Session 2010-11
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General Committee Debates
Delegated Legislation Committee Debates

Draft Apportionment of Money in the National Lottery Distribution Fund Order 2010

The Committee consisted of the following Members:

Chair: Mr Edward Leigh 

Austin, Ian (Dudley North) (Lab) 

Birtwistle, Gordon (Burnley) (LD) 

Creasy, Stella (Walthamstow) (Lab/Co-op) 

Foster, Mr Don (Bath) (LD) 

Glindon, Mrs Mary (North Tyneside) (Lab) 

Hepburn, Mr Stephen (Jarrow) (Lab) 

Laing, Mrs Eleanor (Epping Forest) (Con) 

Penrose, John (Parliamentary Under-Secretary of State for Culture, Olympics, Media and Sport)  

Reckless, Mark (Rochester and Strood) (Con) 

Rotheram, Steve (Liverpool, Walton) (Lab) 

Sheerman, Mr Barry (Huddersfield) (Lab/Co-op) 

Shelbrooke, Alec (Elmet and Rothwell) (Con) 

Smith, Angela (Penistone and Stocksbridge) (Lab) 

Stewart, Bob (Beckenham) (Con) 

Tomlinson, Justin (North Swindon) (Con) 

Watkinson, Angela (Lord Commissioner of Her Majesty's Treasury)  

Wilson, Mr Rob (Reading East) (Con) 

Wishart, Pete (Perth and North Perthshire) (SNP) 

Ben Williams, Committee Clerk

† attended the Committee

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First Delegated Legislation Committee 

Monday 8 November 2010  

[Mr Edward Leigh in the Chair] 

Draft Apportionment of Money in the National Lottery Distribution Fund Order 2010 

4.30 pm 

The Parliamentary Under-Secretary of State for Culture, Olympics, Media and Sport (John Penrose):  I beg to move, 

That the Committee has considered the Draft Apportionment of Money in the National Lottery Distribution Fund Order 2010. 

This matter has been brewing for a while. I am delighted to say that, in the 16 years since it was set up, the national lottery has been a huge British success story. It is no exaggeration to say that it has devoted billions to a succession of good causes across the entire spectrum of our national life, and it has done so in a way that makes sure it focuses on things to do with the quality of life. It proves that our society is about more than just law and money—about improving the way in which we live in Britain and, as I said, it does so across a whole range of issues. 

The lottery itself is tremendously impressive, and I am sure it is thoroughly supported and has many adherents throughout the House. In the course of its 16 years there have been several changes, again, supported throughout the House. Money was diverted successfully to fund the millennium in the run-up to the year 2000 and, since then, money has been diverted to fund the preparations for the 2012 Olympics—again with cross-party support. We now have the opportunity to refocus the lottery back to the original core good causes, which is what the new coalition Government wish to do, and at a time when the diversion of funds to the 2012 Olympics will naturally be coming to an end—in about the next 18 months. 

Our aim, in two stages, is to raise progressively the proportion of money going to the three good causes other than the Big Lottery Fund from the current 16.66% to 18% on 1 April 2011, and to the full 20% in the following year. The good news is that, in doing so, we expect everyone to have more cash going in because we are effectively dividing up an ever-growing pie, because the Olympics diversion is coming to an end at the same time. In rebalancing the lottery back to its original good cause proportions, we are at the same time delivering a steadily increasing flow of cash funding to good causes in the process. I hope that everyone will find that easy to support. Such action was promised by my party before the election, so we are delivering on a campaign promise and, without further ado, I commend the order to the Committee. 

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The Chair:  Before I call Mr Ian Austin, I draw attention to the fact that that the hon. Member for Rochester and Strood has brought a banned substance into the Committee. 

Mark Reckless (Rochester and Strood) (Con):  Is that my coffee? 

The Chair:  Yes. Will the hon. Gentleman please remove it? 

4.33 pm 

Ian Austin (Dudley North) (Lab):  The Minister is absolutely right that the lottery has been a huge success. It has made a difference in communities throughout Britain, and I wish to associate myself with what he said and also congratulate everyone who has been involved in the lottery’s success over the past few years. 

Opposition Members agree with the principle of properly funded organisations to support sports, the arts and heritage. That is why the previous Government’s funding for such sectors grew to record levels through not only lottery funding, but general Exchequer funding. In real terms, Government funding for heritage, arts and sports increased from £527 million in 1997-98 to £873 million in 2008-9. Exchequer funding for the arts increased by 71%, and funding for sport more than trebled from £65 million to £215 million. 

