National Lottery

Oral Answers to Questions — Communities and Local Government – in the House of Commons at 4:29 pm on 15th January 2008.

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Photo of James Purnell James Purnell Secretary of State, Department for Culture, Media & Sport 4:29 pm, 15th January 2008

I beg to move,

That the draft Payments into the Olympic Lottery Distribution Fund etc. Order 2007, which was laid before this House on 25th October, in the last Session of Parliament, be approved.

I recently met two young Olympic hopefuls. One was an incredibly impressive young woman who gets up every morning and does two hours of swimming before school and two hours after school in pursuit of her dream of competing at the London Olympic games in 2012. The second is a young disabled athlete who is hoping to compete at table tennis, and whose father told me that even before there was the possibility of his son's going to the Olympics, the very fact of training transformed his confidence to such an extent that he now goes on training weekends without his carer—something he would never have done before. Those are just two young people, but our Olympics will be an inspiration to a whole generation. It will be one of those events where hyperbole is justified. It will be a once-in-a-lifetime experience. It will bring the country together. It can transform Britain's reputation overseas.

The Olympics can be all those things, but we have set ourselves a bigger goal: we want it to be the best Olympics ever. My right hon. Friend the Minister for the Olympics has put in place the best preparations ever seen for an Olympics at this stage; those are not my words, but those of Jacques Rogge, president of the International Olympic Committee. There are three building blocks to those preparations. First is a clear organisation with the right structure and world-class leadership—we have that. Secondly, like any team, our success will depend on our cohesiveness and support—and with 76 per cent. of the population backing the 2012 games, rising to 90 per cent. among young adults, we have that, too. The third element is a robust funding package, and that is exactly what we have. Last March, my right hon. Friend announced a £9.325 billion public sector funding package for the games, including contingency funding to manage risks. Of that total, £6.09 billion was identified for Olympic Delivery Authority costs. The remaining contingency funding will be released only if needed.

Cross-party consensus is undoubtedly important to speed our progress towards the best ever Olympics, but there is also, of course, a legitimate space for scrutiny and challenge. That is why my right hon. Friend provided Parliament with details of the ODA baseline budget in December, as soon as it was confirmed, and why she has agreed to provide every six months a full update of progress of the Olympic spend against the budget and the breakdown provided in December. The motion puts in place an important part of the funding package. It allows for £1.085 billion from the national lottery distribution fund to be transferred to the Olympic lottery distribution fund.

D

John Grogan m.p. would be for the Olympics and the ripping off of the lottery fund to pay the set up costs. The main costs and taxes will be paid for by the population that come after the failed and debt laden games is over;When John has left the job and the country with his good pension and poor showing for his constituents.

If he had has much to say for the poor, the sick and the disabled in his constituency he would have done the job well. All he wanted was another stage sound and pictures to push his name forward for companies to see now he has decided to leave the job. I for one will never buy another lottery ticket to pay for this Olympics rip off. The quicker you go John the better, stick to history not taxes!

Submitted by Dennis Holdroyd

Photo of Anne Snelgrove Anne Snelgrove PPS (Rt Hon Ruth Kelly, Secretary of State), Department for Transport

That is a diversion of funds from the national lottery to the Olympics, and while the Olympics is an important part of our culture and will be very important in the run-up to 2012, will the Secretary of State guarantee that there will be no more diversion of funds away from good causes after this announcement?

Photo of James Purnell James Purnell Secretary of State, Department for Culture, Media & Sport

My hon. Friend makes an important point, which has also been made by a number of stakeholders, including the National Council for Voluntary Organisations, Heritage Link and the Voluntary Arts Network, which I met over the past week, and the National Campaign for the Arts as well. I hope that my hon. Friend will be happy to hear that I can confirm today that there will be no further diversion from lottery good causes to fund the Olympics.

Photo of Frank Field Frank Field Labour, Birkenhead

I intervene on the Secretary of State merely to strengthen his hand. Should events not turn out as he plans, might he remind those who come back with a begging bowl that while his Department ensured that the Olympics has in excess of £9 billion, it found only £5 million for Liverpool as city of culture?

Photo of James Purnell James Purnell Secretary of State, Department for Culture, Media & Sport

Actually, that is not correct: we found £11.2 million, I think, which is more than we were required to find by the bid for the capital of culture, which asked for £10 million. In addition, there has been a significant contribution—I think more than £25 million—from the Heritage Lottery Fund towards galleries and projects in Liverpool, and a significant contribution from European moneys as well. I was there on Saturday for the opening night, and I know that the Liverpool capital of culture will be a fantastic success and that people are looking forward to it across the country.

Photo of James Purnell James Purnell Secretary of State, Department for Culture, Media & Sport

I am sure they are looking forward to it in Wales as well.

Photo of Adam Price Adam Price Spokesperson (Communities and Local Government; Culture, Media and Sport; Defence; Transport; Ministry of Justice)

Liverpool is, of course, the unofficial capital of north Wales.

How can the Secretary of State justify the further diversion of lottery funds before the House this afternoon? How can it be right that the poorest communities in the UK have to finance the regeneration of London?

Photo of James Purnell James Purnell Secretary of State, Department for Culture, Media & Sport

I am glad the that hon. Gentleman thinks that Liverpool is the unofficial capital of north Wales—the nationalist influence of being in coalition with the Labour party in Wales is obviously starting to rub off, even now. If he waits for the rest of my speech, he will hear a clear argument on the point he has made.

Photo of John Grogan John Grogan Labour, Selby

Given this diversion of resources—I say this as a strong supporter of the Olympics—is there not a case for changing the taxation system of the lottery to a gross profits tax, following the example of most of the gambling industry, which some estimates suggest could mean up to £400 million for good causes over the next decade? [Interruption.]

Photo of James Purnell James Purnell Secretary of State, Department for Culture, Media & Sport

Mr. Foster, who has also raised this complex issue—he did so at the previous oral questions—makes a loud cheer from a sedentary position. I thank my hon. Friend for his support for the Olympics and for raising that question. I am happy to announce that my Department and the Treasury will re-examine the issue. The House will understand that tax policy is a matter for the Chancellor and would be covered in the Budget, but I hope that I have given my hon. Friend the assurance that he was after.

Photo of James Purnell James Purnell Secretary of State, Department for Culture, Media & Sport

I shall make some progress and then answer the hon. Gentleman's question when I come to that point in my speech.

Photo of Hugo Swire Hugo Swire Chair, Speaker's Advisory Committee on Works of Art

Will the Secretary of State clarify what he has just said? Has he said that as well as trying to announce another raid on the lottery this afternoon, his Treasury colleagues will examine the question of taxation in respect of the national lottery?

Photo of James Purnell James Purnell Secretary of State, Department for Culture, Media & Sport

The hon. Gentleman raises the point of the tax regime for the lottery. Some people, including Camelot, have argued that moving to a gross profits tax regime could mean further money for good causes. The issue is complex, but we are announcing today that we and the Treasury will examine it again. I hope that that assurance will be welcomed by the House.

As I was saying, the order puts in place the funding package from the lottery. It allows for £1.085 billion to be transferred in 15 instalments, starting on or after 1 February 2009 and ending on or after 1 August 2012.

Photo of Kate Hoey Kate Hoey Labour, Vauxhall

The explanatory memorandum helpfully gives details of the net effect of the order on each distributor—it will be about £99 million on Sport England, some £4 million on Sport Northern Ireland and so on. Will the Secretary of State tell me whether his Department has done an analysis in conjunction with those bodies of exactly what the order will mean in terms of cuts at grass roots level and money that those many community groups might have expected over the next few years?

Photo of James Purnell James Purnell Secretary of State, Department for Culture, Media & Sport

I shall come to that matter later in my speech. An impact assessment has been published to accompany the order. It is obviously slightly counterfactual, because one does not know what grants would have otherwise been made. I shall make some announcements later in my speech that I hope will reassure my hon. Friend.

I shall try to finish the paragraph of my speech that I am currently in, as I have been on it for a while. The £1.085 billion is made up of £410 million, as previously confirmed, and an additional £675 million as announced in March 2007. We have been open about the fact that that will mean that there is less money for the lottery between 2009 and 2012, and of course we recognise that concerns have been expressed about that. I am keen to respond to them as strongly as I can.

