HC Deb 01 June 1998 vol 313 cc102-19

9 pm

Mr. Spring

I beg to move amemdment No. 5, in page 17, line 36, out from 'potential' to 'and' in line 40.

Mr. Deputy Speaker

With this, it will be convenient to discuss amendment No. 6, in clause 27, page 22, leave out lines 8 and 9.

Mr. Spring

In the course of the past few days, I have read the Secretary of State's book "Creative Britain". In it, he describes the huge increase in our exports of radio and television material, the increase in employment in that area and the massive rise in sponsorship of the arts and in the number of cinema admissions. On behalf of my hon. Friends, I thank the right hon. Gentleman for so generously applauding the Conservative Government's 18 years in office. It was precisely the conditions created by that Government which led to the explosive increases so graphically set out in his 27-page introduction.

As we have made clear in respect of the National Endowment for Science, Technology and the Arts—NESTA—we are not against the setting up of a national fund for talent; there is considerable merit in the idea. Indeed, it is based on a Conservative concept. It builds on the well-established and admirable philanthropic tradition of this country. We entirely support the principle of a fund that supports individual talent.

We are fortunate in having many people of considerable talent who have contributed to our national life and won so many Nobel prizes. Our success compares extremely favourably with that of any other country, especially given our small population.

The sad truth, however, is that the Government have missed an important opportunity. Elements involved in the establishment of NESTA in the form suggested in the Bill put at risk the success of the whole venture. We greatly regret the fact that the Government have chosen to establish it in this form. I appeal to the Minister even at this late stage to persuade the Government that NESTA' s objectives are incompatible with the sort of body that we believe could successfully nurture our national talent. We are deeply sceptical of the idea of setting up a quasi-governmental body, some of whose objectives will be overtly commercial.

We know now why the Government have determined not to set up NESTA as an independent charity, despite the clear commitment given before the election to do so. As the Minister explained, the Government have decided to graft a commercial remit on to the original concept for NESTA, which, by definition, loses it the advantages of charitable status. The amendments are designed to remove the commercial elements and turn NESTA into the genuine trust for talent that the entire country would applaud. To set up a national endowment with true nobility of purpose would secure the support not only of the House, across party political lines, but of the whole country, desirous of enabling talented individuals to realise their talents to the full.

We accept the advantages of establishing a body such as NESTA as an independent endowment, but, regrettably, NESTA, as proposed, will not be fully independent of the Government. As a consequence, it risks not being able to attract money from independent sources, which is a crucial element in the long-term success of NESTA. That is the crux of our concern about the establishment of that body.

As I said on Second Reading, people simply do not quickly volunteer to give money to Government bodies—even Bernie Ecclestone, I dare say, might find it difficult to be so persuaded.

I remind the House of the Labour party's commitment to NESTA: Our immediate objective would be to have NESTA-supported ideas earning copyright revenues by 2001. The National Endowment for Science, Technology and the Arts would be a national trust for talent, helping to turn bright ideas into successful and innovative businesses. It will be constituted as an independent charity. I stress those last few words. Labour continued: NESTA will invite successful figures in the arts, technology and science to contribute part of the value of their copyrights and patents to help the young talent of tomorrow. These contributions will go into a permanent endowment fund. To give NESTA an initial boost, limited contributions will be set aside from the new Lottery fund to add to this endowment". That commitment is to be found in the Labour party document of 23 April 1997.

The Prime Minister reiterated those proposals before the election. In a press release on 27 April, he said: We propose to give a Lottery-aided launch to our proposal for a national talent fund—a National Endowment for Science, Technology and the Arts. NESTA will be an independent charity which will encourage successful people in the arts and sciences to donate part of the proceeds of their talent to an endowment fund which will foster new talent for the future". Those words are to be applauded.

The amendments would remove the commercial aspect of the objectives set out for NESTA. They would give it a proper coherence and a real opportunity to acquire the national support that it deserves. In effect, they would make it work. There is a danger that the initial endowment of £200 million will be put at risk because NESTA, as currently constituted, will not attract the additional funding over time.

As I said in Committee, we broadly support the aims of NESTA and would support the idea of just such an independent body dedicated to nurturing talent, especially in the arts. Indeed, the Conservative manifesto of 1997 included the following pledge: We will encourage the use of Lottery money to train young athletes and artists, with revenue funding for bursaries, concessionary tickets to professional performances and support for young people's organisations and productions. Therefore, there was considerable cross-party support, which the Government have unfortunately now put at risk.

NESTA was in fact the development of an initiative first announced in April 1996 by my right hon. Friend the Member for South-West Surrey (Mrs. Bottomley), to whom I pay tribute.

It was always the view of the Conservative party that the lottery would evolve. That view was reinforced as the popularity of the lottery grew among those playing it and the communities that benefited from lottery grants. As my right hon. Friend the Member for Huntingdon (Mr. Major) said on Second Reading: there is the prospect of moving rather more from capital funding to revenue funding, which was always envisaged at the outset and, again, is perfectly sensible. The only points at issue are the specific details of what is proposed and the timing."—[Official Report, 7 April 1998; Vol. 310, c. 187.] I am happy to congratulate the Government on following the path set by the previous Administration, but they are risking the very success and popularity of the lottery by using it to fund areas that it was not originally set up to finance. Potentially, that could damage the image of the lottery and could end in failure.

In Committee, we learned of the Government's continuing determination to use the lottery to supplement public expenditure on health, education and the environment—I use those definitions in the broadest possible terms. The amendments simply highlight another unexpected and unwelcome departure in lottery funding under Labour.

We debated in Committee the unfortunate decision—which I believe will be regretted—to place NESTA under the control of the Secretary of State rather than to make it a genuinely independent body, as was at least the Government's original stated intention. We debated the disturbing funding arrangements for NESTA, which show that the Government have no faith that it will ever perform as an independent, self-financing body or that it will ever manage to attract significant contributions from independent sources. The evidence, as we shall see, is the scope for the Government to raid the original good causes to pay for NESTA.

