Lords Sitting of 12 June 1996

Preamble
The House met at half-past two of the clock: The LORD CHANCELLOR on the Woolsack.
Prayers—Read by the Lord Bishop of Worcester.
The Earl of Effingham The Earl of Effingham—Sat first in Parliament after the death of his uncle.

EU: Harmonisation and Subsidiarity
Lord Renton Lord Renton asked Her Majesty's Government:
Whether they are aware that the obligation of member states of the European Union under the Treaty of Rome as amended to harmonise their laws is in conflict with the subsidiarity rule agreed at Maastricht; and whether they will propose at the forthcoming Inter-Governmental Conference that harmonisation should cease to be an obligation.
The Minister of State, Foreign and Commonwealth Office (Baroness Chalker of Wallasey): My Lords, subsidiarity and proportionality are the key principles governing action by the European Community. They do not necessarily exclude harmonisation where this is clearly required, for instance to ensure the effective working of the single market. But they underpin the need for the Community to prefer mutual recognition to harmonisation wherever possible.
Lord Renton: My Lords, while I thank my noble friend for her reply, which is to an extent encouraging, is she aware that the Treaty of Rome as amended has created a chaotic and unworkable law-making process which is unsuitable for 15 nations with 11 languages and various legal systems? Does she also agree that if the enlarged Community is to succeed, as we should all wish it to do, we must have fewer and better laws, which means less harmonisation and more subsidiarity? Will the Government press for this at the IGC?
Baroness Chalker of Wallasey: My Lords, I have a great deal of sympathy with my noble friend. We have less regulation because we have less harmonisation. As to primary legislation, the number of proposals continues to fall: 61 in 1990, 48 in 1993, 38 in 1994 and an estimated 25 last year. This year, there are likely to be only 19 new principal legislative proposals. While I agree with my noble friend, I believe it is necessary to ensure that subsidiarity is at the forefront of the European Commission's mind and that of member states in deciding what needs to be done. We should do at Community level only what needs to be done at that level. Certainly, we should not let the Union interfere in everything that goes on. That is the very principle of subsidiarity.
Lord Bruce of Donington: My Lords, is the noble Baroness aware that under Article 100 of the original
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Treaty of Rome measures to achieve harmonisation had to be passed unanimously but that unfortunately the position was altered by the Single European Act 1986 and amendments to it? In particular, under Article 100A proposals for harmonisation were allowed on the basis that they were intended to further the single market. In so doing, it invoked Article 189C of the Treaty of Maastricht which introduced qualified majority voting. The original safeguards have been rendered totally invalid by virtue of the Single European Act and the Treaty of Maastricht, and the subsidiarity doctrine in relation to harmonisation is not worth the paper on which it is written.
Baroness Chalker of Wallasey: My Lords, not for the first time I have to say that I disagree with the noble Lord, Lord Bruce of Donington. I believe that harmonisation had its place in seeking the construction of the single market. We had to remove a multiplicity of national regulations for a single product; otherwise, we would never have achieved a single market. Although the noble Lord will not like my saying so, this country has benefited very greatly from the single market. We were the driving force behind it. The noble Lord can quote Articles 100A and 189C for as long as he likes. I can do similarly in response, but I will not do so for your Lordships' sake. While not everything that comes out of the treaty—formed at that time between 12 participating nations (now 15)—will be exactly to our liking, we are far better off. We would never have achieved the successful outcome in the GATT negotiations without the UK's liberal non-protectionist approach, which also underlay the single market and brought other European Union countries along with us in those negotiations.
Lord Harmar-Nicholls: My Lords, while my noble friend is very persuasive in explaining the Government's view on this matter, is she aware that there is a contradiction in terms in what she has said? If harmonisation is obligatory it makes a nonsense of subsidiarity as it was explained to us. That is the effect of the words as they stand. Can we try to do something about it at the forthcoming meeting?
Baroness Chalker of Wallasey: My Lords, I believe that my noble friend misunderstands. The legislation underpinning the single market, adopted under the harmonisation articles, is still operative and is sometimes required for new single market legislation following technological change. That does not mean that harmonisation is always required. In some areas, such as health, it is specifically excluded. That was why I said in my original Answer to my noble friend Lord Renton that we preferred mutual recognition to harmonisation wherever possible. That is what we work for.
Lord Richard: My Lords, perhaps I may start by welcoming the noble Earl, Lord Ferrers, back to the House. It is the first time I have seen him here. I am sure that he is restored to his usual vigour, energy and determination. We are glad to see him back. May I also congratulate the Minister on her robust defence of the necessity for QMV in relation to the single market?

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I heard her say with regret that she found herself in disagreement with my noble friend Lord Bruce of Donington. I shall have to bear that disagreement with equanimity.
Baroness Chalker of Wallasey: My Lords, perhaps I may say, first, on behalf of my noble friend Lord Ferrers, that the Opposition should note that he is back in fighting form; but he still wields a big stick, which is just down there. I thank the noble Lord, Lord Richard, for what he said. Of course there are some things which are necessary, but in previous years there have been too many unnecessary proposals from Brussels. We are working towards getting rid of those unnecessary proposals. On those occasions when the noble Lord, Lord Bruce of Donington, finds something unnecessary I can agree with him, but not today.
Lord Pearson of Rannoch: My Lords, is one of the main problems with Article 3B (the subsidiarity clause) not the fact that its meaning is unclear, and that our European competitors give it the opposite meaning to that which the Government put forward? Is it not true that those competitors see it as a means of advancing their federalist cause, whereas the Government pretend that it is the shield of our sovereignty?
Baroness Chalker of Wallasey: My Lords, we have always been clear, and so have most of our fellow member states in the EU, about what subsidiarity means. I do not believe that there is any doubt about that matter, which is why we are pressing hard further to entrench the principle of subsidiarity into the treaty in the IGC. We have the support of a large number of other member states. So I hope that my noble friend's problems will soon be put entirely to rest.
Lord Barnett: My Lords—
Lord Stoddart of Swindon: My Lords—
The Minister of State, Department of the Environment (Earl Ferrers): My Lords, my noble friend said that I had a big stick. That is perfectly true, but I have no intention of using it. If we were to take the noble Lord, Lord Barnett, and then the noble Lord, Lord Stoddart, there would be time enough for both. Thereafter, I think it would probably be best if we were to move on.
Lord Barnett: My Lords, I am particularly pleased to see the noble Earl back, and I am obliged to him. Is the Minister aware that I very much agree with what she said to my noble friend Lord Bruce of Donington about the value of the single market? To refer to the Question on the Order Paper, given current circumstances, is there any chance of success for the Government in proposing anything, whether it be harmonisation, subsidiarity or anything else? Would it not be better if we proposed the reverse? We might then succeed.
Baroness Chalker of Wallasey: My Lords, I would have thought better of the noble Lord, Lord Barnett—I nearly called him my noble friend—than to ask that
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question. He is well aware that there is a great deal at stake. That is why we have this period of non-co-operation in the European Community. We hope that it will soon be at an end. We are seeking a clear and staged process towards the complete lifting of the beef ban. We shall succeed in that—I hope before very long. Honesty is the one thing for which we can be thoroughly respected and for which we can never be criticised. That is why we play straight.
Noble Lords: Next Question!
Lord Stoddart of Swindon: My Lords—
Noble Lords: Order, order!
Lord Stoddart of Swindon: My Lords, the Deputy Leader of the House did invite me to ask a supplementary question.
Noble Lords: Order, order!
Lord Stoddart of Swindon: My Lords, will the noble Earl tell me whether he will hold to that?
Earl Ferrers: My Lords, I did suggest that as the noble Lord, Lord Stoddart, had been getting up to speak there would be time to have his question, but if he could make it succinct that might be to the convenience of the House.
Lord Stoddart of Swindon: My Lords, I am most obliged to the noble Earl. Is the Minister aware that I was surprised to hear from her that the business of the EC was reducing? Has she noticed the Written Answer in Hansard which quotes eight columns of business to be dealt with by the EC during June? One item is the Justice and Home Affairs Council, which proposes that we should have 1997 as a year against racism, something which was recommended against by the Select Committee on European Affairs of this House.
Baroness Chalker of Wallasey: My Lords, I did notice, because I answered the Question.

Prisoners: Education Services
2.50 p.m.
Lord Avebury Lord Avebury asked Her Majesty's Government:
What cuts are being made in the educational services provided to prisoners in England and Wales.
The Minister of State, Home Office (Baroness Blatch): My Lords, decisions about education budgets are taken by individual governors in consultation with their area managers. Changes to budgets are still being made and information about them collected centrally is not yet available. Efficiency savings need to be seen against a budget increase on education between 1993 and 1995 of almost 25 per cent., to £37 million. The aim

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is to target resources more effectively, giving priority to literacy, numeracy, information technology, English as a second language and social and life skills.
Lord Avebury: My Lords, is not one of the consequences of the devolution of budgetary responsibility to the level of the governors that the Minister and her colleagues no longer answer Questions about the functional headings of expenditure, such as education, across the Floor of the House?
Has the Minister noticed the report of the National Association of Teachers in Further and Higher Education which states that in the 45 prisons which it surveyed there has been a 16.7 per cent. reduction in the number of teaching hours and that in the case of Wandsworth the number of teaching hours has been decreased by 52 per cent.—a fact that she admitted in reply to my noble friend Lord Harris on Monday? Although emphasis must be placed on basic literacy and numeracy skills, as the Minister said, in view of those figures does she agree that we must be losing an enormous amount of other educational provision which is of help in preventing recurring crime by people who are released from prison?
Baroness Blatch: My Lords, the noble Lord will know that I answered in great detail all the questions about Wandsworth. He will also know that, despite a reduction in the money for Wandsworth Prison, provision was being sustained. Much of that was related to improving the way education was being done; for example, phasing out uneconomic classes, concentrating on more economic numbers, concentrating on literacy and numeracy, improving the workplaces and the vocational training for people in that prison. Perhaps I may refer to NATFHE, whose survey is interesting. I refer to what it stated about Whitemoor Prison, with which the noble Lord is familiar. However, it was wrong about the number of hours in 1995–96; in fact, they were 14,700. There is no plan to reduce below that number for this coming year.
Baroness Sharpies: My Lords, can my noble friend say how many prisons have artists in residence?
Baroness Blatch: My Lords, I cannot give my noble friend that particular information but I can say that a vast amount of art and craft work is carried out in our prisons. As I said in the recent debate, there were 3,000 entries for an art competition from our prisoners and some of the work was of a very high standard indeed.
Lord McIntosh of Haringey: My Lords, the Minister cited an increase in expenditure on prison education between 1993 and 1995 of 25 per cent. Is not that increase broadly matched by the increase in the number of prisoners? Therefore, is not the amount of education that is available to any individual prisoner not on the increase?
Baroness Blatch: My Lords, no. Although the number of prisoners has increased, all other factors have increased disproportionately favourably to that. Since the noble Lord is speaking of comparisons, I will compare today with 1979, when his party was in power.
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Spending on prisons has doubled; sleeping three to a cell has been eliminated; and sleeping two to a cell has been vastly reduced. Officer to prisoner ratio has improved by 33 per cent.; we now have one officer to every two prisoners, compared with one officer to every three. All prisoners now have 24-hour access to sanitation, compared to 46 per cent. who had no access to 24-hour sanitation in 1979. Escapes from prisons have improved by 79 per cent.; there are fewer assaults in prisons; there has been a vast improvement in time out of cells—
Noble Lords: Order!
Baroness Blatch: My Lords, I know that the noble Lord does not want to hear this because it bears unfavourably on his party's record. May I give him the final statistic?
Lord Graham of Edmonton: It is Question Time!
Baroness Blatch: My Lords, the number of hours of education has improved from 4.6 million to 9.4 million.
The Earl of Longford: My Lords, will the Minister deny that under the present Government's policy there is to be a substantial decrease in the amount of education provided in prisons? That cannot be denied, in spite of all the nonsense that we have heard. If any noble Lords doubt that, they can come with me to a prison. There is no doubt at all that there will be a decrease in the number of hours of education. Is the noble Baroness going to justify that in terms of what she calls "efficiency cuts"?
Baroness Blatch: My Lords, if the noble Earl is looking merely at the number of lecturers coming into prisons he may well be right that there will be a decrease. There will be a corresponding increase in purposeful activity outside cells, which will include vocational training, education, rehabilitation programmes and a great deal more constructive activity. The most constructive activity for someone who has the basic skills and basic education is work experience and the noble Earl knows that a good deal of that is also going on in our prisons.
Earl Russell: My Lords, does the Minister agree that any efficiency saving which had the effect of making prisoners more likely to re-offend after release would not be efficient?
Baroness Blatch: My Lords, the noble Earl is absolutely right. We know that the governors of all prisons have been told to give priority to all those activities which will help prevent prisoners returning to offending; in other words, to address all their offending behaviour. It is important to say that in 1995–96 a total of 17,000 individual national vocational units was awarded, which is an increase of more than 25 per cent. on 1994–95 and more than twice the total for 1993–94.

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There was an increase in full national vocational qualifications of 50 per cent., three times higher than in 1993–94—
Noble Lords: Order!
Baroness Blatch: My Lords, noble Lords opposite find this highly amusing. Their record on the Prison Service is lamentable.
Noble Lords: Next Question!
The Clerk of the Parliaments: The Lord Spens.
Lord Avebury: My Lords, the noble Baroness—
Noble Lords: Order!
Earl Ferrers: My Lords, I believe that the next Question has been called and I believe that, considering the time, it should go on.
Lord Avebury: My Lords, I should like to appeal.
Noble Lords: Order!
Lord Avebury: My Lords, no, I should like to appeal to the noble Earl. I want to appeal to the noble Earl.
Noble Lords: Order!
Earl Ferrers: My Lords, I do not wish to cross swords with the noble Lord, Lord Avebury. I realise that he would like this Question to continue but there are two other Questions to be dealt with—
Lord Avebury: My Lords—
Noble Lords: Order!
Earl Ferrers: My Lords, it is in the interests of the House that we should go on.
Lord Avebury: My Lords, I want to say one thing. I want to say that all the time that was taken up during that Question was by the noble Baroness dealing with matters which—
Noble Lords: Order!
Earl Ferrers: My Lords, I must appeal to the noble Lord. I believe he has discovered that it is not in the interests of the House to continue with his questioning, however cross he may feel. I can understand him feeling such anxiety. However, the will of the House is clear that we ought to move on to the next Question.

"Marchioness"/"Bowbelle" Collision
2.58 p.m.
Lord Spens Lord Spens asked Her Majesty's Government:
Whether the Director of Public Prosecutions has considered the transcripts of the evidence of the inquest into the sinking of the "Marchioness" where
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a verdict, on 7th April 1995, of "unlawful killing" was concluded and, if so, whether any prosecutions are contemplated.
The Lord Chancellor (Lord Mackay of Clashfern): My Lords, your Lordships will recall that there have already been two prosecutions arising from the tragic sinking of the "Marchioness". Proceedings brought by the Crown Prosecution Service against the master of the "Bowbelle" for an offence contrary to Section 27 of the Merchant Shipping Act 1970 resulted in a directed acquittal after the jury twice failed to agree. An application for judicial review of the initial decision by the CPS not to proceed for manslaughter failed. A private prosecution against the owners of the "Bowbelle" also failed when the Chief Metropolitan Magistrate ruled that there was no case to answer. The Crown Prosecution Service is reviewing the evidence given to the inquest jury in combination with the pre-inquest evidence. It has also sought the advice of senior counsel. When this task is complete, a decision can then be made on whether further criminal proceedings are warranted.
Lord Spens: My Lords, I thank the noble and learned Lord for that Answer. Would he agree with me that it has been seven years since this dreadful incident and 15 months since the last inquest, which was achieved only with the aid and help of the noble and learned Lord who allowed legal aid to the families? Is it not time that some decision was reached? Is it not true that the transcripts took eight months to move from the Coroner's Office to the Crown Prosecution Service and that the Crown Prosecution Service has now had six months to look at information which it has known for a very long time? After seven years we ought to be getting a decision, ought we not?
The Lord Chancellor: My Lords, as the noble Lord says, it is true that the evidence from the last inquest took a considerable time to reach the Crown Prosecution Service. But the CPS owes it to the circumstances to make a thorough examination in the light of the evidence at the second coroner's inquest to see whether, in view of the verdict, any prosecution is justified. It is a very complicated matter which must be considered thoroughly and the final decision taken as soon as the investigations are complete.
Lord Irvine of Lairg: My Lords, is not the key point that the inquest jury in April 1995—that is four years after the two trials to which the noble and learned Lord referred—heard further evidence and returned a verdict of unlawful killing, in terms saying expressly that its verdict was not inconsistent with the outcome of the two previous trials? In those circumstances, is it not now urgently necessary that the Crown Prosecution Service should reach a prompt decision as regards whether or not to prosecute for manslaughter? I well recognise that it is a very difficult decision to reach but the CPS should come to that decision as promptly as may be in the interests of all the relatives of the 51 victims and in the interests of the peace of mind of the captain.
The Lord Chancellor: My Lords, I strongly agree with that, subject to the proviso that it must take sufficient time to examine the detail—and quite a lot of detail there is—to ensure that the decision taken is the correct one.
Lord Campbell of Alloway: My Lords, is my noble and learned friend aware of the profit or purpose of raising this Question in your Lordships' House?
The Lord Chancellor: My Lords, I often have a tendency to speculate on reasons for some of your Lordships asking questions, but happily, it is not my function to deal with those speculations. I merely try to answer the questions to the best of my ability, which is what I have done.
Lord McIntosh of Haringey: My Lords, the noble and learned Lord has acknowledged that it took eight months for the transcripts to reach the Crown Prosecution Service from the coroner's inquest. Why did it take that long?
The Lord Chancellor: My Lords, because, as I understand it, the transcripts were not complete and ready to be handed over until the expiry of that period.

British Library: NAO Report
3.2 p.m.
Lord Donoughue Lord Donoughue asked Her Majesty's Government:
What is their response to the report of the National Audit Office on the problems attending the building of the new British Library.
The Parliamentary Under-Secretary of State, Department of National Heritage (Lord Inglewood): My Lords, the Committee of Public Accounts in another place will be taking evidence on 24th June from the accounting officer of the department and the chief executive of the British Library. Your Lordships will be aware of the convention constraining comment on the report before the Committee of Public Accounts has taken evidence.
Lord Donoughue: My Lords, I thank the Minister for that shrewdly constraining reply. Is he aware that the report listed what was described as a catalogue of technical disasters leading to an overrun of the completion date of eight years and a trebling of the original costs? Is he aware further that the report put the main blame on the Department of National Heritage and its predecessors? Would the Minister like to speculate with the House whether anyone will be held responsible for that—given the fact that we all accept that Conservative Secretaries of State are never responsible for anything?
Lord Inglewood: My Lords, I am of course constrained in my reply to the noble Lord, but this matter has a long history. The noble Lord says that the department has been blamed, but the department has been responsible for the project only since 1992. Indeed,
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the project ante-dates the department. The noble Lord says that the costs have trebled, but of course the project itself has changed during that period and there have been factors such as inflation and the imposition of VAT.
Lord Strabolgi: My Lords, perhaps I may ask the noble Lord a different, if related, question. Have the Government yet made any decision about the vacant land site to the north of the St. Pancras building, as that will be needed for very important expansion, since the number of seats has been reduced from the original figure of 3,000 to just over 1,200? That is not many more than there are in Great Russell Street.
Lord Inglewood: My Lords, the noble Lord asks two distinct questions. As regards his first question, the land to the northern part of the site is potentially going to be used during the construction of the Channel Tunnel CrossRail site and may be subject to compulsory purchase until the year 2007.
As regards the provision of seats, it is not merely a matter of the number of seats provided but the use to which they are put. Different forms of delivery are required other than people merely appearing in person. I am advised that the provision of seats is adequate for the purpose for which they are required.
Lord Dean of Beswick: My Lords, will the Minister explain why the costs of such a prestigious building can treble without anybody being brought to account? Why were those costs allowed to treble? How was the money made available? I remind the Minister that if local authorities slightly exceed what they are allowed to spend, they are severely surcharged and called to account.
Lord Inglewood: My Lords, as I said in response to the noble Lord, Lord Donoughue, bearing in mind the history of the project, the way it has changed and the financial circumstances during that period, I do not accept that the cost has trebled. In view of my original reply, I had better leave the second part of the noble Lord's question unanswered.
Earl Russell: My Lords, I must declare an interest as a member of the advisory council of the British Library. Will the Minister confirm the statement in paragraph 14 of the report that the British Library has never had any management or contractual responsibility for the construction of the project? Does he agree further that any errors by the contractors or others involved in no way diminish the need for a new British Library which will work?
Lord Inglewood: My Lords, I can confirm the first part of the noble Earl's comments. As regards his second question, this has been a sorry story but I do not believe that there is a possibility of the final dénouement being that, after 14 years and the spending of £500 million, the Library was not necessary. No, this Library is required.
Lord Annan: My Lords, is the noble Lord aware that I raised this matter in an Unstarred Question several

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years ago when I asked the Government whether they would appoint one single person to be responsible for the whole project? Has that been done?
Lord Inglewood: My Lords, in July 1995 Mr. David Trench was appointed project manager. His job is to deliver the project on time, which is by the end of this year, and within the cost target.
Lord Dainton: My Lords, I should like to ask two questions, but before doing so I must declare an interest. I was Chairman of the National Libraries Committee in 1968–69 when it went outside its remit not only to recommend the foundation of a national library, which later recommendation was incorporated in the British Library Act 1972, but also to recommended that a building must be provided for the vast collections then dispersed, and still dispersed, throughout 16 buildings, many of which are totally unsatisfactory—for example, wooden huts at Woolwich Arsenal—to house that vast treasure house which is so valuable to us.
Noble Lords: Question!
Lord Dainton: My Lords, I am merely declaring my interests. For seven years, I was Chairman of the British Library Board, during which time the project to which the Question refers was started. Certainly while I was chairman for three years there was very strong control within the British Library.
Does the Minister agree with me that this building, which has recently been the subject of favourable comments from knowledgeable people not only in this country but also abroad, will—although smaller than it might be—provide an environment wholly appropriate for the Library's treasure house of knowledge and rich holdings? It will thereby ensure a much longer life and readier and easier access to the users. Does he agree also that judged by any system of rational accounting, the UK will be having a fine building which is much more satisfactory than other libraries? It will certainly be workable and will not be a icon to any particular politician, like the Bibliothèque Nationale at twice the cost.
Lord Inglewood: My Lords, I have every confidence that this project will turn out to have created a significant, important and long-lasting national asset.
Lord Howie of Troon: My Lords—
Noble Lords: Order! Thirty-one minutes!

Henry Johnson, Sons & Co., Limited Bill
3.10 p.m.
Read a second time, and committed to an Unopposed Bill Committee.

Business of the House: Debates this Day
Earl Ferrers: My Lords, before moving the Motion standing in the name of my noble friend the
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Lord Privy Seal, perhaps I may thank the noble Lord, Lord Richard, for his kind remarks. I can only say that it was a pleasure to be able to come back and see the faces of noble Lords and noble Baronesses opposite looking just as well as they did when I left.
Having said that, on behalf of my noble friend I beg to move the Motion standing in his name on the Order Paper.
Moved, That the debate on the Motion in the name of the Earl of Gowrie set down for today shall be limited to four hours and that in the name of the Lord Astor of Hever to two hours.—(Earl Ferrers.)
On Question, Motion agreed to.

National Lottery
3.11 p.m.
The Earl of Gowrie The Earl of Gowrie rose to call attention to the social and economic benefits of the work being undertaken by the distributing bodies of the National Lottery; and to move for Papers.
The noble Earl said: My Lords, I am delighted that my Motion has at least the merit of attracting the maidenly appearance of my noble friend Lord Hindlip. He is an old friend from youth and when I was chairman of Sotheby's he was a fascinating sparring partner. I congratulate him on now assuming the world chairmanship of another great auction house whose name temporarily escapes me.
If we strip the phrase of its sinister, Maoist overtones, nothing less than a cultural revolution is taking place in our country today. Its engine is the National Lottery. In only a year and a half, the National Lottery—an engine so successful that no one surely should carp at the engineers drawing a 1 per cent. reward—has raised no less than £2 billion for the arts, sport, the heritage, caring charities and schemes to celebrate the new millennium. So far, 5,812 awards for nearly 7,000 projects adding up to £1.7 billion have been committed. Through these the lottery is encouraging a sense of community and social cohesion, not least by acting as a springboard for the regeneration of our towns, our cities and our villages.
With both the major political parties acknowledging that public spending as a proportion of GDP is not only unsustainable, but prevents output from rising as fast as it otherwise might, it is surely fantasy to imagine that the work being done in those fields could be fuelled by conventional public expenditure. In my view, that outweighs hostility to gambling in any form. That hostility has a long and honourable history in our culture, but so does the gambling. Be this as it may, I am told that the average weekly spend is £2 and that no less than 65 per cent. of the adult population regularly take part in the games.
I believe that in a consumerist democracy it is if anything rather offensive to take a paternalist stance, and for us to assume, as legislators, that this huge proportion of people do not know what is right for them. If people change their minds, the lottery takings will

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fall—and so be it. Meanwhile work has already been undertaken which is already bringing good news to good causes and which will deliver even greater results in the early years of the new millennium itself.
I am, therefore, most grateful to my noble friend Lady Young, and the Whips' Office, for allowing me this opportunity, on a Conservative day, to draw attention to the social and economic benefits of the National Lottery. It is generous of them, because on all aspects concerning lottery awards and their effects—and these are very far-reaching aspects—and, indeed, on the arts economy generally, I am in effect a Cross-Bencher. The Arts Council which, with the art councils of Wales, Scotland and Northern Ireland, gets one-fifth of the lottery's distributable proceeds, is an instrument of government, peopled by those who support various political parties, and none. But our hand, so to speak, is at arm's length from government, and that is a long accepted and valued system.
However, it is fair to say that there is at least poetic justice in taking Conservative time. The lottery is very much the personal creation of my right honourable friend the Prime Minister. Others, myself included, tried to get one accepted for legislation a dozen years ago, and we failed. My right honourable friend got the legislation through and, most important of all, he got it through with all-party support. The three shadow Ministers that I have had the pleasure and interest of dealing with since I joined the council two years ago have been generally supportive as have the three Ministers; and so, indeed, has the noble Lord, Lord Donoughue, who I am delighted to see will be speaking for his Front Bench today.
Indeed, the Labour Party in local and regional government, sharply aware of the regenerative possibilities of investing in our culture, has been most supportive. Newcastle and Gateshead, Manchester and Liverpool, Birmingham, Bristol and London, to name only the biggest cities, will soon be transformed in a way not seen since the confident years of Victorian and Edwardian industrial and municipal expansion. Or they will be transformed if we keep our heads and do not mess about with the lottery on any significant scale for five or six years. As the Prime Minister said to me when we discussed my appointment:
"I want young people in Britain to have the best sporting and cultural facilities in Europe within 10 years".
That is an honourable and useful aim. It is shared by the Leader of the Opposition and, I believe, by the Leader of the Liberal Democrats. It is, if we keep our heads, a perfectly achievable ambition.
So the revolution is under way, fuelled by talent and commitment but also by the sudden, and rather bewildering, availability of new, hard cash. The Sports Council (which I hope the noble Lord, Lord Addington, will tell us something about) has made about 1,750 awards, totalling nearly £300 million, for football, new swimming pools, athletics, tennis—we shall start winning Wimbledon again when tennis moves from Windlesham, so to speak, to Wigan—for cricket and, I am told, for bowls: in the people's lottery those of us who are not so young must also be served.
The caring charities—and I believe that my noble friend Lady Young will have something to say on these—started a year behind the rest of us. But they are catching up fast, and there have been 2,500 awards totalling about £160 million. Well known organisations like Age Concern, Bamados and Cancer Relief have received lottery funds, so have many much smaller charities whose work is no less important.
When he comes to reply for the Government, I hope that my noble friend Lord Inglewood will tell us a little about the activities of the Millennium Fund as that is ministerially chaired. The noble Lord, Lord Rothschild, who chairs the National Heritage Memorial Fund and whose name I am pleased to see on the speaker's list, has made 336 awards totalling £225 million, with the money going to museums, art galleries, libraries and Churches and to the bedrock of our heritage, the land itself. The NHMF and ourselves combine from time to time. Witness the Royal Albert Hall award and the award for the marvellous opera house/art gallery in the Lowry Centre at Salford.
The arts councils, the largest of which, the one for England, I chair, has made 1,200 awards to the tune of £471 million. They include £23.5 million for film: a wholly new and welcome public contribution to a great art form and a great industry. Over 75 per cent. by number of those awards have been less than £100,000 in value, demanding 10 per cent. in matching funds only. Surely this gives the lie to perceptions that all we do is dish out "dough" in fistfuls to large and prestigious organisations. Of course we also do that, and quite right too. Britain has starved her great theatres, opera houses, concert halls, living art galleries and dance centres of investment ever since I entered my teens, which happened to be the year of the Festival of Britain. How well I remember the excitement, the optimism and the post-war revivalist spirit of 1951 which the Royal Festival Hall, the Dome of Discovery and the much missed Skylon and Battersea Fun Fair generated. How fervently I hope that the refurbishment and regeneration inherent in the South Bank's exciting lottery bid is in due course successful.
When you have spent decades trying to keep shows on the road, at the expense of investment in infrastructure, two things happen. Your overseas trade begins to suffer because however much foreign visitors admire your actors, actresses and musicians, they will not indefinitely support uncomfortable, non-air-conditioned and tatty theatres and orchestral halls. In an age of ever more sophisticated electronically packaged entertainment, catering to brows high, middle and low, it is easier to stay comfortably at home with the TV, the CD and the magic carpet of the Internet. These are all wonderful inventions capable of raising awareness and interest in all fields of endeavour. But they miss out surely on the almost erotic and life-changing encounters with living art and artists which only the public and physical arena can deliver. Your audiences for venues—and therefore your revenues—start to fall off if you start to starve the venues of investment. More seriously still, you begin to fail to generate the new encounters, the progeny, which constitute the yeasts, the gene bank of your culture, be

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these sporting or artistic or scholarly or just—in my view this is no less important—plain participatory. Audiences also serve who only sit and attend to things.
Brought down to earth, what this means is losses in terms of revenues, taxes and jobs. The arts in Britain are big business indeed and they repay a minute public investment a thousand times over. So when you read a snide leader in the Sun or the Daily Mail about lottery grants, or tales of "luvvies lining each other's pockets", please remember that "luvvies" of one kind or another are seeing to it that Britain is boxing above her weight in the world, to borrow a phrase beloved of the Foreign Office. The clever Mr. Murdoch and the clever noble Viscount, Lord Rothermere, are both cultivated, agreeable and talented individuals. Their publications draw a shilling, in the tabloids, from those who supposedly hate the arts, and at least sixpence, in the broadsheets, from those who love them. Remember that these gentlemen are also in the entertainment and leisure businesses. What I would like them to do is to recognise that only perhaps the Sovereign carries as much moral weight beyond our shores as our artists.
In recent years British business has come to recognise this to some degree, and I am proud to have played a small part in that. What is new and exciting is that a city council such as Gateshead believes that too. This was the council which under the visionary scheme established by my predecessor, the noble Lord, Lord Palumbo, submitted and won that brave bid for the Anthony Gormley sculpture, the Angel of the North. As a senior member of the council put it to me,
"I don't know anything about modem sculpture, though I rather like this one. I do know that our enabling contribution to the Lottery bid is a sensationally cheap way of achieving international standing for Gateshead and that will have positive knock-on effects for our citizens".
For their work on that bid, and for their understanding of one of the key purposes of the lottery, I might be tempted, if I lived in Gateshead, to vote for them. But before I am asked to have a quick word with my noble friend the Chief Whip, let me say that temptations, of course, are designed to be resisted.
The terms of my Motion accentuate the positive. Had I more time I could continue in wholly positive vein, mentioning large awards such as the Cambridge Arts Theatre, the Hall for Cornwall and the Ikon Gallery in Birmingham; middle-scale awards such as the Green Room in Manchester, the Norwich Playhouse and the film adaptation of Thomas Hardy's The Woodlanders; and small awards such as the Warwickshire County Youth Orchestra, the Cheshire Dance Workshop and even Zippo's Academy of Circus Arts. Even more extremely, we have—God bless us—given a little money to a troupe of drum majorettes.
Lord Cledwyn of Penrhos: My Lords, I am enjoying the noble Earl's important speech. However, is he not sad that he cannot include an opera house in Cardiff in that list?
The Earl of Gowrie: My Lords, although I am privileged to be a resident of the Principality of Wales, sadly my writ does not run there. If the noble Lord will suggest that it does, I shall see that he gets his opera house.
I believe that, only 14 months on from our first awards last year, it is right to be thoroughly positive—to be bullish even—because I have no doubt whatever that so long as any modifications we make to the lottery and its mechanisms are made in the light of reality, rather than on the grounds of fleeting public perceptions as interpreted by the commercial press, we shall indeed go further up the slopes of Parnassus than at any time since the war. More important still, more and more people will enjoy the climb and become entranced by the view. However, there is a difference surely between being positive and being bland. Any revolution is fraught with difficulty and controversy, and if it is not it is probably not worth doing.
Let me close with the two most considerable of these difficulties and say what, in our field, we are trying to do about them. There is the confusion in the public mind—expertly exploited by the Treasury—between the rules that govern the lottery awards and the rules that govern the grants we make for the support of the arts with the money Parliament votes to that end. Public confusion on this issue extends to Parliament itself and, in my experience, even to Government. It is felt that the arts are all right, and perhaps even rather spoiled, so what on earth is the council doing moaning about cuts and demanding more money?
The short answer is that we are not allowed to use lottery money, nor even the rapidly compounding interest on sums awarded before they are called down, to look after the arts themselves. We can build shining new palaces of culture, and some very needed and exciting bids such as the new centres at Stoke-on-Trent and Milton Keynes, and Alan Ayckbourn's theatre at Scarborough have been successful. But we cannot fund what goes on inside them. On top of this, the funding consensus, which has always governed the council, has in effect broken down. Successive governments may not have provided the money needed but they broadly maintained the provision. Now it is not only being cut in real terms; it is being cut in cash terms.
Since I became chairman of the Arts Council of England only 26 months ago, the Government have cut our current budget by about £17 million in real terms. A further £3 million cash cut is threatened next year. On an annual budget to England of less than £200 million this is having a devastating effect. In terms of my Motion, it is creating cynicism and dismay about the lottery. The administration which, with the institution of the lottery, has offered so much possibility to the arts, is at the same time making it exceptionally difficult for the arts to take advantage of what they have been offered. One of these days a number of cherished orchestras or theatre companies will go bust. I do not believe for a minute that you can indefinitely protect every cultural institution from market changes, but any collapse will be, to put it politely, puzzling to people. "What happened to the lottery?", they will say.

