The National Lottery Act 2006



The National Lottery Bill was introduced into the House of Commons on 24 May 2005. The Bill received Royal Assent on Monday 11 July 2006.

The National Lottery Act 2006 reforms National Lottery distribution, making it easier for distributors to involve the public and ensuring that Lottery money goes efficiently to good causes. It also establishes Big Lottery Fund as a new good cause distributor with simpler rules making it easier for applicants to access Lottery money. Key changes introduced by the Act include:

. Establishing Big Lottery Fund as a single body replacing the Community Fund, the New Opportunities Fund and the Millennium Commission. The efficiency saving will be available as additional Lottery funding for good causes.
. Increased public involvement in the Lottery with distributors able to consult and take account of public views in making distribution decisions.

This briefing refers to specific issues raised during the progress of the Bill in relation to Big Lottery Fund (BIG).

Additionality

Big Lottery Fund recognises the political concern over the principle of additionality. Big Lottery Fund believes that its funding should not replace core Government expenditure but be additional to that funding and add value to projects, people and places. We will, wherever appropriate, seek to complement not duplicate government strategies and funding streams in ways that add value. Big Lottery Fund's Mission Statement is supported by seven values that underpin all its work. One of those values refers to the principle of additionality: "Additional to Government - ensuring our funding is distinct from Government funding and adds value."

The National Lottery Distributors have agreed a common interpretation on additionality and to report annually on additionality.

The National Lottery Act 2006 requires that each Lottery Distributor should produce a report that sets "out the body's policy and practice in relation to the principle that proceeds of the National Lottery should be used to fund projects, or aspects of projects, for which funds would be unlikely to be made available by a Government department, the Scottish Ministers, a Northern Ireland department, or the National Assembly for Wales."

Relationship with Government

Big Lottery Fund is a Non-Departmental Public Body and, like other National Lottery Distributing Bodies, is accountable to the Secretary of State and Parliament. The Government sets the strategic framework in consultation with Big Lottery Fund, which consists of three broad themes (Community Learning and Creating Opportunity, Promoting Community Safety and Cohesion, Promoting Wellbeing) and four broad outcomes. The Fund will decide independently on specific priorities within the framework agreed with Government. This is the appropriate relationship. BIG is convinced that an appropriate balance has been struck between the highly prescriptive but strategic approach of the New Opportunities Fund and the light touch open access approach of the Community Fund - building on the strengths of each distributor.

The National Lottery Act 2006 states that BIG should 'take account of' as opposed to 'comply' with Directions from the Secretary of State. This mirrors the text of the 1993 Act so that BIG takes account of policy directions but has to comply with financial directions. This puts BIG on the same footing in this respect as the other Lottery Distributors.

60-70% of Big Lottery Funding to Voluntary and Community Sector

The outcomes and priorities of Big Lottery Fund mean that there is nothing that was funded by the Community Fund that could not be funded by the new Distributor. Big Lottery Fund Board has made a public undertaking that between 60 and 70% of all its funding will go to the voluntary and community sector (VCS).

The results of our audit of this undertaking will be published in Big Lottery Fund Annual Report, which is laid before Parliament and in a separate, more user-friendly document. Whilst reporting on the target will occur annually, Big Lottery Fund would expect to meet the undertaking over the lifecycle of its programmes and within each country. We are discussing with the VCS how we will count, measure and report on this undertaking.

The National Lottery Act 2006 makes no reference to BIG's 60-70% undertaking. However, during debate on the National Lottery Bill (21 March 2006) Lord Davies of Oldham said: "I am this evening prepared to place on the record that the Government will act as the guarantor of Big Lottery Fund's undertaking that 60 per cent to 70 per cent of its funding will go to the voluntary and community sector. We will do everything possible to ensure that the fund delivers on the undertaking and reports on it in a transparent and accessible way."

Clause 19 Definition of Charitable Expenditure

The Act, through the Clause 19 definition of 'Charitable Expenditure,' will allow BIG to fund social enterprises and community groups - something the legacy organisation, the Community Fund, had difficulty in doing consistently because of legal constraints in the previous legislation. Defining "expenditure for a charitable, benevolent or philanthropic purpose" as the Act does, means BIG can move away from a narrow test related to the type of organisation applying to being able to consider more widely what the applicant wants to do if successful in their application. This reflects the wide variety of organisations and the broad range of purposes that will benefit from BIG Funding. It is the purpose for which funding is sought which is the key criterion of charitable expenditure rather than the institution applying.

