Deregulation Bill

Lord Mancroft Excerpts

Thursday 5th February 2015 Lords Chamber

Moved by

[Lord Mancroft]

29A: After Clause 64, insert the following new Clause—
“Change in mandatory conditions of lottery operating licence
In section 99(2) of the Gambling Act 2005, after “at least 20% of the” insert “aggregate annual”.”

[Lord Mancroft (Con)]

My Lords, society lotteries constitute the smallest sector of the gambling industry. They predate the National Lottery by 20 years, and were set up on the recommendations of the Rothschild commission in 1968 under the Lotteries and Amusements Act 1976.

The legal structure of society lotteries, which ensures that lotteries can be run only by registered charities or non-profit-making sporting bodies, remains in place and is pretty much the same today. While the National Lottery, launched 20 years later, has performed an enormous and important role in providing very large sums of money for a variety of good causes, society lotteries play a small but vital role in providing direct funding for smaller charities, particularly local hospices throughout the United Kingdom. In 2012-13, society lotteries raised £155 million for charities. It is the only form of charity fundraising in Britain that has been on the increase since 2009.

Since 1976, there have been restrictions on the size of charity lotteries, in part for historic reasons, which my noble friend Lord Deben might describe as “not of this day”. The creation of the National Lottery in 1994 rendered those obsolete, but as a policy it has emerged subsequently—an unchallenged policy without any intellectual basis and no debate—that nothing should be allowed to compete against the National Lottery. The restrictions imposed in the 1976 Act have been substantively altered only once, in 1994, during the passage of the National Lottery legislation through your Lordships’ House, when your Lordships were kind enough to accept a number of amendments that I moved to protect charity lotteries from the overwhelming might of the National Lottery’s monopoly status. Your Lordships accepted those arguments then and I hope that they might do so again today.

In practice, the National Lottery has 96% of the lottery market, a virtual monopoly, while societies struggle on with about 4%. For some years there has been a debate over whether there should be any restrictions at all on society lotteries. After all, what reasonable Government would seek to put a restriction on a charity’s ability to raise funds? This question was examined in the Budd report, published in 2003 and which recommended that the restrictions be abolished. The joint scrutiny committee on the draft Bill that became the Gambling Act 2005, of which I was honoured to be a member, also looked at this question and came to the same unanimous opinion. Unfortunately, in the horse trading during the pre-election wash-up before the Bill hit the statute book, that reform was lost. The DCMS Select Committee in another place has looked at the matter in two separate reports, which both recommended, in two slightly different ways, a substantial relaxation. Both the previous Government and the present Government have promised consultations to find a way forward; neither consultation has been completed.

We know that there has only ever been one substantive objector to these proposals—and that, not surprisingly, has been Camelot, the operator of the National Lottery. Its objection very simply is on the basis that a relaxation of regulations would inevitably put at risk the success of the National Lottery, despite its 20-year hold over 96% of the market. Assuming that your Lordships do not wish today to debate the whole question of the monopoly status of the National Lottery, the secondary argument that removing these restrictions from society lotteries risks damaging the National Lottery is simply not supported by the evidence. What limited evidence there is from within the UK—and the extensive evidence from other jurisdictions around the world—shows clearly that a healthy secondary lottery market simply leads to a gentle expansion of the whole market. The growth of one does not threaten the other.

In Grand Committee, my noble friend deployed as his main argument that my amendments would threaten the National Lottery, which I hope that I have demonstrated is without basis. He also offered a secondary line of defence—that the Government intend to consult so as to review the evidence. I am all in favour of consultations, but they must be completed, and there needs to be some undertaking to act on the basis of the evidence that emerges. I say this because the Government have already undertaken a consultation process on this; that was two years ago, but it has never been completed. As I have said, the Budd report, the joint scrutiny committee report, two Select Committee reports and two aborted departmental consultations have all examined the evidence in the past few years and all come to approximately the same conclusion—and have promptly been ignored by the Government. So there is no point in having a consultation that has no conclusion or which the Government promptly ignore.

My Amendments 29A to 29D make four changes to the current regulations. In Grand Committee, those four changes were grouped together as one amendment, but I have separated them into their four component parts, for reasons that I shall explain. Currently, the law requires that 20% of the proceeds from each lottery is retained by the promoting charity for its charitable objectives, colloquially known as the “good causes”. My Amendment 29A would allow that 20% to be aggregated over a year so as to alleviate the start-up costs of the lottery, which often present a serious barrier to entry, particularly for smaller charities.

