HC Deb 20 October 1993 vol 230 cc322-9

Lords amendment: No. 1, in page 3, line 31, at end insert— ("( ) to refer matters to the Director General for approval; ( ) to ensure that suchy requirements as the Director General may from time to time determine or approve are complied with;")

The Parliamentary Under-Secretary of State for National Heritage (Mr. Ian Sproat)

I beg to move, That this House doth agree with the Lords in the said amendment.

Mr. Deputy Speaker (Mr. Michael Morris)

With this it will be convenient to take Lords amendments Nos. 2, 3, 4 and 5.

Mr. Sproat

The amendments allow for certain additional provisions to be included in the licence to ensure that the lottery is operated fairly and efficiently. The Bill, as originally drafted, already included a wide range of powers for the director general of the lottery to control the operator and the new provisions merely complete the regulatory picture.

Amendment No. 1 will enable the director general to ask the operator to prepare codes of practice for certain elements of the lottery, in particular to cover advertising and customer relations. The operator will, therefore, be asked, within these areas, to establish his own regime according to which he intends to operate for the benefit of the playing public. Codes will have to be approved by the director general, who will then monitor the operators' performance against their requirements. If there were breaches of the codes, it would be open to the director general to introduce new licence conditions covering appropriate matters.

The requirement to develop codes of practice will be included in the draft invitation to apply for the licence which the director general will issue shortly after he is appointed, following Royal Assent. Once the draft document has been considered, the final invitation to apply will be issued, enabling him to license an operator by, we hope, next spring.

As part of the tendering process, applicants will be asked to outline their codes of practice and explain how they see them operating in practice. When the successful applicant has been selected, the director general will agree codes with him before the lottery is finally up and running.

Despite the fact that we could not complete the Bill's parliamentary process before the summer recess, we still hope that the first draw might be held towards the end of 1994 or in early 1995, with money flowing to the distribution bodies in the following month. Of course, the distribution bodies will need to prepare themselves for handling applications some time before that.

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The timetable is especially tight for the new bodies to be established under the Bill and particularly for the Millennium Commission, which will be handling major projects due for completion in time for the year 2000. In order to allow work on establishing the commission to get ahead quickly after Royal Assent, my Department intends to bring forward a supplementary estimate this autumn for £150,000 for the Millennium Commission. That expenditure during the current financial year was not anticipated in the earlier stages of the Bill, so I wanted to put it on the record for the House now.

Amendment No. 2 would allow the director general to publish information relating to the performance of the operator. That would be in addition to the annual report that the operator must produce and would make him even more accountable to the House and to the general public.

The remaining amendments deal with the situation that will arise when, for whatever reason, one licence ends and another begins. They would require the licensee to take certain actions in connection with the end of his period of holding the licence so that the new licence holder could operate the lottery effectively with as little disruption as possible.

Some examples of the kind of action that might be required may be helpful. For example, the director general might have to ensure the transfer of rights over the national lottery logo or identity. The identity of the national lottery must, of course, be able to continue even if the operator's licence is transferred to another body. Secondly, the director general might also require the former operator to provide information on accounting matters connected with the running of the lottery. Finally, the outgoing operator might still have information relating to his period as licence holder that the director general needed for completing unfinished games, reissuing the licence or reporting on the running of the lottery in a particular period. Clearly it is important that the director general should be able to gain access to such information and that the licensee should be fully accountable to the publicly appointed regulator for his actions even after the licence has expired.

I emphasise that it will not be possible to include variations in the licence relating to the transfer of property or rights without the prior consent of the operator. The draft licence sent out with the invitation to apply will make those conditions clear so that all those who bid for the licence will know of their obligations before they make their bid.

It is important that a certain degree of continuity be maintained in the event of a change in the operator. The amendments are needed to ensure the smooth operation and continuation of the lottery and I commend them to the House.

Mr. Tom Pendry (Stalybridge and Hyde)

The Opposition recognise that the amendments are, in the main, sensible and that amendments Nos. 3, 4 and 5 are technical. We also welcome the news that supplementary estimates will be brought forward to help the Millennium Commission to get on with its work.

Amendments Nos. 1 and 2 deserve some comment. The Government have said that amendment No. 1 would make it possible for the director general of Oflot to place additional requirements on the lottery operator, such as a requirement to adhere to a code of conduct on advertising. The amendment also offers the possibility of developing other codes of conduct if necessary. We welcome that addition to the Bill.

