What has been the impact of the national Arts lottery? Overall has it benefited the Arts?
On 19 November 1994 the first ever UK National Lottery draw took place. It was the result of 12 years of work and campaigning, starting in 1986 with the conductor and musician Denis Vaughan campaigning for a lottery to support the Arts and sport. Margaret Thatcher (then Prime Minister) turned it down. It wasn’t until 1991, when Sir Ivan Lawrence QC MP introduced it as a private members bill to the House of Commons, that the lottery began to take off. In March 1992, the Government white paper A National Lottery: Raising Money for Good Causes was published. In April 1992, the Department for Heritage, under the control of David Mellor, took control of establishing a National Lottery. In May 1994, Camelot won the first National Lottery licence, lasting until June 2001. Then on 14 November 1994, the National Lottery was launched. Prime Minister John Major called it “A Peoples Lottery”. Five days later the first ever draw was made.
Since that date the British public have spent over £34.8 billion on lottery tickets, making it the worlds largest lottery in terms of annual ticket sales. It is also the most efficient lottery, returning the highest percentage of revenue to the Government and worthy causes (44.3 per cent), one of which is the Arts. This money is then distributed via the Arts Councils of England (ACE), Wales (ACW), Scotland (ACS), and Northern Ireland (ACNI). This money is used primarily for capital projects, e.g. for new buildings, refurbishments, and extensions. Sometimes they are changes to old buildings, or new buildings for old organizations, old buildings for new organizations, or sometimes they are completely new buildings.
Originally the ACE set up a new department to deal with lottery applications. It was seen as very important that the lottery funding and the exchequer funding were kept separate. This was set out in the National Heritage committee’s first annual report (1995-96).
“We accept that different criteria may be necessary in different areas of funding, but believe that continual vigilance will be required to prevent reductions in Government spending taking place because lottery funding is available . . .
The Department agrees that continued vigilance is required to maintain the principle of additionality. The Government has repeatedly made it clear that money raised by the lottery should be a new and independent stream of money for good causes across the country. Lottery funds are not intended to substitute for funds which would otherwise have been provided by conventional public expenditure.”
This is why the lottery money was used primarily for capital projects. It meant that there was very little overlap between lottery and exchequer money. People were concerned that the Government would use the lottery as an excuse to lower the level of funding for the Arts. By keeping both areas separate it allowed people to keep a closer eye on the levels of funding. This relationship didn’t last though. In 1997 a reorganisation meant that the “Councils lottery expenditure would no longer be handled separately from it’s direct Government funding”. However, the combining of ACE and exchequer funds wasn’t a new thing, and therefore not directly attributable to the New Labour Government. In her review of the second annual report of the ACE (1996), Dr. Linda Moss points out the “Increasing trend of using Lottery funding to support the core costs of the Arts council”. Various employees of the ACE were being paid between 35 per cent and 49 per cent of their salaries out of the lottery fund. This was an increase from the year before, and as such it would seem to indicate that either these people were spending more time working on the lottery each year, which seems unlikely, or that it was simply a “Gradual (and increasing) encroachment of lottery money into costs which hitherto have been borne by the exchequer”.
However, the fear that the amount of funding received by the Government would fall due to the lottery, or that greater integration of lottery and exchequer funding would also decrease Government funding, has proved to be just that, a fear. For the moment at least. The amount of Government funding has in fact continued to rise under the new Labour Government.
“The amount has been steadily rising over the years, and currently tops £200 million a year. In the past ten years alone, the amount has increased by over 50 per cent, from £155 million in 1989/90 to £237 million in 2000/01.
The change to a labour Government has also brought about some rewards with it in terms of the Arts. Between 1994 and 1997 [Conservative Government] the amount of funding for the Arts stagnated around the £186 million mark. However, following the election of the Labour Government in 1997, the amount of funding rose again, and is now planned to break the £250 million mark in 2001/02”.
So, has the National Arts Lottery benefited the Arts? Over £1,164,562,050 has been spent on the Arts as a direct result of the Lottery since 1994. It seems therefore that there can only really be one answer. But before declaring the Arts lottery an overwhelming success, there are other factors besides the financial that should be considered.
One of the big concerns raised was that people would buy their lottery tickets instead of giving to charity. The Arts are made up of many charities, and so if people decided to stop giving to charity, and only bought lottery tickets, there may not actually be any net gain. They would be simply replacing one form of income with another. This raises the question then of whether there has been a rise or a fall in charitable income since the lottery started in 1994.
A piece of research released in 1996 seemed to show that the lottery had in fact had a dire effect on charitable giving.
