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House of Commons

Friday 1 March 2002

The House met at half-past Nine o'clock


[Mr. Speaker in the Chair]



Achievements of the National Lottery

Motion made, and Question proposed, That this House do now adjourn.—[Mrs. McGuire.]

9.33 am

The Secretary of State for Culture, Media and Sport (Tessa Jowell): I welcome the opportunity to debate the achievements of the national lottery and to take account of the Select Committee report on the operation of the national lottery published in March last year.

The national lottery is all about dreams. Some are glamorous, such as the new car, the yacht or the exotic holiday, and some are personal, such as support for the family or the funding of a career change. Other dreams are essential for the health and vitality of the community, such as the new arts centre, the new pavilion or the restoration of a local landmark. Whether people are spending winnings or working out what the good causes can do for them, the lottery relies on firing the imagination of millions of people up and down the country and inspiring their ability to dream. It is vital that everyone involved in the lottery remembers that and does as much as possible to fan, not extinguish, that fire of enthusiasm.

Every week, six out of 10 of us spend at least £1 on a lottery ticket. Since its launch in 1994, the lottery has become part of our national life and a major force in improving the quality of life. It is fair to recognise the amount of cross-party credit that is due for its success. The key challenge is to maintain public confidence. Although the Government and the Opposition have taken different approaches to the national lottery, a strong body of consensus underpins it, and that consensus is cause for public confidence.

The lottery has surpassed all expectations. It has become one of the most successful lotteries in the world. More than £12 billion has been raised for good causes and more than 100,000 awards have been made. The success is evident in the wide-ranging and varied projects that it has funded from the national flagship projects such as Tate Modern and the Eden centre, to the funding of sports events for people with disabilities, to new dance studies and the refurbishment of football pitches.

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In many ways, the lottery is succeeding in meeting the needs of our diverse lives and interests. Instead of hanging around on the streets after school, children can pursue worthwhile interests and activities in the after-school clubs that are funded by the lottery or take advantage of the new sports co-ordinators to develop their interest in sport. People of all ages can improve their health by visiting one of the lottery-funded healthy living centres. Anyone can enjoy the parks that have been restored with funding from the heritage lottery fund.

However, the landscape is changing as our lifestyles are changing. Things are now possible that would have once seemed out of reach. We can be proud of the lottery's success. Sales of games have totalled nearly £36 billion. It is worth considering why the lottery has been so successful. It caught the public's imagination early on with high-profile big cash winners. That caused the public to take the national lottery to their heart; they believed that they really could be winners. Our system is well regulated. It strikes a good balance between allowing fun games at the soft end of gambling while ensuring that young people and the vulnerable are protected. People from all parts of our society enjoy playing it. For those reasons, the lottery has become part of our national life. It is good fun for good causes.

We have an efficient operator in place, but we have no grounds for complacency. We need constantly to consider ways to improve and therefore strengthen our national lottery. The market is changing, as is the technology available to deliver the lottery, which is why this is the right time to review its structure and regulation to ensure that we continue to achieve the maximum return for good causes. I welcome the opportunity to set out some of the matters dealt with in the review and the reforms that we need to address.

When we came to power in 1997, the Government wanted to make the lottery responsive to the needs of the whole population, acting and responding to criticisms that lottery funding was too often for the articulate few rather than the silent many. Large, well-resourced organisations were adept and experienced at securing funding, but the fruits of the lottery were passing entire communities by in too many parts of the country. People feel strongly that lottery money is their money and that it should support the things that they think are important, and we agree with them. So we delivered reform by making the lottery more accessible and responsive to people's needs.

We introduced a new good cause and created a new distributor—the new opportunities fund—that in turn has funded new initiatives in the areas that concern people most: health, education and the environment. We also changed the distributors' powers and responsibilities so that they could become more strategic and pro-active and work together better, made the application system less bureaucratic and more user-friendly, and pushed more decisions closer to the grass roots. We encouraged distributors to ensure that all parts of the UK have access to funding. We also gave them scope for reducing social and economic deprivation, highlighting the need for much greater emphasis on people, activities and access.

Those changes have yielded important success in the way in which money is awarded. The number of small grants—under £5,000—to community groups has more than trebled since 1998. Some 41 per cent. of all grants have gone to the 50 most deprived local authorities. The percentage of revenue funding awards has increased from

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9 per cent. to 31 per cent., and more money is being invested in people and activities, rather than just buildings.

Lottery distributors have made significant advances in simplifying the application process, especially for smaller grants. They have launched a national telephone helpline to point callers to the right distributor for their project, and have undertaken to overhaul application forms. The awards for all programme, which involves a single distributor bringing together many other distributors, has been a tremendous success and has made lottery funding accessible to community groups throughout the country. UK-wide, it has awarded nearly £123 million to some 38,000 projects. The programme is also making money available for projects to celebrate the golden jubilee. We are encouraged by the enthusiastic take-up of that opportunity by extraordinary people throughout the country, who want to do extraordinary things for the jubilee.

Area-based schemes such as the community fund's Brass for Barnsley, which distributed £3 million to local voluntary and community organisations, have proved successful in distributing lottery money where it is needed most. I am sure that hon. Members can point to ways in which the national lottery has helped to regenerate and revitalise urban and rural areas in their own constituencies.

The Millennium Commission, which I chair, has injected more than £300 million into regeneration projects in places such as Belfast, Bristol, Coventry, London, Leeds, Manchester and Sheffield.

