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Lord Davies of Oldham: My Lords, I am grateful that neither Front Bench spokesman indicated that they intend to oppose the regulations. However, I can scarcely be grateful for the response of the noble Baroness, Lady Miller of Hendon, who treated us to an extraordinary perspective on the state the British economy. If she is going to say that the problems of the British economy that she identified are related to these regulations, the one critical fact that should be established is the impact upon employment. After all, what are the regulations about, if it is not that workers should be paid a proper rate?

The Opposition's dire forecasts have always been that this policy would lead to a significant rise in unemployment levels. Of course, although the noble Baroness indicated that the Opposition in the other place produced their normal doom and gloom perspective on the economy, she was not able to treat us to any such description of the current state of employment, because levels are very high. Levels of unemployment remain low despite the forecasts made by the Opposition that the introduction of the minimum wage would lead to substantial increases in unemployment.

I understand the Opposition's problems. They are also increasingly emphasising the problems of manufacturing industry against the downturn that we

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all recognise in the global economy and world trade. For an administration that presided over the collapse of our manufacturing industry in the 1980s and early 1990s, to talk about the present problem in similar terms is a trifle forward on their part. However, it is Friday, and we do not normally engage a great deal in politics, particularly when we have such a mild order before us. I shall confine myself predominantly to the specific points raised by the noble Baroness and the noble Lord.

I apologise if there was a slip of the tongue in my introduction. I meant to say that the forecast increase to be introduced in October is three times the present rate of inflation. That is the figure that I hoped to convey, and I am glad to have the opportunity to make that clear.

Are the increases too high? We are, as the noble Baroness said that we should be, concerned about the burdens on business. We have deliberately followed a partnership approach and been careful to consult business at all stages, to avoid unnecessary burdens. There are members of the Low Pay Commission who represent the interests of the small firms sector. The only burden on business that arises from the minimum wage is the cost of paying workers at a decent rate. The commission has found evidence that some companies are able to offset it through savings from reduced staff turnover and from improvements in productivity.

I hear what the noble Baroness says. She will also recognise that others have spoken differently about the effect of low pay. The Low Pay Commission is chaired by Adair Turner, a former director-general of the CBI, someone who is not unaware of the interests of business.

The noble Lord, Lord Addington, made a point about young workers. I hear what he says about the desirability of extending the provision. We are mindful of the fact that the group that falls outside the provisions can be subject to exploitation. That is an ever-present consideration, as is the noble Lord's other point about the degree of enforcement. It is difficult for the Government to take direct responsibility for the enforcement of minimum pay levels, given the substantial number of employers in the country and their relationship to the workforce.

Employers who are identified as having broken the law will be prosecuted accordingly, but the noble Lord will recognise that the only way in which employers can break the law is if the workers are complicit. As he said, some workers are so vulnerable that they are complicit in such a situation, and the abuse continues for some time because the workers have little leverage and may themselves be in a vulnerable position in relation to the laws of the land.

We are, of course, concerned to ensure that the minimum wage is enforced, but the noble Lord will recognise that there are bound to be sections of the economy in which it is more difficult than others. He identified a particular sector in which we know there has been abuse. I remember that, when that came to light a few years ago—prior to the introduction of the

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minimum wage—the increased publicity made sure that employers who were paying grossly exploitative rates changed their pattern of behaviour. Part of the work that we must do is expose grievous exploitation of workers.

The regulations advance substantially the interests of a large section of the low-paid workforce. That is why I commend them to the House.

On Question, Motion agreed to.

National Lottery (Funding of Endowments) Bill

11.54 a.m.

Lord Walpole: My Lords, I beg to move that this Bill be now read a second time. I shall give a little background to the Bill and explain why it is here today.

A Private Member's Bill with similar objectives to the present Bill was introduced in the other place by Dr Ian Gibson and supported by several Norfolk MPs, including, at that time, the noble Lord, Lord MacGregor of Pulham Market, who was a Member of that House during the previous Parliament. However, after the Committee stage, it fell, due to the general election.

