National Lottery Bill [H.L.]

House of Commons

Session 1997-98
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Arrangement of Clauses (Contents)

National Lottery Bill [H.L.]

EXPLANATORY AND FINANCIAL MEMORANDUM

The Bill provides for the establishment of a panel to assist the Director General of the National Lottery ("the Director General") in selecting the person to run the National Lottery. It confers on the Director General the power to impose financial penalties on the holder of a licence to run the National Lottery, or a licence to promote a lottery as part of the National Lottery, and provides for appeals from the imposition of such a penalty. It provides a new procedure for appealing against the revocation of a licence. It also creates a new good cause, of health, education and the environment, and adjusts the percentage allocations of Lottery funding for the existing good causes accordingly. It allows the Secretary of State, after consultation, to specify initiatives to be funded by the new good cause and establishes a new distributing body, the New Opportunities Fund, to implement these initiatives. It amends the legal framework for distribution, to permit distributors to distribute otherwise than by a grant of money, to solicit applications, delegate decision-making and participate in joint schemes of distribution and it enables the Secretary of State to require distributors to draw up strategic plans. It amends aspects of the legal framework of the National Lottery Charities Board. Finally, it establishes the National Endowment for Science, Technology and the Arts.

PART I

Part I relates to the operation and regulation of the Lottery and the distribution of Lottery funds.

Clause 1 and Schedule 1 provide for the establishment of a Lottery Advisory Panel on Selection to assist the Director General on the selection of the body to run the National Lottery, and confer power on the Secretary of State to give directions to such an Advisory Panel.

Clause 2 confers on the Director General the power to impose on holders of National Lottery licences financial penalties for breaches of licence conditions. Provision is made for the procedure relating to the imposition of a penalty.

Clause 3 provides for an appeal against a decision of the Director General to impose a financial penalty.

Clause 4 provides a new procedure for an appeal against a decision of the Director General to revoke a licence to run the National Lottery or promote a lottery as part of the National Lottery.

Clause 5 establishes a new good cause, of health, education and the environment, and with effect from 14th October 1997 amends certain of the percentage allocations of the existing good causes so that the arts, sport, charities and national heritage causes each receive 16⅔%, millennium projects continue to receive 20% and the new health, education and environment cause receives a 13 1/3% allocation.

Clause 6 and Schedule 2 establish the New Opportunities Fund as a body to distribute Lottery funds for initiatives specified by the Secretary of State under the new good cause. The Secretary of State is given an order-making power to specify such initiatives and a power to give directions to the New Opportunities Fund concerning the initiatives. The provisions require the New Opportunities Fund to keep proper accounts and records.

Clause 7 makes provision supplemental to Clause 6, providing definitions and making provision as to the effect of consultation prior to the enactment of the Bill. Provision is also made for the recoupment of expenses incurred by the Secretary of State in facilitating the establishment of the New Opportunities Fund prior to the enactment of the Bill.

Clause 8 permits Lottery distributing bodies to distribute funds otherwise than by making grants of money; for example in the form of vouchers entitling the holder to specified goods or services.

Clause 9 permits Lottery distributing bodies to solicit applications and provides that in determining whether any decision to distribute money was unlawful, it shall be immaterial that the application was solicited.

Clause 10 enables Lottery distributors to delegate, either internally or externally, decisions relating to grant-making, and confers power on the Secretary of State to give directions to distributors on the use of this power to delegate.

Clause 11 and Schedule 3 enable Lottery distributors to participate in joint schemes for the distribution of grants. The provisions deal with the approval of such schemes and make related supplementary provision.

Clause 12 enables the Secretary of State to require Lottery distributors to produce strategic plans from time to time.

Clause 13 amends certain aspects of the legal framework in which the National Lottery Charities Board may operate. It makes provision with respect to the acquisition and disposal of land, the appointment of staff and the determination of their terms and conditions.

Clause 14 makes provision with respect to the making of regulations and orders.

