National Lottery

Lord Foster of Bath Excerpts

Monday 16th July 2018 Lords Chamber

[Lord Foster of Bath (LD)]

My Lords, it is becoming a bit of a lottery to know who will speak next. I congratulate the noble Earl on securing this debate, and I agreed very much on the various points he raised. I am delighted that I am following the noble Baroness, Lady Andrews, who, as my noble friend pointed out, has done so much in the field of heritage in this country. I hope that while the Minister will take account of everything the noble Baroness said, he will pay particular attention to her proposal that there be a proper review of the impact of online gambling on the National Lottery.

I congratulate all three noble Lords who jumped in to speak briefly. My noble friend Lord Beith is absolutely right to remind the Government that they must not rely on the lottery as the provider of many of the good things that we want to see in this country. I take entirely the point made by the noble Lord, Lord Berkeley, on the wonderful work that is done, particularly by the Heritage Lottery Fund. He referred also to taking into account the needs of a wide range of people, including, for instance, disabled access. I hear entirely what the noble Lord, Lord Kerr, says. He spoke eloquently in support of many of the good things that have happened but then raised concerns about the way in which the money is raised, and he has properly come up with an alternative. I confess that I suspect his alternative would not bring in anything like the sums of money needed to achieve the wide range of projects.

At its inception in 1994, my party opposed the National Lottery, but we were clearly very wrong. As the noble Earl rightly pointed out, it has brought in something like £38 billion and helped over half a million projects. He did not point out that it has also brought around £15 billion into the Exchequer’s coffers. However, I do not want to use what limited time I have got extolling the National Lottery. Rather, I want to raise a few areas where I think improvements could be made that would bring in even more money for good causes.

In doing that, I am conscious that reports such as the NAO report last December, the PAC report in April this year and the recent review carried out by the new CEO of Camelot have already led to some improvements beginning to being made. These include, as the noble Baroness, Lady Andrews, said, an improvement in the range of games, more investment in outlets and upgrading the digital capacity. However, there are four areas in which work could still be done: additionality; umbrella lotteries, which have already been raised; taxation; and promotion of the lottery.

Your Lordships’ House will be well aware that it was John Major who established the principle of additionality: that National Lottery money should add to but not substitute for government expenditure. Sadly, this principle has not always been followed. Indeed, during the Blair years, the creator of the National Lottery, John Major, was highly critical of what Labour was doing, saying that,

“since it took power, Labour has diverted Lottery funding into areas that have historically been funded by the Exchequer”.

He went on to accuse Labour of,

“muddying … the waters between Exchequer and Lottery revenues”.

Interestingly, almost immediately after John Major criticised the Labour Party, the Conservative manifesto proposed a Club2School scheme to be funded from the National Lottery, along with a number of other schemes such as a school leavers programme. All three parties have been guilty of this. For instance, all three, with varying degrees of reservation, accepted the need for National Lottery funding to be made available to support the 2012 Olympic and Paralympic Games. The principles have of course been developed further: it is not just additionality now—we also talk about complementarity.

My point, however, is simple. Whatever the principles, there should be clear evidence that they are being adhered to; otherwise, money will leach out into things that the Government themselves should definitely be funding. I have always believed that the reports from lottery distributors should state precisely how they have met the additionality and complementarity principles. I argued for this as far back as 2005. However, over the weekend, I was reading the Big Lottery Fund’s annual report for this year, and all I found, on page 47, were the simple words that all the awards made in 2016-17 were “consistent with the principles”. There was no explanation of how that was done. Can the Minister explain what independent evaluation takes place to ensure that lottery funding meets the principles? Is he satisfied with the monitoring that takes place?

As other have already done, I want to touch on so-called umbrella lotteries. I recognise that, in recent times, action has been taken on lottery-style games being run by gambling operators, but it has taken since 2005, when that issue was first raised, for action to be taken. Also in 2005, I first raised the issue of umbrella lotteries. I pointed out that the online lottery, Monday, appeared to be offering a prize of £1 million, yet the then maximum prize allowed for a society lottery was £200,000. To achieve that £1 million prize, Monday brought together five so-called society lotteries that were not paying any tax. That was established in competition to the National Lottery.

Since then, we have seen the growth of these huge umbrella-type lotteries, particularly the People’s Postcode Lottery and the Health Lottery, which have been mentioned, which give less money to good causes and do not pay taxation in the same way. In fact, the Health Lottery returns only the minimum of 20% to good causes, paying no tax. They have a huge promotional budget—we have heard about the sort of tricks they get up to—far larger than for the National Lottery. They distort the lottery market and undermine the original intention that there should be a single, national lottery, and they reduce funds to good causes.

I first formally raised this issue with the then Secretary of State in 2006. I tried again in 2011 with the new Secretary of State, now the Foreign Secretary, and I am now taking my chance with the Minister. The Government’s current review of society lotteries provides an ideal opportunity at long last to address this particular issue, so can the Minister explain what action is being considered in relation to umbrella lotteries, whether the Government will reconsider a limit, say of 15% as has been proposed, on the level of expenses allowable to society lotteries, and what impact the Government believe the proposed increase in the maximum society lottery prize to £500,000 will have on returns for good causes? Surely, as research shows, increasing the jackpot still further encourages more participation in the umbrella lotteries and less in the National Lottery.

