Examination of Witnesses (Questions 60
- 79)
TUESDAY 24 OCTOBER 2006
MS JANET
PARASKEVA AND
MR MIKE
O'CONNOR CBE
Q60 Mr Evans: Did you have any input
into the forecasts of the projected annual income from the Olympic
themed games?
Ms Paraskeva: That is not part
of our remit. Our role essentially is to receive the money that
is raised by the Lottery that goes into the Olympic Lottery fund
and of course after 2009 the top-up monies which have been identified
through the National Lottery Distribution Fund. Our role then
is to make sure that money is given in a proper fashion against
an effective application. The budgeting process is really outside
of our role.
Q61 Mr Evans: You would be interested,
would you not, that the estimate is about £750 million which
is the amount that you are expecting to get. Therefore you clearly
have some interest in whether that is going to be achieved, what
sort of games are taking place, whether there is going to be player
fatigue since it is the first time that people have contributed
through the Lottery for an Olympic games. You are at the cutting
edge here.
Ms Paraskeva: We are very interested
in it and while we have no formal role, of course we will only
be able to give out the money that we get in and therefore it
is in our interests, again in terms of the reputation of the Lottery,
the reputation of the Olympics and our accountability to the general
public, to make sure that their money is useful. Of course, we
have an interest in whether or not that £750 million will
be realised and will be enough.
Q62 Mr Evans: Are you confident?
Ms Paraskeva: We are looking very
carefully at the projections by Camelot and any future operator
of the money that they intend to raise through existing or new
games.
Q63 Mr Evans: I should declare an
interest that I own a small retail store in Swansea which has
a Lottery outlet. Therefore I will ask you this question, do you
find it at all difficult in the negotiations that you have had,
by the fact that there is going to be an announcement shortly
about a new bidder and maybe somebody taking over from Camelot,
we do not know yet, do we, who is going to be there in 2009?
Ms Paraskeva: We do not know who
the operator will be and we have to have confidence in the process
and the work that the Commission is doing looking at the applications
before the new licensee. We must have confidence in that process,
that they will look at the ability or otherwise of any applicant
to make sure not only that they can deliver in the long-term but
that they do not give us any kind of dip in productivity that
would seriously impede the kind of cash projections that we will
be working to. We are fairly confident that will be one of the
things in their sights as they select the new licensee.
Q64 Mr Evans: You are happy at the
moment then and you think that should they choose somebody else
other than Camelot it will slot in nicely and everything will
be agreed beforehand?
Ms Paraskeva: As I said, I do
believe that the National Lottery Commission will make the decision
and have got firmly in their sights the need to make sure that
all of the applications that they might consider seriously have
this written in as a very significant part of their objectives.
Q65 Mr Evans: To date, how much money
has come in?
Mr O'Connor: To date almost £60
million so far.
Q66 Mr Evans: £60 million?
Mr O'Connor: Yes. We were slightly
up on target at the end of the last financial year and this year
we have received about £43 million to date.
Q67 Mr Evans: In total you have had
£60 million since the Olympic game started?
Mr O'Connor: That is right, since
the game started and we have made one grant to the ODA.
Q68 Chairman: Given that the success
of the Games is very dependent on the Lottery's finance, are you
relaxed about the idea that potentially we are going through the
disruption and the change of operator at one of the most crucial
funding times?
Ms Paraskeva: I do not think we
can be relaxed about it, I think we have to put our confidence
in the selection procedure and in the way in which the application
will be looked at. I do not feel relaxed because it is our job
to make sure that we are able to give out the money that comes
in and therefore we are obviously as anxious as any of you will
be that the projected cash will be raised and that there are no
disruptions to that income generation because of the way in which
any changeover happens.
Q69 Chairman: Clearly the disruption
would be minimised if Camelot were to retain the contract. Is
that going to influence the process at all?
Ms Paraskeva: I have no idea,
that really is outside our remit.
Q70 Chairman: Can I ask you about
your funding policy. You clearly do not see yourselves simply
as being a body that writes cheques to the ODA when the ODA asks
for them. What discretion do you feel you have and on what grounds
would you consider rejecting a request from the ODA?
