APPENDIX 1: EXPLANATORY INFORMATION
Draft Payments into the Olympic Lottery Distribution
Fund etc. Order 2007
Q1. A more detailed
consultation analysis needs to be provided - the Committee will
want to see evidence that the Arts, Film and Heritage sectors
are in agreement. Para 7.10 of the EM does not make it clear whether
the consultation was public or only involved the limited circle
of lottery distributors. Please clarify.
A1. The second sentence
of paragraph 7.10 states 'All the Lottery distributing bodies
were consulted, along with key representative bodies of the affected
sectors and the Devolved Administrations.' They were:
Big Lottery Fund
Heritage Lottery Fund
Arts Council England
Scottish Arts Council
Arts Council of Wales
Arts Council of Northern Ireland
UK Film Council
Scottish Screen
Sport England
Sport Scotland
Sport Council for Wales
Sport Northern Ireland
UK Sport
Olympic Lottery Distributor
National Council for Voluntary Organisations
Scottish Council for Voluntary Organisations
Wales Council for Voluntary Action
Northern Ireland Council for Voluntary Action
Heritage Link
Central Council of Physical Recreation
Voluntary Arts Network
Scottish Executive
Welsh Assembly Government
Northern Ireland Executive
The consultation was also public in the sense that
it was announced publicly by Tessa Jowell on 15th March 2007,
and mentioned on the DCMS website.
In the event, as the number of responses was manageable
- and in the interests of openness - we have chosen to publish
all 21 responses we received in full at http://www.culture.gov.uk/Reference_library/Publications/archive_2007/Responses-OlympicLotteryTransferOrder.htm
Q2. The Impact
Assessment is supposed to give fuller background information into
the costs and benefits of the policy and the other options considered
- including what happens if you do not pursue the proposed course.
The whole evidence section of the document is missing.
A2. There is no prospect
of further funding from either the Government, which has increased
its contribution from £1,044 million to £5,975 million,
or from the Mayor of London, who has already increased his contribution
by £300 million.
Nor is there any prospect of raising private funding
in lieu of the Lottery funding, within the tight timescales remaining.
That is why there is no alternative to Lottery funding
to deliver the Olympic Programme. Without this funding there will
be no Games and the benefits of this huge regeneration programme
will be lost.
Of the £1,085 million that we are seeking through
this Lottery Order £410 million was part of the original
funding package for the Games announced in 2003. The additional
£675 million that we are seeking, we aim to refund by sharing
with the London Development Agency the profits from land sales
after the Games.
Between the submission of the Olympic bid in November
2004 and the announcement of the revised funding package in March
2007 the Government has increased its funding contribution nearly
six-fold but we are requesting an additional contribution from
the Lottery of just 45% (the £675 million), which we aim
to repay from profits from land sales after the Games.
In consequence the Government would now bear 64%
of the cost compared with 26% at bid, and the Lottery would bear
23% of the cost compared with 37.5% at bid.
The evidence section cross-refers to the Explanatory
Memorandum which includes details of the policy background and
the net effects of the Order on each Lottery distributor. As the
section in the Impact Assessment 'What is the Problem under Consideration'
states, this is an essential part of the funding stream to deliver
the 2012 Olympic and Paralympic Games. We do not intend to disclose
the funding options considered by Ministers or discussed with
the Mayor. However, we think it important to note that under the
terms of the Memorandum of Understanding between the Government
and the Mayor of London, the contribution from the National Lottery
could have been much higher than now proposed.
There was cross party support for the arrangements
announced in 2003 for bidding for the Olympics including that
key elements of the cost would be met by the National Lottery.
It was always clear, under the Memorandum of Understanding between
the Government and the Mayor of London that, if costs increased,
the National Lottery would have to contribute extra. Negotiations
between DCMS Ministers, the Chancellor and the Mayor of London
resulted in the Government's proposals as set out in the Order
and EM. The Government is now providing £6 billion to the
2012 budget and the Mayor of London is contributing an additional
£300 million.
