HC Deb 10 February 1995 vol 254 cc637-44

Motion made, and Question proposed, That this House do now adjourn.—[Mr. Bates.]

2.38 pm
Mr. Nigel Evans (Ribble Valley)

I had hoped that I might catch your eye during the previous debate, Mr. Deputy Speaker, but unfortunately that was not to be the case. Some of my best speeches are speeches that I have never given. In fact, all my best speeches are speeches that I have never given, None the less, I am extremely grateful to be able to speak in this important debate.

I come from a small business background and the convenience store that I own sells both national lottery tickets and pools coupons. Indeed, I am probably the only Member of the House who has sold a national lottery ticket and given out prizes at the same time. Obviously there are more losers than winners with the national lottery and with the pools, but the debate is about whether the pools companies are the biggest losers of the lot. Will the pools industry survive? I refer hon. Members to an article in The Observer of 22 January with the headline, "Pools wiped out by lottery." One analyst at Barclays de Zoete Wedd believes that the decline of the pools is, "likely to be terminal." So the issue is very important.

The pools industry obviously faces serious consequences because of the introduction of the national lottery. The hon. Member for Liverpool, Mossley Hill (Mr. Alton) and I were members of the Standing Committee which considered the National Lottery etc. Bill and the subject was discussed at length. The Government said that they would always keep an eye on the effects on the pools industry.

It was impossible to get away from the massive publicity that came with the introduction of the national lottery. Camelot allocated a budget of £34 million for marketing and promotion within the first six months, of which a considerable amount would have gone in launch costs. That is a large amount compared with the £9 million that the pools companies and scratch-card distributors spent in 1993.

At the time of the launch, the slogan "It could be you" was on every street corner, in every paper, on the radio and on every television channel. One could not escape it. Yet the pools have only now been allowed the opportunity to advertise on television. They have also just been allowed to operate a roll-over system so that there is an accumulator on the unearned winnings from previous weeks. That is good, but not half as good as it ought to be.

Pools companies have to pay extra sums to the Government and the good causes, amounting to about 8 per cent. more per year than the national lottery has to pay. Let it not be thought that I object to the success of the national lottery, because I do not: it is a good thing and it provides much money for many good causes, as hon. Members may have seen from an answer in Hansard last week.

I urge those organisations which give away money to good causes to have regard for rural areas and small towns, which may not be able to get funds from any other source, and to consider them for national lottery money.

A flutter on the national lottery is harmless. I have certainly played and, although I live in the Blackburn area, the luck that seems to reside there has not yet rubbed off on me—I have won £10 and I suppose that I should declare that. The national lottery should be given a fair crack of the whip.

On 14 January 1993, the Select Committee on National Heritage published a report containing the following conclusions: The Committee recommends that the Lottery and the pools should be treated equally … in the marketing of their products … in the ability to roll-over jackpots, and in the way the pools are promoted to clients who do not wish to exercise the use of skill and judgement. I would add to that list equality in the amount of voluntary and obligatory payments that the companies make.

Littlewoods is by far the largest of the three pools companies, which also include Vernons and Zetters. All were established well before the second world war, are independent and compete with each other. Between them, they employ about 4,500 permanent employees and about 80,000 part-time employees, spread throughout the length and breadth of the country.

There will not be one Member of Parliament who does not have pools collectors living in his or her constituency. They are the backbone of the industry and for many people, especially the elderly and infirm who find it difficult to get to stores to pick up and return coupons, pools collectors are an essential resource. In many respects they are like social workers and become good companions to the people whose coupons they collect. They provide an essential service and we must be careful to do nothing to endanger what those 80,000 collectors do.

That work has certainly been endangered by the introduction of the national lottery and the unfair competition that has been built into the system. That is amply illustrated by recent job cuts by Vernons, which announced in January that it would shed 95 full-time jobs at its Liverpool headquarters. The blame for that rationalisation was laid firmly at the door of the 12.5 per cent. reduction in revenue since the start of the national lottery. Other estimates put the reduction at more than that.

