HL Deb 04 February 1999 vol 596 cc1690-702

8.20 p.m.

Lord McIntosh of Haringey rose to move, That the draft order laid before the House on 20th January be approved [6th Report from the Joint Committee].

The noble Lord said: My Lords, I beg leave to move the Apportionment of Money in the National Lottery Distribution Fund Order 1999.

The purpose of this order is to adjust temporarily the shares of National Lottery income to good causes so as to provide the New Opportunities Fund with the funding we promised it in September last to deliver three new initiatives.

The Government announced their intention in the 1997 White Paper, The People's Lottery, to establish a New Opportunities Fund. The National Lottery Act 1998 made this a reality. NOF, as it is generally known, will fund initiatives in health, education and the environment. There is no question of the lottery taking over core funding responsibilities for these areas. This expenditure will be additional to core government support. NOF was officially launched last Friday, when it invited applications for its first initiative—healthy living centres.

We were able to create NOF without disadvantaging the existing good causes. It had originally been told to plan on the basis that it would receive 20 per cent. of the £9 billion which it was anticipated would be raised over the course of the operator's licence, which ends in September 2001. This amounted to £1.8 billion each. In the event, it became clear that the National Lottery was likely to raise an additional £1 billion, taking income to the good causes to £10 billion. It is this additional £1 billion which made possible the initial NOF programmes.

The National Lottery continues to be a great success. We now estimate that income to the good causes will be at least £10.6 billion over the lifetime of the licence, which is £600 million more than our previous estimate. We announced in September last year that this additional money would be split between NOF, which would get an additional £400 million, and arts, sports, heritage and charities—which would get an additional £50 million each. So rather than £1.8 billion, arts, sports, heritage and charities can now expect £1.85 billion over the life of the licence. The Millennium Commission, about which I will say more later, is not affected.

In deciding how best to allocate the additional £600 million, we kept in mind the pressures on the good causes. But we also needed to balance this against the opportunity to use the additional money for pressing priorities in health, education and environment. We believe that the split proposed strikes the right balance. It gives arts, sports, heritage and charities £50 million more than originally expected. And it allows NOF to launch significant new initiatives.

The original three initiatives were announced in September and will support regular out-of-school activities; training teachers and librarians to use technology; and a core network of healthy living centres. The additional £400 million will allow NOF to develop three further initiatives. We published our proposals for these in November last year, in the consultation document, New Links for the Lottery. The three initiatives are: green spaces and sustainable communities, which will help urban and rural communities across the UK to understand, improve and care for their natural and living environment; cancer prevention, detection, treatment and care, which will build on local fund-raising to address local needs; community access to lifelong learning. We also proposed an expansion to the after schools initiative to find 250,000 new summer school places.

We have received well over 300 responses to our consultation and are currently considering them. The vast majority welcomed our ideas. We hope very soon to bring to the House an order to establish the new initiatives.

The order changes the percentage shares of the affected good causes. If we did not do so, the current percentage split would mean that only £200 million of the additional £600 million would flow through to NOF, rather than £400 million as intended. The purpose of this order, therefore, is to transfer a further £200 million to NOF.

The Secretary of State and officials have been in discussion with the distribution bodies about how they would prefer this to be done. They decided that they would prefer a quick reduction as early as possible, followed by a return to their current percentage shares. This is what the order before you does. It reduces the percentage income shares to arts, sports, heritage and charities from 16⅔ per cent. to 5 per cent. for 13 weeks from 15th February until 16th May. At the end of this period, their share of lottery income reverts to 16⅔ per cent. During the same period, NOF's share increases to 60 per cent. before reverting to 13⅓ per cent. All the good causes have substantial reserves sitting in the National Lottery distribution fund and can meet all of their commitments during this period and afterwards.

We appreciate that these changes can make it more difficult for the distributing bodies to plan ahead. And we are very grateful to them for the constructive way in which they have approached this issue. The Secretary of State was able to announce yesterday for the first time that we will not change again the percentage shares to arts, sports, heritage and charities for the remainder of the licence period. This is in addition to the undertaking already given that these good causes are each guaranteed 16⅔ per cent. of lottery proceeds after the current licence expires.

