National Lottery etc. Bill

HL Deb 23 July 1993 vol 548 cc905-23

11.34 a.m.

Earl Ferrers

My Lords, I have it in command from Her Majesty the Queen to acquaint the House that Her Majesty, having been informed of the purport of the National Lottery etc. Bill, has consented to place her prerogative and interest, so far as they are affected by the Bill, at the disposal of Parliament for the purposes of the Bill.

Bill read a third time.

Lord Airedale moved the amendment: After Clause 59, insert the following new clause: Betting. Gaming and Lotteries Act 1963 (". Paragraph 13(a) of Schedule 2 to the Betting, Gaming and Lotteries Act 1963 shall ceas to have effect").

The noble Lord said: My Lords, I believe that we may take this matter quite shortly because we have been round this course twice already. One reason why I come back to the subject is that on Report the noble Earl questioned the basis for the argument put forward by the noble Lord, Lord Allen of Abbeydale, suggesting that the noble Lord had founded his argument on the wrong section of the wrong Act. Having regard to the experience of the noble Lord, Lord Allen, I feel that that was extremely unlikely. But in case the noble Earl is still unhappy about the matter, I have now founded the same argument upon the schedule to the 1963 Act which was the foundation for the House of Lords case which went right up to this House. The judgment of the court was delivered by lord Pearson.

I am sorry that the amendment does not on the face of it explain what it is about. However, the facts are quite straightforward and are non-controversial. The facts are that the football pools started out as a competition which consisted overwhelmingly of a game of skill, whereby the punters each week attempted to forecast the results of the football matches of the following Saturday. But as time went on the football pools were transformed overwhelmingly into a gigantic lottery, so that less than a fortnight ago a letter was received from the managing director of Littlewoods Pools, who wrote: 90 per cent. of [our clients] tend to use the same numbers on the coupon week after week". So obviously those people are using the pools as a lottery. The question is whether that is legal.

The pools promoters claim that it is legal because, they say, the pools provide an opportunity for their clients to exercise skill in forecasting the matches. But unfortunately for the promoters, Lord Pearson, delivering the judgment of the court, came to the opposite conclusion, having listened to the arguments in favour of their proposition. Perhaps I may just refer briefly to the salient points of Lord Pearson's judgment. He said: For the 99 per cent. in any week, who make no forecast but win prizes if their numbers happen to be lucky numbers for that week, the competition has the character of a lottery. For them the distribution of the prizes depends entirely on chance and no element of skill is involved. Is the competition saved from being a lottery by the fact that the participants have in each week an option to substitute chosen numbers, involving a choice of teams, and on the average 1 per cent of them exercise the option in any week? In my opinion it is not saved from being a lottery by that fact. In substance and reality what is offered is a lottery available to all the participants, but there is associated with it an option to opt out of the lottery in a particular week and try to win a prize by making a forecast. This option is something collateral to the lottery and does not take away its character as a lottery".

I fear that unless the Government are prepared now to accept the amendment, the anti-gaming Lobby will start a new prosecution against a football pool for running an illegal lottery.

On the strength of the judgment of Lord Pearson, the chances must be that there will be a conviction. All hell will then be let loose. At present the pools are bobbing along to the entire satisfaction of promoters and their clients; they will be thrown into confusion. The Government will then have to table an amendment to legalise the status quo of the football pools. All I ask is that the Government take the opportunity now to legalise the status quo of the football pools.

In Committee, the noble Earl said something which he may now regret and wish to take back. At col. 1627 on 8th July he said, But whereas the national lottery will be promoted to benefit good causes, the lotteries run by Littlewoods, Vernon's, Zetters and so forth will be promoted for commercial gain". I did not know that the Government were against commercial gain; I do not find that theme in the Railways Bill, for instance. In any event, the football pools, on top of their commercial gain and on top of paying magnificent winnings to the Chancellor of the Exchequer every Saturday, still manage to provide £60 million for the Foundation for Sport and the Arts. I hope that that puts the matter into perspective and that the noble Earl will wish to think about it again. I beg to move.

Earl Ferrers

My Lords, the noble Lord, Lord Airedale, said with a great deal of truth that we have been round the course twice already. He is a persistent rider, and today he is going round for a third time.

The noble Lord says that I said that there was a difference between the football pools and the lotteries because football pools are basically run as commercial businesses. That is perfectly true. I do not deny for a moment that they contribute to good causes; they do. But much of the money which goes to good causes is because of the revenue which is foregone, and it is money from punters. The essential distinction is that the football pools are basically set up as a commercial exercise whereas the national lottery is set up to benefit good causes.

On this occasion the noble Lord has produced a rather different amendment. I am afraid, however, that it still would not achieve his objective. Disapplying paragraph 13(a) of Schedule 2 to the Betting. Gaming and Lotteries Act 1963 will not change the fact that a registered pool promoter, such as Littlewoods, Vernon's and Zetters, is, nevertheless, carrying on a pool betting business. If a pool promoter promoted his competitions as lotteries, rather than as a form of betting, then he would fall foul of Section 1 of the Lotteries and Amusements Act 1976 which provides that all lotteries are unlawful, with the exception of those lotteries which are made legal by that Act. So the noble Lord's latest amendment gets us nowhere.

The noble Lord rests his case on the judgment of Lord Pearson in the case of Singette Ltd. and others v. Martin. But, as I sought to explain last week on Report, there is a substantial difference between the football pools which are conducted today and the competition which was promoted by Singette Ltd.