The arts, heritage, sport and health / education
/ environment / charitable good causes will collectively have
£1,085m less available to them to distribute between 2008-09
and 2012-13 than they might otherwise have expected. However,
it is not possible to describe what benefits might have been from
forthcoming Lottery applications that have yet to be submitted.
What the Impact Assessments seeks to make clear is that no differential
impact is expected. The compensating benefit will be much greater
certainty that we can deliver a successful Olympic and Paralympic
Games in 2012, with all the regeneration, social, economic and
other gains that this will bring. These benefits are summarised
below:
London specific benefits
- The Olympics will act as a catalyst for the most
ambitious regeneration programme in recent memory. It includes:
- The largest urban park in Europe in over a century.
- Five new permanent sports venues.
- A one million square foot media centre for the
Games which will provide state of the art high quality business
space after the Games.
- 4,000 homes converted from the Village and a
further 5,000 elsewhere in redevelopment.
- An improved transport infrastructure including
the railways, roads, bridges, waterways, footpaths, cycle routes
and towpaths.
- One of the largest shopping centres in Europe
- a £7 billion private sector investment
- The Games are expected to create:
- 7,000 full-time equivalent jobs in the construction
industry
- 30,000 jobs in staging the Games
- 6,700 jobs in the wider visitor economy
- Jobcentre Plus has placed over 110 local people
into jobs on the Murphy Powerlines Project on the Olympic site
- 66 from host boroughs
- The London 2012 Employment and Skills Taskforce
aims to reduce worklessness in London by 70,000 by 2012 - including
20,000 in the 5 boroughs.
UK Wide Benefits
- There will be several venues outside London,
these are: Football in Glasgow, Cardiff, Newcastle, Manchester
and Birmingham; Sailing in Weymouth; rowing in Eton Dorney; canoeing
in Broxbourne and mountain biking in Weald Country Park
- Tourism benefits from the Games are estimated
to be worth up to £2.1bn. Over half a billion of this (£0.6
billion) will be UK Wide. Source: VisitBritain commissioned research
for the recent Tourism Strategy (Winning: A Tourism Strategy for
2012 and beyond)
- 70,000 volunteers will be engaged in the London
2012 Games, and it will be the largest volunteer force ever seen
in peacetime UK
- A Legacy Action Plan will be published by the
end of this year, detailing the legacy benefits to be gained from
the 2012 Games and how they will be delivered. These will include:
- Making the UK a world-class sporting nation
- Transform the heart of East London
- Inspire a new generation of young people to take
part in local volunteering, cultural and physical activity
- Make the Olympic Park a blueprint for sustainable
living
- Demonstrate the UK is a creative, inclusive and
welcoming place to live in, visit and for business
- All 8 English regions have now published their
plans for realising the benefits of 2012; For example, East of
England estimates that with the right strategy a potential £600
million boost could be delivered to the economy from the Games.
Devolved Administrations are continuing to work on their plans
for 2012.
- 79% of the public support the Games taking place
in London in 2012. Source: Sports Marketing Surveys Ltd research
conducted for LOCOG -published December 2006
- LOCOG will be contributing around £9 million
to encourage overseas Olympic and Paralympic teams to use pre-Games
training camps across the UK
- A Legacy Trust will be launched shortly to give
£40m of grants to community projects and encourage young
people to get involved.
Q3. The table in
the EM is very helpful but the explanation in the text does not
make the rationale for the 2 tranches sufficiently clear. Is it
simply two contributions from the same source, i.e. the mainstream
National Lottery Games, just announced at different times?
A3. Yes. Paragraph
7.10 of the EM explains the genesis of the £410m and the
Government's confirmation in June 2006 that the sum would be required.
Para 7.2 describes the events leading to a further call of £675m
from the Lottery announced to Parliament on 15th March 2007. Para
7.8 sets out the proposed contributions of Lottery distributors
to the £410m and £675m elements and the resulting totals.
