Cultural organisations across the UK now face a total of £137.6m reduction in Lottery funding as a result of budget shortfall for London 2012 Olympics.
Cultural organisations across the country have reacted with dismay to the Governments announcement that a further £77m will be 'top-sliced' from the national Arts Councils' Lottery funds over the next five years to help cover a £6bn shortfall in funding for the London 2012 Olympics. This contribution is in addition to the £60m that had already been earmarked as a contribution from the arts distributors, bringing the total contribution from the arts to £137.6m.
The total estimated bill for the Olympics has risen dramatically following a review of expenditure plans, which revealed that VAT had not been included in the original budget; that an anticipated contribution of £750m from the private sector was unlikely to be found; and that the amount required for security would have to be increased. The Government has also incorporated a significant contingency within the new budget to cover any slippage in construction schedules. The projected cost included in the Governments 2003 bid for the Games was £2.4bn. Last November, in response to questions from MPs, this was revised to £3.3bn. The new budget now estimates the cost at £9.3bn.
New losses to arts Lottery distributors include £62.9m from Arts Council England (ACE), £7m from the Scottish Arts Council, £4.5m from the Arts Council of Wales and £2.5m from the Arts Council of Northern Ireland. Further funds will be drawn from other Lottery bodies including £425m from the Big Lottery Fund, which distributes half of all Lottery funds through schemes such as Awards for All. This now means that £1 in every £5 raised by the Lottery will be spent directly on funding the Olympics. This is in addition to any losses in Lottery income through competition from the dedicated Olympic Lottery games, which have been running since last year.
The majority of the £6bn shortfall will be carried by the Treasury which will need to find £5bn for the Games. While some £800m of this will be returned to the Exchequer in VAT revenues, the additional expenditure is likely to limit the Treasurys options ahead of this summers Comprehensive Spending Review. Peter Hewitt, Chief Executive of ACE, which distributes much of its Lottery funding through the Grants for the Arts programme, said, "We still believe that the 2012 Olympics presents a real opportunity for arts and culture in this country. But we are deeply disappointed that more money is to be diverted away from the arts to pay for the Games. We will now have to look in detail at how this reduction in Lottery funding might be managed and what particular effects it will have. The impact is likely to be felt across the whole of England and disproportionately by smaller arts organisations, local projects and individual artists the main recipients of our Lottery funds and precisely the sorts of people who may be asked to contribute to the cultural Olympics. We must hope that the Government will compensate the arts for this setback through the Spending Review and we will be seeking an urgent meeting with the Treasury to discuss the situation."