rose to call attention to the effect on heritage and the arts of the transfer of lottery funds to the 2012 London Olympic Games; and to move for Papers.

The noble Lord said: My Lords, on 16 March this year, Tessa Jowell, the Culture Secretary, transferred substantial funds from the lottery funds to the Olympics. Combined with the money that was transferred a year ago, the total transfer now amounts to £675 million—a huge sum. Ten days before her speech, the outgoing Prime Minister made a speech in the Tate Gallery on the arts. He had not made a speech on the arts for the past 10 years—his last brush with the arts was “Cool Britannia”. In that speech at the Tate, he made a statement with which no one in this House could disagree. He said that the arts were,

“of fundamental importance to the country”,

and that there would be no more “boom and bust”. Yet 10 days later, the Culture Secretary slashed support to the arts and heritage. So when the Prime Minister says boom or bust, it is boom for Tony and bust for Tessa.

The trouble with the Prime Minister is that, when he stumbles on the truth, which he does from time to time, he picks himself up as though nothing has happened. When I read and hear his speeches, I get a feeling that here is a man who does not often open a book of poetry or go to the theatre or opera—or even open a book at all. In fact, his first confrontation with a novel may well be the fiction choice of the month, his own memoirs.

Whatever I say about the Prime Minister is left at the post by the Master of the Queen’s Music, Sir Peter Maxwell Davies, who referred to,

“an utterly philistine government, whose Prime Minister recently read a platitudinous speech about the … arts in Britain, when his own horizons are rock and pop”.

We know that the outgoing Prime Minister likes Liam Gallagher and that the new Prime Minister likes the Arctic Monkeys—not much of a regime change there, I suggest to the House.

What I object to particularly in Tessa Jowell’s statement was that she referred to this massive transfer of money as a loan. It is not a loan; it is an act of larceny. Any Cabinet Minister should be able to distinguish between a loan and larceny. She went on to say that it would unlock the ambitions of young people. It will not for those in the arts or those who work in voluntary heritage activities.

In 1992, I was the Home Secretary who set up the National Lottery. I persuaded John Major and Norman Lamont, who were not too keen on it, to create a new source of money for what no Government would be willing to fund, appropriately or sufficiently; namely, the arts, sport, the heritage and good causes. That was the purpose of the National Lottery. In the White Paper, I had a cast-iron guarantee from the Treasury that lottery money would be additional money for public sector projects and not a substitute. That was the promise from the Treasury. I cannot help feeling that a Treasury promise is rather like—I think that it was Jonathan Swift who said this—pie crusts, made to be broken. That promise has been fundamentally broken. The lottery, as it was set up, provided 25 per cent of its funds for the arts, 25 per cent for heritage, 25 per cent for grass-roots sports and 25 per cent for charities. They now get 16.6 per cent. That is a huge change.

I come now to the various activities that have been hit by this decrease. Since 1997, the Government’s record on heritage has not been good. We know that they do not like history. Many new Labour people thought that history started in May 1997—even the Minister is nodding—and had little love for our heritage. There is no doubt about that because, since 1997, there has been a real-terms cut in heritage money, with no advance at all on £97 million. The Minister is looking for confirmation on that from his department, but I got the figures from his department. The substitute for that has been the Heritage Lottery Fund, which became the main funder of heritage activity in our country. The body that pulls them together is Heritage Link. It represents a massive number of organisations— 81 across the country. In the next few years, its money will be reduced from £255 million to £180 million and is planned to be reduced to £120 million. That is a massive cut.

What is at risk? Let me give one or two examples. It so happens that today, in Norfolk, in the fenlands, the Royal Society for the Protection of Birds is opening a visitor centre in Lakenheath Fen, in a remarkable recovery of farmland being turned into wildlife-rich fenland, with reed beds and biodiversity. That is a tremendous improvement of the landscape. That centre was funded by the Heritage Lottery Fund to the tune of £546,000. Fortunately, it is complete and is being opened today, but that is the sort of project for which money will no longer be available. If the money is cut from £255 million to £120 million, there will be lots of noes in future to landscape and other projects.

There are also 1,400 schemes for churches and historic town centres from Gateshead to Great Yarmouth. They involve modest amounts of money and protect and enhance the environment in one way or another, using volunteers. Much of the money comes from the National Council for Voluntary Organisations. The Heritage Lottery Fund also supports our craft industry—lacemakers, for example. It has launched a scheme to create 20 internships in glass-making, making coloured glass for windows. It will not be able to initiate such schemes in future on anything like the scale that it has done.

The fund has also introduced training courses for volunteers on how to maintain places of worship, whether that be a mosque, a synagogue, a temple, a church or a cathedral—training volunteers how to help to maintain the fabric of our nation. Again, there will be much less money to go on those projects. The drop in money is dramatic. This year, there is £261 million. Compared with the money announced last year, £250 million has been taken from the Heritage Lottery Fund and the bit of the good causes fund that goes to heritage.

Let me mention museums, because I am involved in that area. The Minister was involved in it, too. He was appointed by a Conservative Minister to a quango to look after libraries and museums and he did a wonderful job. We recognised his worth before the other party. Museums have not fared well under this Government. Let me give the figures: I have them from the Minister’s department. I asked the Library for them and it produced beautifully tabled figures; they must be right. In 1997, the government national grant to the main museums was £205 million. In 2007, it was £320 million. That is a good increase, £115 million, but in real terms—these are again the figures that I got from the department—it is £53 million, £5 million for each of the 10 years.

The Government boast that more people are going to museums because they have abolished admission charges. In the last year for which there were admission charges for our major museums, as the report from the National Audit Office showed, income was £18 million. What do they get in exchange? Five million pounds. That is not a success story. That is why, in 2005, 60 per cent of our museums said that they could not add to their collections.

I am involved in museum work because I helped to start a new museum during the past two years and I am the principal fundraiser for it. It is the Cartoon Museum, just 100 yards from the British Museum. There, we tell the whole history of one of the art forms that we created, from Gillray, Rowlandson and Hogarth in the 18th century right up to date with Peter Brookes, Steve Bell and Martin Rowson. We had to raise all the money ourselves. There was not a penny from the Arts Council or local government. I do not mind at all. We do it. But if the Minister wants to help a little museum such as ours, I suggest that he gives a dinner at one of the houses that the Government have, such as Lancaster House. I will bring along some sponsors to raise money for the Cartoon Museum. I will give the patter; he can collect the money. The Government have not done well by museums, as every museum director will tell you today.

I now turn to the arts. The general fund for the arts is through the block grant from the Government, but the Arts Council is fundamental for the funding of small activities in the arts. This year, it is suffering a cut of £112 million, as was said in an Answer in the House of Commons yesterday, but the Minister forgot to mention that, last year, it suffered a cut of £63 million as a result of transfer to good causes from the arts. That is quite a cut. It is not £112 million; it is more.

What does that mean? The lottery funds for the Arts Council go to small operations and activities. The budget for those is £83 million. This year, it is £54 million and will then be reduced to £24 million. Ministers say, “We are only going to cut the arts by 5 per cent”. I am sufficiently numerate to know that a cut from £83 million to £24 million is not one of 5 per cent but one of 75 per cent. The sort of activities hit by that are all the ancillary activities across the country—brass band support, handbell ringer support, dramatic societies, operatic societies, dance groups and young actors. Of those grants, 86 per cent are less than £5,000 and go to small local activity groups and individuals.

I had a letter from the Secretary of a Member of this House who is a senior adviser to the Government—this is supposed to be a joined-up Government. She wrote a painful letter saying that, part time, she writes plays and is a director. She said that she is the sort of person who will be hit by the cuts. I am talking about those people at the end of the arts world all over the country—not the great arts institutions—being creative, putting on plays in tiny halls with some of the actors being voluntary, some of them professional, getting by, writing modern plays about the dilemmas of today. Those small organisations are innovative, experimental and imaginative.

Sport is also involved. The Council of Physical Recreation claimed that it had a much bigger rout, with £540 million diverted to the Olympics. That will hit local provision, smaller pavilions and multi-use games areas.

The Minister and I are very old friends; we go back a long way. He once published some of my books, but he has recovered from that. Today, he has to defend the indefensible and excuse the inexcusable. He is by far the most cultured member of the Government and ought to be Secretary of State—I hope that I have not doomed his political career. However, if he is going to say that the private sector should make up some of this money—he is nodding already and will say that Mr Serota went to America last week and raised a lot of money for the Tate—then give us the same tax breaks as Americans have. Let a British citizen who gives money to a charity or to an arts or heritage organisation deduct that from his top level of salary, which is what Americans do. That is a much greater tax break. Every $60 given to a cultural organisation in America is worth $100. For a 40 per cent taxpayer in the UK, the tax benefit today is not 40 per cent if you give; it is about 20 per cent. Therefore, you cannot rely on rich philanthropists, such as Mr Hintze, who has bailed out the Wandsworth Museum. The Government have a big responsibility here.

Yesterday, Tessa Jowell mentioned the cultural fund of £40 million. It is not her money to spend; it comes from the Big Lottery Fund. Does the Minister remember what was said about that fund? The noble Lord, Lord Davies of Oldham, who is sitting next to him, should remember, because when the Bill was going through this House, he said:

“Of course, we all support the spirit. I make no bones about it: we are not going to resile in any way, shape or form from the spirit of additionality”.—[Official Report, 13/3/06; col. 1053.]

The programme announced yesterday is pure additionality; Tessa Jowell has just put £6 million into the £40 million. This is another pie crust broken.

The activities that I have been talking about are subject to a treble whammy. First, there are the cuts of £675 million, which have already been announced. Then there is the lottery game, which must raise £715 million. All these institutions fear that that game will suck money from the rest of the fund. I think that their fear is justified. Then there is the spending round later this year. Most of the arts organisations to which I have talked are planning for a real-terms cut that will probably be substantial. It will be the first test of whether Gordon Brown, who has already agreed all this, really supports culture.

Finally, I ask the Minister to make one specific declaration today. At the end of the day, societies and civilisations are remembered not for their athletics but for their aesthetics. They are remembered for their painting, their music, their drama, their poetry, their architecture and their landscape. That is what marks out the memory of civilisations. I hope that the Minister will say at the Dispatch Box today, “We have taken this money from the lottery but we are not going to take any more”. I would like the Minister to make that pledge. He is scowling already. I make the same recommendation to the noble Lord, Lord Coe. There is a great deal of anger about what has been done to these bodies, which will suffer as a result of money going to the Olympics. The Minister’s reputation is becoming a bit tarnished by what is becoming the great maw of public spending. One way of improving that reputation would be to say, “I am not going to take any more money at the expense of the arts, heritage and good causes”. That would do the Olympic cause some good, and I hope that the Minister will make that announcement today. I beg to move for Papers.

My Lords, I congratulate the noble Lord, Lord Baker of Dorking, on securing this important debate. I have some sympathy with a number of the points that he made, although I could not agree entirely with the detail.

I declare a number of interests in the arts. I am director of the Clore Leadership Programme, chairman of the London Cultural Consortium, the Donmar Warehouse and the Wordsworth Trust, and I am on the board of the National Theatre. I am in some difficulty, because I believe on the one hand that huge benefit can and will come to this country and to many people in this country from the Olympics and Paralympic Games in 2012, including from the vast range of cultural activities that will and should take place before and around the Games. On the other hand, 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. The noble Lord was absolutely right that the principal impact on the arts is on the grants for the arts scheme, which provides small grants to individuals and small organisations, particularly organisations that are not regularly funded from Arts Council England’s mainstream budget. They are already suffering from the decisions that have had to be taken to reduce the grants for the arts programme.

