Corporate report

The National Lottery Community Fund framework document

Published 15 January 2025

© Crown copyright 2025

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Introduction and background

1. Purpose of document

This framework document (the ‘framework document’) has been agreed between the Department for Culture, Media and Sport (‘DCMS’) and the Big Lottery Fund (operating as The National Lottery Community Fund) (‘TNLCF’) in accordance with HM Treasury’s handbook Managing Public Money (‘MPM’) (as updated from time to time) and has been approved by HM Treasury.

1.2. The framework document sets out the broad governance framework within which TNLCF and DCMS operate. It sets out TNLCF’s core responsibilities, describes the governance and accountability framework that applies between the roles of DCMS and TNLCF, and sets out how the day-to-day relationship works in practice, including in relation to governance and financial matters.

1.3. The framework document does not convey any legal powers or responsibilities, but both parties agree to operate within its terms. References to TNLCF include all its subsidiaries and joint ventures that are classified to the public sector and central government for national accounts purposes. If TNLCF establishes a subsidiary or joint venture, there shall be a document setting out the arrangements between it and TNLCF agreed with DCMS. Copies of the framework document and any subsequent amendments have been placed in the libraries of both Houses of Parliament and made available to members of the public on TNLCF’s website and GOV.UK.

The expected date for review and updating of this framework document is November 2027. This Framework Document replaces all previous Management Agreements between TNLCF and DCMS and will remain in place until it is superseded.

2. Objectives

2.1. DCMS and TNLCF share the common objective of distributing National Lottery good cause funds, and non-lottery funds for the purpose of meeting expenditure which is charitable or connected with health, education, or the environment. TNLCF’s powers to distribute funds for these specific purposes are granted under s25 (1) of the National Lottery etc Act 1993 (the ‘1993 Act’). TNLCF also has the statutory obligation to distribute money ring-fenced from Dormant Assets for meeting expenditure that has a social or environmental purpose. This statutory obligation is granted to TNLCF under s16 of the Dormant Bank and Building Society Accounts Act (the ‘2008 Act’) as amended by the Dormant Assets Act 2022 (together the ‘Dormant Assets Acts 2008 to 2022’). TNLCF may also distribute government money/non-lottery funds, for a purpose specified under s36C(3) of the ‘1993 Act,’ subject to the additionality principle under s34(2A) of the ‘1993 Act’ and s9(3) of Schedule 3 of the ‘2008 Act’.

2.2. To achieve this TNLCF and DCMS will work together in recognition of each other’s roles and areas of expertise, providing an effective environment for TNLCF to achieve its objectives through the promotion of partnership and trust and ensuring that they also complement the strategic aims and objectives of DCMS and wider government as a whole.

3. Classification

3.1. TNLCF has been classified as a central government organisation by the ONS/HM Treasury Classifications Team.

3.2. TNLCF has been administratively classified by the Cabinet Office as a non- departmental public body (‘NDPB’).

Purposes, aims and duties

4. Purposes

4.1. TNLCF was established by the National Lottery Act 2006, which amended the ‘1993 Act’. Under section 23 (4) of the 1993 Act, TNLCF is named as the distributing body to expend national lottery income for the purposes set out in section 22 (3) (d) of the ‘1993 Act.’ Under section 16(1) of the, ‘2008 Act’ as amended by the Dormant Asset Act 2022, TNLCF is named as the distributing body to expend Dormant Assets money for meeting expenditure that has a social or environmental purpose.

TNLCF’s main functions are to:

  • distribute National Lottery good causes funds (Lottery money) received by TNLCF to meet expenditure which is charitable or connected with health, education or the environment
  • distribute non-Lottery funds for the same four purposes, normally on behalf of government departments (third party work); and
  • distribute funds issued to it by Reclaim Fund Ltd (Dormant Assets money) to meet expenditure that has a social or environmental purpose

4.2. TNLCF does not receive any grant-in-aid funding from the government.

Grants distributed by TNLCF are derived from any of:

  • (i) a proportion of income from the sale of National Lottery tickets
  • (ii) third party funding (often, but not limited to Exchequer funding); and
  • (iii) Dormant Assets money received from Reclaim Fund Ltd.

TNLCF’s lottery and Dormant Asset income spending purposes are set out in section 23(4) of the ‘1993 Act’ and section 16(1) of the ‘2008 Act’. When making grant funding decisions, TNLCF will take into account the additionality principle; that lottery and Dormant Assets money should be used to fund projects distinct from government finance, for which funds would be unlikely to be made available by the UK government or devolved administrations.

5. Powers and duties

5.1. TNLCF’s powers and duties derive from:

  • Sections 25 to 25C, 25E, 34, 36B to 36E of, and Schedule 4A to, the 1993 Act
  • Sections 16, 22, 25 and 26 of, and Schedule 3 to the 2008 Act

5.2. This framework document complements TNLCF’s Financial Directions and Statement of Financial Requirements (SFR) issued by the Secretary of State for DCMS under s36E(3) of the ‘1993 Act’ and the Financial Directions issued to it by the Secretary of State for DCMS under s22(3) of the ‘2008 Act.’ The provisions of this framework document, unless otherwise stated in the SFR or Financial Directions, apply to the administration of National Lottery and Dormant Assets proceeds allocated or transferred to TNLCF. It should also be read alongside TNLCF’s Policy Directions issued under section 36E of the ‘1993 Act’ and directions issued under section 22 of the ‘2008 Act.’

5.3. TNLCF’s statutory duties and functions are to distribute National Lottery good cause money, money from third parties for expenditure that is charitable or connected with health, education or the environment and Dormant Asset ring-fenced monies for expenditure that has a social or environmental purpose.

6. Aims

6.1. TNLCF’s strategic aims are set out in the Fund’s 2030 strategy ‘It Starts With Community’, in TNLCF’s 2024/2027 Corporate Plan, and also in TNLCF’s Annual Report and Accounts. TNLCF has three corporate objectives set out in its Corporate Plan:

  1. Making a difference
  2. Advancing funding practice; and
  3. One Fund

6.2. These objectives are underpinned by six strategic priorities in the Corporate Plan:

  1. We will expand our grassroots community funding;
  2. We will focus around our four community-led missions;
  3. We will take an equity-based approach to tackle inequality;
  4. We will put environment at the heart of our funding and operations;
  5. We will ensure our people and culture practice reflects our values and the communities we serve; and
  6. We will use our resources well to deliver funding and support to communities.

