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Olympic Bid

Volume 406: debated on Wednesday 11 June 2003

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To ask the Secretary of State for Culture, Media and Sport what estimate she has made of the likely impact that the introduction of a new London Olympic lottery game would have on the level of funds that are being generated by the existing lottery games. [117973]

Preliminary estimates suggest that the negative net impact need not exceed 4 per cent. (or about £54m a year) for the remainder of Camelot's licence period (i.e. until 2009). These estimates are subject to the work to be done by Camelot on the design, structure, and marketing of new games, which the National Lottery Commission will need to consider before licensing them.

To ask the Secretary of State for Culture, Media and Sport what steps she will take to ensure that the London Olympic Bid will not reduce the level of sports funding to the North West. [117974]

The distribution of Lottery Sports funds to the English regions is a matter for Sport England. The Government has guaranteed the percentage shares of Lottery proceeds net of any income generated by the new hypothecated Olympic Lottery games going to the sports, arts, heritage and charities good causes will not fall below their current level of 16 at least until 2009. The National Lottery Commission's prudent assessment is that the Olympic Lottery games could generate £750 million in the period 2005–2012. However it does not discount the possibility of the initiatives out-performing this estimate. Up to a further £340 million will be sought from theestablished Lottery Sports Fund distributors for Olympic costs.Preliminary estimates provided by Camelot, as assessed by the National Lottery Commission, suggest that any negative impact on income on the existing good causes from the new Olympic Lottery games would be small—4 per cent. for the remainder of the Camelot licence period, until 2009. That equates to £54 million out of their current forecast annual income of £1.5 billion. The precise impact on existing good causes will depend on the way in which Olympic Games are developed. Camelot will carry out extensive market research to establish how to reduce or even eliminate this negative effect. In fact, any Olympic Games could so invigorate the Lottery that other good causes benefit. Any outstanding balance could be met by changing the percentage shares of Lottery income passing to the existing Good Causes after 2009.

To ask the Secretary of State for Culture, Media and Sport if she will list the estimated (a) number of sales, (b) total revenue, (c) total raised for a London Olympic Games, (d) total paid in prizes, (e) total raised for the Exchequer and (f) total in administration costs of the new lottery games for a London Olympic Games. [118005]

Our estimates are that the proposed Olympic Lottery should yield 750 million towards the costs of staging the Olympic games in London, subject to Parliamentary approval of legislation for the introduction of a hypothecated income stream. These amounts together with sales numbers and prize payments will depend on further work to be done by Camelot on the design and structure of the games, which will be necessary before the National Lottery Commission can license them; and on the nature of the Lottery operation following the end of the current licence in 2009. However, the money spent by players on Lottery tickets is currently approximately shared out among the following stakeholders as follows: prize winners 50 per cent.; for the good causes 28 per cent.; to the Exchequer 12 per cent. (Lottery duty); in commission on sales to retailers 5 per cent.; in operating costs 4.5 per cent.; and in profit to Camelot 0.5 per cent. These proportions will not necessarily remain unchanged throughout the relevant period, but if they did so then total sales of £2,680 million would imply Lottery duty of £330 million retail and operating costs of £254 million.

To ask the Secretary of State for Culture, Media and Sport if she will make a statement on the contingency plans for the financing of a London Olympic Games if (a) Lottery and (b) private sector funds are insufficient to cover the total projected cost. [118006]

The agreed public funding package of £2.375 billion in place for a London 2012 Olympics already includes a significant contingency element of more than £1.2 billion over the public subsidy requirement estimated by Arup as part of its cost benefit analysis of a specimen Olympics situated in the Lower Lea Valley. This compares with the required public subsidy for the Sydney Olympics of approximately £750 million.The Government plan to be the ultimate guarantor of Olympic funding needs should the shortfall between Olympic costs and revenues exceed the agreed £2.375 billion public funding package. The Government expect to discharge that responsibility in a sharing arrangement to be agreed as appropriate with the Mayor of London and through seeking additional National Lottery funding in amounts to be agreed at the time.These expectations will be reviewed in summer 2005 when the bid has been finalised and we have a clearer picture of the likely costs. Any such review would also allow the inclusion of additional funding sources as appropriate.