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Arts and Heritage Funding (Olympics)

Volume 461: debated on Wednesday 6 June 2007

The news that the UK would host the 2012 Olympics was welcomed enthusiastically across the country almost without exception. However, that Olympic dream is beginning to be at best tarnished, and at worst shattered, by the bungled initial costing of the games, the delays in getting the building programme under way, the throwing away of £400,000 on the supposed design of the controversial logo and, above all, by the Olympic smash-and-grab raid on lottery funds.

Nearly two thirds of the latest costing of £3.3 billion is to come from the lottery, which must have a devastating effect on arts, heritage and sports funding across the whole country. How can there be a cultural Olympiad from 2008 to 2012 when such huge sums of money are being diverted from grass-roots activity, especially given that arts groups and, to a greater extent, heritage groups have already had to turn to lottery funding to make up for shortfalls in mainstream funding? Mainstream funding bodies such as the arts councils, English Heritage and the Museums, Libraries and Archives Council have been asked by the Department for Culture, Media and Sport to cost the effect of potential cuts of 5 to 7 per cent. in the next comprehensive spending review round.

Some countries put significant sums of money into the cultural Olympiad when they hold the Olympics. In the UK, however, it seems as though vast sums are being taken out instead, with an absolute minimum of £1.1 billion being taken directly from good causes funding. Another £750 million will come from the special Olympic lottery, whose sales will probably have an impact on general lottery sales and therefore on arts and heritage funding. Given all that, it seems inevitable that arts, heritage and cultural activities across the country will be undermined.

In place of all the money that is being lost, just £40 million is being offered by the Legacy Trust UK, which was announced by the Secretary of State, of which only £6 million is new Government money. That is counter-productive madness. Taking £340 million of lottery money from grass-roots sport can only undermine nationwide enthusiasm for the sporting aspect of the Olympics. The huge diversion of lottery funding to the Olympics will undermine the cultural value of arts and heritage, but the Chancellor and the Treasury seem unable to understand that. It will also undermine the economic value of the tourist legacy that the Government promise will come in the wake of the Olympics.

Let me give the background to the cuts. At the time of the original Olympic bid, the agreed funding package was £1.5 billion from the lottery, £250 million from the London Development Agency and £625 million from the Greater London authority via London council tax. In short, two thirds of Olympic funding was to come from the lottery. It was agreed that £340 million of the lottery funding would come from sport, £750 million from the new Olympic game, if it could raise that money as an extra, without affecting usual lottery sales, and £410 million from existing good causes.

In November 2006, the Secretary of State admitted that costs had already risen by nearly £1 billion— £900 million. Despite the fears that were voiced by the Select Committee on Culture, Media and Sport, the National Audit Office and many arts and heritage organisations about the likely impact on lottery good causes, she announced a further diversion of £675 million from lottery good causes. That brings the total lottery contribution to the cost of the Olympics to £2.2 billion, which equates to a loss of 20 per cent. of the money that would have been available for good causes between 2005 and 2012-13. Of the additional diversion, £425 million will come from the Big Lottery Fund and £250 million will come from other good causes. However, the impact on lottery good causes is likely to be even greater as ticket sales are likely to be diverted from the general lottery to the Olympic lottery, thus further reducing the money that is available for good causes.

What will be the specific impact of all that on arts funding? There will be funding cuts of £112.5 million for the Arts Council of England, £21.8 million for the UK Film Council, £4.5 million for the Arts Council of Northern Ireland, £12.5 million for the Scottish Arts Council, £1.8 million for Scottish Screen and £8.1 million for the Arts Council of Wales. In total, there will be cuts of £161.2 million in the arts sector.

As a result of the cuts, the Arts Council in England is already cutting its grants for the arts fund, which finances thousands of small projects, by 30 per cent. from £83 million to £54 million. It has also set stricter caps on the amount of money that is awarded to projects. The grants for the arts fund is the only source of funding for many small arts projects that are not designated as regularly funded organisations. Many companies will be threatened by those cuts, and many projects simply will not go ahead. The grants for the arts scheme is used to invest in one-off, time-limited productions such as theatre tours. The loss of such productions will threaten the viability of many regional theatres, which rely on such programmes to attract custom and fill their seats. It may therefore threaten their ability to survive economically, as well as deny regional audiences access to top-quality productions.

Cutting funding for those sorts of smaller-scale projects will have a knock-on impact on the whole sector. The grants for the arts scheme is the breeding ground for the artists of the future. The main threat is to small-scale and new projects, including the 53,000 voluntary arts groups in England whose only source of Arts Council funding is the grants for the arts scheme.

The impact of the cuts will be even greater in other UK nations, because whereas 60 per cent. of the Arts Council of England budget goes to the voluntary and community sector, the proportion is higher in Wales, Scotland and Northern Ireland. The effect in those nations may be to cause stagnation and lack of innovation, because new companies and projects will no longer be able to get off the ground. Local community-based participatory groups will be heavily hit, which will affect the Government’s participation targets and will undermine the development of future talent.

It is the vibrancy of the arts in the UK that makes it so attractive to overseas visitors. That vibrancy was an essential strength that helped London’s bid to be the host city of the Olympics to win, but it depends on small community arts activities and projects, which can only be undermined by the short-sighted cuts.

The Heritage Lottery Fund will also take a cut of £161.2 million, because there was a 50:50 split with the Arts Council. The fund is the only heritage body that operates throughout the UK. It funds heritage projects of all sorts, including museums, libraries, archives, natural heritage sites, historic buildings, townscapes and parks—the list goes on. It is the main source of public funding for heritage in the UK, and the heritage sector relies increasingly on its funding because other sources have reduced in recent years. Gift aid, for example, will generate less income in coming years as the standard rate of income tax is reduced by 2 per cent.

English Heritage is suffering a real-terms reduction in grant in aid of £20.6 million between 2000 and 2008. The Heritage Lottery Fund has had to fill the gaps that have been left by the cuts, but it will no longer be able to do so when the diversion of funds to the Olympics takes effect. The fund gives 55 per cent. of its grants to the third, or voluntary, sector. It has given grants to Strutt’s North Mill at Belper, in Derbyshire, which I visited a few weeks ago. The mill is an historic landmark from the industrial revolution of the 18th century, and would not have been saved and be open to the public without the work of a small, voluntary group that survived entirely on heritage lottery funding when it was getting off the ground. There are similar stories all over the country. Large-scale cuts will inevitably hit the voluntary and community sector despite the Secretary of State’s assurances that they will make no difference. If making cuts of at least £1.1 billion will make no difference, then money must surely be being misspent at the moment, but I see no evidence of that.

In the heritage sector alone, some 400,000 people volunteer every year, creating a social network that contributes to all communities and to community activities and identity. The diversion of £90 million of funding from the Heritage Lottery Fund is equivalent to wiping out four years’ worth of spending on smaller community and voluntary sector grants, as well as the entire stream that is aimed at younger people—6,000 projects in all. Or it is equivalent to wiping out the planned spend on churches and historic town centres from Gateshead to Great Yarmouth—1,400 schemes—for four years. Or it is equivalent to wiping out five years’ worth of funding for renovating our historic parks, such as Queen’s park in Chesterfield, which has benefited enormously from that funding in recent years. It would be a shame if many historic parks around the country were denied access to that funding.