I have talked to people right across the cultural sector, and virtually everyone engaged in the arts believes that money has been taken away from the arts to fund the Olympics. That perception is a real tragedy. The Government made a serious error of judgment when they took their decision on this funding. I do not particularly blame the DCMS. I see the hand of the Treasury in this, and I suspect that the DCMS fought valiantly to minimise the damage that was going to be caused.

This has set the arts against the Olympics. That should absolutely not be the case, because the two should go hand in hand. The original de Coubertin vision was that sport and the arts together would have a great festival. I believe that that can still be the case. In the next few weeks, I suspect that we will hear more about the plans for the cultural Olympiad—the cultural activity around the Olympics and in the run-up to it. There has been enormous enthusiasm in the cultural sector for that concept until now. The decisions that have been taken on lottery money have done great damage to that enthusiasm. I believe that it is possible to rekindle the enthusiasm, but we need to put some effort into doing it.

How can all this be put right? I fear that the raid on the lottery cannot now be reversed, at least in the short term. I am sad about that. It was a mistake, and I hope that at some stage the Government will admit that. It is especially so because it comes after the first blow—the introduction of the Olympic lottery, which is already siphoning some money away from the mainstream National Lottery and reducing the money for the good causes. The way to put things right is through the Comprehensive Spending Review, which is due to be announced in the autumn and where decisions will probably be made at an earlier date.

At the moment, the DCMS is canvassing on options for funding for the arts and the spending review, which range from the status quo plus an allowance for inflation, to a cash standstill and on to cuts of 5 per cent or even 7 per cent per year. I cannot say what a disaster it would be if, on top of what has happened to the lottery, cuts of any kind—even a standstill is a cut—were to be made in funding for the arts. At the very least, an increase for inflation is needed. Let us remember that these would be rounding figures for any other department of state. They would be small change for the Department for Work and Pensions or the Ministry of Defence, but they are absolutely vital, and make a huge difference, to the all-important arts.

In contradistinction to the noble Lord, Lord Baker of Dorking, I would argue that the arts have been a huge success story for this country, and for this Government, in the past 10 years. Recent decisions have put that success in danger. I plead as passionately as I can with the Government not to make it worse later on this year.

My Lords, I, too, thank the noble Lord, Lord Baker, for initiating this very important debate. As all of us interested in this area know, despite the greatness of this country’s cultural endeavour, this subject is somehow a poor relation in the political arena. Too often, it struggles to be heard, and, too often, it is treated as an optional extra. Today, we are talking about the result of both these responses.

Ever since it became clear that the financing of the 2012 Olympics was running into difficulty, the arts and heritage sectors have feared that they would be targeted. They were right to worry. Only two months ago, as the noble Lord, Lord Baker, said, the Prime Minister made one of his so-called legacy speeches—a speech about the arts. He referred to his pledge that the arts should be,

“part of our core script”.

Gordon Brown has said something similar:

“The arts sector is not a sideshow”.

This of course was precisely the line taken in London’s bid for the 2012 Games and one of the main reasons why it won.

The modern Olympic movement was created by Pierre de Coubertin, who was not only an amateur boxer, but also a part-time poet. His vision was not just about sport, but about bringing together culture and sport. London’s bid for the 2012 Games outlined a vision for a cultural Olympiad, a festival celebrating the diversity and richness of culture in London and the United Kingdom. There was more: the London bid was unique in promising that this cultural Olympiad would be held across the whole country and not just confined to the Olympic city.

It may be asked whether those who will travel to London for the Games will pop into the National Gallery between races. I am more optimistic. The Games done well will mean that everyone across the length and breadth of the country will have, through museums, galleries and festivals et cetera, enough opportunity to feel involved with the Games. But the voluntary arts and heritage groups, which are rooted in almost every local community, are crucial in ensuring that this cultural Olympiad does what the London bid promised. Here comes the catch: the Olympic organisers have admitted that they will provide “very little funding”, so the money has to be found by the various arts and heritage organisations. As we have already heard, this latest diversion of lottery funds hits them particularly hard.

The chief executive of the Voluntary Arts Network has said:

“The voluntary arts sector provides the potential for collaboration and celebration on a vast scale ... further diversion of lottery funds threatens ... the development, and even the survival, of many groups ... between now and 2012”.

Nicholas Hytner, the hugely respected 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 the Olympic bills. The money raided from the lottery will largely affect small, innovative, experimental organisations and individuals”.

The Secretary of State argues that the arts should contribute to the Olympic bill because of the cultural Olympiad, but there will not be a cultural Olympiad if there are no funds to run it. At the moment, there is not nearly enough to achieve what the Government envision.

On Tuesday, in a speech full of inspiration about the importance of culture in the Olympics, the Secretary of State, as we have heard, announced a £40 million legacy trust. This trust has been launched no fewer than three times—in October, January and now, May. Can the Minister assure us that this time it is for real? I join the noble Lord, Lord Baker, in asking the Minister to assure this House that there will be no further raids on the lottery. Does he accept that due to the lottery funds that have already been diverted, it is essential that the Arts Council is not delivered real-term cuts in the forthcoming Comprehensive Spending Review?

The latest “transfer” of funds, as the noble Lord, Lord Baker, so politely called it, has, of course, far wider implications. The voluntary arts sector involves more than 3.6 million people who stage plays, operas, concerts, and run classes and workshops. These types of enterprises are the seedbed of our major arts institutions, discovering, nurturing and encouraging the talent that feeds through to the pinnacles of achievement we celebrate across the arts in this country. We undermine this sector at our peril.

In answer to a Question asked yesterday, the Minister pointed out how much money the Government have put into the arts and I congratulate the Government on being so generous. But, in return, they have demanded the stringent setting of targets. How does the Minister expect such targets to be adhered to when funds are withdrawn because the Government cannot stick to their own?

Unlike the noble Lord, Lord Baker, I congratulate the Government on the revitalisation we have seen of museums across the country through the introduction of free admission and on the Renaissance in the Regions programme. But the future of the renaissance programme is far from secure. Only three out of nine regions have received full funding and the other six are now at risk because money is being siphoned off to the Olympics. Will the Minister assure the House that Renaissance in the Regions is not sacrificed to the Olympics?

We on these Benches look forward to a successful Olympic Games and wholeheartedly endorse the idea of the cultural Olympiad. I shall conclude by quoting the Prime Minister, Tony Blair:

“I urge people to support this project because I believe it is good for Britain. It is a display of confidence in the creativity and talents of our people ... It will be a time for the nation to come together to be excited, entertained, moved and uplifted. Visitors from all over the world will have the time of their lives”.

Noble Lords probably think that the Prime Minister is talking about the Olympics. Let me continue:

“In the dome we have a creation that, I believe, will truly be a beacon to the world”.

In raiding the arts and heritage to deliver the hardware of the Olympics, the Government are in danger of failing to deliver on another vision and we are potentially witnessing a lost legacy.

My Lords, I recall with pleasure the days when in the late 1980s I was Minister with responsibility for arts and the noble Lord, Lord Baker, gave me enormous encouragement and help when he was, I think, Secretary of State for Education. I am delighted that he has launched this very important debate because the strength and independence of the arts depends on diversity of funding rather than dependence on any one particular source of funding. Therefore, I was very pleased when in the early 1990s a decision was taken to launch the National Lottery system. I campaigned for it in the early 1990s and I am convinced that it has brought about a very important extra dimension for the arts, certainly to the extent that in the past 13 years it has contributed an extra £2 billion for the arts bodies, covering about 25,000 projects.

Of course, whatever the condition of the lotteries, hard choices and judgments have to be made. Today, we are facing the diversion of £675 million from National Lottery good cause funds. The adverse effect of the withdrawal of money from small arts bodies is, as has already been described, very large indeed. Further, when the budget for the Olympics started at just under £3 billion and today stands at over £9 billion, one does not have a great deal of confidence that it is going to end there; it may escalate further.

The truth is that in this country we are not particularly good at handling large projects. I had some experience of that myself with the British Library. It is a success today, but was a very difficult thing to manage. However, the Millennium Dome, the Scottish Parliament building at Holyrood, Wembley Stadium and now the Olympics do not exactly give one a great deal of confidence that they are being managed effectively and well. Indeed, miscalculations and the mismanagement of such projects cause immediate damage to other bodies through the diversion of funds.

However, for me the most striking thing about this judgment is the lack of consistency and the muddled thinking. On the one hand, the Government have announced that alongside the Olympics there is to be a cultural Olympiad with three component parts: ceremonies, major art events and a United Kingdom cultural festival. I welcome most warmly the opportunity it provides for the flowering and regeneration of culture, arts and heritage throughout the country. It is a good boost for the arts. But having announced it, the Government suddenly turn around and hit the arts over the head by saying that funds are going to be cut, thus demoralising and making things very difficult indeed for the 50,000 or so smaller, voluntary arts bodies which do so much to lay the foundation of the arts in this country. I am proud to be president of the Voluntary Arts Network, a body that gives support, advice and encouragement to a large number of these small groups. My support for them stems from the belief that there is an essential interaction between the voluntary and professional arts. A strong voluntary arts provision provides a springboard for expanded arts activities, greater public interest and participation, and support for the professional arts.

We have already heard mention of the criticisms being made by leading figures in the arts world. The chief executive of the Arts Council, Peter Hewitt, has already spoken of the adverse effects this decision will have on small arts bodies, while the director of the National Theatre, Nicholas Hytner, said that it is these small bodies which are the lifeblood of creativity in the United Kingdom. Hitting them undermines the future of our major arts institutions.

The Prime Minister’s speech of 6 March has been quoted many times today. Not only did he refer to the need to end boom and bust in culture as well as in the economy, but he also gave a clear commitment to do his best to ensure that any anxieties or concerns over the Comprehensive Spending Review or the claim on resources made by the Olympics could be laid to rest. A week later the Statement was made which led to the massive diversion of funds. To retrieve the situation, I would of course in an ideal world like to see the Government reverse their decision. If that really is not possible, I agree with the noble Lord, Lord Smith, in his effective intervention based on his experience of the arts and heritage, that one will need to look to the Comprehensive Spending Review and for compensation that way. There are not many other avenues that can be pursued, whether through local government, the Legacy Trust UK fund or the Contingencies Fund. However, if it was possible to divert a small sum from the overall budget for the Olympics, that would help.

The Government are in danger of doing serious damage to an important part of our heritage and arts, and certainly jeopardising the cultural Olympiad. We need assurances from the Minister today that they will tackle this issue urgently and seriously in order to retrieve the situation.

My Lords, I start by declaring three interests, all unpaid, which have a bearing on this debate. I am vice-chairman of the Cardiff Millennium Stadium, a major project built on time and to budget ready for the Rugby World Cup in 1998; I am chairman of the Railway Heritage Committee; and a member of the board of trustees of the National Museum for Science and Industry. I join others in congratulating the noble Lord, Lord Baker, on initiating this debate, and I should like to say particularly how pleased I am to see the noble Lord, Lord Coe, in his place and how much I look forward to his speech.

Perhaps unlike all other speakers in this debate, I want to make it clear that I supported London’s bid to win the Olympics, and I believe that all those who were involved in the process deserve our praise—none more so than our colleague on the opposite Benches. I have no doubt that the Games will be good for London as well as for Britain because the benefits will spread well outside the capital.

