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Chris Bryant (Rhondda) (Lab): I should like to try and push my hon. Friend the Minister in a different direction. Will he consider abandoning the idea of additionality? It is nonsense and a complete figment of the imagination. Additionality does not exist except as a way of saying that lottery money can go only to projects that are not getting money already from some other source. In the early years of the lottery, former mining constituencies such as mine found it difficult to get money for arts or sports projects, as they got only a quarter of the funding received by other areas, such as Henley or Bromsgrove. Bringing the priorities of lottery funding more in line with the views of constituents such as mine has been a significant and welcome change.

Mr. Caborn: There is some truth in what my hon. Friend says, but I repeat that these matters were part of the wide consultation held in 2002. Further consultation has been held since, and it was accepted that additionality was an important principle that should be embodied in future legislation. The Government have a responsibility to respond to that and to manage additionality in the best possible way. I agree with my hon. Friend to the extent that the word "additionality" presents problems because it can be interpreted in a variety of ways—[Interruption.] I hear giggles from Opposition Front-Bench Members, but that difficulty also existed when the Conservative Government were in power.

Another difficulty is that the principle of additionality has prevented the lottery from being as holistic in its approach as it should have been. We are trying to address that problem. I am not saying that projects can always turn to the Big Lottery Fund for money, but they will be able to seek additional funds from other sources, as long as they stay within the terms of the Bill, and give advice to other organisations. That shows that we are trying to adopt a joined-up approach to this problem. We believe that there will be benefits in terms of added value, and that results from the money that is invested will be improved. We want to move the lottery on, with the support of all those who buy tickets every week, and of the good causes that benefit.

Robert Key: Will the Minister give way?

Mr. Caborn: I will, but this is the last time, as I have been speaking for more than 30 minutes already.

Robert Key: I am grateful to the Minister, and want to help him. The most sensible thing that he has said is that the lottery should move on. I was the Minister responsible for taking the original legislation through Parliament, and I remind him that the Labour Opposition of the day fought against additionality mainly because they believed that it would reduce the takings from ticket sales. We agreed, but that is why so many of the Minister's predecessors—notably Lord Pendry—fought so valiantly against the principle of
 
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additionality. Experience may have caused minds to be changed, but we must not forget what motivated Labour Members at the time. In those days, all the available evidence—primarily from the Republic of Ireland—suggested that acceding to additionality would cut the number of tickets sold. We have moved on since then, and we must not impugn each other's honesty on this matter.

Mr. Caborn: I disagree with the hon. Gentleman, although my colleagues may well have argued in the way that he describes. Let me offer him an example of how lottery money is used that runs counter to what he has just said. School sports co-ordinators are an integral part of the school sports partnerships, of which there are now 3,000. Under that scheme, teachers are able to devote two or three days a week to that role, and originally they were funded out of the lottery. However, that funding is now part of the core expenditure of the Department for Education and Skills. The amount of money involved is significant, and it contributes towards delivering the sports programme in schools throughout the country. The investment is sustainable, because it has been taken over by the Department for Education and Skills and, through Sport England, the money thus liberated has been put back into sport.

There are a number of other examples of how the problem identified by the hon. Member for Salisbury (Mr. Key) can be seen to work both ways. In those cases, lottery money has made a significant contribution in the first instance, but has then been taken over by core expenditure in the relevant Department. I have not prepared a balance sheet or conducted a cost-benefit analysis of these matters, but I urge the House to be careful about questioning additionality, as it cuts both ways, in the way that I have set out.

On getting money to causes quickly and balances down, let me say some more about how the Bill responds to concerns in Parliament that lottery money is not always distributed as quickly as it might be. I am hopeful that the advice from the National Audit Office will be followed, but we have made slower progress than I would have liked. I have said that many times at the Dispatch Box and outside the House. We cannot be complacent, because £2.5 billion in reserve is still a great deal of money that should be, at least in part, distributed. We can no longer be relaxed about that until more progress has been made, so the reserve powers are designed to ensure that all distributors act quickly.

Last year, the proposed new powers were misrepresented as an attack on our heritage. That attack has been echoed this afternoon. It was said that our proposals would mean less money for heritage projects. That was simply not true, and I hope that in the discussions and exchanges of letters that we have had since then, we have been able to explain that and put minds at rest. Nothing in the Bill will allow money to be taken from heritage and spent on something else. The Bill has been clarified in that respect.

Mr. Don Foster : If, as the Bill would allow, the Government were to redistribute the interest on balances in a different way from the way it is done
 
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presently, the heritage lottery fund would lose £15.7 million in the current year, as was pointed out earlier. That is a redistribution to other good causes.

Mr. Caborn: What I said was that the allocation laid down in the original Act means that the money goes to the three funds of sports, heritage and the arts. The hon. Gentleman is right in that the interest on the balances—the proceeds on the ticket sales—will be redistributed differently. However, the percentage distribution for heritage, the arts and sport and the Big Lottery Fund will be the same and the terms of reference will remain the same.

Mr. Wayne David (Caerphilly) (Lab): Will my right hon. Friend confirm that at present distributors have a perverse incentive to hold on to funds for as long as possible because they can claim the interest?

Mr. Caborn: Absolutely. The problem is not new. The distribution of regional structural funds from the European Union has experienced the same problem. Funds have not been drawn down, so the EU has started to put claw-back clauses into the agreements. That is an option that we could have taken, but we have not done so.

