National Lottery Bill


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Mr. Swire: Are those currently serving on the Millennium Commission, the New Opportunities Fund and the Community Fund, whose services will come to an end when the Bill comes into force, still being paid? Will they continue to be paid or will they be compensated for their loss of office?


 
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Mr. Caborn: They will not be paid for loss of office. I am the chairman of the Millennium Commission at the moment and I, rightly, do not get one penny piece. To the best of my knowledge, there has been a 50 per cent. reduction in the number serving on the board in the past three months. None of those concerned were compensated, and they would not expect to be.

These are honourable people who want to serve the public. There may be the odd exceptional circumstance, so that different things happen, which is why the reserve powers are necessary. However, hundreds of people serve on the boards in question, giving valuable service to communities around the country and receiving, probably, little by way of expenses or remuneration, which seldom even begins to compensate them. I do not know what expenses are given to the people with whom I have served on the Millennium Commission, but they spend hours travelling the country to ensure that the commission is seen in the best possible light.

It is unthinkable that we should take the action set out in the amendments against such people. Hon. Members who want to pass measures to prevent them receiving a modicum of financial reward should reflect on what kind of people they are. Their attitude is unacceptable to me, but modern Conservatism obviously thinks differently.

6.15 pm

Mr. Swire: The word I used was “progressive”. As a progressive Conservative, I acknowledge the work of the people in question, but I also want to protect them and one of my amendments would prevent them being hired and fired by the Secretary of State. The Minister says that the powers are reserve powers, but should not people be better protected? Referring back to an earlier amendment, should not two-thirds of the board decide whether a member is performing, rather than the Secretary of State having reserve powers? What kind of signal does the Minister wish to send?

Mr. Caborn: I pray in aid the fact that for eight years, to the best of my knowledge, none of the circumstances that the hon. Gentleman has just described arose in any of the NDPBs that operate on behalf of Government, and I do not believe that they will in future. We are legislating for exceptional circumstances: 99.9 per cent. of such bodies provide a valuable service. There may well be the odd exception, but the vast majority act in the public good. The amendments would change what are clearly standard provisions.

Adam Afriyie: Will the Minister clarify one last point, for my peace of mind? Am I correct in thinking that the Secretary of State could appoint Members of Parliament to the board?

Mr. Caborn: No. I apologise if I misled the hon. Gentleman. The constitution of the Millennium Commission was different in that it had Government and Opposition Members and Members of the other place, including Lord Heseltine. Members of Parliament are not eligible to serve on NDPBs.


 
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In the light of what I have said, I hope that the hon. Gentleman will not press the amendment to a Division.

Mr. Swire: I am happy to accede to the Minister’s wishes in this respect, lest I be reported to somebody and sacked without any right of appeal. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Mr. Swire: I beg to move amendment No. 96, in schedule 2, page 22, leave out lines 9 to 14.

Mr. Foster: Will the hon. Gentleman give way? [Laughter.]

Mr. Swire: On that point, yes.

Mr. Foster: The hon. Gentleman said that he might get reported and sacked. I point out that the hon. Member for South-West Bedfordshire (Andrew Selous) is not in the Room at present, but he and I had a fairly serious chat before he left.

Mr. Swire: I do not know what to make of that. I hope that no one is hoping to compromise the wheels of the proper democratic process of opposition. If the hon. Gentleman is encouraging brevity, I take his point.

Amendment No. 96 is a probing amendment, which would remove the ability of the BLF to deposit money in an interest-bearing account. What does the proposal actually mean? Does it mean the National Lottery Distribution Fund and if not, why not? The amendment is designed to elicit an explanation from the Minister. If the account referred to is not the National Lottery Distribution Fund—having seen the Minister’s civil servants nod in accord, I have a sneaking feeling about the answer—where do the other distributors keep their balances? What is the fund and where is it? The investment power does not seem to be provided to any of the other distribution bodies established by the previous Acts.

