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There will, of course, be a wider impact in loss of opportunity. How can we have a serious debate on cultural entitlement, built on the foundations of what the HLF has achieved to date, and then starve it of investment capital? The effects of this loss of opportunity will be felt nationally, regionally and locally. The UK’s reputation has undoubtedly been enhanced by cultural projects; the Tate Modem is a great example. Regionally, Kelvingrove, the Museum of Scotland and the National Waterfront Museum in Wales are all evidence of the wide impact of lottery funding. Locally, many communities have benefited from revenue and capital projects. This has increased tourism and local spend, which, particularly in rural areas, has been vital in keeping communities together and offering job opportunities.

To some, the Olympics may be very worthwhile, but why must we jeopardise the national, regional and local impact of National Lottery Fund projects for a package of benefits that in no way replaces these? The impact on funding from now to beyond 2012 has robbed the heritage and arts sectors of much of the vitality engendered by lottery funding. The loss of funding will create a legacy from which it will take considerable time to recover, even if investment returns to pre-Olympic levels once the Games are over.

4.17 pm

Baroness Hooper: My Lords, the debate focuses on the arts and cultural heritage, which are close to my heart. It is most timely, because it leaves the Government with time to do something about it. I thank my noble friend Lord Baker for introducing it in his usual forthright and inimitable style. I feel a certain sympathy in advance for the Minister who is to reply, especially as he was under attack yesterday at Question Time on the same subject.

My starting point is the recognised importance of our cultural heritage. In this, our great musical institutions, orchestras, ballet, theatre and, of course, museums have all succeeded in enabling us to hold our heads high in the world, despite scarce and diminishing resources. I declare my interest as a former trustee of National Museums Liverpool. Liverpool is, of course, famous for football and horseracing, but it also enjoys a reputation for music—it has the Royal Liverpool Philharmonic, as well as pop—for theatre, and for its famous Walker Art Gallery and Merseyside Maritime Museum. The Merseyside Maritime Museum also embraces a slavery museum, which we talked about last week. The city also has Tate Liverpool—the Tate of the north—and other specialist museums and galleries. As a member of the delegation to the Parliamentary Assembly of the Council of Europe, I point to the Churchill Museum, which is not far from here, in the Cabinet War Rooms, which last year won the Council of Europe museum prize for using new technology and brilliant design to drive its message home. What has been achieved despite increasingly difficult and diminishing funding is wholly admirable, and many more examples have been quoted today. As the noble Lord, Lord Luce, said, the role of museums and the arts in complementing our education system, particularly in the light of the national curriculum introduced during my noble friend Lord Baker’s stint as Secretary of State for Education, is vital.

Since the lottery fund was introduced in 1994 to support projects that would not otherwise be funded through general taxation, it has performed a very useful role. But I believe that people who buy lottery tickets do so on the basis that they are providing alternative and additional funding for the arts; they do not just hope to win the big prize or to make up for deficits in government funding.

I also find it very difficult—I think other noble Lords have also said this—to understand how other countries can provide government support through direct government funding or tax and other incentives, and we cannot. Therefore, can the Minister give us any encouragement that more thought will be given to alternative methods of providing finance or that there will be more support for something like Arts & Business, to which the noble Baroness, Lady Kennedy, referred?

My concern is that the Government give greater priority to sport than to our cultural heritage and the arts. For example, two days ago a Question was asked concerning Liverpool’s role as European Capital of Culture in 2008. Comparisons were made with the special funding provided for the extra policing of the Commonwealth Games in Manchester. In defending the Government’s decision not to provide similar extra funding to Liverpool, the noble Baroness, Lady Scotland, said:

That is perfectly true, but the implication of that remark was, “So they’re on their own”. Is this a question of sport versus the arts or is it a question of London versus Liverpool?

The astronomical growth in the projected cost of the Olympics should not come as a surprise. I have to confess that I was also one—obviously in a minority here today—who felt that Paris would have been quite close enough for the Olympic Games. Nevertheless, since our bid did succeed, I believe that we have to make the best of it and, as a London council tax payer, I am prepared to pay that extra whack. But I do not wish to see the arts suffer as a consequence. I look forward to hearing more about the plans for the cultural Olympiad, to which my noble friend Lord Coe and others have referred, about which announcements are shortly to be made. Having attended the cultural Olympiad in Barcelona three years ago, I hope that we will be able to build on that success and that there will be adequate funds to do so. More immediately, I look forward to hearing what the Minister has to say.

