The great Olympic raid

Ten years after Gordon Brown's government borrowed £425m from the Big Lottery Fund to help pay for the London 2012 games, not a single penny has been repaid. Tom de Castella investigates

Olympic Park: stadium now rented by West Ham United
Olympic Park: stadium now rented by West Ham United

As she walks through the Olympic Park, Eleanor Image has mixed feelings about the architectural grandeur that is all around. As manager of Play Association Tower Hamlets, she sometimes takes children there for picnics. Those famous landmarks of London 2012 remain: the spaceship-like Aquatics Centre, the red squiggle of the Orbit tower and the giant white bowl of the athletics stadium. But despite the billions spent here, few of her families use the park regularly.

What grates particularly is that money that otherwise would have gone to charities helped to pay for it all, money that has still not been repaid.

The backstory has largely been forgotten, but in 2007 Gordon Brown’s government was looking for ways to cover a ballooning Olympics bill and took £425m from the Big Lottery Fund to cover some of the costs. After an outcry, the Olympics minister of the time, Tessa Jowell, said the money would be repaid after the games. Subsequent governments agreed to honour that pledge, but 10 years on and there is no sign of the money.

"It doesn’t feel fair that charities have been cut back to pay for it," says Image (left). "Austerity makes things like the lottery even more important."

The raid on the BLF has coincided with the play association’s budget being cut in half, from £300,000 in 2009/10 to £150,000 in 2017, says Image. "The lottery was a very good funder, but it became increasingly hard to get funding," says Image. "By 2010 money was reducing really fast."

In 2014, the association reapplied for a grant from the BLF’s Reaching Communities programme, but was rejected. Staffing is down from five to two and some services have had to be cut, including work with children with special needs.

It’s not just in Tower Hamlets that play projects have seen lottery funding fall. Adrian Voce, former director of Play England, says a promise by the BLF to follow up its major play programme, worth £155m, was dropped in 2010 after "the Olympics came calling". It left the play sector to "fall over the cliff", he says.

The fight to get the money back is being led by the Directory for Social Change, which launched the Where’s Our Big Lottery Refund? campaign in 2010. Jay Kennedy, director of policy and research at the DSC, says this remains a great injustice. "Money that was earmarked for charities ultimately went into helping the private sector redevelop east London," he says.

The skyline around the Olympic Park remains dotted with cranes involved in constructing new apartment blocks: the private sector still appears to be reaping the rewards of public investment in the area.

A controversial deal has also been struck that allows the Premier League football club West Ham United to rent the Olympic Stadium for what many consider to be a bargain £2.5m a year. The club contributed only £15m to the £272m cost of converting the stadium into a football venue.

"If you could take a lottery pound, colour it purple and trace its journey, you’d probably find it in Andy Carroll’s pocket," says Kennedy, referring to the highly paid West Ham United footballer.

The much-vaunted legacy plan involving the sale of major assets has not yet happened. But Kennedy says that, with a bit of imagination, the Treasury could make an immediate repayment to the sector. It should take on the role of creditor, he says, and pay back charities against the future sale of Olympic assets. In such a way, the money could be paid back now without damaging the government’s balance sheet.

The government says the money will start being repaid in the "early 2020s". But no detail is provided as to how this might happen, how regularly payments will be or when repayment might be completed.

Tracey Crouch, the Minister for Civil Society, declined to answer questions, but a spokeswoman for the Department for Digital, Culture, Media & Sport, says: "We have always been clear how this money will be returned. We are committed to paying back the £425m the BLF contributed to support the London Olympic and Paralympic Games, with payment due to start in the early 2020s."

Questions remain over whether the London Legacy Development Corporation, set up to manage the legacy after the games, is capable of raising sufficient money from asset sales to repay the lottery. So far, none of the sporting infrastructure has been sold. The Aquatics Centre has been leased to the leisure trust Greenwich Leisure, but swimming pools generally lose money so it is unlikely to be bringing in any extra cash. The LLDC declines to give details on any future sales.

Campaigners argue there is a lack of transparency. For example, last year the LLDC was criticised for trying, and failing, to keep details of the stadium deal with West Ham secret. And if and when the money is repaid, the charity sector will find itself some way down the queue because the Greater London Authority is due to receive the first set of payments for its work on preparing and developing the land for the Olympic sites (see box, below).

