Draft National Endowment for Science, Technology and the Arts (Increase of Endowment) Order 2003

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Mr. Moss: Thank you, Miss Widdecombe. May I say what a pleasure it is to serve under your chairmanship once again.

I am new to the whole area of Government lottery policy. We are asked to agree to substantial new moneys for an organisation that only two months ago was the subject of a rather damning Select Committee report. That report produced a list of criticisms that the Minister brushed aside this afternoon in his drive to hand out more cash to what must be one of the Government's pet projects.

The Minister alluded to the fact that NESTA had been pressing the Government for additional funds. As far as financing is concerned, it is no secret that NESTA was looking for moneys to make up the shortfall between the predicted £10 million to £12 million from the endowment and the £8 million that it is receiving, and to expand into new areas of service and grant. I have a long list of questions on that financing. If the Minister cannot answer them this afternoon, perhaps he could write to me in the usual way.

Coming to the matter as a new boy in the shadow DCMS team, I wondered why the Government had initially gone down the route of bestowing an endowment on NESTA. Would it not have been easier to agree an income distribution from the lottery fund each year? There could have been a guaranteed amount spread over five years, under contract, and subject to review at the appropriate time. What costs does NESTA incur simply to administer, invest and monitor its investments? Surely there may be unnecessary administration costs in carrying out such financial transactions, which could have been avoided had the means of financing been different from the outset. Where is that endowment invested?

The Minister alluded to the problem with interest rates. Perhaps he could disclose to the Committee where that endowment money is invested. Does NESTA have full autonomy in investment decisions? If it does, it could incur criticism if investments did

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badly—for example, if it decided to invest in shares rather than Government gilts. Who is responsible for the shortfall in income over the last couple of years, which has led to an income of £8 million as opposed to the predicted £10 million to £12 million? Did the DCMS, or the Minister, or even NESTA, foresee any difficulties if income was lower than expected or it fluctuated significantly? If those difficulties were foreseen, what contingencies were identified and put in place at inception?

The grants given by NESTA appear to be one-off grants of one sort or another. At the end of the period in which original pump-priming finance has ended, to whom do individuals who have developed successful ideas turn to progress their scientifically important ideas? To whom do they go for extra funding to make their ideas reality? The Minister said that NESTA had asked for additional money. When did it approach the Government in the first instance for those finances, and when did the Government make the decision to capitulate to the demands of NESTA? It asked for £100 million extra, according to the Minister, and it is getting £95 million. Give or take a few million, it has got what it asked for.

The Minister talked about clarity in the accounts. The Select Committee was critical of that. I return to the question that I put to the Minister during his initial remarks. The Science and Technology Committee report severely criticised NESTA for the way in which it presented its accounts. Recommendation 1 says:

    ''Annual Reports should not read like the production notes in a theatre programme. Creativity should not be at the expense of clarity. We recommend that NESTA in future provide Annual Reports which contain clear and full information on expenditure, including awards made; the targets; and expenditure plans''.

The Committee Clerk kindly gave us a copy of NESTA's outline response. It is not in the public domain, but I understand that we can use it. In it, NESTA says:

    ''Like many Non-Departmental Public Bodies we are governed by the Directions given to us by the Secretary of State for Culture, Media and Sport with the approval of the Treasury and in accordance with Section 23 of the National Lottery Act 1998''.

It goes on to defend its position strongly in its outline response. Therefore, who is responsible if NESTA's accounts do not make any sense to a Select Committee, one of whose prime recommendations is that the body needs to get its act in order? It is no good for it to say that it is just following ministerial guidelines while the Minister says that it is NESTA's fault. The Committee has every right to know who is responsible for the inadequate presentation of accounts.

Mr. Caborn: I would not normally intervene, but the point is important and needs to be cleared up. We are talking about style and substance. I want to make it clear that the summary of accounts in each report has been approved by the Comptroller and Auditor General. The full annual accounts have been similarly approved and are published. We are talking not about the substance, but about the style, and the annual report, as the Select Committee said, should not read like

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    ''the production notes in a theatre programme''.

I accept that fully. I have a copy of the accounts with me, and I agree with the Select Committee. When I got them, even before I saw the Select Committee's observation, I thought that they were not of a style that is necessary for an organisation such as NESTA. However, that is not to doubt accuracy of the accounts. It is only the style that was subject to criticism, criticism with which I agree, and that is why we are now working with NESTA to ensure that a different and more appropriate style is used next time. However, the accounts are accurate and have gone through the normal processes.