The Government, in their initial response to the report of the Culture, Media and Sport Select Committee in another place published on 24 January, said that they hope that the benefits to the country as a whole will outstrip costs by at least two to one. That is the figure that the Australians claim for the Sydney Games in 2000. I particularly welcome the promise of long-term economic regeneration and the public transport infrastructure improvements which they will bring. I also strongly support the vision for the cultural Olympiad as a festival celebrating the diversity and richness of culture in London, UK and around the world.

But all this, of course, has to be paid for, and that is what the debate today is about. We have heard about how the costs have risen—that is hardly surprising as no Olympic Games in history have cost less than the original estimate—and it is right that everyone should be asked to pay something, including the general taxpayer and the London council tax payer. I can understand why the Government do not wish the burden to fall on any group disproportionately, and the establishment of a specific National Lottery competition for the Olympics has been tried successfully elsewhere.

But it comes at a price and, speaking in regard to my heritage interests, I want to say a word about the Heritage Lottery Fund. It seems that in this process it will lose £161.2 million, not counting any loss of revenue that may come through lower sales of non-Olympic lottery games. I recognise that the effect on heritage projects will probably be more than this because the HLF is particularly effective in acting as a lever for attracting other funds, often on the basis of 50-50.

In my own railway world, there are numerous examples of lottery money being used to good effect—for example, the National Railway Museum’s restoration and display of the Flying Scotsman locomotive, the creation of the Search Engine Archive Centre at York and the construction of the magnificent new Locomotion Museum at Shildon. There are many, many more examples like that. The museums at York and Shildon attract more than 1 million visitors a year between them, very many of them the children from disadvantaged families that are exactly the kind of audience that the DCMS wishes to encourage to use our free national museums.

The HLF makes a huge contribution to heritage railways as well and there are numerous examples of projects which would not have gone ahead without its funding. I refer in particular to the carriage shed and new engine house on the Severn Valley Railway and the new museum building at the Middleton Railway Trust.

No one is saying that all this good work will come to a juddering halt because of the diversion of lottery money to pay for the Olympics, but it is undoubtedly the case that projects will have to be scaled back at least until 2012. As far as the north of England in particular is concerned, there is likely to be a five or six-year hiatus on major heritage projects. The free entry museums will find it particularly difficult to improve themselves during this period because they cannot raise money by increasing admission charges which my noble friend Lord Smith of Finsbury did so much to get abolished. So it is vital that they should have access to capital elsewhere. In particular, I hope that the Treasury will encourage the regional development agencies to be particularly generous to the regional free entry museums during the period when HLF funding is tight.

The Secretary of State has come in for mixed reviews in the debate so far. I believe that she deserves great credit for ensuring that the projects to be undertaken before 2009 will be unaffected and for undertaking that the lottery will eventually be repaid some of the profits from land sales at Stratford by the London Development Agency after the Games. I understand—perhaps my noble friend will confirm this when he replies—that she has got the Treasury to agree that there will be no further raids on the lottery funds before 2012.

The situation could have been much worse. The Guardian reported that,

“Ms Jowell fought a fierce battle with the Treasury which originally sought to siphon an additional £1.9 billion from the lottery, three times the sum it finally settled on”.

In an article in the Observer on 15 April, the Secretary of State described the arrangement as,

“more of a loan than a withdrawal”.

The noble Lord, Lord Baker, was a little dismissive of that. Perhaps my noble friend when he replies will say more about how this will work. Certainly if a substantial proportion of the funds which are—shall we say?—“borrowed” are returned later, that will provide some reassurance to those who are concerned about their heritage and other products.

My Lords, I congratulate my noble friend Lord Baker on having introduced this debate about arts and heritage. I declare an interest as chairman of the Reviewing Committee on the Export of Works of Art, the so-called Waverley committee. The purpose of the committee, which is appointed by the Secretary of State, is to advise her about aspects of export control of works of art, particularly in respect of certain individual licences and more generally on the workings of the system. We do that once a year and publish an annual report, which is laid before Parliament. Our role is that of the candid friend. My remarks today will essentially focus on that; they are based on those that I made in the debate on 30 October last year in the Moses Room and on the Minister’s response. I would like, as we lawyers say, to incorporate those by reference into my remarks.

The reviewing committee subsequently discussed that debate. Although policy discussion is obviously confidential, and I do not speak here as chairman of the reviewing committee, I do not think it improper to say that members were of the view that the serious and important points and issues raised in the debate were not properly dealt with in the Minister’s reply. I shall proceed from that starting point.

As my noble friend Lord Baker has said, the lottery was established to do things that it was thought improper to fund from taxation, at least in part. We have been told in terms by the Secretary of State that one of the functions of the Heritage Lottery Fund is to assist with that position. Already there is a problem, and I have every sympathy with the trustees of the fund and their role in the context of the National Heritage Memorial Fund in this regard. They have had to make some very difficult decisions, because you cannot do everything all the time. The simple consequence of the recent developments in lottery funding allocation is that a bad problem will inevitably get worse.

It is important to be clear that the Waverley system, in which I play some part, is a trip wire. It is the line of last resort. It is concerned with objects whose leaving the country would be a national misfortune. With the exception of me, this is not a group of laymen. They are experts and scholars at the top of their respective professions. We are not talking about people taking decisions who are mountebank dealers trying to sell soi-disant “art” to hedge fund managers with huge bonuses. They are the equivalent of the highest expertise in any sphere you may care to find around the country. The objects we are concerned about are by definition important to the cultural capital of this country and of outstanding value to our great institutions, part of whose mission is to acquire objects. We are talking about objects of world importance. They are at the core of the definition of ourselves, Britishness, the role of this country and its reputation in the world.

People talk about price. It is trite to say that the best things are always cheap, but a lot of the inflation in the art market is in areas outside the scope of the committee. Contemporary works of art and things that have not been in Britain or have not existed for more than 50 years are outside the scope of the system. Currently, as I have said, it is not working. Only 60 per cent by number are saved, representing something like 40 per cent by value. We deal with a number of antiquities and archives that are, relatively speaking, inexpensive.

What museums do in this country is popular. We have the Minister’s word for it in the previous debate and, what is more, a recent survey by the National Museum Directors’ Conference shows that 43.5 per cent of people visited museums in 2005-06, the same number as watched sport on television.

The Minister has also said, “We can’t throw money at it”. My instinct is to agree with that, although I ask him to think about it; after all, whatever else you can say about the Olympics, buckets of cash are being chucked at that. The reviewing committee’s work suggests that around 4.5 per cent of the total budget for the Olympics would have enabled this country to acquire every single object that met the Waverley criteria but was subsequently exported since the committee was established in 1952. In other words, in the period between this Olympics and the last time they were held in London, something like 5 per cent of the money involved in the 2012 Games would have acquired everything.

The real answer—I go back to a remark of my noble friend Lord Baker—is that we must look at other ways of funding this. I repeat what the Minister said last time:

“I repeat that these opportunities are there, but they are not being exploited to the full. It weakens any argument for further tax concessions and further help from the Treasury if things that are already in place are simply not used”.—[Official Report, 30/10/06; col. GC 54.]

There is no logic to that. To argue that, because something is not working properly, it should not be changed seems fundamentally illogical. The Treasury is still considering the proposals made by Sir Nicholas Goodison, at its request, about changes to the way in which works of art are acquired in this country. That provides a wonderful opportunity to look at this again. I said so in the previous debate and I say so again now.

In the United States in 2003, according to Giving USA 2004, something like $13.1 billion was given in private donations to the arts. In the UK that would amount to around £1 billion. That is a rough estimate, but it shows what can be done. That is the kind of direction the Government should look to in order to resolve an actual, not a theoretical, problem. There would be no need for debates about this if the Government addressed the issue in that way.

It is sad, but things have come to a pretty pass when Ministers for culture in this country become the apologists for the philistines. I feel very sorry for the Minister as he stands at the Dispatch Box. He is like the hero of Henry Newbolt’s Vitaï Lampada, who, noble Lords will recall, was in the Army, in the desert in the imperial wars:

“The sand in the desert is sodden red,

“Red with the wreck of a square that broke,

“The Gatling’s jammed and the colonel dead,

“And the regiment blind with dust and smoke”.

And what is in the noble Lord’s ministerial brief? It is:

“Play up! play up! and play the game!”.

My Lords, when I saw that this subject was going to be debated, I had not decided what I expected to come out of it. Ever since the Olympics became a subject for debate, there have been groups saying, “What about us? What about our good cause? How will we suffer? Will we lose our piece of cake?” I am afraid it looks as though a piece of that cake has gone.

Ever since the lottery was introduced, the Government have treated it as something that will pay for everything and have wanted another cut. The noble Lord referred to four good causes—originally it was two or three, but there has been constant expansion. Ultimately, the lottery cannot carry everything and, to mix metaphors like mad, it may well be a case of straws and camels’ backs. How can it carry on expanding?

Camelot is not an organisation that ever underplays its achievements. It has said:

“The only way to mitigate any decrease in returns to other Good Causes is to maximise overall sales”.

It also says that it cannot mitigate everything; it will struggle to make up any loss over time.

We are where we are. I have always been a vigorous supporter of the Olympic Games. They are all-embracing and bring people in; they are not just a championship but can be a celebration and achievement. If the cultural Olympiad buys into this, there will be a tremendous celebration—at least, it has that potential. We must make sure that we bring everything in. However, we are peddling the myth that all the small groups at the base of the pyramid will have every type of support cut away. There will be no celebration, no matter what bricks and mortar we have in place, what achievements and medals are gained, if everybody who has a stake in the sporting or cultural process feels constantly under pressure to defend their operations. That is where we stand. When the RSPB starts sending brief to sports spokesmen, that means that word has got out. These are not normal subjects for my postbag. The Government must address this fear. The greatest things about the Olympics—the enthusiasm and burst of energy released—are now drifting away. We can bandy about figures until we are blue in the face, but unless we address the drift and squeeze, something will have to give. We can have the event without the successes; that is something to bear in mind.

Will the Government now confirm that this will be the last time we cut into lottery funds? Then we can start to rebuild the consensus and sense of purpose. If that happens, we can then go forward. Also, can we ensure that grassroots organisations are made sure of where they stand in the scheme of things—in the food chain?

The Central Council of Physical Recreation is worried that its budget will also be cut into. When the base of the sporting pyramid is worried about what will happen, we must do something. People will be introduced to sport not only by the 2012 Games but in 2016 and 2020, and if it is a true success, it will inspire people to go on. We must establish a tradition of better training and competition facilities at home. Will the Minister confirm that the Government will not allow any further squeezing of these factors? Young sportsmen going on to be international athletes may want to go to a museum when they are finished. Let us stop the idea that these groups are not complementary; they are part of the pattern of life. We must promote the idea of the Games as central and part of the whole. Will the Minister guarantee that that idea will be defended by not allowing the whole basis to be squeezed?

My Lords, I join all those who have congratulated the noble Lord, Lord Baker, on obtaining this debate and thank him for giving me a particular opportunity that I would like to seize. I will not engage in discussion of the Olympics versus art because I personally believe that there must be room for both. I am more interested in talking about the residual impact of possible cuts in funding to the arts, and will focus on one area in particular. I am encouraged to do so by a statement by the Secretary of State for Culture, Media and Sport that,

“the work of the Koestler Trust is essential to humanising our prison and detention system … Arthur Koestler’s vision was far ahead of his time”.

