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When my right hon. Friend the Minister for the Olympics announced this funding package, she agreed with the Mayor of London that lottery distributors would be repaid the additional £675 million from the profits arising from the sale of land in the Olympic park after the games. Hon. Members will have seen
stories in the press this morning reporting pessimistic forecasts for growth in land values. The headline in this morning’s story is highly misleading, because the Olympic budget does not rely on land sales—there is no black hole in the Olympic budget. What has been said—the Mayor said this as early as April last year—is that we have to make estimates about the increase in land values. The prudent basis on which the London Development Agency has always made its assumptions is that values would grow at the rate of 6 per cent. But the Mayor also said in April that, given past trends in growth, it was possible to estimate much higher growth, up to 19 or 20 per cent. We are therefore confident that we would be able to repay the lottery if those levels of growth were achieved, but that does not create a black hole in the funding and there is nothing new about the story in the papers today. Those figures have been in the public domain for some time.
Mr. Mark Field (Cities of London and Westminster) (Con): The Secretary of State suggests that the Olympic budget somehow remains intact, but the public at large see an overall package for the cost of the Olympics. It is not simply a matter of the budgetary figures; there is also the notion of repaying the lottery in the way that he has described. If land values fail to go up, the lottery will not be fully reimbursed. Therefore, our concern is that the financial package is incomplete. The budget may be intact, but that is not to say that the lottery will not be raided.
James Purnell: We have the same goal, which is to repay the lottery from the increase in land values. The amount is in line with growth over the past 20 years and it is not an optimistic forecast. It will also be realised over the next 10 to 20 years, and regardless of market conditions at present, it is right to have confidence that we will be able to deliver on the memorandum of understanding between my right hon. Friend and the Mayor.
Paul Farrelly (Newcastle-under-Lyme) (Lab): I share the concern about the additional raid on the national lottery money, but I recognise that the Government have moved to repay the proceeds in this way. It would be more comfort, in terms of incentives in the future, if my right hon. Friend looked more carefully at who will handle those land sales and whether it should be the London Development Agency or an independent body.
James Purnell: That is a matter for the Mayor and the LDA. We have a high level of confidence in the LDA’s ability, and it has been a key partner in delivering the Olympics. I welcome my hon. Friend’s support for the proposal.
The second commitment that we have made, in listening to people’s concerns, is to look carefully at grant in aid funding and to secure increases in the current spending review for the good causes that will be affected. The Arts Council will receive an extra £50 million, an increase of 3.3 per cent. above inflation over three years. Sport England will receive an increase of 2.1 per cent. above inflation—an increase since 1997 of more than 170 per cent. English Heritage will receive an increase of £7 million in cash terms by 2010-11, which was welcomed as good news by Sandy Bruce-Lockhart, its chairman.
The third commitment that we have is to protect voluntary groups. We have agreed with the Big Lottery Fund that, first, no existing projects will be affected, and secondly and importantly, that we will honour the Big Lottery Fund’s commitment that at least £2 billion will be available for the voluntary and community sector over the next five years. I understand from the papers that the Conservatives—
Greg Clark (Tunbridge Wells) (Con): The Secretary of State has made a commitment on the Big Lottery Fund. Does that commitment extend to the distribution to voluntary groups by the other lottery distributors?
James Purnell: The other lottery distributors will operate at arm’s length and make their decisions. They do fund voluntary organisations, and indeed a large part of their money goes to such organisations. I am glad that the hon. Gentleman intervened, because I understand that the Conservative party is considering not supporting the order and instead taking the money from the Big Lottery Fund and the so-called pet projects. I hope that the Conservatives will not do that, because there are no pet projects. Lottery policy has moved on since the New Opportunities Fund, which has been abolished, and everything is delivered through the Big Lottery Fund.
If the proposal were to take all of the £675 million from the BLF, it would involve a significant raid on the voluntary sector. Existing projects would be cancelled and the full £2 billion guaranteed to the voluntary and community sector could not be delivered. It could also mean some £250 million of cuts to that sector. I trust that the Conservative party will not make that proposal later in this debate.
Robert Key (Salisbury) (Con): While the Secretary of State is talking about existing commitments being cancelled, can I remind him of the Stonehenge fiasco? The heritage sector has lost hundreds of millions of pounds in value through the Government’s decision to cancel the project—including the cancellation of the visitor centre. Not one penny has been promised to provide a new visitor centre or to substitute for the grand plan that has now been shattered by the Government. The heritage sector always seems to lose out whereas the Olympic sector gets bigger and bigger. I hope that he will not forget that when he cites the recognition by Lord Bruce-Lockhart that the £7 million or whatever is welcome. It is not doing the cultural heritage of our country any good to see money leaking away from the lottery all the time.
