National Lottery Reform

Ben Bradshaw Excerpts

Thursday 22nd July 2010 Westminster Hall

[Stephen Gilbert (St Austell and Newquay) (LD)]

I am grateful to have been called in what is clearly an important debate. I will be outlining the Liberal Democrat position on the reforms in place of my hon. Friend the Member for Bath (Mr Foster), who could not be with us today. Before I do that, however, I want to acknowledge how incredibly valuable lottery money is.

When I think of the odds of winning the lottery, a saying comes to mind: “Don’t bet on the lottery, bet on yourself.” However, the fantastic thing about the national lottery is that that is exactly what it allows us to do; it contributes hugely to the things that allow us to better ourselves as individuals, as members of our local communities and as a country.

The various arts councils contribute to the UK’s artistic culture, which is one of the most exciting in the world. Our arts help to drive our immensely successful creative industries. However, they also nourish the inner life of everybody who engages with them. The sports distributors support activities that improve health and longevity. They promote not only self-esteem and the drive to succeed as individuals, but teamwork and co-operation.

As a country we have been bequeathed a physical heritage that is part of our national character, which the Heritage Lottery Fund helps to maintain. It also helps to preserve our local identity. In St. Austell, the Heritage Lottery Fund has provided £850,000 to regenerate the china clay museum where I worked before being sent by my constituents to this place. The museum celebrates the history of the china clay mining communities in the heart of Cornwall and provides a fascinating insight into how the industry changed and shaped the environment that I represent.

I recently attended the opening of a local art exhibition on the theme of Newquay and the sea, a display of 19th century paintings, many of which were owned or created by local people. That also benefited from £10,000 of Heritage Lottery Fund assistance. Through Big, lottery funding is directed to a host of other community groups and volunteers working on all manner of important projects. There are other benefits from promoting all those good causes and organisations—far more than I can list here—which work very hard. Indeed, as the Minister said, we have all benefited from the £24 billion that the lottery has generated for them since its creation. That does not mean that improvements cannot be made, and the coalition Government are right to look at ways to make the most of lottery money.

The lottery reforms, as has been mentioned, will lead to a boost in funding for the arts, heritage and sport. The relevant distributors have welcomed the changes. The Minister will be aware that no one funding stream can completely replace another: £1 million of public money is not the same as £1 million of private money, and £1 million of lottery money is something else again. There are plans to boost private donations for the arts, for instance, and that is welcome, but we must still try to ensure that risky projects, smaller groups and organisations based outside London, such as in the constituency of the hon. Member for Kilmarnock and Loudoun (Cathy Jamieson) or, indeed, in the south-west, all of which may be less appealing to private donors, do not miss out in the reforms. We must remain aware that sometimes funding is conditional. Money is offered from one source only because another has signed up, and if one goes there is a risk the other will also be withdrawn.

Therefore, the boost in lottery funding will not be a panacea, but it is still an important step. To make the most of it we need to ensure that cuts will not be implemented immediately, but phased in gradually. I understand that statutory instruments to enact changes to lottery distribution will be laid in September, according to recently published DCMS plans, but it will be 2012 before distributors receive their full 20% of good cause funding. Bearing in mind that £88 million of cuts have already been found this year, our side of the coalition would like reassurances that spending reductions will be restrained until that money comes into play. As the Minister said, the money that was redirected towards the Olympics will also start to find its way back, and will provide some relief; but we seek further reassurances.

The coalition agreement contains a promise to look more closely at a gross profits tax system for the lottery. Camelot’s figures showed that that would generate many millions of pounds of extra income for the Exchequer, but there has been little movement since the coalition agreement was published, and I should be grateful if the Minister would tell us what recent discussions have taken place with the Chancellor about gross profits tax, and when we can expect further announcements. Overall, we want greater urgency from the Government on those points. Most importantly, I urge the Department not to front-load the cuts but, instead, to phase them in, so that they begin to bite only when the new funding sources that I have mentioned become available.

That brings me to the matter of how we handle cuts to administration. Under current plans, lottery distributors will be instructed to reduce their spending on admin to below 5%. It is of course right to make the most of limited funds and ensure that they are spent as efficiently as possible, but, again, such cuts need to be implemented intelligently. As other hon. Members have said, and distributors have made clear in representations to us, distributors are not just banks doling out large sums of money. Indeed, the Public Accounts Committee, in a report in 2008, considered the efficiency of grant making and said:

“The Big Lottery Fund has increased the spread of successful applications across the United Kingdom and from different social groups”.