Despite the Heritage Lottery Fund’s assurance that it will continue to support in full the range of projects as they are currently funded, it seems that in the circumstances of such cuts it will be impossible to fund large projects such as the Big Pit in Blaenafon, Kelvingrove museum in Glasgow and the transformation of the British Museum. The cuts will inevitably worsen the already poor ability of British museums to acquire new material. Some 96 per cent. of our museums already say that poor core funding is a barrier to collecting, and 60 per cent. of museums were unable to allocate any income at all to collecting in 2005.

What is the value of the arts and heritage? They are a central part of community life, not an optional extra. They define and bind communities and they provide an understanding of the world and of what makes us human. The arts make a crucial contribution to innovation, education, diversity and social inclusion. A healthy society is one in which everyone can share in the arts, and it is the responsibility of the Government—indeed, it is an oft-proclaimed Government target—to ensure that that happens and that participation covers all levels of society and people from all backgrounds. Sustained investment in the arts means that they can now effectively contribute to wider agendas such as health, education, social inclusion and community cohesion.

The creative industries are acknowledged to be a key part of British competitive economic performance, accounting for 7 per cent. of the economy and growing at 5 per cent. per annum—twice as fast as the rest of the economy. Heritage is critical to the tourist industry, consistently featuring among the top reasons why people from overseas choose to visit this country. In one survey, 72 per cent. of visitors from Russia, China and the United States cited British historic sights—castles and houses—as the leading reason that brought them to this country.

For every £1 spent on entrance fees to heritage attractions, £25 is spent in the vicinity on retailing, catering, transport and accommodation. Heritage attractions are important employers and they generate significant income for many communities, especially those in rural areas. Britain’s privately owned historic houses, castles, parks and gardens alone contributed £1.6 billion to £2 billion and 10,000 jobs to the rural economy in 2005 and attracted 15 million visitors. In my county of Derbyshire, tourism is the largest single employer—not agriculture in the Peak district, and not the defunct mining and engineering industries in east Derbyshire where Chesterfield lies, but tourism throughout the whole county.

Heritage is also important in developing strong local communities and identity, and we have recently heard much talk from the Government about fostering ideas of Britishness, community and identity. Heritage is not elitist; it is extremely popular. Some 70 per cent. of adults visited an historic location last year alone, and more than 1 million people supported the “History Matters—Pass It On” campaign.

In the build-up to the Olympics, arts and heritage are vital to achieving the objectives that the Government say they have set themselves. The cuts will affect the ability of arts and heritage to deliver and to act as a showcase for Britain during that period. If our arts and heritage are not at their best, the potential benefits from additional tourism before and after the games will be lost. The Government estimate that the tourism legacy will be £1.4 billion to £2 billion for a decade after 2012, but that will not be achieved if arts and heritage cannot showcase and market themselves to the rest of the world using the Olympics as their vehicle.

The four-year cultural Olympiad in the run-up to the games should be that showcase. It should showcase both London as one of, if not the, greatest cultural capitals in the world, and the rest of the UK’s world-class arts and heritage. The cultural Olympiad is a key to the whole project and it was central to the UK’s winning bid, but instead of funding the Olympiad at this critical time, funding is being drastically cut throughout the country, reducing the ability of the arts and heritage sector to deliver the cultural Olympiad successfully.

Most of the money available for cultural events connected with the Olympics has already been assigned to the opening and closing ceremonies, the torch relay and the medal ceremonies. It appears that the rest of the cultural Olympiad is to be paid for by participating organisations out of existing budgets, but existing budgets are being cut. The international exhibitions programme, which is designed to be a collaboration between many major and smaller museums and galleries throughout the UK, has not been assigned any money from the Olympics budget.

There is no clear plan for the cultural Olympiad, and regional co-ordinators are only now being appointed. However, there is little point in recruiting people who will not have any budget and whose role could have been covered by the existing infrastructure. Other cultural Olympiads have received significant financial support from their Governments. Australia’s Government put 70 million Australian dollars into the cultural Olympiad that preceded the Sydney games, but in England, some parts of the cultural Olympiad, including the Shakespeare festival, the world festival of youth culture, and an international music programme, which were part of the original bid and therefore must be delivered, are to be delivered despite not having any budget allocated to them.

We need a clear plan to be made public as soon as possible so that arts and heritage organisations can plan the participation that they can manage to deliver under such conditions. Among all the arts and heritage organisations that I meet, I find a growing cynicism about the cultural Olympiad and the Olympics that threatens to undermine the delivery of a successful nationwide festival of culture, as the small-scale and voluntary groups that are key to its delivery lose enthusiasm in the face of the loss of funding.

More money, not less, is needed in the heritage sector. It has not had the benefit of the increased grant in aid that DCMS arm’s length agencies in other sectors have had. From the 2000-01 baseline, English Heritage has received an increase of just 3 per cent., compared with 53.4 per cent. for the Arts Council and 98.6 per cent. for Sport England. Clearly, DCMS has already prioritised sports over arts and heritage, and it plans to take even more money from arts and heritage to put towards sport. That has left the heritage sector with a legacy of funding needs that grow yearly.

The Heritage Lottery Fund has observed and documented that £3 billion is needed to finish regenerating our historic parks, £10 million to provide digital access to archives and £700 million for repairs to canals and waterways. The canal in Chesterfield is a case in point: 30 years ago when I moved to Chesterfield, the canal was a stagnant ditch; today, as a result of the work of a terrific band of volunteers, it has become a viable canal, helping to regenerate at the centre of Chesterfield an old industrial site in which new shops and offices will be built around a brand new canal marina—something that was unthinkable 20 or 30 years ago. The combination of voluntary work by the Chesterfield Canal Trust and judicious funding from lottery and local government sources has made it possible. Are all those projects to go by the board in the next few years?

Additionally, £185 million a year is needed for repairs to England’s listed places of worship, and cathedrals alone need £95 million over the next five years just for maintenance. The repairs needed to buildings on the buildings at risk register would cost £400 million, and there is the danger of a long-term loss of conservation and maintenance expertise as the funding goes and heritage posts dry up. In addition, the heritage sector needs more money to carry out the recommendations of the Government’s heritage protection review. It has been widely welcomed, as long as the money exists to make it happen, but money—mainstream and lottery funding—is under threat and drying up.

Even such a tiny scheme in funding terms as the portable antiquities scheme, which costs just £1.6 million a year, could be at risk as a result of comprehensive spending review cuts, as and when we hear of them in the autumn. If those cuts happen, the scheme will not be able to turn to a diminished lottery budget to make up the gap. For such a small cost, the scheme plays a fantastic and invaluable role in preserving, recording and mapping local archaeological heritage throughout the UK, as witnessed at Chesterfield museum when I met the finds officers for my region a few weeks ago. However, even that small amount of funding could be under threat.

There is a good case for saying that the arts world needs more funding, not less. The arts have fared better than heritage in terms of grant in aid over the past 10 years, but we do not want to return to the boom and bust cycle. The cuts of the 1980s and 1990s led to a drop in the quality and quantity of output; attendances fell and theatres closed. In the past 10 years, the funding that existed before the cuts in the 1980s and 90s has effectively been restored. Is that to be threatened by the forthcoming CSR and by lottery cuts? That would be a grave mistake, given the success of the Government’s policy in that area over the past 10 years.

