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Philip Davies (Shipley) (Con): Does the Minister agree that far too often awards given from the national lottery money have been given to politically correct organisations that command very little support from the public, while very small organisations such as Fashion Services for Disabled People in my constituency, which command a great deal of public support, find the whole process so bureaucratic that it is very hard to get money? Will he assure me that we will have a system whereby more money goes to smaller groups that command very local public support and less money goes to politically correct groups?

Mr. Caborn: My strong advice to the hon. Gentleman is to think very carefully about which Division Lobby he goes through tonight. If he votes for the reasoned amendment tabled by the official Opposition he will continue to have bureaucracy, but if he votes for the Bill, he will streamline the process, make it effective and get money to the very people he wants to have it. [Interruption.] I am entitled to give the hon. Gentleman, who is a new Member, a bit of advice. I simply say that he should not believe everything his Front Benchers tell him.

Dr. Tony Wright (Cannock Chase) (Lab): People feel that there should be a connection between the amount of money that areas put into the lottery and what they get back from its distribution. There is a feeling that no such strong connection currently exists. I wonder whether my right hon. Friend could ensure that there is a stronger connection when considering the new arrangements.

Mr. Caborn: Again, if my hon. Friend will allow me to progress through the speech, I shall try to answer the question. There is no perfect solution. There will always be imbalances when deciding whether to base distribution on those who pay into the lottery or deprivation factors. However, we have tried to balance that.

Let us consider the Big Lottery Fund. In consultation, there was considerable support for bringing the Community Fund and New Opportunities Fund together. It made no sense in our view to run two separate bodies with such similar remits. Conversely, it makes sense for the Millennium Commission's residual functions, including any remaining balances of funds, to be transferred to the new lottery distributor. One body, one board, one set of overheads instead of three will mean more money for grants and cut costs and bureaucracy. The new body, the Big Lottery Fund, is at the heart of the important progressive reform that I am presenting to the House. The fund will also be the centre of lottery excellence, for example, in improving the assessment of capital projects for viability and developing cutting-edge ways of involving the public in decisions about grants and programmes.

Although the Department has not conducted any polling, we know that polls have shown evidence that the public regard health, education and the environment as important good causes.
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Let me consider the balances. Careful preparatory work and consultation lies behind the provisions that we are introducing to ensure that money gets to the good causes more quickly. The size of the balances that distributors build up has always been a matter of concern in the House and, indeed, outside. We have already made much progress on that. We have developed guidance on managing the balances and we have simplified the financial framework in which they operate. More recently, the National Audit Office recommended more that the Department and distributors could do and we are following that advice vigorously.

All that has helped to get money out more quickly to where it is needed and to reduce the balances by no less than one third.

Robert Key (Salisbury) (Con): The Minister has been generous in giving way but he has reached a crucial point and I hope that we will refer to it in detail in Committee. The point about the Heritage Lottery Fund is vital for cathedrals and ecclesiastical buildings. We all understand the desire to reduce balances and get the money out quickly but that is exactly what should not happen in the case that I mention. For example, the Heritage Lottery Fund estimates that, if it does what the measure suggests, it would reduce the available funds by £15 million in any year. That is almost as much as the entire spending on cathedrals and ecclesiastical buildings in the Church of England. If they are not allowed to have the money ready for the preparatory work—it takes a year to get the application in—heritage buildings could lose out seriously. I hope that we can reconsider the matter.

Mr. Caborn: With all due respect, there is a difference between £15 million and £3.5 billion. There must be balances in any organisation or business. However, the amount of the balances caused concern in and outside the House. I have rightly had to go on television and defend—or probably not defend—the position. We are holding more than £3 billion in reserves. There is a great difference between £3 billion and the few millions that the hon. Gentleman mentions. Any sensible organisation will have a reserve with which it continues to perform its functions efficiently and effectively. That does not mean holding balances of the amount that the distributors have been holding in the recent past.

Mr. Don Foster: Can the Minister tell the House whether he believes that the current balances are acceptable or too high? Will he not acknowledge that it is bizarre that the Government are going ahead when the Public Accounts Committee, which is due to report on the issue, has still not produced its report?

Mr. Caborn: When the Public Accounts Committee produces its report, we will examine that. As I have indicated, the National Audit Office has given us further advice, we have tried to introduce a more managed regime in consultation with the Treasury, and we have reduced the balances by a third already. The NAO has indicated that we need to do a lot more to bring the balances down, and if the PAC, which will no doubt
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reflect on the NAO's report anyway—I cannot see it departing much from that—believes that it is prudent to reduce those balances further, and if that can be managed in a proper way that does not put at risk any of the schemes, it will be in everybody's interest to consider that. That is sensible and common sense.

Mrs. Theresa May (Maidenhead) (Con): Does the Minister accept that when dealing with large-scale heritage projects, which will amount to major expenditure over a number of years, it is prudent and only right that the Heritage Lottery Fund should set aside the money for those projects as soon as it has been committed? Otherwise, it could find that money has been expended and is not available to put forward to those good causes. Does he not accept that that is prudent for the Heritage Lottery Fund?

Mr. Caborn: Absolutely, I do not disagree with that at all—what the hon. Lady has said is sensible. A balance must be struck, however, in relation to having money in the bank that could be used for other purposes and it not being there to cover that type of heritage expenditure. We have given assurances, and I will refer later to the undertakings that we have given to one of the distributors, the Heritage Lottery Fund. We have tried to take on board what we believe is a reasonable request to reduce those balances. We have done that in consultation with the Treasury and given new guidelines, and we have also taken on board what the National Audit Office has said. If the hon. Lady believes that she is the sole custodian of wisdom in this area, and far better than the National Audit Office or anyone else, that is fine, and she will table relevant amendments in Committee. I hope that at the end of the process the Opposition will defend keeping public money in accounts when it could be used for good causes—[Interruption.] It is public money, and if the Opposition are not going to use it, that is fine, and they will defend that at another time. Money has been drawn down and spent on good causes, probably in some Opposition Members' constituencies. There is over £1 billion less waiting in the bank now than there was two and a half years ago, and I do not believe that taking out that £1 billion has done any damage to the heritage lottery distributors or to any scheme in the pipeline. That £1 billion is helping many projects up and down the country.

What does the Bill propose? The Bill will make changes to the framework of the lottery to make it more responsive to people's priorities and to maximise the money going to good causes. Clauses 1 to 5 deal with the regulation of the lottery through the National Lottery Commission. The chairman would no longer change annually and it would be possible to have executive board members, putting the commission in the same position as the companies with which it will be dealing. Clause 6 and schedule 1 deal with amendments to the licensing structure of the lottery. As we announced in November last year, the new system is designed to deliver significantly greater competition to the licensing process with a clear presumption that there will be a single licence.

Clause 7 deals with the apportionment of the national lottery fund. The new good cause will be set up for the Big Lottery Fund covering half of lottery funding. This good
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cause will be very wide so that the Secretary of State will have the power to prescribe expenditure at the highest level. She will also be able to prescribe "devolved expenditure", which will be the responsibility of country committees set up by the Bill and subject to direction from the appropriate devolved administration.

Clause 8 provides for a reserve power to re-allocate excessive unspent balances from one distributor to another in the same good cause. It would be used only as a last resort after consultation and affirmative resolution by Parliament.

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