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	England and Wales High Court (Administrative Court) Decisions
You are here: BAILII >> Databases >> England and Wales High Court (Administrative Court) Decisions >> Asian Music Circuit, R (on the application of) v Arts Council England [2012] EWHC 1538 (Admin) (01 June 2012) URL: http://www.bailii.org/ew/cases/EWHC/Admin/2012/1538.html Cite as: [2012] EWHC 1538 (Admin)

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IN THE HIGH COURT OF JUSTICE
QUEEN'S BENCH DIVISION
ADMINISTRATIVE COURT
MANCHESTER CIVIL JUSTICE CENTRE

		Manchester Civil Justice Centre 1 Bridge Street West, Manchester, M60 9DJ
		01/06/2012

Mr Justice Foskett :

Introduction

1. The Claimant, the Asian Music Circuit ('the AMC'), is a national touring and educational organisation producing events centred on music from across the Asian continent. It has been operating independently since 1991, is widely recognised as the leading organisation in its field and has received funding in the manner described below (paragraph 18) from the Defendant, now known as the Arts Council England ('the ACE'), continuously since it began.
2. Mr Viram Jasani, the Chairman and Chief Executive Officer of the AMC since 1991, said this of the history of the AMC in his first witness statement:

"The AMC was created following the recommendations of a public inquiry instigated by the Music Advisory Panel of the Arts Council of Great Britain in 1985/86, The inquiry was set up to investigate the state of African, Caribbean and South Asian music. The Inquiry carried out an investigation over a year and made several recommendations which included the setting up of two organisations as national touring companies, African & Caribbean Music Circuit and the Asian Music Circuit.

Other recommendations included providing substantial funds to promote Asian, African and Caribbean Music and employing people from these communities who had knowledge of the music traditions of these cultures to help and advise the Arts Council so that it could become a more diverse organisation and fund a more culturally diverse programme of events which catered not only for Western tastes but also provided access to music for Asian, African and Caribbean audiences. The Council of the Arts Council of Great Britain accepted the recommendations and the AMC was duly created by the Arts Council in 1989.

The Arts Council ran AMC as an in-house company in the same way as the contemporary Music Network for Western music. The AMC became an independent company in 1991 and was funded by the Arts Council thereafter."

3. The ACE is a non-departmental public body sponsored by the Department of Culture, Media and Sport. It is the national development agency for the arts in England. It originated as the Arts Council of Great Britain, founded by Royal Charter in 1946. Its remit was revised in a second Royal Charter in 1967. The ACE was established by Royal Charter on 1 April 1994 and granted a Supplemental Royal Charter in 2002 (which was subsequently amended in 2008 and 2011). Its first two objectives as set out in the amended Supplemental Royal Charter are to develop and improve the knowledge, understanding and practice of the arts and to increase accessibility of the arts to the public. The ACE receives grant-in-aid from the Department for Culture, Media and Sport and is one of the bodies designated to distribute funds from the National Lottery by the National Lottery, etc, Act 1993.
4. Until 31 March 2012 the AMC was funded by the Defendant as a Regularly Funded Organisation ('an RFO').
5. In October 2010 the ACE announced the replacement of the existing RFO funding scheme with the 'National Portfolio Funding programme' ('the NPF programme').
6. The AMC made an application for funding under this new programme which was rejected by the ACE in a letter dated 30 March 2011. (The ACE received a total of 1333 applications for national portfolio funding of which apparently 696 were successful. 206 of the 792 applications made by RFOs were unsuccessful.)
7. It is essentially that decision that the AMC seeks to challenge by way of judicial review in these proceedings.
8. Given that the annual funding of the AMC by the ACE in the five years or so prior to the effective withdrawal of funding was over £500,000 (and the annual amount sought over the 3-year period beginning on 1 April this year was £525,000), it can be seen that the ACE's decision was a major (and possibly fatal) blow to the AMC's survival.

The history of the judicial review proceedings

9. I can summarise the history briefly for present purposes.
10. Following the letter of 30 March (see paragraph 6 above and paragraph 49 below), on 13 May 2011 the AMC's solicitors sent a detailed letter of complaint to Mr Alan Davey, the Chief Executive of the ACE, seeking a review of the decision to refuse funding which, on 18 May, was agreed should also be treated as a letter before claim under the pre-action protocol for judicial review. On 20 May 2011 the ACE's internal complaints panel agreed that some of the issues raised in the letter warranted investigation under its complaints procedure. On 1 June 2011 a response to the complaint/letter before claim was received rejecting the complaint.
11. The Claim Form seeking judicial review was issued on 15 June 2011. Summary Grounds of Resistance were lodged on 12 July and there were exchanges of responses thereafter. Supperstone J rejected the application for permission to apply for judicial review on the papers on 4 August and the matter was considered at an oral renewal hearing by Blake J on 28 September. The hearing lasted some 2½ hours. In a reserved judgment given on 10 October 2011 Blake J refused permission: [2011] EWHC 2864 (Admin). An application to the Court of Appeal was rejected on the papers by the single Lord Justice, but permission on limited grounds was granted following an oral hearing before Moore-Bick LJ on 9 February 2012: [2012] EWCA Civ 282. Permission was given only upon Ground 1.
12. Moore-Bick LJ described Ground 1 as being that ACE's decision "was irrational as a result of taking into account irrelevant considerations or, perhaps more importantly, failing to take into account certain relevant considerations", those matters being more fully particularised as follows:

(1) that it failed to consider at stage 1 of the process the extent to which the applicant could contribute to achieving goals 3 and 4;

(2) that it failed to take into account specific plans described by the applicant or proposed new partnerships;

(3) that, in assessing the applicant's financial position as weak, it failed to take into account that it had strict financial controls and that its freehold assets exceeded in value the amount of its current and long term liabilities;

(4) that, when making the first cut for the portfolio, its management team did not have the full application but relied on an assessment made at stage 1, which was itself flawed;

(5) that it failed to have sufficient regard for the need for diversity; and

(6) that it wrongly thought that the applicant invested predominantly in international, rather than British, artists.

13. The basis for those contentions will become clearer in due course, but, as Moore-Bick LJ put it, "the first five … are really little more than aspects of one overarching complaint [namely] that at the second stage of the process [the ACE] failed to take into account all the information at its disposal." That, in essence, is the argument that has been developed before me by Miss Jenni Richards QC on behalf of AMC and responded to by Ms Aileen McColgan on behalf of ACE.
14. It will, perhaps, be clear from what I have said already that the primary focus in this judicial review application is the relationship between what have been described as stages 1 and 2 of the decision-making process. I will be describing this in more detail below (see paragraphs 22-42 below).

The approach of the court

15. It is, of course, clear that the court has no function in considering the merits of the Claimant's position. The evidence suggests that it has made a major contribution to the arts scene in its particular area over the years and it plainly has some very distinguished supporters, some of whose letters questioning the ACE's decision are in the papers before me. It has received the support of The Guardian in its endeavour to have the decision reviewed. However, the role of the court is simply to review, in accordance with traditional public law grounds, the process by which the decision of the ACE was reached. If the net effect of the court's consideration is that the decision cannot stand in accordance with those principles and must be quashed as a result, the application for national portfolio funding will simply have to go back to the ACE for re-consideration. If the process adopted meets the standards required by those principles, that is the end of the story no matter how regrettable it may be. Miss Richards recognised this at the outset of her submissions and disavowed any reliance upon the substantive merits of the AMC's position as such. She also (very properly) said that the submissions she made were not intended as any personal attack on the role of anyone within the ACE in the process. There has undoubtedly been a close relationship between all parties for many years and the decision of the ACE on this occasion will almost certainly have been one reached with considerable regret on the part of those at the ACE who will have had dealings with the AMC over the years.
16. In that general context it is to be noted that the court has been faced recently with a number of applications for judicial review from organisations that, on any view, have done (and attempt still to do) enormously good work for the community, but have been deprived of funding from public sources because of the public spending cuts: see, e.g., The Queen on the Application of Greenwich Community Law Centre v Greenwich London Borough Council [2012] EWCA Civ 496. As I have said, the court's task is to look at the process by which the relevant decision has been made, not at the decision itself.

The background in more detail

17. As with almost any judgment these days, it is necessary to be familiar with the acronyms. I have already mentioned that the AMC was funded hitherto by the ACE as an RFO (see paragraph 4 above). Some appreciation of what that involved is necessary in order to understand the changed arrangements introduced at the end of 2010, going into early 2011. It is also of relevance to at least one part of the substantive challenge made by the AMC to the ACE's decision for the future.
18. Mr Jasani described the arrangement from the perspective of the AMC as follows:

"The AMC has been funded by the Arts Council ever since 1991 as [an RFO] …. This meant that funding agreements were 1-2 years long over the fiscal year April to March but an offer of funding could be made for 3 years. ACE as [an] RFO was in the same category of funding as, for example, the Royal Opera House or the orchestras or theatre companies. The AMC, like other RFOs, did not have to apply for funding but was offered funding every 1-2 years or latterly every 3 years. The amount of funding was always a matter of negotiation but mainly in the hands of ACE.

…

[ACE] carried out regular reviews and monitored the work of the AMC by reviewing quarterly management accounts, annual audited accounts, through regular meetings, Board meeting papers, annual review meetings, annual submissions and statistical surveys of RFOs.

Initially the funding agreement was finalised around November/December for the following year with an agreement being signed in March, This changed to a review in February/March for funding commencing in April of the following year. The new practice came into effect in about 2006. The funding agreement had conditions which had to be met as to documents to be submitted to ACE. These were:

Management accounts for the year to March

Board papers for the last quarter

Artistic programme for the up-coming year

Annual budget for the up-coming year

The practice was that all of the above would be discussed in full with ACE prior to the funding agreement being sent out for agreement and signature.

The funding was paid in four instalments through the year, in April, July, October and January. Each instalment was released against specific conditions for example, the July instalment was conditional upon providing final management accounts for the previous year and annual submission (statistical survey) with final audited accounts being provided for the January instalment together with Board papers and management accounts …."

19. I do not understand there to be any material dispute with that essential description of the arrangements. The outcome of each annual review to which Mr Jasani makes reference was reflected in a letter sent each year by the ACE to the AMC, usually in the October or November following the year to which it related which would have ended in the preceding March.
20. Each RFO had a contact with the ACE called the "relationship manager". In the case of the AMC the relationship manager at the material time was Ms Milica Robson, who had been employed by the ACE since 1996 and thus with 15 years experience in arts development, funding, grants management and equality and diversity. She described the role of relationship manager thus:

"My role as Relationship Manager, Diversity in arts practice/ Music is to lead on and to manage a relationship with a portfolio of regularly funded organisations, all of which are either diversity led or diversity and equality focused. My responsibilities range from assessment and monitoring of artistic, business, engagement and other aspects of their work in relation to achieving objectives specified in their funding agreements, to observing their board meetings and acting as a kind of a critical friend to these organisations."

