Enterprise and Culture Committee, 25 Jan 2005

Meeting date: Tuesday, January 25, 2005

Official Report 197KB pdf

---

National Lottery Bill

We move to our second item of business, which is consideration of the National Lottery Bill. I welcome to the meeting Patricia Ferguson, who is the Minister for Tourism, Culture and Sport, and Gavin Barrie, who is from the lottery and sponsorship unit at the Scottish Executive. As members know, this bill is United Kingdom legislation. Patricia is here today to update us on the bill and to answer our questions. A fair amount of documentation has been circulated on this matter.

Minister, would you like to say a few opening words?

Yes, convener, if I may.

I thank the committee for considering this Sewel motion so quickly. This UK bill will effectively bring powers north of the border for the first time and give legal effect to the merger of two UK lottery distributors, the New Opportunities Fund and the Community Fund, to fund a new community distributor, called the big lottery fund. This is a key element of the Government's aim to make the National Lottery more responsive to communities' needs and priorities.

Scottish ministers want the lottery to be more responsive to the devolved environment, which is why our partnership commitment makes it clear that we want a Scottish fund. The bill delivers that commitment by establishing a committee for Scotland with a devolved budget and giving Scottish ministers new powers over key controls, including the approval of appointments, the ability to issue policy directions and the power to make annual accounts available to the Scottish Parliament.

The big lottery fund will take a UK approach only where there is a strong need to do so. Indeed, the only UK programmes are large transformational grants and international development. The UK Government has also agreed a less prescriptive approach to the direction of lottery bodies, but three overarching UK themes will give some cohesion to what would otherwise be a very broad remit for the fund.

Scottish ministers have given the big lottery fund in Scotland a framework to conduct a targeted consultation, and we are discussing with the Scottish Council for Voluntary Organisations the question of the key role that the voluntary sector can play in that respect. We expect that the fund will distribute some £60 million to £70 million a year in Scotland, and programmed development will be for the fund itself. It has already been made clear that 60 to 70 per cent of funding will be for the voluntary sector.

That brings me to the end of my brief opening comments. I am happy to answer any questions.

I would like to ask one quick question before we proceed. Am I right in assuming that if London wins the bid to host the Olympic games, as I hope that it does—[Laughter.] I am simply making that clear for the record. If London wins that bid, will separate legislation be required to establish the proposed Olympic lottery game?

First, I thank you very much for supporting the bid, convener. Indeed, I will make a point of conveying that endorsement to Seb Coe the next time I speak to him. I am sure that he will be delighted to receive it and will mention it frequently.

If the bid is successful, the proposed new game will play a very important role in raising funds to support the eventual holding of the games. I must admit that I am not 100 per cent sure whether that will require separate legislation. Gavin Barrie might be able to help me with that.

To be honest, I am not sure under which legislation the provision for the new lottery game will be made. However, I know that such a game cannot be introduced until the decision on the bid is made.

That said, given that the bill contains provisions for licensing and regulations, I think that provision will already have been made somewhere to allow the Olympic lottery game to go ahead. It might be that it will go ahead through directions issued under existing lottery legislation.

Could you follow that response up with some confirmation?

If I were to make a guess, I would say that any such game would be introduced through direction rather than through separate legislation. However, I am happy to check that out for the committee.

I remind the committee of my registered interests as a trustee of the Fife Historic Buildings Trust and a former member of the Scottish Arts Council national lottery capital grants committee.

I have a question on the bill's impact on the Heritage Lottery Fund, on which I have already asked a question through my local MP after receiving Colin McLean's communication just before Christmas. The Heritage Lottery Fund provides funding to projects that can take a very long time to get off the ground. As that funding is the first tranche of funding that such projects receive, it is often the hook on which other funding depends. What assurances has the minister been able to obtain that the measure will not be detrimental to Heritage Lottery Fund regeneration projects in Scotland?

Before answering that, I should say that I was delighted to visit one of Fife's historic buildings a week or two ago as part of my tourism remit. I would encourage the committee to visit that amazing building, which is stunning.

The issue to which Christine May alludes is the response to a National Audit Office report from some time ago that suggested that a number of lottery distributors were holding balances that were too big. As a result of that report, it was agreed that those balances would be reduced by half. The theory was that other causes could usefully use the money that was sitting in the large balances of some distributors. So far, I believe, those balances have been reduced only by about a quarter, so there is a significant way to go. One thing that we can do is to try to encourage people to reduce those balances.

