Legislative Reform (Exempt Lotteries) Order 2016
The Earl of Courtown
That the Grand Committee do consider the Legislative Reform (Exempt Lotteries) Order 2016.
Relevant Document: 15th Report from the Regulatory Reform Committee
The Earl of Courtown (Con)
My Lords, this order removes unnecessary regulation on certain types of small lotteries to enable greater opportunities for fundraising for charities and good causes. These are small-scale, locally run lotteries such as a raffle held at a school fair or a workplace sweepstake. They are known in the Gambling Act as “exempt lotteries”, being lotteries that are so small they are exempt from the licensing system.
The first change is to lotteries held incidental to an event. Currently, if an organisation holds a lottery alongside a commercial event, the organiser cannot retain the proceeds of the event, such as entrance fees, food or drink sales. The proceeds of the event, as well as the proceeds of the lottery, must be donated to charity. The end result is that organisers of commercial events are discouraged from holding lotteries at their events and charities are deprived of vital opportunities to raise funds.
Article 2 of the order therefore removes the requirement that the connected event be non-commercial. We think that allowing pubs, clubs, event and concert organisers, and other businesses to keep money from entrance fees, sponsorship deals, food and drink sales or commissions from traders will see an increase in the amount of money raised for charity. Most importantly, this will not affect the profits of the lottery. All profits of the lottery held in connection with an event will still be required to be donated to charitable causes.
At present, the results of a lottery must also be made during the event itself. Article 2 also removes this requirement. This now means lotteries that do not produce a result on the day—for example, a balloon race—can benefit charities.
Another way in which charities miss out on opportunities to maximise their fundraising efforts is through the restrictions placed on private society lotteries. At the moment, these lotteries are allowed to be held only where they benefit that particular society. The impact of these restrictions was made very plain in the responses to the consultation. Several charities said they had been approached by members of clubs wishing to support the charity through small private society lotteries, often as a thank you for support of a family member. However, under the current framework these lotteries cannot take place. Article 3 removes this restriction. Private societies will now be able to promote lotteries within their societies for the purposes of donating the proceeds to charity.
Article 3 also lifts restrictions on work and residents’ lotteries raising money for charity. Take for instance a sweepstake on the Grand National. Currently, the proceeds of lotteries such as this in workplaces or by groups of residents, for example in a university’s halls of residence, may not be used for anything other than prizes and the expenses of the lottery. This is an unnecessary restriction. Work and residents’ lotteries will now be able to make a profit and that profit will be able to be donated to charity. However, it is not the Government’s intention to make it mandatory for all work and residents’ lotteries to give their profits to charities; these lotteries are often played for fun and this element will be retained. Where a work or residents’ lottery is held for a non-charitable purpose, the “no profit” prohibition remains.
Article 3 also removes certain ticketing requirements for these lotteries. Tickets will no longer be required to display the name and address of the organiser and other information about the arrangements for the lottery. Given that tickets in these lotteries are restricted to a single site or premises, it is unnecessarily bureaucratic to require this level of information. We are allowing the organisers of such lotteries to ticket their event as they deem appropriate.
Article 4 amends Section 261 of the Gambling Act 2005 to extend the offence of misusing the profits of an exempt lottery to apply to these new, profit-allowed work and residents’ lotteries, ensuring them the same level of protection against fraud. Article 4(2) makes minor consequential amendments to the 2005 Act and the Licensing Act 2003 upon the removal of the requirement for incidental lotteries to be held in connection with a non-commercial event.
This order also creates common sense changes that remove unnecessary regulation of the very smallest lotteries. The order will allow many more people to hold fun and innovative events to raise money for charity. I commend the order to the Committee.
Lord Clement-Jones (LD)
My Lords, I thank the Minister for his very succinct introduction, and I thank all those who put the papers together, so to speak. Even though this is a relatively small piece of law reform, having a Keeling schedule is an enormously helpful thing—the sort of thing we cry out for on more complex legislation. My goodness, it certainly makes a huge difference when you are looking at something with this level of detail.
After something like eight hours’ debate last Wednesday on the subject of inappropriate statutory instruments, it seems rather strange to be welcoming a statutory instrument that amends primary legislation. However, it is a good thing that one is able to make amendments of this kind by an LRO because it would otherwise take years for the wheels to grind and come round to something of this kind, which, although relatively small, could have a significant effect on the objects of its reform and for the benefit of some of the smaller charities. Therefore it is heartening that the Red Tape Challenge extends in this way and that it can be implemented in this way.