We are also concerned about the requirement placed on NESTA not merely to encourage talented individuals in the fields of science, technology and the arts and to contribute to public knowledge and appreciation, but to seek out and sponsor commercial success in those sectors. It is simply the latest incarnation of Labour's long-standing desire to pick winners, as the previous Labour Government sought to do so unsuccessfully. It is a further sign of Labour's inexhaustible faith in Government rather than the private sector.

As we look back on the development of the venture capital industry in Britain, we must recognise that, although we have had many successes, more could be done. There is certainly an argument that many of the most important British inventions have been commercially exploited elsewhere. However, we recognised that when we were in government, in the considerable changes to the tax regime for venture capital. We sought to encourage and secure seedcorn capital, by the tax changes introduced by my right hon. and learned Friend the Member for Rushcliffe (Mr. Clarke). That is the way forward. If the dynamics of the small business sector, particularly the seedcorn, are to be nurtured and encouraged, it is through the tax mechanism and not by the Government picking winners. We have been there before, and I believe that once again it will be a considerable failure.

A similar amendment was proposed and rejected in another place, when my noble Friend Lord Skidelsky said: The contention seems to be that we are very good at inventions but banks or others are reluctant to back them, so they end up being exploited overseas. The argument that our innovators have suffered from lack of venture capital is an old one, but it is very hard to prove. Surely, whatever the case, NESTA should not seek to become a venture capitalist or business angel in its own right. We should have learned by now that government agencies should not try to second guess the private sector. In the end it is the taxpayer, or in this case other National Lottery initiatives, who suffers the losses of bad decisions."—[Official Report, House of Lords, Grand Committee, 29 January 1998; Vol. 585, c. 108.] The difficulty about establishing that objective for NESTA is that in practice it may well embody the very worst kind of corporatist second-guessing. It is an ominous precedent which I wish to highlight again.

By adding that specific aim to NESTA's remit, the Government are establishing a further call on the lottery in an area that should be the responsibility of the Department of Trade and Industry—if the Government have any role, other than via the clear tax incentives that my right hon. and learned Friend the Member for Rushcliffe introduced in the latter years of the previous Government. The Minister should reflect on that. If it is necessary or desirable to amend the tax regime, something should be worked out between the Treasury and the Department of Trade and Industry that would satisfy the integrity of NESTA. We should be happy to support such a policy, which would be separate from the commercial remit being given to NESTA.

9.15 pm

The conventional new Labour wisdom is that the British economy is blighted by short-termism that prevents the British people from fulfilling our true potential; that we do not have a sufficiently vigorous or flexible enterprise culture to take advantage of all our talent for innovation. It was clear from the comments of Labour Members in Committee that the private sector was an alien and mysterious world to them, because so few had any practical experience of it.

The aim of the clause is return to the state-sponsored enterprise for which there is no evidence of success in this country over a long period. If a market for an idea or project cannot be found in the private sector, it is folly for the Government to imagine that they know better. It is regrettable that the Government have chosen to saddle NESTA with that objective. We urgently ask them to reconsider, even at this late stage. If they were prepared to do so, we should happily support the establishment of NESTA.

We discussed all the issues comprehensively in Committee, but the Government rejected outright any amendment that we proposed. At no stage did they even consider looking again on Report at any of the points that we had raised. That is unprecedented in the experience of many and shows the insecurity of Ministers. How much better it would be if NESTA were set up as a charitable trust—as the Government originally intended—along the lines of the National Trust, which was established by a series of Acts of Parliament and commands the support of millions throughout the country, or the Prince's Trust, which makes grants to businesses, but does not take on commercial risks. The Government are proposing a beast that is neither fish nor fowl. It is not charitable in its aims, so it cannot benefit from charitable status and will not attract the general public support that a charity enjoys, but it will not make any money either. Instead of attempting to be a venture capital arm of the Government, NESTA should act as a real endowment for talented individuals.

Governments have a miserable record of picking winners in this country. There is no reason to suppose that that will change. I ask the Minister once again to consider the great potential that NESTA has. A clear message of bipartisan support could be sent out from the House. Creating a widely appreciated national endowment for talent is within the Minister's gift, but he must accept that the commercial element contains the seeds of NESTA's destruction and its lack of public acceptance.

I hope that the Minister will reflect on what I have said today and what my hon. Friends said so often in Committee. He should return to the assurances given when the Prime Minister, then Leader of the Opposition, set out the original concept. If the Government returned NESTA to what was originally envisaged, even at this late stage, real hope would be offered to those talented and successful individuals who would enjoy the benefits of the endowment from the national lottery that NESTA offers.

Mr. Tom Pendry (Stalybridge and Hyde)

I had intended to make a lengthy speech on Third Reading, but as my hon. Friends on the Front Bench have been so forthright and clear in their answers on Report, I am left with just one narrow point that relates to amendment No. 5. It follows a point that I made on Second Reading which does not appear to have been acted on in Committee. My hon. Friend the Member for Eastwood (Mr. Murphy) made a similar point. It relates to NESTA and our promise—which I wrote—in the sports election manifesto. Page 10 of that document states: The endowment will not focus solely on excellence. It will be inclusive in its approach, encouraging access and partnership across the whole range of sciences, humanities, sports and the arts. On Second Reading, I suggested that the Government might see a way in which to develop a useful sporting role for NESTA in, for instance, sports science or sports information technology—both of which are crucial to developing world-class sport in the UK. Unfortunately, the Government seemed unable to move on that point in Committee. They appeared reluctant even to acknowledge the omission. I am sure that it was merely an omission and that the Minister for Arts was right at the time. Perhaps he is saving his best card until tonight, and will give sport—and me—some encouragement in the concept of NESTA at this very late stage. I congratulate my right hon. and hon. Friends on the Front Bench on their handling of the Bill.

