RN The National Lottery

Research Note RN 01/72 17 July 2001 THE NATIONAL LOTTERY This subject map outlines the main organisations involved in the running of the National Lottery and their respective roles. Each of the distributing bodies and the grant programmes they operate in Scotland are examined in more detail. Some of the key issues surrounding the Lottery including additionality, operation of the funds in Scotland and the complexity of the application process are also examined. INTRODUCTION The National Lottery, which remains a reserved matter, was created by the National Lottery etc Act 1993. Five good causes were identified to benefit from Lottery money: sport, the arts, heritage, charities and the millennium. Some changes to the National Lottery, including the introduction of a new good cause covering health, education and the environment and a new regulator were made by the National Lottery Act 1998. The key organisations involved in the running of the Lottery and their roles are detailed below: UK Government The UK Government through the Department of Media Culture and Sport has policy responsibility for the way National Lottery proceeds are distributed to fund providing research and information services to the Scottish Parliament 1 the good causes. The Department issues policy directions (frameworks for specific initiatives) which are subject to public consultation and UK Parliamentary scrutiny (policy directions for sports and arts are issued by Scottish Ministers). The National Debt Office also administer the National Lottery Distribution Fund (NLDF) which distributes the money received from the National Lottery for good causes Scottish Ministers Although the Lottery is a reserved matter, the administration of Lottery distribution has significant implications for policy areas which are the responsibility of the Scottish Ministers. The concordat between the Department for Culture, Media and Sport and the Scottish Executive sets out the relationship between the two. Prior to devolution the Secretary of State for Scotland had powers to issue policy directions for the Scottish Arts Council (SAC) and sportscotland. With devolution this power has passed to Scottish Ministers subject to consultation with the Secretary of State. Scottish Ministers also have power to make directions about the Scottish operations of the UK-wide distributing bodies inasmuch as these operations relate to devolved policy areas. These powers do not extend to the Millennium Commission. Scottish Ministers do not have power to make decisions on the allocation of resources between Scotland and other parts of the United Kingdom, or on the general principles of the administration of Lottery funding. The National Lottery Commission The National Lottery Commission, a non-departmental public body, was established on April 1 1999 to regulate the National Lottery, a task formerly carried out by the Office of the National Lottery (OFLOT). Under the terms of the National Lottery Act 1998, the statutory responsibilities of the Commissioners are: • to secure that the National Lottery is run with all due propriety • to protect the interests of participants • to maximise, subject to the first two considerations, the amount of money available to good causes. The five Commissioners are presently: Lord (Terence) Burns, Rosalind Gilmore, Timothy Hornsby, Brian Pomeroy and Harriet Spicer. No Commissioner can chair for longer than one year at a time. Lord Burns, the current chair, was appointed on 12 October 2001. Operator The National Lottery is operated by Camelot Group plc, a private sector company owned by a consortium of other companies: Thales plc (formerly Racal Electronics) plc, Cadbury Schweppes plc, International Computers Ltd and De La Rue plc Consignia (formerly Post Office up until March 2001). Their objective is to maximise revenue for the Good Causes and the Government through lottery games in the most efficient and socially responsible way. Camelot was awarded the licence to run the National Lottery in 1994 following a competitive application process. Camelot successfully bid to run the National Lottery for another seven years in December 2000. The interim licence takes effect 26 October 2001 while the new seven-year licence commences 27 January 2002. providing research and information services to the Scottish Parliament 2 Distributing Bodies For each of the good causes there is an independent Distributing Body1 which has responsibility for implementing the policy decisions of the government. They are required to prepare and adopt strategic plans for how funds will be distributed2. Strategic plans are statements