PART II

Part II provides for the establishment of the National Endowment for Science, Technology and the Arts ("NESTA").

Clause 15 and Schedule 4 establish NESTA as a body corporate and provide for its membership, its power to delegate functions, the tenure of office and remuneration and allowances of its trustees, and its staff, proceedings and status. Schedule 4 also makes provision as to the recoupment of expenses incurred by the Secretary of State in facilitating the establishment of NESTA prior to the enactment of the Bill.

Clause 16 describes the objects of NESTA and the means by which NESTA is to achieve those objects.

Clause 17 sets out NESTA's general duty and powers.

Clause 18 gives the Secretary of State the power to provide NESTA with an endowment by making, within one year of enactment of the Bill, one or more payments to NESTA from those funds held in the National Lottery Distribution Fund ("the NLDF") which are allocated to the new good cause of health, education and the environment. The Secretary of State may also make an order permitting the endowment of NESTA with further sums from the NLDF thereafter.

Clause 19 requires NESTA to seek other resources and, subject to directions from the Secretary of State, requires NESTA to invest its endowment and certain other money through the National Debt Commissioners.

Clause 20 requires NESTA to comply with any directions given to it by the Secretary of State. If NESTA fails to comply with the directions, the Secretary of State may require it to pay an appropriate sum which will be paid into the NLDF.

Clause 21 requires NESTA to make an annual report to the Secretary of State on the exercise of its functions, detailing any directions given to it, and to draw up from time to time a forward plan.

Clause 22 requires NESTA to keep proper accounts and records and prepare a statement of accounts.

Clause 23 provides certain exemptions from taxation in relation to NESTA.

Clause 24 defines certain terms in Part II of the Bill.

PART III

Part III contains supplemental provisions.

Clause 25 and Schedule 5 provide for the repeal of certain enactments.

Clause 26 provides for the short title, interpretation, commencement and extent.

Financial effects of the Bill

No net expenditure in respect of Lottery Advisory Panels on Selection, the New Opportunities Fund or NESTA falls on the Consolidated Fund or the National Loans Fund.

Lottery funds are outside the control total of public expenditure.

The effects of the Bill on total public expenditure are as follows.

- A Lottery Advisory Panel on Selection, established under Clause 1 and Schedule 1, is an advisory non-departmental public body ("NDPB") to be brought into existence for about 18 months from time to time, probably every seven years or so, for the selection of the holder of the licence to run the National Lottery.

Total administration costs are likely to be of the order of £40,000 over the life of each panel. This comprises the costs of part-time temporary dedicated personnel from the Office of the National Lottery ("OFLOT"), accommodation, expenses and remuneration.

The costs form part of the control total of public expenditure and would be met from OFLOT's Voted funds. These funds are reimbursed to the Consolidated Fund from NLDF receipts. There will therefore be no net impact on public expenditure from Advisory Panels.

- Financial penalties may be imposed under Clause 2 on a Lottery licence holder by the Director General for a breach of the licence conditions. This is likely to be a rare occurrence. The level of the penalty would have to be reasonable and relate to the gravity of the breach and the loss to the NLDF. The penalty would be paid into the NLDF.

- The New Opportunities Fund established by Clause 6 and Schedule 2, is an executive NDPB and a distributor of Lottery funds.

Any administrative expenses incurred in facilitating the establishment of the New Opportunities Fund prior to enactment of the Bill will be met by the Department for Culture, Media and Sport ("DCMS") from Voted funds, but the Consolidated Fund will be reimbursed from the NLDF. The New Opportunities Fund's on-going expenses will be met from the NLDF and will have no net impact on public expenditure.

- NESTA, established by Clause 15 and Schedule 4, is also an executive NDPB. The Bill permits the allocation to NESTA of money which would otherwise have gone to Lottery distributors.

Any administrative expenses incurred in facilitating the establishment of NESTA prior to enactment of the Bill will be met by DCMS from Voted funds, but the Consolidated Fund will be reimbursed from the NLDF. Thereafter, all of NESTA's expenditure will come from revenue from its endowment and any other outside income it generates.