The comprehensive spending review covering 2005-08 froze the Arts Council grant, resulting in a real-terms cut of £34 million, which the council absorbed through restructuring and cuts. However, it seems unlikely to be able to do so again in a further round of cuts over the next three years. Without at least an inflationary settlement in the CSR, there is a real danger that theatre grants will be cut, and the impact will be serious. Why undo the good work of recent years? The subsided arts sector is a training house for the performers and technical staff who go on to work in commercial arts companies. Public funding drives up the standards of theatre and the arts by enabling risk taking and investment in new material. “Jerry Springer: The Opera” and “The History Boys” both started in subsidised theatre before moving on to the commercial world. That is what makes the UK’s arts so attractive that 1.5 million people attended orchestral performances in 2005 and 12.4 million people viewed west end shows in 2006 alone. Many tourists come to London and the rest of the UK for the arts and heritage. On its own, theatre makes a major contribution to the UK economy of £2.6 billion a year.

In conclusion, I should like to put a number of questions to the Minister. It is time that the Government finally acknowledged the positive role of the arts and heritage in the success of our Olympic bid and for the nation as a whole. The arts and heritage sector strongly supports the Olympics and welcomes the opportunity that it will bring to showcase the UK. However, the sector cannot afford the twin cuts, through the CSR—if that is what emerges—and through the diversion of lottery funding. As Nicholas Hynter, the director of the National Theatre, has said:

“There is a spectacular lack of logic in using money earmarked for the arts to plug the holes in Olympics bills. The money raided from the lottery will largely affect small, innovative, experimental organisations and individuals who are the lifeblood of creativity in the UK. Pulling the carpet out from under them and nobbling their money is undermining the future of our major arts institutions.”

The lottery funding is not

“the icing on the cake”,

as one DCMS spokesperson recently suggested. It is an essential element of arts and heritage funding, providing the financial base for the grants by Arts Council England and the Heritage Lottery Fund to a vast and diverse range of small organisations and community projects, which should form the backbone of the cultural Olympiad.

I have seven points to which I look forward to hearing the Minister’s response. First, the Government must now guarantee that this is the last time the lottery will be raided to pay for the Olympics. No one other than Ministers doubts that the original inadequate bid, which has already been increased by nearly £1 billion, will increase again over the next few years. However, that must not be met at the expense of further lottery funding being slashed, so, secondly, any additional cost increases or shortfalls in Olympic lottery sales should be paid for by other means. The arts and heritage cannot sustain further cuts.

Thirdly, the Government should allocate money for the cultural Olympiad from the Olympics budget, perhaps from the contingency fund. That would enable arts and heritage organisations to take part in the festival and to do more than simply rebrand existing, underfunded activities. The arts and heritage sector would receive a direct benefit from the Olympics that would overcome the perception that it was being punished by having money taken away for sport, with no compensation.

Fourthly, arts and heritage should get a higher funding settlement in the comprehensive spending review, to compensate for the loss of lottery money. In particular, funding for English Heritage should be raised to a level at which it can deliver its core objectives as well as the new heritage protection reforms, which the Government have suggested passing over to it. Fifthly, the Government should give a tighter guarantee that the lottery—especially lottery funding of the arts and heritage—will have first call on the profits from the sale of Olympic properties after 2012.

Sixthly, the original principle of additionality in lottery spending should be strictly reinstated, to prevent further raids on good causes to fund what should be mainstream Government spending. Finally, Parliament as a whole, not a small Committee, should debate the resolution on the lottery funds diversion. I look forward—probably in vain—to the Minister’s reassurance that the Government have realised the folly of their Olympic smash-and-grab raid on lottery funds.

I congratulate the hon. Member for Chesterfield (Paul Holmes) on securing this important debate, which is part of a wider debate that has resonated throughout the country. The Government’s decision was a difficult one to make. If I have been critical of it, I am sure that that did not come as a surprise to the Minister, although to be honest I think that it was just bad politics. It is bad politics, approaching an election in 2009 or 2010, for each constituency to be stripped of £1 million. The decision just does not make sense and it is an own goal.

There is some hubris, however. I want to clear my throat and make one or two quick comments. Dick Pound, who was on the International Olympic Committee for more than 20 years, said that the bids that came in contained the most creative pieces of accountancy that he had ever seen. The principle of bids is to win them, not to come second or third. We won the bid, and we should be proud of that. We probably did take rather too long to get the bid into a proper position once we won it, and we are all aware of the time that that took. However, previous Olympic games—in Athens, Sydney, Atlanta or Montreal, for example—all did the same. They all underbid and they all spent too much. But were the games a magnificent success in those countries? They were. Some of us poured scorn on Greece; it has a population of 4 million people, but for them to put on the biggest sports occasion in the world and pull it off has given them the most amazing confidence in their society.

I wrote to both the Leader of the Opposition and the leader of the Liberal Democrats to suggest that we needed a Select Committee on the Olympics, of both the House of Lords and the House of Commons. Interestingly, the Leader of the Opposition turned that proposal down, but I am pleased to say that the leader of the Liberal Democrats thought that it was a good idea. With the changes that are approaching on our side, perhaps the idea will not be lost.

I could not agree with some of the conclusions that the hon. Member for Chesterfield came to. What are the alternatives, if the expenses for the Olympics have been increased? There are seven: either we pay higher general tax or London ratepayers pay a higher London tax, or we use a combination of the two, or there are also some other alternatives, which I shall come to. Higher general taxes are not good politics, either, but if that is what the Liberal Democrats propose, I look forward to their spokesman, the hon. Member for Bath (Mr. Foster), saying so at the end of this debate. In going into a mayoral election in London, if the Liberal Democrats are saying that they want to increase taxation on London, I am sure that they will be elected on that platform. However, in reality that is nonsense, and we cannot have a combination of the two alternatives, either.

The two things that I have been banging on about for the past three years as worth considering are, first, the sale of the analogue spectrum, which Ofcom will undertake in the next two years and which will come into place in 2012. The Budget in March estimated that that would bring in £5 billion, although I think that that is a serious underestimate. So, first, there is a pot of money from the analogue spectrum, which is currently allocated to the Treasury.

I do not think that we disagree about that. Money from the sale of the analogue spectrum goes to the Treasury. Therefore, if money comes from the Treasury to pay for the real costs of the Olympics, instead of being raided yet again from the arts and heritage, the route is the same.

I ask the hon. Gentleman to bear with me. The analogue sale is the first pot of money, mentioned in the Budget only a few months ago, although I cannot remember whether the Opposition or the Liberal Democrat arts spokesman have written to the Treasury on the matter. More importantly, last month the Treasury published a report entitled “Unclaimed assets distribution mechanism: a consultation” and finally, there is the lottery. So, there are six alternatives—I said that there were seven, but there we are.

Let us consider the analogue spectrum. Our bid for the games was an all-party bid, and when we won it there was an all-party celebration. However, there has been some bitterness since, which I do not think is acceptable. We are either in this together or we are not. I therefore make this challenge to hon. Members in the Chamber: why do we not come together to make a representation to the Treasury on the analogue spectrum? Why do we not counsel our parties, make that representation and see whether we can secure some of the extra funding needed from the Treasury?

