Olympic Lottery Distribution Fund (Winding Up) Order 2014

Tuesday 13th January 2015 Grand Committee

Motion to Consider

16:35

Moved by

[Lord Gardiner of Kimble]

That the Grand Committee do consider the Olympic Lottery Distribution Fund (Winding Up) Order 2014.

Relevant document: 14th Report from the Joint Committee on Statutory Instruments

[Lord Gardiner of Kimble (Con)]

My Lords, the Olympic Lottery Distribution Fund—the OLDF—was established for the purpose of holding lottery funding for the London 2012 Olympic and Paralympic Games. The sum of £2.175 billion of National Lottery funds was raised for the Olympics out of a total funding package of £9.3 billion. The statutory instrument before us is an order that will wind up and distribute the remaining funds of the OLDF. The order provides for the remaining £69 million to go to the National Lottery Distribution Fund to be distributed in the usual proportions: that is, 40% to the Big Lottery Fund and 20% each to arts, heritage and sport good causes.

Lottery funds contributed hugely to the costs of staging this tremendous and transformative event, and it is right that we are able to give back to the NLDF in order to support good causes throughout the country. This approach will ensure that all the National Lottery distribution bodies benefit from these funds, given that they all were affected by the raising of funds for the Olympics.

While the order before us today is straightforward, it is worth taking a moment to pause, reflect and acknowledge the significant role that lottery funding had in supporting the extraordinary London Olympic and Paralympic Games of 2012. It was a once in a lifetime event which bestowed huge benefits on the whole country beyond the Games themselves. Thus the decision was taken, with cross-party support, to use lottery funds in the belief that the benefits to the country in sport, heritage, culture, tourism and regeneration would be greater than the disbenefits brought by a reduction in funding to other good causes.

The memories of that summer will remain with us for many years, from the feats of the elite athletes in our world-class stadiums to the extraordinary efforts of the thousands of volunteer Games Makers. More than that, the Games have left a lasting legacy: 1.7 million more people are playing sport once a week than when we won the bid in 2005; there are new homes and jobs in east London; there has been an increase in tourist numbers and spending; and there has been a huge boost to investment in the UK and to UK trade overseas. This legacy has been hailed by the IOC as a blueprint for future hosts. It has been an immense success for our whole country, and I believe that the return on this investment, funded in part by lottery money, is immense.

This success cannot be separated from the National Lottery. Indeed, in the recent recognition of the National Lottery’s 20th anniversary, the Olympics were brought up again and again as an example of the extraordinary effect that National Lottery funding can have. The investment from the National Lottery has paid truly exceptional dividends.

Some £79 million was previously given to distributors from the OLDF under regulations in July 2014. This, along with the £69 million remaining in the fund, is over and above the £675 million that will go back to distributors from the sale of land in the Olympic park from the early 2020s onwards. We therefore expect lottery distributors to receive back a total of around £823 million. This represents around 38% of the over £2 billion of lottery funding made available for the Games, in addition to all the extraordinary benefits to the country that I set out earlier.

The funds from the OLDF that are being returned to the NLDF will be put to good use. In anticipation of these funds, the previous Secretary of State for Culture held conversations with lottery distributors in late 2013, leading to a series of announcements of new funding programmes. These include: funding from the Arts Council England to promote the best of arts and culture from the UK to overseas countries; funding from the Heritage Lottery Fund to mark significant anniversaries across the UK; a programme from Sport England to improve the outdoor play areas in school; and many more.

The order dissolves the OLDF, which was set up specifically for the Olympic Games. Through sharing the remaining funds across the distribution bodies in the usual proportions, it also represents the Government’s strong commitment to ensure that good causes are supported fairly and well into the future. I beg to move.

[Lord Stevenson of Balmacara (Lab)]

My Lords, I thank the Minister for giving that full introduction to the order. I have no objection in principle to what has been said. I have a couple of points to make and a couple of questions that he might wish to answer, either today or subsequently in writing.