This order does not directly affect the Millennium Commission, but it may be helpful if I set out how we anticipate its future funding stream developing. As we have previously announced, the Millennium Commission is assured £2.017 billion over its lifetime. At present the Millennium Commission gets 20 per cent. of money going to the good causes. It was originally planned, however, that at the end of September 1999 the percentage shares for the Millennium Commission and NOF would switch so that the Millennium Commission would receive 13⅓ per cent. (rather than 20 per cent. as at present) and NOF 20 per cent. (rather than 13⅓ per cent. as at present).

We have now decided that the Millennium Commission's share of lottery income should remain unchanged at 20 per cent. until it reaches its target of £2.017 billion. Once that figure has been reached, all of the Millennium Commission's 20 per cent. will go to NOF.

I would stress that these are our best estimates. Accurately predicting future lottery income is almost as difficult as predicting an individual draw. That is why our plans are made on the basis of cautious forecasts. if, as we all hope, more money comes through, then all the good causes will share in it. We are clear that the continued success of the National Lottery is very good news indeed for all the good causes. It is changing the face of the United Kingdom for the better and bringing benefits, direct and indirect, to all of us.

I must stress that this order does not change policy, it gives effect to policies announced last September. We have gone beyond that announcement, however, by giving the distributing bodies an undertaking that there will be no further change to their percentage shares during the rest of this licence. And this, as I have said, is in addition to the undertaking already given that these good causes are each guaranteed 16⅔ per cent. of lottery proceeds after the current licence expires. I am sure that the good causes welcome the greater certainty which this will give them now and into the future. I commend the order to the House.

Moved, That the draft order laid before the House on 20th January be approved [6th Report from the Joint Committee].—(Lord McIntosh of Haringey.)

8.28 p.m.

Baroness Anelay of St. Johns

My Lords, I thank the Minister for his explanation of the order. However, I must make it clear that when the Motion is put to the House I cannot give the Government any assistance in its passage. The convention of this House is that the Opposition Front Bench does not oppose the making of an order, and I shall indeed abide by that convention. Let me make it clear, too, that I am of course in general favour of the projects which will benefit from this order in so far as at this stage we know anything much about them.

My objection is simple. It is that the Government are raiding the arts, sports and good causes lottery fund to provide for them. I was intrigued to note that the Minister said that yesterday it was possible for the Secretary of State to announce that he would not change the system of funding again. When one reads the report of the Standing Committee, the words read rather differently. What actually happened was that the Secretary of State said: There will be no further raid on that money". The Secretary of State for the first time admitted that the Government are carrying out a raid on lottery funds. His admission is now on the record.

When the National Lottery was established in 1994 that was done in order to: restore our heritage and promote projects which will become a source of national pride". It became a massive success story. Lottery money brought about a renaissance in the arts of Britain. It revolutionised sport. Hundreds of amateur dramatic societies, small sports clubs and local museums benefited from it. The lottery boosted the work of our charities.

The Labour Party's main source of opposition to the National Lottery at the time of its inception was that, given time, the Conservative Party would use its proceeds as a surrogate for government expenditure. Time and again it accused us of that—and it was untrue. Throughout the three years that the Conservative government presided over the lottery, no such action was taken. Today that action is being taken by a Labour Government.

We are being asked to agree to an extra £200 million being taken away from the original good causes, which are already being hit by the cuts in their allocations from 20 per cent. to 16⅔ per cent. However much the Government try to argue that the arts and good causes will still have funding, they cannot escape the fact that the lottery funds have been raided by this order—the Secretary of State himself said so.

This order also makes a mockery of the additionality principle under which it was established, despite the Minister's valiant attempt to argue that this money will not go to core funding. The Prime Minister himself originally supported the principle of additionality. He said: We don't believe it would be right for lottery money to pay for things which are the Government's responsibilities". That must be right. The National Lottery was not intended to be used to fund projects which are the Government's responsibilities, such as cancer care. The Government state that the New Opportunities Fund initiatives must be: additional to government expenditure and not a substitute for it". The reality of the matter is that the initiatives will indeed be a substitute for government expenditure. Again, I do not for one moment say that the projects which will be funded by moneys diverted from the arts and good causes will be misspent as such. I anticipate that all the projects will be most useful and most welcome. But I argue that they should not rely upon the lottery for their funds. At the moment, of course, we do not have the details of these projects and I would not expect that we would. I appreciate that many of them are likely to be popular, but the public has not yet grasped what these raids on the lottery funds really mean for them, for the arts and for good causes. We shall do our best over the coming months to lift that veil.

