Irish language rap trio Kneecap has won its legal challenge over a decision by former business secretary Kemi Badenoch to refuse them a £14,250 funding award after the UK Government conceded it was “unlawful”.

The outspoken band had launched the legal action claiming the decision to refuse the grant discriminated against them on grounds of nationality and political opinion.

During a brief hearing at Belfast High Court on Friday, Mr Justice Scoffield said he was glad that the two sides in the case had reached agreement.

Reading an agreed statement, barrister for Kneecap Ronan Lavery KC said: “It is declared that the decision is unlawful, procedurally unfair, took into account immaterial considerations and failed to take into account relevant factors.”

It was agreed that the sum of £14,250 would be paid by the Government to the group.

The west Belfast hip-hop artists had applied for a grant allocated to support UK-registered artists in global markets.

Their application to the Music Export Growth Scheme had been approved by the British Phonographic Industry (BPI).

However, the grant scheme is overseen by the Department for Business and Trade, and the Department for Culture, Media and Sport at Westminster, and then UK Business Secretary Ms Badenoch, now the Conservative Party leader, decided to refuse the funding in February.

At the time a government spokesperson said it fully supported freedom of speech, but that it was “hardly surprising” that it did not want to hand out UK taxpayers’ money to those opposed to the United Kingdom.

Kneecap, formed in 2017 by three friends who perform under the stage names Mo Chara, Moglai Bap and DJ Provai, openly court controversy with their provocative lyrics and merchandise.

The group had said its views in favour of Irish unity, and particularly a provocative poster for their 2019 “Farewell to the Union” tour, had angered the Conservative Party.

Following the agreement, the band said it would donate the grant to two youth organisations in Belfast – one from a nationalist and one from a unionist area.

A statement from the band said: “For us, this action was never about £14,250; it could have been 50 pence.

“The motivation was equality.

“This was an attack on artistic culture, an attack on the Good Friday Agreement itself and an attack on Kneecap and our way of expressing ourselves.”

The statement added: “The former secretary of state Kemi Badenoch and her department acted unlawfully; this is now a fact.

“They don’t like that we oppose British rule, that we don’t believe that England serves anyone in Ireland and the working classes on both sides of the community deserve better; deserve funding, deserve appropriate mental health services, deserve to celebrate music and art and deserve the freedom to express our culture.

“They broke their own laws in trying to silence Kneecap.”

They added: “They have tried to silence us and they have failed.”

The band’s lawyer, Darragh Mackin from Phoenix Law, said: “A court has exonerated our clients and declared this decision unlawful in every sense of the word.

“Today is not only a victory for Kneecap, but a victory for the arts, for culture, for the freedom of expression.

“Kneecap continue to lead by example in practising what they preach.”

A statement from the Department for Business and Trade said: “This Government’s priority is to try and reduce costs and help protect the taxpayer from further expense, so we will not continue to contest Kneecap’s challenge as we do not believe it in the public interest.

“The music industry is the heart and soul of our economy and are committed to helping acts continue to thrive and break into new markets, including through our MEGS programme – which has helped around 400 artists tour the globe.”