Let me quote from the report on unclaimed assets, which all hon. Members have received and which I am sure they have all read. Towards the end of page 7, under the heading “Principles for redistribution”, the report refers to

“distribution to be managed efficiently, with as little resource as possible being spent on administration and running costs; and…distribution in England to focus on a diverse range of communities across the country.”

There we go—that is our chance of bidding for the money. At the bottom of that page, the question asked is:

“Are the principles underpinning the distribution of the available surplus assets the right ones?”

For the benefit of those of us who have lost pensions or who have constituents who have lost their occupational pension schemes, I should point out that I have led the debate about unclaimed assets for four years. I happen to think that the amount of unclaimed assets is spectacularly under-represented. The Treasury, under Sir Ronald Cohen, thinks that only £350 million is unclaimed. I think he is wrong. The Irish claimed that there was £100 million, but when they introduced primary legislation they found that there was £2 billion. I think that we will find between £5 billion and £8 billion, but that is a separate issue.

I am concerned about how one applies for the money that is available, as published by the Treasury. People have until 9 August to apply. I ask the leaders of the Opposition parties and their spokespersons whether they have applied. What have they sent in? If hon. Members think that I am completely mad, they should consider some of the questions for consultation contained in the report. On page 35, it asks:

“Is the proposal to use the Big Lottery Fund as the primary UK-wide distribution vehicle for the available surplus assets the right one”?

I think it is. The document goes on to ask:

“What are the different approaches that the Big Lottery Fund could take to the distribution of the available assets”?

Why do we not ask? Finally, the report asks:

“Do you agree with the proposals for how legislation will work in relation to the distribution of these assets?”

I do not. I do not want it all to follow the ideas in that report. It is up to us to make the case.

Does the hon. Gentleman recognise that the independent Commission on Unclaimed Assets recommended that the funds should be used to set up a social investment bank to promote social entrepreneurship and social enterprise? The Treasury report seems to have abandoned that worthwhile exercise, which is another blow to the voluntary sector in addition to the raid that is the subject of today’s debate.

I was not aware that that had been said; I think that the whole social banking side has been toned down. The issue is that there is a pot of money, and it is up to us collectively to argue the cause for it. I will say again, as I did about the analogue spectrum: do we want to put an all-party group together—I would happily lead it or be a part of it—to argue to the Treasury by the closing date in August about how we would like the money to be redistributed, so that we make up for the wretched smash and grab, as the hon. Member for Chesterfield put it, on the lottery, which we all find incredibly embarrassing?

There is work to be done, and in the spirit in which all parties support the bid and the winning of the games, I hope that my suggestions will be taken seriously. The analogue spectrum and the unclaimed assets are available.

I congratulate the hon. Member for Chesterfield (Paul Holmes) on securing the debate and on his meticulous contribution.

I want to make three brief points, which are based on my disappointment at the performance of the office of the third sector. It is just a year ago that the office was set up to be a champion for voluntary organisations in government, after a period of many years in which they lacked a strong voice in that field. The office was set up with a new Minister as the advocate in government. The history of the Olympics episode is a testament to the disappointment that many of us feel about the intentions of the office not being delivered in practice.

In particular, on 15 March, when the Government announced their second raid on the lottery good causes to prop up the Olympics, the Parliamentary Secretary, Cabinet Office, the hon. Member for Doncaster, North (Edward Miliband), who is the Minister responsible for the third sector, assured the voluntary sector that

“today’s funding settlement protects both existing programmes and future resources”

for the voluntary sector. That is a disgraceful statement as it ignores completely the effect on arts and heritage organisations of the raid. It is almost as if the office of the third sector disregards charities and voluntary organisations that happen to be involved in arts, heritage and sport as part of its responsibility, when they should be central to it.

The truth is that such organisations will lose £100 million because of the raid that took place. That figure came to light only in response to a parliamentary question that I tabled to ask what proportion of funding from each distributor went to voluntary organisations. The calculation of £100 million as the cost of the second raid is based on the most recent figures supplied by DCMS for Arts Council England, the Heritage Lottery Fund and Sport England. It does not include any estimate of the loss of funding from the other lottery distributors. My calculation was confirmed in a press release on 23 April from the National Council for Voluntary Organisations, which also put the cost at more than £100 million.

That might not be the end of it. Just today, the sector’s magazine, Third Sector, carries an article that claims to bring news that the voluntary sector is under a new threat of another raid from the Big Lottery Fund, despite assurances specifically to the contrary from the Minister responsible for the third sector. According to Third Sector:

“The board of the Big Lottery Fund has decided in principle to cut £120m from its programmes, including some that fund voluntary sector projects, in a bid to recoup losses from the recent raid to fund the London 2012 Olympic Games.

Sources have told Third Sector that two programmes in line for cuts are the Young People’s Fund 2 and the Research Programme, both of which are targeted at third sector organisations.”

If true, that would be a great betrayal of the trust that the sector has in its Minister, who has promised that existing programmes under the Big Lottery Fund would be protected. I would be grateful if the Minister present could reassure the House that the rumour is unsubstantiated and that those organisations can sleep easy without that further worry.

That same Minister who is responsible for the third sector said in a recent interview with The Spectator that

“charities and social entrepreneurs are going to require funding from government to really make a big impact.”

The way to do that is not to match that ambition with the record, which so far has been to withdraw money from charities.

What a great pleasure it is for me to debate under your chairmanship for the first time, Mr. Bercow. I pay tribute to my hon. Friend the Member for Chesterfield (Paul Holmes) for securing an extremely important debate on an important issue. I congratulate the hon. Member for Sittingbourne and Sheppey (Derek Wyatt), too, on his great honesty in being fairly critical of what the Government have done, describing it as “bad politics” to withdraw the equivalent of £1 million in lottery funding from each constituency throughout the land. He admitted that the decisions that the Government have made about using lottery money to bolster the Olympic funds are something that we all find terribly embarrassing. I suspect that any Government Member would find it terribly embarrassing, in view of the wide-scale concerns that are being expressed by many people.

We are talking about the Olympics, and we all acknowledge that the Olympics are not merely about sporting activity. They are about artistic endeavour, culture and heritage. If we look back to the first Olympic games, many millenniums ago, we see that they brought together not only the best athletes from around the world, but the best poets and artists. Medals were awarded for artistic endeavour as much as for sporting prowess. It is important that we continue that approach with the modern Olympic games by promoting not only sporting activities for able-bodied and Paralympic athletes but a cultural Olympiad. The connection between arts, culture, heritage and sporting endeavour in the Olympics is well established.

Like everyone else, I was delighted when we won the great privilege and honour of hosting the 2012 Olympic and Paralympic games in London in 2012. I had the great fortune to be out in Singapore when the announcement was made, and it is a credit to all the people who put together the bid and lobbied for it that we achieved that. I want in particular to pay tribute to the Prime Minister. He has never been fully recognised for the work that he did in the last couple of weeks before the final decision was made.

