There was some great theatre in 2008, says Arts Editor Terry Grimley as he lists his highlights.

Usually the theatrical year begins slowly, green shoots of artistic activity gradually appearing alongside the running-down of Christmas shows.

But 2008 began with a blazing row. The Arts Council’s comprehensive review of its funding portfolio, intended to demonstrate a robust “development agency for the arts” capable of making bold and imaginative decisions, quickly descended into chaos as the arts world reacted in anger and disbelief.

A better than expected grant from Government had somehow been followed by a savage rounds of cuts targeting nearly 200 organisations, and observers struggled to see the logic behind many of the decisions.

A subsequent inquiry revealed how the 2002 reorganisation which combined the former regional arts boards with the Arts Council to form a single-tier structure had left a weakness at the centre, so that decisions were strategically suspect.

In the end most of the high-profile cuts, including Exeter’s Northcott Theatre, London’s Bush Theatre and Birmingham Opera Company, were reversed. By the spring this rare period of excitement had subsided into calm, but you may wonder what will happen when the funding structure comes under real pressure from the recession – particularly when the Government will undoubtedly want to protect its investment in the 2012 Olympics.

The Arts Council was also implicated in another of the year’s ongoing bad news stories in The Public, the troubled media fun palace in West Bromwich.

What does The Public have in common with Stratford’s new £100million Royal Shakespeare Theatre? Very little, apart from the fact that these two projects, both coincidentally in the West Midlands, were the ones held over from the Arts Council’s original lottery programme.

The rebuilding of the RSC’s theatre continued quietly throughout the year, apparently on time and budget, reaching a topping-out ceremony at the beginning of December. The Arts Council added another £5million to its contribution shortly before Christmas, intended to help the company through the period when it has only one functioning theatre in Stratford.

Meanwhile, the temporary Courtyard Theatre, a close match for the new RST, continued to be the focus of the RSC’s renaissance under artistic director Michael Boyd.

Principles of Boyd’s vision for the company include a reassertion of its ensemble philosophy and a close integration of performance and education work. However his biggest hit came from quite another direction.

The casting of two sci-fi stars, David Tennant and Patrick Stewart, made Hamlet an even hotter ticket than Sir Ian McKellen’s Lear.

The first part of the year saw the conclusion of the ambitious opening season for Coventry’s recently regenerated Belgrade Theatre. Sir Trevor Nunn returned to the theatre where he gained his first directing experience to direct his wife, Imogen Stubbs, and Iain Glen in a compelling adaptation of Ingmar Bergman’s Scenes From A Marriage in the new B2 theatre.

Also in B2, Alan Pollock’s new play One Night in November, about the bombing of Coventry, brought writing and production reminiscent of the old days at the RSC’s Other Place in a play ultimately more memorable for putting a human face on tragedy than for its conspiracy theory.

In an extraordinary interaction of life and art, a performance was cancelled when an unexploded Second World War bomb was discovered during excavations for the nearby Belgrade Plaza development. Not surprisingly, One Night in November sold out and was brought back for a second run last month.

Warwick Arts Centre and Malvern Festival Theatre shared many of the year’s highlights.

Warwick, in particular, claimed two of my top productions – the English premiere of the National Theatre of Scotland’s internationally-acclaimed Black Watch and DV8’s stunning dance-documentary on the subject of homophobia, To Be Straight With You.

Black Watch, which toured to America and Australia before making the shorter journey to Coventry for its English premiere, was a raw account of the history of the famous Scottish regiment, seen through the prism of Iraq and reflecting on Scottish macho military culture.

To Be Straight With You matched good journalistic research with a magical range of theatrical devices. Later in the year a retrospective show marking ten years of the Jasmin Vardimon Dance Company brought some similar excitement to the Patrick Centre, though with rather more uneven results.

The powerful dance infrastructure developing around the Hippodrome, Birmingham Royal Ballet and DanceXchange stepped up to another level when a new international dance festival made its successful debut in April. Hopefully this will establish itself as a regular biennial event.