What was Arthur Koestler’s vision? He was a political prisoner on three occasions and recognised the power of the arts in building self-esteem among prisoners to encourage them to be involved in work, education and training and to help them to lead more positive lives by motivating them to participate in the arts. The Koestler Trust, which was founded in his name, is the UK's national charity for awarding, exhibiting and selling artwork by offenders. In last year's exhibition, there were 4,330 entries in 53 different art forms submitted from prisons, young offender institutions, secure units, high security psychiatric hospitals, probation and youth offending teams and immigration removal centres. I declare an interest as the former chairman of the trust.

Referring to the impact of this on an individual, a former award winner who is now a professional artist said:

“The Koestler exhibition took my work and a part of me out of the confines of the prison. You need to be an inmate to comprehend what this means”.

That was the situation until last year. On 23 January this year, the Koestler Trust received a letter from the social inclusion and offenders unit in the Department for Education and Skills, which read:

“As we signalled to you last year … this year is the last in which we will make grants available to individual voluntary community sector organisations”.

The trust had received a grant of £45,000 every year for the past 25 and more years to help it mount the exhibition, which amounts to about 15 per cent of the trust's costs. It was paid by the Home Office until responsibility was passed to the Department for Education and Skills. The department went on to say that the Government had published a next steps document, which makes no mention of the arts. The National Offender Management Service’s arts strategy has been awaited for over a year. DfES officials confirmed that the Koestler Trust’s work is unlikely to meet the criteria for its funding because it is run on a national basis and now all funding has to be obtained on a regional basis. It ended with the following platitudinous remarks:

“I would like to thank you very much for the work you have undertaken on our behalf and the contribution it has made to the development of this important policy of gender. We believe that the voluntary and community sector has a very important role to play and along with our partners we will continue to work with them to deliver our strategy. I know that we still have work to do together and look forward to receiving the final report from the work you have undertaken for us this year. I am sure this will be helpful to the cross government group overseeing development of the arts strategy”.

There was no mention of what preventing reoffending and helping prisoners to gain the self-esteem to do that meant in terms of protecting the public.

What worries me is that the Department for Culture, Media and Sport and the Arts Council, which I would have expected to take a lead in tackling this national problem, unfortunately have been very quiet on all this. I do not believe that the delivery of the arts should be funded merely by the Department for Education and Skills; therefore, my plea to the Department for Culture, Media and Sport is to realise the long-term and residual damage caused by this move, which could be avoided. I have to question what the Government expect will be achieved for other purposes in taking the miserable sum of £45,000 away from something which achieves so much. Have the Government ever considered using their own resources to run a competition to encourage prisoners in the creative arts and to mount an exhibition of prisoners’ work, bearing in mind what the Koestler Trust has done on behalf of this Government and former Governments over the past 50 years?

My Lords, I too thank the noble Lord, Lord Baker, for initiating this debate. I appreciate that its thrust is about the effect of the transfer of lottery funding on heritage and the arts. However, I wish to take the opportunity to make some comments about the implications of the transfer of lottery funds in another area of DCMS responsibility; namely, community sport.

I have over the past year participated in a parliamentary fellowship scheme which has enabled me to spend a number of days with Sport England in different parts of the country, and to see at first hand how the resources it has to promote and develop community sport in partnership with a wide range of organisations and authorities—public, private and voluntary—have been used, and with what effect.

I believe that around 30 per cent of Sport England’s funding has gone to voluntary and community organisations over the lifetime of the lottery. So while the Government have sought to protect Big Lottery Fund resources to the voluntary and community sector, funds that come to this sector through an organisation such as Sport England will not be protected. Consequently, the decision to divert a further £55.9 million of Sport England’s share of lottery income between 2009 and 2012 to fund the Olympic and Paralympic Games, on top of Sport England’s share of the already agreed £410 million Olympic lottery contribution, runs the risk of having an adverse impact on the delivery of one of the objectives of the 2012 bid, which was to build a legacy from the Games by increasing participation in sport and boosting community sport across the country. In reality, the cut is greater because Sport England levers in almost £3 for every £1 of investment it provides.

If new funding is not secured, Sport England will have to lower its 2012 goal of getting 2 million people participating more in sport. Greater participation in sport has many benefits. It improves physical health and well-being and is an important factor in the efforts to reduce obesity. It provides an activity in which people of all ages, including those with a disability, can participate and achieve and gain self-confidence and self-esteem as well as enjoy themselves. Participation in sport also provides an opportunity for those whose activities either have been or might otherwise be of a less socially acceptable nature to find more productive and satisfying ways of spending their time, while also developing the skills of self-control, self-discipline, team working and facing and meeting challenges. The work that Sport England does is an integral part of the Government’s agenda for both a healthier, more active nation and for reducing crime, including reducing reoffending. Its work also enhances quality of life.

The Government are, of course, entitled to expect that a body such as Sport England will do more than simply draw attention to the likely consequences of the transfer of lottery funds. Sport England is looking to find ways of raising £50 million, through working with the private sector to increase investment in community sports facilities as well as encouraging the private sector to offer its skills and expertise to local sports clubs in the communities that they serve. Advice and practical help can be invaluable in just the same way as qualified coaches and instructors and capital investment in sports facilities. It will also be working with the Football Association and the Football Foundation to create sports hubs, involving community and commercial activities.

If Sport England, through its own efforts, can find from elsewhere resources to replace lottery money that it will now no longer receive—and it is determined to do so—it will still be able to achieve its 2012 goal of increasing participation in sport. If, despite all efforts, it is unable to secure those resources, expectations and ambitions will have to be pared back. Is it intended at some later date after the Olympics have been held to provide Sport England with the lottery funding that it would have had but which has now been diverted? If so, would it be inflation-proofed, and would that funding be given irrespective of whether Sport England had raised additional resources through its own efforts?

I am sure that I will be no different from anyone else in taking great pleasure and pride in our hoped-for successes in the 2012 Games by our elite sportsmen and sportswomen. I am sure that I will be no different from anyone else in wanting the organisation and running of the Games and the facilities and infrastructure to be nothing other than a credit to ourselves as a nation. Achieving that needs money; and the effects of any significant paring back in that regard would become all too obvious in 2012, when we will be the focus of searching international attention. I recognise the issues that the Government face over funding, and I imagine when my noble friend responds that he will remind us quite rightly, justifiably, and with pride, of the considerably increased support that the Government have provided to sport both in schools and in the community at large.

One of the consequences of that commendable record is that inevitably the bar is raised as far as expectations are concerned. The new, much higher levels of funding become the new base line for developing community sport and participation levels below which it now becomes unacceptable that we should fall. I am sure that is one reason why Sport England is determined to try to make up the reduction through its own efforts. The demands on its resources will not fall, and neither will the expectations on those through whom, in partnership, Sport England seeks to achieve its goals, which have the full support, backing and approval of the Government. I hope that Sport England will continue to make its case to the Government on behalf of community sport, and I hope that the Government will look sympathetically at it, particularly if Sport England, despite its endeavours, finds itself unable to make up all the shortfall in its lottery funding.

My Lords, I congratulate my noble friend Lord Baker on securing the debate. I declare my interest as chairman of the London Organising Committee for the Olympic Games and the Paralympic Games, an organisation that is charged with the staging of those Games. I remind noble Lords that it is an organisation that raises all its income from the private sector.

I will take a few moments today to reflect on the place that culture and heritage have in our planning for the Olympic Games and Paralympic Games. I can do no better than to restate the observations of the noble Lord, Lord Smith, when I say that I, too, do not understate how great the opportunity to host the Games in 2012 is for all of us across the United Kingdom. From 2008 onwards, when the Mayor of London is handed the Olympic flag in Beijing during its closing ceremony—and we have our opportunity to take eight minutes in that closing ceremony—the eyes of the world will be upon us as our Olympiad begins. Few, if any, global events generate the excitement and enthusiasm that the Games generate. They are a demonstration of humanity, challenge and engagement.

Our achievement in winning the right to host the Games in 2012 was underpinned by people the length and breadth of the country, including those in the cultural community. The backing and active support of our talented musicians, artists, actors and our creative industries sat comfortably and crucially alongside the support and visibility of our iconic sports men and women. That help and support for our bid will never be forgotten.

London’s Games present us all with a unique opportunity, whether we work in sport or cultural activity, to reach out across our communities, to enjoy, to participate, to push and challenge ourselves, and to inspire—just as I was inspired as a 12 year-old watching the Mexico Games in 1968 on a black and white television.

The London Games will be different for many reasons, one of which is the emphasis that we place on leaving a sustainable legacy after the Games have gone—not just in bricks and mortar, but in culture and sport. The slightly dismissive comments—if I may say so—of the noble Lord, Lord Baker, on the historic role of sport in the socio-cultural process reminded me all too readily of my time as a deputy chairman of the UK Sports Council for a few years in the 1980s. At that time, I found it difficult to engage the artistic and cultural community in meaningful dialogue. In fairness, it was not always easy to convince my sporting colleagues that there was a coalition of interest between sport and the arts.

I was not successful then, but I am determined that we should be successful now. Why is this important to us? Baron Pierre de Coubertin, father of the modern Games, had a vision based around the idea of a healthy body and a healthy mind. He believed, as I do, in the inextricable link between sport, culture and education. That is the foundation of our vision for the London 2012 Games—a vision that has never just been about a summer of sport. We want the Games to transcend the traditional boundaries that have often stood between sport and culture and, often paradoxically, have prevented them reaching out together to the most disadvantaged and isolated in society.

Harnessing the power and the spirit of the Games and the excitement and passion that they generate can underpin and help to unlock opportunities for cultural activity in the UK that have simply not existed before. From first-hand experience of the numerous visits that I make across the UK each month, I know that there is enormous excitement, interest and support for the Games in our schools, village halls, community centres, local authorities, theatres and galleries.

The questions that I am most often asked are: “How can we play a part?” and “How can we be involved?”. There is no way that the organising committee alone can provide answers; we never intended to be a one-stop shop. We recognised from the start that, with help from the cultural sector, we needed to work in partnership. That is our template. Nor should we forget that we have a four-year opportunity in the global spotlight to showcase the best of our vibrant arts, culture and heritage. That is what we are now working on to deliver.

Our director of culture, Bill Morris, has travelled across the country and has spoken with more than 3,000 people. He met with huge enthusiasm and, at the end of his travels, the message was unambiguous. There is enormous excitement about the opportunities that a UK-wide, four-year cultural festival will bring. That will include ceremonies—not, as the noble Lord, Lord Luce, said, a government project, but a duty set out by the International Olympic Committee that has been readily accepted by the local organising committee and enshrined in our host city contract.

That celebration will begin in 2008 and will run until the opening ceremony in London. In every area of the UK, cultural groups—large and small; local, regional and national—are working right now on ideas for exhibitions, concerts and festivals. They are wonderfully innovative projects inspired by the Games. Projects as varied as an international Shakespeare festival, a world festival of youth culture, a celebration of film and video and a UK-wide exhibition programme are all being developed, and there is so much more to come.

The partnership and enthusiasm also extends to the official business partners for London. Lloyds TSB, our first domestic partner, is already looking at ways in which it can be involved in the cultural Olympiad as a way of activating its Games involvement.

I remain optimistic that over the next five years—to 2012—we will be able to bring new, additional funding into the cultural sector, both from public and private sources. Our own culture team will be announcing plans for the culture Olympiad shortly. We are still five years ahead of the Games, which is the right time to be planning. I thank your Lordships for allowing me to share what I hope you will see is the full extent of our ambition and the opportunities available to us from hosting the London 2012 Games, an event which for all of us will always be so much more than simply sport.

My Lords, I join others in congratulating the noble Lord, Lord Baker, on securing the debate and on the role that he has personally played in supporting the arts in our country. I also thank him for his rollicking, frolicking contributions in this House, which are always a joy to listen to.

