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ARTS COUNCIL FOR ENGLAND

Case No. C.852/97

Mishandling of an application for a grant

2.1 Mrs X complained that the Arts Council of England (ACE) had been wrong to reject her group's application for funding on the basis that a reference provided by her local authority had been signed by someone other than the referee she had nominated. She complained also that ACE had not followed their complaints procedure when dealing with her case.

2.2 My investigation began in November 1997 once the Commissioner had obtained comments from the Acting Secretary General of ACE after the referral of the complaint by the Member. I have not put into this report every detail investigated by the Commissioner's staff; but I am satisfied that no matter of significance has been overlooked. An appendix lists the initials used in this report with their meanings.

Statutory and administrative background

2.3 ACE's Arts for Everyone (A4E) scheme is funded by proceeds from the National Lottery and is designed to offer grants both to existing arts organisations and to voluntary and amateur groups which ACE have not been able to fund before. As part of A4E, ACE launched an experimental scheme, aimed specifically at grass-roots projects, called A4E Express (A4EE). ACE's booklet about the scheme said it had been designed to get smaller-scale initiatives started fast with ‘minimum fuss, minimum bureaucracy [and] maximum opportunity'. Under A4EE grants of £500 to £5,000 could be made to youth and voluntary groups and small professional arts organisations. One condition of the scheme was that the applicants should also have attracted support from one or more partners or sponsors covering at least 10% of the cost of the project. If a project met at least one of the scheme's five aims a group would be eligible to apply. Those aims were: encouraging and developing participation in arts activity; getting more young people actively involved in arts and cultural activities; supporting new work and helping it develop its audience; building people's creative potential through training or professional development; and encouraging new audiences to experience high quality arts activity.

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2.4 If a group considered it was eligible it could send an application form to ACE. Included in the application was a requirement for a group to provide the names of two referees. The A4EE booklet said that those referees should be ‘respected people in a relevant field, who know about your project. One must be from a formally constituted organisation, such as a local council or theatre. The other should be someone who knows your group – for example a youth worker or local councillor'. If an application was considered eligible ACE contacted the referees and then reviewed the applications based on the information in the forms and the references received. During the trial period the opening date for applications was 6 January 1997. There were two deadlines by which applications had to be made, 31 January 1997 and 30 April 1997. If applications were refused a group could not reapply during the pilot scheme. There were 12,222 applications to the A4EE scheme and more than 5,300 awards were made. Approximately 13% of the applications in round two were rejected because of problems with references. There is no comparable data for round one.

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2.5 ACE's complaints procedures say that complaints about the way an application for funding has been handled should be raised initially with the director of the relevant department. If applicants remain dissatisfied ACE send them a copy of their complainants procedures telling them that they can then address their complaint to the Deputy Secretary-General. If, following that, the applicants continue to be dissatisfied ACE allows those alleging deficient procedures or failures to follow procedures to make an appeal to the Secretary-General who, within four weeks of receiving such a request, will consider the matters raised with relevant senior ACE staff. Their conclusions and recommendations are then submitted to the Council of ACE, whose decision is final and is sent to the appellant within seven days of the Council meeting concerned. For the A4EE scheme it became clear to ACE after the first round of applications that it would be necessary to have a first level assessment of the cases of dissatisfied applicants. Therefore, before the close of round two applications in April 1997, ACE appointed what they described as ‘an independent external assessor'. ACE told the Commissioner's staff during the investigation that as the assessor had been required to be conversant with the assessment procedures for the scheme, they had decided that it would be more cost-effective to use a specially designated ACE officer as the independent assessor. That person worked in the A4E unit but had not been directly involved with the original eligibility or recommendation stages of the assessment. The standard ACE procedure for replying to general correspondence is that letters should be acknowledged within one week and a full reply should be sent within four weeks. For those letters where it is clear that a full reply will take longer than four weeks an acknowledgement should be sent immediately.

