Select Committee on Culture, Media and Sport Minutes of Evidence

Examination of Witnesses (Questions 379 - 399)



  Chairman: Good morning. Thank you very much indeed for coming to see us as we proceed on this inquiry into the National Lottery. Whether or not questions are addressed to you individually, if any one of you believes that she or he has an answer they would like to give to any of the questions then within our time limits please do not hesitate to respond. I will ask Mr Fearn to ask the first question.

Mr Fearn

  379. Are you satisfied with the way Camelot are promoting the good causes?
  (Ms Case) We see in a sense a distinction between our interests, which are those of getting the maximum return for the good causes and the day to day operations of Camelot. We clearly want the return to the good causes to be as high as possible and part of Camelot's promotion for the Lottery game feeds into that. We have all in our turn helped Camelot in the sense of giving them evidence of what the money we are spending has done which they have then used as part of their advertising campaigns. I do not think we have collectively or individually a specific view about how well Camelot has done as an operator.

  380. When you say you advise Camelot what you have done so that they can use it, do you all do that?
  (Mr Hornsby) Yes.

  381. Has the delay and uncertainty over the next promoter done anything to affect you in any way, shape or form, or is it affecting you?
  (Mr Hewitt) The principal concern here would be in relation to any hiatus that might occur. Whilst it is essentially a matter for the National Lottery Commission, we have obviously considered this and the truth is that whilst all the Lottery distributors are fully committed in terms of the resources that they have there are variations in the balances that we hold. The Arts Council balance is probably the lowest of the four before you today. We have therefore given some careful consideration to the difficulties that might occur were there to be a hiatus. Our feeling is that it would be seriously problematic. Obviously, the longer it went on the more the difficulty that would accrue, but it would vary greatly among distributors. It would be most acutely felt by the Arts Council and once it got beyond weeks then it would become a very major concern for ourselves and increasingly for the other distributors.

  382. When you said it would be a major concern to you if it went over a few weeks, in what way?
  (Mr Hewitt) The Arts Council's balance is something in the region of £250 million. I should add, however, that that is all committed. We are not talking about money which is still for commitment. We are fully committed, as indeed are the other distributors. Once those balances start being eaten into in a significant way, then obviously that would have a major impact on our capacity to keep the flow of decisions going in terms of the demands being made on us at the present time, and it would undoubtedly have a significant effect on our operation.

  383. Does that mean that you entirely rely on the Lottery to keep things rolling? What is the contingency?
  (Mr Hewitt) There is a degree of contingency in that we do hold balances and all of us hold balances of varying degrees. It ranges from £250 million in our case to something in the region of £900 million at the top end, so there is degree of flexibility.

  384. But that would take more than a few weeks?
  (Mr Hewitt) It is the point at which forward commitment has to be considered alongside resources available over a longer period of time. One has to take into account the impact of commitments being made now over a longer period of time. It is quite a sophisticated analysis that we need to do at any one time to ensure that we are not committing beyond a certain point.

  385. When you talk to the National Lottery Commission on issues of the new licences that have been issued, is it ongoing about what may happen?
  (Mr Casey) No. The discussion with the Commission is strictly from Government. The points that Peter has mentioned we will express to DCMS and obviously that is translated on to the Commission, so the relationship is an indirect one with the National Lottery Commission.
  (Mr Hornsby) Our concern essentially is to get the most robust forecasts of future income from DCMS so we can manage our cash and manage our forward commitments, and it is up to DCMS to make representations about their forecasts of the likely income from the commercial operator and it is important to us how robust those forecasts are.

  386. How often does that happen, that you meet with DCMS?
  (Mr Hornsby) We are given six monthly forecasts by DCMS but the most recent forecast, which is due, is a little late so we are waiting for it rather anxiously.

  387. But that does not cause a blip of any kind, does it, that the five weeks may cause with the Lottery?
  (Mr Hornsby) No. What Peter Hewitt was saying was that a hiatus in cash flow would certainly cause us alarm for the reasons he has mentioned. A slight delay in getting the forecast does not have an immediate impact but we do need forecasts if we are going to get the mix of existing payments and forward future commitments done as accurately and as responsibly as possible.

