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Lord Burnham: My Lords, I thank my noble friend for giving way. Is he going to continue for very much longer? If so, we can all go and have a cup of tea while he continues.

The Earl of Gowrie: I am on my last paragraph. While, after 1st May, I may well be the noble Lord's noble friend, if he continues to behave like that, I probably will not be.

My Lords, I recognise--and as a former Treasury spokesman with Cabinet rank, I even approve--public spending restraints, however painful. But new money is not here required: commitment is. It involves all the big regional projects I mentioned as well. It depends on the political parties continuing with a programme of cultural regeneration, education and the creation of audiences and artists, at very least until the middle of the next Parliament. This Government have a unique and golden opportunity to restore confidence which they have lost, in the world of the arts through allowing for the provision I have urged. They must make their commitment plain and make it now.

3.3 p.m.

Lord McNally: My Lords, it would be presumptuous of me to follow the noble Earl, Lord Gowrie, and his manifesto for the arts. It has been an extremely well-informed and often passionate debate. I have learnt

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a great deal. I hope that the right reverend Prelate the Bishop of Leicester takes comfort from the success of the noble Viscount, Lord Falkland, with scratchcards. That can only be confirmation of the text that to him that hath, much will be given. The Minister, having confessed that he is in the House as a Treasury Minister, will, I hope, take back to No. 11 the message that each time the Treasury was mentioned it was like Captain Hook in the pantomime. There was hissing and booing in the great tradition of a Christmas show.

I share the doubts expressed by my noble friend Lord Redesdale and the noble Lord, Lord Skidelsky, about the "people's" lottery. I have a certain distaste for such populism. I think that, like patriotism, it is the last refuge of scoundrels. Parliament is rightly concerned about what the Government are doing with the lottery. If I have correctly gauged the tenor of the debate, the verdict at best seems "not proven" with regard to their intentions. I suspect that the House will want to probe the matter deeply in Committee.

When Parliament set up the National Lottery, it had some very clear ideas. It wanted a lottery which was corruption and crime free. We may take that for granted now, but it is not always as guaranteed as one might like. It should not be a pork barrel for the politicians of the day. It should not be a honey pot for the Treasury to raid at will. There should be transparency in both the conduct of the lottery and the distribution of the funds to good causes. Those were Parliament's original intentions; I thought that the last administration got it right.

Perhaps I may say a word about the selection of Camelot. At that time I advised one of the losing companies, the Rank Organisation. Although Camelot may not always have played its public relations with consummate skill, we must acknowledge that it has run the lottery with very great skill indeed. A number of noble Lords quoted the brief supplied to us by Camelot, which states that the National Lottery is the world's most efficient in terms of percentage sales to good causes and duty to government. If that is true, my strong advice to the Government is, "If it is working so successfully, don't try to fix it" because a miscalculation as to who runs the lottery would have a catastrophic impact on the cash flow to good causes which are now working, as is the Government, on the assumption that whoever runs the lottery will do so at least as well as Camelot. The decision on who succeeds Camelot--whether it is Camelot or some other body--must take into account the very high standards that Camelot has set.

I welcome some of the tweaking in the Bill. I acknowledge that the Government are within their rights to tweak the original Act, as they succeeded to it. Like the noble Lord, Lord Howell, I would welcome the right to solicit. It is silly that those administering the funds can neither solicit nor delegate. Both of those provisions will strengthen the legislation. I, too, welcome the idea of a strategic plan.

I return to a matter I raised a couple of weeks ago in your Lordships' House. I refer to the question of sport in schools. On that occasion I raised a parallel question

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to that just asked by the noble Earl, Lord Gowrie, about funding after 2002. At the time of that debate, the Central Council of Physical Recreation asked me specifically to raise the matter with the Minister who was to respond to the debate, the noble Baroness, Lady Blackstone. I confess that on that occasion I asked the noble Baroness a lot of questions, so it might have been a complete oversight that she did not answer that particular one. I shall ask the Minister only one question today: will sport continue to be a major beneficiary after 2002? As the noble Earl, Lord Gowrie, said in connection with the arts, it is important to have an answer to that question, particularly if, under this Bill, the Government are demanding long-term strategies and long-term planning from the sports organisations.