21. The ACE was funding a portfolio of 843 RFOs in 2010/2011 of which, of course, the AMC was one.

The new arrangements

22. During 2009 the ACE began looking to develop a strategic framework for its work over the succeeding 10 years. As part of the process, it ran a public consultation exercise between January and April 2010. The results of that process became embodied in a paper published in November 2010 entitled 'Achieving great art for everyone - A strategic framework for the arts'. The publication of this paper followed shortly after the announcement of the government of a nearly 30% reduction in Arts Council funding.
23. The new arrangements announced against that background were described in a letter from Mr Davey to "national stakeholders" in these terms:

"Today the Arts Council is launching two very significant pieces of work – Achieving great art for everyone, our 10-year strategic framework for the arts, and our new national portfolio funding programme for arts organisations in England.

The two are very much connected. Our 10-year strategy, and the consultation that shaped it, have been absolutely central to developing this new funding system.

On 20 October the Arts Council was given an almost 30% cut to our funding from government. This is obviously a very significant reduction, but we are determined that this should not dent our ambitions for the arts and audiences in this country.

Central to our long term ambition is a new way of funding organisations which, from April 2012, will replace regularly funded organisations (RFOs). This is the biggest transformation of arts funding for a generation.

The new system will be open application, and all existing RFOs are invited to apply to it through a straightforward online process. Organisations not currently funded by the Arts Council are also eligible to apply.

The four major changes to our existing regular funding programme are:

- an open application process for all organisations

- Funds awarded will be for a fixed term of normally three years, but there will be the flexibility to have variable funding terms of as little as two years or as much as six years

- The funding agreement with individual organisations will be tailor-made, based on the delivery of shared goals and clear criteria

- The funding agreements will be based around 'strategic' and 'programme' relationships with organisations, rather than a 'one-size-fits-all' relationship

Through these changes we aim to make the Arts Council's investment approach more flexible, more open and more transparent. All funding decisions will be made against a set of published criteria, with organisations demonstrating how they will help us meet at least two of the five goals set out in Achieving great art for everyone. The application form and guidance has been published on the Arts Council website.

Following the closing date on 24 January, applications will be assessed and we intend to let organisations know of their funding for 2012/13 onwards by the end of March 2011. This will give organisations at least a year's notice of any significant changes to funding.

Our funding decisions will need to be made in the context of the more limited resources available. As we announced last week, the Arts Council is limiting cuts to the budget for funded organisations to 14.9% over the next four years.

We are about creating the conditions for excellence to thrive. That's why some organisations will receive more funding, some will receive less, and some will no longer receive funding.

This will of course mean some very tough decisions, our funding is limited and there will undoubtedly be good applications that we are unable to support. But by the end of this process we hope to unveil a portfolio of organisations shaped by an ambitious ten year plan, with a balance of large and small organisations, across all artforms and geographical areas, and with either an outstanding track record of achievement or outstanding potential.

I want to assure you that we are determined to address the future in the most constructive way. Rather than letting these cuts limit our ambitions, we hope the measures we are taking will ensure a strong and resilient future for the arts, building as well as sustaining our unparalleled cultural sector."

24. This letter heralded what Mr Davey described as "the biggest transformation of arts funding for a generation". Ms McColgan said that it represented a "sea-change" in approach. That is probably a fair description. The penultimate paragraph of Mr Davey's letter foreshadowed unpalatable decisions. His letter referred to an "open application process" in which applicants (including those which were currently RFOs) must make an online application which would be judged by reference to "a set of published criteria, with organisations demonstrating how they will help us meet at least two of the five goals set out in Achieving great art for everyone." It is the way that process was implemented in the AMC's case that is challenged in this application.

What the Claimant had to do

25. The ACE produced a document in November 2010 entitled 'The National Portfolio Funding Programme - Guidance for applicants' which set out what applicants for NPF needed to do. The deadline for the submission of applications was 24 January 2011. It will be necessary to set out in some detail the requirements set out in this document because at least part of the AMC's case is that the ACE failed to adhere to its own declared process in considering the AMC's application.
26. The first two paragraphs in the Introduction should be recorded:

"Welcome

Thank you for your interest in the National portfolio funding programme. This guidance should give you all the information you need to apply, so please read it carefully before you fill in the online application form.

The Arts Council's mission is Great art for everyone. We exist to create the conditions in which great art can be made, experienced and appreciated by everyone.

This programme provides funding for a national portfolio of organisations from April 2012. It replaces our regular funding programme, which will end on 31 March 2012.

Spending Review

Funding for this programme is limited. As part of the recent Spending Review, the Government has announced that the Arts Council's funding will be cut by 29.6% over the next four years.

This means there may be organisations we currently fund that we will not be able to fund in the future. It is likely that there will be good applications to this programme that we are unable to fund. You should think about what you would do if we cannot award your organisation funding."

27. There is an obvious warning that currently-funded organisations may not be funded in the future. This was also said:

"We strongly recommend that you contact us before making an application. If you currently receive regular funding from the Arts Council, you should contact your relationship manager …."

28. Mr Jasani followed that advice and was in contact with Ms Robson by e-mail on 17 November having attended a "briefing meeting" on 15 November. She replied on 25 November. This may be a convenient point at which to highlight two of the questions he raised and to record her answers:

Q: In the briefing session it was mentioned that applicants should focus on their core work. The AMC was set up as a touring company. Then ACE said we had to have an education programme too. In the latter we developed the schools outreach work, the summer and winter schools, the museum with its various facilities and offerings. As part of our outreach work we developed partnerships with MID and Hospital arts. Hence I am a bit concerned that having expanded the work of the AMC in areas which still work with the touring programme, are we being encouraged to reduce areas of work which are not directly "touring" and boost that instead?

A: AMC has expanded its programme over the years and currently offers a range of different programme strands. The content of your application will depend on what you and your board decide to include in it, bearing in mind the changed context. We would hope that every applicant will describe a clear 'offer' both in terms of a future programme of activities and its beneficiaries, and will be able to describe clearly the impact of the programme, the quality of the programme, and how it represents good value for money.

Q: Because of [the first question raised above] our work in fact covers perhaps 3-4 of the ACE's long-term goals and all the ACE's desired outcomes. Could our application be considered weak if it focused on just 1-2 areas?

A: One of the eligibility criteria is an organisation's ability to contribute towards achieving two or more of the five goals. In the first stage of the assessment process, we will make an assessment of which of our goals and priorities you would contribute to and the quality of that contribution. Your application must demonstrate that you contribute to at least two goals.

29. Mr Jasani also asked the question as to who the assessors would be. Ms Robson indicated that the first stage of the assessment would be done by her (as AMC's current relationship manager) or "another colleague from the team".
30. The eligibility criteria were summarised in the Guidance document as follows:

1. you must be able to contribute towards achieving two or more of our five goals. (There is information on our goals and priorities in Section three of this guidance. You can also read our 10-year strategic framework for the arts Achieving great art for everyone, available from www.artscouncil.org.uk)

2. you must apply for a minimum annual award of £40,000

3. you must engage people in England in arts activities or help artists and arts organisations in England to carry out their work. ('Engaging in arts activities' could include attending an arts event, taking part in an arts activity, or creating a work of art)

4. the programme of work which our funding would support must mainly benefit artists or audiences in England

5. you must be based in the United Kingdom

6. we will not accept applications from individuals in a personal capacity ….

7. we will accept applications from organisations working in partnership. One organisation must take the lead having responsibility for managing the application and being responsible for any grant that is awarded. If you are successful, you may be asked to provide us with a copy of a written agreement with your partners

31. Under the heading 'What your application must include' the following two paragraphs appear, the second of which is said to be highly material to the AMC's judicial review application:

"All applicants will be asked to include details of:

your mission or purpose: this can be taken from your business plan, or a previous funding agreement with us

how much you are applying for

how you plan to use our funding to contribute to our goals and priorities

your management accounts for 2010/11

your planned budget for 2011/12

your outline budget for the years for which you are applying for funding

We expect organisations to generate income from other sources and your budgets should show the different sources of your income.

…

If you are currently an Arts Council regularly funded organisation

If you currently receive regular funding from us, you may send additional information if you wish, especially if there have been major changes in your finances or in the way the organisation is run. If the information we have about you is up to date, then you are not required to do so and we will take into account the knowledge and understanding we have of your organisation and information such as your annual reviews and previous funding agreements.

…" (Emphasis added.)

32. The guidance then goes on to deal with how much money an applicant should apply for. Little hangs on this for present purposes, but since Ms McColgan made the point that the AMC, had it been granted the funding it sought, would have been about 18th in the hierarchy of funding actually granted and that the sum claimed was a "large amount", perhaps I should summarise the guidance. It suggested that the expectation was that "most organisations will apply for three years' funding" and drew attention to the fact that "the online application asks [the applicant] to say how much funding [it is] applying for in each of the three financial years 2012/13, 2013/14 and 2014/15." In relation to those (like the AMC) who were then in receipt of regular funding from the ACE, the suggestion was that "you should consider the total amount of funding you will receive from us in 2011/12 and use this as a guide." It was said that if the intention was "to apply for a sum in any one year which is significantly different to (sic) the funding you will receive from us in 2011/12, you should explain the reasons why."
33. Whilst I do not really think that the point made about the size of the sum claimed is of relevance to the issues to be determined in this judicial review application, given the figures I referred to in paragraph 8 above, it is not a point that, to my mind, demonstrates any lack of merit in or over-statement of the AMC's position: it had hitherto received in the region of £500,000 plus per annum and it was not unreasonable to be claiming sums in that region for the future.
34. At all events, the more important issue is the process to which the application, once made online, would be subjected. This was described in the guidance in the following way:

"How we make our decision

When we receive your application we will first check whether it is eligible.

All eligible applications will then be considered against the same set of criteria. Our decision-making will be in two distinct stages. The first stage is an assessment of the application itself, looking at the organisation and its ability to deliver the programme of work that it proposes. The second stage is about balancing the overall national portfolio of funded organisations that we want to support to achieve our goals and priorities.

We will make our assessment on the basis of the information you provide in your application, our knowledge of your organisation, if applicable, and any further information that we request.

Stage one: assessing your application

The first stage makes a judgement about the kind of contribution that the organisation would make to our goals and priorities. It looks at the individual application on its own merits and assesses against the following criteria.

1. Contributing to our goals and priorities: we will make an assessment of which of our goals and priorities you would contribute to and the quality of that contribution.

a. You must demonstrate that you contribute to at least two of our goals. Applications which contribute to more of our goals and priorities will not necessarily be treated more favourably than applications from specialist organisations which contribute to fewer. Our assessment will take into account the nature of your organisation and the amount of funding applied for.

b. In the 'Meeting our goals' section of the form you must tell us how you propose to help us meet the goals you have selected. This should give us details on the programme of work or the activities you will be doing that will contribute to these goals and priorities.

2. Governance, leadership and management: you should have appropriate governance, leadership and management to be able to deliver effectively the programme of work that you propose. You will be asked to confirm that your application is supported by the governing body of your organisation.

3. Financial sustainability: you should be financially sustainable and have appropriate financial controls in place able to deliver effectively the programme of work that you propose.

