1946–50: The Arts Council takes shape

During the war years, Keynes set up his plans to extend the work of CEMA into peacetime. He praised CEMA's wartime work, saying: 'when our spirits were at a low ebb...[CEMA] carried music, drama, and pictures to places which otherwise would be cut off from the masterpieces of happier times.' But without the threat of war, a state-funded Arts Council would offer new opportunities to spread the best of culture even further.

The new Arts Council would be ultimately responsible to Parliament, financed by the Treasury through grant-in-aid. But it was not itself a government department. No minister directed its policies or decided to whom funding should be awarded. Keynes advocated for the 'arm's-length' principle as a defence against the type of state-supported, and politically censored, art found in Nazi Germany. The arm's length principle meant that while the Arts Council had the freedom to make individual funding decisions without intervention from government, it had to be prepared to account for these decisions to government, parliament, and the public.

Keynes died the Easter weekend of 1946, a short time before the Arts Council Charter was ratified later that summer. But as wartime passed into memory, the regional offices, amateur artists and local productions that characterised the early years of CEMA were superseded by a London-directed organisation which emphasised high standards of excellence.