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Baroness Carnegy of Lour: My Lords, I shall not express a view on whether or not the New Opportunities Fund is a good idea. However, I believe that the measure raises unnecessary controversy between Westminster and Holyrood. The fund will supplement budgets of the Scottish parliament. The suggestion that any body other than the Scottish parliament will formulate policies and decide how the money is to be spent is extraordinary. It could distort some of the policies which the parliament proposes.

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It is a small change that could make a big difference and the Government should consider it. From the point of view of the Scottish parliament the measure will be extremely irritating and may raise controversy.

Baroness Linklater of Butterstone: My Lords, I declare an indirect interest as my husband is chairman of the Scottish Arts Council. The noble Lord, Lord Monro, raised important elements and issues of doubt about the exact role and function of the New Opportunities Fund. When lottery money is being used as a substitute for government funding there is perhaps a blurring of the distinction between additionality, additional funding, and subsidiary.

The Department for Culture, Media and Sport, under Chris Smith, is responsible for the guidelines which are followed when lottery money is administered. In Scotland, a proportional amount of money is allocated to each of the strands. This final strand is currently the sixth good cause, at least until the Millennium Fund is wound up.

While it is an attractive notion that the Scottish parliament should make its own decisions--that is what we have been talking about throughout the Bill--and decide on its own guidelines according to the perceived needs of Scots by Scots, there is less point in devolving one of the strands in isolation. How would it be disentangled from the rest? I believe that there is greater merit in having unity of purpose and some synergy between the various strands of grant allocation.

I believe that until the Scottish parliament can address the total picture from the Scottish perspective it is preferable to stick to the current arrangement and have lottery guidelines for all the good causes determined at Westminster.

6.15 p.m.

Lord Sewel: My Lords, the reservation of the National Lottery as a single UK-wide lottery offers the largest possible prize fund and the highest possible return to good causes in the United Kingdom. The basic idea is to keep the lottery as a UK-wide organisation and entity. A single UK-wide National Lottery distribution fund is an extremely important part of a single National Lottery.

The distribution arrangements have been discussed at length in another place and it makes no sense at all to attempt to introduce separate arrangements for only one of the six good causes. That point was made by the noble Baroness, Lady Linklater. However, it is right and proper that we recognise the legitimate interests which the Scottish parliament and executive will have in ensuring that Scotland receives its fair share of all lottery proceeds and that Scottish circumstances are fully taken into account in the distribution arrangements in Scotland. With the recent announcement that the New Opportunities Fund will receive one third of lottery proceeds after 2001, it is particularly vital that the initiatives that will be funded from it take cognisance of Scottish interests and priorities.

In the first place, the National Lottery etc. Act 1993, as amended, guarantees a place on the New Opportunities Fund for a member who is suited to make

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the interests of Scotland his or her special care. Scottish Ministers will have a particular interest in that appointment and I can assure noble Lords that that interest will be recognised. We are currently considering precise arrangements which will fully meet Scottish requirements and at the same time be compatible with the character of the lottery as a UK institution.

The first three initiatives to be funded from the New Opportunities Fund--healthy living centres, IT training for teachers and out-of-school hours activities--are all UK-wide initiatives. However, they will take Scotland's distinctive needs fully into account. In particular, Scotland will receive a very favourable share of the funds accruing to each; 11.5 per cent. for healthy living and child care initiatives and 10 per cent. for IT training. These allocations recognise Scotland's distinctive needs, in particular in terms of relative deprivation and health records. By having a national fund rather than allocating money to a separate Scottish fund on a per capita basis or on one which reflects the lottery's income, and by identifying the main themes, it is possible fully to recognise the relative need of Scotland in relation to those initiatives. It amply demonstrates how Scotland can benefit from the flexibility of current arrangements.

By contrast, if the distribution of the funds of the New Opportunities Fund were to be devolved, the allocation to Scotland would have to be set much less flexibly and probably less favourably from Scotland's point of view; for instance, on a simple population index Scotland would receive only 8.9 per cent. of the income.

The initiatives I have mentioned are only the first which the New Opportunities Fund will fund. The success of the lottery is such that already consideration is being given to what future initiatives might be funded. A consultation paper on this will be issued within the next few weeks. It is of course quite possible that an initiative might emerge which is primarily, or even exclusively, of concern to Scotland. Indeed, the opportunity currently exists. We have identified the possibility of an environmental initiative under Green Spaces. That can be given a particular twist in recognition of the precise environmental interests in Scotland, which may not be identical to environmental interests in England. The idea of a Scottish initiative, rather than being ruled out, is compatible with the current arrangements. I assure noble Lords that we are giving serious consideration to the way in which the views and roles of Scottish Ministers can be best expressed and carried through.

