Lords Sitting of 17 June 1993

Preamble
The House met at three of the clock (Prayers having been read earlier at the Judicial Sitting by the Lord Bishop of St. Edmundsbury and Ipswich. ): The LORD CHANCELLOR on the Woolsack.

Fuel Cell Technology
Viscount Hanworth Viscount Hanworth asked Her Majesty's Government:
What steps they are taking to ensure that British industry will be able to compete in future in the manufacture of fuel cells, in view of the substantial sums being spent on their development by the Americans and the Japanese.
The Parliamentary Under-Secretary of State, Department of Trade and Industry (Baroness Denton of Wakefield): My Lords, a collaborative research and development programme for advanced fuel cells was established by the DTI in April last year to provide a focus for United Kingdom fuel cell interests. It is helping industry to assess this technology, contributing to its development and promoting collaboration with both the research community and with programmes elsewhere.
Viscount Hanworth: My Lords, I thank the Minister for that reply. Is she aware that already in Japan there is an 11 megawatt fuel cell generating station? Does she agree that the fuel cell will almost certainly become very important for several uses before the end of this century? Has she received information that the Americans recently claimed to have produced a plastic which will reduce the cost of fuel cells by 80 per cent. or more? Finally, does she recognise that I am anxious that we should be in a position to capitalise on this technology when the time comes?
Baroness Denton of Wakefield: My Lords, I am pleased to tell the noble Viscount that we do indeed agree with him on the importance of this technology. That is why we started our programme. I am well aware of developments in the United States and also in Japan, many of which are driven by their need to reduce reliance on fuel imports. It is estimated that total funding for fuel cells in Europe from both government and industry is broadly on a par with that in the United States and Japan
The Earl of Halsbury: My Lords, is the noble Baroness aware that the first manned landing on the moon had its auxiliary power provided by hydrogen/oxygen fuel cells designed by Tom Bacon, now a Fellow of the Royal Society? He was supported by what is now the British Technology Group. There is no lack of skill in this country.
Baroness Denton of Wakefield: My Lords, I am delighted to confirm to the noble Earl that that is
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indeed the case. We recognise the work that has been done. I also recognise that my depth of knowledge on this subject will never match his.
Lord Stoddart of Swindon: My Lords, can the noble Baroness confirm that fuel cells have a great potential in transportation, particularly in public transportation, since they would reduce pollution and, it is to be hoped, be cheaper, silent and environmentally friendly? Are the Government taking this into account in making an allocation of money for development?
Baroness Denton of Wakefield: Yes, indeed, my Lords. We believe that as an alternative to the internal combustion engine fuel cell technology has much to offer. We are looking at both that and other areas where small scale efficiency, coupled with quiet operation and low emissions, bring great benefit. That is why we are staying alongside the programme and why, indeed, we doubled expenditure on the programme this year.
Lord Ezra: My Lords, will the noble Baroness indicate whether there is collaborative research on fuel cells within the European Community?
Baroness Denton of Wakefield: My Lords, as the noble Lord points out, this is not an area in which national governments should work alone. I am pleased to say that under the last European Community JOULE round, 10 of the 17 fuel cell projects recommended for support and some £10 million of public funding involved at least one United Kingdom participant.
Lord Donoughue: My Lords, fuel cell technology may not yet have inflamed the collective imagination of noble Lords, but does the Minister agree that the potential is of enormous importance? Does she further agree that it is, as an energy, pollution free? Is she aware that the Japanese have already begun to power, heat and ventilate office buildings with fuel cell technology? Would it not be an excellent beginning and example if government buildings—perhaps starting with the Minister's department—were also powered by fuel cell technology?
Baroness Denton of Wakefield: My Lords, I cannot totally agree with the noble Lord because if that were to be done at extra cost to the taxpayer I certainly would not find it acceptable. Much work is being done in different areas in different parts of the world. I am delighted to tell him that this country is hosting a major international fuel cell conference in September this year

Organophosphate Sheep Dips: Disposal
3.7 p.m.
The Countess of Mar The Countess of Mar asked Her Majesty's Government:
What action they take to ensure that spent sheep dips are properly and safely disposed of.
The Parliamentary Secretary, Ministry of Agriculture, Fisheries and Food (Earl Howe): My Lords, detailed guidance to farmers on correct

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disposal is provided in statutory codes of good practice on the prevention of pollution from agricultural activity which have been published, widely publicised and made available free of charge to farmers. Warnings of the dangers of these dips and advice on their disposal are also given in leaflets produced and widely distributed by the Veterinary Medicines Directorate, the Ministry of Agriculture, Fisheries and Food and the Scottish Office Agriculture and Fisheries Department
It is an offence to dispose of spent sheep dip in any way which pollutes the water environment
The Countess of Mar: My Lords, I thank the noble Earl for his reply. Is he aware that until very recently responsible farmers who contacted the authorities asking how they should dispose of their dip have been told only what not to do—in other words, not to let it get into a water course—and not what to do? Recent instructions that it should either be mixed with slurry or stored for disposal by a specialist company cause problems because a lot of sheep farmers do not have slurry available so that they can mix it and spread it on their land and the other disposal method is very expensive. Is the noble Earl aware that some research has been done which indicates that organophosphates, if they have all the phenols removed from them, can be mixed with hypochlorite solution which renders them harmless? Can he say why this has not been introduced as a matter of urgency?
Earl Howe: My Lords, the safe method of disposal for spent sheep dip depends on whether there are suitable areas for disposal. If there is doubt over the risk of polluting water, the NRA, or in Scotland the local River Purification Board, should be consulted. If a suitable area of land cannot be identified the spent sheep dip should be stored in a holding tank pending disposal by a reputable specialist contractor. In other circumstances, where there is no risk to controlled water, the spreading of spent sheep dip onto suitable land is permitted subject to appropriate precautions
With regard to the noble Countess's second question, we are aware that preliminary research in this area is under way but the results have yet to be evaluated. The use of hypochlorite for the treatment of spent sheep dip formulations containing phenols would not be considered suitable in the light of the formation of chlorinated phenolic compounds.
Lord Gallacher: My Lords, can the noble Earl confirm that the United Kingdom Government is facing the possibility of legal action by European Community officials over the disposal of organophosphorous sheep dips? If such action is pending, do Her Majesty's Government contemplate any advice to farmers meanwhile?
Earl Howe: My Lords, the Government have received a letter from the EC Commission following a complaint that it received about the application in the United Kingdom of Directive 80/68EEC on the protection of groundwater against pollution. It is alleged that farmers in Scotland dispose of sheep dip containing diazinon in ways contrary to the
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requirements of the directive. The Government are carefully considering the Commission's letter and will be sending a full reply in due course.
Baroness Nicol: My Lords, can the noble Earl say whether the cost of disposing of sheep dip in the recommended way is very prohibitive for farmers? If the cost is too great, does the Minister agree that farmers might be persuaded just to open a tap and let it go? Have the Government undertaken any investigation as to whether the costs are proper in relation to the job which is done?
Earl Howe: My Lords, there is obviously a cost attached to the disposal of sheep dip where a licensed contractor is employed to undertake the work. It is around £200, and up to £500 in some cases
The Countess of Mar: My Lords, can the noble Earl say why the development of sheep dips not containing phenols has not been hastened? I understand that phenols do not serve much purpose in a sheep dip. I have been told that Welsh farmers like it because it gives the dip a nice smell, and that is what they have been used to over the years. It is a very important question concerning environmental safety. Can the Minister say whether the matter can be expedited?
Earl Howe: My Lords, that is a matter for the manufacturers to consider as a question of commercial judgment.

EC Exclusive Competence: Scope
3.11 p.m.
Lord Pearson of Rannoch Lord Pearson of Rannoch asked Her Majesty's Government:
What areas would not fall within the exclusive competence of the European Community under Article 3b of Title II of the Treaty on European Union, and what areas would.
The Lord Chancellor (Lord Mackay of Clashfern): My Lords, areas which fall within the exclusive competence of the European Community are those where the comprehensive nature of the treaty's requirements for the Community to adopt a common policy prevents action within the ambit of that policy by member states. In all other areas member states remain competent to act provided their action does not conflict with existing Community rules. An example of an area of exclusive competence is the common agriculture policy. Not all action on agriculture by member states is excluded. For example, the law on agriculture holdings and fiscal policy on agriculture remain for member states.
Lord Pearson of Rannoch: My Lords, I thank my noble and learned friend for that reply. It goes to the heart of the Government's position when they claim that subsidiarity will be our shield against further attacks on our sovereignty by the Community. Since my noble and learned friend has not defined precisely which areas will be protected by the somewhat illusory shield of subsidiarity and those which will not, can he say by whom this vital decision will be taken? Will it

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be taken by the unelected Commission? Or will it be taken by the Council? If the decision is taken by the Council, will it be a majority or a unanimous vote? Or will the decision be taken by the Luxembourg court? If the court is to have anything to do with the decision, does my noble and learned friend agree with my right honourable and learned friend the Attorney-General that our concept of judicial review is not available in that court?
The Lord Chancellor: My Lords, the definition of these areas is on the lines that I have sought to describe. I believe that that can be applied to any term of the treaty. However, as I sought to point out in the speech that I made on Second Reading of the European Communities (Amendment) Bill, the third paragraph of Article 3b on subsidiarity applies whether or not the area in question is an area of exclusive competence. Therefore, the rule of subsidiarity can have effect both within and outside the areas of exclusive competence of the Community. The question of what is such an area or what is the effect of subsidiarity, if disputed, is ultimately a matter for the Court of Justice of the European Community. Its decision is a decision on a matter of Community law. My noble friend referred to an answer by my right honourable and learned friend the Attorney-General. It is true that the procedures of the Court of Justice are somewhat different from ours. But the procedures of the Court of Justice enable the kind of question asked by my noble friend to be fairly and fully discussed and decided.
Lord Bruce of Donington: My Lords, is the noble and learned Lord aware, as I am sure he is, of the 24-page document published by the European Commission exactly on this subject? Is the noble and learned Lord aware that the document contradicts the treaty under discussion in that there is no such thing as exclusive competence referred to in Article 3b, but only the notion of exclusive competence? Further, is he aware that the document does not list the areas covered by that term?
Is the noble and learned Lord aware that the Commission itself has further contributed to the confusion, which we trust the noble and learned Lord will assist us in resolving, as regards subsidiarity, which now becomes muddled up, if I may use the term, with intensity, proportionality, the functional and material elements of it, the complementary measures required even to consider it, the hierarchy of norms, which is another bit of gobbledegook, and so on? Is the noble and learned Lord aware that this whole question has now become shrouded in such ambiguity as to become almost an abuse of Parliament?
The Lord Chancellor: My Lords, I am not sure that I have discerned, in the clarity of the noble Lord's question, the heart of the question. If it is a question of the difference between a Community document and the treaty, there is no doubt which is the decisive document; namely, the treaty. It is of course possible to shroud even the clearest concept in mystery if one cares to aim for that. I have sought to indicate with as
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much clarity as I can command what the scope of that doctrine is. I believe that it is an important doctrine and that it is reasonably clearly set out in the three paragraphs of Article 3b of the treaty.
Lord Hailsham of Saint Marylebone: My Lords, is it not the case that some of the most valuable legal concepts are really much simpler than some people think; for instance, that of the reasonable man? Is it not the case that they are matters of degree and fact to be decided on all the circumstances of the case and that anybody with a certain amount of common sense finds no difficulty with them?
The Lord Chancellor: My Lords, I respectfully agree with my noble and learned friend. It is of course possible for people to argue at almost indefinite length about what the reasonable man would do in particular circumstances, but that in no way detracts from the value of the concept in our law. It has proved a valuable concept over many generations. I believe that subsidiarity may do the same.
Baroness Seear: My Lords, will the noble and learned Lord accept that many of us are overwhelmed with gratitude for the clarity with which he has managed to disentangle these complex arguments? Does he also agree that we are going to have, I believe, six days in which to discuss the matter in connection with the Maastricht Bill and that that will be a more suitable time for dealing with it.
The Lord Chancellor: My Lords, when Questions are put down it is the responsibility of the Government and of myself, when they happen to be allotted to me, to try to answer them within the confines of the time allowed at Question Time. I am grateful for the noble Baroness's first question.
Lord Renton: My Lords, while accepting what my noble and learned friend the Lord Chancellor has said in answer to the various questions put to him, does he agree that our courts will have to take judicial notice from time to time of the decisions of the European Court of Justice as to the application of subsidiarity? Will our courts be able to rule, when the issue arises, following the precedent of the Court of Justice?
The Lord Chancellor: My Lords, it is perhaps an existing application of the doctrine of subsidiarity that the system of law within the Community is that the national courts are responsible for enforcing the law within member states but that when a question of Community law arises it may be referred for the opinion of the Court of Justice in Luxembourg. If the question arises in a final court of appeal, it must be referred to Luxembourg. The decision of the European Court of Justice in Luxembourg on the question of European law is final: it is then given effect to in the manner in which the national court thinks appropriate in applying the law within the member state.
Lord Monson: My Lords, in order to clarify this vital question of subsidiarity, would not the noble and learned Lord agree that Article B of Title 1 of the

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treaty states categorically that the acquis communautaire must be maintained in full? Does that not mean, in effect, that everything which has already been devolved to the Community by the member states can never be devolved back to them, and that therefore subsidiarity can apply only to new laws and regulations, and not to existing ones?
The Lord Chancellor: My Lords, strictly speaking, as adopted in the treaty, the new article will apply from the date of ratification of the treaty, which I hope will not be unduly delayed. However, the principle, once accepted, may well actuate proposals for changing the existing law. It could well be that existing laws might be shorn of some unnecessary detail as a result of a desire in the Community as a whole to simplify matters. If the Community moved in that direction, it would be in accordance with public opinion not only here, but in other member states as well.
The Earl of Onslow: My Lords, is not the only defined definition of subsidiarity a doctrine of the Roman Catholic Church which states that the Bishop of Rome shall allow the bishops and others in their own dioceses to interpret something which does not interest him at the time? If, however, he decides that it is of his interest, he can bring it back just like that. At the moment, that is the only definition of subsidiarity. Does my noble and learned friend agree that that is a rather clearer definition than the one which he has just given, because if what he has said is a clear definition, I do not know what it would be like if he was talking gobbledegook?
The Lord Chancellor: My Lords, I do not agree that the definition to which my noble friend has just referred is the only one. Indeed, the latter part of his question appears to assume that it is not, because the definition of the principle in Article 3b of the treaty does not refer in any way to the Bishop of Rome. I have to say that the words used in the definition appear to me to be reasonably clear. Their application may not always be as clear, but that is often the way in relation to legal concepts. They have to be applied to the circumstances of the particular case. This Question is not so much directed to the definition of subsidiarity as to the areas of exclusive competence.
Lord Stoddart of Swindon: My Lords, have we not already seen a great deal of creeping competence within the Community? Is it not implicit in the Maastricht Treaty that there are to be many more areas in which the Community will be involved where previously it has not been involved? Does not experience tell us that the Community is a centralising Community and that the European Court will, in general, come down in favour of that? That is the real question. And before we pass this treaty, would it not be as well to know exactly what we are doing?
The Lord Chancellor: My Lords, it is always advisable to know exactly what we are doing, and I commend that course. In so far as I can assist the noble Lord to know exactly what he is doing in
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passing this treaty, as I hope that we shall, I shall be happy to do so. It is often said that the European Court of Justice has a centralising influence. The truth is, I believe, that the European Court of Justice endeavours to give effect as fully as it can to the terms of the treaty taken in their contexts. I have no doubt that it would seek to apply the same principles faithfully to construction of Article 3b of the new treaty when it becomes part of the law of the Community
Noble Lords: Next Question!
The Lord Privy Seal (Lord Wakeham): My Lords, we should be fair to the noble Lord, Lord Jay, and move on to the next Question.