Mr. Gareth R. Thomas (Harrow, West): The Millennium Commission awarded some £46 million to help stimulate construction of the millennium stadium, in Cardiff. Will my right hon. Friend acknowledge on this St. David's day that the value of that award will be even more apparent when we beat Italy tomorrow and the renaissance in Welsh rugby begins?

Tessa Jowell: I entirely agree with my hon. Friend's welcome intervention. The millennium stadium will give many causes for celebration, not least as an example of the investment of lottery money.

Many other large-scale city developments have acted as a catalyst for further regeneration, triggering investment by commercial companies and thereby creating an even greater impact. Indeed, the Millennium Commission's programme of lottery-funded projects has generated some 7,000 jobs. However, as I said, maintaining public confidence is crucial. The lottery has been a success in so many ways, but there are no grounds for complacency. Public confidence in the lottery's integrity is key to its continuing success. Against that background, we must face some crucial challenges if we are to maintain the critical bond of trust between the public and the lottery.

I want to run through the key headlines for the programme of reform that, as I announced, I intend to initiate. The high level of funds in the national lottery distribution fund is rightly a cause for public concern. People ask why good applications are rejected as money appears to languish unspent, and some accuse Government or distributors of seeking to capitalise on the interest raised.

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I want to take a moment or two to debunk a few myths. While lottery money continues to flow to the good causes, balances will never stand at zero, and nor should they. Lottery income is by its nature uncertain and distributors are right to hold on to a certain level of funds to cope with the inevitable fluctuations. They have commitments to the causes that they fund and cannot overdraw, but money held in the distribution fund is largely committed to projects. Awards have already been made and distributors are waiting for applicants to draw down the available funds. In fact, total commitments by all distributors stand at £3.82 billion, which is £290 million more than is held in the NLDF account. In one sense, therefore, they have not underspent at all. In reality, they have overcommitted, and interest received from the balance goes straight to the good causes.

Having said all that, I do not consider it right for money to sit needlessly unspent while some parts of the country lose out on lottery funding. A balance must be struck between managing money prudently and putting it to good use now, when it is needed. Action can be taken to speed up the flow of lottery funds. The steps that I am discussing with distributors include setting deadlines by which applicants must draw down funds, providing funds to help them manage their projects and get them under way more quickly, and committing funds further ahead to prevent them from silting up.

No one expects lottery balances to reduce dramatically by tomorrow, but I made it clear in firm terms to the distributors whom I met that excessive prudence makes no sense. They agree, and they accept that reducing the balance is an important priority. They have made absolutely clear their responsibility for achieving that aim, and they expect balances to halve by March 2004. I shall hold them to account in that regard.

On licence renewal, although the new Camelot licence began only a few weeks ago, the time is right to review the lottery's licensing and regulatory framework. I aim to publish a consultation document before the House rises for the summer recess to ensure effective competition for the next licence.

On the size of projects, as I said, since Government reforms in the 1998 legislation, a change of emphasis has been made from capital to revenue projects. I welcome that, because as a result more money is getting out to communities for smaller, people-based projects. However, the people to whom I have spoken have made it clear that there is still value in both large capital projects and small, more community-based ones. Some of the more ambitious capital projects have provided communities with facilities that they could never have dreamed of before the lottery intervened.

The important thing is that those projects, large or small, are seen to deliver value for money and to offer improvements to people's lives. I have asked the distributors to evaluate carefully the results of the projects that they fund, so that the lessons learned can be applied to subsequent funding policy.

Lottery funding should not and will not substitute for Government spending. The point is not what the Government could fund, but what they will fund. I accept that there is a fine line to be trodden here, and it needs to be navigated in a way that maintains public trust and confidence. The Government have never been able, and indeed have never aspired, to fund everything from the

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Exchequer. We fund cancer equipment, for example, but the demands are infinite, and so much more can be provided for local communities with the help of the voluntary sector, as has always been the case. Much more has been made possible by the introduction of lottery funding, and the lottery can do things that the Government cannot. I hope that we will begin to define those distinctions a bit more sharply in the review that I have announced.

The lottery is a fund for innovation, and lottery money should be available to take risks. We like to focus on the lottery's big successes, but nobody pretends that every last penny has been spent as wisely as it should have been. I hope that we can create a sense that lottery funding is venture capital for community enrichment. We have to accept that such a role means that distributors must be willing to take risks.

A further problem, which is often identified as an obstacle to the most effective operation of the lottery, is the overly bureaucratic distinction between the role of the different distributors, so a more joined-up lottery must be another objective. The lottery was designed to build on the experience of existing funders such as the Sports and Arts Councils, as well as creating the new ones, bringing us to the present total of 15 distributors, UK-wide. I am sure that there is value in such a diverse funding system, which builds on and develops particular areas of expertise, but there is also a need to ensure good co-ordination between distributors.

It is frustrating when people tell me that good projects have come to nothing because they have fallen between the remits of various distributors or they involve two or more distributors. It is vital that distributors work together more effectively when considering applications or providing advice to potential applicants. The awards for all programme, to which I referred to earlier, has been an encouraging example of such co-operation, but we need to be able to do more.

Another key challenge is to ensure local equity in the distribution of money. The lottery has always been open to all parts of the country and to all sections of society. The problem is that some areas, and some of the groups that live and work in them, are much more adept than others at identifying opportunities and applying for funding. Certainly, there seems to be a small-town problem, and we may well hear examples of that in the contributions of hon. Members this morning. There are areas that do not have an established infrastructure and funding network, and there is a risk that they will lose out on their fair share of lottery funding.

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