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That is one example of how Big already manages a clear separation of its funds. The Government expect that Big will similarly manage to ensure that dormant account funding remains publicly and operationally distinct. While we have great sympathy and more with the noble Lord’s intention, we think that it is too early to give a definitive name to this fund. I repeat that those who run it in other parts of the country will want to brand it in their own ways. I ask the noble Lord rhetorically, “Is it really for us, today, while the Bill is going through Parliament, to give it a name that, once given, cannot easily be changed?”. I thank him very warmly for dealing with this issue, but I invite him to think again and perhaps to withdraw his amendment.

Lord Shutt of Greetland: My Lords, I thank the Minister for his contribution. It may well be that there are other, brighter ideas. I hope only that those who make inquiries as to possible names will make inquiries of people who come up with brighter names than three-letter words such as “Big”. I am sure that better can be done. I hope that words that engender excitement can be put into the title. The Minister possibly realised that I would not necessarily press the amendment, and I will not do so on the grounds that I am frankly more interested in substance than top show. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Viscount Astor moved Amendment No. 16:

The noble Viscount said: My Lords, in Committee, I tabled an amendment allowing some of the proceeds from dormant accounts not only to go to the Big Lottery Fund but to the other distributing bodies. As it was on the third day of Committee, I was not able to be there, but my noble friend Lord Howard kindly moved the amendment for me, and the Minister replied. I always listen to the Minister very carefully, and in this case I read very carefully what he said on my amendment. He made an important point about the accountability of the funds. He said:



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I regard the Minister’s words as very important, and so I come back with another amendment today taking account of them. The amendment allows the Big Lottery Fund to distribute money to other lottery distributors for meeting expenditure on exactly the same terms, so that it has a “social or environmental purpose” as is written into the Bill. It gives the Big Lottery Fund that power.

One of the problems with the Big Lottery Fund, as my noble friend Lord Eccles said at Second Reading, is that in effect it has become the arm of government. We can see from its annual report that it is seriously oversubscribed. Last year alone, it received applications of £8 billion for an income of £600 million. I am afraid that it has lost its way, and it is giving money all over the place. In the accounts, one can see that it gave nearly £900 million to statutory bodies, including £112,000 to Wakefield Council to spend on a traffic calming scheme, £315,000 to Blyth Valley Borough Council for the enhancement of footpaths and £27,000 to Exeter Council for a new walking route network. I am sure that those walking route networks and paths are important, but do we really think that they are a matter for lottery spending? Can they possibly be additional or anything to do with the principles of the lottery and how it was set up? They really are part of government expenditure, whether that be national or local government.

The Big Lottery Fund has become huge. It has about 1,100 employees, which is about the same number of employees as the Treasury. Some 12 per cent of its budget is spent on administration, which costs £77 million a year. It has become too big and too cumbersome. The most important thing is that it is getting all this extra money when we know that, because of the Olympics, £675 million is being diverted from the lottery to the Olympics, which is mainly falling on the other distributing bodies. They are not getting any of that money and they are under pressure. My amendment does not force the Big Lottery Fund to give money to the other distributing bodies, but it allows it to do so. To come back for a moment to additionality, when the previous lottery Bill was passing through Parliament, we tabled an amendment requiring the Big Lottery Fund to report on additionality. We await that report with mounting excitement. It might win this year’s prize for fiction; or it might be honest with the facts. We wait to see.

The central point is that the distributing bodies that have suffered most because of the Olympics, such as the arts and the sporting bodies that are not involved in the Olympics, are very short of funds. This is an opportunity for the Government to say to the Big Lottery Fund that they can help it to make up the deficit that those bodies have suffered. Can the Minister tell me whether the Government can do that under the Bill anyway? It may be that they have the power already. This amendment gives the Minister an opportunity to tell noble Lords whether that is the case. I beg to move.

Lord Howard of Rising: My Lords, I support the amendment. Some of the other lottery distributors have considerable knowledge of the sectors in which

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they work, and it seems only sensible to allow the Big Lottery Fund the flexibility of making use of those organisations, especially those that have specialist knowledge in the spheres that meet the criteria set out in the Bill. Indeed, that would be a cheap and effective way of distributing funds. The Big Lottery Fund should be not only permitted but encouraged to make use of that pool of talent.

All the reasons the Big Lottery Fund put forward explaining why it would be an appropriate distributor of dormant money hold true for other lottery distributors. I hope that the Minister will be sympathetic to this small amendment. It does not in any way restrict the Government in directing this money to the causes that they have defined; instead, it increases the chances that the money will be distributed by the organisation that is best suited to the purpose.

7 pm

Lord Shutt of Greetland: My Lords, I have a quick question for Minister. The Heritage Lottery, for example, could decide that a dig involving young people was a good thing. Would that dig get money from Big?

Lord Davies of Oldham: My Lords, I am grateful to those who have spoken in the debate and particularly the noble Viscount, Lord Astor. We missed him in Committee. He is more than welcome to discuss, in his inimitable way, issues in relation to the Lottery on which we have discoursed together on many occasions.