Last year, I introduced the same Bill into your Lordships' House. After First Reading, I was asked by the Government to withdraw it and told that the Department for Culture, Media and Sport would re-draft it for us in a form that the Government could support. That has now been done, and those of us who were involved with the original Bill are grateful to the DCMS and are pleased with the result.

The Bill was taken through the other place by the honourable Member for Mid Norfolk, Mr Keith Simpson, who was lucky in the draw for Private Members' Bills. It went through all its stages in the other place unscathed and is here for its Second Reading.

Why is it the Norfolk Bill, and why does it have all-party support? What happened was that the Norfolk Millennium Trust for Carers, commonly known as We Care 2000, was set up in the millennium year to raise 1 million. From the interest on that capital, it could help many people in the area. It was advised that the community fund could not provide grant aid for a capital endowment fund, and thus it did not submit a formal application.

The appeal in Norfolk has so far raised 656,000, which has been invested. My notes were written yesterday, and they say—I am not sure what the effect of the decrease in the bank rate will be—that it was attracting 4.5 per cent. That is a creditable amount for an endowment. It has so far benefited some 250 people, and over 60,000 has been paid out in grants, without touching the capital. Grants were received from the National Lottery Community Fund at the time of the millennium for start-up costs. Recently, another 100,000, mainly for white goods, has been offered. That has not been taken up yet, but We Care is incredibly grateful for it. It has also received generous support from the Esmee Fairbairn Foundation, but it is important to

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emphasise that by far the largest proportion of the funds has been raised by appeals to and events run by local firms, individuals and organisations. The trust, we hope, will benefit, on average, some 200 people a year for many years to come.

The purpose of the Bill is to amend the National Lottery etc. Act 1993, as amended by the National Lottery Act 1998, expressly to provide that all distributors have the power to make grants to endowment funds. Current statute gives lottery distribution bodies the power to distribute money for meeting expenditure of the type specified in Section 22 of the National Lottery etc. Act 1993. It does not, however, define what is meant by meeting expenditure or contain any explicit reference to funding endowments.

The Bill would amend the sections of the National Lottery etc. Act 1993 that refer to meeting expenditure, to clarify that, in each case, it includes funds for endowments. DCMS advises that distributors other than the Community Fund were able to fund endowments and that such grants have been made by some of the distributing bodies. Clause 1(9), therefore, would ensure that the Bill had retrospective effect.

The Bill would clarify the legal position of distributing bodies giving money to endowment funds, put the community fund on the same legal footing as other distributors in the area and assist charities such as We Care to manage their funds more effectively. Endowment funds can be a useful way of providing long-term revenue funding, particularly for voluntary sector bodies. They can enable bodies to plan strategically, with some certainty about the security of future funding and enable them to operate more effectively on behalf of their client groups. They can also provide credibility with potential third-party funders and partners because of the knowledge that core funding is guaranteed. Nevertheless, we must recognise that endowments require large sums to provide reasonable returns.

Of course, future income levels will vary with interest rates, as has happened in the past.

This is a permissive rather than a mandatory power for distributors which, ultimately, could determine how to treat applications for grants for endowment funds against other calls for lottery funding. Should the Bill be successful, the Minister's department intends to assist distributors in this matter by issuing guidance. A draft of the guide was placed in the Library. I hope that your Lordships have had an opportunity to read it.

A further issue is the regulatory cost of the Bill. As a permissive power, there would be no resulting regulatory cost to government, businesses or the voluntary sector. The measure is intended to assist charities within the sector, and other good causes, by enabling them to apply for lottery funds to help set up or augment their endowment funds and to manage their operations more effectively. While the power may result in additional calls on distributors' resources, ultimately it would be a policy decision for distributors on how to prioritise such applications against others for non-endowment grants. It would be

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a permissive and not a mandatory power. The Bill would act on all national lottery distributors' powers and therefore would be UK-wide. The policy for the lottery is a reserved issue, but I understand that earlier provisions of the Bill attracted support from the devolved administrations.