I note that the Prime Minister, in all his lobbying, continually made the point that winning the Olympics was not about winning an event that would last for a few weeks, mainly in London. It was about the lasting benefits that it would bring for the whole United Kingdom—not only London, but every part of the UK. What he expressed very strongly was the crucial importance of the games’ legacy in terms not only of sporting endeavour, but of artistic and cultural endeavour. It is therefore a supreme irony that the Government have chosen to fill the hole in the Olympic budget by taking money from the grassroots bodies that ensure that we have vibrant sporting activity and vibrant artistic and cultural endeavour in this country.

As to sporting endeavour, we have seen cuts of £525 million to the various lottery bodies that fund grassroots sport, which means that we will have real difficulties giving young people the opportunity to be involved in the games’ legacy and ensuring that more people are active and become interested and involved in sports, whether by volunteering, supporting athletes or becoming athletes themselves.

Similarly, as my hon. Friend said in his excellent contribution, there will be a significant cut in funding for arts, cultural and heritage activities. He referred to the cuts to the Arts Council of England, the Film Council, the Arts Council of Northern Ireland, the Scottish Arts Council, Scottish Screen and the Arts Council of Wales. He said that, taken together, those cuts add up to more than £160 million. He referred to a further cut of more than £160 million, which is being made to the Heritage Lottery Fund, making the total more than £320 million. As a result, £525 million has been taken from grassroots sport, while the figure in arts and culture, according to my hon. Friend, is more than £320 million.

In his excellent contribution, my hon. Friend also referred to one other aspect of the cuts, although only in passing, and I want to draw his and hon. Members’ attention to it. He talked about the possible loss of revenue as a result of what is known in the trade as cannibalisation. Not all the money that people use to buy an Olympic lottery game ticket will be extra money, and some would have been put into one of the other lottery games. That means that those other games and therefore the lottery distributors will lose out.

Hon. Members do not have to take my word for that, because the problem is clearly documented in the Government’s own figures, which show that 59 per cent. of the £750 million to be raised from the new Olympic lottery games will come from cannibalised sales from other lottery games and that that will mean £140 million extra in cuts. My hon. Friend says that the cuts to art, culture and heritage amount to about £320 million, but we must add to that the Government’s estimate of a further £140 million, which brings the total much nearer to £470 million.

That will have a huge impact in all the areas that we are talking about, and it is hardly surprising that so many organisations are deeply concerned. Indeed, they are equally concerned, as my hon. Friend said, about the outcome of the comprehensive spending review, given the mood music coming out of the Treasury and the Government. It is no wonder that Dame Liz Forgan, the chairman of the Heritage Lottery Fund, recently said:

“Heritage funding was already due to drop because of the Olympics and 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”.

Peter Hewitt, the chief executive of the Arts Council of England, also expressed his concern, saying:

“There is currently a view in Whitehall and Westminster that the arts sector can absorb the impact of the Olympics raid on lottery funding without visible impact. This is not true.”

It is worth noting that, on hearing the recent announcement, even the former Culture Secretary, now Lord Smith of Finsbury, said:

“The Government made a serious error of judgment when they took their decision on this funding.”

How right he was, and he certainly should know what he is talking about.

Perhaps the Minister will give a cheery, positive response to my hon. Friend and the hon. Member for Tunbridge Wells (Greg Clark), who made an important contribution about the third sector and the disappointing response that we have had so far from the Minister responsible for it. It is slightly worrying, however, that when fears have been raised with the Secretary of State, they appear to have fallen on deaf ears. She referred to the additional contribution that the Arts Council will now have to make as “relatively small” and as

“just 5 per cent. of its total income”,

as if the cuts were small beer and would have no impact on anyone. As my hon. Friend and the hon. Member for Tunbridge Wells said, however, the impact will be felt largely by small organisations and small events right around the country. As my hon. Friend put it, they are the lifeblood of the arts, culture and heritage, but they will lose out. That is not small beer, and I hope that the Minister will acknowledge that.

We are told not to worry because there will be a £40 million legacy fund, which will fill the black hole that has opened up in the arts, culture and heritage funding system. As my hon. Friend said, however, the vast majority of that money has already been earmarked for two events—the opening and closing ceremonies—so there is not a lot of money there.

That is particularly worrying given that, on 6 March, in his excellent speech on the arts at the Tate, the Prime Minister, whom I began by praising for his success in bringing the Olympics to London, said that the arts were of

“fundamental importance to the country”

and assured us that there would be no return to boom and bust in the arts world. However, he is the Prime Minister of a Government who are making the very cuts that I am talking about. I congratulate the Government on the increased funding that they have provided to date, as my hon. Friend did; the Minister appeared to acknowledge that from a sedentary position. However, they are now moving us away from the boom, and it appears that we will have the bust. That is our real concern.

I will not repeat what my hon. Friend said, but he explained why the arts, culture and heritage are so important to the country. Everybody recognises that they are important for their own sake and that they make a contribution to tourism and to regeneration. Indeed, he referred, for instance, to the work on canals, and there are many other examples. There is, therefore, real concern.

The hon. Member for Sittingbourne and Sheppey rightly said that anybody can stand up and say, “It’s a disgrace that the Government are doing this” and that people should say a little about what the Government should do instead. He asked whether I believed that there should be increased taxation to pay for the games. Given that he asked me a straight question, let me make it absolutely clear to him that the answer is no. He also asked whether I believed that additional money should come from the London council tax payer, and the answer is no. He therefore has a straight answer to those questions.

The hon. Gentleman then asked whether I believed that an all-party group should go to the Treasury to make representations about the sums that might be available, whether from the analogue sale or from unclaimed assets, and the answer is yes, I do. I would be happy to join him, just as I was when he suggested that there should be an all-party, cross-House Select Committee to keep an eye on the Olympic games.

Could I add just one note of caution as regards the all-party consensus on such an approach? There is a danger in pinning the whole answer on an easy option such as unclaimed assets. The hon. Member for Sittingbourne and Sheppey talked about the pensioners who lost £125,000. I have been campaigning for them for six years, since autumn 2001, when their company first went bust in my constituency. This is not a question of an easy option of saying that the analogue spectrum or unclaimed assets are available. The principle is that the Government—the Treasury—should find funding for the Olympics, in this case, without devastating areas such as arts and heritage. The Treasury should find the funding. The detailed mechanics of where it comes from are for the Treasury to sort out. Any cross-party approach should not pin its hopes on one simple solution.

My hon. Friend is right, and has obviously been looking at my notes, because I was going to give the hon. Member for Sittingbourne and Sheppey a few additional suggestions for putting cross-party pressure on the Government to do something about the problem. I should be interested in the Minister’s reaction to the couple of suggestions that I have.

I want to suggest to the Minister that, as money is being removed from lottery distributors or funds, there may be a way in which, without taking money away from the Treasury, we could help them to grow the money that they have available. I suggest two ways in which that could be done. The first would be a change in the tax regime: at the moment the lottery is taxed on its turnover, but I am assured that switching the taxation on to profits—so-called gross profits tax—would allow Camelot to invest more of its revenues in growing the business. That, in turn, going by its evidence to the Select Committee on Culture, Media and Sport, would raise an additional £50 million per annum for lottery good causes. We should be well on the way to making up the loss. That would require a change in the taxation regime, but the figures show that it would happen in such a way that not only would the Treasury not lose money, it would gain a little, which, in turn, it could contribute to paying for the Olympics or meeting the shortfall of the arts, heritage and cultural sectors.