When my right hon. Friend the Minister for the Olympics announced this funding package, she agreed with the Mayor of London that lottery distributors would be repaid the additional £675 million from the profits arising from the sale of land in the Olympic park after the games. Hon. Members will have seen stories in the press this morning reporting pessimistic forecasts for growth in land values. The headline in this morning's story is highly misleading, because the Olympic budget does not rely on land sales—there is no black hole in the Olympic budget. What has been said—the Mayor said this as early as April last year—is that we have to make estimates about the increase in land values. The prudent basis on which the London Development Agency has always made its assumptions is that values would grow at the rate of 6 per cent. But the Mayor also said in April that, given past trends in growth, it was possible to estimate much higher growth, up to 19 or 20 per cent. We are therefore confident that we would be able to repay the lottery if those levels of growth were achieved, but that does not create a black hole in the funding and there is nothing new about the story in the papers today. Those figures have been in the public domain for some time.

Photo of Mark Field Mark Field Conservative, Cities of London and Westminster

The Secretary of State suggests that the Olympic budget somehow remains intact, but the public at large see an overall package for the cost of the Olympics. It is not simply a matter of the budgetary figures; there is also the notion of repaying the lottery in the way that he has described. If land values fail to go up, the lottery will not be fully reimbursed. Therefore, our concern is that the financial package is incomplete. The budget may be intact, but that is not to say that the lottery will not be raided.

Photo of James Purnell James Purnell Secretary of State, Department for Culture, Media & Sport

We have the same goal, which is to repay the lottery from the increase in land values. The amount is in line with growth over the past 20 years and it is not an optimistic forecast. It will also be realised over the next 10 to 20 years, and regardless of market conditions at present, it is right to have confidence that we will be able to deliver on the memorandum of understanding between my right hon. Friend and the Mayor.

Photo of Paul Farrelly Paul Farrelly Labour, Newcastle-under-Lyme

I share the concern about the additional raid on the national lottery money, but I recognise that the Government have moved to repay the proceeds in this way. It would be more comfort, in terms of incentives in the future, if my right hon. Friend looked more carefully at who will handle those land sales and whether it should be the London Development Agency or an independent body.

Photo of James Purnell James Purnell Secretary of State, Department for Culture, Media & Sport

That is a matter for the Mayor and the LDA. We have a high level of confidence in the LDA's ability, and it has been a key partner in delivering the Olympics. I welcome my hon. Friend's support for the proposal.

The second commitment that we have made, in listening to people's concerns, is to look carefully at grant in aid funding and to secure increases in the current spending review for the good causes that will be affected. The Arts Council will receive an extra £50 million, an increase of 3.3 per cent. above inflation over three years. Sport England will receive an increase of 2.1 per cent. above inflation—an increase since 1997 of more than 170 per cent. English Heritage will receive an increase of £7 million in cash terms by 2010-11, which was welcomed as good news by Sandy Bruce-Lockhart, its chairman.

The third commitment that we have is to protect voluntary groups. We have agreed with the Big Lottery Fund that, first, no existing projects will be affected, and secondly and importantly, that we will honour the Big Lottery Fund's commitment that at least £2 billion will be available for the voluntary and community sector over the next five years. I understand from the papers that the Conservatives

Photo of Greg Clark Greg Clark Shadow Minister (Cabinet Office)

The Secretary of State has made a commitment on the Big Lottery Fund. Does that commitment extend to the distribution to voluntary groups by the other lottery distributors?

Photo of James Purnell James Purnell Secretary of State, Department for Culture, Media & Sport

The other lottery distributors will operate at arm's length and make their decisions. They do fund voluntary organisations, and indeed a large part of their money goes to such organisations. I am glad that the hon. Gentleman intervened, because I understand that the Conservative party is considering not supporting the order and instead taking the money from the Big Lottery Fund and the so-called pet projects. I hope that the Conservatives will not do that, because there are no pet projects. Lottery policy has moved on since the New Opportunities Fund, which has been abolished, and everything is delivered through the Big Lottery Fund.

If the proposal were to take all of the £675 million from the BLF, it would involve a significant raid on the voluntary sector. Existing projects would be cancelled and the full £2 billion guaranteed to the voluntary and community sector could not be delivered. It could also mean some £250 million of cuts to that sector. I trust that the Conservative party will not make that proposal later in this debate.

Photo of Robert Key Robert Key Conservative, Salisbury

While the Secretary of State is talking about existing commitments being cancelled, can I remind him of the Stonehenge fiasco? The heritage sector has lost hundreds of millions of pounds in value through the Government's decision to cancel the project—including the cancellation of the visitor centre. Not one penny has been promised to provide a new visitor centre or to substitute for the grand plan that has now been shattered by the Government. The heritage sector always seems to lose out whereas the Olympic sector gets bigger and bigger. I hope that he will not forget that when he cites the recognition by Lord Bruce-Lockhart that the £7 million or whatever is welcome. It is not doing the cultural heritage of our country any good to see money leaking away from the lottery all the time.

Photo of Alan Haselhurst Alan Haselhurst Chairman of Ways and Means

Order. May I remind the House that short interventions are good at all times, but especially when we are in a time-limited debate?

Photo of James Purnell James Purnell Secretary of State, Department for Culture, Media & Sport

The hon. Gentleman has been a resolute campaigner for Stonehenge, and he makes his point clearly and forcefully, as always. He might want to talk to his own Front-Bench spokesmen. Greg Clark has promised that at least as much funding will go to charities, while the shadow spokesmen for the Department for Culture, Media and Sport have promised to go back to the old good causes. That all adds up to more than 100 per cent. of the lottery. The Conservatives say different things to different audiences and have ended up double-counting the funding.

Photo of Greg Clark Greg Clark Shadow Minister (Cabinet Office)

The Secretary of State seems to be unaware that among the other good causes, including heritage organisations, there are many charities and voluntary organisations. Is he not aware of that aspect of his brief?

Photo of James Purnell James Purnell Secretary of State, Department for Culture, Media & Sport

So is the hon. Gentleman saying that the Conservative party would not stick to the £2 billion guarantee? Is that his commitment? I know that he and Mr. Hunt like to write policy pamphlets together; perhaps they would like to focus on policy next time, before they start to widen their approach.

A concern was also expressed that the Government would continue to collect funding from the planned Olympic lottery game after the target of £750 million is reached. I can confirm that that is not the case.

In our last discussion on the subject, the hon. Member for Bath highlighted an issue about grey lotteries, which are opportunities to bet on the numbers or outcomes of overseas lotteries. I shall ask the Gambling Commission and the National Lottery Commission to explore the cases that give rise to concern. I know that the hon. Gentleman has such concerns, and he is welcome to make them known to both organisations.

I believe that the commitments that I have made today should form the basis of cross-party consensus. I hope that that is what will be delivered. Both main Opposition parties supported the Olympic bid and the subsequent Bill. I trust that that will continue to be the case. One of the lottery's founding purposes was to support such big national projects, as the Conservative Government did with the Millennium Commission, which funded a similar event. Both Opposition parties supported the approach to the Olympics, and I hope that that will continue.

Photo of James Purnell James Purnell Secretary of State, Department for Culture, Media & Sport

No, I know that time is limited and I want to wind up.

In the original funding package, the lottery made up 44 per cent of the total. The new funding package provides an extra £5 billion from the Exchequer. The lottery will contribute an extra £675 million, and its share of the total will therefore fall to 23 per cent.

I can also finally report that the National Lottery Commission has informed me that under the third licence recently awarded to Camelot, which will run from 2009, returns to good causes are likely to increase by between £600 million and £1 billion over the 10-year period of the licence, based on constant levels of sales at £5 billion per annum. I am depositing in the Libraries of both Houses today a letter from the chair of the commission to set that out.

The order is intended to secure the best Olympics ever for this country and to inspire a generation of young people to aim to be the best they can be. Our task is to deliver the political consensus to make that a reality.

Photo of Jeremy Hunt Jeremy Hunt Shadow Secretary of State for Culture, Media and Sport 4:48 pm, 15th January 2008

Perhaps the best example of the Olympic spirit was shown by someone who never competed in the Olympics, although his sport is recognised by the International Olympic Committee: Sir Edmund Hillary, who died last week. He did one of the most competitive things ever by being the first man to set foot on the highest peak in the world, but he combined it with remarkable modesty—so much so that, apparently, when he reached the peak he took photographs of Sherpa Tenzing, but forgot to ask Sherpa Tenzing to take photographs of him. For most of his life, in the spirit of not wanting to be one up, he refused to confirm which of them had reached the peak first. That combination of competitiveness and decency—the desire to win, but to do so with honour—is what we want 2012 to bring to London.

It is therefore right that we approach the Olympics in a spirit of bipartisanship, with as much cross-party support as possible. In that spirit, we on the Conservative Benches are happy to pay tribute to the Government's achievement in winning the 2012 bid. It was a personal victory for Tony Blair and Lord Coe. The Opposition's redoubtable shadow Sports Minister was in Singapore at the time and, although he does not claim to have swung the bid, his presence was important, as it demonstrated cross-party support. When he was Leader of the Opposition, my right hon. and learned Friend Mr. Howard spoke to the International Olympic Committee to confirm our support for the Olympics and, as the Secretary of State said, we supported the London Olympic Games and Paralympic Games Bill at every stage.

