The story of the Big Lottery Refund campaign: everything we know so far…
In this section, we sum up everything we have learned about the complex and convoluted story of the Government’s raid on the Lottery to fund the Olympics. The finances around the Olympics are extraordinarily complicated but also not sufficiently transparent. If you know of further information which could help clarify the story further, please email us at biglotteryrefund@dsc.org.uk.
The beginning of the story – Labour raids the Lottery as Olympics budget is trebled
The next chapter – Coalition Government keeps the commitment, but drags its heels
A further footnote or two – some movement towards an earlier payback?
The latest chapter – HM Treasury claiming the ‘underspend’ on the Olympics budget
A closing thought…
Resources
The beginning of the story – Labour raids the Lottery as Olympics budget is trebled
After London won the bid for the 2012 Olympics, the organisers and the Government realised they needed to treble the budget to some £9.3bn, including a massive multi-billion pound contingency. As a result, in 2007 the Government raided an additional £675 million of lottery revenues to help fill the gap. £425 million of this should have been distributed by the Big Lottery Fund. This is where we get the figure of £425 million for our campaign.
In fact, the £425 million taken from Big was on top of £213 million which the Government had already arranged to take from Big to support the original budget for the Games. This took Big’s total contribution to the Olympics budget to £638 million, or nearly two-thirds of the £1.085 billion Olympics contribution from general lottery revenues. Despite having nothing to do with elite sport, Big became the biggest lottery contributor to the Olympics.
The decision to raid the £675 million in 2007 was criticised at the time by many charities and politicians in Parliament (including people now in Government). In response, in June 2007 the then Olympics Minister Tessa Jowell told the House of Commons that the Government had agreed a Memorandum of Understanding (MOU) with the Mayor of London, designed in part to reimburse the Lottery for lost revenues, using the proceeds from selling Olympics assets.
According to the Minister, this would:
‘give lottery distributors real confidence that the additional funding necessary for a successful Olympic and Paralympic Games will be
re-paid—providing them and the whole country with a further 2012 dividend’
Crucially, there was never any schedule or timeframe for selling the assets set out in the 2007 MOU, but the expectation of campaigners in the voluntary sector was certainly that it would be prompt.
The next chapter – Coalition Government keeps the commitment, but drags its heels
After coming to power, the current Government said it would honour the previous commitment to repay the £675 million by selling Olympics assets, and negotiated several revisions of the original agreement. To our knowledge, the latest of these remains unpublished – we obtained it through an FOI request and you can view the PDF here.
It was at this time that Government also announced that repayment of the Lottery from Olympics assets sales would take place over a period of 25 years, and would be ‘potentially’ completed by 2030/31. The following lines have been oft-repeated in letters responding to our campaign and in the House of Commons:
‘the National Lottery distributing bodies are entitled to receive £675 million from the receipts from land sales in the Olympic Park, in the years after the Games in return for the £675 million transferred to the public sector funding package for the Games. The timing of returns from the Olympic Park land sales is dependent on the timing of the land sales – currently envisaged to take place over a 25 year period, and receipts will be delivered to the Lottery as the land sales take place. Current estimates are that the Lottery should start to receive payments in the mid-2020s with the full £675 million potentially paid by 2030/2031.’
This situation is quite simply not good enough. The National Lottery does not exist to fund massive public infrastructure projects like the transport network, property redevelopment and sports stadia. The Big Lottery Fund provided the bulk of the £675m mentioned here, and it exists to fund projects which help people in need across the UK, not just in London. This money was wrongly taken without the consent of the people it is intended to help. 2031 is not acceptable as a timeframe for refunding the money. It is ridiculous to expect us to accept that promises made now will be kept by Governments 20 years from now.
Another related development, announced in early 2012, involved the Government turning over control of the assets to the Mayor’s London Legacy Development Corporation. You can find this here. Government officials repeatedly tell our campaign that:
‘This commitment to reimburse the National Lottery is enshrined in a contractual agreement with the Mayor of London, and we have also secured an arrangement that will deliver earlier returns than would have been the case under the 2007 Memorandum of Understanding (MOU), between the Government and the Mayor. Under the contractual agreement, the National Lottery will share receipts with the Mayor, after the first £223 million of receipts have been allocated to the Mayor, rather than after £650 million, as was the case under the 2007 MOU.’