Mr. Caborn: The amendment would remove the Big Lottery Fund’s powers to invest money. Paragraph 20 of new schedule 4A to the 1993 Act, which is inserted by schedule 2, allows the funds to invest money in an interest-bearing account. Most of the money that the fund receives will be held in the National Lottery Distribution Fund and invested by the national debt commissioners under section 32 of the 1993 Act. However, non-lottery money received pursuant to the new section 36C of the 1993 Act, which is inserted by clause 14, may be invested under the power in new schedule 4A. The hon. Gentleman has sought elsewhere to limit the BLF’s powers to handle non-lottery funds, but he has not sought to remove those powers entirely. Given that the BLF will have such powers, that makes sense. The BLF is able to invest money received in an interest-bearing account and gain interest on it. I am not sure what advantages there would be in requiring the BLF to keep its funds under the mattress. I hope that, in light of what I have said, the hon. Gentleman will withdraw the amendment.


 
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Mr. Swire: On reflection, Mr. Gale, having heard parts of the Minister’s explanation, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Question put, That this schedule be the Second schedule to the Bill:—

The Committee divided: Ayes 9, Noes 6.

[Division No. 7]

AYES

Bailey, Mr. Adrian
Caborn, Mr. Richard
Engel, Mrs. Natascha
Gwynne, Andrew
Harris, Mr. Tom
Mann, John
Reed, Mr. Jamie
Thornberry, Emily
Ward, Claire

NOES

Afriyie, Adam
Foster, Mr. Don (Bath)
Swinson, Jo
Swire, Mr. Hugo
Turner, Mr. Andrew
Walker, Mr. Charles

Question accordingly disagreed to.

Schedule 2 agreed to.

Clause 14

Functions

Mr. Foster: I beg to move amendment No. 15, in clause 14, page 7, line 4, at end insert—

    ‘(1A)   The value of loans made under subsection (1) must not exceed the value of grants made under subsection (1).’.

The Chairman: With this it will be convenient to discuss the following amendments: No. 35, in clause 14, page 7, line 4, at end insert—

    ‘(1A)   The total value of loans made in any financial year may not exceed more than one quarter of the total monetary value of both loans and grants combined,’.

No. 36, in clause 14, page 7, leave out lines 7 to 29.

No. 99, in clause 14, page 7, leave out lines 10 to 15.

Mr. Foster: The Minister read out his brief the last couple of times he spoke, so for the Committee’s amusement, and because it will be quicker, I shall do the same.

The amendments are designed to amend the legislation governing the Big Lottery Fund’s powers to distribute funds. Amendments Nos. 15 and 35 deal with the BLF’s licence to grant loans. Amendments Nos. 36 and 99 are designed to curb the Secretary of State’s powers over the BLF.

One of the national lottery’s founding principles was that it would support good causes through grant funding. As a result, the lottery distributing bodies have developed a wide range of different grants that meet the voluntary and community sector’s diverse needs. In some cases, however, loan finance can play an extremely valuable role as part of a funding mix for some voluntary and community sector organisations. Organisations such as the National Council for Voluntary Organisations have established programmes that use loans to help bodies to become
 
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financially self-sustaining. A loan could help an organisation to set up a trading arm or to purchase a building that they could then hire out. Those initiatives allow voluntary and community organisations to break their dependence on short-term contracts or grants, including grants from the Big Lottery Fund. Those are examples of the way in which lottery funding through loans can sustain the voluntary and community sector. Loans can increase an organisation’s capacity to generate independent income or to obtain more funding.

Although loans can help to promote sustainability among the voluntary and community sector, grants also play a critical role in funding good causes. Grants can be tailored to meet the good causes’ diverse needs and one-off grants can be used to breed innovation. Grants fund projects and organisations that would not secure support from elsewhere. The pressure to repay loans could hamper many organisations’ ability to develop pioneering schemes. The NCVO reports that a general shift towards loans could adversely affect the voluntary and community sector’s income and fundraising activities by forcing it to fundraise in order to repay loans to the BLF. The balance is a difficult one. Loans can be beneficial, but grants, too, are crucial. We must get the balance between the two right. Our probing amendment is designed to ask what proportion of funds will be distributed in loans. Will the Minister confirm that grants will account for for the majority of payments, as our amendment proposes, if not three quarters of all funding, as the Conservative amendment proposes?

