Select Committee on Merits of Statutory Instruments First Report


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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