Mortgage Interest Tax Relief
3.25 p.m.
Lord Jay Lord Jay asked Her Majesty's Government:
What is the estimated total loss of budget revenue to the Exchequer in the current financial year due to income tax relief for mortgage interest payments.
The Minister of State, Department of Transport (The Earl of Caithness): My Lords, about £4.3 billion.
Lord Jay: My Lords, since this rather arbitrary tax relief, which goes to some tax payers and not others, is no longer justifiable —certainly not in these enormous amounts—and since the Government are now so worried about the budget deficit, which is in large part due to the irresponsible tax cuts made in 1987 and 1988, would not, say, a 50 per cent. reduction in this tax relief be a very wise step towards bridging the budget gap?
The Earl of Caithness: My Lords, I am sure that the noble Lord will recall that in 1991 mortgage interest relief was limited to the basic rate of tax and that from next year, 1994–95, the relief will be at 20 per cent. That will reduce the borrowing requirement and be a further step towards a basic rate of 20 per cent.
Lord Boardman: My Lords, if mortgage interest relief were cancelled, what would be the impact upon house prices, especially in the lower range, and upon the mortgage security relating to them?
The Earl of Caithness: My Lords, it would be difficult to predict what would happen to house prices. I am certainly in no position to give that answer to my noble friend this afternoon. Clearly, however, it would disappoint a lot of potential house buyers. The Government are very proud of the help that they have been able to give to house buyers, and are delighted that people have been able to take the opportunity to own their own homes.
Lord Desai: My Lords, since the tax on domestic fuel will raise less money than the abolition of mortgage relief, have the Government carefully examined the effects of both proposals? Why did they choose the one that will benefit the better off and hurt the worse off?
The Earl of Caithness: My Lords, I admire the noble Lord's skill at being able to translate one Question into a rather wider Question. If he would like to table that Question I am sure that a Minister would answer it on behalf of the Government.

Business
3.28 p.m.
Lord Hesketh: My Lords, it may be for the convenience of the House to know that the Committee stage of the National Lottery etc. Bill will be adjourned at about 7 p.m. for about one hour and that during this adjournment the time-limited Unstarred Question in the name of the noble Lord, Lord Ezra, will be taken. Following the recent agreement by the House to this new procedure for time-limiting dinner break Unstarred Questions, no speech on the Question should exceed 12 minutes in length.

Cardiff Bay Barrage Bill
Viscount St. Davids: My Lords, I beg to move the Motion standing in my name on the Order Paper
Moved, That it be an instruction to the Committee of the Whole House to whom the Cardiff Bay Barrage Bill has been re-committed that they consider the Bill in the following order:

Clause 1,

Schedule 1,

Clause 2,

Schedule 2,

Clause 3,

Schedule 3,

Clauses 4 and 5,

Schedule 4,

Clause 6,

Schedule 5,

Clauses 7 to 19,

Schedule 6,

Clauses 20 and 21,

Schedule 7,

Clauses 22 to 34.—(Viscount St. Davids.)

On Question, Motion agreed to.

National Lottery etc. Bill
3.29 p.m.
The Minister of State, Home Office (Earl Ferrers): My Lords, I beg to move that the House do now resolve itself into Committee on this Bill.
Moved, That the House do now resolve itself into Committee.—(Earl Ferrers)
On Question, Motion agreed to.
House in Committee accordingly.
[The CHAIRMAN OF COMMITTEES in the Chair.]
Clauses 1 and 2 agreed to.
Schedule 1 agreed to.
Clause 3 agreed to.
Schedule 2 [The Director General of the National Lottery]:
Lord Birkett Lord Birkett moved Amendment No. 1:
Page 26, line 24, after ("staff") insert ("and advisers").
The noble Lord said: I should like to speak also to Amendments Nos. 9, 12, 16 and 28. Taken together, they form the substance of the amendment that I am moving. I should like to say at the outset that the amendments are not intended to damage or alter the Bill dramatically in any way. I believe in the Bill and in its purposes. What I do not believe is that the mechanism for achieving that is as perfect as it should be. My amendments are concerned with one thing only; that is, that the mechanism for implementing the worthwhile purposes of the Bill should be put into the hands not of a body corporate but of a charitable foundation. The lottery should be run as a charity.
I have a number of reasons for saying that, but all of them suppose that the Bill's aim since it was first announced in the manifesto, in all its stages in another place and here is that there are five good causes which should benefit from it: arts, sports, national heritage, the Millenium Fund and charities in general. That is set out as clearly as can be in the Bill and should not be altered, because together they form what I call the foundation of our life, the quality of it, and the lottery will enhance it with the sums it raises beyond any measure we have so far seen.
Why therefore do I suggest that there should be any change? Partly, and first, because a charitable foundation would spell out exactly the Bill's purposes. It is for a charitable purpose. It is not a lottery designed merely to make anyone rich beyond the fortunate winner of the lottery. It is to make the nation rich by the methods I have already outlined. It would sit well with other charities, and many other charities have been worried about the effect a national lottery may have upon their life.
I do not believe that those effects will be as serious as some have outlined. It is interesting to look at Ireland, which has featured greatly in everyone's statistics lately. Just under half the charities questioned in Ireland about whether they had won or lost as a result of the introduction of a national lottery answered. The top 20 grew by an overall 30 per cent. after the introduction of a lottery; some 32 per cent. of them were forced, I believe beneficially, to think clearly about their means of raising money, and whether they could be effective and efficient; and only 15 per cent. suffered any loss.
If the predictions of a national lottery's income are correct, something not far short of £200 million will be going to charities through the new charities foundation or committee which is set up by the Bill. I should have thought that that was more than enough to compensate for any possible loss to charities. I see that there are other amendments down which suggest that such statistics should be published to this place regularly. I see no reason why not. If everyone is worried about the effect of a lottery, any monitoring mechanism that would report back to both Houses of Parliament on the effect of a lottery should be welcomed. I do not believe that charities will suffer as has been predicted. If the lottery itself were a charity, it would sit better.
Another reason why I believe a charitable foundation would do better than what is suggested in the Bill is that I do not believe that it is necessary for big business to run, at a profit, for a percentage, the lottery. There is a superstition abroad that only big business knows how to make big money. That is not true. There are plenty of charitable foundations which make a great deal of money without the incentive of a piece of the action at the end of the day. I have nothing against big business or the making of money. There will be enough to be made within the lottery: the provision of its equipment; provision of its ticketing facilities. There will be plenty of money for the expert firms of this country, and thank goodness we have several of them. I have nothing against big business, but I can see no reason why the amount of money raised by the lottery should be subject to a percentage, or a business. It could do it without it. That is a good reason why the lottery should be a charity and not a business.
Lastly, everyone says, "Well, the amount of money needed to set up the lottery in the first place will be enormous". Indeed it will. The sheer physical machinery required will need money, and predictions range from £100 million, £200 million or even £300 million. The experience of lotteries all over the world shows that they are a good banking risk. I can see no reason why the money required should not be raised in ordinary banking terms. Whoever does so, and if he banks for the lottery, will be banking in terms of billions over the years. There is no need for a percentage in that. The ordinary banking facilities will be enormous.
I do not believe that it would be difficult to raise from the banking community the capital necessary to run the lottery from the start. It has even been suggested that a charity will only be able to give to other charities, that some legal constraint will be placed upon it. The only legal constraints that will be placed upon a charitable foundation will be the legal constraints put within the very terms of the foundation. I understand that the Sports Council is worried on that score. But it is significant that this very morning in The Times there is a letter from 11 of the most distinguished sportsmen in this country suggesting that a charitable foundation is the only way for the lottery properly to proceed and to provide the money that sport so badly needs and about which the Prime Minister spoke so eloquently when he first introduced the measure in the manifesto.
The second reason why I believe a charitable foundation would be a much better advised mechanism than the one suggested in the Bill is that there is too much government influence spread throughout the Bill. Two of my amendments replace the words, "Secretary of State" with "Director General". By "Director General", which is already in the Bill, of course I mean the director general of the charitable foundation that I propose.
It must be remembered that we are not dealing with public money. That is a good argument for saying that there should be no tax upon it. I am, however, well aware that that does not form part of the Bill, and it
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cannot form part of my amendments. It has been announced, although happily not confirmed—I hope that it will not be for a long time—that the tax will run at 12 per cent. I believe, and I have a strong suspicion that many Members of the Committee agree with me, that there should be no tax at all. It would probably even benefit the Treasury not to tax the lottery. The spin-offs of the spending on arts, sports, the environment and all the other things would come back to it more fully that way than by tax. I cannot argue that the charitable foundation is a tax device because it is not part of our competence to argue that this afternoon.
It should be remembered that when the Government suggest that a 12 per cent. tax is justifiable because it will compensate for tax or income to the Treasury lost in other ways because of the lottery, that assumes that every penny spent upon it would have been spent upon something which would have provided tax of at least 12 per cent. It is never mentioned, however, that almost all the funds raised by the lottery and the projects into which they go—the heritage, arts and sports—would surely have been asked for from the Government. I do not say that the Government would necessarily have granted them, but they would nevertheless be the sort of funds for which one would look to the Government.
It cannot be an accident that the British Museum owes a great deal to the lotteries of the past. It cannot be an accident that the Government have handsomely and sensibly spent an immense sum of money on the new British Library. If a lottery had been able to provide those funds it would have saved the Treasury more in a decade than it could have gained in tax.
Therefore, I do not believe that the Government should have as big a say in the Bill as they do now. The Secretary of State has powers in all kinds of directions. I believe that they should be delegated to the director general of this charitable foundation, who ought to be within the control of Parliament; indeed, he must be. One of my amendments would ensure that he is, in perhaps a complicated way, by misplacing a clause from one part of the Bill to another part. I cannot believe that the Government should have the degree of control that they have. My proposal would not damage the lottery or the nation's chances one whit.
Thirdly, the Bill provides that the money should be paid directly to five recipients and that five people should decide upon the spending of that money. They are all good and sufficient bodies. They are: the Sports Council, the Arts Council, the National Heritage Memorial Fund, the new Millennium Commission and the new charities organisation to be set up by the Bill. Please believe that my amendments do not suppose that those bodies are not to be considered. Indeed, they will remain the most important sources of advice and counsel on how to spend the money. However, I believe that they should not be the only sources of counsel, advice and decision. That is why the first amendment standing in my name adds to the power of the director-general to appoint his staff the power to appoint his advisors.
I believe that a charitable foundation will ensure the fair running of the lottery. It will ensure as well as

