National Lottery money intended for the arts is being syphoned off for the 2012 London Olympic Games.

A 35 per cent cut for the current year - £29m - is likely to be followed up by further reductions totalling £112.5m in future.

In all some £900m of National Lottery money has been targeted for the Olympics.

While that is no longer news, the future of funding from the Arts Council England remains of concern to such as Ian Brown, West Yorkshire Playhouse's artistic director, whose contract is being extended by another five years to 2012.

"I would be disappointed if there were any more raids on National Lottery funding for the Olympics; it wasn't set up for that," he said.

Mr Brown was telling a press conference about an ambitious new £570,000-plus development called First Floor, aimed at attracting young people off the street and helping them find a purpose through arts activities.

First Floor is located in St Peter's building adacent to the Playhouse in Leeds. The Wardrobe bar and restaurant is on the ground floor.

The Playhouse's arts development officer Sam Perkins said First Floor would consist of a visual arts studio and a large performing arts space. It would be open throughout the week, daytime and evening, and during holidays.

The project has already secured £100,000 from Arts Council England, £100,000 from the Linbury Trust plus another £20,000 from other sources. Applications for another £150,000 are pending.

Ian Brown, who hopes to see First Floor operating by next April, is asking the theatre's regular patrons to support the project by paying £1 extra on ticket deals.

"The future is young people and this place will benefit from young people having an experience of the arts," he said, referring to the Playhouse.

For the fifth consecutive year the books had balanced. Keeping the theatre alive, solvent and open to the communities of Leeds and Yorkshire was his primary concern at a time when financial support for the arts was in jeopardy.

"There is no safety net any more. The money we earn from the box office is vital to our survival. The Spending Review by the Arts Council is not yet known," he added.

For the last two or three years regional organisations applying for arts council funding have been obliged to justify their requests by explaining the relevance of their operation to the wider community.

Thus theatres like West Yorkshire Playhouse have of necessity had to undertake more educational work as an adjunct to what they normally provide.

The Playhouse has put on courses for young writers in conjunction with the BBC, and First Floor intends to spread its net even wider.

People in the arts generally acknowledge that they must account for the public grants they apply for; it is ironic, however, that West Yorkshire Playhouse has to branch out into something akin to social work.