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In any case, revenue support grant has to reflect the ability to raise council tax revenues and that relationship has to be understood. However, such formulae generally do not take into account the various alternative sources of revenue available to authorities. Across the country, authorities benefit from different streams of revenue. Portsmouth, I think, earns £5 million a year—perhaps a little more—from its port. Some authorities have bus companies. The director of transportation services in Ipswich, which I visited recently, told me that their bus company returned some three-quarters of a million pounds a year to revenues. So the authority was able to make use of profit it made in one area perhaps to suppress levels of council tax or raise standards of services, whichever it chose to do. There is always that ability to raise revenue support from the locality. In the case of the noble Lord, Lord Hanningfield, perhaps Essex has a big profit motive tucked away somewhere in its budget, though I am sure it is not expressed in those terms—they are probably not allowed to express it in those terms. But I am sure that Essex County Council makes income from many of its services which it then applies more generally across the range of services that it provides to its communities.

As I made clear on Report, there are no plans to change our current policy on this. Regarding the allocation of specific grants for major schemes, the department takes into consideration the level of local contribution, including, for example, any developer contributions and any revenue likely to be generated by the scheme. That is an important aspect of an authority’s business case and of the calculation of the scheme’s value for money. That has always been the situation for major transport schemes, because it is fair that revenue from any transport fares is factored

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into the business case of a scheme. We do not see that road-pricing or road-charging schemes are any different.

It is perhaps also worth reminding noble Lords that the Government annually provide £1.5 billion in capital funding as well as substantial revenue support for local and regional transport outside London. Indeed, funding for local transport in every English region outside London has more than doubled since 2000. I think that that is a pretty enviable record. If someone had said a decade or more ago that we were going to do that, there would have been gasps of disbelief. As for funding in London, as well as the revenue support grant given to the London borough councils, the Greater London Authority also receives a transport grant from the Department for Transport. That is a substantial amount of money which, as I said, has more than doubled over the past few years. The transport grant up to 2017-18 was agreed between the department and Transport for London as part of the Comprehensive Spending Review 2007.

I also remind noble Lords that the Government are working with local authorities to develop local road-charging schemes. Additional funding on top of what I have already discussed is available from the transport innovation fund to support authorities’ packages of local transport improvements combined with road charging. The £200 million a year earmarked up to 2014 is in addition to any other funding sources. This is a substantial commitment of extra funding for areas taking forward local road-charging schemes and the very opposite of the reduction in funding which the noble Lord’s amendment suggests.

I refute the allegation that we are bearing down on or pressing local authorities to bring forward pricing schemes. I would not want there to be a suggestion that we are using the transport innovation fund as a form of blackmail, because that is not the case. What we genuinely want to see is innovation. We hope that this legislation will assist in the process so that innovations are brought forward; so that smart and intelligent bids are made to tackle road congestion issues and improve the quality of local transportation; and so that local authorities work closely with their transport providers and the public to ensure that standards continue to rise. What we want to see from the Bill is more people making better use of public transport, particularly bus services. It is in everyone’s interest that we get more passengers on to buses. The welcome improvements in bus passenger numbers over the past few years need to be spread across the country so that we achieve a much more effective and efficient use of this form of transportation.

I have given the noble Lord a rather long reply because I want to put his mind at rest on this. I hope he does not feel the need to press the issue to a Division. I would like to think that he will take my assurances at face value.

Lord Hanningfield: My Lords, I thank the Minister for that answer. As I said when introducing the amendment, I wanted to hear more about this from the Government because this legislation, which is

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coming to the end of its consideration in this House, could result in innovations and local schemes that improve the transport infrastructure for transport of all kinds. I would rather that such innovation came up from the bottom than have it forced on us by government. That is where this will work well, by leaving it to local initiatives that enjoy local support.

However, as the noble Baroness, Lady Scott, pointed out, local funding is extremely complicated these days. In my other role as leader of Essex County Council I am currently producing a budget worth some £2 billion. We thought that the interest charges on £7 million-worth of transport infrastructure would be supported by national government but suddenly discovered that it was not so. The result is that about another £700,000 now has to be found. I live daily with the uncertainties of local government funding; as I said in my introduction, all Governments tend to maintain those uncertainties. I just wanted to establish on the record that national government will not see this as a substitute for the funding that they provide, and that it will be used for local initiatives and local schemes aimed at improving transport infrastructure—for buses, for rail and so on, as we discussed. I have now put my bit on the record and we shall see what happens. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

An amendment (privilege) made.