Mrs Organ

  388. Do you think that the work of the New Opportunities Fund complements the work of yourselves as the original distributors? How do you see that you interface with the new good cause?
  (Mr Casey) Perhaps I could give two examples of this. One of the issues that the New Opportunities Fund is charged with is on issues relating to education and health. We would argue strongly that sport and physical activity is also about education and health, so therefore there is a synergy between our work and the New Opportunities Fund. Therefore we have a joint programme with the New Opportunities Fund, and indeed with the Arts Council, which is for the provision of facilities for the community but also for youngsters, so a programme which covers all three, helping the education and health of young people. Another area which we are charged with is sport in the natural environment, as is the New Opportunities Fund which has responsibility for environmental improvements. Again the synergy there is with a programme called the Green Spaces Initiative which will look at the provision of new pitches and open spaces and improved facilities again for youngsters in inner cities and rural areas. The specific objectives of the two organisations are different. There is a very close relationship with the fact that we can use sport to achieve health and education, and health and education can encourage physical activity particularly among young people.

  389. What about heritage? The third item is about the physical environment which is what the New Opportunities Fund is charged with looking at and yet is not heritage as important?
  (Ms Case) I think the two are complementary. Because we are a heritage organisation we can only look at certain aspects of the natural environment. It is shown up perhaps most strongly in our urban parks programme where the research we have done about needs assessment in urban parks shows enormous need which we can only be part of meeting because only some of those parks are, if you like, heritage assets, historic parks. The needs that we are meeting in making those parks fit for use today as well as in preserving heritage are just as acute I think in many other urban parks which do not in our terms meet our heritage classifications and they are the sorts of things which could fall to the New Opportunities Fund.
  (Mr Hornsby) Could I add that we have funded a considerable number of out of school clubs in our early days. NOF now have a quite specific programme on that. We have co-operated closely with them on that. We do in fact deliver that programme, though the decisions and the money are from NOF. We have looked at some areas where there is a degree of overlap and we issue joint guidance because of course a significant amount of NOF's funds go to the voluntary sector. We also fund the voluntary sector. On the whole I think our activities are complementary but, as I say, we did produce a joint leaflet so that charities who are applying will know which one to go to.

  390. It seems to me from your answer though that you are almost saying that if it was not created you were developing in that way anyway. Do you think that the New Opportunities Fund was set up because the public, when they are thinking about good causes from the Lottery, have made it quite clear that they would like money to go into health and education and they are not too interested about arts funding and old buildings being restored; it is all a bit peripheral and it is chattering classes stuff anyway, so there is a sort of political move to say, "Let us have a new good cause and you guys have now got to tailor and complement into that"?
  (Mr Hewitt) If you take the arts, we did some research into the public's view of arts support last year. Rather surprisingly, those statistics were extremely good. We found that 78 per cent of the public were entirely content with public support for the arts, whether through Lottery or from grant-in-aid. There were also 82 per cent who applauded the fact that the arts supported arts and education and indeed 95 per cent of the public said that they wanted more arts for their kids in school and through education and youth services. It is a mistake to underestimate the degree of support there is for the arts, particularly where the public is looking at the interests of young people, at education and the aspirations for their children and young people.
  (Ms Case) The research which English Heritage have done which underlies their launch this morning of their review of the historic environment shows very much the same sort of public support for the heritage in terms of public funding for it and particularly its role in education and for young people, so the evidence is mixed.
  (Mr Hornsby) I would not like to attempt to outshine my colleagues in this Committee but some of the evidence before this Committee equally shows a fair amount, in fact a very considerable amount, of public support for the work that charities do. It comes in the appendix to one of the academics who gave evidence to you and it is clear from the evidence given to this Committee by the ACF that there is a very considerable amount of popular interest and popular support for the large amount of work which charities do. I do not think any of us would argue that we were in such marginalised chattering class areas that you had to bring on new troops. I think most of us feel that there is quite a solid constituency for the work that we do.

