Official Report of the Grand Committee on the National Lottery Bill [H.L.]

HL Deb 19 January 1998 vol 584 cc1-58GC

Monday, 19th January 1998.

The Committee met at half-past three of the clock.

[The Deputy Chairman of Committees (Lord Ampthill) in the Chair.]

The Deputy Chairman of Committees (Lord Ampthill)

Before I put the Question that the Title be postponed, it may be helpful to remind your Lordships of the procedure for today's Committee stage. Except in one important respect, our proceedings will be exactly as in a normal Committee of the Whole House. We shall go through the Bill clause by clause; noble Lords will speak standing; all noble Lords are free to attend and participate; and the proceedings will be recorded in Hansard. The one difference is that the House has agreed that there shall be no Divisions in the Grand Committee. Any issue on which agreement cannot be reached should be considered again at the Report stage when, if necessary, a Division may be called. Unless, therefore, an amendment is likely to be agreed to, it should be withdrawn.

I should also explain what will happen if there is a Division in the Chamber—a likely event—while we are sitting. The Committee will adjourn as soon as the Division Bells are rung and will then resume after 10 minutes.

Title postponed.

Clause 1 [Advisory panels on selection of the body to run the National Lottery]:

Lord Redesdalemoved Amendment No. 1: Page I, line 15, after ("shall") insert (", after consultation with such bodies as appear to him to represent local government,").

The noble Lord said: I realise that the Minister probably will not agree to Amendment No. 1, but its purpose is to make sure that the advisory panel which will select the next operator has the widest possible remit. I hope that the Minister will agree that local authorities (which are very often involved in providing matching funding for the projects, or a degree of funding, and which will often be directly affected by the provision of lottery funds) should have some opportunity to put to the panel their views on who should be selected. I beg to move.

Lord Skidelsky

The purpose of Amendment No. 2 is to ensure the presence on the lottery advisory panel of persons with relevant business expertise. We wondered why such a panel was necessary in the first place in view of the fact, which was confirmed by the Minister on Second Reading, that there was no suggestion that the director general's selection of the existing lottery operator was somehow flawed. We were bound to see this proposal in the context of the Government's determination to move the lottery on to a non-profit-making basis. Therefore, the amendment is designed to put on the face of the Bill the Minister's own assurance that members of the advisory panel will be well fitted to advise the director general by dint of their experience of the lottery market.

It is important to have people capable of evaluating bids on a business rather than on a political basis, so as to ensure the maximum revenue for the good causes. We believe that a reasonable expectation of profit is the best way of maximising the lottery's revenue and we want to ensure that this view is represented on the advisory panel.

Lord McIntosh of Haringey

I am grateful to both noble Lords for the explanation of their amendments, and I well understand the point made by the noble Lord, Lord Skidelsky, that they do not see the need for a panel in the first place. As he rightly reminds the Committee, we have no criticism—and we have made that clear—of the procedure for the selection of the first operator. However, the proposal for a panel, which was put forward in the White Paper, has the support of the Director General of the National Lottery and has—I shall not say survived—been welcomed in the consultation.

I say straight away that both of the points made by the noble Lords about the nature of the advisory panel are well taken by the Government. I say to the noble Lord, Lord Redesdale, that not only is it our firm intention to consult organisations representative of local government on this matter but also on the other matters on which he has tabled comparable amendments later in the Bill. If that saves time, I do not think any of us will regret that. I also confirm, as the noble Lord, Lord Skidelsky, said—in quoting me at Second Reading—that we intend, and have always intended, to recruit to the panel people with experience of business, and in particular with experience of the lottery business. However, we do not think it is necessary to include on the face of the Bill a provision requiring the panel to include these members. It is not the normal practice for Bills to include that degree of detail.

As I said, we agree that it is important for the Secretary of State to consult widely. I repeat my assurance that this consultation will include bodies representing local government because they have an interest in distribution matters and in consumer affairs. However, if we were to include only local government all kinds of other interests whom we would wish to consult would feel themselves excluded from the consultation. The legal phrase which I promise to use only once is expressio unius est exclusio alterius. I do not think that we have enough Law Lords here to challenge my semi-modern pronunciation. We have much sympathy with the motivation behind both of these amendments but we do not feel it is appropriate that they should be included on the face of the Bill.

Lord Redesdale

I thank the Minister for that reply. I very much suspected that he would not include the measure on the face of the Bill. However, I sought his assurance and I thank the Minister for that assurance. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 2 not moved.]

Lord Skidelskymoved Amendment No. 3:

Page 3, line I, leave out subsection (3).

The noble Lord said: This amendment is designed to strike out subsection (3) which requires the advisory panel to comply with any directions which it may be given by the Secretary of State. It is a drastic amendment but the subsection which we seek to remove seems to us directly to contradict the Minister's assurance that the process of selection will be objective, independent and more transparent.

The Government are setting up an advisory panel and propose to tell it what advice to give. We want to remove the Secretary of State's power to give such directions as will remove or limit the power of the advisory panel to recommend profit-seeking applicants. The emphasis in selection of a new licensee should be on maximising revenue for the good causes, not minimising profit for the licensee, and that is what this amendment seeks to secure. We would of course consider an alternative form of words designed to achieve that aim. I beg to move.

Lord McIntosh of Haringey

I can confirm that the noble Lord is right in describing the effect of his amendment, but I have to disagree with him when he describes the effect which subsection (3) would have. It is true that subsection (3) enables the Secretary of State to give directions to the lottery advisory panel on selection which relate to the panel's functions and performance; but its purpose is not to give the Secretary of State control over the advice that the panel gives but rather to ensure the smooth operation of the panel. The Secretary of State is required to consult the director general on any directions that he makes.

Perhaps it would help your Lordships if I give examples of the issues which we envisage may be covered by the directions. They may include, for example, a timetable for the panel to deliver its advice to the director general; they may require the panel to give the director general not just its conclusion as to which person should be appointed to operate the lottery (as set out in the Bill), but also its reasons for reaching that conclusion (but not so as to breach commercial confidentiality); they may also require the panel to consider the basis on which the director general must select the operator (as set out in Sections 4 and 5 of the 1993 Act and in the directions issued under Section 11 of the National Lottery etc. Act 1993). This latter will ensure, most importantly, that both the panel and the director general are working to the same selection criteria.

However, when the noble Lord says that the directions would tell the panel what advice to give and when he suggests that they would be concerned with minimising profit rather than maximising good causes, I can assure him that that is not the purpose of the directions. The panel has to operate against criteria for selection which are set by legislation, rather than arbitrarily. The legislation requires that the selection should be made in order to maximise the return to good causes but also, as he will recognise, to protect the players in the National Lottery.

Neither of those charges have been changed and could not be changed by the directions. These directions come in the category which will occur again and again as we consider this Bill. In other words, we expect very little of the directions—certainly not that they should be fundamental—but we would, and could rightly, be criticised if we did not have that power in the legislation. Similarly, we could not set up an organisation such as the panel, or indeed the new opportunities fund, or NESTA, which we shall be considering later, totally free from the power of direction of the Secretary of State, who is, after all, representing the public. The power, therefore, to the director general as well as to the panel will not be used for narrow political ends, nor will the power to direct the advisory panel.

Lord Skidelsky

Perhaps I might ask the Minister a question. Are the Secretary of State's directions in subsection (3) to be made public?

Lord McIntosh of Haringey

That is a very interesting question. We see no reason why they should not be made public. I do not think that directions to panels of this kind are normally made public, but in the interests of open government I am certainly prepared to consider that.

Lord Skidelsky

In view of that assurance, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

3.45 p.m.

Lord McIntosh of Haringeymoved Amendment No. 4:

Page 3, leave out lines 8 and 9 and insert— ("(4) In section 20 of the 1993 Act (interpretation of Part 1) the following definition shall be inserted at the appropriate place—").

The noble Lord said: I am sorry to trouble the Committee with the correction of a simple error. This amendment is required simply to place the definition of an advisory panel with the definitions in Part I of the National Lottery etc. Act 1993—that is, the part which deals with the operation and regulation of the lottery game—which is where it belongs, rather than with the definitions in Part II (which deal with the distribution of lottery funds) which is where the Bill, as printed, mistakenly places it. As the Committee will see, the amendment simply changes the position of the section inserted into the 1993 Act and, on that basis, it is entirely uncontroversial.

I queried the wording "at the appropriate place", which could give rise to the suspicion that we had not made up our minds exactly where it should go. That is not the case—the phrase is only used because it forms part of a long alphabetical list which could be subject to change. However, on the basis that it is uncontroversial, I commend the amendment to the Committee. I beg to move.

On Question, amendment agreed to.

Clause 1,as amended, agreed to.

Schedule I agreed to.

Clause 2 [Financial penalties for breach of conditions in licences]:

Lord Skidelskymoved Amendment No. 5: Page 3, line 16, leave out ("contravened") and insert ("committed a serious breach of").

The noble Lord said: The purpose of this amendment is to protect the position of the operator against the change this Bill makes to the conditions in the licences. It is an example of something that occurs elsewhere in the Bill. I refer to a retrospective alteration of contract, about which the present operator has every right to feel aggrieved since it changes the balance of risk which the operator faces. We are not moving the amendment to deal with that retrospection, but we ask the Minister to bear it in mind when considering the amendment.

We agree on the need to fill a gap in the regulator's armoury—there is no argument about that—but the Minister was a little cavalier in his treatment of the effects of the financial penalties on the operation of the lottery. Any fines levied, he said, would go into the distribution fund for the benefit of the good causes. However, he failed to point out that any financial penalties incurred would be to the detriment of the prizes, which in turn would lead to lower sales, and that lower sales would mean less money for good causes. That is why we believe that financial penalties should be limited to serious breaches of licence. The Minister himself referred to fining for serious licence breaches and we seek to put those words into the Bill.

"Contravention" is perhaps a little too sweeping; we would like to limit the power in some way. We would oppose fines for technical violations, particularly when no significant loss to good causes arises. Our form of words, committed a serious breach of', a condition in a licence, achieves that aim. I beg to move.

Lord Redesdale

We on these Benches support the amendment because we believe that there is a grey area which the amendment highlights. Although I understand the Minister's attempt to put something between revocation of the licence and no action at all, there seems to be a problem in that almost any contravention could be seen as a breach. That could include such minor things as a difference in the colour of the logo used. We would like the Minister to clarify precisely how he defines "contravened" because "a serious breach" is a clearer indication of what would be at stake.

Lord McIntosh of Haringey

This is the first of a number of amendments to Clause 2 which are concerned with the power to fine the operator. I shall try not to trespass on the subject matter of later amendments. Let me first of all acknowledge that in his amendment the noble Lord, Lord Skidelsky, is proposing not only a change of wording but the wording that occurred in the White Paper: I can hardly criticise him for that.

Secondly, let me assure him that we make no difference between "breach" and "contravention". am told that some lawyers make a distinction between what is appropriate for a contract and what is not, but there is nothing in it as far as we are concerned. The issue that we are dealing with in this amendment is the use of the word "serious"; it is not the use of the word "breach" instead of "contravention".

I am happy to respond to the noble Lord, Lord Redesdale, and to give examples of the way in which it is proposed that this power should work. Section 5 and 6 licences under the 1993 Act—Section 5 being the licence to an operator and Section 6 being the subsidiary licence for a particular lottery game—are complex documents. As the licence could be breached in many ways and it would be difficult to define in advance when a breach is serious, leaving the provision undefined could be an invitation to litigation and muddle. It has been suggested that that could lead to a great deal of profitable fun for lawyers.

Perhaps I may give an example of that. A breach of contravention that occurred once might not be serious, but if it were repeated a number of times it would be serious. It is difficult to see how the introduction of the word "serious" into the legislation would deal with that problem of the cumulative effect. The amendment would lead to great difficulty for the director general in addressing the circumstances of whether or not the breach was serious. In the end, it is not a problem. The power to distinguish between what is a "serious" breach and what is not a "serious" breach rests with the director general. He will implement that power by deciding whether or not to impose a fine, and, if he does impose a fine, by the severity of that fine. The definition of the word "serious", therefore, will become evident as the director general implements these powers, for which he himself has asked.

The Bill does not require the director general to impose a penalty for all licence breaches. He will be prepared to discuss with present and future operators the issues and principles that will arise from the use of his powers and to deal with the matters they put to him. I am sure that he will take account of the views expressed by noble Lords this afternoon.

I advise the noble Lord, Lord Skidelsky, that the fines would not be to the detriment of prizes; they would be taken from the operator's running costs. I acknowledge the validity of what the noble Lord, Lord Redesdale, said, that we need something in between the ultimate "nuclear" penalty of revocation of a licence and taking no action at all. The power to fine was flagged up in the consultation on the White Paper. It is accepted—indeed, welcomed—by the director general, and I hope that it will be accepted by present and future operators as a more refined and selective way of dealing with potential contraventions or breaches of the licence. I hope that noble Lords will not only feel able to withdraw the amendment, but that they will also feel that it is not necessary.

Lord Skidelsky

I should like to come back on that. In his clear response the Minister did not deal with the context of the alterations of the conditions of the licence which have been imposed midway through the contract. The licence was applied for under one set of conditions, and those conditions have been altered half-way through. That alters the risks that the operator faces. It was in that context that I was urging the amendment. To say that the director general's job is difficult does not address my point. We accept that he has a difficult job. However, we are seeking at least to give him some guidance as to the considerations he should bring to mind when deciding whether or not to fine. That is the purpose of the amendment. I believe that there is an advantage in having it on the face of the Bill; as the Minister said, it was in the White Paper. He himself repeated it at Second Reading and he has not convinced me that it should not be on the face of the Bill.

Lord McIntosh of Haringey

The noble Lord makes an additional point to which, it is quite true, I did not respond in my first response. It is true, as he acknowledges, that the power to fine is one that was not available when the first operating licence was granted to Camelot, but it has, indeed, been flagged up in the White Paper.

I should emphasise that the terms of the operating licence to Camelot are not altered by the amendment. Camelot indicated in its response to the Government's White Paper that it was confident that it would continue to operate the lottery without serious breaches of its licence and that it was therefore comfortable with a fair regime of fines. If any difficulties arise, which I do not anticipate given Camelot's response to the White Paper consultation, I am sure that the director general will be pleased to discuss the implications with Camelot. In the meantime, the difficulties that I have indicated about introducing the word "serious" into the legislation still apply and still make it necessary for me to resist the amendment.

Lord Skidelsky

I am sure that Camelot is in favour of a fair regime of fines. It is precisely the fairness of the proposed regime that is in dispute. I beg leave to withdraw the amendment, but I reserve the right to return to it on Report.

Amendment, by leave, withdrawn.

4 p.m.

Lord Redesdalemoved Amendment No. 6: Page 3. line 18, at end insert (", in accordance with a published set tariff or formula of financial penalties.").

The noble Lord said: The purpose of this amendment, which carries on from the last amendment, is to look at the level of fines to be set. We have no difficulty with invoking fines for breaches; indeed, the director general has asked for that power. It is something that was probably overlooked when the original legislation was drafted and the need for such an interim measure can now be seen without advocating the "nuclear" option which the Minister has mentioned.

However, as the Minister is well aware, there was a good deal of public outcry when Camelot announced that its directors were to receive large bonuses and high salary scales. That affected public opinion. One of the intentions in setting a tariff or formula was to make sure that public opinion could not result in political pressure being put on the director general to make the fines extremely punitive. The lottery operator, because it is looking to renew its licence at the end of its term, is hardly going to oppose fines and will try to act within the set guidelines. However, any bidders for the licence would not have to put aside provision which could not be quantified under set tariffs or formulae. I hope that the Minister will consider publishing guidelines on set tariffs or formulae. I beg to move.