The second pair of amendments is concerned, yet again—it does not say yet again in my brief; I admit to adding that, even though the person who wrote the brief might be upset that I have started to busk a bit—with the Secretary of State’s remarkable powers to control the BLF. While the Conservatives have suggested eliminating much of the Secretary of State’s power over the BLF, the Liberal Democrats are particularly opposed to the Secretary of State retaining the power to specify the maximum and minimum amount that may be distributed

    “during a specified period for expenditure of a description prescribed under section 23(3A)”.

It is most important that the BLF should retain the right to set its own maximum and minimum amounts and that the Secretary of State should not encroach too far on the distribution of funds. I hope that those comments have been for the edification of you, Mr. Gale, and the entire Committee.

Mr. Swire: I am more than happy to support the hon. Member for Bath in his amendments, but I rise to speak to the official Opposition amendments in the group. We have several concerns about the ability of the Big Lottery Fund to make loans, two of which I shall address. First, we are concerned that loans could be used as a way to bring down balances in an emergency, as it is much quicker to make a loan than to go through the process of making a grant. Secondly, is it envisaged that the same criteria will be applied to
 
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the granting of a loan as to the making of a grant? Both those points deserve clarification, and I would welcome a response to them.

On the first two amendments in the group, neither ours nor that of the Liberal Democrats would rule out the BLF being able to make loans; we merely suggest that there should be a limit on the value of those loans. Such a cap would ensure that the BLF retains its primary role as a distributor of lottery grants, rather than becomes a banker of lottery loans. Loans can be an important part of the funding mix for voluntary and community organisations, but my main concern is that lottery distributors should remain grant makers, for that is the basis on which the good causes have operated so effectively for the past 11 years.

I am sure that the Minister will reassure us that it is not intended that the Big Lottery Fund should make loans of greater value than our or the Liberal Democrats’ amendments would allow, and that the amendments are therefore unnecessary. I hope that he will assure me that the BLF’s power to make loans will not be used as a vehicle for Government funds. I refer here to our other proposed amendments to clause 14 regarding the BLF’s use of non-lottery funds, so you will be glad to know, Mr. Gale, that I will not raise that matter again. I am merely concerned as to whether it is intended that the BLF should make loans out of non-lottery or lottery funds, and whether the powers might be used to make the BLF more than a distributor of lottery money.

I am also keen to hear whether and, if he does, why the Minister disagrees with proposed amendments Nos. 36 and 99, which would remove the Secretary of State’s ability to micro-manage the Big Lottery Fund. The Minister has been assiduous in pointing out the fallacy of Opposition amendments that would, to his way of thinking, involve the micro-management of the whole national lottery enterprise by bringing various matters to Parliament, which he says would be ridiculous. The Opposition now wish to remove the Secretary of State’s ability to micro-manage the Big Lottery Fund, so logically—if there is any logic to the Minister’s thinking on this matter—he should support those amendments.

6.30 pm

The Bill allows the Secretary of State to specify individual amounts for prescribed grants. That sort of micro-management is incompatible with the ability of the Big Lottery Fund to operate effectively as a distributor of hundreds of millions of pounds a year. We are not making a political point about the Secretary of State’s power but an operational one about the Big Lottery Fund, and the Minister will no doubt wish to respond to it.

Interestingly, given our discussions on earlier amendments, I note that proposed new section 36B(4)(c) to the 1993 Act, on the power to distribute funds, gives the Secretary of State the power to

    “make provision by reference to the aggregate of amounts distributed, to a percentage of amounts available for distribution or otherwise”.


 
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Does that mean that the Secretary of State could, with a wave of her hand, ensure that that 60 per cent. or 70 per cent. of the Big Lottery Fund goes to charities?

Mr. Caborn: The amendments relate to the Big Lottery Fund’s functions as set out in proposed new section 36B to the 1993 Act. Amendments Nos. 15 and 35 would limit the value of the loans made by the Big Lottery Fund and amendment No. 15 provides that the value of the loans made by the fund should not exceed the value of the grants. Amendment No. 35 provides that the total value of the loans made in a financial year should not exceed one quarter of the total monetary value of loans and grants combined.