The report goes on to stress the importance of making funding available to small organisations, and stimulating higher-quality applications. To provide the support needed to make that happen, distributors need dedicated backroom staff. Such staff should be seen as valuable assets, not unnecessary paper-pushers.

[Mr Ben Bradshaw (Exeter) (Lab)]

It would be helpful to hon. Members if the hon. Gentleman would explain when the Liberal Democrats changed their policy from their manifesto commitment of protecting spending on arts and culture, which the hon. Member for Bath (Mr Foster) repeated ad nauseam before the election, to their present supine acquiescence in what are likely to be savage cuts by the coalition Government.

[Stephen Gilbert]

The right hon. Gentleman was a member of the Government who left the country in a situation that meant that some difficult choices had to be made in the negotiations between the two coalition parties. If he lets me finish my remarks he will see that I am trying to encourage my right hon. and hon. Friends in the Government to make the changes as softly as possible.

Backroom staff should be seen as valuable contributors to building the capacity of the sector. Even if a small organisation does not eventually succeed in securing a grant, the recommendations that a distributor makes can improve the operation that it is advising. The risk is that distributors will have to make a few large grants because making lots of small grants becomes too expensive. Small organisations should not lose out as a result of cuts. For that reason, such “hand-holding” should not fall within the definition of administration; I should be grateful if the Minister would address that point.

I have mentioned the PAC’s assessment of Big and its valuable work. My constituency has benefited from around £4.5 million in Big awards since 2004. Some of them are as large as the £1 million given to the Eden project; others are as small as the few hundred pounds offered to war veterans, their families and their carers, so that they could travel to memorial services or the places where they saw active service. There are already many deprived communities around the country and the challenges that they face will not get any easier as we try to get a grip on the country’s miserable financial situation—an unwelcome gift from the previous Administration. Big, and the organisations that it supports, will have an important role in creating opportunities and making such places better places to live. I note that some have received more money than others in the past, and that some—including places in my own constituency—are much more deprived than others. I urge Big to rise to that challenge, and funnel money where it is most needed.

Overall, I welcome the Government’s intention to prevent abuses of lottery money. Lottery funding is not a piggy bank to be dipped into to plug Government spending or fund ministerial pet projects. However, we are concerned that limiting Big to funding the voluntary and community sector only could mean that a lot of good projects miss out. There are concerns that individuals could no longer be funded—such as the veterans I mentioned from my constituency, who were helped by the “Heroes Return” scheme. Sometimes a statutory body, such as a parish council, or a school, may be better placed to implement a project. If the aim, for example, is to reduce antisocial behaviour, and a school can do that by putting on after-school activities, why not give the money to the organisation that is best placed to do that? Biscovey junior school in my constituency received an award to do just that by involving older boys in its choir.

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[Mr Ben Bradshaw (Exeter) (Lab)]

I thank all right hon. and hon. Members for coming to the debate regardless of whether they have spoken. It has been good to see so many people here. Furthermore, I am grateful to the Government for giving us the opportunity to discuss these issues.

Let me start by saying that I agree entirely with the Minister’s opening remarks about the invaluable contribution the national lottery has made to our national life. Indeed, that is something on which Members on both sides of the House can agree. However, I have a number of questions about the specifics of the review and about one or two things that the Minister and other Members have said during the debate.

When the Conservatives were in opposition, they said on a number of occasions that they would return the lottery to its original four good causes: arts, sports, heritage and charities. The fifth good cause, health, education and the environment, was introduced by Labour through the National Lottery Act 1998, and it enabled lottery distributors to fund a wider range of public projects and things that the public had said in numerous surveys that they valued.

In November 2009, the right hon. Member for South West Surrey (Mr Hunt), now the Secretary of State for Culture, Olympics, Media and Sport, said:

“So one of the first things the Conservative Government will do will be to restore the Lottery to its original four good causes.”

My first question is what has happened to that commitment? When I asked in a parliamentary question whether the Big Lottery would continue to be able to fund the fifth good cause, the Minister replied:

“The Big Lottery Fund will continue to be a lottery distributor after April 2011, funding the same range of projects as it does, now but focusing on the voluntary and community sector.”—[Official Report, 21 July 2010; Vol. 514, c. 333W.]

There is an element of confusion, and I would be grateful if the Minister could clarify the matter. Given that it was one of the first things that his party said that it would do after the election, when can we expect legislation to implement that commitment? Or is it yet another commitment that has been dropped since the Conservatives arrived in government?