In the Singette case, participation was essentially a passive exercise. The promoter simply allocated numbers to each entrant. In contrast, participation in today's football pools is an active exercise in that the entrant must select his or her own numbers. He actually has to do something. In selecting the numbers the opportunity is available for the participant to exercise his skill. But as Lord Pearson pointed out in his judgment, a person who has no knowledge of football cannot use any skill and, even a person who has such knowledge, may choose not to make use of it. But the opportunity is there for skill to be used. The pools companies cannot compel an entrant to exercise skill when making his or her selection. Given that distinction between the pools as they are presently operated and the competition as it was run by Singette Ltd., there is really no need—or justification—for a change in the law.

The noble Lord, Lord Airedale, says that people use the pools as a lottery. That may be the noble Lord's view; indeed it may even be the case. The point is not whether a person is using the pool as a lottery, but whether the pool is a lottery. The pool is not a lottery because one has the opportunity of using skill.

The noble Lord, Lord Airdale, would have a better case if the pools companies were to market their football pools as a lottery but fail to tell prospective participants that the object of the exercise was to forecast the result of football matches. But that does not happen. I quote from the terms and conditions which are printed on one of Vernon's standing forecast entry forms. It says: I [that is, the entrant] understand that the numbers on my Standing Entry coupon serve to identify the matches appearing in the current coupon/fixture list for each week as published in certain newspapers. I understand I can change my forecast at any time". It is clear therefore that the pools are marketed as a game of skill. How any particular entrant makes his or her selection is a matter for them. Last week we heard my noble friend Lord Brabazon—who is closely associated with the pools industry through the Foundation for Sport and the Arts —confirm that the pools are indeed a game of skill. I hope that the noble Lord, Lord Airedale, will now exercise his skill and realise that his argument, for once, is flawed.

Lord Airedale

My Lords, the noble Earl has undoubtedly taken great trouble. I advise him to read the judgment of Lord Pearson again. I do not believe that he has quite grasped the essence of it.

I am in good company with the noble Lord, Lord Allen of Abbeydale. In the opinion of the noble Earl we both chose the wrong section of the wrong Act upon which to found our amendments. I do not know whether the noble Earl is right in that regard. But I do not wish to pursue the matter further. I shall await events and see whether another prosecution is brought forward by the anti-gambling lobby. If it is, and if all hell is let loose and the Government have to rush in with legislation, I shall do my best not to say, "I told you so". In the meantime, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

11.50 a.m.

Earl Ferrers

My Lords, I beg to move that the Bill do now pass. The Bill has been extensively debated in your Lordships' House, and I would not wish to detain your Lordships for longer than is necessary to extol the virtues of a measure which has had, on the whole, a very good reception. There is no doubt that the scrutiny which your Lordships have given it, laced with a mixture of knowledge, enthusiasm and even, sometimes, hopeful anticipation, have made it even better than when it first came here.

In considering the way in which this innovative piece of legislation has been so greatly improved there should be a number of prizes awarded. I would not wish to enter into a lottery to determine who deserves the highest prize or praise. I should, however, like to thank those on the Front Benches opposite for their considered co-operation in ensuring the Bill a smooth passage.

The noble Lords, Lord Donoughue and Lord McIntosh, from the Labour Front Bench, and the noble Lords, Lord Holme and Lord Redesdale, from the Liberal Democrat Front Bench, have played a notable part. I thank them for the helpful way in which they put their arguments. I referred in an earlier debate to my noble friend Lord Swinfen as being like a person who had been given a slice of cake but who then returned and wanted the icing and the candle as well. In Committee my noble friend sought to ensure that the limits on turnover for society and local lotteries were varied yet further from those increases already made so that in the event the turnover of individual society lotteries has increased from the current limits of £180,000 to £1 million and the prizes from £12,000 to £100,000. That is a tremendous increase. A formidable feast—slices of cake, icing, candles and the box too!

I remember that there was a schoolboy whose half term report consisted of one word—"trying". His parents were absolutely delighted. His end of term report consisted of two words—"very trying". If I were my noble friend's schoolmaster, I would have used the same single word for his half term report—"trying". His end of term report would have been of one word too—"succeeded".

I realise that my noble friend's "gluttony" or "success"—whichever metaphor he may choose to align himself with—was not for himself but for those whose interests he sought to represent; namely, charities and those who run charitable lotteries.

My noble friend Lord Mancroft made similar points about charities, as did the noble Lord, Lord Allen of Abbeydale. I hope that both feel that charities have had a good deal from the Bill.

The Bill will mean a great deal to the good causes which stand to benefit. That is, of course, its purpose. We heard a great deal from the noble Baroness, Lady Birk. the noble Lord, Lord Birkett, and the noble Baroness, Lady O'Cathain, and others, on arts and on films. My noble friend Lord Cavendish, the noble Lord, Lord Gibson, and other noble Lords gave their views on heritage. The noble Lord, Lord Howell, spoke with his usual authority on the subject of sport. I hope that all feel that we have taken the interests of their chosen subjects very much to heart throughout the Bill.

The aim of the national lottery is clearly to benefit good causes, with the ultimate aim of improving the quality of life of the people in our country. It also offers the opportunity for us to look back on, and to reflect on, the best of the old millennium while looking forward to the new one and the exciting projects which will be funded by the Millennium Commission. It will also enable us to enhance the valuable role played by the charitable and voluntary sector and by those who participate in the work which they undertake.

