"The theatre should be necessary – like a bank or a greengrocer's shop. It should offer something that people can't get anywhere else."– Peter Brook, The Observer, 1970.

When I arrived in York 10 years ago Tony Blair had just been elected, there was an optimistic, New Labour glow and anything seemed possible. My third child was due and I felt as if I had found a home for my family and for myself as an artist.

I had always wanted to run a regional theatre, particularly a proscenium space and felt I knew what was required to give a local theatre a viable, vibrant future. My stated aim at interview had been to put children and young people at the centre of the theatre's work.

UK theatre received £49.7 million in funding from the Arts Council, the industry was starved, under-confident and very angry. The feeling that early May morning in 1997 was that things, indeed, "can only get better".

I have never been a party political animal. I believe there is a natural mistrust of politicians if you are an artist and vice versa. The stage has only in recent times been spared the censors' critical and often untrained eye and it can be argued that censorship has continued to exist since '67 in the much subtler guise of public funding.

Governments give then take back, give to some and not to others, much of it historical and little of it pertaining to logic or the notion of a level playing field. There are constant shifts in policy that require artists to dance to different tunes, the notion of "accountability" paraded as an excuse to keep the artist in check. It is understandable that most believe things did get better, an extra £25m post-The Boyden Report and Theatre Review, had considerable impact. What is almost always ignored was the real-terms reduction in funding from our hard-pressed local authority, capped by government.

In the post-Thatcher era there was to be no return to public subsidy without strings, to a theatre that would place the artist at its centre. There is far greater emphasis upon the needs of the audience and a far greater need for the value of the arts to be evidenced.

The role of the theatre is to offer all of our community the opportunity to be involved in some way with the performing arts. We view ourselves as public servants. The difficult task has been to create a balanced economy within our own organisation, allowing growth in the face of public subsidy that often lags well behind inflation. Some projects generate more income than they cost and others cost more than they generate.

Understanding and manipulating this internal subsidy has allowed us to develop a broad range of work that includes: our youth theatre with over 320 weekly attenders; children and young people's tickets costing £5 for any performance (we now have 26,000 young people coming to the theatre each year, not including pantomime); over 800 workshops to 21,500 participants and delivering the Partnership in Education and Training project in six local schools; a studio which has broadened the range of work on offer, allowing a wider group of performers from the local community the opportunity to perform here; a resident partner company, Pilot, and various creative partnerships with different companies enabling us to offer an ever-widening programme.

Things have got better, primarily through the industry, commitment and creativity of the artists, staff, theatre supporters and arts officers – not thanks to Tony.

As I write, our pantomime is still playing, bringing large parts of our community together. This is the central point of our year; about 50,000 people will come to the York Theatre Royal pantomime. Our legendary dame, Berwick Kaler, is adored by the community, and a team of actors and show staff create some wonderful evenings that truly celebrate the power of live performance.

In the depths of winter are found colour, warmth, wit and anarchy tumbling over the footlights, igniting imaginations and proving that theatre works.

We hope to have escaped the sword of Damocles hanging over all arts organisations which, sadly, fell upon nearly 200 on December 13, just in time for Christmas. We are aware that the economic climate is uncertain and that it is often "leisure" activities that are first to suffer. The arts assist us in dealing with the great uncertainties of life, they pose the questions we sometimes avoid, give us the time and language to reassess who we are.

Through the great narratives of life we can connect with our deeper selves and others, we can develop empathy which allows us to live together in understanding rather than ignorance and fear. "Art is the apotheosis of solitude," wrote Beckett. In this country we spend 0.02 per cent of government spending on theatre – not a lot, imagine what we could achieve with twice that.

We desire to be a company open to and supportive of the creative needs of York, to offer the building and its resources to the community and to ensure that the space is fit for purpose for the next 100 years and beyond.

The nature of my working process has developed my understanding of theatre, inevitably changing in my time here. I hope I have become a better director and grown in my understanding of the organisation's purpose and how best to frame and achieve our goals.

I am often asked when I will be moving on, as if I have served my time –or maybe they just want rid of me! I have never viewed this job as a means to an end. I love the building, the company and the work.

The greatest challenge will invariably be programming, to maintain the balance between that which confronts preconceptions and work which is more celebratory. We must present the argument for the growth of the arts in this country, demand that everyone has equal access to art, value partnership, celebrate diversity and inspire, and above all prove that theatre is "necessary"… what else can we do?