Lord McIntosh of Haringey

As I indicated in my response to the previous amendment, the purpose of Clause 2 of the Bill is to ensure that the director general has the appropriate powers to enforce licences issued under Sections 5 and 6 of the 1993 Act. As I have already said, the power has been welcomed by the director general and implements the recommendations—and I did not say this—of the Public Accounts Committee. The Bill provides that in imposing a financial penalty, the director general may have regard to the desirability of deterring further contravention and of recovering any diminution of the sums paid to good causes which are attributable to the contravention". I lay emphasis on the words "deterring" and "recovering", because these are two quite separate motivations for having fines.

It is conceivable, although I shall argue against it, that one could have a tariff of fines for deterrence, but it is difficult to see how you could have a tariff of fines for recovery. Recovery of moneys lost to the good causes could be of any size. They could be very large or they could be relatively small, and that part of the motivation for having a system of fines as proposed in Clause 2 could not readily be subject to a tariff. Clearly, it is important that where the operator has contravened the licence he is deterred from doing so again. Camelot has indicated in its White Paper response, as I have already said, that it is comfortable with a fair regime of fines. However, the problem I have outlined, of the two different purposes of the fining regime, makes it impossible for us to support the amendment.

The licences issued under the Acts are complex documents and they cover a wide range of different issues. There are many ways in which licences might be contravened, and in many instances the same kind of contravention might involve different degrees of seriousness. This comes back to the argument on the previous amendment. We do not believe it would be desirable or possible to produce a comprehensive tariff. If we look at fining regimes applied by other regulators such as, for example, the rail franchising regulator or the gas regulator, we find that, although they have had the power to fine for years, they have never found it necessary to have a tariff for it.

Any financial penalty imposed by the director general must be reasonable, and the Bill makes provision in new Section I OB(3), as inserted in Clause 3, for the operator to appeal to the court if it feels that the amount is not reasonable and the court may reduce or quash the penalty. We believe that the sensible and reasonable application of the power to impose financial penalties is the most appropriate way of ensuring that any penalties imposed are fair. The imposition of a tariff would not help with fair penalties.

Lord Redesdale

The Minister has given a very fair reply. It was not our intention to indicate that there should be a set limit on the size of the tariff. Indeed, any moneys that should have gone to the good causes should be compensated if the licence is in breach. That was why we added the expression "formula to be set".

One of the difficulties I have with the system as it is set out is that, although Camelot, the present licensee, may be happy with the actual formula set out, any new bidders for the licence will have the difficulty that there are areas where they will not be as competent in assessing the financial liabilities under contravention as Camelot, and this might put them at somewhat of a disadvantage. However, the Minister has said that there is recourse to the courts and he has outlined the purpose of the fine. Therefore, I beg leave to withdraw the amendment.

Lord McIntosh of Haringey

Before the noble Lord moves to withdraw the amendment—I know it is not normally my job to delay him when he wants to do that—may I respond to what he said about future operators as opposed to Camelot?

The noble Lord, Lord Skidelsky, criticised the fining regime as being one which was introduced in the middle of the licence period for Camelot. The point about future operators is that they will be preparing their applications in the knowledge that there is a fining regime. By the time we come to the next period of operating licences, any difficulties will readily have been resolved, and if they are not clear about anything in the fining regime they can certainly discuss the matter with the director general. None of the difficulties with the current contract which the noble Lord, Lord Skidelsky, saw would apply in the case of a new operating licence.

Lord Redesdale

I thank the Minister for that reply. He has mentioned that the lottery is developing along different lines from the original legislation. Perhaps we could look at this as the next piece of legislation affecting the lottery. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

The Viscount of Falklandmoved Amendment No. 7:

Page 5, line 23, at end insert— (115) The Director General shall not impose a financial penalty if he is satisfied that the operator has agreed to take, and is taking, all such steps as it appears for the time being to be appropriate for the operator to take for the purpose of securing or facilitating rectification of the contravention in question.".").

The noble Viscount said: This amendment follows the general drift of debate which we have had on the subject of fines and financial penalties. The Bill as drafted makes no allowance for the operator to take any corrective steps or measures that may be appropriate before a fine is imposed. It seems to us that this would be desirable, as indeed it is desirable and relevant in other regulated industries. They have an opportunity to take corrective measures before penalties are due and that avoids unnecessary adversarial relationships which may result. It would allow smoother and more efficient management where there is the potential for improvement. An example of this is the railway industry, where South West Trains had a period of difficulty with a shortage of drivers, and this was the third call in three years, resulting in a breach of its franchising agreement. In this event the franchising director issued a draft enforcement, with which it complied in the following services in April and May. Failure for it to have done so would have resulted in a heavy fine of £1 million.

That example illustrates that there has been provision in other areas for corrective measures, and that has been to everybody's benefit. The Bill before us, however, has no provision for such measures. The Minister will be able to guide us as to whether that is an omission. I gather from his very reasonable remarks on previous amendments relating to fines and penalties that he is anxious to meet concerns in this whole area of penalties and fines, in order to create the right atmosphere and ensure the continued smooth running and efficiency which the lottery enjoys at the moment.

The present licence allows for corrective action to take place in the event of a satellite failure, which the operator is given six weeks to correct, and a shortfall in terminal count. Why could we not follow this precedent and allow a corrective period on the face of the Bill for anything which draws the possibility of a fine or penalty? It might be of a trivial nature—my noble friend mentioned the seemingly trivial example of the colour of a logo—but there are many examples between that and more serious issues.

We believe that that would add to the efficient running of the lottery, and remove the possibility of an unnecessarily combative or adversarial relationship between the Secretary of State and the operator. That might well be not only to the benefit of the present operator, but also to the preparation of bids by other potential operators who could make allowances in their preparations in the same way. I beg to move.

Lord Skidelsky

I would like to support Amendment No. 7. I sympathise with the purpose of the amendment. It seems to me to be a potentially useful addition to the regulatory armour which we are all seeking to provide, and to provide a cooling-off period before we get to the stage of fines. I think the amendment is very well worth considering.

4.15 p.m.

Lord McIntosh of Haringey

Again I have a great deal of sympathy with what noble Lords are trying to achieve. However, I do not think the amendment will actually achieve it. My difficulty comes down to a single word in the amendment which is before the Committee. The amendment states that the director general "shall not" impose a financial penalty. The noble Lord, Lord Skidelsky, refers to this as being an addition to the regulatory armour. I am afraid that, on the contrary, it is a reduction in the regulatory armour. If the amendment were to say that the director general need not impose a financial penalty if he is satisfied that the operator has agreed to take and is taking appropriate steps we would have no difficulty with it.

I have no difficulty at all with the argument about what the noble Viscount calls a corrective period, and the noble Lord, Lord Skidelsky, calls a cooling-off period. Both of those are sensible suggestions to the director general about how he should proceed, but to deny the director general the power to impose a financial penalty ignores what I said in regard to the previous amendment. It ignores the fact that fines are required for two purposes: first, for deterrence—and there, perhaps, the effect of the amendment might not be so serious—and, secondly, for the recovery of sums lost to the good causes as a result of the breach or contravention. If the amendment were carried as it is drafted we would lose the ability of the director general to act to recover sums that have been lost in circumstances where the operator was, quite properly, taking steps to ensure that it did not happen in future.

References have been made to other regulators. I repeat that this requirement that there should be no fine—and it appears that things are being put right—does not apply to other operators such as the rail regulator or the gas regulator. Where a licence holder has contravened the terms of its licence, I would hope that it would rectify the matter itself and not require prompting by the director general. It might well be inappropriate to impose a financial penalty if the breach has been corrected or is being rectified. I am sure that the director general will consider this, as he considers each licence breach and the action he should take. He is not forced by this Bill to penalise: it is an option open to him as appropriate. But the effect of the amendment is that the director general is prevented from imposing a fine if corrective action is being taken. This cannot be right.

There may be occasions when a fine is still appropriate even though the operator is taking action to prevent a reoccurrence of the breach—particularly if there has been an impact on the income to good causes. Equally, there may be occasions when no penalty is appropriate. If the amendment were accepted, an operator might deliberately contravene the terms of its licence hoping that the contravention would not be discovered, safe in the knowledge that if it were discovered it would merely have to put the matter right and would not face any further penalty. That is much further than the noble Viscount intended with this amendment.

I remind the Committee that the Bill provides a right of appeal should the operator consider that the director general has not acted reasonably, and if the breach is clearly caused by factors beyond the control of the operator it is likely that the courts would regard this as having a bearing on the rightness of any penalty. I am sure that the director general will, as with previous amendments, take account of what the noble Viscount and the noble Lord have said.

Having said all that, I would have no difficulty with a changed amendment along the lines that I have indicated, but I repeat my argument that it is not necessary, for the reasons I have set out. The director general will assess each breach on its merits. I urge the Committee to accept that not only is this amendment undesirable, but any more reasonable amendment would be unnecessary.

The Viscount of Falkland

The Minister has given a full and persuasive answer, as he normally does. There is a great deal of common ground between us, but it has been suggested to me that in the amendment before your Lordships the word "shall" after "director general" could well be replaced by the word "need", which would possibly answer many of the Minister's concerns.

However, I should like to read in Hansard what he has to say, which is very interesting. We may wish to reserve the right to come back to the matter at a later stage and produce something which might bring us even closer.

Lord McIntosh of Haringey

Again I am risking my life when it is clear that the noble Viscount is going to withdraw the amendment, but I remind him that I did not only say that it would be unobjectionable if the word "shall" were changed to "need", but it would be unnecessary. It would add to the length of the Bill for no good purpose. The power of the director general not to impose a fine under these circumstances is already in the Bill.

I remind the noble Viscount of the legal maxim "unnecessary words turn sceptic".

The Viscount of Falkland

Very appropriate in your Lordships' House! If I may, I shall take this matter away and look at it further and reserve the right to raise it again at a further stage of the Bill if necessary. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 2 agreed to.

Clause 3 [Appeals against financial penalties]:

Lord Skidelskymoved Amendment No. 8:

Page 6, line 14, at end insert ("or (d) that the contravention was due to circumstances beyond the person's contra).

The noble Lord said: This amendment seeks to extend the grounds of appeal against financial penalties. That is very necessary in view of the rather unspecific nature of the fining regime.

As it stands, the grounds of appeal are very narrow: errors as to facts, procedural errors and errors of law. The amendment seeks to give the operator ground for appeal in the case where the contravention of licence was beyond his reasonable control. Some examples of that have already been given: the lack of display of mandatory information by retail outlets or various kinds of freak events.

I am sure that no financial penalties will be awarded unreasonably, but it seems to me to be useful to have that rather broader ground of appeal, and I know that the operator would feel happier with that. That not only applies to the existing operator, but it would apply to future operators. It does not raise any serious issue of principle, and I would hope that the Minister would see his way to accepting it. I beg to move.

Lord McIntosh of Haringey

The noble Lord suggests in arguing the amendment that the grounds of appeal in Clause 3 are narrow. I cannot agree with that. The grounds of appeal are as to whether a breach contravened the conditions of a licence, whether the director general made an error as to fact, whether there was a procedural error or there was an error of law. What other kinds of error are there other than those of fact or law? Then, when we turn to the amount of any fine, the grounds of appeal are that the amount of the penalty is unreasonable, that there is a material procedural error or that the decision was based on a manifest misapprehension as to fact. Those grounds of appeal are about as wide as can be possibly imagined. I cannot accept that there is any significant restriction—perhaps the noble Lord can help me if I am wrong—in the power to appeal against the finding of the director general.

As I explained to the noble Viscount, Lord Falkland, I am confident that the director general when exercising his power to apply a financial penalty would do so reasonably and would take into account whether the cause of a licence breach was outside the control of the licensee. If matters were to come to an appeal, then the court already has the power to consider whether, because outside factors contributed to, or caused, the breach, the imposition of a financial penalty or its amount is unreasonable.

Let us take, for example, the example of a power cut on a Saturday afternoon which caused all the electronic systems in preparation for the draw to go down. If the power cut were cataclysmic and affected large parts of the country, I am quite sure that the director general would say that there was nothing that any reasonable operator could do about that. If, on the other hand, the software used by the operator was inadequate and there was inadequate provision for back-up in the case of a relatively straightforward failure, the director general might say that they ought to have anticipated a failure of that kind. Under those circumstances, therefore, a fine would be appropriate, because if a draw in any one week had to be cancelled, clearly the loss to good causes would be very significant.

There is plenty of opportunity for the director general to think reasonably, rationally and sensibly about this without a force majeure principle being added to the face of the Bill. After all, there is case law running back over many years which implies a force majeure limitation on the application of contracts, and it would apply as much in this case as in any other.

Lord Skidelsky

The Minister has challenged me and I have to respond. The issue is not about any misapprehension of the facts; it is about the responsibility for the facts. That responsibility may well be disputable. Indeed, the Minister gave an example of such a possible dispute. To the Minister it was quite clear that in the case of a local power failure the responsibility would lie with the operator, but that is exactly something that the operator might seek to dispute. On the present grounds of appeal, however, he could not dispute that finding because it is not a question of fact; it is a question of responsibility for a fact. We are therefore adding a ground of appeal which is not covered by the existing grounds of appeal.

Lord McIntosh of Haringey

I should point out that the amendment does not address the problem that the noble Lord has identified. If the amendment was intended to affect the grounds for appeal, it should come at the end of Clause 3(2) rather than where it does. which is at the end of Clause 3(3). The noble Lord has placed the amendment where his force majeure argument applies only to the amount of the financial penalty rather than to whether there should be a financial penalty. I should have thought that the reasonableness of the fine derives from the culpability for the contravention and that therefore the kind of distinction which the noble Lord is asking the director general—and ultimately the courts—to make depends on the existing responsibilities of the director general, rather than on the need for this particular provision in Clause 3(3). I repeat that, subject to the courts, the director general has all of the powers and responsibilities which are necessary to protect operators in the circumstances which the noble Lord fears may arise.

Lord Skidelsky

This has been useful because in the course of our discussion we may have identified—I am not sure whether the Minister would agree—an additional ground of appeal to those already allowed. However, our amendment may not deal with that problem. In that case, it may be that we should try to fashion a form of words that deals with the issue of a dispute over responsibility for a particular breach. That is not covered anywhere at the moment and I should be happy if it could be inserted into the right place. I apologise if it is not where it should be.

If the Minister accepts that there is a ground here for appeal that is not covered by recourse to errors as to facts, procedural errors or some other error of law, I hope that we can find some way to include it on the face of the Bill; exactly how I am not quite sure.

Lord McIntosh of Haringey

I rather think that for the other reasons I have given we would resist even a rewording of the amendment to place it in subsection (2). If the noble Lord would like to talk about this between now and Report I shall be happy to do so.

Lord Skidelsky

I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

On Question, Whether Clause 3 shall stand part of the Bill?

4.30 p.m.

Lord Fraser of Carmyllie

I make clear immediately that my interest in the Bill stems from the fact that in another place last week the Scotland Bill received its Second Reading. As Tam Dalyell observed in the Sunday Times yesterday, when in the late 1970s a Scotland Bill went through another place, at its Second Reading not only was the Prime Minister in his place but most of the Cabinet, and the Leader of the House stayed in his place for the duration of the Second Reading debate. Last week there was a fleeting visit during Second Reading by the Leader of the House and the only Ministers on the Front Bench were Scottish Office Ministers. I regard that as a matter of some dismay. It is a major constitutional change which will have implications right across our constitution and will have a significant effect on all manner of legislation that goes through this House.

It seems to me, therefore, that we should now, even in advance of the Scotland Bill receiving Royal Assent, be looking at legislation coming through your Lordships' House to identify as far as possible the extent to which any Bill deals with matters which, once the Scottish parliament is established—as it now clearly will be—would fall within the legislative competence of that Scottish parliament.

There are two good reasons for doing that. First, we would want to demonstrate that trying to tease apart what will continue to be within the reserved matters of Westminster and what will be devolved to the Scottish parliament is infinitely more complex than seems to have been appreciated to date. In our view, it is desirable to examine that as clearly as we can.