Photo of Edward Leigh Edward Leigh Chair, Public Accounts Committee

How was it in the Olympic spirit—or even decent—for the Government to pull the wool over the public's eyes? The games will cost more than twice as much as was promised when the bid was made. How is that decent?

Photo of Jeremy Hunt Jeremy Hunt Shadow Secretary of State for Culture, Media and Sport

My hon. Friend makes an important point. I was about to say that the spirit of cross-party support has been sorely tested at regular intervals, mainly over budgetary issues.

The budget was raised last March. It was not raised by 20 or 50 per cent., or even doubled: instead, it was nearly tripled, to £9.3 billion. Did the Opposition withdraw our support for the Olympics, or say that it was a mistake to spend the extra money or to have bid for the games in the first place? No, we did none of that. Our support for the Olympics has been rock solid—rather more so than the Secretary of State's. When the bid was being assembled, he was leading the charge against it, so we will take no lessons from him about the need for an Olympics consensus.

However, the Secretary of State will appreciate that our commitment to the success of 2012 means that we have a duty to speak up when we think that the Government are managing the project badly. We have a responsibility to scrutinise the use of taxpayer's money, to protect the good causes for which the lottery was set up and to ensure that the games are on a sound financial footing.

In the spirit of bipartisanship, I spoke to the Secretary of State in the Lobby last week, and I also wrote to him last Thursday. I said that the Opposition would be prepared not to vote against the statutory instrument—even though it is in large measure due to the Government's financial incompetence—if the Government could reassure us on two matters.

The first reassurance that we seek is that the Government will publish proper cash flow figures for the project. Those figures should set out the money that has been spent and contain cash flow forecasts. The Secretary of State will know that, if accounts are to be scrutinised properly, they must contain a profit and loss balance sheet and a cash flow analysis. With a project of this size, however, we can determine whether it is under proper financial control only if we are able to measure the rate at which cash is going out of the door and to compare that with the rate that was predicted. That is why the cash flow forecasts and outcomes are so important.

In response to my request, the Secretary of State said that he was prepared to make available any figures that the Department had, but that he did not want to construct figures especially for us because that would involve a cost. He said nothing in his speech about cash flow forecasts for the way in which the Olympic budget will be spent, so are we to take it that no such forecasts have been prepared? If they do exist, will he publish them so that we can scrutinise the progress being made and the rate at which money is being spent?

Photo of James Purnell James Purnell Secretary of State, Department for Culture, Media & Sport

I can tell the hon. Gentleman that that information is available, and that my right hon. Friend the Minister for the Olympics will be happy to have quarterly meetings with both Opposition parties to go through it. The information will be subject to commercial confidentiality, but it will be available for scrutiny.

Photo of Jeremy Hunt Jeremy Hunt Shadow Secretary of State for Culture, Media and Sport

I am very grateful for that concession, as it will greatly improve our ability to scrutinise the progress of the Olympics budget. Most importantly, it will mean that there will be no repeat of what happened last March, when the budget had to be tripled.

We sought one other concession, however. It was, as the Secretary of State says, a commitment that there would be no more raids on good causes. Why should good causes, which the lottery was set up to protect, suffer from Government financial miscalculations? We have to recognise that the good causes have suffered a triple whammy as a result of the Olympics. There was the original £410 million; then the £750 million from the special Olympics lottery games, which, it now transpires, will cannibalise much of the revenue that would have been raised through the normal lottery games that raise money for the good causes; and then the additional £675 million.

Photo of Michael Fabricant Michael Fabricant Opposition Whip (Commons)

My hon. Friend is quite right in what he has just said. He is also right to say that none of us should be demonised if we question the amounts of money being spent on the Olympic games— particularly those of us who are not from metropolitan London and who will not feel quite the same benefit as Londoners from the legacy. There are already swingeing cuts in the arts. Lichfield Garrick theatre is no longer to receive its funding, nor is the Birmingham repertory theatre, and that situation is replicated throughout the United Kingdom. What assurance do we have that the situation will not get worse?

Photo of Jeremy Hunt Jeremy Hunt Shadow Secretary of State for Culture, Media and Sport

My hon. Friend makes an extremely important point—he is absolutely right. I shall talk later about the impact in the rest of the country and on arts budgets.

Photo of Michael Weir Michael Weir Shadow Spokesperson (Trade and Industry), Shadow Spokesperson (Environment, Food and Rural Affairs)

Earlier, the hon. Gentleman rightly mentioned that the cost of the Olympics has already tripled. He accepts the Secretary of State's assurance that there will be no more raids on the lottery, but what happens if the cost continues to climb? Where will the money come from? At what point will the Conservative party say, "Enough is enough"?

Photo of Jeremy Hunt Jeremy Hunt Shadow Secretary of State for Culture, Media and Sport

We are saying, "Enough is enough", which is why we said that if there are further problems with the Olympics budget we do not want any more raids on the good causes. That was the purpose of extracting the concession that we extracted.

Photo of Jeremy Hunt Jeremy Hunt Shadow Secretary of State for Culture, Media and Sport

May I make a little more progress before giving way to the hon. Lady?

What the Secretary of State said about the headline in The Times today was inaccurate. He said that there is no new information, but of course there is very serious new information. The article states that

"Land agents contacted by The Times" say that the sale of land is unlikely to make the amounts predicted because of

"the current flattening of the housing market."

The ability to meet the commitment to help lottery good causes from land sales has changed materially because of the change in housing price conditions.

Photo of James Purnell James Purnell Secretary of State, Department for Culture, Media & Sport

What I am saying is that there is nothing new about the Government information and the Mayor's information that has been provided. We cannot control everything that estate agents say. However, as early as April last year, the Mayor said:

"In the last 20 years land prices in London on average have increased 19 per cent. a year. Take the last 10 years, where we have had a more consistent margin, it's averaged 20 per cent. and the lowest increase in any one year was 6 per cent."

Those figures have been in the public domain for a long time.

Photo of Jeremy Hunt Jeremy Hunt Shadow Secretary of State for Culture, Media and Sport

They have been in the public domain for quite some time. The Mayor said that a month after the budget tripled and he was trying to reassure good causes that, according to that scenario, they might make up £1.8 billion. Looking at the state of the market now, we realise that the amount raised is likely to be £1 billion less than that, which is another whammy for good causes.

Photo of Jeremy Hunt Jeremy Hunt Shadow Secretary of State for Culture, Media and Sport

I would like to make a little more progress; I will give way later.

We fought hard for the concession that the Secretary of State has made—the commitment not to take any more money from good causes. That is a victory for our fight and it is a victory for the hundreds of thousands of people who work for charities and voluntary organisations, arts and heritage groups and sports clubs up and down the country, because their big concern was that, given the Government's appalling record of financial incompetence on the Olympics budget, they would be stung not only today, but many times in the future.

The Secretary of State talked about bipartisanship, but if he intended to make that pledge today, why did he not tell me that when we met at 9 o'clock last night? He asked to meet me then to discuss today's debate. If we are to maintain cross-party support—assuming that he did not make that decision after our meeting last night—he might at least have had the courtesy to tell me then. I suggest that that would be a better way to create a spirit of cross-party support than playing party political games.

Photo of James Purnell James Purnell Secretary of State, Department for Culture, Media & Sport

I am happy to proceed on the basis of cross-party consensus. I am sorry for the tone that the hon. Gentleman's speech has taken. It is the Government's intention to continue on that basis. If he does not want to do the same, that is entirely up to him.

Photo of Jeremy Hunt Jeremy Hunt Shadow Secretary of State for Culture, Media and Sport

With respect, that is exactly what I want to do. I am just saying that if the Secretary of State was going to make a concession as major as the one that he has just made, why did he not tell me at our meeting at 9 o'clock last night?

The Secretary of State mentioned an additional £600 million to £1 billion in lottery income under the new Camelot licence. Those numbers are based on items in the Camelot bid document. He will know that they are very speculative. They depend on the Treasury's agreeing to move to a gross profits tax, which he said has not been confirmed—he is simply prepared to consider it again. They depend on the introduction of restrictions on lottery-style games in adult gaming centres. Again, he said that he would ask the Gambling Commission and the National Lottery Commission to consider it, but there is no undertaking that it will happen. They also depend on the approval of the National Lottery Commission. We have a commitment from the Secretary of State to examine ways to increase the returns to good causes, versus what is written in black and white in the statutory instrument, which is that there is to be a raid of £90 million on the arts and heritage budget and of £70 million on the grass-roots sports budget.