6.3. When awarding funding, TNLCF must comply with SFR and Financial Directions referred to at paragraph 5.2 of the Framework Document.

6.4. The purpose of any grant of lottery funds must comply with the purposes set out by the Big Lottery Fund (Prescribed Expenditure Order) 2006, or any replacement order issued under s22(3A) of the ‘1993 Act.’

6.5. TNLCF must also take into account any Policy Directions issued to it by the Secretary of State under section 36E(2) of the ‘1993 Act’ or by the now Welsh Parliament, the Scottish Ministers or the now Department for Communities (Northern Ireland) under section 36E(4).

6.6. In distributing Dormant Assets funds, the purposes for which TNLCF may distribute such funding must be in line with any orders made under sections 18A to 21 of the ‘2008 Act’. TNLCF must also comply with any directions issued under section 22 of the ‘2008 Act.’

6.7. In distributing non-lottery funds under section 36C of the ‘1993 Act’, the purposes for which TNLCF may distribute such funding must be for meeting expenditure which is charitable or for purposes connected with health, education or the environment

Governance and accountability

7. Governance and accountability

7.1. TNLCF shall operate corporate governance arrangements that, so far as practicable and in the light of the other provisions of this framework document or as otherwise may be mutually agreed, accord with good corporate governance practice and applicable regulatory requirements and expectations.

7.2. In particular (but without limitation), TNLCF should:

  • comply with the principles and provisions of the corporate governance in Central Government Departments Code of Good Practice(as amended and updated from time to time) to the extent appropriate and in line with its statutory functions and duties or specify and explain any non-compliance in its annual report
  • comply with MPM
  • in line with MPM have regard to the relevant functional standards as appropriate and in particular those concerning finance, commercial and counter fraud
  • take into account the codes of good practice and guidance set out in Annex A of this framework document, as they apply to ALBs

7.3. In line with MPM Annex 3.1 TNLCF shall provide an account of corporate governance in its annual governance statement including the Board’s assessment of its compliance with the code with explanations of any material departures. To the extent that TNLCF does intend to materially depart from the code, DCMS Sponsor Team should be notified in advance.

Role of DCMS

8. Secretary of State (The responsible Minister)

8.1. The Secretary of State for Culture, Media and Sport is accountable to Parliament for all matters concerning TNLCF.

8.2. The Secretary of State’s statutory powers in respect of TNLCF are set out in the ‘1993 Act’ and the ‘2008 Act.’

8.3. These include:

  • To grant consent to appointments to TNLCF’s England Committee.
  • To issue financial and accounts directions across all UK countries with regards to the spending of lottery income for grant making purposes.
  • To issue policy directions in respect of TNLCF’s England and Isle of Man. funding portfolio of distribution of lottery income, and to issue policy directions for the UK funding portfolio of lottery income in consultation with the devolved administrations.
  • To issue an order for which or the kinds of person, to which a distribution of Dormant Asset expenditure may be made for meeting English expenditure.
  • Additionally, issue an order which makes a provision restricting the purpose for which, or the kinds of person to which, a distribution of Dormant Assets money, for meeting English expenditure may be made.
  • To prescribe, by order, descriptions of expenditure which are to have effect in relation to each of England, Scotland, Wales, Northern Ireland and the Isle of Man.
  • To prescribe, by order, the maximum or minimum amounts or percentages TNLCF can distribute for each prescribed area of expenditure.
  • To appoint or remove or vary the numbers of non-executive members to TNLCF’s board.

Both the ‘1993 Act’ and the ‘2008 Act’ generally require that TNLCF is consulted in exercise of these statutory powers conferred on the Secretary of State for DCMS.

Appointments to the Board

8.4. The Chief Executive of TNLCF is appointed by TNLCF’s board. A DCMS representative should sit on the appointments panel. The DCMS Permanent Secretary, as Principal Accounting Officer (PAO), designates the Chief Executive as TNLCF’s Accounting Officer (AO).

8.5. In line with the ‘1993 Act,’ TNLCF’s board will consist of a chair, together with a minimum of 8 and a maximum of 11 non-executive members that have a balance of skills and experience appropriate to directing TNLCF’s business, including the four Chairs of the Country Committees representing the interests of England, Scotland, Wales and Northern Ireland. These appointments are subject to the Public Appointments Order in Council and as such must comply with the Governance Code on Public Appointments.

8.6. The Secretary of State has the following appointment and approval rights in relation to TNLCF’s board:

  • Appointment of a chair under paragraphs 1(1) and 1(2) of Schedule 4A to the ‘1993 Act’ and removal of the chair under paragraph 4 (1) of Schedule 4A to the ‘1993 Act’.
  • Appointment of the non-executive members of the Board under paragraph 1(1) of Schedule 4A to the “1993 Act”, including, under paragraph 1(3) of Schedule 4A to the “1993 Act”, appointing one member to represent the interests of England, and, with the agreement of the devolved administrations, one member to represent the interests of Wales, Scotland and Northern Ireland. The length of tenure of their appointment is set out in the terms of their appointment. These appointments are subject to the Public Appointment Order in Council and as such must comply with the Governance Code of Public Appointments.
  • All such appointments should have regard to the principle that appointments should reflect the diversity of the society in which we live, and appointments should be made taking account of the need to appoint boards which include a balance of skills and backgrounds.

Other ministerial powers and responsibilities

8.7. The responsible Minister is also responsible for:

  • accounting for TNLCF’s business in Parliament
  • setting the performance framework within which TNLCF will operate including being consulted on TNLCF’s Corporate Plan and associated key performance indicators and issuing ministerial policy directions for TNLCF’s UK-wide and England portfolios
  • such other matters as may be appropriate and proportionate

9. The Principal Accounting Officer (PAO)

The Principal Accounting Officer (PAO) is the Permanent Secretary of DCMS.