A code of conduct for advertisting is important. Those who took part in previous debates will recall that concern was expressed about the possible nature of the advertising. For example, it is plain that in some lottery advertising campaigns in the United States marketing material is targeted on low-income groups. Concern has also been expressed about the possible impact of careless lottery advertising on the incomes of charities. The amendment is welcome because if offers an opportunity for those concerns to be tackled, at least partially, through a condition in the licence that would require the lottery operator to adhere to a code of conduct on advertising prepared by the director general of Oflot.

I believe—perhaps the Minister will confirm this—that the Government intend that if the need arose the code of practice could cover the use of charities in lottery advertising. We believe that it is important that it should do so. It appears inevitable to us that "good causes" will be a secondary feature of lottery promotion; and that could affect charities' income and give rise to concern about how images of charitable work are presented in the lottery's promotional material.

Amendment No. 2 provides that the director general may publish some of the information that the licence specifies that he may require from the lottery operator. That, too, is welcome because it will enable the director general to obtain from the lottery operator for publication information that could help to assess the social effects of the lottery. We sincerely hope that that is one way in which the information will be used; the Minister may wish to comment on that idea.

Research from the United States shows that lottery operators have a tendency to concentrate lottery terminals in the poorer districts of cities. The Government said in the House of Lords that the director general would require the lottery operator to provide information about the number and location of ticket sale terminals across the country. We believe that that information should be published. Indeed, the Government should go further. The director general could be required to include in his annual report a statement about the social impact of the national lottery. That would probably mean requiring the operator to make available to the director general for publication all its market research, including information about patterns of purchase of tickets according to social class, geographical area and so on. That could form one element of the director general's statement about the social impact of the lottery. I hope that the Minister will respond positively to that suggestion.

In another place the Government also gave an undertaking to publish before the Bill left Parliament a document giving information about what would be in the licence, including details of the headings. They had better hurry up. So far as we are aware that document has not been published. In fairness I must say that that is probably because the regulatory adviser, who will become the director general of Oflot when the Bill is enacted, was appointed only a couple of weeks ago. However, it is a shame that the document will not be made public before the Bill leaves Parliament. I hope that the Minister will comment on that matter, too.

Subject to those provisos, and taking the group of amendments as a whole, we support it as a positive move in the right direction.

Mr. Tim Renton (Mid-Sussex)

First, I declare an interest as chairman and shareholder of a new company, Interactive Telephone Services, in Southampton. Our automatic call-handling facilities may well be used by the winning consortium that will operate the lottery, so it is only fair to mention that fact to the House, although my interest is of course declared in the Register of Members' Interests.

My purpose in speaking in the debate is not, however, to advertise my new company, but, as someone who has consistently and eagerly supported the cause of the national lottery over the past three years, to say how extremely pleased I am that its gestation period has nearly come to an end. I hope that we shall soon see a thriving baby alive and kicking. I am especially pleased about the Millennium Commission, and the commitment of 20 per cent. of resources after expenses to projects commemorating the end of this millennium and the start of the next, because that concept originated from my desk two years ago when I was the last Minister at the Office of Arts and Libraries. I therefore wholly support the idea, and believe that over the next six or seven years we shall have an exciting time —together, I hope, with communities throughout the country—making suggestions to the Millennium Commission about how the money could be spent in a manner that will make our children and grandchildren proud and pleased, and by which they will remember us in years to come. That said, I have to say to my hon. Friend the Minister that I am a little dismayed, particularly by the language in Lords amendment No. 1, which states in a general manner that matters should be referred to the Director General for approval ;". If I am correct, that would come at the end of the lines in the Bill which state that the director general's consent must already be obtained by the operator before he does anything specified, or of a description specified, in the licence;". I wonder whether the Minister would have inserted the amendment if the House of Lords had not insisted on his doing so. He has told us that the matters to be referred are limited in scope, but the terminology seems all-embracing. The Bill's provisions afforded enough protection when it left this House and went to another place. We do not need to tie down still further the hands and feet of the operator, but the words refer matters to the Director General for approval could be interpreted as doing so. I hope, therefore, that when the Minister winds up this short debate he will reassure the House that it was not the intention to provide a further bureaucratic stranglehold on the operator.