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any organisation can that the maximum amount of money will go to the causes in which we all believe and not into private pockets, government pockets, or elsewhere. I cannot believe that this is anything but an entirely sensible and beneficial amendment. I hope that Members on all sides of the Committee will feel free to support me. I beg to move.
Lord McIntosh of Haringey: The noble Lord, Lord Birkett, moved his amendments in an attractive way. Indeed, they are attractive amendments because all of us would like to see maximised the extent to which the proceeds of the national lottery go to the beneficiaries, the good causes, provided for in the Bill.
My anxiety about the amendments arises from a point to which the noble Lord referred but on which he did not elaborate. The matter was raised in a letter from the Sports Council within the previous two days and we need to know the facts. The Sports Council claims that if the lottery franchise were won by a charitable foundation applicants for grants to that charitable foundation would themselves have to prove that their purposes are charitable. The good causes provided for in the Bill cover a wide range of arts, sports, national heritage, charities and the Millennium Fund. Many of those have charitable status but many, such as small sports organisations, do not.
I now address my remarks to the Minister. If it is correct that applicants to a charitable foundation must themselves have charitable status, all the attractive arguments put forward by the noble Lord, Lord Birkett, fall to the ground. I should like to know the facts about that matter before we go further.
3.45 p.m.
Lord Holme of Cheltenham: We on these Benches listened with great interest to the noble Lord, Lord Birkett. He has part paternity in the Bill and must therefore be listened to with particular interest and respect. The noble Lord probably knows that we do not share his enthusiasm for the Bill as a whole. We approach it with great scepticism and in some senses have reservations about its whole principle.
The noble Lord has, however, made a powerful case for a charitable foundation. It would be a large charity, would it not? On some estimates it would deal with between £2 billion and £4 billion per year; it would be a kind of super charity. We on these Benches have an open mind about whether that is the correct way in which to achieve the aim. However, our attitude will be conditioned by the Government's response to the question about the discretionary powers of the Secretary of State. I agree with the noble Lord, Lord Birkett, that they are far too wide. The discretion which the Bill gives to the Secretary of State is extremely comprehensive and it should be limited in one way or another. Of course, the powers given to the director general of the new foundation will have that effect. We shall see during Committee what restrictions the Government are prepared to accept on the powers of the Secretary of State. That might, in turn, condition our response to the proposal for a charitable foundation. I share the reservation of the
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noble Lord, Lord McIntosh, which was also passed to me from the Sports Council. I should like to hear the Government's response to that.
If we are to have such a lottery it is important that it is run as professionally as possible, that it is marketed as efficiently as possible, and that it is conducted as responsibly as possible. There is no point in having a national lottery unless it is properly run. In that regard, I shall be interested to hear the Government's reaction to the prospect of the charitable foundation being the operative body within the Bill.
Baroness Seear: While I do not disagree with my noble friend I believe that there is no earthly reason to suppose that a charity will not be professionally run. The days when charities were run by well-meaning amateurs are long past. Almost all the large voluntary organisations and charities employ extremely competent and professional people to run them. There is every reason to suppose that a charity on this scale will attract and deploy some of the highest talent in the field. My only reservation about the amendment relates to the point raised by the noble Lord, Lord McIntosh. It is essential that this body should be able to give out its money more widely than to registered charities. I cannot believe that a way cannot be found round that. If it can, the noble Lord's amendment has everything to recommend it.
Lord Rix: Somewhat to my surprise I rise to support the amendment, because I do not see eye to eye with my noble friend Lord Birkett on the working of the charitable foundation. If the amendment falls today I shall on Report propose a mechanism co-ordinating both the body corporate and the charitable foundation, which can undertake the administration of the lottery.
In speaking in support of the amendment as it stands, I refer to a letter that I, as Chairman of MENCAP, wrote on 16th January to Mr. Robert Key, Parliamentary Under-Secretary of State at the Department of National Heritage. I stated:
"as I understand Part I of the Bill, the body licensed to run the Lottery and the bodies licensed to promote it could be entrepreneurs in business to make a profit. Put bluntly, the overall system, taking account of all expenses, profits and tax, suggests an invitation to the punter—who used to put £1 in the collecting tin knowing that about 90% of it would go directly to a charitable cause—to put £1 in the Lottery knowing that 90% of it will go elsewhere. I would hate to see the Lottery renamed the Lootery. Would not direct administration by a Government Agency, or using a non-profit Company provide better guarantees?".
That was my letter on 16th January. I have had reason to change my thinking slightly as to that charitable foundation since that time. However, I support some form of charitable foundation, perhaps in co-operation with a business enterprise, so that it can be run expertly but also so that more money would be available for the five constituent bodies which will receive money from the lottery. Indeed, the charitable foundation could be made up of those bodies themselves.
The noble Lord, Lord McIntosh, questioned whether a charitable foundation could give to non-charities. In my experience, which I admit is

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limited to the MENCAP City Foundation and the King George V fund, those foundations have given to bodies which are not charities. I cannot believe that that would not apply in this case.
Finally, two nights ago the Performance Alliance held a reception within the Palace of Westminster in the Jubilee Room—Equity, the Writers' Guild and the Musicians' Union —where it was said:
"Under the present proposals too little money is allocated to the worthy causes representing a mere 5 per cent."—
actually it is less—
"for each category, ie, arts, sport, national heritage, the Millennium Fund and Charities with the lion's share going to the Exchequer".
I shall support the amendment, although I have reservations as to the means by which the charitable foundation will operate.
Lord Howell: I support the views which have just been expressed. It is interesting that this first set of amendments goes to the heart of the anxieties of many of us that the Government will kill the golden goose before it has laid a single egg. In other words, the windfall for charities, for good causes, for sport, the arts and so on will be so insignificant after the 12 per cent. tax and the considerable running costs and profits for the operators that disillusionment will set in. Faced with the very competitive situation provided by football pools, which are themselves a lottery these days, the lottery will fail.
On Second Reading some of us expressed those views. We hoped that the Chancellor of the Exchequer would reconsider his predecessor's proposal to impose a 12 per cent. tax on the lottery. I do not know whether the Minister who is to reply is able to offer any words of comfort now, although we understand the difficulties of speaking about taxation when the Chancellor is considering those matters for the next Budget. That is one reason why the proposal for this charitable foundation has come about: to protect the good causes from the ravages of the operators and the Chancellor of the Exchequer in imposing his tax. Therefore, this is an extremely serious proposal which in my judgment deserves support.
I am astonished that the Sports Council has written a letter which states that a charitable body cannot give money or make grants to non-charitable bodies. That seems to me to be the purport of the letter which I read with some anxiety. If that were the case, I must have broken the law many times because I sit on a number of charitable bodies and it has never previously been explained to me that I am not able to make grants to organisations which are not charitable. We give grants to people who we believe are proceeding to enhance the objectives of our charity, whether or not they are charities. That point needs to be clarified.
I am no expert on this matter but the whole of charitable law in this country is in a somewhat chaotic state. Therefore, it seems to me that proceeding along the lines of the amendment, Parliament would need to look at the status of charities as a whole, the restrictions imposed upon them and the objectives which they can embrace. Therefore, I hope that the Committee will appreciate the importance of the amendments. In my judgment, they may be the key to
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whether the lottery will prove to be successful or otherwise. For that reason, I am disposed to support the amendment unless the Minister can give us assurances in other directions that the proceeds available to the good causes will not be as restricted as some of us fear they may be.
Lord Renton: The noble Lord, Lord Birkett, made it quite clear that his amendments refer only to Part I of the Bill which is concerned with the way in which money is raised by the lottery. They are not concerned with the distribution and he has been so open as to say that he does not wish to challenge what is in Clause 20, which deals with how the money will be distributed.
I must confess that I cannot see that there will be any great difference between the amount of money raised by the method proposed in Part I and the amount of money raised under the method advocated by the amendment in the name of the noble Lord, Lord Birkett.
Perhaps I may now turn to the question of what the effect will be on charities. It is no doubt my fault but I had not studied the amendments to be moved by the noble Lord, Lord Birkett, until he began to speak to them; I have not discussed this with the noble Lord, Lord Rix; and I have received no briefing from MENCAP on the subject. Therefore, I am expressing my own opinion.
Charities like MENCAP receive their funds in various ways—small local lotteries, gift aid to an increasing extent and in various other ways. I am rather worried that if this group of amendments were accepted, some people would say, "Oh, don't let us give our money to our usual charities. Let's give it to this charitable foundation", proposed by the noble Lord. I fear that charities' income from various sources, especially from small lotteries, may suffer if the amendments are accepted. That is merely a question of what the purchasers of lottery tickets may think.
I believe that that is a factor that needs to be borne in mind by MENCAP and by all who are interested in charities of one kind or another which receive some of their funds from lotteries and, indeed, those charities which receive funds in other ways as well.
On the question of how much money altogether might be raised, I should like to hear what the Government have to say. It is very difficult to make an estimate or a comparison but at this moment I cannot see that the method proposed by the amendment would lead to larger sums being contributed. It may do but I believe that it would be marginal.
As regards the costs of administering and operating the scheme, I should have thought that the charitable foundation proposed by the noble Lord and the body corporate proposed by the Government are likely to have the same kind of administrative costs. I cannot see that there would be very much difference. Having said that, I do not wish to continue and become tedious. I hope that I have said enough to show that there does not seem to be any clear or great advantage either to charities or to the scheme as a hole by accepting the amendments.
4 p.m.
Lord Allen of Abbeydale: I am prompted to intervene by hearing the noble Lord, Lord Howell, say that charity law should be reviewed. Thinking of the time that we spent discussing what became the Charities Act, I find that slightly depressing. I have two comments to make. I share the great problem that, although the charity envisaged by the noble Lord would not be obliged to make grants to bodies which were themselves charitable, my understanding is that they would be obliged to limit their grants to bodies whose work could be described as having a charitable purpose.
My other point concerns a remark made by the noble Lord, Lord Birkett. He said that there was no question of altering the proposals about taxation. If we are to have a charitable body raising money and 12 per cent. tax is to be paid on it, that seems to me to be setting a precedent which other charities would not welcome.
Lord Swinfen: I am not in favour of the amendment. I should, however, first declare an interest as I am employed by a charity. I follow very strongly the line taken by the noble Lord, Lord Renton. In my view, if the amendment of the noble Lord, Lord Birkett, was accepted, it would very considerably reduce the income of many charities, especially those small charities which rely a good deal on local lotteries. I say that because the general public would think that they were giving £1 for every £1 that they paid to the national lottery to charity, when in actual fact it comes out at a one figure percentage.
I agree with the noble Lord, Lord Allen of Abbeydale, that a charitable grant-making body can give to organisations and individuals that are not themselves charitable by registration but are charitable by what they do and by virtue of the cause that the funds support. However, as I understand it, under the legislation the expression is "good causes", which goes rather wider than causes that could be considered to be charitable. There will be a number of instances when it is quite right and proper for money to be given under the national lottery to a good cause that in no way could be considered charitable.
My further point is purely an inquiry. If the amendment is accepted and a foundation introduced, will it not be limited in the number of lotteries that it can run during the year, or in the size of the lottery, both under the Bill and under current charity law?
Lord Houghton of Sowerby: I am not in favour of this wolf being put in sheep's clothing. We are hearing much about charity in connection with the Bill. Indeed, the very first amendment talks about a charity and a charitable foundation. But there is no charity in the Bill: it is a money-making Bill for those who want to promote it. Many people will make a great deal of money out of it.
It seems to me that in such matters our sense of hypocrisy rises to the surface. We do not want to call a spade a spade and we are thinking of all the words that we can use in connection with the national lottery which will give it a more respectable appearance. To
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my mind, there is no doubt that charity comes into the Bill not for charity's sake and not because charities have asked for it, but because it makes a lottery more respectable. So far as I am concerned, I draw upon my earlier nonconformist conscience. I am dead against it.
Viscount Astor: The proposed new clause seeks to allow Parliament to prescribe the powers and duties of the director general by resolution of both Houses. Those duties of the director general have been drafted into the Bill because the Government feel that they provide the crucial underpinning of the whole of the lottery operation. To set additional duties would represent a massive and unnecessary transfer in the burden of responsibility from the director general. The matters which would be discussed under the proposed amendment would be predominantly operational matters, not matters of policy which are for the Secretary of State. That would not, I suggest, be a good way to run a successful national lottery.
The performance of the director general will be clear from the annual report of the director general which will be laid before Parliament and will be open to parliamentary scrutiny. The noble Lord, Lord Birkett, would like to change the role of the director general entirely. Instead of taking sole charge of the regulation of the lottery and the licensing of games, which together is no small task, the director general and his advisers would perhaps form an overall board which would also be involved in the distribution of the money available for good causes. That is an extension of the director general's role.
One of the strongest points which emerged from the consultation period after the publication of the White Paper last year was that the functions of running the game and of distributing the money should be kept entirely separate from one another.
It has been suggested that the regulatory role of OFLOT will not be onerous: I should like to dispel that notion now. We intend that the director general, through his staff, should keep a very close eye on the operation of the lottery, including looking at cash flows and banking arrangements and conducting a continual and detailed audit. The job seems to me to be very different from the overall supervision of the distributing bodies.
There is a suggestion here, which I cannot accept, that the appointment of a new person to oversee all of the distribution process will better allow for a visionary use of lottery funds which would not otherwise happen. In our discussions with the bodies which will distribute the money, it has been very clear that those bodies see the lottery as presenting a wholly new opportunity. The arts and sports councils and the National Heritage Memorial Fund do not consider the lottery as merely an adjunct to their existing responsibilities but as a new area of activity to be taken forward creatively and with a new vision of what can be achieved in each of those major areas to improve and enhance the quality of life for the nation.
The Charities Board and the Millennium Commission will also be appointed precisely because of their ability to view the needs of the nation in a strategic and far-sighted way. I am confident that all the distributing bodies will use the lottery funds to