NESTA's activities will have little net impact on public expenditure. Any spending out of income it receives from private sources will become part of total public spending. Public expenditure effects will therefore depend upon the nature and timing of receipts. It is not possible at present to estimate how much of its income NESTA will derive from non-Lottery sources since this will be dependent on the success of its fund raising efforts.

Subject to the approval of the Secretary of State, NESTA will be able to borrow. Any borrowing would be included in the PSBR. Any expenditure financed by borrowing would be included in the control total of public expenditure.

Any sums paid by NESTA to the Secretary of State in respect of a failure to comply with directions under Clause 20 would be paid into the NLDF.

- Tax exemptions are conferred on NESTA by Clause 23. Establishing NESTA with such exemptions will prevent revenue flowing to the Treasury which would otherwise have done so as a result of NESTA's activities.

The revenue foregone is estimated at £6 million per annum. The main element is corporation tax of £4.4 million on NESTA's investments (principally the Lottery endowment). The scale of other elements, including Inheritance Tax, tax on chargeable gains and stamp duty, depend, among other things, on the success of NESTA in raising income from other sources.

Effects of the Bill on public service manpower

It is expected that any changes in staff in Government departments and their agencies as a result of the Bill will be minimal.

The changes in wider public service manpower, in the NDPBs, are as follows.

A Lottery Advisory Panel on Selection, established under Clause 1 and Schedule 1, will have only a minimal effect on manpower, and only for a limited period of about 18 months, probably every seven years or so, for the selection of a new Lottery operator. Administrative support will be provided by OFLOT.

The best estimate for the New Opportunities Fund, established by Clause 6 and Schedule 2, is that it might employ up to 30 public sector staff once it is formally established.

The best estimate for NESTA, established by Clause 15 and Schedule 4, is that it might employ up to 30 public sector staff once it is formally established.

© Parliamentary copyright 1998
Prepared 17 March 1998

National Lottery Bill [H.L.]