Mr. Andrew Lansley (South Cambridgeshire)

I am grateful for the opportunity briefly to add to the excellent remarks of my hon. Friend the Member for West Suffolk (Mr. Spring) in pursuit of acceptance of amendments Nos. 5 and 6. I want to add to his remarks, not least because his reference to the Labour party's desire to pick winners struck a great chord.

When I entered the civil service way back in 1979, one of our tasks in what was then called the industrial planning division—it seems a rather archaic title now—was to start to dismantle some of the measures that the previous Government had implemented precisely to pick winners. The National Enterprise Board, which was very like what the Labour party proposes, went about the task of trying to put public money into industrial and commercial enterprises with the objective of making money for the country and the taxpayer. Of course, it failed to do either.

I say that as somebody who was once responsible for the science and technology budget in the Department of Trade and Industry. I disposed of £440 million. I shall elaborate briefly on the interesting debate on which my hon. Friend the Member for West Suffolk briefly touched. He criticised the Labour party's desire to move towards the market in proposing that NESTA should provide resources, take stakes in companies and acquire property to pursue commercial exploitation of an invention, new product or process.

In moving towards the marketplace, one must realise that one is not behaving in the same way as one would in a genuine market. There is a conjunction of two principles—one of exploitation close to the marketplace and one of additionality. I found when working on the science and technology budget that, when one moves public money for the purposes of subsidy closer to the marketplace and at the same time applies the principle of additionality—I shall be interested to hear whether the Minister says that that is not to be applied in this context, although I suspect that it will be—one ends up with projects right at the margin of commercial exploitation. The market itself is quick to leap on those products, processes and inventions that have readily exploitable commercial potential. It leaves to the publicly funded or publicly subsidised body those projects that are not obviously commercial or will not obtain a full return. The net result is that the market says that the publicly funded operator can have all the projects that are right at the margins where the returns are doubtful.

To reinforce what my hon. Friend the Member for West Suffolk was saying, Ministers should not be sanguine about the possibility of the project bringing forward returns to the taxpayer or NESTA for subsequent reinvestment. On the contrary, my hon. Friend was right to emphasise the value of the endowment in relation to talented individuals. That is precisely where the public sector—at some distance from the marketplace—does not necessarily exploit the potential.

I hope that we have learnt not to seek to direct subsidy close to the marketplace in substitution for commercial judgments. I hope that we have learnt that there is a role for the public sector through the subsidy of research that is essentially some distance from the marketplace. There are significant externalities to the United Kingdom economy from subsidising that research because not all the benefits of that research can be appropriated to a particular project or the promoter. That is why the public sector puts funding and subsidy into projects further from the marketplace.

Interestingly, there are precisely the same potential externalities available if one subsidises individuals who have talent—and I say that with a constituency interest. It is highly probable that many individuals in the area around Cambridge are precisely those who have the talent to bring their projects, products, processes and inventions to the marketplace. What they do not lack is the commercial exploitation around Cambridge. What is important to them is the process of bringing them out of some of the world-class research institutes in Cambridge university and giving them a start.

That start will often be focused on their talents as individuals, demonstrated in the research environment. It will not necessarily be in relation to a particular project, but it will be in relation to their broader talent. In just the same way as public subsidy should be directed towards blue-skies research, the endowment should be directed toward people who can look to the blue skies but who are not necessarily close to the marketplace. On that basis, I support the new clause.

Mr. Prior

I wish to make two points in support of my hon. Friend the Member for West Suffolk (Mr. Spring). First, NESTA is mixing its drinks—mixing thoroughly laudable charitable aims and commercial aims. The great risk is that the almost inevitable failure of its commercial objectives will ultimately overwhelm its sensible charitable ones. I entirely agree with my hon. Friend the Member for South Cambridgeshire (Mr. Lansley) that the history of Government organisations in terms of picking winners is a bad one. When they pick losers, it casts a shadow over the worthwhile charitable objectives.

I am glad to see the Minister for Small Firms, Trade and Industry in the Chamber, as I wish to refer to the myth that there is a shortage of capital in the United Kingdom for decent ventures. I agree with my hon. Friend the Member for South Cambridgeshire that, at an early stage, potential entrepreneurs, scientists and artists need help, encouragement, training and education. However, a lot of capital is available in the commercial market and, in Cambridge, there are venture capital groups that specialise in science and high-tech firms. I ask the Government not to delude themselves into thinking that there is a shortage of capital.

9.30 pm
Mr. Fisher

I am glad that there is a measure of agreement that NESTA is fundamentally a good idea and that the United Kingdom is good at invention, design, engineering, science and medical and artistic innovation. Despite one or two comments from Opposition Members, I think that there is also general agreement that we are not so good at developing ideas in the private sector or at developing ideas and bringing them to the market.

In framing NESTA, the Government have been guided by three important reports: the 1997 Confederation of British Industry report "Breaking the Growth Barriers for Technology-Based Small and Medium Sized Enterprises"—a snappily named document—which identified the need for early-stage finance and seedcorn investment; the 1997 House of Lords Select Committee on Science and Technology report "The Innovation-Exploitation Barrier", which identified the need for management of innovation, highlighting the importance of intellectual property; and the 1996 Bank of England report "The Financing of Technology-Based Small Firms", which called for partnership between the public and private sectors.

All three reports identified a weakness, which is not to say that there is no good work. It was encouraging to hear from the hon. Member for South Cambridgeshire (Mr. Lansley) that there is, perhaps inevitably, a clustering in and around a great university such as Cambridge, which means that many good ideas will be produced and brought to market. However, Cambridge is perhaps better placed than some other areas to benefit from seedcorn investment; it will not be alone, but success there may not be reflected throughout the country. The belief that we are failing in some respects has led the Government—with, I think, the general support of the Opposition—to press forward with the idea that, good though we are at innovation, we are less good at developing ideas and bringing them to fruition; it will often be for the private sector to take on those ideas, products and services.

