In three years time, I want all our most deprived areas to be getting their fair share on Lottery funds

Tessa Jowell Culture Secretary

Ms Jowell hailed the success of the Lottery as she opened a debate on its achievements in the Commons on Friday but said change was needed.

A consultation paper on change is being issued this spring so there can be effective competition for the next Lottery licence.

It comes in the wake of the High Court wrangling that accompanied the last franchise contest.

Ms Jowell told MPs: "It's clear the high level of funds currently held in the National Lottery distribution fund is, and should be, a cause of public concern.

"People ask why good applications are rejected while money appears to languish unspent."

Faster distribution

The government says it is sensible to keep reserves in the fund because grants are given out in stages, rather than handed to project managers all at once at the start.

But Ms Jowell said things could be done to make the flow of funds quicker.

There is currently about �3.5bn in the distribution fund, although the Lottery is committed over the long-term to providing �3.82bn.

Jowell says rural areas are "chronically underfunded" by the Lottery

Small towns especially were suffering from the problems over distributing funds to projects across the country, she continued.

"There does seem to be a small town problem - those areas where there is not the established infrastructure and funding network.

"The risk is that these are the areas that lose out on their fair share of Lottery funding."

The Lottery should be more pro-active, argued Ms Jowell, "seeking out" applications instead of just waiting for them to be submitted.

The culture secretary used the debate to trail the forthcoming announcement of another �10m of Lottery funding to help rural areas, which had been "chronically underfunded".

"In three years time, I want all our most deprived areas to be getting their fair share on Lottery funds," said Ms Jowell.

'Government raids'

Lottery funding would not be a government resources, she said, but there was a "fine line" to be trodden on that issue.

Conservative culture spokeswoman Anne McIntosh, who hailed the Lottery as a lasting success of John Major's government, argued that line was being crossed by the government.

Money had been "diverted" away from so-called good causes, including a �100m fall in the amount of cash for sports projects since 1997, she said.

"This raiding of the Lottery for purposes intended to be funded out of general taxation is deeply regrettable," Ms McIntosh said.

That point was echoed by Liberal Democrat culture spokesman Nick Harvey, who said the government should avoid making essential public services dependent on Lottery funding.

'Implosion' warning

Mr Harvey said it was vital to make the best of the Lottery while it lasted.

"The experience of lotteries elsewhere around the world is that, however successful they seem to be for quite a time, they do inevitably in the end more or less roll over and implode," he said.

"No one can predict with any certainty how long they last and certainly it is the case that our own Lottery has shown some diminution in the ticket sales."