PAO’s specific accountabilities and responsibilities

9.2. The PAO of DCMS designates the Chief Executive as TNLCF’s Accounting Officer (AO) and ensures that they are fully aware of their responsibilities. The PAO issues a letter appointing the AO, setting out their responsibilities and delegated authorities.

9.3. The respective responsibilities of the PAO and AOs for ALBs are set out in Chapter 3 of MPM.

9.4. The PAO is also responsible, usually via the sponsorship team, for advising the responsible Minister on:

  • an appropriate framework of objectives and associated key performance indicators for TNLCF based on TNLCF’s Corporate Plan and KPIs in the light of DCMS’s wider strategic aims and priorities
  • how well the ALB is achieving its strategic objectives and whether it is delivering value for money
  • the exercise of the responsible Minister’s statutory responsibilities concerning TNLCF as outlined above

9.5. The PAO via the sponsorship team is also responsible for ensuring arrangements are in place in order to:

  • monitor TNLCF’s activities and performance
  • address significant problems in TNLCF, making such interventions as are judged necessary
  • periodically and at such frequency as is proportionate to the level of risk carry out an assessment of the risks both to DCMS and the TNLCF’s objectives and activities in line with the wider departmental risk assessment process
  • inform TNLCF of relevant government policy in a timely manner
  • bring ministerial or departmental concerns about the activities of TNLCF to TNLCF’s full board, and, as appropriate to the departmental board, requiring explanations and assurances that appropriate action has been taken

10. The role of the sponsorship team

10.1. The TNLCF sponsorship team in DCMS is the primary contact for TNLCF. The sponsorship team shall include policy sponsor teams alongside teams with corporate functions including, HR, Legal, Business and Finance and Public Bodies teams. The responsible senior civil servant for this relationship is the Director for Civil Society (‘the senior sponsor‘), delegated to the Deputy Director. They are the main source of advice to the responsible Minister on the discharge of their responsibilities in respect of TNLCF. They also support the PAO on their responsibilities toward TNLCF.

10.2. Officials of TNLCF’s sponsorship team in DCMS will liaise regularly with TNLCF’s officials to review performance against plans and achievement, KPIs and corporate plan. TNLCF’s sponsorship team will also be responsible for flagging and explaining departmental priorities of relevance to TNLCF and wider policy developments that might have an impact on TNLCF.

The mechanisms for the working level relationship are set out in:

  • Partnerships with arm’s length bodies: code of good practice
  • Arm’s length body sponsorship code of good practice.
  • This framework document

11. Resolution of disputes between TNLCF and DCMS

11.1. Any disputes between DCMS and TNLCF will be resolved in as timely a manner as possible. DCMS and TNLCF will seek to resolve any disputes through an informal process in the first instance. If this is not possible, then a formal process, overseen by the senior sponsor, will be used to resolve the issue. Failing this, the senior sponsor will ask the relevant policy director general to oversee the dispute. They may then choose to ask the Permanent Secretary to nominate a non-executive member of DCMS’s board to review the dispute, mediate with both sides and reach an outcome, in consultation with the Secretary of State.

12. Freedom of Information requests and Environmental Information Regulation requests

12.1. Where a request for information is received by either party under the Freedom of Information Act 2000, Data Protection Act 1998 or 2018, or the Environmental Information Regulations 2004 Act, the party receiving the request will consult with the other party prior to any disclosure of information that may affect the other party’s responsibilities.

13.1. TNLCF shall provide a quarterly update to the sponsor department on the existence of any active litigation and any threatened or reasonably anticipated litigation. The parties acknowledge the importance of ensuring that legal risks are communicated appropriately to the sponsor department in a timely manner.

13.2. In respect of each substantial piece of litigation involving TNLCF, the parties will agree a litigation protocol which will include specific provisions to ensure appropriate and timely reporting on the status of the litigation and the protection of legally privileged information transmitted to the sponsor department to facilitate this. Until such time as a protocol is agreed, the parties will ensure that:

  • material developments in the litigation are communicated to the sponsor department in an appropriate and timely manner
  • legally privileged documents and information are clearly marked as such
  • individual employees handling the legally privileged documents are familiar with principles to which they must adhere to protect legal privilege
  • circulation of privileged information within government occurs only as necessary

TNLCF governance structure

14. The Chief Executive

Responsibilities of TNLCF’s chief executive as accounting officer

14.1. The Chief Executive as AO is personally responsible for safeguarding the public funds for which they have charge; for ensuring propriety, regularity, value for money and feasibility in the handling of those public funds; and for the day-to-day operations and management of TNLCF. In addition, the AO should ensure that TNLCF as a whole is run on the basis of the standards, in terms of governance, decision-making and financial management, that are set out in Box 3.1 of MPM. These responsibilities include the below and those that are set in the AO appointment letter issued by the PAO of the sponsor department.

Responsibilities for accounting to Parliament and the public

14.2. Responsibilities of the AO to Parliament and the public include:

  • signing the accounts and ensuring that proper records are kept relating to the accounts and that the accounts are properly prepared and presented in accordance with any directions issued by the responsible Minister.
  • preparing and signing a Governance Statement covering corporate governance, risk management and oversight of any local responsibilities, for inclusion in the annual report and accounts
  • ensuring that effective procedures for handling complaints about TNLCF in accordance with Parliamentary and Health Service Ombudsman’s Principles of Good Complaint Handling are established and made widely known within TNLCF and published on TNLCF’s website
  • acting in accordance with the terms of MPM and other instructions and guidance issued from time to time by DCMS, the Treasury and the Cabinet Office
  • ensuring that as part of the above compliance they are familiar with and act in accordance with:
    • any governing legislation
    • this framework document
    • Policy, Spending, and Financial Directions
  • ensuring TNLCF has appropriate internal mechanisms for monitoring, governance and external reporting regarding non- compliance with any conditions arising from the above documents
  • giving evidence, normally with the PAO, when summoned before the Public Accounts Committee on TNLCF’s stewardship of public funds, or before other select committees as required.

