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Lord Mackay of Ardbrecknish: I am grateful to the Minister for his reply and for giving us an insight into the Government's thinking on this issue. He clearly has my noble friend Lady Carnegy on his side. That shows that on this side of the Committee we do not carry with us the pagers issued by control freaks to keep us on message and on the same line. I take the point that my noble friend and the Minister made. In the competitive business of obtaining projects for university research, and the funding for those projects, it is important that there is no difference between Scotland and England when it comes to the experimentation which, let us say, pharmaceutical companies could do on live animals to find new and better drugs to deal with various problems in the human condition. I am satisfied with that answer. I am grateful to the Minister. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Mackay of Ardbrecknish moved Amendment No. 190:

Page 68, line 21, at end insert--
("Exception from reservation
The distribution in Scotland of funds raised by the National Lottery.").

The noble Lord said: With this amendment we come to the question of the national lottery. My amendment suggests that at the end of the section on the national lottery, we should exempt from reservation,

I am perfectly content that we have a national lottery over the UK, but I am looking at the distribution of funds.

Lottery cash distribution has become extremely important for many bodies and organisations. Indeed lottery cash distribution, and the work that flows from

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it, is pretty big business. The original forecast made in 1994 for the whole of the United Kingdom was that there would be £9 billion over the seven-year licence. That has now been revised to £10 billion. That is a lot of money. It shows, dare I say, that the lottery has been run extremely successfully. The objective of gaining lots of money for good causes has been achieved to a far greater degree than was perhaps originally envisaged. That must be to the credit of the people who run and promote it.

As regards the £10 billion, on a pro rata basis--a Barnett formula for the lottery--it would suggest about £1 billion for Scotland. The current proposals in the Bill are that the Scottish executive should have power only to influence two parts of the distribution because the bodies involved are based in Scotland: the Scottish Arts Council and the Scottish Sports Council. The executives will have no power over the other four heads for distribution. Those are the New Opportunities Fund, the National Heritage Memorial Fund, the National Lottery Charities Board and the Millennium Commission. For something like two-thirds of the distributed lottery cash the Scottish parliament will have no influence on decisions about priorities between the different heads and competing interests. That is something we may need to look at. While this Parliament can shift money between one head and another, the Scottish parliament will be unable to do so. That seems wrong.

I would probably have let that pass if it had not been for the advent of what I think is grandly called the New Opportunities Fund. I remember sitting on the Government Back Benches at the time the lottery was set up and the legislation was passed. I remember many happy hours spent with the Labour Opposition probing the Government and seeking assurances that no lottery fund would ever be used for funding projects which government should fund through general taxation. They were insistent on obtaining those assurances. I cannot recall whether we were put to the test of Divisions on these issues but I recall my noble friends who manned the Government Front Bench on the issue being put to the test of debate. I suppose the Labour Opposition believed that the Conservative Government would promptly start to use the lottery to pay for things in the health service, education, the environment and other matters which government should pay for, and that by that substitution we would reduce government expenditure and be able to reduce taxation.

Many assurances were sought. We gave them; and we kept to those assurances. But now the grandly called New Opportunities Fund is funding the health service, the education service and other services that should be funded by government out of taxation. It is amazing how quickly the Government have done a major U-turn on this issue. They have cloaked it in the suggestion that they are providing new money for those important services and forgetting the assurances they demanded and received from us.

Lord Watson of Invergowrie: The noble Lord must surely have missed last week's announcement on spending over the next three years in which health and education were prioritised. I seem to remember that

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members of his party were critical of those spending projections. How does he reconcile that view with the view he has just expressed that the money raised through the lotteries should not be spent on those matters? He says that public expenditure in general, as announced last week, should not be used for those priorities. Where does he stand on those issues?

Lord Mackay of Ardbrecknish: I stand clearly with the assurances my party gave when in government in response to requests by the Labour Party: that we would not use--as we did not do--lottery funding to replace funding that should come from central government expenditure. That is the simple point. It is not an argument about whether the health service or education needs or can use extra spending. It is where that extra spending comes from. If the current Government were honest about the assurances they sought from us when the lottery legislation went through, they would not have created the New Opportunities Fund. They would not have set up a fund which is designed to put money into the health service, a service which should be funded by central government.