We think it right that the lottery will be run by the private sector. The need to earn a profit will sharpen up the operator so that he runs his operation as efficiently and successfully as possible within the rules which will be provided. Your Lordships were concerned that the lottery should be conducted with dignity and in a well regulated way, and in this respect the post of director general will be important. He—or she—will be the watchdog—or bitch—who will ensure that the lottery is run for the nation in a way which reflects the ideals and the aspirations which inspired its establishment. The director general will agree codes of conduct for advertising and other matters with the successful licensee.

Lotteries are important for a great number and variety of charitable organisations, both large and small. Lotteries run by particular societies will more than ever be patronised by people whose motivation is to contribute to the good causes which they represent.

We had some discussion on the football pools, much of it inspired by my noble friend Lord Brabazon of Tara, and the possible effects on them of the introduction of the national lottery. My noble friend was anxious to see that what is at present being done illegally should be made legal—arid as soon as possible too, please. Well, we even met him on that; at least part of the way.

The noble Lord, Lord Airedale, was convinced that all football pools are lotteries, that they always have been, and that there is no skill involved. I do not .think that my limited powers of oratory ever persuaded him that that was wrong. I had another shot this morning but to no avail. That was because of my own limitations and not the noble Lord's.

Lord Airedale

My Lords, I never said that the pools had always been a lottery.

Earl Ferrers

My Lords, I would need to go back and look at Hansard, but the noble Lord certainly left me with that very vigorous impression. If I misquoted him, I would be the first to apologise. However, all his intervention has done is to stimulate me to look at Hansard to make sure exactly what he did say. He was, I think, wrong. But he has a perfect right to be wrong. And he does it with great charm.

I believe that, provided the pools cornpanies fully utilise their considerable expertise in realising the sales potential of their long established product, the size of their market position should not be greatly affected by the introduction of a national lottery. The Government have included a number of proposals in the Bill which will allow the pools considerable additional advantages. In particular, we introduced a facility for the pools companies to roll over their prize money in equal measure to the national lottery.

I, for one, have learnt a great deal, as a result of the Bill, of areas of which I am bound to confess I did not have much previous experience or even, in some cases, knowledge. Some of your Lordships who might be in an uncharitable mode could say that that was pretty obvious. Football pools, long odds, short odds, scratchcards, rollovers—these are all in a world of their own, and very interesting it has been.

It is a world of gambling, chance, skill or lottery —whichever takes your fancy—in which many people, according to their wishes, like to indulge themselves. It takes up a large part of the relaxation time in people's lives. It is not wrong that it should do so. And it is right that it should be conducted properly. That is what the Bill tries to do.

In all this my noble friend Lord Astor has borne the burden and heat of the day. He has been responsible for dealing with the vast majority of the Bill while my appearances, rather like those of a Sputnik from outer space, have been made periodically. M y noble friend has discharged his responsibilities with skill, understanding and courtesy. I am grateful to him for taking the nasty parts and for leaving me the more understandable ones.

The setting up of a national lottery is an exciting venture. Nothing in this life is for free. Of course there will be losers—stacks of them—but that is part of the fun of participating. If you are not prepared to lose your money, keep your money in your pocket. But many people will become winners and many organisations will benefit.

I am grateful to your Lordships for the consideration which you have given to the Bill and for the courteous and understanding way in which that consideration has been given to it. I beg to move.

Moved, That the Bill do now pass.—(Earl Ferrers.)

Midday

Lord Donoughue

My Lords, this has been an interesting Bill both in content and in the nature of its political passage through both Houses. It is the first serious Bill that I have handled from the Opposition Benches and it has been an education for me as for the Minister. I am interested in sport. The House may not know that I quite like horses. But I am not a gambling person: so I also learnt a lot about that.

We on these Benches supported the Bill in its broad principle although we had numerous reservations on details. One of the most striking features—and it gave us some difficulty—was the uncertainty and the cloudiness about the precise nature of the national lottery animal. The House still does not know exactly what it will look like; how it will operate; who will operate it; who will regulate it. Although much of that is inevitable—it is in the nature of the process that we must have the Bill before we have the details—it has presented some difficulty. To some extent we have been dancing and voting in the dark on this Bill. I say at the beginning that I support very much the views which the noble Lord, Lord Holme, has frequently expressed in regretting the absence of detailed regulations.

However, having said that, in addition to the normal courtesies which I wish to express and which are always expressed on these occasions, I would like, with unusual warmth, to give particular thanks to the Minister for the exceptional degree of friendliness, flexibility and co-operation that we have experienced in our dealings throughout the passage of this Bill. It has been to an exceptional degree. Throughout Ministers have been very open with us as regards their wishes and intentions and very willing to listen to our suggestions and to try to find a compromise. In fact, because of that we on this side—I am sure that it is also true of noble Lords on the Liberal Democrat and Cross-Benches, as we have heard this morning and at great length throughout earlier stages of the Bill—all feel sure that we have secured a number of valuable concessions in the same way as we also secured them at earlier stages in another place. It is a better Bill as a consequence. I mention in particular the concessions in relation to various aspects of charitable lotteries and the provision of monitoring of the impact on charities and racing revenues. These are particularly welcome.