The three pools companies, Littlewoods, Vernons and Zetters, handle between them about 9 million entry forms a week, have an average of 13 million customers and pay out prizes totalling about £5 million a week. That shows that the industry is too important to be left to wither on the vine because of the unfair provisions relating to the national lottery.

The revenue generated by the industry is distributed in five main ways: by voluntary contributions to good causes, and through prizes, operating costs, taxes and profits. The companies distribute about £100 million a year to good causes, which include the Football Trust and the Foundation for Sport and the Arts. I have had representations from the hon. Member for Mossley Hill about those two organisations.

The funding for those worthwhile organisations was made possible by a reduction of 2.5 per cent. in the pools betting duty in the 1991 Budget and by the proceeds of a donation of 5p in every pound taken by the pools company as stake money. The foundation distributes more than £65 million a year for the improvement and creation of community facilities which would otherwise remain inferior or would not exist.

I have just received a document containing details of the foundation's grants for the period 1 October to 31 December 1994. It is a weighty document. The grants are spread throughout the length and breadth of the country. I have also been given a list of the recipients in Lancashire for last year. I note that groups in my constituency which have received funds from the foundation include the Wharrey sports club, Salesbury bowling club, the Longridge News playtime and the Ribchester festival, which is an excellent music festival in one of my smaller villages. It received £10,000. In 1993, the West Bradford village hall received £60,000 from the foundation. If it had not received that money, the facility which people enjoy in that area would not have gone ahead. We should be extremely careful about any action which endangers those funds. The foundation gave funds to more than 11,000 organisations nationally.

Mr. David Alton (Liverpool, Mossley Hill)

I emphasise what the hon. Gentleman has said and I know that his view is shared by all parties in the House and throughout the country. Many people appreciate the contributions that the Foundation for Sport and the Arts has made to vital components of community life in our great cities and villages. Does the hon. Gentleman agree that underlying his remarks, with which I fully concur, is the need to treat the pools industry and the national lottery on an even basis, on all fours? Both should be given precisely the same opportunities not just to advertise but in relation to matters such as roll-over provisions: either they should both be allowed to do it, or neither should be allowed to do it.

Mr. Evans

That is indeed the only way to assist the pools to compete fairly into the future.

Since the introduction of the national lottery, income to the Foundation for Sport and the Arts and the Football Trust has fallen dramatically by some 17 per cent. The Football Trust's income has gone down even more because spot-the-ball competitions have been hit even more harshly by the national lottery.

Mr. Peter Bottomley (Eltham)

As my hon. Friend is a newsagent, he may have noticed that one newspaper decicded to drop its spot-the-ball competition when it discovered that it had put the ball in the picture and everyone was winning.

Mr. Evans

I am sure that some readers still submitted entries with crosses elsewhere.

The Football Trust's publication shows the good work that it does in relation to football fields throughout the country. I notice especially that it gave £500,000 to Blackburn Rovers. Irrespective of which football club hon. Members support, I am sure that we all wish that team well in gaining the premier league championship.

Mr. George Howarth (Knowsley, North)

I am not sure that I concur with the hon. Gentleman's last remark, but I am grateful to him for giving way. Will he confirm that the income to the pools industry has been declining, and that the contribution to the Foundation for Sport and the Arts has therefore also been declining? Will he confirm that as a result of the decline in their revenue some of the smaller pools companies are actively considering withdrawing from what is a voluntary arrangement?

Mr. Evans

I understand that that is the case. Vernons is seriously considering the possibility of withdrawing voluntary contributions, which would be an great shame as they have done a lot of good. I congratulate Sir Tim Rice on the hard work that he has put in as chairman of the Foundation for Sport and the Arts.