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Things are not only bewildering to the public. How would you feel if you were a second violinist in a London symphony orchestra, had trained hard for 10 years, were paid about the same as a 23 year-old typist, and were now reading about your funding Arts Council having more than one-and-a-half times its annual grant to spend on cultural facilities? "What are they going to put into these buildings?", you would say. I very much welcome the Secretary of State's new directions in respect of new works, new talents and the making of new audiences. But those will take quite a time to work through. Our problem is getting from here to there.
The Secretary of State has sought to address this crisis with new directives. I am very grateful to her. It looks as though there will be a small but welcome shift from capital to content, from buildings to people and audiences, particularly young people. But the same financial regulations, different from those which govern our grants in aid, and the same need for challenge funding, will remain. The English have a genius for surrounding beautiful creations and concepts with rings of regulatory fire. Somewhat to my surprise, I now find myself in the unlikely role of Siegfried, hacking my way through these so that Brunhilde may ride once more to our rescue.
Anxiety has been expressed about the share of grants between the capital and the regions. Of our own awards, the largest share has so far gone to London, as one would expect, London being the national capital of a small country. The figure is £216 million for 136 projects, followed by the North West. But, as the House of Commons All-Party Select Committee concluded,
"the Lottery grants do not go invariably, or even usually, to such plush recipients as the Royal Opera House … Countless inner city and rural enterprises have benefited, ranging from community centres to amateur sports clubs. But … it is right that national institutions—like Covent Garden in London or Hampden Park in Glasgow—should receive substantial amounts. They ought to be causes of national pride not envy".
That view was backed by my right honourable friend the Deputy Prime Minister in a trenchant speech at the Royal Society of Arts last month, and I agree with him. But as more money is raised and more grants are made, we are confident—and we are working with the regional arts boards to ensure it—that the regions can share fully in the spoils that the lottery brings. I can say, hands on heart, that so far no award made in one part of the country has been made at the expense of any award made in another part of the country. To date we have had sufficient money.
To quote the Select Committee in terms which I hope will set some of the agenda for this debate,
"just for once, let us praise something which has been done well and gone right".
My Lords, I beg to move for Papers.
3.32 p.m.
Lord Howie of Troon: My Lords, it is extremely agreeable to see the noble Earl, Lord Gowrie, in his place addressing us again. He has not done so too often in recent years. I remember the elegance and grace with
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which he discussed with us such unlikely matters as industrial relations in the 1980s. I am glad to see him back. It is good, too, that he is raising this matter with us.
I begin by giving a total welcome to the idea of the lottery. I think that Britain is a nation of gamblers. My own family has spent a lifetime betting on horses—which explains our present poverty. There is no reason to gainsay the lottery. I have no truck with the puritans among us who oppose it.
However, there is one factor to be remembered. That part of the lottery revenue which goes to the various good causes indicated by the noble Earl is a hypothecated tax, and should be considered in those terms. I welcome the lottery. I welcome the fact that a tax is involved which goes to good causes. However, I nevertheless have some unease. In the course of seven minutes, I can only niggle. I cannot express my approval at great length; noble Lords will have to take the approval for granted and take my niggles as peripheral.
Disquiet has been expressed in public about the initial distribution of the funds. I say immediately that I entirely agree with what the noble Earl said: that for the overwhelming part the distribution has been sensible. He would probably agree that the distribution of funds got off to a rather bad start. The situation was not well received and not well understood.
My views are these. Where we deal with the distribution of large sums of public money, the project should preferably be necessary. One high profile early project caused a good deal of harm to the lottery funding arrangements. I refer to what is popularly called the South Bank Crystal Palace. The South Bank is a conglomeration of buildings of a brutalist architectural persuasion. The proposal was that those buildings should be covered over with a large glass and steel canopy. It was an elegant architectural and engineering solution to a problem had a problem existed. There was no problem. Those buildings already had roofs; they did not need another roof. Elegant arguments were put forward that the concept would produce a contained environment of some kind. Of course it would produce a contained environment—but an unnecessarily contained environment. That project came too early. It might have been acceptable had the concept arisen much later in the distribution of funds.
There were two aspects that were wrong: first, the roof was unnecessary, and to some minds it architecturally clashed with the rather severe, brutal concrete buildings which already existed—and which I rather like. But there was another serious problem: the architect concerned in the project was involved in some way in the distribution of funds; he was close to the decision. I know that he left the room while the decision was taken. But even if one leaves a room, in an organisation in which you are concerned and important can you really have left totally? Do you not leave a miasma? Are you really not there? Do your colleagues not recognise your position?
The Earl of Gowrie: My Lords, I am most grateful to the noble Lord for giving way. I believe the answer to this dilemma, at least in the case of the Arts Council,

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was succinctly put by the previous Secretary of State, Stephen Dowell. He said that, broadly speaking, one could have a system where decisions are made by participants, the people who were highly involved in the arena, or one could have them made by civil servants. If one has decisions made by participants, one has to put up with a certain amount of linkages and trust procedures that are instituted to deal with that.
Lord Howie of Troon: My Lords, that is a good reply, but I do not like it. The problem still remains. If people are in any way involved in the projects, they should not be in any way involved in the decisions. They must resign totally from these issues. That is my view. I see that the noble Earl shakes his head. His view about people may be different from mine. I have only a minute left, but perhaps I may take an extra one from the noble Earl's intervention.
Projects may be necessary, but do we need a ferris wheel on the South Bank? Great exhibitions are sometimes marked by projects which are not necessary; for example, the Eiffel Tower. It was not necessary but it was at the forefront of the technology of the day. It was a statement of fresh technological fortitude and adventure. A ferris wheel is a nostalgic reference to the Vienna of Johann Strauss. I agree with my noble friend Lord Cledwyn that Cardiff should get its opera house, but I am not sure that it should be the one suggested. However, it should get an opera house of some kind. I am glad that Cardiff has its rugby stadium. Finally, are we sure that we should give the great sporting organisations public funds while they do deals with Sky television and Rupert Murdoch for large sums of money?
I hope that my thoughts will be taken into account. I apologise to the noble Earl for the fact that I am unlikely to be able to hear his reply, although I shall read it in the Official Report. The reason is that I have to chair a meeting in the Moses Room. But if I can neglect my duties there and rush into the Chamber, I shall do so.
3.42 p.m.
The Viscount of Falkland: My Lords, I wish to devote the short time available to me to funding from the lottery for the film industry. It is welcome news to film activity in this country, and I thank the noble Earl for the chance to speak on it. The exact amount which has been earmarked for film production is not known, but let us say that it is £15 million a year. That is generally understood by people in the film community here to be correct. It is perhaps the most important thing to happen in this country in cinema since the introduction of the multiplex cinema. It has completely changed the ethos and enthusiasm of the industry, which has been given a great lift. Not only that, but in a short time, to use a film industry expression, 11 films are on the slate which have been funded out of lottery funds. I wish to examine how that is happening and how it is likely to continue.
I have no direct interest in the film industry these days, but two close members of my family are involved. One now works in the United States as a writer; and my
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wife works as a senior executive for a prominent British company. I doubt whether either of those close relatives will agree with half of what I say, knowing film people as I do; but if they agree with a quarter, then I shall be happy.
Over the past 12 years, the situation in the country has been dismal, to say the least. Twelve years ago we had the Film Bill which became the Film Act—the first piece of legislation on which I had the opportunity to speak during its passage through your Lordships' House. At that time, cinema audiences were down to about 18 million admissions a year. They have now increased to 130 million—that is a huge turnround. For it, we must thank the introduction of better exhibition. I must claim some credit there because I foretold that if there were to be an improvement, it would come first through better cinemas. Other things would fall into place.
The multiplex cinemas were introduced by American and Canadian companies; then others followed. They changed the pattern of cinema going in this country to the extent that the foretold extinction of cinema screens, to be replaced by video, has not happened.
Most of the people who go to the cinema are young; 70 per cent. are under 26. The reason that people go to the cinema is that many are single, they go out and it is a social occasion. However, audiences are fickle. It is impossible for film makers to forecast what will happen, otherwise they would be rich and there would be just a few of them because they would have more successes than they do. The decision on what subject one takes through the laborious process of making a feature motion picture is subjective. The failure rate is high and there is no formula. One can say that in the United States the problem is overcome by having a massive machine, with economies of scale and with a long tradition of making films from the Hollywood period when a great deal was put into the development and marketing of films for the screen. That continues to this day.
If films in the United States break even, make a small profit or even a small loss, they are likely greatly to improve the position when they move into the rest of the world. In this country over 90 per cent. of all films seen by the cinema-going audiences are of American origin. There is nothing wrong with that; people must enjoy what they enjoy. That is where I somewhat disagree with those who in the first flush of enthusiasm over lottery funding have been stating what cinema is all about. That includes the Minister's right honourable friend in the other place who said that film is all about heritage. I am afraid that it is not, any more than it is about art. It is about people paying at the box office, putting their behinds on seats, coming out and saying they enjoyed what they had seen over one-and-a-half or two hours. It may have something to do with heritage or art, but basically film is about giving people what they want to see.
Over the past 12 years, we have not been good at that, but various people bravely and enthusiastically went ahead with producing intermittent independent productions. Some were moderately successful; some lost a great deal of money. For what we have, we must

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thank television, Channel 4 and the BBC. We must also thank British Screen for keeping the situation alive. It was given the job of disposing of modest moneys for production.
Perhaps I may concentrate on the lottery money. What worries me is that it is being administered by the Arts Council, for which I have nothing but praise. It has been given a difficult job in a short time. It has got together with various panels of film makers, and so on, and it has a slate of 11 films, if I may use that term. That is an achievement. However, there is uncertainty as to whether the criteria taken into account are right. We will only be able to tell that when we see the films which have been funded, but there will be failures and successes. I hope that the ratio is favourable.
I am concerned that the people who, over the past 12 years, have said to the Government: "We need funding in order to compete with the United States", went quiet purely out of exhaustion because the Government would not listen. I do not blame them for that. However, such people are now coming out of the woodwork saying: "We must now have a British Hollywood". I believe that a report is being published which will show how the seeds for it will be sown. I am sceptical about it and I share the views of Mr. David Aukin, who wrote an interesting article the other day in the Evening Standard. He is the head of drama of Channel 4. If I remember correctly, he said that Channel 4 and the BBC had funded a number of films which had been seen as suitable for both the cinema and the television screen. They created a hybrid. At first, I did not like the concept, but we have developed a great deal of expertise in the area. All the films which have been successful recently in Britain have fallen into that category. For example, "Trainspotting"; "Shallow Grave"; and "Four Weddings and a Funeral". The films were made on modest budgets. Our expertise—that of scriptwriters, actors and technicians—is falling well into the pattern. We now have a success on which we can build.
If the noble Lord has time, I should like him to answer my question. Surely we have now built up if not enough profit out of those activities, enough international regard to continue along those lines before we jump into grandiose ideas, thinking too big and trying to take on the Americans at their own game. That would be extremely unwise. It was tried before by one or two companies, and they are no longer with us. It is not without resonance that the Rank Organisation came out of production a long time ago, and is one of the few major companies that has its money in place. It is much criticised for not backing films, but there it is. I hope that we can build on success. I congratulate the Arts Council and the lottery board for making a brave decision. I hope that they will not be put off by the inevitable passions and the criticisms they receive from a very volatile industry.
3.50 p.m.
The Lord Bishop of Worcester: My Lords, I am grateful to the noble Earl, Lord Gowrie, for initiating this debate. It gives us a chance to look at the massive new feature at the centre of our life. I also look forward to the
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maiden speech of the noble Lord, Lord Hindlip. I wonder whether his ancestral home was in the diocese of Worcester at Hindlip Hall, which is now the headquarters of the police.
There is no question but that I want to join in the celebration. I am no tight-lipped puritan. I want to accentuate the positive and, so far as possible, eliminate the negative—although I cannot do that entirely. I thank the Arts Council for sending me a splendid list of all those applicants in the diocese of Worcester that have received grants. I am delighted that Bretforton village band has received a grant—as has the City of Birmingham Symphony Orchestra; a primary school in Dudley; the Elgar School of Music in Worcester; and Huntingdon Hall, home of the English String Orchestra. I could go on: £425 million has gone to 701 projects.
However, the noble Earl said that as well as being positive one must avoid being bland. It is equally misguided totally to affirm the lottery and think it wonderful as it is totally wrong to describe it as evil, as some do. We have to live in the real world. Many churches and cathedrals will undoubtedly benefit. It is my own view that in so far as the Government of the day have decided to raise funds in this way, the money raised becomes public money, and I for one will apply for a grant for anything in the diocese of Worcester that is worthy of one. I have no qualms about that.
This is a serious debate. We are not yet clear as to the effect on charitable giving in this country. The Charities Aid Foundation says that there is no problem; but the National Council for Voluntary Organisations is less sure; and the Directory of Social Change is less sure. We have to realise that in this country we have built up a very fine tradition of voluntary giving for charitable and voluntary organisations, choosing those that we want to support rather than having them chosen by a government body. So let us examine that point very carefully. Great work is being done. If people think that millions of pounds in funds are sloshing through the system, they may be less ready to put their hands in their pocket. Furthermore, they may find that there is not much in the pocket if they are busy playing the lottery every week.
There have been more charities applying for grants than good causes under the other four headings. If that is so, will the noble Lord, in winding up, give some reassurance that that aspect will be examined? There were 15,000 applications from charities in the first year—far more than under any of the other headings.
Then there is the question of whether the lottery is taking money from the poor to aid the predilections of the rich. I am told that poorer people spend 30 per cent. of their spending money on lottery tickets or scratch cards, as opposed to 4 per cent. by those who are better off. Are we pursuing those who live on the edge of desperation? That is a serious question.
Scratch cards, which come into the category of instant games, are available to the young, even when we know that fruit machines have become an addiction for young people as much as drugs. Are we going to let scratch cards fall into that category? In the past youngsters have actually committed robbery with violence in order to gain

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money for gambling. Perhaps we ought to limit playing of the lottery and scratch cards to those who are over 18. I do not know; but I think the issue should be addressed.
In addition, can we possibly be content with the present size of the jackpot and roll-over prizes? I have no desire to say anything in this House which would identify persons. However, I could tell noble Lords of one family I know that has been totally destroyed by suddenly receiving a massive prize. It has ruined both the marriage and their family life.
More prizes could benefit so many more people: £1 million could lift an ailing family business; get a family farm back into business for instance. There is also the matter of the diminution of our municipal culture. Local authorities have found themselves with fewer funds; therefore they point their applicants to the lottery boards, and municipal culture is diminished. We need to discuss the ways in which public amenities are provided. It is no use encouraging a kind of adolescent or childish view that all good causes can be supplied with resources from the lottery. They cannot. It is a matter of partnership between local authorities, the Government, and perhaps with the lottery. Can we not discuss that in an adult way? I believe that core funding for our public amenities should be provided by taxation, thereby indicating a corporate responsibility, and thereby helping to safeguard the coherence of our nation.
Finally, is it good for government to lead the market in state-sponsored gambling? The 1978 Royal Commission on gambling laid down that gambling should not be artificially stimulated. Yet at the moment we see a massive promotional campaign on the part of Camelot. It is one of the biggest advertising exercises of all time. What is more, regulations on other forms of gambling are being relaxed, after much effort has been made during this century to establish an agreed and acceptable discipline in that field.
I want to rejoice with those that rejoice. Yet I want to see independent, rigorous and authoritative research into the overall effect of the lottery. There is much to celebrate. Yet we should also ask in this House whether state power should be used to promote a form of gambling, escapism and greed. In participating in the lottery, there is a lack of realism and a gullibility which we as a nation cannot afford to feed and fuel. As I said, we must live in the real world. The real world is a place where you cannot get rich quick. It is probably part of the superstition of our time. Since a society that believes nothing is very close to one that will believe anything, we should take heed.
However, I rejoice with the noble Earl, Lord Gowrie; yet I rejoice by no means uncritically.
Baroness Trumpington: My Lords, perhaps I might remind your Lordships that when the figure seven appears on the clock, we are in the eighth minute. So far we have had speeches lasting 22 minutes, nine minutes, eight minutes and eight minutes. We are falling behind.
3.59 p.m.
Lord Hindlip: My Lords, first I thank my noble friend, who is my old friend, Lord Gowrie, for his kind
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words and the right reverend Prelate the Bishop of Worcester for his. Yes, Hindlip was my family home. I entirely sympathise with the right reverend Prelate's view about stopping young people stealing money for scratch cards—I find it very difficult to get a taxi to work on account of it.
I must declare an interest. As my noble friend Lord Gowrie pointed out, I am the chairman of an auction house. Just to refresh my noble friend's normally perfect memory, it is the old English house of Christie's. As such, I have frequent dealings with the National Heritage Memorial Fund and the Heritage Lottery Fund and its chairman, my noble friend Lord Rothschild. It is to their work that I wish to address myself this afternoon.
My noble friend needs no introduction from me. His record speaks for itself. He did wonderful work as chairman of the Trustees of the National Gallery. He was responsible not only for approving great acquisitions but also for providing the framework for the superb addition to the gallery by the family of my noble friend Lord Sainsbury and Paul Getty's equally important gift of cash. No one could have come to the lottery with a better track record and better credentials.
But it would be foolish not to admit that the lottery has been subject to some criticism. There have been missed opportunities. That great masterpiece, "The Finding of Moses" painted for King Charles I by Gentileschi—after Holbein, Van Dyck and Rubens, the most important painter to work in Britain—should have been purchased. It is a masterpiece.
That is the nub of it. Lottery money should be spent not on good things but reserved for the very best—such as, for instance, the Churchill Papers. They should have been purchased. There should have been no argument about it. It does not matter where the money goes so long as what is bought with it is the best and the best is made available to the public. It would be perfect if great works of art and great buildings belonged only to the deserving. They do not. They never have and they never will. What is important is that, however feckless and irresponsible the sellers, the few masterpieces that they sell and the few buildings that they leave in ruins are acquired by the nation for its enrichment in perpetuity.
We must not get sentimental about the lottery money. I buy lottery tickets every week but I do not buy them because I am thinking of Gentileschi or even Covent Garden—again, my noble friend Lord Gowrie deserves a big pat on the back for that. I buy tickets because one day I am going to win, and I am no exception. Until I do so, I must slave away as an auctioneer. It is from that perspective and, incidentally, not one of profit but rather of loss that I want to make one specific point; namely, that the lottery money be made available for the purchase of works of art in situ. Surrender in lieu and surrender in lieu in situ, in the lean years before the lottery, with Hugh Dalton's gesture of the land fund the great exception, have been the means whereby the galleries of Great Britain have been able to enlarge their collections, notwithstanding the sadly low level of government support. That excellent system should now be extended into the realms of private sales in situ.

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Lottery money should be made available to purchase private collections and leave them in the great houses for which, in so many cases, they were originally intended and where they look best and are best appreciated by the public (when they are not out buying lottery tickets).
There are a few great pictures that should go to Trafalgar Square, Edinburgh and Cardiff. But, leaving works of art in situ appeals not just to the viewing public. It is a system that is inexpensive to administer—the house owner pays for the guides, the security and the fabric of the house. If an owner defaults on his obligations or closes his house, of course the works of art which belong to the nation must leave that house and be shown and enjoyed in a museum or other public place; but, where the owner of a great house is prepared to go on looking after works of art, which he does not own, for the public's benefit—as well as his own; I am not blind to self-interest—he should be encouraged.
In closing, I shall revert to the Heritage Lottery Fund and my noble friend Lord Rothschild, its chairman. I know that there have been mutterings that his powers should be curtailed and possibly handed over to other organisations. But, please, do not seek to curtail the noble Lord, Lord Rothschild; seek rather to give him more support. He and his team have been entrusted with a task that goes far beyond the built heritage. It encompasses the whole of the UK and covers everything from museum acquisitions to wetland marshes. They have been given resources reminiscent of the Medicisor, indeed, the noble Lord's own ancestors. What he needs today for our nation to help him achieve the results that they achieved in the past are trustees. I fear that at the moment he has those who are worthy but possibly too politically correct. He needs men of vision like himself, who can recognise great works of art and take bold and immediate decisions to acquire them. If that happens, we shall all be the winners from the Lottery.
4.6 p.m.
Lord Rothschild: My Lords, the whole of the House will want to join together in congratulating the noble Lord, Lord Hindlip, to whom I shall refer, if I may, as my noble friend, for not only have our families known one another for a very long time, but he and I have been friends, professionally and personally, over many years and we have never had a disagreement. My noble friend's speech was splendid, light-hearted and characteristically generous—incredibly generous—but with a most serious and professional content. Perhaps I may say that the more time he can spare from his new and distinguished duties as chairman of that great institution, Christie's, away from King Street and Villiers House, the happier and better off we shall be for his specialised knowledge of an area of deep interest to this House. He has always conveyed that deep knowledge with skill, verve and humour. I can assure him that his contribution will be welcomed by all. Let me, finally, renew my congratulations on behalf of the House, and perhaps also thank him personally for his most generous words of support.
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I should also like to congratulate the noble Earl, Lord Gowrie, my fellow distributor at the Arts Council, for his initiative in calling this debate at a great moment in the very short history of the National Lottery. It was only this week that the landmark figure of £2 billion was raised for the good causes of arts, sports, heritage, charities and the millennium.
The Heritage Lottery Fund, which I have the good fortune to chair, has now awarded some £225 million to more than 330 projects across the United Kingdom, bringing great benefits to many communities. The grants range from £1,500 to help restore St. Mary's Church, Frome, in Somerset, to £23 million toward building the new Wellcome Wing at the Science Museum. Noble Lords may have seen yesterday's announcement about the spectacular, imaginative and generous gift by Mr. Arthur Gilbert of his great collection. That gift, together with a capital grant from the Heritage Lottery Fund of some £15.5 million, to be supplemented in the future by an endowment fund, will ensure at long last the opening up of that hidden architectural masterpiece of Sir William Chambers, Somerset House.
In 1781 Edmund Burke exclaimed that,
"Somerset House did honour to the present age and would render the Metropolis of Great Britain famous throughout Europe".
Now, 200 years later, Mr. Gilbert's generosity and the catalyst of lottery funds have given us that opportunity.
We need a vision for Somerset House, as we do in all things, and must capitalise on our good fortune to achieve it: by banishing the cars from the Great Quadrangle, which could become the greatest urban open space in London where concerts and music could be enjoyed by all; by opening up the Seamans Hall; and by welcoming the public on to the South Terrace. Indeed, I wonder how many noble Lords have ever walked there? Charles Weld in his History of the Royal Society wrote in 1848:
"the view from the Terrace is by far the finest on the banks of metropolitan Thames".
As we approach the year 2000 the view is going to be just as remarkable. We will be able to see an unprecedented range of projects—Bankside, the Globe and Battersea Power Station, which are all being prepared for the Millennium.
Somerset House will be a truly memorable national project made possible by lottery funds. But let us consider a very different example of our heritage which, with the benefit of lottery moneys, could change dramatically—urban parks, the Heritage Lottery Fund's first special theme for which £50 million has been set aside. Many of our public parks have been disgracefully neglected over the past two decades and yet more than 8 million people visit a park every day. At Tollcross Park, in the east end of Glasgow, we have just awarded a grant of £1.95 million to restore and rejuvenate it. When the works are complete it will once again be a place that the people living around that park can take delight in; they will be proud of living where they do and it will help them to feel, as nothing else can, part of a community.
The fund is deeply conscious of the need to be flexible over the issue of partnership funding. Thus, grant applications for more than £100,000 will require

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around 25 per cent. partnership funds and for £100,000 or less the threshold has been set at 10 per cent. We have pitched the figure at a level which we hope will encourage applications for small but vital projects such as village halls, churchyards, ponds and small museum acquisitions. Furthermore, we are already prepared to be flexible in accepting how this partnership funding is presented—it may include contributions in kind such as voluntary labour or materials—but our overriding objectives are not to allow imaginative schemes to become silted up and to encourage a spread and a balance of projects large and small across the United Kingdom.
The "Additionality" and its interpretation will be ever-increasingly important. The directions from DNH to the lottery distributors make it clear that lottery funding should be strictly "additional" to government funding. A year on and we are asked to interpret that instruction liberally. But while the lottery is and will remain a substantial addition to funding within the heritage sector, it must not be allowed to threaten or substitute for core funding. It will of course take time to smooth over the distortions between lottery and government funding. Noble Lords may ask: why favour the new rather than the old when many organisations are facing a backlog of essential repair and maintenance works? If we are to help with the "black holes" of our heritage, we should do so on a one-off basis and not accept responsibility for recurring maintenance.
We welcome the Government's green paper on the heritage and the proposals to amend the present restrictive clauses under our Act to give us the freedom which the Arts and Sports Councils already enjoy. That will enable us to broaden the definition of eligible projects and recipients; for example, funding projects to improve access through new technology and educational initiatives. We would like to be able to include private individuals as well as charitable and not-for-profit bodies where there is a clear public benefit.
The lottery distributors are not, nor were they ever intended to be, primarily social regeneration agencies, although many of the projects we fund happily combine restoration and repair works with broader social benefits. Repairing run-down or derelict buildings or open spaces while at the same time finding alternative uses such as providing facilities for local communities may result in a welcome "double dividend". But there are many government departments with far greater funds at their disposal set up to oversee those issues. For example, the Department of Social Security's annual expenditure is 300 times greater than ours. Our focus is, and should remain, the heritage.
We were proud, for example, to have funded Chetham's Library in Manchester, one of the oldest public libraries in the country. Built in 1421, it includes some of the finest examples of medieval collegiate architecture in the world. I will not pretend that thousands of people should go to visit that remarkable library—that would spoil it—to which we awarded £1.8 million; but occasionally we feel that something is of such outstanding quality, such a jewel in our heritage, that we should simply help it.
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Equally, we are just as proud to have awarded £250,000 to help restore the River Skerne where it flows through Darlington and to open up the river banks to the public; £400,000 to help restore Polokshields Burgh Hall in central Glasgow for use by more than 20 local communities; and £91,000 to refurbish the galleries and improve disabled access at Brecknock Museum in Wales.
As I have said, the lottery offers a once-in-a-lifetime opportunity to change our national mood and raise the quality of life in this country. To achieve that we will sometimes need to take a deep breath, take risks and fund projects which will add to our pride in this country. It is indeed an odd situation that the arts and heritage should find themselves lottery rich and public expenditure poor. The responsibility of the lottery distributors therefore becomes all the greater to ensure that, with courage, we break the mould of mediocrity of the past decade and find ourselves in a new era to which we may proudly refer in the future as the "Lottery Age".
4.17 p.m.
Baroness Young: My Lords, I too thank my noble friend Lord Gowrie for introducing this debate this afternoon and congratulate him on his speech. I congratulate also my noble friend Lord Hindlip on his maiden speech. I am sure that we all look forward to hearing from him on many occasions in the future.
It is an appropriate time—18 months after the start of the lottery—to debate this issue. Like all other speakers I should like to say that I believe that the lottery is a great success story. We have an extraordinary national habit, when something is successful, of finding opportunities to run it down. But in this case it is encouraging that all those who have taken part in the debate so far have pointed to its success.
First, I should declare an interest as I am a member of the council of the Royal Albert Hall, which received a substantial grant from the lottery. But that illustrates in a real way the value of the lottery. A national institution which we like to describe as "the nation's village hall" will be improved with vastly better facilities for those who go to concerts or other entertainments and not least for those who perform there. It is a magnificent building which will be preserved and enhanced, and all that at no cost to public funds. I believe that the original critics of the lottery have been confounded by its success.
I do not believe that anyone taking part in today's debate is unaware from personal experience of the large number of small projects which have been helped. We listened with great interest to what the noble Lord, Lord Rothschild, said regarding our enormously important national buildings being preserved and helped, which we all support. But the smaller organisations, perhaps with as little as £5,000 or £10,000 are also being helped and, as a result of that activity, being saved. They too are adding to the quality of life of people throughout the country. Indeed, research has shown that the majority of recipients of lottery money consider that the grant not only was essential to their organisation but also to its long-term viability.

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As regards the lottery, it is extremely easy to lose one's way in a welter of statistics which have come out about it. I should like to make two points in particular. First, I should like to confirm that, like so many of your Lordships, I think it is remarkable that lottery funding has gone to some of our great national institutions which are not only enjoyed by people here but by people abroad. Sometimes the criticism indicates a very patronising attitude to these matters. After all, there are lots of people who may not go to the opera every week but also like to save up and go somewhat infrequently. If it does not survive, they will not be able to go at all. We have to recognise that our national institutions are there for everyone to use.
Secondly, I should like to turn to what has been done to help charities. We heard only yesterday that £159 million was distributed to 2,229 charities. Altogether—this is the second round of grants—some £320 million has been distributed to more than 4,800 organisations. That is only the beginning. We often talk in your Lordships' House about the need for social services and helping those who are the poorest in the community, but the aim of the first round of these grants was to help those disadvantaged by poverty, and the aim of the second was to support youth issues and those on low incomes. Two-thirds of the funds from the board have gone to meet the revenue costs of charities and community organisations, particularly for the salaries of those running them.
Anyone involved in charitable organisations knows that volunteers need to be underpinned by some professionals. Forty-eight per cent. of the funds have gone to organisations describing themselves as social welfare services, a high proportion to housing and a high proportion to charities involving children. Every part of the United Kingdom has benefited. As a result, the lottery funding has played an important economic role in helping to provide employment, training and education to a large number of people, and it is a benefit in addition to public expenditure.
Perhaps I may comment briefly on some of the points raised by the right reverend Prelate the Bishop of Worcester. If we did not have the lottery money, the funds would have to come from general taxation. I do not believe that any political party is contemplating raising taxes to cover these kinds of sums of money and to go on covering them well past the Millennium. This expenditure has an enormous knock-on effect not only on employment but on, to use that indefinable term, the quality of life, which is difficult to measure though we know what we mean when we use it, and it goes to all parts of the country.
Have charities suffered? They are facing competition and all charities have to become more efficient. Everyone knows that money raising is very difficult. As I understand it, the Henderson Top 2000 shows that charitable donations were up last year, the first year of the National Lottery, by 6.6 per cent., an increase of £166 million over the previous year. The study of the Charities Aid Foundation showed that the total income from the 500 biggest fundraising charities rose to a record £3.5 billion. I am pleased that the Home Office is to monitor the effects of lottery giving on charity
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income, but at this early stage I do not think we need feel depressed. I think that probably after an initial dip the amount of charity giving will continue to increase. The Family Expenditure Survey has also shown that charitable giving has remained unchanged.
My time has come to an end. I shall conclude by saying that the lottery has been a great success. If we had a similar debate in two years' time, we would all be saying the same thing, with ever more objectives of arts, the heritage and charity to support.
4.25 p.m.
Lord Jenkins of Putney: My Lords, I shall reserve my thanks and congratulations to the end of what I have to say in the hope that that will encourage me to get there quickly.
When I thought that I was going to make a long and relaxed speech, I headed down here to say that Oscar Wilde said, "Life follows art". As usual, they all laughed. But, equally as usual, after a while some of them began to think it might not be just a joke. Similarly, housey-housey was just a game which became bingo, and now we have the lottery which is due to become an essential method of wealth redistribution. People love it as much as they hate taxation.
I am not sure whether it was George V who praised the Order of the Garter because, as he said, "There's no damn merit about it". It is only when you introduce an element of merit into it, when you try to decide which of the many deserving causes shall benefit, and by how much, from the consequences, the fruits, of turning the nation into a vast collection of gamblers, that you run into trouble. For what you have to do is to graft rational decisions onto irrationality, to show the mass that they have not been entirely daft without some benefit coming to someone other than the lucky few new millionaires. They know gambling is wrong and they need to be reassured that some good is coming out of it.
As to what is good—here comes the trouble—for as we have seen here this afternoon, one man's good is another's bête noire. I would be hypocritical if I praised over-much the maiden speech we have just heard, though it is the tradition of the House from which I shall not shrink, a speech with which I found myself in very considerable disagreement. Nevertheless, I conform to the tradition and heartily praise the noble Lord.
I am told that the Prime Minister's more sentient friends wish he had not chosen to reveal the Pooterish side of his personality at the Dispatch Box. The P.M. might have reminded himself that Mr. Gladstone did not find helping women out of prostitution something to be condemned. Personally, what I found reprehensible was the other decision to pay a huge sum of money for papers which most of us thought were already state property. Here, once again, I find myself committing the offence of disagreeing with a maiden speech.
The Earl of Gowrie: My Lords, since the noble Lord has mentioned me, I do not speak for the NHMF but the fact was that, like it or not, the Churchill papers did not belong to the nation.
Lord Jenkins of Putney: Exactly, my Lords, but that was the public impression. I did not say that it was the