There is another argument in favour of sport being a recipient of lottery money. I refer to the very eloquent comment made by Mr. Joe Ashton, Member of Parliament, at the time that the idea of the national lottery was being debated. He worried that the lottery would be a way of plucking money from the pockets of people who stood on the terraces and of putting it into the pockets of those who sat in boxes in opera houses. I do not want to get into a debate about the merits of funding. However, a good number of people who play the lottery are sports fans. Research reveals that when the lottery began 40 per cent. of people supported the idea of sport being a major recipient of lottery money. In the three years that the lottery has been going that support has increased to 60 per cent. I suspect that the reason is the strategy of the Sports Council to put lottery money into visible projects that are beginning to have an impact on communities and the lives of individuals.

A number of noble Lords expressed concern about the sixth good cause which covers education, health and the environment. The concern is that although it has great merit it also has many dangers. It involves the possibility of pork barrel politics and Treasury plundering. Most dangerous of all perhaps is the potential for it to become the cuckoo in the lottery nest which over a period of time squeezes out the other good causes. This is a real concern. The noble Lord, Lord Skidelsky, asked what would happen if lottery funds fell for any reason. I suspect that the sixth good cause would remain intact because we know that it is really government spending on projects that should be the subject of general taxation.

During an earlier debate the noble Baroness, Lady Blackstone, made it clear that the Government, in the area of education, would give priority to the drive for literacy and numeracy. That is quite understandable. However, that is why we must be concerned that the intention to give sport a certain percentage of lottery funding is protected. I firmly believe that sport is not only good in itself but that it can promote a whole new commitment by parents and pupils to their schools. I urge the Minister to adopt lateral thinking in relation to healthy living standards, schools, clubs, and voluntary clubs and the extension of the role of NESTA in sporting talent. Do not exclude sport from involvement in these projects. If these projects have a sporting element, young people can be attracted to them.

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Both the CCPR and the National Association of Head Teachers have drawn to my attention that one of the reasons why primary schools do not get their fair share of lottery funding is that many of them are small and there is a need for security for young people. For example, it pretty well rules out a large number of adults going into school premises during the school day. The 40-hour rule for community use is very difficult to fulfil. If that is preventing primary schools from getting funding the rule should be changed. I echo the words of the noble Lord, Lord Howell. If sports funding money can be put into deprived communities and into schools it can have a disproportionate effect on the lives of those who live in those communities.

Funding by the Sports Lottery Fund has contained priority area and school community initiatives which have had an impact. I was interested, however, to hear what the noble Lord, Lord Howell, said. If what he said is the case, there is a need for a further look at how funds are distributed. I hope that the freedom-to-solicit provision will enable the opportunity to be taken to do that. Independent monitoring of the first 320 completed projects has shown that the participation by under 18s has tripled; participation by women has doubled; and participation by people with disabilities has doubled.

We have seen that during its first three years the lottery has had an impact, especially as it is used for sporting organisations. That is why it receives support. Over 90 per cent. of all schemes approved, amounting to 65 per cent. of the amount committed to date, have been community level schemes under £100,000.

The noble Lord, Lord Bassam, referred to cricket. Cricket has received more capital awards than any other sports. I do not know whether that was the influence of the previous Prime Minister. The lottery has made a substantial impact on the development of the game. There have been 400 awards to cricket organisations of lottery funds amounting to about £48 million. Of those awards, 290 were for new or additional provision. The example of cricket can be seen in other sports where lottery money has been provided to build up the sport from the grassroots.

The various sporting bodies have already shown themselves capable of developing long-term strategies for sport which are fully compatible with the Government's other priorities, such as inner city deprivation, underclass alienation, and health and education enhancement. But sport is worried that the Bill has too much potential for thin-ended wedges and slippery slopes, and not enough recognition of the need for long-term funding. There is too much potential for sport to be squeezed just at the time when its potential for contributing to social well-being and social progress has never been greater.

There are two challenges for the Minister. One was well put in the Evening Standard last night in an article by Liz Forgan. She said of the new opportunities fund in relation to health, education and the environment:

    "In what way is this spending on health, education and the environment different from the Government's normal spending on health, education and the environment? Send for a Jesuit. This is theology beyond the discernment of ordinary folk".

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I suspect that it is beyond the discernment of most people in the House.

The other warning I would sound relates to our beloved millennium dome. An article in the Guardian today claimed that if the dome results in overspending in a big way, the Government will raid lottery funds to bail it out. We know who will be squeezed by such a raid. I give Ministers fair warning that if they think they are going to raid sports funds for the Greenwich folly they will have a great deal of opposition, and it sounds as if it will come from all sides of the House. I hope that in those warm and friendly terms I can encourage the Minister in lateral thinking and look forward to his response.