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Jurisdiction

2.6 The Commissioner is empowered to investigate administrative actions taken by or on behalf of those government departments and other public bodies, such as ACE, listed under Schedule 2 to the Parliamentary Commissioner Act 1967. Under section 12(3) of the same Act the Commissioner cannot question the merits of a discretionary decision taken without maladministration by a body within his jurisdiction.

Report of the ACE-commissioned evaluation of the A4EE scheme

2.7 On 26 June 1997 ACE commissioned a company to carry out an evaluation of the A4EE scheme. ACE received the report of the evaluation in October 1997. The report recommended that A4EE should continue but made several suggestions for improvement. It found that the adoption of a production line approach to dealing with applications had the disadvantage of inflexibility and that applicants found the main weaknesses to be ‘poor information, technical rejections, inflexibility and no appeal system'. The research found that both Regional Arts Boards (RABs) and local authorities were most critical of the use of technicalities in deciding applications, especially as the majority of reasons for rejection were technical rather than substantive. Many local authorities thought the rejection criteria were inappropriate, inflexibly handled and insensitively communicated. The evaluators accepted that technical criteria had been used because ACE were concerned about ‘fairness and equity' and had wanted ‘to make decisions objectively rather than subjectively' but they said that ACE could be criticised for not explaining the technical conditions to applicants. As a result the A4EE pilot programme had not dispelled the image of ACE as being bureaucratic. One of the technicalities on which applications had been rejected was if a reference had been sent from someone other than a nominated referee. That was a matter of internal policy of ACE and had been introduced to avoid fraud. The research found that RABs thought there were good reasons why references were sometimes signed by people other than the named referee, for instance where a senior officer signed in a local authority. The RABs pointed out that the A4EE application form had not explained what was expected of referees and they said that refusals because of problems with referees were causing bad feeling locally. The evaluators concluded that referees had not been given sufficient guidance about what was expected of them, at what time and with what liability. The system needed to be sensitive to institutional differences whereby local authorities and other organisations sometimes directed correspondence through senior officers. In short, the referee process needed to be made clearer and handled more flexibly.

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Investigation

2.8 On 28 January 1997 Mrs X, as secretary to the group applying for a grant (the group) submitted an application to ACE for funding of £5,000 from the A4EE scheme. The application form asked for the names of two referees each of whom ‘should be respected people in a relevant field who know about your project. One must be from a formally constituted organisation, such as a local council or theatre. The other should be someone who knows your group – for example a youth worker or district councillor – but who will not benefit directly from the grant'. Mrs X gave the name of an art teacher and a leisure services officer (LSO) at her local authority. ACE wrote to those referees on 4 March asking for references that would form the basis for the assessment of the application and would be instrumental in assisting ACE to make a decision about whether or not to fund the group. The referees were told that they were under an obligation to use due care when compiling references to ensure that they were based on accurate information. Nothing in the covering letter or reference form said that the reference for the local authority could not be signed by anyone other than the person named in the application form. On 14 March the Chief Planning and Leisure Services Officer (CPLSO) of that authority sent a completed reference to ACE which strongly recommended funding for the group. A letter enclosed with the reference confirmed that the local authority had agreed to pay a grant of £500 to support the project (paragraph 2.3) which they believed covered their arts policies in a ‘well-thought out way' and had therefore gained the local authority's ‘financial and professional' support. On 20 March the LSO wrote to Mrs X saying that the authority would award the group £500 if their A4EE application was successful.

