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Lord Cledwyn of Penrhos: My Lords, I am enjoying the noble Earl's important speech. However, is he not sad that he cannot include an opera house in Cardiff in that list?

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The Earl of Gowrie: My Lords, although I am privileged to be a resident of the Principality of Wales, sadly my writ does not run there. If the noble Lord will suggest that it does, I shall see that he gets his opera house.

I believe that, only 14 months on from our first awards last year, it is right to be thoroughly positive--to be bullish even--because I have no doubt whatever that so long as any modifications we make to the lottery and its mechanisms are made in the light of reality, rather than on the grounds of fleeting public perceptions as interpreted by the commercial press, we shall indeed go further up the slopes of Parnassus than at any time since the war. More important still, more and more people will enjoy the climb and become entranced by the view. However, there is a difference surely between being positive and being bland. Any revolution is fraught with difficulty and controversy, and if it is not it is probably not worth doing.

Let me close with the two most considerable of these difficulties and say what, in our field, we are trying to do about them. There is the confusion in the public mind--expertly exploited by the Treasury--between the rules that govern the lottery awards and the rules that govern the grants we make for the support of the arts with the money Parliament votes to that end. Public confusion on this issue extends to Parliament itself and, in my experience, even to Government. It is felt that the arts are all right, and perhaps even rather spoiled, so what on earth is the council doing moaning about cuts and demanding more money?

The short answer is that we are not allowed to use lottery money, nor even the rapidly compounding interest on sums awarded before they are called down, to look after the arts themselves. We can build shining new palaces of culture, and some very needed and exciting bids such as the new centres at Stoke-on-Trent and Milton Keynes, and Alan Ayckbourn's theatre at Scarborough have been successful. But we cannot fund what goes on inside them. On top of this, the funding consensus, which has always governed the council, has in effect broken down. Successive governments may not have provided the money needed but they broadly maintained the provision. Now it is not only being cut in real terms; it is being cut in cash terms.

Since I became chairman of the Arts Council of England only 26 months ago, the Government have cut our current budget by about £17 million in real terms. A further £3 million cash cut is threatened next year. On an annual budget to England of less than £200 million this is having a devastating effect. In terms of my Motion, it is creating cynicism and dismay about the lottery. The administration which, with the institution of the lottery, has offered so much possibility to the arts, is at the same time making it exceptionally difficult for the arts to take advantage of what they have been offered. One of these days a number of cherished orchestras or theatre companies will go bust. I do not believe for a minute that you can indefinitely protect every cultural institution from market changes, but any collapse will be, to put it politely, puzzling to people. "What happened to the lottery?", they will say.

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Things are not only bewildering to the public. How would you feel if you were a second violinist in a London symphony orchestra, had trained hard for 10 years, were paid about the same as a 23 year-old typist, and were now reading about your funding Arts Council having more than one-and-a-half times its annual grant to spend on cultural facilities? "What are they going to put into these buildings?", you would say. I very much welcome the Secretary of State's new directions in respect of new works, new talents and the making of new audiences. But those will take quite a time to work through. Our problem is getting from here to there.

The Secretary of State has sought to address this crisis with new directives. I am very grateful to her. It looks as though there will be a small but welcome shift from capital to content, from buildings to people and audiences, particularly young people. But the same financial regulations, different from those which govern our grants in aid, and the same need for challenge funding, will remain. The English have a genius for surrounding beautiful creations and concepts with rings of regulatory fire. Somewhat to my surprise, I now find myself in the unlikely role of Siegfried, hacking my way through these so that Brunhilde may ride once more to our rescue.

Anxiety has been expressed about the share of grants between the capital and the regions. Of our own awards, the largest share has so far gone to London, as one would expect, London being the national capital of a small country. The figure is £216 million for 136 projects, followed by the North West. But, as the House of Commons All-Party Select Committee concluded,

    "the Lottery grants do not go invariably, or even usually, to such plush recipients as the Royal Opera House ... Countless inner city and rural enterprises have benefited, ranging from community centres to amateur sports clubs. But ... it is right that national institutions--like Covent Garden in London or Hampden Park in Glasgow--should receive substantial amounts. They ought to be causes of national pride not envy".

That view was backed by my right honourable friend the Deputy Prime Minister in a trenchant speech at the Royal Society of Arts last month, and I agree with him. But as more money is raised and more grants are made, we are confident--and we are working with the regional arts boards to ensure it--that the regions can share fully in the spoils that the lottery brings. I can say, hands on heart, that so far no award made in one part of the country has been made at the expense of any award made in another part of the country. To date we have had sufficient money.

To quote the Select Committee in terms which I hope will set some of the agenda for this debate,

    "just for once, let us praise something which has been done well and gone right".
My Lords, I beg to move for Papers.

3.32 p.m.

Lord Howie of Troon: My Lords, it is extremely agreeable to see the noble Earl, Lord Gowrie, in his place addressing us again. He has not done so too often in recent years. I remember the elegance and grace with

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which he discussed with us such unlikely matters as industrial relations in the 1980s. I am glad to see him back. It is good, too, that he is raising this matter with us.

I begin by giving a total welcome to the idea of the lottery. I think that Britain is a nation of gamblers. My own family has spent a lifetime betting on horses--which explains our present poverty. There is no reason to gainsay the lottery. I have no truck with the puritans among us who oppose it.

However, there is one factor to be remembered. That part of the lottery revenue which goes to the various good causes indicated by the noble Earl is a hypothecated tax, and should be considered in those terms. I welcome the lottery. I welcome the fact that a tax is involved which goes to good causes. However, I nevertheless have some unease. In the course of seven minutes, I can only niggle. I cannot express my approval at great length; noble Lords will have to take the approval for granted and take my niggles as peripheral.

Disquiet has been expressed in public about the initial distribution of the funds. I say immediately that I entirely agree with what the noble Earl said: that for the overwhelming part the distribution has been sensible. He would probably agree that the distribution of funds got off to a rather bad start. The situation was not well received and not well understood.

My views are these. Where we deal with the distribution of large sums of public money, the project should preferably be necessary. One high profile early project caused a good deal of harm to the lottery funding arrangements. I refer to what is popularly called the South Bank Crystal Palace. The South Bank is a conglomeration of buildings of a brutalist architectural persuasion. The proposal was that those buildings should be covered over with a large glass and steel canopy. It was an elegant architectural and engineering solution to a problem had a problem existed. There was no problem. Those buildings already had roofs; they did not need another roof. Elegant arguments were put forward that the concept would produce a contained environment of some kind. Of course it would produce a contained environment--but an unnecessarily contained environment. That project came too early. It might have been acceptable had the concept arisen much later in the distribution of funds.

There were two aspects that were wrong: first, the roof was unnecessary, and to some minds it architecturally clashed with the rather severe, brutal concrete buildings which already existed--and which I rather like. But there was another serious problem: the architect concerned in the project was involved in some way in the distribution of funds; he was close to the decision. I know that he left the room while the decision was taken. But even if one leaves a room, in an organisation in which you are concerned and important can you really have left totally? Do you not leave a miasma? Are you really not there? Do your colleagues not recognise your position?

The Earl of Gowrie: My Lords, I am most grateful to the noble Lord for giving way. I believe the answer to this dilemma, at least in the case of the Arts Council,

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was succinctly put by the previous Secretary of State, Stephen Dorrell. He said that, broadly speaking, one could have a system where decisions are made by participants, the people who were highly involved in the arena, or one could have them made by civil servants. If one has decisions made by participants, one has to put up with a certain amount of linkages and trust procedures that are instituted to deal with that.

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