Select Committee on Culture, Media and Sport Minutes of Evidence

Memorandum submitted by the Joint Lottery Distributors


(i)  Since its creation in 1994, the National Lottery has made a significant contribution to improving the country's quality of life. Billions of pounds have been made available to the original "good causes", which had previously suffered from decades of inadequate investment.

(ii)  In addition, the more recent creation of the New Opportunities Fund is ensuring that health, education and environment initiatives are now benefiting from substantial Lottery funding.

  (iii)  All over the country, money from the Lottery has enabled many much-needed projects, which would not otherwise have been funded, to go ahead. Such projects have helped to revitalise communities, regenerate previously deprived areas, and enable individuals to realise their potential.

  (iv)  While the distributors have made a significant difference to the United Kingdom, they have yet to solve, after barely five years of receiving Lottery proceeds, all the needs arising from the long-term under-investment which lay behind the selection of the "good causes".

  (v)  Each distributor is continuing to receive a large number of high quality applications for Lottery funding: accordingly, the current "good causes" need to continue receiving Lottery proceeds to ensure that these projects can go ahead.

  (vi)  The DCMS's Quality, Efficiency and Standards team (QUEST) recently reviewed the distributors' record and reported that they have continued to improve the ways in which they handle Lottery applications and distribute Lottery funds.

  (vii)  QUEST confirmed that the distributors have risen to the challenges presented by the 1997 People's Lottery White Paper and the National Lottery Act 1998 by—for example—increasing the number of small awards, achieving a better balance between capital and revenue funding, and simplifying their applications procedures. However, the distributors are acutely aware of the need to ensure that simplified procedures do not result in public funds being put at risk.

  (viii)  The distributors have actively consulted potential applicants—and will continue to do so—with a view to further refining and improving their grant schemes.

  (ix)  All distributors are concerned that, after a period of higher-than-expected sales, fewer Lottery tickets are now being bought—meaning that less money is available to support worthwhile projects.


  1.1  Since 1994, almost 65,000 projects have been supported directly by the National Lottery distributors, which have provided them with funding of nearly £8 billion. Indeed, the £200 million given to NESTA—the National Endowment for Science, Technology and the Arts—means that the £8 billion threshold has comfortably been passed.

  1.2  By 5 September, over 58,000 projects had received Lottery funding from the six distributors jointly responsible for this submissiona the Arts Council of England; the Heritage Lottery Fund; the National Lottery Charities Board; the New Opportunities Fundb, Sport England; and UK Sportc. The Lottery funding of these projects amounted to more than £7.5 billion.

  1.3  However, the total cost of these projects is considerably higher than this £7.5 billion figure suggests, because Lottery funding often helps to "lever" in money from other sources. For instance, in the case of Sport England's community projects, Lottery funding of approximately £1.1 billion has helped to attract almost £1 billion from other sources. Similarly, funding of £1.5 billion from the Heritage Lottery Fund has helped to attract £1.7 billion from other sources, while the comparable figures for the Arts Council are just over £1 billion and £1.4 billion, respectively.

  1.4  The variety of projects supported by the Lottery is every bit as impressive as their total number. They range from:

    (i)  the Heritage Lottery Fund's provision of £322,100 for the restoration and refurbishment of an historic building for the Indian Community Centre, Belfast—providing a neutral venue for use by all community groups—to the New Opportunities Fund's provision of £2.98 million to deliver literacy, numeracy, sports, drama and other arts activities aimed at raising the self-motivation and esteem of young people attending 180 primary and secondary schools across Glasgow;

    (ii)  Sport England's provision of £112 million for facilities (principally in the relatively deprived Beswick and Clayton area) for the 2002 Commonwealth Games in Manchester to the National Lottery Charities Board's provision of £68,386 for the Lincolnshire Rural Activities Centre, which is improving the locality's social, leisure and recreational opportunities—particularly for those with physical and/or learning disabilities;

    (iii)  the Arts Council of England's award of £53,000 to the Murton Colliery Band (County Durham) to the sports distributors' investment of over £60 million, since 1997, in the World Class Performance Programme, to help our top sportsmen and women in their quest for medals at the Olympic and Paralympic Games and in world, European and other major sporting championships; and

    (iv)  the National Lottery Charities Board's provision of £898,774 to the Community Channel Project, giving free-to-air digital television that will service and support the voluntary and community sector, to the Arts Council of England's grant of £41 million for Salford's Lowry Centre (which was also funded by the Heritage Lottery Fund—with £8.65 million—and the Millennium Commission).

  1.5  Indeed, every part of the country has benefited from Lottery funding from one or more of the distributors responsible for this report.


