§ Mr. CorbettI beg to move amendment No. 101, in page 2, line 22, at end insert—
'() A licence under this section shall include a condition forbidding the licensee from making arrangements which seek to prohibit the sale of tickets in local or society lotteries in outlets authorised to offer for sale tickets for the national lottery and those lotteries forming part of it.'.The amendment is designed to avoid what happened in Ireland, where, over a period, those who operate the national lottery have driven from outlets authorised to handle national lottery tickets those who sell society and local lottery tickets. The Government cannot want that to happen, so there should be no difficulty in accepting the amendment or its principle.The Under-Secretary of State may say that this is a matter for the Director-General of the National Lottery, but it is too risky to leave to him or to the good sense of those who will eventually be licensed under clause 5 to operate the lottery. The retail outlets that will be authorised to sell lottery tickets are matters for the 1041 commercial judgment of the lottery operators.
There must be ground rules, and the first, must be that exclusive arrangements which compel shopkeepers to get rid of local lottery and society tickets if they want to sell national lottery tickets are unfair and anti-competitive, and should not be tolerated. In a phrase that will doubtless appeal to the Under-Secretary and his hon. Friends, the decision should be left to the person running the retail outlet and his customers. It is for them to decide and decisions must not be imposed upon them by those who operate the lottery.
There is no reason at all why the national lottery operators should try to do that, because we are virtually agreed that, generally, the two sets of tickets are competing for different money, probably from different people. I am glad to see that the Under-Secretary of State nods. However, there is a suspicion that in circumstances where the national lottery is not doing as well as expected, the operator may feel that the best way to drive up custom is to bear down on shopkeepers and threaten that unless they stop selling all other forms of lottery tickets they will not be allowed to sell tickets for the national lottery.
Under competition policy, a shopkeeper, probably a customer and certainly a large retail chain would be able to take action. As the Under-Secretary knows, that is the case in Ireland and I suspect that it is a fairly long route. When local lottery and society tickets have disappeared from the shop counter, the shopkeeper may decide to acquiesce and agree to what is going on.
If the Minister feels unable to accept the amendment, perhaps he will acknowledge its principle and think about ways to try to ensure that this does not happen, so that retailers and customers can decide on the tickets they want to buy—none or both, one or the other.
§ Mr. Alan HowarthI endorse the arguments of the hon. Member for Birmingham, Erdington (Mr. Corbett). It is important that we do what we can to ensure that the national lottery does not become a monopoly. We can guard against this by legislating to ensure equal opportunities for small lotteries in the marketing and distribution of tickets in the United Kingdom. As he said, in Ireland the national lottery reinforced its monopoly position by practices that severely restricted the sales of tickets for charity lotteries. We would do well to learn from the experience of Ireland, where the system is similar in many ways to the one that will exist here.
Within two years of the introduction of the national lottery in Ireland, sales of charity lottery tickets were reduced by 60 per cent. The reason was mainly a concentrated selling campaign by the national lottery and its insistence that sellers of national lottery tickets did not sell the tickets of any other lottery.
§ Mr. HowarthI am glad to see my hon. Friend acknowledging the importance of that experience. I would expect him to be aware of it. It is important to state on the record now what has happened and the danger that we need to guard against.
The tactics went further, in that the best sales outlets of charity lotteries were specifically targeted to sell national lottery tickets. When a market for those tickets had been built up, the operators refused to supply further national lottery tickets unless the outlets stopped selling tickets for 1042 any other lottery. That resulted in the national lottery coming to control 98 per cent. of the market. An outcome along those lines would be a disaster to charities here.
I accept, as the hon. Member for Erdington said, that national and European legislation forbids such restrictive trade practices, but by the time that action can be taken under such legislation the damage will already have been done and it will be too late to save most small lotteries. The practices of the national lottery in Ireland were the subject of protests to the Office of Consumer Affairs and Fair Trade and a restrictive practices order was made in May 1990, but I am advised that those practices continue and that the problem has not altogether been resolved.