Mr. Deputy Speaker (Sir Alan Haselhurst): Order. May I remind the House that short interventions are good at all times, but especially when we are in a time-limited debate?
James Purnell:
The hon. Gentleman has been a resolute campaigner for Stonehenge, and he makes his point clearly and forcefully, as always. He might want to talk to his own Front-Bench spokesmen. The hon. Member for Tunbridge Wells (Greg Clark) has promised that at least as much funding will go to
charities, while the shadow spokesmen for the Department for Culture, Media and Sport have promised to go back to the old good causes. That all adds up to more than 100 per cent. of the lottery. The Conservatives say different things to different audiences and have ended up double-counting the funding.
Greg Clark: The Secretary of State seems to be unaware that among the other good causes, including heritage organisations, there are many charities and voluntary organisations. Is he not aware of that aspect of his brief?
James Purnell: So is the hon. Gentleman saying that the Conservative party would not stick to the £2 billion guarantee? Is that his commitment? I know that he and the hon. Member for South-West Surrey (Mr. Hunt) like to write policy pamphlets together; perhaps they would like to focus on policy next time, before they start to widen their approach.
A concern was also expressed that the Government would continue to collect funding from the planned Olympic lottery game after the target of £750 million is reached. I can confirm that that is not the case.
In our last discussion on the subject, the hon. Member for Bath highlighted an issue about grey lotteries, which are opportunities to bet on the numbers or outcomes of overseas lotteries. I shall ask the Gambling Commission and the National Lottery Commission to explore the cases that give rise to concern. I know that the hon. Gentleman has such concerns, and he is welcome to make them known to both organisations.
I believe that the commitments that I have made today should form the basis of cross-party consensus. I hope that that is what will be delivered. Both main Opposition parties supported the Olympic bid and the subsequent Bill. I trust that that will continue to be the case. One of the lottery’s founding purposes was to support such big national projects, as the Conservative Government did with the Millennium Commission, which funded a similar event. Both Opposition parties supported the approach to the Olympics, and I hope that that will continue.
Michael Fabricant (Lichfield) (Con) rose—
Mr. Mark Field: Will the Secretary of State give way?
James Purnell: No, I know that time is limited and I want to wind up.
In the original funding package, the lottery made up 44 per cent of the total. The new funding package provides an extra £5 billion from the Exchequer. The lottery will contribute an extra £675 million, and its share of the total will therefore fall to 23 per cent.
I can also finally report that the National Lottery Commission has informed me that under the third licence recently awarded to Camelot, which will run from 2009, returns to good causes are likely to increase by between £600 million and £1 billion over the 10-year period of the licence, based on constant levels of sales at £5 billion per annum. I am depositing in the Libraries of both Houses today a letter from the chair of the commission to set that out.
The order is intended to secure the best Olympics ever for this country and to inspire a generation of young people to aim to be the best they can be. Our task is to deliver the political consensus to make that a reality.
4.48 pm
Mr. Jeremy Hunt (South-West Surrey) (Con): Perhaps the best example of the Olympic spirit was shown by someone who never competed in the Olympics, although his sport is recognised by the International Olympic Committee: Sir Edmund Hillary, who died last week. He did one of the most competitive things ever by being the first man to set foot on the highest peak in the world, but he combined it with remarkable modesty—so much so that, apparently, when he reached the peak he took photographs of Sherpa Tenzing, but forgot to ask Sherpa Tenzing to take photographs of him. For most of his life, in the spirit of not wanting to be one up, he refused to confirm which of them had reached the peak first. That combination of competitiveness and decency—the desire to win, but to do so with honour—is what we want 2012 to bring to London.
It is therefore right that we approach the Olympics in a spirit of bipartisanship, with as much cross-party support as possible. In that spirit, we on the Conservative Benches are happy to pay tribute to the Government’s achievement in winning the 2012 bid. It was a personal victory for Tony Blair and Lord Coe. The Opposition’s redoubtable shadow Sports Minister was in Singapore at the time and, although he does not claim to have swung the bid, his presence was important, as it demonstrated cross-party support. When he was Leader of the Opposition, my right hon. and learned Friend the Member for Folkestone and Hythe (Mr. Howard) spoke to the International Olympic Committee to confirm our support for the Olympics and, as the Secretary of State said, we supported the London Olympic Games and Paralympic Games Bill at every stage.
Mr. Edward Leigh (Gainsborough) (Con): How was it in the Olympic spirit—or even decent—for the Government to pull the wool over the public’s eyes? The games will cost more than twice as much as was promised when the bid was made. How is that decent?
Mr. Hunt: My hon. Friend makes an important point. I was about to say that the spirit of cross-party support has been sorely tested at regular intervals, mainly over budgetary issues.