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2.9 The Acting Secretary-General of ACE (then the Deputy Secretary-General) wrote to Mrs X on 9 April saying that ACE had decided not to approve a grant of National Lottery funding for her group ‘because the reference received [from the CPLSO] was not from the nominated referee [the LSO]'. As the scheme was a pilot Mrs X would not be eligible to apply again before the second deadline at the end of April (paragraph 2.4). On 18 April the CPLSO wrote to the Deputy Secretary-General saying that it was common practice for a relevant Chief Officer to sign important letters or documents. The LSO had worked in detail on the project and had drafted the reference for the CPLSO's signature. He believed that the authority's support for the group was the relevant factor, not the person who signed the reference and he added that he was surprised by ACE's apparent narrow interpretation of their rules. He hoped they would reconsider. Mrs X wrote to ACE's A4E unit on 19 April also asking ACE to review their decision. She said the group's project could only go ahead with an A4E grant. She headed her letter ‘Appeal in connection with grant refusal'. In reply the A4E unit said on 25 April that referees had a legal responsibility when writing references and ACE expected the nominated person to sign the reference. The practice of the local authority had not been explained to ACE when the reference had been submitted. More than 4,700 applications had been received and ACE had had to deal with them consistently. They could not review Mrs X's case again as they had been strict in other similar cases. (ACE later told the Commissioner's staff that they had decided not to review the case because it had already been reviewed and ACE had decided that to apply the rules consistently changes to the individuals named as referees would not be accepted, except where a written application for the change was provided and deemed valid. ACE had decided not to treat Mrs X's letter as a formal request for an appeal because they considered it to be a request according to the complaints procedure to re-consider the decision not to fund the project, rather than a request for an appeal.)

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2.10 In the meantime, however, in reply to a letter of 17 April from Mrs X to her local RAB the Deputy Secretary-General of ACE, who was not then aware of Mrs X's letter of 19 April, said on 24 April that ACE had appointed an ‘independent external assessor' (paragraph 2.5) who would review the issues raised by Mrs X's letter. On receipt of the letter of 25 April Mrs X wrote to her local RAB again saying that she was very disappointed and felt duped because there was a disparity between the optimistic tone of A4E's invitation to apply which was encouraging and the tone of the letter of refusal which was legalistic. She wondered whether, if the CPLSO had explained at the time he had returned the form that it was the local authority's practice to have senior officers sign references, that would have altered the legality of the reference.

2.11 On 8 May Mrs X wrote and told the Member that her group had been refused a grant on grounds which seemed to contradict the advertised aims and objectives of the A4E scheme. In addition because the application had been rejected by ACE at the final stage the group were debarred from resubmitting an application within six months and also had to miss the 30 April deadline. On 22 May she wrote to the then Secretary-General of ACE saying that she did not know what more her group could do to satisfy ACE of the legality of their referee, nor could she see that anything stood in the way of the application being reconsidered. She asked for confirmation that the application had been rejected solely because of the problem with the referee and that the error had been discovered after the application had been considered by the Council. The Member wrote to the then Secretary-General on 12 June saying that it seemed to him that ACE had been particularly narrow minded in applying their guidelines about referees in this case. He asked for the application to be reconsidered. On 20 June the Chief Executive of Mrs X's local authority wrote to ACE saying that the treatment by ACE of the application from Mrs X's group had not been satisfactory and that there had been no reply to previous letters from the local authority on that matter. He believed that a ‘very worthwhile project' which would apparently otherwise have received funding had been rejected for invalid reasons. He added that in contradiction to the A4EE booklet ACE's reason for rejection had been bureaucratic. He asked for reconsideration of the application. On 24 June Mrs X telephoned ACE to say that she had sent in a request for a review of the application on 20 May but had heard nothing. On an unrecorded date in June the assessor chosen by ACE to consider the case concluded that as the referee had been nominated by the applicant it had been the nominated referee's responsibility to complete and sign the application form and the referee questionnaire. Also on 24 June the Acting Secretary-General wrote and told Mrs X that the independent assessor had carefully considered the case but the Council were unable to reconsider the previous decision to reject the application. He said that it had been a condition of the eligibility procedure for the A4E scheme that referee responses were to be from the referees nominated by the applicants, and whose names and signature appeared on the application form. The requirement for the nominated referee to sign and complete both the application form and the questionnaire ensured that the referee knew about the applicant's proposed project and the group. He concluded by saying that ACE were not prepared to consider any more correspondence on the matter.