Secondly, there is an issue of principle here whether we should be legislating in respect of matters which in less than two years will be within the exclusive competence of the Scottish parliament. I would suggest to the Government that if they propose to legislate within the next 18 months to two years, they should be prepared to offer up a good reason why that is being undertaken.

My concern is this. Because I wish to see the union of our two countries continue, I would wish to see that the opportunity for conflict between your Lordships' House and another place and the Scottish parliament should be reduced to a bare minimum. Interestingly, the approach that I have been suggesting would seem to be finding favour with the Government themselves.

In opening the debate last week, the Secretary State for Scotland, Mr Donald Dewar, made the point that one of the first acts of the Scottish parliament would be to repeal and reform the last remnants of the feudal system in Scotland. I am not sure that this will be the most important thing to confront a Scottish parliament but, be that as it may, that is the way he put it. If the Secretary of State for Scotland regarded this as a matter of compelling requirement for reform, he could introduce it now. He has two Scottish Standing Committees in another place which have been wholly idle since 1st May, and they could have taken the matter through. With this proposal, and in opposing that this clause stand part of the Bill, I am seeking to identify from the Minister at all points during this Bill—I hope I need make the point only once, but I shall make it repeatedly if necessary—those areas in the Bill that would fall within the legislative competence of the new Scottish parliament. I have selected this clause on which to make the point because, as he will doubtless be aware, in subsections (6) and (7) there is reference to an appeal being heard in Scotland in the Quarter Sessions: indeed, it goes further: any appeal on this section to the Quarter Sessions shall be heard in the Upper House. That last subsection absolutely makes the point.

It seems somewhat presumptuous of this Government and this Parliament to detail such things as in which part of the Scottish courts an appeal should be heard. It would seem to me that that is tacitly something which one would want to leave to the Scottish Parliament, to give it its own flexibility and its own discretion to determine in just which mode and in which place any appeal might be heard.

I hope that the noble Lord in responding can, if not now then at some point, give me an indication of what parts of this Bill would come within the legislative competence of the Scottish parliament. I hope he will not try to fob me off with the rather obvious argument that the Scottish Bill has not yet completed its passage through Parliament and that it cannot be identified at this point with absolute certainty what will or will not remain within the Bill. There is a pretty clear scheme to the Bill, and he should be able to give me a clear indication and understanding of what matters fall within that restriction of legislative competence to the Scottish parliament.

Lord McIntosh of Haringey

The noble and learned Lord, Lord Fraser of Carmyllie, as Deputy Leader of the Opposition, has a wide range of responsibilities and it is not always possible, just from the fact that he has given notice that he will oppose the Question that a given clause or schedule be part of the Bill, to know what his intentions are. However, he has made his intentions clear and I am grateful to him for that.

Let me first comment about the effect of the Bill on Scotland and the effect of the lottery on Scotland, and then come to the particular points he raised in his very interesting speech. First, Scotland will continue to participate in and benefit from the world's most successful lottery, which will raise about £10 billion for good causes over the lifetime of the current licence. As he recognises, the lottery is a national lottery and covers Scotland under no different circumstances than other parts of the United Kingdom.

As far as distribution of lottery money is concerned, in arts and sport there are separate Scottish distributary bodies which will continue to be allocated a statutory share of the proceeds based on the Barnett formula on population. The National Lottery Charities Board operates through a statutory Scottish committee.

The Millennium Commission and the National Heritage Memorial Fund have to date allocated a higher percentage of their grants than population share to Scotland. The UK operation allows these bodies to fund very large projects in Scotland. The Scottish executive will continue to be consulted on appointments to UK distributing bodies, including the new opportunities fund which was announced in the Government's White Paper on reforming the lottery.

If the noble and learned Lord were suggesting—and I do not think he did explicitly—that Scotland has somehow suffered from the provisions of the 1993 Act, I think such a suggestion would be unjustified. He challenged me to go further than saying that to the extent that devolution brings changes they will be dealt with during the passage of the Scotland Bill. I forget the exact words he used but he described that as being less than satisfactory.

I recognise that the Scotland Bill, in the form that it ultimately reaches the statute book, will affect a number of provisions of this legislation. I give an undertaking to the noble and learned Lord that between now and Report stage we shall prepare a detailed explanation of the effect on this legislation of devolution in Scotland and indeed—if we can do so—of devolution in Wales. Although it would be quite wrong for us to hold fire on all other legislation while the devolution Bill is going through Parliament I do not think the noble and learned Lord is suggesting that—it is fair to say that the effect of devolution ought to be considered as part of the consideration of other legislation. I give the noble and learned Lord the undertaking that I hope he is asking for; namely, that we shall provide, in time for Report stage, an explanation of the effect on the lottery Bill of devolution in Scotland, and indeed vice versa, subject, of course, as the noble and learned Lord has acknowledged, to difficulties in dealing with two Bills which are going through Parliament at the same time. As I have said to other noble Lords, if the noble and learned Lord would like to discuss the matter with me between now and Report stage, I shall be only too glad to do so.

Lord Fraser of Carmyllie

I am most grateful to the noble Lord for responding in that positive fashion. What really troubles me is the following matter. I refer briefly to a parallel. According to the Government's White Paper competition policy will be a matter reserved for Westminster. However, as the noble Lord will appreciate, we have recently dealt with the Competition Bill on the Floor of the House, and it would appear that the Bill in its entirety is a matter reserved for Westminster. However, within such a Bill there are provisions that deal with powers of entry, powers of search, powers of seizure and related ancillary matters which give authority to decisions that might be taken. What I am anxious to identify is where there are such ancillary powers and ancillary purposes which more appropriately ought to be dealt with by a Scottish parliament, once it is established. Perhaps the Minister's reply will be that such and such a clause that would fall within the future legislative competence of the Scottish parliament should be removed from this Bill. However, I think it is desirable that we identify what those matters are so that we ensure we do not unintentionally introduce items of legislation which might lead to a conflict in the future. I have a slightly separate point on a later clause to do with Scotland. However, at this stage I have no intention of expressing my intention to oppose the provision any more forcefully.

Lord McIntosh of Haringey

Although the noble and learned Lord has a valid point, I hope I have responded to it adequately. I think he is exaggerating the difficulties for this particular Bill. The Bill is concerned fundamentally with a national lottery and the issues with which we have been concerned so far this afternoon are about the operation of a national lottery. Those must be reserved powers for the Westminster Parliament. If the noble Lord has particular points about distribution—and it appears he does from one or two more specific amendments that he has put down—let us by all means discuss them. However, on the whole, those will he issues of distribution rather than the matters with which we have been concerned so far, which is the national UK operation of the National Lottery.

Clause 3 agreed to.

Clause 4 agreed to.

4.45 p.m.

Lord Redesdalemoved Amendment No. 9: After Clause 4, insert the following new clause—

("Holdings of the National Lottery Distribution Fund

HOLDINGS OF THE. DISTRIBUTION FUND

After section 21 of the 1993 Act there shall be inserted the following new section—

"Holdings of the Distribution Fund.

21A. The Secretary of State shall ensure that, by the end of each financial year, the Distribution Fund has distributed at least 40 per cent. of the sums paid into it by virtue of section 5(6) in that financial year."").

The noble Lord said: I can say with total safety that this is only a probing amendment. Indeed the purpose of the amendment is to question the Minister about the size of the National Lottery Distribution Fund, which at present is standing at over £31/2 billion and growing at a faster rate than it can be spent.

The purpose of the amendment—although I realise that the Minister would have great difficulty in accepting it in its current form, or probably in any form—is to ask the Government what amendments they propose to introduce in future to ensure that the sum in the National Lottery Distribution Fund does not grow to a huge extent without being spent, and to ensure that the provisions for distributing the money are improved so that the sum in the distribution fund does not decrease. It is not the purpose of the amendment to ensure that the money is spent unwisely because of haste. The amendment refers to the figure of 40 per cent. to indicate how little is being distributed. I am aware of the reasoning behind that.

However, people buy a lottery ticket knowing that a proportion of the money goes to good causes. They would be surprised to discover that so much of that money is held in reserve for quite a period of time. Indeed part of that £31/2 billion probably relates to money from the very first lottery.

One area we have been looking at is to see whether the Government have any schemes under way to decrease the size of the lottery as many of the schemes that are dependent on lottery money discover that they cannot spend the money because they have no matching funding. I know that later in the Bill the Minister will consider changing the matching funding provision. However, will he give an assurance that certain projects that at present will fail to materialise due to a lack of matching funding—even though they have been allocated lottery money, money which is at present sitting in the National Lottery Distribution Fund—will have some access to funds which will allow them to go ahead? I beg to move.

Lord McNally

I rise with some trepidation to support my noble friend because it is quite clear that the Minister has brought with him the Oxford book of legal putdowns to admonish us during the course of this debate! I believe that the point being raised by my noble friend is a worthy one. It seems to me that the Government are straining every sinew to make sure that Camelot does not make a penny piece of excessive profit, whilst not paying enough attention to what might be the real problem of the working of the National Lottery; that is, how the success that Camelot has generated is being used "downstream". I believe that, as a probing amendment, it is worth suggesting to Ministers that they should use some of their energy to look at this. We recognise that there is going to be an inevitable time-lag between application and expenditure and we accept that there has to be a proper audit trail to make sure that lottery money, public money, is being well spent and properly spent.

However, there is a body of evidence that there is a certain sclerosis in the procedure, a time lag, and also in getting lottery money to small projects, particularly small projects in sport, which is my own interest. It is a point to which we will return when we look at the means of distribution, and this probing amendment may nudge the Minister. The £31/2 billion is a formidable figure. The Minister may well know that that old campaigner on lotteries, Mr. Dennis Vaughan, has focused on that matter and will no doubt be supplying many solutions for expenditure. But he is joined by others who want to make sure that, as well as ensuring that Camelot has belt and braces as far as concerns probity, the success of the lottery is used effectively. That case is not yet proved.

Lord Rowallan

I also rise to back the noble Lord, Lord Redesdale, in his amendment. I gather that on 18th December at Second Reading the balance available was, as noble Lords have mentioned, £31/2 billion. I gather that in a month this has now risen to £4,627,574,589, which is an increase of enormous proportion. It is over a billion pounds in a month. One must ask whether these sums are really committed or it is money which is parked to stop it being used for other purposes.

The Minister very kindly wrote to me and explained what was happening to the money. In so far as it was difficult to distribute it, he said that the causes concerned actually received the money from the other source so that the projects could get going. This leads us to ask, what is the period that we propose to allow people before the whole project becomes invalid and the funds are released? Does the Secretary of State intend to ask the distributing bodies to uncommit as much money as possible so that the endowment process can start?

These are important processes. We cannot have this balance going up by a billion pounds each month.

Lord Puttnam

I raise two points in opposition to the amendment, purely from a practical point of view. I spent three years as a member of the Arts Council lottery panel, distributing funds. Many of the errors we made early on were a direct result of submitting to what I can only describe as media pressure to get on and spend money.

I can understand the thinking behind the amendment. There is a great danger of creating artificial pressure to spend money. That is the way to make bad decisions, and we are living today at the Arts Council with a number of poor decisions that were made earlier on.

Let me make one other point. There is the added problem of artificial inflation being built into the building industry, particularly in the area of specialist building. There is enormous pressure to put up buildings and to make them, one hopes, beautiful. It is an area of specialist building that has brought enormous inflationary pressure, and anything that is done to increase that pressure can only work to the disbenefit of the entire arts funding system.

Lord Chorley

The noble Lord, Lord Redesdale, is absolutely right to initiate a discussion in the guise of the amendment. I rather agree with the noble Lord, Lord Puttnam. He has been at the sharper end. In my time at the National Trust I was more at the ceiling end. In the other charities I have had to deal with, I have been enormously impressed by the care which the various distributing bodies have taken. This may include helpful things like paying for a consultant to run a slide rule over an organisation to see that it is adequately and properly run. Inevitably there will he delays, and a lot of the delay is due to the fact that the amount of money that has been available is far more than anybody ever expected. There may be a large sum, and the distributing bodies are as conscious of that as anybody else, but they are being highly responsible and I do not believe that we should yet become too alarmed.

Lord Montague of Oxford

As a member of the Millennium Commission, perhaps I may point out that many of these projects are capital projects. We are faced with the drawings and foundations, and it will be some time before the bulk of the money starts flowing at a great pace. I am a little surprised by the figure of £1 billion in one month, but I do not believe that we should be surprised by what is happening. There will be a far faster flow of money out as these projects come towards completion.

Lord McIntosh of Haringey

I am grateful to noble Lords who have taken part in this most interesting debate and I am grateful to the noble Lord, Lord Redesdale, for introducing it in the way that he did. I shall attempt to reply to the points that have been made.

The Government share the noble Lord's desire to ensure that the public benefit from lottery money, which they have contributed by playing the lottery, as quickly as possible. While we recognise that there is a large balance in the National Lottery Distribution Fund, it is important to understand the reasons.

Commitments made by the distributing bodies total £4.63 billion. This exceeds the total raised for good causes so far, which is £4.55 billion. I do not understand the explanation for the increase over the past month, but in case I do not receive an explanation before this debate is finished, I shall certainly write to the noble Lord and place my answer in the Library.

Lottery distributors are able to make commitments in excess of their current income, provided they are prudent, precisely in order to ensure that lottery money reaches people as quickly as possible. Lottery money is public money. It is only paid from the fund to the distributors as and when it is needed. This is in line with long-established practice for payment of any form of public money, and helps to safeguard public funds. It also helps to maximise the interest earned on this money, which I emphasise, as I did at Second Reading, accrues to the distributors, not to the Treasury, and is used to fund even more lottery projects. It is important that we make the best use of lottery money. If the distributors were required to distribute a set percentage of their income within a given time period—which the amendment on the face of it requires, although I appreciate that it is only a probing amendment—they might distribute money, as my noble friend Lord Puttnam suggested, to projects that had not been properly thought through and which did not represent the best use of lottery funds, simply in order to comply with the requirement.

Most lottery money, as my noble friend Lord Montague pointed out, has been on capital projects. Inevitably, these projects take some time to complete—particularly some of the large projects that have received lottery funds—and this has meant delays between awards being announced and funds being paid out from the fund. Similarly, revenue projects such as those funded by the National Lottery Charities Board are often funded over a number of years and money is provided as it is needed.

The Government want to shift the focus of lottery expenditure from buildings to people. One of the benefits of this new approach should be that the benefits of the National Lottery reach the public more quickly. A number of other measures in the Bill should also help to achieve this end. The Bill proposes that the national endowment for science, technology and the arts should receive an endowment from the National Lottery Distribution Fund. The new good cause, the new opportunities fund, will also distribute funds expeditiously. And the power for distributors to delegate decision making should help ensure that there are no delays in distributing funds because of the large volumes of applications that distributors have to consider.

I am happy to be able to assure the Committee that as lottery projects have matured more funds are now flowing out from the National Lottery Distribution Fund and are currently running well in excess of the 40 per cent. of proceeds suggested in the amendment. In the first nine months of the current financial year, income for the National Lottery Distribution Fund has been £1,354 million; draw-down from the fund has been £812 million. This means that in the current financial year 60 per cent. of the money paid into the distribution fund has been distributed. Our estimate for total draw-down from the fund in this financial year is £1,135 million; this is more than double the amount drawn down in the last financial year.

I am confident that in future more than 40 per cent. of the annual income of the National Lottery Distribution Fund will be paid out each year. But if for any reason this does not happen, the effect of the amendment would be to require the Secretary of State to make payments from the fund to distributors or grant recipients who did not at the time need the money. This would not be the best way of safeguarding public money or maximising the amount available for good causes. Therefore, while the Government sympathise with the desire to ensure that the benefits of the lottery reach the public as quickly as possible, we think our approach is the best way of achieving that objective.

The noble Lord, Lord Redesdale, asked me about matching funding. If an award has been made on the basis of certain expectations of partnership and an applicant now thinks that the partnership will not be forthcoming, it is open to the applicant to discuss the problems with his distributor. I emphasise, however, that in support of the arm's length principle it would not be for Ministers to intervene.