In conclusion, the benefits of the Bill will be to those charities which operate or are considering operating endowment funds. Indeed, it would be helpful to them as the Government will be issuing guidelines to indicate the advantages or otherwise of this method of funding. The powers are not mandatory but are permissive. I commend the Bill to the House where I hope that it will find support.

Moved, That the Bill be now read a second time.—(Lord Walpole.)

12.2 p.m.

Baroness Pitkeathley: My Lords, I should like to thank the noble Lord, Lord Walpole, for introducing the Bill. Your Lordships will not be surprised to know that I support anything which will benefit carers. I declare an interest as a former chief executive of Carers UK. But the Bill has a much wider implication than that. I therefore declare a further and perhaps more significant interest as chair of the largest of the good cause distributors from the lottery, the New Opportunities Fund. The NOF was set up in 1998 to distribute lottery money to disadvantaged individuals in communities in the areas of health, education and the environment. I support the Bill and welcome the proposal to extend to all distributors the powers which are currently enjoyed only by some.

As the New Opportunities Fund is to be merged in the near future with the community fund to create a new distributor which will have control over one-half of all the funding for good causes from the lottery, it is particularly appropriate that we are considering the proposal now so as to clarify the position regarding the new distributor. I emphasise that this small change is unlikely to skew the delivery of funds in disadvantageous ways for charities. I know that there have been some fears about that. Commitments to endowments are likely to apply to a small proportion only of lottery funding.

In order that we can understand some of the potential effects of the Bill, I think that the most helpful thing that I can do for your Lordships today is to give an example of how the New Opportunities Fund recently employed its power to use endowment funding. This is through our part of the fair shares programme, which is a joint programme with the community fund and is a pioneering scheme to invest 50 million for the benefit of disadvantaged communities. In particular, it is aimed at areas which have not so far received their fair share of lottery funding.

The fair share trust is an important step in lottery distribution. It will start to address the imbalance in areas which have a poor track record in accessing lottery funds and will help to build community capacity, enabling them to work up projects and prepare future—we hope successful—lottery bids. The

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programme represents a new concept in lottery distribution making money available over a much longer period. Endowments can run for up to 10 years. We must remember that the short-term nature of lottery funding and the difficulties of sustaining programmes are some of the most frequent criticisms. It can therefore have a much more sustained impact on disadvantage by boosting the capacity of communities to obtain and manage funding that meets the needs and priorities of that particular area.

It puts long-term funding into the hands of local communities so that they can make their own decisions about investment which will be of benefit to them. It links with the desire of the Department of Culture, Media and Sport, as recently expressed by the Secretary of State, to see decisions about lottery funding made as close to communities as possible. I hope that the legislation will enable many more such schemes to be set up. The New Opportunities Fund programme seeks to build capacity within communities, including support for community assets, planning and local regeneration. It also encourages local social and skills development to facilitate community engagement in local organisations and to promote job creation.

There is an emphasis in this endowment scheme on "liveability", enabling communities to improve their living environments, to make them healthier, greener, better designed, more welcoming and accessible to everyone. We believe that the programme will make a sustained impact on the ability of these communities to secure funding in the future from the lottery and other sources.

The allocations for each fair share area will be managed by local delivery agents which will, for the most part, be drawn from community foundations. I am very grateful for the support of the Community Foundation Network in this programme. The priorities for areas in England will be identified by local panels drawn together and facilitated by local delivery agents based on the information supplied by local strategic partnerships. Alternative delivery models are currently being negotiated for Scotland, Wales and Northern Ireland and, importantly, will ensure again that decisions are made locally by the communities which will benefit.

This is the first time that lottery money has been ring fenced for local communities over a 10-year period. The aim is that the approach of making a sustained investment over time will set a precedent for future lottery programmes. I hope that your Lordships will consider this Bill as a means of enabling other such schemes to develop for the benefit of local communities and individuals.

12.7 p.m.

