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'No more Lottery raids' for 2012 MPs back Olympic funds transfer
(about 4 hours later)
Culture Secretary James Purnell has promised MPs the government will take no more money from the National Lottery to pay for the 2012 London Olympics. MPs have voted to take almost £1.1bn from the National Lottery to pay for the 2012 London Olympics.
MPs will vote later on plans to take £1.1bn from the Lottery for the Games. They approved the measure by a majority of 348 after Culture Secretary James Purnell promised no more money would be transferred afterwards.
Tory Jeremy Hunt said he wanted a commitment that "there would be no more raids on good causes" and an ability to scrutinise the Olympics' accounts. In a Commons debate, he also announced the Treasury would change the tax regime for the Games, potentially bringing in £400m for good causes.
Mr Purnell said no more lottery funds would go towards 2012 and he rejected claims of a £1bn funding "black hole". The Tories said there must be "no more raids" on Lottery-funded projects.
The budget for the London games is £9.3bn - nearly four times the estimate that helped win the bid in 2005. 'No black hole'
Guarantees Mr Purnell said the £9.3bn budget for the Games - nearly four times the estimate that helped win the bid in 2005 - was "robust". He dismissed claims of a £1.1bn "black hole".
Mr Purnell urged MPs to vote for £1.085bn to be transferred from the Lottery to the Olympic Lottery Distribution Fund in 15 instalments starting in February 2009 to August 2012. The government won the Commons vote by 357 to nine.
Asked if he could guarantee that this would be the last cash transfer from the Lottery, the minister said: "There will be no further diversion from the Lottery good causes to fund the Olympics." The £1.085bn Lottery cash comprises an original allocation of £410m and an extra £675m.
It will be a once in a lifetime chance. It will bring the country together. It can transform Britain's reputation overseas James PurnellCulture Secretary It will be transferred from the Lottery to the Olympic Lottery Distribution Fund in 15 instalments from February 2009 to August 2012.
He also announced that the Treasury was considering changing the tax regime for the Lottery to a gross profits system - as applies to much of the gambling industry. Challenged over the effect of using cash intended for the arts, sports and charities, Mr Purnell told MPs: "I can confirm today that there will be no further diversion from the Lottery good causes to fund the Olympics."
"It is a complex issue but I am happy to announce that we and the Treasury will look again at this issue," he said. He also insisted the Olympic budget was not dependent on land sales, stating: "There is no black hole in the Olympic budget."
And he agreed to allow opposition frontbench spokesmen to attend quarterly meetings to review funding for the Games. Shadow culture secretary Jeremy Hunt said: "These concessions are important but they do not undo the main damage of this afternoon's measure, which is that it is an extraordinary way to fund a £9.3bn Olympics budget - to cut budgets for grassroots sport, the very budgets that could provide the sporting legacy which was the big promise of 2012."
The 2012 Olympics "will be an inspiration to a whole generation", he said.
"It will be a once in a lifetime chance. It will bring the country together. It can transform Britain's reputation overseas."
The Commons exchanges came after London Mayor Ken Livingstone described claims there would be a £1bn "black hole" in Olympics' funds as "pessimistic".
'Cautious' view
Olympics Minister Tessa Jowell and Mr Livingstone have said £1.8bn could be recouped after the Games from land sales at the east London site.
But the assumption of 16% annual land price rises has been criticised as too optimistic by some property experts.
Money from the National Lottery is set to be put towards helping to fund the Olympics - which has met some opposition from sports, heritage and arts projects set to get less lottery cash.
If more than £800m is raised from land sales the plan is for three quarters of the excess money to go towards paying back National Lottery funds.
Asked by a committee of MPs about the suggestions of a black hole, Neale Coleman, the Mayor of London's director of business, planning and regeneration, said the £800m figure was a "very, very cautious" view.
"It's quite wrong to suggest that (£1.8bn) is the planning number, or that this creates some sort of black hole or that the Lottery won't get its money back," he said.
"It's very likely that the figures for land sales will be much higher than this given all that's happened in the past and all we know about east London."
Growth perception
And Mr Livingstone said: "On the most pessimistic assumption, taking the worst year out of the last 10, we get £800m, which would repay all the debts we've incurred.
"Taking the average of the last 20 years, we would get £3bn.
"We've gone for something midway between and so I think we're being quite cautious."
However, Jeremy Leaf, of the Royal Institution of Chartered Surveyors, said while land values and prices have increased, the perception now is that growth is "not going to be anything like it was for the last decade or so".
"It's unlikely we are going to see anything like the growth we have seen in the past, so re-appraisal's very much on the cards," he said.