The noble Lord, Lord McNally, made a totally irrelevant speech, talking as if we were discussing the profits of Camelot. He is perfectly at liberty to make that speech and to put down amendments, but the amendment is about the National Lottery Distribution Fund rather than about Camelot. I look forward to hearing from him on Report on the subject of Camelot.

The noble Lord, Lord Rowallan, asked about the period of grace available to grant applicants if they cannot bring their project to fruition after being given a grant. As with the question of matching funding, it is for grant recipients to talk to their distributors rather than for Ministers to intervene. Generally speaking, distributors take a flexible approach and in the review of policy directions to distributors which we are making we shall consider that issue.

There is no question of asking lottery distributors to "uncommit" any commitments they have already made. As the noble Lord, Lord Puttnam, said, distributors must not be pushed to pass money out before it is needed, which point is still valid. The correct control of public money, the Committee will agree, is that we should continue to encourage applications and to encourage such money as becomes available to be extended as quickly as possible. We should, however, certainly not be paying out money before it is needed, nor parting from a responsible control of public money, which has been the basis of our approach to these matters.

I hope on that basis that the noble Lord will not press his amendment.

5 p.m.

Lord Crickhowell

The Minister has referred to the need to safeguard public money, with which I agree entirely. But may I raise one issue that concerns me somewhat, particularly about the Millennium Commission?

We have already seen more than one key executive leave the Millennium Commission and the most recent departure was apparently based on the excuse that there was not much interesting work to be done. It is the nature of the job that the Millennium Commission has to do that there will be less interesting work to be done once the major distribution decisions have been taken. One wonders, therefore, what degree of adequate supervision of public money will extend over the possibly very long period beyond the millennium and beyond the distribution of grants, when there will be a temptation for those who have been working for the Millennium Commission perhaps to depart to do more interesting work.

There will clearly be a need to ensure that the commission has a viable and effective structure for protecting public money, just as long as there are projects awaiting final distribution or decisions are taken as to whether they are to be wound up because matching funding has not been found. I should be grateful if the Minister would give me an assurance that safeguards will be provided to ensure that the run-off period will be adequately provided for. Perhaps he could give me an explanation, if not now then at some other time, as to exactly how that will be done, particularly in the final months when it may be quite difficult.

Lord McIntosh of Haringey

The noble Lord, Lord Crickhowell, accurately describes one of the distinguishing characteristics of the Millennium Commission in that it attracts people who are interested in a quick return, who are interested in a finite project and who have something to contribute which may not last a long time. Under the previous government, as the noble Lord knows well, Barry Hartop from the Welsh Development Agency joined the millennium project for a pre-determined period of three months and then left. It is not likely that the millennium will proceed to its conclusion without other changes of staff.

The Millennium Commission requires a smaller management structure than other distributors and there is therefore no need—I take it that the noble Lord is referring to the impending departure of Eric Sorensen—for a separate chief executive post, which is why he will leave the Commission in March this year.

Restructuring is a necessary part of managing the work of a short-life body such as the Millennium Commission. However, we should not look at the Millennium Commission without recognising the extent to which it has effectively distributed very large amounts of money so far. There have been 131 awards totalling £1,277 million: seven of these awards have been to umbrella organisations, so that over 12,000 projects have benefited. The commission has announced 27 partners in the millennium awards scheme.

A great deal has been done, and it is no criticism of the Millennium Commission to say that there have been changes in its personnel and in its management structure. The Millennium Commission is perhaps an extreme case of a feature of all new organisations. The kind of people who are good at starting things up are not necessarily good at carrying on in a steady state. The challenge to the Millennium Commission is to move from start-up to medium-term steady state without too much disruption. I emphasise that the Millennium Commission will not disappear when the millennium funding stream terminates: the monitoring of expenditure will continue and staff will be needed to do that. I am confident that the arrangements already in place will be sufficient for that purpose.

I am grateful to the noble Lord for his intervention. It has enabled me to say something about the special case of the Millennium Commission and the plans which are in train to ensure that it works well not only as a start-up body commissioning new ideas but also as a body controlling them and seeing that they are carried through to fruition.

Lord Redesdale

I thank the Minister for that reply. As I mentioned in opening this small debate, this is an imperfect amendment and I never suspected it would be accepted. However, I believe that this Committee is the perfect place to initiate such discussion, as we agreed that we shall not divide on any point.

It is useful for the Minister to put forward how he sees the working of the lottery being conducted over the next few years. As he mentioned, the lottery funds are public money. People have the right to see how there is going to be an improvement in the process of distribution, especially those many charities that have found themselves rejected—sometimes almost out of hand—because money is not available. I think putting this down in Hansard is a useful process.

I was slightly disappointed to hear the Minister say that, rather than improving the distribution schemes already under way, he is going to find new ways to spend the money, one of which is to set up the new clause. That I find slightly unfortunate, although the amount of money that has been generated by the lottery has exceeded expectations.

I believe that the £1 billion that has accumulated in one month might be due to the misinformation given out by myself at Second Reading that the distribution fund was standing at £3.5 billion. I said this stood at over £3.5 billion because I did not want to be a victim, a hostage of fate. The fact that it stands at £4 billion I find quite outstanding.

I would like to point out that it was not the purpose of this amendment to denigrate the excellent work that the distributors have undertaken so far, and this is a point that needs to be borne in mind—that there have been so few cases (although the press has special lottery reporters) of actual fraud. The National Lottery Distribution Fund as it stands is of benefit to the country through the PSBR, but I think that as it is public money the Minister's views on how it should be spent were worth putting in Hansard. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Randall of St Budeaux

moved Amendment No. 10: Before Clause 5, insert the following new clause—

WINDING UP OF MILLENNIUM FUND: ALLOCATION OF SUMS FOR CHARITABLE EXPENDITURE

(".—(1) Section 30 of the 1993 Act (winding up of fund allocated under section 22(3)(e)) shall be amended as follows.

(2) After subsection (I) there shall be inserted—

"(1A) Any sums held in the Distribution Fund on 1st January 2001 and allocated under section 22(3)(e) for expenditure on projects to mark the year 2000 and the beginning of the third millennium shall on that date be reallocated for charitable expenditure under section 22(3)(d).".

(3) In subsection (2) the words "shall bear the same proportion to one another as the percentages for which they are substituted and" shall he omitted.").

The noble Lord said: This amendment is simple. It is a new clause based upon amending Clause 30 of the 1993 Act, to do with the winding up of allocated funds.

I am glad the amendment has the support of both sides of the House. The names added to my amendment include the noble Lord, Lord Rowallan, and my noble friend Lady Pitkeathley, which suggests there is some degree of unanimity across the Committee, which I welcome.

Charitable giving from the general public remains the largest source of income for charities in Britain. Indeed, the country has built up a fine tradition of voluntary giving for charitable and voluntary organisations, choosing those that we want to support. However, recent evidence suggests that the growth in this support is barely keeping up with inflation, and the voluntary sector economy overall appears to be stalling after quite a good period during the 1990s.

This stagnation coincides with a period where charities and voluntary organisations are experiencing what seems like an infinite demand for their activities. The sector has been asked to take on new responsibilities in partnership with the Government, such as the delivery of the voluntary sector option of the new deal programme, which I welcome very much indeed. In this instance the Government have recognised the role the charities can play in helping young unemployed people back into work. Given this context, it is important that the National Lottery can support and develop voluntary sector activity, particularly at a local level.

When contributions to the Millennium Fund dry up—and the essence of this amendment is all about transferring money which currently is allocated to the Millennium Fund—it will, according to this amendment, be reallocated to charities and the voluntary sector. That is because the Millennium Fund is time limited and the money that currently goes into that fund will be released by about 2001, or probably sometime thereafter. That is the essence of it. Grants and this extra money would then be awarded by the National Lottery Charities Board, or the money could be used to establish a new voluntary sector funding organisation. Therefore, there is an open option as regards which funding organisation would distribute the money.

I stress that the voluntary sector is not against the principle of the National Lottery; indeed, it welcomes an additional source of income. I know from the work I have done formerly as vice-chairman of the All Party Charity Group that the National Council for Voluntary Organisations and the Home Office are examining the effect of the lottery on charitable giving. I know that is a matter of great concern. We need to have firm evidence to prove quantitatively what that effect is. There is widespread concern that the National Lottery is having that effect, particularly as regards raffles, street collections and door-to-door collections. I believe the case for further funding to charities is based upon three key arguments. The first is that fundraising charities are suffering because of a fall in public donations. The second is that the public either favour more money going to charities or think that they are giving more to charities than is actually the case. They believe that more money goes to charities from the lottery than is actually the case. Thirdly, there is a greater level of demand for funds from the National Lottery Charities Board than from any of the other boards. That is illustrated by the number of applications and by the number of applications as a proportion of the total award.

There has been quite an amount of survey work on the impact of the National Lottery on charitable giving. However, what we can deduce from the evidence so far is that fewer people are giving to charities. It is interesting to note that between 1993 and 1996 charitable donations declined by 20 per cent. in real terms. That equates to a loss of £650 million for the voluntary sector. In 1993 before the lottery began 81 per cent. of people taking part in an NCVO survey said that they had given to charity in the past month. In 1995 the figure was only 70 per cent., and in 1996 it was just 68 per cent. That is a 13 per cent. drop in three years. This to my mind is serious indeed. Part of the reason I move this amendment today is that I do not wish to see those small organisations lose out because of the National Lottery. I beg to move.

5.15 p.m.

The Deputy Chairman of Committees (Lord Strabolgi)

I have to inform your Lordships that there is a printing error that needs to be corrected in line 5. The word "march" should read "mark".

Lord Rowallan

I rise to support the noble Lord, Lord Randall, on what I believe is an important measure. I was delighted when the National Council for Voluntary Organisations contacted me about this matter as it is absolutely vital at this stage that we know what is going to happen to the 20 per cent. sum that is at the moment committed to the Millennium Fund. As the noble Lord, Lord Randall, said, the voluntary sector has been hit extremely hard and it is important that we have something written into the Bill to make certain that that situation is rectified when the millennium money ceases to go to that particular cause. Lottery money for the Millennium Fund should be made available for voluntary organisations working in the broad area of social welfare. Nobody, I hope not even the Minister, can deny that that is a prerequisite. There is a greater demand for funds from the charities board than from any other board—in fact, four times as many applications come to the charities board than to all the other boards put together. It is a very important sector. We have already seen the share going to the charities fall from 20 per cent to l62/3 per cent, and it is essential that it does not go lower than that. It is absolutely essential, as I have already said, that we sort out what will happen to the millennium portion. I hope we can agree that it can go to the voluntary charity sector.

Baroness Young of Old Scone

Perhaps I may speak against the proposed amendment. I do so with some trepidation, as chief executive of one the UK's major charities, but I also speak as someone with a great interest in one of the other lottery distributors. Had I more knowledge about the arts and sports distributors, I might also speak on their behalf. The pressure on each of the lottery distributors is intense.

We have heard from the Minister this afternoon the commitment that lottery money is to be distributed more towards people than buildings in future. I simply make the point that an important part of people's quality of life is the quality of the natural environment which they can enjoy, and which indeed some depend upon for their livelihood. We are in a situation where there may be many more applications to the National Lottery Charities Board than to any other single distributor, but we are also in a situation where the number of applications turned down is comparatively higher for the Heritage Lottery Fund than any of the other distributors. At the moment, the Heritage Lottery Fund can only fund one in ten applications for funds, whereas the National Lottery Charities Board at the moment funds one in five applications. There is considerably more pressure on the Heritage Lottery Fund. I am unaware, personally, of the pressure on the other two boards, but in the light of this I would certainly want to express caution that the millennium funding be re-allocated simply towards the charity sector when other sectors, which are equally important to the people of this country, deserve a share of the kitty when it becomes available.

Lord Chorley

Like the noble Baroness, Lady Young, I have an interest to declare through the National Trust. I agree wholeheartedly with what the noble Baroness has said.

Lord McNally

I am even more reluctant to intervene since, in my last attempt, the Minister managed to squash me, even without a legal quotation! I hope that when he reads Hansard, the Minister will see how unworthy was the charge of irrelevance about my last remarks.

Before I move to the substance of what I would like to say, I say to all interest groups that a worry I raised at Second Reading remains. The problem, at the end of the millennium, will not be what we do with the millennium funds, but how we fight off the Greenwich project and prevent it from raiding other lottery funding because the Government will be spending almost any amount to make sure that that particular project is a "success".

I will not delay the Committee long with memoirs, but the road that led me to this place started over 30 years ago at University College, London, when I was a very humble sportsman. I was dragooned into taking part in Student Union debates because Dram. Soc. had so overspent its budget that it managed to persuade the union to raid the sports funds to make up its deficit. Since I was a debater, the sportsmen elected me to the student council and, as they say, the rest is history. It is true that over the years the same experiences recur: the muddied oafs and flannelled fools are quite often outmanoeuvred by more silver-tongued advocates when public money is up for debate. That is no less true now. The percentage of the share of lottery funds to sport has been reduced and at the same time, as we know, the impact of the lottery on the Football Trust and the Foundation for Sport and the Arts has already cost sport some £135 million.

Like the noble Baroness, Lady Young of Old Scone, I make a plea. There is no doubt that the noble Lord, Lord Randall, has a great deal of emotional support on this side in arguing for the charities—those of us who are involved in various charities wish him well—but it is important that the various good causes do not start squabbling and trying to elbow one another out in this matter. There is a need for a cooler and more rational discussion of how these sums should be allocated. Sport plays an important part in the life of the country, and the sports clubs themselves play a big part in raising sums for charity. Therefore, I urge a little caution before powerful cases are made for one particular sector or another. We should try to take a balanced view of the needs of, contributions made by the various good causes when we take such overall decisions.

Lord Monro of Langholm

I shall follow on from what the noble Lord, Lord McNally has said, with which I agree. I had something to do with the National Heritage Memorial Fund in taking the legislation through another place and with the lottery legislation in the last parliament. I am therefore somewhat concerned that we are now opening up again the decisions about distribution.

I certainly do not hide the fact that I am very disappointed that the Government have introduced a sixth good cause. I felt that we still had some way to go on the five causes already in place which were generally agreed in the last parliament. I feel that many aspects of the sixth good cause should be the responsibility of government. I refer particularly to education and IT. I can think of no other position than that they should form part of normal government expenditure. Such expenditure should not come from lottery resources and thus from the five good causes that we already have in place.

It would be disappointing if a cantankerous argument about the distribution developed. A very good case could be made for spending money on almost anything; it would be wrong to try to argue against spending money on good causes. However, we have five classifications now that are working well, and if the noble Lord, Lord Randall, provides that after the Millennium Fund closes down, its allocation could be distributed equally among the original five good causes, giving them the additional powers to spend it, we would certainly be moving in the right direction.

I know that we started originally on capital expenditure only. However, there is now a general move towards giving some money towards running costs and other expenditure. That will make the overall expenditure by the good causes easier to distribute and produce many more satisfactory results than we are seeing at present.

The whole operation of distributing the money has become woefully complicated. I know we have to be desperately careful about expenditure of public money, and this is what lottery money is, but we must try to simplify the scheme, not only in the form of the application but in the very long time it takes to reach conclusions in some of the organisations.

While I believe there is merit in what the noble Lord, Lord Randall, was putting forward, by and large, I would be happier with the view of the noble Lord, Lord McNally, that we should move cautiously and try to prevent any form of disagreement between the five or six good causes and, if there is money over, there is no reason why they should not share equally in the money from the Millennium Fund.

5.30 p.m.

Lord Crickhowell

When I first saw this amendment I was rather sympathetic. Those of us involved in lottery projects will remember the strong views often expressed that more should be going to charity in the early days. That was partly because there was some slowness in distributing charitable funds in the first year.

However, the noble Baroness, Lady Young, made a very good point. There was a brief, fleeting moment when I thought she was making it because of her responsibilities for one of the richest of all the charities, the RSPB. But she hastily put me right on that one.