If the lottery is to succeed, it is essential that a vast hierarchy should not be created around the director general of the national lottery, which would generate further expense and reduce the amount of money available for distribution to the five good causes—small charities, arts, sport, heritage and the millennium fund. It would be a tragedy if the idea of a national lottery, which has existed for so long, were not to succeed. I am told that the idea first came before the Treasury about 30 years ago when Robert Armstrong, now the noble Lord Armstrong, was a very junior civil servant in the Treasury. If the national lottery is now to be created, it is essential that there is not a huge hierarchy of civil servants and that excessive profits do not go to the operator, but a lot of money goes to the five good causes.

The reason for my enthusiasm for the lottery when I was Minister at the Office of Arts and Libraries was that it was the only way in which I could envisage bringing a lot of new money into the arts, heritage and sport. There was no other likely avenue available to achieve that. Let us now ensure that that concept is not dissipated by excessive bureaucracy in the administering of the lottery. Administrative expenses should never exceed more than 5 per cent. of the gross total. If there is to be a gross revenue of £2 billion from the lottery as the first annual figure, ideally 50 per cent. of that—£1 billion—after prizes, the operators' profits, taxes and administration have been accounted for, will be available for the good causes. There should be £200 million for each of the five good causes out of the initial turnover of £2 billion. That should remain the target over the months ahead as the idea is developed and the first national lottery is introduced before the end of 1994.

The hon. Member for Stalybridge and Hyde (Mr. Pendry) mentioned points of sale. I have written to my right hon. Friend the Secretary of State for National Heritage once or twice to emphasise the argument that I hope that points of sale will be mainly in small corner shops such as tobacconists and newsagents, not concentrated in the supermarkets. I think that all hon. Members want the lottery not only to help the small corner shop to survive, but to provide it with another useful source of revenue by attracting more customers. Therefore, if the points of sale and the vending machines—whatever technology is used—were concentrated in the big supermarkets, it would be a tragedy. We would be throwing away an opportunity to bring new life back to a sector of this country's retailing industry which has suffered in recent years and which we would all like to help.

I agree with the hon. Member for Stalybridge and Hyde. It would not be a bad idea if the director general's report were to contain an analysis of points of sale and of the social effects of the lottery. That is an acceptable idea, but I have a twist to that argument. I very much hope that points of sale will be concentrated in the small corner shop.

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Mr. Peter Kilfoyle (Liverpool, Walton)

The amendment relates to clause 7, which deals with the issue of the licence for the promotion of the lottery. When the Minister replies, will he enlighten us on some small but important points? Will matters to be referred back to the director general include details on the companies involved in some of the consortia? That subject is of great public interest and has been heavily covered in newspapers and on television in recent weeks.

I refer specifically to three of the consortia which are said to be interested in the lottery franchise. The consortia have dealt with two American companies, one of which is Automated Wagering International, which is currently suspended for its activities in Victoria. I understand that it is involved in the bid of the Great British Lottery Company and is also assisting the Rank Organisation in a bid for the lottery franchise. G-Tech, which is involved in the Camelot consortium, has been under investigation for some time in Maryland in America. It was also under investigation in New York and its lobbyists were prosecuted in California in connection with anti-lottery legislation in that state.

It is of great concern that companies that are to be involved in the lottery should be beyond doubt. I hope that the Minister will give an assurance that the companies' involvement in the consortia will be closely examined as it is said that the annual turnover could be as much as £4 billion.

Dr. Joe Hendron (Belfast, West)

I wish to refer to amendment No. 10—

Madam Deputy Speaker (Dame Janet Fookes)

Order. We have not reached that amendment, although I am sure that many people wish we had.

Mr. Sproat

I take your subtle hint, Madam Deputy Speaker.

I thank the hon. Member for Stalybridge and Hyde (Mr. Pendry) for his general welcome for what we have introduced in the amendments. He raised the extremely important issue of controls on advertising and their place in the draft licence. We are concerned that the lottery should not be promoted in unsuitable markets. The licence issued to the lottery operator will oblige him to draw up a code of practice covering the way in which the lottery is to be advertised. That code will go into great detail—

Mr. Robin Corbett (Birmingham, Erdington)

Will the code include promotions?

Mr. Sproat

The hon. Gentleman makes a fair point. The code will include promotions and public relations.