The Minister has begun to implement the commitment that the Government made before the election to increase the proportion of lottery revenue going into the arts, sports and heritage. However, as a number of my hon. Friends have pointed out, increasing the lottery funding going to the arts, sports and heritage will not make up for the savage and unnecessarily severe cuts that the Government appear to be intent on making to the arts, culture and sport. I am disappointed that Ministers from the Department for Culture, Media and Sport are not resisting Treasury demands in the negotiations on the comprehensive spending review. As the Minister has followed the debate very carefully, he will know that there are good economic and broad cultural arguments for protecting spending on the arts and culture. Indeed, I suspect that those arguments were why the Liberal Democrats had a manifesto commitment to do exactly that. I always made it clear that I would fight hard in any negotiations with the Treasury.

Overall spending on the arts and culture represents less than the underspend in the national health service every year. The hon. Member for St Austell and Newquay (Stephen Gilbert) said that the Liberal Democrats had a Damascene conversion because they did not realise how serious the economic situation was, but the argument that the hon. Member for Bath (Mr Foster) repeatedly made before the election was that cutting spending on the arts and culture would have such an infinitesimal impact on reducing the deficit and would inflict such damage that it was not worth doing. I would like some reassurances that when the Treasury asks the Minister and his colleagues to jump, they are not simply saying, “Yes, very nice, but how high?”

Does the Minister accept that by shifting the priorities in lottery spending, the Government are effectively cutting funding to community and voluntary groups? When the Conservatives formulated their policy in opposition, they worked on the basis that the Big Lottery Fund, which at the moment receives 60% of lottery good cause money, spent 80% of its revenue on community and voluntary groups and 20% on the non-CVS sector. In fact, as the Minister acknowledged in his opening remarks, 92% of Big Lottery’s spending went to the voluntary sector last year. That means that if Big Lottery’s share of funding is reduced from 50% to 40%, even if it is restricted exclusively to funds within the community and voluntary sector, the share of lottery funding to voluntary groups will be cut. Will the Minister explain how his leader’s big society will be helped by cutting funds to voluntary groups?

Let me turn now to the administrative costs of the lottery. In its structural reform plan, the Government state that by the end of this year they intend to

“reduce lottery distributors’ administration costs and ban lobbying activities.”

In opposition, the Conservatives were more precise:

“So we insist that admin costs should be no more than 5% of grants distributed… Self-publicity by the distributors will also be banned. As will lottery money being spent on lobbying and public affairs.”

Are the Government still insisting that administration costs should be cut to 5%? If so, perhaps the Minister can explain on what basis that figure has been chosen. As my hon. Friend the Member for Kilmarnock and Loudoun (Cathy Jamieson) rightly said, Big funds many community projects. The Minister will be aware that it is much more expensive to administer the costs of funding such projects. The National Council for Voluntary Organisations has also expressed concern. It estimates that Big’s current administration is 7.5% of its costs. It says:

“Because BIG funds many community projects and because of its approach to supporting those it funds, in practice these costs are relatively low. Moreover, this approach helps BIG to maximise the effectiveness of its grants, thereby achieving better value for money in the longer term. There are further concerns that pressure on administration costs may make the funding of smaller, community projects more difficult.”

Will the Minister reassure me that that will not be the result of his policy? Moreover, will he be happy to meet voluntary organisations, perhaps under the umbrella of the national council, to ensure that his drive to reduce administration costs does not make it more difficult for small community and voluntary groups to win lottery funding?

The Government’s structural reform plan states that the Big Lottery Fund will be restricted to funding the community and voluntary sector. Will the Minister confirm that the intention is to restrict it exclusively to funding the CVS sector? If so, what does that mean for schemes such as Heroes Return, which provides grants to world war two veterans to enable them to return to the battlefields where they served their country? More than 40,000 veterans and their families have benefited from that scheme. Will the Minister assure the Chamber that such an initiative can continue to be funded by the Big Lottery Fund?

Moreover, will the Minister tell us when we are likely to see the national lottery independence Bill, which we were told was needed so that the lottery

“cannot be raided by politicians for their own pet projects.”

Given that commitment, which was made before the election, will the Minister explain why the DCMS structural reform plan states that Ministers will

“direct the Sport Lottery Distributor to take responsibility for the community sports legacy following London 2012.”?

Again, I detect a slight conflict. The Government appear to be pointing in two directions at once. The Minister said that he would push forward with the proposals that were made before the election to introduce a gross profits tax. Will he outline the time scale for that?

