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Lord Rea: My Lords, how far does the Milosevic regime have to go in order--

A noble Lord: Order!

Lord Rea: My Lords, I started just before the 30 minutes. How far does the Milosevic regime have to go in oppressing the Kosovan and Albanian population

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before a United Nations resolution is called for, preferably by this country, to try to draw a halt to this from the United Nations angle?

Baroness Symons of Vernham Dean: My Lords, as I suspect the noble Lord is aware, the issue of what is happening in Kosovo is the subject of a meeting in London today chaired by my right honourable friend the Foreign Secretary. The contact group is meeting even as we speak. I suspect that I shall be able to answer the noble Lord's question considerably better if he is able to put it to me tomorrow or on a subsequent occasion.

Audit Commission Bill [H.L.]

The Lord Chancellor (Lord Irvine of Lairg): My Lords, I understand that no amendments have been set down to this Bill and that no noble Lord has indicated a wish to move a manuscript amendment or to speak in Committee. Therefore, unless any noble Lord objects, I beg to move that the order of recommitment be discharged.

Moved, That the order of recommitment be discharged.--(The Lord Chancellor.)

On Question, Motion agreed to.

National Lottery Bill [H.L.]

3.10 p.m.

Report received.

Clause 2 [Financial penalties for breach of conditions in licences]:

The Viscount of Falkland moved Amendment No. 1:

Page 5, line 23, at end insert--
("(15) The Director General shall not impose a financial penalty if he is satisfied that the operator has agreed to take, and is taking, all such steps as it appears for the time being to be appropriate for the operator to take for the purpose of securing or facilitating rectification of the contravention in question.".").

The noble Viscount said: My Lords, this amendment deals with the fines and penalties which may be levied by the regulator. I initiated a short debate on this matter in Committee. The amendment gives the regulator an opportunity to warn of the possibility that a fine may be the appropriate penalty, and provides a reasonable time for the problems giving rise to the need for a penalty to be rectified.

The most likely breakdown which can lead to a possible fine is in the operation of the satellite and the radio link with satellites. That is excluded from the Bill and the operator has the chance to put matters right before a penalty is enforced. Perhaps the Minister can say why that principle cannot be applied to other possible infringements by the operator.

It is hard to imagine any serious infringement of the scope of the breakdown of a satellite and radio link which would cause stoppage and loss of revenue, and thus revenue to good causes; it would more likely be infringements by those selling lottery tickets in terms of

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their displaying the logo and matters of that kind. But it could involve measures that should be taken by the operator if lottery tickets or, in particular, scratchcard tickets are seen to be bought by under-age persons. If an infringement of that kind occurred, would it not be more sensible and in line with procedures in other areas of our life where a regulator is involved to allow the operator time to take action and put the matter right before a fine is imposed?

The Minister said in Committee that he would have been more friendly towards the amendment I had tabled at that stage if the words had been "need not" rather than "shall not". However, there is no compulsion on the regulator at any stage to levy a fine or penalty against the operator. To state that would therefore be superfluous. The words, "shall not", as suggested in the amendment, seem logical and may lead to a smoother running of lottery sales and certainly a smoother relationship between the operator and the outfits which have infringed the rules. I beg to move.

3.15 p.m.

Lord McIntosh of Haringey: My Lords, the noble Viscount raised this point in the Grand Committee and I am glad to have an opportunity of making the Government's position clear. The purpose of Clause 2 is to give the director general the full range of powers he needs to ensure that licence holders comply with their licences. The procedures for fining give the director general an intermediate course between taking no action at all and the ultimate sanction of revoking the licence. As the noble Viscount said, this power is already enjoyed by other regulators and I do not believe, given that only one amendment has been tabled, that there is any objection in principle to its introduction for the lottery. However, if it is to work, it must be clear of unnecessary procedures and areas of uncertainty.

Where a licence holder has contravened the terms of the licence I hope that it would take corrective action itself and would not require prompting by the director general. I know that the acting director general is mindful of the need to clarify, as far as possible, how he would approach the operation of financial penalties. I understand that he intends to take into account the effectiveness and timeliness of any corrective action that the licensee has taken when deciding whether to impose a penalty and the level of any penalty. He would also, I am sure, take into account the extent to which the circumstances which gave rise to the breach were within or beyond the licensee's control, although I acknowledge that that is outwith the amendment before us.

The director general is not forced by the Bill to penalise; it is an option open to him as appropriate. But the effect of the amendment is that the director general is prevented from imposing a fine if corrective action is being taken. That cannot be right. There may be occasions when a fine is still appropriate even though the operator is taking action to prevent a recurrence of the breach, particularly if there has been an impact on the income to the National Lottery Development Fund.