As for the Labour Party's smoke and mirrors spending last week, I suggest that the noble Lord has a look back over the past 20 years. My noble friend Lord Selkirk of Douglas recently asked a question. He will see that when the Conservative Party were in government there were many years when we spent considerably more year on year on the health service than their Government propose to do.

However, that is not the most important issue, which is this. The Government having broken the promises they appear to have made when in Opposition have now to realise that some lottery money is going into health, education, the environment and other matters which are devolved functions. That is the point I am driving at. If they are devolved functions, the money from the New Opportunities Fund in Scotland should be handed out on the basis of Scottish priorities and Scottish needs, not on the basis of United Kingdom priorities and United Kingdom needs.

If this fifth stream is to go to functions which are devolved and are to be paid for out of the Scottish block, some provision should be made for the Scots by setting up a new opportunities fund for Scotland, or whatever it may be called. In that way an organisation in Scotland will determine and work alongside government in deciding the priorities in education and health, for example, on which lottery money should be spent.

I have not created the problem; the Government have created it by the amazing U-turn they have made on lottery funding. If this is to happen and devolved functions are to receive lottery money as part and parcel of the core money they require to meet the demands of the public, the decisions about that money

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should be made in Scotland, just as the decisions on the core funding in the block will be made in Scotland. I beg to move.

The Earl of Mar and Kellie: I shall speak to my amendment, Amendment No. 190A, which is grouped with Amendment No. 190. Before doing so, perhaps I may say that I hope that the national lottery fund administrators will open Scottish offices and not rely on offices in London to administer the funds in Scotland.

The effect of Amendment No. 190A is to devolve lotteries which are organised at a local level. I believe that local lotteries should be devolved because of the existing responsibilities of local authorities in this respect. Not only is this a local authority issue, it is a social policy and a cultural issue. It seems nonsensical that a lottery in Clackmannon has to be conducted according to the writ of the Westminster Parliament. It is not a multi-national issue. It is a distinctly local issue.

Alternatively, do the Government fear the disapproval of the Church of Scotland? Is this another issue similar to the Government's fear of Cardinal Winning over the abortion issue, to which we shall come later? I believe that that type of moral issue is centred in the Scottish culture and should definitely be devolved to the Scottish parliament.

6.30 p.m.

Lord Sewel: I am sure that noble Lords recognise, because they are not questioning the reservation of the national lottery as a whole, that a single UK-wide national lottery, by offering the largest possible prize fund, offers the highest possible returns to good causes throughout the United Kingdom. A single UK-wide national lottery distribution fund is the most efficient and beneficial way of distributing national lottery funds. For example, it means that large individual projects can be supported which might not be possible if the distribution of funds was handled separately for Scotland. Subject to that, the Government recognise fully that money spent by the lottery on good causes has important implications for matters which are devolved. We intend to ensure that the Scottish executive can have the influence it needs over the distribution of lottery funds in Scotland.

Following discussions on the National Lottery Act earlier this year, my noble friend Lord McIntosh of Haringey set out our intentions very fully in a letter to the noble and learned Lord, Lord Fraser of Carmyllie, which is available in the Library. I shall therefore run through the main points briefly. Distribution of lottery funds for the arts and sport is handled by Scotland-only bodies. Their members are appointed at present by the Secretary of State for Scotland, who is also responsible for the issue of financial policy directions to those bodies. That point was recognised by the noble Lord, Lord Mackay of Ardbrecknish. In future these tasks will fall to Scottish Ministers. In other words, complete control over the membership of Scottish arts and sports councils will rest with Scottish Ministers and they will be able to

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direct the councils on matters of policy without reference to Whitehall and Westminster. In addition, Scottish Ministers will, if they choose, be able to appoint other bodies to act as distributors of the arts and sports shares.

The heritage and charities good cause and the new good cause for health, education and the environment are each administered by a single UK-wide distribution body; again, as the noble Lord, Lord Mackay of Ardbrecknish, identified. That approach offers some obvious savings in administrative costs, but I have to point out that Scotland receives a greater share of grants for these good causes--I had better say this quietly--than it does for the arts or sports good causes and also than it would if funds were allocated according to the Barnett formula. So it is going in Scotland's favour. That said, however, the Government recognise fully that the Scottish executive will have a keen interest in the activities of these bodies and are determined to ensure that the executive can influence their activities, bearing in mind only that they are independent, arm's length bodies.

