The Big Lottery Fund has channelled billions of pounds in proceeds from the National Lottery to good causes. Colin Marrs quizzes chief executive Dawn Austwick on the interplay between her organisation’s priorities and the government’s
More than 4,000 people have become millionaires through the National Lottery since its launch in late 1994. Enthusiasm for the weekly draw shows no sign of abating – record ticket sales of £3.6bn were recorded during the first half of 2015/16. A booming lottery is music to the ears of Dawn Austwick, chief executive of the Big Lottery Fund (BLF), which has received more than £9bn from the 40% share of proceeds allocated for good causes since its creation.
Each year, BLF funds 12,000 projects through 75 individual programmes, with 90% of its awards coming in at under £10,000. Although the vast majority of this spending comes from lottery, rather than taxpayer receipts, the organisation – a non-departmental public body – faces close strategic direction and oversight from civil servants. BLF’s relationship with government is complex, but Austwick is clear that she is under no pressure to direct funding to policy areas which have seen reductions in government grants.
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“We have a little chart that we use which has a circle for our funding, which is about £700m a year,” she says. “Then we have a circle for total public expenditure which dwarfs our budget. So the moment you look at that you understand that even if you were to try to [plug funding gaps] you couldn’t do it because we don’t have the money.”
In any case, she says, her body’s budget is consistently unpredictable because of the lack of correlation between lottery ticket sales and general economic circumstances. The perception that more people turn to the lottery in desperation during a recession is mistaken – a rule that applies across all of the world’s lotteries. “It is very unclear exactly what drives, increases or decreases sales,” she says. “There was a big spike upwards in the UK during the Olympics. It’s gone slightly down since then, but by very little.”
As accounting officer, Austwick answers directly to the Cabinet Office – which also appoints the BLF board – on the fund’s financial management. The BLF has five funding portfolios – one for each constituent country as well as the UK overall, with devolved administrations setting their own strategic priorities to guide funding decisions.
But Austwick maintains that, beyond the strategic direction set by government, the BLF operates “absolutely at arm’s-length” from officials in making its funding decisions. Regular conversations with civil servants are merely one part of a mosaic of consultation that help her 850 staff (down from 992 a couple of years ago) to work out where funding should be directed, she says.
“There are a number of inputs in how we decide how to spend our money. The first is learning through what we are already funding and responding to that,” she says. “Then we have folk operating in the field producing patch reports on what is happening at the grassroots level in terms of the demands and issues. Then, of course, like anyone, we horizon-scan, which does involve regular conversations with civil servants in different departments, as well as with lots of other folk from policy institutes and other bodies.”
The issue of BLF’s independence from government came into sharp focus in 2014, when the National Audit Office (NAO) investigated three grants totalling more than £2m made to a foundation created to promote the Big Society concept – a concept which was being enthusiastically promoted by coalition ministers. The investigation was prompted by Gareth Thomas MP, the former shadow minister for civil society, who raised questions over political involvement in the decision to fund the foundation and a subsidiary body.
Austwick is clear. “We got a clean bill of health from the National Audit Office. There was no question of political interference.” However, the organisation did not get off completely scot-free, and she admits there were some lessons on corporate procedures to be learnt from the experience. In particular, the NAO criticised the decision to pay full grants early into the process, which, it said “left the Big Lottery Fund with very little scope to influence the project when it became clear that the project was struggling to deliver its objectives”.
“To be fair,” Austwick says, “I would put that in the category of being quite a risky grant because it was something that hadn’t happened before. One of the learnings is to understand which box we’re in. If it’s in the box of the risky grant because it’s new, potentially, you need to wrap more oversight around it.” However, avoiding risk completely is impossible, she says. “Some things are a bit risky because they are about encouraging new ideas or developments and they’re going to be inherently riskier than things which go to better established organisations,” she says.
Judging the success of BLF grants is less than straightforward. Austwick lists the current system of audit, which requires recipients to provide reports and accounts showing how money was spent. But, she admits, the current measurement regime, across the charity sector as a whole is seen as a “blunt instrument”. “We are starting to have a conversation about how we take another step forward in how we talk about impact, and what it actually is.”
"One of the learnings is to understand which box we’re in. If it’s in the box of the risky grant because it’s new, potentially, you need to wrap more oversight around it.”
