Published: 29 June 2007
Politicians promise Compensation for ‘stolen’ Lottery Funds
The Government and the Mayor of London have outlined how the National Lottery and London will benefit from the sale of the Olympic Park land after the Games.
A new 'Memorandum of Understanding' between Tessa Jowell and Ken Livingstone, deposited in the House of Commons library, sets out how the Lottery and the London Development Agency will be paid back using proceeds from the land sale.
The agreement is the formalisation of the commitment made by Tessa Jowell in March that the National Lottery would be repaid from the financial benefits of increased land values in the Lower Lea Valley after 2012 as well as reimbursing the LDA for the purchase of the land and relocation of businesses to create the Olympic Park.
The potential proceeds from the sale of land & property are to be shared to allow both the Lottery and the LDA to recover all of their investment.
In order to allow continuing spend on regeneration and to repay the Lottery good causes, the proceeds will be shared on a staged basis.
After the LDA has recovered the initial cost of buying the land, the Lottery will recover 75% of its additional funding (£506m), while the LDA recovers 25% of its outstanding costs (£125m), on a pro rata basis.
Then each will recover their remaining costs from subsequent sales - with £169m going to the National Lottery and £375m going to the LDA.
This will cover the LDA costs in remediating and clearing the Olympic Park land.
Ms Jowell told MPs:
"This is a good deal for the National Lottery, for those who benefit from its projects, and for London. It fulfils the promise I made in my statement to this House on March 15th.
It should give lottery distributors real confidence that the additional funding necessary for a successful Olympic and Paralympic Games will be re-paid - providing them and the whole country with a further 2012 dividend."
Mayor of London, Ken Livingstone, said:
The new memorandum makes it crystal clear once and for all that the further funding of the 2012 Games agreed between myself and the Secretary of State means Londoners will not have to pay a penny more towards funding the Olympics.
We now have an agreed funding framework that ensures we can make the quick decisions that will be necessary if we are to continue our success in meeting all our key milestones as we prepare for the Games.
I am confident that proceeds from land sales will be sufficient to repay the Lottery in full and deliver hundreds of millions of pounds for further investment in local regeneration."
Sir Clive Booth, Chair of the BIG Lottery Fund, welcomed the news, saying:
“The clear commitment set out in the Memorandum of Understanding with the Mayor of London, to refund the £425 million diverted from BIG’s good causes is a welcome reassurance for communities and Third Sector organisations across the UK who benefit from our funding.
This will allow us to plan our programmes and support them after 2012.
We have borne more than our fair share of the diversion and it is good to know that reimbursement plans are now in place.”
Sir Clive added that he is pleased that the Government has confirmed there will be no further diversion from BIG’s good causes. The Fund is the biggest of the Lottery distributors and responsible for half of all lottery funding across the UK.
Sir Clive also said that the Fund is already looking at how it will manage its cashflow between 2009 and 2012, when the £425 million will be transferred.
He reiterated, that, provided forecasts of Lottery income hold up, the Fund will maintain its 2006-2009 programmes in full and provide 60-70% of its funding to the Third Sector at levels already planned.
When new programmes are launched from 2009, the Third Sector will receive 60 – 70% of the funding which would have been available before the £425 million diversion.
Further information
Revised Memorandum of Understanding between the Government and the Mayor of London - June 2007
London 2012
Big Lottery Fund
London Development Agency
Related articles
Olympic Face-to-Face
Is it possible to get some financial return from the 2012 Olympics?
Setback to Community Sport Legacy
To find a business you can trust, click on the related categories below: