National Lottery Bill

My Lords, in 1993 I introduced the Bill to establish the National Lottery on behalf of my noble friend Lord Brooke, who was then Secretary of State for National Heritage. The Bill was greeted with great scepticism by the two then Labour spokesmen, the noble Lords, Lord Donoughue and Lord McIntosh of Haringey, and I have to say that it was greeted with outright hostility on the Lib Dem Benches. Anyway, time has passed and there has been a reversal of roles—I must warn the Minister that I will try to give him just as difficult a time as I was given then by the Opposition. We fought the battle with the Lib Dems on why there should be a jackpot and with the Labour Party on why the lottery should not be run as a charity as opposed to having competitive bids for its operation. Incidentally, Labour changed its policy on increasing the number of operators when it came into government. I suppose that, at this stage, I should declare an interest. I am trustee of the Stanley Spencer Gallery in Cookham, which has just received approval in principle for a grant from the HLF. Since the National Lottery was established, we have had two Acts that have affected it. The first, in 1998, created the New Opportunities Fund, with the sixth good cause taking 13.3 per cent from the other good causes. The New Opportunities Fund was for innovative projects in health, education and the environment. In creating the fund, the Act increased bureaucracy, which is one of the reasons for the current Bill to reduce bureaucracy, even though that bureaucracy is of the Government’s own creation. The second Act, which was in the previous Parliament, was the Horserace Betting and Olympic Lottery Act 2004. That created the Olympic Lottery Distribution Fund. We supported that Bill despite the fact that it will siphon off over £1.5 billion from the existing bodies. It is a pity that the Government did not listen with more care during the passage of that Bill to what we had to say about the Tote, which remains in limbo, caught between the incompetence of the department and the diktats of Brussels. That is a subject for another day, however. The creation of the National Lottery was, as we have heard, the brainchild of Sir John Major, our former Prime Minister. He saw the lottery as a chance to enhance the lives of millions of people by funding arts, sport, charities and our national heritage, and to celebrate the millennium, with each body receiving 20 per cent. It was to be funding free from the grasping hands of the Treasury, additional to government spending and free from the control of Ministers. Those three key principles have been eroded by this Government—the first two by a Chancellor with a vast deficit to fund and the third by a Government who cannot help interfering and exerting control by guidance and regulations and, if that fails, by using their power of appointment. The creation of the New Opportunities Fund enabled a blatant and overt breach of the principle of additionality, despite the fact that, when the original Bill was going through Parliament, the Labour Opposition stressed the importance of government keeping an arm’s-length relationship with grant distribution. Despite all that, the National Lottery has been a great success, with sales of tickets last year of nearly £5 billion. I have to say that there has been little growth in sales over the past 10 years, although the recent EuroMillions rollover may have added to the lottery’s fortunes. As we have heard, the lottery has been well run by Camelot—I was delighted that the Minister was able to give it credit—and has generated about £18 billion for good causes and over £24 billion in prizes. Most of the time, the distributing bodies have done well. They have improved the quality of life for thousands of people around this country and their successes have vastly outnumbered their failures. The Arts Council alone has given over £2 billion to the arts, and sports have received slightly more. However, the change of the National Lottery Charities Board into the Community Fund in 2001 was not a success and was rightly censured and criticised by the National Audit Office and the Public Accounts Committee. It proved, again, that given the wrong remit, even supposedly sensible people can make ridiculous decisions. Reputations were destroyed by funding the farming of Peruvian guinea pigs. We must not forget that there was a much more serious failure, the Millennium Dome. That was a good idea, totally mucked up by this Government. We are still bailing it out and financing it and that will go on for some time. It is an embarrassing reminder for the noble and learned Lord the Lord Chancellor. However, we must also not forget that the lottery has been good for the Treasury, which has collected over £6 billion in tax since 1995. I return to the Bill. Why do we need it? The Government want more control. The original 1993 Act allowed the Secretary of State to issue directions to distributing bodies to ensure good governance, financial control and appropriate allocation of funds. The 1998 Act went much further and introduced the need for all distributing bodies to construct strategic plans in line with government policies. The Government also imposed highly prescriptive policy directions, so that the Big Lottery Fund must comply with directions issued by the Secretary of State as opposed to the other distributing bodies that will have to take into account policy directions only when allocating funds. Directions will also apply to the internal functions of the board, including the employment of staff. Let us not forget that it is the Secretary of State who appoints the chairman and the board members, so delivery has been politicised over 50 per cent of the funds that are distributed. The Bill in Clauses 7, 8 and 14 gives a new power to the Secretary of State to reallocate funds from one distributor to another, although not between good causes. It is difficult to understand how that can be done and how the other distributors will have the expertise to do it. No doubt that is something that we shall have to discuss in Committee. Clause 9 imposes a new way of calculating interest on lottery