HC Deb 28 April 1993 vol 223 cc1096-101
Mr. Pendry

I beg to move amendment No. 196, in page 18, line 10, leave out '10 per cent.' and insert '20 per cent.'.

Mr. Deputy Speaker

With this it will be convenient to take the following amendments: No. 12, in page 18, leave out lines 12 and 13 and insert— '(6) The total value of the tickets or chances sold in any one such lottery shall not exceed one quarter of the total value of tickets or chances which may be sold in all such lotteries held in any one year and promoted on behalf of the same society or by the same local authority.'. No. 4, in page 18, line 13, leave out '£500,000' and insert '£1 million.'.

12.30 am
Mr. Pendry

The purpose of the amendment is to allow societies to offer larger, more attractive top prizes. That should assist small lotteries to survive the competition from the national lottery. Research suggests that the lottery could have dramatic effect on charitable income from small lotteries, as has already been pointed out. Charities in Ireland experienced a 60 per cent. drop in their small lottery income since the creation of the state lottery in 1987 and, according to that oft-quoted Guardian-GAH group report, the drop in small lottery income in the United Kingdom as a result of the national lottery could be as great as 50 per cent.

As we know, the Government introduced amendments to the Bill in Committee which increased the limit of the size of the single lottery from £250,000 to £500,000 and changed the maximum prize limit from £25,000 to 10 per cent. of potential ticket sales, whichever is the greater. While those changes were welcome, as was said in Committee, many charities are still doubtful about whether they will be sufficient to maintain charitable incomes for small lotteries.

The Opposition believe that the Government should do more to ensure that charitable lotteries are strong enough to survive the competition from big prize national lotteries. I am sure that every hon. Member has heard it argued that the size of the top prize in the national lottery will be the crucial factor determining sales. Surely the same argument holds for the smaller lotteries run by charities, sports clubs and community groups. We believe that the maximum top prize in a society lottery should be increased from £25,000 or 10 per cent. to £25,000 or 20 per cent. of the potential ticket sales. As the Bill is drafted, that would mean a top prize of £50,000 in a society lottery.

We also support the amendment proposing that the size of a single lottery should be increase to £1.25 million. The amendment would enable charities and other societies to reach the £5 million turnover proposed in the Bill by running four rather than 10 lotteries. If the amendment were accepted, it would mean that charities would incur lower administrative costs in reaching the total turnover limit. More small lottery proceeds would be available for charity and community use.

In debate on both the issue of single lottery size and the maximum prize level, the Minister said that the Government were not prepared to allow small lotteries that would compete with, and poach sales from. the national lottery. However, a charity lottery with a turnover of £1.25 million and 20 per cent. maximum size could hardly be thought to compete with a national lottery with jackpots that could reach, with the roll-over of three games, something like £44 million at one estimate.

The purpose of the. amendment is to make charitable and other society lotteries more attractive and more likely to survive and prosper, given competition from a heavily promoted multi-million pound prize lottery. We hope that the Government will be prepared to consider again both the limit and the size of the single lottery, and the maximum prize in any society lottery.

Mr. Alan Howarth

In deference to the lateness of the hour, I shall be as brief as I can. The House will be relieved to know that this is the last time that I shall seek to catch your eye, Mr. Deputy Speaker.

I want to speak to amendment No. 12, which stands in my name and those of my hon. Friends. I have considerable sympathy with the amendment moved by the hon. Member for Stalybridge and Hyde (Mr. Pendry). My amendment is an alternative means of achieving essentially the same objective.

I appreciate that the Government have already amended clause 46, and the movement that they have allowed is welcome. The annual limit of £5 million is fair and sensible and I welcome the spirit of the amendment that the Government have already made. However, there seems to be a basic inconsistency in Government thinking on the issue. The Bill allows a society to run lotteries with proceeds of up to £5 million per annum, but limits the size of each lottery to make it impossible, in practical terms, to reach the new limit, because each society would have to run at least 10 lotteries a year.

My hon. Friend the Minister said on a previous occasion that some societies do run instant lotteries 10 times a year. That is possible in the case of draw-type lotteries, which are suitable for football and supporters' clubs that meet regularly—but it is not realistic for national charities whose members and supporters are widely dispersed throughout the country. In practical terms, it is impossible for them to run more than four or five modern, instant lotteries a year on a national scale.

A period of 12 to 15 weeks is needed for each game to be produced, distributed, sold and recovered. Tickets and posters must be designed and distributed to thousands of retail outlets, a publicity campaign organised, tickets sold, and money gathered in. The draw must then be held, and perhaps an event organised in that connection.

Ten weeks is the very least in which that cycle of activity can be completed. I prefer my amendment to amendment No. 4 because it would still require societies to run instant draws every 10 weeks and that is too frequent. More time should be allowed. I note that the Government do not intend to restrict the national lottery's own instant lotteries in the same way.