What was also quite striking was that these improvements were secured by reasonable discussion and negotiation. There has been very little marching of the infantry blindly into the machine-guns of the Lobbies on this Bill. In fact, there may be some lessons for all of us on all sides of the House in that it is one constructive way—although it is not always appropriate—to conduct the business of this House. But it requires flexibility on all sides and we have had that. One fortunate result is that the Bill is out of this House this summer and I am sure that that is a relief to all involved.

Having been positive, and genuinely so, I conclude with one or two continuing reservations about the Bill and in particular what I feel about the role of the Treasury. The Treasury take is nothing short of being outrageously greedy. It will take 12 per cent. direct tax which is twice the average of our European partners who have lotteries. The Treasury will also of course take corporation tax on the operating profits which I estimate to be equivalent to at least another 1 per cent. take. It will also, I assume—perhaps the Minister can tell us via the Customs and Excise —have a VAT take.

I am not clear about the VAT situation, but I am sure that somewhere there will be revenue from that. If so, this lottery will be thrice taxed if it is only on the lottery tickets, the papers and so forth. The Treasury becomes the biggest beneficiary taking, I expect, more than the arts, sport, charities and heritage together. So, sadly, it becomes a case that really the main function of the Bill is to help fund the terrible deficit on domestic public finances which exists in this country due to the appalling recent mismanagement. That is very sad. Indeed, it is intolerable. We have been unable to discuss properly that Treasury tax due to the conventions of this House that that subject comes under the Finance Bill. That is a major continuing reservation. When the lottery is operating, I hope that it will still be possible to look at that again.

I would like to restate and stress, in case it is lost sight of, that the original and prime purpose of our national lottery was and is to raise money for good causes. My fear is that that great purpose will be lost sight of partly because of the Treasury's take, although that is often silent, but also because of another factor. It will be lost sight of in the consortia bidding to run this lottery. We see the consortia publicly salivating and boasting of their huge potential profits which they expect to make out of running the lottery. That distasteful process has already begun within the confines of this Palace.

I ask the Minister to give the House the strongest assurances that, first, the prime purpose is to provide funds for good causes. Secondly, that the profits of the operator, when selected, will be scrutinised and restrained. I would like to be confident that excess profiteering will be grounds for a rapid change of operator. Thirdly, that the Treasury take will be reconsidered for downward revision once the consequences of the appalling state which the Treasury is in is corrected. There is no doubt that on a change of government, which may be imminent—I have chosen those words carefully—this tax will be looked at again. I believe that everyone involved with charities throughout the land, but particularly those in the Christchurch district of Southampton, should note that there is the prospect, on a change of government, that that heavy tax will be reconsidered.

Finally, I hope that the operator will be British and will include our post offices in the operation. I trust that the regulator will be very careful and wary of, for instance—and I am a great friend of America—American operators who may arrive with George Raft as chairman and various distinguished Italian families in the background. So I hope that this lottery will be run on a proper, British basis.

With those observations and reservations I am happy to see the Bill passed. I look forward to the deserving worlds of the arts, sport, charity and heritage receiving significant benefits because it will be a waste of all our time if they do not.

Lord Holme of Cheltenham

My Lords, like the noble Lord, Lord Donoughue, for me this Bill has been on-the-job training. It has been a pleasure learning how to take a Bill through the House in his distinguished company. I would like to get the courtesies over at the beginning. They are more than formal. It has been a very great pleasure working not just with the noble Earl who has made one of his characteristically stylish guest appearances this morning on the Bill, but also with the noble Viscount, Lord Astor. I hope that it is not invidious to say how much we have appreciated his very great courtesy and consideration when dealing with some of the anxieties which have been advanced throughout the House.

Within the limits of a Government who are clearly in a hurry on this Bill, if on nothing else, Ministers have tried to be as flexible as possible. I am grateful for that. Although we shall not be voting against the passage of the Bill, I cannot pretend that we on these Benches are entirely happy with it. I have not been happy at any point. Excepting that many people like a flutter and that putting down a small price for a large daydream is a relatively harmless form of human frailty, I am not sure that it is right for the Government themselves to move beyond tolerating gambling and regulating it, to becoming the sophisticated promoter of gambling, particularly if the justification for doing so is the distribution of the ultimate surplus, whatever that may be, to worthy causes and projects which in many cases and in most civilised countries would be funded largely, if not entirely, by taxation.

In that context, I should like to pay particular tribute to those noble Lords who have contributed so much to our debates, particularly to the noble Lord, Lord Houghton. When so many of your Lordships, to put it candidly, have had an interest in the outcome of the Bill (whether as potential operators of the lottery or potential beneficiaries of the money raised), the noble Lord has sounded a very proper social and moral note about whether this is a proper activity for the Government. We are all greatly in his debt for that.

Accepting that the Government are determined to press ahead, we have seen it from these Benches as our principal obligation to try to improve the Bill. However, I am still concerned that the ostensible beneficiaries of the national lottery—the arts, heritage, sports and charities, which as the noble Lord, Lord Donoughue, said are, after all, the justification for the whole exercise—are still being treated as a contingent variable and as the residual at the end of the line once the Treasury, the prize winners and the operators have all taken their cut.

