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Public Bodies (Abolition of the National Endowment for Science, Technology and the Arts) Order 2012

My Lords, let me start by reassuring noble Lords that, while this order will abolish the National Endowment for Science, Technology and the Arts as a non-departmental public body, NESTA's future is secure. It is being reconstituted as an independent charity with the National Lottery endowment transferred to a separate charitable trust. There is no anticipated negative impact on NESTA's work as a result of these changes. NESTA was established by the National Lottery Act 1998 with an endowment from the National Lottery, currently valued at £321 million. Over the past 14 years, it has promoted innovation through a combination of activities. In recent years, its focus has been on delivering practical programmes, such as the Big Green Challenge, providing early stage capital to innovative companies and carrying out research into innovation. NESTA's future was considered as part of the Government's public bodies reform programme and our commitment to reduce the number and cost of quangos. NESTA performs a valuable function—it delivers highly regarded programmes and research—and we wanted to see its activities continue, but it did not need to remain a public body. Therefore, the Government put forward a proposal to abolish NESTA using the powers of the Public Bodies Act, which, as noble Lords know, received Royal Assent in December. BIS launched a consultation in October last year on the proposal to change NESTA's status. Some 85 per cent of responses agreed with the preferred policy option as the most suitable choice for NESTA. Furthermore, more than 90 per cent of responses agreed that NESTA would benefit from increased independence from government. BIS carried out a full impact assessment of the transition and it is estimated that there will be a net benefit over 10 years of £1.84 million. I should like to give noble Lords more details about the changes once NESTA is abolished as a public body. It will be reconstituted as an independent charity with the National Lottery endowment held in a charitable trust. Both the charity and the charitable trust have already been registered with the Charity Commission and the objects of the charity are sufficiently broad to allow NESTA to continue with current activities. If the noble Lord, Lord Warner, were here, I am sure that he would be pleased to note that, as he asked during the passage of the Public Bodies Act whether NESTA's activities would be accepted as a charitable purpose by the Charity Commission. All property and rights relating to the National Lottery endowment will be transferred to the charitable trust. All NESTA's other property and rights, and its staff, will be transferred to the independent charity. The new NESTA charity is the sole trustee of the charitable trust and will apply returns from the endowment to advance the charitable objects of the trust. The NESTA charity also plans to obtain income from other sources, which it can use for its wider objectives. A final transfer scheme will be laid in the House once the order is made and the transfer will take place at the same time as NESTA is abolished. Subject to parliamentary clearance, the changes will come into effect on 1 April. In order to maintain assurance for propriety of the way in which the National Lottery endowment is used, the Government are currently appointing a protector of the trust. The protector will have a fiduciary duty to ensure the integrity of the administration of the trust and the propriety of its procedures. He or she will be able to report any matters of serious concern about the way the endowment is being used to the Charity Commission and to Ministers. This model is already in use by the Millennium Awards Trust. Following its change of status, NESTA will remain a UK-wide organisation and I understand that it is keen to increase its level of activity in Scotland, Wales and Northern Ireland. As required by the Public Bodies Act, we have obtained the consent of the Northern Ireland Assembly, and the Scottish Parliament will be considering our order on Wednesday. We have also consulted the Welsh Government and continue to keep them informed of progress. I commend this draft order to the Committee.