National Lottery Reform

Thérèse Coffey Excerpts

Thursday 22nd July 2010 Westminster Hall

[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.

[Dr Thérèse Coffey (Suffolk Coastal) (Con)]

I respect the hon. Gentleman’s arguments, but is there not a risk that when organisations, such as schools with after-school clubs, try to do more and more activities, it will start to dilute their original purpose? The same is true of a parish council. Perhaps instead voluntary organisations could be allowed into that area to provide different solutions, rather than dealing with things in a state-controlled environment.

[Stephen Gilbert]

It depends on one’s understanding of the big society. My understanding is that we should be encouraging more groups and individuals to participate in creating vibrant, thriving communities; it will depend on the organisations.

I have talked about the need not to exclude the groups that are best able to carry out projects from receiving the money. There are relevant groups benefiting from the 8% of Big funding that does not go to the voluntary and community sector. It makes sense to make the most of what they can offer, rather than shutting them out completely. We might consider some kind of community benefit test. That would achieve our goal of ensuring that lottery money is not being used to plug gaps in local service budgets—I think that was the point that my hon. Friend the Member for Suffolk Coastal (Dr Coffey) was making—but would still allow Big to fund projects that clearly benefit the community, even if the funding goes to a statutory body, a social enterprise, or an individual. It would have the added advantage of future-proofing Big. When the lottery was first created, we did not anticipate the increasing importance of social enterprises. It is important that any restrictions on Big are flexible enough to enable it quickly to embrace future innovations and changes. I welcome the recent announcements about the big society bank, which will work to enable similar projects, but it seems worth giving the Big Lottery Fund the flexibility also to fund projects in its own way.

There are concerns that voluntary and community organisations could see a reduction in the amount of funding that they receive if Big has its funding capped at 40%. Currently, it receives 50% of all good cause money, of which 46% goes to VCOs. I hope that the Minister can provide some reassurances on this matter, as well as considering the other suggestions that I have made.

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[Alun Michael]

There are two points to make, I think. First, those who play the lottery are contributing and should have something to say. Secondly, many of them are from more deprived communities and are less well off. I spoke to someone about the fact that many of those who play the lottery cannot afford to do so. A friend of mine who was representing a deprived community in my constituency made a good point when he said that the more deprived someone is, the more difficult it is to make ends meet and to provide for their families, so the more they need something to provide hope. The gamble and the likelihood of a return may not make sense, but they are buying a dream, not a ticket. If the way people buy that dream leads to a contribution that is likely to come back to their community and help people in similar situations, surely that principle should be pursued. That is a good way of introducing a point that I want to emphasise: a needs-based approach is important, and that has been the approach adopted by the Big Lottery Fund. I hope that it will continue.

The Minister made the point that we will be talking about the funds that go into the Big Lottery Fund being a smaller proportion of a larger sum, so there will at least be an increase in money terms, but I would prefer a greater proportion of increased funds to go to areas and communities with the greatest needs. That is the essence of a needs-based approach. It is not impossible to achieve it while pursuing the Minister’s objectives. For example, it might be a question of emphasising the importance of a needs-based approach to the other lottery funds. There is more than one way of achieving a specific outcome, but I hope that the Minister will undertake today to consider how best the needs-based approach can be protected within the new arrangements for the Big Lottery Fund, and perhaps the other funds.

The Big Lottery Fund formula for allocating funding within the United Kingdom—I believe that this applies to Scotland and Northern Ireland as well as Wales—is based on need rather than population. Wales is likely to be worse off from any change in shares, unless that point is taken on board. The Minister has a pleasantly listening visage this afternoon, so I hope that he will take my points into account.

We need a larger proportion of a larger sum to go to the places in greatest need, but that does not necessarily apply only to the crude figures of the distribution between different lottery funds. The Big Lottery Fund distributes its money to charities, health, education and the environment, and its mission is to support people and communities in the most need. That is why I am concerned about the consultation. The Minister seems to have someone sitting behind him who specialises in shaking her head, but I have given a factual description of how the Big Lottery Fund works.

[Dr Thérèse Coffey]

I am shaking my head because I completely and fundamentally disagree with the right hon. Gentleman’s proposal. Unfortunately, I cannot stay for the whole debate, but if I am called to speak I will make precisely the opposite plea—that we get rid of the politically correct nonsense formula, and allow the lottery to be what it is: additional funding that celebrates communities throughout the country, not just more politically correct indices that the Labour Government dreamed up.

[Alun Michael]

I am glad that the hon. Lady has exposed her views, but I hope that the Minister will take a more intelligent approach to what I am saying. I am not talking about political correctness; I am talking about the difficulty of getting money to the most deprived communities that lack resources. As my right hon. Friend the Member for Oxford East (Mr Smith) pointed out, those are the communities that contribute most to the lottery because people are buying a dream.