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noble Earl's impression, and now he has lost me a minute of my time so I shall have to put one minute on at the end.
I venture to suggest to the House that the overall conclusion of the House of Commons All-Party National Heritage Committee, after prolonged consideration including the examination of witnesses, should be respected. Personally, with my Puritan background, I do not really like the idea that we now live in a society in which a national lottery is acceptable. But we do live in such a society. I know from my connection with the Theatres Trust that there is reason to commend the committee's summary to the House. It is quite brief and reads as follows:
"The National Lottery could be better, and, if our recommendations are accepted, will be better. But, just for once, let us praise something which has been done well and has gone right."
I associate myself with the full sense of that recommendation.
I must now approach the end of my remarks as there is not much time left. I commend that report from the Select Committee. It makes impressive reading and its two pages of recommendations at the end are especially worthy of attention. I shall mention only two. First, I share the view that, with suitable safeguards, it is time to move cautiously into revenue funding in non-profit areas. I hope that, if he has the time, the noble Earl will comment on that point when he replies. I also support the proposal which was made on 4th June by the shadow national heritage secretary, Jack Cunningham, that Camelot shall be replaced by a non-profit-seeking body.
Although I appear to have a minute of my time left, another noble Lord may have it as, finally, I warmly congratulate the noble Earl on initiating this debate. I am sincere in saying that he has done the House a great service on which he is to be warmly congratulated. If there is anybody else I should congratulate whom I have not yet congratulated, I now proceed to congratulate him and sit down.
4.31 p.m.
Lord Palumbo: My Lords, first, I must add my congratulations to those paid by previous noble Lords to the noble Lord, Lord Hindlip, on a truly admirable maiden speech. I share the hope of the noble Lord, Lord Rothschild, that the noble Lord will make frequent appearances in this Chamber, even if he should win the National Lottery. Secondly, I must express my gratitude to my noble friend Lord Gowrie for initiating this debate. Thirdly, I must declare an interest. As chairman of the Serpentine Gallery, I represent a beneficiary of National Lottery moneys for the much-needed refurbishment of that Grade II listed building in Kensington Gardens, which attracts almost 400,000 visitors through its doors every year.
It is important that we should recognise that the definition of "heritage" is what has been, or will be, built. Therefore, it is not so much upon capital improvements to the existing fabric on which I wish to focus attention this afternoon, but rather upon commissions for new buildings to improve and enhance
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the environment. A good building, one that is well designed and combines beauty with function, is of incalculable civic benefit. Architecture, after all, is the most visible of all the arts. It is a subject upon which every person feels, rightly, that he or she is competent and qualified to hold a view. There are thus no experts—or perhaps everyone is an expert. The point is surely that a good building does not depend solely upon money, but upon talent and the enlightened use of that talent.
We are particularly fortunate in this country to have available to us creative talent of the highest order—as good as, if not better than, any in the world—talent that is able to celebrate, to raise expectations and to lift up the spirits. God—or at any rate your Lordships—knows only too well how much we need that uplift in these uncertain times.
I cannot help feeling that the Georgians and the Victorians were, above all, confident societies; and that that confidence expressed itself tangibly and in large measure in the architecture of those times. The 19th century, for example, saw the construction from lottery moneys of the British Museum, the finest museum of its kind in the world. I cannot help feeling also that the greatest cultural glory of these islands, the cathedrals, were an expression of spiritual confidence. The spiritual confidence that eludes us today is a response—at any rate, in part—to the turmoil that we are currently experiencing as we approach the dawn of a new millennium. No wonder people are reaching out for certainty, order, stability, permanent values and some sort of return to a spiritual safeground as a counter-balancing force to the apparent chaos that surrounds them. That is precisely what the arts—and the first of the arts, architecture—can provide at its highest level. Which of us has not stood transfixed at one time or another before the wonders of Durham Cathedral or Chartres or the Parthenon or Ronchamps or the great Temple of Karnak? Of course, the secular is able to evoke as equally powerful a response as the religious—the common denominator being God-given talent that has the ability to spawn a great statement of the human spirit.
The application of lottery funds to existing buildings seeks to redress the neglect through woeful lack of funding in the past. Already a good start has been made with the designs of the architect Richard Rogers for the re-ordering of the South Bank Centre; with those of Norman Foster for the British Museum; with those of Michael and Patty Hopkins for the Royal Academy, and with those of Hertzog de Meuron for the Tate Gallery at Bankside.
In my opinion, it is nothing short of a tragedy that the coruscating brilliance of the design for a new opera house at Cardiff by the architect Zaha Hadid was rejected through loss of nerve and lack of confidence. I hope very much that the same fate will not befall the proposed extension to the Victoria and Albert Museum by the architect Daniel Liebeskind. Had the opera house at Cardiff been constructed, I am in no doubt that it would have done for that city what the Sydney Opera House, itself the recipient of lottery money, has done for Sydney; and it would have created the same image and perception both at home and in countries around the

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world of a society that was sufficiently confident and forward-looking to commission a masterpiece to withstand the test of time.
Against that background, what do we find at home? We find that the Arts Council of England, one of the five distributing bodies, and itself the recipient of £5 million per week, has received only two major applications for lottery funding for new buildings, the larger of the two from the City of Salford for a new opera house and performing arts complex by Michael Wilford and Partners—a complex incidentally which will be the very reverse of élitist, conferring as it will wide-ranging benefits upon the community as a whole. That is just the sort of exemplary project application that the Arts Council of England should be considering on a regular basis. We must hope that where the City of Salford leads, others will follow.
My time is—
Baroness Trumpington: Up!
Lord Palumbo: Yes, my Lords, my time is up. Perhaps I may close by saying that the objectives are worthy of your Lordships' consideration; that the creative process should be allowed to have its head and be allowed to flourish and that risks should be taken to ensure that 100 years hence our great-great-grandchildren, standing in the sunlight of other days, can smile benignly upon us for initiating in these times a series of commissions that not only transformed the environment, but set the agenda, the standards and the tone for the third millennium.
4.40 p.m.
Lord Boyd-Carpenter: My Lords, as has been demonstrated, it is extraordinarily difficult to debate this vast, complicated and enormously important subject with a seven-minute time limit. I begin by expressing the hope that there will be further opportunities for your Lordships' House, given its enormous assemblage of knowledge and talent, to debate the matter more fully. For my part, in the circumstances I shall simply put one or two questions to my noble friend in the hope that he will be able to deal with them in the time available to him. Does my noble friend believe that sometimes lottery awards are on the large size? Would it not be better if awards were sometimes less spectacular and grand and therefore there were more of them? It seems to me that part of the difficulty in working the system is that some of the awards have been very large and therefore limited in number. The development has been remarkable, but the prizes are very big and give rise to problems.
A separate issue was raised in yesterday's and today's press. Awards have been made to homosexual organisations. I do not wish to introduce prejudice, but a good many of your Lordships will feel that where one is concerned with distributing very large funds to help finance activities in this sphere it is a pity that in four cases (according to yesterday's press) awards have been made directly to organisations which believe in and advocate activities which are repulsive at any rate to a great majority of the population. Can my noble friend give an indication as to the Government's view of the future treatment of such applications?
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A very big question was raised by the right reverend Prelate the Bishop of Worcester. He asked about the effect of this system on ordinary charitable giving. Is it the fact that to some extent the existence of these awards has diminished the amount available from other sources, or is it the case—which would be very cheering—that these activities have produced a net increase in the level of charitable giving? This is an extremely important aspect of the matter. If the new system, which one wishes well, detracts from the size of other charitable activities, the enthusiasm which one has for it will tend to be diminished. I would be grateful if my noble friend could give an indication of the tendency in respect of other charitable giving. Has there or has there not been an increase in the totality of charitable gifts since the system came into being? I believe that the view that many people take on this question will be very much affected by that.
Finally, I put in a plea, as I have done more than once, that funds raised in this way, as in others, shall be made available for the repair of old churches. Churches, particularly small, old country ones, are supported by limited congregations with limited means. If this system can be adapted to help to repair these treasures of architecture and wonderful aspects of our civilisation, the enthusiasm for the system will be accentuated.
I would be most grateful if my noble friend would reply to those questions. Perhaps he would also comment on whether the size of some of the individual awards under this system is excessive and whether it may be more productive to have more awards of slightly lower amounts. I hope that those questions are clear and that my noble friend will give his habitually clear answer to them.
4.46 p.m.
Lord Gibson: My Lords, I supported the introduction of the National Lottery for exactly the reason given by the noble Baroness, Lady Young, in her observations on the speech of the right reverend Prelate the Bishop of Worcester. It has always seemed to me that no government we can possibly elect in this country can ever give the arts, sports and cultural institutions the support that they deserve.
As the noble Earl, Lord Gowrie, said in his powerfully persuasive speech, the lottery has transformed the outlook for the arts and heritage world, as well as for sport. I believe that that is a matter for great congratulation. But in spite of the unexpectedly large sums now available to these causes, government support for them remains essential. Cultural institutions need stable and reliable core funding, and lotteries by their nature cannot be relied upon. As the noble Earl said, if people decide not to commit themselves to gambling, so be it. To a greater or lesser degree, that may well happen. That is why, in my view, lottery proceeds should never be used, as some commentators urge that they should be, to supplement public purposes like healthcare or education. Basically, these are government responsibilities.
The Government have recognised their essential, though not exclusive, role in funding the arts and heritage by promising to protect "additionality" (if I may

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use that ugly but rather useful shorthand). They have done so by limiting the lottery to supporting capital projects. But in the light of the large sums involved, serious anomalies are being created in various contexts. In mentioning these anomalies I do not wish to appear in any way to underestimate the marvellous work which the lottery has done and is doing through the distributing bodies. These anomalies are especially great where funding is badly needed and difficult to obtain for core purposes.
I make the same point made by the noble Earl, Lord Gowrie, in relation to an orchestra's running costs: one may give it a hall but not help with its running costs. I make that point in relation to the National Trust. My noble friend Lord Chorley, the present chairman of the trust, has asked me to apologise to your Lordships for his absence this afternoon. Unusually among institutions, the trust is eligible to make application to all five lottery distributing bodies and has received offers of seven grants from the Heritage Lottery Fund. The trust is deeply appreciative of the helpful service that it has received in making its bids.
As an ex-chairman of the trust, I am familiar with its problems, but since my day they have intensified financially as the backlog of necessary repairs to historic properties has grown ever larger through lack of necessary funds. One may say that there was a miscalculation 20 or 30 years ago when many of these properties were taken on. The degree to which inflation has taken place was not then envisaged. However, many people besides the National Trust made that mistake.
The many millions now needed for each of three famous properties—I mention only three because they are probably the most important ones in serious need of funds—Petworth, Knowle and Hardwicke, are the source of deep concern to the trust. What is needed for such properties is a rolling, say 10-year, programme of work where the trust's funds and, I would hope, heritage lottery funds could work together in planned partnership. What more important work for the heritage can possibly be envisaged for heritage lottery funds to be applied to?
Yet under present guidelines it is easier to find money for a new project, such as an interpretation centre, than it is for the maintenance of the building itself. I am not speaking for the trust when I say that my enthusiasm for interpretation centres is strictly limited, but, even assuming their value, it is anomalous, to say the least, to spend money on interpreting buildings and collections which we cannot afford properly to maintain.
I understand that the Heritage Lottery Fund is acutely aware of the problem. I know that it uses what flexibility is allowed it and can in some cases fund endowment for certain purposes. What I want to urge upon the Government is that the anomaly to which I have referred be recognised, and it should be accepted that endowment is essential if heritage lottery money is to be put to the best use. The alternative of course is to contribute to core funding on an annual basis. If endowment is considered a wasteful way of applying money, annual funding is the only alternative, but it must be annual funding on a planned basis. If
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that endangers additionality, I would hope that the National Heritage Committee in another place would keep its eagle eye on it. Additionality can only be protected in the long run by public debate and constant public pressure.
Finally, a plea for the private owners of historic property: it is not right to exclude them as potential recipients of grant aid from lottery sources if proper access is provided for and proper standards of care are ensured. The private owner is an indispensable part of the process of preserving historic buildings for public enjoyment. There are of course difficulties in ensuring the permanence of such arrangements, but those difficulties are not insuperable.
I should like to add my own words to those of the noble Lord, Lord Boyd-Carpenter, and say that money should be made available to the historic churches of our country. There are over 9,000 pre-Reformation churches. They are badly in need of more help.
If these variations or extensions to the process of distributing lottery funds can be agreed upon, the lottery will have an even greater impact upon our national treasures than the important contribution it has already made.
4.53 p.m.
Lord Sainsbury of Preston Candover: My Lords, first, I should like to congratulate my noble friend Lord Hindlip on his most interesting speech, and say how much I, as others do, look forward to his contributions to your Lordships' debates in the future.
Perhaps I may declare an interest as chairman of Britain's oldest public art gallery (the Dulwich Picture Gallery) which is looking forward one day to receiving substantial sums from the lottery. I declare also my interest as chairman of the Royal Ballet governors, and therefore a particular interest in the development of Covent Garden and the benefits that that will bring to the Royal Ballet. Perhaps I may apologise in advance to the House for being unable to remain until the end of the debate owing, unfortunately, to a longstanding commitment in Oxford.
I shall start by thanking my noble friend Lord Gowrie for initiating today's debate. I support all he said with great enthusiasm, and I should like to pay tribute to the Arts Council and the National Heritage Memorial Fund for the imaginative and wise use of lottery funds that they are making, particularly in terms of the spread, size—both large and small—and geography throughout the country.
Noble Lords might feel that such an opinion and enthusiasm are somewhat predictable, given the interests that I have declared, but I should like to justify my opinion and enthusiasm by putting the lottery grants now being made to the arts in some sort of historic and European context.
Looking back over the past 50 years, one sees that the record of post-war governments' investment in the nation's art is abysmal. Let us consider for a moment how few of the nation's great museums, art galleries,

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theatres, concert halls, stadiums, and sports complexes, have enjoyed government-funded improvements on any significant scale.
Leaving aside the disastrous British Library project, I believe that there have been only two major new London arts buildings financed by government in the post-war period—the Festival Hall, which has already been referred to, in 1951, and the National Theatre which opened in 1976. An example of reluctance to invest in the arts is the story of the National Gallery. Having left the space beside that great institution empty for 40 years, the Government of the day then only favoured an extension that was half office and half gallery. The only criterion that seemed to matter was that it did not cost the Government a penny.
Such a mean-minded attitude towards investment in the arts is, I fear, typical of all governments over the past five decades. That is why my noble friend Lord Gowrie is right to be optimistic, for what we are seeing is, indeed, a cultural revolution—a complete and desperately needed change from the Philistine past, an escape from the dead hands of the Treasury.
Instead of Whitehall deciding, the distribution of these capital lottery funds is being decided by the heritage, arts, and sports bodies—committed, independent, knowledgeable, non-political, and practical people, giving their nation their valuable time and, in my humble opinion, doing a great job.
No doubt mistakes have been or will be made, but I feel sure that the quality of their decision making will be of a higher standard than had it been left to the Whitehall machine. Of course these are still early days, and time is needed for distributors to adjust fully to their huge tasks. Time is also needed for the public and the media to recognise the great benefits for the whole country that the lottery will create and which are on the way.
I shall turn for a moment to how we compare to Europe. The starting point so far as concerns London is that if we want our capital city to be one of Europe's greatest financial and business centres, then surely it should follow that London should aim to be one of Europe's greatest artistic centres of excellence, bringing also benefit to the rest of the country by raising artistic standards nationally. That is one measure of the importance of lottery funding.
We all know that we spend less on the arts as a proportion of total public expenditure than any European country except Ireland, with France and Germany currently spending approximately three times what we do. One should also recall the mega arts investments in both France and Germany. A recent example is of course the Bastille Opera House in Paris which cost the state £350 million. That compares with the generous lottery grant to the Royal Opera House of £78 million.
However critical one may be of the failure of governments in the past to recognise the capital needs of the arts, it is surely right to praise my right honourable friend the Prime Minister for bringing in the lottery, about which so much enthusiasm has been generated in our debate. The Prime Minister's wish that the young people of this country should have the finest
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sporting and cultural facilities is now attainable. It will take time because we have to catch up on decades of under-investment, but now we can do it, and it will be done. The problem today is no longer capital needs, but, as my noble friend Lord Gowrie so clearly showed, it is revenue cuts.
As I said in this House in April last year, lottery funds should be used to increase public accessibility—reducing seat prices, aiding art education and so on—and it is good news that that is now accepted. But such help is insignificant compared to the huge cuts that the Arts Council has suffered.
My final point is my most important. The future health of the arts in this country now depends on not allowing the lottery to absolve the Government of their long-standing responsibility to maintain their support for the Arts Council and on not allowing the principle of additionality to prevent extra funds from the lottery being allowed for revenue needs in the arts.
5 p.m.
Lord Addington: My Lords, with six minutes and 59 seconds available it is difficult to give a résumé of the lottery funding. I intend to confine my remarks to sports. Sports, and especially the Sports Council, have benefited greatly from the vast wedge of new money which they now receive. Most of that money has been spent on a variety of small community-based projects. I believe that 720 projects have received less than £100,000 in funding. Funding small projects is probably the way forward, with a few prestige projects at the higher end of the scale being in the forefront but becoming a diminishing part of the funding procedure.
There is a finite number of new buildings that we can use. If we continue to build using lottery money we will eventually have a sports hall on every corner. We must use the lottery funding for the maintenance of buildings and the repair of infrastructure and equipment. As was said by the noble Earl, Lord Gowrie and the noble Lord, Lord Sainsbury, such funding is more difficult than creating enthusiasm for new projects. Anyone who has anything to do with charitable and sporting projects knows that. If someone is given a fundraising target they will achieve it. Everyone in fundraising departments knows that that is comparatively easy. It is not unusual that one-third of the cost of any project is required to maintain it on an annual basis. That is often the case as regards an old project which has a crumbling infrastructure. More lottery money must be used to fund existing projects because eventually we shall have sufficient facilities and only a limited need for new ones.
Furthermore, if we are to improve our sporting facilities we must consider the people involved and provide good training facilities and good advice on diet and medical issues. That requires people to meet other people and to give them advice, training, encouragement and a supportive background. We must also invest in the sportsmen themselves. Depending on the sport, international sportsmen in this country receive funding from a variety of sources. Professionals receive money from those who watch them play. Those in the amateur bracket—or, as is more common in many sports, the

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"shamateur" bracket—who receive only some funding. In addition, there are sportsmen who fall between those two categories; for instance, those who play professional sports to a limited audience, as is increasingly the case. All those people, while they are on their way up need support, but once at the top a professional can be supported by his sport.
It is not sufficient to build an academy for sport and to staff it. Scholarships and bursaries must be given to the athletes who take part. The current lottery set-up does not take that on board; it does not concentrate on individuals. The same is undoubtedly true as regards the arts. There is a pool of talent in the performing arts but if that is to be improved there must be investment in people.
Furthermore, one must be prepared to accept failure in some investments. For a sportsman or a dancer one trip or stumble can mean the end of a career and there is no use in complaining about that. We must be prepared to accept a degree of wastage in order to obtain the best. I suggest that that should be taken on board by all those involved. If not, we shall have wonderful theatres and sports halls with only about three people in them. It will be a total waste of time.
As regards the funding of individual projects, it is important to remember that if one appoints quangos one should listen to them. Unfortunately, we have heard a series of comments to the effect that certain projects were not liked. Using a sporting analogy, that is the same as a child playing in the street and saying, "It's my ball. I don't like the game anymore because I am losing. I am going to pick up my ball and go home". If we are not prepared to listen to such ruling bodies we should give the authority either to Parliament or to local authorities which are democratically elected. We must give the bodies a free hand because, just as we must be prepared to accept a degree of failure in the preparation of individuals, so we must be prepared to accept that people will make decisions that we do not like.
What is politically unacceptable to one group of people is not always politically unacceptable to another. In the future someone may not approve of contact sports—for instance, judo or rugby—and decide to stop them. Can your Lordships imagine the outcry? I suggest that we leave well enough alone and allow those who are appointed to run a project to do so. I shall conclude my remarks because I believe that we can retrieve some of the time that has been lost in the debate.
5.6 p.m.
Lord Aberdare: My Lords, I too am grateful to my noble friend Lord Gowrie for initiating this interesting and important debate. As I believe most of your Lordships know, I am the chairman of the Football Trust. I wish to highlight the important relationship that exists between it and the Sports Council, which is one of the lottery's distributing bodies with which we have worked closely for many years.
Your Lordships may also know that the Football Trust derives its funds from two different sources. The primary source is the reduction in pool betting duty,
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which was announced in the 1990 Budget and restricted to the professional side of football. Its object is to implement the recommendations of the Taylor Report, in particular the need for all-seater stadia. Sadly, the National Lottery has affected that part of our income very badly and has resulted in a significant reduction in receipts from that source.
That part of our funds and the way in which we use it is not relevant to today's debate because the Sports Council is specifically excluded from providing grants to professional clubs; that is left to the Football Trust. However, I wish to stress one important point for the future. Should the needs of spectator safety and comfort in sport in general in the country become eligible for lottery support, I hope that the Sports Council will wish to draw on the expertise and experience of the Football Trust and the Sports Grounds Initiative which it administers.
The trust's second source of income comes historically from what was once the Pool Promoters Association's spotting the ball competition. In the past the trust received approximately £14 million annually from that source of income. It allocated that partly to safety requirements at professional clubs which were not eligible for reduction in pool betting duty grants and, most importantly in my opinion, to helping the grassroots of the game. Unfortunately, the result of the National Lottery is that income from that source, which now comes from Littlewood's spot the ball competition, has been reduced from £14 million to £4.5 million. That is a serious reduction. Of what we have available, three-quarters must be allocated to safety and improvement work at professional clubs, because in 1990 we agreed with the Government to devote that amount to that purpose. That leaves us with just over £1 million in our budget for the 1996–97 financial year, for the many worthwhile and important projects which we have hitherto been supporting at grass-roots level. We have had to withdraw funding from many worthwhile schemes which were often run in collaboration with the Sports Council. Those include, for example, funding for local authorities, dual use of educational facilities, football in the community projects, boys clubs, YMCAs, the Divert Trust and other admirable amateur bodies which would normally be worthy of our support. We are now in a position of having to advise those bodies which received grants from us in the past to look for their assistance in the future to lottery money from the Sports Council.
I am happy to see that the Sports Council has so far awarded £220 million in grants and I understand that of that amount, some £25 million has been given to football projects in the United Kingdom. I am sure that that is good news. If we are to find the good players, which we know we need so desperately, at the top of the tree, it is essential that we nurture the roots.
5.11 p.m.
Lord Grantchester: My Lords, I start by declaring my interest as a shareholder in the Littlewoods organisation and as a director of Everton Football Club, the relevance of which will become apparent.

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I am grateful to the noble Earl, Lord Gowrie, for initiating this debate. I agree with the noble Baroness, Lady Young, that it is impossible not to be impressed by the benefits brought by the National Lottery. I do not dispute that the National Lottery has brought many economic and social benefits, but in the euphoria that its supporters have managed to generate, we tend to lose sight of a number of detrimental consequences which I believe we ignore at our peril which I shall highlight briefly in my allotted time. It is clear, for example, that the effect on charities and voluntary organisations has been mixed: some may have gained, but a great many others, particularly those which depended for a large part of their income on small lotteries, have been hit hard.
We do not yet know what will be the social consequences of unleashing a dramatic stimulation of gambling demand. Fifty years of consensus, in which all parties agreed that the gambling industry should be tightly regulated, and people were not encouraged to gamble more than they could afford, have been swept away, with no proper regulatory machinery put in its place.
The rÔle of Mr. Peter Davis as director of Oflot has been much discussed. Apart from the reservations about his fitness for office which have been widely talked about, it is obvious that there is an inherent contradiction in Oflot's terms of reference. On the one hand the director general is supposed to consider the national interest and only license games which do not encourage excessive play; but on the other hand, his job is to encourage Camelot to make as much money as possible, under the guise of maximising the return to "good causes". This has meant that he has the strongest interest in stifling competition, and we have the extraordinary situation whereby the operator, Camelot, effectively has a veto over the licensing of fresh games by competitors. Consequently no Section 6 licence for instant games has been granted to any organisation other than Camelot.
Now that the British lottery has established itself as the largest in the world, and is making profits of over £1 million a week, he has clearly met the second objective, but perhaps he has fallen down in his protection of the public interest. All that needs to be looked at urgently.
In that regard, I warmly welcome the assurance given by the Secretary of State for National Heritage that there will be no question of agreement being given to Camelot for running a second on-line midweek game. Mrs. Bottomley told the National Heritage Select Committee inquiry into the national lottery on 2nd April:
"there is no need at present to further encourage new games and initiatives."
I turn now to two particular good causes, which far from benefiting from the National Lottery, have been hit extremely hard by it. I refer to the Football Trust and to the Foundation for Sport and the Arts to which the noble Lord, Lord Aberdare, alluded. The Football Trust has been around for more than 20 years. It was originally set up by the pools companies, Littlewoods, Vernons and Zetters, to help British football with the implementation of the Safety of Sports Grounds Act.
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As your Lordships will be aware, we are now half way through the first week of the EURO 96 football championships—the greatest sporting event to come to this country since the World Cup 30 years ago. Had it not been for the Football Trust, this tournament would never have been awarded to England. The trust has been responsible for massive ground improvements at all eight stadia which are staging the matches. Perhaps the best compliment to the work of the Football Trust was paid by the chairman of the UEFA Stadia Committee, Mr. Ernie Walker, who said:
"It is quite clear to me that city for city England has the best football stadia in the world".
And speaking specifically about EURO 96, Mr. Walker added:
"The clubs with major help from the Football Trust have transformed these grounds in recent years. There will be eight splendid venues for what will be the biggest and potentially the best ever European Finals."
In addition to transforming the football grounds, the trust has made a huge contribution to providing the funds to tackle social disorder associated with football. For example, for the EURO' 96 tournament, the Football Trust paid £150,000 for the provision of eight new photophone stations for use by the police to catch known football hooligans and prevent them from gaining access to our football grounds, and a similar sum towards new closed circuit television cameras at Wembley. Both are measures for which the Home Secretary has been quick to claim the credit. It was indeed the trust—under the inspired chairmanship of the noble Lord, Lord Aberdare—that pioneered the introduction of CCTV at British football grounds. That is the measure regarded as the most important by far in the war against hooliganism.
Its main responsibility, however, is to provide the finance to enable smaller clubs to fulfil the requirements of the Taylor Report, notably new grounds, new stands, seating and roofing. None of that expenditure is eligible for assistance from the lottery.
Half way through the Taylor implementation timetable, grants totalling more than £140 million have been made to new stands and new grounds costing more than £437 million. Those completed included the award-winning new stadium in Huddersfield, and a host of other new grounds in places as far apart as Millwall and Middlesbrough, Northampton and Livingston. New stadia are now going up in Oxford, Sunderland, Bolton, Derby and Stoke-on-Trent.
In 1990, when work on implementing the Taylor Report began, the minimum cost over the agreed 10 year timescale was estimated at £600 million—£60 million a year. The trust would have met about a third of this bill, around £20 million a year. Since the lottery started in November 1994, the trust's income from the 1990 betting duty reduction has fallen by 45 per cent. and it looks as though it will be short of around £33 million from the sum needed to see the Taylor implementation completed, particularly in the lower divisions where the need is greatest. It is essential that the life of the betting duty reduction, which was introduced by the present Prime Minister when Chancellor of the Exchequer, is

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extended for at least another three years after the year 2000, if the job of implementing the Taylor Report is to be completed properly.
The Football Trust is therefore one extremely good cause which has not only received no benefit whatever from the lottery, but has suffered a huge drop in its income as a direct consequence of it.
The same applies to that second great good cause funded by the pools companies—the Foundation for Sport and the Arts. This phenomenally successful body, chaired by Sir Tim Rice, and graced by two distinguished members of your Lordships' House—the noble Lord, Lord Brabazon, and my noble friend Lord Attenborough—has in the first five years of its life awarded 12,335 grants to sport and 433 grants to physical recreation, totalling £188,848,078 and 7,271 grants to the arts, totalling £91,964,140. The foundation was established by the Pool Promoters Association in July 1991 and funds from the foundation have gone to such good causes as the Liverpool Social Partnership in Drugs Prevention, the Drumblade Junior Band and the Aylesford Rugby Football Club.
I suggest that these are compelling reasons why steps need to be taken now to remove the many inequalities in the competitive regime governing the operation of the pools and the lottery. It is not a question of loading the dice in favour of the pools, but of ensuring that the two can compete on fair terms, and each contribute to the welfare of our country.
5.20 p.m.
Viscount Astor: My Lords, I regret that I am unable to declare any interest today because, despite being a regular buyer of lottery tickets, I have failed miserably to gain one prize. My noble friend Lord Gowrie has given us the opportunity today to consider the lottery. The debate is extremely well timed, coming so soon after the publication of the National Heritage Select Committee report. Perhaps I may also congratulate my noble friend on his excellent maiden speech.
The National Lottery is a resounding success. We must be proud of its achievements, and ensure that it is as successful as it is now for the remainder of its licence period. Four out of five of its shareholders are British public companies and Camelot must be congratulated on its achievement. The lottery is the most efficient in the world and provides more to good causes than any other lottery in the world.
Perhaps I may start by looking at one of the issues which has concerned your Lordships' House—additionality. We have had a number of debates on the subject. The concern was always that the lottery money would allow the Treasury or, indeed, local authorities to cut their funding commitments. In fact what has happened, instead of a rather general principle of additionality, defined simply by saying that lottery funds should not support projects that were already in the planned budget—for example, money had been earmarked either by the Government or by government bodies—the distributing bodies seem to have been
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bound up by trying to define every possible scenario. I am afraid that there is rather a log jam of applications and certainly a bit of a muddle.
Additionality is a concept that protects the heritage from cuts in government spending; that is all. It is not a concept to do the opposite—to cut lottery spending. You do not have to define every scenario; that is not necessary. Even the Permanent Secretary at the Department of National Heritage, the guardian of the concept of additionality as departmental accounting officer, pleaded at the Select Committee hearing for simplicity and urged distributors and recipients alike not to try to complicate the issue.
My plea is for flexibility, and that also goes for endowment funding and partnership funding. There was never any intention that endowment funding should only be used in rare cases. What is needed is some funding to be raised by the applicant, because it does show that the project has backing, but again I believe that it is a mistake to be too prescriptive. Sometimes 50 per cent. would be right, sometimes only 25 per cent. or 10 per cent. and, perhaps in some cases, as little as 2 per cent. Without proper endowment funding some projects will fail. We must ensure that they do not. The huge amount of money now coming through has simply put too much pressure on private funds that are able to back lottery applications. As the sums increase there will have to be more endowment funding, not less.
I would like to see the distributing bodies encouraging more projects. I know that they are barred by the Secretary of State from "soliciting", and I am not asking my two noble friends to stand on street corners—although, if they did, that might make them eligible for a grant from the charities board. However, I urge them to ensure that they get their message across, particularly to smaller bodies.
Those of us who were involved in bringing the lottery Act into being always recognised that we were gazing into a crystal ball. None of us knew what would happen once the money started rolling in. Who would put in applications for funding? Would there be enough applications or, indeed, enough funding? What types of people or organisations would apply, and what kind of projects would they be for? As a result, flexibility was built into the Act, so that changes can be made by secondary legislation.
The National Heritage Memorial Fund was appointed, as a distributor, to support the heritage. But I am afraid that the majority of the built heritage is missing out. As the noble Lord, Lord Gibson, said, the private owner is not being helped. The reason for this is not the fault of the National Heritage Memorial Fund. It is prevented by the National Heritage Act 1980 from funding private owners. In its early days, the fund had about £10 million a year to distribute.
I believe that one of the main ambitions of the lottery grants must be to restore and upgrade our inner cities and town centres. They are currently often excluded as, for example, many of our historic squares and streets are owned partly by local authorities, partly by the private sector and partly by heritage organisations. The resulting mix of ownership excludes them from funding.