The other approach, which would entail no difficulty or cost to the Treasury, would be to clamp down on the legal grey area of so-called lottery-style games. Those are causing leakage of money—some estimates suggest as much as £45 million per annum—that would otherwise have gone to the national lottery. Those two suggestions would go a long way towards supplying the shortfall that currently exists. I hope that the Minister will respond to those, or will at least be prepared to discuss them with the Treasury.

I have a small third suggestion to add, because the hon. Member for Sittingbourne and Sheppey will obviously be anxious to draw up a long list for his all-party grouping to take to the Treasury. It does not cost a lot, but it is bizarre that alongside the special Olympic lottery game an Olympic lottery game distributor has been set up. Why do we need a body, which costs money, to allocate the money, when we could just give it to the Olympic fund, and reduce the take?

I am at a loss as to why the Government have done something that the hon. Member for Sittingbourne and Sheppey calls bad politics, and which causes those on the Government Benches acute embarrassment, when there are other ways to proceed, and when we know that it will cause deep difficulties in the arts, culture and heritage sectors: they are critical to ensuring the legacy of the games that the Prime Minister has described as crucial.

In a note on this issue, the head of heritage services in my council area, Stephen Bird, said:

“The supreme irony of the loss of Lottery funds to London 2012 is that museums will now have less opportunity than they might have had for contributing to the Cultural Olympiad. This also means that the much-vaunted “legacy” will not be a rich one but an impoverished one.”

That is right. The Government’s decision is fundamentally flawed and they should seriously think again.

It is a great pleasure to be speaking under your chairmanship, Mr. Bercow; it is the first time that I have done so. I congratulate the hon. Member for Chesterfield (Paul Holmes) on securing today’s important debate. I think that he and all hon. Members present would agree that it is sad that more hon. Members are not present to debate a hugely important aspect of what is happening to the arts and heritage sector. I also congratulate the hon. Member for Sittingbourne and Sheppey (Derek Wyatt) on coming to the debate in a spirit of cross-party consensus, and proposing possible solutions, and my hon. Friend the Member for Tunbridge Wells (Greg Clark) on his important contribution on the voluntary sector. Finally, of course, I congratulate the hon. Member for Bath (Mr. Foster) on his ebullient and pacy speech setting out the Liberal Democrat position.

Figures on the cuts to the lottery, and therefore to arts and heritage, have been bandied about, and at one point I thought it might help if a whiteboard were put up in the Chamber, so we could write them down and reach some agreement on their significance. What we know is that £675 million is going from lottery good causes to the Olympics. With specific reference to arts and heritage, we know that the Arts Council of England will lose £112.5 million—a huge and significant sum when one considers the total arts budget—and that the Heritage Lottery Fund, another incredibly important distributor, will lose £161.2 million. We can add to that the fact that the arts in Northern Ireland, Wales and Scotland will lose £25 million and the Film Council will lose £28 million. Pretty soon a huge sum is reached—something like £1 billion in total.

As has been mentioned, it is also necessary to take into account the new Olympic lottery games. The hon. Member for Bath pointed out that those games will cannibalise the existing lottery: the people who play them will not play other lottery games, so their money will not go into the lottery. I can update him, because, as I understand it, the National Audit Office has considered the matter and increased the estimate of the cannibalisation effect from the Government’s figure of 59 per cent. to 77 per cent., which equates to £575 million. That is the kind of money that will no longer be available to good causes, and it should certainly be added to the figure. Probably about £1.5 billion will come out of good causes overall. That is a huge impact.

What depresses most hon. Members is the fact that much of that additional funding has been taken to cover the Government’s embarrassment. The hon. Member for Sittingbourne and Sheppey rightly took the realistic and common-sense view that one makes a bid to win, and that sometimes the figures that one presents, just as with any business plan, do not necessarily exactly equate to the way the figures will turn out. However, one is entitled to ask how on earth the budget for the Olympics can effectively triple in less than two years. That is an appalling indictment of how the Government went about bidding.

There are two very clear reasons for the enormous increase in the Olympic budget. First, no provision was made for VAT in the original Olympic bid. That is a sum of £840 million—a pretty big slug with respect to money coming out of the lottery. There is also the new contingency fund of £2.7 billion, another cost that was not put forward in the original budget. Those two clear mistakes made by those who made the bid for the Olympics, involving huge sums that were not put into the original budget, are mistakes for which our arts and heritage sector must pay.

It is important for the Minister to understand, if he does not already, the enormous anger that is felt in the arts and heritage sector about those raids. I do not think that that is because people feel that they should not necessarily make any contribution. It is the way in which the situation has come about. On 6 March, 500 or 600 people were dragooned to Tate Modern to sit at the feet of our Prime Minister during his legacy tour. Having not made a speech on the arts for nigh on 10 years, he decided to share his views on the arts with the arts world and to claim the credit for what he called the arts renaissance. People sat there listening to his fine words, which referred to a golden age for the arts. Just 10 days later, the Secretary of State for Culture, Media and Sport stood up in the House to tell the arts world that its golden age was over, and that, as far as she was concerned, it existed simply to fund the mistakes made in bidding for the Olympics.

Still the Government carry on blithely as though nothing had happened. The Chancellor of the Exchequer, who a few months ago sent letters to all arts organisations asking them to budget for 7 per cent. cuts in the comprehensive spending review, had the chutzpah to announce at the Brighton festival:

“I do intend to make sure that what happens over the next period is not detrimental to the arts and will not allow the fact that we are having an Olympic Games to come in the way of the arts.”

How does one square that statement with the fact that about £1.5 billion is being taken away from the arts?

Is it any wonder that those who have been working in the arts or have cared about them feel passionately about the subject and able and willing to speak out? It is no wonder that the former Secretary of State for Culture, Media and Sport, Lord Smith of Finsbury, said in the other place that

“I absolutely recognise the deleterious impact that the recent decisions about lottery funding have had, particularly on the arts, heritage and, importantly, on community sport. It is difficult to overestimate the impact that these decisions have had on the cultural sector.”—[Official Report, House of Lords, 17 May 2007; Vol. 692, c. 342.]

Is it any wonder that the former Under-Secretary of State for Culture, Media and Sport, the hon. Member for Stoke-on-Trent, Central (Mark Fisher), tabled an early-day motion that condemns the Government and the redirection of up to £675 million of national lottery funding to meet increased infrastructure costs, and which

“notes that such a diversion will lead to profound funding cuts for the very culture that the Prime Minister hailed as a key reason for the UK's successful Olympic bid; further notes that such cuts in Arts funding threaten to tarnish what the Prime Minister recently called this ‘Golden Age' of British arts”.

Is it any wonder that so distinguished a Labour backbencher as the hon. Member for Sittingbourne and Sheppey should find the time to come to this debate and call the Government’s decision “bad politics” and “incredibly embarrassing”? As the hon. Members for Bath and for Chesterfield pointed out, numerous practitioners of the arts have had their say.

