Memorandum submitted by the Joint Lottery
(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
(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
(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 byfor exampleincreasing
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 applicantsand will continue to do sowith
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 boughtmeaning that less money is available
to support worthwhile projects.
1. HOW THE
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 NESTAthe National
Endowment for Science, Technology and the Artsmeans 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
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, Belfastproviding
a neutral venue for use by all community groupsto 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 opportunitiesparticularly
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
(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 Fundwith £8.65
millionand 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
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
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
(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 publicattracting 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 trainingand
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 people45 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
(i) better co-ordination and co-operation
(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
(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 documentssuch as Sport England's Investing
for our sporting future and the Heritage Lottery Fund's Strategic
Plan 1999-2002were 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
(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
(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 pastsuch 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 areassuch as the city of Liverpoolwhich
have long been in need of additional investment.
EXAMPLES OF LOTTERY-FUNDED PROJECTS HELPING
TO REGENERATE LIVERPOOL
||Project ||Lottery award
|Arts Council of England||New national centre for FACT (Foundation for Art and Creative Technology)
|Heritage Lottery Fund||Lower Duke Street and Henry Street
Townscape Heritage Initiative: conservation and regeneration of run-down Georgian area
|National Lottery Charities Board||Summer activity club for 130 children with moderate to severe disabilities
|New Opportunities Fund||Extension of after-school hours and lifelong learning services
|Sport England||South Liverpool swimming pool
TOTAL AMOUNTS GRANTED TO PROJECTS IN LIVERPOOL
||Total project costs
|Arts Council of England||114
|Heritage Lottery Fund*||29
|National Lottery Charities Board||283
|New Opportunities Fund||7
* 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 townsand 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 reportA 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 millionand
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
"The accepted view is that the Lottery distributors ask
for much more detail than most other funders offering grants of
a similar sizealthough 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
(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-workingas 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
4. THE CONTINUING
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
"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
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
(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 fivefoldreceiving 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 positionincluding
Sport England, for example, in respect of its inner-city community
sports programmes, which are in equal need of sustained funding.
5. IMPROVING THE
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
The organisations' roles are as follows:
"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
"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".
"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 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 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
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 publishedalbeit
without explanatory notesin 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