£2.4bn of lottery funds 'hoarded' by distributors

In a report into the bureaucracy behind the lottery, MPs complained that distributors hold back hundreds of millions of pounds and can take up to five years to pay grants.

The Commons Public Accounts Committee (PAC) demanded that the Government get a grip on the problem by setting "clear milestones" for reducing the huge sums piled up in the bank.

Since the lottery was established 11 years ago, more than £15bn has been raised for sport, the arts, heritage and other good causes. The cash is held by the National Lottery distribution fund, which passes them to 15 distributors for allocation to good causes.

Although the fund is constantly being topped up through ticket sales, the PAC reported yesterday that it was often holding on to the cash for future, unidentified projects. It found that one distributor, the Heritage Lottery Fund, could take as long as four to five years to hand over money for projects.

The worst offenders were the heritage fund and the New Opportunities Fund, which channels money to deprived areas. Between them they had amassed about £1.6bn.

Edward Leigh, the PAC chairman, said: "Lottery money is for funding worthy community projects, not sitting in a bank account doing nothing.

"There is no shortage of high-quality projects to fund but the enormous sum of £2.4bn was stuck in limbo in May of this year - in part because the distributors are too timid to apply their own policies for committing funds," he added.

He said communities could have benefited to the tune of £450m had distributors followed their rules for distributing cash.

At one point in 1999 the distributors had £3.7bn of unspent money and were instructed by the Department of Culture Media and Sport (DCMS) to reduce the balance to £1.85bn within five years. But they missed the target and five distributors actually increased the amount of money they were holding.

The committee said: "Distributors need to increase the amount of money that they pay out in grants. The most significant impact on balances would come from distributors making more commitments to pay grants. It would also help reduce balances if projects were delivered, and thereby grants paid, more quickly."

The MPs accepted that uncertainty over funding for the London Olympics in 2012 caused some problems for distributors.

A DCMS spokesman said: "The Government ... agrees it is important that lottery money gets to communities as quickly as possible. Lottery balances have fallen by over a third since 1999 and we are working with lottery distributors to make more progress."

Hugo Swire, a Tory culture spokesman, said: "Although some distributors, such as the Heritage Lottery Fund, have high balances because of the long-term nature of the projects they fund, it is clear that the Government's target to reduce lottery balances has failed spectacularly."