of distributors policies for making awards in the light of government policy and financial directions, the funds available and the assessment of both needs and priorities. They assess the eligibility of grant applications and award Lottery grants. NATIONAL LOTTERY INCOME Since the launch of the National Lottery in 1994 total ticket sales have amounted to over £32 billion3. However, sales have recently been declining. From a high of £5,514m4 in 1997/98 they declined to £4,983 million in 2000/01, down 2.1% on the previous year. According to Camelot the rate of decline has now stabilised, with large investment planned to support sales growth5. The money spent by players on lottery tickets is shared out approximately as follows: Chart 1: Lottery Income Distribution Lottery Income Distribution Camelot 5% NLDF 28% Prize Winners 50% Retailers 5% The Treasury 12% As the chart shows on average 28% of the fund goes to the National Lottery Distribution Fund (NLDF) for the good causes, Camelot receives 5% (4% operating costs and 1% profit), while the Treasury receives duty on sales of 12%. 1 The Distributing Bodies are: The Scottish Arts Council, Scottish Screen, Sportscotland, New Opportunities Fund, Community Fund, Millennium Commission, Heritage Lottery Fund 2 Section 25C of the National Lottery Act 1993 , as amended by the National Lottery Act 1998 3 National Lottery website as at 12/06/01 4 National Lottery Commission, National Lottery Facts and Figures 26/03/2001 5 Camelot website providing research and information services to the Scottish Parliament 3 The actual shares depend on a number of factors, for example, any prize money that winners fail to claim must be passed to the NLDF after 180 days. DISTRIBUTION OF FUNDING Prior to the introduction of the New Opportunities Fund (NOF)6 the five good causes each received 20% of the NLDF. When the NOF was set up the other cause’s share, apart from the Millennium Fund, fell to 16.66%. The NOF will receive the Millennium Fund’s share when it winds up in August 2001 taking its overall share to 33.3%. The share of money received by each UK country is specified for four of the six causes. The money allocated to arts and sports is divided according to population, though in the case of sports, a 'top' slice of 9.2% goes to the UK Sports Council for UK-wide projects. Both the Communities Fund and the New Opportunities Fund divide their share between the four countries on the basis of population figures weighted for deprivation7. The Heritage Lottery Fund divides its total budget by size of award and also allocates percentages of the total to the various heritage sectors. Half the annual budget is allocated to grants below £1 million, and Scotland receives a share of this based on population. The geographical distribution of funds across these four causes is shown below: Table 1: Geographical Distribution of good cause funding Arts (%) Charities (%) Sport (%) NOF (%) England 83.3 77.5 75.6 77.5 Scotland Wales Northern Ireland 8.9 5.0 2.8 11.5 6.5 4.5 8.1 4.5 2.6 11.5 6.5 4.5 Source: House of Commons Research Paper 00/24 The National Lottery Total Lottery funding for Scottish projects to date amounts to approximately £873.3 million8. Appendix 1 shows the total amount of Lottery Funding until the end of 2000 by each local authority area in Scotland. THE DISTRIBUTING BODIES THE COMMUNITY FUND The Community Fund9 supports charities and voluntary and community groups throughout the UK and UK agencies working abroad. The main aim is to help meet the needs of those at greatest disadvantage in society and to improve the quality of life in the community. It is the biggest independent funder of the 6 The NOF was set up in 1999 to administer the sixth good cause of health, education and the environment 7 For NOF, these hares are specified in the policy directions issued to the Fund by the secretary of State. For the Communities Fund these shares are self- imposed. 8 Department of Culture Media and Sport website, 20/06/01 9 Known as the National Lottery Charities Board prior to 9 April 2001 providing research and information services to the Scottish Parliament 4 voluntary sector in Scotland. The current grant making priorities were consulted on in 1998 and will continue to March 2002. They will fund: • • • • Projects which ensure a fair distribution of our funds around Scotland Projects which strengthen the infrastructure of the voluntary sector Projects which provide equality of opportunity Projects which are run by small organisations (those with an annual income of less than £100,000) and by community-led organisations. The grants programmes operated include: • Main grant programme which aims to give grants to help meet the needs of those at greatest disadvantage in society and improve the quality of life in the community. • Grants for projects costing up to £60,000 • Research grants programme • International grants programme • Awards for all programmes. The Community Fund is currently consulting on the Strategic Plan10, which sets out priorities for funding in Scotland for the years 2002-2007. It was also announced on 27 June 2001 by the Rt Hon Tessa Jowell MP, Secretary of State for Culture, Media and Sport11 that the Community Fund and the New Opportunities Fund will jointly take the lead in delivering a new £150m initiative to fund community projects. The initiative will target around 50 of the most deprived areas of the UK which have so far failed to receive their share of lottery money. Operation in Scotland Decisions on grants are made in Scotland by the Scotland Committee, who meets several times a year, on the recommendation of grants officers who assess all the applications. In 1999 the Community Fund widened the base of this committee by appointing three new members recruited through open advertising. The current Scotland Committee chair is Kay Hampton. The Community Fund in Scotland has made 7,345 awards to date with a total value of £200,962,71912. THE NEW OPPORTUNITIES FUND (NOF) The National Lottery Act 1998 created the New Opportunities Fund to distribute grants to health, education and environmental projects across the UK with particular focus upon the needs of those who are most disadvantaged in society. The NOF works with national, regional and local partners from the public, private and voluntary sectors to deliver these initiatives. The aim of the initiatives is to: • Improve the quality of life for people throughout the UK; 10 11 The consultation ends on 14 September 2001 Department of Culture Media and Sport press release, 27/06/01 ‘THE NATIONAL LOTTERY MUST DELIVER FAIR SHARES FOR ALL' 12 Department of Culture, Media and Sport Awards Database, 17 July 2001 providing research and information services to the Scottish Parliament 5 • Address the needs of those who are most disadvantaged in society; • Encourage community participation; • Complement relevant local and national strategies and programmes. The current initiatives which run into 2002 cover: • • • • • • Out of School Hours Activities Information and Communications Technology Training Healthy Living Centres Community Access to Lifelong Learning Green Spaces and Sustainable Communities Living with Cancer The third round of policy directions which came into force on 6 April 2001, allowed the New Opportunities Fund to support projects covered by these initiatives. The proposed new initiatives are: • • • • • School sport and outdoor education Health – reducing the burden of coronary heart disease and stroke. Transforming Communities Childcare Projects Small Grants Scheme The NOF is currently consulting until 3 September 2001 on how it should deliver the new initiatives in Scotland13. All the new initiatives are expected to be launched by spring 2002 Operation in Scotland There is no overall Scottish committee in contrast to other distributing bodies. The Board of New Opportunities Fund currently consists of a Chair and 10 members. Four members of the Fund are required to be persons suited to make the interests known of England, Scotland, Wales and Northern Ireland, respectively. The current Scottish board member is David Campbell OBE. Scottish advisory groups have also been recruited for each individual programme. The UK allocations for the first two policy directions, lasting 4 years, totalled £1.5 billion. For Scotland this figure is £163.55 million. The proposed new programmes have £167.9 m allocated to Scotland HERITAGE LOTTERY FUND (HLF) The HLF aims to improve the quality of life by safeguarding and enhancing the heritage of buildings, objects and the environment of the United Kingdom. For the period 1999-2002, HLF's strategic priorities are heritage conservation, national heritage, local heritage and heritage access and education. Grants are awarded under the following programmes: 13 New Opportuntiies Fund, Delivering New Opportunities - Scotland providing research and information services to the Scottish Parliament 6 • • • • Capital Grants Local Heritage Initiative Revenue Grants Programmes Small grants scheme for capital projects up to £50,000. HLF special programmes include: • the Joint Places of Worship Scheme (operated with English Heritage), • the Townscape Heritage Initiative (THI) and • the Urban Parks Programme. HLF are currently consulting on its