There is some confusion about what NESTA will do. It will not be a rerun of the Industrial Reorganisation Corporation—it will not be a Government company sponsoring new ideas. It will do specific things: it will provide limited seed capital; it will provide guidance on the protection of intellectual property rights; it will raise awareness among banks about technological entrepreneurship; it will support networks for creative individuals; and it will provide a one-stop source of information. Those are practical ideas, which cluster around the problem—we do not intend that NESTA will replace the market.

In his short but helpful speech, my hon. Friend the Member for Stalybridge and Hyde (Mr. Pendry) asked whether NESTA would also support sport. He will appreciate that the projects that NESTA backs will be a matter for its chairman and board, who will be appointed very soon. However, there is no reason why sports products and services should not be supported, particularly where new technologies can help to improve performances, training or the medical understanding of sport, for example—it is easy to see where there may be interesting and fruitful conjunctions between technology, innovation and sport. I am sure that my hon. Friend will work with those organisations that will present interesting new ideas to NESTA.

There is some confusion about whether NESTA will operate on the margins and whether it will duplicate the private sector. Although we appreciate that there are some dangers that it could do so, it is not our intention that it should. The hon. Member for North Norfolk (Mr. Prior) said that there was plenty of venture capital; I agree that there is plenty for some good ideas, but we should not ignore the 1995 report of the European Venture Capital Association, which identified the fact that, in that year, only £23 million was available for small and early-stage businesses, amounting to only 1 per cent. of the venture capital activity in this country. That suggests that there is not the scale of capital that there might be—which probably accounts for why we have been losing the benefit of the development of some of the innovations and techniques with which we have benefited other countries.

Labour Members consider this a good, constructive, practical idea, and we commend it to the House. We think that amendments Nos. 5 and 6 would knock out the core of the development of products and services, the importance of intellectual property and the economic realisation of what NESTA is intended to foster and nurture, and we therefore hope that the House will reject the amendments if they are pressed to a vote.

Mr. Spring

The Minister made a point about the possible lack of venture capital in this country. The subject is debatable and arguable, but let me make another point to him again.

The Minister fails to understand that if the Government indeed believe that there is a shortage of venture capital as seedcorn investment potential in this country, this is not the way to address the problem. It should be addressed by means of tax and other incentives. We should not put at risk an endowment, thereby depriving it of its charitable status. The Government are responsible for a total confusion of opportunities, which I very much regret. I cannot for the life of me understand why the Government are adopting such a means of dealing with a problem that they think exists.

Mr. Fisher

The hon. Gentleman is being unusually doctrinaire. We are not talking about alternatives. Of course there is room for the tax system and the private sector, which perform their task very well and will continue to do so. They are not alternatives: we need them both. We believe, however, that there are gaps and weaknesses, and that our proposed system can work along with the existing tax incentives and seedcorn capital from the private sector and strengthen this important area.

Mr. Spring

I am afraid that that does not answer my point. The simple truth is that the system will not work. It has never worked in this form before, and it certainly will not work now.

The most important aim of the national endowment was to secure a charitable status. It was an endowment which all of us could have been happy to support. It is a great shame that the Government are so determined to affix this particular commercial remit to the whole concept of NESTA. The House could have sent out the clear message that NESTA has an important role to play, across party divisions, as a national endowment body. Adhering to the old-fashioned and long-past idea that Governments can pick winners and impose a commercial remit destroys the value of NESTA in its entirety.

I do not want to press the matter further, but we want to put on record our fear that NESTA—which has so much potential—is put at risk by the way in which it has been constructed in the Bill. I think it a great shame that the Government have moved away from their original commitments, which we would have been happy to support.

Amendment negatived.

Order for Third Reading read.

9.39 pm
The Secretary of State for Culture, Media and Sport (Mr. Chris Smith)

I beg to move, That the Bill be now read the Third time.

Let me first give a warm welcome to the hon. Member for East Surrey (Mr. Ainsworth) in his new capacity as shadow Secretary of State. In my dealings with him here over a number of years, I have always found his approach both courteous and constructive, and I look forward to fruitful and robust debate with him across the Floor of the House. He seemed to spend most of this afternoon and this evening reading my book. I recommend it to him as a somewhat more productive exercise than reading the fulminations of Mr. George Walden on the subject.

The Bill has been the subject of much interest both inside and outside the House. It has also been subject to thorough scrutiny by the House. I place on record my thanks to members of the Standing Committee and especially the hon. Member for North Thanet (Mr. Gale) and my hon. Friend the Member for Bootle (Mr. Benton) for their excellent chairmanship. The Committee was thorough in its scrutiny, and all the issues were debated thoroughly—indeed, so thoroughly that reading the proceedings of the Committee it seemed to me that the same speech was made on different occasions by several Committee Members. On some occasions, it appeared to be repeated several times within the same speech.

I must also thank my colleagues the Ministers for the Arts and for Sport for their sterling work both in Committee and on Report. Nor should I neglect to mention my noble Friend the Deputy Chief Whip in another place and my noble Friend Baroness Ramsay of Cartvale for their careful stewardship of the Bill in that place.

We have never sought to argue that the lottery as introduced by the right hon. Member for Huntingdon (Mr. Major) and his colleagues was anything other than a basically good idea. I appreciate the sincerity with which the right hon. Member for Horsham (Mr. Maude), the hon. Member for West Suffolk (Mr. Spring) and their colleagues sought in discussions on the Bill to preserve what they see as fundamental aspects of their vision of the lottery. My only regret is that we have not been able to persuade them that we agree with them on more than they realise and, where we disagree, we are improving on what is there already, not spoiling it.