Responsibilities to DCMS

14.3. Responsibilities to DCMS include:

  • establishing, in consultation with DCMS, TNLCF’s corporate and business plans in the light of DCMS’s wider strategic aims anD agreed priorities to the extent that these are relevant for TNLCF’s statutory remit
  • informing DCMS on progress in helping to achieve DCMS’s policy objectives to the extent this is relevant to TNLCF’s statutory remit and in demonstrating how resources are being used to achieve those objectives
  • ensuring that timely forecasts and monitoring information on performance and finance are provided to DCMS; that any significant problems whether financial or otherwise, and whether detected by internal audit or by other means, are notified to DCMS in a timely fashion

Responsibilities to the Board

14.4. The Chief Executive is responsible for:

  • advising the Board on the discharge of their responsibilities as set out in this document, in the founding legislation and in any other relevant instructions and guidance that may be issued from time to time
  • advising the Board on TNLCF’s performance compared with its aims and objectives
  • ensuring that financial considerations are taken fully into account by the Board at all stages in reaching and executing its decisions, and that financial appraisal techniques are followed

Managing Conflicts

14.5. The Chief Executive should follow the advice and direction of the Board, except in very exceptional circumstances with a clear cut and transparent rationale for not doing so.

14.6. If the Board, or its Chair, is contemplating a course of action involving a transaction which the Chief Executive considers would infringe the requirements of propriety or regularity or does not represent prudent or economical administration, efficiency or effectiveness, is of questionable feasibility, or is unethical, the Chief Executive in their role as AO should reject that course of action and ensure that the Board have a full opportunity to discuss the rationale for that rejection.

14.7. Such conflicts should be brought to the attention of the PAO and the responsible Minister as soon as possible.

14.8. Furthermore, and if agreed with the responsible Minister, the AO must write a letter of justification to the Chair of the Board setting out the rationale for not following the advice and recommendation of the Board and copy that letter to the Treasury Officer of Accounts.

14.9. If the responsible Minister agrees with the proposed course of action of the Board it may be appropriate for the responsible Minister to direct the AO in the manner as set out in MPM paragraph 3.6.6 to 3.6.8.

15. The Board

Composition of the Board

15.1. TNLCF will have a board in line with good standards of corporate governance and as set out in its establishing statute and in guidance as set out in Annex A. The role of the Board shall be to run TNLCF, and to deliver the objectives, in accordance with the purposes as set out above, their statutory, regulatory, common law duties and their responsibilities under this framework document. Detailed responsibilities of the Board shall be set out in the Board terms of reference. Remuneration of the Board will be disclosed in line with the guidance in the government Financial Reporting manual (FReM).

15.2. The Board will consist of a chair, together with between a minimum of 8 and a maximum of 11 members that have a balance of skills and experience appropriate to directing TNLCF’s business, including the four Chairs of the Country Committees representing the interests of England, Scotland, Wales and Northern Ireland. All Board members including the Chair will be non-executive members under Schedule 4A Part 1 of the ‘1993 Act’. The responsible Minister will be advised by and agree with the Chair on the skills and expertise needed for new board members prior to launching a public appointments process. The Board will be advised by an appropriately qualified finance director.

15.3. In some circumstances, DCMS may appoint an Independent Observer (IO) to board meetings for a specified time period. The IO encourages good governance of TNLCF in line with the ‘Government Code of Good Practice for Corporate Governance’ and the ‘Code of Conduct for Board Members of Public Bodies’. The IO can further strengthen relations with DCMS. The IO should attend all meetings of the Board and should act only as an observer. The IO has no voting or decision-making powers and should not contribute to the meetings. The IO is independent and does not represent DCMS to the Board.

Country Committees

15.4. As per paragraph 7(1) of Schedule 4A of the ‘1993 Act’, TNLCF must operate:

  • a committee for the purpose of exercising TNLCF’s functions in relation to English devolved expenditure;
  • a committee for the purpose of exercising TNLCF’s functions in relation to Welsh devolved expenditure;
  • a committee for the purpose of exercising TNLCF’s functions in relation to Scotland devolved expenditure; and
  • a committee for the purpose of exercising TNLCF’s functions in relation to Northern Irish devolved expenditure.

15.5. Under paragraph 8 of Schedule 4A of the ‘1993 Act’ TNLCF may establish or authorise another or other committees to exercise a function of TNLCF.

Board Sub-Committees

15.6. The Board may set up such sub-committees as necessary for it to fulfil its functions. As is detailed below at a minimum this will include an Audit and Risk Committee chaired by an independent and appropriately qualified non- executive member of the Board.

15.7. While the Board may make use of sub-committees to assist its consideration of appointments, succession, audit, risk and remuneration it retains responsibility for, and endorses, final decisions in all of these areas. The Board Chair should ensure that sufficient time is allowed at the Board for committees to report on the nature and content of discussion, on recommendations, and on actions to be taken.

15.8. Where there is disagreement between the relevant sub-committee and the Board, adequate time should be made available for discussion of the issue with a view to resolving the disagreement. Where any such disagreement cannot be resolved, the committee concerned has the right to report the issue to the sponsor team, PAO and responsible Minister. They may also seek to ensure the disagreement or concern is reflected as part of the report on its activities in the annual report.

15.9. The Chair should ensure board sub-committees are properly structured with appropriate terms of reference. The terms of each committee should set out its responsibilities and the authority delegated to it by the Board. The Chair should ensure that committee membership is periodically refreshed and that individual independent non-executive directors are not overburdened when deciding the chairs and membership of committees.