The Minister is correct to say that, before the election, he and his colleagues told us they would be increasing the proportion of lottery funding going to such areas in the future, but what they did not tell us is that they would at the same time be cutting the funding that those areas received directly from the Government. At the outset, we should be clear what is happening as a result of the spending review. The Department for Culture, Media and Sport is losing 24% of its budget. The funds going to Sport England are being cut by 28% and those for UK Sport by a third. The Arts Council’s funds are being cut by 29% and English Heritage is losing a third of its funds. There are also cuts to sports programmes in other areas associated with education, as we all know. 

My first question to the Minister is: can he explain why he and his colleagues could not secure a better settlement for his Department in the spending review and why they have acceded to all the Treasury’s demands? Ministers claim that direct cuts do not matter because they will make up the difference by increasing funds from the lottery; but is the Minister not driving a coach and horses through the principle of additionality, which he and his colleagues have told us is sacrosanct? His boss, the Secretary of State, promised that the lottery would be free from what he castigated as political interference, stating that 

“the lottery is the people’s millions and not the politician’s pot.” 

As recently as July, the Minister said in Westminster Hall that the principle of additionality is 

“very important. It means that national lottery funding for good causes needs to be in addition to core Government spending; it should not be used to subsidise or replace Government spending but should go to causes that would not otherwise receive funding.”—[Official Report, 22 July 2010; Vol. 514, c. 147WH.] 

Avoiding that, he stated, was “essential”, but is that not exactly what he is doing this afternoon? 

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So, secondly, despite his claim, will he concede that he has torn up the principle of additionality? Will he admit that he and his colleagues have decided to treat the lottery as a piggy bank, into which they can dip to fund anything they decide to cut that is currently funded from general taxation? If he is not prepared to concede that, will he set out the principles that will govern lottery funding in the future and ensure that lottery funds cannot be used to make good the cuts that he and his colleagues make in other areas of Government spending? While he is at it, will he set out the areas that his Government would not use lottery funds to pay for in the future? 

When the Minister was in opposition, the Conservatives made their plans for lottery policy on the basis that the Big Lottery Fund, which at the moment receives 50% of lottery good causes money, will spend 80% of its funding on voluntary and community groups, with 20% going to the non-voluntary and community sector. In fact, last year 92% of Big Lottery Fund spending went to the voluntary and community sector. So, cutting the Big Lottery Fund’s share of the national good causes money from 50% to 40%, even if that is used exclusively to fund the voluntary and community sector, means that there is none the less a risk that the share of funding going to voluntary groups will be cut. 

Will the Minister explain how cutting funding to voluntary and community groups fits in with his Government’s vision of the big society? Can he confirm that changes to the Big Lottery Fund, ensuring that 100% of funding goes to the voluntary and community sector, will mean that programmes and schemes for individuals will not be funded in the future? 

For example, to commemorate the 65th anniversary of world war two, the Big Lottery Fund has given grants to individuals, as part of its Heroes Return programme, to pay for commemorative visits to places including France, Germany and Holland. In fact, in the Minister’s constituency, 42 such grants were awarded in the past four years. Will he explain why he is bringing forward proposals that would prevent similar projects from being funded for the 70th anniversary in five years’ time? Will he also assure us that similar veterans’ projects funded by the Big Lottery Fund, such as the Home Front Recall programme—he will know it well, as it has paid £17,000 for five projects in his constituency—will be eligible for funding through the Big Lottery Fund for the 70th anniversary in 2015? 

Furthermore, if the Big Lottery Fund is no longer able to fund statutory organisations, what does the Minster suppose will happen to the Parks for People project? I have a particular interest in that project, which is doing superb work at Priory park in my constituency. The Big Lottery Fund contributes £90 million to that and runs it in conjunction with the Heritage Lottery Fund. In future, because the funding goes to local authorities and other statutory organisations, will the Big Lottery Fund no longer be able to make such grants? If that is the case, will the Heritage Lottery Fund be able to continue to fund statutory organisations that the Big Lottery Fund will not be able to fund? Will the Minister clarify that, despite the policy change he has introduced, the Big Lottery Fund will still be able to fund projects for the wider community through schools? 

What freedom and flexibility will be enjoyed by the Big Lottery Fund in the future? For example, what discretion will it have to serve areas where the voluntary

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and community sector is less strong or has less capacity, as in poor rural communities? In the past, applications have come from parish councils for community centres, village halls or other community facilities. 

The Minister and his colleagues have said that they want to reduce bureaucracy and achieve greater efficiency in the use of lottery funding. Does he not recognise that, as my hon. Friend the Member for Kilmarnock and Loudoun (Cathy Jamieson) pointed out in a recent Adjournment debate, many small organisations that apply for funds cannot produce detailed business plans and elaborate budgets, and need more help and advice? The Big Lottery Fund’s overheads have paid not simply for administration costs, but for capacity building and the provision of support to ensure that poorer areas can benefit. 

