Deregulation Bill

Lord Mancroft Excerpts

Tuesday 11th November 2014 Grand Committee

Moved by

[Lord Mancroft]

81: After Clause 60, insert the following new Clause—
“Changes in mandatory conditions of lottery operating licence
(1) Section 99 of the Gambling Act 2005 is amended as follows.
(2) In subsection (2), after “at least 20% of the” insert “aggregate annual”.
(3) In subsection (3)(a), for “£4,000,000” substitute “£10,000,000”.
(4) In subsection (3)(b), for “may not exceed £10,000,000” substitute “is unlimited”.
(5) In subsection (4)(b), for “10%” substitute “50%”.”

[Lord Mancroft]

My Lords, usually when one introduces an amendment in Committee there is a vague prospect that other Members of the Committee will have some familiarity with the subject, having sat through Second Reading and other days in Committee. However, we have already had a gallop through BBC funding, busking regulation and copyrights for broadcasting, so it would not be unreasonable for me to assume that not everybody in Committee this afternoon is intimately familiar with the details of lottery regulation.

I declare an interest as president of the Lotteries Council, which is the trade organisation that looks after 440-plus organisations, most of which are charities or non-profit-making sporting organisations that promote lotteries in this country. The collective revenues are about £350 million a year and they donate, provide or raise for their charitable organisations about £155 million a year, which is quite a significant sum.

Most noble Lords will probably have come across the National Lottery. However, I will forgive them if they have not all come across society lotteries. Society lotteries were introduced following the Rothschild commission on gambling in 1968, which was followed by the Lotteries and Amusements Act 1976, which provided the regulations by which charities, known in law as societies, could raise money for their activities by running small lotteries.

As have many things in this world, they have developed over the years since 1976. There was a significant change in lottery law in this country with the advent of the National Lottery in 1994, after the Bill became law as the National Lottery etc. Act. At that stage your Lordships agreed half a dozen small amendments, not dissimilar to those I am proposing today, to change the 1976 Act to protect society lotteries from the might of the proposed National Lottery. I am delighted that the Government agreed to those amendments, which I had the honour to propose in Committee in your Lordships’ House in the summer of 1994. My noble friend Lord Astor was the Minister who was sitting where my noble friend Lord Gardiner is sitting now. I am delighted that the Opposition strongly supported what we were trying to do then and I hope that they will do so now.

I will not go into all the detail but Amendment 81 proposes five small changes to the regulations. The first one is really the preamble and need not particularly concern us. Subsection (2) of the proposed new clause is in relation to the amount of money that society lotteries are obliged by law to give back to the promoting charity. That has consistently been 20%. However, it is quite difficult for some of the smaller charities when they are starting out to maintain that, and my suggestion is that that 20%—which is quite right, and of course it is the primary purpose of lotteries to raise money for their good causes—should be aggregated over the year rather than in single lotteries. If your Lordships think that amount is too low, it is worth remembering that in the last year for which figures are available, 2012-13, society lotteries actually provided 48% to the societies that were promoting them, significantly more than the 20%. This is just to protect those in start-up when their costs are at their highest and it is more difficult for them. They may not all make use of it but it would be an important change.

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My strong starting point, which we heard in the debate yesterday, is that the “one national lottery” system remains the best model to achieve the maximum return for good causes. Noble Lords made that point very strongly at Question Time yesterday, and I was very pleased to hear the Minister respond likewise—that the National Lottery has done a huge amount and that the principle was worth defending. We know that actions or changes that impact on sales of National Lottery tickets will have a huge impact on all the very good causes that my noble friend Lord Rooker mentioned. We do not know what the impact would be, which is why I am articulating caution.

[Lord Mancroft]

My Lords, the noble Lord says that we do not know. We do know; this has been out to consultation several times. We also have the recent report of the Centre for Economics and Business Research, which, as he knows, was published in February this year and went into this subject in great detail. After carrying out a great deal of research, it made it absolutely clear that all the changes that have been made to society lotteries over the years and the ones that we are proposing today have absolutely no negative effect on National Lottery sales at all. What they can do and have done in the past is to expand the market overall, therefore actively improving National Lottery sales. The biggest increase in society lottery sales was in the past year, which also saw the biggest increase in National Lottery sales. Therefore the argument that he is proposing at the moment has been proven to be completely wrong.

