Column Number: 117
Standing Committee A
The Committee consisted of the following Members:
Chairmen:
Frank Cook, †
Mr. Roger Gale
†Afriyie, Adam (Windsor) (Con)
†Bailey, Mr. Adrian (West Bromwich, West) (Lab/Co-op)
†Caborn, Mr. Richard (Minister for Sport and Tourism)
†Devine, Mr. Jim (Livingston) (Lab)
†Engel, Mrs. Natascha (North-East Derbyshire) (Lab)
†Foster, Mr. Don (Bath) (LD)
†Gwynne, Andrew (Denton and Reddish) (Lab)
†Harris, Mr. Tom (Glasgow, South) (Lab)
†Mann, John (Bassetlaw) (Lab)
†Reed, Mr. Jamie (Copeland) (Lab)
†Selous, Andrew (South-West Bedfordshire) (Con)
†Swinson, Jo (East Dunbartonshire) (LD)
†Swire, Mr. Hugo (East Devon) (Con)
†Thornberry, Emily (Islington, South and Finsbury) (Lab)
†Turner, Mr. Andrew (Isle of Wight) (Con)
†Walker, Mr. Charles (Broxbourne) (Con)
†Ward, Claire (Watford) (Lab)
Alan Sandall, Emily Commander, Committee Clerks
† attended the Committee
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Thursday 27 October 2005
(Afternoon)
[Mr. Roger Gale in the Chair]
Clause 14
Functions
Amendment proposed this day: No. 46, in clause 14, page 8, line 13, leave out
‘comply with any direction given to it’
and insert
‘have regard to any guidance made’.—[Mr. Swire.]
The Chairman: I remind the Committee that with this we are discussing the following amendments: No. 47, in clause 14, page 8, line 16, leave out ‘A direction’ and insert ‘guidance’.
No. 48, in clause 14, page 8, line 17, leave out ‘specify’ and insert ‘suggest’.
No. 49, in clause 14, page 8, line 19, leave out ‘specify’ and insert ‘suggest’.
No. 50, in clause 14, page 8, line 24, leave out ‘A direction’ and insert ‘guidance’.
No. 52, in clause 14, page 8, line 39, leave out ‘A direction’ and insert ‘guidance’.
No. 73, in clause 18, page 11, line 13, leave out subsections (2) and (3).
1 pm
Question again proposed, That the amendment be made.
The Chairman: At the end of this morning’s sitting Mr. Swire had the Floor, but I understand that he had taken an intervention from Mr. Turner.
Mr. Hugo Swire (East Devon) (Con): I am happy to give way again to my hon. Friend the Member for Isle of Wight (Mr. Turner).
Mr. Andrew Turner (Isle of Wight) (Con): Let me complete the sentence that I was in the middle of when we adjourned. Is the Minister giving those assurances on behalf of the bodies listed in new section 36E(4)?
Mr. Swire: That question would be better addressed to the Minister than to me.
Mr. Turner: I am grateful to my hon. Friend for that answer, but my question is a rhetorical one. The Minister has given assurances on his own behalf and he is unlikely to speak again on the amendment, but I am not clear whether his assurances, which are of some significance to our interpretation of the Government’s intentions, apply similarly when the powers are exercised by the bodies listed in subsection (4).
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Mr. Swire: My hon. Friend, in his customary way, makes an extremely good point.
We listened to what the Minister had to say on the subject and I return to the point that we are charged with making legislation that stands the test of time. Regardless of the present Secretary of State’s intentions on whether to use the powers, we must see the legislation as a very different Secretary of State might see it. We have already heard that the Community Fund did not have the powers that will be vested in the Big Lottery Fund. The Minister tried to sell that as a piece of housekeeping, arguing that by wrapping up the New Opportunities Fund and the Millennium Commission into the Big Lottery Fund, it could assume those powers. There is definitely an increase in the powers of the Secretary of State.
As has been the case throughout these deliberations, we are being asked to take a lot on trust. I am happy to take a certain amount on trust, but it is my job to ensure that the Bill can stand up to close examination. I return to the law of unintended consequences: in the hands of someone less honourable than the current Secretary of State, the whole process of control could be ratcheted up, severely restricting the controls, freedom and flexibility of the distributors, which the Minister argues he is keen on.