In the meantime, I would be grateful on a technical matter if the Minister could explain to the House how it is possible for the New Opportunities Fund—the Minister conveniently refers to it as NOF and, in the context of the last order before this House we were told the police in Liverpool told people to "clear off'; so I wonder whether NOF will not now become something of a rude acronym in this House—to draw down 86 per cent. of its funds (£244 million) without publishing the causes to which it goes, while the rest of the five original good causes have drawn down an average of 35 per cent. because they have to wait for a private matching first.

Also, I do not believe that the Government have thought through the full implications of the New Opportunities Fund and the way in which it sits within the funding structure of central and local government departments. What happens if the Government raid the lottery to provide funds for excellent schemes which depend for their very existence—their core funding, as well as the Government's—on services funded by local governments who cannot sustain those services? To turn from the abstract to a practical example, I refer briefly to the issue of libraries.

On 1st December the Government announced that it would use part of the NOF for grants for library ICT projects. The press release of the Department for Culture, Media and Sport stated that the public library network is to become a key means of giving the information have-nots access to the benefits of education and training initiatives—welcome initiatives. But the situation in our public libraries is critical. At least 50 libraries are at risk of being shut. Barnsley plans to close 23 branch libraries. My own county of Surrey is reported to be closing 16 branch libraries, and Haringey, the Minister may note, may close two or three. Islington may cut its library service so that only five open at the weekends. Librarians say that the impending closures threaten to undermine the National Year of Reading and the drive to raise literacy levels among the young.

A spokesperson of the Library Association, Sherry Jespersen, said that, There is a huge gap between the government's vision for libraries and the reality of closures, reduced opening hours and cutbacks". It is not much use a central government raiding the New Opportunities Fund of arts' and charities' money to put into grants for library projects if the libraries are being closed down by local government at a fast rate of knots.

I began by saying that there was one small crumb of comfort in the Secretary of State's speech yesterday; he did pledge that the Government would not raid the lottery again. But even if that pledge is kept, there are still manifest dangers in the passage of this order. The London firm of Farrer and Co. described those dangers graphically in its response to the Secretary of State's comprehensive spending review last year. It stated: We fear that there is a danger in the boundary between lottery funding and Grant-in-Aid becoming so blurred as to remove any tangible difference between the two". It concluded that: the loss of any practical distinction between lottery funding and Grant-in-Aid and the tying of the process of lottery distribution more closely to the strategic priorities of the department will inevitably lead to the adoption of lottery funding as an adjunct to public spending. This may result in a consequential loss of public support for the lottery, which until now has been a highly successful means of raising funds for cultural initiatives". The danger has been identified. The warning has been given. The passage of this order is a threat to the long-term health of the lottery.

Viscount Falkland

My Lords, we on these Benches believe that the draft report and order are excellent documents if one believes the underlying philosophy, which we do not. There is no point rehearsing the arguments; we have done that on numerous occasions and the Government will have their way. The Government have drawn away from the basic philosophy of the original lottery legislation and whether or not it is "raiding"—the noble Baroness used that word very effectively—

Baroness Anelay of St. Johns

My Lords, I was merely quoting the Secretary of State.

Viscount Falkland

My Lords, then the Secretary of State used the word "effectively". I shall not use it myself but there is no doubt that sports and the arts are underfunded in relation to those areas in many other countries and have suffered with this shift away by the Government from that which was generally agreed when the original lottery Bill went through both Houses of Parliament. But that is the way things have happened and there is nothing we can do with this order either.

My friends are now very interested in what is going on in this place for other reasons, and I tell them that our business here is amending and revising. But a lot of good it is amending and revising 60 per cent. of the time when more and more legislation comes through in this form. I understand from the White Paper that has been published on reform of the House that there is an intention that this House, however it is composed, will have even less say on legislation of this kind.

However, the original five causes have suffered. There is no getting away from that. Assuming the same input to the lottery during the first months of this year as was taken in the same period last year, each of the original five causes will lose around £47 million and receive only £20 million instead of the roughly £67 million that they should have received. On the other hand, the New Opportunities Fund will receive around £188 million more of the £244 million, instead of the £53.76 million it expected to receive.

