White paper on funding reform
back to the contents page

Below is a digest of the document, highlighting key decisions, proposals and requests for further views

Make sure you receive your fair share of lottery cash - take out a no-obligation trial subscription today.

The white paper on lottery funding is called a ‘decision document’, but also contains many ideas and proposals on which further views are sought. This is, in effect, a second round of consultation.

Big themes
Three themes will guide future lottery funding:

1. Streamlined and accessible funding for communities
2. Big transformational funding 
3. Innovation funding

Purpose of lottery funding
Yet again, the government reiterates its commitment to additionality (par 2.7): ‘Lottery funding will not be allowed to become a substitute for funding that would normally fall to mainstream government spending.’ This is backed up at par 5.13: ‘At the heart of lottery funding is a desire to be different, to innovate, to take risks. Lottery projects should excite and enthuse people, engage their interest and commitment, and make a difference.’ There is also a warning to the arts and sports councils (par 2.19), some of which have restructured their funding so that it is hard to tell the difference between lottery and exchequer grants: ‘...they must also ensure that lottery funding is doing something different from grant-in-aid. Inevitably there is some ambiguity about the precise dividing line, they must constantly work to protect additionality in this way…’ The current proportions of funds allocated to sports, arts and heritage will remain intact until 2009. 

Seven new funds

1. Open Grants
This is the community sector funding stream first proposed in the joint NOF/CF ‘vision document’ (see Lottery Monitor May 2003). It will be run by the new distributor and the white paper guarantees that:

  • the proportion of funding will be at least equal to what it is now
  • the government won’t exercise any tighter control than at present.

Other characteristics of the Open Grants fund are that it will:

  • be ‘demand-led’
  • have eligibility criteria at least as broad as those for current CF programmes
  • be outcomes-based l have tiered programmes according to grant size, with varying levels of scrutiny
  • not impose any tighter match funding rules than at present.

2. National Programmes 
 These are the old NOF funding strands (eg PE and Sport, Healthy Living Centre). They will be:

  • outcomes-based
  • drawn up in the strategic plan of the new distributor (which suggests an end to closely drawn policy directions of the sort that NOF has had for its first three funding rounds)
  • health, education and environment
  • very wide in their eligibility criteria, taking in ‘statutory or commercial agencies and other non-political community-based agencies (such as schools, patient interest groups, primary care trusts) as well as voluntary and community organisations’ (par 2.14).

3. Transformational Projects
 This is a significant new funding power for the new distributor. It will be expected to renew the lottery’s role as an agent of large-scale infrastructure and regenerative change. Projects will be ‘similar to some of those funded by the Millennium Commission. Some will be funded wholly by the new distributor but it will also use some of its funds to act as a catalyst to work jointly with other funders, including other lottery distributors, on projects which have the capacity to transform and inspire. These could be themed social or community programmes as well as major infrastructure investments.’ (par 2.15)

4. Young People’s Fund
 This is a showcase initiative which the Culture Secretary is particularly keen on. Initially it will be handled by NOF, and then the new distributor. Features:

it is to be set up within a year
initial budget is £200m
it will promote youth inclusion
it will fund both activities and facilities.

As reported in Lottery Monitor June 2003, this fund is likely to receive other pots of government money, developing into a cross-departmental repository for a range of schemes all directed at disadvantaged young people.

5. Olympic Fund
 The white paper confirms this new dedicated (‘hypothecated’) funding stream, which will be linked to specific new lottery games from 2004 onwards. The Olympic Fund will finance infrastructure and athlete preparation for the London 2012 games but also ‘an exciting programme of cultural, heritage and grass roots sporting investment’ (par 2.17).

The government will be watching this experiment in hypothecated funding, with a view to repeating it to promote other single causes if the approach goes down well with the public. 

6. Expanded Awards for All (England)
 The success of the small grants scheme is acknowledged and the widely supported proposal to increase A4A’s maximum to £10K is given the go-ahead for the England scheme. The government wants the 12-week turnaround time on A4A reduced, however.

Arrangements for A4A in the home countries are to be reviewed by their respective administrations.

7. Micro grants 
 The white paper heralds the trialling of another favoured initiative of the Secretary of State. A4A England will pilot micro-grants in one area. The paper gives only headline options on how this scheme might work; clearly the details are for A4A to work out.

