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The Earl of Gowrie: My Lords, the noble Lord claims that they are a better government than the previous one.

Lord McIntosh of Haringey: My Lords, this Government do not claim to be more rigid than the previous government, in this respect among many others.

Lord McNally: My Lords, I am conscious of the time. However, in the Bill the Government encourage strategies but apparently without the funding for those long term strategies. That is the problem which concerns both the arts and the sports bodies.

Lord McIntosh of Haringey: My Lords, that concern is entirely misplaced. I shall come to the reference to strategies in due course, but there is no

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reason to think that the requirement on funds to produce strategic plans is in any way a diminution of any security that may exist for future funding.

I turn now to the accusation that the existing distributors will lose money. It took up a good part of the debate. I can only repeat, perhaps more loudly and forcefully than I was able to do at the beginning, or than other Ministers have done, that the existing funds are still on course to receive their share of the £9 billion over the life of the licence that they originally expected. The sum of £9 billion is not an insignificant influx of funds into sectors that could never have been a first priority of government before the launch of the lottery. No change is proposed in the Bill from that which was intended by the Government and expected by the existing funds when they were established. What has changed is that more money has become available because of the success of the lottery. Noble Lords who think that that success is fragile should listen to those other noble Lords who have paid glowing tributes to Camelot. If the glowing tributes are right--I have no reason to suppose that they are wrong--I do not think that Camelot has run out of marketing initiatives. I have no reason to suppose that it will not think of new ways of ensuring that the income from the National Lottery keeps up. After all, it is fundamentally in its interests to do so.

Baroness O'Cathain: My Lords, I thank the noble Lord for giving way. I shall be brief. He said that the good causes will receive as much as they expected to receive when it was first estimated that the amount was £9 billion. But, in fact, they will not receive the same percentage. There is only one winner in all this--that is the Treasury, which will receive far more than it expected since the sums of money will be bigger.

Lord McIntosh of Haringey: My Lords, the percentages going to good causes, including the new opportunity funds, will be the same as they would have been under the 1993 Act had we not amended it as is proposed in this Bill. The percentage going to the Treasury is unchanged. The amounts of money--spending is in pounds, not percentages--are no less than was originally anticipated. I am afraid that the noble Baroness's earlier remarks were mere assertions; they did not go any further than that in terms of argument. My advice is that the £10 billion is a cautious figure. I and my advisers believe that Camelot will continue its marketing activities. If anything, the chance is that there will be more money available for good causes in general.

Under those circumstances I have to reject the arguments that the additional funds--whether it be the National Heritage Lottery Fund, the Arts Council, the English Sports Council or any of the other distributors--are losing money in such a way that they require assurances from me of the indefinite continuation of their funds. The Government have assured them that they will receive the money that they expected, and will continue to receive that money until the end of the present licence. No further assurance has ever been possible.

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A number of noble Lords made a point about other people losing money, notably the charities. As will be known, we have carried out research, together with the National Council for Voluntary Organisations, on the effect of the lottery on charitable income. I do not deny that some charities--by no means all--have experienced a reduction in charitable income over the period. Whether or not there is a causal effect can never be established.

I remind the House that the National Lottery Charities Board has distributed some £680 million to charities and voluntary organisations since the launch of the lottery. I make that point particularly to the noble Lord, Lord Rowallan, who raised the matter. I know that the right reverend Prelate has had to leave to make a broadcast, although I believe that he will return to the House--

Noble Lords: He is there.

Lord McIntosh of Haringey: My Lords, I am delighted to see him "outside the wall", so to speak. We are continuing with our policies of seeing to it that hard gambling does not take place in soft locations, so to speak. We are continuing to review our policies on gambling. The Home Office has a draft Bill on the subject which it hopes to introduce before too long. I will take the right reverend Prelate's points about the need for a continued review of gambling back to Home Office and other Ministers.