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enhance significantly the quality of national life, with a strategic and visionary framework within which to make decisions on the multitude of worthy applications which will come in. That is no small risk. I do not think that it would be sensible for any one person—even the director general—to take on that supervisory role. Therefore, I cannot see the involvement of the director general in the distribution process as being sensible; I believe that it would be misguided and ill-conceived. It might even mean that the operation and regulation of the lottery did not receive due attention, leaving the revenue-raising arm exposed to the risks of under-performance.
The noble Lord, Lord Birkett, proposes to make it a statutory requirement that the licence to run the lottery and the licences to run games as part of the lottery could only be held by a charitable foundation. I think that the noble Lord should be aware that such a requirement would place inflexible limits on the kinds of project which the lottery is able to fund. For example, if the amendment was accepted, we might find that a project which the majority of people considered should be able to receive money was excluded by the articles of the foundation.
At present, charities which derive some of their income from lotteries often decide to contract with a company for a lottery to be run on their behalf. This is in recognition of the fact that business skills are very different from expertise in grant-making and—dare I say?—lobbying, or any other functions which the voluntary and charitable sectors perform to such good effect in this country.
The Government have taken the important decision that the private sector will deliver the most effective operation for the lottery. There is nothing to suggest that a charitable organisation would be able to introduce a more successful UK lottery or, indeed, raise any more money. There is some evidence to suggest that it would not. Let me put to rest two misunderstandings, on profits and taxation. First, a charitable foundation would still need to employ profit-making companies actually to run the lottery, supply the equipment, print the tickets and handle the marketing. Therefore the level of operating costs would be the same and the profit would be no lower or higher. The lottery would still have to be run in a businesslike way.
Secondly, it is not true that a charitable foundation would not be required to pay the 12 per cent. tax which was announced on 16th March. I can assure the Committee that the tax would be levied by the Chancellor on the turnover of the lottery, regardless of the type of organisation which runs it. It is a tax on the lottery, not a tax on charities as the noble Lord, Lord Allen of Abbeydale, suggested.
The running of a successful lottery, raising as much as possible for good causes, is a serious commercial operation. We believe that it should be the responsibility of a reputable and efficient private sector operator, with the skills and experience to launch and market a new product successfully. In drafting this Bill the Government have sought a balance between the public regulatory role, played by
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the Secretary of State and the director general; the distribution role played by the bodies in Clause 21, with financial monitoring by the Secretary of State and Parliament; and the commercial function of introducing a successful lottery. I think that the structure we have devised will make it possible for government and Parliament, the public distributing bodies, and the private sector, all to use their strengths to the full, and for each to complement the activities of the other, rather than duplicate them. I firmly believe that the concept of the lottery is too large for a single body, no matter where it might look for advice.
The Bill sets out that there should be accountability to Parliament. To establish a lottery as a charity would blur the lines of accountability, with direct accountability to the Charity Commissioners and not to Parliament. We live in a parliamentary democracy. As regards something as important to national life as the lottery, it is important that Parliament has first call on scrutinising what will become an important national institution. I believe the noble Lord, Lord Howell, was in a way arguing against this amendment, although perhaps he is in favour of it, when he talked about killing the goose that lays the golden egg. I agree with the noble Lord, Lord Holme of Cheltenham, that we want a well-run, efficient, properly-run lottery. I agree with my noble friend Lord Swinfen that the purpose of the lottery is to help good causes. Some of those good causes may not be charities.
The noble Lord, Lord McIntosh, asked me about the letter from the Sports Council and whether applicants to the charitable foundation must be charities. If the charitable foundation operates under charity law, the beneficiaries would have to be charitable. It is true that a charity may give to a non-charity—for example, an individual or organisation—but the latter must be in need of philanthropic or charitable benefaction. Therefore, some good causes could lose out.
The Government gave an undertaking in their election manifesto to introduce a lottery. The Bill reflects the sort of lottery which the Government want to introduce, after over 12 months of consideration and determination to get it right. The Government have talked to many bodies involved in this matter. These amendments would totally unravel the structure which the Government consider essential to a sound lottery. They would create a totally different lottery, and not one which the Committee would want. I believe this new clause runs contrary to the whole concept of the efficiency and accountability of the national lottery to Parliament.
4.15 p.m.
Lord McIntosh of Haringey: We have been debating a group of amendments proposed by the noble Lord, Lord Birkett. I do not know whether he agreed to the grouping or proposed it, but the grouping contains a number of different issues and it is important that we should get our minds clear about what it is we are debating. Most of the earlier discussion concerned Amendments Nos. 9 and 16, which provide that the body running the lottery should itself be a charitable

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foundation rather than a body corporate. The Minister chose in his reply almost to ignore that aspect and concentrate on the other amendments, in particular the proposed new clause, which refer to the relationship between the Secretary of State and the director general. As a result, I do not think we have reached the firm conclusion from our discussions that we need to reach.
Viscount Astor: I believe I clearly covered the matter of why the lottery should not be a charitable foundation. I covered the tax issue and the complications caused when charities give to bodies that may not be charities. I also discussed the issue of turnover raised by my noble friend Lord Renton. If the noble Lord had listened carefully, he would have heard me cover those issues during my speech.
Lord McIntosh of Haringey: I listened carefully and I acknowledge that the noble Viscount covered those points although they were somewhat swamped by the other points he made which did not bear any relation to the issue that most Members of the Committee wished to discuss. The noble Viscount gave an unqualified reply to my question and I am grateful to him for that. The reply he gave was—this seems to me the most significant point to come out of the discussion so far—that a charitable foundation could only give to a charity. A number of Members of the Committee said that they are involved in charities which give to non-charities. If a charitable foundation gives to a non-charity—I assume that Members of the Committee are not breaking the law—then the gift must be for a charitable purpose. I believe that is what the Government are saying.
The question on which we must resolve to make up our minds is this: is there a significant body of good causes within the scope of the legislation under the headings of arts, sport, national heritage, charities and the Millennium Fund which is neither a charity itself nor run for charitable purposes? The Sports Council is suggesting that there are many small sports clubs around the country which are not charities themselves and are not run for charitable purposes; they are simply clubs. If we can resolve that question of fact as to whether there is a significant body of good causes to which the proceeds of the lottery should be devoted, which do not fall within the category and which could be provided for by a charitable foundation, then I am afraid the amendments of the noble Lord, Lord Birkett, fall. If that is not the case, they do not.
Viscount Astor: I am afraid the noble Lord, Lord McIntosh, has rather misquoted me. As regards charities giving to non-charities, he made various remarks which are totally at variance with what I was at pains to explain to the Committee. I said that a charity can give to a non-charity—an individual or organisation—but it must be in need of philanthropic or charitable benefaction. I was clear on that point. I believe that addresses the issue. However, the most important issue which the noble Lord has perhaps chosen not to emphasise is that if this amendment
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were accepted it would remove the accountability of the national lottery to Parliament. We consider that to be very important.
Baroness Seear: What the Minister did not address, however, is something that lies at the heart of this amendment. If the lottery were organised by a charity, a larger sum of money would go to charities at the end of the day because less would go to either the profits of the undertaking running it, or to the Government. A member of the Committee said that he was afraid that this would kill the goose that lays the golden eggs. Many of us are afraid that the Government are going to eat the golden eggs.
Viscount Astor: Perhaps I may answer the point made by the noble Baroness, Lady Seear. I believe that my argument shows that we care about charitable lotteries. One of the complications of the amendment of the noble Lord, Lord Birkett, is that it confuses the national lottery with charitable lotteries. We have always been at pains to point out that the national lottery is not a charitable lottery. It is a lottery in which the primary objective of people who take part will be to win prizes. Their primary objective will not be to give to charities. It is important that some of the money raised will go to good causes, but I stress that when somebody buys a lottery ticket they will not be buying that ticket for charitable purposes. They will be buying a ticket in order to win a prize.
If we make the national lottery a charity we shall totally confuse the issue in relation to important charitable lotteries, which we do not want to suffer. We do not want anybody to be confused when they buy a ticket in the national lottery into thinking that they are supporting a charity. If they want to support a charity they will buy a ticket in a lottery run by one of the charities. That is a totally separate issue. To create the national lottery as a charitable foundation will have a detrimental effect on charities.
Lord Holme of Cheltenham: I am grateful to the noble Viscount for giving way. I believe that this point will run through our deliberations in Committee. Does he accept that people's motives are bound to be mixed? They will both hope to win a prize and hope that as large a proportion of their money as possible will do some good and go to good causes rather than specifically to charities. Does the Minister accept that for the lottery to be successful there will be a mixture of motives on the part of the people who participate in it?
Viscount Astor: I am sure that there will be a mixture of motives. However, I believe that the primary motive in the national lottery will be to win a prize. A secondary motive will be that a proportion of the money paid for a lottery ticket will go to good causes. If we blur the distinction between the national lottery and charitable lotteries that can only have a detrimental effect on charitable lotteries.
Lord Birkett: I believe that it would be helpful, particularly to the noble Lord, Lord McIntosh, if at this stage I said that the grouping of these five amendments together was given to me today. I agree

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with it entirely, for the simple reason that all the amendments relate to the nature of the body which will run the lottery. I would not have proposed changes between "Secretary of State" and "Director General" had I not assumed that we were talking of a charitable foundation in the first place. The amendments all go together. Nor would I have suggested "advisers" as well as "staff" in the slightly marginal area of how the money is spent in the long run had I not supposed that that body would come into existence. Therefore, I can assure the Committee that I am entirely happy for all the amendments to stand or fall by the one which happens to come first.
There has been a great deal of confusion about charities, good causes, philanthropy and so forth this afternoon. Someone described me as noble and learned. I wish I were, because then I could answer the point. Alas, I am not learned. I am in exactly the same position as a number of Members of the Committee in that I serve on charitable bodies, and in some cases I chair them. Indeed, I give money left, right and centre to causes which are not charities. However, I always do so for the charitable purpose of the charity concerned. Our experiences are vastly different, but in this case the charitable purpose would be the very purpose set out in the Bill. It would obviously be necessary to set up a charitable foundation with those objects in mind.
I cannot think of anybody who will fall through the net. It is said that there may be organisations which would not be able to receive money. I cannot think of any, assuming that the charitable foundation is set up to do exactly what the Bill intends.
Therefore, I cannot say that anybody has persuaded me that I am on a wrong tack here. Perhaps I may take one or two moments to reassure some Members of the Committee, particularly in relation to other charities. I do not believe that a national lottery on this scale will divert people from a small lottery for their local hospital or local church or all the charitable purposes to which we have been used to subscribing over the years. I believe that they will be regarded as being totally different. This lottery has a general purpose while those have particular purposes. We espouse particular purposes in particular small lotteries. I do not believe that those will suffer. I believe that the public will make an immediate and obvious distinction.
The noble Viscount said that people will enter the lottery to win. Indeed they will. If I put in £1 I shall hope to win, like anybody else. However, I would have a reassurance which I do not have when I gamble in any other way; when I lose, at least a proportion of my money will go to a cause that I am very happy should receive it. That is more than one can say at a racecourse.
How much of the money goes to those good causes is another matter which has been raised a great deal this afternoon. It is more or less accepted as axiomatic in the lottery world, which includes almost every nation except ourselves, that about 50 per cent. of the money placed into the lottery should be set aside for prizes, in whatever shape or form they take—perhaps
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big ones at the top and lots of small ones at the bottom. We have discussed that question often enough in this Chamber. Unless 50 per cent. goes into prize money the incentive of the lottery will be lost. That is not my wisdom; it is the wisdom and experience of the accumulated lotteries of the world.
That leaves 50 per cent. In what way will the lottery do better if my amendments are accepted this afternoon? Everybody has pointed out that there will be sizeable administrative expenses, just as there would be with a non-charitable foundation or body corporate. Yes, there will be. It will have exactly the same expenses. However, it will not take a percentage of the profits, which a commercial company would expect to earn on top of the expenses of running the lottery. That is the difference. If 15 per cent.—which is the average around the world for the expenses of running a lottery—is the right amount, I believe that there should not be an additional 15 per cent. to pay back to the shareholders of the company. My ideal would be to see a lottery in which 50 per cent. of its income is spent on prizes, 15 per cent. on expenses and the remaining 35 per cent. goes to good causes.
The noble Viscount pointed out that its being a charity will not stop the Treasury from taxing the body which runs the lottery. I am afraid that I believe him. Nothing will stop the Treasury, in certain moods, from taxing anything. I do not say that making the body running the lottery a charity would avoid taxation. I say no such thing. However, I hope that the Treasury might conceivably tax it with a little more shame and more lightly, or perhaps reconsider its decisions. The amendment would not make the Treasury do so, but it might make the Treasury inclined to think more about the tax aspect.
I turn now to the whole question of parliamentary responsibility and the duties of the director general. The entire body is set up by Parliament. Parliament would have the means of overhauling it or dismantling it. It would not become separate from the wishes of the nation because it was a charitable foundation. To suppose that we would somehow let out of the nation's grasp something intended to benefit the nation is not the case.
Nor is it the case that the director general would suddenly find enormous duties thrust upon him when he already has enough duties set out in the Bill as it stands. It is perfectly possible for an organisation to deal with the three segments of the life of the lottery —setting it up, regulating it and the payment of the proceeds. It is perfectly possible for an organisation to employ people to carry out all of those functions, just as possible as it is for three separate bodies to do it. There would be no more complications and no more staff involved. Indeed, there might even be a streamlining of the organisation if there were only one body. The director general would not be overwhelmed. The functions would have to be performed by somebody. I believe that more functions should be performed by him than by the Secretary of State. That is all. They will have to be performed sooner or later. I do not share the noble Viscount's view of an overwhelming and intolerable burden being placed on one individual.

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I have heard nothing this afternoon that dissuades me from the view that what I have proposed is the best and most advantageous way of running the lottery. It will not spoil it. The noble Viscount suggested that it would make it a totally different lottery. It will not. It will make it the lottery that we all want. It will not need an unravelling of its own organisation. Nor does the proposal aim to unravel the organisation put together in the Bill. I believe that the provision simplifies it. I cannot believe that it is not a sensible way of going about it. I urge noble Lords to believe that the five amendments that I have put forward represent the best chance of making the lottery—
Lord Renton: There may be one point that the noble Lord overlooks. It is this. The director general whom he proposes in place of the Secretary of State will not be answerable in Parliament for the decisions that he takes. The Secretary of State will be answerable; and that is a great safeguard.
Lord Birkett: That is true. The provision for the director general that I propose already exists in the Bill. It is simply an extension of his responsibilities.
It is worth remembering that the Bill states quite clearly the purposes for which the money shall be used and the organisation that must set it up. Within the Bill restraints are placed upon all manners of operation—they are entirely sensible—which the director general must accept, as the Secretary of State must. It states quite clearly the split of proceeds—to whom they shall go in the long run. None of that will be changed. Parliament has the ultimate and overriding responsibility to make sure that the lottery runs well. If it does not, it needs merely ordinary parliamentary procedures to bring it to heel. I cannot believe that a director general is more likely to evade the ire of Parliament than a Secretary of State. In fact, I believe that a Secretary of State is in a better position to dodge than a director general will be.
4.32 p.m.
On Question, Whether the said amendment (No. 1) shall be agreed to?
Their Lordships divided: Contents, 16; Not-Contents, 129.

