My impression is that it's not Liverpool Council who have made the decision. A quick look at the blog shows that arts promotions have been out-sourced to a relatively new organisation of 'arts professionals' called 'The Culture Company'. It may be that their grasp of the historical context is limited; it is often the case that such agencies have neophiliac tendencies that may blind them to the value of traditional cultures that are not perceived as exotic. Without wishing to appear cynical, I'd suggest that you may not have placed sufficient stress in your proposal on the important contribution to the shanty tradition made by sailors of African decent. Presenting the proposal as a multi-cultural event would probably have given it more weight from their point of view.

Their website at http://www.theculturecompany.co.uk/ will give you some idea of what they think of as 'culture'. Watch out for the annoying (though mercifully brief) 'flash' presentation, though.