Hard lessons to learn

Most Lottery projects are a great success, but we hear a lot more about the few that fail. At least

To err is human, but to really foul things up requires Lottery money. Wherever you live, you may not know about any of the excellent Lottery-funded facilities down your street. However, the odds are that you'll know about the local Lottery failure.

In Scotland, perhaps you're bothered about the Big Idea science centre in Irvine (£5.3m Millennium Commission funding), a bad idea that failed to inspire the scientifically calculated visitor numbers and was deemed too stupid to find ongoing support. In Bradford, the leap of blind faith that was the Life Force intercultural faith centre (£2m Millennium Commission funding) produced so few disciples that the building is now used by an arts group.

In Sheffield, the National Centre for Popular Music (£11m Arts Council funding) opened with less of a fanfare and more of a scratchy B-side. It closed after four months. The building is now the local university's student union, serving up Special Brew instead. In north London, the closed and close-to- collapse Clissold Leisure Centre in Hackney (£10m Sports Council funding) remains the subject of legal battles over who is to blame. But who thought of giving money to a council with no overall political control, most of its senior management missing and a reputation from the Audit Commission for poor and weak management?

In Wales, the leek and daffodil lovers must despair at the National Botanic Garden (£22m Millennium Commission funding), which in October needed an urgent liberal spreading of cash manure to keep the garden in bloom. In Bath, the Spa (nearly £8m Millennium Commission funding) is now more famous for contractors sparring with each other in legal punch-ups that have prevented the Roman restroom from opening. And Daily Mail readers nationwide will remain outraged that the Community Fund recklessly threw £336,261 at the asylum-supporting lefties of the National Coalition of Anti-Deportation Campaigns.

It's an impressive list of cock-ups, but you could fit all of them in the biggest misuse of public money in peacetime - the Millennium Dome. This £628m (£229m more than originally forecast) overgrown Boy Scout's tent in south-east London attracted just over half the number of anticipated visitors. It has since remained closed and almost unused at a cost of several million pounds. It will be handed over to private property speculators who, when they have made a killing, may pay something towards its original erection costs.

The government's spending watchdog, the National Audit Office, has more than once sunk its sharp teeth into the Lottery grant distributors. In 1999, it savaged the major capital projects of the Arts Council's Lottery spending. Only eight of the 15 projects had been finished or were scheduled to finish on time, with five running more than three months late. A staggering 12 of the 15 were over budget, six by more than 10 per cent. And eight of the 15 projects had applied for, and been granted, additional Lottery funding.

This prompted the Arts Council to hire expensive consultants to compare its projects with similar-sized private sector construction projects. And guess what? The consultants told the council that its projects overran by only 17 per cent, compared with the private sector average of 18 per cent. You can rely on consultants to tell you what you want to hear.

In April 2000, the National Audit Office snarled at the National Lottery Charities Board. The watchdog suggested that between £67m (15 per cent) and £145m (32 per cent) of the money spent had gone on projects that had not provided, or were only partly providing, the planned level of service or activity. In 11 out of 132 cases, reports on the projects' progress were either more than a year late or still outstanding.

And so it goes on. But this year, the National Audit Office has also criticised the Lottery distributors for not throwing away their cash fast enough. Each distributor sets a target for how much money it wants to spend and how fast. Going by these self-set targets, the NAO said that, in total, they should have spent an extra £450m by now. That's money just languishing in their banks.

Whatever the Lottery distributors do, they are damned: damned if they spend money on projects that fail, damned if they don't spend money on certain types of project, and damned if they don't spend money fast enough.

All say they have learnt lessons from their failings. The Arts Council says it now looks much harder at the long-term viability of major projects and is rejecting outlandish and exaggerated schemes. The Community Fund was this year swallowed up by its fellow distributor, the New Opportunities Fund, in what was described as a "merger", to form the Big Lottery Fund. Its chief executive, Stephen Dunmore, says it now carries out random spot-checks on all funded projects, and a separate risk-based approach sends it scurrying to investigate those projects where early-warning sirens have sounded. And it now uses trusted partners such as the Countryside Commission and the British Trust for Conservation Volunteers to help manage and monitor smaller projects, rather than just passing on grants to local groups and leaving them to it.

And the fund distributors now try to give a helping hand to organisations that, if left to their own devices, would never be trusted with a grant. The second National Lottery Act meant that, from 1998, the funders had to seek out organisations in parts of the country or from social or ethnic groups that had not received their fair share of funding under the earlier system. That had favoured white middle-class organisations with professionals experienced in putting together bids, working in partnership and lobbying at the right political levels. Dunmore says: "If anything, supporting groups who find applying difficult on their own mitigates against our risks."

The Millennium Commission, which will itself close in 2006, has ten projects still on the go. They include the Bernie Grant arts centre and the Stephen Lawrence technical centre. A spokeswoman said: "They are struggling. We are helping. Some of these communities don't have access to the skills or to the high-level support that can help drive these projects on. That can't be said of the Bath Spa. That should have opened, and we are disappointed."

And as she points out, the Lottery has funded 1,750,000 projects to the tune of £16bn and you have to take some risks. She adds: "The failures are way, way in the minority."