In the amendment, we are dealing only with the distribution fund. I have one point that causes me anxiety about the wording of the amendment in any case, although I do not have the 1993 Act in front of me and therefore I may be misinterpreting it. There seems to be a possibility that this wording might lead us into the difficulty that the noble Lord, Lord Puttnam, spoke about on an earlier amendment, and that would be to accelerate the process of dealing with these projects in a dangerous way. I simply make that point in passing and I may be wrong about it.

However, I feel there is a strong case for saying that these funds should not simply be confined to the charities. There is a powerful case for saying that heritage and sport should also gain, and perhaps particularly heritage, if only for the reason that so much of the millennium distribution was for projects which are natural partners of the heritage. Very often they were dealing with buildings, they were dealing with projects concerned with the natural environment and they were dealing in many cases with projects which fall within the general field of heritage. Therefore it seems to me particularly apposite that some of the money should go for that particular purpose, not least because it is clear from what has happened recently that the Heritage Fund has been under great pressure and has suffered particularly severely from the recent reduction in funding available to it. My noble friend Lord Rees may refer on the later amendment—and I certainly shall—to a specific example in Wales where a project involving the national museum has already suffered from just that effect and it had a severe impact on the much larger project of which it was part.

We need to have flexibility when we come to deal with anything that is left from the distribution fund. I agree with all my noble friends who have spoken, and indeed, the noble Baroness, Lady Young, that we want to maintain flexibility. However, it would be totally wrong if this money were used for those things which are and should be the responsibility of government. We will come to that issue in a moment.

I shall not say any more about it, but I happen to think that what is being done in what I would call the "pilferage" clause, to which we are about to come, should not be extended further. We are dealing with the distribution fund. I hope at least we can have an undertaking that this fund will not be pilfered for government spending purposes in the way that funds will be later in the Bill.

Lord Randall of St Budeaux

Before the Minister speaks, may I make a few comments which he may find helpful? The reason for putting the amendment down in this form is not that I want it to be a kind of "grab all" for charities. What I am attempting to do is to get over a message—this is why I have made it a probing amendment—that the charities have lost out as a result of the introduction of the National Lottery. The figure we have is something of the order of 13 or 15 per cent., which is a substantial sum of money. Because of the importance of charity work we do not want to be in a position where everyone is fighting. But there is a special pleading case for the charities because of the superb work which they do in this country. I doubt that there would be many members of your Lordships' House here today who would disagree with that. The noble Lord, Lord Monro, made this point most eloquently. That has been recognised by the Government in their indicating that, with the new funding or the new distributor that they are establishing, the charities will be able to do some very good work in that respect.

To save the Minister time, I make just one other point on the distributors: I mentioned the National Lottery Charities Board; I also referred to all other charities. I am not particularly concerned about which distributor does it; I am concerned that the priorities of the existing board regarding charities are maintained and that there would not be a loss thereby. I hope that those few comments might prove useful.

Lord McIntosh of Haringey

I had hoped that if I sat tight my noble friend Lord Randall would be fully answered by other speakers. We nearly reached that point, but then he fought back! I have to intervene. It has been a very interesting and worthwhile debate and has raised a number of issues which perhaps go wider than the wording of the amendment. I hope, therefore, that the Committee will forgive my commenting on the background to this amendment.

First, let me explain the position on the millennium share, which we shall look at in more detail when we consider Amendment No. 16. I should explain the Government's position now, because it is the millennium money which they are proposing to distribute under this amendment. The 1993 Act is a tidy-minded piece of legislation, providing that, unless government and Parliament decide otherwise, the millennium share should come to an end on 31st December 2000.

However, the Act also sensibly leaves it open to the Government, with Parliament's approval, to extend the funding stream beyond 2000 if that should prove necessary. The then government announced on 18th January last year that they would bring forward an order extending the funding life of the Millennium Commission. This Government confirmed that as part of their announcement on the Millennium Experience on 19th June. On 1st October, the Secretary of State for Culture announced that the Millennium Commission would receive funding of some £2 billion over its lifetime. In the same announcement he also explained that, in order to meet the commission's cashflow requirements in the run-up to the millennium, the share would remain at 20 per cent. until autumn 1999, offset by a reduction to 131/3 per cent. thereafter. This frontloading effect accounts for some of the peculiar percentages in the Bill. The percentage would continue until the millennium funding totalled £2 billion.

The date on which that happens cannot, of course, be predicted accurately at this stage, but we expect it to be some time during 2002. The Government have not at this stage taken a view on what the position of the good causes should be when the millennium funding stream comes to an end. That indeed was an issue referred to by a number of noble Lords. My noble friend Lady Young, the noble Lord, Lord McNally—in an entirely relevant speech—and others gave support to the view that it is too early to make up one's mind about what is likely to happen some four-and-a-half years hence. However, I can assure the Committee that when we come to make further decisions on the good causes shares, whether in connection with the end of the millennium stream or otherwise, the Government will take very seriously the claims of the charities and the arguments of those who wish to see their share of the funding maintained or increased.

The second piece of background to which I have to refer before coming on to the argument on the amendment is the question of charities' income. My noble friend Lord Randall has referred to the evidence that exists on a drop in charities' income since the start of the lottery. It is a very difficult thing to calculate, as he will recognise. He chose to give prominence to the proportion of people giving to charities but it is very difficult in survey research—I speak as a survey researcher—to get people to remember, let alone tell us, how much they actually gave. The evidence, therefore, is by no means as clear as it might appear on the surface. The NCVO, to which I pay tribute in this respect, has been working with the Home Office, as my noble friend said. There has also been a report by the Institute of Fiscal Studies and the Charities Aid Foundation. Here I suppose I ought to declare an interest in that my wife is a trustee of the Charities Aid Foundation, and as vice-chairman of NCVO was responsible for setting up the research that has been referred to.

The process is not yet complete and we hope that we will have a better idea by the spring of this year. Meanwhile, I ought to point out that not only has the National Lottery Charities Fund made nearly 12,000 awards totalling £680 million, but the distributors have been making very substantial awards to charities. Sixty-four per cent. of all awards by all distributors go to charities and voluntary organisations—that is, a total of £2.4 billion. The balance between loss and gain for charities is by no means a simple matter to calculate.

Now, at long last, I return to the issue of whether it is right for the charities to leap in and, with what my noble friend Lord Randall admitted is special pleading, to seek to grab what will be available in four and a half years' time. There is a technical problem in that my noble friend's amendment would transfer to charities not only funds subsequent to the demise of the Millennium Commission, but also funds which had been allocated to the millennium good cause up to the end of its funding life but not yet paid to grant recipients. That would obviously mean disastrous results for the ability of the Millennium Commission to meet its own commitments. On those grounds alone, I hope that my noble friend will recognise that the amendment is flawed.

Of course, I understand that the true purpose is to ensure that the charities board picks up the whole of the millennium share, although I point out that a government who wish to undo the board's work could use their powers under Section 28 to reduce the charities' share again.

It comes down, as many noble Lords have said, to an issue of justice between the existing five or, as the noble Lord, Lord Monro of Langholm said to his displeasure, six distributors. I repeat—I believe I have some support in the Committee—that it would be premature to make such a decision. There is the power to make a decision at a later stage. Any decision that is taken by the Government will be taken after full consultation and in full recognition of the strength of feeling which has been expressed in the Committee this afternoon and which is evident in the country as a whole. It would be very unfortunate to introduce the amendment, or anything like it, into the Bill in the early stages of 1998.

Lord Randall of St Budeaux

I very much appreciate my noble friend's reply. I was particularly pleased to hear him say that the whole question of good causes is to be reviewed and that a fairer hearing will be given to the charity sector—

Lord McIntosh of Haringey

If I may intervene—"a fairer hearing"? I do not want to give that sector a fairer hearing than any of the other good causes but I repeat that it will have a "fair hearing".

Lord Randall of St. Budeaux

Although I accept that this probing amendment is flawed, it gets over the principle that our charity work in this country is recognised as extremely good. However, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

5.45 p.m.

Lord Randall of St. Budeaux moved Amendment No. 11: Before Clause 5, insert the following new clause—

RING FENCING OF SUMS ALLOCATED FOR CHARITABLE EXPENDITURE

(". In section 28 of the 1993 Act (power to amend section 22), after subsection (2)(a) there shall be inserted— (aa) no percentage lower than 16⅔ shall be allocated for charitable expenditure,".").

The noble Lord said: This is another probing amendment which proposes changes to the 1993 Act, and also an amendment to the Bill currently before us. The Government have established a new good cause, supporting health, education and the environment and a new distributor, called the new opportunities fund, to implement these initiatives. They are to establish an organisation to be called NESTA, the national endowment fund for science, technology and the arts. Many thousands of charities and voluntary organisations are already active in delivering schemes relating to health, education and the environment. The White Paper on the lottery, The People's Lottery, acknowledges that voluntary organisations already provide out-of-school programmes and that voluntary organisations are likely to play a part in helping to meet the targets set for this initiative, working in collaboration with local education authorities, TECs, libraries and so on.

The voluntary sector is pleased that the Government acknowledge in the White Paper, The People's Lottery, that the voluntary sector will have a role to play in designing and delivering the new opportunities fund's health and education programmes in partnership with public and private sector organisations. We need a clear indication from the Government as to what role they envisage for the voluntary sector under the new opportunities fund. Certainly, the voluntary sector will be keen to apply for grants under this new good cause. I would appreciate hearing the Minister's response on that point.

The Government have argued that the new opportunities fund and NESTA can be introduced "without any change to the original funding expectations of the existing good causes". The Government have diverted £1 billion into new good causes and have reduced the percentages for arts, sports and charities from 20 per cent to 16ࡪper cent. They argue that on the basis that the Camelot licence to operate the lottery specified that each good cause could plan to receive about £1.8 billion over the seven years of the licence. However, this does not take account of the fact that the lottery has been massively more successful than Camelot predicted and that, as a result, the distributors have already made general plans and specific commitments on the basis of this more optimistic return. The White Paper goes on to say that the Government will make sure that £1 billion is made available for the new opportunities fund and NESTA from lottery revenues by 2001. Over the next three years the lottery grant makers will have expected to receive £4.2 billion; instead they will receive £3.2 billion, almost a 25 per cent. reduction. What this means in practice is almost £70 million a year lost to the National Lottery Charities Board.

I appreciate that this reduction in lottery funding for the National Lottery Charities Board may, however, be compensated for, in part at least, by voluntary sector access to the new opportunities fund grants. The new voluntary sector is concerned that the sums allocated for distribution by the National Lottery Charities Board have been reduced to 16⅔ per cent, although it is acknowledged that some voluntary organisations working in education, health and the environment will be able to access the new opportunities fund.

Let me end by saying that we are not seeking to reverse the decision to reduce the percentage of sums allocated for charitable expenditure from 20 per cent to 16⅔ per cent. The aim of this amendment is to ensure that further sums allocated for charitable expenditure are not diverted to the new opportunities fund, or any of the other distributing bodies, at a time when funding to the sector is falling and demand for funding from the National Lottery Charities Board is growing. It seeks to ensure that the amount allocated for charitable expenditure remains at 16⅔per cent. I believe it would send a strong signal to the voluntary sector that the Government are serious in their commitment to the sector and recognise the need to ensure that the existing levels of funding to the National Lottery Charities Board are not reduced. It would also allow the National Lottery Charities Board to plan ahead with projects and fulfil its commitment to the voluntary sector. I beg to move.

Lord McIntosh of Haringey

I am grateful to my noble friend for his explanation of the amendment, and I am particularly grateful for his assurance that he accepts that the percentage going to the National Lottery Charities Board should go down from 20 per cent to 16⅔ per cent. and that that is not what is in contest here. That means, of course, that the National Lottery Charities Board will receive its original expectation of £1.8 billion by 2001. That is relevant to Amendment No. 12, which we shall consider in a moment.

In view of the extended debate on the previous amendment, I do not need to go over all the general points, but I remind the Committee particularly of the point I made about the difficulty of singling out one good cause as a special case, and the fact that the lottery funds charities through all its good causes and not just through the National Lottery Charities Board.

The provision that the funds to any one cause could go down to 5 per cent is not an invention of the Government; it is one that was contained in the 1993 Act. I pay tribute to the honourable way in which the previous government adhered to the equality between the existing five good causes and did not seek—no doubt in spite of all temptation—to reduce or increase the funding to any one of the five good causes. I suspect that the outcry that would be experienced if anybody tried to increase the funding to one good cause at the expense of another is a very good reason for not interfering. That is a good reason why, although we propose to continue that power, at present we have no intention of making such a change and no intention of reducing the expectations of any one of the existing good causes.

Let me give some assurances to my noble friend about the Government's commitment to the charities good cause. First, barring the extremely unlikely circumstances in which lottery income for good causes is less than £10 billion in total, we will ensure that by the year 2001 it receives the £1.8 billion expected at the time the lottery started.

Secondly, the Government have taken no decision on how any returns beyond the £10 million might be allocated. There is no assumption that they automatically fall to the new good cause or any other. I can assure the Committee, however, that if we needed to decide how to allocate any extra returns we would take very seriously the case for extra funding for charities and indeed any case put up by any of the other good causes.

Thirdly, the Government have no plans to alter funding for the charities good cause beyond the proposal in the Bill to set its percentage share at 16⅔ per cent. Indeed, if they had any proposals they would have put them into the Bill. That is not what my noble friend is asking.

I also assure my noble friend that the new opportunities fund will involve the charitable sector in the design and/or delivery of initiatives in health, education and the environment. We have not yet discussed the new opportunities fund in detail and I can certainly expand on that when the time comes. However, the way in which the new opportunities fund will operate will be by ensuring that proposals are put forward, which may be different in different parts of the country, in order to achieve the objectives of the initiatives within the new opportunities fund. If charities put forward the proposals they will be treated at least as seriously as proposals put forward by any other organisations, either as recipients of funds or as partners or agents.

The case for flexibility on good cause percentages is as strong on this amendment as it was on the preceding amendment, and I hope, in view of the very moderate way in which my noble friend has moved it, that he will feel impelled to withdraw it as he did the previous amendment.

Lord Randall of St. Budeaux

I thank my noble friend the Minister for his response. The Government's attitude to this is fair and correct, and although at this stage one cannot expect any financial commitment, I am sure the principles on which my noble friend presented his case will be widely acceptable to people within the charitable sector. Accordingly, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 5 [The new good cause and the re-allocation of lottery money]:

6 p.m.

Lord Skidelsky

moved Amendment No. 12: Page 7, line 30. after ("for") insert ("such"). The noble Lord said: With the Committee's approval, I shall give a background to our general philosophical opposition to Clause 5, without which my amendments and those of my noble friend Lady Rawlings will not be fully explicable.

The general aim is to protect the principle of additionality by finding some way of stopping, not just this Government but all governments, diverting National Lottery money to programmes that should be publicly funded. I fully agree with what the noble Lord, Lord Redesdale, said at Second Reading: The problem is that the Bill goes a long way towards destroying the principle of additionality"—[Official Report, 18/12/97; co1.761.]

I hope the noble Lord will be able to support the amendments when he comes back; we are moving to protect that principle.

I remind your Lordships of what the Prime Minister said. We don't believe it would be right to use lottery money to pay for things which are the Government's responsibility".

Those were wise words. There are two sound principles underlying that. First, ongoing public services should not depend on variable, voluntary contributions. Secondly, National Lottery money should not be diverted to pay for what is essential at the expense of what is merely desirable. The National Lottery should not come to be seen as a sort of painless extra tax for every spending programme the Government choose. That is why I am a little uncomfortable about calling it public money. I know that is the convention into which we have slipped. But it gives a better idea of the proper limits of National Lottery spending to call it "private" money which is voluntarily subscribed for a variety of good causes.

