HC Deb 14 July 1981 vol 8 cc1139-46 2.52 am
The Minister of State, Home Office (Mr. Timothy Raison)

I beg to move, That the draft Pool Competitions Act 1971 (Continuance) Order 1981, which was laid before this House on 21st May, be approved.

The purpose of the draft order is to extend the Pool Competitions Act 1971 for a further period of 12 months to July 1982. In 1971, when the Act was passed, it was limited to five years, but it contained provision for its extension by order for up to a year at a time, and it has been extended in each of the years from 1976 to 1980.

The House will remember that the 1971 Act was introduced to safeguard the position of certain charitable and sporting pools which gave prizes based on the outcome of sporting events, mostly football matches. They differ from football pools in that, instead of selecting teams each week, competitors hold a permanent selection of numbers which are assigned each week to football teams, and winners are determined by reference to the results of the matches. The Spastics Society and other medical and sporting charities derive substantial income from these competitions.

It was held in a House of Lords judgment that these competitions were not, as had been supposed, a lawful form of pool betting, but that they were unlawful lotteries. A number of worthy causes depended substantially on the funds generated by these competitions, and the 1971 Act was passed to safeguard their position until a permanent solution could be found.

The present situation does not suit anyone. It does not suit the organisations concerned because of the uncertainty that they have about the future of these competitions. It is unfair to any other organisation which might consider running such a competition but is prevented from doing so because the Act applies only to competitions being run in 1970. Nor is it right that Parliament should be asked to go on approving extension orders indefinitely.

When a similar order was debated last year, I said that it was proposed to invite the organisers of these competitions to discuss with the Home Office the scope for a permanent and satisfactory resolution of the temporary arrangements for which the Act provides. Useful discussions have been held. It had been thought that the doubling of the monetary limits on lotteries, which took effect on 1 July, might have enabled some organisations to dispense with these competitions. However, in most cases the income from these competitions is still considerably in excess of what they could raise from ordinary lotteries.

The House would not, I am sure, wish to curtail the valuable work being done by bodies such as the Spastics Society by cutting off this part of their income. However, the long-term choice is between banning such competitions altogether, with serious consequences to the organisations concerned, or putting them on a permanent footing open to any organisation, subject to a system of licensing and control administered by the Gaming Board for Great Britain and with appropriate safeguards which would prevent the general availability of such schemes from stimulating a significant increase in the turnover of money expended in this way.

My right hon. Friend the Home Secretary therefore intends that our officials should pursue their discussions with the six organisations which still benefit from such competitions with a view to making proposals for permanent legislation which would enable these competitions to retain their distinctive character while making them generally available, subject to safeguards, to other organisations.

I am sure that we are all agreed that this temporary legislation cannot go on being extended indefinitely. A lasting solution must be found and my right hon. Friend is taking steps to that end, although I cannot say when it will be possible for permanent legislation to be introduced. Meanwhile, I ask the House to approve the draft order and extend the Pool Competitions Act 1971 for a further year.

2.57 am
Mr. John Hannam (Exeter)

I hope that the House will approve the order. The amounts involved for the charities are enormous. It is essential that the major charities, many of which are hard pressed in these economically difficult times, should continue to obtain income from the pools.

The Spastics Society relied on pools to raise about £800,000 this year. Action Research for the Crippled Child will raise about £500,000. Pools are essential to such worthwhile organisations. The amounts raised would be higher if the uncertainty were removed and we could agree on legislation and put the system on a proper basis.

In the debate last year, the Minister said that new proposals would be forthcoming and that discussions would take place with the charities. He has confirmed that meetings have taken place. I am informed that they took place only after repeated requests and telephone calls from the organisations involved. In March a Home Office official had discussions with the Spastics Society and stated that before the renewal order came before the House a meeting would take place with the Minister. No such meeting has been arranged. I should be grateful if my hon. Friend could clarify the position. I hope that he will have discussions so that the organisations can consider the draft legislation. In that way we can safeguard the vital income from pools competitions.

Last year the hon. Member for Isle of Ely (Mr. Freud) expressed anxiety about the high running costs of some of the pools promoters. It was suggested that people who contributed to charity football pools were being fiddled. I understand that the promoters—certainly in the case of the Spastics Society—print costs clearly on the pools sheet to show exactly how much of the contributors' money reaches the charity. A figure for operational costs of about 38.3 per cent. was quoted. That was taken as a percentage on the net income rather than the gross income, which is the normal method of assessing costs under the Lotteries and Amusements Act 1976. Therefore, the percentage which we should consider would be about 5 per cent. less than the 38 per cent.

It should also be remembered that the average charitable takings are 15p rather than the £1 average for normal commercial pools. From that the collectors who give up their time to go round weekly collecting those small amounts receive a 25 per cent. commission.