Duties of the Board

15.10. The Board is specifically responsible for:

  • establishing and taking forward the strategic aims and objectives of TNLCF, consistent with its overall strategic direction and within the policy and financial directions, which is determined by the Secretary of State
  • any elements of the Chair’s letter issued to the sponsor department that is relevant to the operation of the ALB
  • providing effective leadership of TNLCF within a framework of prudent and effective controls which enables risk to be assessed and managed
  • ensuring the financial and human resources are in place for TNLCF to meet its objectives
  • reviewing management performance
  • ensuring that the Board receives and reviews regular financial and management information concerning the management of TNLCF
  • ensuring that it is kept informed of any changes which are likely to impact on the strategic direction of TNLCF’s Board or on the attainability of its targets, and determining the steps needed to deal with such changes and where appropriate bringing such matters to the attention of the responsible Minister and PAO via the Fund’s executive team, sponsorship team or directly
  • ensuring that any statutory or administrative requirements for the use of public funds are complied with; that the Board operates within the limits of its statutory authority and any delegated authority agreed with the sponsor department, and in accordance with any other conditions relating to the use of public funds
  • ensuring that in reaching decisions, the Board takes into account guidance issued by the sponsor department
  • ensuring that as part of the above compliance they are familiar with:
    • this framework document,
    • policy and financial directions
    • Chair’s letter which outlines ministerial priorities and governance expectations.
    • ensuring that effective arrangements are in place to provide assurance of risk management, governance and internal control.
    • ensuring that there are effective and appropriate internal mechanisms for the monitoring, governance and external reporting regarding any conditions arising from the above documents and ensure that the Chief Executive and TNLCF as a whole act in accordance with their obligations under the above documents.
  • demonstrating high standards of corporate governance at all times, including by using the independent audit committee to help the Board to address key financial and other risks
  • appointing a Chief Executive and, in consultation with DCMS, setting performance objectives and remuneration terms linked to these objectives for the Chief Executive which give due weight to the proper management and use and utilisation of public resources
  • supporting DCMS-led annual evaluation of the performance of the Chair carried out by DCMS, taking into account the views of relevant stakeholders. The outcome of that evaluation should be made available to the responsible Minister.
  • determining all such other things which the Board considers ancillary or conducive to the attainment or fulfilment by TNLCF of its objectives.

The Board should make a strategic choice about the style, shape and quality of risk management and should lead the assessment and management of opportunity and risk. The Board should ensure that effective arrangements are in place to provide assurance over the design and operation of risk management, governance and internal control in line with the Management of Risk – Principles and Concepts (The Orange Book). The Board must set up an Audit and Risk Assurance Committee chaired by an independent and appropriately qualified non-executive member to provide independent advice and ensure that DCMS’s Audit and Risk Assurance Committee are provided with routine assurances with escalation of any significant limitations or concerns. The Board is expected to assure itself of the adequacy and effectiveness of the risk management framework and the operation of internal control.

16. The Chair’s role and responsibilities

16.1. The Chair is responsible for leading the Board in the delivery of its responsibilities. Such responsibility should be exercised in the light of their duties and responsibilities as set out in their appointment letter, the priorities in the Chair’s letter issued to them by the sponsor team, the statutory authority governing structure of TNLCF, this framework document and the documents and guidance referred to within this framework document.

16.2. Communications between TNLCF’s Board and the responsible Minister should normally be through the Chair.

16.3. The Chair is bound by the Code of Conduct for Board Members of Public Bodies which covers conduct in the role and includes the Nolan Principles of Public Life and the 12 Principles of Governance for all Public Body Non- Executive Directors.

16.4. In addition, the Chair is responsible for:

  • ensuring, including by monitoring and engaging with appropriate governance arrangements, that TNLCF’s affairs are conducted with probity
  • ensuring that policies and actions support the responsible ministers, and where relevant other ministers, wider strategic policies of DCMS to the extent that these are relevant to TNLCF’s statutory remit and where appropriate, these policies and actions should be clearly communicated and disseminated throughout TNLCF.

16.5. The Chair has the following leadership responsibilities:

  • formulating the Board’s strategy
  • ensuring that the Board, in reaching decisions, takes proper account of guidance provided by the responsible Minister or DCMS
  • promoting the efficient and effective use of staff and other resources
  • supporting the AO to achieve high standards of regularity and propriety
  • representing the views of the Board to the general public.

16.6. The Chair also has an obligation to ensure that:

  • The work of the Board and its members are reviewed and are working effectively including ongoing assessment of the performance of individual Board members with a formal annual evaluation and more in-depth assessments of the performance of individual board members when being considered for re-appointment.
  • In conducting assessments, the view of relevant stakeholders, including employees and the sponsorship team are sought and considered.
  • They advise DCMS on the skills and expertise required from prospective Board members appropriate to directing TNLCF’s business, and that all board members including the Chair and additionally the Chief Executive continually update their skills, knowledge and familiarity with TNLCF to fulfil their role both on the Board and committees. This will include but not be limited to skills and training in relation to financial management and reporting requirements, risk management and the requirements of board membership within the public sector.
  • Board members are fully briefed on terms of appointment, duties, rights and responsibilities.
  • The Chair, together with the other board members, receives appropriate training on financial management and reporting requirements and on any differences that may exist between private and public sector practice
  • The responsible Minister is advised of TNLCF’s needs when Board vacancies arise.
  • There is a Board Operating Framework in place setting out the role and responsibilities of the Board consistent with the ‘Government Code of Good Practice for Corporate Governance’.
  • There is a code of practice for board members in place, consistent with the ‘Cabinet Office Code of Conduct for Board Members of Public Bodies’.

17. Individual board members’ responsibilities

17.1. Individual board members should:

  • comply at all times with the Code of Conduct for Board Members of Public Bodies, which covers conduct in the role and includes the Nolan Principles of Public Life as well as rules relating to the use of public funds and to conflicts of interest
  • demonstrate adherence to the ‘12 Principles of Governance for all Public Body Non-Executive Directors’ as appropriate
  • not misuse information gained in the course of their public service for personal gain or for political profit, nor seek to use the opportunity of public service to promote their private interests or those of connected persons or organisations
  • comply with the Board’s rules on the acceptance of gifts and hospitality, and of business appointments
  • act in good faith and in the best interests of TNLCF
  • ensure they are familiar with any applicable guidance on the role of public sector non-executive directors and boards that may be issued from time to time by the Cabinet Office, HM Treasury or wider government

17.2. Four members of the Board have been appointed, as required by the 1993 Act, to represent the interests of the four countries of the United Kingdom. These board members have additional duties in their agreed terms and conditions of public appointment, related to their responsibilities as Chairs of the non-executive committees that make funding decisions in each of the four countries.