Most of the beneficiaries of the fund—health, education and the environment—as we have argued before, should be government funded. We still hold to that view. They should not be funded from the lottery. That is an unsatisfactory state of affairs particularly when the party of government so fully supported the original philosophy of the lottery—to support activities and areas of our national life that could not expect the right level of funding from normal government sources. The shift away from that philosophy has done no good. I am sorry to disagree with the noble Lord, Lord McIntosh of Haringey, but I think that the country is the poorer as a result of the legislation and the draft order.

As to the millennium fund, the millennium dome has received in the region of £450 million. That amount does not appear to be included in any figures published by the Lottery Board or the Government, which is curious.

I shall not go further because that would be pointless. The order will happen, and sport and the arts will struggle as they have always struggled. The noble Lord who is answering the debate will do his best in those areas, as he always does. It is just a great pity that we could not have organised ourselves in such a way that the lottery would be dealt with by another department of state and we could have a proper champion for the arts. If only the great skill and eloquence of the noble Lord, Lord McIntosh, could be used to champion the arts against another department that is trying to impose changes upon us, the country would be the richer.

8.40 p.m.

Lord Cocks of Hartcliffe

I thank the Minister for introducing the order, and I will concentrate on one point. Basically, the lottery is a tax on the working class for the benefit of the middle class. The people who administer the lottery are becoming increasingly self-conscious about that fact. My honourable friends in the other place are vociferous in raising that issue and I welcome growing awareness by the Government of what is actually happening.

I became aware of the situation when, as vice-chairman of the BBC, I used to visit the regions and talk to staff in the news departments—particularly the people producing local news. They used to tell me about applications and failures, and it soon became clear that there was a dearth of money going into working-class areas. One might argue that that was anecdotal evidence, so today I approached Camelot to ascertain the facts. They were able to identify participants by social groups. They were groups A and B, 21 per cent.; group C1, 27 per cent.; group C2 24 per cent.; and groups D and E, 28 per cent. Note the nice, even balance, with the lowest figure being 21 per cent. and the highest 28 per cent. All groups seem to be doing well and are much the same. However, those percentages do not mean anything unless one knows the number in each group and the spend per head.

When I asked Camelot they said, "We no longer track the amounts spent on the lottery by different social groups. We did once but we stopped 12 to 18 months after the lottery began". I wonder why. I have a naturally suspicious mind, so I believe that one reason that those calculations slipped out of sight was that they blew the gaff and showed that some of the poorest people in the country were coughing up to improve the conditions of the extremely well off.

I have in the past raised in the House the question of how we have been bounced by the chattering classes into constitutional reform in which virtually no one has any interest. The Prime Minister said recently that we are all becoming middle class. That is a jolly good thing because the middle class know how to work the system. The need to provide matching funds makes it much easier for middle-class areas to raise matching funds and get lottery money. There is even the new profession of consultants who will advise groups on how to milk the lottery.

The middle class are familiar with lobbying and pressurising, so it is a natural extension to use consultants to get even more money. The working class, because of their traditions and so on, are not so familiar with such methods and are therefore suffering.

I hope that the Government will continue their efforts to improve the distribution of lottery funds between social groups. It is quite wrong to have a system that plays on the hopes of one class who are hoping for a material improvement in their conditions—and for whom the lottery is a major source of secondary poverty—but which actually benefits another class, who are already comfortably off and are just looking around for subsidised entertainment to enjoy in their leisure time. I hope that my noble friend will carry on with his efforts to make lottery fund distribution much more equitable.

8.45 p.m.

Lord Mancroft

My Lords, I have no desire to detain the House too long as we approach the unusually civilised hour at which the House is to rise this evening.

I listened carefully to the noble Lord, Lord McIntosh, who comes to the House as well briefed as always. I also read the exchanges in Standing Committee in the other place last night, when the Secretary of State made the remarks to which my noble friend alluded and which persuaded me to speak this evening. Those remarks rather horrified me.

I have no desire to enter the debate about the manner in which lottery funds are allocated or will be in future, and I do not want to score points on the theology behind the principle of additionality—which I had never heard of before reading the Standing Committee report. Nor do I question the desirability of specific projects on which the new opportunities fund will spend its money in the areas of health, education and the environment. On the face of it, those seem to be perfectly reasonable areas of expenditure for the Government to embark upon.