We need to take the greatest possible care over the selection of the operator and in writing the tightest possible contract for the operator. It would be outrageous if the billions of pounds which are potentially passing through the new lottery machine (including, for those of your Lordships with a commercial instinct, a mouth-watering cash flow, on which the interest alone would make this an extremely profitable business to be engaged in) led to excessive profits being made on the operation of the lottery.

In that context, I should like to raise the same issue as the noble Lord, Lord Donoughue, raised in his concluding remarks. I refer to the test of who is a "fit and proper" operator for the licence. I have not been one of those at any stage of the Bill who has tried to maintain that there should be anything but an open competition for the lottery. I do not want to exclude people because they come from abroad. I do not want to exclude certain sorts of businesses from bidding for the lottery. I am glad that the Tote will be able to bid.

I do not have any problem with the widest selection of people being able to bid for the operation. However, I think that the Government have a particularly heavy responsibility to ensure that a test of "fit and proper" is applied so that this massive new business does not end up in the wrong hands. That is a problem in the United States and we do not want it to become a British problem. The Government could draw on their experience of the Gaming Act of 1968 and apply that test of "fit and proper". I should very much like to be reassured by the noble Earl that when allocating licences for gambling the test of fitness will be subject to the Government's experience of the Gaming Act.

The Bill still leaves too much power in the hands of the Secretary of State and the Government. Although I have reservations about the amendment tabled by the noble Lord, Lord Birkett, I think that the Government would have been well advised to find ways of making this whole operation more semi-detached from the Government. It is because I think that there is still too much power in the hands of the Secretary of State and with the Government in general that I have paid particular attention to the question of the licence regulation.

The noble Viscount, Lord Astor, has been good enough to write to me about that and I should like to read to your Lordships a very short passage from his letter, which I was encouraged to receive. The noble Viscount wrote: I can confirm that the Department has undertaken some preliminary work on the kind of things which might be contained in the licence… From this work, for example, has emerged the need for the Director General to establish codes of conduct in order to reflect your Lordships' concerns on matters such as advertising—particularly in relation to young people, and the concerns of charities. We have therefore amended the Bill at Report in your Lordships' House to allow for codes of conduct as a result of these concerns, which were raised at committee stage". My one observation on that is that I wish that the Government would put it more strongly than "allow". I would expect that the sense of your Lordships' House and good sense itself would mean that the Government would wish and would say now that they are going to have codes of conduct, rather than simply permissibly saying that they should be "allowed". There was general concern about advertising aimed at young people, and the Government should take that seriously.

Perhaps I may make one parenthetic note on behalf not only of myself but also of the noble Baroness, Lady Birk, who is not able to be here today. The Government showed some signs of flexibility in giving guidance to the Arts Council on the issue of films. I hope that they do that. There have been two pieces of relevant news in this morning's newspapers. First, Elstree Studios are to close. That was reported on the same day as the fact that the top 10 films on exhibition in this country are all American. That is a terrible missed opportunity and has great artistic significance for Britain as a whole.

The concession to which the noble Lord, Lord Donoughue, referred in relation to reporting is welcome, much appreciated and will improve the Bill and ultimately the operation of the Act. However, I am not clear yet whether the Government will have an independent agency to make the annual analysis and to report back.

I turn now to the question of the regional balance of the funds. I know that it is the Government's intention to ensure that the money does not end up disproportionately in London, but I hope, on the question of the sub-committees, that when it comes to the distribution of the funds, a real structural effort will be made—not just a good will effort—to ensure that the money is distributed as widely as possible around the country, remembering always that the people who put up the money, the gamblers, will not necessarily be drawn from the great metropolitan centres but will come from all over the country.

In conclusion, this is one of those Bills which presents a broad brush picture. It leaves an awful lot to our good will in assuming that the fine print will be well worked out. I wish that we had the regulations in front of us. I understand the reasons given, but I do not altogether accept them. I simply say to the Government that at the moment they are taking a substantial leap in the dark. I hope that, like anybody taking a leap in the dark, they will take every possible care that the implementation of the lottery meets the aspirations which have been expressed in this debate in your Lordships' House.

12.15 p.m.

Lord Birkett

My Lords, as co-chairman of the Lottery Promotions Company, it is a matter of enormous satisfaction to me that the Bill looks poised to pass through your Lordships' House. I have enjoyed the debates very much, and I, too, would like to pay my tribute to the immense courtesy and consideration that I have always received from the noble Earl, Lord Ferrers, and the noble Viscount, Lord Astor.

I confess to being rather disappointed that your Lordships did not agree with me that the whole thing should be run by a charitable trust. However, if I understand the timetabling of the Bill correctly, it looks unlikely that your Lordships' amendment will be considered in another place until October. If that is the case, there is the whole of the summer for the fine tuning of the Bill to be considered. The reasons why I thought that the lottery should be operated by a charitable trust were simple and still remain slight worries. In determining the projects on which the money is spent by the good causes, and in particular by the Arts Council, the Sports Council and the National Heritage Memorial Fund, I hope that those bodies are empowered to seek advice from any other bodies that they choose. I hope that they will be urged to do so because the moneys involved will be very large. It is dangerous that the decision-making process on such large sums should rest in each area within one door only.

