National Assembly for Wales
CC(3) VS11
Communities and Culture Committee
CC(3) 06-07 (p1): 14 November 2007
Inquiry into the Funding of Voluntary Sector Organisations in Wales
Purpose
To provide an overview of the funding of the voluntary sector in Wales by the four distributors of Lottery funding: the Arts Council of Wales, the Big Lottery Fund, the Heritage Lottery Fund and the Sports Council for Wales.
Background
Under the terms of the National Lottery Etc Act 1993 (the 1993 Act), as amended, there are five good causes funded by the National Lottery, the fifth being added by way of the National Lottery Act 1998. Each of these good causes received a share of the funds raised by the National Lottery, with Wales receiving a consequent share. The table below refers:
| Good Cause | Share of Funds - UK | Share of Funds - Wales |
|---|---|---|
| The Arts | 16.3% | 5% |
| Sports | 16.3% | 4.5% |
| National Heritage | 16.3% | 4.5% |
| Charitable Expenditure | 16.3% | 6.5% |
| Health, Education and the Environment | 33.6% | 6.5% |
The apportionment of funding between the home nations was initially based on population figures as set out in the 1991 census. That put Wales’ share at 5%, though this was never formally prescribed. The variations in funding are caused by differing funding practices between the good causes and are set out in Annex 1.
Welsh Assembly Government & the National Lottery
Matters relating to the National Lottery are not fully devolved. The National Lottery remains a UK-wide institution, with the Department for Culture, Media and Sport responsible for all non-devolved matters. This includes the designation of good causes and distributors, the apportionment of the funds between the good causes and the management of the National Lottery Distribution Fund.
The power to issue policy directions setting the strategic framework of operations for distributors has been devolved to the Welsh Assembly Government. Welsh Ministers are responsible for setting strategic outcomes and priorities for each of the four distributors operating in Wales, taking account of the needs of the people of Wales.
Welsh Ministers issued directions to the Big Lottery Fund (BIG) in November 2005. Based on those directions BIG developed a portfolio of programmes including the highly successful People and Places programme. Worth £66 million over three years the programme is aimed at improving communities and their environments. These directions are due for review in 2008.
Work is underway on revised policy directions for the Sports Council for Wales and the Heritage Lottery Fund. Direction for the Arts Council of Wales will be considered in the New Year.
The Welsh Assembly Government is fully committed to the principle of additionality that underpins Lottery funding. While there is a requirement for an alignment of funding to ensure complimentarity and to provide the best return for the people of Wales, Lottery funding is distinct from Government funding. Neither should be used as a substitute for the other, though Lottery funding can add value to Government investment where appropriate.
This principle is at the heart of Welsh Assembly Government policy on Lottery funding in Wales.
The 2012 Olympic Games and Paralympic Games
The National Lottery is required to contribute £2.2billion towards the costs of the 2012 Olympic Games and Paralympic Games. This is towards the costs of construction, the total budget for which is £9.3billion including:
- £6.1 billion from the UK Government;
- £2.2 billion from the National Lottery; and
- £1 billion from the Mayor of London.
Staging costs for the Games fall to the London Organising Committee for the Olympic Games. Wales is not contributing to the costs of staging the Games, but the distributors in Wales will experience a consequent drop in funding as a result of the contribution to the construction costs.
No contribution for the Games will be made before February 2009. Nor will the contribution be made in one payment. The Department for Culture, Media and Sport have stated that the contribution will be made in a series of instalments between 2009 and 2012, allowing distributors time to plan future funding commitments.
The Welsh Assembly Government is working with distributors to minimise the impact. We have received a commitment from the UK Government that the Voluntary and Community Sector will not experience a cut in funding. Nor should any existing commitments be affected. The Lottery distributors will receive a share of the proceeds of the sale of the land after the Games. This should provide a significant level of funding for reinvestment in community projects.
Dormant Accounts Scheme
Outlined in the 2005 Pre Budget Report, a Dormant Accounts Scheme is one which seeks to reinvest money held in dormant bank and building societies in the community. HM Treasury consulted on the establishment of such a scheme in March 2007 and in May 2007 published a further consultation which set out how any funding available under a scheme would be distributed.
Money available under a Dormant Accounts Scheme should not be confused with Lottery funding. However, BIG is the designated distributor and there is a commitment that any funding available will be dedicated to the third sector.
As with Lottery funding the Welsh Assembly Government will set the strategic framework of operations for the scheme in Wales. Cabinet will consider proposals in December 2007 with a public consultation held in the New Year.
Annex 1
Funding Practices
Funding Practices between the home nations varies between the good causes. At present there are 13 Lottery distributors spread across the five good causes as follows:
| Good Cause | Distributor |
|---|---|
| Arts | Arts Council England Arts Council of Wales Scottish Arts Council Arts Council Northern Ireland Scottish Screen UK Film Council |
| Sport | UK Sport Sport England Sports Council of Wales Sport Scotland Sports Council Northern Ireland |
| National Heritage | Heritage Lottery Fund |
| Charitable Expenditure | Big Lottery Fund |
| Health, Education and the Environment | Big Lottery Fund |
At the time the National Lottery was launched, the share of the funding for each of the good causes paid to each of the home nations was calculated according to a formula based on population figures set out in the 1991 census. The shares determined are set out in the table below:
| Home Nation | % Share |
|---|---|
| England | 83.3 |
| Northern Ireland | 2.8 |
| Scotland | 8.9 |
| Wales | 5 |
Allocations were only prescribed in relation to the arts and sports good causes, where there are dedicated distributors in each of the home nations. For the Arts, Wales was allocated 5%. The Arts Council of England and the Scottish Arts Council both received smaller allocations to subsidise the UK Film Council and Scottish Screen, with no affect on the budgets for Wales or Northern Ireland.
In respect of Sport, all of the home nations received a smaller allocation to subsidise UK Sport, which administers funding for UK athletes competing in international events. This resulted in Wales’ share of funding for sports being reduced to 4.5%.
As allocations were not prescribed in relation to the remaining good causes for which the distributors were UK-wide, varying practices emerged. The Heritage Lottery Fund has allocations for each of the home nations and a separate UK budget. Wales received 4.5% of the total Heritage Lottery Fund budget directly, but can access the UK allocation as well. As a consequence we have received over the straightforward 5% in some years and less in others.
The Big Lottery Fund uses an adapted formula which includes a deprivation weighting figure. This increases Wales’ share of funding by a further 1.5% and the Welsh Assembly Government has pressed for this formula to be used by all distributors. This is regularly discussed with the UK Government, which retains the responsibility to vary allocations between the home nations.