The nub of the matter is that however Ministers choose to portray them, those areas should, without a shadow of a doubt, benefit from mainstream government expenditure. In 1993—which seems a lifetime ago—when we started to talk in this House, in the other place and around the country about a national lottery, there were numerous debates about how and where the money should be spent. Everyone took a different view, undoubtedly slanted by their particular areas of interest. The one view that everyone had in common—none more resolutely than the then Labour Opposition—was that the fund should not be controlled by the Government and on no account should it be spent as a substitute for normal government expenditure.

Even those of us who did not like the lottery very much agreed that its purpose was to fund those things that, while worthy and desirable—such as sports, the arts, charities, national heritage and other areas—are difficult for government to fund directly for reasons we all know. What we have today is very different from that envisaged.

I have always been unhappy about the level of duty paid by the lottery to the Treasury. Few state or national lotteries that I know of pay tax to their governments—certainly not at the level imposed in the United Kingdom. I have always felt that the millennium fund is more a tool for inflating the egos of the politicians most closely involved with it and is of limited worth. However, the millennium fund was agreed by Parliament and I was personally comforted by the knowledge that it would not continue indefinitely. That comfort has evaporated with the advent of the new opportunities fund and the inflated amount that it has received at the expense of the original good causes.

The result, which no amount of clever accounting and persuasive debate can change, is that the Government now extract more money from the national lottery than any other state or national lottery in the world. The Government will have their order tonight because governments always do, but the Government should be in no doubt that their policy will widely and correctly be seen as extremely shabby and their conduct as dishonourable—both of which are to the detriment of the original and real good causes.

8.50 p.m.

Lord McIntosh of Haringey

My Lords, Chris Smith and I learned a lesson yesterday and today that irony goes down very badly in either House of Parliament, particularly when what has been said is read in cold print after the event. Anybody who knows what happened yesterday knows perfectly well that the Secretary of State made a speech that had a text lasting perhaps 10 or 12 minutes, but which actually took three-quarters of an hour to deliver. The reason was that he was constantly attacked by a large number of Conservative Back-Benchers, not members of the committee, who went along to make and enjoy a show. Ironically, he said that there would be no further raid on that money. That is fine. The noble Baroness and the noble Viscount can make as much of a meal of it as they like. I do not begrudge them that.

However, that does not mean that any change in government policy is implied by the order. We are bringing into force something that we announced very early on. Perhaps I may advise the noble Lord, Lord Mancroft, who accused us of shabby and dishonourable conduct—those are the very words that he used—that the announcement being brought into effect by the order was made not only in the White Paper of July 1997, but also in a Labour Party document before the election when we made it absolutely clear to the electorate that we were going to do what we are doing now. We said that we were going to extend the provisions—the good causes of the lottery—from the arts, sport, heritage and charities to include initiatives in health, education and the environment.

Lord Mancroft

My Lords, I am certain that the noble Lord is correct when he says that. He always is. However, telling someone that you are going to behave badly does not make the behaviour better.

Lord McIntosh of Haringey

My Lords, the noble Lord refers to behaving badly, but that is very different from what he said before about behaving shabbily and dishonourably. He and I disagree about whether that is behaving badly. I shall give my reasons for thinking that that is not behaving badly. However, he cannot legitimately claim that the behaviour is shabby or dishonourable. I fundamentally reject—

Lord Morris

My Lords, the noble Lord misses the point that the original idea of the lottery was to fund those projects that could not be funded, or had difficulty in being funded, other than through direct taxation. My noble friend was raising the point that the lottery was being abused to fund those projects that should be funded from other sources.

Lord McIntosh of Haringey

My Lords, I regret giving way to the noble Lord. He was not in the Chamber when I first spoke to the order. He has seriously misunderstood what the Government are doing. Nevertheless, because it is my duty, I shall attempt to answer all the points raised.

I fundamentally reject the view that somehow the expenditure of lottery money on the arts, sport, heritage, charities and the millennium is good and that such expenditure on health, education and the environment is bad. I fundamentally reject the thinking behind that which is, and can only be, that expenditure on the arts, sport, heritage, charities and the millennium is expenditure which would not have come out of core government expenditure and that expenditure on initiatives on health, education and the environment is expenditure that would have come out of core government expenditure.