In 1998, Parliament approved setting up the New Opportunities Fund to distribute lottery funding to a new, additional good cause of education, health and the environment. The new good cause has been successful and popular. It has enabled lottery money to support activities that go beyond what it is right for taxpayers to fund in health, education and the environment. The charitable good cause, administered by the Community Fund, is also enduringly popular and has helped tens of thousands of voluntary and community sector bodies to carry out their important work.

I acknowledge that some have said that a Big Lottery Fund could lead to voluntary and community sector organisations losing out. I can give a categorical assurance that that will not happen. But there will be change. The alternative, of a repackaged Community Fund running a larger version of the so-called open programme for the voluntary sector, is not the way forward.

As a result of the proposals in the Bill, the voluntary and community sectors will have access to the two thirds of the Big Lottery Fund money that is currently going to the New Opportunities Fund. The Big Lottery Fund has given a clear undertaking that 60 to 70 per cent. of its funding will go directly to the sector—a significantly higher proportion than before.

In future, the Government will not—[Interruption.] I wish that the right hon. Member for Maidenhead (Mrs. May) and the hon. Member for Bath (Mr. Foster) would listen to what I am saying. The Government will not decide programmes, budgets or partners, as has been the case with the New Opportunities Fund. Within a framework of broad themes, outcomes and priorities agreed with the Government, the Big Lottery Fund will make all the important decisions about who, what, when and how to fund. Consultation on the emerging themes has shown a good degree of support for them and we will have more to say about that if the Bill is given a Second Reading. I underline that we are responding to what was
 
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said in the consultation, which was that people wanted more power to be given to the distributors, but with a clear direction of broad policy. That is exactly what is contained in the Bill, and it has been misrepresented by some on the Opposition Benches.

I should like to say a few words about providing a lottery for what people want and providing capital for communities. The national lottery is different: it is additional to Government expenditure and decisions are taken independent of Ministers. But it is the people's money and decisions cannot be taken in a vacuum by the great and the good. So it will not be politicians taking decisions, but it will not be the great and the good either. If the lottery is to flourish, lottery distributors must keep in touch with popular aspirations and involve people in taking key decisions. The new powers will allow them to do just that. We need a wholehearted commitment not just to consultation, but to true involvement.

Only last week, I was briefed by the acting chairman of the Big Lottery Fund. I am delighted that 3,000 people have written in response, and 2,000 have actively participated in roadshow events throughout the UK about how the fund will work. I want to see this development continue, because that type of ownership is important to the integrity of the lottery.

We consulted on the broad themes for the fund, which were described as community learning and creating opportunity, promoting community safety and cohesion, and promoting well-being. Within the final version of those themes there will be very lightly prescribed programmes, including the responsive and successful "awards for all" scheme, and there will be others in which priorities are set taking full account of ideas emerging from consultation.

At the same time as we consulted on distribution, we launched a consultation on the award of the lottery operating licence. This was prompted by the rise of new challenges to the lottery, especially other forms of ambient gambling and the less-than-smooth award of the last licence that we all remember in 2000–01. We must ensure that the lottery continues to raise as much money as possible for good causes through effective competition for the licence, and that it retains public confidence.

Drawing on the responses that we received and the work of both the Public Accounts Committee and the Select Committee on Culture, Media and Sport, we have concluded that the current system for awarding a single licence has served the lottery well in the past and should do so again. We are determined to see a successful competition for a single licence. There are improvements that the regulator, the National Lottery Commission, could consider making to the bidding process: switching to two stages; reducing information required from bidders at early stages; and possibly contributing to bid costs. Those underline our confidence that we will have a successful competition for a single licence next time. That is what we want to happen, what is best for those who benefit from lottery funding and what the commission is working to make happen.

My clear and firm presumption is that there will be a single licence awarded by competition, and that there is sufficient market interest to give confidence that that will
 
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happen. However, even though that is what we want to happen, we cannot absolutely guarantee it; it is a market, probably like any other. In the extreme circumstances—I emphasise the word "extreme"—of an unsuccessful competition, unwelcome as that would be, we would be negligent not to have a fallback, a plan B. We therefore propose to introduce a reserve power that would allow the commission to offer for competition a small number of licences to run different parts of the lottery. The commission, however, will have to be clear from the outset how it would define an unsuccessful competition, and it will take into account the uncertainty that the fallback could create among potential bidders.

We also propose that the commission be retained as a regulator of the lottery, but be strengthened by increasing the term for which its chair is appointed and offering the possibility of executive members. I believe that the prize of running this world-class—it is indeed world-class—lottery should attract credible bidders for a single licence to give us a lottery that changes people's lives, and our national life, for the better.

Here is the story so far: more than £17 billion has been raised for good causes. Sales have rallied in 2004, rising by some 5 per cent., which is a clear vote of confidence in the lottery. Balances in the banks have been reduced even further. The Big Lottery Fund has made an excellent start, working within existing powers. So the House can be proud of the story so far—not just one party has been supportive of the lottery, but all parties in the House. Regulation is working well and good cause money is well spent.

The Bill aims to ensure a fair lottery, yielding good prizes and an excellent return for good causes. We believe that the Bill will address weaknesses that have emerged and underpin the many successes. These practical improvements, built on two rounds of consultation, will further develop the lottery and confirm it as the best of its kind, probably in the world, and it will therefore be fit for purpose for another 10 years.

I commend the Bill to the House.

4.22 pm

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