More than 400 artists, writers, and producers have signed a letter to MSPs urging them to vote down the next attempt to establish Creative Scotland, the merger between the nation's main cultural bodies, the Scottish Arts Council and Scottish Screen.

They believe that "huge costs of setting up a new institution, coupled with over-stretched resources, will inevitably result in a damaging cut in grant aid funding for artists and arts organisations."

Among the more well-known signatories to the letter are the writers Val McDermid, Denise Mina, Zoe Strachan and Louise Welsh, visual artists Rosalind Nashashibi and Matt Hulse, and Alison Peebles, the actress and director.

The letter states the much-rumoured new funding policies of Creative Scotland, which may involve loans instead of grants, will "reinforce artists' poverty".

Although there has been much discontent in the arts world - and within the two bodies being merged - over the long-running merger process, not until now have a significant number of artists called for the entire process to be abandoned completely.

Creative Scotland should have been set up last year but the Creative Scotland Bill was surprisingly voted down in parliament and now its formation will be included in the forthcoming Public Services Reform Bill.

The costs of the merger have not been officially published but speculation has costed it from around £2m to as much as £7m.

The Herald revealed last year that around £200,000 had been spent on a list of consultancy firms by the team established to lead the transition from the status quo to the new body.

The letter, signed by 440 individuals, also expands on concerns that artists have not been properly consulted over the merger, and that those activities traditionally thought of as art are being considered alongside the "creative industries" in funding terms.

It says that the information received so far on the new body is "confused and inappropriate proposals".

The letter to MSPs concludes: "Whilst many of us have been critical of the existing institutions, Creative Scotland does not offer improvement on the current provision managed by the Scottish Arts Council and Scottish Screen, and will impact negatively on Scotland's international reputation.

"For these reasons, we urge you to vote against the formation of Creative Scotland and instead refocus on supporting artists."

The letter is the outcome of an artists meeting in Glasgow in early December, followed by a series of individual artists grouping together, organised by Guyan Porter, a former president of the Scottish Artists Union and Leigh French, editor of Variant magazine.

Just before Christmas, the next stage of the merger of the two funding bodies was begun, with the details of a new limited company, also called Creative Scotland, lodged at Companies House.

Its chairman will be Ewan Brown, the former chairman of Lloyds TSB, and it will form the bridge between the current set-up and the final version of Creative Scotland which will exist when the Public Services Reform Bill is passed.

The letter says that the formation of Creative Scotland has now "reached crisis point".

It was January 2006 when the then culture minister, Patricia Ferguson, announced that the SAC and Scottish Screen would merge into a new body, Creative Scotland.

A draft version of the nation's first culture bill was unveiled in December 2006, and in January 2007, the joint board of the SAC and Scottish Screen was announced, chaired by Dr Richard Holloway.

May 2007's Scottish parliamentary elections brought a new SNP government and a new culture minister, Linda Fabiani.

Ms Fabiani took another look at the legislation, and it was substantially altered. In November 2007 the joint board appointed leading arts consultant Ms Bonnar as transition director to lead the move to Creative Scotland and in March this year, the Creative Scotland Bill was presented to parliament. However, when it came to the vote in the parliament in June, the bill unexpectedly failed to be passed.

A Scottish Government spokesman said: "The Creative Scotland limited company will take forward the practicalities of merging the existing organisations.

"The Scottish Parliament voted unanimously in favour of the establishment of Creative Scotland as a statutory body, and we will proceed with the democratic legislative route, not least to enshrine the important arms length principle in arts funding.

"The culture minister has agreed to meet with a number of representatives from across the sector to hear and address their concerns about the transition process and remit of Creative Scotland." MAIN POINTS The letter signed by 440 signatories from across the arts world has several concerns: A lack of consultation with the arts community during the transition process from Scottish Arts Council and Scottish Screen to Creative Scotland.

A proposed expanded remit to support the creative industries "at the expense of the public funding of artistic independence".

The "huge costs" of setting up Creative Scotland, coupled with "over-stretched resources" will lead to cuts in grants.

Changes to intellectual property rights and the rumoured introduction of loans will "reinforce artists poverty".

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