Many of Birmingham's best known arts organisations, including Symphony Hall and the CBSO, have been told the amount of grant money from the city council will be increased by only a quarter of a per cent.
The decision was criticised by Labour councillors who accused the council's ruling Tory-Liberal Democrat coalition of attempting to disguise the true impact of the increase.
Cabinet members approved a 2.75 per cent increase in grants earlier in the week, but at the same time imposed a 2.5 per cent efficiency saving on the arts organisations.
The decision sparked a secrecy row after the cabinet refused to publish a list of the organisations receiving grant or the amount being paid. The information was described as "commercially sensitive".
Councillor John Alden (Con Harborne), the cabinet member for leisure, sport and culture, said it had been necessary to impose the 2.5 per cent saving as a result of the Government's Gershon agenda, which requires local authorities to save money by becoming more efficient.
The explanation was dismissed by Sir Albert Bore, the leader of the Labour opposition group, who said Gershon savings were meant to be achieved by cutting bureaucracy. It was unfair to expect charitable organisations such as Symphony Hall to make cuts.
Sir Albert (Lab Ladywood) added: "The real reason for this is the fact that the leisure budget is overspent and the cabinet member has to make savings.
"Grants to major arts organisations are effectively being pegged."
Deputy council leader Paul Tilsley said the coalition's approach to the arts had been more generous and more inclusive than that of the Labour leadership.
Coun Tilsley (Lib Dem Sheldon) added: "We have put an extra £270,000 into the arts and we are helping not only traditional organisations but we are also supporting arts across the entire city endeavouring to reach out to a ll sections of the community."
Council leader Mike Whitby (Con Harborne) said: "We are trying to be equitable by making sure subsidies for the arts are spread right across the board."