  2.1  Each of the distributors seeks to minimise its own costsd and maximise the cost-effectiveness of its Lottery awards.

  2.2  Not only do they endeavour, wherever appropriate, to ensure that Lottery funding is complemented by money from other sources, as previously indicated, but they monitor their awards to (a) prevent any problems from being replicated and (b) ensure that good practice is spread as widely as possible.

  2.3  The cost-effectiveness of distributors' awards can be demonstrated both generically and on a case-by-case basis.

  2.4  For example, Sport England's Lottery-funded projects have (on average) doubled both the level of facility usage and the amount of sports coaching which each facility provides.

  2.5  Specific examples of successful Lottery-funded projects include:

    (i)  Duxford American Air Museum. A grant of £6.6 million from the Heritage Lottery Fund enabled the Imperial War Museum to bring together its entire collection of American aircraft and display them (in environmentally controlled conditions) in a specially commissioned and highly acclaimed new building. This has enabled the Museum to increase both its number of visitors (from 370,000 to over 400,000 per year) and the amount of time that they spend on site (helping, in the process, to create 15 additional jobs);

    (ii)  Walsall Art Gallery received one of the largest out-of-London awards (£15.75 million) from the Arts Council of England, and is already being hailed as one of the most exciting new art galleries to have opened in the United Kingdom in the last 20 years. It has been a huge success with the public—attracting over 165,750 visitors since opening in February this year. This is a much higher figure than was projected for the whole of its first year of operation (140,000);

    (iii)  Youth Clubs UK received a grant of £1.4 million, from the National Lottery Charities Board, to establish a network of trainers to improve the quality of work carried out in over 1,000 youth organisations (ultimately benefiting up to 14,000 young people, by providing them with workskills training—and leading to increased participation in education, vocational training and employment); and

    (iv)  the Crewkerne Aqua Centre, in Somerset, has been an outstanding success in meeting widespread community needs in a town which previously had no indoor swimming facilities. In its first year of operation, following a £1.138 million Lottery award from Sport England, it was used by around 80,000 people—45 per cent more than originally estimated.


  3.1  In the early years of its existence, there was some press and public concern about the operation of the Lottery and a number of the awards that were being made.

  3.2  Shortly after the 1997 General Election, the Government addressed such concerns in its White Paper The People's Lottery (Cm 3709). This recognised that Lottery-funded projects were already "bringing real benefits up and down the land", but expressed Ministers' belief that there should be:

    (i)  better co-ordination and co-operation between distributors;

    (ii)  an injection of Lottery money into projects designed to improve Britain's health, education and environment;

    (iii)  increased emphasis on economic, cultural and social regeneration;

    (iv)  a greater focus on revenue, rather than capital projects;

    (v)  a higher number of small awards;

    (vi)  better distribution of Lottery funding, both socially and geographically; and

    (vii)  an improved applications process.

  3.3  These aims were subsequently reflected in the National Lottery Act 1998, which created the New Opportunities Fund and obliged each distributor to produce a long-term strategy explaining how it would meet the new legislation's requirements. These strategy documents—such as Sport England's Investing for our sporting future and the Heritage Lottery Fund's Strategic Plan 1999-2002—were duly published in 1999.

  3.4  Since then, each distributor has been working hard to achieve the Act's objectives. For example, the new emphasis on prioritising economically deprived areas has been reflected by:

    (i)  Sport England's creation of "Sports Action Zones", which it can pro-actively identify and assist (using its new powers of solicitation);

    (ii)  the National Lottery Charities Board's identification of (a) geographic priority areas (including, in the East Midlands, deprived wards within Rural Development Areas) and (b) priority communities (such as, in the East of England, people with disabilities, socially excluded young people, and rough sleepers);

    (iii)  the Arts Council of England's allocation of £957 million (72 per cent of the money that it has awarded) to projects within England's 99 most deprived local authorities;

    (iv)  the targeting of deprived areas by most New Opportunities Fund initiatives. For instance, 50 per cent of the funding for its Out of School Hours Learning Programme is concentrated on schools in the most disadvantaged localities (as measured by the level of free school meals); and

    (v)  the decisions taken by the Heritage Lottery Fund which, in England, has allocated over £740 million (62 per cent of its Lottery grants) to projects within the 100 most deprived local authority areas.

  3.5  In addition, the Heritage Lottery Fund has three programmes, with an approximate annual budget of £60 million, which are specifically targeted at areas of social and economic deprivation. They are: the Urban Parks Programme; the Townscape Heritage Initiative; and the Joint Scheme for Places of Worship (in partnership with English Heritage).

