National Lottery Bill |
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Mr. Caborn: We went out, consulted and got elected. We are discussing the National Lottery Bill, which does not just concern the Heritage Lottery Fund. I know that the HLF has done a lot of briefing, but the discipline in the Bill is for all the distributors, not just the HLF. As I said, it is bringing its balances under control. They have come down by 17 per cent. in the past 12 months and are coming down by another 10 per cent., and that is moving in the right direction. Column Number: 146 The amendment seeks to add detail to the new power set out in clause 8 to reallocate excessive national lottery distribution fund balances from one lottery distributing body to another one. It would add a requirement that the power may not be used to prevent a distributor from meeting existing contractually binding grant commitments if the distributor and the grant recipient have agreed a timetable for paying the grant. The hon. Gentleman may be concerned about the effect of the reallocation order-making power on lottery distributing bodies that pay grants over extended periods. Let me reassure him that he need not be concerned. We would use the reallocation power as a last resort only if a distributor had persistently failed to take steps to manage its distribution fund balances at a reasonable level. The power could not be used without consultation with the distributing body concerned and a vote in both Houses. If we were to propose making an order, one of the key factors to consider would be the existing commitments of the distributor concerned and when they fell due for payment. I can give an absolute assurance that the clause is not about individual schemes. On the contrary, it is about lottery fund distributors bringing their overall balances down to something that is reasonably manageable; down to where the PAC, the NAO, the Government and the general public believe they ought to be. We will ensure that the financial commitments of the individual schemes will be fulfilled. The Government have said that they would not exercise the power in a way that would threaten or put into doubt any commitment of a distributor from which they proposed transferring a fund balance. I am happy to repeat that undertaking today. Adam Afriyie: For the sake of clarity, can the Minister point out where in the Bill that commitment is made? Mr. Caborn: I have just made the commitment. In operation, an order would be a last resort. That can be quoted in any of the debates that would have to take place in both Houses before the order could be enacted. I give that clear assurance; it is important to do so. The clause is not about creating uncertainties in the marketplace where the distributors use money to invest in and develop schemes or projects. That is not the object. It is about ensuring that lottery funds are used properly and effectively, and dealing with what the NAO and the PAC have been saying for some time. Indeed, the funders themselves said in 1997 that the collective balances ought to be brought down to about £1.5 billion. They are nowhere near that. Even with all the pressure that we have put on the funds during the past four years, they are still in excess of £2 billion. That is why we have introduced the measure. Adam Afriyie: I thank the Minister for being so generous in giving way. I wish to clarify what I said earlier. I did not intend to insult him in any way or to question his integrity. It has been clear throughout our
Mr. Caborn: The Government would have to carry out commitments made by another Government, unless a change were made in the law or by some other method. Ministers have to act within the law and be reasonable. The commitment has been given, and that is what will stand and what would reasonably be carried out. It is not just a commitment of a Minister but a commitment in what will, I hope, be an Act, that any other Minister who comes to the House with an order would be subject to a vote of both Houses. The debate and scrutiny are there, and the scrutiny is set against the background of what is in the Act. That is why I give those reassurances now. I am grateful to the hon. Member for East Devon for tabling the amendment. I am sure that it is just a probing amendment. He obviously wants to get some reassurances on the record and I am more than willing to give them. We are talking about good financial management of the funds; we are not in any way trying to undermine any of the distributors or any of the schemes or projects that they are investing in. That would be completely contrary to what the Government are trying to achieve. What we are doing is in concert with what the PAC and the NAO have told us—on not one, but two occasions—in their reports. 