[Lord Collins of Highbury]

I will come to that point, because in this market the proposals could result in an expansion with unforeseen circumstances and I want to address that. I have raised that with the Minister before, with regard to who may enter that market if we deregulate it. That is one of our major concerns. The principle of the National Lottery is that it was designated as a monopoly to ensure that it generates sufficient income for all the causes that Sir John Major originally envisaged for it. We need to be very careful about weakening the protection of that principle. That is the point that I am making at this stage. My noble friend Lord Rooker quite rightly pointed out that there was a range of proposals within these amendments; I will come to one of them, which could be well worth considering.

We need to protect the principle of the model that has worked successfully over the past 20 years. Measures that could have the potential to undermine that settled principle of one national lottery alongside many small small-scale society lotteries need to be avoided. I shall mention as an example the increase in prize caps for society lotteries. The level of prizes on offer to players is a fundamental differentiator between the National Lottery and society lotteries. When we introduced the National Lottery, we had that in mind. Any substantial increase in prize caps for society lotteries risks fragmenting the money spent by players across all the different lotteries available, which would lead to smaller jackpots, fewer tickets sold and, ultimately, less money for the good causes that were highlighted in the Chamber yesterday.

[Lord Collins of Highbury]

I was not attempting to rewrite history—far from it. That is why I mentioned the debate yesterday where noble Lords referred to Sir John Major’s proposals and their legacy. In the context of the Olympic Games and their legacy, the National Lottery has played a critical role. I think that the Labour Party has learnt many lessons over the years and adopted policies that perhaps it had been concerned about. My noble friend referred to the national minimum wage. I worked for a trade union that opposed that every step of the way, but it has learnt the lesson of reconsidering positions. We are talking here about the outcome of the National Lottery and the huge amount that it has achieved for a whole range of good causes, not just the national legacy causes but local causes and, in particular, the cultural impact. Any change to that principle therefore needs to be considered extremely carefully.

The proposal that the 20% contribution should be spread over a period of time may be one that the Minister will take on board. However, another point that I want to make about any changes, and I have raised this in the Chamber, relates to the loophole that we have seen exploited by the Health Lottery. It is supposedly made up of 51 separate companies yet has the same three directors, the same office and the same branding, in effect enabling it to operate as an alternative to the National Lottery. That is something that the Minister needs to look carefully at, despite the actions of the Gambling Commission in this regard. The amount that goes to worthy causes there is 20% but it is not absolutely clear how it is spent, and its promoters are certainly operating on a commercial basis.

[Lord Mancroft]

I do not want to enter into a debate about the Health Lottery now, but it is registered with the Gambling Commission. For every single lottery that it does, every single week, it submits a return to the Gambling Commission, which noble Lords can all see online today. There is no hidden money anywhere else. The putting together of a group of societies into one big one, with a lottery operator working above it, was debated and agreed very forcefully in your Lordships’ House 15 years ago. There is nothing secret about it. I accept the fact that Mr Desmond is, for some reason I am not clear about, a very unpopular person, but he has done exactly what the law envisaged and what Parliament intended. I took part in all those debates, and that is exactly what we planned. The Health Lottery has not produced any threat to the National Lottery. Camelot endlessly says that it does but, in the year of the Health Lottery’s birth and rise, National Lottery sales increased at a greater rate than at any time in its history, and long may that be so.

[Lord Collins of Highbury]

I do not accept what the noble Lord says because that lottery has exploited a loophole which I had hoped that the Government would be able to close. I am not suggesting for one moment that, in the dodgy sense, there is hidden money but only 20% of the money raised by that lottery goes to good causes. That may be seen to be a reasonable return, but it is advertised on Mr Desmond’s channels and in his newspapers, it is competing with the National Lottery and people think that it is a national lottery. It is even called a “national lottery”, which I think is in breach.