  3.6  Similarly, the Arts Council's new Capital Programme is prioritising:

    (i)  ways of reaching new audiences and participants, to increase access to the arts;

    (ii)  the promotion of cultural diversity, by supporting more capital projects from African, Asian, Caribbean and Chinese arts organisations; and

    (iii)  improving the balance of artistic provision, by targeting areas where capital arts provision has been poor in the past—such as in many areas of economic deprivation.

  3.7  More generally, the promotion of social inclusion is one of the key themes contained in distributors' Policy Directions from the DCMS.

  3.8  The distributors' determination to help foster economic regeneration can be illustrated by their commitment to particular areas—such as the city of Liverpool—which have long been in need of additional investment.

Table One


Distributor Project
Lottery award
Total cost
Arts Council of EnglandNew national centre for FACT (Foundation for Art and Creative Technology)
Heritage Lottery FundLower Duke Street and Henry Street
Townscape Heritage Initiative: conservation and regeneration of run-down Georgian area
National Lottery Charities BoardSummer activity club for 130 children with moderate to severe disabilities
New Opportunities FundExtension of after-school hours and lifelong learning services
Sport EnglandSouth Liverpool swimming pool

Table Two


Lottery grants
Total project costs
Arts Council of England
Heritage Lottery Fund*
National Lottery Charities Board
New Opportunities Fund
Sport England

  * Includes grants approved in principle.

  3.9  In addition, particular efforts (including "Brass for Barnsley", from the NLCB), have also been made to help former coalfield areas, which often face a number of acute social and economic difficulties (as explained in the DCMS-commissioned report Improving Lottery Funding Access and Delivery in the British Coalfields, produced by the Centre for Regional Economic and Social Research at Sheffield Hallam University).

  3.10  More recently, distributors have been encouraged to assist declining coastal towns—and the Heritage Lottery Fund has helped to support a number of regeneration projects, including pier and harbour repairs and the refurbishment of parks and historic areas, with funding of £176.6 million. However, there are obvious limits to the distributors' ability to prioritise a growing number of social groups and geographical areas without compromising their ability to support high quality projects elsewhere.

  3.11  Another report—A Review of Lottery Application Processes (by the DCMS's Quality, Efficiency and Standards Team, QUEST)—has shown how the distributors have responded to the other aims of the 1997 White Paper and the 1998 Act. For example, it revealed:

    (i)  a shift from capital to revenue funding. In its words: "in the first full year of the Lottery's operation (1995-96), 97 per cent of the total amount of money distributed was spent on capital projects. By the year ending March 2000, the proportion of funds spent on capital projects had dropped to 42 per cent";

    (ii)  more smaller awards. As QUEST reported: "the average size of grant has dropped and the number of awards made has risen . . . the total number of awards made has risen from 5,019 in the Lottery's first full year to 17,347 [and] the average size of a Lottery grant today is £40,000, down from a peak of more than £250,000 in 1995-96"; and

    (iii)  improved applications procedures. QUEST concluded: "the distributors have made efforts to adapt their application processes to meet different types of demand; to make their application processes as fair as possible; and to increase the capacity of under-served communities and poorly resourced organisations to apply. By listening to applicants and to each other and, in some cases, by commissioning their own research, they have learned more about the strengths and weaknesses of their processes and, in most cases, have taken steps to refine them".

  3.12  Individual distributors have also invited other third-party bodies to assess their performance and recommend ways in which their practices could be improved. In the case of the National Lottery Charities Board, for example, these have included the National Council for Voluntary Organisations and the Directory of Social Change. In addition, distributors liaise closely with applicants (and prospective applicants), and commission research to identify their strengths and weaknesses.

  3.13  Furthermore, the distributors have sought to improve their co-operation and co-ordination. The most obvious example of joint working has been provided by the Awards for All scheme. Independent assessments (by the Scottish Community Development Centre and DTZ Pieda) have confirmed that Awards for All is meeting its objectives, in terms of making small grants easily and quickly accessible to community groups. It has a good geographical spread (but has yet to be extended to Wales and Northern Ireland), secures high overall satisfaction ratings, and is succeeding in attracting first-time Lottery applicants.

  3.14  Since its launch, in 1998, Awards for All has resulted in 18,535 community groups receiving a total of £55 million—and DTZ Pieda estimated that Awards for All grants would benefit over seven million people in England in 1999-2000.

  3.15  While the distributors are keen for Lottery funding to be made available as simply and widely as possible, they are acutely conscious that public money must be properly safeguarded.

