You can't please all the people, all of the time.

I expected to see John Lydgate's quote on a plaque when I arrived at the headquarters of Arts Council Yorkshire a week ago today.

I was in the privileged position of meeting with Andy Carver, the head of Arts Council Yorkshire at 9am, two hours before arts organisations around the county would hear their funding fate.

It was a meeting all arts professionals in Yorkshire wanted: some to offer a relieved sense of gratitude that their funding had been approved, improved upon or, in some cases, offered, for the very first time.

There were plenty of others who wanted to unleash a tidal wave of vitriol in the direction of the chief executive of ACY; the organisations who were going to see drastic and, in extreme cases, complete cuts to their funding.

It is a wave that has been gathering momentum, previously engulfing Peter Hewitt, the current chief executive of Arts Council England, at a meeting held at the Young Vic in London on January 9. His audience, which he could not have hoped to outdo with his eloquence or delivery, was made up of arts professionals – mainly working in theatre – including Kevin Spacey, Ian McKellen and Sheffield Theatre's former artistic director, Sam West. The two-hour meeting came to a close with a rallying call from West attesting to a vote of no confidence in the Arts Council.

One of the voices heard at the meeting was that of David Bown, the chief executive of Harrogate Theatre.

This week, Bown had the look of a man recovering from shell shock.

ACY had told the theatre on December 12 to expect a reduction in its funding from £409,000 a year, to just £100,000.

The theatre appealed, and last Friday it received the news that ACY had reassessed and decided to up its funding to £150,000.

This slight increase was in recognition of the work Harrogate carries out in rural communities, while the original cut was a result of a general decrease in quality of the work produced. The Arts Council has decided that Harrogate should operate in the same way as theatres in Wakefield and Huddersfield, which is as a receiving house no longer creating its own productions. He also criticised the length of the theatre's Christmas pantomime run.

"I can refute every single one of the comments made by Arts Council Yorkshire," said Bown this week.

"Other theatres run far longer pantomimes than ours and we are in the strongest financial position than we have been for years. Our rural communities work is vital and it is not something that can be done on a budget of £50,000."

Harrogate Theatre is not the only organisation which has received a devastating cut in the newly announced three- year cycle – Sheffield's Compass Theatre will receive no funding whatsoever – but it is perhaps best to concentrate on Harrogate as an example of the national outrage felt at funding cuts.

The argument from the ACY is that last May it announced it intended to put more money into the visual arts and in doing so, challenge the status quo. It also wanted to increase funding to certain organisations, but a finite pot means robbing from Peter to give to Paul.

Carver said: "I am absolutely clear that if we continue to fund the organisations we have always funded, you achieve only stagnation and the arts are about developing, not stagnation."

This is a sentiment to be applauded and something that, despite the cuts, David Bown recognises.

The Harrogate chief revealed this week that he went to ACY with a "proposal of disinvestment". Essentially, Bown realised that his theatre could not match the strengths of the rest of the Yorkshire Six – the region's six producing theatres – and that the "strengths of Harrogate Theatre, lay not in being a full-blown producing house, but composed of a mixture of smaller productions and received productions, along with the vital work of taking important theatrical art out into the rural communities of North Yorkshire".

He even admits that the quality of the work produced by the theatre in the past year has not been of the highest standard.

"I should be able to reserve the right to criticise my own theatre's productions without that being used as ammunition in this situation. I went to the Arts Council to demonstrate that I am not blinded by the fact that productions at my theatre might be open to criticism."

But in acknowledging that the productions haven't been up to scratch over the past year, why such uproar at the funding cut?

It is for this very same reason that there has been outcry across the country. Nationally, the Arts Council has been accused of handing out cuts in an almost arbitrary manner. While on the one hand, it claims to wish to support new writing, it counters that with a funding cut to London's Bush Theatre, recognised as an epicentre of quality new writing in recent years.

Closer to home, it wants to support the delivery of art to rural communities, yet it cuts the funding to Harrogate which does this as part of its raison d'être.

A killer piece of information in Harrogate's arsenal is that the productions for which it has been criticised were co-produced with Pilot Theatre and Oldham Coliseum. Both these organisations received funding increases from Arts Council Yorkshire.

"How can that be the case? How can they cut our funding for a production and increase funding for another organisation involved in the same one?"

The Arts Council knew its funding cuts would not be popular, but it could not have been braced for the amount of bad feeling emanating from the theatre sector. A vote of no confidence is hugely significant from arts organisations to the body that funds them.

Practitioners feel the judgments are made by faceless Arts Council bureaucrats, not people working in the theatre.

"Who's better placed to make these judgments? People working in the sector or people with seemingly limited expertise?" asks Bown, validly.

The apparent discrepancy in thinking is also under heavy criticism outside the theatre. Harrogate MP, Phil Willis, has expressed his outrage at ACY in the Commons. Harrogate's board has been advised by TMA (Theatrical Management Association) that it may have cause for legal action.

"We are still waiting for our file from Arts Council Yorkshire, which will explain exactly what the decision is based on. If it was based on clear, cogent analysis, we would be able to accept or argue against it, but there seems to be a complete lack of that," says Bown.

"The letters came shortly before Christmas. These cuts affect people's livelihoods, their lives and the work we are carrying out."

In the summer, Harrogate Theatre will complete phase two of refurbishments, with its productions for the coming months safe. After that, the future is unclear.

The announcements of the funding cuts is merely Act One of this drama, with much of the story yet to be played out.