Nicholas Hytner said:

“There is a spectacular lack of logic in using money earmarked for the arts to plug holes in the Olympic bills. The money raided from the lottery will largely affect small, innovative, experimental organisations and individuals who are the lifeblood of creativity in the UK. Pulling the carpet out from under them and nobbling their money is undermining the future of our major arts institutions.”

Liz Forgan, the chairman of the Heritage Lottery Fund, said:

“This is bad news for the nation’s heritage…It will impact on our ability to invest in the nation’s heritage at exactly the time that it is being showcased to the world.”

Peter Hewitt, of the Arts Council of England, said that

“£63m will need to be found over four years from 2009 and will sadly impact on the arts at local level in every corner of England - with very many youth organisations, festivals, dance and theatre tours, exhibitions, concerts and other activities being turned down for funding”.

I could go on, although you will be delighted to know that I will not, Mr. Bercow.

Is my hon. Friend aware that there are 53,000 voluntary arts groups in England, for which the only accessible Arts Council funding comes from the grants for arts lottery fund, and that the diversion of resources to the Olympics will cut by about a third the Arts Council funding for those local community-based groups?

I am aware of that, and I thank my hon. Friend for bringing it to my attention. It echoes the point made by the hon. Member for Sittingbourne and Sheppey about the bad politics of cutting grants to so many of those voluntary organisations. As I said, I could go on: I could quote Tony Hall, the chief executive of the Royal Opera house; I could quote Jude Kelly, the artistic director of the South Bank centre, a great jewel for the nation that will reopen this weekend thanks to a national lottery grant. The Minister knows all that, and he knows the sheer depth of anger about it.

It is not just about money; there is a principle at stake. The national lottery was set up with the clear principle of additionality. The lottery was meant to fund things that the Government would not normally fund. It was meant to create a pot of money on which charities, grass-roots sports organisations, arts organisations and heritage buildings and institutions could draw. It was a magnificent achievement, which was going to secure long-term funding and capital for those organisations. It was precisely set up with a view to keeping the grubby hands of politicians out of the till. Sadly, the Government, who long ago ceased to pay much attention to the additionality principle, have now thrown it out of the window completely with their raids on the lottery.

I apologise for interrupting the flow of the hon. Gentleman’s excellent contribution. I urge him to be a little cautious with his condemnation of the Government on additionality, however. Will he confirm whether the Conservative party included in its manifesto a pledge to raid money from the lottery to pay for its club-to-school sports scheme?

I praise the hon. Gentleman for his huge attention to the detail of the Conservative manifesto, which exceeds mine by a factor of 10.

Our arts and heritage organisations are astonishingly efficient. Since I took on this shadow role, I have seen that they are among the most efficient public sector organisations in the country. Many of them survive on what is almost peanuts: we are talking about sums of £50,000, £100,000, £150,000. When they see that £400,000 has been spent on the universally acclaimed logo for the Olympics, having pared themselves to the bone to provide first-class arts and heritage services for their localities and for the country, one can imagine how they feel.

Another reason why people feel so angry is that the Government’s decision has set the arts and sport against each other. I echo the comments of the hon. Member for Chesterfield and others: sport and the arts should co-exist. The Olympics should be a fantastic opportunity to showcase our arts and heritage to the world, and to invest more in them if we can. Sadly, that opportunity has gone and the arts and heritage now see sport as having robbed them to pay for its activities.

As the Government scrabble about, trying to square circles and pretend that the raid on the lottery is not as bad as it has been, confusion has emerged as a result of the idea that the money will somehow eventually come back. We are told that there is a legacy fund of something like £40 million, of which some £28 million may or may not go back to the arts and heritage. That is described as venture capital. If a venture capitalist got £28 million back from an investment of £300 million, they would be fired pretty quickly.

We are also told that the sale of the land will somehow make its way back to the lottery. We are not told whether the lottery should expect a percentage of or all the profit from that sale; we are not even told the current value of the land. The Minister tells anyone who dares to suggest that he might put an estimate on the value of the land that they should grow up—

Or he says, “Come on” from a sedentary position. We only want more details, because it is no good telling the arts and heritage sector that in five, six or 10 years’ time—we do not even know when the land might become available for sale—that somehow there will be a pot of money at the end of the rainbow. Such an approach is ludicrous. The Government raised this as an issue and an opportunity, but they now refuse to discuss it in detail because should anyone possibly ask them a question about what they mean, they regard that as immature.

In last month’s debate in the other place, the Government spokesman hinted that if the contingency fund—the £2.7 billion—is underspent, it will come back to the lottery. Will the Minister elaborate on that, and confirm that that is the position?

As the Prime Minister leaves office in the next two or three weeks, having made what the hon. Member for Bath describes as a magnificent speech on the arts, it is sad that his arts legacy is in utter disarray. The Government like to claim that they have invested more in the arts, without saying that much of the investment was to make up for the shortfall caused by withdrawing charging. They have slashed the heritage budget by millions and millions of pounds, have entirely ignored their own report, prepared by Sir Nicholas Goodison, on ways of bringing more money into the arts—not a single Minister, including the one who is present, has bothered to meet Sir Nicholas Goodison, despite his work—and now we have the lottery raid.

The Government have no coherent policy on the arts. We need long-term investment, positive support from the Government and a re-examination of the Goodison report. We do not need the Liberal Democrat policy, which I understand is not to build an Olympic stadium in order to save £600 million.

I am pleased to be replying to this debate and to see you in the Chair, Mr. Bercow. It is the first time that you have been in the Chair when I have spoken in this Chamber.

This debate is important to the arts and heritage sector in this country, and I congratulate the hon. Member for Chesterfield (Paul Holmes) on securing it. There has been concern and discussion over the past few weeks about the nature of arts funding. It had been going on before because this is a comprehensive spending review period. It is right that we have this debate, and I am pleased that passion has been shown across the Chamber and that a consensus has emerged that arts and heritage are vital to the life of this country. On that basis alone, although I cannot agree with all that has been said, I congratulate the hon. Member for Bath (Mr. Foster), my hon. Friend the Member for Sittingbourne and Sheppey (Derek Wyatt), and the hon. Members for Wantage (Mr. Vaizey) and for Tunbridge Wells (Greg Clark) on their participation.

The debate has been a good opportunity to reflect on the achievements of the arts, culture and heritage over the past few years. Culture and heritage in this country are outstanding and are important to millions of people. They impact hugely on our international reputation and are economically vital. Changes in cities such as Manchester, Newcastle, Glasgow and Liverpool have been led by cultural regeneration.

Concerns have been expressed today, and I shall come to those a little later, but it is worth reminding ourselves briefly of the context. I say that because it took the hon. Member for Chesterfield 19 minutes to put on record the success that has occurred over the past 10 years because of this Labour Government’s investment. It is easy to forget that just 10 years ago, many of our cultural and heritage organisations were struggling to survive; they were caught in a downward spiral of deficits and underfunding. The financial fragility in the arts had a hugely debilitating impact. Some 30 out of the top 50 regional producing theatres were in deficit, many were technically insolvent, and there was no sign that the trend would be reversed. I must say to the hon. Member for Wantage that that was the legacy of a Conservative Government, and I was surprised that he sought to attack the free entry to museums that has been a cornerstone of the revival over the last period.

I am not attacking that; I am attacking this Government’s attempt to elide the compensation that they gave to museums when they were prevented from charging with the phrase “increased investment in the arts”.

