Select Committee on Public Accounts Minutes of Evidence


Examination of Witnesses (Questions 60-79)

MS SUE STREET, MS CAROLE SOUTER AND MR STEPHEN DUNMORE

12 JANUARY 2005

  Q60 Mr Steinberg: How much is that?

  Ms Street: That is what we are looking at. That is around £750 million.

  Q61  Mr Steinberg: £750 million. I am very worried, therefore, bearing in mind how much London has had already, not including the Dome. That means good causes in my part of the world is going to dip out again because the money is going to be concentrated in the South of England and particularly in the Olympic bid. Have we got worries about that or not?

  Ms Street: I think that, of course, constituency MPs and Members of this Committee will want to look to their own constituencies. From the information I have Durham has benefited a lot, £46 million in the past.

  Q62  Mr Steinberg: How much did you say the Dome was again?

  Ms Street: Several hundred million.

  Q63  Mr Steinberg: Right.

  Ms Street: But some very important projects in Durham. Of course, all of my colleagues in the distribution funds will have to look to distribute across the geographic spectrum.

  Q64  Mr Steinberg: Are you saying that if we are successful with the Olympic bid that the distributors can look forward to a lot less money?

  Ms Street: I have explained, our projections are 5% could be diverted.

  Q65  Mr Steinberg: What was the original expectation the Dome was going to cost?

  Ms Street: I do not have that. I think the Dome came in on budget but the visitor projections were extremely optimistic.

  Q66  Chairman: We had a report on this this morning, actually, so we know a bit about it. It cost about £600 million, is that right, NAO?

  Sir John Bourn: Yes.[4]


  Q67 Chairman: £600 million because of the shortfall in visitor numbers. That is the answer to the question.

  Ms Street: No doubt you will be discussing that next week, Chairman.

  Q68  Mr Steinberg: I am very worried that my good causes in the North of England are going to end up as good causes for the Olympics?

  Ms Street: I note your concerns.

  Q69  Mr Steinberg: I hope you will do more than note it. Can we move on. Would you agree, therefore, that there is this danger looming, it would be advisable for the distributors to spend as much as they can at the present time and give out more grants?

  Ms Street: My reasoning would not be the same as yours. Parliament will have the opportunity to take a view on the Olympic Games and whether they want it. That is why I cannot answer your concerns, because it is a matter for Parliament and for ministers. As a matter of good financial management, as I have said, we are extremely keen, and we have had robust discussions with the Lottery distributors to reduce balances.[5]


  Q70 Mr Steinberg: How can you ensure that the distributors now move much more speedily to allocate grants?

  Ms Street: I think the movement has to be not necessarily in speed. HLF in particular is very fast in getting money out of the door. The move has to be to implement their own policies and for some of them to see if they want to move a little bit along that spectrum of caution and over-commit more than they do now which the NAO clearly signals—

  Q71  Mr Steinberg: Clearly the two organisations sitting either side of you have something like half a billion pounds in surplus, is that right?

  Ms Street: A bit more than that.

  Ms Souter: Our balance is just over £900 million but if I can explain, it is not surplus. All of that money, and by the end of this financial year another £280 million on top, is committed to specific projects, Woodhall Colliery and things like that, projects which are either being developed and shortly will be ready to go or have spent some money but not yet spent all of it.

  Q72  Mr Steinberg: I understand your problem, I do. With the new National Lottery Bill there could be problems, clearly, particularly with yourselves. Do   you think it is fair that with the new recommendations any interest being held separately should be shared equally amongst the distributors?

  Ms Souter: I can understand perfectly the Government's thinking behind it.

  Q73  Mr Steinberg: Do you think it is fair?

  Ms Souter: It would be for Parliament to decide.

  Q74  Mr Steinberg: Yes, but do you think it is fair?

  Ms Souter: I think at the moment the need for heritage projects is so great that I would be very sorry to see any loss of income to heritage projects. Clearly that is a matter that will be put before Parliament and for Parliament to decide.

  Q75  Mr Steinberg: You see I have a great deal of sympathy with the argument that has been advocated that you should be spending the money more quickly but also what worries me as well is money should not be given out willy-nilly and that money is given to the projects. How do you assess that projects are doing what they said they were going to do?

  Ms Souter: We have very clear published criteria for each of our grant programmes which we provide in all sorts of different formats for people and obviously we are working within terms of our strategic plan which runs to 2007. The assessment process is a very formal process and we look at each of the criteria and assess against those. Obviously it is a recorded process as we are distributing public money, we have to be accountable for what we are doing. With the largest projects we will employ a monitor to make sure that what is happening on the ground is what people said they were going to do in their project. Now the degree to which we check projects, and the frequency with which we check projects, obviously depends on the size of the project we are talking about. If we are talking about a £20,000 local history project, which might be run through our Local Heritage Initiative programme with the Countryside Agency, there will be a very light touch monitoring assessment there. If we are talking about a £20 or £25 million grant, thinking about the £20 million given to the Royal Festival Hall, for example, there will be inevitably a much  greater degree of monitoring and detailed assessment as the programme goes along. We have talked about risk a lot already, I think it is right that we assess the risk of the various projects and apply a degree of monitoring accordingly.

  Q76  Mr Steinberg: A final question to Mr Dunmore: what do you hope the Bill that is going to come before Parliament shortly will do in terms of the distribution of the interest and the distribution of the balances?

  Mr Dunmore: Certainly we welcome the Bill and the particular reason why we welcome the Bill is because it will legitimise the Big Lottery Fund which will be very helpful. We welcome the fact, also, that in the Bill the Government is committed to giving us a much more flexible framework than the framework that the New Opportunities Fund had which will enable us to add value to the programmes that we have developed and to respond to the views of our stakeholders.

  Q77  Mr Steinberg: Can you answer two specific questions?

  Mr Dunmore: On the reallocation of the interest, I feel fairly neutral I think it could be regarded as being a fairer way of doing it. I do not think it will make a great deal of difference to the way we behave. I do not look at my balances in the NDLF every week and say: "This bit of it is interest and this bit is principal", I just work on the basis of the balances that we have got and the firm targets that we have for reducing them. I am not sure that will make a great deal of difference to me. Again, I feel fairly neutral about the other process that is proposed in the Bill as well.

  Ms Street: I wonder if I could correct something: I said £750 million but I am advised—I do not know if this brings you small comfort—it should have been £450 million not 750 million.

  Q78  Mr Williams: For the Olympics?

  Ms Street: That would be the diversion from the good causes.

  Q79  Mr Steinberg: 5%?

  Ms Street: Yes.


4   Note by Witness: The New Millennium Experience Company which built, fitted out and ran the Millennium Dome received Lottery grants totalling some £600 million. Back

5   Note by witness: I can confirm that the situation is essentially as described in paragraphs 4.15-4.17 of the NAO's Report. The National Lottery is expected to provide up to £1.5 billion to help meet the cost of the Games. Of this, about half would be raised by special Olympic Lottery Games, running over seven years, and the remaining £750 million would come from sports distributors (£340 million) and changing shares to good causes after 2009, should any of the remaining £410 million be needed. Back


 
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