balances. The Bill creates the Big Lottery Fund by amalgamating the Community Fund and the New Opportunity Fund, although we have heard that they have in fact been amalgamated for some time. As a result, that will account for 50 per cent, as I have said. Sports, the arts and heritage will remain with 16.6 per cent, rather than the original 20 per cent that they were always going to receive and did receive at the beginning of the lottery. It will also cost £5 million to amalgamate the two, which is equal to at least one year’s supposed savings. A memorandum submitted to the House of Commons Select Committee by the New Opportunities Fund showed that it was,"““established to make grants to health, education and environment projects, UK wide, under initiatives to be specified by Government””." It is quite clear that there is to be greater ministerial control over a larger sum of money. That leaves the Government open to the accusation that they have been able to push money to areas in England where it suits them. Although I am not sure that that is entirely fair, it is an accusation that they will have to answer when they have the control. Ministers will not admit that they have broken the principle of additionality and they claim to be committed to it. However, it is clear to everyone else that they have. As we know now, this Government can interpret principle by as many means as they want—almost as many as the number of lottery tickets bought on a Saturday afternoon, one suspects. During the passage of the Bill in another place, the Minister gave a commitment that the Big Lottery Fund would produce a report on how it upheld the additionality principle. That is not good enough. It is not answerable to Parliament; only Ministers are answerable to Parliament. The principle must be on the face of the Bill. Ministers must take responsibility, so that through their departments the distributing bodies can be fully answerable to Parliament. We will seek to insert the principle of additionality into the Bill during its passage through this House. The Chancellor of the Exchequer will no longer be able to rely on the lottery to plug spending holes. We shall support the amendment suggested by the noble Lord, Lord Clement-Jones, about guidance to bodies on additionality. This is an important subject and it is an area where my noble friends Lady Flather and Lord Eccles are concerned. I agree with all that they have said about it. When the Bill proceeded through another place, the Government were attacked on it a number of times. Their response was quite weak. Their argument was that if additionality were defined in statute, it would leave every funding decision open to legal challenge. The answer to that must be that they will not be any more than they are now. There have been no challenges, as far as I am aware, from those who have been turned down in the past 12 years. The Government’s argument, therefore, does not stand up. The other reason put forward by Richard Caborn at Third Reading in another place was that,"““there is a great deal of Government expenditure . . . that falls outside such expenditure””.—[Official Report, Commons, 19/01/06; col. 1010.]" That is a rather convoluted and obtuse statement. He then promised to explain what he meant by the end of the debate, but he managed to come up with only one example, which was that the Government provide money to charities. He failed to explain who provides it, where it comes from, where it goes, how it is accounted for, and who accounts for it. It made no sense and he did not answer the questions. He satisfied neither us nor the Liberal Democrats. We all know that there is a long list of projects that break the principle of additionality, but I shall not attempt to list them. It is not just me. The Culture, Media and Sport Committee in another place, which is dominated by Labour Members, condemned the erosion of the additionality principle in its 2004 report. It called for an annual statement to Parliament on how the principle was applied. All that, despite the Prime Minister saying in 1997 that the Government did not believe it right to use lottery money to pay for things that were the Government’s responsibility. Ministers in another place tried to excuse their behaviour—that is the polite way of describing it—by offering to implement what was in the Labour manifesto. There would be public consultation by the end of the year on how the lottery’s good-causes proceeds were spent after the new lottery licence was awarded in 2009. I thought that that was a trifle convenient. I wonder what else might happen on the political front in 2009 or 2010 to enable the Government to make what could be called extravagant promises. I can think of something, but I shall leave the Minister to ponder that question. We shall be putting forward amendments on the issues that I have raised, but I have a simple alternative solution to the problems created by the Government. I shall be moving amendments in Committee to put back the four original distributing bodies, covering the arts, sports, charities and heritage. We need to have that debate. I was delighted that my noble friend Lord Eccles supports that principle. We have heard other concerns today, which we shall deal with in detail in Committee. One of them is the definition of charitable expenditure, which is an important issue. I come back to what I said earlier. I am a great supporter of the lottery. I bought a ticket in the first draw, and have bought many since. I have never won a prize but remain doggedly hopeful. I am reminded of the day of the first draw when we were all encouraged to buy a lottery ticket. The Permanent Secretary got in a panic in case one of his Ministers might win a prize. He sent round a note saying that should a Minister win a prize we were all expected to give the money to charity. I sent back a note saying that if I won £10 I would certainly give the money to charity, but if I won the jackpot, I would consider my position in the government very carefully. That remains my position today. I thank the Minister for being so helpful in his letters that he sent prior to the debate. We shall have an interesting time in Committee.