Ms Paraskeva: We do have discretion,
we are an independent body. Of course, the Secretary of State
lays down policy directions and at any moment I think she does
have the right to exclude particular kinds of funding arrangements.
Apart from that, we have absolute discretion to look at any application
before us and fund or not fund all or part of it depending on
whether we believe as a Board that it meets the criteria that
are laid down for a successful delivery of the Olympics. We certainly
would feel confident enough to say no to the ODA if we believed
that what they were presenting to us was unachievable. In a way
it is very linked to the question I think that I was asked right
at the beginning, it is the reason that we need to be as involved
as we possibly can in the groups that are talking about progress.
If something looks as if it might be going wrong, the sooner we
know about that the better. We do not want to find ourselves receiving
an application and suddenly, completely from out of the blue,
comes something that we have to say no to because obviously that
would be in no-one's interest because the funding could then slow
down the building of the site itself.
Q71 Chairman: You are pretty confident,
given the arrangements which you were explaining earlier and yourselves
that have been put in place, that you could resolve any disagreement
between the ODA long before it got to the point at which they
were asking you to write the cheque.
Ms Paraskeva: I think given that
they would know that we are going to write the cheque, although
we may decide not to write the cheque, they may listen to us fairly
seriously during the negotiations.
Q72 Chairman: Who else might benefit,
do you think, from your distribution of funds. Are there other
players in this process who are likely to come forward?
Ms Paraskeva: At the present moment
we have decided, in fact, not to open any kind of application
line because we fear that would encourage applications that we
could not necessarily meet. At the end of the day, if the Lottery
manages to exceed its expectations and we are projecting a greater
cash pot than is required, then clearly we might look to other
applications. There is nothing to prevent anybody at the present
moment, even though we not seeking applications, making that approach
to us.
Mr O'Connor: Parliament gave us
the power to fund anything which is necessary or expedient for
the delivery of the Olympic Games so we have quite a broad range
of powers. Clearly we see those people who are delivering the
physical infrastructure being the first priority call on our funds.
We could do other things and in fact to say that we would never
do other things would be to go in the face of what Parliament
has said we should do. Clearly, the review of costs which are
going on at the moment will be very important to us. I think we
would like to see the outcome of that before we could even consider
whether there would be room for anything else.
Q73 Mr Sanders: If a community wanted
to host a training camp for a series of events or an event, would
they be able to apply to you to upgrade their facilities in order
to host that?
Ms Paraskeva: I think that is
the responsibility of LOCOG.
Mr O'Connor: LOCOG have taken
on the responsibility of ensuring that training camps happen but
we also think that there will be local authorities, RDAs and also
the National Olympic Committees who bring their team to a country,
they should be willing to invest. At the moment we see it as LOCOG's
responsibility, it is not something which we are considering.
Q74 Mr Sanders: The success of ticket
sales is absolutely crucial to everything we are talking about
today. How much of a ticket sale do you think is down to the fact
that it is a Lottery ticket and people like a bit of a gamble,
or how much of buying this specific Lottery ticket is down to
the fact, "I feel part of the Games and I want them to succeed"?
Ms Paraskeva: I am not sure that
we know that yet, to be honest. I think the past history of Lottery
players in relation to good causes shows that while people are
interested in good causes and where their money goes, that is
not why they buy the ticket, they buy the ticket to win and we
know that because of the significant increase in ticket sales
every time there is a rollover.
Q75 Mr Sanders: This is different
because this is the first time we actually have no specific evidence
of the benefits when you buy it.
Ms Paraskeva: The reason that
we do not know that yet is that although we have some scratch
cards that are re-branded effectively, or new games replacing
old games and we have the Dream Number ticket which apparently
is doing very well, have not got anything which is very explicitly
selling the Games on a Lottery ticket.
Q76 Mr Sanders: Are you at all concerned
that there is a need to get a message out beyond London that people
are part of these Games in order to help promote ticket sales
or do you fear there could be a backlash that people reject this
Lottery because this is some London-based event which has got
nothing to do with me and I will buy a different one?
