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The National Lottery Distribution Fund, which holds Lottery funds for good causes, has stockpiled reserves totalling over £2.5bn, according to a report by the National Audit Office (NAO). The balances in the Fund increased steadily from the start of the National Lottery to a peak of £3.7bn in 1999. Culture Secretary Tessa Jowell, decreed in 2002 that total balances should halve by 2004; this target has not been met. The Decision Document on National Lottery Funding, published by the Department for Culture, Media and Sport (DCMS) in July 2003, highlighted ?widespread concern? about the amount of money that was yet to be distributed, which led to the NAO inquiry being commissioned.
Sir John Bourn, Comptroller and Auditor General of the NAO said, ?Balances held in the National Lottery Distribution Fund are not delivering the intended benefits in the community. Although the balances have started to fall, there is scope to reduce them further? the DCMS has a role in helping distributors to manage effectively the opportunities and risks in seeking to reduce balances.?

The NAO acknowledges that distributors must maintain the capacity to meet all funding commitments and recognises the uncertainty caused by proposals to siphon Lottery funds to support London?s Olympic bid. It suggests that the DCMS should set a clear timetable for making decisions about future distribution arrangements for the distributors and that it should seek to enhance confidence in the projections of future Lottery income that it provides to distributors, to help them plan their grant programmes. Lottery income has risen over the past few years; average weekly National Lottery sales currently stand at £85m ? nearly £40m higher than when the Lottery was launched in 1994, but certain funds are dwindling. The Arts Council of Northern Ireland (ACNI) has just taken the decision to allocate its capital funds to minor works, refurbishment and equipment applications, and no longer to support major capital bids. With its fund for capital projects now standing at only £1m, ACNI issued a statement: ?Applicants who intend to apply for new build or major schemes are not ineligible, but should bear the total fund available in mind when applying.?