Therefore, I hope that no one will be under the misapprehension that in some way those charity pools are a rip-off for the promoters because those facts show, as with many of the local government lotteries, that the costs are high when the amounts being contributed are low, as distinct from the running of the major pools where he average amount contributed is about £1 per person.

Mr. Clement Freud (Isle of Ely)

Does the hon. Member accept that when someone gambles in a football pool he does so in the full knowledge that the prize winners and the pool promoters will benefit, whereas when one buys a ticket for a specific charity one is not made aware of a number of other people who benefit? Is he further aware that, of a total of £23 million which was netted by the six organisations which now remain, only £3.5 million went to charity?

Mr. Hannam

What I am trying to point out is that the percentage amounts which go to charities are clearly shown to the people who are contributing. The costs of administration of such a pool are high. That has to be accepted and admitted. However, I do not believe that those costs can be avoided. The charitable organisations with which I have been concerned have taken great pains to ensure that all the details of the costs are investigated and verified. I know that the hon. Member has expressed doubts. No doubt he will do so again in the debate. I felt that it was important to give some of the facts, which the charitable organisations are anxious should be made known to hon. Members.

Earlier tonight we heard of the problems caused to charities by VAT and inflation. I hope that it will be appreciated that this is an important order and that if we fail to pass it those charities will face a grave financial crisis. I hope that the order will receive the support of the House.

3.3 am

Mr. Clement Freud (Isle of Ely)

I have always felt that one should be guided by the merits of an argument rather than the lateness of the hour. I feel that this is an important matter. I genuinely feel that the Minister of State, Home Office has read a shoddily prepared brief without much verve. It is time that the House considered the inadvisability of allowing Governments to postpone legislation from year to year.

This Act was brought in in 1971 as a response to the decision in the House of Lords in the case of Singette Limited and others v. Martin. In its judgment, the other place ruled that the operations of Singette were illegal and that that was contrary to the general belief at the time of the judgment. That decision was based on the difference in law between legal pool betting and illegal lotteries. In practice, both involve the entrant putting a stake into a pool from which expenses are deducted and prizes paid. In a lottery, the winner is determined by chance, and in a pool the entrant must exhibit an element of skill.

The sort of pool operated by Singette involved the entrant making one forecast which remained the same for many weeks. The other place decided that that did not involve a regular forecast and that, therefore, the element of skill was minimal. On that basis, Singette and others were breaking the law because they constituted a lottery and not a pool betting system.

In Committee, on 12 May 1971, the present Secretary of State for Education and Science, then a Minister in the Home Office, said: The essential difference is that, in the case of a lottery, the winners are determined by lot or chance, whereas in the case of pool betting, entries must comprise a forecast". That was accepted by the House.

A proportion of the money raised by the operations went to registered charities, notably the Spastics Society and sports associations. Nobody wanted the charities to suffer. The House of Lords judgment would have deprived such organisations of funds. That was the major factor given by the junior Minister for introducing a Bill to legalise such operations. He continually stressed that the measure was temporary—a specific reaction to a specific judgment.

The Act was to have a life of five years only, subject thereafter to an annual extension. During the five-year period the charities and other benefiting organisations were to find other ways to raise the funds that they received from the pools. The House, with total wisdom, said that that was to be done. The life of the Act was to allow time for investigation into the whole sphere of lotteries and their operation.

The Minister said: I hope that the organisations concerned will take a warning—namely, that the Bill is allowing them a breathing space and that, during that breathing space, they should seek to diversify their sources of income.

When the Act was introduced it was generally accepted that the judgment of another place could not be allowed to stand because of the financial harm that it would do to worthy causes. The Minister was not wholly happy about the introduction of such a measure because it lacked principle. He said: the Bill is based on expediency far more than on principle…I concede at once that it is on the basis of expediency that I commend the Bill. I feel that that basis is the only one on which it can be justified."—[Official Report, 12 May 1971, Vol 817 c. 566–587.]

The Royal commission on Gambling, reporting in 1978, saw no reason for the Act to be continued and discounted the argument used by the Government to extend the life of the Act—namely, that charities needed it. The Rothschild commission said that they should raise funds in some other way. In paragraph 15.14 it said: There is no doubt about the merits of the deserving causes, mainly in the field of medical research, which benefit from these pools. Nor should any charity be deprived of the right to benefit from this form of fund raising if it were agreed to be necessary or desirable.

The reasons for that dislike were that, first, other charities and organisations could not join the elite bandwagon of those able to benefit from pool competitions—the seven pools, now reduced to six. Secondly, if other charities managed without, all of them should be able to do so. The report said in paragraph 15.17: There is no case for allowing the Pool Competitions Act 1971 to continue beyond July 1979 and the activities of the companies licensed to promote charity supporting pools should in any event not be allowed to continue in their present form for more than a limited period. They will, we believe, continue unchanged until July 1979. We recommend that the Pool Competitions Act 1971 should not be extended after that date and simply be allowed to lapse.