We will consider how you have planned your income and expenditure for this funding period alongside your management accounts for this current year. Value for money will be an important consideration.

Where it is appropriate, we will also take into account the extent and strength of support from other partners, such as local authorities.

Each of the criteria will have 'prompts': that is, questions our assessors ask themselves about the applications to help identify key issues. These prompts are set out in Section four of this guidance. It is important to note that not all the prompts are relevant to all applications, and they are not a check list for applicants.

We understand some organisations that do not currently receive regular funding from the Arts Council may find it more difficult to meet these criteria, particularly financial sustainability. We will take this into account in our assessment and make a judgment about each organisation's potential to meet these criteria within an agreed timeframe.

Stage two: balancing the portfolio

The second stage makes a judgment about how well the organisation would fit into a balanced portfolio of funded organisations. This stage looks at a range of areas where we need to find a balance across our investment in the arts.

1. Goals and priorities: we will look across the national portfolio of organisations and consider how it is contributing to our goals and priorities as a whole, as set out in Section three, alongside our other investment in the arts.

2. Diversity: we want our investment in the arts overall to create the conditions in which a diverse range of great art is open to all.

3. Range of artforms: we want to support a range of artforms and a range of artistic practice. Artists and arts organisations often work across and between different artform areas. We group the organisations we fund, however, into six artform areas in order to help us consider how we are investing in different parts of the arts sector. These are: combined arts (which use multiple artforms to achieve their aims), dance, literature, music, theatre and visual arts.

4. Size and type: there are many interdependencies within the arts sector and we want to invest in an appropriate mix of sizes and types of organisation. This includes, for example, considering an appropriate balance of building-based companies, touring companies, arts venues and other types of organisations. Some of the organisations we will support may not directly produce or present art but may play a role in supporting arts organisations.

5. Geographical spread: we will take into account the need to support work by a national portfolio of funded organisations across the whole of England. We will keep in mind the fact that some organisations work intensively within their home region, some will have a reach and impact far beyond their home region and some will tour widely.

There is no mechanistic formula for balancing the portfolio. This is a framework against which we will make an informed judgment about how each organisation might contribute to the overall mix. There may be applications which are strong in the first stage assessment but which are not funded because in the second stage they do not fit into this overall picture."

35. Reference is made in both stages to the "goals" of the ACE. The goals are articulated more fully in the third section of the guidance in the following terms:

"Arts Council England has published Achieving great art for everyone, a 10-year strategic framework for the arts. This sets out five goals for the arts over the next 10 years and, under each of the goals, a number of priorities for the next four years.

All of our investment in the arts will be based on this strategic framework and all our funded organisations will need to demonstrate to us how they will contribute to at least two of our goals.

We do not expect all of the organisations that we fund to contribute to all of our goals and priorities. We aim to ensure that we support a portfolio of investment in the arts which, taken together, contributes to all of them.

Goal 1: Talent and artistic excellence are thriving and celebrated

using our investment to ensure excellent art happens

establishing a coherent, nationwide approach to the development of artistic talent, particularly for emerging and mid-career artists

supporting an artistically-led approach to diversity in the arts

responding to major opportunities such as the London 2012 Olympic and Paralympic Games to showcase talent and build audiences for excellent art

Goal 2: More people experience and are inspired by the arts

developing arts opportunities for people and places with the least engagement

strengthening the distribution of excellent art through touring and digital platforms

encouraging funded organisations to be even more focused on attracting audiences

Goal 3: The arts are sustainable, resilient and innovative

promoting greater collaboration between organisations to increase efficiency and innovation

strengthening business models in the arts and helping arts organisations to diversify their income streams, including by encouraging private giving

Goal 4: The arts leadership and workforce are diverse and highly skilled

building a network of arts leaders who value sharing their knowledge and skills, for the benefit of the arts and civil society

creating equal opportunities to enter the arts workforce

Goal 5: Every child and young person has the opportunity to experience the richness of the arts

improving the delivery of arts opportunities for children and young people

raising the standard of art being produced for, with and by children and young people"

36. The next section of the guidance details how the assessors of the applications were to approach their task. It involved engaging, if relevant, with certain "prompts". This feature was introduced in the following way:

"Assessors will use their knowledge, expertise and judgement to consider each application against three criteria.

Contributing to our goals and priorities

Governance, leadership and management

Financial sustainability

Each of the criteria will have 'prompts': that is, questions our assessors ask themselves about the applications to help identify key issues and risks.

Risk is important in many artistic activities and the arts thrive on risk-taking. Artists rely on the trust, commitment and ambition of audiences and funders to support those risks. Identifying and considering the level of risk in your application is an important part of our assessment and there is a prompt about risk under each of the three criteria.

It is important to note that not all of the prompts are relevant to all applications, and they are not a check list for applicants. Our assessors use their judgement to decide what prompts are relevant in each case."

37. The "prompts" were then identified:

"Prompts

1. Contributing to our goals and priorities

a. Which of our goals and priorities will the applicant's programme contribute to?

b. How will the programme of work proposed by the organisation contribute to those goals and priorities?

c. Will those goals and priorities be realised effectively through the organisation's proposed programme? If not, why not?

d. How effective in achieving its stated ambitions has the organisation's previous work been?

e. How will the organisation's programme compare to best practice in their area or type of work?

f. Does the organisation's work stretch boundaries or question assumptions for the artists who participate or the audiences that engage with it?

g. Is there evidence that the organisation challenges itself to be excellent? Does it review the quality of its work and consider other people's opinions when evaluating its activity? Does it act on what it learns?

h. Do the organisation's other funders or stakeholders have any views about the quality of the organisation's work?

i. Is there any evidence about the quality of the experience that the organisation offers audiences or participants?

j. To what extent has the organisation effectively identified the risks to its ability to contribute to our goals and priorities? To what extent has it effectively identified steps to manage those risks?

k. If the organisation is going to work in partnership with other organisations, what are the responsibilities of its partners and how is the organisation, as the lead organisation, going to work together with its partners?

2. Governance, leadership and management

a. Are the Memorandum and Articles of Association available?

b. To what extent does the board have the appropriate skills to govern the organisation and how balanced is it in terms of its experience, expertise and length of tenure?

c. Do the board and management committee set and /or approve overall strategy and priorities?

d. Do the board and management committee monitor financial management and approve budgets?

e. Is the organisation's programme based on a convincing plan that gives detail of resources needed, delivery, desired outcomes, risk management, monitoring and evaluation?

f. Is the management structure appropriate to deliver the programme effectively?

h. To what extent does the governance, leadership and management of the organisation present risks to its ability to contribute to our goals and priorities? To what extent has the organisation identified those risks and effectively identified steps to manage them?

3. Financial sustainability

a. Has the organisation produced financial information that covers all aspects of its activity?

b. Does the organisation file its financial statements at Companies House and the Charities Commission on time?

c. Is the organisation in a healthy financial position? Key indicators include:

d. achieving an annual breakeven position or surplus across the whole organisation

e. having enough current assets to pay off its current liabilities

f. no expectation that it will run out of cash or (where relevant) exceed its overdraft

g. Does the organisation have any reserves, and does it adopt an appropriate approach to them?

h. Is the overall budget appropriate and suitable for the scale and type of programme, including an appropriate balance of income sources?

i. How appropriate are the financial controls that are in place?

j. Are the financial assumptions behind the programme based on a long-term business plan which the whole organisation supports?

k. Do current audited accounts confirm the financial assumptions the programme is based on?

j. Is there a realistic plan for achieving additional income to support the organisation's activity, and is this linked to the business plan?

l. Does the organisation provide for replacement and repair of its key assets? (Assets might include a venue or a building, but also vehicles, computers and furnishings.)

m. Does the organisation have any long-term loans or mortgages? Does it have a clear plan as to how it will repay them and the means to do so?

n. Where there are a small number of directors (possibly just one or two) is the financial relationship between them and the organisation clear and transparent?

o. To what extent does the financial sustainability of the organisation present risks to its ability to contribute to our goals and priorities? To what extent has the organisation identified those risks and effectively identified steps to manage them?"

38. So that represents the substance of the detailed guidance given. It is guidance that everyone seeking funding from the ACE had to digest and act upon relatively quickly and it was doubtless guidance upon which applicants sought further guidance. Mr Jasani certainly sought to engage with Ms Robson on aspects of this advice as is plain from paragraph 28 above.
39. Since Goals 3 and 4 figure significantly in the challenge made in these proceedings, I should record what was said about each in 'Achieving great art for everyone'.
40. Goal 3 was addressed in this way:

"Why this goal?

This goal is about ensuring the sustainable growth and success of the arts. With public investment in the arts reducing, it is also about developing resilience, as arts organizations extend their roles and responsibilities within the wider cultural landscape and civil and national life, including how they adapt and respond to the climate change. For arts organizations to thrive in a mixed economy, they will have to be even more enterprising. Our vision depends on arts organizations continuing to innovate, collaborate and evolve to sustain the excellence of their work and to make a wider contribution to the nation's well-being and prosperity.

What will we do?

We will invest in the sustainable growth of the arts ecology encouraging networking, collaboration and partnerships

We will broker partnerships with other major public and private funders to secure greater impact from our shared investment in the arts

We will work with partners, including government, to encourage and enable a higher level of private giving to support the arts

We will encourage innovation through recognizing the value of research and development in the production, presentation and distribution of art

What will success look like?

The arts are known for resilience – with organizations building sustainable business models that include a greater diversity of income streams, including a higher level of private giving

The arts are naturally collaborative and networked, sharing knowledge and ideas

There are more partnerships between arts organizations, the wider public sector and the commercial sector

With commitment and innovation, the arts have contributed to the reduction of carbon emissions"

41. Goal 4 was addressed in this way:

"Why this goal?

Unless the arts workforce is diverse and highly skilled it will not reach its potential. For our arts leaders to play an active role at the heart of civil society, they need to be diverse and highly skilled. Diversity in the workforce is important to fostering diverse arts practice; it is also important to ensuring that artists and arts organizations can understand and reflect the values of their local communities. Likewise, the ongoing professional development of the sector is important to its resilience during times of change. In both areas, there remain challenges to address. A long term approach is needed.

What will we do?

We will promote equality within the arts, focusing in particular on crating equal opportunities to enter the arts workforce

We will encourage skills development, collaborative working and knowledge sharing, including enabling the arts to realize the potential of technological change

We will seek to ensure that mainstream funding for learning and skills development supports the training needs of the arts

We will renew our commitment to leadership development in the arts, working with a network of arts leaders to share knowledge and skills, while promoting best practice in the governance of arts organisations

What will success look like?

More arts leaders are regarded as world class, renowned for excellence and playing an active role at the heart of civil and national life

The arts leadership and workforce will reflect the diversity of society

Professional development is regarded as essential to the health of the arts"

42. It was with that guidance and against that background that the AMC and the other applicants completed the online application.

What happened to the AMC's application?