Furthermore, if that company can do it, what if Tesco suddenly decides, “This is a market we need to expand into. It’s a worthy cause. We can say to our customers that we’ve the infrastructure and the stores”? I believe that this is why we need to exercise caution. We have a model that has worked. We need to support local societies, even small societies, in terms of enabling them to raise money, and that includes local lotteries. I do not believe that when people buy those tickets they are necessarily thinking, “I need to win £4 million”, but we know the impact and the dream of the National Lottery, which is why it is so important to regulate the area. I am sorry to have banged on a bit on this, but there is a principle here that is worth defending and protecting. If we move forward in any step to deregulate that, we need to understand fully the consequences for the good causes.

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The Government believe that society lotteries are an important feature but the National Lottery has become such a key part of the well-being of our nation that we would not want to rush into anything that could even possibly put that in jeopardy. I understand the points that my noble friend made in denying that this will have an impact but there is sufficient concern—it was raised in the Chamber yesterday across the House—that the Government’s process of looking at this, considering what the Select Committee is going to come forward with, is the right way of doing it so that we get this right for both the National Lottery and the society lotteries, which do so much good. On that basis, I ask my noble friend to withdraw his amendment.

[Lord Mancroft]

My Lords, I was not expecting a different answer but that does not mean that I am not disappointed. As I said when I moved my amendment, I have been down this track before and I have heard all those answers before.

The noble Lord on the opposition Front Bench was talking about a detailed examination. That is a good thing to do, which is why the Government commissioned the Budd report before the 2005 Act. That, of course, came out in favour of this level of deregulation. The report of the joint scrutiny committee on the draft Bill in 2004 said that we should remove these regulations. My noble friend has just referred to the upcoming report of the DCMS Select Committee. Of course, he may wait for that but if he was to look at the previous DCMS Select Committee report on society lotteries, it, too, recommended that these regulations should be removed. The two most recent government consultations recommended that they should be removed. Indeed, fascinatingly, 350 organisations and individuals responded to the Government’s most recent consultation on society lotteries, and 349 of them were in favour of deregulation. One organisation was opposed to deregulation and that, amazingly enough, was Camelot.

What is proposed here is not, as the noble Lord said, an alteration of the principle. There is no alteration of the principle at all here. The first section of the National Lottery Act says there is only one national lottery. That is entirely true. The Health Lottery is not a national lottery. The People’s Postcode Lottery is not a national lottery. Collectively, those two enormous organisations, and the 440 or so other organisations that run lotteries in this country, still have less than 5% of the market. The National Lottery, quite rightly, has 96% of the market. How on earth can that be seen to be a threat? There is an idea that Tesco or Sainsbury might suddenly launch a society lottery. Actually, they tried, but even they, with their massive marketing might, could not take on the might of a 96% monopoly operator.

The principle is odd because, as the Committee will know, Britain and France are the only two countries that have monopoly national lotteries. In America they are state lotteries; in South America they are primary, secondary, tertiary and charity lotteries; in eastern Europe, which invented lotteries, they have provincial, state and national lotteries and even smaller ones; in Germany they are state lotteries; in Ireland and Spain there are three—need I go on? The way that the national lotteries are set up in Britain and France is virtually unique; no one else does it like that. It is recognised in most other parts of the world that secondary, tertiary and charity lotteries actually increase the size of the market, as the noble Lord, Lord Rooker, suggested, and everyone benefits. That is why, I repeat, when the Health Lottery started last year or the year before, it was the best ever year for the National Lottery.

I dare say that we will have the consultation, we will all take part in it, it will come up with exactly the same answer as the previous consultations and the Government will seek to damage it to defend their own monopoly, which they do not need to do. More importantly, they will do the most extraordinary thing: they will maintain the regulation that prevents charities from increasing the funds that they can raise. I know of no other piece of law, in this country or anywhere else in the world, whereby a Government prevent charities from raising funds for their own charitable causes. It is a pity, but no doubt we will return to this at a later stage in the Bill. In the mean time, I beg leave to withdraw my amendment.

Amendment 81 withdrawn.