My hon. Friend the Minister also suggested that societies and charities could run concurrent lotteries, but that is not an attractive solution. It would require a double set of printing, posters, administration, accounting and advertising. That would be expensive and confusing for charities and for the Gaming Board. Also, I am advised that it would contravene the current regulations governing lotteries and would require the amendment of section 10 of the Lotteries and Amusements Act 1976. It seems illogical to allow two lotteries of £500,000 and not one of £1 million.

Charities depend on the efforts of their voluntary workers and everyone wants them to keep their administrative costs down. It is not realistic on either count to ask charities to organise 10 lotteries a year or to run two or three concurrently.

Amendment No. 12 would raise the limit on the turnover for any individual lottery to £1.25 million, with a corresponding top prize limit of £125,000. My hon. Friend the Minister warned of the danger of creating mini national lotteries, but it should be borne in mind that a charity lottery would be able to offer a prize of that size only four or five times a year, at most. A prize of £125,000 would not compete in any real way with the national lottery's weekly prize of millions, as the hon. Member for Stalybridge and Hyde suggested.

Many charities want to continue to raise their own funds rather than rely on the national lottery. It seems unfair to restrict their initiative, particularly if the Government give them a total annual limit of £5 million which it is impossible to realise in practice. Charities should be allowed to run their lotteries on a cost-effective basis and to offer attractive prizes.

My hon. Friend the Minister may argue that the arrangements can be altered by statutory instrument, but it is important not to start off on the wrong footing. I fear that charity lotteries would wither on the basis that my hon. Friend proposes. A prize of £500,000 only would be perceived by the public as just too unattractive compared with national lottery prizes. Irremediable damage would be done before the regulations were altered and charity lotteries would be virtually destroyed—as in Ireland, where, as was mentioned earlier, small charity lottery income has collapsed 60 per cent. If that were replicated in Britain, charity income from small lotteries would fall from the present level of £240 million to less than £100 million, which would be most serious. I ask my hon. Friend to address that point.

Lady Olga Maitland

I support amendment No. 12, which was spoken to by my hon. Friend the Member for Stratford-on-Avon (Mr. Howarth). It reflects my concern about how small charities and voluntary organisations that run their own lotteries can survive the anticipated enormous success of the national lottery. Scratch card lottery tickets are sold by 200 charities and bring in art estimated income of about £40 million a year. They are unlikely to be able to raise similar sums of money if the Bill as it stands becomes law.

Therefore, I ask my hon. Friend to give serious consideration to the amendment, particularly bearing in mind that the Government will be able to be generous after the undoubted success of the national lottery. I ask the Government to support what I call the little fella, the smaller charities, and allow them to raise the full sum to which they are entitled. The means for doing so has not been provided for in the Bill.

Mr. Alton

I wish to associate amendment No. 4—in my name and that of my hon. Friend the Member for Caithness and Sutherland (Mr. Maclennan)—with amendment No. 12, spoken to by the hon. Member for Stratford-on-Avon (Mr. Howarth), and amendment No. 196, which was moved by the hon. Member for Stalybridge and Hyde (Mr. Pendry). If any one of the amendments were accepted, the Bill would be improved and would go some way towards meeting the concerns which the hon. Member for Sutton and Cheam (Lady O. Maitland) raised this evening, but which she more appropriately raised in Committee, where she explored the issues raised in these amendments rather than scratch cards, with which we dealt earlier this evening.

The amount of money that can be given in lottery prizes by charities, voluntary organisations, football clubs and others is an important matter. My hon. Friend the Member for Rochdale (Ms Lynne), who has been here for most of today's debate, has made representations to me about the football clubs in her constituency. Recently, I met Liverpool football club representatives, and I know that many other voluntary organisations and charities are anxious about the amount of prize money that they will be able to give. Their concern is that, if they are competing with a lottery that is handing out huge sums of money, they will look like very poor relations.

The arguments have been well put. Whichever of the amendments the Minister could find it in his heart to accept would improve the Bill. Even if he is unable to accept any of them tonight, I hope that he will continue to bend his mind to the issue and accept an amendment in the other place.

Mr. Peter Lloyd

As is clear from all the speeches, these amendments seek to increase still further the limit on the proceeds and prizes from a single lottery. We amended the Bill in Committee to increase the limit on proceeds from £250,000 to £500,000 and the limit on prizes from £25,000 to the greater of £25,000 or 10 per cent. of the proceeds.

Amendment No. 4, spoken to by the hon. Member for Liverpool, Mossley Hill (Mr. Alton), seeks to double the proceeds limit to £1 million. Amendment No. 12, spoken to by my hon. Friend the Member for Stratford-on-Avon (Mr. Howarth), is even more ambitious, for it would provide, in effect, a limit of £1.25 million. Amendment No. 196, moved by the hon. Member for Stalybridge and Hyde (Mr. Pendry), would double the prize limit, so that the promoter of a £1.25 million lottery could offer a top prize of £250,000.

