Almost half of arts bodies that have applied for grants from Arts Council England will not receive them, the council has said.
It revealed that 1,340 institutions had applied for funds under the new application process that was introduced in November and which closed on Monday.
The council funds 850 organisations, but has already said it will reduce that number by at least 100 in the wake of the government’s comprehensive spending review, which slashed its budget by almost 30 per cent.
The new programme for distributing money was introduced to allow some “fresh air” into its funding model, said Dame Liz Forgan, who chairs the council.
“[The previous model] was deemed to be a closed shop, and we thought that was wrong,” she told the House of Commons culture, media and sport committee on Tuesday.
The new application process was simplified and made more transparent – but the high number of applicants means that almost half of them will be disappointed when the council announces its funding decision at the end of March.
“We know that demand for funding will outstrip supply, but we are confident that at the end of this process we will have a portfolio of excellent organisations,” said Alan Davey, chief executive of the council.
The committee was holding the final hearing of its inquiry into the funding of the arts and heritage. Its report is expected at the beginning of March.
Asked how many arts bodies would be forced to close if they did not receive grants from the council, Mr Davey said: “Evidence from the past shows that withdrawal of funding does not always mean death – organisations can regroup or shrink back to core activities”.
Dame Liz said she expected some of the decisions to cause controversy. “You cannot take that sum of money out of the system without a hoo-ha. We are prepared for it,” she said.
The council has to cut its own administrative costs by 50 per cent over the next four years, despite implementing a new funding model and taking over the activities of the Museums, Libraries and Archives Council.
Tom Watson, Labour MP for West Bromwich East, wondered if the council had been set up to fail.
“I think you are carrying the can for the bonfire of the quangos,” he told Dame Liz, who said the council would do “the best job that we can”.