The hon. Member for Mossley Hill mentioned some of the problems and inequalities faced by the pools companies in relation to the national lottery. I was trying to get through my speech without mentioning the words "level playing field", but it is just too difficult. I congratulate the Home Office on allowing the pools companies, rather belatedly, to advertise on radio and television and I urge the Independent Television Commission and Radio Authority to get a move on so that the pools companies can advertise as soon as possible. Broadcasting is the most powerful medium to sell any product and the sooner it can be done, the better.

The Bingo Association of Great Britain has also contacted me. It wants the same sort of ability to advertise because its turnover has suffered since the introduction of the national lottery. The take-out from the pools companies is part of the problem. The pools companies pay 37.5 per cent. in pools betting duty, 2.5 per cent. to the Football Trust, and 2.5 per cent. to the Foundation for Sport and the Arts. In addition, 5p in every £1.05 is taken in stake money. We should compare that with the fact that the national lottery pays 12 per cent. in betting duty, and 25 to 28 per cent. to the "good causes". The disparity of 80 per cent. is vital, especially to smaller pools companies. That matter must be dealt with.

The roll-over is another contentious issue for the pools companies. It is a complex issue. Those companies must wait for the national lottery to roll over before they can start to trigger their own roll-over. They have only a limited time to use the roll-over, after which it is lost and they have to wait for the national lottery to roll over again. I hope that we can consider the roll-over issue again. We should consider either freeing up the ability of the pools companies to roll over far more freely or stopping roll-over altogether. Many hon. Members have made representations about the enormous prizes generated by the roll-over and those who considered the National Lottery etc. Act 1993 in Standing Committee never thought that prizes would ever get up to £18 million, so perhaps there is a case for examining that matter again.

The other point concerns retail outlets. Pools coupons placed in retail outlets are restricted to weekend football matches. They should be allowed to include some mid-week sporting occasions, which pools coupon collectors are able to have on their coupons. To have a division between pools collectors coupons and shop coupons seems strange. I hope that we will consider that matter.

National lottery customers can pick up their small winnings immediately from the retail outlet where they bought their ticket. I know that the pools companies would like the opportunity to allow small winnings to be paid through the retail outlet where a coupon has been picked up. I hope that we shall be able to consider that, too.

The final issue of concern is the imbalance between the lottery and the pools companies in relation to the subsidy that Camelot can add to the jackpot to make the prize more appetising. The problem for the pools companies is that if they decided to add a subsidy it would be taxed at a prohibitive 37.5 per cent.

I am not saying that the pools companies should not be doing more to help themselves. They should certainly be using new technology far more. The problem for some of the pools coupon collectors is that they have to get coupons in by Thursday when the matches are on Saturday. I know from experience that, with the national lottery, Saturday night fever occurs on Saturday night and people come rushing in to buy tickets. By far the vast bulk of the money is taken on a Saturday night. If the pools companies were able to adapt more to new technology, they could increase the amount of money that is coming into the pools net.

There must be seen to be free and fair competition—the competition principle is extremely important. I always thought that competition would be introduced into the arena where the pools had a near monopoly. Now that we have a national lottery, we do not want to see the pools wither on the vine and the national lottery to be left with a monopoly.

We know that there will be a problem with mid-week games and that the national lottery expects to take vast sums of money. That will further deplete people's funds—they cannot spend the same pound twice. People are already taking their money from the pools and putting it into the national lottery, so something will have to be done about the extra competition from the mid-week games.

We must consider the equalisation of out-take between the pools and the lottery. We need to remove the restrictions on the pools roll-over. Section 56 of the National Lottery etc. Act 1993 should be amended to permit the collection of small winnings from shop premises. Also, Camelot should be prevented from manipulating its prize money or the pools should be allowed to do the same.

The subject is an important one. Over the past few days, knowing that this debate was to be held, many hon. Members have spoken to me on the subject. They will be keenly awaiting what my hon. Friend the Minister has to say to show that we care about the future of the pools industry in this country.