The budget was raised last March. It was not raised by 20 or 50 per cent., or even doubled: instead, it was nearly tripled, to £9.3 billion. Did the Opposition withdraw our support for the Olympics, or say that it was a mistake to spend the extra money or to have bid for the games in the first place? No, we did none of that. Our support for the Olympics has been rock solid—rather more so than the Secretary of State’s. When the bid was being assembled, he was leading the charge against it, so we will take no lessons from him about the need for an Olympics consensus.
However, the Secretary of State will appreciate that our commitment to the success of 2012 means that we have a duty to speak up when we think that the Government are managing the project badly. We have a
responsibility to scrutinise the use of taxpayer’s money, to protect the good causes for which the lottery was set up and to ensure that the games are on a sound financial footing.
In the spirit of bipartisanship, I spoke to the Secretary of State in the Lobby last week, and I also wrote to him last Thursday. I said that the Opposition would be prepared not to vote against the statutory instrument—even though it is in large measure due to the Government’s financial incompetence—if the Government could reassure us on two matters.
The first reassurance that we seek is that the Government will publish proper cash flow figures for the project. Those figures should set out the money that has been spent and contain cash flow forecasts. The Secretary of State will know that, if accounts are to be scrutinised properly, they must contain a profit and loss balance sheet and a cash flow analysis. With a project of this size, however, we can determine whether it is under proper financial control only if we are able to measure the rate at which cash is going out of the door and to compare that with the rate that was predicted. That is why the cash flow forecasts and outcomes are so important.
In response to my request, the Secretary of State said that he was prepared to make available any figures that the Department had, but that he did not want to construct figures especially for us because that would involve a cost. He said nothing in his speech about cash flow forecasts for the way in which the Olympic budget will be spent, so are we to take it that no such forecasts have been prepared? If they do exist, will he publish them so that we can scrutinise the progress being made and the rate at which money is being spent?
James Purnell: I can tell the hon. Gentleman that that information is available, and that my right hon. Friend the Minister for the Olympics will be happy to have quarterly meetings with both Opposition parties to go through it. The information will be subject to commercial confidentiality, but it will be available for scrutiny.
Mr. Hunt: I am very grateful for that concession, as it will greatly improve our ability to scrutinise the progress of the Olympics budget. Most importantly, it will mean that there will be no repeat of what happened last March, when the budget had to be tripled.
We sought one other concession, however. It was, as the Secretary of State says, a commitment that there would be no more raids on good causes. Why should good causes, which the lottery was set up to protect, suffer from Government financial miscalculations? We have to recognise that the good causes have suffered a triple whammy as a result of the Olympics. There was the original £410 million; then the £750 million from the special Olympics lottery games, which, it now transpires, will cannibalise much of the revenue that would have been raised through the normal lottery games that raise money for the good causes; and then the additional £675 million.
Michael Fabricant:
My hon. Friend is quite right in what he has just said. He is also right to say that none of us should be demonised if we question the amounts of money being spent on the Olympic games—
particularly those of us who are not from metropolitan London and who will not feel quite the same benefit as Londoners from the legacy. There are already swingeing cuts in the arts. Lichfield Garrick theatre is no longer to receive its funding, nor is the Birmingham repertory theatre, and that situation is replicated throughout the United Kingdom. What assurance do we have that the situation will not get worse?
Mr. Hunt: My hon. Friend makes an extremely important point—he is absolutely right. I shall talk later about the impact in the rest of the country and on arts budgets.
Mr. Mike Weir (Angus) (SNP): Earlier, the hon. Gentleman rightly mentioned that the cost of the Olympics has already tripled. He accepts the Secretary of State’s assurance that there will be no more raids on the lottery, but what happens if the cost continues to climb? Where will the money come from? At what point will the Conservative party say, “Enough is enough”?
Mr. Hunt: We are saying, “Enough is enough”, which is why we said that if there are further problems with the Olympics budget we do not want any more raids on the good causes. That was the purpose of extracting the concession that we extracted.
Anne Snelgrove: Will the hon. Gentleman give way?
Mr. Hunt: May I make a little more progress before giving way to the hon. Lady?
What the Secretary of State said about the headline in The Times today was inaccurate. He said that there is no new information, but of course there is very serious new information. The article states that
“Land agents contacted by The Times”
say that the sale of land is unlikely to make the amounts predicted because of
“the current flattening of the housing market.”
The ability to meet the commitment to help lottery good causes from land sales has changed materially because of the change in housing price conditions.
James Purnell: What I am saying is that there is nothing new about the Government information and the Mayor’s information that has been provided. We cannot control everything that estate agents say. However, as early as April last year, the Mayor said:
“In the last 20 years land prices in London on average have increased 19 per cent. a year. Take the last 10 years, where we have had a more consistent margin, it’s averaged 20 per cent. and the lowest increase in any one year was 6 per cent.”
Those figures have been in the public domain for a long time.
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