Given the nature of the funding that the Heritage Lottery Fund provides, I have some sympathy with the case that it has made. However, I think that I am right in saying that the fund's current policy allows it to hold balances equivalent to two years' income—about £480 million—although its current forward commitment level is only £175 million. Therefore, I do not think that the policy will be detrimental to the Heritage Lottery Fund. I can understand why the fund is rightly concerned to ensure that that is the case but, at the end of the day, it is probably not right for it to hold that kind of balance. I can understand why the fund wants to hold a significant balance, but I think that the way that things are going at the moment is the right way to go. I appreciate the need for a balance to be struck—I am sorry to employ the word "balance" in more than one usage—but the fund does not need such a large balance.

Let me put to the minister the scenario that, although the Heritage Lottery Fund's committed forward balance might be less than its current balance, the fund is aware of projects in the pipeline that are not yet at the stage at which they can be committed to and that are the subject of on-going negotiations. Will she undertake to clarify the position of those projects to ensure that, in so far as is possible, there will be no detriment to the Heritage Lottery Fund's work in Scotland?

We must remember that such funding streams do not work on an annualised basis. It is entirely possible, and appropriate, for such organisations to work through their stream and not to be short of money. They know their forward commitments and they are able to budget for them. What is being asked is not particularly unreasonable. Obviously, however, we are prepared to work with the Heritage Lottery Fund to ensure that it does not suffer detriment.

My question is twofold. Without in any way wishing to denigrate what has happened in the past—as the minister can imagine, I have been very grateful to this source of funding for projects in the remote parts of the Highlands—I want to ask about the increased powers to direct funding that ministers will be given under the bill. In the past, notwithstanding the best efforts of officials, it has been somewhat complicated and a bit difficult for organisations such as a remote football club to make a small application. Will there be some willingness on the part of Scottish ministers to ease that situation?

Secondly—and possibly more important—although some parts of the Highlands, such as Inverness, have been very successful in attracting lottery funding, other parts of the Highlands have been less successful. Therefore, there is a patchy map of provision of, for example, covered leisure facilities. Such facilities might be numerous in Ross-shire and Lochaber, but not so numerous in Caithness. Bearing in mind the powers of Scottish ministers to direct, would ministers consider keeping some sort of masterplan of bits of Scotland that could do with investment? I know that the applications must come first, but might ministers review the operation of the allocation of the money in the light of such a masterplan, so that we can identify the areas where there are shortfalls and tackle those shortfalls accordingly?

I am not sure that we would want to be so prescriptive, as that would go against the whole ethos of what we are trying to do. I am concerned—and I have been concerned as a constituency MSP—that, sometimes, organisations that could do with a bit of help from one part of the lottery do not get that help. Over the past couple of years, the lottery has taken great steps to try to be more accessible to communities and to explain to communities which bit of the lottery is the best bit for them to approach, how they should fill out application forms and what they should include in their submissions. More work could still be done on that. However, I am not sure that I would want to be so prescriptive as to say that we would direct individual pots of money to individual areas or projects. I do not think that that is quite our role.

Okay. I accept that. However, without committing yourself or ministers and civil servants any further, will you at least be mindful of the relative imbalances?

Yes, but that is a hard question to answer without talking about specific projects and, even then, it is for the distributors to assess projects against the criteria. Nevertheless, I hope that distributors will have regard to the specific problems of a certain area and that consideration will be given to those difficulties when awards are made.

There are other things that we can do. You mentioned covered sporting facilities. It may take a partnership of communities coming together to bid for that kind of provision, or there may need to be a partnership with a transport authority to ensure that there are transport links to a specific facility. There are many other things that we can do. We aim to ensure that the money is spent as well as it can be, which inevitably means that there should be some kind of geographical consideration and consideration of the overall aims of the fund. However, we aim to set broad themes rather than dictate where the money ends up.

Good afternoon, minister. I do not want to get into the continuing debate about Sewel motions in general, but I was quite reassured that this Sewel motion—unlike some others that have come before the Parliament—does not express a view for or against the principle of the bill. That is a welcome development. It means that if we are minded to support the motion, we can do. I know that my party colleagues at Westminster have certain reservations about the bill, but that is not relevant to whether it is a good idea to pass the Sewel motion.

