Examination of Witnesses (Questions 40-59)
MS SUE
STREET, MS
CAROLE SOUTER
AND MR
STEPHEN DUNMORE
12 JANUARY 2005
Q40 Jon Trickett: In accounting terms,
this amount of money, which is significant, how is it accounted
for in terms of the National Debt? Is it something that is handled
by these Commissioners because they are a safety first body of
people or is it having some macro-economic or macro-fiscal effect
in some way, the fact there is a surplus?
Ms Diggle: I think there are two
effects to look at here. First of all, interest accumulated on
behalf of the funds actually goes back to the funds as and when
they draw it. While it is parked in the CRND it does reduce the
National Debt because Lottery money is public money. It has been
raised from the public, it is to be used for the public good,
and while it is being held for use for the public it is being
parked in the National Debt and holds the National Debt down.
Q41 Jon Trickett: Is that a statutory
requirement or is it something that has been decided by the Treasury?
Ms Diggle: It is in the Lottery
Act 1993.
Q42 Jon Trickett: It specifies that
it will be used to reduce the National Debt or that it will be
managed by the Commissioners?
Ms Diggle: It is specified in
the Lottery Act 1993, I think it is Section 32, that it is to
be held in the CRND who are then to manage it in accordance with
a direction agreed by the Treasury.
Q43 Jon Trickett: Can I just ask
one further question. Does the Treasury publish accounts and make
assumptions about the amount of surplus which will be used to
"help" with the National Debt? Are there assumptions
made? I can easily check in future years.
Ms Diggle: I think I will need
to give you a note on that to give you a full answer but certainly
the interest accumulated on the balances held on behalf of the
various funds appears in their resource accounts.[2]
Q44 Jon Trickett: I understand that but
I am trying to work out if the Treasury is making assumptions
about the use of the National Debt by mismanagement or under-management
of resources.
Ms Diggle: For the purpose of
forecasting, the Treasury forecast will always make the best realistic
projection on the information available.
Q45 Jon Trickett: You do not hope
we will be successful, do you really? You hope we will be unsuccessful.
Ms Diggle: It is not a question
of profiteering, but of efficient management of public funds.
Q46 Mr Steinberg: If you turn to
page 13, figure 7, it is quite clear that when the Lottery first
started the income was much greater than the actual distribution.
What are you doing about the huge discrepancy in the first few
years? What has happened to that money?
Ms Street: Firstly, I think paragraph
2.3 is a really seminal paragraph, it sets out fairly clearly
that the current level of balance is a result of the low rate
of drawdown compared with income in the first four years. That
was where it all built up. Then, as this report sets out, there
have been successive and increasing efforts to reduce that so
that is why we can over-commit now by 133% because there is more
in the balance than is called upon at present.
Q47 Mr Steinberg: I did make some
rough calculations. I worked out that the fund had taken something
like £15 billion over the life of the Lottery up to now,
is that right? The drawdown has been something like £13 billion.
Ms Street: It is very close. I
think we are £16.6 billion and the drawdown has been £14.2
billion
Q48 Mr Steinberg: That £2 billion
is still in balances?
Ms Street: £2.57 billion.
Q49 Mr Steinberg: That is the total
balances?
Ms Street: Yes.
Q50 Mr Steinberg: The reason why
I ask is how quickly is that being used up?
Ms Street: I think the graph at
table one shows a much too gentle decline from 1999 but since
we began to get a grip and really challenge this, as I have said,
in the last eight months it has fallen to 6%, which if we can
keep that up will bring us through.
Q51 Mr Steinberg: The reason why
I ask this question—there is a purpose behind it—many
of my northern colleagues and myself are very worried about there
being big balances at the present time because there is this thing
called the Olympic Lottery Fund, is there not?
Ms Street: Yes.
Q52 Mr Steinberg: How much of this
money is destined for the Olympic Lottery Fund?
Ms Street: The money is not intended
to come from the balances. I am wearing my badge for the Olympics.
Q53 Mr Steinberg: I noticed that
which worries me a great deal.
Ms Street: We can debate this.
The virtues of the bid have cross-party support but clearly not
everyone wants it.
Q54 Chairman: That is no guarantee.
Ms Street: I just mention it.
We will know in six months' time on 5 July whether or not we have
won the bid.
Q55 Mr Steinberg: I was coming on
to that. How much money are you using from the Lottery money before
you even know whether you have got the bid or not?
Ms Street: No money from the Lottery.
Q56 Mr Steinberg: No money at all?
Ms Street: No.
Q57 Mr Steinberg: Okay.
Ms Street: If we do win the bid
there is an argument to say that the Lottery funds exactly this
kind of celebration of sport and the arts that the Olympics is.
Q58 Mr Steinberg: We had a celebration
of the year 2000 and it was called the Dome. Can you remember
that celebration?
Ms Street: Unfortunately I was
not at the celebration but, of course, I do remember the difficulties.
Q59 Mr Steinberg: Just remind us
how much was spent on the Dome?
Ms Street: I think it was £750-800
million. I do remember, of course, appearing before this Committee,
and you will have a chance to talk with one of my colleagues next
week on that. We will be returning about 13% of the sale of the
proceeds back to the Lottery but, of course, it left a scar on
my back as I have said to you before. It is important to be clear
that if we win the Olympic bid the projection is that the possible
diversion from the current good causes will be around 5%.[3]
2 Ev. 14 Back
3
Note from Witness: I indicated that £750-£800
million was spent on the Millennium Dome (actual total £789
million), but later Sir John Bourn confirmed that the figure was
£600 million (Question 66). The discrepancy here is between
the total cost and the Lottery contribution (£604 million
to date), to which Sir John was referring. Back
| 