As I understand it, the Government are now interpreting additionality in a different sense from that used by the Prime Minister. According to the Secretary of State, the new opportunities fund will only support initiatives additional to core programmes. The Secretary of State gave as examples of core programmes school buildings and National Health Service beds. Again I agree with the noble Lord, Lord Redesdale, when he says that his understanding of core programmes went somewhat beyond the provision of National Health Service beds and school buildings. On that kind of definition, we shall soon have school textbooks and medicines being provided from National Lottery moneys. Almost anything can be represented as additional if the Government play fast and loose with their understanding of core programmes.

The new good cause is worryingly open-ended both as regards scope and finance. Surely the Government regard the training of teachers to use computer technology as essential for raising school standards. The Prime Minister, when he was Leader of the Opposition, never stopped talking about, guaranteeing access for every school and college in Britain to the benefits of the information superhighway".

A clearer case for a self-accepted government responsibility can scarcely be imagined, yet a major part of this programme is to be hived off to the National Lottery.

In her winding-up speech at Second Reading my noble friend Lady Rawlings referred to childcare. The provision of universal childcare facilities was a Labour manifesto commitment, yet the National Lottery will provide £220 million for childcare in addition to the £80 million recently announced by the Chancellor of the Exchequer. "Additional to" today, but who is not to say, "substitute for", tomorrow.

Let me briefly turn to Amendments Nos. 12 and 13. Amendment No. 12 seeks to ensure that National Lottery money should not be applied to programmes already being funded by the Government. The test of government responsibility here being proposed is an historic one. Government are assumed to be responsible for activities they are already paying for. It is as simple as that.

Again I reiterate, my purpose is to narrow the scope for government simply to divert National Lottery expenditure to whatever cause they want as they now have in this rather elastic concept of the new good cause. I beg to move.

Lord Redesdale

I support the concept behind these amendments and I apologise fully for not being in my place when the noble Lord, Lord Skidelsky, was speaking to them. It is rather unfortunate in one respect that when the lottery was first envisioned and the legislation went through originally the word "additionality"—although I do not like the word—was not placed on the face of the Bill. In one respect the previous government were guilty of a failure in that regard. I do not believe that any government, of whatever political colour, will ever be able to resist the urge to use lottery funds for very admirable cases.

As I stated at Second Reading, the schemes outlined under the new opportunities fund meet with public approval and indeed meet with approval from Members on this side. The big problem is that this is so open-ended. Indeed, one problem we face is that many of the schemes which will in future make up the new opportunities fund have not seen the light of day or even been thought of. Whereas the new opportunities fund will be made up of new initiatives, as seems fit, one problem is that such items could well fall into areas that would normally be paid for by the taxpayer. Therefore, if the idea of additionality was being adhered to, they would fall outside the scope of lottery funding.

I support these amendments, but I fear that the Minister will, as the sixth good cause is already such an integral part of this Bill, reject the proposal for many good reasons. If the Minister is to take this road, although it is not the intention to go into causes or areas that would be affected by additionality, which are at present serviced by taxpayers' money—I realise he was only using an example of NHS beds. although it was a fairly narrow example—I hope he can give us as strong an assurance as possible that as a prime consideration the Government will try to pursue the idea of additionality. I hope he will give us some indication at Report stage whether the word "additionality" on the face of the Bill would meet with support from the Government.

Lord Crickhowell

The noble Lord, Lord Redesdale, said that the Minister will give us some very good reasons, but I am afraid he is more charitable than I am. I doubt very much whether he will give us good reasons on this general point of principle.

One advantage of having been Secretary of State for Wales is that one has been responsible for the whole field of domestic government in part of the United Kingdom and therefore one has a fairly clear view of the responsibilities of government, what one has to provide for and what one has to find public spending for. It is clear that the new tasks that are to be funded by the lottery, that have been selected by the Government, are all, and without exception, causes that would normally be funded by public money—the taxpayers' money—and be the responsibility of the state. To pretend otherwise is simply to deceive.

The Government have found it convenient to use lottery funding, despite the pledges given previously, for expenditure that should have been the responsibility of the Treasury, I suppose so that they could say they had met a manifesto commitment not to increase expenditure—a commitment of the previous government. It is as simple as that. However, it has happened and we shall be told no doubt when we press one or other amendments at Report, as I hope we shall, that this is a wicked act by hereditary Peers in defiance of the elected House.

I give notice that if no hereditary Peer tables an amendment and presses it, I shall certainly do so and I hope that noble Lords will support those amendments when we reach the Report stage. We are having a general debate in which we cannot press the amendments today but the principles are extremely important. We have now reached amendments to what I have called the "pilferage" clauses; that is. the clauses which take money from those areas which the lottery was committed to support. As regards the specific amendment I am in some difficulty because I am not sure that my noble friend moved the amendment, and he was speaking to a grouping that has changed since he saw it. I imagine that he was speaking to Amendment No. 12. I certainly think that this is a suitable opportunity to make the point which will come up again in later amendments; namely, that we should seek to prevent the Government taking further steps down a road which seems to me totally unprincipled and in defiance of the principles on which the lottery was established. I refer to the lottery which was described earlier as the most successful in the world; the lottery which was established by the previous administration and which is now being diverted and distorted by the present administration.

Baroness Rawlings

I wish to speak to Amendment No. 17. This measure is straightforward and goes to the core of the whole Bill. It seeks to enshrine additionality in the Act. We have heard a clear explanation of this from my noble friend Lord Skidelsky and a powerful speech from my noble friend Lord Crickhowell. This matter was Conservative policy. It was also favoured at the time of the previous Bill by the party opposite, so I shall be brief and say I trust the Minister will support this amendment.

Lord Rees

I rise to support the amendment so ably moved by my noble friend Lord Skidelsky. The general principles have been amply illuminated by him and indeed by my noble friend Lord Crickhowell. I am sure that each noble Lord, if he searches the area with which he is most familiar, will be aware of particular projects that will be damaged by the Bill.

I wish to give one particular example, with which I am a little concerned, because it exemplifies several points. First of all, I refer to a possible breach of the principles on which the whole scheme was originally constructed in 1993 with the approval and subsequent affirmation and support of the present Government. Secondly, there is an element of retrospection in this particular case, which I am sure on analysis noble Lords from whatever party will find unattractive, and, thirdly, it happens to affect Wales.

The noble Lord, Lord McIntosh, said robustly in relation to Scotland that he would explain how the operation of the Bill will interact with the plans for devolution for Scotland if it is carried into law, which seems likely. He spoke a little sotto voce about Wales. It may be slightly smaller—only 3½ million people compared with 5 million north of the border—and we are being given a slightly less effective chamber. As I voted against the whole principle of devolution I do not complain at that. However, I do not think on this occasion the noble Lord should be let off the hook. I hope he will at some point explain for us people who live west of Offa's Dyke how the—

Lord McIntosh of Haringey

I hope I can close off a possible diversion which I created by my own hesitancy, as the noble Lord, Lord Rees, rightly said. Any undertaking which I gave to consider the effect of devolution with regard to Scotland I also give, without qualification, with regard to Wales.

6.15 p.m.

Lord Rees

That is reassuring and will be met with approval by the people who live west of Offa's Dyke, when they hear what the noble Lord has said this evening.

I refer now to a particular case. I think it is only right to do so because one wants to move occasionally from the broad principle to particular cases with which one is familiar so that the Committee and indeed the country outside can judge the merits or otherwise of this piece of legislation.

Noble Lords, particularly those like myself and the noble Lord, Lord Crickhowell, who come from west of Offa's Dyke, will know that there is a great scheme of urban redevelopment in Cardiff Bay. He may blush a little, but I think a great deal of the credit for that scheme is owed to my noble friend Lord Crickhowell. As part of that scheme of urban redevelopment which is being carried forward under this administration, the Museum of Wales—here I must declare an interest because I was until recently on the court and council of the national museum, and I am still a member of one of the committees—has a subsidiary body, the industrial and maritime museum. The museum is to be closed to make way for development and will possibly be rehoused if the funds are available.

An imaginative scheme has been devised. It will cost a little, but these schemes do cost a little. An application was submitted earlier in 1997 under the second round of the major assessment programme for museums, libraries and archives. That was nearly a year ago. There were minor hiccups and the application by the national museum was amended and resubmitted. It was eventually turned down at the end of November 1997. I will say at once that part of the reasons given for turning it down was that not all the criteria laid down by the Heritage Lottery Fund were met. Further—this was stated clearly by the director of the fund—the cut in funding which has reduced the available allocation for heritage purposes made it difficult to take a decision in favour of this worthwhile project. I believe that must encompass the cut which is implicit in the particular measure which we are considering today. That is why I say there is an element of retrospection here. The museum had proceeded on the basis that there probably would be sufficient funds. It was never told back in the early months of 1997 that the project was quite impossible on the funds available; that was never mentioned. Now this has become a major factor it is unlikely that the funds will be made available for the resiting of the industrial and maritime museum.

Added to this—I hope I may share my anxieties with other noble Lords—it is suggested that the national museum should take over the mining museum at the Big Pit at Blaenavon. It is extremely unlikely that that will be funded. If that is the outcome no part of the United Kingdom will be left with any industrial, maritime or mining museums.

I see a frown passing over the normally sympathetic face of the noble Lord, Lord McIntosh, which shows that he must be struck with the force of my arguments. I hope that he will be so struck hereafter. I would not expect that now; I know that papers will be thrust into his hands. His devoted civil servants will give him quite a different view of events, but if that is so of course I shall stay to listen to his reply to the debates. This is the kind of situation that arises when governments blunder into this field and cut across the basic principles on which an extremely worthwhile piece of legislation was introduced in 1993.

As I said, I know at heart that the Minister is a sympathetic and understanding member of the Front Bench, so I hope that he will go away and reflect on the instance that I have outlined. I am sure that every noble Lord here, given time and a wish to proceed on this front, could also reflect on this. Perhaps the Minister will take Clause 5 away and think very hard indeed about whether it is consistent with those principles and whether it is likely to be acceptable to the country as a whole when people realise the implications of what the noble Lord is arguing for.

I very much hope that the Minister will have second thoughts. If not, the implication must be that he will go off to his other noble friends and to his right honourable colleagues in government—for example, to the Secretary of State for Wales—and say, "I am terribly sorry, but you must treat this as part of your expenditure, and if you do not have the resources in your present budget, you will have to go back and raid the contingency fund of the Treasury". That would be quite a difficult case for the Minister to sell to his colleagues. I hope, therefore, that to ease himself out of difficulties and relieve himself of the burdens which may otherwise fall on his devoted colleagues in government, he will take serious note of the arguments we are advancing from this side of the Committee.

Lord Rowallan

I rise quickly as my noble friend Lord Crickhowell mentioned that much maligned breed, the hereditary Peer. As I believe that I am the only hereditary Peer in the Room (apart from our august chairman) I certainly support this motion.

Lord McIntosh of Haringey

I think the Committee will agree, from the force with which the arguments have been made, that to many noble Lords this is the most important single issue in the Bill. I certainly treat it with the seriousness that it deserves. I am very glad that the issue has been raised in this way because it gives me an opportunity to correct a whole series of misconceptions about the Government's approach to the lottery.

From the outset, let me stress that this Government's commitment to additionality can be in no doubt whatever. We argued vigorously for it in opposition at the time of the passage of the 1993 Act and it remains central to our approach now. That is clear, if only from the statement from the Prime Minister which the noble Lord, Lord Skidelsky, has quoted and which the noble Baroness, Lady Rawlings, has included, with only minor changes, in her amendment, Amendment No. 17. I am sure that the Prime Minister will be grateful to her for her acknowledgement of his debating skills.

There is a fundamental misconception when anyone—noble Lords or otherwise—seeks to argue that any item in arts, sport or heritage spending is not core expenditure while any expenditure on health, education or the environment is core expenditure. That is the fundamental misconception. Expenditure on the five original good causes proposed in the 1993 Act was not in spheres in which there is no core expenditure. The whole existence of the Department of National Heritage, as it then was, was testimony to the fact that that government, like this one, considered that public support of the arts, of sport and of heritage (and, indeed, in a different sense of charities and of the millennium project), includes elements of core expenditure. What the Government were seeking to do then was to add to core expenditure new expenditure from new funds—lottery funds—on things which would not otherwise have been supported. I shall come to the issue of definitions in a minute. The starting point that there was no issue of additionality in 1993 is wrong. Also, the concluding point that there now appear for the first time to be issues of additionality (because the new opportunities fund is to act in the spheres of health, education and the environment) is equally false.

Of course there are elements of core expenditure, very large elements of core expenditure, in health, education and the environment. If I have given the impression at any stage that core expenditure in health was confined to things like hospital beds, I gave a false impression and I apologise. With regard to health, the environment and education, just as for the arts, sport and heritage, there are many things that it is desirable for government to do which are simply not possible within government's programmes and priorities. For any of these items of expenditure, whether they fall within the definitions of the 1993 Act or of the Bill, it is possible for non-core expenditure to be funded from lottery funds. There is also the possibility of argument about what is core expenditure and what is not. However, the black and white case that has been put (that it is wrong to spend lottery money on health, education and the environment and right to spend it on arts, sport and heritage) simply does not stand up.

This lottery supports different kinds of things from those on which the Government can and must spend money. Additionality can be achieved if the lottery supports different kinds of things—the kind of innovative projects that would never be high priority for government funds given the many other demands on the Exchequer or the kinds of things that are not absolutely necessary but which are highly desirable in a civilised society. That was the rationale behind the original good causes in 1993 and it holds good for the new good cause as well.

Given the other pressures on the Exchequer, it is inconceivable that we would be contemplating provision for out-of-school learning and childcare, and healthy living centres in the way that is proposed—important as their benefits will be—without the lottery.

Additionality can also be achieved by providing support in particular sectors on a scale which has never been affordable before. It might mean making available across the country what previously has been possible only on a very small scale and for those who could afford it. That is true of both the out-of-school initiatives and the healthy living centres. Through a mixture of very limited government funding and local initiatives, there are currently some very good examples of such projects but, without the lottery, there is no possibility that they could be set up on the scale now contemplated. The White Paper gave a number of examples, but I shall not take up the time of the Committee by referring to them.

An important aspect of lottery funding closely linked to additionality is its potential for injecting significant resources into an area over a limited period in order to produce a change in provision. The investment, on a scale unprecedented in recent years, which the existing good causes have made in our cultural and sporting infrastructure is one such example. It is an important feature of the NOF initiatives as well: investments over a short period of time to make up for years of too little training for serving teachers and librarians in information and communications technology; a one-off investment in digitising content; and the establishment of out-of-school learning and childcare and healthy living centres on a scale which has never before been contemplated, still less achieved.

Important as the principle of additionality is, I am afraid that there is no practical way in which it can be enshrined in legislation. I believe that there are other, more effective, safeguards.

Let me refer to the wording of the amendments before us. The noble Lord, Lord Skidelsky, suggests that the new good cause should not provide funding that is already provided by the Exchequer. I listened to what he said at Second Reading and he defined additionality. He said: It is not an addition to existing Treasury money; it is money spent on things that are not being done".—[Official Report, 18/12/97; co1.737.]

That is the broadest possible definition that I can imagine, and yet he claims that he is seeking to narrow the definition of additionality. If he wanted to narrow the definition of additionality, he should turn back to the speech by Mr. Robert Key in Committee on the 1993 Act on 25th January 1993, which I quoted at Second Reading. Mr Key said: the Government will not make any case-by-case reduction in conventional expenditure programmes to take account of lottery proceeds. The Government will continue to provide the finance necessary from within public expenditure programmes to enable their policy objectives to be achieved."—[Official Report, Commons, 25/1/93; col. 804.]

It is clear from the variety of definitions which have existed over the years, and the refusal of the previous government under pressure from the Opposition to include a definition of additionality, that there is no readily available definition open to us. If a hypothetical Treasury were to stop spending money on hospitals, and Ministers instructed the new opportunities fund to launch an initiative funding hospitals, that would be perfectly legal under the definition offered by the noble Lord, Lord Skidelsky. Is that what he really wants?