  391. My next question is more directed at you, Mr Hornsby, than at the other members before us this morning. I would like to talk about medical research because we have talked about the public wanting to have their Lottery proceeds possibly going into health and education and there has been work done where the public thought that about £12 out of every £100 raised for the good causes went to medical research, going to cancer charities and those sorts of areas, whereas in fact the figure is more like 5p in every pound. Do you think that there is a complete mismatch between the conception of where money is going into charities and where it actually is going? People think that it is going into medical research, cancer charities, but in fact it is going to (albeit very worthy) the Silver Band of Liphook?
  (Mr Hornsby) Your first point, if I may say so, is absolutely accurate. What research and tracking has been done by MORI and others show that the public very considerably overestimate the amount of the proceeds that go to the good causes, which actually go to charities or, as a sub-set of that, which actually go to charities doing medical research. In our own case we must have made grants of about £30 million to very specialised medical research very much linked with patient concern. The sort of charities we fund tend to be those which do work in conjunction with universities but are very much patient centred. I think your first point is right, that there is a popular perception of the amount that goes to this which is much higher than the reality. There are of course significant amounts of money going into medical research and the Wellcome Trust is one of the biggest and most generous of the trust makers, but that of course is a totally separate grant making trust.

  392. Lastly in this area, are you concerned that as time goes on and we tweak around with what the distributing boards are doing or you work more in synergy with the New Opportunities Fund, you are going to be providing services and sectors that really should be dependent on Exchequer funding, not on Lottery proceeds?
  (Mr Casey) I think it is certainly something we do need to bear in mind. The concept of trying to make sure that this money is additional to Exchequer funding is still an important principle. Particularly in funding local authority facilities, the sports centres and swimming pools, as time goes on it does become more difficult to see whether or not Lottery funding has a causal relationship with the decrease in spending on leisure and recreation because indeed the pressure is on local authorities. Other pressures may actually cause that. It would be fair to say that it is more difficult to make that judgment but the principle of additionality is still one which we think is important.
  (Mr Hewitt) From our point of view I would agree with Derek. It is quite difficult to do the analysis in terms of whether there is any substitution of local government support for the arts. What is clear however is that if one takes the five years from 1998 to 2003 there is no evidence whatsoever (indeed the contrary is the case) that Exchequer support for the arts, which will have grown from £190 million to £330 million over that five year period during which our Lottery proceeds have also been very sizeable, is subject to substitution in terms of the Arts Council. I do agree, however, that there is more analysis that needs to be done in terms of public expenditure in local government.
  (Ms Case) If you are looking forward the position that we all find ourselves in is, and this is something the Select Committee itself picked up when we gave evidence about the task that we were doing, that the needs which have emerged in the heritage field are still far and away beyond those which either the Government or local government could conceivably be expected to meet, so in that sense to the extent we are meeting those needs we are doing something which is additional to what the Government or local government would do.
  (Mr Hornsby) Again in our case my Board is extremely concerned that our funds should be in addition and not in substitution. In practice of course there are always slightly grey areas that become involved. In fact, only one per cent of our rejects are on grounds that the bid was for something which breached our additionality rules so we attach great importance to them but the number of bids that we get that transgress, as I say, is remarkably small.


  393. Could I, before I call Mr Maxton, follow up on this theme? Ever since the National Heritage Department was formed in 1992 we have had Secretaries of State both from that Department and from the Culture, Media and Sport Department coming to us and affirming in the strongest terms the additionality principle which we have been discussing. I have got no reason whatever to disbelieve the averment of those Secretaries of State, but do you think that successive Chancellors of the Exchequer have believed in the additionality principle with the same firmness as the secretaries of state?
  (Mr Hewitt) From my point of view, to repeat, there is no doubt that the Exchequer's response to the case from the cultural sector, at least as directed through national agencies such as the Arts Council, is such that they would believe and have supported that in action. As I say, there is a further degree of analysis needed in terms of other areas of public expenditure.