The Big Lottery Fund has sought to enable such communities to develop the skills and contributions of individuals who often have a great deal to offer but struggle to do so. Often, the lack of an infrastructure as well as the lack of money in those communities acts as a considerable obstacle to bringing projects forward. I have worked in deprived communities in my city of Cardiff and within my own constituency. Those communities do not lack commitment or a degree of energy; what they lack is money and often a professional infrastructure among the people who live there, so they often find themselves at the end of the queue when projects are proposed.

Such communities often lack the capacity to produce big schemes, because planning, infrastructure and voluntary contributions by architects and so on can make a big difference to achieving projects that meet the criteria of the different lottery funds. I do not think that what I said is controversial. I thought that the Government were intent on creating a big society that involves the concept of inclusiveness. The hon. Lady is expressing the political correctness of the right in—if I may say so—a most unpleasant and worrying manner. I hope that we will hear later that that is not the view of the Government as a whole.

The Secretary of State stated his desire to protect the voluntary and community sector and proposed that the Big Lottery Fund should exclusively fund that sector. I am instinctively sympathetic to that approach because it is too easy for funds to slide into the public sector rather than the voluntary sector, where more effort is sometimes required. I share the concern expressed by the hon. Member for St Austell and Newquay (Stephen Gilbert), and I hope that the Minister will take care to leave some flexibility so that priority and preference is given to funding outcomes that will actually be delivered for the local community, while allowing some discretion for lateral thinking and for those communities that struggle to obtain the necessary infrastructure. At least I can agree with the hon. Member for St Austell and Newquay on that. It is right to have tight criteria, but it also makes sense to have some flexibility.

I hope that the Minister will reassure us that the three essential principles laid down to underpin the national lottery will continue to apply. The first is the independence of the lottery distributors, which are independent of Government but accountable to Parliament and have the freedom to take decisions on funding priorities and specific grant allocations, after consultation. Second is the principle of additionality, which the Minister has already markedly underlined, and third is sustainability, meaning that lottery funding should cover the full cost of the activity being funded with the aim of helping organisations to deliver and sustain the project throughout and beyond the life of the grant.

I ask for care in portraying the national lottery as an efficient way of giving to charity. The Minister has said that the lottery raises considerable funds that go to charitable, voluntary and community purposes, and that is correct. However, it is fair to note that if gift aid is used, a £1 donation given directly to charity results in £1.23 for that charity, whereas only 28p in every £1 spent on the lottery goes to good causes. I make that point not to undermine the effectiveness of the lottery, but to suggest that if people want to give to a good cause, additional value is created by donating with gift aid and a greater sum will go to that good cause.

I agree with the point made by the hon. Member for St Austell and Newquay about the danger of misunderstanding how administrative costs work. It does cost more to give funds to smaller and more community-based organisations, but often that funding will have a disproportionately large benefit in those communities. Small sums of money can sometimes attract other, greater, funds. When I was responsible for national parks, I set up funding through the sustainable development fund to encourage community-based projects within national parks, based on the principles of sustainable development. That led to millions of pounds of other money coming in from organisations such as parish councils, charities or from business donations and contributions from individuals who wanted to take part in a community project. It was beneficial because everybody could see the value of bonding together to produce positive outcomes that were good for the national parks and for the communities and voluntary organisations, such as youth clubs, that used them.

Sometimes the value of small grants is greater in terms of long-term impact than that of big sums of money. However, it takes more time and administrative effort to achieve those outcomes. Applying simple proportionality in judging administrative costs is too crude, and I hope that the Minister will acknowledge that and take it into account when he responds to the debate. I welcome this opportunity to debate this subject with the Minister, and I hope that he will take account of the constructive points that have been raised.

--- Later in debate ---

[Dr Thérèse Coffey (Suffolk Coastal) (Con)]

I had not planned to speak today—if Hansard asks for my notes it might not be able to make head nor tail of them—but I felt compelled to speak after intervening on the right hon. Member for Cardiff South and Penarth (Alun Michael). I do not always attend debates to make a speech; I often come to listen, but I enjoyed today’s debate so much that I feel I have to join in.

I welcome the lottery. It is John Major’s greatest legacy. He may claim that his greatest legacy is the golden economic legacy he bequeathed to new Labour, but I believe that the national lottery is his best and will be his most enduring legacy.

I do not speak for the Government, of course, but for the people of Suffolk Coastal. It is for that reason that I am here. I should perhaps declare an interest: I was recently given lunch by Camelot, but I have no intention of talking about that side of the national lottery today. I believe that all Members were recently invited to surgeries by the lottery distributors. I was surprised to learn how little funding had been received by projects in Suffolk. Billions of pounds have been generated for good causes in the past 15 or 16 years, but Suffolk—especially Suffolk Coastal—seems not to have received much, particularly not Big Lottery funding. I asked the lottery distributors why they thought that was so, and they came clean, saying that the funding formula was biased towards certain aspects and indices and that Suffolk, being average, loses out. That is unfair.