Note, too, the invitation for suggestions about increased involvement in deciding on micro-grants applications: ‘We would also like to pilot ways of getting local involvement in decision making on individual grant applications as well as on funding priorities and would welcome views on this.’ (par 2.20)

Streamlined distribution
 The white paper sets out in part 3 the detail of the new distributor’s role. It is to be not just as a mega-distributor of general funding but also as the lead partner among lottery boards: it is given several coordinating and directive roles for tightening up on efficiency, customer service and joint working.

The core role of the new distributor closely follows the outline in the ‘vision document’ (LM May 2003). ‘The touchstone for the new distributor will be that funding should be for public benefit and that it should make real and sustainable improvements to the quality of life wellbeing of local communities.’ (par 3.6) Despite scepticism from NOF in particular, the white paper leaves open the possibility of a different legal form for the new body (ie, not a NDPB) – as long as tight accountability criteria are met (see par 3.4). As outlined above, the new distributor will run the Open Grants, National Programme, Transformational Projects and Young People’s Fund. It will also act as the residuary body for any unfinished business and unspent assets when the Millennium Commission winds up in 2006.

  • It is given a raft of lead responsibilities for improving efficiency and developing a broader joined-up funding approach:
  • it will be able to distribute non-lottery funds/li>
  • it will be able to fund social enterprises, and speial encouragement is given to working with the new Community Interest Companies
  • it will act as the ‘single front door’ for lottery applicants, running the phone hotline, the shared website, and a clearing house for initial inquiries which will include identifying suitable non-lottery funds for projects/li>
  • it will develop pre-applications support/li>
  • it will develop a common customer charter and a complaints procedure for all lottery boards (including an independent complaints reviewer, ombudsman-style)/li>
  • it will develop a common applications process, including a cross-distributor applications protocol (not a single form, but standardised information requirements and common use of terms to help simplify things) l it will develop a network for voluntary sector capacity building./li>

Joined-up working
 The informal meeting of board chief executives is to be beefed up into a regular ‘Lottery Forum’ to try and persuade them to do more joint decision-making –and the Secretary of State wants to hear from the board chairs regularly, too. The white paper asks whether it would be useful for the joint CEOs’ meeting to encompass Scotland, Wales and Northern Ireland boards – or whether each country should have its own lottery forum (par 3.20).

The lottery brand
 The crossed fingers logo will feature on a range of lottery funding materials and in future, ‘most’ funded projects will be expected to display lottery branding. The Joint Promotional Unit, which Camelot is taking initial responsibility for, will eventually transfer to the care of the new distributor. The JPU’s brief includes a lot of work on local promotion, and the white paper invites ideas about how this might be done.

The white paper endorses an annual National Lottery Day, a celebration involving a major prize draw, free entry to venues, free shows and showcasing of local projects, plus possibly also an emphasis on volunteering. The first National Lottery Day will run on the lottery’s 10th anniversary in November 2004.

Greater public involvement
 There are proposals throughout the white paper for increasing public consultation and participation in lottery funding. This ranges from the big-picture consultations done by the boards when they are drawing up their strategic priorities, through to decisions on individual grants locally. The white paper talks of bridging the ‘consultation deficit’ using opinion polls, citizens’ juries, local referenda, tick-box slips at ticket terminals and even TV-linked phone and text voting. There will be more delegation to local organisations for funding decisions. There is also a strong nod towards more autonomy for the home countries: ‘the devolved administrations in Scotland, Wales and Northern Ireland should have more influence in setting specific priorities and strategies, taking account of the needs and wishes of local communities and service providers there. We will legislate to achieve this if necessary.’ (par 4.22) 

NLDF balances
 The government is finally going to create powers for itself that will force the distributors to shift their balances more quickly. In a carrot-and-stick reform, the government will overhaul the very restrictive financial directions which slow down money transmission; but it will also change the way interest is calculated on unspent balances to remove the ‘perverse’ incentive to hoard cash. And it will take a further reserve power to remove excessive balances from one board and redistribute them to the others (par 5.10).

Cost of reforms
 In keeping with all prospective new law, the white paper identifies where change will cost money. It invites views and estimates on these costs (Annex A).


Deadline for submissions
 There is a formal 12-week consultation on this white paper. The closing date is 31 October 2003. The DCMS has asked for emailed submissions if possible, to lotteryfunding@culture.gsi.gov.uk

or in writing, to 
Rachel Miller, Review of National Lottery Funding, DCMS, 2-4 Cockspur St, London SW1Y 5DH

You can download ‘National Lottery Funding: decision document’ (pdf) from www.culture.gov.uk