Appendix 4
PAPER SUBMITTED BY THE NATIONAL HERITAGE
MEMORIAL FUND
House of Commons Culture, Media and Sport
Committee First Report 1998-99
In the period since the Committee's helpful Report
and the subsequent publication of our first Strategic Plan, we
have made significant progress on many of the issues raised by
the Committee in respect of the service that we provide to our
customers.
By the end of September we had committed over £1,500m
on more than 5,700 projects. An increasing number of grants have
been to smaller projects, focusing on what communities believe
is important to them; a trend on which we are continuing to build
through Awards for All and the Local Heritage Initiative. At the
same time we have given significant support, on a scale which
only Lottery funding can provide, to beacon projects of national
importance.
We have increased the extent to which our funding
targets deprived areas and the results of the evaluation of completed
projects is showing that applicants believe that the impact in
terms of wider social and economic benefits is greater than they
anticipated.
Looking to the future, we hope to develop more sensitive
responses to need at regional level, building on the needs assessment
work that we are undertaking, greater outreach by our regional
teams and through new Regional Committees in England.
We set out below a report of the progress that we
have made in implementing our response to the Committee's recommendations.
(ii) Preparation of a comprehensive
audit of the heritage sector and its needs should be a high priority,
but it is a responsibility of all relevant statutory agencies,
as well as voluntary bodies and local government, not just the
Heritage Lottery Fund.
A three year programme of research was launched in
1999. Good progress is being made but it will take time to complete
a full heritage needs assessment given the wide spread of the
sector involving no fewer than 23 statutory agencies and many
other heritage organisations that have a legitimate interest in
this important work.
The Fund has commissioned a major study of parks
in local government ownership (together with the DETR and English
Heritage) which has now reported, drawing attention to the declining
state of many of the UK's parks. HLF and Resource have worked
together to produce a major study of the assessment of needs in
the UK's museums and galleries, the first of its kind. With support
from HLF the South West Museums Council has published a model
audit of museums in its region and similar studies are in hand
for the two Southern Museum Councils. In addition, we have supported
work by the Transport Trust (for transport heritage) and an updated
report by the Inland Waterways Amenity Advisory Council. A schedule
of work for other heritage areas is being developed, according
to the most pressing areas of concern, and as part of a longer
campaign.
In its Report, the Committee saw no basis whatsoever
for thinking that the needs of the cultural heritage had in any
sense been met by the investment that HLF had been able to make.
All of the indications from our early research into need suggest
that the scale of the funding deficit is enormous. If it were
not already appreciated, it is becoming apparent that investment
on the current scale will need to continue for the foreseeable
future if the accumulated deficit in the sector is to be tackled
in any meaningful way.
(v) We recommend that, when any
future application follows an earlier application rejected in
part due to policies, priorities or criteria established after
the initial application was made, that fact should be brought
to the attention of the Trustees by staff of the Fund.
This situation has not arisen since the Committee
made the recommendation and we believe that this problem has now
worked itself out of the system. After a time when we had to change
policies, priorities and criteria in response to new legislation
and Directions we have more recently enjoyed a period of consolidation
which has made possible greater consistency of approach. If any
future changes in the Directions prompt a change in our policies
or priorities we shall follow the Committee's recommendation.
(vi) Once the Heritage Lottery
Fund has established a Strategic Plan in the light of consultation,
including the conclusions and recommendations of this Committee,
it should seek to adhere to that Plan with clarity and consistency
over a period of years. Once the Department for Culture, Media
and Sport is satisfied that the Strategic Plan reflects the requirements
of its Policy Directions and the recommendations of this Report,
we recommend that it exercises great restraint in policy changes
and amendments to Policy Directions
for England until at least 2001.
We have adhered to the policies and priorities set
out in our Strategic Plan, reporting on our progress in implementing
these in our Annual Report. There have been no further changes
to the Policy Directions, which has meant a welcome period of
stability. The present Strategic Plan comes to an end in March
2002 and we have started the process of preparing for our next
Plan, taking account of the needs assessment work described above.