The first is my favourite comment about dates. There is a requirement on all who provide statutory instruments that they be brought in on common commencement dates, which are 6 April and 1 October each year. Why is this instrument not being introduced on a particular CCD? Before the Minister asks for guidance on that, perhaps I may continue a little because I am aware that the statutory instrument states that the order will come into force,

“in accordance with article 1”,

which states that the order will come into force,

“on the day after the day on which it is made”.

The date is not quite right in that sense.

I did not hear the Minister comment on the exchange of correspondence with the Joint Committee on Statutory Instruments. Would he like to do so, given that considerable pressure is placed on the department for failing to observe the rules and regulations relating to this issue? This may seem to be a trivial point, since I think I am right in saying that all that was required was that the statutory instrument should have been labelled in such a form that made it clear that it was one of those to which special consideration applied. I can see puzzled looks behind the noble Lord, so I may have got this completely wrong—but I have the relevant document here, which refers to the Olympic Delivery Authority (Dissolution) Order. I just wanted to check whether I had misunderstood what was being said, so perhaps the Minister can respond on that point. I think the matter is resolved and is not an issue, but it does bear on my point about the date, given that the date is now postponed for 40 days after the passing of the arrangements—which, again, takes us away from 1 October, and indeed 6 April.

More generally, I listened carefully to the story about the £2.175 billion in lottery funding placed at the disposal of the Olympic lottery distribution body. Again, I associate myself with the Minister’s comments about the brilliance of the Games and the way in which the lottery was able to play a key part. We fully accept that without this lottery funding there would have been a very different approach to Games; indeed, they would not have been as good as they were.

However, he was not entirely complete in his comments. The money that the Government were going to contribute through the lottery—or ask the lottery to contribute—was £1.85 billion, but he said that the amount spent was £2.175 billion. I just want to check my recollection of the difference between those figures. I think that I am right in saying that an additional tariff was placed on the normal lottery distributors—the arts, heritage and sports bodies—of £675 million each to top up the figures. That brings us very close to the £2.175 billion that the noble Lord mentioned. Can he confirm that my arithmetic is, if not exactly right, at least close to an approximation of what happened on the ground?

The reason I make that point is that I think the Minister also said that, at the winding up of this fund, there would be some £69 million left available, which technically should be with the OLDF but which is being transferred across to the NLDF—I apologise for the acronyms. That is good, but it is only 10% of the money that would have been going normally to these lottery distributors had the Olympic Games not happened. Perhaps the Minister could reflect on this. Again, I am delighted to see bodies now distributing the additional money for the good purposes which he mentioned in his closing remarks, but it would have been a rather different story had it been the full £675 million. That would have meant rather more being spent on the arts, sport and other matters of good value—but it is only £69 million. That is point one.

16:45

Point two is: why is it £69 million? If all the money was to be spent on the Olympic Games, why is there any left over? Was this good management and brilliant expertise in budgeting or was it some sleight of hand that we are not yet being told about? I would be interested to know what the story is here. I think I am right in saying that the Olympic lottery distributor was due to receive any proceeds, or a share of any proceeds, from the facilities that it funded, particularly the Olympic fields at the Queen Elizabeth Olympic Games site. Is that right and is that £69 million the same £69 million that was reported to have been paid back to the OLDF as a result of the sale of the Olympic village? If that is correct, are there any other funds that might be coming around later? Presumably there are still some contributions to come, perhaps from other facilities which have been made available elsewhere.

To the extent to which they are due to provide funding back into the original Olympic distributor, the OLDF, where will that go? Does that go automatically straight to the NLDF? I am sure that there is a straightforward answer to what happens when the fund is wound up, but there is a bit of gap between the £675 million which was pinched, or taken, from the sports, arts heritage and charities funds, and the £69 million which is going back. Is there any more money and, if so, will that help bridge that gap?