First, I declare my interests. I am a trustee of the British Museum, a patron of the Tricycle Theatre and chair of Arts & Business. I wish to speak particularly about the role of the private sector in enhancing the cultural life of our nations in the United Kingdom.

We have good reason for rejoicing in Britain’s cultural output. Public financing is crucial to this success, but it is not the whole story in the ecology of cultural funding. This success would not be possible without a huge private sector contribution and this contribution cannot happen without the essential work of Arts & Business. It behoves a civilised Government to invest properly in the arts. The present Government have a proud record in this respect. From 1999 to 2005, the increasing investment in the arts, year by year, was one of the most important things that this Government have achieved. Yet we see that our spending on culture and its consequences amounts to only 0.6 per cent of our national income—the loose change of government spending.

There has been a lot of rumour and fanfare on the transfer of lottery funds, but a crucial element has largely been neglected, which I want to distil. We cannot assume that there will ever be enough public sector funding for the arts. Recently, an Arts & Business publication warned of the further demise of cultural funding from local authorities.

By recognising and celebrating the role of the commercial sector and of individual philanthropists, we can avoid the current dependency on a single line of finance and find more effective new ways to resource the arts, be they showcasing artists as cultural entrepreneurs, making venture philanthropy work for the arts, rolling out new tax campaigns, or signposting responsible cultural practice. Indeed, in the next two months, Arts & Business will launch a major initiative to stimulate greater giving in the City of London. Arts & Business has the crucial knowledge, pioneering ideas and research capability to show us all how to embed corporate cultural responsibility.

The point that I want to emphasise is that it is only by investing in Arts & Business that we shall uncover the best ways to tap into the commercial sector to further augment the success of the cultural sector. The Government have to champion and promote the role of the private sector in supporting the arts in the run-up to London 2012. The arts world does not want to undertake endless juggling to keep the show on the road or to eke out temporary solutions to funding issues. The corporate world can help, but it needs assistance to enable it to do that.

I mentioned earlier the essential work conducted by Arts & Business, and I want to highlight the five valuable roles that we play. In 1976, the amount of business investment in the arts stood at £600,000; it now touches £150 million. When you add in funding from private individuals, which is £262 million, and money coming in from trusts and foundations— £113 million—the figures rise to £525 million a year. Arts & Business creates the environment to make this happen, and the annual Arts & Business awards showcase outstanding examples of what happens when culture and commerce connect.

Corporate engagement is not about simply writing a cheque, however. It uses the skills, be they marketing, legal, financial, branding or sponsorship, which can be offered by businesspeople to the cultural sector. Last year alone, Arts & Business placed over 5,500 business volunteers in arts organisations. This work is worth just under £4 million. Arts & Business trains the cultural community with over 12,000 fundraising executives in the arts, learning how to prosper within the commercial sector. People do not just pick this up easily; that have to learn how to do it. Arts & Business’s research shows that 83 per cent of cultural organisations would have reduced audiences had they not received private investment.

To all this work, however, Arts & Business needs seed funding from central government to help us to foster initiatives and long-term partnerships between business and the arts through investment. We therefore cannot have cuts to our core funding. Clearly, a lot of learning has taken place since Arts & Business was first launched. Big institutions such as the National Theatre and the Tate Gallery can now go directly to the corporate sector for money, but that is not the case with any of the lesser-known arts organisations or those of medium size. As a network, Arts & Business covers the whole of the United Kingdom and employs over 100 people to efficiently run programmes and projects tailored to local conditions and needs, bringing together the commercial and arts worlds.

I believe in London 2012 as a great enterprise, and want to welcome the world to celebrate London and the whole of the United Kingdom. I want us to inspire our young people with that venture. But we must ensure that there is no reduction of culture to that end. I hope that when the Chancellor and his successor are thinking about the spending review later this year, they in no way cut the funds of Arts & Business. Culture matters at all levels within our society, and investing in it works. But in order to do the business that we do in Arts & Business, bringing commercial money into the arts sector, we must be well funded in our own right. I press those matters on the Government and hope that we can have an assurance from the Minister that we will not be facing cuts towards the end of the year.

My Lords, I make this speech having returned from a test match where, for those who are interested, the teatime score is 158 for 2 for England. However, there was also much disquiet there about the cuts in grants to grass-roots cricket. During the next few weeks, I shall visit an event at Salisbury Festival, which is in danger of being cancelled next year, after 25 years, because of further cuts in grants. I shall worship in the magnificent Salisbury Cathedral, which will have its funding slashed—one of the great catastrophes of the freeze on English Heritage expenditure. Yet, on Saturday, I shall go to the FA Cup Final at Wembley, an edifice of gross mismanagement and overspend, overseen by this Government.

I applaud my noble friend Lord Baker for organising this debate. I also declare an interest as a current and former board member and trustee of several arts museums and organisations, and chairman of a pressure group called the Sports Nexus. The 2012 Olympics receives my full support. I applaud the Government—although I can also criticise them—and my noble friend Lord Coe for bringing the Games to London.

But I am afraid that, when the dead hand of government gets involved in a project, it demonstrates its incompetence. We cannot run away from the fact that there have been incompetent budgeting and a failure to learn from the mistakes of other major projects. When budgeting, could anyone in the modern financial world not have taken into consideration building inflation, land price inflation, transport cost inflation and the cost of security? They surely cannot live in London. It would be easy to criticise only the so-called Minister for Culture, but this financial fiasco has the dead hand of the Chancellor on it. It is the Chancellor who is charging VAT of £1 billion, whereas the Commonwealth Games in Manchester did not have to pay VAT, and it is the Chancellor who has had to sanction the original costing and the revised costings at every juncture, having been guided by the Treasury. My goodness, how we look forward to greater things!

We have found ourselves in a situation where, as other noble Lords have enunciated in this Chamber, Peter is being robbed to pay Paul. Who are the Peters? They are the Walnut Whip Peters, the London citizens who Ken Livingstone famously said would not have to pay more than the price of a Walnut Whip for the London Olympics. I fancy that we will be charged for a boxful. Then there are the arts Peters, whose spending allocation is about to be frozen: museums, galleries, local community arts initiatives, local sports facilities, grass-roots sports and, of course, our heritage, including 16,000 churches and all our cathedrals, which are totally dependent on the Government and the lottery for money and support. There are also Peters who think that when they buy a lottery ticket the money will go through an independently run venture for distribution to a number of causes. It is hard to imagine that this freezing of expenditure could have affected so many special interest groups.

A number of questions remain unanswered. Can the Minister furnish us with the answers? I support my noble friend Lord Baker in asking his question. Miss Tessa Jowell said that £675 million will be venture capital, and that it would be a loan from the lottery. What is that about? If it is a loan, it will need to be paid back, so what are the terms? If it is venture capital, the capital is ventured with a view to making a profit. Can we have a straight edge on this? The Secretary of State talked about the profit from the sale of land after the Olympics. Can we have more details of her plan, and do her recent figures include anticipated profit from the sale to mitigate the cost or will it, in fact, reduce the cost?

The much heralded Olympic scratch card was going to raise £750 million in addition to other lottery spending, but recent figures from the National Audit Office show that 80 per cent of the money being raised from scratch cards is to the detriment of other lottery fundraising initiatives. What steps are going to be taken to reverse that trend?

I share the concern of my noble friend Lord Baker that we have not seen the end of this spending mismanagement because there is no sound commercial strategy in place to reverse this trend. Can we have a guarantee that this is the final bill?

It is a tragedy that an event that cost only £2 billion in Sydney—which many people say was the best Games ever—is currently going to cost nearly five times as much in London. Only in a new Labour world do sport and the arts become worse off as a result of London staging the greatest sporting event on Earth.

My Lords, I, too, congratulate the noble Lord, Lord Baker, on sponsoring this important debate. In doing so, I must take issue with him over his contrast between the athlete and the aesthete. He suggested that they were mutually exclusive, but I do not believe that. The achievements of Bannister and Best will long outlive them in the same way as those of Burns and Betjeman have outlived them. It is wrong to counterpoise the two.

I was as thrilled as anyone when I learnt two years ago that the noble Lord, Lord Coe, and his team had won the contest to bring the 2012 Olympics to the UK. I want the Games to be viewed in retrospect as the best ever staged, but, I have to say, not at any costs. And, as ever, where there are winners, there are of course losers.

I want to introduce something of a Scottish dimension to the effects of the funding decisions made by the Government. I have real concerns over the diversion of lottery funds from good causes to pay for the rising costs of the Games. I am not one of those who believe that Scotland will gain nothing due to the fact that it is 400 miles north of where most of the Games are to be staged, because I think that many young people will be inspired into taking up some form of physical activity, if not, indeed, organised sport.

As part of the Games bid, the National Lottery pledged to contribute £1.5 billion towards the costs of the Games, a sum that has been estimated to mean a reduction in funding for good causes in Scotland alone of around £80 million. In January this year, a further £900 million increase was highlighted. Big Lottery Fund Scotland estimated that an increase of that amount would add a further £50 million to the costs across Scotland.

For illustration, a £51 million reduction in funding for good causes would be equivalent to closing the BIG Scotland small grants fund, known as Awards for All, for six years, perhaps resulting in as many as 10,000 projects going unfunded and facing almost certain closure. To put that into perspective, there are around 45,000 voluntary organisations in Scotland, so a shortfall of funds that led to 10,000 projects going unfunded would hit the sector very hard.

Two months ago, the Culture Secretary, Tessa Jowell, announced that, to cover some of the costs in the budget, £675 million would be taken from National Lottery budgets, including, as we have heard, £425 million from the Big Lottery Fund. Assurances were given at the time that this would come not from funding for voluntary and community organisations but from the 30 per cent of the Big Lottery Fund that goes to statutory bodies. The point has not emerged sufficiently clearly from this debate that while these assurances will mean—if they are adhered to—that voluntary organisations do not lose out in direct funding, they will nevertheless suffer a heavy hit indirectly, because a considerable amount of the 30 per cent that goes to statutory bodies is in turn used by those bodies to fund voluntary projects.

That point is reinforced in a letter sent to noble Lords participating in this debate by the Central Council of Physical Recreation, Heritage Link, the National Council for Voluntary Organisations and the Voluntary Arts Network. Their joint letter spells out their concern that similar protection has not been provided for charities, voluntary organisations and community groups that apply for funds from Arts Council England, Sport England and the Heritage Lottery Fund.

The National Council for Voluntary Organisations’ equivalent north of the Border, the Scottish Council for Voluntary Organisations, has echoed these very real worries as to the future of third sector provision in its widest sense, including cultural and sporting provision. The Government surely must listen and act to ensure that these fears are not realised.

It is appropriate that the lottery should make a contribution to the staging of the Games, but it is inappropriate that it should subsequently be used as a soft touch to bail out cost increases that, to some extent at least, should have been anticipated by the Government and the Games organisers. That pitfall was identified by the CMS Select Committee in January of this year, when it published its report on the funding and legacy of the Games. It stated:

“We believe that any further diversion of money from the Lottery would reduce the money available for each of the good causes, and it is not our preferred option for funding any overspend”.

I do not know whether the Minister read that report, but just two months later, as we know, Tessa Jowell announced precisely that. There was concern at the time about the projected cultural Olympiad. Noble Lords have referred to Baron de Coubertin and the fact that the modern Olympics at the start had a cultural input. Of course the Greeks themselves in the ancient Olympics had that, too; the role of Euripides is well recorded. But Nicholas Hytner of the National Theatre was quoted last month as saying about the cultural Olympiad for 2012,

“There’s no money and there’s no plan”.