The noble Baroness, Lady Rawlings, attempts a different approach. Lottery funds, her amendment says: shall be used only to pay for programmes that are additional to core Government expenditure and not on those things which are properly the responsibility of Government".

I have acknowledged the way in which she has used the Prime Minister's wording and only slightly changed it, but what is core expenditure, and how can it be defined in legislation? I know these are phrases we use in trying to convey the concepts simply, but when it comes to a court having to decide what such a definition means in a particular case, then we start to have problems. We all have our own views on those functions which are central to government in a civilised society. I suspect that, across the political divide, unless we are going in for zero budgeting, there is more agreement about such core expenditure than is sometimes revealed by cross-party rhetoric. What is "properly the responsibility of Government" is a question at the heart of political debate in the country, and not a clearly defined matter which courts can determine.

The noble Lord, Lord Redesdale, attempts a different approach again—a requirement on distributors to include in their strategic plan a statement that their funding is additional. That is rather like saying that, because I put something in words, it immediately becomes a reality, but it is no more realistic than the other definitions that have been attempted.

I cannot think of any other way in which additionality could effectively be enshrined in legislation. There is no point saying that spending shall be additional because one would require a definition. Given the different aspects of the principle which I have outlined above, I think it would be impossible to draft. Any kind of detailed definition in law would open up all sorts of possibilities for legal challenge, profiting no one except the lawyers.

Trying to define additionality legally is like hunting for the pot of gold at the end of the rainbow. Even so, it might be worth pursuing if the principle were genuinely under threat, but it is not. Quite apart from this Government's firm commitment to the principle illustrated by the Prime Minister's words, we can rely on the distribution bodies to be stern defenders of the principle. Whether or not they are also responsible for Exchequer spending—some, like the Arts Council are, whereas some, like the National Lottery Charities Board are not—they know well that if they were to allow some of their lottery spending to leak into areas which are not additional, they would be teetering awkwardly at the top of a very slippery slope. That is a phrase which was used antagonistically by noble Lords at Second Reading. Last, but not least, I know from responses to the White Paper that organisations and individuals, not forgetting Members of this House, are deeply attached to the additionality principle. So are we.

I hope that, on further reflection, and remembering in the case of the Opposition their own party's view in 1993 that it would be impossible to define additionality in legislation, the noble Baroness and the noble Lords will agree to withdraw these amendments.

6.30 p.m.

Lord Monro of Langholm

I must say I have never heard a thinner argument than the one the Minister has just put forward. I speak as someone involved in the 1993 legislation. It may have been impossible to define "additionality" but, my goodness, we all knew what it meant and we did not expect our government, or now the present Government, to devolve into a new concept of the sixth good cause. The subjects in the new sixth good cause are all those which should have been the responsibility of government. They should not be the responsibility of the lottery, which is there specifically to help all those who were unable to get help in other ways.

We always made the point that government expenditure would never be reduced because of lottery expenditure. Here the Government have not only moved entirely away from that but set up a new class of support for various causes, all of which, though we cannot argue against their being good causes, are the responsibility of government. It is government who are using the lottery to avoid proper public expenditure.

Lord Skidelsky

The only reason that additionality has arisen as an issue is that the Government have put in a new good cause. That is why there is pressure on the word—because it is difficult for them to say that the new good cause is not an extension of existing government responsibilities. That is why we have been trying to limit it in some way. As my noble friend Lord Monro said, no one had any doubt that the previous five good causes were not being supported by the government, were not part of the traditional area of government responsibilities, that it was desirable to spend money on them but not justifiable to raise taxation for them. People understood that and there was no big argument about it. Now with the new good cause there is a lot of argument.

I agree with the Minister that there is no absolute distinction between essential and desirable expenditure. It is a continuum, but where along the continuum you are is very important. A rough and ready distinction between the two is understood by most people when you give concrete examples. Everyone understands that defence should not be paid for by the National Lottery but, on the other hand, the restoration of historic buildings could well be. If you ask why defence and not historic buildings, you might find yourself in trouble, but it is a well-understood distinction.

Similarly, education is a publicly-funded service in this country. Therefore, measures to improve education should not be paid for out of National Lottery money. Undoubtedly, we could go over to a private system and we could say we will not fund education any longer; it will be paid for privately. Then there will be private money coming into it. However, this Bill is a back-door to doing these things, which is fundamentally dishonest.

Unless you keep some of these common-sense distinctions in mind, you have no safeguard whatever against the principle of additionality being used as a cloak for substitutability. In other words, you simply shrink your existing expenditure and put more and more lottery money into it because you do not want to raise taxation. The whole purpose of the amendment is to prevent that. I am not sure that we have achieved the right words, but it is an attempt to cut the link between existing programmes and lottery money. Unless we find some way of doing that, I predict that more and more lottery money will go into these core services at the expense of existing allocations. It will be popular, it will be easy for the Government to do it, it will be satisfying people's wishes, and there will be no point at which the process stops.

Let me in conclusion refer to one example given by the Minister. He said that the National Lottery money for education will not really be going into ongoing programmes. There was a backlog of teachers to retrain in computer technology, a backlog of librarians: once we have done that, we will be able to reduce the expenditure enormously. He presented it as a kind of one-off thing. But surely he knows that cannot be so.

Technology is not static. It is always improving. There will always be teachers to train and retrain, librarians to train and retrain; computer technology is improving all the time. It is not something you do for three years and then say you are finished with it. That is why I made a very important point that ongoing programmes should not depend on variable voluntary contributions. I am afraid that the Government have started down this slippery slope. That is why, even if we have not found exactly the right formula for doing it in our amendment, we would like to return to the issue at Report stage, hoping we can improve. I beg leave—

Lord McIntosh of Haringey

Before the noble Lord does that, I owe the noble Lord, Lord Rees, an apology for not having referred to his specific point. I cannot believe that in the early part of last year there was "a cut in funding"—his words—for the Cardiff Bay Museum which was caused by anything in this Bill. But I will certainly write to him and to other noble Lords who expressed an interest—and that clearly includes the noble Lord, Lord Crickhowell—between now and Report stage.

Lord Rees

Before the Minister sits down, he may have misunderstood what I was saying. I was saying that when the application was put in originally there was no suggestion that there were inadequate funds. I said this quite clearly. One of the reasons was that not all the criteria had been met, but more particularly that now there is a shortage of funds. I said that that must inevitably be a consequence of this measure. I hope the Minister will look into it, but I did not want him to pursue a hare which I did not run.

Lord McIntosh of Haringey

It is a matter for the National Lottery Heritage Fund, but I will look into the matter and write to the noble Lord and send copies to any other noble Lords who are interested.

Having stood up to apologise for not having referred to that specific point, I must return briefly to the points made by the noble Lord, Lord Skidelsky. When the 1993 Act was passed, nobody in government claimed that there were not elements of arts, sport or heritage expenditure which were not core expenditure. What they said—and it was at the time a mere assertion because there was no evidence—was that lottery money would go to projects which were additional to the core expenditure. That is exactly what we are saying now about health, education and the environment. There is no difference in principle between the two. If the noble Lord, Lord Skidelsky, thinks there is a difference, did he disapprove of lottery funds going to schools for sports and arts facilities under the existing regime, because they of course are additional to education expenditure, even under the previous government?

Lord Skidelsky

Perhaps I may respond quickly. I am not against the new cause in toto. Of course I am not. I am not proposing that Clause 5 be cut out. I am proposing to limit it, and I am exposing a problem and a slippery slope. The Government ought to take this seriously. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 13 not moved.]

6.45 p.m.

Lord Fraser of Carmyllie moved Amendment No. 14: Page 7, line 35, at end insert ("of which sum no less than 11) per cent. shall be allocated for expenditure wholly in Scotland.").

The noble and learned Lord said: I entirely support the line taken by my noble friends who contributed to the previous debate. Having said that, it follows that I can be a little more brief in speaking to my own amendment.

I suspect that I may be even more sceptical than my noble friends about the uses to which money under this new good cause will be put. Whether it is truly additional or not, it seems to me to be beyond doubt that it will be used for the funding of activities in health, education and the environment which would or should otherwise be part of the autumn allocation of public resources. If that is the case, it seems to me to follow that the amount that is to be spent should be distributed on the same basis as general taxation would otherwise be distributed in the autumn.

That means, in the relationship between England, most particularly Scotland, and Wales, the money should be distributed according to that formula which is now known by the shorthand of the Barnett formula. If the noble Lord wishes to announce to a startled Scotland that the Barnett formula is no longer to he in place even in the Moses Room, I have no doubt that that news will travel quickly back to Scotland.

What the amendment seeks to do is to use exactly the figures that are to be found in the Barnett formula, namely where there is any increase in the amount of resources put to health, education or whatever, the proportion of that increment going to Scotland should be 10.66 per cent. That is how I suggest we should approach it here.

Unless I have completely misunderstood the position—and the Minister will correct me if I am wrong—it could be that the entirety of that 13.5 per cent. that is to be allocated for expenditure connected with health, education and the environment could be expended in England. There is no requirement whatsoever that any part of it be spent in Scotland, any more than there is any requirement that any part of it be spent in Wales.

When we get down to such matters as health, education and the environment—all three matters which are to be exclusively within the remit of the new Scottish parliament—it seems to me to be a most extraordinary arrangement to be proposing to put in place. If I understand the scheme, a Secretary of State who will have no expertise and no connection with these activities in Scotland will be able to give directions and set about giving advice to the new opportunities fund as to how the money is to be expended. Does the Minister believe that in Scotland they will be satisfied that, with 129 Members of the Scottish parliament dealing with issues of health, education and the environment, the only contribution that will be made in the allocation under this fund is that one out of 12 members shall be appointed by an English Secretary of State to have some reason to make Scotland his or her special care?

I am very serious about this. I believe that it is one of the points on which there could be a very real conflict between Westminster and the new Scottish parliament. For the broad reasons that I have already spelt out, I am clearly of the view that at all possible cost that should be avoided.

The amendment may not be the precise way to achieve this. But it seems to me that we need to have something far more responsive to the needs of the people of Scotland and those who are best able to express those needs, namely the Members of the Scottish parliament, not just one person who happens to sit on the new opportunities fund board. It seems to me that first of all we have to make clear that it is not merely a consultation requirement, and distribution is left entirely at the discretion of someone this side of the Border.

We would only avoid the threat of real conflict if we determine now, in advance, what proportion of funding goes to Scotland. We may want to elaborate on this further. We should also have in place some mechanism that makes it clear how those who are most expert in Scotland—and I think the same argument would probably apply to Wales—decide how that distribution should be achieved.

Clearly, here in the Moses Room I shall not press this matter further but, as my noble friend Lord Crickhowell indicated, I view this matter with such alarm that I have to say to the noble Lord that he must anticipate that we will return to it at a later stage. I beg to move.

Lord Crickhowell

I confess that I have some hesitation about supporting an amendment which specifies a particular percentage. It may be wholly appropriate, and I see the strength of my noble and learned friend's argument where it applies to health and education and matters of that kind, which are at the heart of the Secretary of State's responsibilities and will be at the heart of the responsibilities of the new Scottish parliament and the Welsh assembly. If I hesitate it is because I suspect that the Minister will get up and say that "Ah, Scotland and Wales have had rather more than that percentage in their share of the distribution of arts and heritage and millennium funding, or may have done, and we do get on to slightly dangerous ground if we specify percentages."

However, my noble friend has identified a fundamental point about which I would like further guidance. He spoke as if the guidance that can be given and the direction that can be given under this Bill will all come from the Secretary of State for Culture. Indeed, I think my noble friend Lord Rees made almost the same point in an intervention on an earlier amendment. My understanding of legislation has always been that the word Secretary of State is a collective term in a Bill; it applies as much to the Secretary of State for Scotland as the Secretary of State for Wales. I suspect, therefore, that the answer will be that if the matters come within the responsibilities of the Secretary of State for Scotland or the Secretary of State for Wales, guidance and direction can come from that Secretary of State, and not from the Secretary of State for Culture.

That then raises an even more difficult and fundamental point which reinforces precisely the case that my noble friend was making earlier for clarification, because, of course, many of these responsibilities of the Secretaries of State are about to be taken over by the new bodies in Scotland and Wales. Therefore, we really must know who is going to be responsible in this situation. Is the direction and guidance not going to be given by the Secretary of State at all but by the new parliament or the new assembly?

The Minister, very reasonably and properly, undertook to come forward with a full statement of the position before Report stage, when referring to an earlier amendment. I was concerned at that time. I nearly rose to say that, while I was grateful for the undertaking, it did create a difficulty because if we only received the statement at that time it might be very difficult to put down amendments, although in this House we are able to table amendments at Third Reading in a way that is not possible in another place.

We are in a difficulty here because on an absolutely fundamental area we are now in doubt about who is to do what, and what the position is. The points made by my noble friend about the role of the Secretary of State have brought this out clearly. It is an extremely significant matter.

Lord Fraser of Carmyllie

I am grateful to my noble friend for what he said. He is absolutely right that in legislation one never finds anything other than reference to the Secretary of State, because the responsibilities of Secretaries of State shift from time to time. Sometimes their responsibilities are merged.

He is absolutely right that in the ordinary course of events, if we did not have a devolution proposal before us at the moment, the Secretary of State would be able to go to the Secretary of State for Scotland to ask his view on how an initiative might be framed throughout the United Kingdom. After this change, however, I am not quite sure what the Secretary of State for Scotland will do. But he will certainly say, "Don't come to me. I am not the expert on matters to do with health, education or the environment in Scotland. And even if I do have a set of priorities, I cannot in any way assert that those are the priorities which the Scottish Parliament would regard as being the important ones". There seems to be a fundamental difficulty here which has not been confronted at all in the Bill as it is presently framed.

Lord McIntosh of Haringey

If that were a valid criticism, no legislation could he pursued while devolution legislation was before Parliament. If that is what the noble Lord wants, it is an interesting tactic but it is not practical politics.

In the terms in which the amendment is worded, and in so far as the amendment refers to the noble Lord's proper concerns about the National Lottery Bill rather than about the Scotland Bill—which I am certainly not capable of dealing with—I am grateful to the noble Lord for putting it forward. It affords an opportunity for the Government to explain our approach to allocating resources for the new good cause to Scotland and to the other home countries. The Government share the noble Lord's underlying concern, which is that Scotland and the other home countries should each receive their fair share, although we differ about the best means of achieving this.

The Government believe it would be incorrect to allocate resources for the new good cause by a fixed percentage or formula enshrined in statute. The new opportunities fund will be responsible for a number of initiatives which will change from time to time. As they are for different purposes, so the allocation of their funding should be on the basis of a methodology relevant to each initiative. We propose to provide for this by the directions to be issued under new Section 43C(1). For example, the information and communications technology training initiative is designed to train all teachers and librarians, so a formula based on the numbers of teachers and librarians is the obvious answer: that would be 9.9 per cent. for Scotland—unless, of course, Scotland had fewer teachers in need of information and communications technology training, in which case it might result in a smaller proportion.

We are looking for out-of-school activities across the United Kingdom, but we want a degree of focus on deprivation. That has led us to follow the National Lottery Charities Board formula at 11.5 per cent. for Scotland—more than the noble Lord proposes. The noble Lord's amendment refers to initiatives wholly in Scotland. The digitisation of content, which is part of that initiative, is of its nature national. It benefits Scotland as much as any of the other home countries. We are still working on the best methodology for healthy living centres. But it will certainly reflect both population and relative needs, because that is the way in which it has been formulated.

I hope that what I have said reassures the noble and learned Lord, Lord Fraser. There is no hidden plot by the English to monopolise resources for the new good cause, nor indeed for any other country to receive more than its share. A case-by-case approach set by Ministers in directives, which could include following the Barnett formula where it is appropriate—and I will certainly not be responsible for any unauthorised departure from the Barnett formula—will be preferable.