“You can get into difficulty with outcomes if you say a grant has been unsuccessful because it didn’t achieve the outcomes which were defined at the beginning. That might not necessarily be the case. It may be that circumstances changed, but it could also be that the delivering body got halfway through and in conversation with us might have realised what they were trying to do wasn’t really working and they needed to do things slightly differently.”
However, in the wake of the NAO investigation, the organisation is now “moving towards a model that is less one size fits all” in how it deals with different categories of awards, she says. “If you’re talking about the big strategic programmes or a grant of a million pounds plus, you’re going to have a much more ongoing relationship, much more dialogue as you go through. So that’s more complicated; that’s more likely to be looking in some depth at the quality of the organisation, its governance and management at the point of decision as well as the quality of the idea. Then it’s about having clear milestones as you go through in your monitoring regime.”
And the Big Society episode has not diminished Austwick’s appetite for working with government – indeed BLF has a specific remit under the 2006 National Lottery Act to distribute non-lottery funding on behalf of other organisations, including central government departments. Austwick points to the Coastal Communities Fund, delivered on behalf of DCLG, along with a “lovely” project to fund the purchase of a Cold War listening station through a community land programme instigated with the Scottish Government.
Crucially, though, Austwick says BLF is going further than merely acting as a bureaucratic machine for distributing cash. She identifies a desire to become a “catalyst” for new approaches to delivering public services. Five strategic programmes in the fund’s English portfolio have elicited bids from consortia of local agencies to help coordinate the delivery of services. “The task in each of these places was to look at how they could change service provision, such that the outcomes were improved and the nature of the way in which the service was delivered was changed,” she says.
Austwick becomes animated when describing one of these programmes – the £112m Fulfilling Lives initiative, established to enable the delivery of joined-up services to people with multiple needs. Describing a visit to one partnership in Blackpool, she says: “What was really interesting talking to the professionals was that they said, ‘We’ve learned so much about what we’ve been doing that hasn’t been working for our clients, that we hadn’t really understood.’ You get a renegotiation of how the system works – it is putting the human being in the centre and asking the services to work around them.”
A fine intention perhaps, but doesn’t such an approach inevitably clash with government policy to drive down public spending? Austwick admits there isn’t a perfect solution yet, but says: “The issue in this country has been that outcomes never get any better and the services just carry on and carry on. We can use some of our money, hopefully, to be able to demonstrate that if you start working at the prevention end, you drive down the costs in the longer term. I think one of the problems is if you always start from cost, you probably make some bad decisions.”
Another area where the BLF’s agenda is currently overlapping with Whitehall policy initiatives is in the emerging area of social investment. Austwick sees a key role for her organisation in helping develop the nascent market – which encourages organisations to use their finance to achieve both social and financial returns.
But Austwick is clear that the BLF is unlikely to begin offering social investment loans any time soon. “Our role,” she says, “has really been to encourage the development of that market. That’s primarily been looking at how we can help the voluntary and community sector be better prepared to make use of social investment and working with commissioners to encourage them to think about effective commissioning from the voluntary and community sector.”
“We are coming out of that postwar settlement of public, private and civic. In the 21st century, that relationship, those boundaries, are fluid."
She dismisses worries that the move into social investment is likely to spell a departure from BLF’s focus on traditional grant funding. “Of course, the UK is a pioneer of social investment globally, but we have always been very clear that it is only ever going to be for 10% of the grant holders. For social investment, you’ve either got to have an asset that you can somehow make use of or you need intellectual property or you need a revenue stream. If you don’t have any of those or you haven’t got much of them, then it’s going to be quite hard to take advantage of social investment.”
Moving into new areas might create risk, Austwick says, but it cannot be avoided in responding to the “maelstrom of change” in which the BLF is currently operating. “We are coming out of that postwar settlement of public, private and civic. In the 21st century, that relationship, those boundaries, are fluid. Then you put that alongside technological change, which means that we are in a global market, knowledge spreads virally from one corner of the earth to the other almost overnight. A lot of our institutional ways of thinking and doing are still founded in the way of thinking that sees management merely as a scientific and bureaucratic process.”
As one response, BLF has recently commissioned freelance consultant and writer Sonia Sodha to take a fundamental look at how charities fit alongside government and private sector entrepreneurship. Still a work in progress, the project has been provisionally titled The Future of Doing Good. “We want to throw up these really big questions and ask what are the implications of the changing landscape for people, communities, charities,” Austwick says. “We won’t necessary be aiming to come up with a definitive answer, but we want to stimulate that debate.”