That may have been the case as he saw it at the time, but it was encouraging that Tessa Jowell announced that £28 million from the legacy fund would be provided towards the cultural Olympiad. That will go a long way towards providing what I believe is necessary, although it should be put in context by saying that Sydney had £29 million for its cultural Olympiad and costs have risen somewhat in the 10-year period.

I make one point about the National Lottery operator Camelot, which comes in for criticism, sometimes justifiably. However, as far as the company’s role in raising its share of additional funds through the lottery is concerned, it has to be stated that it is more than playing its part, as it is ahead of schedule for the designated lottery games. But there is a cloud on the horizon, as the CMS Select Committee highlighted. Camelot’s licence comes up for renewal in 2009. The question must be asked: what would happen if it were to lose the licence? Of course, the resources and time of its staff will have to go to seeking renewal, but if it should lose it, we could lose the momentum in the income that has built up from the lottery games. That would be unfortunate. I agree with the committee’s suggestion that Camelot’s licence should have been allowed to continue until after the Games, but that is no longer possible. What do the Government intend to do if there is that shortfall or loss of momentum in funding, should Camelot lose its licence?

Finally, very briefly, I have two points. Where would the money come from if not from the sources that we have been discussing today? The Treasury should look long and hard at the 12 per cent that it takes on every pound that goes to the lottery. Given that the Olympics were last held in this country in 1948 and will now be held here in 2012, we will probably have to wait half a century before they return. Therefore, it can be seen as a one-off event. The Treasury should reduce or even waive that amount to produce additional funding.

Secondly, as other noble Lords have mentioned, the Comprehensive Spending Review is already under way. I understand that the DCMS has the smallest budget of any government department, so, as my noble friend Lord Smith said, it is vital that it is not reduced. Again, perhaps it should be treated as a special case. I hope that when the Minister and his colleagues, when they are in negotiation with the Treasury as part of the CSR, will push that case very strongly and I hope, for the country and the Olympics in 2012, that they have success.

My Lords, I am especially grateful that my noble friend Lord Baker was successful in the ballot for this debate and for how he introduced it.

I declare an interest as a trustee and chief executive of a charitable trust preserving the finest castle ruin in the north of Scotland, the only castle in Scotland to be listed by the World Monument Fund on its watch list, published every two years, of the 100 most endangered sites in the world. It has received two small grants from HLF and may receive more in future. I am also a trustee of other heritage and arts charities that are likely to apply to the HLF. Like many, I was a keen sportsman in a number of games but never at a high level, and still enjoy watching a variety of sports.

The HLF has been a huge success and this country has benefited in a number of ways from its work. We owe it a vote of thanks for what it has done in the past, but its role has changed and the future is bleak. I, for one, was never a fan of the British bid to host the Olympics in London and my heart sank when the decision was made. It was abundantly clear to me even then that the Government had significantly underestimated the projected costs and that, as a result, we would all end up paying considerably more than envisaged. I anticipate more rises in costs and, doubtless, more cuts for the arts and heritage, whatever the Minister says today.

Whether the unrealistic bid was deliberate or naive has not been proven, but I have no doubt which it was. Imagine submitting such an application to the HLF for a project. If one went back to the HLF shortly after a grant had been agreed and said that the costs were nearly three times the estimate, one can visualise its reaction. Some cost changes are always likely with a major project, but a trebling in the space of a year? No one in the private sector could behave in that way and get away with it, but the Government can, because they are abusing other people's money in an unethical way.

Let us be clear about the consequences of that unhappy situation. The Olympic infrastructure will take one-sixth of the lottery pot during the years between London winning the bid and the Games. The HLF will lose £161.2 million, as well as revenue through reduced sales of non-Olympic lottery games. Its share of lottery tickets will drop by more than 10 per cent between 2007-08 and 2011-12. In real terms, it will be considerably more.

The heritage of our country is being severely jeopardised and the damage has already started. The HLF business plan shows that, in 2004-05, Scotland was allocated £14.2 million for grants under £2 million. By 2007-08, that has already been slashed to £12.1 million. When the extra contribution of £90 million was taken by the DCMS this March, the HLF announced that, rather than making deeper short-term cuts, it would absorb the impact over a longer period, so the pain will continue past 2012. There is no possible way in which the HLF will be able to support the full range of heritage projects that people care about.

What will all this mean for grant applicants? To date, the HLF has generally been able to fund all good projects that have come to it. Rejected projects have generally been those with perceived weaknesses. This has changed, however, and we have begun to see that the HLF rejects not only projects with perceived weaknesses but good projects. Furthermore, the HLF’s shift of emphasis from preserving pure heritage projects to those with substantial community involvement, and its increasing use of apparently arbitrary economic considerations to justify refusing a project, are a severe threat to the more rural heritage projects, especially where there is no local or national authority involvement.

All this is having a series of adverse consequences. In addition to the direct effect of good projects not going ahead, we are beginning to see that good concepts are not being developed into good projects, as project promoters—be they local authorities, national institutions, or, as many noble Lords have said, independent trusts in particular—reassess their chances of securing project funding. If even good projects are not to be funded, why bother to incur the significant development costs? As an immediate response, the HLF must cut the development costs and provide meaningful feedback before organisations have to spend upwards of £500,000 developing some of the large projects.

There will, of course, be a wider impact in loss of opportunity. How can we have a serious debate on cultural entitlement, built on the foundations of what the HLF has achieved to date, and then starve it of investment capital? The effects of this loss of opportunity will be felt nationally, regionally and locally. The UK’s reputation has undoubtedly been enhanced by cultural projects; the Tate Modem is a great example. Regionally, Kelvingrove, the Museum of Scotland and the National Waterfront Museum in Wales are all evidence of the wide impact of lottery funding. Locally, many communities have benefited from revenue and capital projects. This has increased tourism and local spend, which, particularly in rural areas, has been vital in keeping communities together and offering job opportunities.

To some, the Olympics may be very worthwhile, but why must we jeopardise the national, regional and local impact of National Lottery Fund projects for a package of benefits that in no way replaces these? The impact on funding from now to beyond 2012 has robbed the heritage and arts sectors of much of the vitality engendered by lottery funding. The loss of funding will create a legacy from which it will take considerable time to recover, even if investment returns to pre-Olympic levels once the Games are over.

My Lords, the debate focuses on the arts and cultural heritage, which are close to my heart. It is most timely, because it leaves the Government with time to do something about it. I thank my noble friend Lord Baker for introducing it in his usual forthright and inimitable style. I feel a certain sympathy in advance for the Minister who is to reply, especially as he was under attack yesterday at Question Time on the same subject.

My starting point is the recognised importance of our cultural heritage. In this, our great musical institutions, orchestras, ballet, theatre and, of course, museums have all succeeded in enabling us to hold our heads high in the world, despite scarce and diminishing resources. I declare my interest as a former trustee of National Museums Liverpool. Liverpool is, of course, famous for football and horseracing, but it also enjoys a reputation for music—it has the Royal Liverpool Philharmonic, as well as pop—for theatre, and for its famous Walker Art Gallery and Merseyside Maritime Museum. The Merseyside Maritime Museum also embraces a slavery museum, which we talked about last week. The city also has Tate Liverpool—the Tate of the north—and other specialist museums and galleries. As a member of the delegation to the Parliamentary Assembly of the Council of Europe, I point to the Churchill Museum, which is not far from here, in the Cabinet War Rooms, which last year won the Council of Europe museum prize for using new technology and brilliant design to drive its message home. What has been achieved despite increasingly difficult and diminishing funding is wholly admirable, and many more examples have been quoted today. As the noble Lord, Lord Luce, said, the role of museums and the arts in complementing our education system, particularly in the light of the national curriculum introduced during my noble friend Lord Baker’s stint as Secretary of State for Education, is vital.

Since the lottery fund was introduced in 1994 to support projects that would not otherwise be funded through general taxation, it has performed a very useful role. But I believe that people who buy lottery tickets do so on the basis that they are providing alternative and additional funding for the arts; they do not just hope to win the big prize or to make up for deficits in government funding.

I also find it very difficult—I think other noble Lords have also said this—to understand how other countries can provide government support through direct government funding or tax and other incentives, and we cannot. Therefore, can the Minister give us any encouragement that more thought will be given to alternative methods of providing finance or that there will be more support for something like Arts & Business, to which the noble Baroness, Lady Kennedy, referred?

My concern is that the Government give greater priority to sport than to our cultural heritage and the arts. For example, two days ago a Question was asked concerning Liverpool’s role as European Capital of Culture in 2008. Comparisons were made with the special funding provided for the extra policing of the Commonwealth Games in Manchester. In defending the Government’s decision not to provide similar extra funding to Liverpool, the noble Baroness, Lady Scotland, said:

“Liverpool asked for this honour and was lucky enough to get it”.—[Official Report, 15/5/07; col. 120.]

That is perfectly true, but the implication of that remark was, “So they’re on their own”. Is this a question of sport versus the arts or is it a question of London versus Liverpool?

The astronomical growth in the projected cost of the Olympics should not come as a surprise. I have to confess that I was also one—obviously in a minority here today—who felt that Paris would have been quite close enough for the Olympic Games. Nevertheless, since our bid did succeed, I believe that we have to make the best of it and, as a London council tax payer, I am prepared to pay that extra whack. But I do not wish to see the arts suffer as a consequence. I look forward to hearing more about the plans for the cultural Olympiad, to which my noble friend Lord Coe and others have referred, about which announcements are shortly to be made. Having attended the cultural Olympiad in Barcelona three years ago, I hope that we will be able to build on that success and that there will be adequate funds to do so. More immediately, I look forward to hearing what the Minister has to say.

My Lords, along with many other noble Lords, I congratulate the noble Lord, Lord Baker, on initiating this debate. It was a pleasure to listen to his incisive speech. It was also a great pleasure to listen to the speeches of other noble Lords, who displayed an impressive range of knowledge, expertise and, above all, commitment in so many areas of the arts, heritage and sport.

What particularly sticks in the throats of many noble Lords in this debate is, as the noble Lord, Lord Baker, said, the Prime Minister’s speech at the Tate Modern, which promised no return to boom and bust in funding for the arts. It was a very short time ago, in March, that the bitter realisation set in that he is presiding in his final weeks over a cut in funding for arts, heritage and grassroots sports that will endanger the long-term cultural health of the nation.

In March, the Secretary of State announced that a further £675 million, as we have heard from many noble Lords, would be diverted from the National Lottery good causes funds to meet the increased costs of the 2012 Olympic Games. It was a grim day for arts, heritage and grassroots sports. This new diversion means that some £2.2 billion will go towards the Games from the National Lottery. That is 20 per cent of lottery income for good causes from 2005 to 2012-13. After 2009, the proposed transfer of £675 million breaks down as £425 million from the Big Lottery Fund and £250 million from the other good causes.

We have heard from all sides of the House how important lottery funds are to charities and voluntary and community groups in the arts, heritage and sport. The Heritage Lottery Fund estimates that, in 2005-06, 55 per cent of its lottery awards were made to this sector. Arts Council England estimates that it awarded about 60 per cent of its budget to the voluntary and community sector, while Sport England estimates that some 30 per cent of its funding has gone to voluntary and community organisations over the lifetime of the lottery. What does this mean in cash terms? Heritage charities stand to lose out on almost £50 million, arts charities on over £37 million, and sports charities on £16 million, which is a total loss of over £100 million.