I believe that we have the best of all possible worlds. We have a national institution. Its public attraction stems from the fact that it is national and can generate--let us be honest--a big prize. That brings many people into the lottery. We do not wish to fragment that. The existing distribution arrangements mean that UK-wide initiatives can be funded. The money, when distributed, can take account of particular Scottish interests,

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priorities and relative need, which is an appropriate mix and a good way forward. On that basis, I hope that the noble Lord will feel able to withdraw his amendment.

Lord Mackay of Ardbrecknish: My Lords, I am grateful to the Minister for explaining the Government's view on this matter. However, I remain puzzled. If the New Opportunities Fund is to deal with education, health, childcare and the environment, I do not see how it can have UK-wide initiatives. All these matters are entirely devolved to the Scottish parliament and the Scottish executive. Therefore, unless the Scottish executive twin with the UK Government, there can be no UK-wide initiative in any of those areas. I suspect that that is a matter which people will have to get used to. Many people do not yet appreciate that simple fact about devolution.

I hear what the Minister says about the involvement of the Scottish executive with the people who run the New Opportunities Fund. In the light of the fact that the disbursement of the National Lottery money is already on a Scottish basis on two issues, it seems odd that the Government should stand firm against the New Opportunities Fund and go down the same route.

I remind the Minister of what he said on 23rd July. The noble Baroness, Lady Linklater, does not seem to realise this point either. He stated:

    "Distribution of lottery funds for the arts and sport is handled by Scotland-only bodies. Their members are appointed at present by the Secretary of State for Scotland, who is also responsible for the issue of financial policy direction to those bodies. ... In future these tasks will fall to Scottish Ministers. In other words, complete control over the membership of Scottish arts and sports councils will rest with Scottish Ministers and they will be able to direct the councils on matters of policy without reference to Whitehall and Westminster. In addition, Scottish Ministers will, if they choose, be able to appoint other bodies to act as distributors of the arts and sports shares".--[Official Report, 23/7/98; col. 1084.]
I remain puzzled as to why what is good enough for the arts and sports, and already exists, is not good enough for the New Opportunities Fund, which relates entirely to issues which are being devolved.

I suspect that somewhere down the line there may be friction on that issue. I have tried to warn the Government about this, as has my noble and learned friend Lord Fraser. However, I can see that I am not making any progress. I hope the Minister is right and that this will work happily. However, if it does not and it ends in friction between Edinburgh and Westminster, as my noble friend Baroness Carnegy of Lour suggested it might, dare I say to the Minister that he heard it from us first? I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendments Nos. 210 to 213 not moved.]

Lord Selkirk of Douglas moved Amendment No. 214:

Page 75, line 19, at end insert (", including all aspects of digital signatures").

The noble Lord said: My Lords, this is an important amendment. It deals with modern technology. Digital signatures are necessary to identify the senders of an electronic message. Encryption is the coding of the electronic message so that it cannot be accessed by an

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unauthorised person. The recipient must know its point of origin. Just down the road, in the War Cabinet Rooms, Winston Churchill's messages to President Roosevelt were scrambled. They were put into a jumbled noise which was then unscrambled at the other end. It was Professor Alan Turing who broke the Nazi Enigma code and contributed greatly to allied successes. So, encryption is certainly not a new idea.

This amendment clarifies the definition of electronic encryption which is reserved to the United Kingdom Parliament. It would ensure that digital signatures are also reserved. There is a growing awareness that commerce and secret commercial decisions, conducted through the exchange of messages on open computer networks, are likely to increase enormously in both volume and value.

A common assumption in all analyses is that since the delivery of electronic messages is on open networks, by definition they are not wholly secure. People dealing with each other in a business sense need to have security in both the identity of the sender and the integrity of the message.

The widely stated view of industries, governments and professions is that those requirements can be met only by means of two independent but closely associated procedures; namely, the attachment and recognition of electronic signatures, and the strong encryption of the message. The framework within which reliability can be added to electronic or digital signatures and encryption is now perceived to be by the use of one or more asymmetric encryption keys issued within a public key infrastructure. However, other forms of ensuring security are being discussed and will no doubt be developed.

In effect, asymmetric public private encryption keys are issued to a user by a certification authority after due inquiry. Messages encrypted and decrypted by those keys may be relied on at the time of use if a reliable authority--that is the certification authority which issues and certifies the public and private keys which constitute the key pair--can itself be relied upon in the manner in which it carried out its functions and to the extent to which it is recognised by higher authorities in any vertical scheme of mutual recognition.

Those matters can best be regulated on a global scale. Regulation by the Westminster Parliament should, however, extend to digital signatures. In view of the reasonableness of the amendment, I hope that the Minister is able to accept it. I beg to move.

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