The amendment possibly had a modest objective. The noble Viscount may have been seeking the assistance of other agents among the lottery distributors in distributing the resources in accordance with the priorities identified in Clauses 17 to 20. The noble Lord, Lord Shutt, asked me whether Big could ask other lottery distributors to hit certain targets within the framework of Clauses 17 to 20. The answer is yes; Big currently does that outside the scheme. Big does, from time to time, hit the objectives that it wants to achieve in partnership with other lottery distributors. The case that the noble Lord, Lord Shutt, mentioned is an illustration. The delivery of the Parks for People programme is run with the Heritage Lottery Fund. Big has got that experience and I cannot see anything that would inhibit Big from following that objective within the provisions of Clauses 17 to 20. However, I fear that what the amendment would—and what in fact the noble Viscount intended it to do—enable Big to operate outside the priorities in Clauses 17 to 20 and to follow other priorities that obtain in relation to lottery funds and spending. What, otherwise, would be the point of his reference to the pressures on other expenditures and schemes within the Lottery if they did not need supplementation from this fund? I cannot accept that. He will appreciate that we would expect Big to work separately; this account is separate. Big has got to be accountable for the separateness of that account—all our processes of accountability require that. As to the use of agents for the distribution of the money for the purposes defined in the Clauses 17 to 20, we expect that to happen—not to a huge extent but where it is felicitous for it to do so.



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However, the amendment opens up the wider field; namely, that the dormant account proceeds might fill the gaps in funding denied to the lottery through other decisions. We cannot accept that because that would be putting this fund into the framework of lottery priorities. We have built into the Bill priorities for expenditure. If the amendment had referred to the use of agencies and involved felicitous interchange, I would have been able to give it the warmest of welcomes because it would have been consonant with present practice. Unfortunately, the noble Viscount indicated, as we had anticipated, that the amendment is a bit more strategic than that and we do not accept that strategic objective. I hope that he feels that he has pushed this as far as it can go and that he will withdraw the amendment.

Viscount Astor: My Lords, the Minister has given an interesting reply. He has accused me of opening gaps by trying to extend where this money could be spent. My amendment does not do that. It refers very clearly to,

Those are exactly the words on page 8, Clause 15(1). I have mirrored those words, so I have not opened any gaps. All I have tried to do is to show that the Big Lottery could give money to other lottery distributors, to be spent on exactly the same basis, subject to all the provisions in Clauses 17 to 20, as the Minister said. I think he said in response to the noble Lord, Lord Shutt, that they could do that. I will have to study what he said with care; if he did say that, I am grateful—that is one of the things we were asking for. He explained why he thought that my amendment was defective; I do not necessarily agree with that. However, I take his final point, which was that it could be redone in a better way.

I know the Minister has had a difficult and bruising afternoon and I do not wish to add to his woes any more. I will look at what he said and see whether his words give us comfort on this—they may do—or whether they encourage me to come back with a slightly amended amendment that fits my purpose and does not break any of the principles, with which I agree, that the Minister wants to make sure are held throughout this Bill. I am not just trying to open gaps. I am grateful to him for his reply and beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 21 [Directions to Big Lottery Fund]:

Lord Shutt of Greetland moved Amendment No. 17:

On Question, amendment agreed to.

Clause 25 [Expenses]:

Lord Howard of Rising moved Amendment No. 18:



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The noble Lord said: My Lords, this amendment is similar to the one moved in Committee, and many of the arguments are similar.

The Big Lottery Fund has lobbied for and—because of its experience working with grant applications and its existing infrastructure throughout the United Kingdom—been awarded the job of distributing dormant resources. Therefore, it is not inappropriate to expect the Big Lottery Fund to fulfil its promised economies of scale. This amendment stops the Big Lottery Fund spending more than 10 per cent of the funds it receives on administration. Your Lordships will no doubt remember that during the debate in Committee, many considered the original cost ceiling of 5 per cent to be unreasonably low, although I am grateful to my noble friend Lord Eccles for defending the original percentage as being perfectly feasible for a well run organisation to achieve.

The Big Lottery Fund currently spends about 12 per cent of its money on distributing lottery funds. Given that it has an existing structure, distributing the extra funds for well below the suggested limit of 10 per cent should be well within its capabilities. Indeed, a 10 per cent limit would give substantial headroom. The Minister also made it clear that he expects the Big Lottery to be able to reduce its administrative costs as it settles into its role; noble Lords may recall that he mentioned more than once bearing down on these overheads. This, and the Big Lottery Fund’s commitment to delivering economies of scale, makes the 10 per cent target extremely realistic. I hope that the Government will be sympathetic to the amendment.