Lord Bassam of Brighton: My Lords, I beg to move that this Bill do now pass. I thank all noble Lords who have participated in our debates on the Bill. I especially thank the Bill team and officials, who have done a splendid job. I have already thanked the noble Baroness, Lady Chapman, once today. We have given the Bill—which I thought might generate a little more controversy than it did—a good and fair hearing. The Committee, Report and Third Reading stages were very constructive and I congratulate all who took part in those debates. We have a better Bill than we started with. I am sure that we all wish it well as it goes to another place for it to be given fair consideration there. I also thank my noble friend Lady Crawley, who, as ever, has been extremely helpful and supportive in helping us through some tricky times with legislation.

Moved, That the Bill do now pass.—(Lord Bassam of Brighton.)

On Question, Bill passed, and sent to the Commons.

Payments into the Olympic Lottery Distribution Fund etc. Order 2007

4.31 pm

Lord Davies of Oldham rose to move, That the draft order laid before the House on 25 October 2007 be approved.

The noble Lord said: My Lords, we all want to ensure that we can deliver the best ever Olympic and Paralympic Games, with venues and facilities of which the country can be proud and a legacy of regeneration, inspiration and sporting excellence unsurpassed in recent times. Jacques Rogge, president of the IOC, has

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already said that we have put in place the best preparations ever seen for an Olympic Games at this stage. We know that the Games remain popular throughout the United Kingdom, with 76 per cent of our population being pleased that London is staging the Games in 2012. We now have a funding package which is robust and sufficient to cover the assessed risks.

The Government value the way in which all parties have supported the 2012 Games. Cross-party consensus is important to their success. I recognise, of course, the importance of scrutiny and I pay tribute to both Opposition Front Benches—to the noble Lords, Lord Glentoran and Lord Clement-Jones, and their colleagues—for the work they have done both in establishing that consensus and subjecting the Government’s work to close scrutiny during the period that has elapsed thus far. We still have a long road to travel.

These are reasons why the Minister for the Olympics provided Parliament with the ODA baseline budget in December, and why she has agreed to provide every six months a full update on progress with the Olympics and spend against budget—a breakdown was provided in December. On 22 January we published our first annual report on the London 2012 Games.

The order puts in place a vital component of the Olympic package—£1.085 billion from the National Lottery, made up of £410 million, as previously confirmed, and an additional £675 million as announced in March 2007. Without this funding the Games cannot be delivered. We are well aware of the concerns that have been raised, not only about the increase in costs but about the fact that the non-Olympic lottery good causes will be contributing more than previously anticipated. We have taken account of these concerns and have made important assurances.

First, there will be no further diversion from lottery good causes to fund the Olympics. We will not continue to collect funding from the planned Olympic lottery game after the target of £750 million for that is reached. The Government will examine again—I know this is a cause dear to the heart of the noble Lord, Lord Clement-Jones—the case for a move to gross profits tax for the lottery. We will ask the Gambling Commission and the National Lottery Commission to explore cases of grey lotteries that give rise to concern. The revised memorandum of understanding agreed with the Mayor of London includes a new profit-sharing arrangement for land sales after the Games, making provision for the non-Olympic lottery good causes to get back all of the additional contribution of £675 million which is being taken over the next few years.

We have agreed with the Big Lottery Fund that it will honour its commitment to give 60 per cent to 70 per cent of its funding to the voluntary and community sector, and it has extended that beyond the Olympic period. The Minister for the Olympics has pledged to provide six-monthly updates to Parliament and quarterly briefings to opposition Members on the progress of the Olympic budget.

We have also done a great deal to protect the lottery from what could have been a much greater impact. Under the previous proposals the lottery was meeting 44 per cent of the budget. Now the Exchequer is

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meeting the largest proportion—64 per cent—against 23 per cent from the lottery and 13 per cent from the mayor. As a result of a consultation we undertook with the lottery distributors and key stakeholders, the order sets out 15 quarterly-stage transfers since the distributors indicated that that would minimise the impact. I make it clear that money will not be transferred unless it is required. The order merely permits a series of 15 transfers starting on or after 1 February 2009, with the final transfer on or after 1 August 2012. In the mean time the arts, heritage and sport will continue to receive substantial core funding from the Government, safeguarded thanks to the recent DCMS spending settlement that includes real-term rises as well as large amounts of lottery funding for the non-Olympic causes. Over £5 billion will be available between 2008-09 and 2012-13.