Amendment 29B increases the permitted pool size for each lottery run by a charity from a maximum of £4 million to £10 million. That amount has been increased only twice since 1994, during which time all other sectors of the gambling industry have benefited from triennial reviews, which society lotteries have repeatedly been promised by government but never given. By way of contrast, I remind your Lordships that the National Lottery sells around £100 million a week.

As for Amendment 29C, currently the law restricts the number of lottery tickets that a charity can sell in each year to the sum of £10 million. This is the most bizarre restriction of all. Effectively, it seeks to put a cap on the amount of money that a charity can raise in any one year by way of lottery. Why would any sane person want to do that? Who wants to stop a registered charity raising charitable funds? The answer is that no one knows.

--- Later in debate ---

[Lord Gardiner of Kimble]

My Lords, I thank my noble friend for tabling these amendments. He is certainly tenacious in these matters.

The amendments seek to remove or relax regulations governing the amounts that society lotteries can raise and the level of prizes they can offer. The effect of the amendments together would be to allow society lotteries to offer jackpots of up to £5 million per draw and to hold as many draws as they wish. Our concern is that this could put society lotteries in direct competition with the National Lottery, and this might present a serious risk to the good causes funded by the National Lottery. The best way of raising funds is through encouraging people to play by offering them the life-changing prizes that are possible only through mass participation in a single national lottery. Indeed, the lottery was set up in 1994 to do just that.

As the noble Lord, Lord Collins of Highbury, rightly suggested, the National Lottery has been an enormous success, raising more than £32 billion for good causes in its 20 years of existence. It has funded everything from very large-scale national projects to thousands upon thousands of small-scale local groups, and this has had a truly transformative effect across the United Kingdom.

Society lotteries have also been very successful at raising funds for good causes and they have grown significantly in recent years. We welcome that success and are clear that they are part of a wider good-cause landscape. However, we cannot let their success be at the expense of the National Lottery.

Even if all the amendments are not taken together, it is unclear what effect making changes to individual limits will have. The limits taken as a package have so far allowed society lotteries to flourish while maintaining the success of the National Lottery. If we wish to change these limits, either singly or as a package, it must surely be done on the basis of evidence and with a clear understanding of how any changes will impact on society lotteries, both large and small, as well as on the National Lottery.

The Government agree with my noble friend that it is now time to consider these limits. That is why we are currently consulting through a call for evidence, asking for views on how we can ensure that society lotteries continue to flourish alongside the National Lottery. In addition, as has been mentioned, the Culture, Media and Sport Select Committee is currently investigating society lotteries and will be considering whether their current limits are appropriate.

We are currently gathering the evidence that will highlight whether any reforms are needed, and I believe that it would be unwise to make any changes now without waiting for that evidence. The Government expect to have it after the call for evidence closes on 4 March. Once we have this evidence, any reforms to monetary amounts or percentages can be made through secondary legislation. Therefore, I am confident that the Government could move to make changes if, indeed, it was decided that this was the right and sensible course of action. For those reasons, I ask my noble friend to withdraw his amendment.

[Lord Mancroft]

My Lords, I am not in a position of having to thank many noble Lords for taking part in this enormous debate; nevertheless, I thank the noble Lord, Lord Collins, and my noble friend for replying.

It was clear from the debate in Grand Committee that your Lordships did not appreciate the importance of the issue, and it is clear that your Lordships have not appreciated its importance today. It is, however, clear that over the past few years, while the voice of the BBC in your Lordships’ House has increased significantly, the volume of sound that comes from the charity sector has, sadly, reduced.

Society lottery regulations were designed 40 years ago, when society had rather a different view of gambling. The gambling industry has changed beyond recognition —in particular, the Government themselves are now the largest player in that industry through their ownership and promotion of the National Lottery. In his answer, my noble friend made it clear that protecting the National Lottery is rather more important than any of the other issues on the table.

The noble Lord, Lord Collins, made some useful comments in taking this debate forward. However, I say to him that the information on ticket sales—the number of sales, which charity the money goes to and what percentage of the money goes to the charity—is in the public domain. Every charity files a return to the Gambling Commission, which is put on its website. Any member of the public can see exactly where the money has gone, how much was raised and how much went out in prizes. It is a requirement of regulations that societies do that and there is no question that that should not be changed. There is no reason why that should not continue. I am sure that the noble Lord knows that every charity lottery ticket has the name of the charity written on it. It is not difficult to tell where the money is going.