Like many of your Lordships, I also hope that the question of profit will be carefully considered. Indeed, so many of your Lordships have wanted 35 per cent. of the eventual money from the lottery to be devoted to the good causes. Since it is well known that almost every successful lottery puts 50 per cent. into the prizes and that 15 per cent. is the average figure for the running costs of a lottery, not much is left over for profit if 35 per cent. is to be achieved for the good causes. If that can be achieved within the figure of 15 per cent., it should be. The noble Earl said that the profits involved would sharpen up the operator concerned. I hope that the sharpening process does not depend upon too large a profit. It would be a shame for the nation if it were to become a private profitable rather than a public profitable lottery.

The one thing that will affect that famous 35 per cent. figure more than anything else is taxation. I well realise that we in this House are not supposed to debate in detail matters of taxation, which are not within our province, but I hope that in the course of the Summer Recess the noble Earl will urge his right honourable friend the Chancellor of the Exchequer to consider carefully whether the benefit to the nation in general, and the benefit to the Treasury, might not he better served by a tax-free lottery rather than by a tax of 12 per cent. upon it.

Everyone's concern in the Bill has always been to see that the good causes receive as much as they possible can. It was the foundation for proposing a lottery Bill in the first place. I am delighted that the Bill looks set to pass through your Lordships' House. I hope that it will come out as profitable for all those good causes as all your Lordships hope.

Lord Howell

My Lords, I support what has been said in appreciation of the Ministers who have conducted this operation, not just with great skill but with remarkable co-operation such as we rarely see in the House these days. That is to be commended. I join with the noble Lord, Lord Birkett, in paying tribute to the lottery promotion company, of which he is a joint chairman. I, with the noble Lord, Lord Gibson, was once a director. should like again to mention the work of Mr. Dennis Ward, the director of that organisation, which has been sterling.

I was pleased that the noble Earl, Lord Ferrers, and the noble Lord, Lord Holme, touched a philosophical note about gambling and losing. I warmed especially to the noble Earl's remarks about the joy of losing. I would not go as far as Kipling. If I can recall his words accurately, he said: If you can make one heap of all your winnings

And risk it on one turn of pitch-and-toss,

And lose, and start again at your beginnings

And never breathe a word about your loss". That is a commendable philosophy for those of us who gamble occasionally. But the point about this lottery is that the winners will not be able, unless they are remarkably stupid, to risk all their winnings at one turn of pitch and toss because they will just be buying another ticket. Charities have conducted lotteries for many years, and many of us have been associated with them. I am glad that we have been able to make special arrangements for charities. Many people expect to lose when they take part in a lottery for a specific good cause. That is what we are dealing with here, although on a much larger scale.

One or two questions remain. I endorse everything that my noble friend Lord Donoughue, the noble Lord, Lord Birkett, and others have said about the 12 per cent. which the Treasury proposes to take. We have at the moment a Chancellor of the Exchequer who might well be imaginative enough to have a further look at that point during the summer. It is essential, if the lottery is to succeed, that people see that there is enough money distributed in prizes and enough to go to the good causes which we are all seeking to help. Nothing should undermine that.

I take particular pleasure in recalling again the undertaking given by the Government, and especially the noble Viscount, Lord Astor, that there will be an annual report to Parliament about these matters so that we can keep them under constant review. One matter that we have not discussed which is worth mentioning in passing is that the distributors—this is something with which I agree—will be the regional councils for sports arid arts when they are concerned. I hope that the Government will resist the temptation to impose in their way guidelines which are too rigid and leave them as much freedom of action as possible to decide how to spend the money.

The temptation will be for Ministers for Sport and the Arts or the Secretary of State for National Heritage to try to lay down too closely guidelines as to how the money will be distributed. If that happens, it will turn the lottery into just another arm of government policy, and that would undermine its purpose. I am delighted to have been associated with the lottery from the outset. Those of us who started the campaign for it thank the Government for taking it on board. We wish it every success in the future.

Lord Swinfen

My Lords, my noble friend Lord Ferrers said that he had found me trying, indeed very trying. I am sorry if I caused him distress, because I suspect that that may also have extended to my other noble friend Lord Astor. I do not regret trying. 1 was not trying to improve the Bill for myself. I was trying for all charitable organisations throughout the United Kingdom. I am sure that my noble friend appreciates that. He suggested that I might be greedy in what I wanted. If it had been for me, I should have taken that as just censure, but as I was attempting to improve the position of charitable organisations which, as my noble friend will realise; help millions of people in this country and throughout the world, I believe that i was justified in doing so.

I welcome the Government's undertaking to monitor the effects of the national lottery on charities and voluntary organisations. I still feel that there is a big chance that a number of them could lose a slice of their expected income. I hope that they will be the first to benefit from any distribution resulting from the Bill. I welcome also the increase in the size of small lotteries and the amount of the prizes that can be awarded by them in their attempt to raise income.

On Report I raised queries on Clause 24. I should like to thank my noble friend Lord Astor for sending me a letter on 20th July which has clarified the position and eliminated my concerns on that point. He also wrote to me on 22nd July, for which I thank him, about the National Lottery Charities Board. He has given me the clarification which I was seeking on Report, something which I believe should have been made clear at an earlier stage. Perhaps I may quote from his letter because it should be on the record. My noble friend wrote: The committees for each of the four nations that make up the United Kingdom, and that the Board can appoint as many other committees, with whatever delegated powers it wishes". He goes on to say: These statutory national committees may take on non-executive advisers to help them directly with their work and may wish to establish further committees in each country to handle applications. For these further committees., the Secretary of State has the power to appoint additional committee members, who will be members of the committee only and not of the full Board. Under powers of delegation from the main Board these further committees would, if the Board wished, be able to make grant decisions". In the next paragraph he states: The Board will have overall control. But it will be able to decide the extent to which committees will have delegated powers, and we expect most of the detailed work on funding decisions to be taken by committees rather than the Board itself". My noble friend's letter has been extremely helpful to me and I hope to the House as a whole. He has offered to place a copy in your Lordships' Library, which will be useful. I am grateful. I hope that the proceeds from the national lottery will be spent wisely. I and others will be watching to see how it is carried out.