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2.12 On 29 June Mrs X wrote and told the Member that neither of the points in her letter of 22 May to ACE had been answered. She believed that ACE's latest letter contravened their complaints procedure (paragraph 2.5). ACE replied to the Member on 4 July in terms of the Acting Secretary-General's letter of 24 June. They said that referees as nominated by an applicant were a vital part of the assessment process in the A4EE scheme. Without their contribution towards the assessment of the viability of both the group and the project, ACE were unable to make recommendations. They wrote also to the Chief Executive of Mrs X's local authority apologising that they had not provided the type of service he had expected. They enclosed a copy of the letter to the Member. On 21 July the Member referred Mrs X's complaint to the Commissioner.

2.13 On 24 July the National Audit Office (NAO) wrote to the Acting Secretary-General expressing concern at the number of unsuccessful A4EE applicants that had approached NAO complaining about the application form for the scheme and the process of vetting applications which some members of staff of ACE had described, incorrectly, as having been approved by NAO. NAO said that the ‘questionable operation' of the scheme would have to be included in an audit of ACE. In reply on 27 August the Acting Secretary-General told NAO that of the more than 12,000 applications for A4EE, more than 5,000 awards had been made. A small minority of the unsuccessful applicants had complained or appealed against the decision. Complaints had focused on administrative issues such as problems with referees. He said that ‘a more iterative process could probably have massaged an unsuccessful application up to an acceptable standard' but if such action had been taken for one applicant it should have been done for all. The time and expense involved would have offered poor value for money and have been administratively impractical. Instead ACE had treated all applicants the same, assessing strictly according to the published criteria the information provided on the form and the receipt of adequate references within the allotted time-scale. In the meantime, on 13 August the Department for Culture, Media and Sport (DCMS) wrote to the Acting Secretary-General saying that a number of applicants had drawn DCMS's attention to the A4EE scheme. On the basis of that correspondence administrative issues had been raised. It appeared that ACE had not anticipated the level of demand and had not been able to handle the applications in the way they had intended. DCMS said that the scheme's guidelines had also apparently been changed so that incomplete or wrongly completed applications had been deemed ineligible without giving applicants the opportunity to re-submit them. DCMS asked ACE to consider how cases refused for reasons of process rather than merit might be reviewed. The Acting Secretary-General replied on 20 August saying that a substantive reply would be sent after he had held a meeting with senior staff of the A4E unit and ACE's lawyers.

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2.14 In an internal minute on 11 September a member of ACE staff said that in the second round of A4EE they had had a standard form of words for circumstances when the referee form had not been signed by the nominated referee which said: ‘where an organisation has alerted the A4E unit within the 14 day timescale given for referee replies, that in the instance of internal local authority procedures, the signature on the reference will be different from that on the application form, our officers have been able to accept such a reference'. Without that information an application would be refused. The following day ACE referred their draft reply to DCMS's letter of 13 August to their lawyers for advice. After receiving that advice on 15 September the Acting Secretary-General replied to DCMS saying that the guidelines for the scheme had not changed during the scheme. The main reason for applications not succeeding had been because of problems with references. ACE had decided not to pursue information or references that had not been submitted with A4EE applications because of time and financial constraints. They believed that it had been ACE's duty to treat all applications in the same way so as not to advantage some over others. ACE's initial evaluation of the scheme had shown that many rejected applicants had perceived it as bureaucratic and unfair but ACE believed that the approach they had taken had been perfectly proper. On 17 September ACE asked their lawyers whether the fact that a senior officer in the local authority had signed the reference for Mrs X's group and had accompanied it with a letter confirming that the authority would contribute £500 to the project affected ACE's ruling about requiring same signatures. They asked also whether that suggested that the local authority had known about the project. Turning to Mrs X's concerns that ACE had not dealt with her complaint in accordance with their procedures, they admitted that, to an extent, that was true. They said that they had introduced a review system which was not described in the published procedure which provided a safeguard against mistakes. In addition they mentioned Mrs X's letter of 19 April which had been headed ‘Appeal' which had not triggered their formal appeal procedure. The legal advice in reply said that as the requirement for a referee was stated in the application form the local authority should have told ACE why the application was signed by a different person from the person who signed the reference form.