3.20 p.m.

Baroness Rawlings: My Lords, we have been privileged for almost four hours to listen to many outstanding, fascinating, wide-ranging and interesting speeches from so many distinguished speakers and therefore I rise with humility to add my few words.

The National Lottery was a tremendous event for this country, set up by the previous government. I remember it well as it was during the same week that I made my maiden speech. I said then that we had taken an important step in line with the rest of Europe and I congratulate the former Prime Minister, John Major, as did my noble friend Lord Gowrie.

The National Lottery has proved to be an even more important step than I imagined because of the large sums of money it has generated; £4.2 billion to date for the five good causes. I agree with the noble Lord, Lord Annan, and my noble friend Lord Hindlip that the money does and will enhance the quality of life. However, the purpose of the Bill is to divert the lottery from the purpose for which it was set up.

The provisions of the Bill blatantly breach the additionality principle, as we heard in an eloquent and brilliant speech from my noble friend Lord Skidelsky and from the noble Lords, Lord Redesdale and Lord Charteris. It is contrary to the principles of the 1993 Act. In their White Paper, the Conservative Government stated:

    "The Government is firmly of the view that the proceeds should not be directed towards the main area of public expenditure, and that it would be inappropriate for the lottery to be seen as a way of funding the National Health Service, education or similar programmes ... The Government does not intend that money provided from the lottery should substitute for that provided in other ways".

Assurances that the Conservative government were strongly committed to additionality were repeatedly given in Parliament. Indeed, this was done to oblige the then Opposition, who pressed for the principle to be enshrined in law. When the Opposition became the Government, the Prime Minister said:

    "We don't believe it would be right to use the lottery to pay for things which are the Government's responsibility".

Sadly, I cannot agree with the noble Baroness, Lady Young of Old Scone, who did not agree with that, but I can agree with my noble friend Lady O'Cathain, who stressed the point.

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Yet, the new opportunity fund proposed by the Bill is to fund areas which traditionally have been funded out of general taxation: health, education and the environment. Recently it was announced that the new opportunity fund will pay for a scheme to extend school childcare. The partnership funds are to be provided by the Exchequer. This proves that any claim that the Government are respecting the additionality principle is hollow. It is a slippery slope. But as was rightly said by the noble Lord, Lord Howell, the importance of sport should be considered. That was also mentioned by my noble friend Lord Rowallan and the noble Lords, Lord Bassam and Lord McNally. I believe that provision for sport should be considered, but not by raiding the lottery.

The Conservative Government also legislated to ensure that lottery money was distributed to the good causes at arm's length from government. With this Bill, the arm's length principle is also jettisoned. That was clearly explained by the noble Lord, Lord Rothschild. The Government are given powers to specify by order, rather than through primary legislation, which initiatives the new opportunity fund is to support. That is referred to in Section 43B of the Act.

The endowment of NESTA, after the first year, may be increased by an order raiding the National Lottery Distribution Fund at the expense of the other distributing bodies. That is referred to in Clause 17 of the Bill. Do we really want that?

The Bill also gives powers to the Secretary of State to instruct the distributing bodies to prepare strategic plans in Clause 11. Those are redolent of the single programming documents of the European structural funds, the key instrument for implementing social policy from above. I do not believe that we should dismiss totally the new ideas on funding made by my noble friend Lord Inglewood in his very entertaining speech.

That centralising trend and grabbing attitude are no surprise. The Secretary of State has already shown his colours by earmarking funds for the new opportunities fund ahead of the enactment of legislation and in breach of the 1993 Act, as we heard from the noble Lord, Lord Redesdale. Moreover, he did so before the consultation process was complete, showing little respect for the people or their representatives. This will no longer be the National Lottery; this will be the lottery of a government displaying great arrogance. We have been told by the noble Lord, Lord McIntosh, that the Secretary of State will now appoint the members of the new lottery advisory panel and the members of the new opportunities fund--surely yet another arm of government.

The National Lottery as set up by the Conservative government has been dramatically successful. If proceeds for the original good causes are set against the relevant central government expenditure, the lottery has brought additional funds equal to an increase of about 110 per cent. in each of the first two years of operation; that is, £4.2 billion in all, including the millennium money.

The Bill, which gives the Government the scope to subsidise general expenditure, will severely damage the original good causes, as we have heard in the very

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forceful speech by the noble Lord, Lord Rothschild. The proposals for the new opportunities fund and NESTA have already diverted funds away from the five original causes, from the National Heritage Memorial Fund, by approximately £50 million, despite the fact that the backlog of capital underfunding has not been cleared. I agree with the noble Viscount, Lord Falkland, that fines would eventually lead us to less money for good causes.