I now turn to the issue of retrospective funding versus underspending. What we did, in accordance with many precedents, which the Official Opposition will no doubt recognise from their comprehensive experience of government, was to announce, on 1st October, that from 14th October the percentages would change and money would be put aside for the new good causes. That appears to have caused some outrage, as if something had happened which was new and entirely illegitimate. What we are doing is trying to avoid the problem identified by many noble Lords of the underspending of money. The National Lottery Distribution Fund has, as pointed out by a number of noble Lords, vast amounts of money sitting in its funds that has not been distributed to the good causes. That cannot be right. It must be right that we should seek to kickstart our new opportunities fund as best we can by the modest means that we have adopted.

The noble Lord, Lord Annan, asked me about interest and I gave an instant answer which was not wrong but incomplete. There are two kinds of interest. The one to which I referred was the interest due from Camelot on unclaimed prizes which it is donating to good causes. The other is the interest on the underspend of the distribution fund, a very much larger figure. That also goes to good causes and it is going currently at an interest rate of 7 per cent.

Lord Skidelsky: My Lords, does the noble Lord agree that the power to divert money from the five good causes to the sixth cause which is mentioned in the Bill was not given by the 1993 Act? Therefore, the

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Government have no right to do it. It may have been convenient to do so, but does the Minister agree that they were acting illegally in the matter?

Lord McIntosh of Haringey: No, my Lords, I do not agree. They were acting in anticipation of legislation which will be passed by Parliament. There are many precedents for that. It will be passed by Parliament and if noble Lords start opposing it in this House, they had better think carefully about the political implications. It will be passed by Parliament and I shall gladly write to the noble Lord, placing a copy in the Library of the House, about the precedents for that action.

I move on as fast as I can, realising that I have missed out many significant points. I wish to talk about the problems of maintaining the arm's length principle and at the same time maintaining parliamentary and public accountability for the funds. In the second part of Part I of the Bill we say that we require all the distributors to announce their strategies. We are not determining their strategies; it is not for the benefit of government that we want to know their strategies. We wish to know what their strategic plans are, to help those who want to apply for funds. That is what it is about. The noble Baroness, Lady O'Cathain, said that consultants are making a great deal of money out of helping people with applications, and I have no doubt that that is true. But it is happening partly at least because it is not clear what the existing distributors are seeking. There is a kind of mystique about reading their minds. If the strategic plans are to be made effectively, they will deal with that point. On a point that the noble Lord, Lord Annan, made, there will have to be strategies for the continuation of projects when lottery funding ends. That has never been clear and it is intended that the Bill will improve the situation.

In response to my noble friend Lady Young, yes, the strategies will include the requirement for a needs assessment as well as a description of what is intended. I shall come back to that issue.

I wish to say something particularly about NESTA. NESTA is the ne plus ultra of the arm's length principle. NESTA is an endowment fund. Its trustees have full control over the endowment fund; it may increase in the future and there is the possibility of expanding it from private and other sources. But we could not have a fund which is further removed from ministerial interference--which was one of the claims made--than an endowment fund. The noble Baroness, Lady O'Cathain, said that the problem was that it would be reliant on the flow of lottery money, but the reverse is the case.

The noble Lord, Lord Skidelsky, said that the Secretary of State had control over NESTA. Again, that is the reverse of the case. The Secretary of State has no power to direct its policies. He can change its objects, but only at the request of NESTA.

On the other issues of flexibility, of soliciting funds--I know that caused laughter, but everybody understands what it means--on the ability to delegate to officials, to regional or local organisations; all those points were widely welcomed by your Lordships, regardless of political party. A number of noble Lords referred to the

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need for regional councils, to the role of local authorities, to the success of Art for Everyone and to the need for greater flexibility with matching funds.

I want to refer to the description of the noble Earl, Lord Gowrie, of "capital feast and revenue famine". He will recognise that what he is describing is the effect of the 1993 Act, rather than of the Bill before your Lordships.

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