I also thank the right hon. Member for Caithness, Sutherland and Easter Ross (Mr. Maclennan) and the hon. Member for Southport (Mr. Fearn) for their contributions from the Liberal Democrat Benches. I am grateful for their support on many issues and their intelligent probing on others.

Last, but definitely not least, I should thank all my colleagues on the Labour Benches who played a part in the discussions on Second Reading, in Committee and today. Their constructive and well-informed support, based on their knowledge of their constituents' needs, has been most welcome and has reminded us constantly of the rightness of what the Bill seeks to achieve.

The Bill delivers our clear commitments in our manifesto and pre-election documents to making something good even better. If the amendments agreed by the House find favour in another place, as I very much hope, this Bill will pass into law playing a significant part in achieving the four aims that we set out in our White Paper: first, widening the benefits of the lottery to health, education and in due course the environment; secondly, reforming the way in which lottery distribution works throughout all the existing good causes; thirdly, setting up the National Endowment for Science, Technology and the Arts; and, fourthly, securing confidence in the way in which the lottery is regulated and operated. In connection with the last of those aims, I am particularly grateful that the House has agreed to important amendments to set up a National Lottery Commission and to open up National Audit Office access to the operator.

The Bill is delivering our commitments, but it is only part of a wider picture. I ask the House to note, in particular, that today I am issuing new policy directions, under my existing powers, to the Arts Council of England, the English Sports Council, the National Lottery Charities Board and the National Heritage Memorial Fund.

On Second Reading, I told the House that I was starting consultations on those new directions and it is particularly pleasing that they have been strongly welcomed by the distributary bodies and that they are being issued in final form with very little change.

The new policy directions for existing distributors will, among other things, shift the focus away from big spending on bricks and buildings towards ensuring that more lottery money goes to people and activities. They will acknowledge the developmental needs of children and young people. They will remove the requirement for significant levels of partnership funding, which will make it easier for less wealthy organisations and areas to benefit. They will, for the first time, encourage distributors to consider how their strategies will contribute to sustainable development, and will invite them to consider the contribution that they can make through the good causes to reducing economic and social deprivation. They will ensure that all regions and parts of society can benefit from the lottery. I want everyone to have confidence that the money for good causes is allocated fairly and goes where it is needed. That is a central strand in our reform of the lottery, and our new directions will help us achieve it. I am particularly pleased that our proposals have been strongly welcomed by the bodies concerned. The Bill will help lottery distributors to be more strategic and proactive in their use of lottery money. We are streamlining the distribution system and helping applicants to cut through bureaucracy to make it easier for small community groups to find out about the lottery and receive grants. In many cases, decision making can be pushed closer to the grass roots.

Taken together, the Bill and the associated directions open an exciting new phase in the lottery's existence. I commend the Bill to the House.

9.46 pm
Mr. Peter Ainsworth (East Surrey)

I thank the Secretary of State for his kind words on my appointment. Our paths have crossed several times in recent years, and I hold the Secretary of State in considerable respect. One afternoon, I even had charge of his dog; we need not go into that now, but I can assure the House that the dog came to no harm.

It is a great honour for me to have slipped out of my stage management role of the past two years into playing a small speaking part at the end of deliberations on the Bill. I am well aware that the real stars were those who slogged through Committee. I pay tribute to them all, particularly to my hon. Friend the Member for West Suffolk (Mr. Spring) who guided the Opposition clearly and well. There were valiant contributions from my hon. Friends the Members for Mid-Dorset and North Poole (Mr. Fraser), for Ashford (Mr. Green), for Mid-Norfolk (Mr. Simpson) and for Eastbourne (Mr. Waterson). I pay tribute, too, to my immediate predecessor, my right hon. Friend the Member for Horsham (Mr. Maude), who brought his unique blend of elan and intelligence to his role in opposition. He is committed to listening to and speaking up for people whose lives are affected by the Secretary of State's Department.

I have considerable respect for the Secretary of State. It is a pity, therefore, that he has been crunched so early by pressure from the Chancellor of the Exchequer. On the back of his finely decorated book, there is a picture by Damian Green—[HON. MEMBERS: "Damien Hirst."] I mean Damien Hirst; I apologise to my hon. Friend the Member for Ashford (Mr. Green). The painting is titled, "Beautiful snail crunching under the boot painting", and it reminded me of the Secretary of State crunching under the boot of the Chancellor.

The previous Government set up and handed on the most successful lottery in the world. I hope that all hon. Members agree that that is some achievement, but we would never have claimed that the lottery was perfect. There are ways in which it can be improved. There are some welcome measures in the Bill. We have, for example, no fundamental objection to the clarification of the regulator's powers. We would support any sensible measure to improve the workings of the lottery, such as the introduction of better ways of handling smaller grants or removing bureaucratic impediments.

As my hon. Friend the Member for West Suffolk said, we support the principle of the creation of the National Endowment for Science, Technology and the Arts, but we do not support it as a quasi-venture capital outfit controlled by the Secretary of State. Conservative Members warned of the dangers of a Government trying to pick winners. In particular, we will continue to support measures that would increase the funds available to the arts, sport, heritage and charities. Our first objection to the Bill is that far from assisting those good causes, it damages them.

In answering that charge, the Government have sought to claim that the changes that they are making will benefit other good causes, such as out-of-hours activities in schools, health, the environment, science and technology. Those are indeed good causes, but that is not the point. If such causes are to be funded, they should be funded from central Government receipts, not by a raid on the arts, sport, heritage and charities.