The Secretary of State’s Statement in March said that:

“We have also agreed with the Big Lottery Fund that resources for the voluntary sector will be protected and will, as it expects, continue to receive the £2 billion from the Big Lottery Fund between now and 2012”.—[Official Report, Commons, 15/3/07; col. 452.]

That voluntary and community organisations will not be affected is of only limited consolation. As the noble Lord, Lord Watson, rightly pointed out, much of the funding to local authorities and statutory recipients of funds from the Big Lottery Fund now being cut actually goes to arts, community and voluntary organisations. Further, the diversion affects recipients through other lottery distributors such as the Heritage Lottery Fund, Arts Council England and Sport England.

Total awards from the Heritage Lottery Fund will fall from £255 million in 2007-08 to £220 million in 2008-09, and £180 million per year from 2009. Heritage Link, the Voluntary Arts Network, CCPR, the umbrella organisations for thousands of voluntary bodies in heritage, arts and sports, together with the National Council for Voluntary Organisations, which has over 5,000 members from the voluntary sector, are campaigning against the diversion of lottery funds. Members on these Benches and clearly many other noble Lords support the urgent call by these organisations on the Government to reconsider and to give assurances that no such further raids will be made.

A loss of £62 million over four years to Arts Council England, a loss of £55 million to Sport England, and the loss to the Heritage Lottery Fund of £90 million will do great damage, despite the enormous care being taken by the HLF and other distributors to try and mitigate their losses. The loss to the HLF, for example, is equivalent to the loss of four years’ spending on smaller community and voluntary sector grants and the entire spending aimed at involving younger people—some 6,000 projects. That is a loss equivalent to the planned spend on churches and historic town centres from Gateshead to Great Yarmouth for four years—some 1,400 projects. It is a loss the equivalent of five years’ funding for parks, which in the past have included Birkenhead park in the Wirral, Tollcross park in Glasgow and Lurgan park in Northern Ireland.

The HLF warned the Public Accounts Committee, which is inquiring into a National Audit Office report on the lottery distributor, about the potentially detrimental effects of diverting funding from the lottery. The evidence of Ms Carole Souter, director of the Heritage Lottery Fund, to the committee on 25 April, when asked whether the Secretary of State had been told of the fund’s concern over diversion of funding, was:

“We have made clear that the needs of heritage outstrip even the funds we have available already and that, therefore, any loss of funding to the heritage is something we can ill afford and, yes, we have made that very clear”.

The Historic Houses Association itself points out that currently there are some 17,000 buildings at risk in England alone.

Let us not think that arts funding is only for our great national institutions such as the Royal Opera House. It is not even only for our orchestras, which have had spectacular success in attracting new audiences and will also be hard hit by losses in funding.

The importance of arts funding is to enable grassroots community arts projects to thrive. As Tony Hall, the executive director of the Royal Opera House, pointed out in the Evening Standard in March,

“most of the Lottery funding for the arts is no longer going on these big-ticket capital projects. Instead, it now funds lots and lots of smaller-scale projects in communities up and down the country”.

Anthony Gormley has forcefully made the same point. It is to enable the artistic landscape in Britain to innovate, experiment, develop and flourish. Noble Lords have made the point that 86 per cent of individual grants are for £5,000 or less.

We are also to have the cultural Olympiad, which a number of noble Lords, including my noble friend Lady Bonham-Carter, have discussed so cogently. The noble Lord, Lord Coe, was very eloquent about the benefits of the cultural Olympiad. The year 2012 will be a showcase not only for British sports but for British arts and heritage. The cultural Olympiad, running in conjunction with the Olympics, is a unique opportunity for the UK to showcase its diverse and rich culture to a global audience. It does not make sense to cause potentially permanent damage and drain resources from these areas at a time when we should be building them up.

This loss of funding coupled with the voluntary arts sector’s loss of trust in the Government threatens to erode its enthusiasm for participation in the cultural Olympiad and diminish the benefits of any subsequent legacy. My noble friend referred to the relaunch on three occasions of the Olympic Legacy Trust, which seems rather extraordinary. That fund, sadly, is also funding many other projects, such as the school games.

What should be done? The public do not want to see a raid on lottery funding for good causes. The YouGov poll recently commissioned by the NCVO demonstrates that the public support the campaign to ensure that no further lottery good cause funding is diverted due to the 2012 Olympics increasing infrastructure costs: 67 per cent of those polled said that they disagreed that more money should be diverted from lottery good causes.

Will the Government rethink this raid on the lottery? As many other noble Lords have pointed out, the Secretary of State on 23 April said of the diversion:

“I see this as more of a loan”.

What exactly does that mean? As the noble Lord, Lord Marland, asked, is this an absolute guarantee of repayment out of the proceeds of increased land value? Who will get the benefit of the regeneration of that part of London? Will it be the LDA or will the lottery be able to claw it back? Will the Minister give an assurance that there will be no further diversion of lottery funds?

To date, the Government have treated the National Lottery as a cash cow. As the noble Lord, Lord Watson, mentioned, Camelot has so far succeeded in mitigating some of the effects of the diversion of funds. It is quite clear, reading between the lines of its current briefing, that there are problems ahead for Camelot in riding successfully two horses simultaneously and making sure that both the mainstream lottery and the lottery for the Olympic Development Fund will be funded and on track with current plans.

What else can be done apart from treating the raid as a loan? There is the possibility of a lottery tax regime change, which we on these Benches have raised before and which was discussed when we debated the Bill on the Big Lottery Fund. The lottery is subsequently taxed on its turnover. Switching to taxation based on profits would allow the operator to invest more of its revenue into growing its business. We believe that that would improve revenue. There is, of course, the possibility of improved enforcement. Camelot argues that a clampdown on the legally grey area of lottery-style games would increase revenues, which could all be put towards the Games.

We on these Benches are great supporters of the Olympic Games, but the Government must mitigate the problems raised by this diversion of funds. It would be tragic if the Government’s actions set the interests of the Olympics against those of the arts and heritage. I very much hope that in his reply the Minister gives some creative thought as to how that mitigation can take place rather than simply attempting to justify the Government’s actions.

My Lords, I, too, thank the noble Lord, Lord Baker of Dorking, for introducing this interesting debate and I congratulate the many noble Lords who have spoken.

It is important for a nation to preserve its heritage. If heritage is not maintained it will wither away or fall down. If your Lordships do not believe in the cultural value of heritage, consider the enormous value of heritage to the tourist industry. Tourists do not come to look at the Dome.

Ahead of the forthcoming Comprehensive Spending Review, a number of respected organisations, including the Heritage Lottery Fund, the National Trust and English Heritage, published a document, Valuing Our Heritage. It showed over £1 billion-worth of outstanding heritage work and demonstrated that spending on heritage in England is less than in Germany, Italy, Portugal, the Netherlands and other European countries. Between 2000 and 2007 English Heritage’s grant-in-aid was reduced in real terms by over £20 million.

As the bulk of English Heritage’s work is with specialist craftsmen, where wage inflation runs at or close to double figures, so inflation for English Heritage is far worse than the official figures used when calculating “real terms”. The true reduction in English Heritage’s funding over the period is probably in excess of £50 million. That reduction has been compensated for by the Heritage Lottery Fund, but, as my noble friend Lord Baker has already said, this funding has been steadily reduced from £355 million in 2004 to £290 million in the current year. That will drop to £180 million in 2008, from which the latest Olympic raid will take another £90 million.

If, as has been said, the money borrowed from good causes to fund the Olympics is returned—and that is a big “if”—will heritage be fully compensated? Old buildings deteriorate at an exponential rate. What costs £1 today will cost £2 or more in just a short time. Libraries might have to close down and their collections of books dispersed. There are many other examples, some of which have been mentioned today. The point is that money borrowed in this fashion must be returned with an adequate uplift to compensate fully for the inflation of costs incurred by postponing or delaying work.

As well as the impact on the arts and heritage, there is to be—despite the ambition to leave a sporting legacy—a cutback in lottery money available for sport, as the noble Lord, Lord Rosser, has said. I declare an interest as chairman of the National Playing Fields Association. The Government pay regular lip service to the benefit to young people of taking more exercise and playing more sport. Taking a grand total of £395 million away from those who support the grass roots of sport and using the funds to contribute to building large showcase stadiums may generate an initial enthusiasm, but the lack of facilities due to the curtailment of funding at the less flamboyant end of sport will rapidly kill off any interest.

I have spoken more about heritage and sport than about the arts. Many noble Lords have spoken more eloquently and knowledgeably than I could on that subject. Although the impact of the lottery raids on the arts will be severe, they will not have the same irreversible impact as depriving children of sport—their youth cannot be replaced—or the harm that will be caused by delaying repairs and maintenance to the nation’s heritage.

When my noble friend Lord Baker started the lottery, in the face of the cynicism of others, it was, as he said earlier, to raise money for the arts, charity, sport and heritage. Since its conception, the lottery has gone from strength to strength and has raised—and continues to raise—significant sums of money. Unfortunately, it has been seen by this Government as a source of funds for pet projects rather than for the purpose for which it was originally set up. I earnestly repeat the request to the Minister that there will be no further raids on lottery funds to pay for the 2012 Olympics.

I realise that this is extraordinarily unlikely, but if the costs of the Olympics do not continue to escalate and the total contingency of £3.2 billion is not all used up, will those funds which have been purloined from the lottery be released back to it, and thereby to those causes that the lottery supports, rather than being snaffled by the Treasury?

My Lords, I am grateful—I think—to the noble Lord, Lord Baker, for securing this interesting and timely debate. As he said, he is an old friend, and I very much hope that our friendship will survive the speech I am about to make.

I thank the noble Lord, Lord Coe, for coming here today in his position and for making a measured and interesting contribution to the debate. It contrasted with the mood of some of the other speakers. We have got the Olympics, which is absolutely brilliant and will bring enormous benefit to this country. Of course there are problems, some of which have been raised today, but we should not be quashed by them.

Noble Lords have raised many interesting points; I am afraid that I will not be able to answer all of them in my 20 minutes, but I promise to write after the debate to those whom I cannot answer now.

I wish to put this debate in a political framework—that is what my notes say, but in fact, the noble Lord, Lord Baker, did it for me. In her memoirs, The Path to Power, published in 1995, Margaret Thatcher made the following point—the only point about the arts in the entire book:

“There were more discussions of public expenditure that autumn of 1970. The Treasury had its little list of savings for the education budget—including charges for libraries, museums, school meals and school milk. I knew from my own experience . . . how vital it was to have access to books. So I persuaded the Cabinet to drop the proposed library charges, while reluctantly accepting entry charges for museums and galleries”.

Fast forward to when the Conservative Party lost the 1997 election—arts funding stood at £187 million a year. Incidentally, it stood at £139 million when the noble Lord, Lord Baker, was Secretary of State for Education in 1988. This Labour Government increased that investment from £187 million, with a real terms increase of 73 per cent, to £412 million this year. This transformed the landscape of the arts in the United Kingdom. A 72 per cent increase in budget for theatre translated into increases in audiences of 40 per cent. Creative partnerships have been developed so that more than 610,000 young people can be involved in creative projects. Grant in aid to museums has risen by 29 per cent in real terms since 1997. Free admission to all our national museums has brought about an 83 per cent increase in total visits to formerly charging museums since 2001, representing an extra 6.5 million visits in 2006.

The noble Lord failed to mention Renaissance in the Regions, a scheme I was involved in, to revitalise regional museums. Some £147 million has been invested in that initiative, and I can assure the noble Baroness, Lady Bonham-Carter, that this investment is safe.