I thought at the beginning of the Minister’s response to the hon. Member for Bath (Mr. Foster) that he was nodding his assent—indeed, his head was nodding so vigorously that he reminded me of one of those dogs on the back shelf of a car. Given his other hat as the Minister for Sport, it was probably an old sports injury rather than an indication of assent. As is always the case, I was prepared to listen to the right hon. Gentleman, who was no doubt going to either give a reasonable explanation of why the Bill should be kept as it is, or concede ground to us. I believe neither to be the case, so I have no option but to press the amendment to a Division.
Question put, That the amendment be made:—
The Committee divided: Ayes 6, Noes 9.
[Division No. 8]
AYES
Afriyie, Adam
Foster, Mr. Don (Bath)
Selous, Andrew
Swinson, Jo
Swire, Mr. Hugo
Turner, Mr. Andrew
NOES
Bailey, Mr. Adrian
Caborn, Mr. Richard
Devine, Mr. Jim
Engel, Mrs. Natascha
Gwynne, Andrew
Harris, Mr. Tom
Mann, John
Thornberry, Emily
Ward, Claire
Question accordingly negatived.
Mr. Swire: I beg to move amendment No. 53, in clause 14, page 8, leave out lines 25 and 26.
The Chairman: With this it will be convenient to discuss the following amendments: No. 59, in clause 14, page 8, line 35, leave out
‘obtain the Secretary of State’s consent’
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and insert
‘consult the Secretary of State’.
No. 54, in clause 14, page 8, line 38, at end insert—
‘(3A) A direction under this section may not relate to the management and control of money received by the Fund.’.
No. 64, in clause 14, page 9, line 16, leave out ‘consult’ and insert ‘obtain the consent of’.
No. 65, in clause 14, page 9, line 17, leave out ‘obtain the consent of’ and insert ‘consult’.
Mr. Swire: These amendments cover similar territory to the amendments to the powers of direction that we have just debated and the amendments to the powers of prescription in clause 7 that we debated long and hard the day before yesterday.
Amendment No. 53 would remove the Secretary of State’s ability to direct the management and control of money received by the fund. Amendment No. 59 would remove the power of the Secretary of State to demand the Big Lottery Fund’s consent on various matters in her direction. Amendment Nos. 54 and 64 suggest that the Secretary of State should obtain the consent of the Big Lottery Fund before giving a direction. I do not suppose that that will be greeted with any great enthusiasm by the Minister. Lot 65—sorry, I thought for a moment that I was doing a charity auction. I have made that mistake before. Mind you, Mr. Gale, the amendments are not for sale. Amendment No. 65 is similar to the preceding amendment.
The Opposition are being consistent in our attempts to weaken the ability of the Secretary of State to direct where the money can go, and certainly to remove the Secretary of State’s ability to direct the management and control of the money received by the fund. We suggest in our amendments that the requirement should be to consult the Secretary of State, rather than to obtain his or her consent.
Mr. Turner: I do not intend to repeat the arguments that I advanced in relation to the previous group of amendments, but I should like to put to the Secretary of State a question relating to the assurances that he gave in the House and that we have heard repeated in Committee about the use to which he intends to put the directions. It is the question that I asked in my intervention on my hon. Friend the Member for East Devon (Mr. Swire) during debate on the previous group of amendments.
What is the status of the Secretary of State’s assurances in relation to those bodies that are mentioned in subsection (4) of new section 36E of the National Lottery etc. Act 1993? We are legislating not only for England, but for the United Kingdom. It is proposed to hand powers that in England are exercised by the Secretary of State, with the assurances that he has given us, to devolved bodies and in some cases to Ministers in devolved bodies without any clear set of assurances. What discussions has the Secretary of State had and what assurances has he been given by the devolved bodies mentioned in subsection (4) that the assurances that he has given to us apply equally in respect of those bodies?
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Mr. Caborn: I wish the hon. Gentleman would not elevate me to greater office than that to which I have risen. I am a Minister of State, not a Secretary of State.
Mr. Swire: And a Privy Councillor.
Mr. Caborn: Indeed, but I am still a Minister of State—a paid one.
