The original Bill focused on the anomaly in the National Lottery etc. Act 1993 which prevented the National Lottery Charities Board from distributing funds to local charities in the form of endowments. A particular charity was mentioned at that time and the change was proposed in a campaign run by the Eastern Daily Press, in conjunction with the hon. Member for Norwich, North, known as the "We Care" appeal 2000. The aim was to raise £1 million to establish an endowment fund for unpaid carers in Norfolk. In my hon. Friend's eloquent speech, he re-emphasised the importance of funding carers in his county. Not only is that vital to him and his constituents, but it serves as a timely reminder of how important carers are in our communities throughout the country.

When the original Bill was debated, although there was general support for it, concern was expressed on all sides about its rather narrow and prescriptive proposals, linked as they were to only one of the seven lottery fund distributors—the National Lotteries Charities Board. As my hon. Friend the Member for Ryedale (Mr. Greenway) said at the time:

"The question for us is whether the proposed change is desirable, whether it would improve the working of the NLCB and provide greater equity of opportunity to obtain grants from the board, or whether it would have adverse consequences for the work of the board or the operation of the lottery funding bodies."—[Official Report, 23 March 2001; Vol. 365, c. 594.]  

 

It is the latter point that is crucial. Would a facility offered exclusively to the NLCB have adverse repercussions for any of the other distributing bodies? This point was not teased out in Committee because the original Bill fell with the looming general election of 2001. However, the Government did then share that concern, along with spokespeople on the Opposition Benches.

These problems have, in our view, been properly and wisely addressed in the amended Bill of my hon. Friend the Member for Mid-Norfolk. It adds to the powers of distributing bodies by including the distribution of money for the purpose of establishing, or contributing to, endowments in each appropriate section of the National Lottery etc. Act 1993: sections 22, 25, 25B, 38, 41, 43 and 44. My hon. Friend's Bill now gives each and every distributor of lottery funds the option of contributing either to the establishment of a new endowment, or to an existing one.

The previous debate also cited the endowment funds of the National Endowment for Science, Technology and the Arts as a precedent already established by the Department for Culture, Media and Sport, and as a template for possible national lottery endowment funds to follow, given the similarity between NESTA and various registered charities. Not only was the method of funding by endowment at that time praised; the freedom and continuity afforded to NESTA trustees, without undue interference from Government, was noted as both preferable and positive when targeting particular groups in need of support.

As my hon. Friend the Member for Mid-Norfolk has pointed out today, however, one of the downsides to the endowment route is the variation in interest rates. Only a few weeks ago, the Minister and I confronted each other, in a statutory instrument Committee, on this very point. NESTA, in receipt of an original endowment, found that the income that it was anticipating—and was presumably spending—had decreased because of lower interest rates. NESTA appealed to the Government and to the Minister's Department for additional capital moneys to put into the endowment fund. So a real problem has raised its head in respect of NESTA, which, at the time, was described as a useful template for others to follow and to adapt.

Another potentially detrimental aspect of the Bill's proposed amendments is that in funding endowments, less money would be readily available for projects in need of immediate funding. This is due, of course, to the large sums needed to initiate an endowment fund. Potentially, that would deny projects immediate funding in the short term. However, the benefits of establishing an endowment fund that can provide funding for an unfixed and prolonged period may prove more advantageous and beneficial in the long run.

As I understand it, the legal position for an endowment is that the money is conferred upon that endowment in perpetuity. Indeed, the Bill's amendment to section 44 of the 1993 Act specifically refers to "permanent endowment". Of course, that has the considerable advantage for the recipient bodies of guaranteed continuity of income, and overcomes the problems faced by many bodies currently in receipt of

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lottery funds, including charities, when their short-term funding—usually of three to five years—comes to an end. But what happens to endowed funds if the recipient body ceases to exist, for whatever reason? Does existing legislation allow sufficient control to avoid funds falling into the wrong hands or being misappropriated in any way? Who would have the ultimate responsibility? Would it be the recipient charity controlling the endowment, or the lottery distributing body that countenanced the funding to the endowment in the first place?

This Bill highlights an anomaly in the original National Lottery etc. Act which denied the funding of endowments by omitting it from the defined expenditure of the various funding distribution boards. No reason has been specified for denying funding of, or contribution to, endowment funds. Since the original Act, the NESTA fund has provided a framework, and precedents, for the establishment of endowments in all areas of national lottery funding.

As I have said, the short-term effects of a change may be detrimental in denying money to organisations that require immediate funding, as the cash will be directed into the establishment of an endowment fund. However, by allowing the funding of endowments, the long-term benefits include prolonged and sustained funding to worthwhile projects.

On this side of the House, we will need reassurance on the technical issues that the Bill raises. However, we are confident that those can be teased out in Committee. The lottery has been a major success since its introduction by the Government of the former Member for Huntingdon. Nevertheless, it is in need of reform to meet changing circumstances. We believe that the Bill introduces welcome—although overdue—reform. We intend to give it a fair wind on this, its Second Reading.