Division No. 1

CONTENTS

Birkett, L. [Teller.]

Lucas of Chilworth, L.

Bottomley, L.

Mulley, L.

Elis-Thomas, L.

Newall, L.

Foot, L.

Rix, L.

Gibson, L.[Teller.]

Seear, B.

Grantchester, L.

Wallace of Coslany, L.

Jenkins of Putney, L.

Wilson of Rievaulx, L.

Listowel, E.

Young of Dartington, L.

NOT-CONTENTS

Aldington, L.

Benson, L.

Alexander of Tunis, E.

Bessborough, E.

Allen of Abbeydale, L.

Birdwood, L.

Annaly, L.

Blatch, B.

Arran, E.

Blyth, L.

Astor, V.

Boardman, L.

Auckland, L.

Brabazon of Tara, L.

Barber, L.

Brigstocke, B.

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Brougham and Vaux, L.

Marlesford, L.

Butterworth, L.

Masham of Ilton, B.

Cadman, L.

Merrivale, L.

Caithness, E.

Mersey, V.

Caldecote, V.

Milverton, L.

Campbell of Alloway, L.

Mottistone, L.

Carnegy of Lour, B.

Mowbray and Stourton, L.

Carnock, L.

Moyne, L.

Cavendish of Furness, L.

Munster, E.

Chelmsford, V.

Murton of Lindisfarne, L.

Clanwilliam, E.

Napier and Ettrick, L.

Congleton, L.

Nelson, E.

Constantine of Stanmore, L.

Newcastle, Bp.

Craigavon, V.

O'Brien of Lothbury, L.

Cranborne, V.

Onslow, E.

Crathorne, L.

Orkney, E.

Cross, V.

Orr-Ewing, L.

Cumberlege, B.

Oxfuird, V.

Dacre of Glanton, L.

Park of Monmouth, B.

Davidson, V.

Porritt, L.

Denham, L.

Prentice, L.

Denton of Wakefield, B.

Prior, L.

Dormer, L.

Rankeillour, L.

Downshire, M.

Reay, L.

Dudley, E.

Rennell, L.

Eccles, V.

Renton, L.

Eccles of Moulton, B.

Rippon of Hexham, L.

Elibank, L.

Rodger of Earlsferry, L.

Elles, B.

Romney, E.

Elliott of Morpeth, L.

St. Davids, V.

Elton, L.

St. Edmundsbury and Ipswich,

Erne, E.

Bp.

Erroll, E.

St. John of Fawsley, L.

Fanshawe of Richmond, L.

Sandford, L.

Ferrers, E.

Seccombe, B.

Foley, L.

Shaughnessy, L.

Fraser of Carmyllie, L.

Skelmersdale, L.

Goschen, V.

Strathclyde, L.

Hailsham of Saint Marylebone, L.

Strathmore and Kinghorne, E. [Teller.]

Harding of Petherton, L.

Sudeley, L.

Harmsworth, L.

Swansea, L.

Harvington, L.

Swaythling, L.

Hastings, L.

Swinfen, L.

Hayhoe, L.

Swinton, E.

Henley, L.

Terrington, L.

Hesketh, L. [Teller.]

Teviot, L.

HolmPatrick, L.

Thomas of Gwydir, L.

Hood, V.

Trumpington, B.

Hooper, B.

Ullswater, V.

Howe, E.

Vaux of Harrowden, L.

Lauderdale, E.

Wakeham, L.

Lindsey and Abingdon, E.

[Lord Privy Seal.]

Lloyd-George of Dwyfor, E.

Warnock, B.

Long, V.

Waterford, M.

Lucas, L.

Whitelaw, V.

Lyell, L.

Wise, L.

Mackay of Ardbrecknish, L.

Wynford, L.

Mancroft, L.

Resolved in the negative, and amendment disagreed to accordingly.
4.40 p.m.
Earl Ferrers Earl Ferrers moved Amendment No. 2:
Page 26, line 44, at end insert:
("The Council on Tribunals
.—(1) In section 7 of the Tribunals and Inquiries Act 1992 (which restricts Ministers' powers to remove members of tribunals listed in Schedule 1 to that Act) in subsection (2) (tribunals to which that section does not apply) after "33(a)," there shall be inserted "33A,".
(2) In Schedule 1 to that Act (tribunals under the supervision of the Council on Tribunals) after paragraph 33 there shall be inserted—

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"National Lottery33A. The Director General of the National Lottery in respect of his functions under section 10 of and Schedule 3 to the National Lottery etc. Act 1993 (c.00), and any member of the Director General's staff authorised under paragraph 4 of Schedule 2 to that Act to exercise any of those functions." ")
The noble Earl said: I beg to move Amendment No. 2 and speak to Amendments Nos. 29 to 36. These amendments are technical, although they have a practical effect. They will allow oral representations to be made to the director general against the proposed revocation of a licence and will also bring the director general under the supervision of the council on tribunals when revoking licences and give the Secretary of State power to make regulations on the procedure to be followed in connection with the hearing of oral representations. The revised procedure proposed under the amendments will allow a 21-day period for written representations and for expressing the intention to make oral representations. The Secretary of State is currently minded, when making regulations under the new powers, to provide that the director general must give seven days' notice of his intention to hold an oral hearing. That could allow the process to be completed within 28 days.
We have decided that it is right and fair that the director general should be under the supervision of the Council on Tribunals in respect of the revocation of a licence, and that the operator, if he wishes to make representations, should enjoy procedures which are laid down in regulations made by the Secretary of State. The amendments will ensure that the procedures are fair and impartial and so provide a proper balance between the interests of the operator and those of the lottery as a whole. I beg to move.
On Question, amendment agreed to.
Schedule 2, as amended, agreed to.
Clause 4 [Overriding duties of the Secretary of State and Director General]:
Lord Houghton of Sowerby Lord Houghton of Sowerby moved Amendment No. 3:
Page 2, line 10, after ("propriety") insert ("in a manner that does not encourage the purchase of lottery tickets by those under 18 years old or those on low or no incomes.").
The noble Lord said: This amendment and anything else I may say during the Committee stage of the Bill are entirely without prejudice to my overriding objection to the Bill in principle. Although I shall help now and again to improve the Bill, that will not in any way prejudice my objection to it.
The amendment proposes to add a second pious hope to the one already in the Bill. Clause 4(1) states that the Secretary of State and the director of the lottery shall be responsible for seeing,
"that the National Lottery is run, and every lottery that forms part of it … with all due propriety".
Those are almost weasel words. The amendment proposes to define the legislation a little more closely in one respect; namely, that it shall be conducted,
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"in a manner that does not encourage the purchase of lottery tickets by those under 18 years old or those on low or no incomes".
There are many things that we think that young persons under the age of 18 should not do. All of them are difficult to enforce; nevertheless they remain in our law as a declaration of intent. I do not apologise for introducing the age factor as regards the selling of lottery tickets. I do not believe that anyone who buys a lottery ticket feels uplifted by it. I have met no one who felt that he had been spiritually reinforced through buying a lottery ticket. He does not feel better for it, nor has he any sense of having supported a good cause. On the whole, the purchase is made in rather commonplace conditions.
We try to discourage young people under the age of 18 forming bad habits or indulging in behaviour which is not becoming in society. With the Bill, we are on the downward slide. Its influence and effect socially and morally will probably be widespread and unpleasant. I do not like it.
The noble Lord, Lord Birkett, has just left the Chamber; otherwise I should say that he is an expert on what young people under the age of 18 should not do. He is a member of the British Board of Film Classification and a kind of censor of video nasties, which occupy your Lordships' House from time to time. Members of the board know, instinctively almost, what young people under the age of 18 should not be allowed to see. Of course, young people laugh their heads off about what they should not be allowed to see: they could tell the film censors a few things about what they should not be allowed to see.
However, I must not divert from my main theme. I am sure that the Government will not feel that they have to object to the amendment on strong political or other lines; it is just an addition to what they probably wish to happen. In case the Committee wonders what has brought together the noble Viscount, Lord Brentford, and myself—we are not usually in the same Division Lobby, as I explained on Second Reading, I am a subscriber to the policy of the Jubilee Policy Group on the Bill and it happens to have suggested this amendment. I beg to move.
Lord Swinfen: When the noble Lord, Lord Houghton of Sowerby, states at the end of the debate what he intends to do with the amendment, will he explain to the Committee why he considers that under this Bill the minimum age should be 18, whereas under the current law, I understand, it is 16? Why should people be two years older for the lottery?
I strongly recommend Amendment No. 7, which is grouped with this one. It is designed to prevent advertising being aimed at young people.
Lord Holme of Cheltenham: I hope Ministers will take account of the great concern that is felt that young people at a most impressionable age should not be led by their Government into gambling. All the amendments in this group deal, in one way or another, with young people. The amendment of the noble Lord, Lord Houghton, simply states in a wide sense that we should not encourage gambling. The

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amendment of my noble friend Lord Redesdale proposes to make it an offence for people to sell lottery tickets to those under 18.
I wish to speak to Amendment No. 7 which is a rather specific and entirely practical measure. It proposes a code of advertising within the parameters of the lottery which stops advertising and promotion being aimed specifically at young people. We have a precedent for that. As the Committee may know, alcohol advertising may not feature people under 25 years old having a good time, enjoying themselves getting drunk or whatever people do with alcohol. It may not even feature young-looking people. The reason is that it is not thought right to encourage young people to take up the habit of drinking. For a long time there have been advertising restrictions of one sort or another on tobacco for the same reason.
I hope that in responding to this set of amendments the Government will give some encouragement to the view that young people at an impressionable age should not specifically be encouraged to participate in gambling because it is trendy or exciting. Those who can remember—my noble friend will remember much better than I do—will know that young people like to experiment. They like to do new and exciting things. I do not think that it is in the interests of our society to encourage young people to think that what is described as "having a flutter" is exciting. I believe, specifically, that advertising which has that effect should not be allowed.
Lord Redesdale: The aim of Amendment No. 48, to which I wish to speak, is to stop people under 18 buying lottery tickets. The purpose of the whole group of amendments is to restrict in one form or another the lottery being aimed at people under 18. It is an interesting point that the youngest person and the oldest person in this Chamber are both speaking on the same side to this group of amendments.
When the age limit on the lottery was debated in another place much was made about the contradictions in age restrictions which now exist. At 16 one is allowed to get married; it is the age of consent; and one is also allowed to smoke—all fairly dangerous pursuits. At the age of 18 one is allowed to take part in one of the biggest lotteries; one is allowed to vote; one is allowed to drink; and one is allowed to gamble. I agree that at the moment one is allowed to take part in a lottery at the age of 16, but I feel that the national lottery is to be a new form of "beastie" altogether. It will be marketed in a completely different manner to the lotteries that we have now. It will be advertised in a completely different way, and to such a different audience, that it can be seen as being slightly different.
The basis of a lottery is, as the Minister was at pains to stress, a gamble. When the lottery Bill goes through I, for one, will put my pound on to win as much money as possible. So will everybody else. Whether or not the money goes to good causes will not come into most people's perspective. In regard to the lottery as a form of gambling, is it right that we should lower the age limit? The age of 18 or 16 is now given as a stop-off point. Most people take up smoking at below the age of 16—I have to admit that I was one of them—and buy cigarettes below that age. If we set the age limit at
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16, young people under that age will be able to buy lottery tickets in certain situations. If we allow people to gamble on the lotteries at 16, are we to lower the age at which one can place a bet at a bookmakers?
Viscount Astor: I hate to come between the happy, spiritually reinforced partnership of the noble Lord, Lord Houghton of Sowerby, and my noble friend Lord Brentford, but I am afraid that I must do so.
There is a clear power in the Bill for the Secretary of State to regulate as to the age limits for selling tickets and participating in the national lottery. Clause 12(2) (a) gives the Secretary of State the power to regulate as to the age of those who might be selling or buying tickets for the national lottery. The Secretary of State has indicated that he is minded to set this age at 16.
The reason for that is entirely practical. At the moment the age limit for small lotteries is set at 16, and as there is no intention of preventing the sale of tickets for small lotteries from the premises where national lottery tickets are sold, then it is logical to set the limits at the same age. Otherwise, think what difficulties could occur when a retailer, having to exercise two different age limits for different products, is faced with that confusion. The potential retailer might, under such circumstances, decide it was easier only to sell one product, and that might disadvantage small lotteries. The Bill was also amended in another place to set the age limits for participating in the football pools at 16 so that the policy for the retailer is coherent.
If we were to set the age limit at 18, then we should in logic be led to amend the regulations regarding small lotteries so that the limit for these lotteries would be 18 as well. Therefore, those over the age of 16 but under the age of 18 would be unable to buy raffle tickets at charitable events. That would not be a popular measure; not least among those who run existing lotteries for charitable purposes. My noble friend Lord Swinfen made that point. We should not deny young people the opportunity to participate in the lottery. Neither should we deny them the opportunity of supporting charities through the purchase of raffle tickets.
I have to say that there is no evidence that participating in a national lottery at the age of 16 will cause particular harm to an individual; just as there is no evidence that participation in the national lottery will harm any member of the population. Nor is there any evidence that state lotteries anywhere in the world target young people or gain sales from young people above other segments of the population.
The noble Lord, Lord Redesdale, gave some examples of the difference in ages. I have to say to the noble Lord that one can do many things at 16. I should say (in the hope that her Ladyship does not read Hansard) that one has to face the lottery of marriage at 16 if one goes to Scotland. So there are a great many things that one can do at 16.
The noble Lord, Lord Holme of Cheltenham, asked about advertising. It is an extremely important point. Advertising for the national lottery will be governed by both the operator's licence under Clause 5 and by the Independent Television Commission and the

