everything I have been at has been well attended, although I saw a comedy show at the Pleasance that was half-full, but that is often the way with comedians, that is not unusual.

"It's been years since I have been to something that's only got three or four people there. The Pleasance itself was mobbed when I was there.

"It is seemingly going to be one of the best years ever at the Fringe - that is what I have been told - the tickets are selling and selling."

Beyond the Fringe, one major topic looms - the future of arts funding in Scotland, the power for which will lie in the hands of a new body, Creative Scotland.

Currently, a transition team, led by experienced arts consultant Anne Bonnar, is preparing a report into the costs of setting up the body, which is effectively a merger between the Scottish Arts Council and Scottish Screen.

The establishment of the body has already been hit by the failure of the Creative Scotland Bill in parliament and last week a report suggested that its set-up costs could be as much as £7m - rather than the £1m figure which the minister informed parliament.

"I refuse to be upset by that figure," Ms Fabiani said, talking about the £7m figure quoted. The first time I heard that figure was last week.

"The work is ongoing, and the Creative Scotland interim board have been asked to come up with some figures.

" The interim board have been charged with giving me the transition costs, that is their responsibility and role. Then I was phoned up about that £7m figure - the first I had heard of it."

She added: "I don't know what the transition costs are going to be. But until I see the transition team's report I don't know what they are going to do. I don't know where that £7m figure has come from. Absolutely no idea, but I cannot begin to speculate.

"As for the bill, it was passed unanimously, and then I believe it was a complete cock-up what they the opposition parties did over the financial memorandum which led to the defeat of the bill. It was bizarre in the extreme.

"I know the parliament unanimously wants Creative Scotland.

"But I believe in the parliamentary process, and there's nothing I can do until we go back to parliament."

She refused to speculate on potential costs, or where she would draw the line over how much the new body could cost.

In the meantime, there are still two weeks of the Festival to go and the Culture Minister intends to enjoy them.