I take what I believe to be the more liberal view that expenditure on the arts, sport, heritage and charities by government is an essential part of the range of activities that a government should support from their own resources—in other words, from taxpayers' money. Since the lottery was established, much more has been made possible by the availability of money for expanding activities, for funding new activities, and for the allocation of moneys in accordance with the principle of additionality. That is exactly the case—no noble Lord has challenged that—for the initiatives that we announced last year in health and education and for the new initiatives on health, education and the environment that I set out in only the broadest outline today, but which will come before your Lordships in the form of an order, before Easter, I hope.

The noble Baroness, Lady Anelay, gave the example of cancer care. We have given a good deal of detail of what is proposed for the cancer care initiative. That is not medical expenditure on the treatment of cancer. It relates to local work, in conjunction with, and in addition to, the vast amounts of money spent by charities on cancer care to improve the quality of delivery of cancer care treatment. Indeed, if that were not money additional to government expenditure, because it is so comparable to charitable money, the noble Baroness would be accusing the Imperial Cancer Research Fund, for example, of putting money into projects which should be paid for by taxpayers. She is not doing that. It is clear that the combination of charitable and lottery money (in adding to core government expenditure on cancer care) is legitimate and in line with the original intention of those who set up the National Lottery.

There is nothing in the argument that the new opportunities fund—I shall not say "NOF" if the noble Baroness does not like it—is drawing down extra money in advance whereas others have to wait for private, matching funding. Last year the National Lottery Act specifically and deliberately relaxed some of the conditions that the distributing bodies had imposed on expenditure by demanding private, matching funding. There is no difficulty in any of the existing good causes drawing down the money that they need. I made that clear in my opening speech.

The noble Baroness certainly has a point about local authority expenditure on libraries. I hasten to assure her that my circular from my noble friend Lord Harris of Haringey, the leader of my council, assures me that any cuts will not affect the libraries in Haringey. I do not know about the others, but it is certainly true that libraries in many parts of the country are having difficulties. Of course, the expenditure on libraries from the new opportunities fund, particularly for IT and IT training in libraries, is additional to anything which had been considered by this Government or any previous governments.

I shall not trade definitions of "additionality". I have a whole series of them and I used them at excessive length when dealing with the National Lottery Bill. I believe that we have a more effective definition than the very narrow definitions which were used, for example, by the noble Baroness, Lady Trumpington, in the previous government.

The noble Viscount, Lord Falkland, said that the original five good causes have suffered. I thought that I had made it quite clear that the original five good causes have not only received as much as they expected to receive when the National Lottery was set up under the first National Lottery Act, but, as a result of what is proposed today, they are receiving more than they had expected then. We are able to set up the new opportunities fund and NESTA because it has been proved that there is more money coming into the good causes from the National Lottery. It is simply not true to say that they have suffered. I cut out that bit of my speech that set out the exact distribution to the millennium fund, but I can confirm that the £2 billion for the millennium fund, to which I referred, includes the money for the Dome. However, the great bulk of funding for the millennium is for projects around the country rather than for the dome itself.

My noble friend Lord Cocks made a valid point when he said that the National Lottery is paid for disproportionately by poorer people and that in the past some of the National Lottery funds have gone to those who, as he put it, play the system. The National Lottery is not a tax and participation is voluntary. I do not know whether it consoles my noble friend to know that the average spend of household buying on on-line draw tickets twice a week is less than £6. Nevertheless, he has a valid point.

Let me give him an example of some of the ways in which poorer people do benefit from the existing good causes—from the grant of £70,000 to Relate, the former Marriage Guidance Council in Bristol. It has got this £70,000 for access deliberately for poorer people for marriage guidance counselling. I know that will not reassure him fully, but I thought that at least he would recognise the example that I gave.

I think I have already replied to the claims of the noble Lord, Lord Mancroft, on additionality. It is simply not the case that the five original good causes were sacrosanct. What we have done is to extend the benefits of additional funding which has become available from the National Lottery to a wider range of good causes. I persist in the view, as do the Government, that these are both to the benefit of the British people as a whole and they escape the charges which have been made by noble Lords opposite. I commend the Motion to your Lordships.

On Question, Motion agreed to.

House adjourned at two minutes past nine o'clock.