4.23 pm

Lord Clement-Jones: My Lords, along with many other noble Lords, I congratulate the noble Lord, Lord Baker, on initiating this debate. It was a pleasure to listen to his incisive speech. It was also a great pleasure to listen to the speeches of other noble Lords, who displayed an impressive range of knowledge, expertise and, above all, commitment in so many areas of the arts, heritage and sport.

What particularly sticks in the throats of many noble Lords in this debate is, as the noble Lord, Lord Baker, said, the Prime Minister’s speech at the Tate Modern, which promised no return to boom and bust in funding for the arts. It was a very short time ago, in March, that the bitter realisation set in that he is presiding in his final weeks over a cut in funding for arts, heritage and grassroots sports that will endanger the long-term cultural health of the nation.

In March, the Secretary of State announced that a further £675 million, as we have heard from many noble Lords, would be diverted from the National Lottery good causes funds to meet the increased costs of the 2012 Olympic Games. It was a grim day for arts, heritage and grassroots sports. This new diversion means that some £2.2 billion will go towards the Games from the National Lottery. That is 20 per cent of lottery income for good causes from 2005 to 2012-13. After 2009, the proposed transfer of £675 million breaks down as £425 million from the Big Lottery Fund and £250 million from the other good causes.

We have heard from all sides of the House how important lottery funds are to charities and voluntary and community groups in the arts, heritage and sport. The Heritage Lottery Fund estimates that, in 2005-06, 55 per cent of its lottery awards were made to this sector. Arts Council England estimates that it awarded about 60 per cent of its budget to the voluntary and community sector, while Sport England estimates that some 30 per cent of its funding has gone to voluntary and community organisations over the lifetime of the lottery. What does this mean in cash terms? Heritage charities stand to lose out on almost £50 million, arts charities on over £37 million, and sports charities on £16 million, which is a total loss of over £100 million.

The Secretary of State’s Statement in March said that:

That voluntary and community organisations will not be affected is of only limited consolation. As the noble Lord, Lord Watson, rightly pointed out, much of the funding to local authorities and statutory recipients of funds from the Big Lottery Fund now being cut actually goes to arts, community and voluntary organisations. Further, the diversion affects recipients through other lottery distributors such as the Heritage Lottery Fund, Arts Council England and Sport England.

Total awards from the Heritage Lottery Fund will fall from £255 million in 2007-08 to £220 million in 2008-09, and £180 million per year from 2009. Heritage Link, the Voluntary Arts Network, CCPR, the umbrella organisations for thousands of voluntary bodies in heritage, arts and sports, together with the National Council for Voluntary Organisations, which has over 5,000 members from the voluntary sector, are campaigning against the diversion of lottery funds. Members on these Benches and clearly many other noble Lords support the urgent call by these organisations on the Government to reconsider and to give assurances that no such further raids will be made.

A loss of £62 million over four years to Arts Council England, a loss of £55 million to Sport England, and the loss to the Heritage Lottery Fund of £90 million will do great damage, despite the enormous care being taken by the HLF and other distributors to try and mitigate their losses. The loss to the HLF, for example, is equivalent to the loss of four years’ spending on smaller community and voluntary sector grants and the entire spending aimed at involving younger people—some 6,000 projects. That is a loss equivalent to the planned spend on churches and historic town centres from Gateshead to Great Yarmouth for four years—some 1,400 projects. It is a loss the equivalent of five years’ funding for parks, which in the past have included Birkenhead park in the Wirral, Tollcross park in Glasgow and Lurgan park in Northern Ireland.

The HLF warned the Public Accounts Committee, which is inquiring into a National Audit Office report on the lottery distributor, about the potentially detrimental effects of diverting funding from the lottery. The evidence of Ms Carole Souter, director of the Heritage Lottery Fund, to the committee on 25 April, when asked whether the Secretary of State had been told of the fund’s concern over diversion of funding, was:

The Historic Houses Association itself points out that currently there are some 17,000 buildings at risk in England alone.

Let us not think that arts funding is only for our great national institutions such as the Royal Opera House. It is not even only for our orchestras, which have had spectacular success in attracting new audiences and will also be hard hit by losses in funding.