I have one technical question about the Secretary of State’s discretionary powers. In response to a question from my hon. Friend the Member for Bury South (Mr Lewis) on what criteria determine the level and nature of payments made by the Secretary of State under section 31 of the National Lottery etc. Act 1993, the Minister stated simply that payments could be used “for defraying certain expenses”. That is a very helpful answer. I remember signing many similarly helpful answers as a Minister. Does he have any idea what level the expenses will reach? 

What criteria will be used to decide who will receive the increased lottery funding for the arts, sport and heritage? Given the Government’s disproportionate cuts to the arts and their dismantling of school sports, how will the Minister ensure that money gets to grass-roots organisations that are under threat? What guarantees are in place to ensure funding for grass-roots sport? Will he guarantee that the kinds of community sports projects that have been funded in the past will still be eligible to receive funding? If the money that the Big Lottery Fund receives is reduced to provide more funds for sport in other areas, is it not bound to look less favourably on sports projects in future, because it will think that if it has lost money to those areas, such projects should be funded by Sport England or UK Sport? Will he guarantee that Sport England will step into the breach and provide funding for the community sports festivals that have done so much good in constituencies such as mine? If so, what programmes will lose funding from Sport England to pay for those projects? Will he guarantee that funding for disabled groups and other hard-to-reach groups will continue? 

Similarly, what assurances will the Minister give on the arts? Will he guarantee that grass-roots arts and heritage projects that have been funded by the Big Lottery Fund will continue to receive funding? If so, will that funding continue to come from the Big Lottery Fund, or will it come from the Arts Council? If it comes from the Arts Council, what projects will it not fund to pay for those community projects? What criteria will be used to decide how lottery funds are allocated to arts projects? What guarantees can he give that the arts will be well supported, despite the deep cuts to local authority budgets? Specifically, who will be responsible for disbursing lottery funding to the film industry following the abolition of the Film Council? Who will small film-makers and independent producers go to for help? 

To conclude, we will not vote against the proposals—that should set the Government Whip’s mind at rest. We do not want to prevent Sport England, UK Sport and the

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arts and heritage organisations from being compensated for the huge cuts that they face as a result of the spending review. However, I place on the record our belief that these changes have not been thought through properly. They have caused a series of unintended consequences and huge confusion, not only for organisations that disburse lottery money, but among the sports, heritage and arts organisations, voluntary and community organisations and individuals that have put lottery funding to such good use over the past few years. 

4.44 pm 

Mr Don Foster (Bath) (LD):  May I respond quickly to the hon. Member for Dudley North? Frankly, many Committee members will have been flabbergasted by his argument that the proposals will remove the principle of additionality from the national lottery, given that his Government had a track record of totally breaking that principle. They broke it by setting up the New Opportunities Fund to allow expenditure in education, health and the environment, and then more fundamentally by allowing lottery funds to be used for the Olympics. They did it on two separate occasions. Those are two good examples of the breach of additionality. However, it went further. I tabled an amendment to the National Lottery Bill to enshrine the principle of additionality in legislation. Perhaps the hon. Gentleman will explain why his Government refused to support that amendment. 

Ian Austin:  The key difference is that the sorts of things funded through the New Opportunities Fund were new and not pre-existing projects, so money was not taken from the lottery to replace Exchequer funding, which was already financing healthy living centres or new sports facilities, for example. They were brand-new facilities, often run in conjunction with community groups. [ Interruption. ] It is very different from taking a huge amount of money from Sport England and UK Sport and saying, “It doesn’t matter, because we are going to make it up with money from the lottery.” There is a massive difference. 

Mr Foster:  That argument is as bizarre as the hon. Gentleman’s initial one. On that principle, he could say that anything that the Government dreamed up that is not currently happening is a legitimate target for lottery funding. That would surely drive a coach and horses through the principle of additionality. However, may I tell him some good news? In one area, I had some of the reservations that he has expressed, because I was originally concerned about the proposals that the Conservative party put forward when in opposition. In the same way that the hon. Gentleman implied he is fearful, I feared that areas such as health, education and the environment would lose out. However, I can with great confidence support my hon. Friend the Minister because the measure will put much needed money into the arts, heritage and so on—I think the hon. Gentleman will acknowledge this—and because the Government have delivered in education, the environment and health. We have protected the health budget, which the previous Government were unwilling to do. In education, we are providing additional money in the pupil premium and we have launched the green deal for the environment. Those are significant improvements. 