2.45 pmIn any case, the amendment is unnecessary as the reallocation powers apply only to balances and not to commitments made by a lottery distributor. The distributor would still be obliged to honour those commitments, which is why it would be important to take into account the commitments in considering how to exercise the power. Mr. Foster: I was listening very carefully, but will the Minister just repeat what he said? I think that I heard him say that the existing distributor would continue to have responsibility for ongoing commitments, although the funds would be passed on to the new body for it to start afresh. If I have got that wrong, that is fine; if I have not, I am deeply worried about what he has just told us. Mr. Caborn: I am talking about the expenditure and the commitments that go with it. The distributor would be obliged to honour the commitments, which is why it would be important to take those commitments into account when considering how to exercise the power. We are talking about the commitments, as well as the financial management. I ask the hon. Member for East Devon to withdraw the amendment. Mr. Swire: This is not a probing amendment. Column Number: 148 Mr. Caborn: That was a joke. Mr. Swire: Well, perhaps the Minister would be kind enough to indicate when he is going to make a joke so that we can all prepare ourselves. We are making a fundamental point. The Minister can pray in aid the NAO report and the timely PAC report, but, overall, those reports are about bringing balances down, and we have done that. The amendment is intended to protect projects that have had funds committed to them from the possibility of those funds being redistributed in some way. Again, we have the Minister’s verbal commitment on this matter. He has made so many verbal commitments that we almost do not need a Bill; that is, we would not need one if we could hold him to account when we felt that those verbal commitments had not been honoured in any way. I am not impugning his integrity. No doubt he will indicate where he feels that I have impugned the integrity of other Ministers or staff at the Department for Culture, Media and Sport in the past, although I still do not believe that I did. Again, we are being asked to take something fundamental on trust. Without seeking to insult any individual, I have to say that this Government are suffering from a trust deficit as far as the public are concerned. The Opposition are expected to probe the Executive, of whom the Minister is the shining embodiment, and to hold them to account. Part of that role involves ensuring that things are not just taken on trust, and do not go through with a nod and a wink or on a private reassurance. We are talking about legislation. As the Minister quite rightly said, he hopes that the Bill will become an Act. It would be a dangerous Act if it were not to include this amendment. Probing amendment or not, it has in fact probed the Minister’s thinking and I do not find his answers or his reassurances sufficient. Therefore, with your indulgence, Mr. Gale, I will press the amendment to a vote. Question put, That the amendment be made:— The Committee divided: Ayes 6, Noes 10. [Division No. 11] AYES Afriyie, AdamFoster, Mr. Don (Bath) Swinson, Jo Swire, Mr. Hugo Turner, Mr. Andrew Walker, Mr. Charles
NOES Bailey, Mr. AdrianCaborn, Mr. Richard Devine, Mr. Jim Engel, Mrs. Natascha Gwynne, Andrew Harris, Mr. Tom Mann, John Reed, Mr. Jamie Thornberry, Emily Ward, Claire Question accordingly negatived.
Motion made and Question proposed, That the clause, as amended, stand part of the Bill. The Committee divided: Ayes 10, Noes 6. [Division No. 12] AYES Bailey, Mr. AdrianCaborn, Mr. Richard Devine, Mr. Jim Engel, Mrs. Natascha Gwynne, Andrew Harris, Mr. Tom Mann, John Reed, Mr. Jamie Thornberry, Emily Ward, Claire
NOES Afriyie, AdamFoster, Mr. Don (Bath) Swinson, Jo Swire, Mr. Hugo Turner, Mr. Andrew Walker, Mr. Charles Question accordingly agreed to. Clause 8, as amended, ordered to stand part of the Bill. Clause 9 Investment income Question proposed, That the clause stand part of the Bill. Mr. Foster: I was desperately hoping that the Minister would catch your eye and lead the debate on this important issue, Mr. Gale. As this is a Government clause, one would have thought that that would be helpful. If I am able to catch your eye in a moment, after the Minister has spoken, I shall be delighted to make my contribution. The Chairman: The hon. Gentleman is well aware that I am entirely in the Committee’s hands. If no Committee member leaps to his or her feet, I have no choice but to put the question. Mr. Caborn: I was not going to speak in this stand part debate, Mr. Gale, but if the hon. Member for Bath wants to have a debate, I shall give him some background. I hope that this debate will be more focused than the last. Clause 9 changes the way in which income earned from the investment of the national lottery distribution fund is divided between lottery distributors. We proposed changes to the method of allocating investment income because we considered that the existing method created an unintended advantage for distributors that hold high balances in the national lottery distribution fund, thus potentially depriving communities of realising the benefits of lottery spending on the ground as fully and as soon as they otherwise might. Column Number: 150 The proposed changes will remove that unintended advantage. The Public