The Government also tried to argue that the good causes will not suffer because the lottery is so successful that it is providing more money than originally expected. This is utterly bogus. The extra money may or may not be forthcoming. My hon. Friend the Member for West Suffolk mentioned lottery fatigue, which has occurred in other countries. I am glad that the Minister for Sport is not suffering from lottery fatigue and that his lust for the lottery remains unabated, even if the bills are getting onerous.

In any case, expectations have been built up by both the recipients and distributors of lottery proceeds. The Bill puts those expectations at risk. The distributing bodies know that and the Secretary of State knows it, too, as he acknowledges in his book. I have not read it all the way through, but I have read some of the reviews; it is a cruel world. He says: the distributing bodies have adjusted their expectations upwards to reflect the success of the lottery. The Bill is a semi-veiled attack on the arts, sports, charities and heritage. Unease about the Government's ability to deliver their pre-election nods and winks is turning into real concern and anger.

Our second objection to the Bill involves a fundamental breach of the principle of additionality. We have heard much about that today and throughout the course of the Bill. I was on the Standing Committee in 1993 that considered the Bill that introduced the national lottery. My two clearest memories are first, that if the Liberal Democrat spokesman had had his way, we would not have had a national lottery at all; and secondly, I recall the immense pressure brought to bear on the Committee, especially by the arts world and the sports world, to ensure that money from the lottery was safeguarded against any attempt by the Chancellor of the Exchequer to pilfer it to support central Government funding in other fields. Labour members of the Committee voiced their vociferous support for the principle of additionality.

The undertaking on additionality was given, and adhered to, by the previous Government. Despite the promises made by the Prime Minister and others at the general election, that undertaking has been broken by the Bill. Those lottery promises are due to join the mounting heaps of broken promises that the Government seem determined to leave behind.

Our third objection is that the Bill ignores the clearly established principle that lottery money should be distributed by bodies that operate at arm's length from the Government. As the sorry story of the Bill has unfolded, it has become increasingly clear that the Government intend to use the new opportunities fund to divert money to its own favoured projects. The new opportunities fund and NESTA will be directly under ministerial control. We do not and cannot accept such a massive increase in political control over lottery players' money. The reason for that, once again, is contained in the Secretary of State's colourful book, although there is a sad lapse from his normal eloquence, so I shall torture the House only briefly with his grammar. He says: In a very real way, lottery players think of lottery money as `their' funds far more determinedly than they do with taxation. That is exactly the point—it may not be well expressed, but it is perfectly reasonable.

Finally, the original national lottery was based on an understanding that it would be used to support local initiatives by local people with local support. The Bill undermines the principle of local support by introducing an unwelcome and subversive centralisation of power. The distributing bodies will, for the first time, be given explicit powers to solicit bids for money, and who is it has the power to appoint members of the distributing bodies? It is none other than the Secretary of State, who can also give them directions as to how they should distribute the proceeds. For the last time—

Mr. Chris Smith

Will the hon. Gentleman give way?

Mr. Ainsworth

I was just about to quote again from the Secretary of State's book, but I give way.

Mr. Smith

I am grateful to the hon. Gentleman for giving way. I am tempted to observe that the face may have changed, but the speech has not. He must accept that all the existing distributors in arts, sport, heritage and charities fall under exactly the same qualification of appointment by the Secretary of State and being subject to directions from the Secretary of State to which he has just referred.

Mr. Ainsworth

Will the Secretary of State deny that the Bill contains new powers that he can exercise in that direction? No, he will not deny it.

Mr. Smith

Let me make it perfectly clear: the new opportunities fund will operate in exactly the same way and under exactly the same rules as the other distributors. Parliament will have the power to introduce new initiatives from time to time, but the independence of the new opportunities fund as a body will be exactly the same as that of the other distributors.

Mr. Ainsworth

The fact is that the Bill and the measure to which I have referred, which the Secretary of State appears not to affirm, is a wholesale attack on the existing good causes and represents a major extension of the Government's control over the national lottery and those who are likely to benefit from it.

For the last time, I shall refer to the Secretary of State's book. [HON. MEMBERS: "More."] I have already referred to it almost as many times as the Secretary of State referred to it in his recent article in The Spectator and I do not want to give it any more publicity. In a sinister example of new Labour-speak, the right hon. Gentleman says: We now have the chance to reorient"— I like that— the lottery so that it reflects more closely the people's priorities. We know that, in new Labour-speak, the "people's priorities" are in fact the Government's priorities. The Government always think that they know best. The Bill takes away control from the distributing bodies and gives it to the Government; it takes money away from the arts, sports, heritage and charities and gives it to the Government; it breaks the principle of the arm's-length management and extends the dead hand of Government control to lottery procedures. That is the way to create, not a people's lottery, but a Government's lottery and a lottery for bureaucrats. That is a way to expand political patronage at the expense of the original good causes.

Throughout the debates on the Bill, the Government have failed to acknowledge those concerns and have resorted to the evasion and sophistry that are becoming their hallmark.

The Bill betrays not only the promises made by Ministers before the general election—we are used to that, although that would be bad enough—but the national lottery that we created. On those grounds, I urge my hon. Friends to oppose the Third Reading of the Bill.

Question put, That the Bill be now read the Third time:—

The House divided: Ayes 278, Noes 129.