Despite these assurances the assets deal is not credible or reliable. Government has negotiated it and renegotiated it behind closed doors without any public consultation. Government says it is ‘enshrined’ in a contract as if this is holy writ – but we all know contracts can easily be amended or broken, especially given the length of time involved, and the number of Governments that will be in place between now and 2031. It is not certain either how this new agreement will ‘deliver earlier returns’ as there was never any schedule in the 2007 MOU.
Further, it is fanciful to believe that the Mayor of London will be motivated to sell off prime assets in one of the most valuable property markets on the planet to reimburse the Lottery. In fact, it looks like most of the assets will be leased or re-purposed – not sold. And whatever the Mayor does sell off is unlikely to be of more value than £223 million! Government is essentially promising to pay back money by selling something it doesn’t even own, which will probably never be sold by somebody else, whom it doesn’t control. This is not a good deal for the Lottery and the millions of vulnerable people who benefit from its funds.
A further footnote or two – some movement towards an earlier payback?
In response to our continued campaigning, a couple of notable announcements came out during the summer of 2012, concerning the return of money from the sale of the Olympic Village and the refund of unspent funds in the Olympic Lottery Distribution Fund at the end of the Games.
Government now tells us that:
‘the Olympic Lottery Distribution Fund (OLDF) will also receive as repayment of grant in 2014, just over £69 million from the sale of the Olympic Village. The Village receipts will be transferred to the National Lottery Distribution Fund (NLDF) for the benefit of the Lottery good causes.’
As far as we can tell this money appears to have been the result of some additional and unpublicised raid on the Lottery, which was made when the property deal with the private sector to build the Village collapsed. Government stepped in to provide most of the funding but it appears that there may have been an additional raid on the Lottery to fund a gap in the amount needed. The Big Lottery Fund announced in September 2012 that it was setting up an Olympics Legacy Trust to receive and distribute this money.
Government now tell us that:
‘The National Lottery will benefit from any funds, including interest accrued, not required for the Olympic Programme and remaining in the Olympic Lottery Distribution Fund (OLDF) after the Games.’
The Olympic Lottery Distribution Fund (OLDF) is sort of a budgetary receptacle for gathering all the raided lottery funds. This money has been spent by the Olympic Delivery Authority on the infrastructure for the Games (not on supporting the athletes or the running of the event itself).
It is still not completely clear how much money remains in the OLDF, and exactly how much might eventually be refunded to the Lottery distributors. The Government’s final report on the Olympics of October 2012 shed no further light on the issue. However, it emerged during a House of Commons Public Accounts Committee hearing on 12 December 2012 that Fiona Mactaggart MP had received correspondence from the Culture Minister Maria Miller, indicating that Government expected £30-50 million to remain unspent in the OLDF at that point. Subsequently a letter to DSC from the Sports Minister Hugh Robertson MP stated that:
‘the final balance in the OLDF is likely to be somewhere in the range £100 million to £150 million, including £71 million receipts from the sale of the [Athlete’s] Village. However it will not be possible to determine the exact amounts until 2014’.
The latest chapter – HM Treasury claims the ‘underspend’ on the Olympics budget
In its final quarterly report on the Olympics in October 2012, the Department for Culture, Media and Sport announced that £480 million of the Olympics budget (i.e. the £9.3bn budget) had been unspent at that time. Of the £480 million, Government said it expected to spend around £103 million, and hand £377 million ‘underspend’ to the Treasury, not the Lottery. This is outrageous.
Our campaign has been calling for any underspend to be used to refund the Big Lottery Fund immediately, because we do not believe the assets deal is credible or reliable. It is vital that this money is made available as quickly as possible so that it can benefit vulnerable people and communities during difficult times.
Despite this our calls have so far fallen on deaf ears. The Government says the underspend will go back to the Treasury. This raises an even bigger question for the wider public about the governance of this country. We now find ourselves in a situation where the National Lottery is effectively subsidising the Exchequer, via the mechanism of the Olympics. Whatever the technicalities of the precise budgetary arrangements, this is simply wrong, and not what the Lottery was ever intended to do. It violates the spirit if not the letter of the law.
A closing thought…
In end, these technicalities and complexities aren’t the point – the principle is.
Lottery money is not Government money. It is raised from lottery sales not taxation, and it is intended to benefit charitable causes, not Government coffers. This money should not have been taken in the first place.
It’s stating the obvious that charities and the millions of people they help across the UK need this money to be refunded now, not in several decades time!
Government made a promise to pay it back – and we want it back! NOW!
You can help us achieve this by supporting our campaign today!
Resources
Interested to learn more about this issue? The following documents will be of interest:
|
