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Charity sector waiting on tenterhooks for news of Olympic budget

Fundraising | Gemma Ware | 3 Apr 2008

They may be more than five years away but the London 2012 Olympics are already dominating headlines. Although the government will not be drawn on a final budget for the Olympics, reports during the last month have suggested the total cost of the games could be as high as £5.1bn, double the original projected cost of £2.38bn. And concern is mounting that the National Lottery will be faced with an extra bill to help meet these costs.

It was originally agreed that the Lottery would contribute £1.5bn towards the cost of the games, but in February, the culture secretary Tessa Jowell, gave her strongest signal yet that that it would be asked to help fund the expected budget shortfall. Asked on BBC1’s Sunday AM on 4 February whether good causes would lose out if money was siphoned off for the Olympics, Jowell said: “More money may well have to come from the Lottery. I mean that is absolutely the case. But we want to ensure that any extra call on the Lottery is both fair and that it’s proportionate.”

The fear that Lottery good causes could suffer when the government makes its final decision on who will bear the brunt of the extra cost burden for the games has caused mounting concern throughout the sector. A campaign led by the NCVO has backed an online petition demanding the Prime Minister defend funding for local voluntary and community organisations, which has gathered more than 2,000 signatures.

Chief executive body acevo is also concerned about reports the government is considering using some of the £400m lying dormant in Unclaimed Assets to help alleviate an extra Olympic burden on the Big Lottery Fund. The Treasury said a decision on where the money would go would be made in “due course”, but strongly denied allegations that it would be used to fund the Olympics.

Two influential reports on the budget for the Olympics published last month have also raised the issue of possible disruption to Lottery fundraising, should the existing operator Camelot lose its bid for a third licence to operate the Lottery.

A National Audit Office report highlighted that £135m more money than originally estimated would be diverted away from good causes by those members of the public who choose to buy Olympic-themed lottery tickets over mainstream lottery games. Camelot had originally estimated this “cannibalisation” of players would make up £440m of the £750m designated to be raised from the Olympic-themed tickets, but has since revised its estimate to £575m.

The NAO report said: “Camelot aims to mitigate the effect of the designated Olympic lottery games on the returns to the other good causes by increasing ticket sales across the board.”

But how much impetus Camelot will have to do this could depend heavily on whether it is chosen to continue operating the Lottery once its current licence runs out in 2009.

Bidding for the new licence closed on 9 February, resulting in Camelot facing only one competitor for the licence – Sugal & Damani, an Indian lottery company. As it submitted its bid, Camelot announced a blaze of strategic partnerships with BSkyB, Microsoft and Endemol as well as plans to create a world lottery super draw should it be successful.

Yet despite Camelot’s strong position in the licence race, concerns could arise around a possible ‘transition’ period between this summer when the next licence operator is announced, and the 2009 transfer date. Although Camelot says it is committed to maximising the return to both good causes and the Olympics, a source close to the company said: “Obviously all the plans for the Olympics are dependent on winning the bid.”

Last month a separate report by MPs from the Culture, Media and Sport select committee on the Olympic budget said the timing of the new licence decision was “very unfortunate” because of the potential for disruption. It concluded: “We recommend that the Commission carefully considers risks of a change of operator on preparations for the Olympics when reaching its decision.”

Despite the mounting pressure the Government is still refusing to publish a final budget, so the sector must wait on tenterhooks until it does.

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