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Furthermore, another practice has been developed. The Irish national lottery sets much higher targets for retailers handling other lotteries and, if they miss their targets, they lose the agency, or the most lucrative part of it. That threat has worked and charities in Ireland have found it impossible to persuade shops and other outlets to take on their business. It is important that there should be specific provision in the Bill to prevent such an experience in Britain. Unless it is written into the Bill, small lotteries will be at a severe disadvantage and in danger of being forced out of business.
§ Mr. Bob Cryer (Bradford, South)I support the amendment. It is necessary to protect small lotteries as much as possible. I have here a letter from Bradford Northern rugby league football club. I am sure that the Minister will know that it has the best amphitheatre site in the north of England and probably in the country, but it has financial difficulties in maintaining the ground and the site. I will not go into the detail of the letter, because this is not the debate in which to do so, but it makes the point that small lotteries such as the one that it runs could be in difficulties as a result of the national lottery unless statutory protections are given, to enable it to run its lottery, as it does now, to provide income for the worthy cause of helping to maintain rugby league football at Bradford Northern.
The club says that, already, much of the Bill is designed to make life as difficult as possible for the small local lottery. It feels that some of the Bill's provisions are unnecessary. Therefore, a safeguard on the sale of tickets would be a useful protection for small lotteries. I am sure that the Minister does not want to see worthwhile ventures such as that pushed out of existence. If that occurs and the lotteries run by Bradford Northern are prejudiced, it will be a serious financial blow to them. Like most Bradfordians, and many others besides, I want rugby league football to be maintained in Bradford for many years to come.
§ Mr. DavidsonOne issue has been concerning small lotteries, and I hope the Minister will address it. As he will be aware, in Committee we debated what should happen in the event of there being more than 52 Saturdays in a year. Has the Minister made an adjustment to the rules covering that? Another amendment deals with the matter, but I hope that he will take the opportunity to address it now.
§ Mr. KeyThat last point is important. However, it is the subject of a different amendment, and it would be helpful if we dealt with it in its turn.
1043 The hon. Member for Bradford, South (Mr. Cryer) is right. We do not wish Bradford Northern or any other club to be prejudiced. That point was dealt with by my hon. Friend the Minister of State, Home Office and we will bear it in mind. It is also relevant to the clause, because it is a question of fair trading. I hope to reassure the hon. Member for Birmingham, Erdington (Mr. Corbett) that I concur with his instincts, and my hon. Friend the Member for Stratford-upon-Avon (Mr. Howarth) that we have learnt from the Irish experience.
The concerns behind the amendment, which are well taken, were addressed in Committee. It seeks to prevent those who deal in national lottery tickets from entering into exclusive deals with retailers that would preclude the selling of other lottery tickets. As I said in Committee, a contract that sought to hold a retailer to an exclusive deal would have the potential to be anti-competitive and would be open to scrutiny and challenge by United Kingdom competition authorities—principally the Office of Fair Trading—and by the European Commission. It would also come under scrutiny by the lottery's director general.
There would of course be nothing to stop an operator establishing its own shops or franchises dealing exclusively in national lottery products—that is a separate issue—but an operator would clearly be open to challenge if it entered into exclusive, anti-competitive deals with general retail outlets, as would pools companies or United Kingdom charity lotteries.
Although I agree with the principle behind the amendment, it is not necessary. I realise that it is based on fears expressed by charities as a result of practices in the Republic of Ireland, which were graphically described this evening, where the Irish national lottery marketed itself very aggressively against existing lotteries. It is made clear elsewhere in the Bill that such practices will be dissuaded. There is no intention to market the national lottery against existing lotteries.
The United Kingdom is not the Republic of Ireland. The economy and the market in which the national lottery and other lotteries operate in the two countries are significantly different in a number of ways. We have also had the benefit of observing what happened in the Republic of Ireland, and of course we recognise that such practices are undesirable.
Those who run small lotteries in this country will be quick to spot tell-tale signs of uncompetitive behaviour and it will need only a telephone call to Oflot's director general to alert him to the problem. I do not accept that that will be a long and bureaucratic procedure.
§ Mr. CryerThat is the very point that concerns me. It might be helpful to have some indication in the Bill so that people do not become bogged down. If an exclusive trading agreement is reached which puts out a local lottery, and if several weeks elapse before any effective alteration can be made, the local lottery will be severely handicapped during that period. I suspect that the Minister wants to avoid that as much as I do.
§ Mr. KeyYes, we both want to avoid that happening. I made the point earlier, in a different context, that we have more than a year to get this right. Precisely that sort of detail must be addressed by the lottery's director general.
1044 It would be against the operator's long-term interest, if it wants its contract to be renewed—because contracts are likely to run for only two or three years under clause 6—to enter into anti-competitive deals that would prejudice its future. I hope that I have reassured the House that the situation does not call for the amendment. When the director general is appointed, he or she will want to bear that aspect in mind, because it will be in no one's interests to damage club lotteries, large or small, or any other lotteries.
§ Mr. CorbettThe Under-Secretary of State has again demonstrated that he is not only or mainly the gas and gaiters that he may have inherited from his father. He has listened and demonstrated that he understands the anxieties voiced tonight and those of the organisations that properly expressed their concerns to us.
I am also grateful to the Minister for putting it on record that the lesson from the Irish experience has been learnt. I feel as satisfied as anybody can be that those who are thinking about applying for a licence under clause 5 will know that this has been said and that the director is likely to jump on them hard if they try it on. With the leave of the House, therefore, I beg to ask leave to withdraw the amendment.
§ Amendment, by leave, withdrawn.
§ Mr. MaclennanI beg to move amendment No. 3, in page 3, line 8, after 'lotteries', insert
'other than lotteries using scratch-off instant tickets'.If the Minister has paid great attention to the experience in Ireland, I hope that he will give a sympathetic hearing to amendment No. 3. Its intention is to deal with a problem that has been identified in Ireland in the working of the national lottery there.The Irish National Lottery Company has used aggressive practices, as the Minister said when he replied to the previous debate, and has, apparently, put pressure on retailers not to sell competing charity scratch card tickets. Many retailers there no longer accept these tickets for sale, with the result that charities find it difficult to obtain good sales outlets.
It is fairly widely accepted that the main motivation of lottery operators in using instant win scratch card games is to drive charitable lotteries, particularly small ones, right out of the market. Evidence of that has been drawn to the attention of hon. Members by the National Council for Voluntary Organisations, in New Zealand and a number of other countries. We are not in entirely uncharted territory.
Scratch card tickets can account for as much as a quarter of the revenue of state lotteries abroad, so it is not an insignificant amount, particularly if it is transferred directly from charitable giving. That is why I move the amendment, which is intended to restrict the use of scratch card tickets in the national lottery. I do not doubt that the charitable sector will inevitably lose income from small lotteries as a result of the national lottery, but if we do not do something about instant win scratch cards in particular, its position will be substantially worse.
I need not delay the House unduly on an amendment whose purpose is widely understood.
§ Mr. OrmeThis matter was raised by the Minister in Committee. He said:
The operators will have to form a view as part of their overall marketing strategy. It may be reasonable not to have 1045 instant gains, but we want to leave that up to them."—[Official Report, Standing Committee A, 4 February 1993; c. 74.]I was astounded when I heard that the national lottery would allow scratch games to be played. I had assumed that the national lottery would be a weekly affair and that people would buy a ticket for it. Scratch cards are used by football clubs, charities and political parties and bring in a great deal of revenue. Scratch cards will, I believe, demean the national lottery.The Government, I acknowledge, have gone a long way towards meeting the issues raised in many of the amendments and that they have met some of the anxieties that have been expressed. However, many of us still oppose in principle the establishment of a national lottery. However, it is our job to try to improve the Bill and to safeguard the charities which it will put in jeopardy.