A spokeswoman for the LLDC says that it has so far received £6m of the £223m due to the Greater London Authority. The money came from the developers of Chobham Manor, East Wick and Sweetwater, the first three housing developments on the park. "A share of sales will be generated as the schemes are progressed," says the spokeswoman. "The level of receipts will depend, among other things, on the level of affordable housing, the phasing of development and growth in land and house prices."

The GLA’s privileged place in the queue perhaps explains London Mayor Sadiq Khan’s refusal to support the DSC’s campaign for immediate repayment. Last September, he called the idea "impracticable". A spokesman for Khan says: "The timing of the payment to the lottery is a matter for the government. Without the receipt share arrangement, the costs to be met by the GLA would fall on London taxpayers."

The BLF will not talk about cuts caused by the Olympics, but a spokeswoman says: "We managed the initial impact of the contributions made towards the London Olympic and Paralympic Games to continue supporting people and communities across the UK."

But the government must provide answers, says Neil Gray, the Scottish National Party’s spokesperson for social justice at Westminster.

"I’m a huge fan of sport," he says. "My gripe is not with the Olympics, but with the government. There was an assumption that this was borrowing, but there’s no sign of this money being returned."

He is dismissive of the DCMS timetable. "It’s promising jam tomorrow for the third sector," Gray says. "The ‘early 2020s’ starts to push it back into the next parliamentary term. Charities deserve answers now, money coming back now and a repayment plan." The delay means that any refund must be linked to inflation, he adds.

It looks unlikely that repayment will be completed until well into the 2030s. But Image of Play Association Tower Hamlets says charities need the money now, not in 20 years. The money can be found, she says, pointing to the extra cash the Democratic Unionist Party managed to extract from the government to secure its support in Westminster.

But that will occur only if people continue to be made aware of what has happened, Image argues. "The fact that 10 years ago a lot of money was taken from charities and has not been given back gets lost," she says. "People have moved on."

Kennedy agrees. As time passes and different governments come to power, the issue can seem like some "ancient buried artefact", he says. That’s why the DSC is fighting hard to get the story talked about. "Plenty of people say we will never get the money back, but we are not giving up," says Kennedy. "We are quite bloody-minded."

The devolved nations

The use of Big Lottery Fund money to pay for the London Olympics has particularly angered charities in the devolved nations, which saw little benefit from the games. John Downie, director of public affairs at the Scottish Council for Voluntary Organisations, has no faith in the government’s promise to pay charities back. "It is clear that this money will not now be repaid," he says. "As a result, Scottish charities – and probably any charities outside London – have seen no benefit from the legacy of the Olympics."

The rationale for using the BLF was wrong, Downie (right) says: "We completely disagree with the original political decision to divert lottery money from good causes to fund the London Olympics in 2012, leaving the Scottish, Welsh and Northern Irish third sectors at a disadvantage."

Phil Fiander, director of European operations at the Wales Council for Voluntary Action, says Welsh charities face a "perfect storm": not only are they having to do without the Olympic cash, but they are set to lose millions of pounds of European structural funds after the UK leaves the European Union. On top of government cuts to the third sector, he says, he has heard that falling lottery receipts will soon mean cuts of up to 25 per cent from the BLF, which makes the original decision to take from good causes all the more damaging. "We knew this would happen," he says. "We said it would take ages to repay and that it was the wrong time to take money away from voluntary organisations."

Almost 90 per cent of BLF funding in Wales is awarded to very small charities in grants of less than £10,000. So it is the local charities on the front line that are suffering most from London 2012, says Fiander. The Olympics was a "wonderful thing", but the way the assets have been managed has been flawed: "When you look at the deals done on the assets, not a lot of money is coming back into the pot. The commercial assets are not being fully realised."

In Northern Ireland, the tone is more muted. Sandra Bailie, head of organisational development at the Northern Ireland Council for Voluntary Action, says: "It seems reasonable that some of the money that was used from the BLF to pay for London 2012 should be refunded. It is unclear what the current situation is and we should seek some clarity and transparency from government." But she cautions against a hurried sale of assets that might prevent land and property sales from obtaining their maximum value.

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