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Now that the NHMF has nearer £300 million a year, it is clearly wrong that two-thirds of our built heritage is being denied funding by an outdated clause in an Act that was designed for another purpose.
What can we do about it? I believe that there is a simple solution. The Secretary of State could by order appoint English Heritage as a distributor alongside the fund. English Heritage is already its adviser on built heritage applications. It has the expertise and the staff to do the job. The issue, then, that must be addressed is how that can help the private owner while, importantly, protecting the public interest. The principle is that public money should not be used to support private gain.
English Heritage currently assists private owners through Section 3a grants under the Historic Buildings and Ancient Monuments Act 1953. Those conditions have protected the taxpayer since English Heritage was formed in 1984, and can be used in exactly the same way to protect lottery funds. So no charge of the use of public funds for private gain can be made. Of course, the principal conditions include means testing, there also has to be public access and, indeed, owners have to maintain their properties. But, most important of all, English Heritage assesses what would be the risk to Britain's heritage if the building were to be put on the market.
Grants in the past have enabled buildings, their surrounding land and often their contents—that is to say, the historic estate—to remain in private ownership, so that future maintenance is no charge on the state and the public can enjoy them. We must remember that the majority of the built heritage also includes very modest buildings—for example, terraced houses, cottages and often offices—but all of importance.
Lottery funds must relate to the needs of all the people, not just to museums and the arts elite. While on elitism, I must say how very depressed I am by some of the large applications from our major museums. I am, I am afraid, going to distress the noble Lord, Lord Palumbo, whom I admire enormously, but I appalled by the idea of covering the British Museum with something that can only be described as an inflatable condom. I am equally appalled by an attempt by the V&A to ruin the last vestiges of symmetry of the Kensington museums by wanting to erect a building which one can only describe, I suppose, as cartoon-type geometry—a sort of "Bent Bugs Bunny Building Blocks". Faced with those applications, the case for the restoration of our existing glorious heritage becomes, I believe, unarguable.
I recognise that my proposal may be considered disruptive by the National Heritage Memorial Fund so ably run by the noble Lord, Lord Rothschild. I must assure the noble Lord that I have nothing but respect and admiration for the way that he has operated the fund within the difficult constraints of the National Heritage Act 1980. I want to make his life easier, not curtail his ambitions. But what matters most is that the money, at the moment, is not going to support all the built heritage.
English Heritage was, of course, once considered as a distributor but, because it was thought that it was more likely to be an applicant, it was ruled out. In fact,
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English Heritage has not received very much lottery money because it has problems of additionality. The reason that I should like to emphasise my suggestion—and I realise that I am coming to the end of my time—is that the change can be made by order rather than the Act of Parliament which would be required to change the articles of the National Heritage Memorial Fund. When she comes to publish her paper, I hope that the Secretary of State will consider these issues very carefully.
5.28 p.m.
Viscount Chandos: My Lords, in thanking the noble Earl, Lord Gowrie, for his initiative and prescience in introducing today's debate, I should also say that I enthusiastically agree with almost every word that he said. His few words in the area of economic theory momentarily tempted me to revive our debates of past years. But, even if there were time to pursue that, I should not want it to dilute my admiration for the noble Earl's other remarks.
I shall try to help your Lordships' House to catch up time by making a few very brief and, hence, disjointed points. I should, first, declare a number of pertinent interests as a director of English National Opera, a governor of the National Film and Television School and an adviser, director or shareholder of various film and cinema companies.
The funds available for distribution are as high as they are because of the success with which Camelot has implemented its franchise. With the benefit of hindsight perhaps a harder bargain could have been driven, but with the benefit of hindsight another franchise awarded by the Government—that for the Channel Tunnel—would perhaps never have been financed and completed.
The noble Earl, Lord Gowrie, paid tribute to the Prime Minister for his success in setting up the lottery. I suspect that he may regret as much as I do that his right honourable friend (in abeyance), in the words of that politically correct and left-wing newspaper, the Evening Standard, has jerked the wrong knee in his intolerant and misguided remarks yesterday. I can understand why the previous Conservative director of communications-but-one resigned, citing the Government's ability to snatch defeat from the jaws of its few victories such as the lottery.
I wish to support the noble Lord, Lord Palumbo—and perhaps oppose the noble Viscount, Lord Astor—in his advocacy of ambitious, imaginative but always well controlled new buildings with which to go into the next millennium, in London as much as in Salford or Cardiff. I hope that, along with the proposed renovations such as those of the Royal Opera House, the Gallery on Bankside and even the South Bank Centre, London will see at least one significant and exciting new public building on a landmark site.
I also welcomed the remarks of the noble Earl, Lord Gowrie, about the issue of widening eligibility for lottery funds to current, not just, capital expenditure. So long as the principle of additionality can be enforced—the noble Earl's figures on the reduction in the Arts Council's grant-in-aid shows that this is a big "if"—it is

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clearly eccentric to draw this rigid distinction between capital and current items, particularly in the light of Her Majesty's Treasury's well known reluctance to do so in its own national accounts.
In passing I also wish to make one observation based on my experience as a director of English National Opera, which last year received a significant award from the Arts Council for a feasibility study in relation to its future needs and home. Even from a partisan point of view it was not immediately easy to feel comfortable with a seven-figure sum being devoted from the lottery to such an intangible purpose. One year on, with the study nearing completion, I am absolutely convinced that this expenditure will be paid back many times over in informing subsequent decisions. I hope it will be an encouragement to distributing bodies to continue such awards where appropriate.
Finally, I wish to add my support to the funding that the Arts Council lottery fund has been able to give the film industry. The wording of today's debate highlights the economic benefits of the work undertaken by the distributing bodies. I believe that there can be no area in which the direct economic benefits can be greater than in the film industry, if the support is wisely applied. I believe that the Arts Council is now considering proposals to move from financing single films to funding ongoing film business to help create mini studios. Although I suspect that this presents the council and its assessors with a smaller number of testing judgments rather than a larger number of merely difficult ones, I have no doubt that the economic and cultural prize of successfully implementing such a proposal could be substantial.
5.33 p.m.
Lord Crathorne: My Lords, first I wish to congratulate my noble friend on his maiden speech. We have been friends for many years and have been involved in the art world together in London and New York. I hope that now that he has "opened the bidding", as it were, he will speak frequently in this House.
The National Heritage Committee's second report on the National Lottery is a commendable and heartening document which states:
"All kinds of worthwhile and socially valuable projects have been encouraged and assisted when, without the lottery, they would have been ideas stifled at birth or never even born".
That puts the case succinctly and accurately. I was involved with the Heritage Lottery Fund in the first months of its life as I was a trustee of the National Heritage Memorial Fund until last August. Having seen the fund from both inside and out, as it were, it seems to me that NHMF was a good choice to manage the Heritage Lottery Fund. The complexities are enormous. For example, the fund deals with over 30 quangos—of which English Heritage is one—and covers the whole vast heritage field. Both enormous sums of money and small sums of money are involved, as are extraordinarily varied projects throughout the United Kingdom. I would not like to see that altered.
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As the noble Viscount, Lord Astor, mentioned, there is the question of private owners. However, there will surely be other ways of getting round that matter. Indeed, one of the recommendations of the National Heritage Committee report was that private owners should be helped, subject of course to there being proper public benefit from that.
The workload that the fund copes with is amazing. The chairman, the noble Lord, Lord Rothschild, deserves all our thanks for the skill, energy and enthusiasm which inspire those who work with him.
A recent initiative mentioned by the noble Lord is the urban parks theme for which £50 million is being earmarked. This is a wonderful initiative. It is the first time that the fund has, in a sense, sought applications in any way. Sadly, in this country public parks have a low priority in many town halls and government offices. But experience abroad has demonstrated that fine parks can help to create flourishing cities. Let us hope that this initiative will restore civic pride in our parks.
I shall try to give a sense of what is involved in that sort of distribution of money. It is not simply a question of signing a cheque. Such restorations take a great deal of time and work, including researching the parks' history, design, topography, hydrology, vegetation, wildlife, ecology, archaeology, current and potential use, management and, last but not least, security. These things will not happen overnight. However, it is exciting that the lottery will make all this possible over the next few years.
I wish to refer to one case which is soon to come before the Heritage Lottery Board. I hope this case will be followed in other parts of the country. One of the great benefits of the lottery is that people can think not only big but on a broad scale. The example to which I refer is the cathedral city of Ripon, sited close to where I live in the north east. The Ripon Improvement Trust, under the chairmanship of Michael Abrahams, worked out ways in which the city could be restored and re-invigorated. It looked critically at the river and its environs, the approaches to the city, the main city square, the disused and dilapidated buildings and the museums. This involved discussions with the county council, the borough council, the city council, a large public company, several private companies, museum trusts, charities, voluntary organisations and private individuals.
To create the will and the unity of purpose for a themed townscape application to the Heritage Lottery Fund is a remarkable achievement. As I said, the bid is just about to be submitted. The whole complicated package involving all these organisations will be presented as one bid, prepared by the borough council helped by a steering committee. Initially the Ripon Improvement Trust went to the Heritage Lottery Fund simply to have the ground rules explained and to discover what was and was not eligible to enable it to put together a bid that made sense.
The next task was to look carefully at the planning issues, as the members of the trust felt that it was not enough simply to restore streets and houses and to make things attractive but that there should also be quite

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substantial economic benefits from the scheme. Once that was shown to be the case, the local politicians put aside political differences; and everyone involved has worked together to produce a scheme which, if implemented, will have great social and economic benefits for the area. It is an imaginative approach that I hope others will follow.
I conclude by mentioning two points made in the Select Committee report. The report calls for a more flexible attitude to partnership funding. In particular it makes a plea to respond to local conditions and needs. That is a very real point. It is easier to raise partnership funding in some areas than in others. The other point, which I mentioned earlier, concerns private individuals being able to benefit so long as there is some public good; and this must be a good idea.
The lottery has been going for only 18 months and we have heard about the enormous sums raised and distributed. Each year will generate more money for distribution. There is no question but that the social and economic benefits of the lottery are, happily, here to stay.
5.41 p.m.
Baroness Wharton: My Lords, I talked to the late Lord Houghton many times about animal charities being excluded from lottery funds. Were he still with us, I suspect that he would be on his feet telling us that it was about time these charities should now be included, and I would have to say that I agree with him.
I am delighted that the lottery is such a success. So many good causes have benefited. Funding has also been expanded to include revenue expenditure, for example the film industry, which is very welcome. Even the Treasury, I suspect, has done rather well.
One group of charities has not benefited. The public believes that 20p in the pound is given to charity, but in reality the amount is only about 5.6p. Since the introduction of the lottery, fund-raising for many charities has dropped. For example, at the Riverdale Shopping Centre in Lewisham, money collected in July 1994 for the RSPCA came to just over £1,000 but in July 1995, at the same centre, the amount came only to £424. That is quite a drop. Since November 1994, the number of people buying animal charity raffle tickets has fallen from about 30 per cent. to 20 per cent. and street collections are down too. I do not think there is any doubt that the lottery has had quite an impact on the traditional methods of raising money for charity for this group. However, charities other than animal charities can benefit directly from the lottery and in many cases are more than able to make up any shortfall that they may have.
Animals play an enormous part in our lives. Most of us have grown up with them. There is no national health for animals. For those who are unable to pay for treatment from a veterinarian, charities like the Blue Cross, RSPCA and PDSA, to name but three, come to the rescue. They keep their doors open for 24 hours a day. No one is ever turned away and in many ways they act as a community centre too, particularly for the elderly. I certainly saw this when I visited the Blue
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Cross Hospital in Victoria a few weeks ago. The National Canine Defence League spent around £300,000 last year on neutering campaigns alone to reduce the number of unwanted dogs. All that has to come from charitable funds which, of course, have to be raised from the public in the first place. If the public were to continue to cut down the amount they donate for the foreseeable future, then many of the smaller animal charities will disappear altogether. They also produce educational literature to promote the care and welfare of animals, often going to schools and talking to children. There is a great deal of inter-activity, and all of it on a voluntary basis. If these organisations were not around, who could do this invaluable work? As I have said, there is no NHS for this group.
While some charities are able to benefit from our lottery, it seems unfair that there should be discrimination between one group and another. After all, both kinds fill an enormous need and relieve pressure on the public purse. Can I appeal to the Minister today in the hope that at some time in the near future our animal charities will also be able to benefit from what so far has been an extremely successful lottery?
5.45 p.m.
Lord Soulsby of Swaffham Prior: My Lords, it is likely that the noble Baroness, Lady Wharton, and I, will be the only two speakers in the debate today to deal with the question of animals and animal charities; and I thank her for cajoling me to speak in this debate.
We have heard today that by any measure of performance the National Lottery must be considered an outstanding success, helping a range of institutions, large and small, in the media, the arts, sports and so on, all of which can be said to benefit the economic and spiritual aspects of life in this country.
However, as the noble Baroness, Lady Wharton, said, one area which has a direct relationship to the social and economic issues of the country has failed to convince the distributing body—the National Lottery Charities Board—that it is indeed of national importance, in particular in the social aspects of life. I refer to animal welfare, and the societies and charities which do such sterling work in supporting the animal welfare side of life in this country.
Indeed, I understand that the distribution board has previously resolved to give animal welfare a low priority. Animal welfare appears to have been linked with animal protection and this may well be why it is given such a low priority. But to categorise it under the rubric of "animal protection" would be wrong. Animal welfare embraces the companion animals, welfare of stray animals, supporting medical aid to animals owned by people who cannot afford veterinary fees, and so on. It also covers farm animals, horses, and wildlife.
With respect to companion animals, your Lordships may be aware that there are some 11 million dogs and cats in this country in about half of the 22 million households. They play an important role in the social life of the country.
I do not make the claim or the complaint that the animal charities have suffered unduly as a result of the lottery although there are claims that their income has

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decreased. Nor do I make the claim that because many people who contribute to the lottery are also owners of companion animals they therefore should have the right to have their animals considered on some preferential basis by the lottery board. No, I do not make that claim. The plea is simply that applications from animal charities should be examined alongside others on their relative merit and should not be positively discriminated against or set aside because of any specific categorisation.
The needs addressed by the animal welfare societies have been mentioned by the noble Baroness, Lady Wharton. Therefore I shall not go over them again. But although animals play an important role in our lives, there are obviously major problems with companion animals and others in our society which need attention. Those charities give attention to such problems.
I hope that the Minister will give some consideration to these issues. I repeat: it is not that those bodies should be given any priority. My plea is that their applications may be considered on the same basis as any other application. My plea is for an overall widening of the basis of consideration.
5.49 p.m.
The Earl of Sandwich: My Lords, fond as I am of animals, I wish to return to the built heritage and in particular the significant group who, I believe, have drawn the short straw in lottery heritage funding. I refer to the owners and managers of the privately owned historic houses and tourist attractions. My wife and I are among them. After 15 years in the front line of opening a house and garden to the public, I feel quite strongly that the Government need to pay more attention to that sector and to the smaller owner in particular.
The smaller attraction receives fewer than 10,000 visitors a year, which in our case works out as an average of about 40 or 50 on a sunny day and only three in the thick West Dorset sea mist. There is, of course, a Fawlty Towers element in this which provides constant amusement to others and rather less to those immediately involved. Small owners are quite literally running between the front-door to let one group into the house and the back-door to help another group find the nearest WC. They are struggling, often with diminishing energy and small amounts of capital to match public with private benefit.
But there is a more serious aspect. Fundamentally, the public enjoys the smaller attractions simply because they are on a human scale and they prefer the owners to be visible. They find a remarkable tranquillity there which is not always present in the well-known stately piles. And yet the irony is that the smaller owners are bound to be disadvantaged because, while in most cases they cannot command the same visitor numbers, they do not have the administration to obtain regular access to funds and their human and social costs are proportionately higher.
We know from the Historic Houses Association that about half (44 per cent.) of all the 2,000 or so historic buildings open to the public are in private ownership.
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The figures we do not have are the number of attractions which are heavily subsidised by private owners for reasons that only they can explain or the number of attractions which change hands fairly frequently because their owners cannot afford to maintain them. That includes my own family home in Huntingdon, rescued by the local authority to become a comprehensive school. It is, of course, hard to estimate the proportion of public and private benefit. But what I do know is that private enjoyment can and does diminish in proportion to the responsibility which the owner has to the public.
It is an acknowledged fact that many houses have suffered because their owners are not wealthy; they are people who may have inherited them and have put a lot of their energy and time into them. The question is not, can the nation afford country houses and gardens? But, can the nation afford to lose any more of those owners who are preserving the heritage by putting in their own free time and spare money, and often selling their possessions, to do so? Without the good will of private owners, how would the Government be able to support the other part of the heritage which is in private hands? The noble Lord, Lord Hindlip, in an excellent maiden speech, mentioned the in lieu arrangements, and I hope that they will be strengthened.
As other noble Lords have pointed out, there is a concern that the Government have not fully appreciated the position of the private owners. It is high time the rules were changed in their favour. It is no good Ministers saying that houses can be turned into charities. That is simply not feasible for the majority of owners. I know that the National Heritage Select Committee has made a very welcome start, as the noble Viscount, Lord Astor, and other noble Lords have mentioned. That is thanks largely to the efforts of the Historic Houses Association. In supporting its recommendation to the Secretary of State—which is that the National Heritage Act 1980 be amended—I would be interested to hear the Minister's comments. I also submit that the case of the private owners deserves closer examination when the lottery bodies come to look at the matter.
I wish to make one final remark on charities. As the right reverend Prelate said, not all charities are enthusiastic about the lottery because of its adverse social effects. I can understand that and I hope that the Minister will give a full reply to the right reverend Prelate. However, there is a positive side, and as one concerned about awareness of world development issues, I was delighted to hear that the Development Education Association received a grant yesterday for its youth work. That is welcome compensation for a neglected area of education suffering from cuts in both the public and the private sector. I congratulate the Charities Board on its decision.
5.55 p.m.
Baroness Rawlings: My Lords, it is illegal to promote a large lottery; that was under the Lotteries and Amusements Act 1976. Under laws dating back to 1898, all lottery notices, correspondence, offers or tickets are judged as illegal imports and must be destroyed. That was the law in Britain until November 1994. It was clear that Britain was in danger of being swamped by lottery

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tickets from abroad and foreign lotteries making huge amounts of money by exploiting Britain's untapped market—and what a huge market that proved to be. As 1992 approached, it would become more critical, with the removal of restrictions brought in by the Single European Act.
The noble Lord, Lord Birkett, proposed in your Lordships' House on 28th November 1990 that there should be a national lottery. There were fierce arguments for and against. We have heard a few of them again today. The history of national state lotteries goes back as far as Ancient Rome. In Britain, the first national lottery was run in 1569 and it became an annual event from the mid-18th century. Funds for the building of the British Museum were raised that way. It ceased in 1826 because there was widespread illegal betting on its outcome.
There can be no doubt now that the lottery figures have exceeded people's expectations and wildest dreams. It is the most successful lottery in the world. Great credit must be given to the Government and to the Prime Minister not only for having set it up but for having set it up so carefully and diligently. There were possible land-mines wherever they walked.
What were those possible land-mines? I detect two: first, the independent framework set up for choosing the company to run the lottery. The decision to award the lottery to Camelot was strongly underscored by the National Audit Office. What a huge success Camelot has made! It is not an easy job—lotteries are not always success stories. As we heard from my noble friend Lord Inglewood last week, the lottery organisation in Arizona had its licence withdrawn after six months, as the operation was in shambles. Camelot is still in competition with other forms of gambling so it is still at risk. No one is obliged to buy a lottery ticket. The driving force behind the lottery is the jackpot itself. Because of its great success, millions have benefited. Imagine a voluntary sum of money paid out, of which over 28 per cent. is given to good causes. That means £1,400 million, a vast sum that is not even distributed by the Government. I find it difficult to understand why people are still whingeing.
A second possible land-mine is that in the framework set up for distribution, there are five bodies. I shall mention only two in my short time: the National Heritage Memorial Fund and the National Lottery Charities Board. Sadly, we often make the mistake in this country of criticising success or quality or something that is superbly run. We hear murmurs of elitism. But, to quote the noble Lord, Lord Donaldson of Kingsbridge, twice as many people went to the opera as watched the Football League Cup. More people go to the ballet than go to Rugby Union football. I am a tremendous supporter of sport and am pleased that one of the five bodies is the Sports Council Lottery Panel, described so ably by the noble Lord, Lord Addington. However, more people go to museums and art galleries than watch sport.
If he will forgive me, I wish to add my tribute to the noble Lord, Lord Rothschild, as my noble friend Lord Hindlip said so eloquently in his maiden speech. We hear today so many stories of sleaze and new restrictions
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from the noble and learned Lord, Lord Nolan. But he would not have needed to produce any report if there were more people like the chairman of the National Heritage Memorial Fund. The noble Lord, a Cross-Bencher, unpaid, chairs a voluntary distinguished body spending hours of dedicated time. I recommend that noble Lords study the list of grants to see how many varied causes have received help all over Britain, not just in England, large and small, built heritage and open spaces, and parks, which the noble Lord mentioned in his speech. It is done with firmness, fairness, courage and great style. There are always criticisms and people wanting to encroach on other people's competencies. But here we have an example of pure professionalism with a human face and with no ulterior motive. That is true service. It was an inspired choice on the part of our Prime Minister. He should be given credit, too.
There are few areas that I should like to mention. One is a booklet that was produced by the National Heritage Memorial Fund, and which has not been mentioned, on advice on how to apply for funds. This was always the hardest information to obtain in the European Parliament. I am afraid that the EU is a maze of dreadful, complicated bureaucracy. I even agree with the noble Lord, Lord Bruce of Donington, on the subject.
Sadly, in the short time available, I cannot go into detail on different projects: the Royal Naval College at Greenwich; Somerset House, which was mentioned; and the lighting of outstanding buildings, which not only brings new beauty to so many but has an important social side in that it greatly reduces crime. Another aspect is computerisation for museums. This has an exciting future.
The National Lottery Charities Board, with another outstanding, dedicated chairman, Mr. David Sieff, announced its awards yesterday. There has been some criticism. I have to declare an interest, having been a member for many years of the British Red Cross Society. Over the past two years the society has raised more money than ever before. It is not alone among the charities.
At this late stage in the debate many points have been covered. However, I repeat one or two because I feel it necessary to emphasise them. The first is the possibility of diminishing Government responsibility, the dreaded additionality so clearly mentioned by my noble friend Lord Astor. Secondly, we must not forget the importance of people—a source of great wealth. And thirdly, I support the noble Lord, Lord Gibson, and the noble Earl, Lord Sandwich, regarding historic houses and churches. I am grateful for the positive debate initiated by my noble friend Lord Gowrie.
I mentioned the terrible dangers, a few of which did not occur. Most well-organised charities have not suffered. People have not become addicted or insane. Why should people not be allowed to indulge in a harmless dream that is even doing good? We do not need less of it, as some noble Lords said, but a good deal more in this troubled world. Art, heritage, charity and sports are perhaps all that we have between us and barbarism. You do not need a degree in fine arts or to come from a privileged background to enjoy Mozart. All you need is a soul.
6.3 p.m.
Baroness Seear: My Lords, I am one of the few people who voted against the lottery when the Bill came before this House. As an unreconstructed old Puritan, I still feel that it is a pity that we are encouraging more and more gambling, which is what we are doing. Seeing what the British people, untempted, will do in the way of gambling, there is no occasion to encourage them—they can do it very well without any further encouragement.
However, that said, when a charity with which I was connected received over £300,000, it did not even occur to me that we ought to send the money back. We are making extremely good use of it in terms of doing something about rural crime. Noble Lords will be the first to recognise that the needs of rural areas are frequently overlooked, and such areas are likely to benefit very considerably from the lottery. It is very difficult to get money for them from other sources and so money from the lottery is very welcome indeed.
I agree with the right reverend Prelate that we have to live in the real world. People are prepared to put up money to buy lottery tickets in the futile expectation that they will receive several million pounds. The odds against it are such that you would think that, even given the present state of arithmetical ability, most people would be able to work out that their chances are, to put it mildly, rather low. That being so, the money is coming in, and that I welcome.
I join with those who said that it is of the highest importance to guard against additionality. We all say that. But I want to ask the noble Lord, Lord Inglewood, who will reply, what safeguards there are, if any, against additionality. Frankly, on the subject of additionality, those of us who have had dealings with the Treasury and the European Union do not trust the Government. I should like to know how we can be sure that the Government are not going to give less because the lottery gives more. That was not what was intended. It would be disastrous, and indeed a betrayal of the country, if that were to be so.
I also echo the remarks of my noble friend Lord Addington about leaving the lottery boards to get on with the job, not telling them from outside what they ought or ought not to do. Anybody in the country, from the highest to the lowest (if one is still allowed to use that shorthand term) is free and entitled to criticise what the lottery boards do and how they distribute money. In relation to a recent outburst from Downing Street, I say only that I was very glad to see David Sieff's temperate but firm rejection of the criticism made. The money is not there for the Government to decide what should be done with it. It is handed over to separate boards to deal with it, and they should be left so to do. People can criticise as much as they like, but there must be no suggestion whatever that the Government will have any say in how the money is used. Inevitably, in the distribution of so much money there will on every occasion be ways in which it is used which will upset somebody. Let people complain as much as they like, but let them not interfere.
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As I said, the moneys are extremely welcome. I very much support a remark that I believe was made by the noble Earl, Lord Gowrie. With so many speeches, it is not always easy to remember who said what, especially as some noble Lords repeated what others said—which I am also certainly doing. It is most welcome that money is going into sports grounds. I very successfully avoided organised games at school. I have always hated them. But if I had the power to do so I would pour money, for both social and economic reasons, into sports facilities in state schools. So many people of our age, and even those younger than some of us, forget how much aggression young males have to get rid of. If they cannot get rid of it in an organised and legal way, they will and do get rid of it in an unorganised and illegal way. It is just as simple as that. If young people cannot have proper training and proper opportunity to be violent in a limited fashion, they will be violent in a very unlimited fashion. There are those who are more knowledgeable about sport than I am, but I imagine that we shall never get a successful team in anything in this country until we spend more money on training youngsters in state schools. More money going in that direction would be very, very welcome.
For the time that remains I shall talk about money going to charities. They have taken the lion's share so far, and quite rightly. As the noble Baroness, Lady Wharton, pointed out, charities receive only 5.6 per cent. of the money which goes to good causes; some 28 per cent. overall goes to good causes. It has been a theme this afternoon to praise—I do not say excessively, but without any undue control—what Camelot has done. Camelot has run a very successful lottery and we agree that, in a way, that is a good thing. But Camelot is getting a great deal of money from the lottery and surely more than 5.6 per cent. of the total money could go into charities. We ought to be pressing to look again at the amount of money going to Camelot and see whether more money cannot be siphoned to the charities which need it so badly.
There has been much discussion as to whether the charities are better or worse off as a result of the introduction of the lottery. According to the National Council for Voluntary Organisations—I am sure that almost every Member of your Lordships' House will have had its briefing and so I need only remind the House of what it says—the verdict seems to be that the big, well-known charities are not losing out. That has been confirmed by other speakers this evening. They are the kind of charities which benefit from planned giving and receive money from well-known trusts of companies. I gather that they are just as well off as ever they were. Those which are not so well off are the very small charities—the struggling little groups which are run locally and which depend on those eternal jumble sales and raffles and the odd garden party. But, those are a very important part of the charities and the social life of this country. They are particularly important because they are local community efforts in a world in which local communities are often threatened and being weakened. We do not want to see those small organisations lose out because of the success of the lottery grants.

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When one looks at the way in which the National Lottery Charities Board has been distributing its money, I am grateful and glad to see that it has in fact distributed a great deal of it to just that kind of group. Some of the money has gone to charities which have income as low as £1,000 a year. Much of the money has gone to small community groups, trying to develop good schemes in local areas. That must be good. We must all he grateful for the sensitivity and perceptiveness with which the National Lottery Charities Board has identified particular unromantic, unspectacular and not well-known causes that have been able to benefit. It will undoubtedly make a great deal of difference to their survival in many cases. I hope that it can not only continue but can be intensified with an even higher proportion going to charities of that order.
I wish to make just one other point in relation to the National Lottery Charities Board. Every charitable organisation of which I have ever heard or with which I have been connected has always been in trouble about core funding. It is often not too difficult to raise money for a particular project. But nearly every charity finds it extraordinarily difficult to obtain the limited amount of core funding which is essential to keep the charity alive and not force it to spend all its time trying to raise the moneys without which it cannot have some kind of central administration, however modest, and therefore cannot exist. Those charities cannot spend all their time raising money for that purpose rather than getting on with the work for which they were brought into being.
I wonder whether the National Lottery Charities Board would give its mind to thinking how that very real problem of core funding for the smaller charities might be dealt with. There are a number of ways in which that might be helped. It is a central problem for all charities but in particular for the smaller ones. I very much wish that particular thought could be given to that very real problem. It would make a great deal of difference to the continuation and competence of a very important social and economic element in our society.
6.14 p.m.
Lord Donoughue: My Lords, I also begin by congratulating the noble Lord, Lord Hindlip, on his excellent maiden speech and thanking the noble Earl, Lord Gowrie, for initiating this excellent debate.
We on this side of the House support the lottery legislation and its rapid progress. We welcome its efficient and successful introduction—though to some of us it seems rather generously rewarded—and the impressive list of beneficiaries that the noble Earl recited. But before this mutual appreciation debate becomes too triumphal, I must point out that in fact over 90 per cent. of the awarded money has still not reached the successful applicants and is therefore still unspent. So, much of what noble Lords are speaking about and praising is still almost hypothetical. I must ask the Minister whether that reflects bottlenecks in the distribution mechanism and how long those blockages will continue. Again, I stress that our basic position is supportive. If the emphasis of what I shall say concerns reservations and proposed reforms, it is because we want the lottery to work better.
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My first and central critical comment relates to the lack of any strategic vision at all for the arts or sports expenditure. We know that that is specifically excluded by the legislation, which presumably is a relief to the Department of National Heritage, since in fact there is little evidence that it has any strategic vision for the fields under its supervision. But the danger is that without strategic priorities the lottery may be spread thinly and piecemeal and be dissipated. I should like to see strategic priorities for the arts and for sport—emphasising, for instance, though others will have different views, new arts and sports, especially for the young; amateur rather than professional activities; access, especially for the disabled; and promoting music in schools by providing instruments, say; or promoting popular dance.
I turn from that general point to more specific issues, and I must immediately raise the question of matching funds. It is becoming very clear that the matching ratios—they differ for each distributary body—are probably too severe. It means that the applicants in most need have the least chance. Even some of the big flagship schemes may stumble when attempting to raise enormous matching money.
It is a particular problem for local authorities which play a very valuable role in co-ordinating local projects and where it is forecast that after the first flush of applications, many of which were already prepared, over half of all future projects will look to their local authority for matching funds. Yet those local authorities do not have the money to match. Specifically, their sources for lottery funding are the basic credit approvals—yet the Treasury this year stipulated and fixed that at zero; so there is nothing there—or usable capital receipts. But many, and especially the poorest areas, have no such capital receipts or potential for them. With others, there is a totally erratic distribution of resources. A striking example is the Scilly Isles, which, with £155,000 of available capital receipts, in fact has more than Newcastle, Sheffield, Birmingham, Gateshead and Bradford combined. So unless local authority funding in that area is alleviated—for instance, through supplementary credit approvals—many lottery projects will fail through lack of matching funding. I ask the Minister to comment on that central problem.
On the local dimension, I believe that we need to look for more devolution of some of the decision-making. I suggest the introduction of a network of local community chests under local community control to handle small grants, so that they do not go through the massive national bureaucracy.
On the delicate subject of additionality, the principle has already been severely breached and all the promises broken. Real expenditure on the arts has been declining since the lottery and nominal expenditure in the heritage area has been savagely cut.
Linking that to the question of grants from the revenue, I must warn the noble Earl, Lord Gowrie, and my noble friend Lord Chandos (who made a brilliant speech) that the revenue grants will further breach the additionality problem and lead to substitution. Block revenue grants will inevitably become part of the

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permanent structure of the established institutions receiving them. It will not be possible to withdraw them because of the threat that that may bring disaster, and flexibility and novelty will be lost. The Treasury will then take the opportunity further to cut the normal sources of funding. We should never lose sight of the fact that the original target of improving the capital infrastructure was right.
The distribution bodies were set up in a great hurry—"on the hoof'—and we need to ask whether in practice they are sufficiently representative and accountable. There are bound to be controversial awards, such as today's from the Charities Board, and it is always better if those distributary bodies are seen to act transparently and accountably. Such decisions can then more easily be defended.
In relation to the National Heritage Memorial Fund, like others I particularly enjoyed the speech of the noble Lord, Lord Rothschild, and agree with everything he said. Despite the Churchill hiccup, which was one of presentation and not of substance, the NHMF is doing a good job. The plans he mentioned for Somerset House are particularly exciting and among the best to appear from any distributary body. I hope that after that the fund can tackle making Whitehall a heritage precinct and pedestrianising Trafalgar Square and Parliament Square. It will have our support for that. It is clear that the heritage remit is too narrow and we on this side support its widening.
We have already stated that we support the suggestion that private houses should benefit, provided they are subject to the public benefit tests.
We are sympathetic with what the noble Lord, Lord Rothschild, said in regard to new technology. The question of intellectual property needs re-examining, and we must make sure that the fund can do whatever it wishes to do in that area. For instance, it is particularly sad that the Victoria County Histories, which was one of the marvellous products of a previous anniversary, cannot be helped. It falls in the gaps in between. I am unofficially informed that that is the case. I hope that it is not, but I fear that it is.
Turning to sport, I should like to praise the effective way in which the Sports Council administered the lottery funds. However, we still have some anxieties. It is clear that the richer and better organised sports are dominating application procedures. It would help if funds were allocated to the weaker governing bodies to help them in their applications.
In a similar vein, the smaller sports clubs suffer from the minimum size restrictions and we would advocate what we would call a small grants fast-track system. We need clarification—perhaps the Minister can help—on the distributary role, if any, of the new United Kingdom Sports Council. It could take a strategic overview and we should like to see it encouraged to do that. There is also the problem of children's play, which is excluded from the lottery remit; it does not come in anywhere. We believe that children's play, which was extremely important when I was on the Sports Council, should be brought back into the net.
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In relation to sport, I am also particularly concerned, as have been other noble Lords, with the losers. The lottery money is not extra magic money; it is taken from elsewhere. Among the losers is the Football Trust. I agree with everything said by the noble Lord, Lord Aberdare, and my noble friend Lord Grantchester. Its income has been savaged by the lottery, as has that of the Foundation for Sports and Arts. And the Horserace Betting Levy Board's income was greatly damaged by the fall in betting, yet racing cannot apply for lottery funds. For reasons that escape me, the Sports Council does not recognise racing—one of the greatest of all sports—as a sport. That must be wrong. It means that racing cannot apply for funds to provide access for the disabled, as can any theatre. That is ludicrous. It is important to take drastic steps to repair the damage, especially to the pools groups and the levy board to make up for the damage done by the lottery.
The Millennium Commission appears to be in a mess. I hope it recovers. We may not have an exhibition for the millennium—perhaps the Government would like to delay its timing. Above all, it is important that the festival should provide a lasting monument of distinction and not some temporary and tacky theme park. Perhaps the Minister can say also what the Government are thinking of doing with that money when the Millennium Commission is no longer needed.
In conclusion, we welcome the lottery. We have comments to make on it. We should like to see more strategy, more public accountability, true additionality and visibility. The sustainability of the projects is very important. Finally, we must remember that it is the people's money and not the Exchequer's money. It should be seen to benefit the majority of people and respond to their issues of concern. I hope that the various refinements we have suggested will contribute to the even greater success of the lottery.
6.27 p.m.
Lord Inglewood: My Lords, my noble friend Lord Gowrie triggered a stimulating and worthwhile debate on the achievements of the National Lottery. We have heard a large number of distinguished contributions, not least that of my noble friend Lord Hindlip, who made a memorable maiden speech. I have no doubt that we shall hear more from him in the future on topics about which he clearly has considerable experience and expertise.
What is clear from the debate is what a resounding success the National Lottery is. When the Government took the decision to set up a lottery nobody could have or did anticipate the scale of that success or how it would become such a central part of our national life within such a short period. This debate is about success and some of the welcome problems, if that is not tautologist, that success can pose.
The National Lottery—in an initiative strongly supported by my right honourable friend the Prime Minister—was set up to provide money for good causes and has raised an amount significantly in excess of our and others' predictions. As the noble Lord, Lord Rothschild, said, last Monday, only about a