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Radio Authority codes. I can give the noble Lord the assurance that if necessary, by direction from the Secretary of State, the director general will be required to set licence conditions to prevent advertising being aimed specifically at young people.
Having explained to the Committee the various differences in age, and the effect of the amendment from the noble Lord, Lord Houghton of Sowerby, I think it is better to give ourselves flexibility to regulate in this area. I believe that the Secretary of State has got it about right when he is minded to set the age limit at 16. That is why I urge the noble Lord to withdraw the amendment.
Lord Donoughue: I thank the Minister for explaining some of the complexities in this area. I should like to speak particularly in support of the noble Lord, Lord Holme, on Amendment No. 7 and the noble Lord, Lord Redesdale, on Amendment No. 48.
In his answer the Minister did not confront the central, moral, question that was raised by my noble friend Lord Houghton. It is not just a question of smoothing out the anomalies in this area; nor have they been smoothed out. There is a central issue; namely, that the Government are extending gambling in a quite massive way. They are extending gambling to youth, even in areas where previously gambling was allowed only at a higher age. They are extending it to 16 year-olds. We on this side are unhappy about that.
The new national lottery will lead to high-pressure salesmanship of a kind that many are not yet fully aware of. It will lead to television advertising on a massive scale. That is why in Amendment No. 7 we focus on advertising. We know that the young are particularly vulnerable to it. The Minister said there was no evidence of damage to youth. However, he will be aware that research in the United States, which has longer experience than we have, shows that young people are particularly targeted and there is evidence of young people becoming addicted. We should seriously ask why we need to introduce to Britain that risk and that exposure.
It may be the view that only a few 16 year-olds will participate in the lottery and it is not thought to be a problem. In that case why bother to change the law? If it generates large incomes for 16 and 17 year-olds and almost certainly will lead to social and personal problems, then the lottery is wrong. I understand that we shall keep the legal age for betting in betting shops at 18. That seems to me to be inconsistent with setting an age of 16 for the lottery and then trying to introduce some consistency by setting an age of 16 for the pools. I believe that the right age is 18. Marriage at 16 was mentioned. In England, to marry at that age requires parental permission. I do not know whether the Minister intends that 16 to 18 year-olds will have to have parental permission to use the lottery. We are uncomfortable with the situation. We support the amendment and wish the age to be set at 18.
5 p.m.
Viscount Astor: Perhaps the Committee will find it useful if I deal with some of the points made by the noble Lord, Lord Donoughue. The most important point is that the amendment seeks to put in the Bill —that is, in primary legislation—the age of 18. The Government's view is that it should not be done in that way.
Clause 12 gives the Secretary of State the power by regulations to make a provision in relation to the promotion of lotteries. Those regulations include:
"the minimum age of persons to whom or by whom tickets or chances may be sold".
There is power in the Bill for the Secretary of State to alter the age. I said that he was minded to consider the age of 16. I am sure that if the Secretary of State saw that there was considerable evidence to support another age, he would look closely at the matter. Obviously it is a decision that he will make. But there is that flexibility in the Bill.
The noble Lord, Lord Donoughue, asked about betting. Betting is very different from a national lottery. People go into betting shops because they are interested in greyhounds or in racing. Betting is to a degree a skill. It is very different from buying a national lottery ticket, and that is an important factor.
Lord Murray of Epping Forest: I find the Minister's explanation rather disingenuous. The purpose of the Bill is to extend the area of gambling; the interest of gambling; the audience for gambling; and participation in gambling. The obvious target is the young.
Gambling is an addiction. There is no question at all about that. The purpose of those who promote the national lottery will be to create or enhance an addiction among young people. The argument for putting an age limit on the face of the Bill is self-evident: to hold back as long as possible the formation of a tendency toward the addictive nature of participation in the national lottery.
Even if only a minority of youngsters are to be hooked on that addiction, as they are on others, there is a very strong case against it. Flexibility—that is the word used by the Minister—is at best a misleading concept. One does not want flexibility. What is needed is a basis and floor below which there is much less likelihood of young people becoming addicted to that activity. I should have thought therefore that the case for putting the age on the face of the Bill is overwhelming.
Lord Houghton of Sowerby: I am very grateful for the support of my noble friend. I remind the Committee of the terms of the amendment. There is no bar or ban. We are dealing with the way in which the lottery should be conducted and the responsibilities of the Secretary of State and the director general. The terms of the amendment are worth stating. It seeks to insert the words:
"in a manner that does not encourage the purchase of lottery tickets by those under 18 years old or those on low or no incomes".
Those phrases have to be taken together. This is a matter of targeting the publicity. It is intended as a discouragement of sales talk, which can easily be

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directed toward young people. We are all conscious of the fact that many dangers surround young people today. They are blamed for many things and many excuses are offered for their behaviour at different times—unemployment, the permissive society, lack of parental discipline or the tumult of school. The Government will be put in a difficulty if they oppose an amendment which asks the Secretary of State to ensure that the lottery is conducted in a manner which does not encourage young people of 18 to go in for the purchase of lottery tickets.
The danger is the lure of the prizes. Nobody talks about the prizes and one would think that there were not any. But they are the most prominent and alluring part of the whole outfit. If there are no prizes there is no lottery. The sales talk will not be about how much good one is doing for the poor or the sick by the purchase of a lottery ticket. The inducement will be on the lines of, "This is a way of coming into big money" —and the big money has to be pretty big.
I read the evidence of some people who had come from elsewhere to give advice on the lottery. I was rather surprised to find that they said that the prizes had to be big. The fact is that, although a prize of £1 million may seem a long way from those who buy a lottery ticket, in time one begins to feel that it is possible to win it. In my Second Reading speech I referred to the complete ignorance of many people about the length of the odds. People are sometimes too optimistic about what such a purchase might bring.
Nobody has spoken about investing in a lottery ticket as one does with the football pools. Football pools are supposed to be an investment. I am sure that no idiot will call the lottery ticket an investment. He may emphasise the good that will be done. I have already read what I imagine to be a rather facetious article in which it is argued that the losers in the lottery will be the winners. The losers are the people who will do good. If one loses the money, one can comfort oneself with saying, "Thank God I did it. Some poor charity will benefit from this. Some poor lurching young person will be rescued from the dangers of unemployment", and all that sort of rubbish.
As I speak I am rather reinforced in my intention to stick to my amendment. It would be unwise of the Government to be seen to be putting any obstacle in the way of discouraging young people from becoming too addicted to the lottery ticket. If one can scrounge a little money from somewhere to buy a lottery ticket and the inducement is there, it may be found that it has an effect on petty crime. One never knows. It is not the kind of thing that we want.
I ask your Lordships to bear in mind that up until now Parliament and the people have set their minds against a national lottery. Many attempts have been made to change public opinion in favour of a national lottery but they have not succeeded. Parliament has not gone that way. Now we want to do it in a big way and we have to watch our step very carefully. We may be setting in train social tendencies and evils of which as yet we know nothing. The reason why we cloak our lottery enterprise with good causes, such as charities and heritage—as if we have not already got a heritage department—is that the benefits of the enterprise will
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arise from persuading people to buy tickets that they would not otherwise buy. I have persuaded myself, and I hope that I have persuaded noble Lords opposite, that this is a benign amendment, not an anodyne amendment, so that the Secretary of State (whoever he may be) or the director general (whoever he may be) can ensure that young people under the age of 18 are not targeted in the sales talk—of which there will be an awful lot—to buy lottery tickets. I hope that your Lordships will approve the amendment.
On Question, amendment negatived.
Clause 4 [Overriding duties of the Secretary of State and Director General]:
Lord McIntosh of Haringey Lord McIntosh of Haringey moved Amendment No. 4:
Page 2, line 10, after ("propriety") insert:
("( ) that the National Lottery is not promoted or run in any way likely to lead to a diversion of donation income away from charities and").
The noble Lord said: In rising to move Amendment No. 4 I should like to speak also to Amendments Nos. 8, 37, 43 and 47 in the name of the noble Lord, Lord Allen of Abbeydale, that have been grouped with this amendment. With this group of amendments we come to what we regard as the most serious problem with the Bill. As was made clear at Second Reading, we are not opposed to the Bill in principle. It has been said that this is a Bill that has both support and opposition, regardless of party affiliations. We respect the views of those who for religious or other reasons—for example, my noble friend Lord Houghton of Sowerby—oppose the Bill in principle. We do not collectively share that view. However, we are very much concerned by the potential effect of the Bill on charities in this country.
The noble Lord, Lord Birkett (who I am sorry to see is no longer in his place), made reference to research done in Ireland on the effect of a national lottery on charities in that country. I am sorry to say that the impression he gave, that a significant number were increasing their income despite the presence of a national lottery or sweepstake, was based on a sample of leading charities that was not entirely comprehensive. Such evidence on the subject as is available is difficult to assess. I know that because I have spent most of my life doing research, a lot of which has been concerned with products that do not yet exist. I believe that the only one that I can be certain I got right was a rather negative assessment on the colour copier market before that product was introduced. In general, it is extremely difficult to do convincing and accurate research into hypothetical subjects and things that have not yet happened. None of us knows what the effect of the national lottery will be on charities.
We gather what evidence we can. The National Council for Voluntary Organisations has commissioned national opinion polls to carry out a survey of individuals about their likely reaction to the establishment of a national lottery. I have looked at the research and judged it to be satisfactory from a professional point of view. It comes to the conclusion that approximately 4 to 7 per cent. of the income of charities will be lost if a national lottery is successfully established. In 1978 the Rothschild Royal

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Commission carried out research that came very much to the same conclusion. It was estimated that 4 per cent. would be lost, although I do not know the professional quality of the work. Two projects have been carried out in Ireland: the one referred to by the noble Lord, Lord Birkett (who I see is now back in his place) and the other a more recent analysis by the National Council for Voluntary Organisations of the experience of half of the 100 leading charities in Ireland.
5.15 p.m.
Baroness Seear: I am sorry to interrupt the noble Lord but I should like to put a question for clarification. He said that the loss to charities was estimated at between 4 and 7 per cent. Is that the loss after account has been taken of the moneys that charities will get back from the lottery, or does it exclude that? If it is supposed to include what they get back from the national lottery, how will we know? We do not yet know what percentage they will get from the national lottery.
Lord McIntosh of Haringey: That is why I say it is a difficult matter to assess. The intention is to calculate the net loss after receipts from the national lottery. The estimates for the national lottery are those used by the Government in their planning. They may not be perfect but they are the best we can do.
As I said before I was so politely interrupted, the best estimate arising from the most recent research in Ireland is that there has been a loss of about 4 per cent. Four per cent. may not seem very much, but the income of charities in this country is £3.1 billion. A number of estimates have been given—one of which I believe was given by the noble Lord, Lord Mancroft, at Second Reading—that suggest that charities may find themselves losing very substantial amounts. I believe that the figure that the noble Lord gave was over £200 million. Even if the income of charities from their own lotteries, appeals and other activities is kept up where a national lottery exists, the experience is that considerable extra cost tends to be incurred in fund-raising.
This may work in a number of ways. For example, if there were to be kiosks selling lottery tickets—as there are in Spain and used to be in France—the fear is that they may affect the receipts from street collections made on behalf of charities. If as part of the national lottery there were to be instant-win scratch cards—which matter is the subject of a number of amendments proposed by my noble friend Lord Merlyn-Rees that we shall be debating later—the fear is that they will affect a number of small lotteries that use such a system. If lotteries were to be advertised as charity lotteries—one can see the temptation even for a corporate body to advertise the benefits to charities of a lottery—the fear is that that will cause a further diversion of expenditure from charities to lotteries which will produce less for them.
Amendment No. 4 seeks to safeguard the situation of charities by placing on the organisers of the lottery and the Secretary of State the requirement to ensure,
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"that the National Lottery is not promoted or run in any way likely to lead to a diversion of donation income away from charities".
Amendment No. 8 would require the Secretary of State to obtain the best evidence that he can on the likely diversion and on the best ways of avoiding such a diversion. The amendment follows the recommendations of the National Heritage Select Committee in another place on 14th January of this year. Amendment No. 37, which is in Clause 1 1 of the Bill, requires the Secretary of State to give directions to the director general that, in granting the licence to an operator, he will ensure that the interests of charities are protected. Amendment No. 43, in Clause 14, requires the Secretary of State to report on the directions he has given to the director general in that respect. Amendment No. 47, which is in the same group, is in the name of the noble Lord, Lord Allen of Abbeydale, and he will no doubt speak to that amendment.
These are extremely serious problems. We do not have adequate evidence and I certainly do not think that the Government have adequate evidence to reassure us on the matter. Such evidence as we have indicates that the effect of the national lottery on the income of charities could well be, and is likely to be, disadvantageous rather than advantageous. We believe that every possible step should be taken to protect the interests of charities which are responsible for so much voluntary work and work in the voluntary sector in this country. I beg to move.
Lord Holme of Cheltenham: The noble Lord, Lord McIntosh of Haringey, who so ably introduced this group of amendments, twice inadvertently attributed Amendment No. 47 to the noble Lord, Lord Allen of Abbeydale. In fact it stands in my name, and so if I speak rather than the noble Lord, he will understand why.
I speak for the amendment in the context of generally supporting this whole set of amendments. They all deal with the same problem—the problem of how this new lottery, in its effect, shall inflict minimal damage on the money raised by charities. Amendment No. 47 tries to adopt what I hope will commend itself to the Government, which is a market-led solution to this problem. Other amendments in the group deal by contrast with what the Government should do or what OFLOT should do.
The amendment states:
"The licensee shall display … on the tickets sold for the National Lottery a statement clearly indicating the proportion of the stake which is to be applied for the purposes of the Distribution Fund".
Let us suppose, as I and other Members of the Committee hope —we have an amendment on this point later—that 35 per cent. of the price of the ticket ends up going to these various good causes. That should be clearly stated on the ticket. That would then allow people, with this mixture of motives that I described earlier—both hoping to win, as people do when they gamble, but also hoping that as they indulge themselves in this minor vice they can also be doing some good—to know that the good they are doing is limited to 35 per cent. of their stake and that the balance will go, as we know, to the Exchequer, to