“The latest Charity 100 index compiled by city fund managers Barclays Global Investors and NGO Finance magazine shows that the income growth dipped below inflation for the first time at the end of 1994 after annual growth in the previous three years. Total charity income increased after inflation by 26 per cent in the three years prior to the introduction of the National Lottery. But full year results from December 1995 to December 1996 show annual growth of only 0.7 per cent – a decline in real terms. The report notes that the decline in voluntary donations was especially marked, and was exceeded by income from investments for the first time in 1994”.
In July 1997 a report by Passey A. and Helms L. published findings in which they claimed that there had been a decrease in the number of people giving to charity. 81 per cent of their respondents gave to charity in 1993, which fell to 70 per cent in 1995, and 68 per cent in 1996. The respective drop in charitable incomes was from £5.3 billion in 1993, to £5.23 billion in 1995, to £4.8 billion in 1996. They blamed the result on a “Hardening in public attitudes to the lottery, perhaps due to the concerns over excessive profits made by Camelot”.
Early research by Crossbow however indicated that the National Lottery would have a neutral effect on both the propensity to give, and the amount given to charity.
And in mid 1996, 70 per cent of the 400 members of the Institute of Charity Managers said that their charity had “Not lost income income because of the national Lottery”. The reasons for this were made clear in a study by the Institute for Fiscal Studies. This showed that young people generally were less likely to give to charity. Also, in terms of peoples income, as income rises so does the amount given to charity. Therefore whilst it is primarily social groups ABC1 that give to charity, it is groups C2DE that buy lottery tickets.
“The reality seems to be that those who play the National Lottery have less propensity to give to charity anyway. The overall findings show that there has been no significant change in the number of givers or in the average level of donations in the two and a half years of the National Lottery”.
The Dimensions report by the Charities Aid Foundation (CAF) in June 1998 showed that “There was an 8 per cent increase to charities in the previous financial year (to April 1997)”. This allayed fears that the National Lottery would reduce the amount of money being given to charities, as people decided instead to buy lottery tickets.
So whilst there may have been an initial drop in charitable giving, more recently, charitable giving has actually increased. The fact that charitable giving in fact rose in 1997 might even suggest that the fall in charitable giving in the early years could be attributable to other causes. Also, the fact that the people who give to charity are not the same people who buy lottery tickets anyway shows that the lottery can only ever have had a minor effect on charitable giving.
Another area that may be considered important in any consideration of the effects of the Arts lottery is that of employment. How many jobs have been lost or created as a result of the Arts lottery?
As mentioned above, the lottery money, especially in the early days, was used primarily for capital projects, e.g. building. As such, the number of construction projects increased, and with it, the number of construction workers who found employment because of it.
In August 1994 KPMG consultants estimated that there would be somewhere between 10,000 and 15,000 jobs created per annum in the construction industry, and related spin off projects due to lottery money. Also there would be around 5,000 people employed in the process of applying for lottery funding. Thus they projected that between 1995 and 2000 there would be around 50,000 and 80,000 people employed as a result of the lottery. It was estimated that the lottery money would add 3 per cent to the construction sector alone over five years.
In 1996, because of the higher than expected sales of lottery tickets, the number predicted by The Lottery Monitor Magazine was closer to 101,000 new jobs (40,000 in construction alone).
The figures projected by The Lottery Monitor Magazine included 40,000 jobs in construction, 18,000 jobs in manufacturing, 8,500 jobs in tourism, and 10,00 jobs in the Arts (galleries, theatres, museums etc.).
Also in 1996, the Royal Bank of Scotland produced an estimate of the employment effects on the construction industry. It estimated that there was £1.3 billion being spent annually on the construction industry because of the lottery (£733.5 million from the lottery, and £592.5 million from partnership funding). Of this, £200 million was attributable to the Arts. In total there would be over 100,000 jobs created over five years. Of this 15 per cent is attributable to the Arts, or 10,000 jobs in construction in the UK.
Finally in a study commissioned by Camelot, the Henley Centre estimated that there would be 105,000 jobs created by the year 2000. They also felt that this could actually be a conservative view due to the areas that they did not look at and include.
All in all it would seem to be agreed that the lottery would provide in excess of 100,000 jobs over a period of 5 years.
There are some other sectors that weren’t included in the above estimates, such as vehicle and instrument supplies, public art, craft works, and film. When these are included as well, the number is even greater.
These projections were made in the very early days of the lottery, and in reality distributions and awards have been higher than expected by around 40 per cent. One final point to consider is that the Arts industry is more labour intensive than many other sectors, and as such employment arising from Arts lottery spending is probably higher by at least a factor of two. Therefore gross employment is estimated to be closer to 27,000 jobs per annum in construction, over the five-year period of 1995-2000.
