Public Bodies (Merger of the Gambling Commission and the National Lottery Commission) Order 2013

Lord Gardiner of Kimble Excerpts

Monday 15th July 2013 Grand Committee

Moved by

[Lord Gardiner of Kimble]

That the Grand Committee do report to the House that it has considered the Public Bodies (Merger of the Gambling Commission and the National Lottery Commission) Order 2013.

Relevant documents: 35th Report from the Secondary Legislation Scrutiny Committee, Session 2012-13, 23rd Report from the Joint Committee on Statutory Instruments, Session 2012-13.

[Lord Gardiner of Kimble]

My Lords, this is an administrative change that will provide some efficiency savings but that will be principally beneficial for the policy synergies and economies of scale obtainable from a single regulator in understanding and regulating the whole gambling market. This merger was first proposed by the previous Government, and the coalition has continued this support.

The Public Bodies Act 2011 provides a legal framework that enables the Government to propose the merger of specified bodies. The two commissions are so specified. This merger will ensure an integrated approach to consumer protection and allow the merged commission to advise the Government on gambling in the round.

The functions of both commissions are broadly similar, especially with regard to social responsibility. The National Lottery Commission ensures that the National Lottery is run with all due propriety and protects the interests of every participant. Subject to these duties, the NLC must do its best to maximise the money available to good causes.

Similarly, the Gambling Commission is responsible for ensuring that gambling is conducted fairly and openly, that children and vulnerable people are protected and that gambling is not a source of crime and disorder. It aims to permit gambling that is reasonably consistent with its pursuit of these licensing objectives.

Nothing in the order would affect the way in which the National Lottery and the gambling industry are at present regulated by their respective commissions; the merged body will retain the statutory functions of the existing commissions. However, the gambling industry, including the society lotteries sector, has expressed some concerns that the NLC’s duty to maximise National Lottery returns might be seen to influence regulatory decisions on commercial gambling or the provision of advice to government in favour of the National Lottery.

The key to addressing this is for the merged body to be absolutely clear as to the statutory regime within which each such decision is taken. The commission will ensure that decisions are taken within the appropriate legislative framework and that they do not take into account considerations that are irrelevant in that context, such as those applicable only to the other regime. Therefore, when making a regulatory decision on commercial gambling, which includes the society lotteries sector, considerations about the impact that this might have on the National Lottery will be irrelevant, and vice versa.

The merged organisation, like the individual commissions at present, will continue to give reasons for its decisions and be subject to judicial oversight via judicial review or the gambling appeals tribunal if, for example, it is thought to have taken into account irrelevant considerations or misused confidential information.

In addition to the preservation of separate legislative regimes and protections for the National Lottery and other gambling, the DCMS is taking further steps to ensure that its oversight of the merged commission continues to provide the appropriate level of accountability. The Minister for Sport and Tourism has written to the Gambling Commission to set out what the Government will require of the merged commission. This letter was copied to the House of Lords Secondary Legislation Scrutiny Committee by way of response to its report dated 26 April 2013. I have ensured that copies of this letter are on the table here for your Lordships’ perusal. I apologise that it has not been possible to make a copy for your Lordships available earlier, but I know that the noble Baroness, Lady Jones, has received a copy.

The Gambling Commission will put in place arrangements to ensure the following: that only relevant considerations are taken into account when making decisions; that the merged commission gives adequate reasons for these decisions; that appropriate information barriers are in place to avoid any actual, or perceived, conflicts of interest arising in the exercise of its functions under the relevant legislation; and that those handling operator-specific information are properly trained in data security protocols. In order to support these requirements, the commission is already planning to establish a sub-committee to make recommendations to the board on National Lottery issues.

All these assurance measures will be reflected in the management agreement, which will be settled between the DCMS and the merged commission in due course. This agreement will inform and underpin the department’s relationship with the merged commission. It will specify the steps that the merged commission will be expected to take to demonstrate impartiality and that the chairman and commissioners are responsible for implementing appropriate governance arrangements to manage any real, or perceived, conflicts of interest.