Management and financial responsibilities and controls

18. Delegated authorities

18.1. TNLCF delegated authorities are set out in the annual Delegated Spend Authority letter to the CEO. This list of delegated authorities may be updated and superseded at any time by the sponsor department in agreement with HM Treasury.

18.2. In line with MPM Annex 2.2 these delegations will be reviewed on an annual basis.

18.3. TNLCF shall obtain DCMS’, and where appropriate HM Treasury’s, prior written approval before:

  • entering into any undertaking to incur any expenditure that falls outside the delegations incurring expenditure for any purpose that is or might be considered novel or contentious, or which has or could have significant future cost implications
  • making any significant change in the scale of operation or funding of any initiative or particular scheme previously approved by DCMS
  • making any change of policy or practice which has wider financial implications that might prove repercussive or which might significantly affect the future level of resources required
  • carrying out policies that go against the principles, rules, guidance and advice in MPM

19. Spending authority

19.1. There is no process of annual budget agreement between TNLCF and DCMS as it does not receive grant-in-aid funding from DCMS. TNLCF’s income derives from (i) The National Lottery Distribution Fund, which is funded through National Lottery ticket sales (ii) non-Lottery funds (often but not always exchequer funds, where TNLCF has entered into an arrangement to distribute funds on behalf of a third party) and (iii) Dormant Assets funds it receives through Reclaim Fund Ltd.

However the following should apply and be considered regarding TNLCF spending:

  • TNLCF shall comply with MPM and seek approval from DCMS regarding novel, contentious or repercussive proposals.
  • TNLCF shall provide DCMS with such information about its operations, performance, individual projects or other expenditure as DCMS may reasonably require.

20. Banking and managing cash

20.1. TNLCF where practicable must maximise the use of publicly procured banking services (accounts with central government commercial banks managed centrally by government banking).

20.2. TNLCF should only hold money outside Government Banking Service accounts where a good business case can be made for doing so and HM Treasury consent is required for each account to be established. Only commercial banks which are members of relevant UK clearing bodies may be considered for this purpose.

20.3. Commercial accounts where approved should be operated in line with the principles as set out in MPM.

20.4. The AO is responsible for ensuring TNLCF has a banking policy as set out in MPM and ensuring that policy is complied with.

21. Procurement

21.1. TNLCF will ensure that its procurement policies are aligned with and comply with any relevant UK or other international procurement rules and in particular the current Public Procurement Regulations (for example, but not exclusive to, the Public Contracts Regulations 2015 and the Procurement Act 2023).

21.2. TNLCF shall establish its procurement policies and document these in a Procurement Policy and Procedures Manual.

21.3. In procurement cases where TNLCF is likely to exceed its delegated authority limit, procurement strategy approval for the specific planned purchase must be sought from DCMS’s sponsor team.

21.4. Goods, services, and works should be acquired by competition. Proposals to let single-tender or restricted contracts shall be limited and exceptional and a quarterly report explaining those exceptions should be sent to DCMS.

21.5. The delegated limit for direct award contracts (where no competition has taken place to select a supplier) is set at £50,000 (ex VAT) for each contract or requirement.

21.6. TNLCF shall comply with the requirements set out in the Delegated Spend Authority Letter.

21.7. Procurement by TNLCF of works, equipment, goods, and services shall be based on, a full option appraisal and value for money (VfM), i.e. the optimum combination and whole life costs and quality (fitness for purpose).

21.8. TNLCF shall:

  • engage fully with department and government wide procurement initiatives that seek to achieve VfM from collaborative projects
  • comply with all relevant Procurement Policy Notes issued by Cabinet Office
  • cooperate fully with initiatives to improve the availability of procurement data to facilitate the achievement of VfM

21.9. TNLCF shall comply with the commercial standards.These standards apply to the planning, delivery, and management of government commercial activity regardless of commercial approach used and form part of a suite of functional standards that set expectations for management within government.

22. Risk management

22.1. TNLCF shall ensure that the risks that it faces are dealt with in an appropriate manner, in accordance with relevant aspects of best practice in corporate governance, and develop a risk management strategy, in accordance with HM Treasury guidance Management of Risk: Principles and Concepts.

23. Counter fraud and theft

23.1. TNLCF should adopt and implement policies and practices to safeguard itself against fraud and theft.

22.2. TNLCF should act in line with guidance as issued by the Counter Fraud Function and in compliance with the procedures and considerations as set in in MPM Annex 4.9 and the Counter Fraud Functional Standard It should also take all reasonable steps to appraise the financial standing of any firm or other body with which it intends to enter a contract or to provide grant or grant-in-aid.

23.3. TNLCF should keep records of and prepare and forward to DCMS an annual report on fraud and theft suffered by TNLCF and notify the sponsor department of any unusual or major incidents as soon as possible. TNLCF should also report detected loss from fraud, bribery, corruption and error, alongside associated recoveries and prevented losses, to the counter fraud centre of expertise in line with the agreed government definitions as set out in Counter Fraud Functional Standard.

24. Staff

Broad responsibilities for staff

24.1. Under paragraph 6 of Schedule 4A to the ‘1993 Act’, TNLCF has the power to appoint staff (subject to any directions under section 36E(3) of the ‘1993 Act’. TNLCF has responsibility for the recruitment, retention and motivation of its staff. The broad responsibilities toward its staff are to ensure that:

  • the rules for recruitment and management of staff create an inclusive culture in which diversity is fully valued; appointment and advancement is based on merit; there is no unlawful discrimination against employees on the basis of protected characteristics under the Equality Act 2010
  • the level and structure of its staffing, including grading and staff numbers, are appropriate to its functions and the requirements of economy, efficiency and effectiveness
  • the performance of its staff at all levels is satisfactorily appraised and TNLCF performance measurement systems are reviewed from time to time
  • its staff are encouraged to acquire the appropriate professional, management and other expertise necessary to achieve TNLCF’s objectives
  • proper consultation with staff takes place on key issues affecting them
  • adequate grievance and disciplinary procedures are in place
  • whistle-blowing procedures consistent with the Public Interest Disclosure Act are in place
  • a code of conduct for staff is in place based on the Cabinet Office’s Model Code for Staff of Executive Non-departmental Public Bodies.

