| Previous Section | Index | Home Page |
28 Feb 2003 : Column 530—continued
12.56 pm
Mr. Anthony D. Wright (Great Yarmouth): I congratulate the hon. Member for Mid-Norfolk (Mr. Simpson) on securing a high place in the ballot and introducing the Bill. My comments will be very brief, first because he has already adequately covered all the points, and secondly because there are three or four other private Members' Bills to be debated.
It is hard not to feel a slight sense of déjà vu as we discuss this Bill, because we debated a similar Bill promoted by my hon. Friend the Member for Norwich, North (Dr. Gibson) two year ago. As we all know, that Bill eventually failed because of the general election, but we hope that the same fate does not await the Bill before us today.
The fact that we are again assembled here today to debate a Bill whose main aim is to allow lottery distributors to fund endowments is a remarkable testament to the degree of cross-party support for the idea, because it was a Labour Member who introduced the private Member's Bill in the last Parliament, and the Bill that we are now debating was introduced by a Conservative Member. If I can be a little parochial for a moment, I might add that it is also a testament to the unity of the hon. Members representing the county of Norfolk, because they have been the driving force behind this legislation.
I pay tribute to those who support the Bill, but I must also congratulate the Eastern Daily Press on its "We Care" appeal. It was the EDP that originally drew
attention to the anomaly in the National Lottery etc. Act 1993 that the Bill seeks to address. I know that the appeal's director, Mrs. Paddy Seligman, has worked hard to raise funds, and I add my congratulations and thanks not only to her but to Peter Franzen, the editor, and James Ruddy, as well as to the hon. Member for Mid-Norfolk.I understand that the Department for Culture, Media and Sport and the Minister for Sport, who is here today, also support the Bill, so we hope that in due course it will make it on to the statute book. The purpose of the Bill is expressly to permit all lottery distributors to distribute lottery moneys by funding endowments, including permanent endowments—both establishing endowments and contributing to endowments already in existence.
When we debated this matter in 2001, there was some discussion about whether it was a good idea to make the change. It was pointed out that granting an endowment would inevitably tie up a relatively large amount of capital, so it might be better for the money to be distributed to more recipients in the short term. It was further argued that the current low returns on endowments were another reason not to make the change. Although I appreciate those arguments, I do not agree with them. The Eastern Daily Press "We Care" appeal provides a perfect case study of why the proposed change should be made.
The amount raised by the appeal stands at £650,000, which is a magnificent effort. All the income produced from investing that sum goes in awards to carers throughout Norfolk. I was pleased to learn that, as the capital is invested for safe income rather than capital growth, the rate of return has not been badly affected by recent falls in the stock market. However, the "We Care" appeal target is £1 million because such an investment would provide a sufficient return to allow the organisers to deal adequately with the requests for assistance that they receive from carers throughout Norfolk. I am told that they are not always able to grant the full amount requested, even in the most deserving cases, because they do not have enough funds. Although they have demonstrated great persistence, determination and professionalism to raise £650,000, the law does not allow them to apply to the lottery for assistance to reach the £1 million target simply because the fund is constituted as an endowment.
It seems wrong in principle that those who are in charge of the various lottery distributors, who discharge the difficult duty of deciding which groups should benefit from lottery funds, should have their hands tied by not being allowed to make grants to endowments. It may be that the present low rates of return on investments and the long-term tying up of capital militate against the funding of endowments in some cases, but surely we should trust those who have been empowered to make such decisions and allow them the flexibility to consider the widest range of possible applicants for the widest range of benefit to the community.
In any case, there is another thing in favour of funding endowments, as I told the Department for Culture, Media and Sport when it invited responses to its Green Paper, "Review of Lottery Funding". Put simply, the long-term and stable nature of the funds that an endowment provides is desirable. No Government have stressed the value of long-term economic stability, nor
done as much to bring it about, as this Government. So if we can give the lottery fund distributors the freedom to encourage that outcome for those who receive their grants, we should do so.I understand that there is a difference between today's Bill and the Bill promoted by my hon. Friend the Member for Norwich, North in 2001. This Bill is more widely drawn and specifically allows all the lottery distributing bodies to fund endowments. The purpose of the previous Bill was to allow the National Lottery Charities Board to fund endowments, which, at the moment, it is specifically not allowed to do. The situation for the other lottery funding boards is unclear but would be clarified by the Bill. A welcome effect of that would be to include not only charities but the range of voluntary groups as possible recipients of lottery endowment funding.
I know from my constituency how deeply ingrained the culture of volunteering is in our society. Last year, I held a reception for representatives of voluntary groups in the borough and was shocked to find that in my constituency of 90,000 people there are no fewer than 350 charitable and voluntary groups. I am hopeful that, if the Bill is passed, some of them will be successful in applying for lottery endowment funds. So I hope that it proceeds with the wholehearted support of the House.