The code will ensure that the lottery cannot focus advertisements on those under the age of 16. It must also stipulate that advertising should not link the lottery with the sale of alcohol or drugs, or with betting and gaming.

The hon. Member for Stalybridge and Hyde made an interesting point about charities and the nature of advertising as it might affect them. The code of practice could cover the use of charities. It will be made clear to operators that if they wish to use the image of any beneficiary, including a charity, they cannot do so without that organisation's permission. I hope that that will set to rest any worries which the hon. Member for Stalybridge and Hyde might have.

The hon. Gentleman also asked whether it would be possible to include in the annual report produced by the operator some sort of social impact. My right hon. Friend the Member for Mid-Sussex (Mr. Renton) also raised that issue. It is an interesting idea and I will draw it to the attention of the director general designate, who can discuss it with the operator when the operator is finally chosen. I certainly see no reason why that should not be done.

The hon. Member for Stalybridge and Hyde also asked whether it would be possible to see the draft licence, and when. It is certainly extremely important that the public and the House should know what is in the licence. When it is issued—shortly, I hope—I will ensure that a copy is laid in the Library of the House for all to see.

Mr. Joseph Ashton (Bassetlaw)

The Minister is giving us rather bland assurances, but the public want to know more about the nitty-gritty. For instance, will people who win the prize be able to claim it anonymously? Will those who operate outlets have to be insured; and if they are refused insurance, what redress will they have? What will happen if someone walks into a greengrocer's shop and sticks up the manager and takes all the funds? These are the practical difficulties, but the Minister is fobbing them off and saying that they are the responsibility of the director general. Apart from during one or two sessions of cross-examining the Minister, the Select Committee has not had a chance to probe this matter either. Will we have another chance to debate these matters in the House?

Mr. Sproat

These matters, important as they are, may arise on another amendment when we will discuss the revocation of licences, improper behaviour and so on. The hon. Gentleman says that I am laying an awful lot at the door of the director general, but that is what the House decided to do when it passed the Bill earlier this year. Of course, these matters will be taken seriously by the director general and I am not fobbing off my responsibilities on to him. It is just that the House has decided to give him certain powers.

It is entirely up to the Opposition whether we hold further debates and if the House considers that we need them, we can have them. This is certainly an important subject; we are moving into a new area and no doubt we will want to refine many things at a later stage.

Mr. Ashton

Would it then be in order for hon. Members to table questions in the House on the workings of the national lottery? Will the Minister answer them, or will he say that they are not a matter for him and his Department?

Mr. Sproat

As the hon. Gentleman well knows, the answer is that if the Table Office accepts the questions I will be glad to answer them. I will be glad to answer as many questions as I possibly can, but the rules of the House will decide that, not me.

I welcome the support for the millennium fund offered by my right hon. Friend the Member for Mid-Sussex. We all pay tribute to his tremendous contribution to the national lottery. He was rather worried that various aspects of the code of practice would have to be referred back to the director general and might thus be a cause of more bureaucracy. I agree wholeheartedly with him about the need to avoid unnecessary bureaucracy. In order to make sure that the code of practice is as realistic as possible, the director general, in his invitation to apply, will issue a draft licence which will give draft examples of what we want in the code of practice. He will then suggest that the applicant state what he would like in the code and the matter will then be the subject of discussions between them. In this way the code of practice will be practical and realistic and will fit in with the plans of the operator as well as meeting the needs of the director general and the public. I can assure my right hon. Friend that we share his wish that no money be wasted on bureaucracy which could go to good causes.

My right hon. Friend also made the important point that points of sale could be in small shops, rural post offices and so on. That will be a matter for the applicants to suggest as part of their marketing plans, which they will put to the director general, but I have no doubt that the latter has heard what my right hon. Friend had to say and will take it into account.

The hon. Member for Liverpool, Walton (Mr. Kilfoyle) asked a good question about the fitness of operators to take part in various consortia. We take that extremely seriously and I can assure him that the director general will make it his first priority to see that no one who has exhibited criminality or any other kind of unfitness to operate is allowed to be part of a consortium. He will scrutinise people's fitness closely. He has the power to ask for papers, documents and information in any other form that he may need to assure himself that the people asking to run the lottery are fit and proper persons to do so. I give the hon. Gentleman that unqualified assurance.

With those few words, I rest my case.

Question put and agreed to.

Subsequent Lords amendments agreed to.

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