The amendments all relate to the directions that will be issued to the Big Lottery Fund under new section 36E(3)(a) of the 1993 Act, which is inserted by clause 14 of the Bill. Amendments Nos. 53, 54 and 59 relate to the financial directions that the Secretary of State will issue to the Big Lottery Fund. Amendment No. 53 would delete new section 36E(3)(a), which provides that directions issued to the fund may relate to the management and control of money received by the fund. Amendment No. 54 would go further, adding a new subsection to section 36E stating explicitly that directions to the fund may not relate to such matters. Amendment No. 59 would require the Big Lottery Fund to consult the Secretary of State rather than seek her consent before taking actions of a specified kind.
I hope that the hon. Member for East Devon will forgive me if I say that I am somewhat confused by the amendments. Under section 21 of the 1993 Act, the Secretary of State is responsible for the control and management of the national lottery distribution fund. That is why under section 26 of the 1993 Act all lottery distributors are required to comply with any directions that she considers appropriate for securing the proper management and control of money paid to the body.
The financial directions will incorporate financial controls similar to those that apply to all non-departmental public bodies, so they are financial memorandums. They may require a distributor to obtain the consent of the Secretary of State before doing anything specified, or of a description specified, in the directions. The requirements in section 26 of the 1993 Act are exactly the same as those placed on the Big Lottery Fund by new section 36E(3)(a) and (d)(ii). For example, existing financial directions require distributors to seek approval for the controlling systems that they maintain to prevent and detect fraud.
I see no reason why the Big Lottery Fund should be treated differently from any other lottery distributor. After all, as I said before, the Secretary of State must be able to protect public money by ensuring that all distributors comply with basic financial and operational good practice. As she cannot devolve her accountability to Parliament, it is essential that she alone has the power to issue financial directions to ensure consistency across the UK. I am sure that the hon. Gentleman does not disagree and I ask him not to press the amendments.
Amendments Nos. 64 and 65 would provide that before directions are given about Scotland, Wales or Northern Ireland devolved expenditure, the devolved Administrations must obtain the consent of the Big Lottery Fund and consult the Secretary of State. As the Bill stands, they must consult the fund and obtain the consent of the Secretary of State. The Bill represents a significant devolution of power to
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Scotland, Wales and Northern Ireland. Country committees will exercise the fund’s functions in respect of Scotland, Wales and Northern Ireland expenditure, operating under policy directions issued by the relevant country, but there must be a balance between devolution and the proper management of what remains a UK-wide lottery. It is therefore right that directions should be issued by the devolved Administrations only with the consent of the Secretary of State.
Adam Afriyie (Windsor) (Con): New section 36E(3)(a) states:
“A direction under this section may . . . relate to the management and control of money received by the Fund”.
Three separate entities are being amalgamated into the Big Lottery Fund. Does the new section increase the Secretary of State’s power over any of the existing funds?
1.15 pm
Mr. Caborn: No. We are taking exactly the same approach. Such provision is not just about lottery funds; it is about the financial management of NDPBs across the board. That is a fairly standard format to ensure accountability to Parliament through the Secretary of State. There are two routes of accountability: via the chief executive of the Big Lottery Fund, as he is the accounting officer and accountable to Parliament through the Public Accounts Committee and the National Audit Office; and directly to Parliament through the Secretary of State—we are dealing with the financial powers of the Secretary of State.
Obtaining the consent of the fund is not a requirement in any of the directions issued to the Big Lottery Fund or to the other funds in existing legislation. I cannot see any reason to make a special case here. In the light of my explanation, I hope that the hon. Member for East Devon will withdraw the amendment.
Mr. Swire: I have listened hard to the Minister and take on board the points he made about amendments Nos. 53, 59 and 54, but I am concerned that he has not answered the points raised on amendment No. 64. I will not press amendments No. 53, 59, 54 and 65, but I shall seek a Division on amendment No. 64.
I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Amendment proposed: No. 64, in clause 14, page 9, line 16, leave out ‘consult’ and insert ‘obtain the consent of’.—[Mr. Swire.]
Question put, That the amendment be made:—
The Committee divided: Ayes 6, Noes 10.