Staff costs

24.2. Subject to its delegated authorities, TNLCF shall ensure that the creation of any additional posts does not incur forward commitments that will exceed its ability to pay for them.

Pay and conditions of service

24.3. TNLCF’s staff are subject to levels of remuneration and terms and conditions of service (including pensions) within the general pay structure approved by the sponsor department and the Treasury. These terms and conditions will be subject to an agreed annual pay negotiating remit and should be in line with the current public sector pay policy guidelines issued by the Treasury. The remit will be subject to the agreement of DCMS. TNLCF has no delegated power to amend these terms and conditions.

24.4. Staff terms and conditions should be set out in an Employee Handbook, which should be provided to DCMS together with subsequent amendments.

24.5. TNLCF shall abide by public sector pay controls, including the relevant approvals process dependent on the organisations classification as detailed in the Senior Pay Guidance and the Public Sector Pay and Terms Guidance.

24.6. TNLCF shall operate a performance-related pay scheme that shall form part of the annual aggregate pay budget approved by DCMS, general pay structure approved by DCMS and the Treasury, where relevant with due regard to the Senior Pay Guidance.

24.7. The travel expenses of board members shall be tied to the rates allowed to senior staff of TNLCF. Reasonable actual costs shall be reimbursed.

Pensions, redundancy and compensation

24.8. Compensation scheme rules and pension scheme rules should reflect legislative, Cabinet Office and HM Treasury guidance requirements regarding exit payments.

24.9. TNLCF staff shall normally be eligible for a pension provided by PCSPS. Staff may opt out of the occupational pension scheme provided by TNLCF, but that employers’ contribution to any personal pension arrangement, including stakeholder pension, shall normally be limited to the national insurance rebate level.

24.10. Any proposal by TNLCF to move from the existing pension arrangements, or to pay any redundancy or compensation for loss of office, requires the prior approval of DCMS. Proposals on severance must comply with the rules in chapter 4 of MPM.

Business plans, financial reporting and management information

25. Corporate and business plans

25.1. TNLCF shall submit annually to the sponsor department a draft of the three-year corporate plan. The draft should be submitted after TNLCF Board approval, and by no later than 31 March. TNLCF shall agree with DCMS the issues to be addressed in the plan and the timetable for its preparation. The plan shall reflect TNLCF’s statutory duties. The plan shall demonstrate how TNLCF contributes to the achievement of DCMS’s priorities as set out in the annual Chair’s letter and aligned performance metrics and milestones.

25.2. The corporate plan shall inform annual directorate business plans. The business plans shall be updated to include key targets and milestones, based on a review of current performance and comparable outturns for the previous 2 to 5 years, for the year immediately ahead, and shall be linked to budgeting information so that resources allocated to achieve specific objectives can readily be identified by DCMS. Subject to any commercial considerations, a digest of the corporate and business plans should be published by TNLCF on its website and separately be made available to staff.

25.3. The following key matters should be included in the plans:

  • key objectives and associated key performance targets for the forward years, and the strategy for achieving those objectives
  • key non-financial performance targets
  • a review of performance in the preceding financial year, together with comparable outturns for the previous 2 to 5 years, and an estimate of performance in the current year, or as agreed with DCMS
  • alternative scenarios and an assessment of the risk factors that may significantly affect the execution of the plan but that cannot be accurately forecast
  • other matters as agreed between DCMS and TNLCF

26. Budgeting procedures

26.1. There is no process of annual budget agreement between DCMS and TNLCF, which receives no grant-in-aid.

27. Annual report and accounts

27.1. TNLCF must publish an annual report of its activities together with its audited accounts after the end of each financial year. TNLCF shall provide DCMS its finalised (audited) accounts by June each year, subject to NAO procedures being complete, in order for the accounts to be consolidated within DCMS. A draft of the report should be submitted to DCMS six weeks before the proposed publication date. Unless otherwise agreed, the publication date should be prior to the House of Commons Summer Recess date. The accounts should be prepared in accordance with the relevant statutes and specific accounts direction issued by DCMS as well as the Treasury’s Financial Reporting Manual (FReM).

27.2. The annual report must:

  • cover any corporate, subsidiary or joint ventures under its control
  • comply with the FreM and in particular have regard to the illustrative statements for an NDPB
  • outline main activities and performance during the previous financial year and set out in summary form forward plans
  • set out TNLCF’s policy and practice in relation to the principle that proceeds of the National Lottery should be used to fund projects, or aspects of projects, for which funds would be unlikely to be made available by the UK government or devolved administrations.

27.3. Information on performance against key financial targets is included within the annual report and subject to the auditor’s consistency opinion. The report and accounts shall be laid in Parliament and made available on TNLCF website, in accordance with the guidance in the FReM.

28. Reporting performance to DCMS

28.1. The ALB shall operate management, information and accounting systems that enable it to review in a timely and effective manner its financial and non-financial performance against the budgets and targets set out in the corporate and business plans.

28.2. TNLCF shall inform the sponsor department of any changes that make achievement of objectives more or less difficult. It shall report financial and non-financial performance, including performance in helping to deliver Ministers’ policies, and the achievement of key objectives regularly. This should refer to progress against TNLCF’s KPIs and any ministerial policy directions.

28.3. An engagement schedule will include the following meetings. TLNCF’s performance shall be formally reviewed by DCMS four times a year. This will be arranged through the Quarterly Partnership Meetings between DCMS and TNLCF.

28.4. The responsible Minister will meet the Chair and Chief Executive once a year as a minimum.

28.5. The PAO will meet the Chief Executive at least once a year.

29. Information sharing

29.1. DCMS has the right of access to all TNLCF’s records and personnel subject to TNLCF’s legal obligations under the UK Data Protection Act 2018 and the General Data Protection Regulations 2018 for any purpose including, for example, sponsorship audits and operational investigations.