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year-and-a-half after the start of the lottery, the amount contributed by Camelot to the National Lottery distribution fund passed £2 billion. That money will be spent on arts, sport, heritage, charities, and on projects to mark the year 2000 and the beginning of the third millennium. Those are areas that are important for the quality of life for everyone in Britain but which have never had a priority call on government expenditure—a point emphasised by a number of noble Lords and illustrated by my noble friend Lord Sainsbury.
As a social phenomenon, the lottery has captured the interest and enthusiasm of almost every household in the land. Camelot, the lottery operator, estimates that 30 million adults in the UK regularly play the lottery; and on double rollover weeks, 86 per cent. of adults take part in the jackpot game. That is a somewhat higher proportion of adults than voted in the last general election. Of course, your Lordships can participate in this exercise of personal decision-making, although I know of none of your Lordships who has won a significant prize. I look forward to the headlines in the tabloid newspapers if and when one does.
An innovation as successful as the National Lottery is bound to attract public and media attention and comment. In recent months, much of that comment has focused on the prize structure of the weekly draw game; and on the way in which Camelot works and the profits it makes.
The Government's objective in appointing a closely regulated private sector operator of the game was to ensure that the lottery was run efficiently and thus maximise the return to the good causes fund, subject of course to Oflot ensuring that the lottery is run with due propriety and that the interests of participants are protected. We believe that the profit motive is the most effective way of achieving this and our view has been borne out by Camelot's success to date. Indeed, I think some would say that if a similar approach had at the outset been adopted in respect of the British Library, it might have been a different story, and I might have answered a different Question from the noble Lord, Lord Donoughue, earlier this afternoon.
The prize structure of the game was part of Camelot's winning bid to be the operator and was designed to produce the maximum possible level of public participation. It clearly meets the public's view of these matters. I would use this as evidence to my noble friend Lord Boyd-Carpenter as part of my response to some of the comments he made about the prizes. Camelot has been conspicuously successful. There has been some criticism of the size of the jackpot prizes, but it is worth remarking that most of the jackpot prizes are shared between syndicates or between more than one winning ticket, and anyway there is nothing wrong or immoral about scooping the jackpot.
The lottery has on occasions mistakenly been portrayed as a regressive tax. That view is incorrect on at least two counts. First, recent research by the Office of National Statistics shows that spending on the lottery rises with household income—in other words, it is not regressive. Secondly, the lottery is not a tax. The decision to play the lottery is entirely one for the
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individual. It is a game which is carried on under a strictly defined regime, controlled by Act of Parliament and by Oflot. It is right at the safest end of the gambling spectrum. I understand that real gamblers look for shorter odds than the lottery offers. The fact that such a high number of people choose to participate suggests that much of the criticism of the lottery is not based on the reality of what is actually happening but how they feel about it.
The right reverend Prelate the Bishop of Worcester raised the important question of scratch cards and under age play. Section 12 of the National Lottery etc. Act 1993 makes it unlawful for retailers to sell lottery tickets to children under the age of 16, and the director general has a duty to ensure that Camelot puts sufficient controls in place to comply with this regulation. Of course, children should be protected. We believe that sufficient controls are in place. My right honourable friend the Secretary of State has directed the Director General of the National Lottery not to license any game which does not allow for sufficient controls to prevent those who have not attained the age of 16 from participating in the National Lottery. I hope that provides some reassurance.
The right reverend Prelate also raised the question of the effect of the lottery on charitable giving, a matter raised by a number of other Members of your Lordships' House. On the evidence available, which is not conclusive, it appears that in general the amount of income collected by charities and foundations shows that the voluntary giving that they have received is holding up. A number of particular aspects of the overall picture have been alluded to, but it is certainly not the case that the catastrophic decline in voluntary contributions to charities which was anticipated in some quarters because of the advent of the lottery has materialised.
My noble friend Lord Aberdare and the noble Lord, Lord Grantchester, raised concerns about the Football Trust and the Foundation for Sport and the Arts suffering from the lottery's impact on the pools. As I am sure your Lordships will be aware, the Government have introduced a number of deregulatory measures to assist the pools industry, including the lifting of a ban on television and radio advertising and a reduction by 10 per cent. in pool betting duty. In addition, a further 0.5 per cent. cut in pool betting duty, worth of the order of £3 million a year to the Foundation for Sport and the Arts, was agreed with the pools companies in the 1995 Budget.
The focus on Camelot and its profits, and on the direct economic effects of the lottery game, have perhaps overshadowed the great impact of the lottery in the wider world on the arts, sport, heritage and charity sectors, as my noble friend Lady Rawlings pointed out. The 11 lottery distributing bodies have, in just over a year, awarded more than £1.8 billion to more than 9,000 projects. As my noble friend Lady Young pointed out, many of these are small-scale, and they are no less valuable for that. If I may make a further comment to my noble friend Lord Boyd-Carpenter about large awards, it is right, we believe, that large awards are made to national institutions and to Millennium

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landmark projects which will benefit the entire population of the community. In simple terms, if we are going to have a national opera house in London, we have to do it properly and well. We want to have a good opera house. There is no point in doing these national flagship projects other than up to the highest standard. What has been happening is an extraordinary achievement by any standard and one on which all those who are involved should be congratulated. The impact of these lottery awards will be felt in every community and hence by everyone throughout the country.
More than 7,700 awards of lottery funds—some 85 per cent. of the total number—have been to charitable and voluntary bodies spread right across the country. A number of speakers have referred to the amount of the total disbursements that have gone to charities. What in this context it is important to remember is that a very high proportion of the disbursements in all the categories have gone to charities. The benefit that the charitable sector as a whole has received from the lottery is far wider than simply those who may receive money from the good causes distribution body. What we are seeing is the lottery providing a massive new source of support for charities.
This success also shows just how much hard work so many people in the public, private and voluntary sectors have put in to the preparation of applications for lottery funds. They do this to enable things to happen which they care about strongly and which otherwise might never happen at all.
One of the Government's aims in setting up the lottery was, as has already been mentioned, to transform the capital infrastructure of our arts, sports and heritage sectors—using those words in a general sense. Thus far, the distributing bodies have made almost 4,500 awards to capital projects for a value of 1.5 billion. The benefit to the recipients, when the partnership funding is taken into account, will exceed £2 billion. It is not only the value of the investment which matters; so far as new buildings are concerned, we want them to be well designed so that in themselves the structures created have a stimulating and positive impact as well as having sound functional characteristics. As the noble Lord, Lord Palumbo, pointed out, we have in this country today some of the world's most distinguished architects who are in a position to be able to contribute to this process.
To deliver the amount of money that is involved in these sectors in the space of just over a year is little short of revolution, stimulating both economic regeneration and investment in the environment.
The noble Lord, Lord Donoughue, emphasised his New Labour credentials by pointing out that the money could not be spent until it was received. The position in respect of what he described as bottlenecks is that many of the projects we are talking about are long-term and will receive funds only as they spend the money that they need. Many also have been given awards on condition that they raise partnership funds. Since that is
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sometimes easier to do with lottery funds than without them, it is necessary to get the guarantee in advance, if the noble Lord understands me.
Lord Donoughue: My Lords, as the Minister defined my political position and it goes on record, I think I should make it clear that I am very old New Labour.
Lord Inglewood: My Lords, I always understood that the old ones were the best ones.
The noble Lord raised a number of other points. For example, he said that distributors should have strategic award plans. One of the characteristics of the lottery is that distributors cannot solicit applications. After all, this then ensures that the projects which might be funded will have the support of their local communities. However, the lottery distribution bodies are free to encourage certain types of application, such as the National Heritage Memorial Fund's urban parks programme, of which mention was made earlier, or the Sports Council's efforts to encourage applications from deprived areas and from schools—to go to a point raised by the noble Baroness, Lady Seear.
Perhaps I may respond to another point raised by the noble Lord, Lord Donoughue, about the United Kingdom Sports Council. Initially, the United Kingdom Sports Council will not be a lottery distributor. Its role will be in advising the home country councils on projects which have United Kingdom significance, for example, the British Academy of Sport. At present we see no need to have a fifth lottery distributor for sport although my right honourable friend the Secretary of State will want to look again at that once the United Kingdom Sports Council is formally established.
The aim of the Department of National Heritage (set out most recently in the departmental report) is to enrich people's lives, through encouraging high quality and diversity in creative activities; to safeguard existing creative achievements and promote understanding of the past; to extend opportunities to enjoy and appreciate rewarding leisure activities; and to promote the contribution which all of the department's sponsored sectors make to national prosperity and prestige.
The introduction of the National Lottery has effortlessly fitted into those objectives. In the areas of sport, arts and heritage, the lottery is building on work which has traditionally been done by our non-departmental public bodies. It is also providing us with the opportunity to celebrate the new millennium in a number of different ways and, following the transfer of responsibility for charities and the voluntary sector from the Home Office, is supporting and focusing our thoughts on what can be achieved in these areas. In the coming months, my department will be seeking discussions with a wide range of voluntary groups and organisations to listen to their perspective on the system of making applications and awards. In this way we hope to ensure that the maximum benefit possible will accrue to these areas.
The lottery has had direct effects on local communities across the country. As my noble friend Lord Gowrie pointed out, in many respects it is doing what was done in the Victorian and Edwardian eras by

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private philanthropy. Perhaps I may return to a point made by the right reverend Prelate the Bishop of Worcester and say that although this may be a change in the way in which things are done, it is part of a longer evolution. For example, in Scotland, in Clackmannanshire, lottery money has been used to repair an early 19th century iron bridge which had fallen into disrepair; and in Wales, in South Glamorgan, conservation work is to be carried out on Llandaff Cathedral to help to preserve it for future generations.
Perhaps I may respond to a point that was raised initially by my noble friend Lord Boyd-Carpenter and later by others and say that funds can be made available for churches.
I have a personal anecdote to tell. I am personally familiar with a project in Keswick, where the Cumbria Theatre Trust Ltd. has been awarded a grant of up to £3.1 million to build a new theatre. Before the advent of the lottery, those running the old theatre which these funds will help to replace dreamt of a scheme such as this. More than a decade ago, I recall going to meetings in the backroom of a pub called "The Packhorse" to try to help bring forward a scheme and feeling very daunted and depressed by the financial problems it posed. Now it is going to happen. It is an excellent example of the way that the lottery has provided an opportunity for people to use their imagination to come up with worthwhile and innovative projects and see them realised.
Lord Annan: My Lords, is there any money for endowment in that Cumbrian project? The great Victorian philanthropists, and even Lord Nuffield in our time, always saw to it that there was an endowment as well as a building.
Lord Inglewood: My Lords, no endowment comes with that project, which involves a new theatre building for an existing organisation.
The lottery is also helping the disadvantaged and the less well off through the National Lottery Charities Board, the programmes of which have so far focused on poverty, health, disability and care. Future grant programmes will focus on improving opportunities, the living environment and community involvement.
In thinking about those distributions, it is important (for the long term well-being of the lottery) to ensure that particular disbursements command a wide degree of support. The noble Baroness, Lady Wharton, and my noble friend Lord Soulsby raised the question of animal charities and whether they can benefit from the lottery. Although animal charities have not been eligible for grants under the first two grant rounds of the National Lottery Charities Board, the board has had discussions with a number of such charities. I understand that they will be able to apply for funds in the grants round covering the physical environment and the social fabric of communities which will be launched later this year.
Lottery money has also been used to help the disabled—not only in ensuring that buildings built with lottery money must provide access for disabled people and be accessible to them, but also in helping them to participate in activities such as sport and the arts.
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The lottery is helping urban regeneration. For example, the Tate Gallery of Modern Art will help to regenerate Bankside in this city; and the Lowry Centre in Salford will bring huge benefits to the surrounding area. The Millennium Earth Centre in South Yorkshire will provide a world-class educational, research and business centre for sustainable development.
The lottery is also bringing benefits to rural communities. Many awards from the distributing bodies have gone to rural areas and the Millennium Commission has set up a scheme designed specifically to help to preserve and build village halls which, as those who live in the country like me will know, are very important.
The noble Viscount, Lord Falkland, underlined the importance of the lottery to film. That point was echoed by the noble Viscount, Lord Chandos. Their comments entirely accord with what I have been told by those in the film industry whom I have met.
As I have already said, sport is important. In addition to the lottery, Sportsmatch is doing what it can to try to provide improved sporting facilities for the very people to whom the noble Baroness, Lady Seear, referred.
The lottery is creating jobs. It is estimated that the Tate Gallery of Modern Art will create 650 permanent jobs in its immediate locality, and perhaps 2,500 throughout London. The Millennium Commission award of £46 million to the new National Stadium in Cardiff should also provide more than 700 permanent jobs. In addition, it is likely that that redevelopment will have a substantial and durable wider economic effect. Another Millennium Commission award, to create an international maritime arena at Portsmouth Harbour, will generate temporary employment for around 5,000 architects, designers, construction workers, electricians and people in associated industries; and when completed is expected to provide 2,100 new jobs.
Less directly, the lottery has also provided an important boost for shopkeeepers. Retailers received a total of £265 million in commission in 1995–96, an average of just under £9,000 each. Many will also have employed extra staff to cope with the public's great demand for lottery tickets.
Tourism is now one of this country's most important industries. The lottery is enabling us to improve the attractions and infrastructure needed to attract visitors in an increasingly competitive marketplace. Grants such as those to national theatres and museums will, in addition to making this country a better place for us to live in, also attract more visitors from other countries and thus trigger additional money entering the economy. In East Anglia, for example, £6.5 million of lottery money is being used by the Imperial War Museum to create a major attraction to be designed by Sir Norman Foster which will commemorate war-time links with the United States Air Force.
The lottery is also providing money for projects which will enhance the environment. For example, the RSPB has been awarded £675,000 of lottery money to recreate fenland feeding habitat of reedbeds and meres

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in Suffolk. This sort of award can bring tourism benefits as well as meeting a recognised need to preserve our natural environment.
The lottery is a means of encouraging national pride—for example, through flagship projects such as the Welsh National Stadium, Hampden Park, and the Tate Gallery. All these projects have an impact on the entire population of the country, not just in the locality where the new facilities are built. In addition, the lottery is also having a similar but perhaps more narrowly focused impact on local communities, through awards to smaller organisations such as local sports clubs and play groups.
My department is not resting on its laurels. It had always been anticipated that the lottery would evolve over time—and it will. The framework for the distribution of lottery funds is kept under continuous review. We very much value the kind of constructive comments and suggestions that we have heard this afternoon, and I am grateful for all that has been said—
Baroness Seear: My Lords, before the noble Lord sits down, I may be wrong, but I do not think that I heard him use the dreaded word "additionality". I thought that he was going to explain to us how we could be sure that there would be no additionality.
Lord Inglewood: My Lords, the noble Baroness has just beaten me to it by a whisker. My next paragraph addresses that very point. Both the noble Baroness and the noble Lord, Lord Donoughue, raised the question of additionality and said that the principle of additionality should be maintained. The Government have repeatedly made it clear that money raised by the lottery should be a new and independent stream of money for good causes. We are committed to this principle and, along with the distributing bodies, will monitor developments to ensure that it is maintained.
On 1st April of this year my right honourable friend the Secretary of State announced the introduction of new directions allowing revenue-only funding in the arts and sports to sit alongside the existing capital directions. The new directions allow a particular focus on developing the creative abilities and sporting talents of young people and on encouraging access and participation in the arts for all people. The distributing bodies are now coming forward with specific proposals under these new directions. This investment in people as well as buildings will help to transform the quality of life for everyone in the country.
The lottery is also helping us to preserve the past as well as invest in the future. For example, the Secretary of State has also announced changes that will allow building preservation trusts to benefit from lottery funding, widening the range of projects and initiatives that can benefit from what the lottery can offer. The National Heritage Memorial Fund is currently finalising the details of this scheme.
A number of noble Lords raised the question of whether the National Heritage Memorial Fund should be able to provide revenue funding and to fund private owners. In answering these questions, I declare an
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interest as the owner of a Grade I listed building. The National Heritage Act 1980 prevents us from making changes to allow the National Heritage Memorial Fund to make revenue awards under the themes of helping talent, or increasing access or to allow funds to go to private owners. The Government are considering amendments to the Act which would, if brought forward, provide the National Heritage Memorial Fund with more flexibility. We shall be considering whether the applications and award system is easy for people to use and understand so it is open to people everywhere in the community to take advantage of these new changes. A related aim is to ensure that as many good applications as possible come forward for schemes which will help young people who represent our future. The lottery provides an unprecedented opportunity to improve the social, economic and cultural fabric of the country. The framework that the Government have set for the distributing bodies has let organisations across the length and breadth of the land grasp this opportunity and to do things they want to do where they want to do them.
Perhaps the most fitting remark with which I can end my speech this afternoon is that with which my noble friend Lord Gowrie concluded his opening remarks. They are the words of the National Heritage Committee of another place, who concluded the foreword to their recently published report on the National Lottery with the words:
"let us praise something which has been done well and has gone right."
6.53 p.m.
The Earl of Gowrie: My Lords, I am gratified that the Motion has attracted such a pertinent and interesting debate. Your Lordships' new and unprecedented succinctness gives me some time in which to sum up the debate, but I think that that might be to tax the patience of the House. The Minister has done it very well. Where matters are of direct concern to the Arts Council I will ensure that I write to noble Lords.
I should like to make three short points in as few a minutes. I begin by endorsing, now that I have actually heard it, all that has been said about the special and authoritative maiden speech by my noble friend Lord Hindlip. Most of your Lordships have expressed the wish that my noble friend will spend more time helping us here. I believe that I have good commercial grounds for hoping that the noble Lord will be more or less constantly in his seat. I certainly look forward to hearing him again.
There may be a need to clarify the effectiveness and propriety with which the Arts Council operates, given the benefits of having experts on the council and its advisory panels and that most of us, either directly or indirectly, are or have been involved in publicly funded arts all over the country both at professional level and as unpaid trustees. As I said in my intervention to the remarks of a former fellow arts Minister, the noble Lord, Lord Jenkins of Putney—which I followed most closely—if one wants to people one's quangi with those who live and work in the cultural or sporting arena, as distinct from wholly disinterested or detached

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mandarins, one faces a difficult issue. I can assure your Lordships that those among us on the Arts Council who are, or who have recently been, involved in organisations making lottery bids always absent themselves from discussions relating to those bids, not simply the discussions when the matter is finally voted upon.
The noble Lord, Lord Donoughue, with whose remarks I was in general agreement, said that he would like to see the Arts Council devote more attention to new and amateur projects—we already fund an enormous number of amateur activities—new talent, new audiences and accessibility. I wholly agree with him. We urged an addition to the Secretary of State's directives. She responded magnificently. The noble Lord will find that his wish will come true late this year or early next year.
I believe that the noble Lord, Lord Donoughue, may have slightly misinterpreted one remark that I made. I am wholly opposed to the lottery providing core funding. Here one refers to the issue of additionality or substitution, as it is sometimes called. What I sought to demonstrate was that the Exchequer was not merely failing to maintain our grant but that it was cutting it in real terms, and that this caused widespread cynicism, muddle and dismay. I know that my noble friend the Minister will be a trenchant fighter in getting that corrected, not least because it was my right honourable friend the Prime Minister who said in a public speech, "Treasury, please note". I hope that that point will be underscored.
With reference to delays in money reaching the coal face, all bodies have asked us to commit money where we are able to do so in advance as a method of helping them raise their matching funds. Although I agree with what has been said about the need for greater flexibility in matching funds, so far in toto we are coming out with more than we require in aggregate in matching funds. We must treat that issue quite cautiously.
Finally, I extend my gratitude to all noble Lords who have taken part in the debate and to the Minister for his robust reply. I beg leave to withdraw the Motion.
Motion for Papers, by leave, withdrawn.

Transport Infrastructure: Private Provision
6.58 p.m.
Lord Astor of Hever Lord Astor of Hever rose to call attention to the role of the private sector in the provision of transport infrastructure and services; and to move for Papers.
The noble Lord said: My Lords, I am delighted to highlight the success of the Government's privatisation programme in the provision of transport infrastructure and services. We forget too easily how burdensome the nationalised industries were. By the end of the 1970s they were costing the taxpayer £50 million a week. Now privatised, they contribute £55 million a week in taxes to the Treasury. Competition and independence have improved them out of all recognition, forcing them to
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become more efficient and to treat consumers as customers. I believe the railways will be touched by the same magic, with staff committed and dedicated to the success of their operation to the benefit of passengers and shareholders. The railway network was after all built by private companies. The glories of the Great Western Railway and St. Pancras Station were funded by shareholders. Public ownership, by contrast, has been characterised by closure and dilapidation. Privatisation offers the industry a chance to break out of this spiral of decline.
New owners are pioneering schemes to lure passengers back to rail, including linking bus and train timetables and tickets, better marketing and park and ride schemes. It is clear they want to run more services, not fewer. From 1999, Midland Main Line will carry 42 additional trains a day from London.
The new operator of the Gatwick Express has pledged to put on more early and late trains, and produce the kind of service standards which we are used to seeing on the airlines. South West Trains has an eight-coach stand-by train fully crewed at Waterloo Station during the evening peak, should the unexpected occur.
Operators have assured me that clean trains are a priority, as well as more secure stations and car parks, more Sunday and off peak services, provision of easier access for the disabled, and provision of passenger lounges. Punctuality will be improved and overcrowding and train cancellations reduced.
Prism, which bought Britain's most hated railway, the Southend "Misery" Line, will begin next year to phase out the line's unreliable "slam door" trains, to be replaced by a fleet of new trains. Not surprisingly, its spokesman told me:
"We quite naturally want people to stop calling it the misery line".
Britain should enter the next century with a dramatically improved and cheaper rail industry. Of course there will be horror tales of failure. But when those erupt, we will do well to remember the system's shabby record under state control; the dirty, crowded, delayed or cancelled trains and Luddite unions.
Wisconsin, the new owners of British Rail's heavy haul freight operations, believes that it can reverse the decline of rail transport—now down to just 6 per cent. of the freight market in the UK—by improving the quality of service. Where BR went wrong, according to many customers who abandoned rail shipments, was in its centralised approach, its lack of flexibility and its inability to provide speed and reliability.
The privatisation of domestic freight services will encourage as many freight operators as possible to come on to the track, and off the roads. Now that freight can be managed as a separate business, it will have managers with a strong commercial motivation to make it work. I am also delighted that the Government have decided that Railfreight Distribution—British Rail's loss-making Channel Tunnel freight business—will be offered for sale.
The privatisation of British Rail should provide the springboard for those operators to acquire railway operations elsewhere in Europe, as countries implement

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an EU directive intended to force European state railways to break themselves up in a manner similar to rail privatisation in Britain. In trying to introduce that system, Neil Kinnock delivers a slap in the face to his party back home. That may represent a betrayal of his party's values, but should be welcomed by passengers all over Europe, who have had to deal with overstaffing, inefficiency and debt in their railway services for decades.
I was in France last week with a parliamentary delegation, and French MPs to whom I spoke were filled with envy at our rail privatisation. French railways have a 200 billion franc debt, a 50 billion franc annual deficit, and only a 70 billion franc income. How lucky we are! Before privatisation, the bus companies were a shambles. It is 10 years since the start of the bus industry's process of commercialisation following the Transport Act 1985, which required the privatisation of the National Bus Co. and enabled local authority-owned bus undertakings to be privatised voluntarily by their owners. That process has opened up the opportunity to provide public transport more closely tuned to the needs of the market place and has been coupled with substantial cost reductions. In the nine years to 1995, costs per vehicle kilometre have fallen by 57 per cent.
Through privatisation, deregulation, and removal of subsidies and grants, the Government have encouraged the growth of an efficient ports industry, based on sound commercial practice, technological investment and greater commercial freedom: 60 per cent. of the tonnage handled in UK ports is now dealt with by private sector ports, many of which are world leaders in their field.
We are now seeing the first compulsory trust port privatisations under the 1991 Act. I hope that in due course privatisation of the port authorities at Ipswich and Tyne will offer new opportunities for innovation and entrepreneurial development to the benefit of port users and the local communities.
The power and strength of British Airways have created one of the finest examples of privatisation seen anywhere in the world. BA is a national asset; the UK can justly be proud of it. Privatisation gave British Airways the freedom, and the incentive, to become a world beater. It set out to become a global leader and has successfully imprinted its stamp of British quality on markets all over the world. Its investments and alliances with other airlines demonstrate, in marked contrast to some of its government-owned competitors, how a company freed to market forces can bend and adapt to take best advantage of prevailing circumstances.
Even this week, in yet another show of remarkable and exciting enterprise, BA has announced with American Airlines an alliance which will keep it at the forefront of world aviation, spell good news for the thousands of people who all own a part of it, and provide consumers with even greater choice.
I would urge the Government to consider the similar alliances forged elsewhere in Europe with major US carriers and to expedite discussions with their American counterparts to enable that deal to go through quickly.
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Already we hear the voice of disaffected parties in Europe and the USA who dislike the aura of success that surrounds British Airways; let us not be sidetracked by them.
British Airports Authority has experienced enormous advantages since privatisation. The amount of money invested into high quality airport facilities has increased dramatically, helped by BAA's freedom to tap the capital markets without government restrictions. The financial expectation of the market has to be met, and to that end there is a strong incentive continuously to examine the efficiency of the company in every area. Since 1991, staff productivity has improved by 45 per cent. in terms of passengers handled by each member of staff.
Over 90 per cent. of passengers expect and want shopping facilities at the airport and retailing has been revolutionised since privatisation.
These are exciting times in transport infrastructure, and the private finance initiative is taking root and growing as everyone involved gains experience. PFI offers a prospect of higher levels of investment, even while public spending remains tight. The Channel Tunnel Rail Link, by far the largest yet taken forward under PH, should open in 2003. An exciting international private-sector enterprise, London and Continental Railways, will take on a variety of roles, both as builder and operator. It will raise the bulk of the finance, produced the detailed design and own, operate and maintain the new line, reserving a substantial amount of track capacity for domestic services.
Other major projects announced or under construction include the Jubilee Line extension, the Heathrow Express and Thameslink 2000. London Transport will benefit from the Northern Line PFI and the Central Line upgrade. Roads are vital for the future health of the British economy and PFI has greatly helped that. I beg to move for Papers.
7.11 p.m.
Lord Berkeley: My Lords, I am grateful to have the opportunity to contribute to the debate and I congratulate the noble Lord, Lord Astor, on tabling the Motion. While listening to his review of transport in this country it occurred to me that it would make a wonderful contribution to the Conservative Party's election manifesto. It is a wonderful example of what he hoped has happened, and sometimes it has. However, I wish to return to the real world.
I do not want to get into a debate on public versus private—public sector good, private sector bad—because the private sector has done many excellent things for transport. As an example, the noble Lord, Lord Astor, mentioned French Railways. According to yesterday's Financial Times, it has agreed to split the infrastructure from the operations and—surprise, surprise, as has happened on many occasions—the French Government are picking up the debt from the infrastructure. However, the problem is one of the structure—separating the private finance from the restructure and deregulation—and I wish to cover more than railways.

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Perhaps I may look at a few of the pros and cons of private finance, which is what I hope we shall be able to talk about tonight. Some of the pros include the availability of private finance to substitute for or supplement the public sector, as less and less public sector money is available. The private sector can take the risks in expectation of future rewards. The Channel Tunnel is an example, as is bus deregulation, new rolling stock, Railtrack's new investment, ports and airports. Some projects are successful but there is a big question mark over others.
It is said that better management and more flexible labour are involved. I am sure that that is true, but sometimes that results in the demotivation of staff, who occasionally begin to wonder who they are working for. Are they working for the customers and passengers or for the shareholders? That is why I believe that we need stronger regulation to look after the customers' interests in many of those examples.
Against private finance is the loss of the public service ethos. Many may say that it never existed. But it has not always improved. There is a serious loss of what I might call "network benefits". British Rail's break-up is a classic example; for instance, through-ticketing and alternative routes are not available. The attitude of staff in booking offices to inquiries about other franchisees is in many cases still lamentable. Perhaps, quite rightly, they have been told to look after the shareholders' interests, whereas they should be getting passengers on to railways, where the competition is with roads and air and not with colleagues on the next-door line. As regards buses, privatisation may be seen to be a great success but the deregulation outside London has caused chaos. Bus mileage has increased dramatically but passenger numbers and passenger mileage are dramatically down outside London.
There is also the lack of government control—let the market decide—and the loss of public accountability. It is becoming more and more difficult to get questions answered by Ministers rather than chief executives of the various agencies. Many people have a fear of turning a public but accountable monopoly into a private but unaccountable one. I am not sure whether the problems that I have identified come down to whether the business is privately or publicly financed; or to the problems of deregulation; or even more to the lack of policy or direction, changes of government mind; or weak or non-existent regulation; or just plain dogma.
I turn now to private finance and the risks which go with it. The private sector is good at taking risks which it understands. However, in many cases the Government have tried to get the private sector to take inappropriate risks. I refer to risks against changes or decisions which are in the Government's gift, new legislation or even new competition where the private sector expected a controlled monopoly, as in one of the early rail rolling stock sales. If the private sector is to be involved it needs clarity and some certainty that a project is going to go ahead.
Perhaps not all noble Lords realise that the cost of tendering or submitting proposals for such schemes is enormous and it is growing. In 1986 the document of
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inquiry from the Government for the Channel Tunnel, in which I declare an interest, was three or four inches thick. I believe that the documents for the Channel Tunnel Rail Link inquiry eight years later required a forklift truck to lift them. There may be reasons for that, but a great deal of work is involved.
Another example is motorway tolling. The Government have asked companies to come up with ideas and testing schemes for tolling motorways. The problem is that the contractors will be competing with each other, and there is no indication that any of the projects will go ahead. Indeed, I believe that the Government have subsequently poured cold water on any idea of tolling but appear to be surprised that three of the five contractors pulled out before starting work. It is almost as though the Government are looking for a free consultancy.
Furthermore, there is the interesting question of ongoing Treasury commitments to the organisations which have been privatised. Much privatisation requires the commitment of government funding to continued rental, subsidy or contributions—whatever one likes to call it—lasting longer than the standard Treasury forecasts of one, two or three years. For example, the London Underground Jubilee Line rolling stock has a 10-year pay back period commitment from the Government. As regards Thameslink 2000, the Government have made a commitment to Railtrack for the new capital works required lasting 14 years. Of course, some BR franchises through the Franchising Director last 15 years. It would be interesting to hear from the Minister how firm those commitments are. I suspect that the private sector believes that in practice they are firm, even if there is some small print. But I wonder whether the Treasury goes along with a commitment 15 years hence.
Finally, privatisation, fragmentation and the occasional lack of policy sometimes cause the Government to forget that for large projects there needs to be a mechanism for deciding and debating, first, whether a project is desirable and in the national interest. We debate that subject occasionally. Secondly, it must be decided whether the proposal is the most economic way of providing the service or whether there is a better alternative. Sometimes we do not quite get there. Thirdly, it must be decided what constraints must be put on promoters to ensure that the national interest is safeguarded.
The noble Lord, Lord Astor, mentioned the rail link. That is being considered by a Select Committee of this House. Stratford Station and the connection north of London is there. I believe that that is good but it was not in the original proposal. A public inquiry is taking place into a possible Terminal 5 at Heathrow. But there is little discussion about whether the expansion should be there or at other airports in the south-east and what public transport should be provided to enable the passengers to get to and from there.
We shall shortly be debating Central Railways. That is a new project arising under the Transport and Works Act procedure. I am sure that we shall wish to ask questions about that. Lastly, the west coast main line

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has been the subject of long-running discussions on its upgrading. The last that we heard from the Franchising Director is that the argument may last for 14 more years. That almost brings it to the time at which it will need its next upgrade but one.
Private finance has a major role to play in providing for the future transport needs of this country. But at present the uncertainties, changes and delays probably caused the promoters to price in additional risk and possibly to enjoy personal corporate rewards subsequently considered to be excessive, as we have seen, while possibly not providing the service which customers expect. The solution is a clarity of policy, roles and responsibilities and commitments to all parties. There should be no changing of the goalposts and, most importantly, there must be consistency of regulation.
I conclude where I started, with buses. London buses are privatised but they are regulated. The passenger numbers are up and if the bus lanes were sorted out—they are not yet but they should be—it would be a great success. But, as I have said, the situation is completely different in relation to provincial buses. I hope that the Minister and his colleagues travel frequently and incognito on some of the different types of transport to see the difference. I welcome privatisation, but it requires proper regulation in order to put the travelling public first.
7.22 p.m.
The Earl of Mar and Kellie: My Lords, I congratulate the noble Lord, Lord Astor of Hever, on his most interesting introduction to this timely debate.
I have had a long interest in railways, mainly nostalgia-based, I now realise, and I hope that my understanding of public transport issues has improved by participation as a parliamentary commissioner in the Strathclyde tram inquiry, which concluded a fortnight ago after 39 days. Noble Lords will have to make up their own minds about that.
I shall focus my comments on public transport provision in Scotland. That allows me to start with the political difficulty that Scotland has with the private provision of a public service. I believe that the broad desire is that government, through taxation, should provide what Scotland needs. It is a consequence of the Act of Union that other political ideas are practised in Scotland from time to time.
A transport debate which did not touch on the Skye Bridge would be inadequate. That symbol of private enterprise, constructed by the Miller Group, raises a number of issues, not to mention a number of uncollected tolls. The principal complaint against the private provision of that bridge must be that it is set in a remote area and, as a bridge with an expensive toll charge—more than £5 for a single journey—will do nothing to open up the economic viability of the Isle of Skye and the Outer Hebrides. A toll-free bridge would have assisted in that economic development.
Secondly, there is an absence of an alternative route to Skye at Kyle of Lochalsh. I believe that that contravenes the spirit of the New Roads and Street
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Works Act. I acknowledge that Skye can be accessed by ferry at Mallaig, to Armadale and in the summer months, from Glenelg to Kylerhea. However, those two are not practical alternatives at Kyle of Lochalsh.
Thirdly, the refusal of the Scottish Office to allow Caledonian MacBrayne to continue with the vehicle ferry service to Kyleakin constitutes, in my opinion, an inhibition of competition.
Fourthly, the highest toll in the United Kingdom contravenes the Act of Union which lays down that tolls must be equal in England and Scotland. To be fair, I conclude this part of my remarks by accepting that the Skye Bridge keeps better hours than the old ferry and can operate in worse weather. But it is the lost opportunity for economic development which is the most significant argument in relation to the Skye Bridge and its tolls.
I turn now to the proposed use of shadow tolls, of which I approve. Your Lordships will be aware of the proposed conversion of the A.74 Glasgow to Carlisle road to motorway by means of a design-build operator-maintained contract. It is proposed that the successful contractor will be paid a toll by the Scottish Office on the basis of vehicle usage. Vehicles will be counted electronically on the move. That approach achieves the combined aims of funding through taxation and value for money through competitive tendering.
There is an element of risk-taking for the successful contractor because the use of the new M.74 might decline, but I find that unlikely.
I turn now to urban public transport and the more difficult topic of reduction of congestion in urban areas. The current policy is that bus transport is provided privately and that rail and ferry services are subsidised. I acknowledge that Scottish local authorities and the Strathclyde Passenger Transport Executive can subsidise bus services on social grounds—typically, late night bus services and country routes. On the face of it, that does not seem to be a level playing field, but examination of private bus provision shows that although bus operators must be able to pay their way and buy new buses through the fare box, they are not paying the full cost of road provision, bus stops or bus stations, but only a contribution to that through the vehicle road licence fee. In the light of that, the subsidisation of rail services begins to level out the playing field.
Some conflict exists when rail services are promoted by increased subsidy on routes already served by bus and hence, in competition with bus operators. It costs £100,000 per year to operate a bus. Co-ordination of public transport is needed rather than wasteful competition.
I believe that a broad strategy is required to deal with the reduction of congestion. Easing people out of their cars is essential but difficult in a democracy. Car restraint measures must be draconian, verging on coercive. I believe that urban car parking needs to be charged at rates which are reasonable for up to two hours but which are positively unpayable at eight hours.
That alone would stifle economic development unless it were mitigated by the provision of increased bus and train services and park-and-ride facilities. It is essential