[Division No.
Column Number: 124
9]
AYES
Afriyie, Adam
Foster, Mr. Don (Bath)
Selous, Andrew
Swinson, Jo
Swire, Mr. Hugo
Turner, Mr. Andrew
NOES
Bailey, Mr. Adrian
Caborn, Mr. Richard
Devine, Mr. Jim
Engel, Mrs. Natascha
Gwynne, Andred
Harris, Mr. Tom
Mann, John
Reed, Mr. Jamie
Thornberry, Emily
Ward, Claire
Question accordingly negatived.
The Chairman, being of the opinion that the principle of the clause and any matters arising thereon had been adequately discussed in the course of debate on the amendments proposed thereto, forthwith put the Question, pursuant to Standing Orders Nos. 68 and 89, That the clause stand part of the Bill:—
The Committee divided: Ayes 10, Noes 6.
[Division No. 10]
AYES
Bailey, Mr. Adrian
Caborn, Mr. Richard
Devine, Mr. Jim
Engel, Mrs. Natascha
Gwynne, Andrew
Harris, Mr. Tom
Mann, John
Reed, Mr. Jamie
Thornberry, Emily
Ward, Claire
NOES
Afriyie, Adam
Foster, Mr. Don (Bath)
Selous, Andrew
Swinson, Jo
Swire, Mr. Hugo
Turner, Mr. Andrew
Question accordingly agreed to.
Clause 14 ordered to stand part of the Bill.
Mr. Caborn: On a point of order, Mr. Gale. There have been some doubts about a quotation in Hansard and perhaps it would be appropriate for me to respond to the question raised by the hon. Member for East Devon this morning. I had not then had time to read Hansard, but I would like to refer to the question raised about appointments made by my right hon. Friend the Secretary of State—
The Chairman: Order. I understand the Minister’s request, but I have to tell him that he would be out of order were to do that. It is of course perfectly open to the Minister to write to the hon. Gentleman and to place his opinion on the record in that way, but he cannot do it here and now.
Clause 8
Reallocation of funds
Mr. Foster: I beg to move amendment No. 98, in clause 8, page 5, leave out lines 13 to 15 and insert—
‘(2) In exercising his duties under section 33 (3), the Comptroller and Auditor General may make recommendations to the Secretary of State regarding the desirability of making an
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order to provide for the money to be held for distribution by a different body specified in section 23 (without altering the purpose for which the money is allocated).’.
The Chairman: With this it will be convenient to discuss Government amendments Nos. 5 and 6.
Mr. Foster: Welcome back to the Chair, Mr. Gale. For those following our proceedings, in an odd but nonetheless perfectly logical order, we move from clause 14 to clause 8.
This is a highly controversial clause, whereby the Secretary of State will take upon herself a range of powers. If she does not like one distribution body and does not believe that it is doing enough to reduce its balances, she will be able to take away its money and give it to another distribution body.
Somewhat surprisingly, I speak to my own amendment with a degree of reluctance. It is somewhat wimpish. Were I to have felt gung-ho and bold, I would have proposed the deletion of all the powers. Knowing that the Minister would not accede to that, however, I thought that it would be more helpful to table a watered-down amendment for the Committee’s and the Minister’s consideration.
The amendment is so watered down that I can see no justification whatever for the Minister to refuse it. It says that if the Secretary of State is to use those draconian powers, which I am uncomfortable with her taking, it should be at least with the advice of an external body.
The Committee will be aware of the explanatory notes as well as the Bill. The notes say about the power:
“In practice, the Secretary of State would only use this as a last resort in the event that a distributor was considered to have failed, signally, to reduce balances to a reasonable level and there were serious concerns about the ability of a distributor to act economically and effectively.”
We have it on record that the provision will be an absolute last resort, and the Minister will no doubt repeat that. Nevertheless, it is clear from the notes that the Secretary of State will judge whether the distribution body has failed to reduce its balances. It will be her judgment whether the body is at fault, for reasons that she will determine.
My amendment simply says, “For heaven’s sake, we have a body that constantly reports on the lottery and matters of balances, namely, the National Audit Office.” The Minister will shortly refer to the most recent report from the National Audit Office to give succour and support to what he seeks to do, so he will acknowledge that it has a vital role to play. I merely suggest that some advice should be sought from the National Audit Office before the Secretary of State uses those powers.