Accounts Committee report on national lottery distribution fund balance management, published on 18 October, said that the public benefit of lottery money is delivered only when the money is spent in the community. Distributors that follow that advice and get funds out of the door quickly will no longer be penalised because their balances are lower. This measure will not reduce overall returns, all of which will continue to benefit lottery good causes. The proposed change has other advantages too. The July 2004 National Audit Office report highlighted a lack of clarity on the part of many distributors about their likely future income from the lottery. Of course, there will always be inherent uncertainty about that, but the proposed new arrangements will make it much easier for distributors to calculate their share of the potential future income to the national lottery distribution fund from the Department’s income projections. The proposed new arrangements are designed to make things fairer and more transparent for all and not to penalise particular good causes or distributors. As the overall balance and distributors’ individual balances continue to fall in line with Government policy, the new arrangements need not, by the time they are likely to take effect, have a major impact on any particular good cause or distributor. Mr. Foster: I shall be brief. I fundamentally disagree with what clause 9 proposes; our current arrangement works perfectly well. The Minister has said that the clause will not significantly affect the funds available for any distributor. The truth is that the National Heritage Fund, following the research that it commissioned, is firmly of the view that the provision will mean that it will lose £15 million a year from the total money that it has available for its activities. I could argue at great length about that. Mr. Caborn: Will the hon. Gentleman give way? Mr. Foster: I will in a second, because I will be so brief that the Minister can respond to the two points that I shall make. The Minister has been at great pains to point out in our deliberations on Tuesday and today that what a Minister says is crucial and that it should be a key determinant of how the legislation is interpreted. The Minister said on Second Reading:
Will he confirm that that is what he said, and will he tell us clearly that the National Heritage Fund is incorrect in its estimation that it will lose out? Mr. Caborn: In terms of the allocation of the lottery funds as per the prescribed percentage of distribution of lottery funds, the answer is no, the National Heritage Fund will not lose out. However, if the hon. Member for Bath is asking me whether it will lose out on interest accrued from large balances, the answer is yes, because that will be distributed. Column Number: 151 All income from moneys gained from interest on balances will be distributed as per the agreement that we had on the distribution between arts, sport, heritage and the Big Lottery Fund. In terms of the Act and the distribution of moneys from the lottery to the lottery distribution fund, the answer is no, they will not lose out. However, the distribution of any moneys accrued through interest on large balances will be distributed as per the agreement on percentages. That is the reasoning we gave for the distribution. Mr. Foster: I am grateful to the Minister. He has given a clear answer, and I fully understand the proposal. He did not need to tell me what it says three times. He seems to make it clear that if this proposal goes ahead, notwithstanding how most normal people would have interpreted what he said on the Floor of the House, the amount of money available to spend on heritage by the relevant lottery distributor will be less each year than it currently is. It currently gets its normal distribution according to the formula and its money from the interest on balances. The money on balances will be less, so there will be less money. I think the Minister is confirming that, and that is a great cause for concern for many people in this country who value the work being done in the heritage field. For that reason, I for one will vote against the clause. Mr. Swire: I for two, Mr. Gale. That is quite extraordinary. It is a sort of Ruritanian politics. We have a Minister on the Floor of the House saying that the heritage sector will not lose out, and then in Committee a few months later saying that the heritage sector will not lose out, however it will lose out “if this happens”. Either it will lose out or it will not lose out. It is perfectly clear from what he has said that it will lose out. Adam Afriyie: Perhaps my hon. Friend might ask the Minister to tell us how much interest the sector will lose through the redistribution process. If we could see the numbers, we should be able to see by how much the sector will lose out. Mr. Swire: I am pleased to act as the conduit for my hon. Friend’s question. Table 10 of the Big Lottery Fund’s corporate plan shows clearly who the real winner is under clause 9. Lo and behold, the big winner is—you will have to wait until Saturday night. No, the big winner is the Big Lottery Fund. That might come as a tremendous surprise to people in the Room, but that is the situation. 3 pmHow much will the heritage sector lose? By its own estimate, as the hon. Member for Bath said, it will lose £15 million a year, which is a considerable sum. The Minister is looking at me in disbelief, and his officials are no doubt scribbling away so that he will be able to tell us that that figure is completely erroneous, that we