strategy for 2002-200714. The priorities being consulted on are: • • • supporting conservation to ensure that the things we care about remain in good shape for future generations broadening the range of heritage, as particular objects, places, traditions and customs can have different relevance and meaning to different communities support for projects which increase access and education opportunities, extending the enjoyment and understanding of heritage to new audiences. Operation in Scotland The HLF has a Scotland committee that makes decisions on HLF grant requests of up to £1 million in their particular area. The committee is responsible to the main board of trustees (UK wide) and will refer any decisions that are controversial or raise issues of policy to the board. Sir Angus Grossart chairs the Committee for Scotland. There have been 475 grants awarded in Scotland with a total value of approximately £190m representing 11% of all UK grants and 11% of all UK spend15. SPORTSCOTLAND Sportscotland provides funding for individuals, sports clubs, local government and the governing bodies of sport for sports development and the provision of facilities. Sportscotland’s strategic plan Levelling the Playing Field sets out its plan for the distribution of lottery funds over the period 1999/00-2002/3. It runs the following Lottery grant programmes: • • • • Talent Identification and Development (pilot) Talented Athletes Junior Groups Major Events 14 15 Heritage Lottery Fund The Horizons of Heritage HLF website, Fact sheet on applications received and grants awarded, Awards for All and other related community grants are excluded from the analysis. As at 25 June 2001 providing research and information services to the Scottish Parliament 7 • • • • • • TOP (to assist primary schools and community organisations to support children in increasing their physical activity and skill levels and to encourage their involvement in sport.) National Coach Support Performance Coach Development School Sport Co-ordinators Awards for All Sports Facilities At the beginning of 1999/2000 sportscotland began to wind down the Capital Programme which it had operated since the inception of the Lottery for various reasons including estimated income decrease because of transfer of funds to the NOF. Consequently sportscotland decided to deploy its limited capital funds to what already existed and to complement some revenue programmes. The total amount committed by the sportscotland Lottery Fund since March 1995 is £140,000,000 16. SCOTTISH ARTS COUNCIL (SAC) The SAC’s national lottery funding strategy 1998-2002 identifies the strategic priorities of: • • • • • • • • Making the arts available to those who have had few or no opportunities to experience them Increasing arts activities for and by children and young people Increasing the numbers and broadening the range of people enjoying and taking part in the arts Making sure there is a fair geographic spread of buildings and activities throughout Scotland Encouraging arts activity as part of the policies of non-arts agencies Supporting film-making and distribution Helping arts organisations achieve lasting positive change Developing the creative and technical skills of those who work in the arts To meet these strategic priorities funds are available through the following schemes: • • • • • • • 16 Capital Projects Access and Participation Children and Young People Skills Development Audience and Sales Development Advancement Creative Scotland Awards Information from sportscotland website as at July 1 2001 providing research and information services to the Scottish Parliament 8 • • • • • • Creative Industry Company Scheme Awards for All Arts and Social Inclusion Partnerships Local Authority Partnerships Scheme Strategic Development Fund Diversity 2001 The SAC is planning to introduce some small changes to a number of lottery schemes to extend the strategic use of lottery funds and help improve the application process. In the future higher priority is likely to be given within every Lottery scheme to appropriate applications from areas which have benefited to a lesser extent in the past. In the future there will also be a shift away from capital programmes towards arts activities. Since the start of the Lottery funding a total of 1,313 awards have been made with a total value of £153,136,74917. SCOTTISH SCREEN On 7 April 2000, Scottish Screen assumed responsibility for allocating National Lottery funds for all aspects of film production in Scotland. This represents about £3m per year for film production. Other National Lottery funding programmes operated by the Scottish Arts Council