The Chairman: Order. I am sure that the Committee is grateful to the Minister for that explanation, but even Ministers' interventions should be brief.

Mr. Moss: We are grateful to the Minister for the clarification, if I can call it that, of his initial criticism of the accounts. We are led to believe that the figures are okay and it is just that we cannot find them, and that the presentation is inadequate, but the substance and accounting practices are spot on. Indeed, as NESTA points out in its response, the National Audit Office cleared the accounts and the Comptroller and Auditor General signed them. However, given that criticism, would it not have been sensible for NESTA or the Government to have foreseen potential problems and ensured that the accounts were published, either as an addendum or at the back of the book? That would have meant that people who were examining the accounts in a normal way could see their way through it. The Government accept that the accounts are inadequate and will need improvement, so I will move on.

Mr. Caborn: I will be brief, Miss Widdecombe but, for the record, I should point out that the accounts are laid out in the annual report that I am presenting to the Committee in the normal format of accounts.

Mr. Moss: I am talking not about the accounts that a company would set out, but about the criticism of the Select Committee, which wants to see where the money has gone. The fact that that is not included is the essence of the criticism.

The Minister clarified the source of the new money as the New Opportunities Fund. It is well known that the Government have come under substantial criticism during the past three to six months about the NOF, and a campaign by several newspapers has highlighted several areas of expenditure that do not normally carry public support. There might be a link between areas of expenditure and people's lack of enthusiasm for buying lottery tickets. It might be that the Government have reached on to the shelf and taken the first bid that they could find in order to get rid of some of the money that is accumulating in the distribution fund. That smacks of an over-hasty, knee-jerk reaction to a pressure that was building up with regard to unspent lottery money.

Dr. Andrew Murrison (Westbury): Does my hon. Friend agree that one use for the funds would be to cancel out the reduction in lottery funding—from £32 million to £17 million—for village halls, which is causing great distress to many rural constituents?

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Mr. Moss: My hon. Friend makes an important point. However, only days ago, a Minister from the Department for the Environment, Food and Rural Affairs said that there had been no reduction in expenditure on village halls. The reality is different; many villages are immensely disappointed that their bids have not been successful.

The Minister spoke of conditions attaching to the drawing-down of the new £95 million in funds. He alluded to some of them, but did not give the Committee any details. It would be helpful if he could place details of those conditions in the Library. He went on to say that the Government wish to see NESTA making a more even geographical distribution of the moneys, and a better balance between the sectors for which NESTA is responsible. NESTA rejected that criticism by the Select Committee. It did not want its activities to be proscribed or to have to meet targets. We know that the Government are fixated on targets. Can the Minister tell us why he thinks that he will get the kind of response that he wants from NESTA, if he is going to tie conditions to extra money that NESTA does not like?

The objectives of NESTA are clear. They are:

    ''helping talented individuals or groups in the fields of science, technology and the arts to realise their potential . . . helping to turn inventions or ideas in these fields into products and services which can be effectively exploited; and . . . contributing to public knowledge and appreciation of science, technology and the arts.''

In each of those objectives, the key words are science, technology and the arts. However, none of those words appears in paragraph 2 of the order, which is about the increase in the endowment. The money is said to be available

    ''for expenditure on or in connection with health, education or the environment''.

Why are those three areas mentioned in the legislation, while there is no reiteration of the key areas of science, technology and the arts? It seems that the Government are again siphoning off lottery money to use in areas of public expenditure that should be taken care of from the public purse. What projects are covered? I can see a connection between science and health and, of course, education. I cannot see how it ties up with the environment. Why only those three—why not every Department? If it is a free-for-all, everybody should be listed. Can the Minister explain why there seems to be a deviation from the key objectives of NESTA by introducing those elements into the legislation?

I return to the sixth report of the Science and Technology Committee, ''National Endowment for Science, Technology and the Arts: A Follow-up'', which was published last October. NESTA has given answers to some of its recommendations, and I am grateful to the Committee Clerk for having provided them today. The report's conclusions were damning, although the Minister brushed them aside this afternoon. Perhaps it would be helpful if I quote from them:

    ''we remain to be convinced that NESTA is making the most of its less than expected income. We are not impressed by NESTA's lackadaisical attitude to figures. We have some concerns about the lack of open competition''—

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3 pm

Committee suspended for a Division in the House.

3.15 pm

On resuming—

 
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