That was just an observation. My question relates to the big lottery fund that is being created for charitable purposes or purposes connected with health, education or the environment. I understand that the UK Government proposes to guarantee a minimum share of that funding for the voluntary sector that may be as much as 75 per cent. Do Scottish ministers have a view on whether a certain percentage of that funding should be allocated to the voluntary sector?

Yes. We think that that is a good thing and we agree with that aim. We think that, although that is not the entire purpose of the lottery, the public would wish to see their lottery funding being used to support voluntary organisations. We are content with that aspect of the bill.

I want to pick up the point that Jamie Stone made about the role that ministers will have in directing funding. The Executive's policy memorandum states that

"Scottish Ministers will direct the Big Lottery Fund in relation to Scottish devolved expenditure".

You are saying that the Executive will be setting broad themes. What do you mean by that and how will you establish what those themes will be?

The broad themes are those to which Murdo Fraser referred. Within those themes, further categories might be identified, but a lot of what we do will be done in consultation. That is why we are involving the Scottish Council for Voluntary Organisations in discussions and asking it to lead that consultation so that we can develop that part a bit further. Gavin Barrie might want to add to that because he has been involved in those discussions.

That is right. The UK Government has agreed to take a less prescriptive approach to direction of the lottery and that will apply across the UK. That is the kind of framework within which we are operating. The UK Government has already come out in favour of three themes that broadly equate to health, education and environment for the big lottery fund.

Beneath that, Scottish ministers are free to determine a framework for the fund. We have not yet advised ministers on the form of policy directions and what they would look like. To date, we have been busy gathering departments' initial views on what a funding framework for Scotland might look like. The development work on programmes and the consultation will all be conducted by the big lottery fund as part of its method of working with its key stakeholders.

The SCVO has particular concerns about what it sees as an erosion of the lottery's independence, given the role that ministers will have in setting themes. It is quite happy about the idea of accountability to Parliament but is concerned about the way in which ministers will be able to establish the themes. Given its concerns, does the SCVO have a statutory right to be consulted by ministers prior to the broad themes being established? Is that in the legislation?

I do not think that it can be; we in Scotland have decided to do that as part of the overall discussions, but I do not think that it is in the bill.

No, I am sure that there is nothing about that in the bill. The consultation requirements that are set by the bill tend to be about such things as appointments and the amount of funding that is available for each stream. The consultees in the various provisions of the bill are usually Scottish ministers, devolved Administrations and the fund itself. I do not think that there is any reference in the bill to the voluntary sector being consulted on the directions.

We regard consultation as important, which is why we are doing it. I would argue that, in effect, this is a less prescriptive way of dealing with the situation than has been the case. As I understand it, that is also the SCVO's view.

Ministers will have the power to appoint a Scottish representative to the UK board, as well as the power to decide who will sit on the Scottish board. What will that process be? Will the big lottery fund recommend who should be on the UK and Scottish boards, or will ministers decide?

Gavin Barrie will correct me if I do not get the detail absolutely right. Appointments to the UK board will be made by the Department for Culture, Media and Sport in consultation with Scottish ministers. It will be for the fund to appoint the Scottish committee, so there is a role for both ministers and the lottery.

The fund makes recommendations to ministers.

Yes.

It is then for ministers to pass that to the DCMS.

Are you talking about appointments to the Scottish committee?

Yes.

The power is for the fund to appoint its own Scottish committee with the consent of Scottish ministers, so the process will not have to go back through the DCMS. It is similar to the current Community Fund model. The fund makes the appointments for the Scottish committee but does so with the agreement of the Scottish ministers.

So the Scottish ministers have the right to veto an appointment if they do not agree about a particular individual.

That is right.

I seek clarification about how ministers would ensure that consultation was carried out. Will you be bringing forward subordinate legislation on that, or will you determine how you are going to ensure that and then proceed?

The latter.

I was interested in what you were saying about your consultations with the SCVO. My question is about the process. My understanding is that the papers before us came to the committee from the Executive on Thursday afternoon, and that we now have to make a recommendation to the Parliament for a vote on the bill this Thursday. What opportunity do you feel that has given the SCVO to comment and give evidence to the committee to help us with our deliberations?