The importance of arts funding is to enable grassroots community arts projects to thrive. As Tony Hall, the executive director of the Royal Opera House, pointed out in the Evening Standard in March,

Anthony Gormley has forcefully made the same point. It is to enable the artistic landscape in Britain to innovate, experiment, develop and flourish. Noble Lords have made the point that 86 per cent of individual grants are for £5,000 or less.

We are also to have the cultural Olympiad, which a number of noble Lords, including my noble friend Lady Bonham-Carter, have discussed so cogently. The noble Lord, Lord Coe, was very eloquent about the benefits of the cultural Olympiad. The year 2012 will be a showcase not only for British sports but for British arts and heritage. The cultural Olympiad, running in conjunction with the Olympics, is a unique opportunity for the UK to showcase its diverse and rich culture to a global audience. It does not make sense to cause potentially permanent damage and drain resources from these areas at a time when we should be building them up.

This loss of funding coupled with the voluntary arts sector’s loss of trust in the Government threatens to erode its enthusiasm for participation in the cultural Olympiad and diminish the benefits of any subsequent legacy. My noble friend referred to the relaunch on three occasions of the Olympic Legacy Trust, which seems rather extraordinary. That fund, sadly, is also funding many other projects, such as the school games.

What should be done? The public do not want to see a raid on lottery funding for good causes. The YouGov poll recently commissioned by the NCVO demonstrates that the public support the campaign to ensure that no further lottery good cause funding is diverted due to the 2012 Olympics increasing infrastructure costs: 67 per cent of those polled said that they disagreed that more money should be diverted from lottery good causes.

Will the Government rethink this raid on the lottery? As many other noble Lords have pointed out, the Secretary of State on 23 April said of the diversion:

What exactly does that mean? As the noble Lord, Lord Marland, asked, is this an absolute guarantee of repayment out of the proceeds of increased land value? Who will get the benefit of the regeneration of that part of London? Will it be the LDA or will the lottery be able to claw it back? Will the Minister give an assurance that there will be no further diversion of lottery funds?

To date, the Government have treated the National Lottery as a cash cow. As the noble Lord, Lord Watson, mentioned, Camelot has so far succeeded in mitigating some of the effects of the diversion of funds. It is quite clear, reading between the lines of its current briefing, that there are problems ahead for Camelot in riding successfully two horses simultaneously and making sure that both the mainstream lottery and the lottery for the Olympic Development Fund will be funded and on track with current plans.

What else can be done apart from treating the raid as a loan? There is the possibility of a lottery tax regime change, which we on these Benches have raised before and which was discussed when we debated the Bill on the Big Lottery Fund. The lottery is subsequently taxed on its turnover. Switching to taxation based on profits would allow the operator to invest more of its revenue into growing its business. We believe that that would improve revenue. There is, of course, the possibility of improved enforcement. Camelot argues that a clampdown on the legally grey area of lottery-style games would increase revenues, which could all be put towards the Games.

We on these Benches are great supporters of the Olympic Games, but the Government must mitigate the problems raised by this diversion of funds. It would be tragic if the Government’s actions set the interests of the Olympics against those of the arts and heritage. I very much hope that in his reply the Minister gives some creative thought as to how that mitigation can take place rather than simply attempting to justify the Government’s actions.

4.34 pm

Lord Howard of Rising: My Lords, I, too, thank the noble Lord, Lord Baker of Dorking, for introducing this interesting debate and I congratulate the many noble Lords who have spoken.

It is important for a nation to preserve its heritage. If heritage is not maintained it will wither away or fall down. If your Lordships do not believe in the cultural value of heritage, consider the enormous value of heritage to the tourist industry. Tourists do not come to look at the Dome.

Ahead of the forthcoming Comprehensive Spending Review, a number of respected organisations, including the Heritage Lottery Fund, the National Trust and English Heritage, published a document, Valuing Our Heritage. It showed over £1 billion-worth of outstanding heritage work and demonstrated that spending on heritage in England is less than in Germany, Italy, Portugal, the Netherlands and other European countries. Between 2000 and 2007 English Heritage’s grant-in-aid was reduced in real terms by over £20 million.

As the bulk of English Heritage’s work is with specialist craftsmen, where wage inflation runs at or close to double figures, so inflation for English Heritage is far worse than the official figures used when calculating “real terms”. The true reduction in English Heritage’s funding over the period is probably in excess of £50 million. That reduction has been compensated for by the Heritage Lottery Fund, but, as my noble friend Lord Baker has already said, this funding has been steadily reduced from £355 million in 2004 to £290 million in the current year. That will drop to £180 million in 2008, from which the latest Olympic raid will take another £90 million.

