Ministers will no longer be able “prescribe” how the Big Lottery Fund - which receives 50% of Lottery money - allocates grants to charitable, educational, health and environmental causes.
The Lords voted 118-116 in favour of an amendment, tabled by Conservative and Lib Dem peers, that was designed to remove any government say over how lottery money is spent.
“The Government have given themselves much greater powers over the distributing body,” said Viscount Astor, one of the peers behind the coup.
“The principle should be that National Lottery expenditure should be additional. The Government should not be involved.”
The move will calm fears that lottery money is being used for causes that should be funded from government expenditure.
“It gives the decision-making power back to the Big Lottery Fund,” said Mubeen Bhutta, policy officer at NCVO.
However, MPs still have a chance to overturn the decision when the bill returns to the Commons. “Generally the Government would seek to reverse it in the Commons,” said Pete Moorey, parliamentary officer at the NCVO.
Moorey says that critics of the Government on additionality can take greater heart from an agreement by Lottery spokesman, Lord Davies of Oldham to redraft the bill so that lottery distributors will have to report on how their spending is free from government interference.
“We’re pretty much guaranteed that this is going to get on the face of the Bill,” he said.
The Government argues against removing its prescriptive powers over the BLF, stating that it has already published a draft of any directions that the Secretary of State might give.
We have given repeated commitments that we will adopt a light touch on direction of the Big Lottery Fund,” said Oldham.