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the operators of the lottery and in prize money. It is a way of trying to supply information that is relevant to the decision that the gambler is making at the point of purchase. I hope, since it is in accordance with the fondness for the market which the Government so often exhibit, that they will find themselves able to take it on board.
Lord Allen of Abbeydale: Although, as the noble Lord, Lord Holme of Cheltenham, has said, my name is not attached to Amendment No. 47 I agree with it and support what he has just said. My name is down to Amendment No. 8. I am just a shade uneasy about it being grouped with the others. It seems to me to be on a slightly different point and could well stand on its own feet whatever happens to Amendment No. 4. But there it is.
I very much support the line which the noble Lord, Lord McIntosh, has so ably put in his opening speech. I do not want to recapitulate what I said in some detail on Second Reading but it seems to me that charities are at risk in two main respects; first, a diversion of contributions, which even at 4 per cent., which seems to be the minimum likely, would mean a very noticeable reduction in charity income as a whole; and, secondly, the possibility of some loss of income from central government—I know that we shall come to additionality later on—and perhaps, more especially, from local government, which supports voluntary effort in a big way at the moment but which is itself subject to great financial pressures.
The only other point I should like to add to what the noble Lord, Lord McIntosh, said about the Irish research is that, although there seems some reason for believing that the big charities have managed to keep afloat and do reasonably well, it has been at the cost of additional efforts in advertising and so forth which is an additional cost. I am not at all sure that we have the net figure of what is involved. If the same pattern were repeated over here, I very much fear that it is the medium and small charities that would be at risk.
Turning specifically to Amendment No. 8, I recall that the noble Viscount, Lord Astor, said at Second Reading:
"Of course"—
I always view with grave suspicion any sentence which has "of course" in it—
"we shall monitor the effect on charities… However, we are considering how best to assess, in general terms, the effect of the lottery and changes in charitable income once the lottery is established".—[Official Report,27/5/93; col. 483.]
It would give a great deal of comfort to the voluntary sector if those admirable intentions were set out on the face of the Bill. No one is claiming that it would be a very easy process but I think that there ought to be a clear statutory obligation on the Government to take responsibility for conducting such research and that it should be the Government and not those who organise the lottery—
Lord Houghton of Sowerby: I would not be surprised to see at some stage in the course of this Bill a proposal to set up a compensation fund by the lottery authorities to reimburse charities which can bring forward evidence of the adverse effect of the lottery upon their income. This is the real bugbear of
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the Bill to the charitable world. It worries charities greatly. They do not know the answer. They have many fears.
Viscount Astor: I do not know whether the noble Lord, Lord Houghton, is aware but the noble Lord, Lord Allen of Abbeydale, had not finished speaking. I do not know whether the noble Lord intends to ask the noble Lord a question. But if he is intending to speak, perhaps he will allow the noble Lord, Lord Allen, to finish his speech.
Lord Allen of Abbeydale: I assumed, to begin with, that it was an intervention in order to ask a question, but it turned out not to be quite that. But it brings out a point that I myself would like to make.
It is to the advantage of the Government to be able to demonstrate that all the fine words that they have been able to say about helping charity prove to be true. It would be helpful to the voluntary sector to know if the words turn out not to be true. If they turned out not to be true there would be a case for some kind of compensation—one need not discuss at this stage how it should be done. But it is a rather gloomy prospect that, after everything we have heard about the lottery, there is quite a distinct chance that charities as a whole will be worse off and certainly not very much better off. As the Government have already conceded in principle, it would be desirable that steps should be taken to ensure that the facts are known, in so far as they are capable of being ascertained, and will also be available when the time comes to redistribute the allocation made in the Bill to the Millennium Fund when that unhappy creation disappears.
5.30 p.m.
Lord Houghton of Sowerby: I owe an apology to the noble Lord. Unfortunately, the Chamber is so arranged that one cannot see through the back of one's head. I agree with everything that he said. Both he and I have been members of the all-party charities group of the two Houses of Parliament. The group is meeting at the present time. The charities have been telling us of their worries. They are trying to do some research to see what the effects of this legislation might be.
One cannot yet see what will be the consequences of their fears. I hope that what will not emerge from the uncertainty experienced by the charities is that the appeals for charitable support go beyond what is reasonable and fair in presenting the case to the public. There is already the risk of advertising for the charities getting into the hands of the professional advertising agencies. That can come very close to going beyond what is a fair presentation of the charitable purpose which they have.
I am very worried about that. I must not anticipate my amendment which seeks to take charities out of the Bill altogether. I am sure that that is a sensible solution. But that would not stop the fear that even if they were not in the Bill, their income might be affected by the heavier claims on people's attention through the publicity on the lottery. I shall not argue that now.

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The chief problem and the source of much discontent and worry is going to arise on the issue in this amendment. I do not believe that there are any assurances that can be given that will allay the fears. Experience may confirm them or it may not. This is a matter which must be heavily borne in mind. We should have some assurance from the Government that they are conscious of the difficulty. The charities never asked for this Bill. Their attitude to it is very reserved indeed. They appear to adopt the view that if the Government are being headstrong about this, the country has gone sufficiently pagan to agree with them and that the charities will have to live with it.
It is incumbent on the Government, when introducing a scheme for a national lottery which is going to make a strong appeal for public support involving surplus incomes and disposable money, that they should be conscious of the harm which they may be doing to other worthy causes which were in the field long before the Government. The Government's claims to charitable expenditure are minimal. They have not done any charitable work. They will not have the funds to do very much either. The lure of rewards with the purchase of a lottery ticket may overcome some people's scruples. I hope that we can get some further understanding from the Government about this issue.
Lord Swinfen: I entirely agree with the noble Lord, Lord Houghton. The charities did not really want this Bill; they are rather frightened of it. I do not believe that it was brought in until the Treasury thought it would be quite a good idea to have another provider of revenue. It is interesting to note that once administrative expenses are paid and prizes given, the Treasury benefits to a greater extent than anyone else.
Generally, I am a supporter of all these amendments. The noble Lord, Lord McIntosh of Haringey, has said what I intended to say very much better than I could. I support every word that he said. It is not only important that we accept Amendment No. 4, but that we also accept Amendment No. 8 so that we can see how Amendment No. 4 works in the long run. In addition, Amendment No. 47 would ensure that the proportion to be distributed to the various recipients is on the lottery ticket. That would help charities in that people would not think that the money they spent on a lottery ticket was all going to charity. There is a very great fear in the charity world that money will be diverted from them.
The best evidence we have of that is, as has already been mentioned, the surveys which have been done since 1987 in the Republic of Ireland. There are national charities in other European countries, but in those countries there is not the same system of charities and charitable giving as exists in the British Isles. When dealing with this amendment the Government should bear in mind that with Care in the Community they are relying to a large extent on charities to provide a considerable amount of that care. Therefore, they should ensure that there is no reduction in the income of those charities.
Lord Murray of Epping Forest: Perhaps I may take up the point which the noble Lord, Lord Swinfen, has made so well. I should have thought that the Government would recognise that it is in their interest to accept the principle and to allow these amendments because of the importance which they have expressly attached to the role of charities in society as providers, initiators and stimulators of activity.
The noble Lord, Lord Allen, has spoken about the two ways in which the charities will suffer. There will be the direct fall in giving and also the fall in government provision. The fall in giving will most certainly come about, first, through the effects on small lotteries run by many charities. People who have the odd flutter on a small lottery will go for the big one. They are going to go for the chance of £100,000 or £1 million. There will most certainly be a fall in income from that source.
The second and more important consequence, as many speakers have said, will be the fall in direct giving as a result of competition from the national lottery. I am sure that many noble Lords have had the same experience as I have had. One has gone from house to house or stood with a box on the corner. But one knows of the effect which "Telethon" has had on giving. People say: "I have sent to the BBC" or something of that kind. People will see that as an alternative. They will not see it as a stimulator for giving to charities as such.
A direct consequence of this new competition—it is competition for the charities—will be that the charities themselves will have to put more money into fund-raising. They will have to spend more money on advocacy. They will have to raise the ratio of expenditure to revenue and that in turn will give yet more people the opportunity and incentive to say: "Look at the amount the charities spend on administration rather than providing projects themselves". The multiplier effect of what is proposed is something which has not been adequately taken into account even in the study made by the NCVO. I repeat: what the national lottery will not do is to stimulate giving to charities as such. It is not unreasonable that the Government should look to charities to enlarge their activities. If the Government are looking to charities to do those things, not to accept the principles underlying these amendments is to expect far too much of charities. It is in the Government's interest that charities should not be starved of funds, as they could well be as a consequence of this new initiative.
Lord Thurlow: I support the broad thrust of the amendments, although it may well be that the wording could be improved. In particular, I should like to support Amendment No. 8. It does not seem to me to be entirely fair to future generations of Ministers (and even less so to officials) to rest the case for preventing the diversion of funds from charities in the long run on assurances and broad principles. Therefore, I strongly support the proposal that something should be placed on the face of the Bill, whatever its exact wording may be.
Lord Airedale: I am glad to hear the noble Lord, Lord Thurlow, say that the wording could be clearer. Amendments Nos. 4 and 5 adopt the wording of paragraph (a) which they follow and show up a curiosity in its drafting. Paragraph (a) refers to two things: first, to the "National Lottery" itself and, secondly, to,
"every lottery that forms part of it".
The paragraph also uses the two words, "run" and "promoted". I take it that "run" means "operated". Incidentally, I should have thought that "operated" is a better parliamentary word than "run". I take it that "promoted" means "organised in advance of the actual operation".
The curiosity is this: "run" applies only to the national lottery and not to,
"every lottery that forms part of it",
and "promoted" applies only to,
"every lottery that forms part of it",
and not to the national lottery.
I do not understand the drafting, but I do understand the perils of trying to draft legislation on one's feet. Perhaps I may put forward to the Minister for his consideration the view that paragraph (a) would be very much clearer and would avoid legal argument if it stated, "that the National Lottery, and every lottery that forms part of it is promoted, and operated, with all due propriety". I merely put forward that suggestion.
Lord Lucas: My noble friend will be aware that I have some sympathy with the aims behind these amendments, but looking at the wording of the amendments, they seem to me to be suffering from an attack of the absolutes. To take Amendment No. 4, for instance, reading it as it runs, it would seem to make running a national lottery totally impossible because I cannot imagine any circumstances under which that condition would not be satisfied.
As far as Amendment No. 8 is concerned, as the noble Lord, Lord McIntosh, pointed out, there is no means to do this at the moment. What is the poor Secretary of State to do if he receives instructions in legislation to do something which proves to be totally impossible? The same applies to Amendment No. 37 where the director general is asked to take into account "the likely effect" when it is entirely impossible to determine what that "likely effect" is. I do not oppose the principle, but I believe that before we pass any such amendment we should be more careful about the wording.
So far as Amendment No. 47 is concerned, I very much hope that the Government will resist it. The noble Lord, Lord Houghton, put it very well when he said that we should not clothe this wolf in sheep's clothing. Although I do not agree with his description of the lottery, nonetheless I feel that we should not pull the wool over the punters' eyes.
5.45 p.m.
Lord Mancroft: I believe that your Lordships know that I am very worried—and have been since Second Reading—about the effect of the national lottery on charitable giving and on the incomes of charities. There is no doubt that I support the motivation
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behind the amendments tabled by the noble Lord, Lord McIntosh. However, I, too, am somewhat concerned about the vehicle which the noble Lord has chosen—I would not dare to say that the wording worried me—when he refers to the promotion, running or operation of a lottery being,
"likely to lead to a diversion of donation".
Surely that will be a matter of opinion and different people will have different opinions. The promoter will clearly not think that it is diverting money, whereas the charities will. I cannot see how that will ever be resolved. Presumably, at the end of the day, it will be resolved in a court, but it would be a nightmare to try to do it.
The same applies to Amendment No. 8. The problem with the amendment is that the provisions would be operating in arrears, as it were, in that the problem would already have occurred by the time that the provisions of Amendment No. 8 were brought into force. The damage would have been done and the charities would have lost their income. Therefore, although the motivation and thinking behind the amendment are again admirable, I cannot see that either of those amendments is the correct tool to bring about that which the noble Lord wishes to bring about.
Turning to Amendment No. 47, again I am not entirely sure how successful or useful it will be to have the proportion of the distribution written on the ticket. It may be helpful, but I do not think that it will be particularly helpful, especially in view of the fact that nobody will know the proportion until after they have purchased the ticket because they will not have the chance to read the ticket until then, by which time knowledge of the proportion will have lost its effect. Therefore, although I very much support the motivation and thinking behind these amendments, I do not see that they will achieve the admirable aims which they set out to achieve.
Lord Birkett: I have two tiny worries. First, I thought—I stand ready to be corrected—that the Bill had taken on board the whole question of compensating charities for their possible loss of income. Many years ago I recommended to your Lordships that we should have a lottery. There was no lottery Bill then and the noble Earl, Lord Ferrers, said from the Government Benches that the Government had no intention of introducing one. I remember that my proposals at that time contained the thought that some 10 per cent. of the proceeds of any lottery should be put aside for the very purpose of compensating charities which might lose by the introduction of the lottery. Now that we have a Bill, the proportion is 20 per cent. or one-fifth of all the proceeds. Those statistics may merely prove me to have been a skinflint in the old days, but I should have thought that that purpose was the intention of the 20 per cent. that is being provided under the Bill.
I turn to my other little worry. I must apologise first to the noble Lord, Lord McIntosh, for not being in my place when he opened his remarks—even in this House one is allowed time to lick one's wounds. It occurs to me that in his phrase,