Lord MacGregor of Pulham Market: My Lords, I, too, warmly support the Bill. Like the noble Lord, Lord Walpole, I have lived in Norfolk for nearly 30 years, having spent 27 years as Member of Parliament for South Norfolk. Your Lordships may have noticed that in the other place it was mainly

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Norfolk MPs who spoke in favour of this Bill. So I want to make it absolutely clear that this Bill is not just for Norfolk but, if it passes through this House, charities throughout the country will benefit. That has been emphasised by the fact that the Bill has not had all-party support only in Norfolk but all-party support nationally.

Why has there been such an emphasis on Norfolk? The reason is that the genesis of the Bill arose there. The noble Lord, Lord Walpole, described the splendid We Care appeal, with which I have been strongly linked since its outset, set up in advance of the millennium. Indeed, I have taken part in fund-raising activities, of which I remember one in particular. One of my hobbies is performing magic. By that I mean magic as a magician and magic of the mind. On one occasion, towards the end of my time in the other place, we had a fund-raising activity at which I performed the cabaret with a colleague from the other place. In one evening, we raised 11,500, which is the most that I have ever—if I can put it this way—"earned" in one night.

I have been a warm supporter of the appeal, but early on we discovered a problem. The appeal was designed to raise long-term funds, but on applying to the community fund—the appropriate fund for the appeal—for some reason that we have never been able to establish exactly—perhaps an oversight—the original legislation prevented the community fund from providing funds for endowment. Indeed, it was the only distributor unable to award grants to endowment funds. It was always assumed that the other lottery funds could and, indeed, in practice, they did. That was the anomaly which had to be addressed. Fortunately, Dr Ian Gibson, a Norfolk MP, won a place in the Private Member's Ballot, and he used the Bill to fulfil that place. Unfortunately, it was just before the general election, so the Bill ran out of time in the other place. Indeed, I had thought that my speech in the Budget debate was to be my last in the other place, but this Bill came forward very late and so it was to this measure that I made my last speech in support of it. Therefore I think that I have the unique distinction and pleasure of having been able to speak on it in both Houses of Parliament.

So the Bill ran out of time. The noble Lord, Lord Walpole, explained the rather niggling legal point which led to the Government being unable to support the Bill when it came forward last year. I am glad that the matter has been sorted out. Fortunately, the honourable Member for Mid Norfolk, Keith Simpson, won a place in the Private Member's Ballot this year and it is a tribute to the attachment we have in Norfolk to this Bill that the two Norfolk MPs who have won Private Member's Ballots have chosen this Bill.

I understand that at a party in Norfolk last night—in the counties we hold splendid summer parties attended by all the distinguished local leaders—while it would not be quite true to say that there was talk of nothing other than your Lordships' debate today, I understand that that was almost the case. That indicates the depth of local support for it.

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I wish to make three particular points. First, it goes without saying that this is a very worthy cause. The noble Lord, Lord Walpole, has pointed out how much has been raised already and I pay particular tribute to Mrs Paddy Seligman, who has been the magnificent leader of this appeal throughout, and to our local newspaper, the Eastern Daily Press, and to its editor, Peter Franzen, and deputy editor, James Ruddy, all of whom have strongly supported not only the cause but this Bill throughout.

I know that the Government now contribute through public funds towards helping carers, and of course the community fund has already assisted the We Care 2000 appeal in Norfolk, but not through an endowment fund. So although the charity has received support, the fact that 250 carers have also benefited through voluntary action in aid of a cause such as this demonstrates the important place for such appeals in the community at large.

My second point is brief. Apparently there is a brief retrospective element in the Bill. I have always opposed retrospective elements in any measure and as a Minister strongly fought against introducing them whenever they arose in Bills in the other place. However, I think I can take comfort here by saying that I do not think that it is really retrospective. It was always assumed that all the other lottery funds were able, through the legislation, to make contributions to endowment funds and indeed were doing so. I hope, therefore, that all that is being done here is an exercise in clarification rather than the application of the legislation retrospectively.

