Cash-strapped arts organisations in the North East are spending time filling in grant applications instead of actually taking part in arts and cultural activities, MPs have been warned.
And cuts to the Arts Council mean decisions on funding are made in London or Manchester - where officials are unlikely to understand the needs of the region.
The warning was issued by leaders of the North East Culture Partnership, who gave evidence to a Commons inquiry.
Co-chairs John Mowbray, former president of North East Chamber of Commerce, and Coun David Budd, member for culture at Middlesbrough Council, spoke to the Culture, Media and Sport Select Committee, which is examing the work of Arts Council England, the body responsible for distributing arts funding.
They highlighted longstanding disparities in funding allocated to London and to other parts of the country, with the capital receiving far more cash than anywhere else.
But they also warned that the problem had grown worse as a result of spending cuts - with arts bodies applying for every grant they could.
Mr Mowbray told the inquiry: “We’re spending a lot of time just doing grant application forms to be honest, instead of doing what we’re supposed to be there for in the first place.”
While some organisations had closed, most were continuing - but scaling back, he said.
“We’ve had some smaller closures. What’s tended to happen is organisations have reduced in size,” Mr Mowbray said.
Lack of funding was an issue “but it’s also about the decision-making process,” he said.
“Decisions need to be made by people in the region who understand the impact it can have.”
Earlier, the inquiry heard from Munira Mirza, deputy mayor of London for education and culture, who argued that spending in London benefitted the entire country.
But Mr Mowbray pointed out that many people in the North East never benefitted from what was happening in London.
He said: “It’s incumbent to try to make sure that as many people as people have as great an access as possible.”
There was particular concern that lottery players in the North East were contributing far more than was coming back to the region in terms of lottery funding for the arts, he said.
“Here we’re talking about a fair share and balancing the needs of the capital city but recognising that in terms of the lottery there’s a large contribution that isn’t coming back to certain areas.”
Coun Budd highlighted concerns that decisions about grants were made by people with little understanding of the region.
He said: “There is a strong view that the regions need to be reflected a little bit more.”
Funding for Arts Council England was cut from from £449m to £349m by 2015, as part of the 2010 spending review. The body lost more than 100 posts and closed some regional offices, as part of efficiency savings.
The funding gap between London and other regions was exposed last year in a report by academics including Peter Stark, professor of cultural policy and management at Northumbria University, which warned that London receives £563.9m a year in culture funding from the Government and the Arts Council while the rest of the country gets £205.1m.
The study also found that the North East had received £86.22 per head in arts lottery funding since 1995, while Londoners received £165.