Arts lose £160m to cover cost of Olympics

Heritage projects will need to raise more of their own money to make up for the diversion of funds to the Olympics, MPs said today.

The Heritage Lottery Fund will lose more than £160 million between 2009 and 2012 to help pay for the London Games.

But the report by the Public Accounts Committee suggests the HLF itself should and could do more to make its money go further and it should test whether money could be raised from other sources. It should also be better about confronting projects which were not being delivered on time and on budget. A quarter of projects were delivered late and a sixth were over budget.

Unveiling its findings, Edward Leigh MP, the committee chairman, said the Heritage Lottery Fund would find its funding cut sharply because of the Olympics. "The fund will have to work hard to make ends meet... [and] should look harder at whether applicants have exhausted other sources of funding," he said.

The Public Accounts Committee report also said under-represented groups needed to be encouraged to raise funds. "There is a risk that those groups best equipped to prepare good quality applications will tend to get the lion's share of the money," the report said.

The Heritage Lottery Fund anticipates that as a result of the cuts, it will make around £180 million a year in grants from 2009 instead of an average of £325 million to date.

Carole Souter, the HLF's director, told the committee: "We have made clear [to Government] that the needs of heritage outstrip even the funds we have available already."