2.56 pm
The Parliamentary Under-Secretary of State for the Home Department (Mr. Nicholas Baker)

I have listened with great interest to the issues raised by my hon. Friend the Member for Ribble Valley (Mr. Evans) on the football pools and the national lottery. By virtue of his retail experience, my hon. Friend is uniquely qualified to introduce the subject. I know that today's well-attended debate is of importance to a number of hon. Members. My right hon. and learned Friend the Chancellor of the Exchequer will be interested in what has been said in the debate.

We share the regret over the job cuts in Merseyside. No one can be complacent at the prospect of 95 jobs lost and others in the pools industry being at risk. However, although much has been said about the national lottery and the dip in the pools' fortunes, we need to be cautious in drawing firm conclusions about the long-term impact of the national lottery on any aspect of consumer spending.

Another consideration is that, although the football pools' turnover might have been affected in the first three months—my hon. Friend produced evidence to show that it has—the pools have still to take advantage of the new marketing opportunities afforded to them. The House had the opportunity to discuss many of the issues raised during the passage of the National Lottery etc. Bill, as a result of which important changes were made.

The Government have made significant changes to the regime under which the pools operate, giving them greater freedom to promote their business. The age limit has been reduced from 18 to 16. In addition, for the first time, roll-over of prizes has been allowed. We have removed a major impediment to the promotion of the football pools in allowing the distribution of football pools coupons through shops and other premises. The pools companies are working hard to exploit the opportunities afforded to them by those new outlets. They have been enterprising in using public houses as an additional outlet. There is nothing in the law to prevent that; there are no restrictions on the sort of premises that may be used.

I have an announcement which I hope will be welcomed by my hon. Friend. It relates to the issue of pools coupons in betting shops. We have considered the representations from the pools promoters and bookmakers to allow betting shops to pay out pools winnings. That would be in line with the bookmakers' normal business activities, so we propose to introduce an order to effect that change. We shall consult on the proposal in the near future and, at the same time, detail our proposals for fruit machines in betting shops.

The Government have allowed sponsorship of television and radio programmes to give the pools access to the media, and the pools companies are already taking advantage of that freedom. For example, Vernons is sponsoring the holiday programme "Wish You Were Here" and we have gone further to relax the ban on broadcast advertising.

Those are significant relaxations. My hon. Friend has welcomed the Government's decision to lift the ban on broadcast advertising by the football pools, which came about as a direct result of the Government's desire to remove unnecessary restrictions and regulations. The advertising rules were under review as part of the Government's wider deregulation initiative.

Unlike other forms of gambling, football pools are allowed free access to non-broadcast advertising and the Government think it right that that should be extended to all the media. I am pleased that the Independent Television Commission and the Radio Authority have already written to canvass views on revised broadcasting codes, which would permit the football pools to advertise on television and radio.

Despite all that, my hon. Friend is a fervent supporter of the pools and would like the Government to go even further to help the industry, which he says is unfairly treated in comparison to the national lottery. It is important to make clear the Government's position. We do not accept that the football pools are in the same position as the lottery. The national lottery has been set up under separate legislation and a tight regulatory regime. The Director General of the National Lottery has a statutory duty to protect the interests of all participants and to ensure that the lottery is run with all due propriety. The football pools are a commercial gambling operation, which are run under entirely separate legislative and regulatory arrangements.

Although there are similarities in the way in which the two games are played—both are low-stake, long-odds games for large weekly prizes at the soft end of the gambling spectrum—the lottery is determined purely by chance, whereas the football pools are a form of pool betting, in which, like betting on horses and greyhounds, there is scope for the exercise of skill in forecasting results. That is a crucial difference, since pools companies may operate lawfully only because they are not lotteries.

My hon. Friend's main theme is the difference in tax regimes between the lottery and the pools.

Mr. George Howarth

I welcome the announcement enabling the pools companies to pay out in betting shops, which will go some way towards balancing opportunities with those of the lottery. However, the argument that the pools is a game of skill as opposed to a game of chance does not hold any water whatever. If anybody could win the football pools by skill, he or she would have to have terrific insight into events several days hence.