Given the nature of the clause and the amendments, the debate will understandably be widened to include the question of the balances more generally and whether there is a serious problem with them. The Minister will no doubt say in a few minutes that money must be transferred as quickly as possible to projects and that it should not sit in distributor bank accounts any longer than necessary. I accept that, but I do not
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accept that increased political interference under the proposed legislation is the way to deal with a perceived problem.
The Chairman: Order. The hon. Gentleman is stretching a little bit wide of his amendment. He has been sitting on Committees long enough to know my custom. I am perfectly happy to have the stand part debate at the start of the debate on the clause, rather than at the end, but I do not want to have it twice. If he wishes to broaden his remarks, he may, but that is on the strict understanding that we shall not repeat the stand part debate.
Mr. Foster: I am most grateful, and I will obviously abide by your ruling. The proposal is that the Secretary of State be given the power to hand over money in circumstances in which distributors have not got rid of their balances in a sufficiently timely manner. I was just about to make the point that, without the powers that the Minister seeks, there has already been significant movement in that regard. The Minister will remind us that, in 1999, the balances stood at £3.7 billion, but by May this year they were down to £2.4 billion. That significant reduction has taken place without the need for the type of action that the Minister proposes in the clause. The power in the clause will be increased by the two Government amendments in the group.
The additional powers are potentially unnecessary, given the successful reduction. My amendment mentions the NAO because there is a real issue about how rapidly and to what extent we want to reduce balances. The NAO, which is the body that I want to involve in making the decisions, addressed this matter in last year’s report, “Managing National Lottery Distribution Fund balances”. I accept that there is a more recent report, which the Minister referred to, but this one states:
“The build up of balances at the start of the National Lottery reflected the . . . time lag between money being paid into the National Lottery Distribution Fund and it being awarded to and drawn down by grant recipients . . . The current level of balances is therefore the result of the low rate of drawdown compared to income in the first four years of the Lottery.”
Critically, it continues:
“There can be a significant gap between a grant being awarded and the project starting to incur expenditure and draw down funds.”
The Heritage Lottery Fund, for example, reports that its largest grants—those of more than £5 million—are paid out on average over four years and two months, although some take as long as eight years. The HLF may well be in a position where it has allocated the money, but has not yet given it out. It reported in a brief that I think that all Members of the House received that, far from its balances being underspent, as was implied, it was actually overcommitted in terms of its planned expenditure by £175 million.
Mr. Swire: The hon. Gentleman is right that the heritage sector is concerned about these and subsequent amendments. Does he agree that if pressure of this sort was applied to the HLF, it could result in an acceleration of allocations and grants and in the money being drawn down in a way that might be unwise given the complicated nature of many of the
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funding programmes that the HLF undertakes, and that it would lead to less control, rather than better control, being exercised over the money being spent?
Mr. Foster: The hon. Gentleman is right; I agree with every word that he has said. That is why we need to treat with caution the powers that the Secretary of State wishes to take on herself. At least, there is a need to include some additional counterbalance to what the Secretary of State might be thinking. When the reallocation of funds is mentioned in the Bill and the explanatory notes, there is no mention of the NAO, yet it has a great deal of expertise in this field, as demonstrated by its numerous reports on the matter—reports that are prayed in aid when making the decision to go ahead with the new powers given to the Secretary of State in the clause.
1.30 pm
I am genuinely fearful that indiscriminate reallocation of funds would cause huge problems. There is no doubt that if that happened it is quite likely that a new distribution body would be set up. I have no doubt that if the Government were to do that, the body would have all the powers imposed on it that they are imposing on the Big Lottery Fund. In many cases—not always—a new body would have to be set up, and that could create a problem.
However, there is a further problem. If the money is to be transferred to a new distributing body, or just another one, there would be concern that some of the commitments already made by the old distributing body would not be carried forward. If the Minister does nothing else in responding to the amendment, will he give the following categorical assurance? If funds are to be transferred from one distributing body to another, all the undertakings and commitments given by the original distributing body should also be transferred to it.
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