I have two final points. First, this was, in a sense, a one-off in that we do not get the Olympic Games very often—and presumably there are lessons to be learnt from that. Is the Minister in a position to comment on whether using lottery funding as we did was the right and appropriate way to fund the Games? Would there be an opportunity to reflect on that at some other point in the cycle? I say this because the precedent set by the Olympic Games could have been, but was not, used for the Commonwealth Games. We are aware that there are a number of other high-profile sporting and other activities coming to the United Kingdom over the next five, 10 or 15 years. Do we have any plans to deal with that, and what are the lessons to be learnt from the operations that were undertaken during the Olympics?

My last point is a slightly wider one, which I am sure the Minister will need to write to me about. I am aware that the payback scheme, which I think—I hope he will confirm this—has resulted in £69 million coming back to the lottery distributors, is based on a system that applied when the Dome was sold after extensive negotiations. Proceeds from that came back through the Homes and Communities Agency to the Big Lottery Fund. I wondered whether there was any more news about what was happening there, because that was to be a continuing process of fundraising. The deal was based, I think, on performance in the O2 arena subsequent to it being sold. Again, is money available, is it coming back and, if so, where is it going? I agree that that is a very complicated question to ask, and much wider than the brief, but I would be very interested in having a response in due course.

[Lord Gardiner of Kimble]

My Lords, I thank the noble Lord for a range of questions. I am most grateful to him for saying that if there are any outstanding points at the end, I can write to him with the full details.

As for the date, my understanding is that this is a general rule from which one may derogate for good reason. The purpose of these common commencement dates is to reduce the burden on business by providing just a few days per year on which the law is changed. This order will not in fact have any impact on business, but I will reflect a little more on what he has said and discuss the matter with officials, because clearly it is desirable that things are done correctly and clearly.

There were a number of points on funding. The £2.175 billion is made up of £750 million of lottery-specific games, £410 million of initial lottery funding from the NLDF, £340 million from sport distributors and £675 million of extra funding from the NLDF. Of course, I shall set that all out in the letter I will write to the noble Lord so that it is clear. As to whether any further money is due into the OLDF account, I understand that no further funds are expected, so that is extremely unlikely. If further funds are due once the OLDF is closed, the draft order provides that they will be distributed to the NLDF in the normal proportions.

Another point about funding is that my understanding is that the £69 million is in relation to the sale of the Olympic village, while the £675 million relates to Olympic land sales, which will be returned from the early 2020s. We are not of the view that there will be any more funding. I think I have covered the query about the distinction and the difference between the £69 million and the £675 million, but if necessary after reflecting on Hansard, I will write more fully on that.

As to whether the funding mechanism is working well, there was a general feeling that the lottery funding worked extremely well so far as the outcomes were concerned. It was acknowledged that there would be disbenefits in one sense, but the organisers and the Administration at the time—I think this was on a cross-party basis—took the view that this was of considerable national importance and, indeed, that the benefits went way beyond the Olympics into regeneration. There was a conscious understanding of and belief in that, which is one of the reasons why there was a determination to return as much money as possible, while recognising that there were probably causes which did not receive funds. It was felt that it was in the national interest and that the opportunities it provided for the nation outweighed those disbenefits. I think I said that there was a feeling of a national dividend that came forward on a range of scales.

Obviously, no one knows when there may be an opportunity for the country to host the Olympics or something of that standing again, but I am sure and would expect that whoever has the responsibility for that would reflect on how the money is raised and whether there is good custodianship. I think that there is a strong feeling that the money was well marshalled and spent, but clearly if there are national events using National Lottery Fund and, indeed, taxpayers’ money, there will need to be a very strong reflection on those experiences.

On the issue of the payback scheme, I am grateful to the noble Lord for having described it as “intricate” or “complicated”. I think that I might find it too complicated to get through this afternoon, and do not in any way want to mislead the noble Lord, so I would be most grateful if I could write to him on all the points that he raised. In the mean time, I commend the order to the Committee.

Motion agreed.