The Parliamentary Under-Secretary of State for Digital, Culture, Media and Sport (Mims Davies)
With permission, Mr Speaker, I would like to make a statement in relation to lotteries. The national lottery and society lotteries contribute around £2 billion a year to good causes in this country, forming the backbone of giving in the UK. As preparations start for the competition for the next licence to run the national lottery, it is important that we ensure that the wider lotteries landscape is fit for the future and allows as much money as possible to be raised for good causes within a suitable framework. To ensure that there is clarity ahead of the upcoming fourth licence competition, I am today announcing next steps on society lotteries. I am also launching a consultation on increasing the age limit for playing the national lottery.
I turn to society lotteries. In June last year, the Government launched a consultation seeking views on proposals to reform the existing limits on society lotteries, which had not been raised for over a decade. I am aware that there has been strong support from across this House for the Government to increase the sales and prize limits for society lotteries, and that changes have taken a long time to come. Society lotteries are a vital source of funds for charities and other non-commercial organisations, and in 2018 alone they raised over £300 million. I am the Minister not only for lotteries but for charities as a whole, and I want the third sector to grow the pie overall for everybody’s benefit. I am aware that society lotteries are a vital funding mechanism for thousands of charities in many of our local communities, including air ambulances and local hospices.
The consultation aimed to ensure that society lotteries and the national lottery were able to thrive, and that society lotteries could continue to grow while we maintain the unique position of the national lottery and its ability to raise funds across the country by offering the largest jackpots. We heard strong arguments from both sectors, and I am grateful to everyone who shared their views. In coming to a final decision, I have balanced needs across the sector to ensure that returns to good causes can grow overall.
I am pleased to announce that I will raise the per-draw sales limit from £4 million to £5 million, and the maximum prize limit from £400,000 to £500,000, for large society lotteries. These increases will allow for significant headroom for most of the sector to continue to grow, and I am pleased that the Gambling Commission has agreed to carefully monitor these changes for any potential wider impact. This will enable us to analyse the impact of the changes over time. In addition, I will raise the annual sales limit from £10 million to £50 million. In recent years we have seen charities forced to slow their fundraising from lotteries as a result of the current limits, or to adopt costly alternative structures to avoid breaching them, thereby increasing admin costs and diverting money away from good causes. Indeed, one charity told us that introducing such arrangements could cost £345,000, with additional running costs of more than £100,000 a year. A £50 million annual limit will reduce or prevent administrative burdens for society lotteries, and I fully expect to see an equivalent increase when it comes to the amount of money directed to good causes as a result of the lower admin costs and this increase. I will be watching that closely.
I am aware that many Members support a higher annual limit of £100 million. I share that ambition, but this is a significant increase and I want to be certain that moving to this much higher limit would in reality increase returns to good causes across the sector. I want to be assured that an appropriate regulatory regime is in place. It is therefore my aim to launch a further consultation, looking at adding an additional tier of licence with suitable additional requirements for the very largest lotteries.
It is also important that society lotteries demonstrate the highest levels of transparency. I am therefore pleased that the Gambling Commission is also planning to consult on measures to tighten the existing licensing framework for all large society lotteries, looking in particular at the information provided to players on how the proceeds of society lotteries are used and on the good causes that benefit. We will also be looking further at how best to increase transparency in relation to executive pay, and we will seek further advice from the Gambling Commission. I will look to legislate if these measures do not go far enough. There was less support for changing the limits for small society lotteries and, having considered the evidence carefully, I do not plan to increase those limits at this time. I have previously committed to laying Camelot’s response to the society lotteries consultation in the Library, and I will also lay the other key responses that my Department received.
The age of 18 is widely recognised as the age at which one becomes an adult, gaining full citizenship rights and responsibilities. At present, all lotteries can be played from the age of 16; that is one of the few exceptions to the age limit of 18 for gambling products. In addition to the option to raise the minimum age to 18 for all national lottery games and to retain the current limit of 16, I am also seeking views on a differentiated approach that would increase the minimum age for instant-win games only. That includes scratchcards and online instant-win games.