If, as has been said, the money borrowed from good causes to fund the Olympics is returned—and that is a big “if”—will heritage be fully compensated? Old buildings deteriorate at an exponential rate. What costs £1 today will cost £2 or more in just a short time. Libraries might have to close down and their collections of books dispersed. There are many other examples, some of which have been mentioned today. The point is that money borrowed in this fashion must be returned with an adequate uplift to compensate fully for the inflation of costs incurred by postponing or delaying work.

As well as the impact on the arts and heritage, there is to be—despite the ambition to leave a sporting legacy—a cutback in lottery money available for sport, as the noble Lord, Lord Rosser, has said. I declare an interest as chairman of the National Playing Fields Association. The Government pay regular lip service to the benefit to young people of taking more exercise and playing more sport. Taking a grand total of £395 million away from those who support the grass roots of sport and using the funds to contribute to building large showcase stadiums may generate an initial enthusiasm, but the lack of facilities due to the curtailment of funding at the less flamboyant end of sport will rapidly kill off any interest.

I have spoken more about heritage and sport than about the arts. Many noble Lords have spoken more eloquently and knowledgeably than I could on that subject. Although the impact of the lottery raids on the arts will be severe, they will not have the same irreversible impact as depriving children of sport—their youth cannot be replaced—or the harm that will be caused by delaying repairs and maintenance to the nation’s heritage.

When my noble friend Lord Baker started the lottery, in the face of the cynicism of others, it was, as he said earlier, to raise money for the arts, charity, sport and heritage. Since its conception, the lottery has gone from strength to strength and has raised—and continues to raise—significant sums of money. Unfortunately, it has been seen by this Government as a source of funds for pet projects rather than for the purpose for which it was originally set up. I earnestly repeat the request to the Minister that there will be no further raids on lottery funds to pay for the 2012 Olympics.

I realise that this is extraordinarily unlikely, but if the costs of the Olympics do not continue to escalate and the total contingency of £3.2 billion is not all used up, will those funds which have been purloined from the lottery be released back to it, and thereby to those causes that the lottery supports, rather than being snaffled by the Treasury?

4.40 pm

Lord Evans of Temple Guiting: My Lords, I am grateful—I think—to the noble Lord, Lord Baker, for securing this interesting and timely debate. As he said, he is an old friend, and I very much hope that our friendship will survive the speech I am about to make.

I thank the noble Lord, Lord Coe, for coming here today in his position and for making a measured and interesting contribution to the debate. It contrasted with the mood of some of the other speakers. We have got the Olympics, which is absolutely brilliant and will bring enormous benefit to this country. Of course there are problems, some of which have been raised today, but we should not be quashed by them.

Noble Lords have raised many interesting points; I am afraid that I will not be able to answer all of them in my 20 minutes, but I promise to write after the debate to those whom I cannot answer now.

I wish to put this debate in a political framework—that is what my notes say, but in fact, the noble Lord, Lord Baker, did it for me. In her memoirs, The Path to Power, published in 1995, Margaret Thatcher made the following point—the only point about the arts in the entire book:

Fast forward to when the Conservative Party lost the 1997 election—arts funding stood at £187 million a year. Incidentally, it stood at £139 million when the noble Lord, Lord Baker, was Secretary of State for Education in 1988. This Labour Government increased that investment from £187 million, with a real terms increase of 73 per cent, to £412 million this year. This transformed the landscape of the arts in the United Kingdom. A 72 per cent increase in budget for theatre translated into increases in audiences of 40 per cent. Creative partnerships have been developed so that more than 610,000 young people can be involved in creative projects. Grant in aid to museums has risen by 29 per cent in real terms since 1997. Free admission to all our national museums has brought about an 83 per cent increase in total visits to formerly charging museums since 2001, representing an extra 6.5 million visits in 2006.

The noble Lord failed to mention Renaissance in the Regions, a scheme I was involved in, to revitalise regional museums. Some £147 million has been invested in that initiative, and I can assure the noble Baroness, Lady Bonham-Carter, that this investment is safe.

This Government do not need lessons from anyone on the importance of proper funding for culture, particularly from a senior and distinguished member of Margaret Thatcher’s Cabinet, the noble Lord, Lord Baker of Dorking. This Government have helped create a transformation in the cultural infrastructure of the country.

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