Funding has been cut completely from 185 organisations, with another 27 having their grants reduced. The ACE has changed its decision in just 17 cases. Organisations are considering legal action against the ACE in some cases.

The reaction from arts organisations to the original decisions was furious. The timing of the announcement left very little time to prepare appeals - between 12 and 18 working days, taking Christmas holidays into account. Notwithstanding this, there was a widespread opposition, as 126 of the affected organisations lodged appeals.

Dedalus, a small publisher specialising in translations of European avant-garde literature, attracted 1,600 signatures protesting the cut of its £24,000 grant. Demonstrators protested in Norwich against the proposed cuts to the local puppet theatre. At a meeting at the Old Vic, actors passed a vote of no confidence in the ACE. The ACE’s Peter Hewitt was booed by an audience including the Old Vic’s Kevin Spacey and Nicholas Hytner of the National Theatre. Hytner described the ACE cuts as a “terrible mess,” and called the ACE’s handling of the situation as a “strategic catastrophe.”

The ACE was certainly stung by the criticism, and last week began to make noises that it would reconsider the decisions. In an interview last weekend, the ACE’s chairman, Sir Christopher Frayling, hinted that there would be a retreat from the original proposals. There were also attempts to pit organisation against organisation. In particular, the ACE singled out Hytner as someone who was complaining unnecessarily.

There were suggestions that the impact would be less drastic than originally proposed. This was not the case.

Only 17 organisations have had the original decision changed. Notwithstanding Frayling’s comment that “It is not the decibel count which has influenced us, but reasoned argument,” these have largely been the highest-profile cases. They include the prestigious London venues the Bush and the Orange Tree, as well as Bristol Old Vic, Exeter Northcott, and the National Student Drama Festival. Campaigns for all of these organisations received some high-profile celebrity support with, for example, director Mike Leigh writing to protest cutting the Bush’s funding.

Of the 17 organisations, 9 see their funding fully restored. Only 2, the Arts Digest research group and Rideout, a Midlands body working to rehabilitate prisoners through the arts, have been completely exonerated. The other organisations that have had their funding fully restored have had conditions imposed and must satisfy the ACE of future improvement. These are African and Caribbean Music Circuit; Jackson’s Lane centre in north London; Suffolk-based touring theatre company Eastern Angles; the National Student Drama Festival; Exeter Northcott; and the Manchester-based lesbian and gay arts festival Queer Up North.

The remaining organisations have had funding partially restored. These are poetry publishers Anvil Press; Arcadia Books; Birmingham Opera Company; Bristol Old Vic; west London’s Bush Theatre; the Crafts Council; Film London; Harrogate Theatre; and the Orange Tree Theatre.

It should be emphasised that this is only a tiny proportion of the affected organisations. It is hardly the “rethink” of cuts being touted by the pro-Labour Party Guardian. The heavily promoted “restoration” of funding to the Exeter Northcott, for example, only applies for the coming year. Beyond that, its future remains in doubt. The Northcott had only just reopened following a £2.1 million refurbishment, to which the ACE had contributed £640,000.

The organisations that have lost their funding were somewhat easy targets. Children’s theatre, minority theatre, and regional theatre were all hard hit. This is in contrast to the ACE’s stated ambitions of developing new audiences, broadening audiences, and extending the reach of the arts regionally. Among those who have lost all their funding are Tara Arts, a leading Asian theatre company specialising in classical plays; the Drill Hall, London’s leading lesbian and gay theatre venue; and London Bubble, a south London company producing children’s theatre.

In their letter to the Drill Hall, the ACE noted “concerns...that the non-renewal of funding...would have a negative impact on the LGBT [Lesbian, Gay, Bisexual and Transgender] sector and central London,” and commented on “the positive reputation the organisation had in the LGBT community.” They then declared that the Drill Hall’s funding model did not represent “best value,” and announced an end to the company’s funding. The theatre is currently dark, and the remaining staff are on redundancy notices.

Organisations have been left only a few weeks to match the axed funding. Derby Playhouse, which had only reopened early in December, has 14 days to replace the ACE’s grant of £700,000. The theatre will close on February 2, and the remaining programme has been cancelled.

The only grounds for appeal permitted by the ACE were “flawed procedure.” There could be no appeal against artistic judgement, which was not in any case mentioned in their original letter to organisations. This, coupled with the time available for lodging appeals, suggested quite clearly that it was not intended for the majority of appeals to succeed.

The Bush, for example, won its appeal on the basis of flawed procedure. It was able to demonstrate that the ACE had drastically miscalculated the audience numbers attending their shows. Other organisations with equally strong cases were not successful.

