Were the Arts Council a new West End musical, you might be fearing for its chances of surviving much beyond next Saturday's matinée, given some of the bruising notices it has been receiving. A fortnight ago the council once again walked on stage with a note reading “Kick me!” pasted on its back by proposing that grant-seekers should in future have to disclose their sexual orientation (“bisexual, gay, heterosexual, lesbian” or, er, “not known”) so that it might better foster cultural diversity when promoting culture.

Three months previously, a cast of angry theatrical grandees, ranging from Sir Ian McKellen to Joanna Lumley, noisily passed a vote of no confidence in the Arts Council after it announced that it was severing funds to nearly a quarter of the arts organisations that it supports, resulting in many of them having to close.

That decision by the council now seems all the odder, and more self-wounding, given the news we report today that the body that funds the lion's share of the nation's artistic activity is currently sitting on £152 million of undisbursed lottery cash. Doubtless a portion of this money is earmarked for projects and is waiting only for the nod from an arts body for a cheque to be posted. But there appears to be no evidence (and the Arts Council seems to strive for transparency in its financial dealings with much the same relish with which a lamb strives to sleep by a tiger) that all this pot of lottery gold is pre-assigned.

In any case, the Arts Council agreed with the National Audit Office in 2001 to reduce its surplus to £75 million. Three years ago the Commons Public Accounts Committee harrumphed at the practice of leaving lottery money lying idle in the National Lottery Distribution Fund, given that this resource is constantly being replenished from the proceeds of lottery ticket sales. The NAO advised administering bodies to keep as a float only as much as they needed to get by from one month to the next. Now, while it might be admirable in these economically straitened times for the Arts Council to be flaunting some financial continence, this body is not designed to travel quite so comfortably in the black; especially so recently after having executed cuts to arts organisations that Sir Ian branded “destructive, disturbing and distasteful”. When Alan Davey, the newly annointed head of Arts Council England, said in an interview this week: “We've got to rebuild our credit”, we had assumed that he meant with bloodied and disillusioned arts practitioners, not in the council's bank balance.

The bulge in the council's wallet will do little to dispel the body's image as a den of bureaucrats, more focused on meeting politically correct targets than fertilising the arts. The report in January on state funding of the arts by Sir Brian McMaster, former director of the Edinburgh Festival, outlined a path towards the sunlit uplands of culture, hailing Britain as being on the brink of a “new Renaissance”. Yet it it appears that the Arts Council is up to its old book-keeping tricks.

As we grow rattled by credit crunches, a weak housing market and oil prices so high you need a mortgage to fill your petrol tank - if you can get a mortgage - the arts can still make our hearts sing, our brains tingle, our feet tap and our lips whistle. This sounds like just the time to sprinkle any spare cash on the arts. If we must go down, let us at least go down singing and dancing.