Division No. 289] [9.59 pm
Adams, Mrs Irene (Paisley N) Casale, Roger
Ainsworth, Robert (Cov'try NE) Chapman, Ben (Wirral S)
Allen, Graham Chisholm, Malcolm
Anderson, Donald (Swansea E) Clapham, Michael
Anderson, Janet (Rossendale) Clark, Rt Hon Dr David (S Shields)
Ashton, Joe Clark, Dr Lynda
Austin, John (Edinburgh Pentlands)
Banks, Tony Clark, Paul (Gillingham)
Barnes, Harry Clarke, Rt Hon Tom (Coatbridge)
Bayley, Hugh Clarke, Tony (Northampton S)
Beard, Nigel Clelland, David
Bennett, Andrew F Clwyd, Ann
Berry, Roger Coaker, Vernon
Best, Harold Coffey, Ms Ann
Betts, Clive Coleman, Iain
Blears, Ms Hazel Connarty, Michael
Blizzard, Bob Cooper, Yvette
Blunkett, Rt Hon David Cranston, Ross
Boateng, Paul Crausby, David
Bradley, Keith (Withington) Cryer, Mrs Ann (Keighley)
Bradley, Peter (The Wrekin) Cummings, John
Bradshaw, Ben Cunliffe, Lawrence
Brinton, Mrs Helen Cunningham, Rt Hon Dr John
Brown, Rt Hon Nick (Newcastle E) (Copeland)
Brown, Russell (Dumfries) Cunningham, Jim (Cov'try S)
Browne, Desmond Darling, Rt Hon Alistair
Buck, Ms Karen Darvill, Keith
Burden, Richard Davey, Valerie (Bristol W)
Burgon, Colin Davidson, Ian
Caborn, Richard Davies, Rt Hon Denzil (Llanelli)
Campbell, Alan (Tynemouth) Davis, Terry (B'ham Hodge H)
Campbell, Mrs Anne (C'bridge) Dawson, Hilton
Campbell-Savours, Dale Dean, Mrs Janet
Canavan, Dennis Denham, John
Caplin, Ivor Dismore, Andrew
Dobbin, Jim Lewis, Ivan (Bury S)
Dobson, Rt Hon Frank Lewis, Terry (Worsley)
Donohoe, Brian H Liddell, Mrs Helen
Drew, David Linton, Martin
Eagle, Angela (Wallasey) Livingstone, Ken
Eagle, Maria (L'pool Garston) Llwyd, Elfyn
Edwards, Huw Lock, David
Efford, Clive Love, Andrew
Ellman, Mrs Louise McAllion, John
Ennis, Jeff McAvoy, Thomas
Fisher, Mark McCabe, Steve
Fitzsimons, Lorna McCafferty, Ms Chris
Flint, Caroline McCartney, Ian (Makerfield)
Flynn, Paul McDonagh, Siobhain
Foster, Rt Hon Derek McDonnell, John
Foster, Michael Jabez (Hastings) McFall, John
Foster, Michael J (Worcester) McKenna, Mrs Rosemary
Gapes, Mike McNulty, Tony
Gardiner, Barry Mactaggart, Fiona
Gerrard, Neil McWalter, Tony
Gilroy, Mrs Linda Mahon, Mrs Alice
Goggins, Paul Marsden, Gordon (Blackpool S)
Golding, Mrs Llin Marshall, David (Shettleston)
Gordon, Mrs Eileen Marshall, Jim (Leicester S)
Griffiths, Jane (Reading E) Marshall-Andrews, Robert
Griffiths, Nigel (Edinburgh S) Martlew, Eric
Grogan, John Maxton, John
Gunnell, John Meale, Alan
Hain, Peter Michael, Alun
Hall, Mike (Weaver Vale) Michie, Bill (Shef'ld Heeley)
Hall, Patrick (Bedford) Milburn, Alan
Hamilton, Fabian (Leeds NE) Miller, Andrew
Hanson, David Mitchell, Austin
Heal, Mrs Sylvia Moffatt, Laura
Henderson, Ivan (Harwich) Moonie, Dr Lewis
Hepburn, Stephen Moran, Ms Margaret
Heppell, John Morgan, Ms Julie (Cardiff N)
Hewitt, Ms Patricia Morgan, Rhodri (Cardiff W)
Hill, Keith Morley, Elliot
Hinchliffe, David Morris, Ms Estelle (B'ham Yardley)
Hoey, Kate Mudie, George
Hoon, Geoffrey Mullin, Chris
Hope, Phil Murphy, Jim (Eastwood)
Hopkins, Kelvin Norris, Dan
Howells, Dr Kim O'Brien, Bill (Normanton)
Hoyle, Lindsay O'Brien, Mike (N Warks)
Hughes, Ms Beverley (Stretford) O'Hara, Eddie
Hughes, Kevin (Doncaster N) Olner, Bill
Humble, Mrs Joan O'Neill, Martin
Hutton, John Osborne, Ms Sandra
Iddon, Dr Brian Palmer, Dr Nick
Jackson, Ms Glenda (Hampstead) Pearson, Ian
Jackson, Helen (Hillsborough) Pendry, Tom
Jenkins, Brian Pickthall, Colin
Johnson, Miss Melanie Pike, Peter L
(Welwyn Hatfield) Plaskitt, James
Jones, Barry (Alyn & Deeside) Pollard, Kerry
Jones, Mrs Fiona (Newark) Pond, Chris
Jones, Ms Jenny Pope, Greg
(Wolverh'ton SW) Prentice, Ms Bridget (Lewisham E)
Jones, Jon Owen (Cardiff C) Prentice, Gordon (Pendle)
Jones, Dr Lynne (Selly Oak) Prescott, Rt Hon John
Jones, Martyn (Clwyd S) Primarolo, Dawn
Keeble, Ms Sally Prosser, Gwyn
Keen, Alan (Feltham & Heston) Purchase, Ken
Kennedy, Jane (Wavertree) Quin, Ms Joyce
Khabra, Piara S Quinn, Lawrie
Kidney, David Rammell, Bill
Kilfoyle, Peter Rapson, Syd
King, Andy (Rugby & Kenilworth) Raynsford, Nick
Kingham, Ms Tess Reed, Andrew (Loughborough)