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to have a dedicated transport service with priority to the urban centre from the park-and-ride site. That service must be absolutely reliable and run at considerable frequency.
Security measures are essential at the park-and-ride sites but I suggest that users will not pay that additional cost. Park-and-ride can be given the kiss of death very easily by unreliability, poor frequency and lack of security. For example, I met someone very recently whose car was taken from a park-and-ride site and wrapped around a lamppost.
Also, I recently sampled the park-and-ride operation in Aberdeen, from Bridge of Don. I found that the £1.50 park-and-ride car park ticket also gave me up to five bus tickets for passengers. The bus service is run at a seven-minute headway in peak hours, reducing to 15 minutes offpeak. On Saturdays, the service has a 10-minute headway.
Such schemes have considerable user and non-user benefits and must be set up and marketed with determination. The political will must be found to implement unpopular measures of parking restraint and bus priority. Subsidy will be necessary to provide park-and-ride facilities. The result will provide the non-user the benefits of reduced congestion, reduced accidents and improved air quality.
I conclude with some further thoughts about urban public transport. First, suburban rail services with car parks should be encouraged. Secondly, bus priority lanes should be engineered into urban streets, and junctions redesigned to give greater priority to buses. Thirdly, in extreme cases, "bus only" roads should be arranged. Fourthly, bus stops should provide electronic real time information, and have their kerbs arranged for modern buses. Fifthly, private bus operators should be grant aided to purchase the latest high-tech city buses, which have stepless low floors, suspension lowering or "kneeling" facilities and some seats left out to provide space for wheelchairs, prams and shopping bags.
Sixthly, to improve city centre air quality, by-laws should be introduced, insisting on the use of ultra-low emission natural gas engines in buses. All those features are now available, but at higher cost which will be difficult for a private operator to afford. A bold public transport planner would wish to implement all those measures, and so would grant-aid private operators to enable them to purchase this superior equipment. It would be expedient to do so in the public interest.
7.30 p.m.
Baroness Seccombe: My Lords, I wish to add my thanks to those already expressed to my noble friend Lord Astor of Hever for initiating today's important debate. I see the problem of nationalised industries as being comparatively simple. I believe that the lack of ownership over years causes stagnation and lack of vision.
In the area of transport services we have the stark example to which my noble friend referred. British Airways was privatised in 1987, since when it has been transformed. Prior to that time the company had a chequered career and was viewed with suspicion by the
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travelling public. Frequent strikes, inefficiency and the lack of customer care were indicative and, I have to say, expected from a nationalised industry. Now, some nine years later, we have an airline to be proud of and one that is recognised as a world leader. Travelling with BA is a pleasure: the well-trained cabin crew are courteous and care for the passengers. The financial turnaround has been remarkable.
The success of British Airways draws attention to the inefficiency and failure of other airlines, such as Air France and Iberia International Airlines which receive huge subsidies from the European Union. We are told that there is always a good reason for yet one more and final subsidy of millions to assist those ailing companies. The sooner those airlines are in the private sector the better. It must be very galling for BA to witness such vast handouts to its competitors.
I am sure that we can all agree that the private sector brings innovation to transport provision as it really is better than the public sector at responding to the needs and wishes of people. The Government understand that and encourage the private sector to be involved whenever possible. Exciting initiatives have developed and individuals have been willing to back their ideas with their own personal investment.
The noble Lord, Lord Berkeley, referred to risk taking. It is a factor in any new business and one which a nationalised industry never has to face. State employees do not have to take home the worries that entrepreneurs often do. But, of course, neither do they have the sweetness of success. However, it is to be hoped that business success will not in future be seen as a dirty word and something to be despised.
It always seems strange to me that footballers, rock stars and other high earners never seem to suffer the same fate if they are successful. We should not forget that it is the risk-taking entrepreneurs who provide the services that we need and the employment of millions of people across the country.
The Railways Act 1993 opened the way to reverse the trend of decline in the numbers of people and the amount of freight travelling by rail. Travelling by train had become frustrating, with trains not running to time. dirty waiting rooms that were a disgrace and shabby carriages, together with a feeling that you as a passenger were just a necessary nuisance. What a challenge! But many of the railway franchises have been awarded and already we learn of new ideas that will come into play in the coming months. One that has not been mentioned so far which I particularly like is the idea of a children's play carriage to assist with the boredom of long journeys.
The mere fact that someone or some people and not the state own a business can change the atmosphere dramatically, improving services and attracting new investment. It can also help to liberate the operating structures, which may be necessary to give private sector initiatives the opportunity to respond to the demands and expectations of the customer. Major transport projects today require huge sums of money. It is therefore very welcome to see the private finance initiative delivering investment into many projects.

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There is another way whereby private finance can be injected. At this stage I wish to declare an interest. My younger son is working with the Community Transport Association, which is the UK's representative body for non-profit-making transport operations. It is a registered charity with a trading arm. There are 1200 members, including voluntary and community groups, local authorities, the NHS and other public bodies. It is mainly concerned with transport needs which are not met by other forms of transport, particularly for the elderly, the disabled, children and people in rural areas.
The trading company of the association generates income from organising training courses and publications. There is also a free advice and information service. It receives other funding from the Department of Transport and grants from Help the Aged. A most interesting project was launched yesterday. It is known as the Asti project and involves the use of electric and gas-powered mini-buses. There will be experimentation with satellite tracking to improve vehicle efficiency and other aspects of environmental management. Funding for the project has come from the European Union, the DTI and 12 business partners, including British Gas, Sainsbury's, PowerGen and London Electricity.
The injection of private finance by funds or services is to be welcomed in imaginative innovations of that kind. People with reduced mobility must have their needs met and the creative role of the voluntary sector is recognised as pivotal to the development of services to meet the needs of an ageing population, in addition to the needs of handicapped people. Many of them, without the support and care of groups like the Community Transport Association, would lose a precious part of their independence and quality of life.
It is good to see the public and private sectors working together, pooling their expertise and harnessing enterprise and innovation. Of course it is important for the public to have a choice of transport, but at the same time people should be aware of its effect on the environment. Good services provided by rail, coach or bus will attract people away from their cars, but only if the services are reliable, comfortable and give value for money. We have seen what has happened to the bus and coach services. They are cheap, frequent and have given millions of people an opportunity to travel around the country and further afield—an opportunity that previous generations were not able to enjoy.
Commuting by car on a daily basis can be a frustrating, unhealthy experience, as people sit in their cars, nose to tail, mile after mile, taking hours to travel a comparatively short distance. There must be a better way. For some the answer may be another form of transport or a combination of services but for others the car may be the only option. It is therefore pleasing to see private finance being brought in to the maintenance and extension of major roads. I believe that we are at an exciting stage in transport development. According to the advertisements on TV the future is orange. I say the future is green as the public and private sectors put their minds to creating the best possible infrastructure and services for a green and clean environment.
7.40 p.m.
Lord Selsdon: My Lords, before I came to your Lordships' House today I had the pleasure of driving 150 miles through lovely English country. I remember the days many years ago when in my MG I could get from the Landuggertrow in Bristol to a pub in London, having downed many pints of beer, in under two hours. When I lived in Newbury I could get to London on a steam train two minutes quicker than I could today.
What has changed in transport? I was brought up in that world because my father spent all our family money on motor racing. In those days one ordered a car from Lagonda and drove it around Epsom Downs before one dashed off to Le Mans. If one were racing and a competitor crashed in front, one used to stop, get out and see whether he was all right. The man behind would say, "You were two minutes ahead. We will give you two and a half minutes' start". In those days transportation was perhaps more gentlemanly. What went wrong? Suddenly all the great Victorian iron bridges—the designs of my hero Brunel—disappeared, and we did nothing. We did nothing for years. In fact we closed everything down. There were more and more deaths on the road. The number of deaths soared, but suddenly today one no longer sees those headlines on a Monday, "Black Sunday" or "Keep Death off the Roads".
Over 30 years ago I was an economist. I was supposed to be a rather bad economist, but I became a transportation economist and was appointed by British Rail to advise it how to get traffic off the roads. We considered containers. We talked of the liner train. The Department of Transport asked us to advise on the economics of death on the roads. How much is a life worth? If you straighten a corner and save one life and prevent three hospitalisations a year, what are the economics of that? I became interested in the economics of transportation.
When I served at the Council of Europe I became the rapporteur for a strange body I had never heard of before called the European Council of Ministers of Transport (ECMT) which was responsible for the standardisation of transport. We discussed the heights of bridges and the size of bogey couplings. Then we became interested in bridges. A bridge over the Bosporus was mentioned. In Sicily I met some strange men who thought that a bridge in Sicily should only be constructed with private sector finance. We looked at the Channel Tunnel link. My civil servant friends from the OECD pointed out to me that that was not a good idea for the British as the tunnel would run from one of the poorest parts of France—where everyone wanted it—and would arrive in one of the richest parts of England where no one wanted it. If only it could have arrived in Newcastle!
I began to think more and more about the economics of transport. A few years ago the CBI pointed out that the amount of money lost through people spending longer periods of time on the roads and losing that time at work was enormous. If only the Treasury would cost that out, it would discover that greater investment in transport infrastructure would pay for itself. I wondered

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why we did not do anything. Then I became involved in railways and roads abroad. I also became involved in bridges including the Bosporus bridge. We managed to obtain a share of the trans-Gabonese railway. We did so with great difficulty and with the help of the Railways Industry Association which could not find a man alive who had built a railway. We had lost much of those skills and technology. At one time 74 per cent. of all steam locomotives were built on the Clyde. We had forgotten about tarmacadam. Basically we had forgotten how infrastructure was funded.
In those ancient days one factor made it impossible to fund infrastructure privately and that was inflation. One could not possibly fund something with a high level of inflation, rising costs and rising interest rates, in a way that one could today. Your Lordships may remember that when the state owned industries wanted to borrow money they had to apply to the Treasury. The banks wanted to lend them money but they had to join the Treasury queue which aimed to control PSBR and to stop money being spent. However, one cannot have good infrastructure without spending money.
My noble friend has said it all today. He mentioned virtually everything apart from trams. When I listened to the speech of the noble Lord, Lord Berkeley, I thought that perhaps there is no division amongst us as regards the requirement to build infrastructure. There is probably no division as regards how that should be financed. It can no longer be financed with government money through a levy on the taxpayer. The world has changed. With the remarkable decline in inflation it is now possible to fund longer-term infrastructure projects in a way that we never could before. There is nothing new about private finance. Many years ago the railways financed containers and wagons through lease mechanisms, and certain things were owned by the private sector. Money is money. We do not need to give it names. However, names started to be used abroad. There was the acronym BOOT, build, own, operate and transfer, or BOT, build, operate and transfer. It is funny that we almost reimported that idea over here. When contractors found life difficult they wondered whether, if the Government would not fund projects, they could fund them themselves.
I must declare an interest in that I am a director of one of the larger quoted contracting companies. We do not do a lot in the PFI sector. Before the debate today I consulted with many contractor friends, consultants, banks and others. I asked them why, if the initiative is to be private funding, this has not been carried out more widely? Where is the logjam? Noble Lords will be aware that there is not an awful lot of construction going on in the construction industry at the moment. Those whom I consulted told me that they were not greatly in favour of the private finance initiative to begin with as they believed it could work only for projects which stood alone such as the Skye bridge, the second Severn crossing or similar bridges. They believed that it could not work with the private sector on its own and that the state and the Government have a big part to play not only as regards planning but also in the ancillary infrastructure that may be necessary to allow a bridge to be built. I shall not go on about the railways. However,
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I was advised—I tried to pass this advice to the bank where I worked at that time—not to invest any money in the Channel Tunnel unless the rail link was built. I was advised that it would not be competitive until such time as a rail link was built. Yet, if that great tunnel had not been built at the time it was built, it probably never would have been built.
There are a few aspects of PFI which bother me. I believe that at the moment the logjam lies not with Ministers and not with Government strategy but within the Treasury structure itself. There is a need for a change of mentality—perhaps even in the Highways Agency—from an attitude of government procuring to government co-operating. The problems are fairly simple. Decision making processes are quite slow. The PFI unit in the Treasury has had three chairmen in eight months. There appears to be no clearly defined strategy. As has already been pointed out, the initial costs of trying to get something off the ground are enormous. Officials in the Treasury are not necessarily charged out by the hour, but the cost of trying to bid for a major infrastructure project, whether road, rail, port or anything else, is enormous. There is no certainty that those projects will go ahead. It has been suggested that there might be closer consultation, as is taking place at this moment, between those who wish to earn business from contracting, developing and consulting, and those who wish to see things built.
The Government have perhaps a greater role in this process than they realise. But those who take the lead must be those who wish to develop that infrastructure, and not necessarily the people who may wish to build it. Instead of BOOT we now have design, build, finance and operate but not own. The shadow tolls on roads is quite a good idea. Attitudes have changed and there is a willingness to go ahead. We could go ahead so much quicker now as costs are at such a low relative level and interest rates are so low.
In the venture capital field it was always said that an investor needed to get a 25 per cent. return because of the risk. I have many socialist friends who attack the Government's policies. A friend of mine told me that he sold his businesses and placed his funds on deposit with a bank that I worked for at that time. He told me that he had been successful and that after he had reared his children he could just about live on the interest. However, he told me that my party had brought down interest rates, and he found that he could not even live on the interest. He discussed it with his wife and said, "When you can't live on the interest any more there is only one solution. You have to invest".
With interest rates as they are, and possibly coming down, and inflation as it is at present, there is a great chance to attract more private funding into the infrastructure where there is a closer relationship between the people who use it, the people who build it and the Government who have a responsibility to ensure that it is under way.
7.50 p.m.
Viscount Bridgeman: My Lords, I thank my noble friend Lord Astor of Hever for initiating the debate. I

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live near Winchester where the trains are run by South West Trains, now franchised to Stagecoach plc which also runs the largest bus undertaking in the area. We have already seen the first fruits of this common management. Even in the heyday of the railways, the town of Romsey was never served by a main-line railway. Now it is possible to board a bus in Romsey in order to join the train for London at Winchester and, significantly, to buy on the bus a through ticket from Romsey to Waterloo.
The city of Winchester is now served by a frequent service of small buses, extending to neighbouring villages which have not had a bus service for years, if ever. One of the first acts of Stagecoach on taking over South West Trains was to put up £1 million for the refurbishment of rolling stock only, depressingly, recently introduced by British Rail. It was a decision, I understand, taken in 15 minutes. I was assured by the South West Trains management—they are all of British Rail upbringing—that in previous days it would have taken a year.
Let it never be forgotten that the vast majority of employees and staff in the privatised sector are former employees of state undertakings. It is just that their enterprise and initiative have been released under the new environment. I have difficulty with the reference to lack of motivation in the private sector which has been mentioned. I certainly have not come across it with the bus or railway operators to whom I have spoken. It must involve other sectors.
The noble Lord, Lord Astor, referred to trains waiting at peak hours at Waterloo. South West Trains is now contracted to run two trains an hour to Southampton; it runs three. It is contracted to run two trains an hour to Reading; it runs four. How is this achieved? It is simply with a cost structure to run a train off-peak at marginal cost, which under BR would have been an outright loss and quite impracticable.
It is wholly logical that the bus operators are heavily involved in bids for the rail operator franchises, for they have the confidence that they can bring to railway operation the flexibility and imagination that they have brought to bus operation. Let me give noble Lords one example. Bus operators have adapted the American airline system of hub and spoke; that is, the hub city served by feeder services. Passengers are conveyed to a central point. (The first one was at Bedford.) They then change coaches for a fast service running between major towns, which would not have been viable without the feeder services. Everyone benefits: the large towns gain an enhanced service and the small towns and villages gain a service which they might not have had previously. The noble Earl, Lord Mar and Kellie, will be pleased to know that there is a similar successful operation running from Glenrothes as the hub city serving the outlying districts of Fife to Edinburgh and Glasgow. It is an interesting reflection that it was precisely this operation in reverse carried out by Dr. Beeching with the railways in the 1960s—the dismantling of feeder services—that spelt quite unnecessarily the end of many main-line railway services.
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The prophets of doom forecast at the time of deregulation that the bus operators, freed from regulation, would retain only the profitable routes and abandon the under-populated areas. All I can say is that there are many cases up and down the country, which have been referred to already in the debate, where operators work with local authorities on subsidised routes to remoter areas—for instance, night services. And, significantly, there is in many of those cases the option to take over the service fully commercially at some stage in the future, thus relieving the public sector of the cost of the subsidy.
I conclude with one statistic. In 1985 the town of Corby in Northamptonshire had the dubious distinction of having one of the highest taxi usages per head in England. At that time only 7,000 people travelled by bus, and buses had only 35 per cent. of the share of non-private transport. Ten years later, in 1995, 26,000 people per week travelled on buses and the buses' share is estimated to have risen to 55 per cent. That was achieved by a bus operator quite simply delivering to the public a good service at an affordable price. It is surely just what deregulation and privatisation are all about.
7.56 p.m.
Viscount Chelmsford: My Lords, I wish to concentrate tonight on private sector provision of transport services. Government strategy on transport has recently been spelled out in two quite large documents. The first, Transport Strategy for London, makes a clear statement. We are to maximise existing infrastructure based on existing money from all sources: from government revenue, users and PFI.
The second document, Transport, The Way Forward, seems more diffuse. It has a great number of wish lists but, in the summary of Chapter 11, nothing on infrastructure and investment, which seems to me to contradict the position set out for London.
If we have to improve our existing infrastructure using existing funds better, I must publicise a new acronym. ITS stands for Intelligent Transport Systems, also referred to as transport telematics—applications which include interactive communications between moving vehicles and the roadside and/or some central control room.
ITS is now an international acronym. There is ITS America, ITS Japan and, in the UK, ITS Focus, and I am its president. Noble Lords will not be surprised to be told that the USA, Japan and Germany are the UK's major competitors in this specialised field and that they show signs of pulling away.
There is no doubt in my mind that Intelligent Transport Systems should play a key role in the UK in maximising use of existing infrastructure with existing money. Government strategy documents certainly mention ITS but do not identify this as a major solution to the restricted strategy which I have outlined.
Transport, the Way Forward, reviews transport telematics in paragraph 14 of Chapter 10. In paragraph 15 it states that the Government will publish a statement later in the year. I would encourage my noble friend the Minister to consult widely before doing so.

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What is ITS really all about? Allow me to offer noble Lords a few simplistic headlines. First, there are urban congestion and incident management systems such as SCOOT, which is the London CCTV and traffic lights control system which has been in operation for some years now and is a world leader. Road tolling comes under this heading—an area where we have not done so well. I believe that all but two of the consortia offering to test motorway tolls have pulled out due to delays while the Government rejected trials in London based on its consultant which could say only that tolls had worked in smaller cities.
Parking guidance systems help to reduce urban congestion as does automatic incidence detection using cameras to monitor known areas of congestion.
Multimodal information and control systems can be found at present in the Southampton area as part of the EU's ROMANSE project. These include kiosks which allow the public to key in the start and end of a required journey and then offer the best route using either a mix of bus, rail and boat, or just car as per the inquirer's wishes. These systems also include variable message signs to drivers—either as road signs to drivers or as radio messages into the car, plus talkback facilities. We could have done with such a system the other day when the police had to close Sloane Square to all traffic and the underground trains did not stop there either.
Automatic highway systems have to do mainly with safety and vehicle density. The M.25 motorway trial of variable speed limits is designed to prevent the concertina effect of too much traffic and thus achieve faster overall journey times. Radar and cameras allow cars to he driven literally on a no-hands, no-feet basis. I know, I have been in one. That could be used as a safety device on motorways when drivers fall asleep or to allow more cars on the road through the use of reduced headroom between vehicles.
Dynamic Route Guidance requires the use of satellites—GPS or the EU's GNSS—which already exists in Germany and Japan. This country is still designing the maps of the UK which will appear on the car dashboard and currently Traffic Master, which monitors traffic speed from road bridges, is our only available application. Fleet Freight Management is a subset of dynamic guidance systems and includes electronic tagging of products and automatic vehicle location to allow operators always to know where the vehicle and/or product is located. I am told that just plain CCTV on suburban roads has reduced accident rates in some places by up to 30 per cent.
London Transport Buses makes a most interesting example of what can be done. It has Countdown, which shows the time to the next bus on an electronic sign at the bus shelter. One day we may also find the sign round the corner in the next feeder street without a bus stop. One day we may even be able to use our home PCs to learn such information before we leave the house.
London Transport Buses is also implementing Prestige—a charged contactless smartcard which, when passed over a reader, deducts the fare automatically and thus speeds up entry into the bus. Use of red routes and
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beacons that advise traffic lights to give priority to the approaching bus are other ways in which the public could he tempted to forsake the car and use the bus.
I am concerned that all these ways of maximising public bus transport are not sufficiently focused in London. The stick of urban congestion charging on cars, together with the carrot of buses, where all the benefits come together across the whole of London simultaneously, would do much more than leaving each part to progress in isolation. The interesting point is that all those ideas are low to medium in capital intensity and low in running costs, particularly when compared with building more roads—the alternative to making better use of what we have got.
Finally, I must remind the House that I am prejudiced—prejudiced in favour of the industry that I represent, an industry that believes that it has many of the answers to the Government's problems. ITS Focus is in the middle of a feasibility study to raise awareness of the value of transport telematics. I have, of course, been doing my part here this afternoon. I hope that some of the applications that I have mentioned were sufficiently intriguing for noble Lords wish to find out more. I hope that noble Lords accept that their awareness of what is on offer can only be good for advancing UK interests overall.
8.4 p.m.
The Earl of Cromer: My Lords, I am delighted to support my noble kinsman Lord Astor in such an important debate. I approve wholeheartedly of the Government's privatisation programme. The Government have successfully shown that privatisation will change the culture of an industry by bringing in competition and choice, as well as introducing private sector management skills, entrepreneurial ideas and marketing flair.
I shall detain your Lordships for only a short period, to speak on one of the most successful privatisations, British Airways, on which my noble friend Lady Seccombe touched briefly. We all know what the initials BA stood for in the airline industry before privatisation. But a few short years after the sale of the company in 1987, the "B" is still the same, but the "awful" has been replaced by "awesome". British Airways is now truly the world's favourite airline, carrying more international passengers than any other carrier, some 6 million more than its nearest competitor in 1993.
Privatisation created for the UK an airline which is strong enough to take on the world and win. British Airways' pre-tax profits of £585 million, announced three weeks ago, made it the most profitable airline in the world. What is more, it has made profits every year since it was privatised, through the toughest period in the industry's history, when most of its competitors have lost money. Compare its soaraway success with the financial plight of many state-run, state-aided airlines on the Continent.
BA has made the most of its freedom. Its recognised expertise and reputation for excellence have led to increasing third party engineering work which, in turn,

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has created hundreds of new jobs at new maintenance bases in South Wales, while its ever expanding global operation has led to the airline diversifying from London to set up new business and new jobs in the UK regions, including Newcastle, Belfast, Glasgow and Manchester.
I totally agree with my noble kinsman Lord Astor that the alliance that British Airways is seeking to form with American Airlines is another example of BA's strategic thinking and is, I believe, to be welcomed. I hope that the Government will support this new initiative in every way possible. British Airways, together with its partners, offers consumers top quality and a wide range of services, the best of British, and it is an example of privatisation at its best.
I worry sometimes that in this country success seems to be a dirty word. It is somehow not British to be seen beating the world and certainly not drawing people's attention to it. Yet many of us have a vested interest in the success of privatised companies such as British Airways or British Telecom. If not investors in our own right, we may well be members of pension funds which do invest in them. British Airways shares have gone up three-and-a-half times since privatisation, which is 120 per cent. ahead of the index.
We should be proud that privatisation created a climate in which so many British companies have been able to flourish, to the benefit of such a wide section of the populace as both investors and consumers.
8.7 p.m.
Baroness Thomas of Walliswood: My Lords, some interesting statements have been winging around the Chamber and I ought to begin by saying that I and the Liberal Democrats have no philosophical objection to the introduction of private funding into transport infrastructure or services. We admit that some services may be better provided by the private sector: private infrastructure initiatives like Central Railway, or an Isle of Wight advanced monorail, or the activities of the privatised transport companies, or the PFI initiative, or the DBFO aspect of that initiative. All those may have a part to play in creating a more sustainable transport system which is our objective.
We are indebted to the noble Lord, Lord Astor of Hever, for this interesting debate. Speakers dealt with something which so far I have not experienced. I should love to be the subject of the lures to get me onto the rail system of which the noble Lord, Lord Astor, spoke. All I can say is that in my neck of the south-west trains, there ain't much of it. Maybe it will come in the end. Dorking is not a mainline destination, we tend to be at the far end, as we were under British Rail. Nothing has changed in the distribution of goodies in the way of trains. We would have preferred to keep the rail track in public hands; we have never made a secret of that. However, we were in favour of at any rate some and even all of the services being privatised along that publicly-owned track. We wish to do that and at the same time to relax the Treasury rules so that Railtrack could borrow where necessary, to make investments and at the same time serve our objective of a more sustainable transport policy.
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I was also interested in some of the comments of the noble Viscount, Lord Chelmsford. Almost all the new and exciting methods of traffic control to which he referred are manufactured in the private sector but are almost always paid for by the public sector. Even the European Union is providing public funds for ROMANSE, not private sector funds. As a previous speaker said, there should be a partnership between the public and private sectors.
A major problem in depending too much on the private sector is the clash between the private sector's legitimate requirement for profit and the public policy requirement to transfer journeys to public transport, which may require lower user prices and therefore mitigate against profits. Better public transport access for passengers and employees to Heathrow would reduce pressure on the surrounding road network, generate an income stream to repay a private investor and incidentally release land within Heathrow which is currently covered with carparks for a more profitable use.
However, experience so far indicates that the private sector is interested only in the honeypots; it is not interested in providing the more difficult sorts of public transport; for example, in rural or suburban areas which currently do not have access to public transport unless they have been assisted by public subsidy or public assistance to a private bus company to provide those difficult services. Rural services and late or early services are nearly always provided with the assistance of the local authority. Even CrossRail may be delayed because of the Government's insistence on the PFI.
That leads me to another point; namely, some of the difficulties with the PFI are a result of the extreme difficulty in getting the whole thing under way. If we are to get the best out of the PFI, we must look very much more carefully at the regulations which surround it at the present time. The requirement to put every project into a competition, as it were, between public and private sector has made it almost impossible for the private sector to respond to the local government level at which that would be particularly useful. In other words, the private sector wants to handle only the big projects because of the difficulties and expense involved in making an approach to deal with a whole project. In the local sector, we are not dealing on the whole with enormous projects; we are dealing with modest-sized projects. If local transport authorities wish to go down that road, there are many difficult obstacles to be overcome. I am interested to hear the Minister's response on the subject of the regulations surrounding the PFI initiative.
The most important point is the contrast between the wish of public authorities—including the Government, who are moving in this direction—to achieve an overall policy strategy for transport and the private interest in achieving a profit. There is a danger of not knowing who leads the process—the policy makers or the profitmakers. To cite a recent Treasury Committee report, I, too, would,
"welcome the Treasury's view as to whether the prioritisation of projects should be the responsibility of Government and Parliament or those seeking to provide projects on a commercial basis".

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Again, I look forward to the Minister's response.
Another major problem is the question of additionality. Giving evidence to the committee, the Chief Secretary to the Treasury said:
"The Private Finance Initiative is genuinely additional".
The Chancellor of the Exchequer said:
"The growing importance of private finance has helped us to find significant savings for the taxpayer".
It appears that cuts in the transport budget are almost exactly matched by a rise in PFI capital, which is not enormous. There must be a very real query as to whether the benefits of the PFI, the benefits from an injection of private capital, can be felt nationwide if it continues to be a substitute for public funding.
There is also a problem in relation to value for money. We are told that just by importing the private sector into projects we automatically guarantee improved value for money. Unfortunately, at the same time it is almost impossible to monitor whether or not that is the case, because the whole question of the involvement of the private sector is covered and surrounded by considerations of commercial confidentiality.
In the end we need to be shown that this new way of funding public investment, in infrastructure in particular, is more economical. It is already the case that all construction work, and much of the maintenance work, on our publicly owned road system is carried out, and has been for many years, by the private sector. It is hard to see from where the benefits of lower cost will come. They will not come from changes in employment practices, which was mainly where they came from in the first CCT rounds, which are already a long way behind us.
I hope that the Minister will respond to some of the queries I have raised. We do not oppose private investment in the infrastructure or the services. We believe that it has to be part of a partnership between the public and the private sector. We also feel that we need to consider relaxing the controls. We welcome the additionality which I believe is creeping into the situation so far as local government is concerned. We need to analyse a little further the proposals recently made by government, but I believe they are moving in that direction, which is very welcome. However, unless we can increase the total amount of investment in our transport system through the use of private finance, to my way of thinking, and in the view of my party, this will not be a useful initiative.
8.17 p.m.
Lord Clinton-Davis: My Lords, I congratulate the noble Lord, Lord Astor of Hever, on introducing this debate. He engaged in some panegyrics about privatised industry which went a little over the top. But I have learnt that, if he sees a top, he can hardly resist going over it. He was ably supported by the ever-charming noble Baroness, Lady Seccombe. Both thought that all public enterprise was bad and all private enterprise was good. That was simplistic in presentation. With respect, I enjoyed their remarks but I thought some balance was introduced by my noble friend Lord Berkeley and by
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the noble Baroness, Lady Thomas, particularly in her comments on certain elements of privatised industry. I take the view that some privatised industry has been extremely good. There has been a great deal of praise today for British Airways. But I think even the Minister would recognise that there are some warts attached to it. He may have enjoyed those contributions, but they were a little illusory. It is not a situation where there are no clouds on the horizon, a sort of Ode to Joy. That is perhaps an appropriate anthem for them to sing at the present time. I only hope it brings some results in another context.
The fact of the matter is that one serious omission appeared in the noble Lord's introductory speech. There was not a word about the debt write-offs in relation to privatised industry. I wonder whether he knows how much it is. I shall give way to him if he knows the answer. It is in excess of £22 billion. He did not mention a word about it. Be that as it may, I do not want to talk too much about privatised railways and so on. We have had a series of debates on those matters. I want to talk about the PFI (private finance initiative) and the Labour Party's proposals in relation to public/private partnerships.
I believe that the Government's PFI has been rightly criticised by the CBI, the construction industry and the noble Lord, Lord Selsdon, in his contribution tonight. The Government should not be complacent. They should recognise that people with a great deal of experience in this field know what they are talking about. I have had many discussions with the construction industry and indeed with many people involved in the PFI. There are serious criticisms to be made. For example, only the other day, on 23rd May, Bovis (which is one of the United Kingdom's biggest construction companies) decided not to tender for further privately financed motorway or trunk roads because of the high cost of bidding and slow progress in awarding work. That is a serious matter. Bovis cannot have done that without a very clear judgment having been made about the matter. Others go ahead; I recognise that. However, there are very serious defects in the scheme.
I do not propose to spend too much time on that subject. I want to talk about the Labour Party's scheme in that regard rather than talk about the outgoing government, though we can learn from the errors of the schemes that are being undertaken. I want to underline the rich potential for the construction industry, for transport users and providers that a redesigned scheme could offer to national, regional and local levels.
Our intention is for a national transport framework to be put in place at the earliest opportunity. That mirrors the cause of the CBI and Transport 2000 as well as many others who have perceived that the vision, targets and objectives of the new government are critically important after 17 years of transport policy without any strategy. We believe that the private finance initiative has to be given fresh impetus. I do not have time to mention all the ideas that we are putting forward to get the process back on its feet, but I shall mention some of them.