One of the things that I have discovered as one of the Suffolk MPs is that the county’s statistics seem always to be average, but we all know that there are great pockets of deprivation as well as wealth. The poorer areas definitely lose out when such indices are applied across such a large area. Many of the indices and formulae used for health funding, police funding, education funding and so on, including the basic support grant for our councils, have been consistently skewed away from rural areas, especially in rural England, in favour of other parts of the country.

Opposition Members have spoken of their concern about certain aspects of the lottery in Scotland and Wales. I have an idea for the Minister. He spoke of having arm’s length bodies, but I think that it would be fair for the Government to give guidance to distributors, and perhaps there should be a rule to restrict lottery grants to the United Kingdom. My constituents would be surprised to hear that Big Lottery Fund money goes to overseas projects.

An encouraging aspect for people playing the national lottery is that they believe that they are helping their own communities, just as when they give money to Children in Need they are conscious that the money stays in the United Kingdom and does not go abroad. Many of my constituents would be surprised to hear that El Salvador has received funding in connection with setting up trade unions, that in Nicaragua there are projects on certain aspects of the millennium development goals, and that there are other projects elsewhere around the world. One of the reforms I suggest to the Minister is that that the funding generated by the national lottery should be used in the UK.

[Fiona O'Donnell (East Lothian) (Lab)]

Does my hon. Friend not agree that that is wholly at odds with the spirit of the Government’s intention to protect (1) the budget (2) of the Department of International Development. The Government should be utterly comfortable with that, as should her constituents, because poverty and deprivation in other parts of the world have an impact on this country.

[Dr Coffey]

I thank my hon. Friend for that intervention—we call each other “hon. Friend” because we are friends outside the Chamber, although as a political convention we do not always use that term. I understand what she says. Funnily enough, if the money given in grants by the Big Lottery Fund was part of the 0.7% of gross national income aid target to which we are committed, I could see some logic in it, but lottery funds are about additionality rather than substitution for Government funding, so I do not necessarily agree with her on that point.

I welcome the move in the allocations back to the original percentages of 40, 20, 20, 20 and away from the 50% split. Again, some of my constituents might be surprised that some of the big society funding—I mean Big Lottery funding; I apologise—is used to fund credit unions. That is a great idea. Many of us recognise the extent of the personal debt crisis in this country; rather than having people going into the arms of loan sharks, Members on both sides of the House are trying to encourage credit unions. However, I think my constituents will be more surprised to hear that some Big Lottery Fund money is going to trade unions—for trade union learning or for particular projects such as “The Union Makes Us Strong: TUC History Online”. I do not think that that is appropriate use of the Big Lottery Fund.

I understand that the lottery is growing. I appreciate that we are going back to the principle of additionality and getting rid of redirection towards Government policy. With appropriate marketing, that might encourage more players to resume, as there has been a drop in the number of people playing. This is not necessarily an interest, but I used to play regularly through a syndicate at work. I was determined that the people who worked for me who could retire if they won that magic figure were not going not leave me behind, so I too contributed. I may even get a syndicate going in the House. It is not that we feel poor because of the Independent Parliamentary Standards Authority, but we would all like to enjoy the prosperity of a win on the lottery. Indeed, it could be any one of us. However—to continue this personal anecdote—when the funding formula started to change and when I thought that the Government were starting to redirect money, I decided not to play as regularly, because I thought that the money was not necessarily going to causes in my community. For me, that was an important motivation.

An interesting point was raised about efficiency in the distribution of funds. I hope that the Government can find a way of benchmarking the different funds and distributors. When it comes to the Big Lottery Fund, I would like the Government to consider having a wider range of distributors. I pay tribute to the Community Foundation Network, which I think was set up by the previous Government. Community foundations are either county based or much more local. I pay particular tribute to the Suffolk community foundation; it really has its finger on the pulse and is much better than the big regional offices that we see. We should do all we can to help them.

[Alun Michael]

I am grateful to the hon. Lady for giving way. In view of her earlier comments, I am glad to find some common cause with her. Funding through community foundations means that the communities that find it most difficult to apply are more likely to obtain assistance—the point that I was making earlier. When I was deputy Home Secretary, I set in train something that led to the rural policing grant, because rurality is indeed one of the elements that should be taken into account. It seems that the hon. Lady is not arguing against the basic philosophical starting point, which is that those areas that have the greatest need and which find it most difficult to apply for funding, including those in her constituency, should be assisted with doing so.

[Dr Coffey]

I welcome the right hon. Gentleman’s intervention. I am not saying that the proportion of money spent on the national lottery in an area should automatically result in that much going back to that postcode area. I welcome what he says about the police grant—I did not know that, and I thank him for educating me—but I honestly believe that generally there has been a skew away from rural areas because of the way certain indices have been applied, so we are not likely agree on that point, but I am glad that we have found common cause on the community foundations being an efficient way of distributing funds.

I hope that when the Minister considers the input into the lottery, including trying to encourage more people to take part and ensuring that even more post offices can benefit—I believe that a third of post offices have a lottery terminal on their premises—he will also give careful consideration to getting the money out as efficiently as possible, as cheaply as possible and, dare I say it, as least politically correctly as possible.