Lottery millions squandered on failing projects

The Government's spending watchdog said yesterday that the Arts Council must stop giving millions of pounds of lottery money to failing projects, after a report found that 15 high-profile ventures overspent their budgets by £94m.

The National Audit Office (NAO) found that 13 of the projects – including work at the Royal Opera House, Sadler's Wells Theatre and the Royal Albert Hall – went over budget by between 1.7 per cent and 58 per cent.

The most disastrous project investigated by the NAO, the planned National Centre for Popular Music in Sheffield, collapsed. The NAO said the Arts Council expected to recover only £500,000 of £11m it had invested in the building.

The Dovecot Arts Centre in Stockton-on-Tees, which received £7.5m in lottery funds, has also closed.

Sir John Bourn, head of the NAO, said: "It is disappointing that two [projects] had to close and that on most the construction work did not go to plan, with delays and cost overruns which resulted in 10 projects needing additional lottery funding."

The NAO said the Arts Council had used £32.5m of lottery funds to pay for 35 per cent of the cost overruns. It said the council should be quicker to withdraw funding from projects that were clearly not working, and should always take legal action to ensure public money was not wasted if ventures collapsed.

Sir John said: "Where things do go wrong, the Arts Council should be prepared to stop funding and ... it must ensure that lottery funds are protected so that it is in a position to recover its money in the event of projects failing."

The Arts Council told the NAO it was concerned that five of the projects that were operational were experiencing "financial difficulties". Nine of the ventures were successful in meeting all requirements for numbers of productions and visitors, and 11 of the projects had won architectural awards, the report found.

The NAO said the project to modernise the Royal Opera House was given £78.5m of lottery funds and went £26m over its budget. The redevelopment of the Sadler's Wells Theatre – to accommodate 1,600 people – took a year longer than anticipated and resulted in an overspend of £22.2m. It was given £47.3m in lottery money.

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