It is a matter of judgment as to where the line between small and medium-sized lotteries, as provided for in the 1976 Act and the national lottery, is drawn. The Government's view, however, is that lotteries of the scale envisaged by the amendments overstep sensible bounds. We have drawn the line at £500,000 for proceeds and £50,000 for prizes. I accept that it is possible for others to take a different view, but what I do not accept is that the levels that we have provided for put small lotteries at risk. Although I know that some of the lotteries that describe themselves as small would like higher limits, most are pleased about the changes that we have incorporated in the Bill.

It is beyond doubt that the Government's new limits represent a substantial increase on those currently in operation—£180,000 for proceeds and £12,000 for prizes. They will greatly enhance the appeal of such lotteries.

I return now to what the hon. Member for Mossley Hill said, having experienced such debates many times before.

It would be sensible at the very least for societies to become accustomed to the new limits before we contemplate further increases. As my hon. Friend the Member for Stratford-on-Avon said, we can keep all the limits under review and we shall do so. If further changes appear desirable in the future, they may be made by statutory instrument. We would not need primary legislation.

I advise the House to accept the substantial increases and to leave matters there for the present.

12.45 am
Mr. Pendry

I expected that reply from the Minister, and I am sure that other hon. Members also expected it. As long as the Minister is in charge, I am happy that he will consider the issue sympathetically. I know that he will not be in his post for too long because we shall be on that side of the House. However, as long as he is in charge, I am sure that he will keep the matter in mind. With those serious remarks, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Mr. Peter Lloyd

I beg to move amendment No. 167, in page 18, line 28, at end insert— '(5A) In subsection (11) (not more than half of a lottery's proceeds may be appropriated for the provision of prizes) for "one half" there shall be substituted "50 per cent.".'.

Mr. Deputy Speaker

With this it will be convenient to take Government amendments Nos. 168, 169, 172 and 191.

Mr. Lloyd

Government amendment No. 169 is the cornerstone of this group of amendments. It would enable the Secretary of State to vary the percentages specified in section 11 of the 1976 Act. The other four amendments make consequential drafting charges.

We have received many representations from football clubs, rugby clubs and others—probably even from rugby league clubs—about lottery expenses. At present, the 1976 Act provides that no more than 25 per cent. of the proceeds of a lottery may be appropriated on account of expenses. This will be of particular interest to the right hon. Member for Salford, East (Mr. Orme). It has been argued that that limit is unreasonably low. Although many promoters of society lotteries are able to operate comfortably within the 25 per cent. limit, we accept that many others—especially those promoting smaller lotteries—find it difficult to do so. In response to representations, we amended the Bill in Committee to raise the expense limit to 30 per cent.

The Lotteries Council, of which the right hon. Member for Salford, East is president, suggested that even that higher figure is insufficient, and the council has argued for a 35 per cent. limit. I am not convinced that a limit above 30 per cent. is necessary or desirable as it would whittle away the amount of a lottery's proceeds which went to good causes. I now repeat what I have said when speaking to a number of other amendments because we are moving into uncharted territory. We believe that it would be sensible to be in a position to alter the 30 per cent. limit without recourse to primary legislation if there was a strong case for a further increase in future.

The amendment would also make it possible to vary by order the percentage limit on the size of the top prize in a lottery and on the amount of the proceeds of a lottery which may be used for the provision of prizes. I stress that we have no plans at present to vary any of the percentages, but the amendment would ensure that we could act reasonably quickly if circumstances changed or if experience suggested that we had not judged one of the limits correctly.

The changes do not mean that we have got it wrong. Experience may suggest that the limits should be altered, and I think that all hon. Members want us to get it right as soon as possible, so it is sensible to have powers available so that we can move by regulation instead of having to find time for primary legislation, which it is often difficult to do.

Mr. Orme

The issue of donated expenses still remains a problem for small organisations. Many such organisations share offices with their lottery companies, and often have overlapping duties, making it difficult for them to determine exactly what constitutes a beneficiary donating expense. That point has been made to me and to many hon. Members by small organisations that fear that the provision could be their Achilles heel.

The Minister has already said that he is prepared to consider the matter again. Will he have one more look at it before the measure goes to the Lords, where it may be discussed further? I have other representations to put to him, and all I ask is that he keeps an open mind for the moment.

Mr. Peter Lloyd

It may be helpful if I say a couple of sentences in response. I do not expect to change the rules because I think that they are adequate and will not be onerous. Expenses incurred solely or primarily to enable the lottery to function, such as the costs of printing tickets and of advertising, must, of course, be counted as the expenses of the lottery, but the definition will not include the use of office space belonging to the club or society if it has not been acquired especially to house the lottery team. That is the kind of principle on which the Gaming Board will work.

I understand, however, that there is considerable worry about the exact side of the balance sheet on which certain expenses will appear, so I have asked the Gaming Board to give societies guidance so that they will know what position they will be in before they make the decisions that might bring them one side, rather than the other, of the 30 per cent. limit.

Amendment agreed to.

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