29.2. TNLCF shall provide the sponsor department with such information about its operations, performance, individual projects or other expenditure as the sponsor department may reasonably require, subject to TNLCF’s legal obligations under the UK Data Protection Act 2018 and UK General Data Protection Regulations 2018.

29.3. DCMS and HM Treasury may request the sharing of data held by TNLCF in such a manner as set out in central guidance except insofar as it is prohibited by law or data protection regulations. This may include requiring the appointment of a senior official to be responsible for the data sharing relationship.

29.4. As a minimum, TNLCF shall provide DCMS with information quarterly that will enable DCMS satisfactorily to monitor:

  • National Lottery Community Fund’s cash management
  • forecast outturn by resource headings
  • other data required for the Online System for Central Accounting and Reporting (OSCAR)
  • data as required in respect of its compliance with any Cabinet Office Controls pipelines

Audit

30. Internal audit

30.1. TNLCF shall:

  • establish and maintain arrangements for internal audit and have complete access to all relevant records
  • ensure that any arrangements for internal audit are in accordance with the Public Sector Internal Audit Standards (PSIAS) as adopted by HM Treasury
  • ensure the sponsor department is satisfied with the competence and qualifications of the Head of Internal Audit and the requirements for approving appointments in accordance with PSIAS
  • set up an audit committee of its board in accordance with the Code of Good Practice for Corporate Governance and the Audit and Risk Assurance Committee Handbook
  • forward the audit strategy, periodic audit plans and annual audit report, including TNLCF Head of Internal Audit opinion on risk management, control and governance as soon as possible to the sponsor Department
  • keep records of and prepare and forward to DCMS an annual report on fraud and theft suffered by TNLCF and notify the sponsor department of any unusual or major incidents as soon as possible
  • share with the sponsor department information identified during the audit process and the Annual Audit Opinion Report (together with any other outputs) at the end of the audit, in particular on issues impacting on DCMS’s responsibilities in relation to financial systems within TNLCF

31. External audit

31.1. The Comptroller & Auditor General (C&AG) audits TNLCF’s annual accounts. The C&AG passes the audited accounts to the Secretary of State who will lay the accounts together with the C&AG’s report before parliament.

31.2. In the event that TNLCF has set up and controls subsidiary companies, TNLCF will in the light of the provisions in the Companies Act 2006 ensure that the C&AG has the option to be appointed auditor of those company subsidiaries that it controls and/or whose accounts are consolidated within its own accounts. TNLCF shall discuss with the sponsor department the procedures for appointing the C&AG as auditor of the companies.

31.3. The C&AG:

  • will consult DCMS and TNLCF on whom – the NAO or a commercial auditor – shall undertake the audit(s) on his behalf, though the final decision rests with the C&AG
  • has a statutory right of access to relevant documents, including, by virtue of section 25(8) of the Government Resources and Accounts Act 2000, documents held by another party in receipt of payments or grants from TNLCF
  • will share with the sponsor department information identified during the audit process and the audit report (together with any other outputs) at the end of the audit, in particular on issues impacting on DCMS’s responsibilities in relation to financial systems within TNLCF
  • will consider requests from departments and other relevant bodies to provide regulatory compliance reports and other similar reports at the commencement of the audit. Consistent with the C&AG’s independent status, the provision of such reports is entirely at the C&AG’s discretion.

31.4. The C&AG may carry out examinations into the economy, efficiency and effectiveness with which TNLCF has used its resources in discharging its functions. For the purpose of these examinations the C&AG has statutory access to documents as provided for under section 8 of the National Audit Act 1983. In addition, TNLCF shall provide, in conditions to grants and contracts, for the C&AG to exercise such access to documents held by grant recipients and contractors and sub-contractors as may be required for these examinations; and shall use its best endeavours to secure access for the C&AG to any other documents required by the C&AG which are held by other bodies.

Reviews and winding up arrangements

32. Review of TNLCF’s status

32.1. TNLCF will be reviewed as part of the wider Public Bodies Reviews programme, at a time determined by DCMS’s responsible ministers and their PAO.

33. Arrangements in the event that the ALB is wound up

33.1. In the event that TNLCF were to be wound up, the sponsor department shall put in place arrangements to ensure the orderly winding up of TNLCF. In particular it should ensure that the assets and liabilities of TNLCF are passed to any successor organisation and accounted for properly. (In the event that there is no successor organisation, the assets and liabilities should revert to the sponsor department.)

To this end, DCMS shall:

  • have regard to Cabinet Office guidance on winding up of ALBs
  • ensure that procedures are in place in TNLCF to gain independent assurance on key transactions, financial commitments, cash flows and other information needed to handle the wind-up effectively and to maintain the momentum of work inherited by any residuary body
  • specify the basis for the valuation and accounting treatment of TNLCF’s assets and liabilities
  • ensure that arrangements are in place to prepare closing accounts and pass to the C&AG for external audit, and that, for non-Crown bodies funds are in place to pay for such audits. It shall be for the C&AG to lay the final accounts in Parliament, together with his report on the accounts
  • arrange for the most appropriate person to sign the closing accounts. In the event that another ALB takes on the role, responsibilities, assets and liabilities, the succeeding ALB AO should sign the closing accounts. In the event that DCMS inherits the role, responsibilities, assets and liabilities, the PAO should sign the closing accounts.

33.2. TNLCF shall provide DCMS with full details of all agreements where TNLCF or its successors have a right to share in the financial gains of developers or grantholder organisations who have a legal obligation to TNLCF to provide TNLCF with a share of any financial grants arising from the commercialisation of tangible or intangible property funded by TNLCF. TNLCF should also pass to DCMS details of any other forms of claw-back due to TNLCF under a legal obligation.

Signatures

Polly Payne/Ruth Hannant

03/09/2024 on behalf of DCMS

Dame Julia Cleverdon

23/12/2024 on behalf of the National Lottery Community Fund

David Knott

23/12/2024 on behalf of the National Lottery Community Fund

Annex A: Guidance

TNLCF shall comply with the following guidance, documents and instructions:

Corporate governance

Financial management and reporting

Management of risk

Commercial management

Public appointments

The following are relevant where public bodies participate in public appointments processes.

Staff and remuneration

General

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