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Lord Crickhowell: My Lords, important points of principle have been raised. I wish to take up two of the excuses referred to by my noble friend: first, the ability to plan earlier; and, secondly, the so-called huge cash balances.
A decision was taken half-way through the financial year of the bodies concerned. Those organisations had been considering, in some cases for several years but certainly for the whole of that financial year, a huge number of applications. They were trying to sort them into order of precedence and fit them within a known budget. The fact that at some point there may be a cash balance was not relevant to their process. Those cash balances are being held for commitments entered into and in due course must be produced to fund those commitments.
Therefore, we have a process which is wholly disruptive of sensible business and financial planning. A Government who have ultimate responsibility for the good management of funds in the public sector and must ensure that public accounting procedures and propriety are properly followed are in fundamental breach of good practice and are encouraging bad practice. It is true that in the Budget the Chancellor of the Exchequer makes changes in taxation and so forth and that they are immediately implemented, but that is part of a process for which there is a known timetable and people plan accordingly.
The organisations involved had every reason to base their financial planning on the assumption that funds would be available over the whole of the financial year. That process has been disrupted. On financial grounds, and on grounds of propriety in managing such matters, the procedure is wholly dubious and indefensible and it should be attacked on those grounds. In some cases, the organisations have to turn down perfectly good schemes due to lack of resources. They have given as one of the reasons for turning down such schemes the lack of resources which has occurred at least in part from this cause. Indeed, since our debates in Committee, the Minister confirmed in writing that the National Heritage Memorial Fund gave shortage of funds as one of the reasons for rejecting the project submitted by the National Museum of Wales, which was raised in Committee by my noble friend Lord Rees. My noble friend was kind enough to copy the letter to me.
There is a large number of other cases which no doubt have been influenced by the event. Perhaps those bodies were inclined to take a favourable position, but suddenly had to say, "No, we are not going to have the money that we thought we would have". Therefore, half-way through the procedure and without any parliamentary
Lord Rowallan: My Lords, I feel bound to ask one or two important questions. I have always been concerned about retrospective taxation. Although that matter was dealt with in Committee, I am concerned about the figures. On 4th February, the Minister kindly wrote to me stating that the total income in the National Lottery Distribution Fund was just under £5 billion. At the same time, Camelot wrote to the Guardian and the European stating that there was only £4.325 billion. There is a substantial difference of almost £308 million which we must address and discover where it has gone. It is also stated that there is £354 million for outstanding prize liability. I believe that the only reason for the existence of that figure is to ensure that the 50 per cent. which is supposed to be given out has been given out.
I would like the Minister's comments on those two points because the National Lottery has been the best new source of funding for a long time. However, certain inaccuracies and discrepancies in figures occur more often and we must address them, particularly when moneys going to one cause are channelled to other causes. I do not wish to comment on whether those causes are good, bad or anything else, but I wish to know how the discrepancies in the figures arise.
Lord Chorley: My Lords, I have no particular wish to help the Government, but I recall that in Committee the Minister said that if the October date had not been used and the Government had waited until the Bill became law, they would have opted for a reduction larger than the 16 2/3 per cent. Arguably, that would have been a more disruptive feature than what is proposed.
I do not particularly like what is being proposed, but I take the point made by the noble Lord, Lord Crickhowell, that it makes financial planning more difficult. On balance, I should prefer to live with the situation that has arisen rather than an arbitrary figure which will apply when the Bill becomes an Act.
Lord McIntosh of Haringey: My Lords, first, I apologise to the noble Lord, Lord Rowallan, for failing to respond to his questions on the previous amendment. I must write to him, and I am afraid that the same is true in respect of his questions on this amendment. The issues are complex and, even if I had the answers, I am not sure that I should wish to detain the House for the length of time which would be necessary to sort out the figures. I shall write to the noble Lord and if it is necessary to debate the matter on Third Reading, I am sure that he will find a way of doing so.
I am afraid that I must resist the amendment, as I resisted that tabled in Committee. The noble Lord, Lord Crickhowell, said that the procedure was causing disruption in the middle of the financial year. Perhaps if I set out the history the noble Lord will better understand why we have taken this course. Before the
It was clear that in order to achieve that we needed to adjust the percentages going to the existing good causes. Perhaps I may stress percentages, not cash. As I said on Second Reading, distributors spend cash, not percentages. The cash they can expect matches their original expectations. We discussed with distributors the best way of meeting those two commitments. The result, which is perfectly proper and legal, was that we and the distributors agreed to set up shadow accounts for their share of the National Lottery Distribution Fund from 14th October 1997 to reflect the percentage changes outlined in the Bill.
Those shadow accounts are simply for the distributors' own purposes, so that they can plan their commitments and expenditure sensibly on the basis of the Government's announced intentions. Nothing irreversible has happened. Funds continue to be allocated to each good cause on the basis of the percentages in the 1993 Act. The actual reallocation of funds will take place only if and when the Bill is passed. If it is not passed, for whatever reason, the funds will simply remain in the accounts of the existing distributors as presently provided.