43. It will be impossible to reflect all aspects of the application in this judgment. However, under the heading "organisation's profile", there is a box (with a word limit of 250 words) in which the organisation's "mission or purpose" must be described. The applicant must then indicate the level of funding required and to say why (in no more than 250 words) the sum sought in any one year was to be "significantly different from your total funding with us in 2011/12" if that is the case. The AMC did indicate what it was planning with regard to strengthening its "artistic programme and reach" as its justification for seeking more than in 2011/12.
44. The application form then required the applicant to identify which of the 5 goals to which its programme was designed to contribute. The AMC placed a tick against all 5 and then in a box with a word limit of 3,000 words it set out to describe how each of the goals would be met by its "proposed programme of work" which itself was attached as a separate document.
45. It was the information contained in this part of the application form that was to be evaluated in the Stage 1 and Stage 2 processes to which I referred above. For present purposes, I propose to say nothing about the substance of what appeared in relation to each of the 5 goals save to observe that the AMC endeavoured to demonstrate how it would achieve each of these goals. My reason for taking this course is plain: it is clearly the case that it is not for the court to stray into the territory of the evaluation of what was advanced. That is obviously the territory of those within the ACE charged with the responsibility of considering the application put forward. If there is evidence of a clear mistake of fact on the part of those evaluating the information, that may afford grounds for the court looking at the information acted upon by those involved, but caution would plainly need to be shown to ensure that the court is not seduced into territory marked "out of bounds": see Chief Constable of the North Wales Police v Evans [1982] 1 WLR 1155 at 1173 and Pam Smith v North East Derbyshire PCT [2006] 1 WLR 3315 at paragraph 10.
46. The essential issue, for present purposes, is whether the ACE adhered to the process it held out to applicants as being the process it would follow. If it did not, it may still be necessary to consider other factors before the court could necessarily intervene (see paragraphs 119-122 below), but it is the evaluation of this issue to which I will now turn.
47. Stage 1 did involve an appraisal of the application by Ms Robson. I am, for the moment, proposing to consider primarily the contemporaneous records which evidence what happened and what constituted her appraisal rather than the ex post facto explanations given in later witness statements. I will deal with the issue of any conflict there may be between the two if it becomes evident or relevant.
48. There is no doubt that the AMC met the eligibility requirements. No further information was sought by Ms Robson or anyone else within the ACE from the AMC and no queries were raised about the contents of its application. It is, however, clear that the ACE said that it would consider the application on the basis essentially of the information set out in the application form (although the italicized passage referred to in paragraph 31 above is relevant) and, given the timescale that required consideration of all applications between 24 January 2011 and 7 February 2011, it would be difficult to see how those responsible for the evaluation exercise could have engaged all or any of the 1333 applicants in a dialogue at this stage. (It is fair to say that the House of Commons Culture, Media and Sports Committee expressed reservations at the time about the speed of the process undertaken which, it was said, was "likely to result in some organisations having to close and there will inevitably be complaints that the process has been flawed and insufficiently rigorous": see 3^rd Report to Parliament entitled Funding of the arts and heritage published on 30 March 2011.)
49. It may be helpful to see the substance of how the refusal of the application was communicated to the AMC in the letter of 30 March 2011 (see paragraph 6 above):

"We thought your application had the potential to make a contribution to our mission of Achieving great art for everyone. However, we needed to create a portfolio of funded organisations which, as far as possible, represents the best mix of organisations in terms of size, type, artform, diversity, geographical spread and contribution to our goals. In the light of this we had to make some very difficult decisions and decided that there were other organisations whose contribution fits better into the national picture."

50. The letter contained enclosed what was said to be a "summary of our assessment of your application", the summary of Stage 1 being in the following terms:

"Asian Music Circuit (AMC) presents the great music traditions of Asia, programmed alongside more contemporary and sometimes newly commissioned work. AMC particularly presents the increasingly rare traditions of Asian music, and claims to be possibly the only 'pan-Asian' force, bringing many diverse cultures together. AMC prides itself on setting national benchmarks for excellence and high standards in Asian music promotion; it has twenty years' track record of promoting national tours, curating exhibitions and delivery education programmes. The application aims to meet all five goals, of which 1, 2 and 5 seem to be more strongly addressed. Goal 1 is addressed through planning to continue to deliver programmes of high artistic standards that place diversity of music traditions of Asia at the heart of its offer. Proposal to meet Goal 2 is based on the organisation's 20 years' track record of presenting high quality tours to a range of audiences. Strengthening digital capacity, marketing, audience outreach and engagement through digital media are all broadly covered in the organisation's plans. Goal 5 is addressed by AMC's planning to continue its education programme and develop additional commissioning opportunities for young composers, whose work would be toured. However, plans to address all three goals appear broad and lacking detail about their likely scope, size, quantity and spread of activities, the definition of likely tours and other activities/ since the organisation's future financial needs have been shown against this broad outline, it is difficult to ascertain potential value for money and therefore, the likely impact and value of funding in relation to Arts Council goals." (Emphasis added.)

51. I will deal with the summary of the assessment of Stage 2 a little later (see paragraph 69).
52. The full assessment under Stage 1 (revealed subsequently) was in the following terms, the word in brackets at the end of each paragraph heading being the assessor's assessment of how well he or she saw the application in the scale of achievement (which ranged through "strong", "good" or "weak") in the context of meeting the ACE's "goals and priorities", "governance, leadership and management" and "financial sustainability".

1. Meeting our goals and priorities (Good)

"AMC presents the great music traditions of Asia, programmed alongside more contemporary and sometimes newly commissioned work. AMC particularly presents the increasingly rare traditions of Asian music, and claims to be possibly the only 'pan-Asian' force, bringing many diverse cultures together. AMC prides itself on setting national benchmarks for excellence and high standards in Asian music promotion; it has twenty years' track record of promoting national tours, curating exhibitions and delivery education programmes.

The application aims to meet all five goals, of which 1, 2 and 5 seem to be more strongly addressed. Goal 1 is addressed (excellence and supporting artistically-led approached to diversity in the arts) through planning to continue to deliver programmes of high artistic standards that place diversity of music traditions of Asia at the heart of its offer. The organisation has a strong record track record of doing this, and the excellence of its programme has been recognised by experts and audiences. Presenting diverse music expressions of Asia to mainstream and Asian/British Asian audiences across England, with the customary high standard of quality and curation would certainly meet this goal well; however the application makes little references to the actual programme beyond a broad overview of programming strands. Re-launch of the AMC's 'Little Chilli' festival (2 past editions in 04 and 05) would form a programming core from 2012/13, around which there would be touring programme and other strands including continuation of existing outreach and education activities. The application makes little reference to the likely scope and size of the programme and its likely geographical distribution of delivery partnerships outside existing ones. (Emphasis added.)

…

Proposal to meet Goal 2 (increasing arts engagement, touring and digital distribution) is based on the organisation's 20 years' track record of presenting high quality tours to a range of audiences across the English regions and in London. Strengthening digital capacity, marketing, audience outreach and engagement through digital media appears in the organisation's plans. It is substantiated by the recruitment of a new staff member responsible for marketing and digital innovation and the organisation's presence on social media. The proposal however lacks evidence of the organisation's plans beyond relying on its track record and aspirations to develop its reach further, not only geographically where provision has been low, but also be developing imaginative ways to present work. The outreach aspects of AMC's work, particularly working in partnership, would continue, but it is difficult to ascertain what future development opportunities the organisation would particularly pursue in this area.

Goal 5 is addressed by AMC's planning to continue its education programme and develop additional commissioning opportunities for young composers, whose work would be toured. AMC has a good track record in this area, and the organisation supports investment in early education and training, which is in line with great traditions of Asian music. Plans for this area appear broad and lacking in details about its likely scope and reach."

53. As I have indicated, the assessment of the contribution to the "goals and priorities" of the ACE was assessed to be "good" which was also the assessment given in relation to "governance, leadership and management". Since nothing appears to turn on this feature of the assessment I will not set it out in detail.
54. In relation to "financial sustainability" the assessment was that it was "weak". I will not set out in full the basis for this assessment, but those matters that appear to have told against any assessment better than "weak" at this stage are reflected in the following extract:

"The organisation's future financial needs have been shown against a very broad outline 2012-15 programme, which across programming themes lacks consideration of the scope and size, quantity and likely resources needed for specific programming elements. The introduction of an annual 'Little Chilli' festival from 2012 financial year, as a main focus around which the organisation would build the touring programme, does not appear to have been substantiated by the likely costs of the festival's programme, or even a broad consideration of financial impact of different programming themes across the three years.

…

ACE is the major funder, providing 71% of AMC's unrestricted income in the 2010 financial year; earned income represented 29% of the turnover in the same financial year. The budget 2012-15 indicates ACE's subsidy reducing to 63% of the turnover, which still represents a high proportion. Earned income from performances and education programme would increase to 33% and fundraising income to 4%. The application does not provide details of a strategy for increasing income proportion, other the intentions to develop revenue streams from digital resources and to increase touring, in addition to strengthening fundraising potential of the board. There appears to be little assessment of financial risks in the proposal, though the accounts for the year ended 31 March 2010 include some consideration in relation to the impact of reduced public funding. The accounts also indicate that the organisation might need to continue the strategy of reducing outputs, thus saving money, and concentrating on just a few productions which could have a higher impact. Additionally, there is a consideration of the need to increase income through ticket sales achieved though enhancing marketing impact. The trustees report also note that, should ACE for any reason withdraw support, the company does not have sufficient reserves to operate in the long term. They state that the organisation would require significant reserves to operate without public subsidy, and that in order to survive in such a scenario, they would have to substantially reduce activity and infrastructure or become a purely commercial organisation.

It is difficult to ascertain potential value for money and impact of the funding request against a very broad outline, which lacks more specific details of the programme's content and scope."

55. It is not in issue that Ms Robson was the author of that assessment and that it reflected the way she expressed herself then about the application. It emerged that her work was overseen by Ms Helen Sprott, London Director, Music, someone who also had considerable experience in the music field and who had worked for the ACE since 2005. What Ms Sprott said about her involvement was as follows:

"6.1 I had a dual role through the assessment process. First, I was an assessor in my own right for ENO and other applicants. I attended NPO assessment training sessions and was guided through detailed assessment materials. Second, as London Director and a Senior Manager, I provided hands-on support to Relationship Managers in the Music Team, offering advice and guidance, moderating scoring in the context of other assessments, and editing copy if necessary, always with reference to the original applications. In the case of the [AMC's] application, as with all other Music applications, I read the full assessment in draft and in its final form, and referred back to the original application to ensure that I understood both application and assessment fully and in detail and was in a position to quality assure the assessment ….

6.2 At Stage 2, I represented the portfolio of Music recommendations in a range of forums – with fellow Art form Directors, with Head Office Colleagues, and to London's Regional Council, presenting the proposals, answering questions, substantiating recommendations with reference to the full assessments, and making clear how judgements were arrived at."