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The hon. Gentleman’s speech was woefully inadequate. He spent his time attacking the Government on the cuts that he says are being made in those areas, without once saying what he would have done were his party still in government. He knows the truth is that he too would have been making those cuts. Thank goodness we have a proposal that will now provide additional funding in each of those crucial areas. 

The Chair:  Order. Before we proceed further, we must have quite a narrow debate on the order, because it amends the proportion of funding from the national lottery game to each of the four categories of good causes. As long as we do not have a general debate on the national lottery, I will be happy. 

4.49 pm 

Pete Wishart (Perth and North Perthshire) (SNP):  I do not like this at all. I will adhere to your ruling, Mr Leigh, and focus on how the money is being diverted. I hope the Minister understands and appreciates that the measure is not consequence-free. It impacts on all lottery-funded organisations and volunteer groups that depend on such funding. I want to address what will happen to Big Lottery Fund money, because that is where we will see the massive impact. The measure will have an effect not only across the board in the UK; it will have a disproportionate effect on the devolved legislatures, particularly in Scotland, where we have a massive Big Lottery Fund footprint. I am certain the Minister has read the submission from the Scottish Government. There are clear concerns about what the measure will mean for Scotland if it is accepted. We will see a reduction of £55 million in Big Lottery Fund money during the next four years. This is at a time when the Scottish Government have given clear guidelines to the Big Lottery Fund in Scotland, where it has to address issues related to inequality, disadvantage and access. All that work will be put under great risk if the order is passed. 

I saw the Minister’s response to Scottish Government colleagues, in which he suggested that something like £54 million will be put into the Big Lottery Fund in the next four years. However, that is based on some pretty shady assumptions that do not take into account the fact that there will be a net decrease in the Big Lottery Fund from 2011 to 2013. I would like the Minister to clarify once and for all the position for Scotland when it comes to the Big Lottery Fund in the next few years. 

There is another important issue. The Big Lottery Fund is a UK-based fund, and what Scotland gets is its Barnett share and Barnett consequentials. On top of that, there is a weighting for the disadvantage that Scotland obviously has. If the money were to be disbursed to heritage and the arts, it would not be subject to the same weighting when it comes to disadvantage. That would cost Scotland £21 million to £23 million in lost lottery funding—another double hit. The sums have been done. That is going to leave us with a net reduction in national lottery funding to Scotland of 0.47%, bringing the share to 7.54%. That is way below our population share; it should be in the region of 9%. That is what we will be securing—a net decrease in our lottery footprint across Scotland. Does the Minister recognise those figures? If so, what is he going to propose in the way of mitigation to ensure that the nations of the UK do not lose out? 

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A few people have mentioned the 5% cap on administration. Again, that will have massive consequences for a number of lottery-supported agencies within the Big Lottery Fund set-up. We talked about the Olympics. I was probably the only person who spoke about a diversion to the Olympics, and I was really pleased that I did so some eight years ago. I foresaw what happened—the massive amount of lottery funding that went to build infrastructure in London to secure the London games at the expense of lottery projects in Scotland, Wales and Northern Ireland. These places get nothing whatsoever from lottery funding. We have lost real money for grass-roots organisations and for other organisations. I will take no lectures about the London Olympics. I expect the Minister to recognise the impact that this will have on the Commonwealth games in Scotland, which are as important to us as the Olympics in London are for both the Labour and Conservative parties. The administration cap will have a big impact on programmes such as 2014 Communities, which makes lots of awards of less than £1,000 to support grass-root sport and physical activity opportunities. That is the type of scheme that will be at the highest risk of closure because of the 5% cap. 

There are also issues to do with VCS funding. We are grateful for the Minister’s clarification that the order will not affect the role of Big Lottery funding. However, again, there are massive concerns about what is going to happen to VCS funding. While I am sure that heritage and arts organisations will be grateful for the additional funding that they are about to receive, I hope that the Minister understands that there are consequences right down the line. It is not something that will happen without any hurt or pain. A number of organisations will suffer because of what is being proposed. I hope that he will acknowledge that, and also say a little about how the order will impact the devolved legislatures and Administrations throughout the UK, who will expect a net decrease in lottery funding because of what is proposed. 

4.53 pm 

John Penrose:  I will endeavour to answer the various points that various hon. Members have made throughout the short debate, in the hope of responding positively to their questions and putting their minds at rest on one or two questions and concerns that have been raised. 

I am afraid that we got off on a slightly sour note. The hon. Member for Dudley North started off by trying to take the Government to task for the spending review. I must say that that is a bit thick, coming from the party that is responsible for the absolutely dreadful economic conditions that we currently face, and which made the spending review necessary in the first place. Until it recognises that fact, it will not get a great deal of sympathy from the rest of the country. I caution him to moderate his language a little in future, until people have, at his suggestion, forgotten who is responsible for the situation that we find ourselves in the first place. 