  394. Dealing with your area, Mr Hewitt, there was a period when not only in real terms but in cash terms the amount of money going to the arts actually fell substantially and one had a feeling that that might have been because Chancellors were saying, "Oh well, the Lottery is around", and while you have spoken about popular support for the funding of the arts it may well be that there is less popular support for the funding of the arts than there is, say, of the funding of sport or heritage. Are you happy that over these years since the Lottery began the additionality principle has been completely observed, and I would be interested in the views of other people on the table, of whether successive Chancellors might have felt that this was a jolly good way of saving money?
  (Mr Hewitt) I think there has been a degree of variability during the eight or nine years in question. I would put that down to the strength of the case made for Exchequer support. I am a firm believer, having looked at experiences in other countries where Lottery support has substituted for Exchequer support and the research has been done, that if the particular agency concerned or the particular subject area concerned makes a good case for Exchequer support alongside Lottery support, then there is a lot of evidence that substitution does not take place. Substitution occurs when there are vacuums into which Lottery support can move. I like to think that in the case of the arts broadly speaking over the eight or nine years, and certainly in the last three or four years, there is no evidence whatsoever of that kind of substitution having taken place.
  (Mr Casey) Perhaps I can add, Chairman, that, rather like Peter's example of the Arts Council, the Sports Council also receives Exchequer funding. It has been variable over the last few years but I think the trend is very different now and over the next three financial years the Exchequer funding of Sport England is going to double. There are examples of other funding coming through from the Exchequer for particular purposes. Again, just judging it at the national level, I would agree with Peter's analysis.

Mr Maxton

  395. What was it by 1997?
  (Mr Casey) It is rather difficult to say, Mr Maxton, because you know that we have split into Sport England and the UK Sports Council now so I do not think there is a direct comparison.

  396. A very good politician's answer.
  (Ms Case) Perhaps I can add two points. On a very minor scale it was the case that the grant-in-aid to the National Heritage Memorial Fund, which is our Exchequer money, went down at the time that the Lottery was introduced but it has now, as a result of the last spending round, gone back up to what it was at the time the Lottery was introduced. More generally, as a gamekeeper turned poacher, as an ex-Treasury official, I think that eternal vigilance is needed on all our parts to ensure that we are putting a good case forward and to keep the flag of additionality flying.
  (Mr Hornsby) I would agree.

  397. In that case the fact that the Lottery money is very specifically spent on specific projects and specific areas additional to your normal grants, particularly in sport and the arts, is that something which you would want to keep as well rather than just saying the Lottery Fund goes into your general fund and you just spend it as you wish? You would prefer to keep it specific?
  (Mr Hewitt) Absolutely. In our case we are very keen to ensure that the Exchequer support basically provides the core of arts provision in this country. The Lottery support adds to that and enhances it. Also, by being clever about using Lottery with Exchequer, you get more out of both. We are anxious to ensure that at any one time were there to be a complete change of policy, which I absolutely would hope would not be the case, the Exchequer support does still make sense in terms of how it has been allocated and used.
  (Mr Casey) I will give one example which is recent and that is looking at revenue support for example for national governing bodies of sport where Exchequer funding provides the core support for those organisations for the whole range of things they do in the community and in terms of development of sport, but the Lottery funding has provided the support for top performers and indeed for talented performance. Again we have a complementary role of the Exchequer funding and Lottery funding which clearly from the Sydney Olympics and the Paralympics has been shown to work well in a complementary fashion.