I wrote to the committee on 19 December with the introduction of the Sewel memorandum. I realise that that fell over the Christmas and new year period.

But we have not seen the bill and its details.

The bill was circulated with the papers for this meeting. It is not the job of the committee to make a recommendation to the Parliament. We are here merely to elicit information. We are not being asked to make a recommendation—that is not part of the process.

Written evidence has been received from one body in particular. I was seeking clarification as to how and when bodies have been approached to ask them to give evidence to us.

Because this is a UK bill, the pre-legislative consultation was undertaken at UK level by the DCMS, and was not the responsibility of the Scottish ministers or, therefore, this committee. The process brings us in only towards the end, albeit that information was circulated earlier. I am sure that this discussion is relevant to the Procedures Committee's review of how Sewel motions work, rather than being exclusive to the National Lottery Bill or the Enterprise and Culture Committee. We should perhaps consider taking up the wider issues with the Procedures Committee as it conducts its review into the Sewel motion procedure.

I accept that suggestion. It just seems odd that the minister should be consulting the SCVO on the matter but that the SCVO's evidence should not form a part of the committee's inquiry.

It is not an inquiry.

Sorry—that was probably the wrong word. I was referring to our evidence-taking session.

Points taken, but they are more about procedure, which is outwith the remit of this committee. We will follow the procedure as it is laid down.

It might be helpful to Chris Ballance if I try to clarify the matter. I understand that discussions have taken place between the SCVO and the DCMS in the drawing up of the bill. Those have also involved the English and other devolved voluntary organisation umbrella groups. Those discussions took place prior to our introducing the Sewel motion.

I appreciate that it is not our role to reach a view but, for what it is worth, I would observe that the changes that are being made are incredibly positive. I think that they will make a big difference to how both Scottish ministers and local organisations can influence how the funding is used.

I have one point of clarification, on section 6 and the funding formula. The Executive's memorandum tells us:

"a modernisation at some future date of the formula that determines each Home Country's share cannot be ruled out."

I understand that—it is a statement of fact. Could you clarify what mechanism would be used, should there be a future review of the formula?

It would be for the DCMS to decide whether it wanted to revisit the formula. I do not expect any change to Scotland's share of lottery funds as a direct result of the bill, although, as we say in the memorandum, a modernisation of the formula cannot be ruled out.

I understand that the latest thinking is that it is the big lottery fund that will decide Scotland's share under what are basically the same formulas as those that have applied to the Community Fund and the New Opportunities Fund. An operational decision will be reached on that, but we do not expect any change in Scotland's share of the funding.

Thank you—you have answered my question on the share of funding.

My reading of the information that you have provided is that a new provision in the bill means that the

"Secretary of State shall consult … the Scottish Ministers"

before making an order on the level of expenditure. I presume that that provision is completely new. It would represent meaningful influence for Scottish ministers, for which there is no equivalent at present. Is that correct?

I think that that is correct.

Yes, I think that it is. We will be consulted on lottery shares in a way that has not happened before, although there is a commitment to maintain the current lottery shares during the current licence period to 2009. I think that it is right to say that we will be consulted on aspects of the shares on which we were not previously consulted.

That is one of the aspects of the bill that we regard as very positive.

I would echo what Susan Deacon said about the many positive developments in the direction of lottery funding in Scotland. I appreciate that you do not want to be too prescriptive to the new committee on the way in which funds should be awarded, but there is an opportunity for a distinctive use of funds in Scotland. The legislation determines quite clearly what the good causes for funding are, but would the Executive be minded to encourage the committee to consider not only those applications that fit neatly into one area or another but those that have cross-cutting benefits—for example, applications for facilities that are beneficial both in education and in health?

In general, we would be minded to do that. Working in this portfolio, I have learned that no issue stands on its own; they all cross-cut.

That concludes our consideration of the Sewel motion on the National Lottery Bill. I thank Gavin Barrie and Patricia Ferguson. I ask Patricia to stay for item 3, for which she will be joined by John Brown and David Noble.

Through the clerks, we will check the timetable for the Procedures Committee's review of the Sewel motion process. Then, in our work programme, we will include consideration of whether we want to make any observations to the Procedures Committee about the process. Do members agree?

Members indicated agreement.