	EXPLANATORY AND FINANCIAL MEMORANDUM
	The Bill provides for the establishment of a panel to assist the Director General of the National Lottery ("the Director General") in selecting the person to run the National Lottery. It confers on the Director General the power to impose financial penalties on the holder of a licence to run the National Lottery, or a licence to promote a lottery as part of the National Lottery, and provides for appeals from the imposition of such a penalty. It provides a new procedure for appealing against the revocation of a licence. It also creates a new good cause, of health, education and the environment, and adjusts the percentage allocations of Lottery funding for the existing good causes accordingly. It allows the Secretary of State, after consultation, to specify initiatives to be funded by the new good cause and establishes a new distributing body, the New Opportunities Fund, to implement these initiatives. It amends the legal framework for distribution, to permit distributors to distribute otherwise than by a grant of money, to solicit applications, delegate decision-making and participate in joint schemes of distribution and it enables the Secretary of State to require distributors to draw up strategic plans. It amends aspects of the legal framework of the National Lottery Charities Board. Finally, it establishes the National Endowment for Science, Technology and the Arts.
	PART I
	Part I relates to the operation and regulation of the Lottery and the distribution of Lottery funds.
	Clause 1 and Schedule 1 provide for the establishment of a Lottery Advisory Panel on Selection to assist the Director General on the selection of the body to run the National Lottery, and confer power on the Secretary of State to give directions to such an Advisory Panel.
	Clause 2 confers on the Director General the power to impose on holders of National Lottery licences financial penalties for breaches of licence conditions. Provision is made for the procedure relating to the imposition of a penalty.
	Clause 3 provides for an appeal against a decision of the Director General to impose a financial penalty.
	Clause 4 provides a new procedure for an appeal against a decision of the Director General to revoke a licence to run the National Lottery or promote a lottery as part of the National Lottery.
	Clause 5 establishes a new good cause, of health, education and the environment, and with effect from 14th October 1997 amends certain of the percentage allocations of the existing good causes so that the arts, sport, charities and national heritage causes each receive 16⅔%, millennium projects continue to receive 20% and the new health, education and environment cause receives a 13 1/3% allocation.
	Clause 6 and Schedule 2 establish the New Opportunities Fund as a body to distribute Lottery funds for initiatives specified by the Secretary of State under the new good cause. The Secretary of State is given an order-making power to specify such initiatives and a power to give directions to the New Opportunities Fund concerning the initiatives. The provisions require the New Opportunities Fund to keep proper accounts and records.
	Clause 7 makes provision supplemental to Clause 6, providing definitions and making provision as to the effect of consultation prior to the enactment of the Bill. Provision is also made for the recoupment of expenses incurred by the Secretary of State in facilitating the establishment of the New Opportunities Fund prior to the enactment of the Bill.
	Clause 8 permits Lottery distributing bodies to distribute funds otherwise than by making grants of money; for example in the form of vouchers entitling the holder to specified goods or services.
	Clause 9 permits Lottery distributing bodies to solicit applications and provides that in determining whether any decision to distribute money was unlawful, it shall be immaterial that the application was solicited.
	Clause 10 enables Lottery distributors to delegate, either internally or externally, decisions relating to grant-making, and confers power on the Secretary of State to give directions to distributors on the use of this power to delegate.
	Clause 11 and Schedule 3 enable Lottery distributors to participate in joint schemes for the distribution of grants. The provisions deal with the approval of such schemes and make related supplementary provision.
	Clause 12 enables the Secretary of State to require Lottery distributors to produce strategic plans from time to time.
	Clause 13 amends certain aspects of the legal framework in which the National Lottery Charities Board may operate. It makes provision with respect to the acquisition and disposal of land, the appointment of staff and the determination of their terms and conditions.
	Clause 14 makes provision with respect to the making of regulations and orders.
	PART II
	Part II provides for the establishment of the National Endowment for Science, Technology and the Arts ("NESTA").
	Clause 15 and Schedule 4 establish NESTA as a body corporate and provide for its membership, its power to delegate functions, the tenure of office and remuneration and allowances of its trustees, and its staff, proceedings and status. Schedule 4 also makes provision as to the recoupment of expenses incurred by the Secretary of State in facilitating the establishment of NESTA prior to the enactment of the Bill.
	Clause 16 describes the objects of NESTA and the means by which NESTA is to achieve those objects.
	Clause 17 sets out NESTA's general duty and powers.
	Clause 18 gives the Secretary of State the power to provide NESTA with an endowment by making, within one year of enactment of the Bill, one or more payments to NESTA from those funds held in the National Lottery Distribution Fund ("the NLDF") which are allocated to the new good cause of health, education and the environment. The Secretary of State may also make an order permitting the endowment of NESTA with further sums from the NLDF thereafter.