Photo of Don Foster Don Foster Shadow Secretary of State for Culture, Media and Sport

I wonder whether the hon. Gentleman could help me and the House by confirming what he has just said. He said that the figure given by the Secretary of State—the £600 million to £1 billion in increased money that Camelot would effectively give to good causes over 10 years—was predicated on the introduction of GPT, the closing down of the grey areas of lotteries and so on. I had a discussion this afternoon with Camelot, and what it told me was rather different. It assured me that the figure depended entirely on the new agreement about how it will operate. None of the three factors that he mentioned was referred to at all. Will he help me on that point?

Photo of Jeremy Hunt Jeremy Hunt Shadow Secretary of State for Culture, Media and Sport

I am delighted to do so. We must have been speaking to different people at Camelot; my office had a discussion with Camelot this afternoon, in which it told us that the additional increase in money to good causes was clearly predicated on those three things.

The concessions are important, but they do not undo the main damage caused by the order. It is extraordinary to fund a £9.3 billion Olympics budget by cutting the budgets for grass-roots sports—the very budgets that could provide the sporting legacy that was the big promise of 2012. Derek Mapp, who resigned as chairman of Sport England, described it as "a cut too far". He is, or was, a strong Labour supporter. In 2004, he gave £3,000 to his constituency Labour party, because he presumed that widening participation in sport was a central plank of the Government's 2012 strategy. Like us, he has no doubt read the London plan, part of the London 2012 candidate file, which said that the games would succeed in

"leaving a legacy to be valued by future generations".

In fairness, the Secretary of State used to take a rather different view, saying:

"The Olympics would inevitably deprive other schools of new pitches and extra coaches. Why? Because we won't be able to raise the extra lottery money, and because the costs will overrun."

It seems that he knew better what his own Government would do than either Derek Mapp or we did—the sad truth is that his predictions have turned out to be spot on.

Photo of James Purnell James Purnell Secretary of State, Department for Culture, Media & Sport

I am afraid that that was said before a 170 per cent. increase in the Sport England budget, a sevenfold increase in the contributions of the Department for Children, Schools and Families and the Department for Culture, Media and Sport, a five-hour offer for children doing sport in schools and a huge increase in the number of playing fields as a result of the building schools for the future programme, which will refurbish or rebuild schools during the next few years. Grass-roots sport is thriving thanks to our investment. By contrast, the Conservatives did not invest in it at all.

Photo of Jeremy Hunt Jeremy Hunt Shadow Secretary of State for Culture, Media and Sport

I suggest that the Secretary of State do the math, as they say in the United States. If one adds up the amount put into grass-roots sport this year from both Government spending and the lottery, it comes to £135 million less than in 1997. Grass-roots sport has suffered, and it will suffer even more. The impact of the cuts in additional spending made this afternoon alone—£70 million—is £108,000 per constituency, which is equivalent to one floodlit multi-use games area or 100 m grass pitch in the constituency of every single Member of this House.

Photo of James Purnell James Purnell Secretary of State, Department for Culture, Media & Sport

Let me save the hon. Gentleman from having to correct the record himself. The combined grant in aid and lottery funding has gone up from £174.9 million to £465 million in 2006-07, which I think is the figure that he quoted. From £174 million to £465 million is more than a doubling of the amount of money.

Photo of Jeremy Hunt Jeremy Hunt Shadow Secretary of State for Culture, Media and Sport

I am happy to trade statistics with the Secretary of State any time, and I am happy to confirm the figures with him. Funding has gone down not just for grass-roots sport, but even more for arts and heritage.

Photo of Hugo Swire Hugo Swire Chair, Speaker's Advisory Committee on Works of Art

My hon. Friend will well remember when the former Minister for Sport, Mr. Caborn, came back from Sydney and said, quoting someone he had met out there:

"'Do not underestimate the budget. If you have to go higher, it will be seen as a failure so make sure your calculations are realistic.'"——[ Hansard, 21 July 2005; Vol. 436, c. 1505.]

From this afternoon's announcements, what on earth makes anyone in the Chamber, other than those on the Labour Front Bench and possibly some Back Benchers, believe that the new figures are realistic? How can we sell them to our constituents, who are suffering from the cuts in grass-roots sports and in our local theatres—the Northcott theatre in Exeter and others throughout the country? Why are the new figures any more realistic? What is to prevent the Minister from asking for more money again in a few months? Surely it is the duty of every Member of the House to protect those causes, which are already suffering so badly.

Photo of Jeremy Hunt Jeremy Hunt Shadow Secretary of State for Culture, Media and Sport

I am grateful to my hon. Friend for his comments, which are extremely well put.

If the Secretary of State does not want to listen to figures from us, why does he not talk to people in the industry? Tim Lamb, the former chief executive of the England and Wales Cricket Board, who now runs the Central Council of Physical Recreation, said:

"What's the use of getting more kids involved in sport at school if they don't have decent facilities to play with when they leave? The Lottery must not be used as a piggy bank for ministers to pay for the games."

If the choice is made between funding lottery good causes or funding the Olympics, we will fail in our commitment to the Olympic legacy, because it is the lottery commitment to grass-roots sport that is the means whereby we will provide that legacy.

Why have all these problems arisen? The construction budget went up by 29 per cent. last March; the regeneration budget went up by 70 per cent.; and the security budget nearly tripled to nearly £600 million, despite the fact that the original security budget at £220 million was less than the Greeks paid for the Athens Olympics. Why we thought it would be cheaper to make the London Olympics secure, I do not know.

There were two items in the revised budget that, inexplicably, did not appear in the original budget. The revision included a contingency budget of £2.7 billion. We now know that it was against explicit Treasury guidelines not to have a contingency budget in a project of that size, yet the Treasury approved the original budget. There was a VAT bill of £840 million in the new budget. If the Treasury approved the original budget, why did it decide that it did not need VAT then, but that it needed nearly £1 billion of VAT the second time? Since then, the news has got worse, not better. In June we heard that the security budget may go up to £1 billion. In October the Olympic Delivery Authority said that the cost of the stadium would go up 77 per cent.—by another £216 million.

Let us return to the lottery. In order to secure the bid, the bid team made great play of London's cultural heritage—they talked about the 300 museums and galleries and the five symphony orchestras—but because of today's measure, arts and heritage distributors will lose £90 million each. The Secretary of State spoke about English Heritage. Dr. Simon Thurley, the chief executive of English Heritage, stated:

"Inevitably the additional reduction in Lottery funding will reduce opportunities for the cost of inspirational projects which have transformed the historic environment...and made it accessible to millions more people".

Peter Hewitt, chief executive of the Arts Council of England until the end of this month, said:

"The reduction in budget . . . will hit smaller arts organisations at grassroots level very hard".

The Olympics will be in London, but of course we want it to benefit the whole country, so it is particularly depressing to read the remarks of the chief executives of the Arts Councils of Wales and Scotland. Peter Tyndall of the Arts Council of Wales commented:

"Many projects will be unable to go ahead and individual artists will not have their work funded."

Jim Tough, the acting chief executive of the Scottish Arts Council, said:

"The Scottish Arts Council is disappointed by this decision . . . the plans will undoubtedly also have a serious impact on general participatory activity and programmes for future years."

Photo of Pete Wishart Pete Wishart Shadow Spokesperson (Culture, Media and Sport), Shadow Spokesperson (Home Affairs), Shadow Spokesperson (International Development), Shadow Spokesperson (Justice)

It is worse than that for us in Scotland. We are holding the Commonwealth games in 2014, but SportScotland has said that it will be deprived of £13 million of spending. How on earth are we supposed to pay for the Commonwealth games when we are deprived of that kind of money?

Photo of Jeremy Hunt Jeremy Hunt Shadow Secretary of State for Culture, Media and Sport

The hon. Gentleman makes a reasonable point.

In conclusion,

"We don't believe it would be right to use Lottery money to pay for things which are the Government's responsibilities."

Those words are not ours, but those of Tony Blair in 1997; as ever, unfortunately, his actions did not live up to his rhetoric. We urge the Government to examine whether it is possible to fund the shortfall, not by the cuts outlined in this measure, but by using the funds that the Big Lottery Fund would have spent on projects that should be funded by central Government Departments.

Photo of Jeremy Hunt Jeremy Hunt Shadow Secretary of State for Culture, Media and Sport

I shall make progress if I may; I am just drawing to a close.

Photo of Anne Snelgrove Anne Snelgrove PPS (Rt Hon Ruth Kelly, Secretary of State), Department for Transport

Will the hon. Gentleman acknowledge that Members from across the House have grave concerns about good causes? That is why I asked the Minister my question. In the spirit of moving forward together, will the hon. Gentleman acknowledge that it would be an excellent idea for us all, including Members of his party, to recognise the importance of the Olympics as well as that of the good causes? I hope that he and his party will vote for the motion.