We have all been brought up with raffles, and I like the way the impact assessment is quite blunt about the fact that we are talking about raffles here. However, I suspect that an awful lot of people who conduct raffles have no idea of the legal context in which they happen. I suspect that an awful lot of raffles are strictly illegal as regards what goes on. That applies to many workplaces, and—dare I say it?—may even apply to events organised by some political parties. Therefore, it is interesting that we can now look forward to raffles being conducted with a rather higher degree of legality.
In response to the paperwork—the impact assessment and what the Minister has had to say—there is a slightly apologetic tone to the impact assessment as regards the amount of evidence available on the possible benefits of this reform, which is quite interesting. It says:
“Reviewing the available literature, it is clear that there is an absence of basic facts, as well as detailed information on raffles as a form of giving”.
You do not often see that in an impact assessment. In a sense, we are being asked to make a leap of faith that this will benefit smaller charities. In this case perhaps we will not be so rigorous about demanding evidence-based policy, and let us hope that we see a positive impact on some of those smaller charity events, which will now be able to take place—dare I say it?—down our local. That would be extremely welcome.
I hope, however, given that there is very little evidence about what could happen, that the Government will at a certain point review how the operation of this reform has taken place—I do not know whether that will be after a year or two years—to see whether it is working out in a proper fashion or whether these changes have had unintended consequences. That would be beneficial for all of us.
Lord Stevenson of Balmacara (Lab)
My Lords, I, too, thank the noble Earl for his easily absorbed comments on the reasons for doing the LRO in this way. It was good to capture it in the way he did. I agree with the noble Lord who has just spoken that the benefits of using the LRO system also have spin-offs in terms of the clarity of the documentation, which again I commend to your Lordships. It is very good to have it. Of course, the Keeling schedule is a delight. Oh, for Keeling schedules for everything we did!
I have only a couple of questions about the wording of the document, which I am sure will not take the noble Earl long to respond to. The Explanatory Note says, with reference to Article 3:
“A work lottery or a residents’ lottery is now exempt in two circumstances, where the lottery … is promoted wholly for a purpose other than that of private gain”—
that is clear. Then there is a double negative which caught me up and perhaps the Minister could read into the record what it is meant to mean. It says that a lottery is now exempt if it,
“is not organised in such a way as to ensure that no profits are made”.
Is that the same as saying, “is organised in such a way as to ensure that it is not profit-making”? One gets caught by these things sometimes and I just wanted to be clear. I would be grateful if, once he has had the advice, he could clarify this.
The Explanatory Note makes a possibly interesting point about Article 4, which is that,
“the maximum imprisonment for an offence committed under section 261(1)(ba) is six months”,
but then goes on to say:
“When section 281(5) of the Criminal Justice Act 2003 comes into force, this will increase to 51 weeks”.
Whatever happened to inflation? I know this is not the Minister’s department but does he have any idea when we are likely to see that change? Clearly, a change from 26 weeks to 51 weeks is quite a big one and, even then, given that this was 2003, perhaps it ought to be higher than that, given the way in which people are behaving. But I do not really want to hold up the Committee with that light-hearted point.
The noble Earl will recall that he responded to a debate in the Chamber about the National Lottery just before Christmas. A number of points were made in that debate, most importantly about the balance to be struck in public policy between the National Lottery, which is of course a monopoly aimed at making the maximum amount of funds available from the gambling intentions of the public to good causes as defined in the legislation, and the impact that is being made on the National Lottery, it is alleged, by a number of society lotteries that are now growing up across the country. The debate, which attracted contributions from all round the House, was broadly characterised by saying that there were growing but not yet serious concerns that the so-called society lotteries—there is one called the Health Lottery; and there is one that is a postcode lottery, which is organised in a slightly different way—are trying to wear the clothes of a national lottery because obviously it serves their purposes better if they can be seen to be competing with the National Lottery.
However, as the noble Earl will recall, the point about this is that the society lotteries have different rules applying to them in terms of where their proceeds may go—and I am not saying in any sense that they do not support good causes, but they are different from those specified in the National Lottery—yet they are benefiting from being seen as a sort of national lottery, to which perhaps those rules should apply. Secondly, the cost framework for the society lotteries is different from that of the National Lottery, which is specified in regulation and limits the extent to which the company operating the National Lottery on behalf of the good causes can charge costs and expenses, which of course does not apply to the society lotteries.