The Hippodrome continued to build its audiences for contemporary dance alongside its established mix of musicals (Mary Poppins occupied the theatre for ten weeks of 2008), BRB (boosted by the unexpected return of golden boy Robert Parker from premature retirement) and Welsh National Opera, whose gripping production of Janacek’s Jenufa was another of my personal highlights of the year.

In September ArtsFest brought another significant event when Birmingham experimentalists Stan’s Cafe staged Of All the People in the World in a disused factory in the Jewellery Quarter.

This show, a blend of installation and performance in which grains of rice represent the world’s population, has become a favourite at international festivals all over the world. It was only the second time that the complete, “world” version had ever been staged, following a German theatre festival in 2004, and it was sobering to learn that the world’s population is growing so fast that an extra eight tonnes of rice had to be ordered this time.

There was a clutch of successful productions by small West Midlands companies.

Alex Jones’s play Packers, an unbuttoned Black Country comedy about low-wage workers (packing Christmas crackers for a firm called “Crackers Am We”) was staged by Zipp Theatre at Newhampton Arts Centre in Wolverhampton, while another Wolverhampton company, Foursight, put on The Corner Shop, a devised play linked to a research project funded by English Heritage, in disused shop units in West Bromwich.

Theatre Absolute’s Zero found resident writer Chris O’Connell on his sharpest form at Warwick Arts Centre’s studio, while grime theatre pioneers The Decypher Collective displayed their wit and innovative linguistic skills with 8Sixteen32, previously performed as a work in progress during 2007, at Birmingham Rep.

Also at the Rep’s studio, The Door, Big Creative Idea – a company new to me – presented Juliet Gilkes Romero’s interesting play At the Gates of Gaza, about the little known involvement of troops from the West Indies in Palestine during the First World War.

It was noticeable that the best shows on the Rep’s main stage were ones which originated elsewhere, although Lucy Bailey’s production of Ibsen’s The Lady from the Sea was a reminder of the kind of thing it can do best.

Otherwise, Peter Nichols’ Privates on Parade, from West Yorkshire Playhouse, and an Alan Bennett rarity, Enjoy, with the brilliant Alison Steadman (which also toured to Malvern), along with The Brothers Size, an exciting play by young America playwright Tarell Alvin McCraney, now in residence with the RSC/University of Warwick, were my most memorable nights out on Broad Street.

Finally, one of the year’s brightest and least looked-for delights was an absolutely rivetting account of Edward Albee’s Who’s Afraid of Virginia Woolf?, staged by the Lichfield Garrick for a lengthy run in its little studio.

Matthew Kelly was superb and his sparring partner Tracey Childs such a revelation that, if I were making an actress of the year award, she might even just snatch it from Alison Steadman.

Here, in no particular order, are ten great nights out I enjoyed in the theatre this year.

1. Hamlet (RSC). Not just for David Tennant’s lean and hungry (and intelligent) performance, but for the exceptional lucidity of Gregory Doran’s production.

2. Enjoy (Malvern/Birmingham Rep). Alison Steadman in vintage form in Alan Bennett’s mislaid 1980 comedy.

3. Black Watch (National Theatre of Scotland, Warwick Arts Centre) Gregory Burke’s tattoo-style drama on the history and culture of the famous Scottish regiment. Will probably forever hold the record for most frequent use of the c-word.

4. Who’s Afraid of Virginia Woolf? (Lichfield Garrick). Wonderful lead performances from Matthew Kelly and Tracey Childs in Edward Albee’s long but ghastly/hilarious journey into night.

5. Dick Whittington (Belgrade). Andy Hockley as the Dame. Enough said.

6.To Be Straight with You (DV8, Warwick Arts Centre). Lloyd Newson’s show about homophobia – theatrical magic rooted in meticulous research.

7. One Night in November. The Coventry blitz brought vividly to life through the story of one family in Alan Pollock’s impressive play (B2, Belgrade).

8. The Circle (Malvern). Dusty society comedy by Somerset Maugham given sparkling treatment by Susan Hampshire and co.

9. The Brothers Size. Exciting minimalist theatre inspired by Yoruba ritual by young American playwright Tarell Alvin McCraney

10.Noises Off (Malvern), Still the classic National Theatre production on tour, still the funniest play ever written.