Lord Skidelsky: My Lords, I thank the Minister for giving way. He said that money continues to be allocated to the existing good causes on the old percentages. Are they at liberty to spend that money on the assumption that they are receiving the old percentages?
Lord McIntosh of Haringey: My Lords, the practical fact is that they do not need to. The question has not arisen. As I said to the noble Lord, Lord Crickhowell, they have cash balances which are greater than the amount which has been placed in the shadow accounts. Provided that they take into account the commitment which they have known about since last April, there is no question of them having to deny the funds for particular projects because of a reduction in funds.
While I am on that point, I should respond to the noble Lord, Lord Crickhowell, who quoted quite properly from a letter that I sent to the noble Lord, Lord Rees, about Cardiff. It is true that the distributor said to the applicants in the case to which he is referring that one reason for the application being turned down was shortage of funds. But to the best of my knowledge, it was not said that the shortage of funds was caused by this present legislation but rather that there was a limit,
Lord Crickhowell: My Lords, I fully acknowledge that. Indeed, when I spoke I said that other reasons were given. The noble Lord has been good enough to give way. He keeps referring to "original expectations". He did that when speaking on the last amendment and is doing it again now. Of course the funds that have come in have far exceeded original expectations. By the time they got into the current year, organisations were planning legitimately on the basis of receiving the kind of funds that had been coming from the lottery. Therefore, to continue to argue a case on the grounds that the Government have done no more than to cut back the organisations to their original expectations is not a terribly convincing argument.
Lord McIntosh of Haringey: My Lords, I cannot accept that. It seems to me that if I were in that position and I heard an opposition party, as was the Labour Party in April 1997, saying that they would set up a new opportunities fund with those objectives but that the existing funds would not be deprived of the money which they had expected originally when the funds were set up, I should do a little sum for myself. I should ask what possibility or probability there was of the Labour Party winning the election. If I drew the conclusion, as a few people did, that it was possible that the Labour Party might win the election, I should draw my conclusions accordingly, right from April of last year. I should start to cut my coat according to my cloth. That is what sensible distributors have done, given that we gave the greatest possible notice of what we were proposing to do.
Noble Lords have said that that creates uncertainty in the distributors' minds. I do not believe that to be the case. It has always been known that it would be possible for us to achieve the same objectives--those which we set out in our manifesto--by a different method; that is, by adjusting the percentages after Royal Assent. That is what this amendment would achieve.
Therefore, taking into account the need to maintain the Millennium Commission's share at 20 per cent. until autumn 1999, we should have had to set the NOF's share initially at 18 per cent. and then at 24 2/3 per cent. from autumn 1999 rather than the 13 1/3 per cent. and 20 per cent. respectively which we are proposing--reducing the existing distributors' percentages to 15.5 per cent. each.
The noble Lord, Lord Skidelsky, said that I told him that the existing distributors would receive less money as a result of the date of 14th October 1997. If I did, I was mistaken. I should have said that they would receive less money earlier on, but the money would have to be made up later on, as the noble Lord, Lord Chorley, rightly commented.
Therefore, it is a question of whether those shadow accounts provide a useful transfer at a sensible time--in other words, after Royal Assent--or whether the money must be obtained from the existing distributors by very much larger percentages at a later date.
For the sake of argument, I shall examine the alternative arrangement proposed in the amendment so that we can truly understand that it is not only unnecessary but is actually damaging. We could remove the subsection and wait until Royal Assent to adjust the percentages. The amounts of money going to the existing distributors and to NOF and NESTA over the life of the licence would be exactly the same. But there would be very severe consequences. In order to meet our manifesto commitment to make available £1 billion for NOF and NESTA by 2001, we should need to reduce drastically the percentages of funds going to existing distributors on Royal Assent. Despite the incredulity of some noble Lords, I insist that that would make planning and commitments extremely difficult for the distributors. They and we rejected that option. The establishment of NESTA's endowment would be delayed and funds would not be available for NOF well into next year. That would completely undermine their ability to deliver the initiatives which have been welcomed so warmly as a result of our consultation.
Therefore, the amendment would have no conceivable benefits and would create considerable problems for the people of Britain who will benefit from the exciting and important work that we are setting in hand.
I must turn now to the issue of retrospective legislation. It is quite true that I gave only one example--the Recreational Charities Act 1958--where your Lordships in their judicial capacity had overturned what had been thought to be the position and that was then corrected retrospectively in 1958. There are many more recent examples of restoring the law to what it was assumed to be. The most recent case is Section 126 of the Criminal Justice and Public Order Act 1994 concerning trade unions in the Prison Service. Another example of providing that preliminary steps such as consultation may be effective even if they occur before Royal Assent is in relation to Section 88 of the Local Government and Housing Act 1989 which is not dissimilar in approach to that adopted in Clause 7(5) of the National Lottery Bill.
There are also examples of benign retrospectivity where it is desirable to do things immediately before Royal Assent for taxation reasons; for example, the date concerning the lower rate of duty provided in the Stamp Duty (Temporary Provisions) Act 1992 was a date before Royal Assent. That provision was indeed introduced in another place by Mr. Francis Maude, who had responsibility for those matters in another place.
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