  3.16  The vast majority of applicants share this view, and believe that the distributors' requirements are reasonable. Indeed, research commissioned by QUEST (from Arts Business Ltd) found that 82 per cent of applicants "felt that the information they were asked to supply in their application was appropriate"—and QUEST concluded:

    "The accepted view is that the Lottery distributors ask for much more detail than most other funders offering grants of a similar size—although most applicants do recognise the additional demands for accountability that Lottery funding requires".

  3.17  In addition to Awards for All, the distributors' joint working (demonstrated by this submission) has also resulted in:

    (i)  a number of joint working groups bringing together (amongst others) the distributors' chief executives, operations directors and communications directors;

    (ii)  different distributors' production of joint regional information leaflets, and the arrangement of joint briefing sessions for potential Lottery applicants; and

    (iii)  the development of common policies (such as the joint Arts Council and Heritage Lottery Fund policy on arts buildings, and joint-distributor guidance on the multi-purpose use of village and community halls).

  3.18  Finally, the successful delivery of some policies is dependent on co-funding and/or joint-working—as in the cases of, to provide two examples, (a) School Sport Co-ordinators, Sport England and the New Opportunities Fund and (b) Out of School Hours Childcare, the New Opportunities Fund and the National Lottery Charities Board.


  4.1  As previously indicated, Lottery funding is being used to help tackle problems created by decades of under-investment. Much has been achieved but, with the Lottery still being a relatively recent creation, many of the effects of such serious long-term under-investment have yet to be addressed. For example:

    (i)  while Lottery proceeds have enabled Sport England to improve many sports facilities, it estimates that the cost of renovating the country's existing facilities base amounts to £3-4 billion (equivalent to around 17 years of its current annual Lottery income)—with £1.2 billion required for swimming pools alone; and

    (ii)  when conducting its inquiry into the Heritage Lottery Fund, the Select Committee heard the museums and galleries sector estimate that it requires capital spending of around £600 million. A more recent estimate, based on a Museums and Galleries Commission/Heritage Lottery Fund-funded needs assessment, put the figure at £800 million, while similar needs have been established in other heritage sectors.

  4.2  Indeed, the very creation of the Lottery has helped to increase awareness of the under-investment which it was designed to address. As the Committee commented in its report on The Heritage Lottery Fund:

    "The creation of a heritage "good cause" as one of the beneficiaries of the National Lottery has provided a welcome, additional dimension to public provision for the heritage. That provision has gone some way to remedy legacies of under-funding and incoherence in public support for the heritage . . . The Heritage Lottery Fund has achieved much in its early years. In some ways its task is becoming more difficult as the full extent of needs becomes more apparent and demand increases" (emphasis added).

  4.3  Today, as at every stage since the Lottery's creation, the distributors are receiving far more applications for Lottery funding than they can possibly support. For example:

    (i)  between October 1995 and July 2000, the National Lottery Charities Board could provide only £1 for every £6 requested;

    (ii)  demand for money from the Heritage Lottery Fund continues to be high, with £4 being requested for every £1 that is available;

    (iii)  since 1995, the Arts Council of England has been able to provide only £1 for every £3 requested; and

    (iv)  more specifically, the New Opportunities Fund's green spaces and sustainable communities programme has been over-subscribed almost fivefold—receiving bids worth £608 million for a programme under which only £125 million is available.

  4.4  As indicated in the Key Points, all the distributors are concerned about the decline in Lottery ticket sales, which means that less money is available to support worthwhile projects.

  4.5  For example, UK Sport faces the prospect of having to reduce award levels from 1 April next year, to ensure that its commitments, over the four year period leading to the Athens Olympics in 2004, don't exceed its likely income. In Olympic year, it would want to increase awards to its priority sports to support final preparation costs. This will, inevitably, have an impact on preparations for the 2002 Commonwealth Games in Manchester. Other distributors find themselves in a similar position—including Sport England, for example, in respect of its inner-city community sports programmes, which are in equal need of sustained funding.


  5.1  The distributors are determined to continue improving the operation of the National Lottery. For example, most have already responded to the recommendations contained in the QUEST report "A Review of Lottery Application Processes".

  5.2  In addition, the distributors are working closely together on the creation of common web sites, as well as links between their individual sites, to further improve the availability of information to prospective applicants. Furthermore, they are co-operating on the development of a joint distributor telephone hotline to provide advice and guidance to potential Lottery applicants.