We all agree, I think, on the diversion of money for the Olympics. The maximum contribution to the 2012 Olympics from the lottery was capped at £2.2 billion, with no more than half diverted from non-Olympic distributors. Will the Minister confirm that the Government will not raise that cap? Furthermore, can he guarantee that the Government will honour the commitment that we gave to return all the money that was diverted from good causes in full, using the proceeds of land sale after the Olympics? If he cannot do that, will he write to me after the debate?

Finally, let me ask the same question that I ask in all such debates. It would interest all Members in the Chamber if the Minister could point to a single Liberal Democrat policy on the lottery that is being implemented by the Government. Or is this yet another example of the Liberal Democrats having absolutely no influence whatever on the coalition Government?

[Mr Joe Benton (in the Chair)]

I call the Minister to wind up.

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[John Penrose]

I thank the hon. Lady for drawing everybody’s attention to that issue. She is absolutely right to point out that any such policy direction would be purely for England; it would then be up to the devolved Administrations to decide whether they wished to follow or not. Alternatively, if they wanted to change or flex the policy direction, it would be entirely up to them to decide how they wanted to react. I hope that that answers the hon. Lady’s question. It is important that we strike the right balance and are flexible on that issue, because an overly rigid approach could create some unintended consequences.

I also want to pick up briefly on one or two of the points made by my hon. Friend the Member for St Austell and Newquay, who is standing in today very nobly for my hon. Friend the Member for Bath (Mr Foster). He asked how we were getting on with the gross profit tax; incidentally, that is an answer to the shadow Secretary of State’s question about whether there was a policy that the Liberal Democrats as well as the Conservatives had backed. The answer to my hon. Friend’s question about the gross profit tax is that discussions with the Treasury are already under way. I am afraid that the timetable is still slightly elastic, because the Treasury is in charge of it, since it is a tax rather than something that is directly the responsibility of the Department for Culture, Media and Sport. However, as I say, discussions are happening, officials are already involved and I have spoken to the relevant Minister at the Treasury about it already.

[Mr Bradshaw]

I asked the Minister whether any discrete Liberal Democrat policies that were not shared by the Conservatives before the election were now Government policy.

[John Penrose]

I am afraid that I shall have to rely on my hon. Friend the Member for St Austell and Newquay, who is speaking for the Liberal Democrats today, to answer that question, as I am not quite such an expert on their election manifesto as I am sure he is. I am certain that he will be willing to be buttonholed by the right hon. Gentleman after the debate and will put him right, as necessary.

My hon. Friend the Member for St Austell and Newquay asked about the speed at which the spending cuts would be made. He and a number of other Members also asked whether we would try to be flexible in making those cuts. In fact, the right hon. Member for Exeter was also very concerned—to put it charitably—about the extent of cuts. We have four years in which to achieve those cuts and therefore we will carefully phase any reductions that have to be made. None of us here like the notion that there have to be cuts at all; sadly, they are a necessary thing rather than something that anyone is looking forward to implementing. But we will try to ensure that we phase them over that four-year period in the most intelligent way possible, to minimise the effect on the front line and to ensure that adjustments that have to be made can be made during that period.

In response to the comments made by the right hon. Member for Exeter about the need for these cuts, I share the view of my hon. Friend the Member for St Austell and Newquay. I am afraid that it is true that these cuts are not something that anybody wants to implement; none the less, they are the result of the previous Government’s actions. The reason why they have to be made is not that anybody wants to make them but simply because of what is happening to countries such as Greece. If we look at those countries, we can see that if a country’s public sector finances are not in balance, the international capital markets and the rest of the world will form their own view about its creditworthiness. We are borrowing a vast amount from international creditors at the moment so we need to ensure that we are a credible borrower in their eyes; otherwise, we will not be able to carry on doing anything that we want to do. I am afraid that that credibility has been gravely put in peril, and that is why we have to bring the national accounts back into balance as fast as is reasonably possible. However, I take the point made by my hon. Friend the Member for St Austell and Newquay that we need to do that with sensitivity and care and attempt to minimise the impact on the front line as far as possible.

The right hon. Member for Cardiff South and Penarth made some points about the needs-based approach, which were picked up by a number of other Members. I think that he was suggesting that he would prefer to see the Big Lottery Fund contribution maintained at 50% rather than at 40%, although as a result of our creating a smaller slice of a bigger pie the total cash amount will go up; I hope that I also answered his question about the impact on both Scotland and Wales. I think that his argument was that he would prefer that contribution to remain as a higher percentage as well as that higher total cash amount, because he felt that that would maximise the amount of money being given on a needs-based approach.

To reassure the right hon. Gentleman—