The House will obviously approve the Bill, which will go to another place and receive Royal Assent. It will establish a national lottery, but we do not need scratch cards within that lottery, and I ask the Minister to acknowledge that.
§ Mr. GrahamI agree entirely with my right hon. Friend the Member for Salford, East (Mr. Orme). Many organisations in my area, which work on behalf of people with mental handicaps or for football clubs or the scout organisation, rely on charitable ventures and use scratch cards, domino cards and spot-the-ball games. The Minister should not allow the national lottery to stray into scratch card territory. Scratch cards are like an instant lottery, and political parties use them all the time. My idea of a national lottery is something like that which operates in Spain, for example. If we allow the national lottery to use scratch cards, we shall be adversely affecting charities, sports clubs and other organisations which the Minister would like to help.
Most of the instant scratch cards are sold by guys in pubs and clubs—Labour has had some success in that way and— usually cost 10p or 25p. I plead with the Minister not to allow the wee clubs to be harmed, although I fear that the national lottery will clearly affect those which raise their own funds. I hope that he will take steps to ensure that they can still earn their dough through the scratch card.
§ Mr. KeyThere are many lotteries in life, one of which is up and running and doing well at the moment—I gather that England was 2:1 up at half time and that Wales drew 1:1 in Prague. However, the lottery with which we are dealing is not yet up and running, but I want it to be up and running and to be a huge success.
If there is any misapprehension about the nature of the national lottery, let me dispel it. It will consist of more than one game. Different types of game will be licensed under clause 6. The issue of scratch cards, which was raised at length in Committee and again this evening, is important. National lotteries worldwide are a mixture of longer-term draw games and instant games. At the birth of this new enterprise—raising money for good causes—we should not shackle it with primary legislation ruling out an entire important category of lottery.
Instant games are an important source of income in the majority of national and state lotteries. Instant lotteries operate in all the states of America in which lotteries are 1046 run and contribute about 26 per cent. of overall turnover. In other countries, the contribution made by this type of game can be as high as 40 per cent.
§ Mr. Grahamrose—
§ Mr. KeyI shall give way in a moment, but I must make a little progress.
The impact of outlawing instant games as part of the national lottery could therefore lead to the loss of many millions of pounds for good causes, including charities, and may call into question the very viability of a national lottery.
§ Mr. Grahamrose—
§ Mr. KeyI promise that I am coming to the hon. Gentleman's point about local charities. If I do not, I shall of course allow him to intervene.
The Bill does not designate particular games for the national lottery. Such legislation could soon become outdated and would place burdensome restrictions on the director general and the operators. Each individual game will require a clause 6 licence from the director general, who will be able to examine in detail the proposed workings of a game. Games should not be accepted or rejected at this stage by rules set in stone a full year before the lottery even begins running.
I am aware that the promoters of some society and charity lotteries are worried that the national lottery will provide them with direct competition backed by a higher market profile. However, as we have argued for some hours, the national lottery will be an entirely different proposition from charity lotteries.
No one will be in any doubt about the distinction. The lottery will not be marketed in the same way as charity lotteries. I expect that, within reasonable limits, marketing decisions will be taken independently of Government. Evidence submitted by respondents to the White Paper, and other contributions that have been made over the past few months, have suggested that the fun, winning images of national or state lotteries are by far the stronger in promotional terms. The motivation is what matters, and the motivation for buying charity or club lottery tickets is very different. Charity and sports club lotteries are played by people who, for the most part, identify with the cause that they are supporting. I am sure that we shall continue to purchase lottery tickets and raffle tickets for local good causes and other causes dear to our hearts.
