for good causes
142. Up to the end of September 2000, the National
Lottery had raised £9.96 billion for good causes.
The initial income for the good causes was greater than expected
and the balance of the National Lottery Distribution Fund rose
very quickly. The distributors still have large balances in the
Fund and the misconception that those funds should be released
more quickly or used to the benefit of various other good causes
still exists. However, although the balance of the National Lottery
Distribution Fund is still high almost all of that money is already
committed to projects and will be released to those projects as
it is required.
The distributors' income has declined since the start of the Lottery,
partly because the balance in the Fund has fallen as grants have
been paid, resulting in lower interest payments to the distributors,
but mainly due to the introduction of the New Opportunities Fund.
Sport England stated that its income had fallen from £302.9
million, in 1997-1998, to £212.48 million, in 1999-2000,
and blamed that decline on the introduction of the New Opportunities
Fund and falling ticket sales.
143. Mr Dunmore said that "we ... have to base
our planning in terms of our cash flow and the rate at which we
get the grants out of the door ... on those forecasts".
Mr Hornsby said that the distributors' concerns were "to
get the most robust forecasts of future income from DCMS so we
can manage our cash and manage our forward commitments".
144. Income for the good causes from the National
Lottery Distribution Fund is subject to four factors that tend
to depress the overall amount received. First, inflation has reduced
the value of a £1 Lottery ticket to 68 pence in 2001. Second,
the Lottery is likely to suffer from lottery fatigue. Third, Lottery
players tend to be older, and over time may not be replaced by
younger ones. Fourth, the American experience is that players
are attracted away from the lottery to more exciting forms of
entertainment and more immediate forms of gambling.
145. Lottery funds are a key contribution to funding
cocktails and provide funding leverage.
The distributors work together and provide joint funding of some
The distributors identified three issues which would improve the
finances of their grant-giving activity. First they "would
like to see some change in the taxation of the Lottery to provide
for, for example, more sports organisations having charitable
status which in very simple terms would make the money go 17.5
per cent further".
Second they felt that they should be able "to give loans
as well as grants so that in some cases where in a sense they
have a cash flow problem we would get the money back in due course".
That would require a change in their financial directions. Third,
they called for a relaxation in the financial directions in relation
to working closely with the private sector in private finance
initiatives or public/private partnerships.
146. The distribution bodies expressed concern about
the level of overbidding for Lottery funds.
All of the sectors supported by Lottery funding can identify continuing
funding need. However, the availability of Lottery funding should
not be taken for granted and there is a danger of those sectors
becoming dependent on the distribution bodies for funding. Exchequer
funding is due to increase for some sectors.
Lottery dependency is presently avoided to some extent because
funds are project-specific and time-limited.
However, those restrictions raise the problem of sustainability.
The Chief Secretary and Secretary of State accepted that it was
problematic if projects turned out to be non-viable.
The distribution bodies encourage applicants to consider their
long-term funding arrangements.
The New Opportunities Fund gave the example of a cancer information
service, which if successful, would seek funding from statutory
Mr Dunmore acknowledged such an approach raised the spectre of
additionality and said that "it does not do to be too precise
about these things because areas of health and education are today
funded by a large range of different sources, not least by the
private sector in terms of capital spend [and] through the Private
He went on to say that "one needs to treat this with care
and caution not least in political terms, the funding world has
changed and we are now in a scenario where in many areas one can
give added value by building up partnerships and cocktails of
He explained that if programmes such as healthy living centres
and out-of-school hours learning had benefits, there would be
an impetus for the Government and other statutory funders to take
over funding, and said: "These are all areas which ultimately
could be funded by the Government".
147. We received submissions from many organisations
calling for more funding for their sectors, or for the distribution
body relevant to the organisations' activities to receive a larger
proportion of the National Lottery Distribution Fund. We cannot
respond to those individual propositions, but it is clear that
the Lottery is an important source of funding for those sectors
and there is a continuing need for Lottery funding in the sectors
it is already serving.
The future of distribution
148. We received many submissions calling for the
introduction of additional distribution bodies to fund specific
sectors. The National Lottery Distribution Fund is not a single
big pot from which grants can be made. The distribution bodies
must remain responsible for specific areas of funding. The Chief
Secretary suggested that "there is a merit ... in having
a plurality of good causes".
The present good causes are not invulnerable, but no strong argument
has been made for supplanting or subsuming any of them at present.
The Sports Council for Northern Ireland, as the body that receives
the least from the National Lottery Distribution Fund, pointed
out that its forecast receipts for 2002-03 are £6.8 million
and therefore any increase in the number of distributors which
reduced its share would seriously affect its income and work.
149. Calls for new distributors are not new, and
have been considered. In March 1997, the then Government published
a consultation paper, which considered the establishment of a
new distributor to succeed the Millennium Commission.
The New Opportunities Fund stated that changes to the distribution
of Lottery funds were a matter for the Government and warned that
any changes must take into account the long-term funding commitments
already made by the distribution bodies.
According to Professor Walker, the good causes that were set out
in the legislation were determined by the political necessity
at the time.
150. We do not propose any changes to existing
good causes, either in their composition or their funding. However,
the Government must allow the good causes to evolve and consider
changes in the future. Furthermore we recommend that the emphasis
on distribution of Lottery proceeds by the good causes should
be shifted from major national projects to smaller projects which
will have a more beneficial impact on local communities.
151. Any proposals for change should allow plenty
of notice of changes to sectors and distribution bodies.
152. We expect the Government, in considering
the good causes, to adhere to the principles under which the Lottery
was established and ensure that it continues to enhance the quality
389 Cm 1861. Back
1861, para 41. Back
397 Ibid. Back
603, 605. Back
436; Evidence, pp 48, 53, 164-166, 275-276. Back
p 91. Back
521, 619-620, 626. Back
391; Evidence, pp 266-267, 273-274. Back
392, 505. Back
185, 273, 390; The Millennium Dome and the Royal Opera House topped
the Impact survey in response to the question name national projects
that have received Lottery money, Lottery Monitor, November
405; Evidence, pp 131-133, 290-293. Back
pp 91-92. Back
185, 379. Back
(1995-96) 240-II, Q 1000. Back
p 123. Back
219, 398-400, 404, 434, 514, 662; Evidence, pp 124, 128, 130,
133-135, 261. Back
Lottery (Amendment) Bill. Back
489; Evidence, pp 186-187. Back
pp 186-187, 189-193. Back
489-490, 502. Back
518; Evidence, pp 187-188. Back
p 277; see Memoranda from the Garden History Society, the Urban
Parks Forum and the Woodland Trust. Back
513, 523. Back
519; New Opportunities from the Lottery, Department for
Culture, Media and Sport, November 2000. Back
Deb, 6 November 2000, col 52W. Back
416; Evidence, pp 136, 233, 237. Back
407-411; Evidence, p 137. Back
p 136. Back
388-389, 530; Evidence, p 187. Back
443 Ibid. Back
444 Ibid. Back
Evidence, p 128. Back
625, 632. Back
436-437; Evidence, pp 166-169, 188, 262-263. Back
630, 662. Back
508; Evidence, pp 127-128, 130, 134. Back
453 Ibid. Back
454 Ibid. Back
pp 264-265. Back
New Good Cause for the National Lottery The Millennium Information
and Communication Technology Fund, A Consultation Paper,
March 1997, The Department of National Heritage. Back