This needs to be seen in a couple of wider contexts - one of which is the way in which a Pressure-Apparatus / Bureaucracy of Fear (Lite) has been applied to a number of publically-funded bodies from the BBC downwards. Its another way that False Austerity can be used to apply political pressure to funded infrastructure / bodies. The other ... heh ... well, let's not go there today. Still, bullies can always count on the self-serving cowardice of the Management Class. Love how here, as in other instances, the LibDumbs try to / get to play 'Good Cop' against Tories 'Nasty Cop' thuggery; in this instance, it's good ol' 'you can trust me' Simon Hughes trying to position himself as The Reasonable Liberal. That whole "things would be soooo much more worse if we weren't sharing government with them" narrative is wearing very thin, unlike Danny Alexander's south-sagging triple chin. If you sit at the table and eat with the pigs, then that makes you a pig too.
"Potentially the new clause could not only prevent anyone connected with an NPO (National Portfolio Organisation) from speaking publicly about ACE decisions or policies, but it could also give the funding body the power to withdraw from arts activities that it initially agrees to fund, but which it subsequently judges to be too politically or socially sensitive."