(vii) We recommend that applicants
should be advised that the extent to which a project offers demonstrable
social and economic benefits to the community will be a significant
factor in a final decision and that the assessment process should
reflect this.
In assessing any application we take into account
the social and economic benefits offered by the project. More
specifically, three of our grant programmes—the Urban Parks
Programme, the Townscape Heritage Initiative and the Joint Places
of Worship scheme in England—are all targeted at areas of
greatest deprivation and we have established a Special Programmes
Unit within NHMF to co-ordinate our approach to these three programmes.
We are also considering how best to emphasise the importance of
social and economic benefits in our guidance to applicants, which
is due to be comprehensively reprinted in April 2001, the first
complete revision for several years.
(viii) In view of the importance
which we attach to social and economic benefits and the past under-funding
of coalfield areas we recommend that the Heritage Lottery Fund
treat the Coalfields initiative as a high priority among the potential
new initiatives listed in its draft Strategic Plan.
When we consulted on a list of potential new initiatives
in the draft of our Strategic Plan the overwhelming response indicated
that we should adopt new initiatives of the Coalfields type sparingly.
However, together with other distributors we have taken part in
research led by DCMS to understand why the Coalfields have done
less well than other areas. The report was published by DCMS in
June. An action plan is now being followed up. We have continued
to make significant grants to a number of projects in the coalfields,
including museums at Big Pit and at Caphouse, the National Coal
mining Museum for England. We have also given the Coalfields explicit
priority in our grants to churches in England through the Joint
Scheme operated with English Heritage. Where the Coalfields areas
coincide with areas of greatest deprivation, we also take this
into account as one of the factors in determining whether and
at what level to make a grant award. We have recently received
an application from the Coalfields Regeneration Trust to undertake
a heritage audit of coalfields areas, in order to determine the
scale of need and opportunity afforded by heritage projects.
(ix) We recommend that the Heritage
Lottery Fund maintains, publishes and monitors statistics on the
allocation of grants by local authority area alongside information
on the level of deprivation of the authority indicated by central
Government statistics.
We have always maintained and monitored data on the
allocation of grants by local authority and made use of the deprivation
indices published by central Government. The top 100 most deprived
local authorities (on the 1998 Index) have received more than
60 per cent of total grant awarded in England.
The review of the 1998 Index of Local Deprivation
by DETR has led to the production of the Indices of Deprivation
2000 which enable direct comparison at ward level in England but
not, as before, at local authority district level. In Scotland
the indices are out of date and do not relate to the new local
authority districts. We are therefore considering how best to
present on our web-site the allocation of grants alongside deprivation
information.
(x) We recommend that the Heritage
Lottery Fund seeks to collect, maintain, publish and monitor statistics
on the distribution of grants of distinct benefit to minority
communities.
We already ask if applying organisations largely
or entirely serve people from minority communities. Following
work with all Lottery distribution bodies DCMS has issued guidance
on what monitoring information should be collected from applicants
and we will be introducing a new form with our reprinted guidance
to applicants in April 2001. We have made increasing efforts through
our outreach work and research programme, and in new partnerships
with leading groups such as the Black Environment network, to
improve our understanding of the needs of heritage groups amongst
Ethnic Minorities. For example, we strongly supported the recent
'Whose Heritage' conference, and have commissioned research on
audience development for small heritage organisations from under-represented
groups.
(xi) We recommend that the Heritage
Lottery Fund amends its policy on partnership funding to provide
for payment of up to 95 per cent of total project costs for projects
under £100,000 and up to 85 per cent for larger projects
in cases of exceptional need within specific geographical areas
which suffer from high levels of deprivation or have received
consistently low levels of Lottery funding.
The research into financial need that we undertook
in conjunction with the Local Government Association did not suggest
the need for changes in our policy on partnership funding. However,
although the research in the Coalfield areas suggested that there
were a variety of reasons why they have attracted less Lottery
funding than other areas, it did reveal that some applicants found
it hard to raise even small amounts of partnership funding. Although
there was no question of a universal exception to the normal requirements
for partnership funding for all Coalfield areas the report recommended
that Lottery distribution bodies should be prepared to be more
flexible in Coalfield areas.