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It must not be used—or misused as the case has been—as a way of disguising cuts in capital spending. The original intention, repeated on a number of occasions by the Chancellor himself, was that that would not take place. It was not a substitute. In November 1993, the Chancellor said that:
"The private finance initiative is now adding to spending in areas for which the public sector in the past has traditionally taken responsibility".
More recently, on 3rd February 1994, he said:
"We seek to increase both the amount and the quality of investment in the infrastructure of our public services by bringing in the private sector".—[Official Report, Commons, 3/2/94; col. 1012.]
There was no suggestion that it was to be used as a substitute.
We take the view that the Government have failed to develop a coherent strategy for delivering private capital to projects—which are required, in the light of what the noble Baroness had to say about our transport infrastructure. We take the view that the Government must set strategic priorities so that the private sector can see what it is expected to bid for. Projects which have the greatest potential for social and economic return for the country as a whole need to be brought forward. I do not believe that market forces should be allowed to be the sole arbiter of what is required. One cannot limit the scheme to those projects which are determined solely on what is viable in the narrowest financial terms.
Secondly, there have to be clear guidelines to cover the terms on which the private sector is required to submit tenders for PFI projects. They do not exist at the present time. I hope that the Minister has consulted the construction industry. I am sure that he has done and that those criticisms have been made to him to his face. They are not to be dealt with lightly.
My third point is that the PFI procedure has become extraordinarily bureaucratic and complex. It has resulted in a great deal of delay. We believe that the decision-making process must be streamlined and reformed. We propose the establishment of a task force to broker agreements between the public and the private sectors, to ensure that projects get off the ground as rapidly as possible. It requires the kind of intervention which I thought was implicit in the noble Lord, Lord Selsdon's remarks. The Government have tended to say, "Let's get on with the PH and leave the parties to it." Government have a role. I totally agree with what the noble Lord had to say in that regard.
There is also the question of risk allocation. That has been dealt with in the most unsatisfactory way under the present schemes. There is no clear set of principles to determine how risks and returns are to be divided. I believe that the Government have to establish clear guidelines to determine how risks and returns should be shared between the public and the private sectors. In projects where there is a greater strategic interest, the Government might be expected to take a greater degree of risk. The risk does not have to come in the form of cash; it might be in respect of the Government taking other risks—for example, planning uncertainty or policy changes which are frequently made.
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I should like to add something to what the noble Baroness said. It is very germane in terms of improving the present scheme. Like her, I believe that there needs to be greater transparency—that was a point made by my noble friend Lord Berkeley also—and greater accountability than exists at the present time. What we have too often is sheltering behind an alleged confidentiality. That is one of the secrecy elements of our society which we should do well to reform. Sometimes, of course, confidentiality is necessary. But I do not like the concept, underlined in the present PFI, that the man in Whitehall knows best. It is an unpleasant syndrome in relation to this matter.
We also believe—this is my fifth point—that local authorities should be able to invest more of their capital receipts in housing and infrastructure generally. We propose that a proportion of the cash should be used as seedcorn for new public/private partnerships, with local authorities working with private construction companies and businesses in developing inner cities and improving estates. That also has a relationship to transport requirements.
Those are just five of the ideas that we put forward for consideration. We shall listen to the construction industry and the financiers in order to hear whether our ideas are in need of improvement, too. We are in the business of discussing matters and listening to those who know. The Government have not done that. A better balance should be struck between the public interest and the enterprise that private suppliers are able to bring.
Much was said about the bus industry and I do not propose to refer to that. I wanted to mention air traffic control. It has been suggested that it should be subject to privatisation. The CAA do not like that idea and nor do the airlines. They believe that safety must be paramount. The private sector has articulated concerns that the present PFI is wrong for attracting private investment for that purpose. The Scottish Air Traffic Services Centre was delayed for several years by the imposition of PFI and could be developed with different technologies from its English counterparts, which cannot make sense.
We had an interesting debate the other day in relation to the Channel Tunnel Rail Link. I do not propose to go into that. The Minister and I will not see eye to eye, but he knows that the Government have ploughed a great deal of public money into that enterprise, though they were reluctant to admit it.
This country must renew its transport infrastructure—our roads, railways, our bus industry, our ports and our airports. Industrialist after industrialist has condemned the PFI in a number of material respects. Adair Turner, Director General of the CBI, said in October:
"The pressure to achieve public expenditure cuts is ferocious, the capital expenditure budget looks an attractive target and the PFI is seen as justification for major cuts".
Andrew Buxton, Chairman of Barclays Bank, said in November 1995:
"The requirement of PFI testing has proved to be a recipe for delay. Companies have found tendering for PFI projects … to be a difficult, frustrating, and above all, costly process".

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Robert Napier, Chief Executive of Redland, the building projects group, said at the CBI conference last November:
"The PFI certainly won't compensate for the reduction in central government funding".
He continued,
"A budget which cuts transport spending and places too much emphasis, too soon, on the private finance initiative is not acceptable to business".
Those words need to be taken to heart. Projects need to fit in with national, regional and local priorities. They must be assessed on their merits and not as a clumsy device to get assets off the public books or to produce income tax cuts today which will be paid for by mortgaging the interests of future taxpayers. That is something which represents the wrong road and which we oppose.
8.32 p.m.
The Parliamentary Under-Secretary of State, Department of Transport (Viscount Goschen): My Lords, today's debate has given us the opportunity to consider and discuss the major improvements to passenger and freight transport in this country which have come about as a result of the increasing involvement of the private sector in the provision of transport infrastructure and services. We are all in the debt of my noble friend Lord Astor for raising the subject of the role of the private sector and for giving us an illuminating introduction to it.
The noble Lords, Lord Clinton-Davis and Lord Berkeley, suggested that my noble friend was giving a somewhat rosy picture of what had been the effects of the private sector's involvement. I do not believe that to be true. An illustration of that is that we do not see any serious commentators these days who are prepared to stand up and say: "We want to turn the clock back". As my noble friend Lord Cromer said, the world has changed. The very fact that we are having this discussion and that the noble Lord, Lord Clinton-Davis, articulated a Labour Party policy in which it now recognises the role of the private sector in transport services, illustrates that point.
The noble Lord, Lord Clinton-Davis, began with what can only be described as a "Sheffieldesque" optimism to his interventions. We have seen a serious discussion of the private finance initiative and I should like to turn later to a number of points he raised and which were raised by the noble Baroness, Lady Thomas.
It is not an entirely unexpected observation from me that the Government believe passionately in involving the private sector as fully as possible in transport, as in other areas of the economy. The private sector has strengths and skills which the public sector does not. The private sector knows how to act commercially; it understands the marketplace and the need for competitiveness. It knows that, to be successful, it must not only respond to the needs of its customers, it must also strive constantly to improve its services.
We had a lot of discussion about risk. The private sector is also better placed to manage many of the risks traditionally borne by government. It has access to new
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sources of capital. With privatisation, contracting out and the provision of services and infrastructure still within the public sector, the private sector is truly in partnership with the Government in helping to ensure improved quality, faster results and better value for money for the taxpayer. Our debate today crossed all modes and provoked a discussion on almost every aspect of transport imaginable. I shall try to pick up some of the major points raised.
My noble friends, Lady Seccombe and Lord Cromer, were quick to point out the changes that have occurred in the aviation industry in this country. The airports, Heathrow and Gatwick, are respectively the first and eighth busiest international airports in the world. The UK led the way by privatising the BAA airports in 1987 and six formerly local authority-owned airports have since joined the private sector. With the remaining major airports restructured as companies operated at arm's length from their local authority owners, all are now more driven by the need to be responsive to their airline customers and the passengers. The success of that transformation is demonstrated by BAA's status in the world as an extremely successful airport group.
British airlines are successfully competing. That was a major point picked up throughout the debate. They are winning business throughout Europe and the rest of the world. The business is being won fairly and squarely without any subsidy from the Government. In 1987 British Airways was privatised. Today BA is one of the most successful and profitable airlines in the world. Indeed, the whole sector in the UK is highly successful, with new carriers such as Virgin Atlantic. I do not believe that anybody today would seriously suggest that BA should be taken back into the public sector any more than the 50 or so other airlines operating successfully out of the UK and competing for business.
On the subject of ports, my noble friend Lord Astor described the changes that have occurred since many ports were brought into the private sector and also since the abolition of the dock labour scheme. With those constraints removed, the ports industry in this country is now extremely efficient and doing very good business. The same goes for the shipping industry, which is entirely in the private sector and is lean, efficient and contributing to our national competitiveness.
Lord Clinton-Davis: My Lords, perhaps the Minister will give way. Is he seriously claiming that British shipping is a success? Is he aware that even in the past few weeks British shipping has shown a further decline, whereas French, Dutch and Danish shipping have been re-attracted to their flags?
Viscount Goschen: My Lords, the noble Lord, Lord Clinton-Davis, makes much of good contacts with industry. I can only suggest to him that he talks to some of the extremely successful British companies that are involved in shipping. I suggest that he talks to the Chamber of Shipping, which is the representative of the industry; I suggest that he talks to P&O, which has had some success—as the noble Lord may recognise—in the cruising, ferry and container industries. There are many

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success stories and we would be wise to say where we are strong in the industry rather than endlessly concentrating on some of the difficulties that the industry has had to go through in the post-war years.
On the subject of buses, we heard a lot about the effects of deregulation and privatisation under the Transport Act 1985. That has been a success. Today 93 per cent. of all bus services in the UK are provided by privately-owned bus companies; 84 per cent. of all bus services in the UK are run commercially without subsidy. Bus operators are free to provide services wherever they wish on a commercial basis and local authorities have powers to subsidise necessary services after competitive tender. That has resulted in more bus mileage—up some 29 per cent. since deregulation—more flexible services, more operators and substantial investment in new vehicles, including minibuses and midibuses. Bus operator costs per vehicle mile have come down by more than a third in real terms and local authority public transport revenue support has more than halved in real terms.
Understandably, a number of noble Lords have concentrated on the issue of railway privatisation. It is a very large undertaking indeed. It is the major structural reform which the railway industry in this country so desperately needed. Most commentators would now recognise that the old railway was a monolithic, monopolistic nationalised industry which never had the opportunity or, I believe, the incentive to focus on the needs of its customers. The railway's basic problem was structural and not financial. We have now addressed these structural difficulties through the passing of the Railways Act and we are beginning to see the benefits of this strategy coming through to passengers. I listened with care to the comments we have heard from many noble Lords that the benefits that have flowed into the airline industry and into many other industries where the private sector has become involved will flow, and are already flowing, into the railway industry.
For the first time, key services are contractually safeguarded in franchise agreements. All seven of the franchises awarded so far will maintain the same levels of service as were previously operated by BR. In a number of cases, franchisees will be adding new services to the timetable.
The noble Lord, Lord Berkeley, commented on networker benefits such as through ticketing. I strongly believe that these benefits are a key to the success of the railway industry in the future. The companies that are operating the services know that it is in their commercial interest to pursue commercial deals with each other, to offer attractive new pricing strategies, to work out innovative fare deals and so forth. Those are what companies do if they want to encourage—it is in their strong interest to do so—as many people on to the railways as possible. Part of that involves working with one's competitors.
Baroness Thomas of Walliswood: My Lords, is the noble Viscount aware of the doubts that some people have about this matter? In Surrey one still cannot buy a ticket which allows one to go one way by one bus
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company and come back with another bus company—and not for lack of trying. I really do think that quite a lot of passengers have a good deal of scepticism about the Government's ability to introduce sensible networking. What can the noble Viscount say to allay some of that scepticism?
Viscount Goschen: My Lords, I am very sad that for second time this evening the noble Baroness has put Dorking in Surrey into somewhere outside the modern world in terms of the developments we are seeing in transport.
It is clear that companies must do and will do everything they can to encourage people on to their services. That involves innovative park-and-ride schemes and looking at what are the basic elements that attract people on to their services. The key to doing that is to build those into their agreement. One comparison would be with package holidays, which are sold with various elements of transport, accommodation and so on included. People buy those because they can see that they are convenient and an economical way of going about buying holidays. We firmly believe that that will continue to flow in the railway system and within other areas of transport such as the bus network, which the noble Baroness highlighted. Network benefits like through ticketing and discount cards for elderly and disabled people are contractually safeguarded—for the first time, one might add.
The franchising director has already announced that, for the first time ever, key fares will be price capped. They will be held constant in line with inflation for three years, and then progressively reduced in real terms for the next four years.
This better, cheaper railway will benefit the taxpayer as much as the travelling public. In seven years' time, the seven franchises awarded so far will require less than a third of the grant paid to British Rail in 1995–96. I would say that that is an extraordinary statistic and it is one which bears careful consideration.
Rail privatisation is now a reality. More than 65 per cent. of the rail industry—worth more than £6.7 billion by aggregate turnover—has now been transferred to the private sector. Only on 20th May, dealing in Railtrack shares began. The successful flotation of Railtrack marked a major milestone in the transfer of Britain's railways to the private sector.
But that is by no means all. The three rolling stock leasing companies have been sold and more than 90 per cent. of the UK rail freight is now owned by the private sector. Twelve of the 13 infrastructure maintenance units and track renewals companies have also been disposed of, along with a large number of other former BR businesses, including BR telecommunications. I could go on about the other businesses—and a very large number of them there are—that have been transferred into the private sector, but a key development was the successful flotation of Railtrack.
In terms of investment, concerns have sometimes been expressed that investment under the privatised railways would not be given priority. Railtrack has already shown that this concern is misplaced. But the

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privatised Railtrack will receive income from franchise train operating companies through access charges and will have access to wider sources of private finance to fund infrastructure schemes. Railtrack has said that it intends to spend some £8 billion on the network over the next five years. It also expects to contribute to the project cost of Thameslink 2000 an estimated £600 million—an excellent example of a major investment project which will enhance the rail network, opening up new opportunities for through services north and south of the river. We have also heard about investment in rolling stock.
These are the hard facts of railway privatisation so far. The private sector is introducing tougher passenger's charter standards, with more generous compensation arrangements for its customers. It is improving the quality of waiting accommodation at stations and investing in measures to boost passenger security.
One could go on about the progress that has been made on rail privatisation, the commitments that have been made and the improvements that we are seeing. But I think it might be appropriate to move on to the private finance initiative, a subject on which a number of noble Lords have commented. Indeed, it was the central thrust of a number of contributions.
As I remarked at the outset, outright privatisation is by no means the only way of involving the private sector. The PFI represents a transformation in the way the public sector procures services and assets. In summary, the Government decide what services they need. The private sector is then challenged to come up with a bid which offers imaginative ideas and solutions to designing, building, financing and operating that scheme. Transport is a key within the PFI. Of the £4.8 billion of PFI deals agreed across the Government in the past financial year, the transport sector accounted for some £3.8 billion, which is some 80 per cent. PFI deals have been agreed across almost all areas of the Department of Transport. Only last week, His Royal Highness the Prince of Wales opened the second Severn Bridge. This magnificent project was completed on time and within budget and financed entirely by the private sector at an estimated cost of £300 million. One could go on.
The noble Lord, Lord Berkeley, raised the question of financial commitments under private finance deals and, as a read across, rail franchising as well. I can assure the House that such commitments are a matter of contract and therefore are legally enforceable. The Government stand firmly behind those financial commitments and will ensure that they are honoured.
Another issue that has been raised in connection with PFI is the question of transparency. I believe that it was the noble Lord, Lord Clinton-Davis, who wanted to see more openness. I am sure that the noble Lord recognises that some areas have to be kept commercially confidential. It is the Government's policy to be as open as possible and to release as much information as possible, although we must not prejudice future deals and we must have the interests of the taxpayer very much in mind. However, given those constraints, we want to be as open as possible.
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Another issue raised by the noble Lord, Lord Clinton-Davis, was the difficulty perceived by some companies in bidding, the length of time that it takes and the costs involved. I accept that bidding for PFI is inherently different from conventional procurement. The private sector is not bidding simply to carry out the design and construction of the project; it is undertaking to maintain and operate services over a longer period. I suggest that such a sea-change in the thinking behind the bidding procedure must be allowed to settle in. We are still in very early days. We are listening to what potential contractors and partners are saying and are very much taking their comments on board. We are alive to the issues that have been raised and continually bear in mind our approach to PFI in determining how future projects should be taken forward.
Some of the major PFI projects relate to DBFO roads and to the Channel Tunnel rail link. As we have heard, the Bill is currently before a Select Committee of your Lordships' House. As we had a very full discussion of the issue some two weeks or so ago, I shall turn instead to the issue of DBFO roads. The noble Earl, Lord Mar and Kellie, and my noble friend Lord Selsdon were interested in that new type of road provision. The new approach is at the forefront of the Government's PFI. It is a prime example of the Government working in partnership with industry to provide value for money for the taxpayer. The programme's capital construction value is estimated at over £1 billion and is expected to deliver 13 projects covering up to 43 schemes, harnessing private finance to fund both initial construction and long-term maintenance of DBFO roads over 30 years. I was intrigued to hear my noble friend Lord Selsdon recount the history of the various acronyms leading to DBFO and the other approaches that have been taken.
The fundamental PFI requirement, apart from value for money, is that the private sector genuinely assumes risk. It is our objective to allocate risk to whoever is best placed to manage it. The Government firmly believe that design and construction risks, and the balance between the quality of construction and future expenditure on maintenance and upkeep, can usually be best handled by the private sector. We bear that very much in mind.
Other PFI schemes are in the pipeline. For example, the preferred bidder for Croydon Tramlink was recently announced and it is hoped that this contract will be signed in the near future. London Transport has announced potential PFI deals in the field of revenue collection, power supply and communications. The Civil Aviation Authority is continuing to progress PFI deals for the New Scottish Air Traffic Control Centre and the Oceanic Flight Data Processing Centre. All told, we already expect to see at least a further £2 billion of transport deals agreed over the next three years.
In conclusion, we have heard about a variety of transport modes and about how the private sector has been involved. It is clear from all those who have contributed, including the Benches opposite, that it is now widely recognised and irrefutable that the private sector has a major role to play in transport provision in this country. There has been a revolution in the way in

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which we look at these things. I believe that my noble friend Lord Cromer was right to draw attention to the change not only in financing and not only in designing, building and operating services, but in our culture and in the fact that the passenger must now be at the front of everyone's thoughts. I again thank my noble friend Lord Astor of Hever for tabling the Motion, and all those noble Lords who have contributed to the debate.
8.54 p.m.
Lord Astor of Hever: My Lords, this has been an interesting and wide-ranging debate. Despite what the noble Lord, Lord Clinton-Davis, said, I am delighted that so many noble Lords agree that privatisation has delivered real improvements in a wide range of transport industries. I thank all noble Lords who have contributed many important points at this late hour and my noble friend the Minister for his robust reply. I beg leave to withdraw my Motion for Papers.
Motion for Papers, by leave, withdrawn.

Trading Schemes Bill
8.55 p.m.
Lord Astor of Hever: My Lords, I beg to move that this Bill be now read a second time. In concept, the Bill is simple. It widens the coverage of the existing controls under Part XI of the Fair Trading Act 1973 over pyramid selling and similar trading schemes.
Trading schemes are, or at least can be, an efficient form of retailing using a self-employed salesforce. The salesforce are members of the trading scheme. In some schemes the members may be franchisees, with a right to use, for example, the scheme's trade name or design.
Members of trading schemes earn a commission on their sales. These sales may be to the general public or in some schemes to other members. Sales to other members need not be only of goods for onward sale; they might, for example, be sales or recruitment aids or training.
In many schemes, members may also earn through recruiting more members to the scheme. For example, in some schemes members receive a payment for every member they recruit. In other schemes, members earn not only through their own sales and recruitment but get a commission on any sales made by members they recruited. In a number of schemes, a commission may be derived from on-sales made by members recruited by their recruits. Similarly, scheme members may benefit from their recruits recruiting more members; and even their recruits' recruits recruiting—and so on.
Trading schemes include many reputable companies. I am unable to put a figure on their annual turnover as trading schemes cover such a very wide range of operations. Many companies operating trading schemes belong to the Direct Selling Association. The association estimates that the total retail sales of its members was £948 million in 1994.
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While some members of trading schemes may be sizeable companies, the vast majority are individuals supplementing their income. But this is not a risk-free way of earning—and the risks can be very high—nor is every trading scheme reputable. Nearly 30 years ago there was a rash of trading schemes in which members lost considerable sums of money.
The initial problem appears to have been those schemes in which members were required to buy stocks of the scheme's products which in the event were virtually unsellable. At one stage it seemed as if garages and garden sheds across the country were jam-packed with shampoos and cleaning products that nobody wanted to buy. Many of the unfortunate owners of those shampoo lakes were trapped by contracts with onerous termination conditions. Unable to sell any of their stock to the public or back to the promoter, they concentrated their efforts on recruiting other members. Against this background, Part XI of the Fair Trading Act provided for protection to both members and potential members of trading schemes.
The most important protection, I believe, is that provided to potential members through the creation of recruitment offences. A payment is unlawful if induced by the prospect of rewards from introducing others to a trading scheme. It is unlawful to benefit from such a payment or to attempt to induce such a payment. These recruitment offences prevent payments for recruiting others being the main attraction of a trading scheme.
In addition, the Act provides for regulation of documents used to recruit members. So that the members of trading schemes are not unfairly treated, the Act provides power to regulate the contracts between the promoter of a trading scheme and its members.
The act does not provide a general definition of "pyramid selling" or "trading scheme"; rather, it defines which pyramid selling and trading schemes are subject to its controls. Unfortunately, this definition has proved to be too narrow. There are many trading schemes which are not subject to the Act's controls.
Not every scheme outside the Act's controls is disreputable. Indeed, I understand that many trading schemes have arrangements that comply fully with the Act's requirements even though these requirements probably do not apply to them. But, as was probably inevitable, there has been a proliferation of schemes that appear to have been devised to escape the controls.
At present the controls can apply only to schemes that have all the characteristics specified in the Act. These characteristics hinge on the provision of goods or services through the scheme. This is a loophole. Thousands of people have lost millions of pounds through schemes which do not involve the provision of any goods or services by the normal definition. In some schemes, commonly known as money-making schemes or money circulation schemes, little is provided other than money and promises of money.

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The Bill seeks to widen the coverage of the existing controls under Part XI of the Fair Trading Act. These controls are offences relating to recruitment and to breaches of the regulations over promotional material and contracts. The Bill does not change these offences.
The Bill replaces Section 118 in Part XI of the Fair Trading Act. This section determines which trading schemes are subject to the controls specified in this part of the Act. It is essential that this section has no loopholes. I fear that this has resulted in a section which is not easy to understand.
The Bill widens the coverage of the existing controls under Part XI of the Fair Trading Act. It does so by listing the ways in which members of trading schemes may earn income. It then applies the controls to all trading schemes in which members expect to earn income in one of the listed ways and goods or services are provided by the promoter, whether to members or to others introduced by members. It also provides, subject to the affirmative procedures, for regulations to disapply the criterion relating to goods and services. The only exception on the face of the Bill is trading schemes which are already subject to control under the Financial Services Act.
However, the Bill provides for regulations to exclude other schemes. In view of the many schemes that have been devised in order to avoid the present controls, it is clearly appropriate for the precise coverage of the controls to be determined through secondary legislation. The Government have already stated their intention to use this power to exclude two types of scheme: first, franchise schemes in which only one UK member can benefit from the activities of other members; and, secondly, simple chain letters.
The meaning of "goods" in the Bill is wider than that which generally applies. It embraces rights to property, and thus money.
The Bill also extends the existing power to regulate promotional material aimed at potential new members. At present the regulations can apply only to documents. The Bill makes it possible to regulate the issue, circulation or distribution of any form of promotional material. I understand that both audio and video tapes and even the Internet are much-used means of reaching potential members. With regard to the regulation of promotional material, the Bill removes the present useless distinction between "invitations" and,
"other information calculated to lead to someone joining a trading scheme".
The Bill provides transitional arrangements so that proceedings cannot be brought as a result of the widening of the coverage of the controls against someone who has neither connived in nor consented to the act constituting the offence. The Bill has the necessary financial provision. I am pleased to report that it is expected to reduce public expenditure. The Bill also provides for a commencement order so that the Act can be brought into force at the same time as its secondary legislation.
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While the Bill is simple in concept, it is not in itself simple. I hope that I have been able to give your Lordships a simple explanation of what it comprises. I commend it to the House.
Moved, That the Bill be now read a second time.— (Lord Astor of Hever.)
9.8 p.m.
Lord McIntosh of Haringey: My Lords, I apologise to the House for not being my noble friend Lord Peston who, in turn, apologises for not being able to be present. I preface my brief remarks, as always, on Private Members' Bills by saying that I speak for myself and not for my party, but it is my understanding that my honourable friends in another place did welcome the Bill. I share that welcome and I wish the Bill well.
It is only the Bill's history that makes me somewhat unhappy. The Bill is, after all, an amendment to the Fair Trading Act 1973. The problems of trading schemes, which the noble Lord, Lord Astor of Hever, in his excellent introduction, made clear are sometimes reputable and sometimes far less than reputable, have been around for a very long time. My honourable friends in another place have been pressing the Government for a number of years now for action to deal with what is a considerable volume of unfair trading and exploitation of vulnerable and sometimes gullible people.
Successive Ministers in the DTI over the years have said in response to my honourable friends that they were prepared to legislate for the problems which are properly raised in the Bill. Indeed, the noble Earl, Lord Ferrers, two years ago said that he was powerless to stop these schemes getting off the ground. We knew that. That is why we have been pressing the Government themselves to legislate for such a long time.
I am disappointed on behalf of Back-Bench Members of another place that what ought to be government policy and government provision in legislation is in fact being done by means of a Private Member's Bill. In this case I do not believe that any harm is done in terms of the drafting, since I am sure that it was done by the department. Nevertheless, Private Members' Bills are supposed to represent an independent input to the legislative process. I do not think that is the case here. I believe that this is merely a government Bill which has been pushed on to a Private Member. I bear no ill will to Sir Nicholas Scott or to the noble Lord, Lord Astor of Hever, but I think that the Government should have done it themselves.
9.10 p.m.
Baroness Miller of Hendon: My Lords, the Government welcome this Bill which has already been passed as a Private Member's Bill in another place with Government and all-party support.
My noble friend Lord Ferrers, when Minister for Consumer Affairs, announced on 23rd November 1994 that the Government proposed to update the legislation controlling pyramid selling and similar trading schemes. The following year, the Government consulted widely over specific proposals, including one to widen the coverage of the existing controls.

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Before offering support for this Bill, the Government considered the responses we received to that consultation. We noted in particular the firmly held views of those who operate trading schemes already subject to this legislation. They consider that this legislation provides much-needed protection to the members and potential members of some trading schemes. They are concerned that that protection is presently available only to members and potential members of a restricted group of schemes.
Sections 118 to 123 of the Fair Trading Act 1973, comprising Part XI of that Act, were designed to provide protection for those who belong or are invited to belong to what were then popularly called "pyramid selling schemes" or "multi-level distributorships" or "network marketing". The Bill uses the less colourful term "trading scheme".
Since the 1973 Act was passed there has been a proliferation of pyramid selling schemes which are outside the Act's controls. At present there is little protection for those who join those schemes. This Bill updates the 1973 Act by increasing control over potentially undesirable trading schemes while not inhibiting bona fide schemes which enable people to be self-employed either full- or part-time.
Successful bona fide trading schemes depend on sales to the general public. Problems arise with schemes where there is little scope or incentive for the distributors, or members, to sell the product to the general public. Rather, in some schemes, it may be almost impossible to find anyone willing to buy the product, in which case the distributors may find themselves left with garages full of stock that they cannot sell.
Problems arise also when, as in some schemes, the distributors are encouraged to recruit more and more new sub-distributors who begin by paying a joining fee or buying some substantial starter pack. Such schemes are similar to the well known chain letter except that the promoter always receives a cut of the so-called investment. Like all chain letters, because of the rules of geometric progression, you soon run out of people to recruit.
That is where the main abuse of such schemes now comes from. The first problem I described—mountains of unsaleable stock—can already be addressed effectively by regulations using existing powers under the Fair Trading Act 1973. But this Act is no longer effective in providing protection from what I consider to be recruitment scams. Those are schemes where the main focus is on recruitment. The schemes are so structured that the rewards for recruitment of new participants, as distinct from actually selling the product, are amazingly attractive.
Section 120 of the 1973 Act provides that it is an offence to use the prospect of benefits from introducing others to a scheme to induce someone to make a payment. The penalties are set out in Section 122 and are currently a fine of up to £5,000 and/or three months'
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imprisonment on summary conviction. Enforcement is in the hands of the DTI, which has to bring charges within one year of the discovering of the offence.
Despite a proliferation of trading schemes using recruitment rewards to induce payments, prosecutions have been extremely rare. There have been none over the past 10 years. The lack of prosecutions does not reflect a lack of concern. It is because the recruitment offence only applies if the scheme in question has all of the set of characteristics specified in Section 118 of the Fair Trading Act. It is not difficult to devise a scheme that lacks one or more of these characteristics.
The reason for the present Bill is to widen the application of the existing controls over trading schemes and thereby increase the protection for the general public as well as for members or all such schemes. The principal control under the 1973 Act was intended to prevent pyramid selling schemes being focused on recruitment rather than on selling. It does so through recruitment offences.
It effectively makes it an offence to operate a scheme which meets the criteria of the Act if payments for recruitment are the inducement to join the scheme. It is not illegal to join the scheme or to make payments. It is illegal to benefit from an unlawfully induced payment or to attempt to induce such a payment. The coverage of this control is now too narrow. It does not apply, for example, to schemes which do not involve the supply of goods and services by members, even though in these schemes payments for recruiting other participants are the only reward for those who join.
It has been a source of considerable frustration that it has not been possible to prosecute the promoters of these schemes under the Fair Trading Act. The powers proposed under the new, replacement section will make it possible to outlaw these trading methods. As I have explained, we have used powers under other Acts to protect the public from the continuation of these undesirable if not fraudulent schemes, but these powers are themselves limited in their application. The Bill greatly extends the potential coverage of all these controls.
The powers under the 1973 Act are not only concerned with the recruitment offence. There are also regulations over the promotional material aimed at new recruits and regulations to ensure that participants are not unfairly treated by the promoters. Those regulations are still needed. They provide the framework within which both the promoters and the participants of bona fide trading schemes can flourish. The regulations do need improving. Following consultation last year, the Government intend to replace the regulations to provide more effective protection without increasing the compliance costs for promoters.
It is true that the Bill extends the coverage of the Part XI controls so that they can apply to any trading scheme which meets its criteria rather than the narrow criteria in the present Act. It is also true that there are many types of trading scheme which meet the Bill's criteria but for which the controls are not appropriate. An essential part of the Bill is that it provides the Secretary of State with power to exclude specified types of scheme from all the controls.

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The Government have already declared their intention to exclude two types of schemes: first, franchises in which only one person benefits from the activities of other participants; and, secondly, simple chain letters.
Views are already being sought on how best to achieve these intended exclusions and also on whether there are any other types of trading schemes that should he excluded from the controls. For example, it might be appropriate for the exclusion to take out any scheme where the members do not receive commission on other members' sales or receive any other kind of benefit from the activities of other members. I understand that such an exclusion would take out what are commonly described as "single level schemes", such as Avon, as well as most traditional types of franchise operation.
The key question is whether or not a type of scheme does or does not present the risks to the general public from which the Fair Trading Act is intended to provide protection. Some types of scheme do present risks. Such schemes should be subject to the recruitment offences and, if appropriate, regulations over their promotional material and participants' contract terms.
Trading schemes provide opportunities to hundreds of thousands of people to earn an income in the direct selling sector. Experience has shown that there is also a potential to exploit those who join such schemes. This legislation is intended to remove the scope for such abuse and thus leave the way clear for legitimate business to flourish.
The Trading Schemes Bill will ensure that protection is available to those who are considering joining, or might be induced to join, or who do join any trading scheme that meets its criteria. The Bill's criteria would make the protection much more widely available than at present. It seeks to remove the scope presently available to unscrupulous persons to devise schemes that avoid or evade these protecting controls.
On behalf of the Government, as I said at the beginning of this speech, I welcome this Bill and, like the noble Lord, Lord McIntosh of Haringey, hope that it will soon become law.
Lord Astor of Hever: My Lords, I thank both noble Lords who took part in this evening's debate. This Bill has received all-party support and I hope that your Lordships will give it a Second Reading this evening.
On Question, Bill read a second time, and committed to a Committee of the Whole House.

