It was a truly jaw-dropping moment. The board of Creative Scotland had just been given a presentation by members of the senior staff as to the impact on Scotland’s arts and creative industries of various budget scenarios dependant on the settlement agreed next month with the Scottish Government.

Worst case scenario could best be described as cultural carnage. A whole swathe of our artistic community unable to be funded, many of whom would inevitably go to the wall as a result. You do not have to have Jeremiah as your middle name to assume that few of them would be able to rise from the ashes. Neither are we talking auntie Bessie’s AmDram. These are household names; much admired and loved institutions.

The other scenarios were less apocalyptic, but all were bleak. And, as many of our umbrella agencies noted in an open letter this week, this time bomb is ticking after a decade in which, in real terms, they have had to live with their income dropping by a third.

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Creative Scotland’s regularly funded organisations are the very heartbeat of our nation’s cultural offer. They are not only valuable in their own individual right but a crucial part of our artistic tapestry. At the moment 118 of them have been given 3 year backing to develop and help keep a vibrant show on the road. The new winners and losers from 2018 will find out their fate a month after the Scottish budget.

For this is not just some rolling programme box ticked by Creative Scotland’s specialist staff. Every application in every round is meticulously cross checked against existing provision across the country, and rigorously debated by all the art form teams in terms of the value and credibility of the bid and its offer.

This means that the list of those funded for three years is tweaked and changed, not least to ensure that new kids on the block get a chance to be nourished and encouraged.

Those who don’t make the cut, or suffer a reduction in their expected award, have often been re-directed to the Open Fund which underwrites single projects. But this too has become so pressurised as to risk becoming meaningless.

Even before this current round produces yet more applicants the recent strike rate has been little better than one in five. This is devastating for the sector, and also colossally dispiriting for the staff charged with bearing serial bad tidings.

But this is not some cri de coeur on behalf of luvviedom. The arts and creative industries now account for over 70,000 jobs in Scotland. They contribute three per cent of gross value added to the national budget, but get 0.5 per cent of it. We know too from VisitScotland that a third of our tourists cite culture and heritage as the main driver for their trip. This sector is very big business in addition to its proven impact on education, health and wellbeing.

And it’s smart business too. Every £33m invested in regularly funded organisations has been bringing in £110m match funding from other sources.

The potential tragedy of the present situation lies in the fact that Scotland is really punching above its weight just now all across the creative sectors. In literature, music, visual arts, performance, digital and screen we have built up huge experience, enviable skills, and international reputation. How perverse it would be to let Scotland the Brand not just lose its gloss, but its engine room.

Looking in from the outside, you might suppose there is no reason to doubt we can continue to survive and thrive as a cultural powerhouse. The screen unit within Creative Scotland is expecting a £10m boost to build on production and inward investment success.

Money has been found for the new V&A in Dundee, to help Paisley’s bid to become a city of culture, to aid the Burrell project. However some of that money comes from budgets other than culture, and high profile one off investments are wholly separate from nourishing and growing core activity.

Of course the government also funds our national arts companies in addition to making a grant in aid settlement to Creative Scotland to help fund the myriad other organisations, projects and festivals. But increasingly much of that latter money is ring fenced. The Youth Music Initiative, Cashback for Creativity, and the Expo Fund which underwrites the Made in Scotland strand at the Edinburgh festival all have budgets attached which CS cannot spend on anything else.

But perhaps the most serious threat to funding has been a direct result of the UK Department for Digital, Culture, Media & Sport's decision to deregulate the National Lottery. This resulted in an explosion of alternative lottery and gambling activity causing a sharp downturn those playing the national one which spreads money to arts, sports and good causes.

Since they did, National Lottery income has been dropping dramatically every year – currently taking over £6m from Creative Scotland’s income. This is an utterly crucial development since lottery money underpins such a large slice of the regularly funded organisations’ awards.

As with the UK budget, Scotland’s cabinet secretary for finance has found a queue of supplicants round his door.

But here’s the thing: our cultural sector is not just about adding to the gaiety of the nation – though that it does in abundance. It is a multi billion pound net contributor to Scotland’s economy, a major employer, and, if we are forced out of the EU vital international calling card. It helps paint a picture of a vibrant, modern, multi cultural democracy. Let’s not needlessly damage that.

Journalist and broadcaster Ruth Wishart is a Creative Scotland board member and is writing in a personal capacity