	Clause 19 requires NESTA to seek other resources and, subject to directions from the Secretary of State, requires NESTA to invest its endowment and certain other money through the National Debt Commissioners.
	Clause 20 requires NESTA to comply with any directions given to it by the Secretary of State. If NESTA fails to comply with the directions, the Secretary of State may require it to pay an appropriate sum which will be paid into the NLDF.
	Clause 21 requires NESTA to make an annual report to the Secretary of State on the exercise of its functions, detailing any directions given to it, and to draw up from time to time a forward plan.
	Clause 22 requires NESTA to keep proper accounts and records and prepare a statement of accounts.
	Clause 23 provides certain exemptions from taxation in relation to NESTA.
	Clause 24 defines certain terms in Part II of the Bill.
	PART III
	Part III contains supplemental provisions.
	Clause 25 and Schedule 5 provide for the repeal of certain enactments.
	Clause 26 provides for the short title, interpretation, commencement and extent.
	Financial effects of the Bill
	No net expenditure in respect of Lottery Advisory Panels on Selection, the New Opportunities Fund or NESTA falls on the Consolidated Fund or the National Loans Fund.
	Lottery funds are outside the control total of public expenditure.
	The effects of the Bill on total public expenditure are as follows.
	- A Lottery Advisory Panel on Selection, established under Clause 1 and Schedule 1, is an advisory non-departmental public body ("NDPB") to be brought into existence for about 18 months from time to time, probably every seven years or so, for the selection of the holder of the licence to run the National Lottery.
	Total administration costs are likely to be of the order of £40,000 over the life of each panel. This comprises the costs of part-time temporary dedicated personnel from the Office of the National Lottery ("OFLOT"), accommodation, expenses and remuneration.
	The costs form part of the control total of public expenditure and would be met from OFLOT's Voted funds. These funds are reimbursed to the Consolidated Fund from NLDF receipts. There will therefore be no net impact on public expenditure from Advisory Panels.
	- Financial penalties may be imposed under Clause 2 on a Lottery licence holder by the Director General for a breach of the licence conditions. This is likely to be a rare occurrence. The level of the penalty would have to be reasonable and relate to the gravity of the breach and the loss to the NLDF. The penalty would be paid into the NLDF.
	- The New Opportunities Fund established by Clause 6 and Schedule 2, is an executive NDPB and a distributor of Lottery funds.
	Any administrative expenses incurred in facilitating the establishment of the New Opportunities Fund prior to enactment of the Bill will be met by the Department for Culture, Media and Sport ("DCMS") from Voted funds, but the Consolidated Fund will be reimbursed from the NLDF. The New Opportunities Fund's on-going expenses will be met from the NLDF and will have no net impact on public expenditure.
	- NESTA, established by Clause 15 and Schedule 4, is also an executive NDPB. The Bill permits the allocation to NESTA of money which would otherwise have gone to Lottery distributors.
	Any administrative expenses incurred in facilitating the establishment of NESTA prior to enactment of the Bill will be met by DCMS from Voted funds, but the Consolidated Fund will be reimbursed from the NLDF. Thereafter, all of NESTA's expenditure will come from revenue from its endowment and any other outside income it generates.
	NESTA's activities will have little net impact on public expenditure. Any spending out of income it receives from private sources will become part of total public spending. Public expenditure effects will therefore depend upon the nature and timing of receipts. It is not possible at present to estimate how much of its income NESTA will derive from non-Lottery sources since this will be dependent on the success of its fund raising efforts.
	Subject to the approval of the Secretary of State, NESTA will be able to borrow. Any borrowing would be included in the PSBR. Any expenditure financed by borrowing would be included in the control total of public expenditure.
	Any sums paid by NESTA to the Secretary of State in respect of a failure to comply with directions under Clause 20 would be paid into the NLDF.
	- Tax exemptions are conferred on NESTA by Clause 23. Establishing NESTA with such exemptions will prevent revenue flowing to the Treasury which would otherwise have done so as a result of NESTA's activities.
	The revenue foregone is estimated at £6 million per annum. The main element is corporation tax of £4.4 million on NESTA's investments (principally the Lottery endowment). The scale of other elements, including Inheritance Tax, tax on chargeable gains and stamp duty, depend, among other things, on the success of NESTA in raising income from other sources.
	Effects of the Bill on public service manpower
	It is expected that any changes in staff in Government departments and their agencies as a result of the Bill will be minimal.
	The changes in wider public service manpower, in the NDPBs, are as follows.
	A Lottery Advisory Panel on Selection, established under Clause 1 and Schedule 1, will have only a minimal effect on manpower, and only for a limited period of about 18 months, probably every seven years or so, for the selection of a new Lottery operator. Administrative support will be provided by OFLOT.
	The best estimate for the New Opportunities Fund, established by Clause 6 and Schedule 2, is that it might employ up to 30 public sector staff once it is formally established.
	The best estimate for NESTA, established by Clause 15 and Schedule 4, is that it might employ up to 30 public sector staff once it is formally established.