The earning of interest on balances in the national lottery distribution fund is not, as the Government have said, a perverse incentive to keep high balances. Mr. Caborn: Of course it is. Mr. Swire: The point is that the money held by the Heritage Lottery Fund has already been committed; it is not sitting idle. The interest allows for more heritage projects to be completed, which seems a good argument to me. Whatever one’s position on whether the balances in the NLDF should be high or low, it is a fact that the interest earned on those balances pays for more good-cause projects. That is surely a good thing and should be celebrated—a word that is overused these days. That brings me to my final point—I do not want to rehearse all the arguments that we went over on clause 8, nor would you allow me to do so, Mr. Gale. The Big Lottery Fund is the winner in this. The Government, not satisfied with the Big Lottery Fund, will control half of all lottery funds, but they must surely have realised when drafting clause 9 that it will benefit the BLF by between £22 million and £26 million a year between now and 2009. The BLF’s corporate plan for 2005, to which I referred in answer to my hon. Friend the Member for Windsor (Adam Afriyie), confirms that the BLF stands to gain most from any redistribution of interest. Since the BLF takes 50 per cent. of all lottery income, it will presumably take 50 per cent. of all interest on balances. In 2006–07, the BLF’s total lottery income would be £616 million under the current system of interest distribution, but £642 million under the proposed new system. That bonus goes to the BLF, despite its admission that its balances in the national lottery distribution fund will average more than £400 million. Very simply, my point is that the clause will not work as the Minister intends it to—if, indeed, this is how he intends it to work. It will be not a disincentive to all distributors to reduce their balances but, curiously, a positive incentive to the BLF to keep high balances. I hope, therefore, that the Minister will agree to leave clause 9 out of the Bill. To give him an excuse to do so, I quote the responses to his beloved lottery consultation. Of those who gave an opinion, 25 disagreed with the measure and only 15 agreed. The Government called that a mixed response, but it is crystal clear to me. I call 25:15 a clear majority. Mr. Caborn: Will the hon. Gentleman give way? Mr. Swire: I am concluding my remarks, and the Minister will now have an opportunity to respond. However, I am extremely unhappy and I urge him to withdraw the clause. Column Number: 153 Mr. Caborn: To make things absolutely clear, in the consultation it was proposed that we move underspent moneys from one good cause to another. That argument was not sustained in the general consultation; it was believed that it was too harsh a discipline for any part of the lottery fund with large balances. We have taken the consultation seriously: we said that we will keep the money for the same good cause, but might change the distributor. The distributor can be another body, as outlined in the previous clause. The action proposed in the consultation was to move moneys from one good cause to another, but we are not doing that. We are keeping the money for the same good cause, but may well give it to another distributor after taking account of all the caveats and safeguards that I outlined. It is not necessarily the Big Lottery Fund but those funds that keep balances down that will gain. I was looking at the figures this morning, and they stick in my memory: the gainer from the provisions will be sport, because it has just about got its balance down to zero. Even though the Big Lottery Fund has 50 per cent. of the funds, if it has balances, interest will accrue on them. That will be put into the central pot and distributed, so that those who get their balances down to zero will be the big gainers, if there are any, from the redistribution of the interest that accrues on balances. Adam Afriyie: If there are to be gainers, may I be bold enough to ask who will be the losers,? Mr. Caborn: Those who have the largest balances. The interest on those balances accrues and goes into a pot, and that is redistributed according to the agreed proportions set out. Let us take sport: if it has zero balance, and the rest of the funds have huge balances, they all put their interest into a pot and sport will gain. Jo Swinson: Does the Minister not accept that, due to the long-term nature of projects funded though the Heritage Lottery Fund, it may need to hold balances in its account? That means that it will lose out. Mr. Caborn: It seems that