In response to previous criticisms that limiting the Big Lottery Fund in this way would be unreasonable because it would impose a requirement that would never be imposed on a private organisation, I point out that private organisations are subject to the disciplines of the marketplace and are therefore compelled to keep administrative costs down if they wish to prosper and survive. The amendment would not impose an undue lack of flexibility on the Big Lottery Fund. On a conservative view, even if the reclaim fund retains up to half the money expected from dormant bank accounts for possible claims, the Big Lottery Fund must be expecting to receive something in the region of £200 million. Surely the Big Lottery Fund can distribute this money effectively without spending more than £20 million on extra administration. I hope that the Minister will consider the amendment with the attention that it deserves. It would encourage efficiency and do much to reassure the public that these funds are being well managed. I beg to move.

Lord Shutt of Greetland: My Lords, I am not inclined to support the amendment. I have no idea whether 10 per cent is the right figure, although it sounds reasonable. However, I am a member of a charitable trust for which the figure would be higher. It depends how you describe the 10 per cent and what funds come within it. Monitoring grants—seeing that things are going well and stopping problems—is all part of the business of grant making. Some people

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may say that that is part of the grant, while others may say that it is part of administration. Timing may be also an issue if there were to be such monitoring, as the figure might be 9 per cent one year and 11 per cent another. I am not inclined to support the amendment, although I very much appreciate the principle of not wasting money and wanting real value for money.

Lord Davies of Oldham: My Lords, the noble Lord, Lord Shutt, made a similar speech in Committee, which I greatly applauded. I am happy that he has produced an encore so that I can offer my applause again. In fact, I shall quote what the noble Lord said in Committee. He did not quite repeat himself, so I shall delight the House by showing how extraordinarily accurate and perceptive he was. He said:

That is graphically put; I could not express it as well myself, which is why I indulged in the quotation. I am grateful to the noble Lord for his contribution today, too.

The necessity of bearing down on administrative costs is, of course, continually with us. We share that objective with the noble Lord, Lord Howard. Like the noble Lord, Lord Shutt, we do not think that Big’s current spending is outrageously large, given that Big is involved in complex disbursements of money.

That brings me to whether an annual cap would make any sense. The noble Lord, Lord Howard, has vast business experience, so I shall not venture down any road in trying to enlighten the House on areas that he knows inside out and far better than I do. However, for a body that operates, as Big does, a portfolio of operations over time—commitments are for more than three years and payments are made over five years or more—an annual cap would be the most extraordinary and arbitrary intrusion. I do not think that it would fit within the framework of any business that operated in quite the way that Big does.

7.15 pm

Let me take the most obvious example. When Big deals with issues in this account, such as providing support services for young people, we would expect it to consult not only those who can provide the services but young people themselves, so that young people are actively engaged in shaping the bids for community resources. That kind of activity can be prolonged; it is not the kind of thing on which one strikes a deal overnight with a handshake. One is not dealing with these groups on those terms, nor is one meeting needs expressed in those terms. We want to give Big the flexibility to meet its distinct and often difficult objectives, which it has experience of doing through the lottery. It currently operates with a degree of flexibility that the amendment would come close to destroying.

I assure the House and the noble Lord that we are concerned about the accountability of the distribution costs of lottery funds. The Big Lottery Fund is legally required under the National Lottery Act to comply

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with a statement of financial requirements issued by the Government, which makes clear the fund’s responsibility to ensure that its finances are managed appropriately. We also have the accounting officers for the departments in which the fund is spending money. As far as this account is concerned, that would be the Department for Children, Schools and Families—I know that that department has not found too much favour on the Benches opposite—and the Secretary of State would sign off the accounts. Big’s administrative costs will be subject to the accounting officers of the departments and of the devolved Administrations. There is a clear accountability framework. We have had considerable experience of this with the operation of the National Lottery. I hear the criticisms of Big’s expenses, but the noble Lord, Lord Shutt, is right in principle. Big is involved in difficult community and local work and you cannot expect it to hit the same target levels as might occur with those much simpler operations—even those involved with such resources—with which it is sometimes compared.

The amendment is also worried about the defrayment of the Government’s expenses. Aren’t we all? It is our job to make sure that Governments keep their own administrative costs down. I put this basic point to the House: for the administration of the distribution of lottery funds, the Department for Culture, Media and Sport charges the National Lottery Distribution Fund about £250,000 a year, which is less than 0.02 per cent of what is raised for good causes each year. The Government estimate that the costs in relation to the reclaim fund will be less in cash terms, because it will be a smaller fund. I do not think that there is great cause for anxiety on that score with regard to government accounts and I hope that the noble Lord will feel satisfied enough to withdraw his amendment.

Lord Howard of Rising: My Lords, I thank the Minister. It will not surprise him to hear that I do not agree with him. Given that the fund already has more than 1,000 employees and an existing structure, that it has pitched to get this, and that it has briefed us on how its existing administrative overhead can easily absorb this new money, I think that it has massive flexibility within a 10 per cent ceiling on its expenses. It should have some discipline over what it spends. I know that that is not customary, but then it would be nice to think that at least some government organisations cannot spend whatever they feel like spending. I beg leave to withdraw the amendment.


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