In the case of Dedalus, the ACE has refused to release some of the documents on which they based their decision. The ACE acknowledges that they have not assessed any of Dedalus’ publications for the last four years. For the last seven months, during the decision-making process, Arts Council East (which covers Cambridgeshire, where the publisher is based) has not even had a literature officer. It is on the basis of this treatment that Dedalus, in collaboration with other affected organisations, has launched a legal campaign, Arts vs. ACE.

Derby Playhouse issued a statement noting what it had achieved since reopening “with a skeleton staff and no funding.” It then asked the ACE directly why, if a high street bank and liquidator would back their business plan, the ACE would not. It also asked pointedly, “Did [the ACE] ask to see the new business plan? If not, why not?” Other organisations, including the Drill Hall, have commented on the ACE’s lack of transparency.

There have been several suggestions that the ACE’s review policy was aimed at justifying decisions to cut funding. London children’s theatre company Pop-Up Theatre noted that two negative show reports were written by ACE officers only after an internal recommendation to end their funding. The ACE’s assessment of the company’s artistic quality excluded a report grading one show 4 out of 5 in all areas, and two negative internal reports were written by the officer “tasked with gathering evidence to support the recommended withdrawal of funding.”

Pop-Up felt compelled to issue a statement to supporters correcting “smears” in the ACE correspondence. In particular, they noted that the ACE criticised the company’s finances. These had never been raised as a concern by the ACE previously. Indeed, in its 2007 Review Letter, the ACE listed among the company’s “Particular strengths: Exceeding fundraising targets for the year 2006/7 leaving the company in a more stable financial position going forward.”

Mike Dalton, Pop-Up’s artistic director, said he was “shocked by the Arts Council’s recent actions, the deliberate dishonesty of its disinvestment process and its willingness to publicly smear a company whose work it has supported and promoted for over 20 years.”

Christopher Frayling defended the the ACE’s decisions, saying the body was “not a cashpoint machine.” The ACE continues to claim that its decisions were based on the striving for “excellence.” Disingenuously, Frayling claimed that the cuts were necessary to promote “new blood,” which could not gain ground “if we keep a fixed playing field.” He refused to apologise, saying that the organisations affected “had an opportunity to tell us things. We have listened. What’s wrong with that?”

Frayling and the ACE continue to push the position that this constitutes a major advance in funding. In October, the ACE received a better-than-expected settlement of £50 million from the government. This, however, followed the loss of more than £100 million of ACE funding last March to pay for the 2012 Olympics.

Welcoming the reversal over some theatres, critic Michael Billington asked why other organisations were still facing cuts, and why they were put through “such time-wasting torment.” He accused the ACE of “muddle and incompetence” and warned that without a radical overhaul, it would no longer be “fit for purpose.”

This is not the point. The determination to push through these cuts presages broader cuts to be made in all areas of the economy. In his blog for the Guardian, literary critic Nicholas Lezard wrote under the headline “ACE is not supporting literature, it’s killing it: The body supposed to encourage literary culture seems to be doing its best to wipe it out.” This philistinism is directly linked to the government’s economic problems.

At the same time, the ACE is also attacking companies for adopting different financial models. The Drill Hall had funded a new studio theatre without recourse to National Lottery money by working with other media organisations as a recording venue. Artistic Director Julie Parker had said the ACE thought of this as “the wrong sort of fund-raising as [the money] does not come from major trusts and foundations.” The ACE criticised the Drill Hall’s model as not “best value,” and axed its funding, preventing it from operating at all. A fundraising campaign has been launched, but after 30 years, the venue is now facing closure.

The ACE has also axed a £2 million grant to the organisation Arts & Business. This grant is used for the 23-year-old New Partners scheme to raise business investment for arts projects. This came in the same week that Arts & Business announced private sector arts investment had just reached a record £600 million. Arts organisations are being forced into a corner. They are clearly not intended to find funding unless it is sanctioned by the government.

In the case of London Bubble, the ACE advised it that it could have a case for transitional funding. London Bubble is organising emergency meetings with the ACE and its other funding bodies, including local councils. The limitations of this as a rescue package can be seen by the recent actions of one council in their area.

Last week, Greenwich council announced a 9.3 percent cut in funding to most arts organisations in the borough. It also completely cut funding to Greenwich Mural Workshop and Lotus Arts, which provides dance classes in schools.

Two thirds of the money saved (£68,220) is to go to the Cultural Olympiad budget. This will provide cultural events for the 2012 Olympics. Debbie Mullins, of street art company Emergency Exit Arts, said that these cuts made it “difficult for our organisations to now contribute [to the Cultural Olympiad] in a meaningful way.”

In response, Councillor John Fahy, cabinet member for Culture and the Olympics, effectively threatened local arts organisations, telling them, “We have expectations that you will fully participate in the Cultural Olympiad, otherwise we may come to a different view on funding in the long term.”