The umbrella lotteries have an additional advantage over the National Lottery. They do not pay lottery duty. So I turn briefly to taxation. As noble Lords will know, the National Lottery pays 12% lottery duty, which places it at a considerable disadvantage to the umbrella lotteries, and to gambling and gaming operators which provide far less to society. For many years, Camelot has argued for a change to a gross profits tax regime, arguing that it would give it greater flexibility to respond to the new market forces. Some 11 years ago, in the other place, the DCMS Committee looked at this matter and saw then that a change to GPT would add £50 million a year to good causes and additional money into the Exchequer. I know that discussions are under way, and I hope that the Minister can update us on this issue. I also hope that he will accept that it is important that this is resolved before we begin the discussions about the new competition for the next round of the National Lottery licence.

Finally, reference has been made to the issue of promotion. Public understanding of the good causes to which National Lottery funding goes is nowhere near as powerful an incentive to participate as the possibility of winning life-changing sums of money—I fully understand that. But it does still matter. This year, the PAC pointed out:

“We are concerned that awareness of the National Lottery’s support for good causes has fallen, and that this is likely to have contributed to reduced participation”.


More should be done to make communities aware of the benefits that the National Lottery has brought them. As the noble Earl, Lord Clancarty, pointed out, the 25th anniversary provides a particularly good opportunity to do that.

I live close to the sunken city of Dunwich in Suffolk. It has an excellent museum explaining how the sea has transformed a once-thriving city and port into a tiny hamlet. The museum boasts a sign saying, “Supported by the Heritage Lottery Fund”. I suspect that few people who visit that excellent museum are aware that the funding actually came from the National Lottery, so I welcome the news that Camelot, the National Lottery promotions unit and the lottery distributors are working together to,

“make The National Lottery and its purpose far more relevant and visible”.

That is vital. But I am especially pleased they will now start talking about a single, clear brand name:“One National Lottery”. I hope that the Minister will be able to update us on progress in that area. I hope that he will also acknowledge that unless action is taken in relation to the huge promotional budgets of the umbrella lotteries, all of that effort may well go to waste.

The National Lottery has been and continues to be a huge success story, transforming lives and communities. Ensuring that it continues to do so in the future means that the issues that I and others have raised certainly need to be addressed. I look forward to hearing the Minister’s response.

--- Later in debate ---

[Viscount Younger of Leckie]

Indeed. Some points have been raised on that issue and I will come to it later, but if I do not manage to address it, I will certainly write to the noble Lord.

The recently launched consultation, which has been mentioned today, outlines measures aimed at finding the right balance between enabling the sustainable growth of society lotteries while protecting the National Lottery’s unique position. I invite noble Lords with an interest to engage with the consultation before its closing date of early September. I echo the noble Earl in saying that we welcome all views on this matter. The noble Earl raised some important points about the contributions and this debate will be taken account of in the consultation.

In conclusion on the matter of falling sales, we believe that Camelot’s revised strategy will go a long way to address this issue, supported by the distributors and, of course, DCMS.

The noble Lord, Lord Berkeley of Knighton, spoke about disabled access. He made an important point that all areas of visitation must have the correct disabled access. The point has been noted.

As has been mentioned, we will be celebrating the 25th anniversary of the National Lottery in a little over a year’s time. Work is under way to ensure that we make the most of this opportunity to further showcase the National Lottery’s singular ability to deliver life-changing outcomes, both in the awards it makes to good causes and in the value of prizes that can be won by lottery players. To reassure the noble Earl, the Government are looking forward to celebrating this important anniversary. Working together with Camelot and the distributors, we will make everybody aware of what this great institution has made possible over the past 25 years. Detailed plans are being advanced and further details will be announced in due course.

The National Lottery has had an unparalleled impact on 21st-century Britain. Across the country the lottery is not just well known but has a recognised brand name, as the noble Earl said. This is not surprising if you stop to consider that the majority of National Lottery money goes straight to the heart of our communities, locally and nationally. Some 71% of the grants made are for £10,000 or less; in other words, small amounts of money going to community-led projects that make a big impact. Less than 1% of the grants awarded exceed £1 million.

Furthermore, as the noble Earl said, this week is National Lottery in Parliament week. As the noble Earl did, I encourage noble Lords to visit the Upper Waiting Hall, where one can learn more about the Lottery and its history, and participate in a range of competitive activities—to keep noble Lords on their toes before we break up for the Summer Recess.

More seriously, we must ensure that we retain the warmth of public sentiment for the National Lottery among existing players and attract new participants. It is critical to ensuring that income is maximised to continue delivering awards across the breadth of this country and to the widest array of good causes. There are some questions that I still have to answer and I will write to all noble Lords. Noble Lords can be assured that this is a clear imperative of the Government and is a core objective in the department’s single departmental plan—

[Lord Foster of Bath]

I think there is some confusion in your Lordships’ House. I will read the Minister a quote from the Gambling Commission, which said:

“The relatively low prizes and generally limited distribution footprint are key factors that have traditionally differentiated”,


the society lottery sector from the National Lottery. Do the Government still believe that that distinction should be maintained?

[Viscount Younger of Leckie]

That is a question that should be put to the consultation. This debate will allow these sorts of questions to be put to the consultation. I reassure the noble Lord that that will be taken into account.

To conclude, we hope to see the National Lottery continue to flourish, both now and for the next 25 years.