There are two main dimensions to the way in which a degree of influence can be obtained. One is through appointments and the other is through direction-making powers. As regards appointments, four members of the National Lottery Charities Board are appointed to represent the interests of Scotland and they have in practice formed the Scottish committee of the board. These appointments are made by the Secretary of State for Culture, Media and Sport after close consultation with the Secretary of State for Scotland. We intend that Scottish Ministers should have a similar close involvement after devolution.

The National Heritage Memorial Fund is responsible for the distribution of lottery funds for the heritage. Appointments are made by the Prime Minister after taking advice from the Secretary of State for Culture, Media and Sport and the Secretary of State for Scotland regarding the member appointed to represent the interests of Scotland. The National Heritage Memorial Fund is expected to be designated as a cross-border public authority under Clause 83 of the Bill, which will ensure that Scottish Ministers are consulted on future appointments. The fund is in the process of forming a Scottish committee in order to give a sharper focus to its activities in Scotland.

The New Opportunities Fund has been set up to administer the new good cause for health, education and the environment. Under the legislation, the Secretary of State for Culture, Media and Sport must appoint one member who makes the interests of Scotland his or her special care. Of course there is no reason why other members of the board should not come from Scotland. Just as the Secretary of State has worked closely with the Secretary of State for Scotland on these first appointments, Scottish Ministers will have close involvement in appointments in the future.

The New Opportunities Fund will have a particularly important part to play in the delivery of the Government's policies on education, health and

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childcare. Unlike the NLCB and the NHMF, we intend to ensure that Scottish Ministers will play an important role in the appointments process and in the power to issue directions. We are convinced that these actions, the exact mechanics of which are still being worked out by officials, will ensure that Scottish circumstances and priorities are given due recognition. In terms of the representation of Scottish interests through appointments, Scotland is well covered through the various aspects of the lottery and in terms of the internal committee structure of the various funds and the setting up of particular Scottish committees.

I turn now to that other area of influence, directions on policy. The Government recognise that the Scottish executive will have a strong interest in the activities of these three bodies because of their implications for areas of devolved responsibility. We therefore intend to provide mechanisms for the Scottish Ministers to exercise appropriate powers of direction over these bodies' activities in Scotland while keeping control at the UK level and after consultation with the Scottish Ministers over matters which can only be settled at that level; notably, directions affecting the allocation of resources between the different parts of the United Kingdom. We are still considering the details of these mechanisms but hope to make an announcement shortly.

In terms of what we wish to achieve and the proper congruence between the policy objectives and priorities in Scotland and the distribution of funds from the various national lottery funds, I do not believe that there is anything between the noble Lord, Lord Mackay of Ardbrecknish, and myself. We are just choosing a slightly different route. Rather than formally devolving them, we are making sure that their internal structures are sensitive to Scottish interests and we are creating a power of direction which Scottish Ministers will be able to use. I believe that the outcome will represent what the noble Lord, Lord Mackay of Ardbrecknish, seeks to achieve.

I turn to Amendment No. 190A. The noble Earl is concerned that locally run lotteries will fare badly under the proposal to reserve all gambling matters. With respect, I cannot agree. One of the primary purposes of bringing all types of gambling under uniform statutory control is to protect those involved. Devolution will not create borders within Great Britain, so it is right that an individual can expect the same degree of protection wherever he chooses to gamble. I see no reason why that protection should not be extended evenly. Lotteries may, on the face of it, seem relatively small beer in comparison with other types of gambling. But even lotteries of the type described by the noble Earl generate significant sums of money. But that is not really the point at issue. The issue essentially is one of protection--protection for the public and operators alike. We want to provide that in equal measure throughout Great Britain.

The amendment would simply fragment what is a very effective policy and remove one aspect of the lottery's arrangement from the general protections which, under our present plans, will be available to

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the public for all other types of gambling. I hope that I have been able to convince the noble Earl that what is proposed is in the best interests of the Scottish people. I therefore ask the noble Earl not to move his amendment and the noble Lord, Lord Mackay, to withdraw his amendment.

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