National Lottery Bill

My Lords, in Committee, we had a debate closely related to this one. I said then that I thought the amendments reflect unwarranted concern about the Government’s intention in respect of the proposed reserved power to reallocate an excessive National Lottery Distribution Fund balance from one lottery distributing body to another body. Amendment No. 4 would sabotage the concept behind the issue that we are tackling on balances. I emphasise again the assurance that I gave in Committee, which had been given repeatedly by ministerial colleagues in another place: the power will be used only as a last resort against the distributor which stubbornly and persistently failed to manage its balance to a reasonable level. In Committee, both the National Audit Office and the Public Accounts Committee of another place have concluded that the public benefit of lottery money is fully delivered only when that money is spent on projects in the community. There is no value to the community in large balances. Distributors have already made great progress in reducing balances. The overall balance has fallen from a peak of more than £3.7 billion to less than £2.2 billion now. Distributors which manage and set clear targets for balances, as all the main ones are now doing, will have nothing to fear from this power. The existence of the power will represent a discipline to ensure that this progress continues and will provide an added safeguard against a return to the days of very high balances which, as I maintain, are of no value to the community. We need a reserved power in case any distributor should, in future, build up an excessive balance and fail to tackle it. Noble Lords have expressed concern that were the Government to propose using the reallocation power to transfer a balance from, say, the Heritage Lottery Fund, there would be no other body suitable to accept the transfer. I remind the House that when the Government first introduced the National Lottery Bill in another place in the autumn of 2004, it included a reallocation power that would have enabled an excessive NLDF balance to be transferred not just from one distributor to another but from one good cause to another. Such a power would have enabled funds to be transferred, for example, from the heritage good cause to sport and the arts. It is because the Government were prepared to listen to the concerns expressed assiduously at that time by, among others, the heritage lobby, that Clause 8 of the Bill proposes a reallocation power that could be used to make transfers only within individual good causes. I hope that gives some reassurance to the noble Viscount, Lord Astor, as he was eyeing the power as a possibility for coping with the Olympic Games costs. I can assure the House again, as I have done within the framework of other debates, that of course the Government have fully costed the Olympic Games and are making provision to ensure that those costs are met through well identified routes. It is certainly not the intention that this power is used in those terms. For some good causes, including heritage, there is only one distributing body. That does not provide a good reason to exclude these good causes from the reallocation power entirely. In the unlikely event that the sole distributing body for a good cause allowed an excessive balance to build up in the future, and that body failed to tackle it, the existence of the reallocation power would be justified. The proposed reallocation power provides a better solution than any that have otherwise been proposed, and better certainly than the powers in the 1993 Act, which could reduce a body’s long-term income stream as well as its balance. In our view, we have a better approach than existed in the previous legislation. The whole point of using the power would be to find another body to accept such a transfer and to use the funds more quickly than the transferring body, without sacrificing public value from the expenditure. If such a recipient body could not be found, the Government would not propose using the power. I want to emphasise those points and also to contend against the argument of the noble Viscount, Lord Astor, on Amendment No. 6, which would build in a specific requirement for the Secretary of State to consider the effects on a distributor’s longer term commitments before exercising the reallocation power. We had this debate in Committee and I gave assurances that the Government would not use the proposed reallocation power in a way that would threaten any existing commitment. The burden of the noble Viscount’s contention was that because the National Heritage Fund has existing long-term commitments, for reasons that we all fully understand, it needs that reassurance—as does the noble Viscount, Lord Astor. I repeat that assurance now. The Government fully recognise the great public benefit derived for many long-term lottery projects in the past. I also pointed out the difficulty of interpretation that the amendment would create—about what would constitute a threat to a distributor’s long-term commitments. The Government would not, for example, accept that in every case a distributor needs to hold funds in its balance now to meet a commitment that is likely to fall due for payment in five years’ time. However, in the unlikely event that we ever propose using the reallocation power, the Government would take into account the distributor’s existing NLDF balance, its likely future income from the lottery and all its forward commitments. I would like to reassure the noble Viscount on forward commitments. In other words, the Government would look at a distributor’s in-principle commitments as well as its contractually binding, hard commitments. Depending on the interpretation of ““commitment”” in the amendment before us, it might have the effect of compelling the Government to take fewer factors into account if they ever proposed to use the reallocation power. I am sure that the noble Viscount, Lord Astor, would not want that result, which, I believe, would be the opposite of what he is seeking to achieve. I will repeat, because of its pertinence, what I said in Committee about the National Audit Office report on NLDF balance management, published in July 2004. The National Audit Office suggested that distributors should increase their forward commitments as the most effective means of reducing their balances in the long term. The Government are hardly likely to propose using the reallocation power against a distributor that had followed exactly that advice by making longer term commitments. I rest the Government’s case on this matter. We only regard this as a reserve power, against a background that we want to emphasise clearly: balances are necessary to meet longer term commitments—that goes without saying—but balances as such are of no value to the community. It is right that we should have this reserve power where a balance might be excessive. I hope that the noble Viscount will think those arguments strong enough to withdraw the amendment.