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2.15 Following the Commissioner's acceptance of Mrs X's complaint for investigation the Acting Secretary-General wrote to the Commissioner's staff on 19 September saying that he had reviewed the file on Mrs X's group's application and that the decision made had been in accordance with the rules of the scheme. It had been complicated by the local authority's practice of having correspondence signed by the head of department but ACE had not been told of that at the time. As they were dealing with applications as quickly as possible their decisions had had to be made on the basis of the information available at the time. The case had followed ACE's complaints and appeals procedure. As that procedure allowed for a further appeal at which the case could be considered by senior officers and ACE members in the light of all the information available he had therefore arranged for Mrs X's case to be considered for appeal and he promised to tell the Commissioner's staff the outcome of that appeal within six weeks. ACE wrote also to Mrs X telling her that her group's application would be considered for an appeal. On 10 October an internal ACE minute recommended that the appeal should not be sustained because ‘the inconsistency between the signatories on the two documents [was] not compatible with normal practice and the reference as signed by the senior member of the local authority does not show personal knowledge of the applicant or the project, only that they are known to the authority'. On 15 October ACE confirmed that recommendation to reject the appeal and the following day they wrote and told Mrs X of their decision. However, the Commissioner's staff were not told of that decision and only learnt of it when they contacted ACE on 3 November after having waited the six weeks.

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Findings
 
2.16   A decision by ACE about whether or not to grant funds to a particular organisation is a discretionary matter the merits of which the Commissioner cannot question unless it is taken with maladministration (paragraph 2.6). My investigation has concentrated, therefore, on the way that decision was taken, and in particular on the reasons why ACE decided that Mrs X’s group were not eligible for a A4EE grant. I have seen no evidence that ACE considered the merits of the application. They rejected it solely on the grounds that the CPLSO of Mrs X’s local authority had signed the reference when the name of the LSO had been given as a referee on the application form. ACE have justified their decision by saying that it had been a condition of the A4EE scheme that the nominated referee should sign both the application form and the reference. They would have been able to accept the reference only if the CPLSO had told ACE why he and not the LSO had signed it. I have found nothing in either the application form or the letter to referees that explains that condition. It seems to me that the local authority were justified in believing that they had followed the conditions of the scheme correctly. The A4EE booklet and the application form implied that of the references one should be personal and the other from an organisation ‘such as a local council’ (paragraph 2.4). There was nothing to suggest that such a reference had to be made by a specific member of a relevant organisation. I consider it reasonable for the CPLSO, as the senior officer, to have believed that it was appropriate for him to sign the reference on behalf of the local authority. ACE could have had no doubt that the local authority approved the application because the reference was accompanied by a letter confirming a grant of £500 to the group from the authority. It seems to me unnecessarily bureaucratic, in a way that went against the aims of the scheme (paragraph 2.3), and unnecessarily officious of ACE to have rejected the application from Mrs X’s group on those grounds. I note the similar findings of the evaluation report of the scheme (paragraph 2.7) and the other concerns raised by both NAO and DCMS after they had been contacted by unsuccessful applicants (paragraph 2.13). While I recognise the time and financial constraints on ACE in dealing with applications for the A4EE scheme and I accept their objective of dealing with all applications consistently so as to be fair to all, I cannot but conclude that such rigid adherence to unpublished criteria of their own making created more inequalities between1 applicants than it sought to prevent. In such circumstances I concluded that the decision had been taken with maladministration. I put it to the Acting Secretary-General that ACE should reconsider the application from Mrs X’s group and any others that had been rejected on similar grounds. In reply he said that the pilot nature of the A4EE scheme had meant that ACE had had no yardstick by which to estimate the volume of applications likely to be received. The scheme had been devised and launched as quickly as possible after the enabling legislation had been passed. As a result the whole process had taken place over a very short timescale and, in retrospect, he said he acknowledged that ACE had not sufficiently considered the full implications of assessing applications before the guidelines had been published. In designing the application form to be as accessible as possible, he said he believed that the eligibility criteria had probably been less explicit than might have been advisable. Those guidelines had not been changed during the pilot scheme, however. Turning to the circumstances of Mrs X’s complaint he accepted that ACE had operated inflexibly, as if trapped by their own procedures. As the signature on the relevant reference had been that of the nominated referee’s senior officer, employed by the local authority which was also providing financial support to the project, a less bureaucratic approach would have been appropriate. As a result ACE would write to Mrs X’s group seeking their confirmation that they still wanted funding for the same activity as originally proposed, asking what the timetable was, and whether the budget and partnership funding sources remained the same. He said that on receipt of a satisfactory response, as long as the group’s plans continued to meet the A4EE criteria, ACE would issue a formal letter offering an award. ACE would also examine their records to identify and reconsider any other applications that had been rejected on similar grounds and in similar circumstances to the case of Mrs X’s group.

