ACE defends Lottery grant to commercial festival

Arts Council England (ACE) has cleared itself of ‘misuse of funds’ following an internal investigation of a series of allegations by Richard Ingrams, former Editor of The Oldie and Private Eye. The allegations related to a £15k Grants for the Arts (G4A) Lottery award made to The Oldie – a private limited company that generated a £300k profit last year – to support the 2014 Soho Literary Festival. Ingrams, who founded The Oldie in 1992, resigned his position with the magazine in June 2014, saying that he believed the G4A application submitted by The Oldie’s publisher, James Pembroke, misrepresented the company’s position. Ingrams subsequently raised the issue formally with ACE, where an investigation was launched.

A report of the investigation, published last month, reveals that The Oldie’s application was submitted in the name of ‘Soho Literary Festival’, which was described as “a company limited by guarantee”, but failed to identify Oldie Publications Ltd as an alternative name or other legal name of the applicant. The investigation revealed that there is no such company as ‘Soho Literary Festival’. Rather, the Festival was established as a commercial activity by Oldie Publications Ltd in 2011, managed from within the organisation for the purpose of promoting The Oldie magazine, and had been run on that basis ever since. Pembroke has defended the omission, and in a statement to Private Eye last year, said: “I have not made any misleading statements to the Arts Council. The Oldie is mentioned throughout the application; it is clear that the festival is part of Oldie Publications Ltd.”

Under ACE funding rules, commercial companies are barred from receiving Lottery awards unless the activity for which funding is being applied is a “self-contained arts project” that “has a clear benefit to the public”. But despite seeing evidence of the role the Festival was playing in the company’s business activities – which included regular updates on the gross profitability of the Festival at Oldie Publications’ board meetings – ACE found “the existence of a separate bank account and separate ledger accounts within Oldie Publications Ltd” sufficient to define the Festival as a ‘self-contained arts project’.

The purpose for the £15k grant was described on the application form as being to pay for “another member of staff to help with the marketing of the festival”, but no mention was made of the fact that The Oldie had been deploying one of its own staff for this work since 2012. Pembroke later told Ingrams that “no new appointment was actually being sought”. After the grant was approved, Pembroke spoke to ACE, who agreed that the company could instead use it to pay a proportion of the existing marketing executive’s salary, improve its website and increase the role of its PR company.

The investigation has nonetheless “concluded that there was no misuse of Arts Council funds”. Specifically it concurs that the 2014 Soho Literary Festival was a ‘self-contained arts project’; that the costs that ACE was being asked to fund were eligible for funding; and that although the application “did not identify Oldie Publications Ltd as an alternative name or other legal name of the applicant and claimed the applicant was a company limited by guarantee… there was not an attempt to mislead Arts Council England”. It also identifies “a number of areas where ACE’s published guidance was considered not sufficiently clear”.

Ingrams described ACE’s response to his complaint as “bizarre”. He told AP: “It is absurd that this profit-making activity can be awarded public funding when there are real ‘not-for-profit’ literary festivals elsewhere in the country that desperately need the money. It makes no sense.”

The Oldie investigation has progressed in parallel with the investigation of a complaint related to another G4A application, made by Rideout (Creative Arts for Rehabilitation). Their £40k grant bid was turned down in May last year, but the company subsequently pursued a complaint relating to what it perceived to be a series of failings in the way ACE had processed its application. Among the list of 12 issues raised was an allegation that ACE failed to take into account supplementary information which “had been attached specifically to address one of the questions on which the application scored poorly”. The company believed this had contributed directly to its rejection.

Dissatisfied with the outcome of ACE’s two-stage internal review of the issues, Rideout pursued their complaint through to a third stage – the Lottery Forum’s Independent Complaint Review Service. The review found that ACE did apply its published criteria and internal guidance to Rideout’s application, but despite conducting two reviews at stages 1 and 2 of its complaints procedure, failed to pick up some of its own errors and omissions. It concurred with Rideout that there was “no evidence that the temporary assessor read the supporting document”, but although this and other errors “weakened the assessment of the application, and undermined Rideout’s confidence in Arts Council England’s decision to reject it”, it did not believe that this affected the final outcome.

Rideout’s Chris Johnston told AP: “Ours wasn’t an appeal, it was a complaint about process. And it was one we only made because [ACE] refused to meet with us. Not that we expected or were arguing for a reversal of the decision, rather it was a strategic exercise to bring to the surface more clarity about the application process and in particular the Arts Council’s apparent inability to conduct this fairly and competently.”

Rideout is tonight hosting a free event to enable West Midlands arts organisations to discuss their experiences of making funding applications to ACE, at which they will share further details of their experience of the complaints process.