The broader definition in the Act means Big Lottery Fund will not have to make complex eligibility judgements as it did before. This will add to the efficiency with which applications are processed and will help reduce costs.

National Lottery Balances

Both the Community Fund and New Opportunities Fund have targets for reducing their balances and have been reducing their balances over several years. The balances of the Community Fund are 76% down from 1998. The New Opportunities Fund has reduced its balance by 33% from January 2003. The Big Lottery Fund (Community Fund and New Opportunities Fund) has actually committed grants above its existing balance by 64%. This means that all the money in our balance has been allocated to projects. What it is also means is that we cannot allocate the same money twice.

During the passage of The National Lottery Bill the Government amended Clause 8 so that the Secretary of State would have a broader consideration of whom to consult if reallocating Distributors balances to other Distributors of the same good cause.

Public Involvement - People's Millions

Involving the public in assisting decision-making can help make better awards. The key is to ensure that the public is not asked to choose between very popular causes and minority, less popular proposals. Where Big Lottery Fund is involving the public in voting it will ensure that all projects aim to achieve similar things, and that the public are not asked to choose between projects where there is a large imbalance in their levels of popularity. We see public involvement as something that will develop over time. We will ensure that our approach is responsible, thoughtful and appropriate.

The first People's Millions awards in partnership with ITV recently received nearly 200,000 votes from the public enabling 53 projects across the UK to receive funding awards of up to £50,000 to improve the quality of life of local communities by tranforming the local enviroment. The most pleasing aspect of this significant step was that 55 per cent of the applications came from groups who had never applied for National Lottery funding before. This demonstrates that this level of engagement, when handled appropriately can help stimulate interest and broaden the reach of National Lottery funding. For details of Year 3 of the People's Millions please visit: www.biglotteryfund.org.uk/programmes/pmillions/index.htm.

Loans

The National Lottery Act 2006 allows Big Lottery Fund to make loans as well as grants. Big Lottery Fund does not expect the ability to make loans to form a large proportion of its funding. We do recognise that this facility might be helpful in some circumstances to meet the funding demands of certain organisations. However, the primary role of Big Lottery Fund is as a grant giver and the focus of Big Lottery Fund will be to ensure that money is spent.

Power to give advice

The National Lottery Act 2006 allows Big Lottery Fund to give advice on National Lottery applications and about the distribution of Lottery funding. An example of this in practice is the development of a National Lottery Good Causes website which will allow potential applicants to search and identify the most appropriate funding programme for them. This website will be funded by all National Lottery Distributors but is developed and coordinated by Big Lottery Fund. www.lotteryfunding.org.uk.

Promoting the National Lottery

Clause 11 refers to the publicising of The National Lottery by Distributors. Big Lottery Fund does not interpret this clause as meaning that we should promote the playing of National Lottery games, we believe that that is the role of the operator, not a National Lottery Distributor. We also agree that the Lottery should not be promoted as an efficient means to give money to charity. However, we do believe that we have an important role in promoting the benefits of National Lottery funding and to raise awareness amongst the public of the many thousands of excellent projects that benefit from Big Lottery Fund. Big Lottery Fund works positively to promote its funding programmes and grants across the UK. This is achieved through a number of avenues including local and national media work, events to mark the opening of projects, public involvement in funding decisions and the development of information resources so that people can identify projects in their area. We also work very closely with
the National Lottery Promotions Unit on ongoing campaigns and events such as National Lottery Day and the National Lottery Awards. All recipients of Big Lottery Funding are obliged to acknowledge and promote Lottery Funding as a condition of their grant and we provide a comprehensive branding pack for groups to use so the public can see where lottery funding is going. We provide a range of materials free of charge to recipients from stickers to bunting to blue plaques for buildings
to denote that the project has received National Lottery Funding.

The Government amendment to Clause 11 addressed Opposition concerns that the original wording of the Bill might be interpreted to mean that Distributors may encourage the playing of National Lottery games. The wording now means that Distributors may 'encourage participation in activities relating to the distribution of money under this Act.'

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