Photo of Jeremy Hunt Jeremy Hunt Shadow Secretary of State for Culture, Media and Sport

It is because we recognise the importance of the Olympics and good causes that we are trying to find a better way than that proposed by the Government this afternoon.

Photo of Mark Field Mark Field Conservative, Cities of London and Westminster

I thank my hon. Friend. Anyone who has listened to this debate for the past 20 minutes will have been impressed by my hon. Friend's grasp of the statistics. Does he recognise that our biggest complaint in the past few years has been that the creation of the Big Lottery Fund has made lottery funding that much more opaque? That is one of the reasons why statistics have been bandied around in this debate. We need a clear reassertion of the four main heads of good causes. When the lottery came into being, there was the millennium fund. Does my hon. Friend agree that it is a great shame that we did not simply transfer the money from that fund into the Olympic fund?

Photo of Jeremy Hunt Jeremy Hunt Shadow Secretary of State for Culture, Media and Sport

As ever, my hon. Friend has made an excellent point. I think that he is really saying that if the lottery were returned to its original four good causes we would not have a lot of the pain that we are suffering today. The structure that the Government have set up for the lottery gives the Minister the power to determine 50 per cent. of the money from lottery good causes. That has led to a lot of the problems.

Some £9.3 billion would be a huge amount if it were simply for 17 days of entertainment. However, if the Olympics can be a catalyst in transforming attitudes to sport, harness the power of grass-roots sport so that men and boys join grass-roots sports clubs rather than gangs, engender a sense of national pride and Britishness, and showcase our sport, which comes from the country responsible for more international sports than any other, perhaps that enormous sum will be more acceptable to hard-working taxpayers.

However, that sum will not be acceptable if the Government are not transparent about the budget, if they make charities and voluntary organisations pay the price for their financial incompetence, or if they decimate grass-roots sports clubs—the very organisations that can secure an Olympic sporting legacy. This afternoon, the Government will win the vote, but I hope yet that we will win the argument.

Photo of Don Foster Don Foster Shadow Secretary of State for Culture, Media and Sport 5:13 pm, 15th January 2008

It has not been a good Olympic day for me; unfortunately, the British Olympic Association decided that Aldershot should be a major training base for the British team in the run-up to the 2012 games. That base will not now be at Loughborough university or the excellent facilities at Bath university in my constituency.

Photo of Andy Reed Andy Reed Labour, Loughborough

I am grateful. As the hon. Gentleman knows, if Aldershot had not been chosen, Loughborough would have been. However, he has mentioned an important aspect. Those of us in the regions will benefit from the Olympics in whatever way—not necessarily from the £9.3 billion, but through such things as training camps, holding camps and the build-up. Those will benefit places such as Loughborough and Bath, regardless of the British Olympic Association's decision to go to Aldershot.

Photo of Don Foster Don Foster Shadow Secretary of State for Culture, Media and Sport

The hon. Gentleman makes an excellent point. I continue to be a keen supporter of the Olympics because I believe that all parts of the United Kingdom will benefit in a variety of ways.

However, this debate is about the lottery. I am delighted to follow Mr. Hunt, who said that it was vital for the Government to keep their sticky little hands out of decisions about the lottery. I entirely agree. It is a pity, therefore, that in 2001 the Tories proposed extra lottery money for local authority-controlled museums and art galleries and, in the same year, £5 million more to protect British heritage overseas. In 2005, they proposed more lottery money for village halls and parish churches and, in their last manifesto, £750 million for their proposed club and school sports programme. Even their leader has been at it: in an interview in 2006, he suggested using the national lottery to fund his proposed national school leavers programme. They say one thing, but act rather differently.

Liberal Democrats have always believed that it is vital to maintain the independence of lottery funding from Government, but we have always accepted that there will be exceptions to the rule. Four years ago, when the Government proposed that some money be taken from national lottery good causes to fund part of the Olympics, we, along with all the other major political parties, reluctantly agreed to it, because we believed that the benefits that would accrue in terms of sport, culture, heritage, regeneration and tourism far outweighed the disbenefit of the cuts to the good causes.

We assumed that that would be the only time we would be asked to do that, but things have not worked out quite as we expected. Part of the package was the £750 million to be raised by new Olympics-related lottery gains. Of that money, more than half—59 per cent.—was to come not as new money from ticket sales but from cannibalisation, as it were, as people switched from the games that supported the traditional good causes. That would have meant a loss of about £450 million to the lottery good causes—but as the recent report by the National Audit Office pointed out, the cannibalisation rate is much higher, at 77 per cent. That means that even the first agreement to cut money from the lottery good causes has involved an additional, unexpected cut of some £135 million.

I am not surprised that that figure has changed. I do not know if any other hon. Members have visited their local lottery distributors recently, but it is impossible to tell from the scratchcards whether they are supporting the Olympics or the traditional good causes. Only in very small print on the back of the cards, not visible to the people who buy them, does it say whether the money is going to the Olympics or to the other good causes. In the outlets that I have visited, a significantly higher proportion of cards were supporting the Olympics than the other good causes. I hope that the Secretary of State will see whether it is possible—I understand that there are difficulties to do with the International Olympic Committee—to make it clearer to those purchasing scratchcards which of the good causes, the Olympics or others, they are supporting.

That cannibalisation will get even worse if we allow the money raised to go beyond £750 million, and we have asked the Secretary of State for an assurance that that figure is an absolute cap.

Photo of Adam Price Adam Price Spokesperson (Communities and Local Government; Culture, Media and Sport; Defence; Transport; Ministry of Justice)

The hon. Gentleman has eloquently demonstrated why the so-called major parties, as he dubs them, were naive to believe the Government the first time round. Why should anyone believe them this time?

Photo of Don Foster Don Foster Shadow Secretary of State for Culture, Media and Sport

The honest truth is that we have to take people at their word and look at as much evidence as possible. I congratulate the hon. Member for South-West Surrey on gaining from the Government the concession whereby more detailed analysis of the figures will be made available for us to study. That is very important. We now have on record an assurance, which we did not have last time, that there will not be any further raid on the lottery good causes to fund the Olympics. Although I said earlier that we expected that to be the case, it had never been put on the record. It has been put on the record today, and I welcome that.

Photo of Michael Weir Michael Weir Shadow Spokesperson (Trade and Industry), Shadow Spokesperson (Environment, Food and Rural Affairs)

I pose to the hon. Gentleman the question that I posed to the Conservative Front-Bench spokesman. Given that the cost has already trebled, what happens if the Government come back and say that they need more money as we get close to 2012? Where will that money come from? Will he refuse any more money when we get to the wire?

Photo of Don Foster Don Foster Shadow Secretary of State for Culture, Media and Sport

In my contribution, which I hope to continue for a brief period, I shall make some proposals as to how we find additional money. I will be particularly interested to hear the contributions from the SNP and the Welsh nationalists in which they explain their position. They can bleat, but it seems to me that there are two choices. People can either sit there and just whinge, and say, "We can't do anything about it," or they can make constructive positive proposals. That is what I seek to do.

We know that there have been problems with the budget. We were originally told that it would be £2.375 billion. In 2006 that figure rose to £3.3 billion, and in early 2007 it rose to £5.1 billion. We are now looking at a figure of £9.3 billion. Before the Minister for the Olympics jumps to her feet, I know that putting it like that is not fair because I have not compared like with like; nevertheless, she will accept that the figures have increased substantially. That is why we are being asked whether we are prepared to authorise a further take from lottery good causes to fill that black hole in the budget.

We want the Olympic games and the Paralympics to succeed, which also means ensuring that they deliver a legacy. As we heard from the hon. Member for South-West Surrey, many people believe that a further cut will damage the very bodies that will deliver that legacy. Dame Liz Forgan, chairman of the Heritage Lottery Fund, says that

"this further cut will impact on our ability to invest in the nation's heritage at exactly the time it is being showcased to the world."

Robin Simpson, chief executive of the Voluntary Arts Network, warned:

"The further diversion of lottery funds threatens to erode this support and...the development and survival of many groups."

As we have already heard, the Central Council for Physical Recreation has expressed real concerns that the

"diversion of funding is likely to result in reduced participation".

There is a problem for those of us making a decision today. Do we simply say, "No, we're not allowing that to go ahead because of all of the potential problems," or do we come up with constructive proposals to find ways of getting additional money to the lottery good causes that will make up for the cut, to help them to deliver that legacy? That is why we have been in discussion with the Secretary of State, as has the hon. Member for South-West Surrey, and we recognise that others have as well. CCPR has put forward its suggestions in discussions with the Government, including the enhancement of the excellent community amateur sports club scheme through the application of gift aid to junior club subscriptions and the reduction of licensing fees. It has also proposed the use of some of the proceeds from dormant bank accounts to help in sports activities. I hope that those proposals will be considered carefully.