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2.17   My investigation has highlighted other shortcomings in ACE’s procedure for dealing with those who were dissatisfied with the outcome of their applications. On 24 April 1997 Mrs X was told that her case would be reviewed by an ‘independent external assessor’ (paragraphs 2.5 and 2.10). That assessor was in fact a member of staff of the A4E unit, although she had not been involved in Mrs X’s case before. The choice of such an assessor is a matter for ACE but it was disingenuous of them to describe her as either independent or external. I criticise ACE for misleading Mrs X in that way. That letter of 24 April contradicted a letter the following day from another member of ACE’s staff which said that Mrs X’s case could not be reviewed again. I note that ACE have explained that by saying that neither section of the office was aware that the other was replying to Mrs X at the same time. However, that cannot excuse the fact that as well as contradicting the letter of 24 April the letter the following day from the A4E unit failed to give Mrs X accurate information about how to pursue her complaint. That letter was in reply to Mrs X’s letter of 19 April in which she had asked specifically to have her case reviewed and she had headed the letter ‘Appeal in connection with grant refusal’ (paragraph 2.9). Without asking Mrs X, ACE decided that her letter had not been a formal request for an appeal. Even if they were correct, Mrs X had been entitled to have the assessor look at her case and, if she remained dissatisfied after that, she had been entitled to use the complaints procedure (paragraph 2.5). The A4E unit’s failure, not only to tell Mrs X of those options, but by refusing to give further consideration to her complaint to go totally against those procedures, again merits my criticism. Mrs X should not have had to wait for her complaint to be referred to the Commissioner before ACE allowed a formal appeal of her case.
 
2.18   Mrs X’s case also shows that ACE failed to follow their procedures for dealing with correspondence (paragraph 2.5). The CPLSO wrote to ACE on 18 April 1997. There is no evidence of any acknowledgement or reply to that letter until after the Chief Executive of the local authority wrote to ACE on 20 June. I criticise that failing. In addition, after the Commissioner had accepted Mrs X’s complaint and the Acting Secretary-General had agreed to permit an appeal, ACE promised to tell the Commissioner’s staff the outcome of the appeal within six weeks. After the six weeks had passed one of the Commissioner’s staff had to contact ACE before being told that Mrs X’s appeal had been rejected nearly three weeks previously. In response the Acting Secretary-General said that he accepted the criticism of ACE’s failure to follow procedures for dealing with complaints and answering correspondence. He added that, while there had been no intention to deceive Mrs X, he accepted that use of the term ‘independent external assessor’ could have misled anyone who was not a member of the A4E unit or of ACE’s staff. However, the assessor had been both independent of and external to the initial assessment and original process of the application.

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Conclusion and remedy
 
2.19   I consider the Acting Secretary-General’s acceptance of the criticism of the failings I have identified, his agreement to offer an award to Mrs X’s group if the terms of their application have not changed and they still meet the A4EE criteria, and his agreement to reconsider other applications that were rejected on similar grounds and in similar circumstances, to be a satisfactory outcome to a wholly justified complaint.
 
19 March 1998

Summary

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Last updated: 26 April 2006