Olympic Sized Loss to Good Causes

The voluntary and community sector including charities, education, health, environment, sports, heritage and arts causes could lose over £2billion pounds of revenue as a result of the financing of the London 2012 Olympics by the Government. In Northern Ireland this represents approximately £80million in lost revenue for good causes. Promises that the voluntary and community sector will be unaffected seem misrepresented. To put this in context - the Big Lottery Fund’s entire budget for 2006 to 2009 was £90m.

GOOD CAUSES DIRECT LOSS £1.085 BILLION

Government will transfer £1.085 billion from National Lottery distributors (the National Lottery Distribution Fund) to help meet the cost of facilities and infrastructure for the 2012 Games. £410m (original budget) + £675m (revised budget). This will greatly reduce funding to Big Lottery Fund (NI), Heritage Lottery Fund (NI), Sport Northern Ireland and Arts Council NI.

SPORTS ADDITIONAL LOSS £340M

An additional £340 million will come from sports Lottery distributors including Sport Northern Ireland.

CANNIBALISATION COST £575M

In addition to the £1.085 billion + £340m, a further £750 million will be raised through dedicated 2012 Lottery games, making a total of £2.175 billion from the National Lottery, or 23% of the overall funding package of £9.325 billion.

£750m is the amount to be raised from special Olympic lottery games, launched in 2005. Camelot's earlier assumption of the proportion of income that would be garnered at the expense of other games was 59%. This would amount to £442.5m of the £750m. Camelot’s latest estimate of the cannibalisation effect is 77%, raising it to £575m out of the £750m. This is £132.5m above original estimates. This figure of £575m would otherwise have been part of the good causes budget in the National Lottery Distribution Fund.

The cannibalisation effect of the Olympic Lottery games happens when lotto players are playing Olympic funding games as opposed to original good causes games. Therefore they are playing Olympic games at the expense of non-olympic games.

Sample effect of cannibalisation

VCS WILL CONTINUE TO BE AFFECTED

The Big Lottery Fund has made a public commitment that, “providing forecasted lottery income is maintained, current programmes for community groups will not be materially affected by the diversion of funds to the Olympics.” The Big Lottery Fund advises that its undertaking to provide 60% to 70% of its funding to the voluntary and community sectors will be unaffected. That will mean that the Big Lottery Fund will invest a minimum of £60 million in the voluntary and community sector between 2006 and 2009.

This promise could be misinterpreted as meaning the sector hasn’t been or won’t continue to be affected by the redistribution of lottery funds. When BIG says “unaffected” it means unaffected because of the further raid of £675m. The figures allocated by BIG for the period 2006 to 2009 were reduced already to take into account the original £410 million diversion from National Lottery funds to the Olympics and the original cannibalisation rates loss of £442.5m. It also comes with the disclaimer of “if income levels are maintained.” It is known that cannibalisation will further reduce the income levels to the non-olympic good causes.

It is also the case that many voluntary and community organisations are funded by the other good cause distributors of heritage, sport and arts which do not have any safeguard for income to the sector.

LEGACY TRUST COSTS GOOD CAUSES £34M

To add insult to injury, lottery distributors are also contributing the Legacy Trust for Olympic themed arts and cultural events to the tune of £34m made up of The Millennium Commission - £24m, Big Lottery Fund - £5m, and Arts Council - £5m.

OVERALL COST FROM NATIONAL LOTTERY DUE TO OLYMPIC GAMES

£2.034 BILLION or £80 million in Northern Ireland (approx)

Therefore the overall loss to good causes because of the Olympics could be as much (or more) as £2.034billion made up of £1,085m (Good Causes) + £340m (Sports Distributors) + £575m (Cannibalisation) + £34m Legacy Trust.

CONCERN OVER REPAYMENT PLANS

Estimates that good causes will be refunded have been criticised by the DCMS select committee. The government was forced to defend its funding plans for the 2012 Olympics after it emerged that the National Lottery may not be reimbursed more than £1bn until almost 20 years after the Games have been held. The Lottery will provide more than £1bn of the total cost of staging the Games but the government and the office of the London mayor have promised that £675m (only) of funding, allocated when the budget spiralled from £4bn to £9.3bn, would be repaid from the receipts of land sales made after the Games. Concerns over estimates of the value of this land have also been questioned.

LOTTERY DUTY REVENUE

It is also worth pointing out that while £20billion has been raised so far by the National Lottery for good causes (and the occasional Government good causes), the Government has raised over £8.5billion in Lottery Duty over this same period which would have almost paid for the entire Olympic costs.

Lottery Duty continues to be levied on lottery ticket sales so while the good causes are being raided to fund the Olympics the government continues to raise 12% on all sales of lottery products in tax.