Let us be clear that when we came into office, Government investment in the arts stood at just £187 million a year. This Government have provided a 73 per cent. real-terms increase to £412 million this year. The increase has clearly paid off in the sector, because a 72 per cent. increase in the budget for theatre led to an audience increase of 40 per cent. and to a 60 per cent. increase in education work.

The groundbreaking creative partnerships initiative has allowed more than 610,000 young people to be involved in creative projects. Grant in aid funding to museums has risen by 29 per cent. in real terms since 1997. Free admission has brought about an 87 per cent. increase in visits to formerly charging museums since 2001, representing an extra 29 million visits. Membership of English Heritage is at its highest level; visitor numbers are running to 11 million a year. Heritage open days have enjoyed increased success and have attracted more than 1 million people in the past year. The listed places of worship scheme has given more than £56 million to places of worship across the UK since 2001.

I say all of that because it is clear that part of this debate has been about the core funding that has gone to heritage organisations. Such funding is yet to be determined in the comprehensive spending review, and I understand the anxiety of hon. Members and the sector during this period. As I have said, it is my belief that we must build on success, tight though the Treasury has indicated that the CSR will be. All that has happened is unaffected by the decisions on the lottery, which I shall discuss.

I agree with almost everything that the Minister has just said. As I said in my opening comments, the cuts under the previous Conservative Government were appalling. It is excellent that things have been restored during the past few years, which is why no one wants a return to the bust period after the boom period—we do not want to go back to where we were 10 years ago.

Will the Minister deal with a specific point that I have made? We were talking about the increased funding for arts in particular, but the heritage world has not done so well. English Heritage has faced real-terms cuts, and it is much more on a knife edge. Private heritage groups cannot bid for DCMS money and must rely exclusively on lottery funding. If lottery funding is to be even more squeezed because of the Olympic-inspired cuts, such groups will lose out even more in what is already a poorly funded area compared with the arts.

We have had long debates in this Chamber about heritage and we had a Select Committee inquiry on heritage investment. Let us be clear. Five or six years ago, a quinquennial review of English Heritage showed that the organisation needed modernisation. That has been led superbly by Sir Neil Cousins and Simon Thurley. It was not the right time to increase the budget of an organisation that was in need of modernisation, but English Heritage was able to make efficiency savings, which it put back into the heritage sector. The combination of investment in museums and heritage and funding from the Heritage Lottery Fund resulted in more being spent on heritage last year than has ever been spent on the sector in this country’s history. That is a statement of fact.

Yes, the hon. Gentleman is entitled to make his case for further funding for English Heritage, and the Government have made our intention clear in the heritage protection White Paper. It is wrong to suggest that the community has been starved of funds during that period. If that were so, we would simply not have the increase that we are seeing in the number of visitors and open days and in the maintenance of the fabric of our buildings and institutions

Museums, galleries and, to some extent, archives have certainly not done as well as the arts, and would argue that they have not had the funding to meet the above-inflation cost of acquisitions, books and digitisation

We are moving towards the Select Committee inquiry, but before I return to the central point let me say that I encourage the hon. Gentleman to look at the page on acquisitions in the Museums, Libraries and Archives Council report that was published two or three months ago, where he will see how our national museums stack up against those of our colleagues in Europe. He will see that the acquisition budgets have held up particularly well and that they are particularly strong in this country. I am sure that he will acknowledge the increase that allows the National Heritage Memorial Fund to ensure that our museums can make acquisitions during the next period.

Given what has been said, it is important to say that in the past few weeks I have of course spoken to cultural organisations and small arts groups, and I recognise that there is real concern about the impact of the changes to the Olympic budget announced in March. It is true that for a limited period of about four years, some lottery projects that might have gone ahead will have to be postponed or will be unable to go ahead. I do not accept the suggestion that that is a smash-and-grab raid, which sounds more like a Dale Winton programme than reality, or that it has shattered the country’s arts fabric. I believe that we are talking about a huge opportunity for this country. We cannot, on one hand, say that it is hugely important for the nation that the Olympics proceed and, on the other hand, not accept that it is precisely the Olympics that will fund this opportunity.

I remind the Chamber that constituents in east London are similar to mine. They are some of the poorest people in the country and include some of the poorest youth in the country, who need sport and arts infrastructure. That part of the country was severely affected by the huge bombing that it experienced during the second world war and it still needs investment. If that is not a case for Olympic funding, I cannot think of another. That is why, in the detailed negotiations between the Government, the Mayor of London, the Secretary of State for Culture, Media and Sport and the Treasury, we have sought to establish a balanced and fair pot of funding.

Of course, during those discussions one must have priorities, and hon. Members may depart from the consensus that we arrived at on the Olympics. I accept that my hon. Friend the Member for Sittingbourne and Sheppey has led on these issues, particularly funding, for a considerable time, but in the end one must be clear about where the funding comes from. The debate has reflected a basic tenet that I cannot accept. I believe that lottery funding is appropriate for the Olympics precisely because of the problems in that part of London and the games’ huge importance for the aspirations of young people in this country, and so that culture and arts in this country can go forward.

Does the Minister agree with the Secretary of State who said in the Financial Times that the loss of lottery funding for the arts was very small?

As I said in my opening comments, the Secretary of State was referring to the overall spend on the arts, which has increased by 75 per cent. Lottery funding remains available to enable the arts to go forward. Lottery spend on heritage to 2019 is £1.9 billion, so it is disingenuous to suggest that this is a smash-and-grab raid that would leave the sector entirely shattered.

I acknowledge the concern in the sector, but it is right to put on record the cultural life of this country and our legacy from that. The hon. Member for Chesterfield should look at the work that the MLA has done on the Olympics and at the 30 per cent. increase in tourist revenue for Sydney after the games there. The net gain to the sector here after the Olympics will clearly be in tourism, heritage and the arts sector. That is why it is so important that we all make that investment.

I confess that I am now totally and absolutely confused. I accept entirely that the additional cut from the arts, culture and heritage sector will not leave it entirely shattered, but does the Minister accept the simple premise that as a result of Government decisions those sectors will have less money to spend? Can he explain how cutting that money will enable us to have more legacy than if we had not cut it? That is what he seems to be implying.

Can we have some consensus among the Liberal Democrats? One Liberal Democrat Member is saying that the sector will be left shattered, and the other is saying that it will not.

This decision has been made for the next four years in the run-up to the Olympics and we have come together to establish a budget that includes contingencies. After that, it is absolutely clear—indeed, axiomatic—that those who gain from a successful Olympic games are precisely the sectors that we are talking about. That is why we made the decision and why we have come to this arrangement. Of course I accept that less funding will be available from the lottery for arts and heritage organisations, but I welcome the decision to protect funding from the Big Lottery Fund to the many organisations that do arts, creative, sporting and heritage work.

On youth exclusion, is the Minister aware that the Big Lottery Fund has decided in principle to cut the young people’s fund, which helps to promote youth inclusion?

I am aware of the rumours to which the hon. Gentleman refers, but I refer him to the statement—

John Bercow (in the Chair): Order. I am sorry to interrupt the Minister, but it is time for the next debate.

Sitting suspended for a Division in the House.