remain open to film and video projects and organisations. The various funding programmes operated by Scottish Screen are as follows: • • • • • • • Feature Film Production Finance Short Film Production Funding Project Development Funding Distribution and Exploitation Support Company Development Programme Short Film Award Schemes Twenty First Films - Low Budget Film Scheme The current chair of the Scottish Screen Lottery Panel is James Faulds . THE MILLENIUM COMMISSION The Millennium Commission's purpose is to assist communities in celebrating the year 200018. Millennium projects fall into three categories: • Capital Projects (£1.25 billion) • Millennium Awards (£200 million) • Millennium Festival (£100 million) Projects are based around five core themes: • Encouraging environmental sustainability 17 18 As at 19 July 2001, Scottish Arts Council As at July 2001 the Millennium Commission Awards for individuals was still open for applications providing research and information services to the Scottish Parliament 9 • • • • Promoting science and technology Revitalising our communities Investing in our education Supporting our communities The composition of the Commission is: two Ministers, one who chairs the Commission; one member nominated by the Leader of the Opposition; and six independent members, drawn from across the UK and representing a broad range of interests. The Commission meets monthly, and more frequently when necessary. Matthew d'Ancona is the current Millennium Commissioner. A total of 290 awards have been made in Scotland totalling £197,713,656m. Capital projects funded in Scotland include Our Dynamic Earth in Edinburgh, the Glasgow Science Centre and the University of Highlands and Islands. AWARDS FOR ALL The Awards for All scheme is a Lottery funding programme, run jointly by Lottery Distributors in England and Scotland and Northern Ireland, which supports local groups19. Awards for All (Scotland) provides small grants, between £500 and £5,000 that bring people together and increase people’s involvement in a wide range of community activities, while being well planned, open and accessible. It funds small groups involved in the arts, sports, heritage and charity activities with annual incomes of less than £15,000. The current second phase of the scheme was launched in July 2000 and will continue until at least 2002. ISSUES Since the establishment of the National Lottery a number of concerns about the principle and operation of the lottery have been raised. Concerns have been focused particularly on: • additionality • the operation of lottery funds in Scotland –particularly the NOF • the administrative process ADDITIONALITY While the principle behind Lottery funding is that funds should not replace government funding for services but should add to public spending some have argued that in practice this principle has been breached, particularly by the New Opportunities Fund which operates in areas that are traditionally associated with government provision (such as health and education). For example, a recent debate20 in the Scottish Parliament on the New Opportunities Fund highlighted concerns by a number of MSP’s about the additionaltiy of the most recently announced policy directions: However, in the same debate it was also argued: 19 Initially the Communities Fund, Scottish Arts Council, Sportscotland and HLF. The Milleniumm Commission joined in April 1999 and the NOF joined in 2001. 20 Scottish Parliament, Official Report 28 June Vol 3 No 13 providing research and information services to the Scottish Parliament 10 Robert Brown (Glasgow LD): “ What is additionality and which existing projects are we talking about replacing? There would be unanimity throughout the chamber that for a council to close a project and then reopen it with lottery funding is not an acceptable way of going about things. On the other hand, councils may have powers that are not being used, but which can be advanced or enhanced by new opportunities funding that is more flexible on the fringe. Any advantage that is taken of such opportunities should not necessarily be criticised. “(Col 2161) The recent House of Commons Culture, Media and Sport Select Committee on the National Lottery also heard evidence on the additionality debate and reported21 that “The additionality principle is not sacred… we believe that at some stage the rigidity of the additionality principle should be a matter for discussion.” OPERATION IN SCOTLAND Some of the concern about the operation of lottery funds in Scotland22centres on the extent to which the funds adequately reflect Scottish priorities. Again such concern focuses