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I remind the noble Viscount that our discussion in Grand Committee made clear that there were two different purposes in imposing fines--to penalise wrongdoing and to obtain money which had been lost to the National Lottery Distribution Fund. Therefore, even though the operator put right the infringement it might still be appropriate to impose a fine in order to restore the position in relation to the National Lottery Distribution Fund. There might also be occasions when no penalty was appropriate. It would not be right to fetter the discretion of the director general. That would reduce his power to regulate effectively and, in appropriate cases, to use his power to impose a financial penalty as a deterrent to future breaches of the licence.

It is not as though we are forcing a penalty regime on the director general. He does not have to impose a fine and, if he does, the Bill provides a right of appeal if the operator believes that he has not acted reasonably when imposing a financial penalty. For example, if the breach was caused by factors beyond the control of the operator, I am sure that the courts would see that as an argument against imposing a penalty.

The noble Viscount asked about analogies with other operators. To take the case that he drew, particularly in Committee, in relation to the Railways Act 1993, the difference is that the franchising director has a much wider range of powers than the director general of the lottery. The franchising director can make a train operator pay compensation to passengers; he can make the operator pay financial penalties automatically for each train cancelled or delayed. Conversely, the operator can earn bonuses for improving performance. Train operators therefore have commercial incentives to meet passenger expectations. No such situation applies to the National Lottery operator.

In the light of the wide and permissive way in which the penalty regime is imposed, I invite the noble Viscount not to press an amendment which would make its fair operation more difficult.

The Viscount of Falkland: My Lords, I thank the Minister for his full reply. Obviously it is in the interests of all parties to make sure that the lottery runs smoothly. I cannot visualise any infringements at this stage which might draw the necessity for a fine, except the major one--that is, a breakdown of the electronic machinery of the lottery. I am sure that the operator would see it as in his interest as well as everyone else's to put that right immediately. And the Bill allows for that. The infringements which one calls to mind are fairly minor. It is just that it would seem tidier and neater to establish a uniformity with other areas of regulation. However, I shall read carefully what the noble Lord said in his full reply. In the meantime, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 5 [The new good cause and the re-allocation of lottery money]:

Lord Redesdale moved Amendment No. 2:

Page 8, line 2, at end insert--
("( ) In section 28 of the 1993 Act (power to amend section 22), in subsection (2)(a), for "5 per cent." there shall be substituted "13 1/3 per cent.".").

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The noble Lord said: My Lords, this amendment was put down at the previous stage by the noble Lord, Lord Skidelsky. I have put it down again because there is the fundamental point to be made that the lottery could change into something we had not previously envisaged if the new opportunities fund is allowed to grow disproportionately.

At the previous stage we went down the avenue of additionality. After reading the Minister's words, I have to agree that it would be fruitless at this stage to go along those philosophical corridors again. However, I believe that the underlying point of the amendment can be looked at without discussing additionality at all. It seeks purely and simply to limit the size of the new opportunities fund so that it does not receive disproportionately large amounts of funds at the expense of the other good causes.

Under the 1993 Act, there is the possibility that the new opportunities fund could grow to 75 per cent. of the money available to all good causes, leaving a mere 25 per cent. to be divided between sports, heritage and the arts. At the previous stage the Minister said that it was not the Government's intention ever to allow the new opportunities fund to grow to such an extent. However, we must underline the fact that the new opportunities fund is a new direction among the good causes. It seeks to provide revenue to areas which we on these Benches thoroughly support--environment, health and education--and so I would hate it if the Minister got the impression that I was attacking the new opportunities fund. We have no difficulty with the new opportunities fund, but we have a difficulty with the fact that it is quite possible that the Government could look at this as government money to fund commitments they make or to fund their own political agenda.

The Minister was kind enough to send me a letter emphasising his point that the new opportunities fund would not grow so large. He strenuously denied our point about the funding of the cause being illegal and said that if the Government were not allowed to fund the new opportunities fund before legislation had been passed, then to bring the new opportunities fund up to the level of funding they wished, they would initially have to spend 18 per cent. of lottery funds on it and then they would have to fund it at 24 2/3 per cent. from autumn 1999. I would find it worrying that if the Government had failed through their rather interesting accounting practices to secure the money for the new opportunities fund they would be quite prepared to take almost 25 per cent. of the lottery for one of the six good causes.

The figure stated in the amendment of 13 1/3 is hardly draconian. It allows for variations in other good causes to a higher degree. Indeed, 13 1/3 per cent. is almost a necessity due to the Millennium Fund having to be at a higher rate than other good causes at present. The Millennium Fund gives us a prime example of a project that can grow out of all proportion. The Millennium Dome seems to be a black hole in itself, having a gravitational field for all available lottery finances.

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I believe that the new opportunities fund, with its open-ended mandate to increase the number of projects put forward, could, in the same way as the Millennium Dome, put pressure on the Government steadily to increase, even in small proportions, the amount of money available to it.

The Minister said that it is not his intention to change the amounts available. He said that it is not his intention that the new opportunities fund should grow to such an extent. But however well intentioned that commitment may be, it still does not lay down the basis of giving a fair proportion of moneys to the funds that have already been set up. I beg to move.

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