There are obvious problems with a flexible approach
that treats some applicants more favourably than others and we
do not favour the introduction of a universal means test by which
to assess the contribution an applicant can afford to make to
a project. Our partnership funding requirements are already very
generous and we are always prepared to count the cost of volunteer
time and other non-cash contributions by applicants. We are not
convinced of the need to change our current policy.
(xiii) We recommend that the Heritage
Lottery Fund includes in its Strategic Plan criteria for the designation
of 'beacon' projects of pre-eminent regional or national significance.
We further recommend that the Fund maintains, publishes and monitors
statistics on funding by nation and region excluding as well as
including 'beacon' projects.
Our Strategic Plan speaks of HLF's wish to reinvigorate
the very best of the UK's heritage and explains that national
heritage is not synonymous with national institutions, but that
it does imply something of more than purely local importance.
Up to 25 per cent of our annual budget goes to major grants of
over £5m, which we hope will meet a significant proportion
of the most important heritage needs (for example, beacon projects)
wherever they arise. A further 2.5 per cent of our annual budget
goes to grants of between £1m and £5m, many of which
are for projects of national importance. However, we are not persuaded
of the need for any additional criteria or a system of designation,
which may serve to limit our flexibility in a way that is unhelpful
to the national heritage.
We maintain, publish and monitor statistics on funding
for every type of national heritage.
(xiv) The Heritage Lottery Fund's
approach to distribution should be based on consideration of heritage
need, not solely on the current location of heritage assets. We
recommend that the Strategic Plan of the Heritage Lottery Fund
includes an assessment of heritage need for each nation of the
United Kingdom and each region of England.
Our first Strategic Plan set out our limited understanding
of need in the heritage sector. A three year programme of research
to fill the gaps is underway. With the help of the Committees
for Scotland, Wales and Northern Ireland we have produced strategic
frameworks for those countries, copies of which are being made
available to the Committee. We also look forward to the production
of regional cultural strategies by the DCMS Cultural Consortia
in the English regions, which will also feed into our strategic
planning.
(xv) We recommend that the Heritage
Lottery Fund includes the following three objectives in its Strategic
Plan:
"to achieve approximate equality in
the distribution of funds (excluding funds for 'beacon projects
of pre-eminent regional or national importance) between the nations
of the United Kingdom and between the regions of England";
"to ensure that the distribution of 'beacon'
projects of pre-eminent regional or national importance reflects
project quality and heritage need as well as the quality of heritage
assets"; and
"to increase the social and economic benefits
from the allocation of grants to heritage projects".
Our Strategic Plan reflects these principles, although
not the particular expressions of them recommended by the Committee.
It is too early in the life of the Plan to judge
our success in these areas but our routine monitoring of the distribution
of grants by area reveals that the objective of spreading grants
under £1m more evenly is proving challenging. A number of
projects—for example under the Townscape Heritage Initiative,
and to Wildlife Trusts—although over £1m in total are
in fact a collection of much smaller grants spread over a wider
area. However, even so, since we set ourselves this objective
the disproportionate share (in per capita terms) of grants under
£1m enjoyed by the three home countries over England has
slightly increased and five of the nine regions of England have
moved further away from the average for all of England. We are
increasing our efforts to reach the parts of the UK that have
not had support from HLF, but it may be that we have set the threshold
too high at up to £1m. We strongly believe that every area
has inherited something of value that it can enjoy and take pride
in. The joint distributor Awards for All programme and the Local
Heritage Initiative, administered on our behalf by the Countryside
Agency, are designed to identify and support this with small grants
of £500-20,000. However, the distribution of grants towards
the top end of the under £1m range may be influenced more
by the fixed location of heritage assets than we had hoped. Certainly,
the award of one or two grants of close to £1m can instantly
change the position of a region or country in comparison to the
national or UK average.