Part III makes further provision for charity and society lotteries, raising the existing limits on turnover and on prizes and improving their ability to continue to raise funds. Motivation is what the hon. Gentleman was concerned about, and I believe that people will continue to support their local football clubs, local charities and other clubs, in addition to any fun that they may derive from buying national lottery tickets.
I know that some hon. Members are concerned that instant lotteries may be addictive. It is impossible to state categorically that no one will find a certain form of game addictive, but our intention is clear: the director general will not license games structured or marketed in such a way as to heighten the aspects of a lottery which most appeal to the gambler. If at any stage such tactics appear to be a problem, the Secretary of State can use the powers in clause 11 to direct that certain types of game should be ruled out altogether. However, to rule out every sort of 1047 instant game at this early stage could in effect ensure that the national lottery was a failure, so I hope that right hon. and hon. Members will join me in opposing the amendment.
§ Mr. MaclennanThis has been a short debate, but I hope that it will not be considered unimportant. I realise that the Minister, who has shown good temper and patience throughout the proceedings, would no doubt like to canter quickly through the latter part of the process.
§ Mr. MaclennanI am delighted that the Minister is still so enthusiastic about his job.
I do not wish to press the amendment to a Division, and I hope that the debate will be noticed in another place so that the matter can be raised again.
I do not think that the Minister's answer to the debate, and especially to the right hon. Member for Salford, East (Mr. Orme), was wholly adequate. He sought to make comparisons with the United States, and did not deal with the example of Ireland at all. The position in the United States is simply not comparable. The whole ethos of charitable giving in the United States is made entirely different by the tax structure in that country, which positively induces people to give money to charities and other good causes. In this country people are not drawn to give in the same way, because there is no obvious benefit in doing so. In the United States there is far less reliance on the scratch card technique of fund raising.
§ Mr. GrahamI am sure that the hon. Gentleman heard the Minister say that scratch cards may be used and that the quick money makes roughly 26 per cent., so there will only be that opportunity to make all that money. In that case, why do the Government not take control of all types of gambling in which instant money can be made? It goes against the grain if we are to punish organisations that use instant scratch cards, and the Government will not allow them to carry on, so that the charity organisations will lose again unless they get money from other sources.
§ Mr. MaclennanI have no doubt that the hon. Gentleman is right. My point about the United States is that lotteries relying on scratch cards there do not have the adverse effect on charities that they will have in this country where charities rely on scratch cards to a far greater extent. There are different tax incentives for private giving in the United States.
I find it notable that the Minister failed to address the Irish example. In Ireland, there has been a charted decline in charitable giving which the Irish attribute in no small measure to the use of instant-win scratch cards. I do not wish to repeat the arguments that have been well made by others in this debate. However, I wish to signal clearly to the Minister that the matter will be returned to in another place.
I acknowledge that none of us can predict with certainty what the outcome of the Bill will be. He and I are both in the dark to some extent. However, when so many charitable organisations whose very existence is at stake take a certain view, we as a legislature are obliged to give them heed.
§ Mr. Robert Banks (Harrogate)I support what my hon. Friend the Minister has said tonight.
The hon. Member for Caithness and Sutherland (Mr. Maclennan) referred to scratch cards in the United States. Is he aware that scratch cards printed in this country cannot be imported into the United States? Does he agree that it would be highly undesirable for tickets printed in the United States to be imported into this country for the purposes of the national lottery?
§ Mr. MaclennanI did not know that. I am grateful for the hon. Gentleman's support. On first blush, I think that the hon. Gentleman must be right. I hope that that point is also borne in mind by the Minister.
Scratch cards are a major issue. The Minister illustrated their significance when he said that, if the lottery was not able to use that technique, it could make or break the lottery. By the same token, if it makes or breaks some of our major charities, it will have a damaging effect which can be no part of the Government's purpose. I beg to ask leave to withdraw the amendment.
§ Amendment, by leave, withdrawn.