My initial view, based on the evidence reviewed so far, is that such a split could be the best approach. This takes into account the fact that the risk of harm associated with playing the national lottery is the lowest for any form of gambling. We know that the risk of harm is slightly higher for instant-win games than it is for draw-based games such as Lotto. Given that the national lottery matters so much to so many people, I am keen to see further evidence in this area and hear what others, including operators, distributors and retailers, think about any potential impacts and benefits of any change.
This year, the national lottery celebrates its 25th birthday. Mystic Meg herself could not have predicted how successful it would be in that time, raising over £40 billion to support our local communities, protect our heritage, enhance the arts and transform funding across our sports. The national lottery has been at the very heart of creating, protecting and driving much of what we love. Each week it raises around £30 million for good causes. Since 1992 it has funded more than 4,000 world-class UK Paralympians and Olympians, and each year it invests around £325 million in protecting some of our most prized national heritage. It has funded the development of our artistic talent, and access to art. It has ensured access to sporting opportunities for people in all communities, alongside its support for 10,000 charitable causes each year, with more than £500 million of funding. I thank our national lottery players, the 12 distributors, the Gambling Commission and my Department for making that all possible.
Today’s announcements give clarity to those interested in running our national lottery when the current licence expires in four years’ time. It also gives our society lotteries greater capacity to continue to increase their work in the constituencies of my many colleagues in the Chamber. I look forward to seeing the real benefits of the changes for charities and good causes that are supported by all our lotteries across the UK. I commend this statement to the House.
Tom Watson (West Bromwich East) (Lab)
I thank the Minister for her statement. I appreciate the prudent approach that she has taken to the issue. As she knows, I wrote to the previous Secretary of State last summer to raise my concern that society lotteries had been waiting for six years for the result of a review into their regulation. More than a year on, it is now a full seven years that the sector has been waiting for an answer from the Government. The delay in making that decision has left society lotteries facing an increasing uncertainty, unable to make substantial plans for the future.
Society lotteries achieve a lot of good for our country, as does the national lottery. They raise hundreds of millions of pounds a year for good causes, funding charities as varied as Barnardo’s, the Stroke Association, Friends of the Earth and Battersea Dogs and Cats Home, as well as many others. Major benefits of society lotteries include their flexibility and predictability, which charities tell me is exceptionally useful because it allows them to prioritise funds where they will have most impact.
The Minister is right that transparency must be paramount, and we agree with her about the importance of openness on what the costs of this fundraising process are and where the money goes. People who take part in the lotteries need to know that they are not just taking a punt but getting value for money.
I understand the feeling that sometimes there is a conflict of interest between society lotteries and the national lottery, and I agree with the Government’s stated aim to
“achieve a balance between enabling the sustainable growth of society lotteries on the one hand while also protecting the unique position of the UK-wide National Lottery”.
The Minister mentioned Mystic Meg. If she was Mystic Mims, what would she say the impact of the changes will be on the fundraising for good causes that the national lottery provides to the arts, culture, heritage and sport? When will the new regulations come into force?
The second issue is the age limit on national lottery products. There are 450,000 children gambling every week in our country; the number has quadrupled in recent years. For many young people, scratchcards are a gateway to gambling from the age of 16. We do not think that is right, particularly when we are struggling with an epidemic of gambling addiction across the country. Gambling is fun, but it can also be dangerous when it is poorly regulated or gets out of control for an individual. In my view, and in that of the Labour party, there is absolutely no need for a consultation on this issue.
The Minister’s predecessor, the hon. Member for Chatham and Aylesford (Tracey Crouch), announced last year that she would gather evidence on the topic. It is our strong view—I am sure Members across the House will agree—that we already have all the evidence we need. Those who gamble should be adults, so the minimum age for all gambling products should be 18. It is as simple as that.
Mims Davies
I thank the hon. Gentleman for his welcome. I believe that this is a prudent approach. I have been very mindful that, as the Secretary of State and I as well as many other Members have found, people are fed up with waiting and want to know what the lottery landscape looks like. As Mystic Mims, I would say that this sets the landscape appropriately for protecting the national lottery and all the good that it does: it keeps the £1 million prize and the jackpot for the national lottery, but allows society lotteries that support causes such as our air ambulances, which are bumping along at the top of the headroom of the money they are able give to local causes, to be able to raise more money and support our local communities. That is the right approach.