just one part of the lottery fund is being mentioned here. The only lobby that seems to get its point across is the Heritage Lottery Fund, but it has brought its balance down by 10 per cent. in the past year, so the discipline is starting to work. We believe that what we are putting in the Bill is absolutely in concert with what the NAO and the PAC have asked us to do to bring about better financial management of balances. It is in the interests of every lottery distributor to get its balances down. That is good financial management. That is exactly what people have been asking for, particularly the NAO and PAC. According to the figures at the moment, the Big Lottery Fund will not gain. It could well contribute to an increase for sport because it holds balances. The interest that accrues on the balances will be put into the central pot and redistributed as per the usual distribution of lottery funds. So it is those who can get
Mr. Foster: The Minister fails to understand the argument. He has accepted—indeed, he is a proponent of the scheme—that there is a need to reduce the balances for what he calls good management. That is not disputed. He has introduced clause 8, which gives draconian powers to the Secretary of State, but told us that balances have already reduced significantly without the powers in that clause being in existence. He has suggested that the addition of its powers as a stop-gap will lead to a dramatic reduction in balances. We are now debating clause 9. The Minister is talking about the clause as though it were a belt-and-braces additional means of reducing balances. I can understand his argument that it is an additional tool in the armoury to reduce balances further. However, I believe that there are already enough powers under clause 8, notwithstanding our failure to amend it. Now he has the additional powers in clause 9. If the powers under clause 8 were the only ones for the purpose of reducing balances, I would understand from the Minister’s case. What the right hon. Gentleman does not seem to understand is that he has given no justification for why he needs yet another power to achieve his objective. What justification is there for changing a well established way of dealing with interest of balances, a method that has been used since the lottery came into being and which has enabled the various distributors to know where they stand and to plan accordingly? The Minister is right that the provision will have a bigger effect on heritage than anything else, but that means that people who plan will have those plans thrown out. No good reason has been given. He said on the Floor of the House that funds would not be taken away from heritage to give to something else. At the end of the day the Minister has a clear argument for what he wants to do, but the Opposition argue that there is no need to do it. If the Government go ahead, they must acknowledge the consequences. We think that those consequences are damaging. There is a difference in opinion. Mr. Caborn: This is an interesting point. First, on the consultation: there is a school of thought that we ought to be tougher about balances than we are in the Bill. It says that those balances ought to be taken—[Interruption.] I see that the House has got up. We are on overtime now—double pay. Mr. Swire: Redistribution? Mr. Caborn: As I said, there is a school of thought that argues that we should introduce stringent financial discipline and that balances above a certain level should be redistributed as part of the redistribution mechanism for lottery funds. The hon. Gentleman is absolutely right. We consulted on that, but withdrew because there was a school of thought that said no, that would be too harsh. Column Number: 155 The argument has been advanced that we should allow lottery distributors to build up balances and project their future business plans based on the income that comes from the interest accrued on those balances. We say that that is fundamentally wrong. We need to bring in some discipline to ensure that balances are distributed—obviously with value for money in mind—as quickly as possible to the good causes, which is what the lottery and the distributors were set up to do. They were not set up to accrue large balances through what some would describe as inefficiency. The balances have decreased from just under £4 billion to just over £2 billion. Compare that with the target that was given to a Secretary of State back in 1997, when it was believed that the balances for the whole of the lottery ought to be around £1.5 billion. We are trying to bring back some financial discipline. We put forward the proposition and people said no to it. We then said that we would simply take the interest accrued on balances to be redistributed, which is an incentive to get balances down without affecting the business plan. That is the increment coming in from the national lottery on the proportions that we had agreed in Parliament. That is a halfway house that introduces good financial discipline and responds to the PAC and the NAO reports. |
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