The intention of the 1993 Act was precisely to provide the capital funding needed to put buildings into the state in which people expect to find them. I am pleased that the right reverend Prelate the Bishop of Leicester mentioned the importance of our heritage covering churches and cathedrals and that they should not suffer from the new good cause. For example, the Arts Council of England, expecting a £190 million loss of its share of lottery proceeds, has announced a capping of single capital projects. What is to be the fate of outstanding schemes like the South Bank and the V&A Spiral which are going to benefit millions? The Arts Council of England is also expected to have to reduce drastically the funds set aside to Arts for Everyone from 20 per cent. to 16.66 per cent. That is a heavily oversubscribed scheme intended to benefit the many. The noble Earl, Lord Gowrie, referred to a revenue famine.

Furthermore, the Government have broken the equitable allocations to the five original causes. In view also of the provisions made for NESTA in Part II of the Bill, they appear therefore to intend to squeeze progressively the original five. Will the Minister give us assurances that that is not the intention? I am pleased that my noble friend Lord Rowallan mentioned the distribution deficiency of the funds and reminded us of the Treasury take.

The lottery proceeds were intended,

    "to be a source for projects of lasting benefit to the nation".

They were not intended to be used as a slush fund by a government intent on frittering away public money on the latest public relations stunt.

We oppose this Bill both on principle and because we believe that in practice it will not benefit those whom it purports to benefit. This will no longer be the National Lottery. It will simply be the government lottery.

3.30 p.m.

Lord McIntosh of Haringey: My Lords, after that, I shall start by saying that I agree with the noble Baroness, Lady Rawlings, on one point--although I suspect on one point only. The noble Baroness paid tribute to the star-studded cast which has addressed the House this afternoon; indeed, she is entirely right. It would be invidious to pick out individual noble Lords who have made great contributions. However, I believe I ought to pay particular tribute, first, to the noble Lord, Lord Rothschild, who is to retire shortly as chairman of the National Heritage Memorial Fund; and, secondly, to the noble Earl, Lord Gowrie, who is also to retire shortly as chairman of the Arts Council. Their ability to contribute to our debates is much appreciated. I shall, I hope, be able to deal with the points that they raised.

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The noble Baroness, Lady O'Cathain, used a horticultural metaphor at one stage of her speech when she referred to the timing of the Bill. She accused us of seeking to pull up the roots of the National Lottery etc. Act 1993. I hope to persuade her that we are certainly not pulling up the roots of the Bill; indeed, it fits into the structure of the 1993 legislation. We are not even seeking to pollard the Bill. What we are doing is a necessary four-year pruning of the Bill to improve the areas where, quite understandably, it could not be perfect. We shall be building on the most important benefits of the Bill and seeking to create new opportunities arising from the undoubted success of the lottery, to which many noble Lords rightly referred.

In responding to the debate, I propose to cover the following subjects. If I miss either completely different subjects or individual bits of my subject, I apologise and I shall of course write to noble Lords on such matters.

I shall, first, deal with additionality. Then I shall respond to comments made about the new opportunities fund. Thereafter, I shall respond to the debate about the impact on existing good causes and deal with the admittedly tricky business of the balance between the arm's length principle and accountability, because there is no completely right answer in that respect. After that, I shall deal with the difficult balance between the accusations made of retrospective action and the equally powerful accusations which have been made as regards the existing funds of underspending. I do not believe that noble Lords have quite recognised that the modest amount of retrospection announced in the Bill is an attempt to deal with the other problem which they have identified. Finally, if I have time, I should like to talk about the accusations of bureaucracy and then say a few words about NESTA, the National Endowment for Science, Technology and the Arts.

I shall begin with additionality. There are many definitions of this word. It is noticeable that they were not included in the 1993 legislation. I have pages and pages of them, but I shall pick just two. The first is the most detailed exposition made by the Conservative Government during the passage of the 1993 Act. It was made by Mr. Key in the other place on 25th January 1993. He said that,

    "the proceeds of the national lottery should not substitute for that provided in other ways. The proceeds will not be brought within the controlled total, and the Government will not make any case-by-case reduction in conventional expenditure programmes to take account of lottery proceeds. The Government will continue to provide the finance necessary from within public expenditure programmes to enable their policy objectives to be achieved".--[Official Report, Commons; 25/1/93; col. 804.]