On 15 January in the other place, Members voted overwhelmingly in favour of the order. The figures were 357 votes to nine. Members of Parliament clearly accepted the importance of the order in ensuring the success of the 2012 Olympic and Paralympic Games, and accepted the Government’s clear assurances. I hope this House will agree the order today. I commend it to the House and trust that I can count on its support. I beg to move.

Moved, That the draft order laid before the House on 25 October 2007 be approved. First Report from the Statutory Instruments Committee, First Report from the Merits Committee.—(Lord Davies of Oldham.)

Lord Clement-Jones rose to move, as an amendment to the Motion, at end to insert “but this House calls on Her Majesty’s Government to mitigate the impact of this draft order through exploration of other funding options and to guarantee that the arts, heritage, sport, charity and voluntary sectors adversely affected by the draft order benefit from any increase in land value in the Olympic site following completion of the 2012 London Olympic and Paralympic Games”.

The noble Lord said: My Lords, I thank the Minister for his concise and clear introduction to the Motion. Unusually, I want to start by wishing the new Minister for Work and Pensions well—not something I often do. The DCMS is a field where I am glad to say that politics is not always red in tooth and claw. James Purnell, in his brief period as Secretary of State, consulted and maintained good relationships with opposition spokesmen in both Houses. He had his successes with the Treasury, too, which is rather unusual for a DCMS Minister; except in the field of tourism, he managed to increase the resources available to the organisations directly funded by the DCMS in the last spending round, as the Minister referred to. I hope the new Minister, Mr Andy Burnham, will take a leaf out of his predecessor’s book for the future. His Treasury credentials will be particularly welcome, as I will mention later.

There has been understandable concern about the diversion of lottery money to the Olympics and the potential impact of such a move on the arts, heritage and other causes supported by the Big Lottery Fund and other lottery distributors—even on grass-roots sport itself. Four years ago, when the Government

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proposed that money be taken from the National Lottery good causes to fund part of the Olympics, we on these Benches, along with all the other political parties, agreed to it because we believed that the benefits that would accrue to sport, culture, heritage, regeneration and tourism, in terms of the Games and their legacy, outweighed the potential damage to good causes. As my honourable friend Don Foster pointed out in the debate in another place a fortnight ago, we assumed that this would be a one-off but of course we were wrong.

I do not want to dwell overly long on the issue of the rise in estimated costs of staging the Olympics, but it is relevant to our discussion today. I am pleased that Tessa Jowell, the Olympics Minister, has pledged regular updates.

We were originally told in the bid book that the Olympic budget would be £2.375 billion. In 2006, that figure rose to £3.3 billion and was later reported as rising to £5.1 billion. As officially announced by the former Secretary of State, Tessa Jowell, last March, we are now looking at a figure of £9.3 billion, which included a contingency of £2.75 billion, but represented a threefold rise in the original estimate. That contingency has now been reduced to £2 billion. At that time, the total funding from the lottery was expected to be £340 million from sports distributors and £410 million from non-sports good causes. Additionally, part of the package was the £750 million to be raised by new, Olympics-related lottery games.

Today, after a rather long interval of 10 months, we are being asked whether we are prepared to authorise a further take from lottery good causes to fill the hole in the budget. We have always made it clear that we are strong supporters of the Olympics, and we want the Olympic and Paralympic Games to succeed. We debated the potential—indeed, potent—legacy of the Olympics just a fortnight ago.

Many people and organisations, however, have strong concerns that a further cut will damage the very bodies that will deliver that legacy—the Heritage Lottery Fund, the NCVO, the Voluntary Art Network and the Central Council of Physical Recreation are good examples. In these circumstances, it would have been easy to be negative and simply to blame the Government. Instead, the Liberal Democrats decided to come up with constructive proposals to find ways of getting additional money to the lottery good causes which could make up for the cuts and which at the same time would allow the Games and their legacy to be delivered. That is what the amendment that I propose today and earlier discussions with the former Secretary of State have been about.

First, we have said clearly that we want a cap on the £750 million raised by the Olympics-related lottery games. I am delighted that we now have on record an assurance not only from the previous Secretary of State but also from the Minister today that no more than £750 million will be taken from the Olympics scheme. This pledge has been welcomed by a wide range of voluntary and charitable organisations.