12.30 p.m.

Lord Houghton of Sowerby

My Lords, I would call this day the "parliamentary gambling day". In another place the Prime Minister is gambling everything in his political life under the eyes and the bourses of the world in a desperate struggle to survive. He is engaged in a gambling exercise. We at this end of the building are also engaged in a gambling exercise —or should I call it a gambling enterprise?

I regard this Bill as the sleasiest of the Session. It was introduced with the urbanity, dignity and skill of the best-liked Earl in the House. And what miserable tasks he is given. A large part of the work of Parliament is to deal with the vices and weaknesses of mankind. I say with great affection that the noble Earl, Lord Ferrers, preserves his sense of humour remarkably well.

I am sorry that the noble Viscount, Lord Tonypandy, has temporarily left the Chamber. I had intended to try to coax him to give us the best high moral line that he had on the subject. After all, he is the most skilled proselytizer in the business and I thought that he might be able to help us. At the present time it is difficult to find one, even in the best company.

The Bill is not the result of a public clamour nor the proliferation of lotteries authorised by the present law to the point of being out of control. Not a single person has written to me and said, "Give us our lottery, and give it us quick". I have had letters of an opposing kind, but probably I am regarded as a depository for people with moral grievances. The Bill is the product of the mind of the Treasury, which is looking round for means of raising money. It is not promoted primarily for the upkeep and promotion of good causes. Good causes are the alibi. It is intended to make money in order to save public expenditure, and the first hand in the till will be that of the Government. They must have their grab at the result of public stupidity and will want to take their cut for Treasury purposes. It is the means whereby the Government can say, "We have a proven way of getting money out of people who when they are taxed say that they cannot afford it". Indeed, the Government keep telling us what they cannot afford. We know what rubbish that is because from time immemorial governments have been telling us in a highly selective manner what the country cannot afford. When we see the billions of pounds that are likely to result from the Bill, spent by people who are overtaxed and cannot afford more, one realises that that is not true.

I shall not weary your Lordships with more of my reflections on that aspect of the Bill. I dislike it. Its effective introduction depends upon the judgment of the Home Secretary or the Secretary of State responsible. I doubt whether between now and Christmas or the New Year he will find the right time to introduce the national lottery. It may come oddly to the nation to find Parliament and the Government busying itself with the national lottery when so many other anxious cares must be dealt with during the next 12 months. We do not know what awaits us in that time; indeed, a good deal may depend on the outcome of the events in another place today. I hope that I am not being unduly censorious but I believe that what we need in this country at the present time is not more laxity in approaches to standards of public life and of social activities but a more stringent approach to our sense of duty and an acknowledgment that we are in a tough period in history. I shall let that matter pass and not trouble your Lordships further with it.

However, there is one matter that I must mention and as far as I am concerned it is new. The Government will be creating a new agency which will handle a great deal of money subscribed by the public. It is therefore imperative that the highest standards of efficiency, and in particular of financial management and accountancy, should be promoted in the national lottery. Such financial transactions make a vulnerable target for shysters, fraudsters, counterfeiters, burglars and any other member of the criminal world. Investigations into other national agencies are afoot and many people close to that problem are most anxious about the less-than-satisfactory standard of probity in the agencies as compared with central government. Two different standards appear to exist. As regards the Government, that stems from the austerity of William Ewart Gladstone who appointed the first Comptroller and Auditor General. It is a matter of passing interest that my noble friend Lord Wilson was the Chairman of the Public Accounts Committee of the House of Commons which celebrated the 100th anniversary of the creation of the Comptroller and Auditor General. But the standards of accountancy, though not always the standards of wisdom, in the Exchequer and Audit departments, overseen by the parliamentary mechanism, shone above all else.

Another aid to central government's standing in this field is the Duchy of Lancaster. As a matter of fact, the Duchy of Lancaster first gave evidence of the efficiency as regards the custody of the king's ransom. This country probably has the highest standards of public administration in the world.

Some very grave losses have been incurred in the health service. They are already public knowledge. Two regional health services and a local authority are involved. Reports on those cases are now being prepared. I am told by a person who knows that one of them is horrifying. It may be that a warning must be given to the Government and to the people that they had better take care of public money which is in the hands of agencies and decentralisation may be an additional risk in that connection.

I ask your Lordships to be vigilant during the autumn so that those matters receive a great deal more attention. I notice that the Bill refers throughout to the Comptroller and Auditor General. That is extremely reassuring. The National Audit Commission is an enlargement of the district auditor and other audits of that kind. I see that my noble friend Lord Bruce of Donington approves of my reference to that. I remember so well his many contributions to the Bill which created the national audit service. That service is busy and has a task far beyond its existing resources. That matter needs attention.