New section 36B sets out the Big Lottery Fund’s main power to distribute funds. The funds will be used to make grants, loans, or other distribution arrangements. We think that it would be useful if the fund had the flexibility to provide funds in different ways to respond to different needs and different circumstances. Parliament gave similar powers to the Olympic lottery distributors in the Horse Racing Betting and Olympics Lottery Act 2004. We do not expect loan making to be a major function of the Big Lottery Fund; we certainly do not intend to turn it from a grant-making body to a loan company. That is clear from the range and nature of grant-making programmes that have already been announced. The circumstances in which the fund may lend money and the conditions that it will be required to observe will be included in the financial directions; that is the case with all non-departmental public bodies, including lottery distributors. No one wants to turn the Big Lottery Fund into a big loans company. For those reasons, we are not convinced of the need to provide restrictions in the Bill. I hope that the amendments will not be pressed.

Amendments Nos. 36 and 39 focus on the Secretary of State’s order-making powers under proposed new section 36B(3). That power allows my right hon. Friend to limit the amount or proportion of money that the Big Lottery Fund may spend on different types of prescribed expenditure. Amendment No. 99 would remove the Secretary of State’s powers to specify maximum and minimum amounts and amendment No. 36 would remove the Secretary of State’s order-making powers altogether.

I shall explain why those order-making powers are necessary. As I said in relation to clause 7, the new good cause provision is extremely broad. We need to be able to set out at the highest level the types of expenditure on which the Big Lottery Fund should focus, and clause 7 allows us to do that. The order-making powers in clause 14, which would in practice be exercised at the same time as the powers in clause 7, allow us to limit the amount or proportion of that money that the Big Lottery Fund may distribute on the different types of prescribed expenditure. Without that power, the fund could in theory spend all its money on one type of prescribed expenditure—for example, on transformational grants. The Secretary of State plans to use the power to specify the amount or proportion of the money that the fund should spend on transformational grants and the awards for all
 
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programme. We do not intend to specify the amount or proportion of money in relation to the three main funding themes.

We recently consulted publicly on an interim order for the New Opportunities Fund; the order is as far as is possible under the existing legislative framework the same as the one that we propose to issue in due course for the Big Lottery Fund. In the 15 responses we received there was no substantive comment from consultees on the draft order, which suggests no great concern about the order-making powers. We have also made available to the Committee an illustrative order using the powers set out in the Bill, which I thought would provide further reassurance about how we intend to exercise these powers. In light of what I have said, I hope that hon. Members will withdraw their amendments.

Mr. Foster: I will confess at the beginning of my remarks that I am going to do as the Minister says and beg leave to withdraw. Notwithstanding his joke and his assurance that it is not anyone’s intention to create “Loans R Us” and that loan making is not to be a major function of the Big Lottery Fund, the Committee would have found it helpful had he given some ballpark indication of the split between loan making and grant giving, at least so that we could get a feel for the Government’s position. It is slightly odd that he is not prepared to do that while resisting amendments that would remove the right of the Secretary of State to specify in detail how different parts of the BLF money is to be spent. On the one hand, he is asking us to allow the Secretary of State to have powers to micro-manage and to specify precisely how the money will be distributed; on the other hand, he is not prepared to give any indication of the sort of split that there might be. I say to the Minister that perhaps he has not treated the amendments with the respect that they deserve.

I end by saying to the right hon. Gentleman, in the kindest and most gentle way possible, that he seems to want to have his cake and eat it. One minute he is telling us that it is disgraceful for the Opposition parties want to write in the Bill that 60 per cent. to 70 per cent. of the money should be spent in a particular area—in this case, on voluntary community activities—despite the assurances that everyone under the sun has given; the next minute, he wants us blithely to accept that at some later date, via an order to be laid at a later stage, the Secretary of State will be able to do all of that. He will not accept the will of the Committee and perhaps of the House to specify that 60 per cent. to 70 per cent. proportion.

There are many inconsistencies in what we are hearing today and we will want to explore them in more detail, perhaps in another form at a later stage. I am disappointed with the Minister’s response, but I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

The Chairman: I do not know how long the Committee wishes to sit for. I am prepared to sit until 7 o’clock on this occasion. If we are likely to go on much longer I shall suspend for an hour and a half so
 
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that members may make themselves comfortable, but I am at the Committee’s disposal and prepared to come back.

Mr. Swire: I beg to move amendment No. 41, in clause 14, page 7, line 31, at beginning insert

    ‘Provided the annual value of money either paid to the Fund or distributed to a third party exceeds no more than one quarter of the annual amount of money donated by the Fund,’.

