Memorandum submitted by the Olympic Lottery
Distributor
OUR POWERS
1. The Olympic Lottery Distributor was set
up under the Horserace Betting and Olympic Lottery Act 2004 to
make National Lottery money available to support the London 2012
Olympic and Paralympic Games. It is a Non Departmental Public
Body.
WHERE OUR
INCOME COMES
FROM
2. OLD utilises the funds held in the Olympic
Lottery Distribution Fund (OLDF) to make grants and meet running
costs. Our income is currently derived from National Lottery games
whose proceeds are hypothecated to support the London 2012 Games.
It is planned that this will provide £750 million. So far
we have received £214 million and we have also earned £5
million in interest on funds awaiting distribution. Government
has announced its intention that, subject to Parliamentary approval,
after February 2009 a further £1,085 million will be made
available to the Olympic Lottery Distributor from Lottery games
whose proceeds are not hypothecated, ie funds which would otherwise
be available to those bodies which distribute Lottery money to
the arts, heritage, sport and to the community and voluntary sector.
(UK Sport will be protected from this diversion.) This would bring
the Olympic Lottery Distributor's total income to £1,835
million, or 17% of the total of National Lottery income expected
between 2005-06 and 2012-13. This represents about 20% of the
£9.35 billion budget for the Olympics although it is a higher
proportion of the budget of our principal grant recipient—the
Olympic Delivery Authority (ODA).
OUR PRINCIPLES
3. The Olympic Lottery Distributor is an
independent organisation accountable through Parliament to National
Lottery players for how their money is used. In making grant,
we will seek to ensure that everything we support provides facilities
which are fit for purpose for the Olympic and Paralympic Games
and will provide a long lasting legacy. Achieving a legacy which
is environmentally and socially sustainable is an objective which
we support. We will be open and transparent in coming to decisions
and we will always stand ready to ask challenging questions of
those using National Lottery money. We will monitor the use of
Lottery funds by the ODA whilst minimising the burden we put upon
them—striking a balance between the desire not to burden
ODA and our need to be accountable to Lottery players. Where possible,
we will rely on existing monitoring information produced internally
by ODA or collected by other members of the Olympic family, eg
the Government Olympic Executive. We will maintain a small organisation:
our target is that running costs spending will be less than 1%
of our income and we hope that the amount we earn in interest
will exceed our running costs. Our running costs in 2006-07 were
less than a third of 1% of our income.
WHAT WE
HAVE DONE
SO FAR
4. Parliament has given the Olympic Lottery
Distributor very broad powers. We can fund, by grant or loan,
"anything which is necessary and expedient for the delivery
of the London 2012 Games". In practice we have concluded
that our primary role is to support the ODA in their task of creating
the facilities necessary to host the Games. The Board has, however,
decided to set aside £19 million which they may make available
to recipients other than the ODA.
5. So far we have made grants totalling
£155 million to the ODA. This comprised Interim Grant of
£152 million made available to ODA to enable ODA to develop
its Business Plan and Corporate Plans whilst conducting necessary
business to the end of 2007. We also decided to pay a separate
Historic Grant of up to £2.6 million to meet the historic
costs related to the start-up of the ODA. We refused one application
to fund the Olympic Programme Support Unit.
6. We are currently considering an application
from the ODA for a grant to cover the rest of their expected life.
7. In announcing a budget for of £9.35
billion in March 2007, the Government defined £2.7 billion
as a contingent sum. The Olympic Lottery Distributor decided in
considering its overall funding policy, when making a Lifetime
grant it would hold back from the funds which it expected to have
available a sum which would be available should the ODA seek further
funding, ie a Lottery share of the contingency. If in the event
such funds are not made available to the ODA, these funds would
remain in the Olympic Lottery Distribution Fund and, unless the
Olympic Lottery Distributor used them in some other way, they
would remain unspent. As and when the Olympic Lottery Distributor
is wound up, it would be for Parliament to decide how they were
disposed of within the constraints of their status as Lottery
funds.
8. In concluding a grant agreement with
the ODA, the Olympic Lottery Distributor will ensure that where
assets are created or enhanced as a result of Lottery grant, provision
will be made for the ODA, or its successor body, to repay Lottery
grant.
9. The Government has announced that it
has agreed a Memorandum of Understanding with the Mayor of London
on how the proceeds of certain land sales on the Olympic site
may be shared between the National Lottery and the London Development
Agency. This falls outside of the remit of the Olympic Lottery
Distributor.
THE CHALLENGES
AHEAD
10. The major challenges facing the Olympic
project are those facing other organisations, especially the ODA
in constructing the necessary facilities and the London Organising
Committee for the Olympic and Paralympic Games (LOCOG) in raising
the funds for running the Games and operating them successfully.
Where we can, we will support them in their efforts. Other general
challenges are set out below.
HOLDING ODA ACCOUNTABLE
FOR THEIR
USE OF
LOTTERY MONEY
11. As a funder, second in size only behind
HMG, one of the challenges we face is balancing the level of proper
scrutiny which goes with the duty of being accountable for National
Lottery money with the need to avoid burdening grant recipients
or delaying progress on project which needs to move very quickly.
This is a challenge for all funders. We need to ensure that we
are zealous guardians of National Lottery players' money but we
wish to avoid unnecessarily adding to the burden the ODA face
in complying with the requirements of various funders. We have
sought to achieve this by having an open book relationship with
the ODA and by working alongside other funders and making use
of a common set of information.
INVOLVING THE
NATIONS
12. We are very aware that the money we
have available to distribute is provided by Lottery players all
across the UK. We face a particular challenge in helping those
Lottery players recognise the benefits which the Olympics can
bring. We share the view that the Olympics will be good for all
of the UK but inevitably the investment for which we are responsible
is concentrated in London. We will work to ensure that Lottery
players are aware of where their money is being spent and we will
encourage those who are concerned with delivering the Games to
continue to reach out to all of the UK, including through a vibrant
and inclusive cultural programme.
DELIVERING THE
LEGACY
13. We share with other funders the concern
that the legacy left behind after the Games is fundamentally important
and in a large part justifies such significant sums of public
investment. Detailed plans for legacy arrangements are yet to
emerge and the need to make progress on site means that vital
work has had to start already and key contracts will need to be
awarded in the coming months. It is important that legacy plans,
including a stable and strong client and a sound business plan
for the Olympic Park, are concluded soon. Planning for the times
during which the Games are held needs to go hand in hand with
planning for the period after the Games. We will monitor progress
on this over the coming months.
November 2007
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