1.3 pm
Mr. Malcolm Moss (North-East Cambridgeshire): I congratulate my hon. Friend the Member for Mid-Norfolk (Mr. Simpson) on his success in coming high in the ballot for private Members' Bills and on taking the opportunity to reintroduce a Bill, suitably amended, that secured widespread support when first introduced by the hon. Member for Norwich, North (Dr. Gibson) two years ago.
The original Bill focused on the anomaly in the National Lottery etc. Act 1993 which prevented the National Lottery Charities Board from distributing funds to local charities in the form of endowments. A particular charity was mentioned at that time and the change was proposed in a campaign run by the Eastern Daily Press, in conjunction with the hon. Member for Norwich, North, known as the "We Care" appeal 2000. The aim was to raise £1 million to establish an endowment fund for unpaid carers in Norfolk. In my hon. Friend's eloquent speech, he re-emphasised the importance of funding carers in his county. Not only is that vital to him and his constituents, but it serves as a timely reminder of how important carers are in our communities throughout the country.
When the original Bill was debated, although there was general support for it, concern was expressed on all sides about its rather narrow and prescriptive proposals, linked as they were to only one of the seven lottery fund distributors—the National Lottery Charities Board. As my hon. Friend the Member for Ryedale (Mr. Greenway) said at the time:
- "The question for us is whether the proposed change is desirable, whether it would improve the working of the NLCB and provide greater equity of opportunity to obtain grants from the board, or whether it would have adverse consequences for the work of the board or the operation of the lottery funding bodies."—[Official Report, 23 March 2001; Vol. 365, c. 594.]
These problems have, in our view, been properly and wisely addressed in the amended Bill of my hon. Friend the Member for Mid-Norfolk. It adds to the powers of distributing bodies by including the distribution of money for the purpose of establishing, or contributing to, endowments in each appropriate section of the National Lottery etc. Act 1993: sections 22, 25, 25B, 38, 41, 43 and 44. My hon. Friend's Bill now gives each and every distributor of lottery funds the option of contributing either to the establishment of a new endowment, or to an existing one.
The previous debate also cited the endowment funds of the National Endowment for Science, Technology and the Arts as a precedent already established by the Department for Culture, Media and Sport, and as a template for possible national lottery endowment funds to follow, given the similarity between NESTA and various registered charities. Not only was the method of funding by endowment at that time praised; the freedom and continuity afforded to NESTA trustees, without undue interference from Government, was noted as both preferable and positive when targeting particular groups in need of support.
As my hon. Friend the Member for Mid-Norfolk has pointed out today, however, one of the downsides to the endowment route is the variation in interest rates. Only a few weeks ago, the Minister and I confronted each other, in a statutory instrument Committee, on this very point. NESTA, in receipt of an original endowment, found that the income that it was anticipating—and was presumably spending—had decreased because of lower interest rates. NESTA appealed to the Government and to the Minister's Department for additional capital moneys to put into the endowment fund. So a real problem has raised its head in respect of NESTA, which, at the time, was described as a useful template for others to follow and to adapt.
Another potentially detrimental aspect of the Bill's proposed amendments is that in funding endowments, less money would be readily available for projects in need of immediate funding. This is due, of course, to the large sums needed to initiate an endowment fund. Potentially, that would deny projects immediate funding in the short term. However, the benefits of establishing an endowment fund that can provide funding for an unfixed and prolonged period may prove more advantageous and beneficial in the long run.
As I understand it, the legal position for an endowment is that the money is conferred upon that endowment in perpetuity. Indeed, the Bill's amendment to section 44 of the 1993 Act specifically refers to "permanent endowment". Of course, that has the considerable advantage for the recipient bodies of guaranteed continuity of income, and overcomes the problems faced by many bodies currently in receipt of lottery funds, including charities, when their short-term funding—usually of three to five years—comes to an end. But what happens to endowed funds if the recipient body ceases to exist, for whatever reason? Does existing
legislation allow sufficient control to avoid funds falling into the wrong hands or being misappropriated in any way? Who would have the ultimate responsibility? Would it be the recipient charity controlling the endowment, or the lottery distributing body that countenanced the funding to the endowment in the first place?This Bill highlights an anomaly in the original National Lottery etc. Act which denied the funding of endowments by omitting it from the defined expenditure of the various funding distribution boards. No reason has been specified for denying funding of, or contribution to, endowment funds. Since the original Act, the NESTA fund has provided a framework, and precedents, for the establishment of endowments in all areas of national lottery funding.
As I have said, the short-term effects of a change may be detrimental in denying money to organisations that require immediate funding, as the cash will be directed into the establishment of an endowment fund. However, by allowing the funding of endowments, the long-term benefits include prolonged and sustained funding to worthwhile projects.
On this side of the House, we will need reassurance on the technical issues that the Bill raises. However, we are confident that those can be teased out in Committee. The lottery has been a major success since its introduction by the Government of the former Member for Huntingdon. Nevertheless, it is in need of reform to meet changing circumstances. We believe that the Bill introduces welcome—although overdue—reform. We intend to give it a fair wind on this, its Second Reading.
| Next Section
| Index | Home Page |