We have made some detailed suggestions. First, we have said clearly that we want a cap on that £750 million. There should be no more take from the lottery as a result of the Olympic lottery games. The Secretary of State has made it clear that he accepts that, and we are grateful for that assurance. Secondly, we proposed that the Government carefully consider the proposal to change taxation on the national lottery to gross profit tax. We know that they were initially very sceptical about that, but I am delighted that the Treasury has now become agnostic about it, and we seem to be getting some support for the idea from the Department for Culture, Media and Sport. According to independent experts from PricewaterhouseCoopers, if such a change were to go ahead, something like £400 million would go back to lottery good causes by 2019, and a lot of that money would be invested before the 2012 games. I am delighted that the Secretary of State has said that he will carry out a review, but I hope that we will have an absolute assurance in the winding-up speech that such a move will be implemented as quickly as possible if the review says that it would be positive for the Exchequer, because of the extra money for the taxpayer, and for lottery good causes. Thirdly, we asked the Secretary of State to examine what he called the grey areas of lottery-style games. Many 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, 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 they reduce the number of national lottery players. Independent experts have shown that if we can eliminate those 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.

Fourthly, we asked for clarification of a memorandum of understanding between the Secretary of State and the Mayor of London. The House is well aware that the sale of land and buildings will follow the Olympics and Paralympics. We are all interested in knowing how much money that will generate. There has been much debate today, but the speculation is no different from that of many months ago. I would not like to judge which of the many experts is right about the eventual figure, but if there is more information at any stage, we would like to see it. However, the memorandum of understanding made clear the order in which money would be repaid to the lottery good causes, the LDA and the Mayor of London. I should like to have an assurance, which I have not yet received, that the memorandum of understanding is binding, and that no attempt will be made to try to change the way and the order in which money is paid out.

Let me give one example to which the Secretary of State might respond. The memorandum of understanding makes no reference to funding the maintenance of the Olympic park after the 2012 games. Will he assure us that there will be no sudden take from the land sale money that duly arises?

We wanted to persuade the Secretary of State to scrap the Olympic lottery distribution body. We would save £2 million by scrapping a body that simply takes money and hands it back to the Olympics. We know where the money needs to go—but the Secretary of State said that he was not prepared to budge on that small issue.

However, we have received assurances on the four other key issues, together with assurances about there being no further take, and the provision of more detailed budgetary information, and we are delighted. We now have a sensible package of measures on which to move forward. If we add the possibility of additional money through the third Camelot licence, leading to between £600 million and £1 billion extra for good causes, and the modest but none the less welcome increase in grant in aid to various bodies, we now have a package that assures us that much of the money taken from good causes will go back to them. Indeed, if all our proposals are accepted, in due course they will get more than was taken from them, and more than £400 million will be returned before the 2012 games. That is a good outcome of the discussions between us and the Secretary of State. On that basis, we are prepared to support the Government.

Several hon. Members:

rose —

Photo of Alan Haselhurst Alan Haselhurst Chairman of Ways and Means

Order. Hon. Members are making it difficult for the Chair because they did not notify Mr. Speaker that they wished to take part in the debate. I must be fair to those who did so. I owe a responsibility to the Chairman of the Select Committee, whom I shall call next. The winding-up speeches will be approximately five minutes each, so, with some co-operation, we should be able to achieve reasonable participation.

Photo of John Whittingdale John Whittingdale Chair, Culture, Media and Sport Committee 5:28 pm, 15th January 2008

I will do my best to keep my remarks brief. As so often, it is a pleasure to follow Mr. Foster. I agreed with much of what he said. As the Secretary of State knows, when the Government first decided to bid for London to host the 2012 games, I held the position now filled by my hon. Friend Mr. Hunt. At that time, I expressed the Conservative party's support for the Government's decision to bid. I remain of the view that it was the right thing to do, and that the Olympics will greatly benefit the country. The Secretary of State and the Minister for the Olympics occasionally interpret any criticism of the preparations for the games as a lack of support for their coming to London at all, so I put my support on record at the outset.

I am encouraged by the evidence that we in the Select Committee have received that progress is on track so far. Although the costs have escalated, at least the timetable appears to have been observed. The Secretary of State and the Minister for the Olympics would have been encouraged had they joined us this morning when we took evidence from the five host boroughs and heard the enthusiasm with which their leaders spoke of the benefits that they saw coming to their part of London.

However, if more than £5 billion is being spent in an area, it is not surprising that the local people should expect quite a lot of benefits to come from it. The challenge for the Government has always been not just to ensure that there are benefits for that part of London, but to persuade the other parts of the country that they will benefit, too. In that respect, the order before us will not assist, because not only will there be no huge investments outside London, but money is being siphoned from the pot—the national lottery—from which other parts of the country might otherwise have benefited. That will jeopardise part of the soft legacy, which is the Government's aim, and it comes on top of the Department's recent decision to cut the amount of money going to VisitBritain, which will jeopardise another part of the soft legacy of the Olympic games—the tourism potential.

When the Government originally drew up their funding package, it was to meet an estimated cost of £2.375 billion, of which £1.5 billion was intended to come from the lottery—£750 million from the new game, £340 million from the sports distributors and £410 million from the non-Olympic distributors. In the report that the Select Committee issued a year ago, we expressed concern about the impact that the original £1.5 billion take would have on good causes, in particular sport. We quoted the Central Council of Physical Recreation, which my hon. Friend Mr. Hunt has also quoted, which said that the move

"would...reduce...funding available to all other aspects of community sport", which would

"undoubtedly be detrimental to achieving the lasting legacy of sporting participation".

We also received evidence from the non-Olympic distributors, such as the Heritage Lottery Fund and Arts Council England, which expressed concern about the money going into the Olympic pot that would be lost to them. That was why the Select Committee concluded that any further transfer of funds out of the lottery to support the Olympics would penalise good causes yet further. We made it clear that that was not our preferred option.

When the Secretary of State had to reveal a budget of £9.325 billion—a considerable extra cost, which had to be found from somewhere—it was with some trepidation that we read reports that the extra would come from the lottery. It appears that the Minister for the Olympics achieved a better deal in her negotiations with the Treasury than some suggested she would. We should therefore be grateful that we are debating an order that will take only a further £675 million from the lottery, and not an even bigger sum. However, there is no doubt that taking £675 million, in addition to the original £1.5 billion, will have a further detrimental effect. Indeed, that sum alone will result in £420 million being taken from Big Lottery Fund, £90 million from the Heritage Lottery Fund and £63 million from Arts Council England. Those sums cannot be taken out without a detrimental effect on those bodies' funding programmes. That will make it harder to sell the Olympic games to the other parts of the country, which are not seeing the immediate benefits from the investment in east London.

At the time of the report last year, the Committee suggested that the rise in land values that would undoubtedly result from such investment should not benefit just the London Development Agency. We therefore very much welcomed the then Secretary of State's announcement, a few months later, that part of the money that would become available from the sale of that land in due course would be repaid to the lottery. As has been said in this debate, she set out a clear order of priorities for how it would be allocated.

It appears, however, that some doubt has arisen over how much will be available. The Mayor's office, which gave evidence to the Committee this morning, dismissed the story in The Times and said that it had always been the case that the amount of money raised from land sales could be between £800 million and as much as £3 billion. However, when I look at the memorandum of understanding I see no mention of the word "if" in relation to the land sales achieving the necessary £1.8 billion to repay the London Development Agency and the lottery distributors. In fact, it uses clear language, stating:

"the National Lottery income...will be re-paid", and that the LDA will be reimbursed.

However much it is now suggested that this does not represent a new story, a degree of uncertainty that did not previously exist seems to apply to the likelihood of the lottery being reimbursed for its contribution. That is obviously a matter for concern. Even if the money is repaid in full, it seems unlikely that that will happen until about 2030. The lottery will therefore have to put up with a substantial hit for a considerable time, and it will not be a great reassurance to the bodies that hope to receive lottery funding to hear that the amount of money available will increase again by 2030.

The one other concession that the Secretary of State has made this afternoon, which I strongly welcome, is his pledge that the Treasury will look again at the case for a gross profits tax for the national lottery. I am always slightly suspicious when I am told that a taxation change will increase not only the amount of revenue to the Exchequer but the amount available to good causes—but PricewaterhouseCoopers has apparently assured us that that would be the case, and that should be grounds for at least examining the idea. The Secretary of State has clearly been extremely persuasive in his discussions with the Treasury, so perhaps he could push his luck and ask whether it will reconsider its intention to have its tax take from the national lottery game. That money, too, could provide extra funding that could be better used elsewhere.