This Bill will create another agency vulnerable to some undesirable elements. After all, it is not an agency which will recruit from among retired clergymen, out of work curates or those who may be expected to come with a high standard of personal honesty. The agency will recruit from those who know the jargon already and who may be engaged in it. Again, that requires some watching because familiarity can sometimes breed contempt.

Those are my final words on the National Lottery etc. Bill. I have criticised the silly title. I hope that the lottery goes well. I share the view of my noble friend Lord Howell and I wish it well. Why should I wish it ill? However, I hope that we shall not play too much on the good causes element because in my view that is only a veneer which is spread over the whole enterprise, when we are after money from people who might feel rather squeamish about going in for that kind of thing because they have been taught in the past that gambling is wrong and that wanting something for nothing is worse. I was certainly taught that at a Methodist Sunday School. That would have been my contact with my noble friend Lord Tonypandy. I shall leave it at that and I am grateful to your Lordships for listening to what I have to say.

12.45 p.m.

Earl Ferrers

My Lords, I did not think that there would be too much enthusiasm for this Bill on the part of the noble Lord, Lord Houghton. He gave us a number of pieces of advice to which he believes that we should adhere. He said that this was a product of the mind of the Treasury and is not for good causes but merely to raise money. I thought that that was rather harsh. He knows really that the whole purpose of the lottery is to raise money. It gives people the opportunity to have a bit of a flutter but it will help good causes, and that is its purpose. With all his knowledge of Whitehall and his experience of the processes of Whitehall the noble Lord will know that Shylock could not go without his pound of flesh. That is why the Treasury has an interest.

I was fascinated by the quotation from the noble Lord. Lord Howell, from If about losing money. When I was about 12 my school moved during the war from the South of England to Scotland and there was a delay to the start of the term, which did not commence until November. My father was anxious that I should not lose the desire to work and he made me learn two things: one was If and the other was the 13th chapter of the First Epistle of Paul the Apostle to the Corinthians all about faith, hope and charity. I do not believe that in this respect the charity part is relevant but it was something that I never forgot.

I remember If but not quite in the way that the noble Lord, Lord Howell, remembers it. My memory does not enable me to recall the last verses but I remember the first verse: If you can keep your head when all about you, Are losing theirs and blaming it on you". I thought that that was an extremely apposite quotation which might he used at both ends of the Corridor today.

I must say to my noble friend Lord Swinfen, lest he should have misunderstood me, that I never said that he was very trying. I said that he was trying. I then said that he had succeeded. If he is offered a carrot, he should not turn it into a pumpkin.

The noble Lord, Lord Donoughue, is worried about VAT. As for all businesses in the United Kingdom, VAT will be payable on all services provided to the lottery but not on the commission paid to the retailers. There will be no VAT on the tickets.

He was anxious also that the tax should be revised downwards. The Chancellor is always able to review levels of duties and taxes on anything. He indicated on 16th March that the level of duty on the lottery will be kept under review, particularly in its initial years. The figure for the first year of the lottery's operation will be 12 per cent., as set out in the Finance Bill.

The noble Lord was worried also about excess profiteering being grounds for the revocation of a licence. The level of operating costs to be proposed by the potential operators will be one matter which will be taken into account in the bidding process. It is quite likely that the level of operating costs will be reduced as the turnover increases. In other words, for the first, for example, £1 million the bidders will say that they will take a certain level of profits and for subsequent additional turnover the amount will be reduced. That would be part of the competitive process. Therefore, do not believe that there will be excessive profiteering.

The noble Lord, Lord Holme, was concerned about the codes of conduct. He told me that he would not be able to be here for my winding-up speech. We clearly intend that there should be codes of conduct. The letter from my noble friend Lord Astor intended to convey that the precise detail of the contents of the codes of conduct and which areas they might cover would be for the director general when he is in post. Of course, your Lordships' views will have been taken into account.

The noble Lord was also concerned about the test that an operator should be a fit and proper person and that the test should be effective. Under Clauses 5 and 6 it is quite clear that the director general would have the necessary powers to investigate not only those who bid to run the national lottery but also all those—for example, shareholders and other controlling interests—for whose benefit the business is carried on. There should be no risk that criminal or other undesirable people can benefit from the national lottery. We shall insist that the lottery is run with the utmost integrity.

As the noble Lord, Lord Holme, said, the lottery is a leap in the dark. That was also the inference that I drew from the speech of the noble Lord, Lord Houghton of Sowerby. Of course, anything new is of necessity a leap in the dark. We must try to ensure that the rules are such as to make the lottery least susceptible to things going wrong and that it is constructed in a way that should provide the greatest benefit all round. I believe that we have done so.

Your Lordships have been kind enough to help in the process during all the stages of the Bill as it has gone through Parliament. Of course, the Bill will not be acceptable to everyone; indeed, we all have different views on the matter. However, the fact is that many people, charities and good causes will benefit. Of course, as the noble Lord, Lord Howell, reminded us, many people will also be losers—but that is part of the form of gambling.

The noble Lord, Lord Houghton of Sowerby, was worried about the prospect of a national lottery and said that no one really wanted it. I can only remind him of what Bernard Shaw said when he dedicated the site of the first National Theatre before the war. In his speech he said: Do the British people want a National Theatre? Well, of course, they did not; neither did they want Westminster Abbey, but they now have it and are well content with it. Perhaps that will be what happens with the national lottery. I commend the Bill to the House.

On Question, Bill passed, and returned to the Commons with amendments.