56. There has been a fair degree of debate about the meaning of the italicised words in the full and summary assessments ("The application aims to meet all five goals, of which 1, 2 and 5 seem to be more strongly addressed") and the impact that that assessment at Stage 1 had upon the next stage in the process, Stage 2. Before I deal with that debate, I should summarise the Stage 2 process (the purpose of which stage was as set out in the quotation in paragraph 34 above).
57. Stage 2 involved a series of meetings at different levels within the ACE. The first stage within Stage 2 was what was known as achieving the "first cut". The whole process was described in the Detailed Grounds of Resistance in the following terms:

"…between 7 and 14 February 2011 Regional senior management teams developed a "first cut" of the overall portfolio on the basis of the stage 1 assessments;

this process was then repeated by Area senior management who put together preliminary balanced portfolios for their areas;

Area senior management teams wrote a "stage 2" reason for their recommendations on each application which went to head office, together with a covering report from the Area Executive Director describing the overall proposals for the Area and the reasons behind them;

… between 15 and 18 February 2011, Regional Councils were presented with the "first cut" portfolios, it being clear that these were initial proposals only and subject to change, and were given the opportunity to comment and/or raise queries relating to them;

… simultaneously (between 16 and 18 February 2011) head office produced an analysis of each region's "first cut" portfolio, identifying issues which arose from a national perspective. These analyses, together with the Area Executive Directors' reports, were key documents for the moderation process which followed;

… on 21 and 22 February 2011, the Defendant's Executive Board, Regional Directors, Arts Team and other head office directors held a moderation meeting to discuss the overall "first cut" portfolio which had emerged from the regional and area processes. At this meeting individual issues pertaining to particular applications as well as broader issues were discussed;

… between 23 and 28 February 2011, Areas reconsidered their proposed "first cut" portfolios in light of the national moderation discussions, and reconsidered the stage 2 recommendations drafted for each application;

… between 1 and 7 March 2011 the Defendant's Executive Board met to confirm changes to the proposals following national moderation. These proposals formed the "second cut" portfolio;

… on 8 March 2011 the Defendant's Arts Investment Committee met to discuss the Executive Board's proposed "second cut" portfolio. As a result of this meeting the Executive Board made some amendments to the proposed "second cut" portfolio shortly afterwards;

… between 15 and 17 March 2011, nine Regional Councils each met and made decisions on NPO applications in respect of less than £800000 p.a., together with recommendations on larger applications;

… on 25 March 2011, National Council met to take an overview of the national portfolio and reach decisions on applications in excess of £800000 p.a.;

on 30 March 2011 all applicants were notified of the decision on their application following which feedback discussions were held with applicants by regional staff."

58. The meeting on 21 and 22 February involved at least in part what have been described as "speed dating" sessions, the precise nature of which is not made wholly clear in the papers before the court except that they appear to have involved detailed discussions about individual organisations and individual decisions made concerning the applications made by those organisations. One paper recording the results of these "speed dating" sessions suggests that an individual or individuals, presumably at Head Office directorial level, requested consideration of issues concerning particular organisations and decisions which were then addressed by others taking part in those sessions.
59. Making the first "cut" was undoubtedly of considerable significance to any applicant although not, it seems, necessarily fatal to the eventual success of an application. The Detailed Grounds of Resistance assert the following:

"Following these stage 2 meetings, a number of applications which had not been recommended for funding in the "first cut" Regional portfolios were reconsidered and the recommendations were changed. For example, in the London Area the following organisations which were not recommended in the "first cut" portfolio were recommended following discussion at stage 2, because of their contribution to a diverse arts sector:

1) Third Text (Visual Arts)

2) inIVA (Visual Arts)

3) the Otolith Group (Visual Arts)

4) Kazzum (Theatre)

5) Nutkhut (Theatre)

6) Talawa (Theatre)"

60. Notwithstanding the eventual emergence of these "first cut failures" into the realm of those that eventually received funding under the NPF programme, it would be surprising if, in the overall scheme of things, surviving the first cut was not a positive advantage and I think I should approach the issue on that basis. Indeed the "Head Office national moderation report" (see paragraph 92 below), which reviewed the "first cut" proposals nationally, showed that of the existing RFOs that applied (791, it was said), 583 survived the first cut. Since 206 of the applications made by RFOs were ultimately unsuccessful (see paragraph 6 above), it does not appear that many (if indeed any) RFOs that did not survive the first cut eventually came through to succeed at a later stage. I will refer to certain instances referred to by Miss Richards where the evidence demonstrates that an assessment (albeit not necessarily a strongly favourable assessment) on goals other than the strongest goals did assist some applicants (see paragraph 81 below).
61. AMC did not survive the "first cut" and it is essentially the process that led to that result that is challenged in these proceedings. I will turn to the way that challenge is advanced.

The grounds of challenge

62. The ground (Ground 1) upon which the decision is challenged (and upon which permission has been granted) is in the following terms:

"… The stage one assessment of the AMC's application notes that goals 1, 2 and 5 seem to be the more strongly addressed. Nonetheless, it was and remains the case that (as the AMC's application explained) it was in a position to make a contribution to each of the Arts Council's five goals and not simply goals 1, 2 and 5. Yet the assessment contains no evaluation of the extent to which the AMC could contribute to goals 3 and 4, notwithstanding that its application clearly set out in relation to each of the five goals how the AMC would propose to meet or contribute towards the achieving of those goals. In failing to consider whether and if so to what extent the AMC could contribute towards goals 3 and 4, the Arts Council failed to have regard to all relevant considerations. That failure was contrary to the Arts Council's own guidance as to how it would undertake the stage one assessment ("we will make an assessment of which of our goals and priorities you would contribute to and the quality of that contribution") and inconsistent with its strategic framework."

63. As I have already indicated (see paragraphs 50 and 52 above), Ms Robson's analysis of the application recorded is that it "aims to meet all five goals, of which 1, 2 and 5 seem to be more strongly addressed". She ascribed the level of achievement in relation to goals 1, 2 and 5 as "good", but the point made strongly by Miss Richards is that she said nothing about goals 3 and 4 other than, by implication, that they were less strongly addressed than the other goals to which she referred. Whilst the assessment contained a discussion of how the application met goals 1, 2 and 5 and thus led to the evaluation to which I have referred, she submitted that it failed to deal with goals 3 and 4 at all. Consequently it contained no evaluation of the extent to which the AMC could contribute to those goals despite the fact that the application clearly set out how those goals were intended to be met.
64. This was not, of course, crucial to passing Stage 1: two goals were sufficient. However, when the Regional senior management teams decided on the "first cut" of the overall portfolio they did so "on the basis of the Stage 1 assessments" (emphasis added). In other words, they had the Stage 1 assessment (arrived at in the way I have described above) and nothing more. In the AMC's case, the relevant team was the London Area Management team, which met between 9 and 14 February. There are no minutes of the meeting, but a report from the London Area Executive Director recorded that "the assessment summaries were available throughout" (emphasis added). This suggests that what they had was Ms Robson's "summary of Stage 1" which, in relation to the goals, was as set out in paragraph 50 above. However, it has been asserted strongly on behalf of the ACE that in fact it was the full assessment upon which the Stage 2 assessment was made, the summary assessment not in fact having been generated until after the assessment process had been completed. In its 'Note on the Claimant's response to the Defendant's Summary Grounds' it was asserted that the "Assessment Summary Reports" were "not available at the time to the decision makers (since they record the product of the decision-making)". (The full assessment, it is said, was available online to all decision-makers.)
65. This does seem to be the most likely scenario and I approach matters on that basis. It may not be that significant because the critical evaluation of the extent to which the AMC contributed to the relevant goals was the same in each version of the assessment.
66. However, in relation to that issue, Miss Richards' argument is that what was presented in Stage 2, with the lack of assessment of goals 3 and 4, meant that at Stage 2 (which involved the critical "first cut") there was no or no adequate information available to those engaged in the decision-making about the AMC's potential or actual contribution towards those two goals. It followed, she argued, that the decision-makers at Stage 2 were disabled from forming any reasoned judgment of their own as to whether the AMC might contribute towards those goals and priorities or as to how it might fit into a balanced portfolio.
67. The net effect in public law terms, she contends, is that the ACE failed to have regard to all relevant considerations by not having highly relevant information available and that the failure was contrary to its own published guidance about how it would undertake both Stage 1 ("we will make an assessment of which of our goals and priorities you would contribute to and the quality of that contribution": paragraph 34 above) and Stage 2, which involved the making of an "informed judgment about how each organisation might contribute to the overall mix" (see paragraph 34 above).
68. I should record first of all what the documents generated at or about the time show about how the AMC's application was evaluated at this stage.
69. The Assessment Summary Report (see paragraph 50 above) records the following in relation to Stage 2 ("balancing the portfolio"):

"The application scored 'good' under goals and priorities and governance/management and 'weak' under financial sustainability. AMC has a long track record of presenting great music traditions and plan to continue do [sic] deliver programmes of high artistic standards. It is difficult to ascertain the organisation's future financial needs, the offer's value for money and impact of different programming themes against presented plans, which appear very broad, lacking in key details and do not indicate likely scope size or geographical distribution of activities, likely tours definition or partnerships beyond existing ones. The Arts Council's funding represents 71% of the organisation's turnover, the budget for 2011-15 indicates reduction to 63%. There appears to be very little assessment of financial risks in the application, although the latest accounts include some consideration of the impact of reduced public funding and indicate that the organisation might need to continue with its strategy of reducing outputs and focusing on just a few productions which could have a higher impact."

70. As indicated previously (see paragraph 65), this Assessment Summary Report was not generated until after the Stage 2 process had been completed. It appears that the only truly contemporaneous specific reference to the AMC in the Stage 2 process derives from the speed-dating session on 21 or 22 February the note of which is as follows:

"All agreed the application had been weak on financial sustainability and other regional proposals were strong".

71. Against that entry in a separate column were the words "No action" (a phrase that appears in relation to many other entries also) whereas in some cases the words "London will look again" or "London agreed to bring back in" appeared in the same column. It seems a fair inference from this document that its perceived weakness in relation to "financial sustainability" (certainly by comparison with others) was a significant (if not "the") factor in preventing any realistic chance of the AMC's application being resurrected at this stage.
72. For completeness, I should record the paragraph in the Assessment Summary Report reflecting the 'Decision':

"This application had the potential to make a contribution to the goals set out in Achieving great art for everyone, and scored well in the first stage of assessment. However, when creating a portfolio of funded organisations which is balanced across size, type, artform, geographical spread, diversity and contribution to our goals, Council agreed with the second assessment stage decision that other organisations fitted better into the national picture."