The Chairman: With this it will be convenient to discuss the following amendments: No. 39, in clause 14, page 7, line 35, leave out from ‘party’ to end of line 37.

No. 40, in clause 14, page 7, line 37, at end insert—

    ‘(2A)   An arrangement under subsection (1) may not limit the Fund’s freedom of action in relation to the distribution of the money paid under the arrangement.’.

Mr. Swire: Mr Gale, you were right to prevent me from speaking again after the hon. Member for Bath sat down and not to allow me to register my disappointment that the Minister had not addressed the two questions about balances that I had asked.

Amendments Nos. 39 and 40 would remove the ability of the person contributing non-lottery funds to the Big Lottery Fund to control what happens to the money. The amendments relate somewhat to the previous discussion and touch again on the financial operations of the Big Lottery Fund. I want to hear from the Minister how he envisages the Big Lottery Fund will be able to distribute non-lottery funds in practice. I admit to what I have been accused of earlier, which is a degree of scepticism, but my fear is that the Big Lottery Fund will become a conduit for Government or taxpayers’ money and the lines will become so blurred that no one will be able to distinguish which is which. It will become a brand through which the Government can channel money in any school dinner-type emergency, as they so enjoy doing.

Amendment No. 41 therefore proposes a reasonable limit on the amount of non-lottery funds that the BLF can handle. It is designed to ensure that the lines do not become blurred. Amendments No. 39 and 40 would remove the ability of the person who gives the Big Lottery Fund non-lottery funds to influence where the money may go. The Bill states that that person may

    “limit the Fund’s freedom of action in relation to the distribution of the money paid under the arrangement.”

That impacts on the operational freedom of the Big Lottery Fund. The provision is akin to someone giving money to a charity and saying that they only want it to spend it on this project or that good cause, or even to a taxpayer giving his taxes to the Chancellor and saying, “Don’t spend this on the Department of Culture, Media and Sport.”—perish the thought. We know the Treasury’s view on those who advocate hypothecation in general taxation terms. We feel strongly that if the Big Lottery Fund is to handle this money, those who provide it will have undue influence on its eventual destination.

Mr. Caborn: The amendments would limit the arrangements under new section 36C of the 1993 Act for the Big Lottery Fund to work as an agent
 
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distributing money for other public bodies, the Government or private foundations. The suggestion for that provision came from the fund and it has been approached in the past to use the system to get things going quickly. As I explained when we discussed amendment No. 27, it does not have the power to distribute other people’s money, whether that is public or private charity money.

Amendment No. 41 would restrict the proportion of non-lottery business for the Big Lottery Fund to a quarter of total grant payments, while amendments Nos. 39 and 40 would prevent the persons providing non-lottery money from putting limits on the Big Lottery Fund’s freedom of action in distributing it. The new powers should not, in our view, be constrained in such a way. It would limit the potential to streamline and simplify a range of funding and limit further developments of specialism, skills and knowledge, as well as the potential reduction in the cost of distribution and grant management through economies of scale.

We do not expect the distribution of non-lottery funds to become a major part of the fund, so I am not saying that we wish to ensure that more than 25 per cent. of their business can be non-lottery. No one wants the fund to be distracted from its main lottery function, but there is a danger that amendment No. 41 would set limits that prevented good opportunities from being exploited. The fund must have the flexibility to get involved where it thinks that it can add value.

Adam Afriyie: Through the history of such funds under the 1993 Act, has there been an example where more than 25 per cent. of that funding was spent in one location?

Mr. Caborn: I would not have thought so, although I cannot say it categorically. I will ask my officials to look at that and will write to the hon. Gentleman.

As I was saying, amendments Nos. 39 and 40 give me the opportunity to assure the Committee that the arrangements are the minimum necessary. If the fund takes on the job of distributing someone else’s money—money from a health promotion charity, for example—funding partners will expect some say in how it is spent. The arrangements cannot be forced on the fund, so if funding partners expect too much there will be no arrangements at all. If the amendments were pressed, the funder would be forbidden any say at all. Obviously no one will hand over money to distributors on that basis. Basically that would end the new section 36C before it had even started.

6.45 pm

 
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