Bradford Council is coming under fierce pressure to sell off some of its valuable art collection as it’s emerged that it could be sitting on a treasure hoard of artworks worth hundreds of millions of pounds.

A new valuation undertaken by auctioneers suggests the authority has been hugely underestimating the value of its art collection.

Now two political parties are calling on the Council to sell off some paintings to help fund local services in the age of austerity.

Bradford Council owns around 4,000 fine art pieces, with some on public display and others kept in storage.

Its art collection includes work by famous names such as David Hockney and LS Lowry.

Earlier this year, one of Cartwright Hall art gallery’s most famous paintings, Lowry’s Industrial Landscape (Ashton-under-Lyne) (1952) was loaned to Tate Britain to be featured in a major exhibition called Lowry and the Painting of Modern Life.

Previously, the Council, which runs five museums and galleries, had insured its whole art and museum collection for a total of £20 million.

But this year, an auction house valued a fraction of its fine art and found the value of these pieces alone eclipsed this figure. The auction house examined 195 items – around five per cent of the collection – and found these alone were worth a total of £30.1 million.

If the rest of the collection has been undervalued to a similar extent, the Council’s fine art collection alone could be worth more than £600 million.

Council auditors have now flagged up concerns that the authority has been seriously under-insuring its valuables.

A new audit report going before the Council’s Governance and Audit Committee says its key concern was “the lack of a systematic process for the valuation of the collections and the review of adequate insurance cover”.

It says the Council’s insurance provider has now been updated with the items’ true values, while its Museums Service is now talking to its finance and insurance section to decide what to do about the rest of the collection.

Councillor Jeanette Sunderland, Liberal Democrat leader, said a lot of the Council’s artworks were left sitting in storage and by selling some of them, the authority could avoid having to cut funding to its youth services or closing children’s centres.

She said: “Given that they are saying they cannot afford to provide care to 2,000 elderly and disabled people in Bradford, and they are talking about cutting funding to young people and closing children’s centres, maybe what they want to do is sell off some of this art collection that we actually just tuck away and pay the insurance on.

“We need to have a complete re-think about whose job it is to look after the Council’s art collection.”

Her remarks were echoed by Councillor Glen Miller, leader of the Conservative Group.

He said he was “hugely concerned” that the art collection could until now have been massively under-insured.

He said: “If the true value of our art is in these huge amounts, what is it doing stuck away in a cellar? And possibly we should look at releasing some of these to the market.

“I am sure they were purchased with taxpayers’ money so maybe we could use this to offset the huge tax increases and cuts to services that this Labour-led authority is doing.”

But Councillor David Green (Lab), leader of Bradford Council, dismissed the idea of selling off art instead of making cuts, saying it demonstrated a lack of understanding about how Council finances worked.

He said one-off sales couldn’t be used to fund ongoing services. He said: “It demonstrates why we have inherited such a difficult financial situation from the previous administration.”

But Coun Green said he was concerned to hear the art collection could have been under-valued and said the Council would look into this.

He said: “It is something we will investigate and make sure its true value is being reflected. I would assume there’s also an insurance issue that will need to be addressed.”

The matter will be discussed by the Governance and Audit Committee at City Hall at 10am tomorrow