73. It would be a fair comment that that summary does not say anything about "financial sustainability". I will return to that issue shortly (see paragraphs 75-79).
74. Miss Richards submits that the contemporaneous documentation taken as a whole suggests that throughout the decision-making process alternatives to the exclusion of the AMC from the NPF Programme were in reality not considered and the "loss" of the AMC from ACE support treated as a fait accompli. I do not, for my part, read the evidence that way (otherwise it would not have been put by Head Office on the agenda for consideration in the speed-dating session: see paragraph 70 above), but there can be little doubt that the less than glowing overall assessment at Stage 1 was carried through the whole process. The essential question is whether that assessment was fundamentally flawed and whether the further stages of the process were such that (a) they did not do what the ACE said they would do (such that it would be unfair to the AMC for the conclusion in its case to be upheld), (b) whether the process simply did not enable any flaws in the assessment (if they existed) to be picked up and rectified and (c) if so, whether there is a possibility that the ultimate decision might have been different.
75. Returning for the moment to the issue of "financial sustainability", Miss Richards submits that this assessment was unfair and flawed because no weight appears to have been attached to the clean bill of health given to the AMC in the most recent annual review and the knowledge it had of its financial position over the years. That there had been no material changes in the AMC's financial position between that review and the application for NPF programme funding was a factor that should have been taken into account, she submits. The ACE's concern about the difficulty of evaluating "value for money" (see paragraph 69 above) or its future financial needs ignored the fact, she submitted, that the AMC had submitted with its application detailed budgets right up to 2014/5, had received regular funding of a similar magnitude for a significant period of time, had made (as the ACE itself had concluded at its annual reviews) a strong contribution over that period to the ACE's aims and that the AMC was capable of delivering the kind of programme it put forward at the same time as managing its finances well (evidenced by having successfully eliminated an earlier financial deficit). It had large freehold assets the value of which exceeded significantly its current and long term liabilities. The previous financial year had ended with a surplus and it had been operating since 1991 which was powerful evidence of financial sustainability. Miss Richards says that these "demonstrably relevant factors" were (with the exception of the freehold assets and surplus, to which passing reference was made) not taken into account in the assessment of "financial sustainability".
76. It is right to say that the annual review as an RFO for the year 2009/2010 (in other words, until March 2010) indicated that the requirement of "financial sustainability" was met. (The possible assessments were "Not Met", "Potential", "Met", "Strong", and "Outstanding".) The comments in the annual review in this connection were as follows:

"The deficit was reduced and eliminated mainly through a strategy of significantly scaling down of touring activity and programming more low cost and smaller events. AMC has strong capital assets and these are seen as a guarantee against current liabilities. There are two HSBC loans, which currently have good terms and conditions; both are supported by the assets and the buildings (the office and the Education Centre).

In 2009/10 the proportion of Arts Council's award in relation to total income remained high at 71%. Earned income made up 28.6% of total income, and 0.4% was raised through other income and fundraising.

Income diversification and fundraising were highlighted as priority areas in last year's annual review. While there have been capacity issues with staff structure, which affected fundraising, and increased competition for grants from trusts and sponsorship due to the economic downturn and reductions in public funding, diversification of income and fundraising should be urgently considered by the board. The Chief Executive's capacity should be prioritised for these key strategic areas of work".

77. Having said that the requirement as to "financial sustainability" was "met" albeit that it was assessed as "weak" in the application for NPF programme funding, there seem to me to be three matters that disentitle the court from upholding this feature of the grounds: first, the assessment of "financial sustainability" was made in the context of the considerations relevant for assessing the factors that govern the meaning of "financial sustainability" in the NPF programme. The emphasis may not necessarily have been the same as it had previously in connection with assessing "financial sustainability" for RFOs. Second, the assessment in the previous financial year was that the criterion was simply "met" which was not indicative of a "strong" or "outstanding" financial position. The content of the review, which I have quoted above, was to some extent guarded. Third, the assessment for the purposes of the NPF programme, whilst arguably different in its emphasis from what went before, was also "met", which does not suggest any intrinsic downgrading from the previous assessment, although the judgment was made that it was "difficult to ascertain the organisation's future financial needs, the offer's value for money and impact of different programming themes against presented plans …" and that there appeared to be "very little assessment of financial risks in the application". What seems to have been the ultimate judgment is that the financial sustainability of the AMC was weak by comparison with that of other applicants.
78. For my part, I cannot see how that judgment could be said to be irrational, fundamentally flawed or based on a fundamental misunderstanding of the factual position concerning the AMC. It was pre-eminently a matter for the decision-maker and the court is in no position (certainly not on the material presented) to question it. I am unable to conclude that the intrinsic conclusion that the "financial sustainability" of the AMC was "weak", assessed by reference to criteria of the NPF programme, was flawed, either by reference to a misapprehension about its financial history or by reference to any misunderstanding, misapprehension or misdirection of fact.
79. Other applicants (indeed, a fair number from the evidence I have seen) received a similar assessment to that received by the AMC in relation to "financial sustainability". Obviously, the court is in no position to judge whether those assessments were valid, but there is no evidence of a wholesale "rebellion" by a large number of applicants arising from them. However, it is correct to observe that an assessment of "weak" for "financial sustainability" was not necessarily fatal to the eventual success of an application (see further at paragraph 81 below). It depended upon the balance struck in Stage 2 between it and other factors.
80. This consideration leads to what remains the principal issue, in my judgment, namely, whether the lack of readily available assessments in relation to goals 3 and 4 at the Stage 2 part of the process materially affected the chances of the AMC application proceeding to eventual acceptance.
81. Miss Richards drew attention to parts of a paper prepared by Moira Sinclair, the Executive Director for London of the ACE for the meeting of the London Regional Council on 16 March 2011 which was the formal decision-making meeting for the region. It indicated how the region had come to the decisions it had. The decisions related to various art forms, not simply music. Miss Richards drew attention to two decisions made in which applications assessed as making a "good" contribution to the ACE's goals and priorities (which was the assessment given to this part of the AMC's application), but which were assessed to be "weak" so far as "financial sustainability" was concerned (again as was the position with the AMC), yet each was recommended for inclusion in the NPF programme. The first was said to have had "a track record of delivery against Goal 1 Priority 2 and 3, Goal 2 Priority 1, Goal 4 Priority 2 and Goal 5 Priority 2" and the second was said to make "a good contribution to goals 1, 2, 4 and 5, because it supports delivery of diverse work and helps us to balance geographical provision, and because it appears to have turned a corner financially". Miss Richards submits that this evidences the advantage that assessments of other goals than just two goals could have in the process of evaluating and choosing those applications that succeeded. (I have not identified these two applicants by name for confidentiality purposes, but the evidence suggests that they had each survived the first cut and did not depend on a review thereafter for their eventual success). The effect of her submission is also that a failure by the initial assessor of an application to record any assessment on each of the goals means that those who came later in the process had no evaluation to look to for assistance.
82. Ms Robson has answered strongly the suggestion that she did not evaluate goals 3 and 4. In her second witness statement she said this:

"I would reiterate that, contrary to the assertions by the Claimant, my first stage assessment did in fact include analysis of the application in relation to how it addressed Goals 3 and 4. It would have been impossible to conclude that the application was less strong on these goals without the analysis and assessment of the application material and documentation."

83. That must, in my judgment, be correct. She plainly addressed goals 3 and 4 and concluded that they were less strongly evidenced than the other three. In her first witness statement she set out her view of the application she saw when she reviewed it at the first stage:

"My assessment is clear and made direct reference to the applicant's proposal to meet all five Goals; however, it asserted a low probability of the proposal significantly contributing to Goals 3 and 4, due to weak evidence substantiating intentions around these goals. Plans were poorly articulated and lacked a realistic approach to risk assessment, sponsorship and income generation, fundraising and partnership development under Goal 3. Similarly, under Goal 4, the intentions were poorly evidenced, lacking considerations of practical actions that would be undertaken, with no references to costed options, potential partners and so on. It was primarily the quality of the application and the applicant's 'offer' that affected the conclusion on how these two goals were addressed, and not the alleged inability of the assessor to comprehend the offer."

84. Plainly, any explanation such as that suffers from the disadvantage of being given ex post facto and, accordingly, may be less persuasive than something recorded nearer or at the time an evaluation is made. The judgment that the AMC was unlikely (by demonstrating a "low probability") to make a significant contribution towards goal 3 is not exactly what she recorded at the time, her conclusion being that Goal 3 was, as I have indicated, less strongly evidenced" than the other goals. Goal 3 involved "promoting greater collaboration between organisations to increase efficiency and innovation" and "strengthening business models in the arts and helping arts organisations to diversify their income streams, including by encouraging private giving". I will indicate shortly what Ms Robson says now about her view of this aspect of the application, but it appears that the first aspect of this goal was to some extent addressed under Goal 1 when it was said that "presented plans … do not indicate … partnerships beyond existing ones."
85. In her second witness statement she said this:

"In short, specific plans were missing, those that were presented were poorly [evidenced] and partnerships that were mentioned were in majority, not new but already existing ones, which we ascertained from existing information that we hold on monitoring files for the organisation's regular funding."

86. Helen Sprott, in her witness statement, said this:

"It was and is my view that the Stage 1 assessment accurately reflected the limited information that the [AMC] submitted in [its] application by way of artistic plans and evidence of partnerships….in this lack of detail, this application compared poorly with other applications where programme proposals were developed and budgeted in detail. In comparison to other successful applications, the [AMC's] plans, rather than 'specific', were vague, with no detail as to numbers of performances or venues, with very limited or only speculative information as to the identity of artists that would be performing at best; the budget for each funded year is not itemized against specific activity making any assessment of value for money impossible.

Although a number of partnerships are described in the application as 'new', there is evidence that these are not in fact 'new' but current relationships. For instance, we hold on file documents, programmes and artistic assessments which cover activity presented by the [AMC] during 2010 at St George's Hall, Bristol, Turner Sims Hall, Southampton, and partnership with Poet in the City: all three partnerships are described in the application as 'new'. More to the point, the nature of these partnerships, whether new or established, is not evident in the proposed future programme where venues and partners are, by and large, not listed."

