Here's the Arts Council statement, courtesy of The Stirrer website:
The National Council of Arts Council England met yesterday (27 January 2009) to consider a request for additional funding for the Public Gallery Ltd and The Public building.
After lengthy consideration of a business plan and independent assessments of the artistic offer - in particular the gallery, which has been the focus of Arts Council funding - a decision was reached that the Arts Council is unable to support the new business plan.
This decision was not reached lightly and in making it, the Arts Council recognises the considerable efforts made by the team at The Public to realise their pioneering and ambitious vision.
Sir Christopher Frayling, Chair of Arts Council England, said: "We are the national development agency for the arts, and investing in ground breaking creative projects that have the potential to give more people access to great art is central to what we do.
"That is why we supported this project and why, at every stage, we have worked with our partners and carefully weighed the level of risk involved against the potential public benefit.
"But the fact is that, although the building is open, the interactive art gallery at the centre of the vision for The Public is not. We have done everything we can but there comes a point where we have to make a difficult judgement - and regretfully, that moment is now."
The absence of a firm opening date for the gallery and the considerable increase in annual revenue funding required by the integrated business plan was central in the Arts Council's decision not to fund this plan.
Arts Council England is, however, offering Sandwell Metropolitan Borough Council (SMBC), who own and operate the building, an award of up to £3m to allow them to develop a revised integrated artistic and business plan and to bring the building fully into public use. The Arts Council's intention is that the significant investment made by all the funders will benefit the residents of Sandwell.
We will be talking to SMBC about how best the Arts Council can support them in developing this plan