The sums are to be transferred from the balances held on behalf
of each distributor in the National Lottery Distribution Fund
using the 15 quarterly payments described in the Order, a formula
agreed upon after a period of intense discussion with the Lottery
distributors following the March announcement, in preference to
the earlier proposal of larger annual transfers.
Q4. The EM says
that UK Sport will not have to surrender any of its allocation
but does not make it clear why Sport England, Sport Scotland etc
do - are they not also involved in preparing competitors? Please
can you clarify.
A4. UK Sport is responsible
for supporting the development of elite athletes from across all
parts of the UK, by investing public funds in sport's National
Governing Bodies to run high performance programmes. The other
Sport distributors do not have responsibility for directly supporting
Olympic and Paralympic athletes (although devolved administrations
do support talent development in their countries).
The Lottery was established to fund unique projects
and to aid regeneration and few projects better meet those criteria
than London 2012. We are transferring Lottery funds - after very
careful consideration and consultation - from one good cause to
another. The other sports distributors, e.g. Sport England which
is the lead agency for community sport, are contributing but will
certainly see a benefit as a result of the increased focus on
sport and the unique opportunity presented by the Games.
Q5. Could you specify
what the £1,085m set out in the Order is for - if UK Sport
is training the athletes what is this sum for?: is it infrastructure
e.g. building stadia, the Olympic village, transport links. You
say that the OLDF will distribute it but readers are not familiar
with the role of that organisation- can you please be more specific.
A5. The Olympic
Lottery Distributor (OLD) was established under the Horserace
Betting and Olympic Lottery Act 2004 to distribute funds from
the Olympic Lottery Distribution Fund. Under the legislation,
the distributor can make a grant or a loan to fund any facility,
function or service which it considers is necessary or expedient
to provide or undertake for the staging of the 2012 Games. The
distributor's main grant recipient will be the Olympic Delivery
Authority (ODA).
The Olympic Delivery Authority (ODA) was established
under the London Olympic Games and Paralympic Games Act 2006.
The ODA is the body responsible for delivering the venues, facilities,
infrastructure and transport for the London 2012 Olympic and Paralympic
Games.
Lottery funding is not ring-fenced to specific ODA
expenditures. It may be used to meet both capital and resource
expenditures.
The Board of the Olympic Lottery Distributor is responsible
for determining the purposes for which the Lottery funding that
it issues is used. It could contribute to meeting any of the following
expenditures, subject to the grant memorandum to be agreed between
the Olympic Lottery Distributor and the ODA.
A) Preparation of the site platform, including
enabling works, such as land remediation, demolitions and construction
of bridges, highways and other infrastructure
B) Construction of the venues, including the
Olympic Stadium and warm-up track, water-polo, handball, BMX circuit,
and the venues for hockey, basketball fencing and a number of
off-Park venues.
C) Logistics: the organisation and movement
of manpower, equipment and materials onto, and on and off the
site
D) Transport: Contributions to the cost of
constructing new infrastructure and transport operations
E) Village: Associated infrastructure and
other costs in relation to the Olympic Village.
F) ODA Management costs: Including the costs
of operating the ODA and its delivery partner
Olympic Lottery funding may also be used for other
appropriate purposes under the Horserace Betting and Olympic Lottery
Act 2004.
The Olympic Funding package of £9.325 billion
announced on 15 March 2007 includes provision for a programme
contingency of £2.747 billion. This is funding that is intended
to manage the inevitable uncertainties around a project of the
size, scale and complexity of the Olympics. Funding from the contingency
will be allocated only if and when it is absolutely necessary.
This contingency will be met primarily from Government funds but
the Olympic Lottery Distributor have indicated that around 20%
of this contingency could be met from the Lottery funds included
in the £9.325 billion package. This would help to push back
further the point at which some of the additional Lottery funding
we are seeking would be drawn down.
Department for Culture, Media and Sport
November 2007
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