87. This constituted the view of Ms Robson and Ms Sprott on this part of the AMC's application which, in relation to partnerships, said this:

"Partnership means AMC providing expert artistic leadership or meeting clients' specific requirements or creating joint projects (eg. Bath Festivals) generating income for the AMC and developing audiences. The AMC will strengthen the existing partnerships with:

Schools, promoters and venues around the country, especially in areas where such provision has been low MID, hospital Arts, LEAs

Academic institutions such as Goldsmith's College (in which the AMC plays an important part in its AHRC funded research and creative projects)

The British Council, The British Library, National Portrait Gallery, The Royal Albert Hall

Croydon International Music Festival

Specific partnerships are being developed with venues such as St George's Hall in Bristol, Turner Sims in Southampton, promoters such as Gem Arts in Newcastle, Mr B Promotions in Leicester, Asian Arts Agency Bristol, Art Asia Southampton, Arts Club St Ives Cornwall, Poet in the City London

Enhanced staff capacity and provide training to widen the AMC's reach"

88. Miss Richards has argued that the conclusion that the application did not indicate "partnerships beyond existing ones" (see paragraph 69 above), amplified by the statements of Ms Robson and Ms Sprott, reflects an error of fact on the face of the ACE's assessment and/or amounted to a failure to take into account relevant information. She submits that the application identified numerous partnerships which included those referred to in the quotation from the application in paragraph 87 above as well as (in the proposed artistic programme for 2011-2012 and the proposed artistic programme for 2012-15, which were submitted with the application) other partnerships including Alchemy, Dartington's Tagore Festival, Manchester International Festival, Music in Detention, Hospital Arts and the Arts and Humanities Research Council. She also submits that the fact that the AMC had long established partners with whom it had worked for many years and new partners with whom it had only recently begun to work ought to have been well known to the ACE from the annual reviews when funded as an RFO, that it is unclear why the continuation of existing partnerships was not viewed by the ACE as a positive factor (and indeed as evidence of resilience and sustainability) and, finally, that the ACE had failed to appreciate that specific dates, venues and locations could not be identified so far in advance with the kind of events that the AMC organised.
89. I have not found evaluating these arguments easy. As I have said in the context of "financial sustainability", a matter such as this is essentially one of judgment for the decision-maker which the court would be very slow to question. To my mind, if the question was simply whether what the AMC was proposing in its application was substantially a restated commitment to its existing programme, then that is a judgment that the decision-makers were well-placed to make: they had the application and the history of the AMC's activities in the form of the content of the annual reviews available and it would be very difficult for the court to say that the judgment was flawed even if, looked at objectively as an outsider, it seemed a somewhat harsh judgment. That is my reaction to the judgment made. However, and be that as it may, it does seem to me to be a fair point that nowhere, so far as I can judge, is it said by the ACE in its 'Guidance to Applicants' that unless the applicant's proposed programme involved new partnerships, with specific information about dates/venues and so on, it would be unlikely to receive a favourable assessment. Indeed, if one looks at "prompt" letter 'k' under section 1 (see paragraph 37 above), the question is posed on the basis that if the Applicant "is going to work in partnership with other organizations", what are the ramifications? There is no clear guidance that what has been done to date in relation to working in partnerships with other organizations has to be improved upon. It does seem to me that Mr Jasani had some concerns about this general aspect having regard for first question set out in paragraph 28 above. If the "core work" of an organization was, at least to some extent, working with the existing "partners", there was no very obvious hint in the answer he received that it was necessary to show some advance on existing partnership arrangements.
90. As I have said, I do not think I could question the judgment of Ms Robson and Ms Sprott that, by reference to the criteria to which they each referred, the application did not measure up to the ACE's new requirements. However, I think it is distinctly questionable whether it was brought home to the AMC (and perhaps more generally) that it was necessary to demonstrate an engagement in new partnerships with (in the case of music events) evidence of venues and so on for the future. Given the time between the promulgation of the guidelines and the date for the submission of the application, it would probably have been difficult for some organizations to be able to demonstrate such matters in any event unless new partnerships were already in train.
91. Whilst, as I have said, I have not found the evaluation of this aspect of the case easy, my eventual conclusion is that the AMC's application in this regard was not treated fairly. I emphasise that I am not critical of the judgment made by Ms Robson on the basis of the considerations she treated as (and was doubtless instructed were) relevant. I am, however, critical of the fact that what seems to have been an important factor in the evaluation of this goal was not made clear to applicants in the guidance they received. It may be possible to read between the lines of the words used in the guidance, but I do not think it was fair to "mark down" an application intrinsically when the basis of the marking system, for want of a better expression, had not been made clear.
92. There is some support for this general conclusion in what was called the "Head Office national moderation covering report", which reviewed the "first cut area portfolios", when it was recorded in relation to Goal 3 that "generally, there hasn't been a very consistent interpretation of goal 3 and what it means, either in the applications or in the assessments …."
93. I will need to consider the implications of my conclusion in this respect, if there are any, in the context of the other main issues raised, one of which is the alleged failure to deal properly with Goal 4 to which I now turn.
94. I am bound to say that, at first blush, the suggestion that the AMC would make no significant contribution towards Goal 4 (namely, to see that "the arts leadership and workforce are diverse and highly skilled") is very difficult to understand given the intrinsic nature of the organisation and its well-established track record in diversity matters. Miss Richards submitted that the criticism of the AMC's application in this regard in Ms Robson's first witness statement was "mystifying". What Ms Robson said was that "the intentions were poorly evidenced, lacking considerations of practical actions that would be undertaken, with no references to costed options, potential partners and so on." Miss Richards submits that that the diversity of the AMC, both in its leadership and its work, was self-evident.
95. Goal 4 embraced two objectives under the main objective, namely, "building a network of arts leaders who value sharing their knowledge and skills, for the benefit of the arts and civil society" and "creating equal opportunities to enter the arts workforce". What the AMC put in its application under Goal 4 was as follows:

"4. The arts leadership and workforce are diverse and highly skilled.

The AMC is one of the UK's most diverse organisations and has shown leadership both in terms of its management structure and its artistic output, which it will maintain in strength. Board members of the AMC come from a variety of backgrounds and are each successful and well known in their respective fields which include business, broadcasting and the media, international policy making and advocacy in the arts, education, academia, literature and music. The AMC team is highly qualified and experienced. The AMC has been a market leader and a business model that others have followed and emulated.

The AMC has been regularly invited to participate in media discussions, at conferences abroad and in the UK, because it is able to speak from a position of authority knowledge and experience in its area of work and has acquired an international reputation.

The Company has been an important training ground, helping to develop skills in arts administration and a variety of issues relating to diversity. Training is provided to its own staff.

The AMC has always demonstrated diversity in its Board and staff structures, practices its equality and diversity policy and action plan and child protection policy.

As the leading company in the UK promoting music from all over Asia, the AMC has contributed substantially to diversity in the arts by "doing", by advising and through advocacy.

The high quality of its work has been recognised in many ways. For example the AMC won the prestigious HSBC INDO BRITISH AWARD in 2003 for contributing to relations between India and the UK; the Asian Achievers Award from the Asian community in the UK. HRH Prince of Wales and the Duchess of Cornwall have visited the AMC's unique multi media museum and education centre. The current Minister for the Arts, mayors of local councils from surrounding areas, artists and many other dignatories have visited the AMC's Museum of Asian Music. At a recent Q & A meeting at the ICA on the subject of museums Ed Vaizey, Minister for the Arts, said that "the AMC is very much at the heart of our new policy". He also recalled visiting the museum saying that it was "brilliant" and attending the BBC Proms concerts curated by the AMC."

96. Miss Richards pointed to the constitution of the AMC "team" (namely, its Board) as described in the application. I need not spell out the names and backgrounds of the individuals concerned, but it is difficult to see how that team could not be described as diverse. She asked rhetorically also what "costed options" or "practical actions" were necessary to demonstrate this goal. She also drew attention to the Annual Review for 2009/2010 recorded that the AMC "had diversity at the heart of its artistic vision and its audiences reflect diversity of the programme".
97. Those are, to my mind, very strong points. However, if the test to be applied was whether the nature and quality of the "evidence substantiating intentions around these goals" was sufficient, either intrinsically or by comparison with the evidence given by others, then it is easier to understand a judgment along the lines mentioned in Ms Robson's statement if what was wanted by the ACE was evidence that the AMC was looking to create and/or to work on a significant number of new initiatives in this context. Was that requirement sufficiently revealed in the guidance given to applicants?
98. There is no doubt that it was incumbent on an applicant to demonstrate how it proposed to meet the goals set. Mr Davey's letter (see paragraph 23 above) made that clear. Ms Robson's answer to Mr Jasani's first question (see paragraph 28 above), also referred to a clear 'offer' in relation to an applicant's future programme of activities and those who will benefit from it. The guidance itself (see paragraph 34) refers to the need, in the 'Meeting our goals' section of the application form, for the applicant to say "how you propose to help us meet the goals you have selected". So much is clear: a future programme was required which demonstrated how it would contribute to the goal of creating a highly skilled and diverse arts leadership and workforce. What was not said explicitly was how an organisation that already contributed to this goal (which, as I have said, there can be little doubt that the AMC did) was to tailor its application to the new requirements. There was no clear indication that, if what was already being done was being done well, that would not necessarily be sufficient in the new scheme. It is difficult for me to judge what the AMC said in its application, although a straightforward reading of what is recorded in paragraph 95 above would probably lead to the conclusion that it did, as Ms Robson said, refer to its "past track record" with little emphasis on its future plans and how those future plans would contribute to Goal 4.
99. It does seem, from Ms Robson's witness statement, that "more of the same" was not going to be good enough, or if that was what an applicant was going to say, it was necessary to give much greater detail, in the form of practical actions and so on, that would contribute to this goal. Again, if judged against these criteria, I do not think it is possible for Ms Robson's judgment to be criticised. She was a person with active responsibility for diversity issues within the ACE and was able to see, by reference to the applications made by all applicants, whether the way the AMC presented its case was more or less persuasive so far as this criterion was concerned. In her first witness statement she says (in my view, with justification) that she did acknowledge clearly the AMC's contribution to diversity under Goal 1 and draws attention to the first two paragraphs of her full assessment under paragraph 1 down to the words "meet this goal well" (see paragraph 52 above). This articulation of the position reflects the previous Annual Review (see paragraph 96 above). Having acknowledged the contribution already made, she then went on to express her reservations about the future programme. However, it does follow that, whilst there may not have been available at Stage 2 a formal evaluation of how the application met Goal 4, the track record of the AMC in diversity was certainly "in play" to the extent that it was considered relevant by those involved.
100. As I have said, it seems to me that, in terms of the process adopted, the real issue is whether the guidance for applicants was sufficiently clear in spelling out the requirement that future plans (and evidence supporting those plans) had to be demonstrated in the application. Where a previously unfunded organisation was applying under the NPF programme it would, one supposes, have been the natural thing to do to put forward a distinct future programme, addressing it on the basis of concrete proposals, whereas a previously funded organisation (particularly one funded for many years) would understandably point to its track record and, in effect, say that there was, as I have put it earlier, "more of the same" to come.
101. Again, I will not disguise the fact that I have not found this issue an easy one to resolve. The guidance could be said to be less explicit than it ought to have been in an area of obvious significance. On the other hand, the whole process of the NPF programme was new and it must have been anticipated by a previously funded applicant that it would be competing with others who had previously not been funded but who would now seek funding under the new "transparent" scheme. Putting forward a programme with a dynamic, rather than an apparently static, angle on diversity was going to be important. It has to be inferred from the fact that many applicants did become funded under the NPF programme, and a good number were previously funded on an RFO basis, that their future plans so far as diversity were concerned were sufficiently well evidenced to meet the required standard. If that inference is justified, it means that the requirement must have been tolerably clear to most applicants.
102. That is my primary inference and, if it is correct, it cannot be argued that the ACE's process was flawed. The conclusion has to be that the application itself was flawed in the sense that it did not address what it should have addressed.
103. If that inference is not a legitimate one and there should, for example, have been a formal conclusion by Ms Robson at Stage 1 that the AMC's track record in diversity was sufficient to meet Goal 4 to a good standard, the question arises as to whether the lack of that assessment at the Stage 2 part of the process did render the process flawed. A good track record could undoubtedly be taken into account as part of an assessment as to whether an organisation found its way into the NPF programme: see paragraph 81 above.
104. The starting point seems to me to be one of commonsense. Given that the AMC was an RFO of some 20 years standing and had attained a wide measure of recognition both within and outside the ACE at a national level, it would be difficult to believe that the fact that the AMC was likely to lose its funding was not appreciated by those involved in Stage 2 who decided on the "first cut" and that it would in consequence mean that an organisation with an extremely good track record in diversity issues (including diversity of music provision) would no longer be part of the portfolio. If the decision no longer to fund the AMC was made with that consideration in mind, it cannot be said that the decision-maker failed to take into account a relevant consideration. Indeed, in my judgment, the evidence does lead to that conclusion even though the paper audit trail in the staged process undertaken by the ACE is a little sparse.
105. Evidence has been deployed to this effect in response to the AMC's application. First of all, I repeat the conclusion referred to in the final sentence of paragraph 99 above. Second, the evidence of Ms Sprott is of relevance. In her witness statement she said the following:

"In our dealings with the [AMC], historically and through the NPO process, we have been consistently mindful of the [AMC's] BAME-led status and have reviewed and assessed the [AMC] by drawing on the expertise of those in the Arts Council best placed to appreciate the artistic and cultural context, in addition to monitoring other key aspects of the [AMC's] operation. In this case, the [AMC's] Relationship Manager has been London's Diversity lead, Milica Robson, a specialist in diversity and equality policy, and a former Head of Diversity in London; we have also drawn on the expertise and experience of the Senior Officer, Dance and Music in the Arts council's Head Office, a former employee of the Claimant and a specialist in Asian music forms.