  398. Certainly the evidence from the state lotteries in the United States was that they would much prefer our system with what they call arms wrapped around particular projects with the Lottery funding rather than it going into the general pot. Can I ask you whether or not you are happy with your own rules in terms of distribution? We have had complaints in the past about the fact that you are over-bureaucratic, that getting money from the Lottery is something that often demands people of some skills in terms of putting forward a bid and as a result the middle classes have benefited considerably more than other classes from funding from the Lottery because they are much better at putting bids in and getting money from you. Is that right? Are you changing the rules?
  (Mr Casey) I would make three points, Mr Maxton. First of all, the new organisation QUEST, which is looking at quality standards, has had a look at this in the last twelve months and has largely provided a clean bill of health in terms of the application process from all the Lottery distributors. They asked us to look at two things; one was to try to provide perhaps a slightly simpler method right at the start, and many of us now have a two-stage process where the first stage is relatively straightforward, much more interested in the outcome of the investment rather than all the other elements which go with an application. That has speeded up the process. The second was to provide perhaps better pre-application and continuous application advice to applicants. Certainly in our system, once the applicant has got past the first stage we can legitimately sit with them and help to get a much better project at the end. It was good to see independent analysis of this showing that while there is anecdotal comment about bureaucracy most of the application processes were straightforward.

  399. Before the others come in can I just ask to what extent that is regionalised? I know you speak only in England but to what extent do you have people around different parts of the country who can give that very specific advice in the area where the project is who have knowledge of that area and knowledge of the project rather than people doing it entirely from some London base where they do not know what is going on?
  (Mr Casey) Certainly again if I may just speak for sport we have nine regional offices around the country and once they have got past the first step of the application process then it goes to our regional office for the regional officer to work with the local community applicant. Indeed, even before that stage there are a number of regional seminars and advice services and surgeries which are provided for people who are just thinking of applying, particularly directed towards the voluntary sector. Increasingly over the last few years all of us have moved towards a much more regional approach in this to make sure that advice is given with knowledge of that patch and I think we will see that trend continuing quite significantly over the next few years.
  (Mr Hewitt) In our case we have delegated substantial sums of money to the regional arts boards so for example all capital grants of under £100,000 are dealt with by the regional arts boards. We have a programme called the Regional Arts Lottery Programme which is about grants to local organisations, regional organisations, which are decided upon by independent regional arts boards which do of course have local government representation on them. If I can just take the broader question about evidence of having achieved spread, I think in general all four of us would argue that we have achieved spread, whether it is the Sports Council, Sports Action Zone strategy or the Charity Board's priority schemes. In our case and in heritage's case a very large proportion of our overall spend has gone to the hundred most deprived local authorities, something between 60 and 70 per cent of our money has gone to those local authorities. Certainly in our case I put that down to the fact that we are working with and through regional arts boards who do have that relationship with local communities.
  (Mr Hornsby) On the issue of regionalisation we have from the outset had separate regional offices in each of the England regions, two offices in Scotland, in Glasgow and Edinburgh, and offices in Wales and Northern Ireland. I was interested to see that the most recent Lottery Monitor survey which polled large numbers of our applicants concluded, "The good news for the Lottery Boards is that all are now registering as average to very good both for their efficiency and for the clarity of their written material". We have made real efforts in terms of plain English and in terms of accessibility and I think it is beginning to bear some fruit where all four of us will co-operate in setting up with NOF a joint hot-line and a joint web site in the early part of next year, and I hope that will increase accessibility. Just to give one example, the new grants programme up to £60,000 that we are launching from my Board in April of next year will cut the application form down from 28 pages to 12 pages which is a move in the right direction, and we will knock well over a month off the processing time, so we are trying to refine our products and be more customer friendly. It is true that for some applicants it is a rather higher hurdle to leap over than for others and we try and lay on helper sessions to make it less of a hurdle.
  (Ms Case) The final point worth mentioning is the success of the Awards for All scheme which is a joint Lottery distributor scheme which has a very simple application pack and a quick decision taking process and which the evaluation we have had done suggests is bringing in a lot of first time applicants who perhaps would not have thought of embarking on a Lottery application under many of our main programmes.

previous page contents next page

House of Commons home page Parliament home page House of Lords home page search page enquiries index

© Parliamentary copyright 2001
Prepared 23 January 2001