Is it for you? £3bn lottery cash mountain demolished

The Government is to demolish a £3.1bn cash mountain raised by the National Lottery and will accuse the bodies which distribute the funds of being bureaucratic and "risk-averse". In a White Paper to be published on Thursday, ministers will announce that distributing bodies which salt away lottery cash unnecessarily will lose some of the interest it accrues. The interest "penalties" will be handed over to more efficient lottery bodies.

Tessa Jowell, the Secretary of State for Culture, Media and Sport, has lost patience with the organisations responsible for handing out lottery grants, who have rebuffed her requests to speed their act. She will say the National Audit Office, the public spending watchdog, is to investigate whether the reserve funds are justified.

In 2001, Ms Jowell asked the distributing boards to halve their £3.6bn reserves to £1.8bn by 2004. They have managed only a £500m. When the Government set up the National Lottery, it estimated that reserves totalling £1.5bn would be needed. The worst offender, in the Government's eyes, is the Heritage Lottery Fund, which enables people to "celebrate, look after and learn more about our diverse heritage". It has £1bn in its reserves. Another target is the Community Fund, which gives to charities, voluntary groups and UK agencies abroad, which has a £280m "kitty". Among those likely to benefit from the interest "transfers" are Sport England, which has speeded its grant approvals. The New Opportunities Fund, which pumps money into health and education, has balances of £865m, the Sports Council £307m, the Arts Council £235m and the Film Council £73m.

The maximum grant for small projects, which are paid quickly, will be doubled to £10,000, and applicants will no longer have to satisfy a second test when they thought funds had been secured. The White Paper will also promise moves to give people more say over how lottery cash is spent, through opinion polls, focus groups, citizens' juries and allowing players to "tick a box" when they buy a ticket.