Tyne and Wear Archives and Museums was awarded £2m in lottery funding for 2018-22. In the past it has used lottery funding to research and interpret circus-related collections.

ACE spends reserves as lottery income falls

Patrick Steel, 08.08.2017
Arts Council of Wales reviews lottery funding programmes
ACE has used funds from its lottery reserves for the first time since 2009-10 in the face of dwindling returns to good causes from sales of lottery tickets.

ACE has increased its lottery reserves each year from £97.4m in 2009-10 to £334.3m in 2015-2016, but used £20m from its lottery reserves in 2016-2017 for “planned payments on existing grant commitments”.

ACE’s use of its lottery reserves comes as Camelot, which runs the national lottery, announced that returns to good causes in 2016-17 were down by 8.8% on the previous year, a fall of £273.1m, due to lower ticket sales.

Jo Taylor, the chairman of Camelot, has stated that the organisation expects 2017-18 to be “equally, if not more, challenging”, anticipating a further sales decline this year.

ACE received £227.4m from the lottery in 2016-17, £40.9m less than 2015-16, and £21.6m lower than was forecast for that year.

ACE’s annual report for 2016-17 stated: “Lottery revenues during 2016-17 have been below expected levels and is a concern in terms of future income.”

An ACE spokeswoman said: “There have always been short term fluctuations in lottery returns, which we manage carefully.

“We keep a close eye on income trends and any impact they could have on our overall budgets, although we have no current plans to amend the national portfolio budget.”

The fall in income for good causes has had an impact across the UK.

The Arts Council of Northern Ireland’s national lottery income fell from £10.8m in 2015-16 to £9.1m in 2016-17.

Creative Scotland’s income from the national lottery in 2016-17 was £29.1m, down from £34.3m in 2015-16.

And the Arts Council of Wales received £16.4m in 2016-17, £2.9m less than 2015-16 and some way short of the Department of Culture, Media and Sport’s (DCMS) income projection for the year of £18m.

An Arts Council of Wales spokesman said: “In the short-term the Arts Council of Wales has had to fund fewer projects that it might otherwise have been able to support. We’re therefore reviewing all of our lottery funding programmes to see how we can achieve sustainable future patterns of funding and support. We hope to conclude this review by the autumn.”


Lottery distributors have been criticised in the past for maintaining reserves at a higher level than is necessary.

ACE has acknowledged that its current level of lottery reserves breaches its own policy, updated this year, of preserving a balance of at least £50m in each year over the period to 2021-22, but not exceeding £150m. ACE’s national council has agreed in principle that the reserve should be brought down to this level.

Its current lottery reserves of £314.5m against liabilities of £279.9m are considerably higher than those of Sport England, a comparable organisation, which holds £97.3m in reserves against liabilities of £260.4m.


ACE is investing around £71.4m a year of lottery funding into the 2018-22 national portfolio in total, compared with £69.6m a year in 2015-18. This has led some to question ACE’s commitment to the additionality principle.

Christopher Gordon, one of the authors of Rebalancing Our Cultural Capital (RoCC), which called for increased arts council funding to the English regions, said: “While the national lottery’s revenues seem to be in continuing decline, the ACE disposition of money signifies that any pretence of lottery ‘additionality’ is now completely dead and buried.

“The DCMS appears to condone this, despite the fact that the department is legally the custodian and enforcer of the still extant 2007 Lottery Directions, which state a rather different set of priorities.

“Our substantial work following RoCC made the case for ‘the missing lottery distributor’ in the arts to concentrate on participation.

“Sport England’s lottery policy starts out from participation. The Heritage Lottery Fund recognises its importance. ACE has never considered it as fundamental – but for a lot of what its policy claims, it needs to have some priority. Participation is a significant focus in the 2007 Lottery Directions.”

An ACE spokeswoman said: “There has been an ongoing debate since the lottery came into being as to what the ‘additionality’ principle is and how to test whether any proposed funding might breach the principle. We remain confident that the approach we’re taking does not breach the additionality principle.

“The biggest proportion of our portfolio funding still comes from grant-in-aid. In using lottery funds to support additional activity we believe that we adhere to the principle that government funding should be maintained and is an essential part of a mixed funding model.

“We believe that the latest investment round shows more clearly than ever our commitment to the principles laid out in the lottery directions. This portfolio of organisations will reach more people, in more places than ever before.”

Museums Journal contacted DCMS for comment.

Rebalancing our cultural capital

ACE pledged in its 2015-16 annual report to invest at least 75% of its lottery revenue outside London by the end of 2018. According to its figures for 2018-22, total lottery investment in London from the national portfolio will be £110.2m, or 42.4% of £260m of total lottery investment across England (38.6% of total lottery investment including Wales).

To meet the target, the balance will need to be made up from ACE’s Strategic Funds and Grants for Arts and Culture budgets, which have yet to be announced.


We incorrectly stated that ACE had failed to meet its target to invest 75% of its lottery revenue outside London by the end of 2018. In fact, while lottery funding for NPOs outside London for 2018-22 is less than 75%, the distribution percentages of all ACE lottery funding, including Strategic Funds and Grants for Arts and Culture, is not yet known.

We said Creative Scotland's income was down from £3.4m in 2015-16. In fact it was down from £34.3m.


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Guillaume Evrard
Web content editor, The University of Edinburgh
10.08.2017, 10:46
MJ News editor please:

"Creative Scotland’s income from the national lottery in 2016-17 was £29.1m, down from £3.4m in 2015-16."

Should it read "was £29.1m, down £3.4m from 2015-16."?
Patrick Steel
Website Editor, Museums Association
14.08.2017, 10:08
Thanks for spotting this typo Guillaume, we've updated that now. All best, Patrick