Despite the contributions that the operators make to the charities being only a very small percentage of their turnover, they are a very large percentage of the income of the charities. The Spastics Society estimates that about 10 per cent. to 12 per cent. of the money it receives from public sources comes from pool competitions. The figure is about £800,000 a year. Without that, its services would obviously be curtailed. That information comes from a sheet provided by the Spastics Society. Under the 1976 Act the society is restricted from raising comparable amounts under lottery schemes similar to those run by other charities.

This is now the tenth year of the Act's life. That is twice as long as was originally intended. Are we to go through this procedure every year? Are we going to forget about it like the Incitement to Mutiny Act 1797 until another law case brings it to our attention?

The Home Office has said on every occasion—the Minister and I have met on these occasions over the years and I have met previous Ministers—that a review is pending or that it is giving the charities just one more year. It was jolly useful for it when the Rothschild commission was about to report. Last year really was the last year when, in all fairness, these six elitist swindles, fiddles, cons, call them what one will, should have had their lives.

When will we have consolidating legislation covering the whole area of pools and lotteries? During the first debate on the order after the Rothschild commission had reported, the Minister said that the Home Office would consider the proposals in the report but that he did not know how long it would be before its views were formed on the views of the Royal Commission. We still have not had the response of the Home Office. That is the response to the recommendation to allow the Act to lapse.

Sections 10 and 11 of the Lotteries and Amusements Act 1976 restrict the amount of money that can be raised in each lottery and the number of lotteries that can be held each year. The present figures—they have been increased this year—allow a maximum of £10,000 to be raised on each occasion and for 52 events to be held in any one year. This is still less than the sum that the Spastics Society receives from pool competitions. It would not have been very difficult to scrap the Act and allow the charities, simply by raising the limit, to continue receiving money and to continue to do their good work.

What is worrying to me about the Act is the small percentage of the proceeds that goes to the charities and sports associations. As I intended to speak in the debate, I did not interrupt more than was strictly necessary. I did so on only one occasion in response to a contention voiced by the hon. Member for Exeter (Mr. Hannam), who has a constituency interest in one of the firms.

The figures that were obtained from the Gaming Board for Great Britain for the financial year 1980, which are the last available figures, for the then seven operators reveal that total proceeds were £23 million, of which £5 million went in prizes, £6 million in duty, £8 million in expenses and only £3.5 million in donations to charities. That is about 15 per cent. When someone buys a £1 ticket for what he thinks is a charitable contribution included in an element of gaming, betting or lottery, 85 per cent. goes to other causes than the one whose name is on the ticket.

It is clear that many people are being misled into buying tickets by thinking that a large amount of the cost of the tickets will go to the charity. I ask whether the operators are not making too much money behind a very respectable front while not being nearly as benign as people might think.

Top Ten Promotions in the financial year 1980 had total proceeds of £7.5 million and made donations of £1,790,000. ask whether the entrants know how much of their fee goes to good causes. I wonder whether they would mind if they did. I said when the measure was debated last year that it was a fiddle. I do not want to repeat my argument, which is to be found in Hansard at columns 1920–21 on 19 June 1980.

We need a change in existing laws, such as the Lotteries and Amusements Act 1976, which does not allow, even with the increased figures of this year, the charities to raise as much as the £800,000 raised for the Spastics Society from the proceeds under the Act. We could then allow a bad anomaly to lapse.

The Government so far have failed to do anything constructive for charities in the International Year of Disabled People. There has been the odd minuscule contribution towards an increase which would probably have been given anyway. The Minister shakes his head. Can he mention a single constructive benefit which came especially because of this year and would not have come normally with the generosity that Governments usually show in their first two years of office?

I end by quoting the Minister's words last year, when he said: Active consideration is being given to the question of when we should bring in new legislation. He also said: We cannot possibly tackle everything at the same tune;"—[Official Report, 19 June 190; Vol. 986, c. 1924.] and claimed that 1980 was a busy legislative year. Will he use that same feeble excuse again? I realise that towards the end of this parliamentary year there are many late sittings, but he surely cannot say that there has been so much legislation that he has been unable to have some of his civil servants and advisers look into a viable alternative to a heavily outdated measure.

3.16 am
Dr. Shirley Summerskill (Halifax)

The Act began life in Parliament as a temporary measure, but it has become an annual ritual. The reason for extending the Act after its first five years was that we were waiting for the Rothschild report. That report came out in July 1978. The Minister has now had more than two years since the Government came to office in May 1979 to decide what response to make to the Royal Commission's conclusion, which was quoted by the hon. Member for Isle of Ely (Mr. Freud). The Royal Commission recommended that the Act should not be allowed to extend after July 1979 but should simply be allowed to lapse. It expressed strong reservations about the methods used by the charities supporting pools and criticised those methods as thoroughly undesirable.