The hon. Gentleman went on to discuss the principle of additionality, which is important. He rightly quoted some comments that I made in an Adjournment debate. I want to respond directly to him. I am happy to confirm that we are not changing the principle of additionality. It is tremendously important, it was initially announced by a Conservative Government and we want

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to ensure that it continues. Just to reassure him on a fundamental point, if we are increasing the share of money going through the national lottery to the original good causes—particularly to arts, heritage and sport, which was part of our pre-election campaign position—while at the same time we are forced, because of our economic position, to make cuts to the overall level of Government expenditure, it does not necessarily mean that the principle of additionality is being breached. It is not only a question of how much money is being spent; it is also a question of how that money is being spent. In particular, it is crucial, as my hon. Friend the Member for Bath pointed out, to look at the kinds of funds that are being spent and the fact that we are not, for example, launching things such as the New Opportunities Fund, which he rightly pointed out was a particularly questionable example of fund diversion. 

I say this to the hon. Member for Dudley North—if there were a question about the principle of additionality being breached, we would have been expected to change the rules that apply to the arms-length national lottery funds distribution organisations. The rules would have been altered, probably in this measure, which would have allowed the organisations to start diverting funds in dodgy ways to purposes that are normally part of the general Government spending patterns. We have not done that; there is nothing in the measure that changes the rules. The patterns of expenditure—the things which national lottery distribution bodies are allowed to distribute money for—are unchanged. The criteria on which they make assessments are unchanged. That change is not in this measure, or any other measure, because we believe that the principle of additionality is absolutely central and we do not want to threaten it. We have no plans to change those criteria. 

It is true to say that the amount of money that the Government can give to all sorts of things, across Whitehall, has had to be reduced and, at the same time, spending on some of the good causes in the lottery is increasing. However, the pattern of that spending, which is the crucial thing about whether additionality has been breached, will remain true to the principle that national lottery funding may not be diverted to subsidise pet good causes. I caution the hon. Gentleman not to lecture Government Members, given his own party’s behaviour on the issue when it was in government. 

The hon. Gentleman asked some questions about the share of the funding that will go to the voluntary and community sector. He is right to point out that the Big Lottery Fund has managed in recent years to raise the proportion of its cash going to that sector to 92%—we applaud that. There are two issues to consider here. One is that the voluntary and community sector benefits not only from funds going through the Big Lottery Fund, but from funds going through the other lottery distribution funds—not to anything like the same extent, but a substantial proportion of the money that goes to arts, heritage and sport goes to voluntary and community groups as well. They will all continue benefiting from this change. In fact, if the proportion of money going to the voluntary and community sector is unchanged as we increase the amount of money going to arts, heritage and sport, that sector in total will receive dramatically more money as the total amount of cash going to those three collective good causes increases over the next couple of years. 

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Ian Austin :   I want to ask for some clarification on that. The Minister’s argument is that, “We have to make these cuts, but there’s a happy coincidence, because at the same time we are able to increase the amount of money that is going through the lottery.” Everybody in the sports, arts or heritage world says that the Government are telling them not to worry, saying, “We have to make these cuts, but we are going to make up the money you get from the lottery.” I admire the Minister’s explanation—it was dextrous—but he cannot have it both ways. If it is the case that we have to make these difficult cuts to budgets, but that there will be lottery funding, he has to be clear about what is currently being funded that will not be funded in future. Will the arts, sports and heritage organisations be able to use the increased money that they will get from the lottery to fund the sorts of things that they have funded in the past, but would not have been able to fund as a result of the cuts? That is the question that I want answered. 

John Penrose:  I am happy to answer it—no. The cuts that we have been delivering in Government grant in aid are deliberately targeted. For example, we have tried to reduce administration costs by 50% to try to protect the front line. The hon. Gentleman will know that we are trying to keep cuts to museums down to 15%. 

Ian Austin:  rose—  

John Penrose:  May I finish answering the hon. Gentleman’s last intervention before I give way to his next? The cuts to Government grant in aid are aimed clearly and deliberately at back-office functions and administrative costs. It is impossible to do that entirely, but wherever possible we have shaded them in that direction very strongly. 

Money that comes from the national lottery distribution bodies must be dealt with at arm’s length—quite rightly—from political interference, by independent boards, which have a series of criteria to follow, which we will not change. Therefore, the criteria that they will apply to new applications for the extra funds in heritage, arts or sports next year, or even tomorrow, will be the same as the ones that they applied three years ago when the Labour party was in power. If those purposes do not match the money that they are losing, they will not be able to move the money across from one to the other. 