(xvi) The scale of investment
in the cultural heritage by the Heritage Lottery Fund has been
impressive, but we see no basis whatsoever for thinking that the
needs of the cultural heritage have in any sense been met. Nevertheless,
we have concluded, with reluctance, that the proposed reduction
in the share of Lottery funds for this area is correct. We also
consider that a greater emphasis should be put on those projects
within the sector which bring significant social and economic
benefits. A reduction in grants for acquisitions may be the unavoidable
consequence of this. This blow should be softened by increases
in the budget of the National Heritage Memorial Fund
The indications from our early research suggest that
the needs of the national heritage are larger than suspected and
that meeting them will take continued investment in all the sectors
we support at the current scale for the foreseeable future.
We share the view that greater emphasis should be
put on projects within the museums and galleries sector that bring
significant social and economic benefits and we will reflect that
in our reprinted guidance to applicants in April 2001.
The grant-in-aid to the National Heritage Memorial
fund was £3.5m in 2000-01, rising to £5m in 2001-02.
The Secretary of State has not yet announced the size of the grant-in-aid
for future years.
In our view, £5m is the minimum amount necessary
in a year to maintain even the most basic defence of the most
outstanding parts of our national heritage which are at risk.
In anticipation of the increase in the Government's grant-in-aid
in 2001-02 to that amount we intend, exceptionally, to make available
£1.5m from our endowment, thus providing a fund of £5m
in 2000-01 also.
(xx) We support the proposal of
the Heritage Lottery Fund to increase its support of the natural
heritage as a proportion of its total grants over the period of
its forthcoming Strategic Plan. We recommend that the Fund gives
particular consideration to the requirements for appropriate revenue
support for natural heritage projects to ensure viability and
the long-term maintenance of countryside and land in receipt of
funding.
We are considering this recommendation as part of
an overall review of the Fund's revenue grants programme and a
review of the priorities for our land and countryside policies.
These reveal that there is a low take up of revenue grants in
the land and natural heritage areas. We will be considering re-focusing
the revenue programme as a whole, in order to raise the number
and quality of 'activity' grants. We will also consider the possibility
of merging our separate capital and revenue schemes in the Fund's
new application literature in April 2001. But on-going revenue
support for long term maintenance of countryside would fall outside
our present Policy Directions.
(xxi) This Committee considers
it vital that the total commitment of National Lottery resources
to urban green spaces is maintained or even enhanced in coming
years. In view of the disproportionate gain to the New Opportunities
Fund from additional proceeds to the National Lottery Distribution
Fund, increasing responsibility for ensuring this should lie with
the New Opportunities Fund We recommend that a joint scheme for
urban green spaces be operated by that Fund and the Heritage Lottery
Fund, drawing upon the experience and excellent track record of
the Heritage Lottery Fund in this area, but not confined to urban
space of heritage importance. Even if the balance of funding switches
to the New Opportunities Fund, we consider that it would send
the wrong signals if the Urban Parks Programme's separate identity
within the Heritage Lottery Fund was not retained.
We welcomed the Committee's comments and entered
discussion with the New Opportunities Fund about the scope for
co-operation and joint action. In the event, NOF's priorities
were too different from our own to make a joint scheme possible
at this stage although we will continue to look for opportunities
to collaborate.
The Urban Parks Programme continues to be one of
our most successful programmes and retains its own identity.
(xxii) What is not sufficiently
taken into account in current processes is the large and disproportionate
burden on smaller projects of the present procedures. We recommend
that a simplified assessment process should be introduced which
will clarify the prospects for smaller projects at an earlier
stage to avoid costs which cannot be afforded and hopes which
ought not to be dashed.
The very successful Awards for All Scheme provides
a simple and rapid process for grants under £5,000. A simple
application process for capital projects under £50,000 is
presently being piloted in the North West and London with a closing
date for applications of the end of September. It is too soon
to judge the success of the pilot, the material for which has
been approved by the Plain English campaign, but initial feedback
has been positive. We will reflect any lessons learned in our
reprinted guidance to applicants in April 2001, which we shall
try to make as simple as possible.
(xxiii) Given the potential of
the two-stage process to reduce costs for applicants and clarify
a project's prospects of success at an earlier stage, we also
recommend that the Heritage Lottery Fund extends the two-stage
process to all Projects. We further recommend that it introduces
a three-stage process for larger and more complicated projects.
