WARNINGS were ignored that should have prevented £7.5m of Lottery cash being wasted on Stockton's ill-fated Arc theatre, MPs said last night.

The powerful Commons public accounts heavily criticised the Arts Council's decision to fund the project, despite Government fears that box office receipts would be too low.

Its report said taxpayers would be "rightly unimpressed" that the centre closed after less than three years - denying that money to other good causes.

Ironically, the Arc, which replaced the Dovecote Arts Centre, reopened last July, after shutting its doors in November 2001 with £2m debts.

But Edward Leigh, Tory chairman of the committee, said Government warnings that the theatre's income would fall short "had not been given sufficient attention."

Mr Leigh said: "Lottery players will be rightly unimpressed that £19m has been spent by Arts Council England on two projects that have closed, denying that money to other good causes.

"Arts Council England must make sure the changes it has made to its approach pay off in delivering viable projects based on a proper strategy and realistic projections of visitor numbers.

"I also want to see Arts Council England getting more Lottery funding to small bodies and communities outside London."

The other major Lottery project to go bust was the National Centre for Popular Music, in Sheffield, which failed to attract the expected numbers.

The Arc was already £1m over budget when it opened - two months late - in January 1999. It received £7.5m of Lottery funding, including a £1.2m top-up.

On future projects, the committee demanded "sensitivity, analysis and an assessment of the risk that visitors might not generate and sustain the expected levels of income".

But, on the Arc, it concluded: "The centre had recently re-opened with a new board, chief executive and business plan. Arts Council England was confident that the centre had a positive future."

Of the 15 major projects examined by the all-party committee, nine were completed late, six went over budget by 20 per cent or more, and the total cost overrun was £94m.

The 15 included the £16m National Glass Centre, in Sunderland, which opened 12 months late in June 1998, and received £6.9m from the Arts Council.

National Audit Office inspectors said the building required more glass in the roof than originally estimated, which prompted an additional £1m on top of the original £5.9m.