Ian Austin:  That is very revealing and it will come as news to people who are involved in sports, art and heritage, all of whom are under the impression from the Government that they should not worry because they will get extra cash to make up the shortfall. Is the Minister suggesting that Sport England will be able to find 28% savings from back-office functions? Of course it will not. Will UK Sport be able to amalgamate its computers, for example, and save a third of its budgets? Will the Arts Council be able to save 29%? Will English Heritage be able to save a third of its funds simply from back-office functions? That will not be the case. 

If such organisations are not able to use the lottery money to make up the deficit that will result from the cuts, when will we be told precisely which functions that they currently provide will not be provided in future? That has not been set out. 

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John Penrose:  We have set that out. There will be no change to the kinds of things that the national lottery money is allowed to fund. The details of every new grant that is delivered are made public in the normal way. They will be made public in the same way next year as they were two years ago. That is unchanged. 

The details of the Government’s cuts—which I hope I have made clear to the hon. Gentleman are different from the money that the lottery will fund—are being rolled out as the individual organisations that are affected can work through the detail. He is right to say that we cannot find all the savings in relation to administrative and back-office costs. We have tried to do so to the greatest extent wherever possible, but there will be some front-line impact, which is one of the unavoidable and regrettable consequences of the economic and fiscal situations that we find ourselves in. 

It is revealing, however, that the hon. Gentleman accepts, in his response to my answer to his intervention, that there will be a difference in pattern of spend. The money that is being lost will not be covered in the same way, pound for pound, or in terms of the kind of spending, by the increase in funding from the national lottery. 

I shall come to some of the other points that the hon. Gentleman has raised. On the share of funding that will go to the voluntary and community sector, I was part of the way through making the point that funding is coming into that through the other lottery distributors as well as the Big Lottery Fund itself. It is also important to realise, however, that in trying to ensure that as much money as possible goes to that sector, we are accepting its arguments—and arguments from the statutory sector—that there must be flexibility in that area. 

That point was raised in the Adjournment debate a couple of months ago, and I reassure the hon. Gentleman, and other hon. Members, that the Government’s view has not changed on the matter. It is important that we are flexible. For example, we might receive an application to the Big Lottery Fund from a local community group—a member of the voluntary and community sector—which is in partnership with, for instance, the local library. It would be a perverse and unwanted outcome if it were turned down on principle simply because the application included a non-VCS partner. We have taken some pains to ensure that the proposed changes on which we have been consulting do not cross that important line. As the hon. Gentleman knows, the consultation closed only a few days ago so the responses have only just returned. We will issue our official response in due course, but I am happy to tell him that on an initial sift most of the reactions in that respect are extremely positive. The respondents are pleased to see that we are maintaining that degree of flexibility. I am happy to reassure him that we intend to do so wherever possible. 

The hon. Gentleman also asked about veterans. It is our intention that our proposed wording of the changes, and the planned policy direction that we have been consulting on, should allow veterans and a whole range of related and similar kinds of applicants to be eligible. The unofficial initial sift of the consultation responses seems to indicate that many other people are equally reassured by that, which is certainly our intention. We hope to clarify that in our official response as well. 

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Both the hon. Gentleman and the hon. Member for Perth and North Perthshire asked about the Government’s plans to reduce the proportion of administrative costs that are charged or lost by the lottery distribution organisations. I am sure that neither was suggesting that they were in favour of large, fat organisations that prevent money from going to the front line. We all agree that our ensuring that as much money as possible reaches the front line is clearly to the advantage of the good causes. Both hon. Gentlemen, however, were driving at the fact that because the Big Lottery makes many grants of small average value to a wide variety of applicants, we must be particularly careful to ensure that we are making it easy and that we are creating capacity among the voluntary and community sector so that they can access and continue to apply for grants successfully. 

I want to reassure both hon. Gentlemen and other Committee members that the Government are concerned about that. We do not plan to apply a blanket cap across everybody, and we will ensure that we reflect that in the directions that we eventually issue. I will have to ask them to preserve their souls in patience until the details are issued, but we accept that the Big Lottery has a slightly better case for having a slightly higher average level of administrative costs per pound dispensed. In general, we want to ensure that every single pound, no matter who spends it, is spent in the most efficient and effective way possible. 

The hon. Member for Dudley North asked me to provide a series of guarantees. He was most insistent on multiple guarantees, asking me to guarantee whether particular projects in a whole variety of good causes would or would not be funded and, if not, what the Government would do about it. I will duck that question, not because I do not have the answers but because it would be improper for a Minister to say that they will direct lottery funding distributors to fund particular projects. 