The recent report presented to the Secretary of State
by QUEST concluded that for the majority of applicants the cost
of applying for Lottery grants was not a significant issue—the
issue, particularly for smaller organisations, was one of capacity
in the applicant body to cope with the application procedure.
The two-stage process has not proved universally
popular with applicants and the introduction of a third stage
is unlikely to be welcomed. Our experience is that applicants
that pass the first stage expect to automatically succeed at the
second stage and to receive a grant. That applicants want the
first stage to be the substantive test undermines the two-stage
concept of a low first hurdle passed with relatively little information
provided by the applicant. We must inevitably have a high level
of satisfaction at that first stage that the project meets all
of our requirements if there is no further effective test at a
subsequent stage.
However, we entirely share the Committee's wish to
make the burden of applying proportionate to the size of the grant
requested and to clarify a project's prospects of success at an
early stage. If successful and extended across the UK, the simple
application process for capital projects under £50,000 presently
being piloted in the North West and London will help reduce the
burden for applicants. We are also keen to provide the earliest
guidance to applicants on their prospects for success and are
considering how we might do that in the context of our reprinted
guidance to applicants in April 2001. If we can engage applicants
in a dialogue that may even be possible at a stage before they
formally apply for a grant, which is the ideal.
(xxiv) We recommend that the Heritage
Lottery Fund introduces as its normal practice continual involvement
by a single member of staff for the whole life of a project as
soon as possible.
Assessment and monitoring processes were successfully
merged in 1999 and we are now providing a whole life service to
applicants.
(xxv) We recommend that action
is taken by the Government and the Heritage Lottery Fund to enable
a simplified standard contract between the Fund and grant recipients
to be in place as a matter of urgency and that the contract should
employ the plainest possible English.
Although in our response we referred to simpler contracts
for revenue and smaller capital projects being in preparation,
in the event, we re-wrote our entire suite of contracts to simplify
them all substantially and to make them easier to understand.
(xxvi) We recommend that all applications
for grants from the Heritage Lottery Fund should be in the public
domain. We further recommend that the Fund's web-site should include
a list of applications, should indicate the stage which each project
has reached and should then state the final decision, including
a decision to reject the application.
We publish on our web-site a list of all new applications
and all decisions, including decisions to reject an application.
The sole exception is applications for acquisitions where the
knowledge of our potential involvement may adversely influence
the sale price of the asset.
(xxvii) We recommend that all
external advice to the Heritage Lottery Fund requested after March
1999 should be made available to applicants and that applicants
should be given an opportunity to respond to and comment upon
such advice before a determination is reached.
We consulted our advisers on the Committee's recommendation.
Many, particularly those that are membership organisations (e.g.,
museums councils), had concerns about making advice available.
Subject of course to the requirements of legislation, our advisers
would rather give us objective and sometimes candid advice on
a confidential basis, particularly where they are commenting on
a body which is a member of their organisation, and with which
they must have a continuing relationship.
We will however review our policy when the Freedom
of Information Bill has been enacted.
(xxix) There is a strong case
for a regional presence for the Heritage Lottery Fund in England.
We recommend that this should be developed in tandem with, rather
than in consequence of, a regional structure for the Department
for Culture, Media and Sport. We further recommend that the Fund
considers the case for separate Regional Committees in England
which would undertake functions comparable to those of the Scottish,
Welsh and Northern Ireland Committees and which would replace
the English Committee.
We have decided to establish regional committees
in England as a replacement for the Committee for the English
Regions as the Committee recommended.
Eight of the nine Chairmen have been appointed and
we are in the process of recruiting the last chairman and members
of the committees by open competition. Like the Committees for
Scotland, Wales and, Northern Ireland, the English regional committees
will decide grant requests for more than £50,000 and less
than £1m. They will also advise on strategic priorities in
their region and on the priority of applications for grants for
£1m or more. The committees will be operational at the start
of the next financial year.
The decision-taking committees will meet in their
regions but they will be supported in their work by staff based
in London but spending significant amounts of time in the regions.
October 2000
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