I welcome the Secretary of State's concession, and I also strongly welcome his pledge that there will be no further raid on the national lottery. I hope that that will not be necessary, in any case. Of the £9.375 billion, £2.75 billion represents a contingency fund, and we all hope that that fund will not be fully drawn down. We are alarmed, however, by the evidence that has already been given by the permanent secretary in the Department, who stated that he expected that it might well all be necessary—and the Minister has said that she cannot guarantee that the final figure might not prove even higher. We understand that she can offer no such guarantee. I regret the necessity for this order, as I still believe that the Government could have found other sources for the funding that would have been less damaging to the good causes, and I must express my strong hope that it will not be necessary to come back to this issue, either to raid the national lottery or to find some other source of funding because the bill has risen even higher than it is currently predicted to do.

Photo of Pete Wishart Pete Wishart Shadow Spokesperson (Culture, Media and Sport), Shadow Spokesperson (Home Affairs), Shadow Spokesperson (International Development), Shadow Spokesperson (Justice) 5:37 pm, 15th January 2008

If there were a gold medal for the mismanagement and botching of a large infrastructure project, it would go to this Government and their Olympic ambitions. This is one project that is in need of a performance-enhancing drug—

Photo of Pete Wishart Pete Wishart Shadow Spokesperson (Culture, Media and Sport), Shadow Spokesperson (Home Affairs), Shadow Spokesperson (International Development), Shadow Spokesperson (Justice)

Let me get started. I have a long way to go yet.

This project is in need of a performance-enhancing drug, but that is not what will sustain the Olympics—the lottery will sustain them. Let us be clear about what we mean when we refer to the lottery. The lottery supports good causes in each of our constituencies, including the grass-roots sports events that we regularly open and visit and the organisations that traditionally support the disadvantaged, the dispossessed and the marginalised. It is they who will lose out to pay for this massive infrastructure and regeneration project in London.

Photo of Angus MacNeil Angus MacNeil Shadow Spokesperson (Work and Pensions), Shadow Spokesperson (Culture, Media and Sport), Shadow Spokesperson (Environment, Food and Rural Affairs)

Is my hon. Friend aware that, in the Outer Hebrides, my constituency alone will lose about £1 million on a per capita basis? What benefit does he think will be directed to the Outer Hebrides from the London Olympics?

Photo of Pete Wishart Pete Wishart Shadow Spokesperson (Culture, Media and Sport), Shadow Spokesperson (Home Affairs), Shadow Spokesperson (International Development), Shadow Spokesperson (Justice)

That is the kind of question that I, too, am asked. The Secretary of State sits there laughing as he listens to the difficulties facing my hon. Friend. My constituents ask why we, in Perthshire, should pay for this massive infrastructure and regeneration project in London. I do not know the answer to that question.

Photo of Barry Gardiner Barry Gardiner Special Envoy for Forestry

The hon. Gentleman talks about the monumental fiasco of the Olympics, but will he enlighten us about whether the resignation today of the chief executives of SportScotland and the Scottish Institute of Sport is another indication of monumental incompetence? Could they be telling the SNP to get its own house in order?

Photo of Pete Wishart Pete Wishart Shadow Spokesperson (Culture, Media and Sport), Shadow Spokesperson (Home Affairs), Shadow Spokesperson (International Development), Shadow Spokesperson (Justice)

I wish I had not bothered giving way to the hon. Gentleman, which is all I can say about that contribution.

What we nationalist Members say is "Not one penny more". In fact, we did not want one penny in the first place, as we disagreed with using the lottery to pay for the London Olympics. We have consistently taken the approach that we do not want the Olympics to decimate good grass-roots causes in our constituencies. That is why we will oppose the motion this evening.

I am disappointed that the Conservatives and the Liberals—the so-called larger Opposition parties—have been bought off so cheaply. I can hardly believe that they are prepared to believe in the Government's commitments. This is a Government who told us that the Olympics would cost £2.3 billion, whereas actually they will cost more than £9 billion. How can anyone believe a word the Government say? We should protect our good causes and grass-roots support this evening and I hope that, even at this late stage, Conservative and Liberal Members might think about joining us.

As I say, we have been wholly consistent. I believe that it is wrong, unfair and counter-productive to use the national lottery to pay for the Olympic games and the associated regeneration in London. The matter was first raised in 2004 when we debated the Horserace Betting and Olympic Lottery Bill, and only the Scottish National party expressed concern about it. Every other party was carried away in the euphoria of securing the games, but we warned that it would be dangerous to our good causes and to our grass-roots support. The other Opposition parties were totally silent, so it is perhaps not too surprising that they are not going to act to save those causes this evening. That euphoria has now long gone and there is now a healthy scepticism about everything to do with the Olympics. Thank goodness that at least the other Opposition parties are prepared occasionally to question the Olympic budget. Are we to believe that there will be no more black holes? When that was raised today, the Secretary of State brushed it aside as though it were of no concern whatever. As sure as night follows day, however, other black holes will emerge.

Photo of Andy Reed Andy Reed Labour, Loughborough

As the hon. Gentleman knows, we spent many an hour in Westminster Hall and elsewhere debating this issue. I am delighted to see that he is sticking to his position, but we are where we are today and we need to know the position of the Scottish National party. If the SNP does not vote for this motion, is it saying that it wants the Olympics to collapse in a heap? Is it willing to bid for it? Real politics is about making tough choices. Where is the SNP going if it will not allow lottery funding to be used in this way?

Photo of Pete Wishart Pete Wishart Shadow Spokesperson (Culture, Media and Sport), Shadow Spokesperson (Home Affairs), Shadow Spokesperson (International Development), Shadow Spokesperson (Justice)

I am grateful for that intervention because, as the hon. Gentleman knows, we have debated the issue on several occasions over recent years and we have consistently said that London stands to gain from the fantastic legacy that the city will receive—regeneration of the east end, a fantastic new infrastructure and so forth—so it is London that should pay. London is about the richest city in the world, so London should pay for these games.

Photo of Adam Price Adam Price Spokesperson (Communities and Local Government; Culture, Media and Sport; Defence; Transport; Ministry of Justice)

I have an alternative funding proposal. Why not slap a windfall tax on the bonuses about to be sent out next week by the likes of JP Morgan and Citigroup? If there is to be an extra burden, should it not fall on the richest citizens in one of the richest cities in the world rather than on the weak, the disadvantaged and the poor?

Photo of Pete Wishart Pete Wishart Shadow Spokesperson (Culture, Media and Sport), Shadow Spokesperson (Home Affairs), Shadow Spokesperson (International Development), Shadow Spokesperson (Justice)

As always, my hon. Friend makes a very powerful point. There are many creative solutions. London is the richest city in the world, so why should the poor, the disadvantaged and the underprivileged in my constituency pay for this infrastructure and regeneration in London?

Let us go back to 2004, when we were told about this £410 million from the lottery. That had as much credibility as a Labour party fundraiser. Nobody believed it then. The initial budget could not even be said to have been drawn up on the back of a fag packet. Indeed, that would be to do a gross disservice to fag packets the world over! It was a total fantasy: it started as a fairy story and it has ended as the darkest of tragedies, with an estimate of £2.3 billion going up to £9.2 billion. That is what we are dealing with. We are asked to believe that this is now the end, but where will it all stop and when will the Conservatives and the Liberals say, "Enough is enough"? So far as we are concerned this evening, enough most certainly is enough.

We have examined the position very carefully, and have found that Scotland's contribution—the London levy that Scotland is to pay at the expense of our good causes and grass-roots sports—will be £184 million. As I said earlier in an intervention, SportScotland alone will lose £13 million, at a time when we have the Commonwealth games to pay for.

The Secretary of State can relax: I am not going to chap on his door asking for £9 billion for the Commonwealth games. I am not even going to ask for £1 billion. What I think fair and reasonable, however, and what I think the Minister should consider, is for some of the money that we are losing through the London grab for the Olympics to be returned to us so that we can pay for our games in Scotland. Why, when we are to have games in Scotland, are we losing £187 million of our money for grass-roots sports and good causes to pay for games in London? It is unfair, and I should like to hear what the Secretary of State has to say about it.

What is the cost to everyone? The Alliance, formerly the Coalfield Communities Campaign, estimates that the eventual cost will be more than £2 billion. We have analysed all the local authority areas in Scotland, and we have discovered that the cost to my local authority, Perth and Kinross council, will be some £5 million. Every single person in the United Kingdom will have to pay £33: that is the true cost of the London levy that will be imposed on us. When London Members get up and talk about this mythical subsidy for Scotland and all the disadvantages for London and the rest of England in comparison with Scotland, we will point out that this is a real and tangible London subsidy.