Thirdly, I turn to the concerns raised by a number of people about the difficulties that might arise on the ability to contribute to endowment funds because those funds will have to be up-front, which would mean that rather a bigger contribution would have to be made up-front than would be the case if it was just an annual contribution. While I recognise the point, it is important to recognise what has been said on this by the noble Lord, Lord Walpole: the powers in this Bill with regard to lottery funds are permissive rather than obligatory. Therefore it will be for the successor of the community fund to weigh up individually the pros and cons of each application, and I am glad that guidance has been given.

There is a real place for lottery funds to contribute to endowment funds because they guarantee continuity of the support system over a number of years. Indeed, that is precisely what the We Care 2000 fund is; it has been raising money for endowments, the income from which is now being applied annually. So in asking the community fund for endowment support, the trustees were acting entirely in accordance with the nature of their own charity. Therefore, as I have said, there is a place for lottery funds to contribute to endowment funds.

The final point I wish to make is that one of the important criteria is the integrity and good stewardship of the trustees of the funds to which endowment money might be given. I have to say that I think that so far the We Care 2000 trustees have demonstrated both in how

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they have used the funds and how they have invested the funds so very successfully and prudently that they are able to meet that guarantee of integrity and good stewardship.

I hope that this Bill will not run out of time, as did its predecessor. I hope also that it will not be subject to any more technical and legal difficulties, and accordingly that noble Lords will enable it to pass through swiftly.

12.14 p.m.

Lord Chorley: My Lords, I, too, warmly welcome this Bill. I congratulate my noble friend on introducing it and on the helpful way in which he has explained it to us. I hope that I may conclude from what he said that it will find favour with the Government. Certainly the noble Lord, Lord McIntosh, will not find it quite as demanding as the Communications Bill.

I am an enthusiast of endowment funding and I should like to see the relevant lottery distributors do rather more of it. I entirely accept that it raises difficult issues and I have, for example, no quarrel with the points made in the various papers provided by the Department for Culture, Media and Sport.

My interest in this subject stems from over 25 years of involvement with the National Trust as well as on-going involvements with numerous other organisations which have charitable status. The trust has always had the policy that it had to be satisfied that there would be sufficient endowment income to cover any operating deficit on properties that it was acquiring. This policy was sometimes observed more in the breach, especially during the 1950s and 1960s. This is not the time to go into the details, but coping with those on-going property deficits, including endless and sterile arguments with the Treasury over its so-called "Treasury" properties, was during my time a very major headache.

In the 1980s and 1990s, however, life was rather better thanks in large measure to the enlightened attitude of the then new NHMF and its redoubtable chairman, Lord Charteris. But for that, it would not have been possible for the trust to have taken on any large historic houses in the 1980s or the early 1990s. However, at that time they were NHMF endowments because the Heritage Lottery Fund had not yet been established. What will happen vis-a-vis the endowment with regard to the last major recent acquisition by the National Trust at Tyntesfield, which has been heavily supported by the NHMF and, I assume, the HLF, I do not know; I am not up to date on it.

Our sister body, the National Trust for Scotland, was similarly helped. I think that I am right in saying that it benefited from one of the first major grants made by the HLF and that some of that grant went towards endowing the Mar Lodge Estate, which was what it was for.

I believe that the reasons given to justify why the NHMF/HLF—the HLF is administered by the NHMF—gave endowment grants to the two trusts was because they were to be declared inalienable. That is, of course, an important consideration, but although the right of inalienability is unique to them, in the

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wider sense it is not a unique situation. Many other organisations acquire property of heritage quality for the long term. They, too, have operating deficits and thus could benefit from more endowment funding.

We all know of museums and galleries that get into major difficulties because of inadequate income, for whatever reasons, to cover running costs. So repairs and maintenance are skimped until surprise, surprise, some years later there is a major problem. Very often the HLF will step in with a major first-aid grant. Thank goodness it does so, but the crisis might have been avoided had there been some endowment income to ensure that an adequate annual maintenance programme was followed in the first place.

The concentration of grant-giving on capital projects—that is, one-off aiding—often means that those organisations bidding for a grant tend to underestimate the running costs consequences. After all, that is only human nature. So operating a splendid new facility, if that is what it is, may later bring an organisation to its knees, or at least cause it to wobble. A little support with running costs could make all the difference.