particularly on the NOF. For example, SCVO’s submission to the consultation on the third policy directions of the NOF states the priorities: “..do not reflect Scottish priorities, which clearly, post-devolution, are diverging from those identified in Whitehall for England. SCVO would like to record its continued view that all decisions about the Scottish proportion of the New Opportunities Fund should be the subject of scrutiny by the Scottish Parliament after wide consultation in Scotland. SCVO believes that further, detailed, policy-making should be the responsibility of a Scottish committee of the NOF Board, which is open to representations from a wide range of interests…Arrangements for mutual consideration as between DCMS and the devolved administrations are poorly developed.” However, the NOF has stated that initiatives show variations from those originally suggested in the consultation paper to reflect the different priorities arising from the consultation process in different parts of the UK. There are also regional differences in current schemes, for example, the Scottish Lands Fund is a uniquely Scottish initiative. THE ADMINISTRATIVE PROCESS Issues have also been raised about the complexity of the grant application process, the length of time taken to assess applications and the time taken by organisations to make applications which are not always successful. To assist in improving this situation a Lottery funding hotline was set up in February 2001 to make information easily accessible to groups who have limited experience of applying for funding (0845 275 0000). Also launched in February was a one stop shop for information on Lottery programmes on how to apply for Lottery funding, House of Commons, Department of Culture, Media and Sport Select Committee, First Report 2000-01 Operation of the National Lottery 22 For example, Scottish Parliament Debate 17 November 1999, Social Justice Committee meeting 5 April 2000. providing research and information services to the Scottish Parliament 11 21 as well as providing information on grants already granted and links to other grant giving bodies. providing research and information services to the Scottish Parliament 12 LINKS Awards for All: www.awardsforall.org.uk The Community Fund : www.community-fund.org.uk Department of Media Culture and Sport: www.culture.gov.uk/lottery/index.html Heritage Lottery Fund: www.nhmf.org.uk Millennium Commission: www.millennium.gov.uk/index_v2.htm The National Lottery: www.national-lottery.co.uk The National Lottery Good Causes: www.lotterygoodcauses.org.uk The National Lottery Commission: www.natlotcomm.gov.uk Scottish Arts Council: www.sac.org.uk Scottish Screen: www.scottishscreen.com Sportscotland: www.sportscotland.org.uk providing research and information services to the Scottish Parliament 13 ANNEX 1 National Lottery Awards by Local Authority Local Authority Aberdeen City Aberdeenshire Angus Argyll & Bute Clackmannanshire Dumfries and Galloway Dundee East Ayrshire East Dunbartonshire East Lothian East Renfrewshire Edinburgh, City of Eilean Siar Falkirk Fife Glasgow City Highland Inverclyde Midlothian Moray North Ayrshire North Lanarkshire Orkney Islands Perth & Kinross Renfrewshire Scottish Borders Shetland Isles South Ayrshire South Lanarkshire Stirling West Dunbartonshire West Lothian 95-2000 Awards Total 95-2000 Total 95-2000 Per Value (£) Head (£) 173 10,895,797 50.46 425 210 355 90 522 202 279 188 171 110 921 182 202 613 1040 831 136 155 192 293 581 108 319 240 321 104 212 613 236 178 182 20,986,676 4,093,675 9,921,777 3,768,747 13,190,885 23,450,977 6,928,453 3,086,788 14,093,271 2,673,848 98,406,397 7,805,868 6,172,925 20,082,309 109,335,755 29,707,296 5,939,698 7,829,274 4,618,934 12,377,882 10,940,183 6,943,874 19,579,590 8,296,567 10,710,792 2,803,807 4,958,536 23,815,411 20,298,335 5,665,878 7,805,868 92.68 37.13 109.57 77.21 89.54 157.47 56.86 27.83 158.35 30.17 218.67 276.41 43.1 57.63 178.75 142.4 68.67 97.04 53.68 88.54 33.5 349.99 146.93 46.54 100.85 121.8 43.16 77.48 242.86 59.21 43.05 Note:Does not include overseas grants, multi-regioanl grants and UK wide awards Scotland average Head % of total UK awards % of UK population Per £147.38 10.17% 8.68% Source: Lottery Monitor Feb 2001, Volume 5, Issue 9, p11 providing research and information services to the Scottish Parliament 14 Subject Maps are compiled for the benefit of Members of Parliament and their personal staff. Authors are available to discuss the contents of these papers with Members and their staff but cannot advise members of the general public. providing research and information services to the Scottish Parliament 15