Mr. Baker

I am not prepared to offer a judgment on that, but I hear what the hon. Gentleman says. He is no doubt experienced.

My hon. Friend's main theme is the difference in tax regimes between the two operations. Taxation of gambling is, of course, a matter for the Chancellor to consider. The rates of duty applied to different forms of gambling are varied and reflect a wide range of policy considerations. National lottery duty was set at 12 per cent. with the aim of being fiscally neutral—it was simply designed to replace the revenue which might otherwise have been lost when people bought lottery tickets instead of other taxable goods.

Pools betting duty is set somewhat higher at 37.5 per cent. However, there is a fundamental difference between the lottery and the pools. The pools companies are run primarily for commercial gain, while the national lottery primarily raises money for good causes. Of lottery turnover, 28 per cent. goes to good causes such as the arts, sport, charities, heritage and projects to celebrate the new millennium. Although pools companies also make generous contributions to sport and the arts, to which I pay tribute, they form a much lower percentage of their turnover and are not the main reason for their existence. The Government welcome and recognise the pool companies' generosity.

In his 1990 Budget, my right hon. Friend the Prime Minister, as Chancellor of the Exchequer, introduced a 2.5 per cent. reduction in pool betting duty, on condition that the revenue forgone by the Exchequer was given to the Football Trust. The trust uses that money to improve the safety and comfort of fans at football grounds and to implement the recommendations of the Taylor report following the Hillsborough tragedy.

Football grounds have been transformed in recent years from old, dangerous and uncomfortable grounds, often with inadequate facilities and uncovered terraces, to a position where our stadiums are among the finest in the world. Altogether, some £387 million has been spent so far on major ground improvement schemes, of which £121 million has been contributed by the Football Trust. The trust also grant aids essential ground and safety improvements with funding from the pools companies' own "spot the ball" competitions. All told, that represents a major investment in the future of football in this country.

In his 1991 Budget, my right hon. Friend the Member for Kingston upon Thames (Mr. Lamont) introduced a further 2.5 per cent. reduction to help fund the Foundation for Sport and the Arts and to supplement the pools companies' own contributions. Sport and the arts have benefited considerably from grants provided by the foundation. In the three years since it was established, the foundation has already made awards of more than £200 million for almost 12,000 projects. The foundation is now considering extending its funding of arts and sports revenue costs. That is welcome news.

The pools companies deserve much credit for their support for the foundation. Their contribution to sport and the arts is a clear example of how the private sector can help to enhance the fabric of our communities. My right hon. and learned Friend the Chancellor of the Exchequer has reaffirmed the Government's commitment to retaining both these reductions. We certainly hope that those arrangements continue.

I should make it clear, however, that the difference between the total contributions to tax and good causes made by the pools companies and the lottery is actually very slight. I welcome the opportunity to set on the record the true comparison that should be made.

First, 5p of the payment made by the pools companies is, in fact, a donation from the pools players in addition to their stakes, so that for every £1.05 played by the player, 5p is paid to the Foundation for Sport and the Arts. Removing that element takes the pools companies' total contribution down to just over 40.4 per cent. Of that amount, 5 per cent. is paid to the FSA and the Football Trust in return for a reduction in the pool betting duty—it is effectively a donation by the Treasury, not the pools companies.

Secondly, the percentage of revenue which Camelot, the lottery operator, will contribute to the good causes can only be estimated at present, but it is likely to be about 27 or 28 per cent. of total revenue over the period of the licence. That would give a comparison of 39 to 40 per cent. to tax and good causes from the lottery and 40.4 per cent. from the pools, after adjusting the equation as I have just shown.

The motion having been made after half-past Two o'clock, and the debate having continued for half an hour, MR. DEPUTY SPEAKER adjourned the House without Question put, pursuant to the Standing Order.

Adjourned accordingly at eight minutes past Three o'clock.