But what of the employment levels in other sectors? There seems to be little evidence that employment has fallen due to the lottery. It has been noted that the football pools turnover has decreased by 25 per cent, which has caused some job losses. Also visitor spending in theme parks and funfairs is claimed to be between 10 and 20 per cent down, although attendances actually went up in 1996. There is “little evidence of job losses solely attributable to the national lottery”.
So who are the beneficiaries of the lottery? In theory the lottery benefits everybody. After all, that is what it was set up to do. When it was launched in 1994, John Major called it a “Peoples Lottery”. More recently, the then Secretary of State for Culture Media and Sport, Chris Smith, said
“We are designing, I believe, a truly popular lottery – a lottery for the people, wherever they live, whatever community they belong to.”
But does it benefit the people? In the early days of the lottery, the lottery suffered from a lot of bad press. This was mainly because there were a lot of very high profile grants. Not least the £55 million grant to the Royal Opera House, or the £13 million to purchase the Churchill papers. Both of these were seen to be elitist, in the sense that they were not something enjoyed by the public at large.
The National Centre for Popular Music (NCPM) in Sheffield is an example of a high profile, expensive lottery project, which ultimately failed. It received millions of pounds of funding in the form of a capital grant, and then failed to attract the visitors. The main argument seems to be that the original prediction on visitor figures was hugely overestimated.
In 1998 a consultation paper, called Making a Difference was published. It attempted to push the lottery grants to areas that hadn’t previously had very many awards. But were also in areas of social deprivation. In principle this seemed like a good idea, in reality people were sceptical of how far this could be achieved.
“The sceptic though, will fear that though these new ideas, if adopted, may now be applied to many grants, most of the actual money will still go to just a few big projects”.
The timing of this new strategy couldn’t have been better. In 1998 the twelve largest grants counted for 71 per cent of all grants given, compared to only 56 per cent the previous year. In total there were only four grants of less than £5,000 made in the entire year.
This isn’t to say that small grants weren’t considered. In 1997, the ACE piloted a scheme called A4E (Arts for Everyone). This was especially for organizations that only wanted to apply for small grants. It was designed to reduce the amount of paper work required when applying for a grant. This was stopped after the initial one-year trial, despite the huge success of the project.
“The great success in 1997 of the A4E express small grants programme led to little in 1998. Though rightly taking credit for its achievements, which it says include getting to no less than 12 million people as participants or audience members, the ACE terminated rather than continued and expanded the programme, thereby seeming to confirm the fears of those who thought that the ACE, as it was then, and the RAB’s would have trouble accepting the huge popular success of a programme that offered open access to funding for projects whose artistic worth had not been mediated through expert process”.
This was replaced in 1999 with a similar scheme called Awards for All. Unfortunately this was only allocated £1 million a year. The A4E scheme distributed £22 million in the same time. There are various reasons for this, ranging from the point made above about the difficulty of controlling ‘quality’ with these small grants, to the fact that it became too easy to apply, and as such only one in twelve applications was successful. This led to vast amounts of paperwork, and unfortunately wasn’t sustainable. The Awards for all scheme, having less money allocated to it ensured a higher degree of quality control as the criteria were tightened, and so only the very best projects would be successful. When the success rate of the larger projects is considered though, some people may ask why the large projects are even considered. Why not just stick to small grants, they seem to be safer.
One of the Arts lotteries largest problems has been the failure of various large projects. Many small-scale projects have done fine, or if they haven’t, then they rarely make the news. Unfortunately, when the sums involved become quite substantial, as is the case with the two projects below, then the newspapers become involved. Because it is the public who decides whether or not to buy a lottery ticket, they feel they should have a much greater say in where the money goes. And so when a large amount of money is ‘wasted’ then people are interested, and upset by it. There have been a quite a few recent examples of failures. The Centre for Visual Arts in Cardiff is one.
“It was conceived as a major visitor attraction, providing the largest venue in Wales for exhibiting the best of Welsh and International contemporary and historical art, as well as an interactive gallery for children”.
It cost £8.8 million. It opened in September 1999, and closed fourteen months later. The blame has been placed quite squarely with the ACW, who it claims
“Did not assess the key risks to the successful delivery and operation of the Centre for Visual Arts to ensure that these were monitored closely. Nor did the council ensure that there was adequate contingency planning in the event of these risks materialising”.
It seems that the original estimates for visitors were grossly inflated (250,000 people in the first year!). In fact, the figures that were quoted originally made the Centre for Visual Arts the second most popular attraction in Wales, by quite a lot. In reality it attracted barely 47,000 visitors.
Another Lottery backed organization that has recently folded is ARC in Stockton-on-Tees. The former Dovecot Arts Centre received a £6.5 million lottery grant, and the newly refurbished building opened in January 1999. A few weeks ago it declared itself insolvent.