Given the distinct and self-contained statutory regimes relating to the National Lottery and other gambling matters, we believe that any such conflicts can be readily managed and that it is unnecessary to be prescriptive about the precise governance arrangements in legislation or the management agreement. This will preserve the merged commission’s ability to amend arrangements in the light of experience while continuing to respect the general principles set out in the management agreement. The Gambling Commission and the National Lottery Commission both support this merger.

Together, the collocation of the two commissions and the shared service arrangements that they have in place have, since January 2012, generated efficiency savings, while steps have already been taken to embed National Lottery expertise within the Gambling Commission. These actions have generated upfront costs but alongside the merger provide a sound basis for savings over the medium and long term. Once costs have fallen away, these initiatives will save more than £1.1 million per annum. The merger of the two commissions will itself generate a total saving for licence fee payers and lottery good causes of £330,000 over the 10-year assessment period considered by the Public Bodies Act.

In summary, this order will create a single organisation that is better able to provide comprehensive advice and guidance to the Government on all gambling issues, including the continuing protection of the public. The two organisations are already integrated in a number of respects, and approval of this order will allow us to realise further savings and additional benefits. I recommend this order to your Lordships.

--- Later in debate ---

[Lord Faulkner of Worcester]

My Lords, I should have put on the record at the start of my speech my entry in the register. I am a gambling regulator as a member of the Alderney Gambling Control Commission.

[Lord Gardiner of Kimble]

My Lords, I thank noble Lords for the points that have been raised and hope that I can allay some residual concerns. Perhaps the noble Baroness and any other noble Lord would care to have a meeting with me and my officials before the House rises if there are any issues that I might not be able to satisfy in my closing remarks. I will be very happy to discuss further any issues that I cannot satisfy today.

The noble Baroness, Lady Jones, referred to problem gambling. I strongly support the Gambling Commission and its advisory body, the Responsible Gambling Strategy Board, in their efforts to determine whether the level of gambling-related harm is increasing and what can be done to reduce it. The conundrum with which all Governments grapple is how to balance the enjoyment of the large majority who gamble safely—of course, gambling brings considerable economic and other benefits, whether employment, tax or proceeds for good causes—with finding ways to identify those at risk of harming themselves and reduce the risk of such harm.

We need the gambling industry to help drive the search for improved ways of mitigating the risks as the quid pro quo of being allowed to trade. It should be recognised that the level of problem gambling is less than 1% of the population, but we must be watchful through appropriate legislation and the work of the commission, which is informed by the Responsible Gambling Strategy Board.

I was going to say that this order has been supported by this Government and their predecessors, but the noble Lord, Lord Faulkner, reminds me that that might not be the case. I also have in my notes a suggestion that this measure was supported in both the Conservative Party and Labour Party manifestos at the last election. I had therefore better look back into the records to see how all this corresponds with the facts. However, I can say that this issue has been at large for both Governments to consider.

The order will merge two bodies with similar responsibilities, aims and objectives, as I have said. Having a single regulator that understands and regulates the whole gambling market will provide desirable policy synergies. This can be achieved while effectively managing sensitive data, handling two sets of legislation and preserving the commitment by the regulator’s predecessors to consumer protection. This is well within the capability of the Gambling Commission. While creating a single entity ensures a common approach and in-the-round advice on gambling to government, this merger will also generate savings for the industry and lottery good causes. This is a clear benefit because we want as much of these savings as possible to remain for good causes.

Neither committee in either House objected to the merger but both have requested that we publish guidance on how the Gambling Commission will maintain its impartiality. As I said earlier, a copy of the Minister’s letter to the chairman of the Gambling Commission outlining the governance arrangements that the Gambling Commission will implement is available. I am mindful of what the noble Baroness has said and I may need to reflect on that and discuss it with her. In particular, it is important that we look at the response from the Gambling Commission.

This merger has been under consideration and we have been talking to officials for a very long time. Indeed, if it had not been for the National Lottery licence competition, this proposal might well have been presented by the previous Government. For that reason, I do not think that the merger itself is a rushed affair. However, we need to make sure that the fine tuning and governance arrangements are fit for purpose. I would like to have discussions with the noble Baronesses on that.