I hope that the Conservatives and Liberal Democrats will vote this measure down. For us, it is a watery grave too far. We will stand up for the underprivileged and the dispossessed. We will ensure that their money is not lost. We will vote against the measure, and I urge the Conservatives and Liberal Democrats, even at this late stage, to join us in the Lobby.

Photo of Hugh Robertson Hugh Robertson Shadow Minister (Culture, Media and Sport) 5:45 pm, 15th January 2008

I think it fair to say that the Olympics remain the world's greatest sporting event, and an important showcase for both the host city and the country as a whole. However, it is also sadly the case that successive Olympic games—notably those in Sydney, Athens and now London—have radically overshot their initial budgets, and in view of that it is probably not surprising that this has been a heated and at times controversial debate.

Let us start with the positives. Two main themes have run through the speeches of Members on both sides of the House. The first, which I think extremely positive, is the support for the Olympics that exists across the main political parties. That support, first evident at the bid stage, continued throughout the passage of the London Olympic Games and Paralympic Games Bill, and remains intact. There are of course differences of opinion over the control of the budget and policy issues such as the legacy for sport, but support for the concept of 2012 is still intact, and I hope that the Minister for the Olympics will feel able to offer the International Olympic Committee assurances to that effect.

The second main theme replicated across the House is widespread recognition of the benefits brought to the country in general, and to good causes in particular, through the national lottery in the decade or so since it was introduced by John Major's Government. In our view it is vital that the lottery does not become a reservoir into which Government can dip when money is needed, or become the poor man's tax that some commentators have dubbed it, as that would inevitably affect its popularity and thus the amount of money that it is able to distribute to good causes.

As only a short time is available, it makes sense to be entirely clear about what we seek from the Government, and why we are seeking it. As always with London 2012, our concern centres on two main issues, the budget and the legacy, particularly the mass participation sports legacy.

Tonight is not the occasion on which to examine why the Olympic budget went so badly wrong. However, as the Minister for the Olympics will confirm, we co-operated closely with the Government over the London Olympic Games and Paralympic Games Bill, and helped them to get it through in record time. That earned us a commendation from the IOC. I hope the Minister will understand that, given the former Minister for Sport's countless assurances in Committee and on Report that the original budget was robust and deliverable, we were dismayed to discover that that was so dramatically not the case. For that reason, as well as any Opposition's democratic remit to hold the Government to account, it would be wrong for us not to seek reassurances over the new budget.

The Minister's recent approach, particularly since November, has helped immeasurably, and I wish publicly to record my thanks to her for that. However, in order to build on that, we want three simple reporting mechanisms: first, a six-monthly report to Parliament; secondly, quarterly ministerial and shadow ministerial briefings; and, thirdly, monthly cash flow forecasts. I cannot see why any of those demands should cause the Government any problems. I am perfectly happy to receive those reports on Privy Council or confidential terms, if the release of any details might affect commercial sensitivities.

There is also the matter of the legacy, which is why the national lottery is so important. Without the lottery, the amount that can be done in legacy terms will be dramatically less than it would be otherwise. For that reason, I entirely welcome the Secretary of State's announcement—or concession—this afternoon that the lottery will not be hit again to pay for future cost overruns; I thank him for that.

Given that concession, for my party this debate comes down to one simple point: will the Government commit to the reporting mechanisms that I have just laid out—a six-monthly report to Parliament, quarterly meetings at ministerial and shadow ministerial level, and a monthly cash flow forecast? If they can give us that assurance, despite our concerns over the budget and the national lottery, in recognition of the Secretary of State's earlier concession and in the interests of maintaining the cross-party consensus that we have all worked so hard to achieve, we will not vote against the Government tonight.

Photo of Tessa Jowell Tessa Jowell Minister of State (Cabinet Office) (Olympics and Paymaster General) 5:51 pm, 15th January 2008

This has been a good debate, with a frank airing of views from all parts of the Chamber. At least the Scottish National party is consistent. It opposed bidding for the games; it has opposed the Olympic games for the United Kingdom in London root and branch ever since the Government first made the proposition. It, therefore, will have to answer to the seven out of 10 people in Scotland who support the Olympic games. It will also have to answer to its talented young elite athletes who hope to represent Great Britain in Beijing and then to bring glory to Great Britain at the Olympic games in London.

Photo of Barry Gardiner Barry Gardiner Special Envoy for Forestry

My right hon. Friend says that the SNP has been consistent, but does she recall that on 6 June 2005 the SNP claimed that it

"gives full support to the London Olympic bid and wishes those leading the London 2012 Olympic bid the very best of luck"?

That does not sound like consistency to me.

Photo of Tessa Jowell Tessa Jowell Minister of State (Cabinet Office) (Olympics and Paymaster General)

My hon. Friend's excellent research has probably found a sotto voce endorsement by the SNP. However, the SNP is against the Olympic games, and I think it is fair to say that it is the only party in this House that holds that view.

Let me begin with the substance of this evening's debate: the importance of the trade-off involving the Olympic games, and the decision to divert an extra £675 million from the national lottery to the Olympics. The Government considered carefully before coming to the House with the proposal, but just as the Conservative party determined that the millennium would be a further good cause benefiting from the lottery for a period of time, so the Government agreed that the Olympics would be a sixth good cause: 20 per cent. of the national lottery was earmarked for the millennium, and a smaller proportion has been provided to the Olympics—16 per cent. or 23 per cent. of the overall Olympic budget.

The safeguards have been addressed by Members in all parts of the House. When I made the announcement in March about revised funding provision for the Olympics, we undertook that no existing lottery funding would be affected, that the Big Lottery Fund would honour its commitment to the voluntary and community sector, and that, in line with the memorandum of understanding, the £675 million would be repaid through land sales. In this debate, we have dealt thoroughly with the prudent assumptions on which those calculations were made—and the Mayor clearly set them out in April last year. My right hon. Friend the Secretary of State has also made clear the commitment that there will be no further diversion of funds from the lottery good causes to the Olympics.

A point was made about legacy transformation. The costs for legacy transformation are provided for within the overall funding package, and the Mayor has already made a commitment of £10 million towards the costs of running the Olympic park. Work is under way to establish governance arrangement for the legacy, the park and so forth. I can also give an assurance that once its job is done in 2012, the Olympic lottery distributor will be wound up.

Much has been said in the debate about the importance of cross-party support. That is critical to the success of the Olympics, but it must be proper cross-party support. The right to scrutinise and ask questions must not be surrendered, but there must also not be the kind of opportunistic flip-flop that we have witnessed this afternoon, and figures must not be misrepresented, such as those for the cost of the Olympic stadium, which have been carefully and meticulously explained to Opposition spokesmen. I hope that from this evening there will be a new resolution to make this cross-party consensus work properly, and to maintain proper scrutiny—but to do so on an honest basis that reflects the information that has been provided to Members in briefings.

We will provide six-monthly updates to Parliament and quarterly briefings to Opposition Members. Next week, the Olympic Executive will publish its first ever annual report, which will set the baseline for that, and I pay tribute to the Select Committee for its rigorous scrutiny in that regard. We will provide continuing and regular financial briefings to Opposition Front Benchers.

This matter should not be seen as a battle between the Olympics, arts, heritage and sport—the debates on it in this House should not allow that. We decided to bid for the Olympics because we knew that it would give us an opportunity to enhance every aspect of our national life right across the United Kingdom. Through the cultural Olympiad, there will be events and celebrations across the country showcasing the British talent and creativity of which we are so proud, and the lives and opportunities of millions of children in this country will be transformed through sport—particularly those of children living in some of the most deprived circumstances in the poorest parts of London in the boroughs most directly affected. Two thirds of the money that will be spent on the Olympic park will go on regenerating an area that has been wasteland for generations.

Tomorrow, we will launch a new business opportunities network, extending the practical opportunities for businesses right across the UK to be part of those economic opportunities. Those are the reasons why public support for the UK hosting the games is so high: the Olympics will enthral the nation and inspire a generation—

It being one and a half hours after the commencement of proceedings on the motion, Mr. Deputy Speaker put the Question, pursuant to Standing Order No. 16(1) (Proceedings under an Act or on European Union documents).

The House divided: Ayes 357, Noes 9.

Division number 44

See full list of votes (From The Public Whip)

Question accordingly agreed to.

Resolved,

That the draft Payments into the Olympic Lottery Distribution Fund etc. Order 2007, which was laid before this House on 25th October, in the last Session of Parliament, be approved.