I am sure that the lottery fund distributors are aware of these dangers. For example, they have an excellent policy on large capital schemes involving grant-aid for professional support, thus ensuring that the project is soundly planned and budgeted and that any management weaknesses are identified. My experience suggests that this kind of preliminary support is hugely important in securing good projects. But I would also suggest that on occasion the appropriate way forward may be a judicious mix of capital and running costs support. I suspect that we tend to over-concentrate on capital projects and under-emphasise getting existing operations onto a well-founded footing.

However, we do not want—I certainly do not want—to be too prescriptive in this area. That would be quite wrong. It is therefore right that the Bill merely draws attention to endowment funding. It strikes the right balances and I hope that it will have a swift passage to the statute book.

I conclude by expressing my enormous enthusiasm and respect for the work of both the HLF and the Arts Council, the only two lottery distributors of which I have any experience. Their contribution to the quality of cultural life in this country is quite incalculable.

12.20 p.m.

Viscount Falkland: My Lords, the Bill, which we on these Benches wholeheartedly support, arrives against a background in this country of a culture of voluntary work; we have a considerable voluntary sector of long standing. Bearing that in mind, there is always a need for the long-term funding of projects and, in the light of that, a need for matching strategies, particularly for charities. In addition to capital grants there is a need for endowments to fulfil the projects they support.

The background to the Bill has been admirably stated by the noble Lord, Lord Walpole, who, as he explained, has inherited it from two Members of another place. As

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he said, in its present form it has had universal support. Its purpose is to enable prolonged and sustained funding for worthwhile projects. It will enable all lottery distributors—including the community fund—to give to charities in the voluntary sector to fund new endowments or to supplement those which already exist.

As has been mentioned, Section 23 of the 1993 Act specifies powers given to distributing bodies to meet expenditure, but there has been an inadequate definition of "expenditure"—or, indeed, any direct reference to the machinery of endowments. The Bill clarifies this area—in particular the term "meeting expenditure"—and how "meeting expenditure" inevitably involves the funding of endowments.

As the noble Lord, Lord MacGregor, among others, said, its genesis is East Anglian. The Eastern Daily Press campaign deserves a great deal of credit for the impetus to get the Bill on to the statute book. As I understand it from reading some of the remarks that have been made already—this perhaps reflects what I said about the voluntary sector—one in seven people in Norfolk are unpaid carers. The impact of the Bill on them will be considerable.

Long-term revenue funding, which allows strategic forward planning, will benefit from the Bill. In addition, the Bill will give security to third parties who give further funding and reassure them about the existence of core funding.

There are problems with endowments—we have debated in the House the problems relating to NESTA—which, to a large extent, rely on the fluctuation of interest rates. Tying-up capital up front necessarily means that there is less money for other projects. However, bearing in mind the remarks of the noble Lord, Lord MacGregor—I like the phrase that this is "permissive and not obligatory"—it is in the hands of those who distribute to make the right assessment.

As to the lottery in general, there will be quite a lot said about it in this House and in another place in the coming months. There has been a foreseeable levelling off—which always happens to lotteries—after an extremely successful start in this country. However, there has been a marked dropping-off in its popularity among those who play the lottery. In my view, that is entirely due to the questionable marketing strategies of the operator rather than anything to do with well-publicised disagreements with various causes; whether they are popular or unpopular does not make a great deal of difference. It may with the public generally, but not with those who play the lottery.

This is important to the Government when they wish to introduce new causes. One of their arguments is that members of the public—especially those who play the lottery—expect that the part of the money they put into the lottery which goes to good causes should go to the ones that they like. I am not sure that I agree with that but we shall have an opportunity to discuss it in future.

The changes in the Bill are for the better. They support long-term and worthwhile funding and I am sure that the public will share that view.

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12.26 p.m.

Lord Glentoran: My Lords, I declare a significant interest: I have been a member of the Millennium Commission for about nine years since its inception. In that time I have chaired its internal audit committee, which I still do, and I co-chair its finance committee with Lord Dalkeith.