Prisoners' Earnings Bill
9.22 p.m.
Lord Renton: My Lords, I beg to move that this Bill be now read a second time.
It is a short, practical and, I believe, eminently sensible Bill which is designed to help to motivate prisoners to get the most out of their sentences both for their own benefit and, perhaps more importantly, for the benefit of society in general.
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The Bill was introduced in another place by my honourable friend the Member for Finchley, Mr. Hartley Booth. It passed through all its stages there with the support of all parties and, therefore, I hope that it may commend itself to your Lordships.
Prison has two main purposes: first, it must punish the offender, and it does that by depriving him of his liberty; but, secondly, it should help the offender to lead a more useful and law-abiding life on his release from prison, which is more difficult, but the Bill aims to encourage that.
This is a short Bill and is rather technical in its terms but its purposes and methods are quite clear. The method is to authorise deductions from or levies on a prisoner's earnings when he is undertaking certain kinds of work to which I shall refer; and to provide for the way in which those deductions or levies should be applied for various good purposes.
The two aims of prison tend to work against one another. Prison is an artificial environment and many of the normal responsibilities and decisions of life are removed from the prisoner. If he is to be encouraged to live a law-abiding and useful life after release, prison life should increasingly be made to reflect the realities of the outside world as much as possible. The prisoner must therefore be encouraged to feel a sense of responsibility for his actions.
The Bill aims to contribute to that process of encouragement. It does so by providing the means by which, in return for the privilege—and it is a privilege—of earning substantially higher wages than they would normally do in prison, prisoners will contribute to their own upkeep and that of their dependants; they will contribute to crime prevention; and, indeed, to victim support schemes. That is greatly to the advantage of prisoners. It will also enable savings to be made by prisoners through their work which will then be repaid to them on their release.
Under the Bill's provisions, prison governors are authorised to make deductions from the wages paid to a prisoner participating in what is known as an enhanced wages scheme. That scheme is different from the ordinary run of prison labour for which prisoners receive a very limited amount each week. Alternatively, prison governors can make levies on the wages of prisoners who are working for outside employers for real wages. The Bill further provides that the deductions or levies must be used for the purposes that I have mentioned.
I should just mention that under the Bill, if a prisoner is not satisfied with the deductions made by the governor, he has the right to appeal to the Secretary of State. That is a useful safeguard. Then, of course, the Secretary of State must do as one might expect and either confirm the governor's decision or vary it.
As I have indicated, the Prison Service already has some schemes in place upon which the aims of the Bill can be based—the so-called enhanced wages schemes. Those schemes now cover 1,300 prisoners. There are 54,000 prisoners in prison in England and Wales, so the project has not got very far as yet; but it may do so. In

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addition to those prisoners, roughly 9,000 are employed in prison industries and on farms but without the benefit of the enhanced wages scheme.
Ordinarily, without the benefit of an enhanced wages scheme, a prisoner can be expected to be paid about £7 a week. However, under the scheme he or she can be paid from about £15 a week upwards, depending on productivity. I am told that the effects of the scheme on both output and motivation in the prisons where it has been practised have already been dramatically successful. In one workshop output trebled with the same number of workers.
The schemes are self-financing in that the extra pay is financed from the value of the extra output produced, and there is no extra cost to the taxpayer. Indeed, the taxpayer benefits from the scheme because the prisoner will be made—and this is one of the things that can be done by the deductions—to contribute to the cost of his being imprisoned.
There is also the pre-release employment scheme which enables some prisoners reaching the end of their sentence to work for outside employers at normal rates of pay on day release from prison. The Bill will provide a clear, legal framework for the deductions or levies which accompany those schemes.
I am willing to attempt to reply to any points that the noble Lord, Lord McIntosh, or my noble friend may raise on the matter. There is a great deal that I could say in introducing the Bill. Indeed, I could go through it clause by clause if your Lordships wished me to do so. However, as noble Lords have had the opportunity to read this short Bill, and bearing in mind the purposes which I mentioned and the method that I have described, I think that it might be better for me to leave any further comments that I have to my reply.
I should, however, just add this. Prison authorities will have to find more work for prisoners to do if the advantages of the Bill are to be obtained. It is crucial that this work should not be obtained at the expense of law-abiding jobseekers in the outside world and the wider community. That is why the Prison Service is increasingly looking for work in partnership with private sector firms rather than in competition with them. It is seeking out opportunities for import substitution or for particular processes or products where prison industries can meet a market need without affecting outside employment. In other words, there are some things that are needed in prisons which outside manufacturers just do not attempt to provide. There is an opportunity there.
With a prison population of over 54,000, if we can get a high proportion of them working productively, that will help in some small way to stimulate the economy and contribute to growth and hence to reduce unemployment. I hope your Lordships will agree that this Bill, though a small one, will have an all round benefit.
Moved, That the Bill be now read a second time.— (Lord Renton.)
9.31 p.m.
Lord McIntosh of Haringey: My Lords, as with the previous Bill, I preface my remarks by saying that Private Members' Bills are supported or otherwise in a personal capacity from this Dispatch Box. However, I have no hesitation in saying that I support the Bill and I welcome the initiative of the honourable Member for Finchley, and of the noble Lord, Lord Renton, in bringing it before Parliament. I note that Mr. Hartley Booth paid tribute to the work of the Howard League for Penal Reform and the Penal Affairs Consortium in the thinking and preparation of this Bill. That encourages me even further to support it.
I was relieved to hear the noble Lord, Lord Renton, describe the purpose of prison as being punishment which he defined as being loss of liberty and rehabilitation. There have been those in the Government who have had rather more retributive ideas of imprisonment. I am glad to see that the noble Lord, Lord Renton, adheres to the old, more liberal views of what prison is for. Of course it is undoubtedly true—everyone agrees with this—that the purpose of prison must be rehabilitation to a considerable extent. One of the best forms of rehabilitation—if we are to stop prisons being universities of crime—is for prisoners to have useful employment, and preferably employment which will be of value to them when they come out of prison. That, of course, is a particularly important element in prison employment and, as I understand it, in this Bill.
I am sure the noble Lord will agree that there are some constraints on what extra money can be earned by prisoners. I think most people would think it unreasonable if prisoners were able to earn more than those, for example, on job creation schemes, whose earnings consist of the dole plus a certain amount. That puts an upper limit on what it is possible to earn from prison earnings. There is also room for argument about the particular purposes for which the deductions might be used. Of course it is entirely reasonable that they should be used for victim support schemes, for example; but what about compensation to individual victims? It is usually assumed that prisoners do not have any resources to make compensation to individual victims. Would it not be worth considering whether the Bill should provide for compensation to individual victims as well as giving general support for victim support services?
The other constraint is that we have to ensure that those additional earnings are not used as a cost cutting exercise in the Prison Service. The noble Lord referred to the increase in the prison population in recent years. He will be as aware as we all are that in real terms the budgets of the Prison Service are being reduced to a considerable extent over the next three years; and we would not like to see prisoners' earnings used to cut costs in prisons. I do not believe that that is possible from the Bill. However, we should be clear that these are genuine extra earnings which are used genuinely for charitable or rehabilitative purposes.

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Allowing for those constraints on the possible effects, the Bill is not a panacea either for the budgets, the Prison Service or the costs of victim support services. However, it is a useful measure and it has our support.
9.36 p.m.
The Earl of Courtown: My Lords, I intervene in the debate to assure your Lordships that the Government fully support the Bill. In doing so, I congratulate my noble friend Lord Renton on his excellent description of the Bill; and my honourable friend Dr. Hartley Booth.
Constructive work in prison can be shown to be helpful in reducing the risk of reoffending after release. It is essential to do what we can to improve the prisoner's prospects of getting a job outside prison. There is good research to suggest that work experience which leads to realistic job opportunities after release reduces reoffending rates. Along with having a stable home to go to, getting a job after release is the biggest single factor which separates ex-prisoners who avoid reoffending from those who do not.
But constructive work has the additional advantage for prisons that it actually brings income into the system. The noble Lord, Lord McIntosh of Haringey, commented on costs. Costs and deductions will go straight into the consolidated fund. Such work also increases the amount of beneficial activity in prison. It enhances its quality, and, properly managed, it will reduce the cost of providing it.
The key is getting more prisoners to work, and getting prisoners to work harder while they are at work. Prisoners are required to work when it is available, but coercion alone cannot make them work harder or more effectively. Nor will it generate the will to work which is such an important aspect of the rehabilitative value of work in prison. But experience shows that prisoners will work harder if there is a reasonable incentive.
It cannot be left simply at that. Prisoners do not have the same living expenses as other people. It would be wrong to enable them simply to accumulate money; and it would be wrong not to take advantage of the rehabilitative potential that constructive work can offer: work which requires prisoners to show responsibility for themselves and their dependants, and for the consequences of their crimes. The Bill establishes a sensible framework, with appropriate safeguards, to maximise all the benefit of the enhanced wages scheme in prisons.
This leads me to the other reasons for Government support for this Bill. The first of these are those which my noble friend set out. It will benefit a wide range of people and organisations. It will benefit voluntary organisations dealing with the effects of crime. It will benefit society at large. It will benefit the prisoner while in prison and after release.
We also support the Bill because it reinforces the ability of the Prison Service to do what both the Woolf Report, the Learmont Report, and HM Inspector of Prisons also said it should: to provide active, busy prisons in which prisoners can do purposeful work.
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Thirdly, we support the Bill because it fits four square with what the Government believe prison regimes should be and do. We believe that prison regimes should not allow prisoners to be idle. They should make plain to the prisoner the value of hard work and working with others. They should enable the prisoner to make reparation to society. They should encourage the prisoner to take responsibility for his own actions, his own upkeep, and that of his dependants.
My noble friend asked about the number of people at present in the scheme. The suggested figure was 1,350. That is just the pilot scheme.
If it meets with your Lordships' approval, the Bill should go a long way towards achieving prison regimes of that kind. If I may say so, I believe that my honourable friend Dr. Hartley Booth has provided invaluable help to the Prison Service and the administration of justice by piloting the Bill so skilfully through its various stages elsewhere. I commend the Bill to your Lordships.
9.40 p.m.
Lord Renton: My Lords, I am grateful to the noble Lord, Lord McIntosh, for the support which he has given to the Bill and I also appreciated his comments. I ought to answer him on two points that he made. First, he referred to the desirability of compensation to individual victims. I agree with him. The position under the Bill is that, when the court has made an order that a victim should be compensated by the accused, there will be a deduction from the earnings of the accused in order to help towards the victim's compensation. So that point is covered.
The second important point that the noble Lord made was that there should be constraints on the amount of money that may be earned. I can assure him that, even under day release schemes as the prisoner's sentence comes towards its end, the amount that the prisoner can earn must be decided by the governor. The prisoner will not merely be able to make a free bargain with the employer. I do not believe that we need worry about other employees' wages being undercut by prisoners. As I understand it, what the Home Secretary and the prison authorities have in mind is that the enhanced earnings and pre-release earnings must be earned on schemes where prisoners do not compete with labour in our own employment market. They compete with importers. That is rather different. Alternatively, when nothing comes in by way of import nor is anything produced in our own factories it produces goods which are needed in the prisons. One prison found it necessary to get prison mugs made and managed to find an employer who was willing to embark on that under the enhanced earnings scheme. So I hope that will set the noble Lord's mind at rest.
I ask that your Lordships give the Bill a second reading and, in doing so, I wish to say how grateful I am for the support that it has received.
On Question, Bill read a second time, and committed to a Committee of the Whole House.

Stalking (No. 2) Bill [H.L.]
9.43 p.m.
Lord McIntosh of Haringey: My Lords, I beg to move that this Bill be now read a second time.
The Bill has had a somewhat tangled history in the sense that the issue of stalking and harassment of individuals by other individuals over a considerable time in various often painful ways has been before Parliament on a number of occasions. Most recently it was during the passage of the Criminal Justice and Public Order Bill in 1994. In another place Lady Olga Maitland sought to introduce a measure which would have provided for additional penalties against stalking, and would have amended Section 5 of the Public Order Act 1986 and Section 154 of the Criminal Justice and Public Order Bill as it then was. She was supported by Labour Members but opposed by the Government on grounds which the Government still use; namely, they support the principle of a Bill of this kind but are still consulting about the way in which it should be achieved.
Since that time there has been the abortive Family Homes and Domestic Violence Bill, which achieved the support of this House but was ignominiously abandoned at the end of the last Session, and has only half been brought back in the Family Law Bill. It is not that that is on the same subject, but it provides very much the same kind of definition of an offence as is provided by the Bill I present today. The analogies are quite valuable.
There have been some improvements in the way in which the matter has been treated in the courts. Most recently, it was established that there is an offence of psychological grievous bodily harm. Anthony Burstow was convicted of grievous bodily harm to Tracey Sant and sentenced to three years' imprisonment for a series of very foul stalking activities towards her. He sent her soiled sanitary towels, he stole her underwear from lines and poured salt on her car. Generally speaking, he made her life impossible over a considerable period of time.
Some stalking does not consist of acts that are violent or offensive in themselves, but can consist of acts which in isolation might be perfectly reasonable, such as sending flowers or gifts, but which over a period of time, by repetition and often by including excessive phone calls and letters, can be exceedingly painful in total to the person being stalked.
I should make it clear that stalking is not only by men of women. Kingsley Martin, when he was editor of the New Statesman before, during and after the war was stalked for a considerable number of years by a woman who was described as elderly with thick glasses and grey hair, who used to appear at his home as he was about to leave for work, appear at work as he was arriving from home, appear when he went out from the New Statesman office, and appear on every occasion when, for example, he went to speak at public meetings. It reached the stage over a period of years where he would not leave his home or office without a member of his family or a colleague accompanying him. It was very painful. I believe he succeeded in getting an
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injunction from a judge in chambers to stop it. Apparently, the injunction worked on that occasion. This Bill is not purely about women being stalked by men. The offence can apply to anybody, although it is undoubtedly true that it applies mainly to women being stalked by men.
When the police are approached by people who are being stalked, they give various practical advice which I am sure is valid. They talk about having a mobile phone available and about panic buttons; and they refer from time to time to the possibility of action to prevent a breach of the peace. As was recognised by the Government as recently as 9th May, when Mr. David Maclean wrote to my honourable friend Janet Anderson, who introduced a Bill earlier this year, the Government are looking for a solution to the problem at the earliest opportunity. Mr. Maclean told Janet Anderson that the Lord Chancellor's Department was aware of the analogy of domestic violence legislation and was looking to see how that might be used as an analogy in seeking to solve the problem of stalking.
As I said, the problem is not that the Government do not recognise the importance of the issue, which affects very painfully and over a very long period of time a considerable number of women in this country, but that they do not know—or claim they do not know—what to do about it. This Bill may not be a perfect attempt, but it is certainly a serious attempt, to deal with the problem of stalking.
Clause 1 provides definitions of stalking and spells out a whole number of activities which will be called "stalking", provided that they are:
"reasonably likely to cause that other person to feel harassed, alarmed, distressed or to fear for his safety".
Clause 2 provides that stalking is an offence when defined in that way, with a penalty of up to five years' imprisonment; that a constable may effect an arrest without a warrant; but that a defence exists for the offence if the accused:
"did not know and had no reasonable cause to believe"
that his actions caused the other person to feel harassed, alarmed, distressed, or fear for her safety.
Clause 3 provides for prohibitory orders to be granted by magistrates on the application of somebody who is being stalked. There is provision for such orders to be granted without the appearance of the respondent; but the respondent may appear, and if he does, the issue is decided on the balance of probability. It does not mean, if a prohibitory order is given, that the respondent is guilty of a criminal offence. There is reference in the Bill to the possibility of counselling for the respondent. But the clause provides that there is an offence for breach of the conditions of a prohibitory order.
Clause 4, which is very brief, excludes those who are acting in pursuit of a statutory or other lawful authority.
Clause 5 is concerned with "Citation, commencement and extent".
A number of objections have been raised. Indeed, there was a News Release by the Home Office on 9th May which accompanied Mr. David Maclean's letter to Janet Anderson. It is necessary for me briefly

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to rehearse those objections and consider how far the Bill deals with them and how further work may be required in Committee.
First, it is argued that the definition of stalking is too wide. There are laws against stalking in other parts of the world. Laws exist in Canada, states of the United States and states in Australia. They appear to work. In this Bill we have taken the best and most workable definitions of stalking and sought to put them into British legislation. If they are too wide, it is up to Parliament to narrow them and be more precise about them when the matter comes to Committee.
Another objection is that journalists, in particular, might be constrained from their activities by a stalking law. Of course, the whole issue of what journalists may or may not do in pursuit of a news story goes very much wider than stalking. It is part of privacy law. The adequacy of the law of privacy and proposals for strengthening the law of privacy are of enormous importance and will have to be debated by Parliament at some stage, if only because it appears that the European Court of Human Rights is not satisfied with British legislation on this matter. I do not feel that I need pursue the matter here, except to say that there are defences provided in Clauses 2 and 4 of the Bill.
Then there is the objection that the Bill provides a combination of civil and criminal measures to deal with stalking. Frankly, I find that objection incomprehensible. I do not see why we should not use both the criminal and civil law to pursue what is patently agreed to be an offence. I do not see why we should not have one single Act of Parliament referring both to the civil and criminal law. There have been improvements in the powers of the civil law in regard to stalking. There is now more generally recognised a civil offence of harassment. A case as recent as July of last year in the Court of Appeal of Burris v. Azadan is an example of that.
We need not only a civil offence which is available theoretically, but also a civil offence which is available easily in a magistrates' court—which is what is proposed in the Bill. We need something which does not require legal aid; we need informal procedures; we need the issue to be judged on the balance of probabilities and we need what the Bill provides—that is, that the respondents should not acquire a criminal record as a result. It is no good leaving it to the common law because the common law does not provide adequate powers of arrest. I would argue that the combination of the criminal and the civil law is necessary to deal with this acknowledged offence and the acknowledged pain experienced by a significant number of people in this country.
I conclude by saying to the Government that I appreciate that their anxieties about the drafting of the Bill may be genuine. I am not saying that they are not real concerns being expressed by lawyers advising the Home Office or the Lord Chancellor's Department. But we have an opportunity in this House—and that is what this House is for—to consider a draft Bill which I put before your Lordships now; to consider it with the help of officials and draftsmen and to come up with something which Parliament can consider and approve.
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I challenge the Minister to say whether, if this Bill goes to Committee as I believe it should, they are willing to participate in the process at Committee; whether they are willing not only to comment on amendments that may be tabled by other people, but also to suggest improvements of their own. It is in all our interests that we should proceed as quickly as possible, consistent with good legislation, to deal with stalking. That is what, above all, the women of this country want. It is within the power of government and the Home Office to give them that help and that assurance. I commend the Bill to the House.
Moved, That the Bill be now read a second time.— (Lord McIntosh of Haringey.)
9.53 p.m.
Lord Dixon-Smith: My Lords, I was interested to hear the remarks of the noble Lord, Lord McIntosh, in introducing this Bill. He covered the ground far better and more thoroughly than I can. I totally agree with him that behaviour now identified as stalking is wholly abhorrent and unacceptable. One can only feel the greatest sympathy for anyone who suffers from that form of harassment.
I rise to speak for two reasons. First, I wonder whether this is the right Bill to deal with this matter. I have great sympathy with those who have the responsible task—it is a terrible task—of drafting a parliamentary Bill. I have to say that the intentions of the Bill, and therefore, of course, of those who drafted it, are entirely honourable. But what I can only describe as a "you know what I mean" approach to legislation simply is not satisfactory. There is also the question, to which I shall return, of how far a person who feels that they are being stalked can obtain redress under existing law.
Next, I shall quote from the Bill—and I hope I shall be forgiven for this—somewhat selectively. Clause 1 states:
"In this Act, 'stalking' shall mean engaging in a course of conduct whereby a person—
(a) follows, loiters near, watches or approaches another person".
I miss out paragraph (b) deliberately. Paragraph (c) states:
"loiters near, watches, approaches or enters a place where another person lives, works or repeatedly visits".
Paragraph (g) states:
"does any other act or acts in connection with another person so as to be reasonably likely to cause that other person to feel harassed, alarmed, distressed",
and so on. Clause 2(1) then states quite properly:
"A person who stalks another person is guilty of an offence".
Finally, Clause 2(3) states:
"A constable may arrest without warrant a person whom he has reasonable cause to suspect to have committed or to be about to commit an offence of stalking".
That is the wording of the Bill. We need to consider one or two situations. All the world is supposed to love a lover, or so it was said. But how many young swains have loitered for the chance of a glimpse of an unobtainable object of desire? I remember being 17, 18 or 19, once a long time ago. I accept that times have

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changed and a more direct approach, perhaps not to say a blunt approach, may have become the norm. But do we really wish to make that a criminal offence? The Bill does.
Lord McIntosh of Haringey: My Lords, if the noble Lord will allow me, the Bill provides in Clause 2(4):
"It shall be a defence to a charge under this section if the person charged proved that he did not know and had no reasonable cause to believe that his behaviour was likely to cause harassment, alarm, distress or fear".
I am sure that when the noble Lord was a lovesick swain he would have successfully pleaded that defence.
Lord Dixon-Smith: My Lords, I am well aware of the defence that is in the Bill and I will come to it in a few moments.
One could foresee other problems, and again one could say that these matters are to a certain extent handled by the latter parts of the Bill. But imagine an investigator looking for evidence in a case of insurance fraud. That could very easily be misconstrued if someone is watching someone else persistently. Consider, even worse, somebody trying to take or obtain evidence in a case of social security fraud. Again, he could very easily lay himself open to a charge of stalking. If we bring in this law as drafted that is what could easily happen. Even if the defence were accepted and so on, perfectly innocent individuals could be summarily arrested and have to talk their way out of what could be an exceedingly embarrassing situation. That may be meaningless, but they could be in that situation. We need to be aware of that in anything we finally put on the statute book.
Worse still, as drafted, you could be following a lady down a road on a dark rainy night and she could become very uncomfortable in that situation. I have seen this happen. She could run into a policeman who happened to have had a quarrel with his wife that morning and been bawled out by his son and therefore was in a difficult mood. Again, one could have a situation where instantaneous arrest was possible. One could talk one's way out of it but it could be exceedingly difficult and embarrassing. The only bit of imagination that needs to be stretched in that scenario is meeting a policeman on the street on a dark wet night, because, unfortunately, policemen are less and less often on their feet in the street nowadays.
The noble Lord, Lord McIntosh, pointed out that sexual harassment is not only one way and stalking is not only one way. I have certainly heard of one case where a young man had his life made absolutely impossible by a girl. He was in serious fear lest she should set about charging him with rape. It is one thing to be charged with rape if you actually committed the crime, but entirely another, and exceedingly difficult, if you did not. As I have said, there are problems with the Bill as drafted.
I turn now to the defence to which the noble Lord, Lord McIntosh, referred. Clause 2(4) states:
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"It shall be a defence to a charge under this section if the person charged proved that he did not know and had no reasonable cause to believe that his behaviour was likely to cause harassment, alarm, distress or fear for personal safety as mentioned in section 1 above, and the burden of proof shall lie upon the defendant".
I am a simple man and I have a simple mind, but I had always thought that it was a cardinal principle of British law that you are innocent until proved guilty. Therefore, I find this defence difficult to accept in that context.
I turn now to the protection offered by the existing law. I am indebted to my family solicitors for this advice. I more or less asked them the question: what would you do if somebody said that they were being stalked? There are two possibilities of remedy under Acts in the criminal code. First, the Public Order Act 1986 creates a criminal offence if a person,
"(a) uses threatening, abusive or insulting words or behaviour".
or, in paragraph (b), "distributes or displays" to another person writing which is "threatening, abusive or insulting", or a person is guilty of an offence if he or she displays threatening or abusive behaviour with the intention of causing harassment, alarm or distress. That covers a large part of what this Bill is all about.
Next, the Malicious Communications Act 1988 makes it an offence to communicate with intent to cause distress or anxiety. Again, that aspect is mentioned in this Bill.
Because in this age divorce is common and family stress and division seem to be becoming—heaven help us—the norm rather than the exception, many actions of the sort we are discussing arise out of matrimonial tension and dispute, so the civil courts make possible many forms of action under family protection orders, exclusion orders or matrimonial injunctions that can be used to restrain the other party. Perhaps I may misquote a recent letter to The Times after the failure of the No. 1 Bill in another place and say, "The challenge for the courts is to use the existing law effectively".
In its present form, the Bill will not do. To quote from Yvonne Von Heusen's letter to The Times on behalf of the National Anti-Stalking and Harassment Campaign:
"Without consultation with us, Mrs. Anderson (the Bill's promoter) used our proposals yet provided an ineffective and unenforceable Bill".
Whether the Bill is beyond redemption I hesitate to say. What I am certain of is that we should be very cautious with the Bill as drafted or we could, as happened with the Dangerous Dogs Act, legislate in haste and repent at leisure.
10.10 p.m.
Baroness Hayman: My Lords, I shall not detain the House long at this time of night, but I wish to say a few words in support of the case for the Bill, so ably argued by my noble friend Lord McIntosh of Haringey.
Perhaps I may deal first with some of the arguments referred to by the noble Lord who has just spoken. He began by expressing sympathy for the victims of harassment. I understand that sympathy to be genuine. But he then pursued an argument which suggested that, as legislators, we should give our sympathy but not take any action. The conclusion was that this proposed

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legislation was not redeemable and so deeply flawed and had so many risks in it that there were grave doubts as to the wisdom of taking it forward. That is my understanding, but I shall willingly give way if that is incorrect.
I suggest that, equally, there are risks in not legislating speedily. I believe that there is a general acceptance that, although there is a panoply of remedies presently available in various situations, those remedies are disparate and many victims of this serious problem, given the despair that can be caused by this harassment, do not find them adequate.
I am afraid that here we are dealing with forms of behaviour that are far more sinister than the mooning of lovesick swains or the innocent following of women down dark, wet roads at night with no ulterior purpose; and we are dealing with a range of different forms of behaviour. That is one of the difficulties in definition and the reason for the breadth of definition that we must have in any legislation. The particular behaviour and its significance, given the context, are difficult to pin down but can be equally distressing for the victim. While it is absolutely correct to say that this is not an offence committed by one sex or the other, some of the most horrifying cases of harassment have gone unchecked, and the ones that have ended with rape and violent attack have been offences against women. I believe that women in the main feel particularly threatened by this range of behaviour.
My understanding is that there is general agreement that the harassment and molestation which cause distress to so many women need to be curtailed. I believe that there is a need for speedy legislation in the declaratory sense; that is, to indicate the seriousness with which these forms of behaviour are viewed and to grant some relief and remedy to those who find the current range of piecemeal legislation very unsatisfactory.
This Bill is by no means perfect. Seldom at Second Reading do we have a Bill that is perfect. However, it contains a sensible definition which, though wide, is based on international experience. It provides the protection through prohibitory orders which is lacking at the moment. I believe that it strikes a proper balance between the interests of complainants and respondents. The role of the magistrates' court, and the accessibility and effectiveness of that system, have an important role in bringing succour to victims.
It has been suggested that, while supporting the principle of legislation, the Government believe that the defects are such that we ought to wait and take a more considered view. I understand that there has been wide consultation on the proposals and that within them is a framework on which we can build during the Committee stage and so improve the Bill. Any necessary amendments could be tabled and argued in this Chamber and the Bill could be turned into a workable and effective measure.
There is, as I said, an urgency in this—an urgency that we as legislators should recognise both the scale of the problem and the distress that it causes, and an urgency to provide remedies for those already suffering
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and protection for those who are at risk from these forms of behaviour. I hope that the Minister will be able to give support to the Bill.
10.15 p.m.
Baroness Blatch: My Lords, the actions which are known as stalking are a menace to our society. The actions of stalkers can have a devastating impact on the lives of their victims. The Government share the desire to do something to put a stop to that menace.
There are, of course, existing laws which can deal with the worst cases of stalking as recent prosecutions against stalkers for causing grievous or actual psychological harm demonstrate. It was interesting that the cases cited by the noble Lord, Lord McIntosh of Haringey, were dealt with by the courts and that the offenders ended up in prison.
It is an offence, under the provisions of the Public Order Act 1986 intentionally to cause harassment, alarm or distress. It is an offence under the Misuse of Telecommunications Act 1984 to make indecent, obscene or threatening telephone calls and under the Malicious Communications Act 1988 to send letters of that kind.
But the Government have recognised that there is a gap in the present legislation to deal with situations where harassment, alarm or distress is caused but where intent to do so cannot be proved. We have been studying legislation against stalking in Australia, Canada and the United States, to see whether their solutions are relevant to the situation here in the United Kingdom. We have also been looking at the existing criminal and civil remedies in this country, to see whether we could build on those remedies to address this problem.
This is a difficult area in which to legislate, since many of the individual actions in which stalkers engage are, in themselves, quite harmless—walking up and down a street, or standing on a street corner, for example. Much of the activity which can be described as stalking can, in another context, be something entirely innocent done as part of normal activity.
We have to get this right. Any legislation in this area must be effective against stalkers and provide victims with adequate security and redress. But it must not inhibit people from going about their everyday business. The Government therefore consider that it is essential that we move forward in this area in co-operation and consultation with those who are seeking change, or who might be affected by new proposals.
When the honourable Lady who introduced a Bill on stalking in another place gave notice that she intended to do so, my right honourable friend the Minister of State agreed that she could speak to the Home Office, which was looking at this problem, so that she could be aware of our thinking and also of the difficulties which remained unresolved. My right honourable friend offered those discussions because he felt—rightly—that this issue was one in which a bipartisan approach was appropriate and achievable. The Home Office offered detailed advice to the honourable Lady on the shortcomings of her proposals, explaining that they did

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not address the complexities of the issue, such as the need to ensure that any criminal offence did not catch legitimate activities.
I understand that the honourable Lady also met the Lord Chancellor, who similarly pointed out that the scope of the proposals was too wide. It is a matter of regret, therefore, that, when the honourable Lady brought forward her Bill—similar to the one we are discussing tonight—it did not address the outstanding difficulties. The problems of drafting an appropriate provision in this area are considerable and more thought has to be given to the subject to get it right.
My right honourable friend recognised fully the intention behind the Bill, but came to the conclusion that the defects in the Bill could not be put right in Committee. I was therefore saddened that there were accusations that the Government did not support that Bill, or will not support this Bill, because they were introduced by members of an opposition party.
As I have said, we support the Bill's intentions. We want to get it right. We should like to see a Bill on the statute book. We believe that it can be done with all-party support. That is not the issue. The issue is that no responsible government should ever allow onto the statute book provisions which would make criminals out of ordinary citizens pursuing legitimate activities.
Let me make clear the reasons why the measures in the Bill under discussion today are unacceptable to the Government. My noble friend Lord Dixon-Smith set out some of those reasons most eloquently. The scope of the Bill is too wide. It would catch the legitimate activities of not only journalists—although there may be some who would regard that as no bad thing!—but also others going about their lawful business. It provides both civil and criminal remedies against stalking without any reference to the circumstances in which either remedy would be appropriate. There is no requirement to prove intent or recklessness in the criminal offence. And I do not believe that the Bill's proposal to reverse the burden of proof, a point so well made by my noble friend, so that a defendant would have to prove themselves innocent, is justifiable.
I think it worthwhile recalling the comments on the Government's attitude to the earlier Bill introduced by the honourable lady, made at the time by Dr. Evonne Von Heussen of the National Anti-Stalking and Harassment campaign, the leading voluntary organisation for the victims of stalking, and in campaigning for new legislation. I shall use a different quotation. She said:
"A bad Bill is worse than no Bill … You have to be able to defend legitimate activities such as debt collecting against the stalking charge. I think the Government is taking a genuine stance".
I believe that she was right. We need to do something about this serious problem, but we need to do it without sowing the seeds of future injustices.
I have to say that I am surprised that the Opposition has not taken note of her views or consulted other groups who might find themselves the innocent victims of the proposed new offence, particularly as measures in this Bill could prove a nightmare for innocent people
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branded as criminals for engaging in legitimate activity. They would also have the burden of proving their innocence.
I do not think either that it would be right to rush into decisions and try to amend this Bill in Committee. The Government believe, as I have said, that consultation is essential on measures of this kind. We therefore intend to publish a consultation paper as soon as possible. I cannot give a date for publication but it is being considered as a matter of urgency and I hope that it will be published shortly. We shall take note of comments on that paper so that effective measures can be introduced to combat this menace.
The noble Baroness, Lady Hayman, referred to wide consultations on the present proposals. I am not aware of those. I know that consultations have taken place with officials in the department and that that advice was ignored. I also know that consultations have taken place with the Lord Chancellor and that that advice was ignored. We are not aware of consultations with Dr. Von Heussen. Indeed, in her letter to the Telegraph she stated that she would have welcomed consultation.
The noble Baroness also said that although there are a panoply of remedies they are far too disparate. I suggest that stalking itself can be pretty disparate both in the nature of the activity and in the range: from the wholly innocent, to the most sinister. The complexity and the nature of stalking is all the more reason why the Bill needs thinking through more fully. It is too complex and sensitive a subject on which to legislate on the hoof and speedily.
We need to consult with interested people because we must get it right. This Bill is not right. We do not believe that it should be amended in Committee unless we have had a proper, formal consultation with interested parties. Therefore, the Government cannot support it, although in keeping with the traditions of this House, I shall not oppose its Second Reading tonight.
10.25 p.m.
Lord McIntosh of Haringey: My Lords, I shall try, so far as possible, to look for points of agreement rather than for points of disagreement. I acknowledge the spirit and the moderation in which the Minister responded to the Bill, although of course I am disappointed at her conclusions.
I acknowledge—and I should have said—that Janet Anderson was grateful to David Maclean and officials in the Home Office for the offer of talks which she took up and, indeed, for the opportunity of discussions with the noble and learned Lord the Lord Chancellor. She felt that it was better to proceed with a Bill as drafted and deal with the points that were raised in Committee because she had hoped that the Bill would not be obstructed on Second Reading. That is a matter of opinion. She might have made a misjudgment about the timing but there was no disagreement about the value of the consultation which took place. There is disagreement only about the way in which we should proceed in order to get something effective on to the statute book as quickly as possible.

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There is no disagreement among us about the gravity of the offence or about the inadequacy about the present law. The noble Lord, Lord Dixon-Smith, seemed to be saying that the problem was less than might otherwise appear because of the possibilities of the present law. But the examples which he gave and the examples which the Minister cited from the Public Order Act referred to acts which were, in themselves, harassment; in other words, acts which were offensive.
The whole point about stalking is that it often consists of acts which are not in themselves offensive. It is not offensive to walk up and down the road, to phone up and say, "I love you", to write love letters or to send flowers. I suppose that it becomes rather offensive at four o'clock in the morning. However, the point about the extension which is required to the law, which was recognised by the Home Office in the press release of 9th May, is that many activities which cause great pain are not in themselves harassment. They are innocent actions—in other circumstances they would be innocent actions. Therein lies the difficulty. I believe that we are all genuinely agreed about that.
I find it difficult to accept the Government's argument that this is legislation on the hoof. The issue has been before Parliament for two years since Lady Olga Maitland raised the issue and if, as I believe, she was right in raising it when the Criminal Justice and Public Order Bill was before Parliament, then surely there has been plenty of opportunity for a determined government to undertake the necessary consultation between 1994 and now.
Janet Anderson has consulted. She has perhaps not done so as widely as the Home Office can but she has talked not only to officials from the Home Office and the Lord Chancellor's Department but also to the Police Federation, the Suzy Lamplugh Trust, the National Anti-Stalking and Harassment Campaign and other interested parties.
The Minister is merely saying to us now that there will be consultation at some time in the future. We are in the last year of this Parliament. I am not going to give any undertaking about what legislation will be dealt with
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in the first year's programme of a Labour Government. But I am sure that your Lordships will understand that there are matters which have very high political priorities and it may be difficult to give priority to measures of this kind. But we have an opportunity now. We have an opportunity to build on the talks which have already taken place and which could be debated in Committee.
I have negotiated for a Committee stage which will take place on Friday, 28th June. I have tabled amendments which have been suggested by lawyers which I believe will improve the Bill. There are other improvements, some referred to by the Minister and some referred to by the noble Lord, Lord Dixon-Smith, which I shall consider very seriously and think about tabling amendments accordingly.
However, in Committee I wish to pin down the Government, if possible, so that they say exactly what is wrong with the Bill and what could be done to put it right. If anything can be done by negotiation as well as in Committee to achieve that, then even if we do not find time in the House of Commons for it in the course of this Session, we might have made some legislative progress towards a Bill which could get through in the next Session without unnecessary controversy. That is the purpose of this exercise. I appeal to the Government to assist it in any way possible. I commend the Bill to the House.
On Question, Bill read a second time and committed to a Committee of the Whole House.

University College London Bill
Reported from the Unopposed Bill Committee without amendment.

Australia and New Zealand Banking Group Bill [H.L.]
Returned from the Commons agreed to.
House adjourned at half past ten o'clock.