As I have already mentioned, such work is rightly done at arm’s length because we do not want political favouritism. We do not want the national lottery to be used as some kind of political slush fund for convenient causes. I can promise the hon. Gentleman, as I have mentioned, that the principle of additionality is tremendously important; that it will be honoured; and that the arm’s length principle will be maintained. I cannot tell him, therefore, which projects will be delivered and which will not. He would not want me to be able to, because if I were able to, it would drive a coach and horses through the arm’s length principle. 

The hon. Member for Perth and North Perthshire has asked about the position in Scotland. He was probably suggesting that similar arguments would be made by other devolved Administrations. To be fair, the arguments have come mainly from the Scottish devolved Administration rather than from the others. None the less, I take the hon. Gentleman’s point. It is an issue that we discussed in the previous Adjournment debate and, as he rightly pointed out, there has been a series of informative bilateral conversations between myself and my opposite numbers in the Scottish Executive. 

I do not think that we have reached agreement as a result of those discussions yet, although there has been a lot of serious engagement in some of the numbers. The hon. Gentleman is right to point out that I did not

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recognise his numbers and I do not think that the Scottish Executive necessarily agree with the Government’s numbers on the matter, either. Therefore, it is tremendously important that we continue to engage. I was speaking to Jim Mather MSP about those issues a couple of days ago when I was in Scotland. We made a commitment to each other to ensure that those discussions continue, if only because we have to have a shared fact base, before we can determine what has gone. 

For the record, Mr Leigh, can I just ensure that I put the figures that I have into the public domain? I am not necessarily expecting the hon. Gentleman to agree with all of them, but they will serve as a fact base for the ongoing discussions between our two sets of officials, and with any luck that will move the discussion along a little. 

We believe that because we have two factors happening in parallel and simultaneously, the total amount of money going to the Big Lottery Fund, which I think was the hon. Gentleman’s major concern, will increase in total in cash over the course of the next couple of years. In 2010-11, we expect it to have £566 million and, by 2014-15, we expect that to have risen to £637 million, a very substantial uplift. How is that happening? A number of things are going on. First, the Big Lottery Fund total share of the lottery funding pot is to reduce from 50 to 40%. If nothing else happened, that would result in a diminution of the total amount of cash, not just for Scotland but for the entire voluntary and community sector around the country. However—and I am sure that the hon. Gentleman will understand why—we have timed it to make sure that two things happen in parallel. The fact that the Olympics top slice ends at the same time means that the total amount of money available is going up sharply as well. So the Big Lottery is getting a smaller share of a much larger pie. Therefore, the total amount of cash available will increase. 

There is a question about what may happen in 2011-12 and whether or not there will be a small interim dip. I know that those responsible for the Big Lottery Fund are currently looking at whether they can smooth out that dip and avoid any fall, because the fund has a reserve of cash that has been unspent and unallocated in previous years. They are working hard to see whether they can do that. We will have to wait to see the outcome. That is what is happening with the Big Lottery Fund overall. Therefore, as the hon. Gentleman rightly points out, because the Big Lottery Fund is the only one that has a ring-fenced chunk for the devolved Administration of Scotland, they should benefit accordingly as a result. 

It is also worth pointing out that the other lottery distributors—arts, heritage and sport—do not have a ring-fenced fund for Scotland. We cannot guarantee—for reasons I have just mentioned to the Opposition spokesman—that Scotland will get a disproportionate share, for example, of the sports lottery funding, because that would breach the arm’s length principle. I am sure the hon. Gentleman would share my hope and expectation that, given the fact that the Commonwealth games are coming up in a couple of years’ time, it would be extraordinary if there were not some extremely compelling and impressive bids coming forward from that city for sports lottery funding. I cannot promise anything, but I share his hope that Scotland would do particularly well as a result of that. 

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Pete Wishart:  I am very grateful to the Minister and much reassured by his constructive approach to the issues. I know of the conversations he has had with Scottish Government colleagues and they have been welcome. Where there is disparity about some of the figures, I am more inclined to accept some of the reasons in the persuasive case he has put across, in terms of trying to achieve a mix and match with the figures we have got. Will he speak a little about the impact on the Barnett consequentials from the move away from the Big Lottery funding? An unintended consequence might be the loss of £20 million because the Barnett-plus weighting disadvantage, which goes with the Big Lottery, will be lost by the rest of the money being diverted through arts, heritage and sport. 

John Penrose:  I will endeavour to deal with that. I think that part of the problem is that we are starting from different sets of calculations, which is why the conversations need to be between officials, as much as anyone else. 