Blame seems to be pointed in the direction of the ACE, who it was hoped would provide financial assistance via its stabilisation fund. Unfortunately this wasn’t to be. This project though had suffered difficulties right from the start. Many local businesses felt that the project wasn’t viable from the early days, and that if it was to have any chance of succeeding, then it certainly required a higher level of revenue funding than it received. It was felt by many to be simply a political decision, and a bad one at that.
“Politicians in Newcastle, London and Stockton wanted a ‘landmark’ building to be a flagship for the regeneration of Stockton town centre. They refused to admit that most of the cost of running such a big building would have to come from the local council and regional Arts funds”.
In much the same way as the Visual Arts Centre in Cardiff, it was the inability to meet overly ambitious ticket sales and income targets that finally forced Arc to go into liquidation.
In her paper Constructing White Elephants, Dr. Linda Moss looks at this argument in more depth. She provides a list of reasons why various large-scale lottery projects failed. In particular she pays attention to the NCPM and the Earth Centre, both in South Yorkshire. One of the first reasons is that the idea of capital funding is all well and good, but once these buildings are built, the cost doesn’t stop there. Unfortunately in these cases it did. “The creation of a new wealth of buildings and renovations at the expense of staffing and creative work to fill them”. She mentions the point above about the over eager use of visitor figures. But one of the main arguments is quite simply that of location. Why locate a multi-million pound development in a place that is difficult to get to, and away from the main tourist trail? This applies to both the NCPM and the Earth centre. This is at once both a good and a bad point. On the one the one hand it is a good point because of the obvious lack of trade. Places like the Jorvik Viking Centre in York do not have this problem, located as it is in York, there is a large number of tourists to make up the numbers. The problem with this argument though is that if the Government only built these sorts of developments in ‘touristy’ areas, then there would become a handful of ‘centres’ around the country, but nothing anywhere else. Unfortunately these two points seem to be irreconcilable in the short term.
When Denis Vaughan first envisioned a national lottery back in 1986, its unlikely he could have predicted just how popular it would prove to be. £34.8 billion since 1994. Of this the Arts have received over £1.1 billion. As with any form of fundraising the lottery has had its critics, however the information presented in this essay, shows that the Arts lottery has been of great benefit. Without it there would be many organizations that wouldn’t exist today, or would still be housed in old and inadequate buildings.
People were initially concerned that the lottery would be an excuse for the Government to take money away from the Arts, and give it to other more ‘needy’ causes such as healthcare, or education. Right from the beginning the Government has denied this is the case. The additionality principle, e.g. that lottery money is in addition to Government money, is used to ensure that this doesn’t happen. This has been maintained, and in fact under the new Labour Government the amount of money being given to the Arts has increased.
One of the biggest concerns raised against the implementation of the national lottery was the fear that it would take much needed money away from charities. But as the figures presented above show, this hasn’t proven to be the case at all. From the figures presented above it seems that whilst there was a decline in charitable giving in the early years, by 1996 it had begun to rise again. As such, the fears that charitable giving would be damaged because of the lottery have been allayed. And since charities now have access to sources of lottery funding via the charities board, there is arguably even more money available to them.
Another area of concern was that of employment. It has always been an important political issue, and so it was with the lottery. People wanted to know how many jobs were going to be created by the lottery. This has always been difficult to calculate, mainly due to the wide range of jobs being covered, and by the spin off projects created. However, the various reports that have attempted to answer this question generally agree that there were over 100,000 jobs created in the years from 1994 to 2000. That is 100,000 jobs that wouldn’t have existed without the lottery. Many of these are in construction, especially the Arts related jobs, and these tend to be longer-term projects, creating employment for people over a period of years.
The one area that the lottery has come under attack for has been the type of grants, and the projects that it has supported, especially in the early days. The ‘Covent Garden debacle’ was mentioned and the Churchill papers, as well as the NCPM in Sheffield. Most of these were early mistakes made by the Arts council, who weren’t used to the public scrutiny they got because of the lottery. There were various mistakes made, most of which were to do with over estimating visitor figures. It could be argued that these sorts of mistakes were simply ‘teething problems’ and so shouldn’t be criticized too harshly. They were predominantly to do with the awkwardness of applying for lottery grants. Since 1997 this has started to be addressed. The A4E scheme made it easier for small organizations to apply for small lottery grants. More recently the Awards for all Scheme is another variation of this. The Regional Arts Lottery Program (RALP), which allows the Regional Arts Boards to disseminate some of the lottery money for smaller projects, is yet another way of addressing this issue.
Overall, the Arts lottery has been a great success. It has had teething troubles, and it still has a few problems to iron out, but the sheer amount of good work it has done for the Arts, and the economy as a whole, is undeniable.
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