I thank the noble Lord, Lord Walpole, for introducing this Private Member's Bill, which I support. It was useful to hear from the noble Baroness, Lady Pitkeathley, who is in her place, about her experience in the use of endowments, particularly in regard to those who have so far had difficulty in accessing lottery funds. The commission has identified that Afro-Caribbean communities are particularly unable to access it because of a lack of leadership and cohesion. I am sure that many other areas could be identified but perhaps this is not the day to do so.

The Millennium Commission has set up a significant endowment policy of 100 million which will, it is to be hoped, continue ad infinitum the Millennium Bursary Fund. It may be of interest to your Lordships—I think I am right in saying this; I did not look it up before entering the Chamber—that the endowment fund which was set up at the time of "Albertropolis" in the Victorian era is still running and still funding adequately. However, that does not prove that endowment funds are a panacea to all kinds of difficulties.

I have spoken to the noble Lords, Lord McIntosh and Lord Walpole, about the fact that my concern lies in the detail. I have no argument with the Bill; I think it is excellent. I am delighted that it has been introduced and I am delighted to support it. However, with all due respect to my friends in the Department for Culture, Media and Sport—I call them friends, having worked with them for a long time— there are a number of failures in the guidelines to the Bill.

There are no policy directions at all. There is room for at least one policy direction in relation to efficiency. I could name a number of other areas but it is quite clear that, so far as concerns efficiency in the use of money, there are a number of significant traps that one can fall into with lottery funds. We fell into one when setting up the millennium bursary fund with an organisation called Un Ltd. What happens is that the endowment is set up and then grant-aided by the commission. As soon as that grant has been made, everybody expects the trustees to be paying out. Setting up an endowment and organisation on that scale requires a lot of cash upfront. We decided that we should fund them, on top of the endowment, a significant sum for the first year. That at least gives them the balance. They can draw down their income from the first year of operation without committing it, so it gives them a bit of a cushion. That is a little detail, but it is the sort of issue that could usefully be covered.

There is another comment in here which I believe to be incorrect. It says under the heading "Controls over endowment funds":

    "Once the recipient has the funds they are theirs forever".

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I do not believe that to be true. It is my information that grants to endowments can be clawed back if there is a failure of contract. They can also be clawed back to enable the removal of trustees. I believe there are a number of areas in the small print which need attention.

Rather than talk about the detail, I ask the Minister if he will agree to ask his officials to have another look and spend a bit more time on the guidelines and possibly consider some policy directions on one or two key issues. I sincerely hope that the various millennium bodies are working together within the DCMS. I have spoken to the noble Baroness, Lady Pitkeathley, on this matter before. I would like to feel that Mr Ian Brack could be accessed. He is the brains behind the considerable amount of work over quite a few years that the commission put into getting this endowment up and running. It is not easily done; it takes a lot of care and one needs seriously competent professional people to be involved.

The other area which needs attention is that most endowments are part of charitable trusts. They then come under the Charity Commissioners, who have their own rules and regulations as to what can be done. There is a whole area of detail and small print—quite a lot of which should be in ordinary, everyday English—which should be put in the guidelines so that bodies which wish to use lottery funds or set up endowments with lottery funds are at least aware of the hazards and the dangers.

Having said that—and noble Lords may wonder why I am standing at this Dispatch Box, having worked so long at the DCMS under the present Government—I support the Bill.

12.33 p.m.

The Parliamentary Under-Secretary of State, Department for Culture, Media and Sport (Lord McIntosh of Haringey): My Lords, I join all other speakers in congratulating the noble Lord, Lord Walpole, on bringing forward this Bill. I know it is not the first time he has brought it forward; I appreciate that there were problems of legality and timing which caused difficulties before. However, I agree with those who have said they wish this Bill a speedy passage through Parliament.

The noble Lord has done very well to get such a well informed speakers' list today. We have had contributions from the New Opportunities Fund, the National Trust and the Millennium Commission, and have heard about caring and magic in Norfolk. This has been an excellent short debate. I pay tribute to those in Norfolk, particularly to the We Care 2000 appeal, which has set us out on this path.