On the minimum age issue, the hon. Gentleman will know that I cannot say any more ahead of the consultation. I seek the views of those in this Chamber and across the sector. The current licence period has seen a range of technological developments, which have changed the way that we play the national lottery, and it has also seen gambling behaviours change. We are therefore right to consider how the licence might look. It is right to consider whether it is appropriate to sell all national lottery games to those under 18 as part of future proofing it for the duration of the next licence.
On the timetable, I hope that we would lay the changes in autumn in order to see a move in 2020.
Mr Iain Duncan Smith (Chingford and Woodford Green) (Con)
I welcome my hon. Friend to the Dispatch Box. I completely agree that there is no need for a consultation about the age limit. Frankly, we should just get on with it—there is enough evidence out there.
Secondly, while I welcome the Minister’s comments, I am slightly concerned. Will she tell the House whether there was real, powerful and compelling evidence why society lotteries should be restricted to a gain of only £100,000 on the prize money? If there is clear evidence that they damage the national lottery, will she publish that? If there is not, will she tell us why we have been in such trepidation about moving the prize money total?
Mims Davies
I thank my right hon. Friend for his comments. There has not been compelling evidence that the majority of the sector requires a £1 million prize limit to drive growth, so we have sought today to seek a balance to enable society lotteries to grow, while preserving the distinct space in which the national lottery operates, with the key feature of life-changing prizes. The Gambling Commission will be monitoring the impact of increasing the prize limit to £500,000, so we do not rule out further increases in the future, if we have a clear evidence base on the impact of the current changes.
Ronnie Cowan (Inverclyde) (SNP)
I thank the Minister for advance sight of the statement. I welcome the ongoing improvements in UK gambling legislation, which the Department has been bringing forward, and I appreciate and welcome the consultation to increase the age for playing the national lottery to 18.
I do not think the Government should be differentiating between Lotto and scratchcards—it should be 18 for all. I am concerned that the Government felt the need to put this comment in the statement:
“My initial view, based on the evidence reviewed so far, is that such a split could be the best approach.”
We are approaching a gambling epidemic in the UK, and the grooming of young adults in the gambling arena should be stopped, and stopped now.
The Gambling Commission was mentioned a number of times in the statement. I have concerns that extra administration will consume its budget, which should be tackling gambling-related harm. Last year, the national lottery paid its chief executive officer £100,000 more than it donated to gambling charities, and I take the opportunity to remind the Secretary of State once again that my preferred option is a mandatory levy.
Recent years have seen an increase in Camelot’s profits against a backdrop of a decline in lottery funding for good causes. However that is to be addressed, we should never forget that we are using gambling to raise funds for charities, and that charities exist because the Government have let down particular areas of our society. Many of the charities being supported should be Government-funded in the first place. Will the Government please reconsider their age-limit review, and will they guarantee the percentage of gross profits to be allocated to good causes?
Mims Davies
I thank the hon. Gentleman for his comments and his hard work on protecting the vulnerable when it comes to gambling. I absolutely share the view that we should be protecting everybody from elements of harm. The risk from the national lottery is low. I understand that he feels differently about the levy, but the Department’s responsible approach of working with the industry is bearing fruit, as we have seen with the £100 million announced recently. The consultation on the age limit applies to all national lottery products, and I will welcome his and others’ response.
Priti Patel (Witham) (Con)
I thank the Minister for her statement and her recognition of the good that society lotteries do across the country through the funds that they raise. She has been clear that the jackpot will not be lifted to the £1 million that the society lotteries had hoped for and is now looking to place new transparency requirements on society lotteries. In the light of that, will she outline the problems she sees with the extensive reporting requirements on charities that justify this further action and the delay in raising the jackpot total to £1 million?