I am sure noble Lords will agree that that is a minimal definition of additionality, as proposed by the previous government.

I turn now to a speech made by the present Secretary of State, Mr. Chris Smith, at a conference on 24th September when he said:

    "The new opportunities fund will only support initiatives additional to core funding programmes funded from taxation. Perhaps I can expand on this. The Government have a strong and abiding commitment to the principle of additionality. That means that lottery funding will not be used for core areas like NHS beds

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    or school buildings but will focus on innovative and desirable initiatives outside those areas--areas that the Government do not currently fund but which are desirable".

I think that is a much more constructive definition of additionality and it is one which is reflected in the provisions of this Bill.

The noble Lord, Lord Skidelsky, has described what we are doing as devoid of principle and logic. The noble Lord, Lord Redesdale, has described it as "smash and grab". The noble Lord, Lord Charteris, spoke of hijacking. The noble Lord, Lord McNally, referred to scoundrels. The noble Baroness, Lady Rawlings, referred to a slush fund. I rather think that some noble Lords have gone a little over the top.

Let us look at what is in the Bill and in the announcements that I made in my speech about the new opportunities fund. It is on those matters that the accusation of breaching the rule of additionality stands or falls. I refer to healthy living centres. I read what was said by my old and dear friend Liz Forgan in the Evening Standard yesterday, but I think she is completely wrong. Healthy living centres promote health and well-being in a variety of innovative ways. They will not provide core medical services, which are properly the responsibility of the NHS.

I refer to out of school hours activities. There has never been under any government the statutory provision for out of school activities which was referred to. However, I quite agree with the noble Lord, Lord Skidelsky, that such activities are essential for the national curriculum. But if that is the case, why did his government not provide them? I agree with the right reverend Prelate the Bishop of Leicester in his assessment of the value of that provision for society as well as in terms of education. There is no obligation on any government under any statute to provide those facilities. No one has done so until now. We can do so because we have this money and we can provide these facilities on a nationwide scale rather than as pilot projects.

Exactly the same argument applies to childcare. There is a modest amount of Exchequer revenue to kickstart the programme, but without additional funding it would simply not be possible. IT training for teachers is exactly the kind of programme for which lottery funding is needed. IT training for teachers has been neglected for many years. The expenditure which is proposed over the next few years is intended to enable us to catch up with what should have been done before. Once that has been achieved, and 500,000 teachers and 27,000 librarians have been trained, a much smaller annual sum will be involved but the benefit will be felt for many years. What better subject could there be for lottery funding?

I reject comprehensively the accusation that we have breached the principle of additionality. I do so because it seems to me that there is a great deal of cultural lack of understanding in what has been said. I reject the accusation on behalf of the arts, sport and heritage. It appears to be thought that any lottery money which is spent on the arts, sport, heritage and culture is somehow, by definition, additional, but that these initiatives in the

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area of health, the environment and education are somehow entirely government responsibilities. The contrast is by no means so clear.

A number of noble Lords, notably my noble friend Lord Howell, the noble Lord, Lord McNally, and the noble Baroness, Lady Young of Old Scone, referred to the new opportunities fund in terms that I find helpful. They have pointed out the interaction between the new opportunities fund and the existing funds.

As my noble friend Lord Howell said, the new opportunities fund projects will make a positive contribution to sport and the arts. As my noble friend Lady Young said, the existing funds have made a positive contribution to the environment which is one of the objectives of the new opportunities fund. I believe that that shows even more strongly that the body is not totally outwith the spirit of the 1993 Act but the rationalisation and expansion, using new money, of the programme set out by the previous government. There has been, understandably, no detailed examination of the new opportunities funding provisions because they are not in the Bill. No one knew about them until I announced them in more detail today. So I shall pass over that part of the problem.

However, as with existing funds, there should be no fear that the new opportunities fund is being overspecified by Government. We had to make a start; and we had to propose the first three major areas. But once those schemes are in operation, continuing funding from the new opportunities fund will be the responsibility of the directors of the fund rather than of central government, and there will be no difference.

I should say a word about the many pleas made for assurances of continued funding under the new contract. The 1993 Act sets out that the new contract provides an opportunity for review of the amounts of the existing funds, even of the existence of the existing funds. Therefore I am in no different position from any Conservative government Minister in saying that no guarantees can be given of future funding. But of course we shall seek to ensure, as the previous government would have done, that success is built upon.

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