Ms Paraskeva: I think the people
all through the country were terribly pleased when the London
bid was successful. Personally I believe that there may well be
a different situation now because the Lottery funding for the
Olympics is a unique experience for people and I do think that
there is an opportunity there for the operator, and one hopes
that the operator will take that.
Q77 Mr Sanders: Should you not be
monitoring this and actually having a contingency in place if
there is customer rejection of this Lottery?
Ms Paraskeva: The difficulty for
us is that we do not have a formal role in that regard but as
I say we do have nervousness. We can in the end only give out
the money if the money comes in and therefore one of our interests
is trying to unofficially monitor exactly what Camelot at the
moment and any future operator is raising for us. If the projections
are such that we do not believe that we will be able to give out
the money which the business case from the ODA requires us, we
are going to have to make that known in the very early days.
Mr O'Connor: If I may add, as
my Chairman has said, it is very difficult to tell when somebody
goes in and buys an Olympic themed game whether they would not
have used that power to buy another Lottery ticket. I think it
may change over time because the excitement around the Olympics
should grow. There are some early positive signs. One of the Olympic
games is the "Going for Gold" scratch card. That has
been the single best selling scratch card which the operator has
used. Also, the game Dream Number which is the main game replaced
the game called Lotto Extra and the new Dream Number game is doing
better than the old Lotto Extra. It is quite early to tell but
we are very conscious that we need people all over the country
to buy Lottery tickets if this income is to be maintained. One
of the duties, as we see it, when we look at applications for
the Olympics, is to make sure that the reason we won the games
for London, selling the long-term legacy and inspiring young people
all over the country, is delivered because if further down the
line the Lottery player does not think the Olympics is bringing
them some benefit, they are not going to play the Olympic games.
We do see ourselves as not just being a conduit, we do see ourselves
as protecting the Lottery players' interests. Therefore when we
look at applications, we look at applications and we say, "Is
this delivering on the promise London made?"
Q78 Mr Sanders: All the projections
are that the Olympic Lottery will have an impact on the amount
that other Lottery distributors are distributing and the other
Lottery distributors are nationwide so a fair amount of that money
is coming back to communities that are a long way from London.
I live 200 miles away from London, why should I buy an Olympic
Lottery ticket instead of one of the other Lottery tickets where
I know at least some of that money might come back into my community?
Mr O'Connor: The question is,
what is the Olympics doing for the rest of the country which was
the question you discussed earlier. There is no doubt about it,
the majority of the activities will be in London but there will
be jobs to be had and there will be contracts to be won. Also,
on a less economic tangible basis, what the Olympics must do,
if it is to be worth money, is to inspire young people to become
active, if they do not take part in the Olympics, to take part
in sport, to change people's attitude and also it is a chance
for Britain, when we will be on show to the world in 2012, to
showcase all of Britain and to attract tourists to all of Britain.
There has to be an integrated strategy across a number of bodies
and the other Lottery distributors are also considering this.
One of the things which the other Lottery distributors have done
with Government is set up a £40 million trust fund to try
and support activities across the country associated with the
Olympics. One example is the UK school games which we aim to make
an Olympic-type experience, a multi-sport activity for young people.
The first one took place in Glasgow in September, the next one
will take place in Coventry next year. Under consideration now
is where those school games will be held running up to 2012. It
is important, as you said earlier, that we rise to the challenge
of making the Olympics meaningful to people all over the country
and if we can do that, then I think we are more likely to get
people to play the Olympic Lottery games.
Q79 Mr Hall: The Olympic Delivery
Authority mentioned in evidence to us that they have got a budget
of £2.375 billion of which the majority of that £1.5
billion is coming from the Lottery, so it is a substantial amount.
If I understand the evidence which we have been given today, the
Olympic Lottery-themed games have so far generated about £60
million in one year. That is not going to get anywhere near £1.5
billion in five years, is it? What happens if there is a shortfall?
Ms Paraskeva: The Chancellor of
the Exchequer, I believe, has underwritten the whole Games.
| 