  5.3  The devolution of decision-making is continuing apace, with the approval or rejection of Lottery grant applications increasingly taking place at a more local level. For example:

    (i)  to enable decisions about grant awards to be taken closer to the communities that would benefit from them, the Heritage Lottery Fund has established a separate decision-making committee for each of the four constituent parts of the United Kingdom, to take decisions on grant awards up to £1 million and to advise on strategic priorities within that country;

    (ii)  in addition, the Heritage Lottery Fund has set indicative financial allocations for each of the nine English regions and is in the process of establishing regional committees which will be operational from April 2001; and

    (iii)  the Arts Council of England has instituted an ambitious programme of regionalisation and delegation in respect of its Lottery awards. For instance, the 10 Regional Arts Boards are now able to grant capital funding of up to £100,000 and project funding of up to £30,000 to arts organisations in their areas. In addition, £30 million (over three years) has been delegated to the National Foundation for Youth Music, to support music opportunities for young people.

  5.4  More generally, the distributors will continue to examine ways of making the Lottery application process as simple, accessible and responsive as possible (as they have done through Awards for All)—not least by paying close attention to QUEST reports and conducting their own research among both successful and unsuccessful applicants for Lottery funds.

  5.5  However, they remain acutely aware of the expectations and requirements of the National Audit Office, the Public Accounts Committee and other public bodies, and are determined to ensure that public money is spent in a prudent, effective and accountable way. For example, the Arts Council of England, Sport England and the National Lottery Charities Board have acted on the recommendations contained in reports from the NAO after their appearances in front of the PAC.

  5.6  Different distributors have made suggestions, to the DCMS, about how the operation of the Lottery could be improved. These have covered their Policy and Financial Directions, as well as the workings of the National Lottery Distribution Fund.

  5.7  In addition, the distributors have responded positively to the recommendations contained in previous reports from the Culture, Media and Sport Select Committee. For example:

    (i)  Sport England recently provided the Committee with a summary of the action it has taken in response to its members' recommendation, contained in the report "The Future of Professional Rugby", that certain conditions should be attached to Lottery grants made to professional rugby clubs; and

    (ii)  the Heritage Lottery Fund is providing the Committee with a paper summarising the measures it has taken as a direct result of the recommendations published by the Committee after it conducted its inquiry into the Fund in 1998.


  This submission was jointly prepared and agreed by: the Arts Council of England; the Heritage Lottery Fund; the National Lottery Charities Board; the New Opportunities Fund; Sport England; and UK Sport.

  The organisations' roles are as follows:

    Arts Council of England

    "The Arts Council of England's mission is to develop, sustain and promote the arts. Its aim is to promote access, education and excellence in the arts through partnership. Its priorities are: to bring the arts to a wider audience; to encourage individuality and experimentation; to nurture creativity across generations; to embrace the diversity of our culture; and to explore new forms of expression".

    Heritage Lottery Fund

    "Heritage Lottery funding throughout the United Kingdom seeks to improve quality of life by `safeguarding and enhancing the heritage of buildings, objects and the environment, whether man-made or natural; assisting people to appreciate and enjoy their heritage; and allowing them to hand it on in good heart to future generations'".

    National Lottery Charities Board

    "The National Lottery Charities Board exists to meet the needs of those at greatest disadvantage in society. It aims, through its grant-making to charitable, philanthropic and benevolent organisations, to meet the needs of disadvantaged people and to improve their quality of life".

    New Opportunities Fund

    "The New Opportunities Fund was established in July 1998 as a new Lottery distributor to make grants to health, education and environment projects under initiatives specified by the Government. By working in partnership with other organisations, the Fund intends to support projects that improve people's quality of life and address the needs of those who are at most disadvantage in society".

    Sport England

    "Sport England aims to lead the development of sport in England by influencing and serving the public, private and voluntary sectors. Its aims are: more people involved in sport; more places to play sport; and more medals through higher standards of performance in sport".

    UK Sport

    "UK Sport awards Lottery funding, through the World Class Performance Programme, to governing bodies of sport and some 730 able-bodied and disability athletes in order to improve their chances of winning medals at the Olympics and Paralympics, and in world, European and other major championships. It also awards Lottery Funding, through its World Class Events Programme, to enable applicants to bid for and stage major sporting events in the United Kingdom".


  a  The other Lottery distributors are the Millennium Commission and the arts and sports councils of Scotland, Wales and Northern Ireland.

  b  The New Opportunities Fund was established in July 1998 and opened its first grant-making programme in January 1999.

  c  UK Sport became a Lottery distributor on 1 July 1999.

  d  Figures showing the distributors' administrative costs in relation to their Lottery income in 1998-9 (the most recent year for which information is available) were published—albeit without explanatory notes—in Hansard, on 12 July 2000 (Col. 482).

  e  Unlike the other Lottery distributors, the National Lottery Charities Board does not require "match" funding (but is perfectly prepared to consider it). Indeed, the majority of grant applications to the NLCB are for 100 per cent of the project costs.

October 2000

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