To further inform our understanding of the [AMC's] work, under the auspices of the Arts Council's Artistic Assessment programme, we have commissioned a series of artistic reports on events and concerts promoted by the [AMC], from freelance specialist and generalist artistic assessors."

106. She also said this:

"… at every meeting that took place during the Stage 2 moderation process, I made sure that Area and Head Office colleagues and Regional Council members understood the potential recommendation not to fund the [AMC] and the implications from a diversity perspective, and that they did not wish to object to the recommendation on any grounds, including those of diversity."

107. Furthermore, Moira Sinclair, the Executive Director London, Arts Council England, said this in her witness statement:

"I, the senior management team and our Council understood the impact that Asian Music Circuit could have with regards to the diversity of the portfolio in supporting and showcasing talent and in providing a programme that appealed to audiences that were not so well served by public investment in the arts.

However their application was not as strong as others and in balancing the portfolio, we felt we were able to mitigate any negative impact. The decision not to fund Asian Music Circuit cannot be taken as evidence that the Arts Council had insufficient regard for the need for diversity. Alongside the formal Equality Impact Assessment which was presented to and approved by our regional council in March 2012, in the covering papers, we said:

While the London proposal is not to fund Asian Music Circuit, strong applications from Asian Music organisations have been submitted in other regions …."

108. Whilst, as I have said, the audit trail in the contemporaneous documentation at Stage 2 is a little thin on the issue of the potential contribution of the AMC to the diversity goal, it does seem to me clear (and a commonsense conclusion) that the track record of the AMC to diversity issues was in effect recognised and acknowledged, even if merely tacitly, but its potential future contribution in this respect became replaced by the contribution to that goal that other organisations could make.
109. The paper prepared by Moira Sinclair for the meeting of the London regional Council on 16 March 2011, to which she was referring in the extract from her witness statement in paragraph 107 above, said this:

"Whilst some BME-led organisations are not recommended for funding … we believe the inclusion of new entrants … will bring fresh thinking and excellence to the portfolio."

110. The "diversity" of the work of the AMC was also something that figured in the contemporaneous documentation. In a document entitled "Touring moderation" on 16 February, it was recorded that three RFOs (which included the AMC) that provided what was described as "core music provision" were earmarked for disinvestment. It described each one as "created specifically to ensure that great art reached people outside London" and concluded that "we are going to have to find new ways of ensuring that this diversity of music provision is available on the touring circuit." It also recorded that the ACE was disinvesting in a number of organisations "presenting diverse work" of which "the biggest hit is to AMC." The paper says that it is partly offset by proposed new investment in a number of organisations but that "nonetheless a significant amount of investment has been removed from the ecology of this area of work, notwithstanding from an organisation with documented challenges."
111. Again, it is clear from this record that the effect of the decision made in respect of the AMC on the diversity of the music presented generally was clearly understood. It is impossible, therefore, to say that the collective decision-makers were blind to the effects of the decisions being taken and blind to the track record of the AMC in this particular respect.
112. It follows from this appraisal of the circumstances that I have not been persuaded that the lack of a full and formal assessment by Ms Robson of Goal 4 did cause a material deficiency at Stage 2. If she had put forward a full assessment, it would not have been favourable and, for the reasons given above, I do not think that such an assessment, if advanced formally at Stage 2, could have been criticised. However, irrespective of that, for the reasons I have given I am also unpersuaded that those engaged in the Stage 2 process were unaware of the general nature of the contribution that the AMC had made to diversity issues in the past (in other words, its excellent track record in this regard) which, had it been felt relevant, could have been brought into play in advancing its cause at this stage in the process had other aspects of the exercise of balancing the portfolio brought it back into contention. Given that those involved in the decision-making process at the time were aware of this track record, I am unable to see how it could be said, as Miss Richards argues, that a relevant consideration was not considered or, at least, was not available for consideration if other factors had brought the AMC back into the frame for consideration.
113. I will move finally to the last issue that was identified specifically by Moore-Bick LJ, namely, the suggestion that a material consideration in the decision-making so far as the AMC was concerned was the belief by the ACE that the AMC's investment was predominantly in international, rather than British, artists.
114. This suggestion emerged in the Summary Grounds of Defence in these terms as part of the ACE's response to the AMC's case that it had not considered Goal 4 correctly:

"… the [AMC] presents predominantly international artists, very rarely investing in showcasing artists based in England. Had it proposed to invest in creating opportunities for showcasing home-grown diverse artists, and providing opportunities for these people to enter the arts workforce, it would have presented a stronger case in relation to meeting this goal."

115. Miss Richards presented a convincing case that, if this did represent the considered view of the decision-makers, it represented a fundamental factual error or a material misunderstanding of the true facts about the artists encouraged and "showcased" by the AMC. I would have been inclined to accept that case.
116. However, she submitted also, quite correctly in my view, that this perception of the AMC's application was not recorded in any of the contemporaneous documentation disclosed by the ACE and, though partly addressed in somewhat differing and, I am bound to say, unconvincing ways by Ms Sinclair and Ms Sprott, it was not addressed (and thus supported) by Ms Robson at all.
117. I do not find this a very satisfactory part of the ACE's case generally; but it would be necessary for me to conclude that the consideration to which I have referred was a material factor in the decision-making process before I could begin to consider it as a material factual error that operated to invalidate the decision-making process. The evidence simply does not support any such conclusion. Accordingly, I do not consider this argument is one that requires further attention.

Conclusion

118. The net effect of my conclusions is that, with the exception of the assessment that Goal 3 was not met to the extent that it ought to have been (see paragraph 91 above), I have not been persuaded that the other grounds of criticism of the process by which the AMC's application was considered have been made out. The question arises as to whether the one unfair aspect that I have identified is sufficient for the decision to be quashed.
119. Ms McColgan's response to the claim on behalf of the ACE has been a robust defence of its processes. No argument has been advanced that, notwithstanding any deficiency in that process, the outcome would inevitably have been the same. Miss Richards, anticipating such an argument, reminded me in her Skeleton Argument of the Court of Appeal's decision in Pam Smith v North East Derbyshire PCT (see paragraph 45 above) where at paragraph 10 May LJ (with whom Keene LJ) said:

"Probability is not enough. The defendants would have to show that the decision would inevitably have been the same and the court must not unconsciously stray from its proper province of reviewing the propriety of the decision making process into the forbidden territory of evaluating the substantial merits of the decision. Authority for this synthesis may be found in R v Chief Constable of Thames Valley Police ex parte Cotton [1990] IRLR 344 at 352; Simplex G.E. (Holdings) Ltd and another v Secretary of State for the Environment (1989) 57 P & CR 306 at 327; R v Secretary of State for Environment ex parte Brent London Borough Council [1982] 1 QB 593 at 646, and see also Fordham, Judicial Review Handbook (4th Ed) at paragraph 4.5 and Clive Lewis, Judicial Remedies in Public Law (3rd Ed) at paragraph 11-027."

120. To that statement of principle and recitation of earlier authority might be added the more recent statement of the Court of Appeal (in a somewhat different context) in the case of The Queen (on the application of) Sharon Shoesmith v Ofsted & Ors [2011] EWCA Civ 642 at paragraphs 69-74.
121. Every case is fact-specific and that there can be no overriding and all-embracing response to a situation such as this. The court will generally be reluctant to permit an unfair aspect of a decision-making process to go without redress. However, the context here is that of a large team of decision-makers considering the intrinsic merits of various applications for NPF programme funding and comparing those merits with the merits of other applications in an exercise designed ultimately (i) to ensure an appropriate overall mix of institutions across a number of art forms that were to be supported by the ACE and (ii) within an overall fixed budget, reduced from what had hitherto been available by nearly 30%. The one area I have identified as not having been satisfactory is, according to those who were moderating the process (see paragraph 92), one that occurred in a context that was not very consistently applied. I do not for one moment say that that was either acceptable or necessarily excusable. But it is a fact and a fact that has to be seen as one arising within the structure of a new and untested selection process conducted against a very tight timetable (cf. the views of the House of Commons Culture, Media and Sports Committee referred to in paragraph 48 above).
122. I do not believe I stray into forbidden territory by saying that, having seen everything written and said about the AMC's application from the perspective of the ACE, I am quite satisfied that the decision would have been the same even if a more positive assessment of the AMC's future "partnership" arrangements had been made. I make no comment, of course, on whether the judgments made by the ACE were right or wrong, but the view was clearly formed that there were aspects of the AMC's financial structure that were not wholly satisfactory and its general plans for the future were not as well-evidenced as those of other applicants. The view was formed that others in the field could replace, at least to some extent, what would be lost by the lack of continued funding for the AMC. As I have said, it is no part of my function to say whether those judgments were correct or not: the judgments were the province of the ACE. But I do not consider that the rectification of the one area of deficiency in the process that I have identified would have made any difference to the outcome.
123. Not unnaturally, I reach this overall conclusion with regret and it will be a matter of sadness for the AMC and its many distinguished supporters. However, there were inevitably to be those who had previously been funded by the ACE who would lose out under the new dispensation. There will be doubtless many others of the 206 former RFOs that would feel similarly "hard done by". The court is only able to look at the process. The process adopted may not have been wholly perfect, but generally it appears to have achieved what it set out to achieve and I am unable to conclude that, looked at in the round, the AMC's application was treated unfairly such that a different outcome would have arisen if the one deficiency had been ironed out.
124. Accordingly, this application must be dismissed.