Spending Review: Charities fear lottery funding raid

Charities are calling on Chancellor George Osborne to protect lottery funding for community projects in Wednesday's Spending Review.

They claim the Treasury could mount a £320m raid on lottery funds to make up for cuts to arts and sports funding.

Treasury sources indicated this was not likely to happen but would not comment publicly on the Spending Review.

The Department for Culture, Media and Sport is still in talks with Mr Osborne over cuts to its budget.

Mental health

Sir Stephen Bubb, chief executive of the charity leaders' group Acevo, has written to the chancellor urging him to protect the fund.

He said: "Society can't afford to lose the life-enhancing Lottery grants that can transform communities.

"It would be catastrophic if the proposed slashing of Big Lottery Fund grants goes ahead."

The Big Lottery Fund gives grants to homeless charities

The Big Lottery Fund hands out a total of £650m a year to voluntary groups to tackle social problems such as domestic abuse, homelessness and poor mental health, among many other causes.

It is the biggest funder of small charities in the UK, with the majority of its grants being for £10,000 or less.

The National Council for Voluntary Organisations (NCVO), which represents charities in England, claims it has evidence that the government is planning to reduce the Fund's share of Lottery proceeds from 40% to 22% - adding up to a funding cut of £320m.

The money instead would go to the National Lottery's arts and sports distributors to make up for cash shortfalls in their funding as a result of cuts to be announced on Wednesday.

The NCVO claims the Fund would have to close its doors to new grant applications for three years if these changes go ahead.

'Hugely damaging'

NCVO chief executive Sir Stuart Etherington said: "The Lottery was founded and has always been operated on the principle that it adds to rather than replaces public funding.

"This would be a clear breach of that principle. It would be hugely damaging to the Lottery if players saw it as financing a government slush fund to compensate for spending cuts."

Sir Stuart has written to Cabinet Office minister Oliver Letwin urging him not to make any "snap decisions" - and to carry out a proper consultation into the impact of any changes.

Mr Osborne will set out his spending plans for the next four years on Wednesday.

Most departmental budgets - excluding health, education, international aid and defence - are expected to be cut by more than 25% as the government works towards its goal of eliminating the budget deficit and securing a surplus in both day-to-day and overall spending by 2020.