The New Statesman Interview - Chris Smith

"The chance of a non-profit company running the Lottery is still possible. We need competition." Chr

Chris Smith, the Secretary of State for Culture, Media and Sport, is one of those rare cabinet ministers who has kept the same job since the general election. "There are not many of us," he declares with relief rather than pride, when we meet soon after the latest reshuffle. Smith is also the longest serving minister the department has had. Such stability is a novelty for them and him. In opposition he was moved from one shadow portfolio to the next with dizzying frequency. For the first time in his political life he has had time to make a prolonged impact in one policy area.

On the surface, the scope seems fairly limited. Even with the mighty Lottery, Smith's formal powers are severely constrained. It will be the five members of the National Lottery Commission, for example, rather than the Secretary of State, who will decide whether Camelot or another consortium should run the venture from 2001. But Smith is not exactly sitting back passively awaiting the commission's verdict. He is keen to highlight the factors that will sway the commission's decision-making and does not rule out the appointment of a not-for-profit organisation. "The chance of a non-profit making body running the Lottery is still very much in play. Clearly the first criterion is that we need a fit and proper organisation to run the Lottery. Second, we need to get the best possible return to the good causes. The commission will consider any non-profit making bid on that basis. If a non-profit making bid comes from a fit and proper organisation, maximising return to good causes, the commission will want to consider them very seriously. The wider point is we need strong competition and then we'll get a good operator."

Smith is especially keen to make a further point. Indeed, he gets up from the sofa in his office and heads for the desk to get the precise wording of what he sees as a key section in the criteria for a successful bid. "There is one thing that is worth noting," he tells me, as he returns to his seat. "One of the aspects of the bid that the commission will want to look at is the levels of remuneration for the key personnel involved in any bid. This is something I was very keen for them to do."

He then consults the paper he has taken from his desk. "I will read the precise wording to you. It is worth flagging up." He reads aloud the pivotal words: "The commission acknowledges that the size of the remuneration of the packages at senior levels of management can affect the public perception of the Lottery. It is therefore important for the applicant to be transparent over the factors determining the salaries and bonuses. The commission will wish to be satisfied that applicants have procedures that guard against levels of remuneration that are excessive in relation to the responsibility and performance of management." He pauses and looks up. "That is tough wording and the message coming out of the commission, and in everything we did in helping them to frame that requirement, is that open-ended profit formulae, such as in the present contract, and excessive levels of remuneration and bonuses, is not what the people want to see."

Smith's emphasis on levels of remuneration suggests that he remains unhappy about Camelot's highly profitable running of the Lottery. Is Camelot paying its senior managers "excessive" amounts? "As you will recall from two years ago, I had quite a public row with them over levels of bonuses. To a certain extent, we've gone past that period and things are considerably better now. It helped that they said they would pay some of the bonuses to charity."

Note the qualification. Only "to a certain extent" has Camelot progressed past its tense early relationship with Smith. He is still not convinced that Camelot has got its priorities right. "What everyone rightly accepts is that Camelot has run an efficient lottery. It was set up well, it started properly and they've continued to run it well and efficiently. They do, however, make a substantial profit of £50 million a year. There's nothing that can be done about that under the present contract, which is why we're looking at levels of remuneration for the next contract. This is an important aspect of the consideration."

Smith cannot say explicitly whether or not he wants Camelot to secure the new contract but he is making it as clear as he can that another credible bid, with managers on lower levels of pay, would be in with a good chance.

He is also keen to see changes in the way Lottery money is distributed by making it easier for smaller projects to apply for cash. "One of the problems at the moment is that the procedures that have to be gone through are burdensome and daunting. I am looking at ways in which we can make the application process simpler and more understandable, and how we can make it easier for people in deprived neighbourhoods to put in applications. We are, for example, consulting the Plain English Society to advise on how to simplify the forms."

He is confident that forms for smaller projects will be available "within months" and that they will speed up the time it takes for groups to receive the cash. "We need to differentiate between bids for millions of pounds and, for example, a bid by a local pensioners' group for a minibus."

He wants to ensure, also, that the most run-down areas get more of the money. "The East Midlands, for example, has received less money per head of population than anywhere else. The average around the country in £90 per head, but in the former coalfields areas in the East Midlands and elsewhere the average is £23 a head, and in some areas it's as low as £6. We must find new ways to improve the geographical fairness." The areas that have done best, according to Smith's latest figures, are Scotland, Northern Ireland, Wales and central London.

Smith's driving theme is "accessibility", whether applied to the Lottery funds or to his other areas of responsibility. He wants, for example, Premiership football clubs to take into account the low incomes of some ardent supporters. "The cost of tickets is very high in the Premiership, although I'm pleased to say that my team, Arsenal, is not as bad as Tony Banks's, Chelsea. Ultimately it's for the clubs to decide, but I certainly want to ask the leading football clubs to think seriously about their supporters, particularly those on limited means. They need great players, but they also need their supporters."

He then claims some of the credit for the decision by Sky to allow terrestrial TV stations the right to broadcast the England-Scotland football match this month. I express surprise, as I had read that Sky was boasting about its generosity in extending access to the match. "Well, we extended the list of sporting events that must be made available to all viewers. We also put in place new provisions about crucial qualifying matches. So we would like a little credit for this as well."

As for the BBC, Smith suggests that he is warming to the idea, proposed by the Davies Committee in the summer, that an external audit should be introduced. "We've announced a one-off exercise and we're currently inviting bids from a number of different firms to carry this out. We need to find out what the BBC currently spends on what, where the commercial income comes from, where the licence fee comes from and goes to. I need hard information before I can make a judgement on future funding."

He rejects the argument put forward by some within the BBC that an annual external audit by the National Audit Office and the Public Accounts Committee would threaten the corporation's independence. "As a matter of principle, the licence- fee-paying public must have confidence that their money is being vigorously accounted for. The BBC must be robustly independent in deciding what goes into its programmes. In terms of how they spend their money, I think the public should have a say as well."

Does he believe the BBC is wasteful at the moment? "I note that one of the things Greg Dyke said when he was appointed director-general was that he felt too much money was spent on BBC bureaucracy and he wanted to shift resources out of bureaucracy into programme-making. I very much support that view."

On the arts more generally, Smith would probably like to have a bigger budget to spend. He smiles when he observes that ministers have all got to be "prudent" as they eye up Gordon Brown's large surplus. But he is dismissive of arts leaders who have accused the government of betrayal because of what they regard as inadequate funding. "I do have sympathy with those who say that if you want to achieve your objective of maintaining excellence then you have to invest in the arts more. But I have no sympathy for the likes of Peter Hall, who simply ignores what is happening and tends to base most of his statements on mythology and is an increasingly isolated voice."

Smith has not been a dominant, headline-grabbing minister in the Blair cabinet; but the politician who was, in the space of two years in opposition, spokesman on heritage, social security and health, seems to be enjoying himself more than some of his fractious colleagues. "The things we deal with here - sport, film, arts and TV - are the things people talk about in the pub and with friends. They give them a sense of identity as communities and real people."