Mims Davies
I thank my right hon. Friend for her question. She has consistently campaigned to support society lotteries, recognising all the good work that they do in her constituency and many others. It is important that society lotteries demonstrate the highest levels of transparency. The changes that we have announced, alongside the Gambling Commission’s plans to consult on measures to tighten the national lottery licensing framework, will help to give players of the national lottery a clear understanding of where the money is spent locally and the good causes that it is spent on. It is absolutely right that we support society lotteries and grow the pie for them, while keeping the unique position of the national lottery. As the charities Minister, I am clear that all money for good causes is very welcome.
Sarah Champion (Rotherham) (Lab)
Will the Minister explain what steps she has taken to increase the transparency of how the proceeds, particularly from large-scale lotteries, are spent?
Mims Davies
This issue has come up significantly in conversations with the national lottery and the sector. Transparency is vital when people play the lottery, so there will be further transparency measures with the change to £50 million, alongside work by the Gambling Commission. The hon. Lady will see from the consultation documents that we seek to ensure that everybody in this space understands where the money for good causes goes and what is spent on marketing, and I am sure that she will contribute to any further conversations.
Sir Desmond Swayne (New Forest West) (Con)
Given gambling’s tendency to be habit forming, the later that it can be put off until, the better. Certainly, gambling should not begin before adulthood, should it?
Mims Davies
I agree with my right hon. Friend, but those who play sport locally or enjoy their local heritage, or who have a local commitment to a hospice or something else in their community, might feel it appropriate to support that. That is why we are listening to all views in the consultation, and all national lottery products will be looked at.
Diana Johnson (Kingston upon Hull North) (Lab)
As the UK city of culture, Hull benefited enormously from national lottery funding. Will the same amount of money be available in future for arts, culture and sport with these changes—the point that my hon. Friend the Member for West Bromwich East (Tom Watson) raised from the Front Bench—or does the Minister think that what happened in the Netherlands will happen here and that less money will be available from the national lottery?
Mims Davies
The hon. Lady is right to mention the Netherlands, where things are set up differently from here. As the lotteries and charities Minister, I am clear that we should support our small lotteries and smaller charities, while maintaining the national lottery’s unique status. It supports our arts, heritage, sports and cities of culture, and it is vital that the unique status of the jackpot is maintained through these prudent changes—as the hon. Member for West Bromwich East (Tom Watson) noted—that support the whole sector.
John Howell (Henley) (Con)
The Gambling Commission evidence that, for scratchcards, people under 18 did not really suffer was based on a small sample size. Would it not be better to have a proper consultation on and examination of this aspect?
Mims Davies
The Gambling Commission plans to consult on measures to tighten up the society lotteries framework, including by looking at the information provided to players about the proceeds of a lottery and how they are used, and publishing breakdowns of where the money is spent and the good causes that benefit. As I said earlier, if we need to, and if those measures do not go far enough, I will look to legislate to protect all players, of all ages, who are appropriate to be playing.
Mr Jim Cunningham (Coventry South) (Lab)
With greater transparency for society lotteries, can we also publish a proper breakdown of how the money is spent?
Mims Davies
As I said earlier, it is important to use this opportunity to work with the sector to ensure that those playing charity lotteries in their local communities get the transparency that they would expect and see from the national lottery—something that the national lottery and its distributors have raised strongly. That is why we have been looking at this and why the Gambling Commission is looking at the sector more widely to support these changes to ensure that anybody playing a society lottery or the national lottery is clear where the money goes and which good causes are supported.
Nigel Huddleston (Mid Worcestershire) (Con)
The £2 billion raised each year by lotteries helps to fund charities, sports and heritage initiatives in my constituency and across the country. I recognise that the Minister must strike a balance, and I know that some of the society lotteries might be disappointed at the limit not being £1 million. Will she confirm that the growth in society lotteries has not been, and will not be, to the detriment of the national lottery?
Mims Davies
This goes back to the prudent—I love that word—decisions that I believe I have made today. We had a huge response to the consultation, alongside the report from the Select Committee on Digital, Culture, Media and Sport, and we have had up-to-date information and advice from the Gambling Commission. In the broader landscape, this change clears the space for the fourth licence, but more importantly gives the national lottery a chance to celebrate its 25th birthday, with a clear differentiation in the sector and clear transparency about where the money for good causes is going and how the sector can thrive on both sides.