The Big Lottery Fund must be “more proactive in driving down costs” by further reducing staff numbers and considering office closures, a government review of the National Lottery distributor concludes.

The Cabinet Office launched the first Triennial Review of the BLF in November 2013 as part of a requirement for all government departments to review their non-departmental public bodies at least once every three years.

Its report on the review, published today, finds that the BLF should remain a non-departmental public body (NDPB) and makes a series of recommendations.

The BLF’s three main functions – to distribute National Lottery funds and non-Lottery funds, and give out funds funds from dormant bank and building society accounts, will all continue, the report concludes. Since its launch in 2004, the fund has awarded close to £6bn.

It says: “The fund needs to be more proactive in driving down costs. Although it has taken the 5 per cent operating cost target seriously, it has viewed this as something to be achieved and does not appear to have identified ways to go beyond it, either to reduce overall costs or to reallocate investment elsewhere.”

The report says that staff numbers of the BLF are on a downward trajectory as a result of restructuring, but says the BLF's new strategic framework must include details about how it will further reduce staff numbers over the next five years.

This should address overall staff numbers, high manager to staff ratios, low staff turnover, and duplication of functions at country and UK level, it says.

It says the BLF may also have scope to "rationalise office locations".

The BLF has six main offices with a number of smaller ones in England and Wales.

Shared services with other Lottery distributors

Other recommendations include the Cabinet Office and the Department for Culture Media and Sport looking at the potential for a “shared service model” between the Lottery distributors and other grantmaking bodies.  The fund should consider shared service opportunities as part of its overall cost control, it says.

The report also recommends that the BLF improves the transparency of its work by being clear about its international activities, and by providing full and clear publicly available details on its dormant account spending.

It says the BLF’s current board does not reflect the government’s aims for diversity in public appointments and that there is a need to strengthen its financial, commercial and risk management capability.

The review, which drew responses from across the sector, including the local infrastructure body Navca, the Directory of Social Change and New Philanthropy Capital, says that the BLF should be playing a leadership role in the wider sector. It recommends that the fund should “clearly define its leadership role”, as it is currently a “sector leader by default” due to its size and reach.

Remaining at arm's length from government

A survey by the Cabinet Office taken as part of the review found 94 per cent of survey respondents stated the fund needs to be, and be seen to be, politically impartial.

The report says there is a lack of understanding about the status of the fund and points out that NDPBs are by definition at arm’s length of government, not independent. Although the BLF has a broad set of policy directors from the Cabinet Office, the government is not involved in funding decisions, it says.

Nick Hurd, Minister for Civil Society, says in the foreword to the report: “I believe that the Fund is a highly respected and very important organisation and I was delighted to see that the evidence gathered throughout the review confirms this. It is clear that the fund is a valued organisation with an important role to play with the voluntary, community and social enterprise sector as well as with public sector partners and business stakeholders.”

The report says the Fund should call an extraordinary board meeting to consider the recommendations and within three months set out how it intends to respond.

Peter Ainsworth, the fund’s chair said: “I am confident that we are making good progress towards growing and developing the fund’s vision in accordance with many of the recommendations made in the review. I will now be discussing with the board the areas of our work and operations that we can further enhance to ensure the best possible service for our customers and stakeholders.”