It may be worth saying before I leave the subject of Norfolk that lottery distributing bodies have awarded grants of over 147 million to nearly 1,500 good causes in the region, including over 23 million from the community fund to charitable and voluntary sector bodies. The Millennium Trust has done marvellous work with unpaid carers who are unsung heroes and deserve our admiration and support. The Millennium

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Trust has now awarded two grants from the community fund—the most recent for an impressive 100,000. Since 1995, the community fund has given nearly 3,000 grants worth more than 200 million for carers to enable them to provide sustained health and social care to more than 16 million disabled, frail, long-term ill and socially isolated children and adults.

The need for this Bill is the unfortunate wording of existing lottery legislation which does not refer to the power of distributors to award grants to endowment funds. I do not think that was the intention at the time, but it was drafted wrongly and the Bill will be helpful not only in clarifying the legal position of all distributing bodies to fund endowments but also in helping charities to manage their funds in a more effective way.

The Bill also fits in well with our lottery funding review. Its decision document was published last week, saying that distributors should strive to be more responsive to the needs and priorities of local communities and other users by making it easier for charities to apply for grants.

I should confirm what was said by a number of speakers—this is a permissive and not a mandatory power. It is up to lottery distributors to determine whether to choose to award grants to endowment funds. Indeed, it is up to good causes to decide whether it is the appropriate funding for which to apply. Although some distributors have, acting on our advice, awarded grants to endowment funds in the past, they have not used that power frequently. There is no evidence that they will enormously expand endowment funding in the future. We do not think they will be flooded with applications for grants, but the power should clearly be available for those occasions.

We have given an undertaking to issue guidance to distributors on the factors that need to be taken into account in awarding grants to endowment funds. Before I leave the issue of guidance, I refer to the very helpful speech of the noble Lord, Lord Glentoran, who has problems with some of the content of the existing draft guidance. It is only draft guidance; it is there for amendment. I hear what he says about having at least one policy direction. I certainly hear what he says about the possibilities of clawback. He kindly offered the support of Ian Brack from the Millennium Commission, who has been working in this area. I can reassure the noble Lord that my officials have already spoken to Ian Brack on this subject and will continue to do so.

One of the existing controls over these funds is that grants to permanent endowments can be made only to registered charities. So the funds fall under charity law and the Charity Commission and the Attorney-General are ultimately responsible. If there is any misappropriation or mishandling, it will be a breach of the terms and conditions set by the distributors, but there could be a criminal offence which would involve the Charity Commission. If a charity ceases to exist, charity law requires that the remaining assets are

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applied for a similar charitable purpose and the distributors would then be involved with the Charity Commission.

There are other controls through the general principles of government accounting, lottery statute and my department's policy and financial directions to distributors. As public money, the general principles of government accounting must apply. Section 26(3) of the National Lottery etc. Act 1993 gives the Secretary of State the power to issue financial directions to lottery distributors to secure the proper management and control of money paid to them, and they must comply with these. Those directions typically include giving a standard set of terms and conditions which must apply to any grant. They also cover what would happen in the event of a material change of purpose, ownership or recipient.

I hope I have reassured the House that we are not complacent about the need for controls or about our willingness to listen to further representations about the content of the guidance. It is the view of my department that the Bill is compatible with the European Convention on Human Rights. We have also, in collaboration with the noble Lord, Lord Walpole, prepared a regulatory impact assessment, which is available in the Library.

In conclusion, I welcome the Bill and congratulate the noble Lord on bringing it forward. I believe that it will clarify the powers of all distributors to fund endowments and give them a more secure funding base for their work. I am happy to offer the support of the Government for the Bill.

12.40 p.m.

Lord Walpole: My Lords, it has been a pleasure and a privilege to have been working with the Bill and its predecessors. I thank everyone who has spoken. I have been very impressed by their speeches. As the Minister said, the debate has attracted a wide range of people. I am grateful. I commend the Bill to the House.

On Question, Bill read a second time, and committed to a Committee of the Whole House.

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