This Government do not need lessons from anyone on the importance of proper funding for culture, particularly from a senior and distinguished member of Margaret Thatcher’s Cabinet, the noble Lord, Lord Baker of Dorking. This Government have helped create a transformation in the cultural infrastructure of the country.

Let me now move to the meat of this debate; the effect on heritage and the arts and other good causes of the transfer of lottery funds to the Olympics. The first thing to say is that the Government have always been entirely clear since deciding to support London’s Olympic bid that money raised from the lottery would be a key part of the funding package. A number of points have to be made that I hope will reassure the arts and other good causes and meet some of their concerns, as well as answering some of the concerns raised today.

We have agreed with the Big Lottery Fund that resources for the small, voluntary and community sector will be protected. This means that the sector will still receive at least the amount implied by the Big Lottery Fund’s earlier commitment—around £2 billion. The NCVO has welcomed this, but clearly not the noble Lord, Lord Clement-Jones.

The other distributors are also concerned that support for small-scale and voluntary-sector projects remains available. We have heard that 50 per cent—£210 million—of the Arts Council’s grant in aid funding already goes to smaller organisations and projects and that trend has continued.

There has been a lot of discussion about the Olympic Park and repayment to the lottery. The Government will make sure that lottery good causes will have first call on any profits that come from the sale of the Olympic Park after the Games, so a share of money going to the Olympics will return to lottery funds after the Games. A number of noble Lords have asked about that—questions that I absolutely agree with—and we will be providing more information to firm up that proposal.

In his book Creative Britain published in 1998, my noble friend Lord Smith of Finsbury made the following point, which was also made today by several Peers:

“We must not forget the enormous importance that will still remain for support from the private sector. Arts organisations derive their funding from a range of sources, starting, of course, with their audiences, at the box-office. Additional backing is and must be a partnership between private support and sponsorship, and public subsidy. That partnership is vital”.

The noble Baroness, Lady Kennedy of The Shaws, spoke eloquently about that issue and the matter was raised in a positive way by the noble Lord, Lord Luce, but characterised by the noble Lord, Lord Baker, as just getting money from rich philanthropists. The partnership has happened and the proof is that the private sector invested £529.5 million in culture during 2005-06.

As we heard from the noble Lord, Lord Baker, earlier this month, the Tate held a gala dinner in New York. That charity has raised $81 million in cash donations. The Tate generates 67p for every grant-in-aid pound.

The Royal Opera House only last week received £10 million from the Paul Hamlyn Foundation. But it is not only the big arts organisations that are raising money from sources other than the Government or the lottery. The Watermill Theatre in Berkshire is an excellent example: this small producing theatre represents a classic case of successful plural funding. The theatre’s Save the Watermill appeal is to raise £3 million capital funding. In less than two years, the theatre has raised £2,300,000 from private sources and £200,000 from Arts Council England: South East. 

My noble friend Lord Rosser made a point about Sport England in relation to private funding and it is a point well made. There is a temporary diversion of some lottery funds towards Olympics-related projects and there are also, of course, other sources of project funding for entrepreneurial, dynamic arts organisations however large or small.

I should like to say a few words about the lottery. It is a success story, raising around £1.4 billion for good causes every year. Figures released last year showed that the National Lottery returned more to society than any other lottery in the world. It is cost-efficient, innovative and reliable. In the previous financial year, more than 35 per cent of revenue was generated through innovations and channels introduced since the start of the second lottery licence. The funding plan for dedicated Olympic lottery games is ahead of schedule, beating the sales forecast in both the first two years of the plan. As the noble Lord, Lord Addington, mentioned, one way in which to mitigate the decrease in revenues for other good causes is to maximise the overall size of the lottery cake. It is also the Government’s intention—this clears up some confusion—that existing lottery projects need not be affected and that none of the money will be transferred until 2009. That point was well made by my noble friend Lord Faulkner.

There has been much discussion about the Cultural Olympiad. In their bid to host the Olympic Games in 2012, the Government set out their aspiration to develop a cultural programme alongside the sporting elements of the Games. From the closing ceremony of the Beijing 2008 Olympics, as we heard from the noble Lord, Lord Coe, the UK will commence its Cultural Olympiad, a developing four-year period of cultural activity. The Cultural Olympiad is intended to encapsulate the widest possible range of culture from the arts, museums and galleries, to the historic and built environment, to libraries and archives, to the moving and digital image, from the biggest institutions to the smallest community groups. My right honourable friend Tessa Jowell made an absolute commitment in Liverpool two days ago. She said:

“We will soon be making a detailed announcement of a Legacy Trust—£40 million”—

to support cultural and—

“sports engagement across the UK in the run up to, and during the 2012 Games”.

She added:

“My challenge to the Trust is that they spend 70% of their funding on culture”.

As we have heard, the Heritage Lottery Fund will contribute a total of £161 million. This means that there should still be left over £700 million of new lottery money for the fund between 2009 and 2012. The Arts Council England will contribute a total of £112.5 million. This means that there will be £500 million of new lottery money for the council between 2009 and 2012. The period of the Arts Council England supporting very large-scale capital grants has come to an end, which means that there is now a focus on smaller grants to organisations and individuals. This fact may go some way to answer some of the genuine concerns we have heard today. That point was made by the noble Lord, Lord Clement-Jones.

I should like to deal with a number of points that came up. As I said, I cannot answer all the points but a few themes must be confronted. Many noble Lords asked whether I could promise that no more lottery money will be diverted. The new Olympics budget has been rigorously and independently assessed. We have put in place rigorous cost-control measures. We believe that this is a robust package. It is not inevitable that costs will rise and—this is a crucial point—the inclusion of a £2.7 billion contingency means that, should the need arise, the funds are available to meet it.

I will come back to the point that the noble Lord, Lord Howard, made in a moment. A number of noble Lords have talked about the Comprehensive Spending Review, and the double whammy of losing money to the lottery and the spending review being just around the corner. Noble Lords will understand that I cannot say anything about the next spending review, but many points have been made, and they will be noted.

The noble Lord, Lord Marland, asked whether the new lottery games for the Olympics are damaging the good causes. Non-Olympic good causes may lose on average about 5 per cent of their income as a result of sales diversion. The new lottery games are on course, as I said earlier, to raise £750 million towards the cost of the Olympics. On the renewal of the licence, the winner of the new lottery licence will be announced by the National Lottery Commission in the summer, and an announcement of the preferred bidder is expected next month.

The noble Lord, Lord Watson, talked very interestingly about Scotland and asked what the impact will be in Scotland. The cash contribution of the arts, including film, in Scotland to the 2012 Games will be around £15 million. However, there should still be more than £60 million for the arts, including film, in Scotland between 2009 and 2012. There should still be more than £410 million of new lottery money for Scotland between 2009 and 2012. The noble Earl, Lord Caithness, asked about the Heritage Lottery Fund. He may be encouraged to hear that the HLF expects to absorb the impact of Olympic funding over time, rather than make deeper short-term cuts. That means that there will be less impact on its customers, and it will still be able to provide support to the full range of heritage activities. Between now and 2019, HLF expects to distribute £1.9 billion to the heritage sector, some £180 million a year from 2009 and beyond, and it has also given a reassurance that those projects already-promised grants will be absolutely safe.

The noble Lord, Lord Howard, interestingly, asked about what will happen to the contingency. Some £2.3 million would be met from Exchequer funds; the balance of half a billion pounds is to be met from the lottery. The lottery sum is already in the revised figures that were announced a few weeks ago, so if it is not spent, it will simply stay with the lottery. Obviously, it would be rather too much to expect Exchequer funds to pay money to the arts if the contingency is not used. There is an interesting note about the contingency and matters around it, which I will pass to the noble Lord after our debate.

I draw noble Lords’ attention to the words of our next Prime Minister, Gordon Brown, speaking at the Brighton festival last Sunday. Much has been said about the present Prime Minister’s views on the arts, as expressed in his speech. Gordon Brown spoke of wanting to achieve two things; first, properly to fund the arts:

“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”.

The second thing that he wants to achieve is that every young person and every school child gets access to the arts and gets a chance to learn about the great range of culture, from music to drama, and everything else.

This has been an extremely interesting debate. I conclude by saying that we were delighted to win the Olympic Games for our country. It will give huge pleasure and benefit to the people of Britain and it will help and encourage sport and the arts. It will leave a massive legacy of great benefit to all our citizens, and the Paralympic Games, which have not been mentioned today, will provide a showcase for some of the bravest and most talented people in our country. That in itself is a worthwhile objective.

My Lords, I thank the Minister for his reply. Our old friendship remains intact. He has defended the indefensible and excused the inexcusable. That is all right. I also thank all noble Lords who have spoken. Every Peer expressed concern, alarm and despondency about the effect of moving £675 million away from the lottery into the London Olympics: my noble friend Lord Luce on the arts; the noble Lord, Lord Rosser, on Sport England; the noble Lord, Lord Ramsbotham, on art in prisons; my noble friends Lord Inglewood and Lord Caithness on historic houses and castles; the noble Lord, Lord Faulkner, on railway heritage; the noble Baroness, Lady Bonham-Carter, on museums; the noble Lord, Lord Clement-Jones, on churches and cathedrals; and my noble friend Lady Hooper on heritage and charities.

We also heard from the noble Baroness, Lady Kennedy, about the continuing difficulty of raising money from business to support the arts. She will be aware that not only is that difficult and somewhat depressing but that in some areas of the country—the east Midlands, West Midlands and the fenlands—there has been a decline in business support for the arts in the past three years.

I have three messages for the Government and the Minister. First, you have taken £675 million. No more must be taken. There would be public outrage if more money was raided from the Lottery funds to support the Olympics. A huge amount has been transferred, which will harm a whole range of activities. Secondly, regarding the loan that we heard about, Tessa Jowell says that the money will all come back. Most loans are accompanied by a guarantee. I see the Minister nodding. If he could rise at the Dispatch Box now and say, on behalf of the Government, that he will guarantee that that £675 will be repaid—

Million!

I should have said £675 million; it will be “billion” next time. That would be a meaningful guarantee, but, of course he cannot get up to say that.

My Lords, what I said to the noble Lord, Lord Baker, was that when the Olympic Park is sold, money will come back to the lottery. I said that a number of legitimate questions had been asked by his noble friend Lord Marland regarding the details of the arrangement. They were absolutely legitimate and important questions and I said that we would provide the sort of detail that any business person would expect for an arrangement such as this.

My Lords, that takes us a bit further and I am encouraged. The phrase that the noble Lord used in his speech was “temporary diversion of money”. That means that a timescale has been imposed on it, and that when that time is over and the Olympics are over, it will be diverted back to us.

Finally, I urge the Minister: please listen to the comments of the noble Lord, Lord Smith of Finsbury. He left the culture department with an enhanced reputation—an almost impossible task for any Minister who has held that role. He said very clearly that enough is enough. I heard the words of Gordon Brown that were quoted by the Minister at the end of his speech; and I hope that Gordon Brown notices them after the regime change. It is up to Gordon Brown to ensure that there is no cut for arts in the spending round this year. That will be his test. All the arts and heritage bodies expect a cut. If it is frozen, it is a cut. We very much expect the Chancellor to redeem what he said in Brighton last week by increasing spending on those bodies. Once again, I thank all noble Lords who have spoken.

Does the noble Lord wish to withdraw his Motion?

Oh yes, my Lords, I will, but we can do it all again if you want. I beg leave to withdraw the Motion for Papers.

Motion for Papers, by leave, withdrawn.