Ladyman, Dr Stephen Reid, Dr John (Hamilton N)
Laxton, Bob Roche, Mrs Barbara
Lepper, David Rogers, Allan
Leslie, Christopher Rooker, Jeff
Levitt, Tom Ross, Emie (Dundee W)
Rowlands, Ted Thomas, Gareth (Clwyd W)
Roy, Frank Thomas, Gareth R (Harrow W)
Russell, Ms Christine (Chester) Tipping, Paddy
Salter, Martin Todd, Mark
Sawford, Phil Touhig, Don
Sedgemore, Brian Trickett, Jon
Sheerman, Barry Truswell, Paul
Sheldon, Rt Hon Robert Turner, Dennis (Wolverh'ton SE)
Simpson, Alan (Nottingham S) Turner, Dr George (NW Norfolk)
Singh, Marsha Vaz, Keith
Skinner, Dennis Vis, Dr Rudi
Smith, Rt Hon Chris (Islington S) Walley, Ms Joan
Smith, Miss Geraldine Ward, Ms Claire
(Morecambe & Lunesdale) Wareing, Robert N
Smith, Llew (Blaenau Gwent) Watts, David
Soley, Clive Welsh, Andrew
Southworth, Ms Helen White, Brian
Spellar, John Williams, Rt Hon Alan
Squire, Ms Rachel (Swansea W)
Starkey, Dr Phyllis Williams, Alan W (E Carmarthen)
Williams, Mrs Betty (Conwy)
Steinberg, Gerry Wills, Michael
Stevenson, George Winnick, David
Stewart, David (Inverness E) Winterton, Ms Rosie (Doncaster C)
Stewart, Ian (Eccles) Wise, Audrey
Stinchcombe, Paul Wood, Mike
Stoate, Dr Howard Woolas, Phil
Stringer, Graham Wright, Anthony D (Gt Yarmouth)
Stuart, Ms Gisela Wright, Dr Tony (Cannock)
Sutcliffe, Gerry Wyatt, Derek
Swinney, John
Taylor, Rt Hon Mrs Ann Tellers for the Ayes:
(Dewsbury) Mr. David Jamieson and
Taylor, David (NWLeics) Mr. Jim Dowd.
Ainsworth, Peter (E Surrey) Fox, Dr Liam
Ancram, Rt Hon Michael Fraser, Christopher
Atkinson, David (Bour'mth E) Garnier, Edward
Atkinson, Peter (Hexham) Gibb, Nick
Baldry, Tony Gillan, Mrs Cheryl
Bercow, John Gray, James
Beresford, Sir Paul Green, Damian
Body, Sir Richard Greenway, John
Boswell, Tim Grieve, Dominic
Bottomley, Peter (Worthing W) Gummer, Rt Hon John
Bottomley, Rt Hon Mrs Virginia Hague, Rt Hon William
Brady, Graham Hamilton, Rt Hon Sir Archie
Brooke, Rt Hon Peter Hammond, Philip
Browning, Mrs Angela Hayes, John
Bruce, Ian (S Dorset) Heald, Oliver
Burns, Simon Heathcoat-Amory, Rt Hon David
Butterfill, John Hogg, Rt Hon Douglas
Cash, William Howarth, Gerald (Aldershot)
Chapman, Sir Sydney Hunter, Andrew
(Chipping Barnet) Jack, Rt Hon Michael
Chope, Christopher Jackson, Robert (Wantage)
Clappison, James Jenkin, Bernard
Clark, Rt Hon Alan (Kensington) Johnson Smith,
Clifton-Brown, Geoffrey Rt Hon Sir Geoffrey
Collins, Tim Kirkbride, Miss Julie
Colvin, Michael Laing, Mrs Eleanor
Cormack, Sir Patrick Lait, Mrs Jacqui
Cran, James Lansley, Andrew
Davies, Quentin (Grantham) Letwin, Oliver
Davis, Rt Hon David (Haltemprice) Lewis, Dr Julian (New Forest E)
Dorrell, Rt Hon Stephen Lidington, David
Duncan, Alan Lilley, Rt Hon Peter
Duncan Smith, lain Lloyd, Rt Hon Sir Peter (Fareham)
Evans, Nigel Loughton, Tim
Faber, David Luff, Peter
Fabricant, Michael Lyell, Rt Hon Sir Nicholas
Fallon, Michael MacGregor, Rt Hon John
Flight, Howard Mcintosh, Miss Anne
Forth, Rt Hon Eric MacKay, Andrew
Fowler, Rt Hon Sir Norman Maclean, Rt Hon David
McLoughlin, Patrick Stanley, Rt Hon Sir John
Madel, Sir David Steen, Anthony
Malins, Humfrey Streeter, Gary
Maples, John Swayne, Desmond
Mates, Michael Syms, Robert
Maude, Rt Hon Francis Tapsell, Sir Peter
May, Mrs Theresa Taylor, Ian (Esher & Walton)
Moss, Malcolm Taylor, Sir Teddy
Nicholls, Patrick Townend, John
Page, Richard Tredinnick, David
Paice, James Trend, Michael
Paterson, Owen Tyrie, Andrew
Pickles Eric Viggers, Peter
Prior, David Water, Robert
Redwood, Rt Hon John Wardle, Charles
Whittingdale, John
Robathan, Andrew Widdecombe, Rt Hon Miss Ann
Robertson, Laurence (Tewk'b'ry) Wilkinson, John
Roe, Mrs Marion (Broxboume) Willetts, David
Ruffley, David Wilshire, David
St Aubyn, Nick Winterton, Mrs Ann (Congleton)
Sayeed, Jonathan Winterton, Nicholas (Macclesfield)
Shephard, Rt Hon Mrs Gillian Woodward, Shaun
Simpson, Keith (Mid-Norfolk) Yeo, Tim
Soames, Nicholas
Spelman, Mrs Caroline Tellers for the Noes:
Spicer, Sir Michael Mr. John M. Taylor and
Spring, Richard Mr. Stephen Day.

Question accordingly agreed to.

Bill read the Third time, and passed, with amendments.