There is a great deal of sympathy in the House and outside for the aims and objects of the worthy charities which the Act helps, especially the Spastics Society and certain medical research. It is appreciated that a total of some £3.75 million is raised on behalf of these charities.

Even the charities, however, claim that the uncertainty of the present annual renewal by Parliament is detrimental to their organisation. They are never sure from one year to the next whether the Act will continue. That is bound to affect their income and the recruitment of permanent staff. They are unable to regularise their affairs. There is no evidence that they are even trying to raise money by alternative means. Perhaps the Minister has such evidence. If so, what success are they having? Are they retying entirely upon this Act to see them through indefinitely? Their view seems to be that the Act should become permament legislation. They want this special treatment established on a regular basis.

The Minister has said that the present situation does not suit anyone, which is true. It seems that in the last year there has been very little progress apart from discussions. There has now been a period of more than two years since the Government took office for discussions to take place between the Home Office and the organisers of the competitions to decide on the best permanent, satisfactory resolution of the temporary arrangements for which the Act provides.

The Minister stated in the last debate on this matter that he would start discussions. He said just now that useful discussions have been held. I have been given permission to quote a letter from the Spastics Society in which, apart from pointing out that the discussions had to be initiated by the charities and were not initiated by the Government, it is stated that nothing of substance has emerged from these meetings", meetings which the Minister calls useful.

The society is aware that the House finds these annual renewal orders tedious and time-consuming. It seems that the society feels that it is not getting anywhere with the Home Office in spite of the meetings. However, the Minister has told us that he intends to pursue discussions. What can possibly come out of pursued discussions? Surely the Government now know the views of the charities. I think that there have been three meetings. What more is there to find out about their attitude? Surely now the only course is for the Government to finalise their view on how to proceed, whether to renew the order annually, whether to allow it to lapse as recommended by Rothschild, or whether to introduce permanent legislation.

I hope that the debate will encourage the Minister not simply to say that for another year he will pursue discussions but to tell us now that during the year he and the Government will reach a definite conclusion about their proposals to replace this annual ritual.

3.22 am
Mr. Raison

I think that this short debate has shown a certain anxiety on the part of all who have spoken that we should get on with this matter. I think that that has been the theme of the debate. My hon. Friend the Member for Exeter (Mr. Hannam) rightly stessed the value of the money that is raised. That point came over during our debates in the two previous years. It is argued that the money could be raised equally well by lotteries, because the limits on the lotteries are raised, but I am advised that this is a still more effective way for these organisations to raise the money. I think that they regard this provision as useful.

The hon. Member for Isle of Ely (Mr. Freud) asked in passing what the Government had done for disability during this year. He then cleverly advanced the point that they would have done something for disability anyway, thus putting himself in an impregnable position. My right hon. and learned Friend the Chancellor of the Exchequer has, of course, introduced decidedly useful benefits for the disabled.

The crucial point to be faced is that of timing. The House knows that I cannot say when we shall introduce legislation, but I made it clear during my speech that that is our intention. Obviously, that must be discussed with the people concerned—

Dr. Summerskill

The Minister is making the same speech as he made last year to the effect that he cannot give the House the timing of legislation. No one has asked him for the timing. We simply want to know what form the legislation will take. What conclusions have the Government reached?

Mr. Raison

I cannot say more than I have said. We have to complete our discussions before we can come forward with legislative proposals.

The hon. Member for Isle of Ely attacked the promoters of these pools, I think it would be fair to say, on the ground that they are making excessive profits for themselves. The uncertainty, which I acknowledge exists, about the future of these competitions has resulted in something of a stalemate. As far as I am aware, the charities and sports organisations concerned are satisfied, with their pool promoters. If they were not satisfied they could hardly consider making a change when they could never be sure that the competitions would be able to continue for more than another 12 months.

If the pool competitions were to be on a permanent basis, which is our aim, and made available to more organisations, their promotion would no doubt become more competitive and any organisation that thought it could get a better return from other promoters would be free to make a change of this kind.

I accept that we have to get on with this. The present situation is unsatisfactory and I am not trying to argue otherwise. We have many other legislative priorities. As the hon. Member for Halifax (Dr. Summerskill) has acknowledged, I cannot say what is to be in the legislative programme in any Session. I have listened to the debate and sense that hon. Members on both sides want to get on with this. I shall do what I can to respond to that feeling.

Question put and agreed to.

Resolved, That the draft Pool Competitions Act 1971 (Continuance) Order 1981, which was laid before this House on 21st May, be approved.