The Arts Council stands accused of misusing lottery funds after failing to distribute more than £150 million intended for cash-strapped projects.

The Times has learnt that the council, which announced drastic cuts to hundreds of theatre and orchestra grants last month, has accumulated a big cash pile. Figures obtained by the Council for the Advancement of Arts, Recreation and Education, the only non-government body with access to lottery accounts, shows that £152 million sits unspent with Arts Council England, up from £144 million last August.

Last month the funding body - one of 13 distributors of lottery money - faced a vote of no confidence from actors and directors after it cut the grants of nearly 200 theatres, orchestras and other organisations.

London Mozart Players, one of Europe’s leading chamber music ensembles, was among the 200 companies, along with Tara, a cross-cultural touring theatre company, and the Watermans Arts Centre in Brentford, which is considering legal action to reverse its 100 per cent grant cut. Others are paring down activities.

The lottery money, which comes from ticket sales, can be allocated to any cultural organisation that makes a convincing case. It is normally given to one-off capital projects, such as the renovation of a theatre.

Concern about the amount of unused lottery money has prompted warnings from the Commons Public Accounts Committee and the National Audit Office in recent years. In 2001 the Arts Council agreed with the NAO to reduce its surplus to £75 million. It also missed its own target to reduce the balance to £105 million by March 2007.

Denis Vaughan, president of the Council for the Advancement of Arts, who persuaded John Major, the former Prime Minister, to start the National Lottery, said he was stunned at the discovery of the surplus. A spokes-woman for the Arts Council defended it, saying that the £152 million was earmarked for worthy causes. The council said that the surplus was sometimes a consequence of staggered payments and when projects being funded were delayed.

“A lottery cash balance is not spare cash sitting in the bank. It represents committed funds not yet paid out,” she said. “We have already made significant reductions to our balance - down from £224 million in March 2004 to £152 million at March 2008.”

She added that the surplus target was £140 million, but £10 million of payments due to go out by the end of March were delayed “as the necessary legal charges were not in place”.

She said: “Taking this into account we are broadly on target with our planned reductions.”

Asked to provide precise details of where the £152 million had been committed, she said that their accounts team would have to check the information before it could be released.

Mr Vaughan said: “I am shocked that they pretend that this money cannot be given out because this practice has gone on for at least ten years, saying one thing and doing another. Lottery players deserve to have the use of this money at grassroots level.” He said that other lottery distributors had reduced their surpluses, with Arts Council Wales down from £21.4 million to £11.3 million. The revelation comes as the Government siphons off £112.5 million from arts causes to pay for the 2012 Olympics.

Louise de Winter, director of the National Campaign for the Arts, said: “I can’t see any good reason why they would sit on that much money.”

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