This is familiar territory for the noble Earl. I am sure he is well briefed to respond to it. His response to the comments from around the House in the previous debate was that there was to be a review, which would deal with a number of these points, building on some work done, I think, three years ago now, which seemed to suggest that the National Lottery was not being affected by society lotteries. The volume of responses that I have received—and I think other noble Lords have had the same correspondence since that debate—prompts me to ask whether or not there is any progress on the review of the National Lottery versus the society lotteries and, if there is any news on that, when we might expect to see some output from that review. These things are part of this overall package.
Having said that, we have no specific objection to what has been proposed. I take the point made by the noble Lord, Lord Clement-Jones, that this brings a number of people who are probably operating outside the law back into the law but does so in a way that I think will benefit good causes, and we have no objection to that.
The Earl of Courtown
My Lords, I thank both noble Lords for their contributions to this short debate. I thank the noble Lord, Lord Clement-Jones, for his support of the order and his comments on the success of the Red Tape Challenge. He made a number of comments, in particular about what happened in the Chamber last week. Of course, he would not expect me to comment on that. One should also look at the responses given to the consultation by the various stakeholders, which answer one of the points that the noble Lord made. The Lotteries Council, Cancer Research UK, the British Red Cross, Sue Ryder and Marie Curie cancer care all consider that this will help to increase the amount of money raised for these very important and valuable charities.
The noble Lord, Lord Stevenson, mentioned a number of matters and I will do my best to answer them all. As ever, if I do not answer them in enough detail I will write to him. He started by talking about a review of the performance of this order. We will take the noble Lord’s words into account and speak to the Gambling Commission on this issue. The noble Lord also mentioned the House of Commons Select Committee report on society lotteries, published in March 2015. He basically asked if the Government will adopt the recommendations set out in that report. The department is taking action on this. The committee said that the Government should seek advice from the Gambling Commission in relation to those recommendations. We have done so and await that advice. Any proposals will need to receive the approval of Ministers, which will happen in due course.
Lord Clement-Jones
Can I just check that the Minister is specifically saying that there will be a review by the Gambling Commission of this set of reforms? After how long will that take place?
The Earl of Courtown
It is probably best if I write to the noble Lord and give him the exact details of what is planned. Obviously, as I said from this position, there are some points that we will take back to the Gambling Commission. Once I have checked with the department, I will write to the noble Lord with exact details of any review. I will ensure that the noble Lord, Lord Stevenson, is also included in that.
Lord Stevenson of Balmacara
My Lords, I think we are slightly mixing up two issues here. The point made by the noble Lord, Lord Clement-Jones, was about this order and the effect it will have on those small lotteries and events run for residents. The question was whether there would be a review of that and I think the Minister will write to him about it. My point was about society lotteries and I did not refer to the House of Commons Select Committee. I could have done but chose not to because I wished to let the Minister know that the outcome of the debate we had in the House just before Christmas was a number of letters, including ones from those responsible for operating society lotteries. I wondered whether there was any progress there. I think the Minister was in the process of explaining that that is also being progressed.
Lord Clement-Jones
My Lords, that is precisely why I asked the question: there seems to have been a conflation of the two points.
The Earl of Courtown
I thank both noble Lords for explaining that position. The noble Lord, Lord Stevenson, made an important point relating to the Explanatory Notes. There is a mistake there, for which we apologise. The new text, which I am sure it is very important to have on the record, is that a work lottery or a residents’ lottery is now exempt in two circumstances: where the lottery is promoted wholly for a purpose other than of private gain; or where it is organised in such a way as to ensure that no profits are made. I hope that clarifies the position to the noble Lord. I will let him know what action needs to take place on that issue.
The noble Lord, Lord Stevenson, also referred to Article 4 and the changes to penalty. I should write on that in greater detail than I have available at present. As I understand it, this would bring the penalty into line with other offences under Section 261 of the Gambling Act 2005, but it is best if I write to him with greater detail on that issue.
The noble Lord also mentioned the debate that took place in the Chamber before Christmas last year. Yes, there was much mention around the House of this issue, and I know that the department is considering carefully what was said in that debate. If anything has arisen since then, I will write to the noble Lord on that.
I thank both noble Lords who have contributed to the debate and very much commend the order to the Committee.