I also point out in passing that on current figures for the existing good causes, as the noble Lord, Lord Crickhowell, anticipated, Scotland has actually done best where there is no set allocation for it. I would also add that I understand that 10; per cent. is the figure used under Barnett for dividing funds for England and Scotland only. The use of Barnett to define funds between all four home countries, as in this case, would result in a different figure for Scotland.

I hope that the noble and learned Lord will feel that his amendment would not justify a Division—even if this were not in Grand Committee—because the variety of different funding procedures which are appropriate for different good causes means that his formula is a gross over-simplification.

If I can anticipate in any way what the results of debates on the Scotland Bill may be, let me say that directions to the new opportunities fund for, for example, a Scotland-only initiative, would be the responsibility of the Scottish executive. For a UK-wide initiative, which would benefit Scotland, the Scottish executive would of course be consulted.

However, that is only scratching the surface of the very complicated issues to which the noble and learned Lord has drawn attention. I am grateful to him for moving the amendment and I am grateful to noble Lords who have taken part in the debate, but we do not believe that this simplified formula would be to the benefit of either Scotland or the good causes in general.

7 p.m.

Lord Fraser of Carmyllie

I shall certainly withdraw my amendment. I appreciate that, as the noble Lord has said, the 10.66 per cent. (which is part of my amendment) determines the allocation of expenditure in England and in Scotland only; it does not take into account all four countries. As I said, I may be a wee bit slow but I really find it difficult to understand how this can be part of a decentralising, devolving approach to government if important initiatives relating to health, education and the environment are going to be determined here—within the Westminster Government, whatever colour it may be—and if the Scottish parliament is not to be able to determine its priorities for health, education or the environment. It seems to me that the matter remains fundamentally flawed and I hope the noble Lord will reflect on that point before we come back to Report.

Lord McIntosh of Haringey

I shall, of course, reflect on it, but it may be my fault that I was oversimplifying. The first three initiatives, which we have set out in some detail, are certainly national initiatives which include Scotland, and they have to be, but that is not to say that future initiatives for the new opportunities fund could not relate entirely to Scotland and be controlled entirely by the Scottish executive.

Amendment, by leave, withdrawn.

Lord Skidelsky

moved Amendment No. 15: Page 8, line 2, at end insert— ("() In section 28 of the 1993 Act (power to amend section 22) in subsection (2)(a) for "5 per cent" there shall be substituted "13; per cent".").

The noble Lord said: I, too, am very grateful to my noble and learned friend Lord Fraser of Carmyllie. He raised a very important question which was that, if the new good cause is simply public spending in disguise, why should it not be allocated in exactly the same way as normal public spending?

I turn now to the amendment to subsection (6). We seek to limit the power of the Secretary of State to vary the percentages going to the various good causes. Clause 28(1) of the 1993 Act gave the Secretary of State the power to lower by order to 5 per cent. the percentage of money going from the distribution fund to any good cause. In theory, the Secretary of State could decree 5 per cent. for each of the five original good causes and 75 per cent for the new good cause. That is a power that is open to him at the moment. The noble Lord, Lord McIntosh, pointed out that that was provided by a Conservative Government and that of course no government have been foolish enough to vary the percentages in that kind of way. At that time, however, there was no "People's Lottery". There was no good cause of the character we now have. The danger arises precisely because there is a new good cause. In view of its elastic character, we believe that it would be prudent to raise the minimum to 13; per cent. That would limit the Secretary of State's power to raid the lottery for the new good cause at the expense of the old ones. We would be failing in our duty if we did not try to find a way to prevent endless encroachments on the share going to the arts, heritage and sport.

In conclusion, all our difficulties arise from locking on to the National Lottery a new good cause with a very different character from the old good causes. I beg to move.

Baroness Rawlings

I should like to speak to Amendment No. 16. This rests on the original principle of equality as enshrined in the 1993 Act which stated that 20 per cent. should be allocated equally to each of the five good causes. We now have 164 per cent. for four good causes. The Millennium Fund will stay on 20 per cent and the new opportunities fund has 13⅓ per cent. In 1999 the Government are suggesting 20 per cent. for the new opportunities fund. That is substantially more than for the other five.

This amendment has been tabled to see whether the Government are willing to commit themselves to maintaining equality between the good causes as enshrined in the 1993 Act. It seeks to protect the old good causes. We fear that if the amendment is not included the Government will not respect the equality principle and may be induced under pressure from the Treasury to use the new opportunities fund for government spending at the expense of the old good causes.

We have also heard this afternoon that Her Majesty's Government have started this squabble between the good causes by breaking the equality principle. It cannot be a happy situation and I hope that the Minister will seriously consider the amendment.

Lord Crickhowell

I rise to support the amendment. I wish that my noble friend Lord Skidelsky had not adopted this horrid phrase, the "People's Lottery".

Lord Skidelsky

Ironically.

Lord Crickhowell

I am glad to hear my noble friend take the opportunity of saying that that was ironic. Curiously, the original lottery with the original good causes might well have been defined as the "People's Lottery". Now that it has been taken over as a means of funding other Treasury responsibilities, it becomes less and less the "People's Lottery". But it is a horrid term, which is being used in the most indiscriminate and absurd way by the Government, and the sooner it comes to an end, the better.

However, that is not what I rose to say. This is a very useful amendment because it provides an alternative to the solution that the Minister so curtly rejected earlier. The Minister suggested that some of us had said that it was wrong to spend lottery funding on health, education and the environment. I do not think that any of us has ever suggested that. Indeed, one only has to look at the way in which the existing funding bodies have distributed their resources to see that they have spent money on causes that can be defined in that way. Equally, the Minister is absolutely right to say that providing strict definitions and such separation is extremely difficult. It is very hard to write that into a Bill. The Heritage Lottery Fund has been helping us to catch up on expenditure on buildings neglected by a whole succession of governments over the years. Sometimes governments found it possible to do one-off things which were not in the normal pattern of expenditure. I take some pride in having found around £23 million to build the magnificent new galleries for the National Museum of Wales. That was rather outside the line of normal arts expenditure but it was possible. The Minister is absolutely right, one can say that comes within the area that can be defined as the responsibility of government.

However, having failed to produce an effective definition that deals with that problem, we now have an alternative, which is a percentage restriction on the amount you can reduce the existing funding. That seems to be quite an effective way of doing it. It removes all the problems of definition dealt with so fiercely by the Minister, and provides another safeguard that the existing funding bodies—we may apply percentages to all six now—at least will have their percentages retained, and we cannot have the expenditures whittled away and funds transferred to whatever happens to be the favourite government interest of the day. It might be argued that that could create a situation where in due course—when all the buildings have been improved and all the possible new buildings have been constructed—one or other bodies might find it difficult to find good causes to support. Earlier the Minister referred to the switch from buildings to people. I must say that is tentative in this Bill; it is only a small start to what is, I think, a desirable process. I was not able to speak at Second Reading—I was not able to be here—but I would have said then that I regret that we have not gone further down this road.

I think we shall soon have splendid theatres, opera houses and museums, but find it extremely difficult to fund the things that go on inside them. That ought to be increasingly the responsibility of lottery funding over and above the normal spend of government in the years ahead. It is a way out of the dilemma for government. I think there will be plenty of opportunity for these bodies to go on finding good causes. If we cannot define the provision by saying that you cannot create any more good causes or you should not be spending the money on education and health because they are the normal functions of government, we ought to look quite seriously at providing the kind of safeguards suggested in these two amendments.

Lord McIntosh of Haringey

The noble Lord, Lord Crickhowell, without meaning to, has made exactly the point that I so inadequately tried to make in response to previous amendments. When he says that these amendments—by restricting the ability of governments to apply flexibility to the percentages for the good causes—remove the problems of definition, he reveals precisely why it is that there is a fundamental misunderstanding among the Opposition and the Liberal Democrats as to what is meant by additionality.

He is saying that, provided we keep the same proportions with regard to the six good causes—he would probably rather say, like the noble Lord, Lord Monro, the five good causes—no question of additionality arises because there is no question of additionality in the five good causes. The problem of additionality arises, on his argument, only because we are introducing the sixth good cause. That reveals exactly the fallacy in the Opposition argument because, as I tried to make clear—obviously inadequately—there is core expenditure in the arts, sport and heritage. The noble Lord, Lord Crickhowell, has made that even clearer by describing how additional galleries for the national Museum of Wales were funded by the Exchequer with the £3 million that he himself found. Does that mean that further galleries to the National Museum of Wales should not be funded from lottery money because the money has already been found from the Exchequer? Of course not. The answer to all of these points is that the expenditure of lottery money on the arts, sport, heritage, the millennium or charities may or may not be additional, may or may not pass the test of additionality, and that expenditure on health, the environment and education may or may not pass the test of additionality. Any claim that the addition of the new good cause in itself breaches the cause of additionality is a false claim.

7.15 p.m.

Lord Crickhowell

Everything the Minister has said so far has involved this horrid word "additionality" and has attempted to define it. I accept it. I made the point that it was impossible to define; we discovered that earlier. I merely say—not pressing the case now on grounds of a strict definition of "additionality" or on an interpretation of the phrase—that we are simply seeking to safeguard the percentages given to various good causes. I have to tell the Minister that what he has said in both his speeches has added to, not reduced, the alarm that I feel because he has broken so free of any constraint and any government commitment. He has virtually said, "We can spend whatever we like on any subject because you can't define it; government ought to be free to do that; we ought to have total flexibility". That is exactly why we want to include some constraints in the legislation.

Lord McIntosh of Haringey

The reverse is the case. What I have said is that the Government have consistently renewed their commitment to the principle of additionality. If the noble Lord, Lord Crickhowell, does not like the word, there is nothing very much I can do about that. We are saying that the principle of additionality could be breached in expenditure in any of the spheres of the five existing good causes, and it could be breached in this sphere of the new opportunities fund. However, the addition of a new opportunities fund—and that is the only change that is taking place here because there is no reference otherwise to the breaching of additionality—does not represent any stage on any slippery slope towards the abandonment of additionality.

Apart from the additionality argument, what the noble Lord, Lord Skidelsky, and the noble Baroness, Lady Rawlings, are seeking to do in these amendments is to change not this legislation, but the 1993 Act. They are quite open about it. They are saying that, despite the fact that there has been (as far as I know) no abuse of the distribution between the existing good causes in the years since the 1993 Act was passed—there has been no pressure by or on government to change the percentages despite the ability provided in the Act to reduce any individual good cause down to 5 per cent.—that flexibility which is available to the Government should now be taken away. In other words, they are saying that although the previous government could be trusted, this Government cannot be trusted. I hope I have made it clear that this Government are at least as well aware as the previous government of the power of the defenders of the existing good cause to kick up an almighty fuss if anybody were to implement the provision which allows for a reduction to 5 per cent. in the amount going to any good cause. For that reason, I hope that noble Lords will not pursue these amendments.

I have a particular point on Amendment No. 16 which stands in the name of the noble Baroness, Lady Rawlings, and which is extremely ingenious. If my arithmetic is correct, she has ensured that the shares of the existing good causes, on the winding-up of the millennium stream, would be increased by just 0.1 per cent each. I understand that this is around £1 million a year which is big money to me, if not to some other noble Lords, but it is a very small amount in relation to the total funds available. In any case, it could be overturned under Section 28 of the 1993 Act. I would like to see that issue debated in the House on an affirmative order.

The intention of the then Government and Parliament in 1993 was not to limit too greatly the ability of Ministers, with the consent of Parliament, through the affirmative procedure, to vary the percentage shares of the good causes. It recognised that there were all sorts of circumstances, not foreseeable at the time of legislation, which might mean there was a strong case for increasing or decreasing the shares of particular good causes, without the inflexibility and delays which would be caused if primary legislation were necessary. This amendment would remove that flexibility and it is as undesirable now as it was then.

Lord Skidelsky

I agree with the Minister. We are proposing a change to the 1993 Act, but the need for that change arises precisely to deal with the problem of the new good cause which did not exist at the time of the 1993 Act. The Minister persists in closing his eyes to something which we on this side regard as self-evident: that the new good cause is of a different character from the old good causes. We have not been very successful in our attempts to define exactly what the distinction is, but it is evident to us that it is not the same kind of good cause as the other good causes. Therefore, the pressure to increase spending on this cause is much greater than that experienced with respect to the other good causes. We would like to limit that pressure, to ensure that lottery money does not encroach on the other causes. It is a new problem and it requires a new solution, which is why we want to go beyond the 1993 Act. I beg leave to withdraw my amendment, but I may return to it at a later date.

Amendment, by leave, withdrawn.

[Amendments Nos. 16 and 17 not moved.]

Lord Skidelsky moved Amendment No. 18:

Page 8, line 7, leave out subsection (8). The noble Lord said: I shall try to be brief, but we have come to an important issue and I am sorry we have reached it so late. This is the problem of retrospection. Let me deal briefly with Amendment No. 18 which seeks to exclude childcare and living and social environment from the definition of education and the environment. These, and especially the second, give statutory warrant for the endless widening of the remit of the good cause, which is why we propose its deletion. What do we mean by "living and social environment"? Surely, practically all our human activities are included under that head. If we regard that as a fit object for a new cause, we face an endless cascade of lottery money going on it, and that is why we seek to limit the Secretary of State's power. I beg to move.

> Lord McIntosh of Haringey

Before I respond to the amendment, perhaps I may say something about the noble Lord's comment on timing and it being late? It certainly now appears that we will not get through the business we had hoped to deal with today because of the logistical difficulties, particularly for Hansard, in carrying on beyond 7.45 p.m. However, it certainly is not the Government's intention that we should seek to hurry the Committee in any way. If we do not finish the Bill by the end of business this Thursday, we are perfectly prepared to see that there should be a third day for the Grand Committee in the Moses Room. We do not wish in any way for noble Lords on the Opposition Benches or anywhere else to be inhibited in debate on legislation. That would be entirely contrary to the tradition of this House.

In response to the amendment which has just been moved, I am grateful to the noble Lord for giving me the opportunity to say why the Government think that the expanded definitions are necessary. There certainly is nothing sinister or unusual in these definitions. We often have definitions of this kind and there are several others in the course of the Bill. We decided that we needed those definitions to eliminate beyond any doubt the possibility that an over-restricted judicial interpretation of the words "education" and "environment" might in the future get in the way of an initiative which was generally agreed to be helpful.

The Government believe that education is not a narrowly defined process which takes place only in the classroom or lecture hall. When we come to look at the amendments to Clause 11 tabled by the noble Lord, Lord Redesdale, it will be clear that we do not believe the environment is limited to the preservation of the physical, natural environment, important though that is. Our approach goes much wider. We would like the fund to be able to support a range of possible initiatives which would improve the surroundings in which people live. Although the definitions appear to be minor, if we lose them we would be reducing the lottery's scope to fund a wide range of useful activities, which is one of the fundamental objectives of our policy.

I take the example of childcare. It was always envisaged as part of our out-of-school hours initiative (page 10 of the White Paper) that: By providing safe and stimulating activities with appropriate supervision outside the school day, out-of-school hours activities could also help support working parents who need childcare and thus contribute to our national childcare strategy". The announcements made in November are entirely consistent with that. But of course what happens in out-of-school hours activities will be a mixture of childcare, of education, of play and of all sorts of things, depending on the needs of the children in that particular childcare out-of-school centre. To have definitions which are too narrow could in the future be very damaging to the aspects that the new opportunities fund would wish to support and which the public generally would wish to see supported. As I say, I do not believe that there is anything at all threatening in the definitions which are included and which this amendment would take out.

Lord Skidelsky

I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

7.28 p.m.

The Deputy Chairman of Committees (The Viscount of Oxfuird)

There is a Division in the Chamber and we will adjourn the Committee for 10 minutes.

Lord Skidelsky

I understand that the Committee intends to adjourn at 7.45 p.m. Is there any point in coming back for five minutes?

Lord McIntosh of Haringey

It may be a convenient moment, therefore, to adjourn until Thursday next at 4 p.m.

The Committee adjourned at twenty-eight minutes past seven o'clock until Thursday next at four o'clock.