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Cannibalisation, where people switch from games that supported the traditional good causes to Olympic-related games—it has been discussed previously—is not therefore now of prime concern. What is of importance, however, is the speed at which the £750 million is raised. The original target was one-third by the Beijing Olympics and two-thirds during the four years thereafter. If it is raised any faster, good causes will be hurt. What assurances can the Minister give in that respect? Quite apart from that, we have previously heard an assurance in the other place, and again today, that there will be no further raid on the lottery good causes to fund the Olympics. We on these Benches welcome this.

We propose also that the Government carefully consider the proposal to change taxation on the National Lottery to gross profits tax. That is a regime in which tax is paid after, rather than before, prizes have been paid to players. GPT allows the operator to increase prize payouts on selected lottery products, thereby stimulating sales growth while protecting and ultimately enhancing absolute returns to the Exchequer and good causes.

We know that the Treasury was initially sceptical about GPT, but I am delighted that it appears now to have become agnostic about it. The DCMS has moved from being agnostic to being advocates. Camelot should be congratulated on its persistent campaigning on this issue during the past five years. It is deeply ironic that the lottery, which provides such a huge benefit to good causes, is not taxed on this basis, yet all the other gaming sectors—bookmakers, casinos, football pools and bingo operators—benefit from a GPT regime. PricewaterhouseCoopers has calculated that if such a change were to go ahead, something like an extra £45 million per annum would be generated for good causes. This figure might well be greater under the terms of the new Camelot licence, which starts next year.

The former Secretary of State has said that he will carry out a review and these Benches welcome the signs that serious work on evaluating the benefits of GPT is being done in the Treasury. Can the Minister confirm that the review is being carried out with urgency and that if the results of such a review are positive the change to GPT could be announced in this year’s Budget so that GPT could be applied in the first year of operation of the new National Lottery licence? Can the Minister say when the review will be completed? The new Secretary of State was, in the immediate past, the Chief Secretary to the Treasury so he is in an outstanding position to understand and influence the Treasury and his former ministerial colleague, Angela Eagle, in this respect.

Thirdly, we ask the Secretary of State to examine what he called the grey area of lottery-style gains. Most people who play the National Lottery know that a proportion goes towards supporting good causes. However, in recent years gambling operators have introduced lottery-style betting games, especially online, which they admit are intended to compete with the National Lottery. They look like National Lottery games but they are run solely for commercial gain and have no good cause benefits. Independent experts have shown that if we can eliminate those

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games so that players switch back to the National Lottery, it would mean on a conservative estimate an extra £44 million a year—more than £500 million by 2019—for good causes. The fact is that, although the regulation of commercial gaming was modernised in the Gambling Act, no such process has taken place with the regulation and legislation governing the National Lottery. We need to ensure that the National Lottery, with its philanthropic purpose, is protected from encroachment, whether through the liberalisation of gambling advertising, the impact of society lotteries, welcome though many of them may be, and the spread of online lottery games run by bookmakers, who, of course, as I mentioned earlier—to add insult to injury—are taxed on a GPT basis.

Fourthly, we ask for clarification of the memorandum of understanding between the Secretary of State and the Mayor of London, which specifies in some detail how expenditure from different sources, including the costs of the land incurred by the LDA and the £675 million from the National Lottery, will be recouped from land sales by the LDA following the Olympics and Paralympics.

There has been much debate in the other place and in the media about what the eventual value of the Olympic Park will be. Will it be £1.8 billion? Will it be £1 billion? As a long-standing London resident, I have in the past consistently undervalued the likely growth in value of London property and I do not believe I am alone. So I doubt whether it is particularly useful at this stage to speculate on the eventual value of the Olympic Park. However, I hope that the Minister can give an absolute undertaking that the memorandum of understanding is binding on all parties, including the mayor and the DCMS, and that no attempt will be made to try to change the priority on the proceeds of the sale of the land.

This is a sensible package of measures on which to move forward. If we add the possibility of additional money through the third Camelot licence, which could lead to between £600 million and £1 billion extra for good causes, and the increase in DCMS funding for various bodies as a result of last year’s CSR settlement, we have a context which at least holds out the possibility that good causes, taken over the long run, will not be disadvantaged. Indeed, if all these proposals come to fruition in due course, more than £400 million could be returned to good causes before the 2012 Games. I beg to move.


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