I shall deal with the figures that I have for Scotland, as opposed to the outline of the Big Lottery Fund for the UK, and take Scotland as a whole, to include not just the ring-fenced amount for the Big Lottery Fund for Scotland but the amount that in the past has gone to Scotland through the other lottery good cause distributors. Let us assume for the moment that the percentages stay the same; as we have been discussing, it is entirely possible, for example with sport, that that percentage might increase, given the advent of the Commonwealth games. 

However, even if we make the conservative assumption that those proportions going to Scotland through arts, heritage and sport do not change at all—and the amount going through in Big Lottery funding is obviously a locked-in number, because it is legally ring-fenced—the figures that I have are that for 2010-11 the total amount of money going to Scotland will be £122 million. I do not know whether that matches any figures that the hon. Gentleman has, but I hope it is at least in the ball park. 

By 2014-15, if we include all the lottery distributors on the standard continuous percentage that has been the case in the recent past, that number will go up from £122 million to £164 million going to Scotland, which is a significant increase. That is not making any assumptions, as I said, about increases in percentages, which may or may not happen to sports lottery funding distribution. 

I hope that that reassures the hon. Gentleman that, based on our numbers, at least, Scotland will not suffer. It is certainly not our intention that Scotland should suffer. If, based on the technical discussions that we are having, and which we need to continue with, that turns out to be wrong, we shall clearly be very concerned, because that is not our starting point or what we want. We are particularly concerned, for example, to ensure that the Commonwealth games in Glasgow should be a thumping success, not just for Glasgow and the whole of Scotland but for the entire country. They should be an event we can all be proud of. 

The Chair:  Mr Reckless, you have asked to speak again. The way we do things here normally—I looked around deliberately—is to have a general debate, to which the Minister replies. You may say your piece briefly, but then the Minister will have to reply a second time. 

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5.17 pm 

Mark Reckless:  Thank you, Mr Leigh. You properly upbraided me for bringing into the room an illegal substance, which I note for the record was coffee. I have also had difficulty with some of the legal substances that I have brought in. Several statutory provisions are referred to in the explanatory memorandum; I considered them at least briefly beforehand, and am disappointed that they are insufficiently comprehensive to enable me to understand all the debate. 

Reference is made to the original position in which 20% went to each of arts, sport and national heritage, and the amendment of those percentages. Our attention is drawn to two statutory instruments—the Apportionment of Money in the National Lottery Distribution Fund Order 1999 and the Apportionment of Money in the National Lottery Distribution Fund Order 2000. Unfortunately, by the time of the 1999 order, the element for health, education or the environment had already been introduced. That was 13.33% even before the 1999 order. Then, extraordinarily, the order increased it temporarily to 60%. That was with a separate charitable stream. I have some concerns just about that, and would like things clarified. 

As to the combined charitable and potentially top-sliced section, together with additionality issues—the health, education and environment element—I welcome the fact that it is to come down from 50 to 40%. However, I was concerned by the reference in the explanatory memorandum to our going back to the original allocation of 20% each for the good causes of arts, sport and national heritage, and 40% for the fourth good cause—the Big Lottery Fund share. The original situation was 20% for charity and 20% for millennium goals. Now we are going to allocate 40% to charitable causes, plus the health, education and environmental issues. 

I have heard what the Minister has said about the need for flexibility, and I understand that, but perhaps he could give us some assurance about that flexibility with respect to the 40%, which will cover charitable purposes combined with additional health, education and environment purposes—things that the Government might otherwise fund. Will he assure us that the emphasis on the charitable side will be at least as great as it was when the National Lottery etc. Act 1993 was first passed? 

John Penrose:  I am happy to provide that assurance and will broaden it a fraction from the charitable sector to the voluntary and community sector, which I am sure my hon. Friend would agree does not just include charities, but a range of other legal bodies. The whole point of the measures is to ensure that as much as possible of the money—it is currently 92%—goes to the kinds of bodies and purposes that he is talking about. My earlier example of a joint application from a voluntary or community sector organisation could mean a charity working in partnership with a local library as part of a small local consortium, and there would be an element of flexibility at the margin. As I have said, the Big Lottery Fund has increased the money available to the voluntary and community sector to 92%, so the vast majority of its money is already going to the bodies and courses mentioned by my hon. Friend. We do not want to reduce that at all. The only thing that we are trying to do is to make sure that we do not count out unintentionally

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any sensible partnership between the public sector and the voluntary and community sector, because the overwhelming feedback that we have received from the voluntary and community sector is that that would be to its disadvantage and to that of the people who it serves. 

Question put and agreed to.  

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That the Committee has considered the Draft Apportionment of Money in the National Lottery Distribution Fund Order 2010. 

5.21 pm 

Committee rose.