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"run in any way likely to lead to a diversion of donation income",
the word "likely" must be a speculation. I do not see how either the Secretary of State or the director general will be able to comply with it. Had the wording been "intended to" or "to encourage a diversion", it would have referred to a deliberate act of rivalry on the part of the lottery which should be discouraged. I do not see that the director general will be able to comply with provisions which are worded "likely to".
Lord Renton: I am of rather the same opinion as that which the noble Lord, Lord Birkett, has just expressed. I am sure that all of us on both sides of the Committee want to help charities in one way or another. The first three amendments in this group seem to be a question of swings and roundabouts and of an unascertainable effect on the swings and roundabouts.
The Bill will help charities. There is no doubt about that. It is intended to, and if we turn to Clause 20, we see that subsection (3) (d) states:
"20 per cent. shall be allocated for charitable expenditure".
Lord Mancroft: If my noble friend will give way for a moment, he said that the Bill will help charities. I think that the reason behind these amendments is that many noble Lords, including myself, do not think that the Bill will help charities.
Lord Renton: All that I can say is that the Bill is intended to do so, but it is impossible to say how much it will. Only a small proportion of the £13.1 million which the noble Lord, Lord McIntosh, said charities receive by way of donations and income of one kind and another comes from their lotteries, which are mostly fairly small. If the noble Lord or any other Member of the Committee can say what proportion of that £13.1 million comes from lotteries, that might throw some relevant information into the debate. I should have thought that it was difficult to say that.
To the extent that charities might suffer, I believe that the effect on their small lotteries would be marginal. I do not believe that they are likely to be affected in any other way. We may be wrong because, as the noble Lord, Lord McIntosh, said, we are speculating.
The national lottery was a manifesto commitment. The Government had to introduce the Bill, and they were right to do so. We have to see how it works out. There are already safeguards within the Bill. I should have hoped that we could somehow unite the two points of view that have been expressed on this group of amendments by conceding that there will be changes, and that under the Bill there will also be a benefit to charities. Let us perhaps leave it like that.
Amendments Nos. 43 and 47 relate to separate matters. They deal with matters wider than the charitable effects of the lottery. What it is intended to achieve by Amendment No. 47 could be achieved by a simple process. We all know that under the modern law relating to lotteries, and the practice which has grown up which elaborates the matter, a great deal of information is properly given on the tickets that are
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sold for charities. I would have hoped that the effects of Clause 20(3), paraphrased and summarised, could be stated on each ticket. That would serve the purpose that is intended to be served in a broader sense by Amendment No. 47.
Lord Swinfen: Before the noble Lord sits down, I hope that he will agree with me that it is not the income solely of charities' small lotteries about which the charitable world is worried, but the income in the form of personal donations, whether through small lotteries, street collections, house-to-house collections or plain donations in response to appeals, because it is thought that the general public will think that by buying a lottery ticket they are giving the whole of that money to charities. It is the view of charities generally that there is likely to be a major misconception.
Lord Renton: The trouble is that no one can quantify these things. It is speculation. My answer to my noble friend, for what it is worth, is that I do not believe that the lottery will affect gifting which at the moment amounts to £250 a year or more. It is now an important part of charities' income. I do not believe that the lottery will affect the amount that people leave to charities in their wills; I do not believe that it will affect money-raising efforts such as, for example, the small opera companies which perform in various parts of the country and which give a portion of their proceeds—generally a stated proportion—to charity. I do not believe that the lottery will affect that. We are left with only a small proportion of the total income that charities receive. It is impossible to quantify the amount, but we should bear in mind that it is a probability.
Lord Moyne: The purpose of buying a lottery ticket is not to make a donation but to bet. Many Members of the Committee have been speaking under a misapprehension.
Lord Ennals: I support the amendments. The words can perhaps be improved. The Minister might say that he accepts the principle and will make some change to the wording. I am not nearly as optimistic as the noble Lord, Lord Renton, that the lottery will not affect gifting. Many charities share that anxiety. Those anxieties should be made clear on the face of the Bill. It will help if the amendments are accepted. I am worried because I believe that the lottery will not affect the largest charities but it will affect the middle ranking charities. It may affect gifting. The assumption that there will be more gain than loss is one that I do not accept.
Lord Rix: Earlier this afternoon the noble Viscount, Lord Astor, said that it would be cupidity which would cause people to bet on the lottery and that the charitable aspect of it would not necessarily attract additional money. As has just been said, betting may be the better term to use. If we were to adopt some form of Amendment No. 47, it should be in the nature of a health warning. It should be stated flatly that if one bets on the lottery, only 25 per cent. of the money will go to good causes, some of which

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one may not wish to support, and that one should remember that the next time one supports a good cause which is close to one's heart.
Lord Howell: The conception that some Members of the Committee have about the intelligence of the British public is something to be regretted. I believe that when the British public goes in for a national lottery it knows that the proceeds will be divided among sport, the arts and other causes, including charity. I do not believe that it is not capable of understanding what it is doing with its money. We should give the public credit for that understanding.
I happen to be involved in a number of charities, as I believe I have told this place before. I am involved in trying to raise £1 million in Birmingham for charities relating to cancer. When people give money to a charity they do so for the purpose of that charity specifically. They will not believe that they should not give money to that charity if they enter a national lottery. I have expressed my support and sympathy for all types of charity, but it seems to me that the charities are doing rather well out of the Bill. When the concept of a national lottery was first introduced it was to support sport and the arts, and other things were added on. We now have 20 per cent. of the proceeds of the lottery guaranteed to be used for charitable purposes, ostensibly, as the noble Lords, Lord Renton and Lord Birkett, have said, to compensate them for any loss of income.
How much is 20 per cent.? If our calculations are right, it is about £150 million. Given all the doubts that have been expressed, I cannot believe that charities will lose £150 million a year as a result of the national lottery. That being so, since at least £150 million a year is guaranteed to charities, charities would be well advised not to look a gift horse in the mouth.
Viscount Astor: I appreciate the sentiment behind the amendments and the anxieties the Committee has about charitable income, but I shall argue against the amendments because of their impracticability, on the one hand, and the consequences for the national lottery, on the other.
The first effect of Amendment No. 4, which would set out in statute that the national lottery must not be run in any way likely to lead to a diversion of donations away from charities, would be to put the director general and the national lottery operator in the unacceptable position of having constantly to prove the unprovable—that aspects of its operation in the types of lotteries which it runs or its promotion had or had not affected charitable donations.
Such amendments would do no more than create a situation in which the lottery and the director-general were open to intractable, acrimonious and inconclusive challenge. My noble friend Lord Mancroft agreed that point.
Perhaps I may explain and give an example. Imagine, if you will; a particular charity that is not doing very well. Its fund-raising for the past few years has not been a success. Major funders have withdrawn because, frankly, the charity is not seen to be fulfilling its stated purpose. There are problems with
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management. The charity applies to the National Lottery Charities Board for money. But the board can see that the charity is not a very well organised or a very good one and it declines to support it; it has important priorities elsewhere. The charity feels aggrieved at the decision. And what better than to blame the national lottery? Why not say that the way the national lottery has been promoted has adversely affected that organisation and seek redress? Why not assert that the national lottery's method of marketing was a direct cause for the failure of this year's raffle or fund-raising? There is nothing to lose and the connection cannot be proven one way or another.
In setting up the lottery we must seek to protect it. It would be very obviously at risk of challenge if the amendment were carried. I suggest that it would make the job of both the director general and the operator impossible.
Perhaps I may deal with the points raised by the noble Lord, Lord McIntosh. Ireland is often cited as an example of what could happen here. We have had a new NCVO report this week. It is, I have to say, a slightly disappointing document. It looks at the "perceptions" of voluntary organisations of the impact of the lottery in Ireland. But it gives no hard facts. Out of 100 organisations which were asked their "perceptions", only 48 responded. In life I find that those who are content rarely voice complaint. At the end of the day, out of 100 organisations asked for their "perceptions", only 27 perceived that the Irish lottery had an impact. There is no evidence for what this perceived impact was.
Let us look further at the business of perception. The economic consultants looked at the effect of the lottery on a range of voluntary organisations. More than one organisation did not reply to their survey, perhaps on the grounds that they had done so well out of the lottery they were a little embarrassed. The report concluded that the income of 20 charities looked at since the lottery began had risen by 19 per cent. in real terms. This was during a time of recession, when in the UK, with no national lottery, charities' incomes had fallen by a third. However, despite this evidence, some organisations "perceived" their income to have fallen. In fact, they had expected their income to increase by 40 per cent. in real terms, not the 19 per cent. average which occurred. "Perception" turns out to be the difference between expectation and reality. I merely say this to illustrate the difficulty of drawing hard and fast conclusions.
It is important to realise that the Irish lottery is different from ours. There money is divided by politicians. It is directly intended to fund health and welfare and youth work; areas where the voluntary sector is strong. In the UK the lottery is intended to help more broadly-defined good causes. Its impact will, therefore, be quite different. We have a method of distribution for the charitable sector which will be fair and efficient. Let us not get too caught up in drawing dire conclusions from the Republic of Ireland.
I turn to the amendments which refer to the advertising and promotion of the national lottery. In the light of worldwide experience, let us consider for a moment how the UK national lottery will market

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itself. It will market itself as an opportunity to participate in a way which is fun in an activity which gives a chance to win a substantial prize. As I said earlier, the focus of the promotion will not be the good causes; that is, arts, sport, the heritage, charities and the Millennium Commission. In marketing terms it will be the prizes. We must make that clear because we do not want the lottery to take money away from charitable lotteries or to confuse the public by suggesting that it is a charitable lottery. It is important to maximise its proceeds and that must be done on the basis of prizes. The public will not be invited, by participating in the lottery, to give to a good cause and therefore not to give to their favourite charity. The national lottery will not be saying, "Don't participate in charity lotteries but come to us".
I agree with the noble Lord, Lord McIntosh, that it is difficult to assess the effects, in particular when we are crystal ball gazing into the future. The Government will certainly reflect very carefully on the anxieties expressed in this Committee on the lottery and the charitable sector. My right honourable friend the Minister of State at the Home Office undertook in another place that the Home Office will look at ways of assessing in general terms the effect of the lottery and changes in charitable income once the lottery is established. It is already talking to the voluntary sector about this. That is the proper way to take this forward. If fears prove to have foundation Parliament has the power to increase the proportion of national lottery funds going to charities.
It will take some time to establish whether the charitable sector as a whole is affected. As I have said, the Home Office has agreed to monitor the situation. If it were established that there was an effect, the Secretary of State could change the percentage of the national lottery to go to the charities by order within a few weeks. It would be done by affirmative resolution. But if an individual charity were to put in a meritorious application for funds to the Charities Board, that charity could be funded for a particular project very quickly indeed.
I turn to Amendment No. 47, tabled by the noble Lord, Lord Holme of Cheltenham—
Lord Allen of Abbeydale: I understand that the Minister is leaving Amendment No. 8. He has given a firm undertaking that the provision will be carried out but why should it not be on the face of the Bill? Great comfort would be given to many voluntary bodies if it were.
Viscount Astor: It is because an undertaking was given in another place and I have reiterated that undertaking. It is difficult to put anything into the Bill which enables that undertaking to be given while retaining the flexibility of the Government. As I said earlier, we do not want any person or charity to use their lack of funds as a way of attacking the whole undertaking or of attacking other charities or the National Lotteries Board. Perhaps I may now turn to Amendment No. 47—
Baroness Seear: The Minister said categorically that if it were found that the income to charities had fallen the Government would make an adjustment so that they received more. Where would that money come from? Would the Government reduce the tax levy or would they insist on cutting the cost of running the charity? Where will the Government find that money?
Viscount Astor: I said that, if that were the case, the Secretary of State could make an adjustment of the percentage going to charities out of the distribution fund. Of course, that would affect the percentage going to the other four bodies in the fund. There is a limited amount of money; I am not inventing money.
I turn now to Amendment No. 47 in the name of the noble Lord, Lord Holme, as regards information to be made available to players in the national lottery. The ticket will be sold in a place where the relevant information is given. I assure the Committee that we intend to ensure that the director general ensures that the operator makes available appropriate information, including the information on the amount of the net proceeds that will go to the various beneficiary sectors.
It is important that that does not become the marketing focus of the national lottery. I go back to what I said earlier. We do not wish the lottery to compete in that way with charitable lotteries.
Lord Holme of Cheltenham: I thank the noble Viscount for giving way. Both on this amendment and on the earlier amendments he came very close to saying that the Government, or the director general in awarding the franchise, will make it a condition that the operator should promote this only by appealing to the public as regards the prize money rather than appealing to the mixed motives that a person could win a big prize but that he is doing good at the same time. I understand that this suits the Government's arguments today to say that this is a very unmixed motive for buying. The noble Lord, Lord Moyne, said that it is a bet and let us not complicate it with anything else. If a substantial part of the proceeds are to go to good causes, that will be known generally to the public and I would guess that a sophisticated promoter of the scheme would wish, albeit in a minor key, to make the point that not only is there a chance of winning a lot of money but some good may be done. If I heard correctly what the noble Viscount said in the last few minutes both on earlier amendments and on Amendment No. 47, he categorically stated that the operators will be instructed, guided or directed to focus only on the winnings which people might make. Is that correct?
Viscount Astor: I think that is going further than what I said. I agree with everything that the noble Lord, Lord Holme, said in the first part of his intervention. My point is not that we want to preclude those who sell lottery tickets from making available the information as to the percentage which will go to good causes. However, we do not want the lottery

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tickets to be sold only on that basis. I believe that there is a mixed motive and I agree with everything that the noble Lord said. We are trying to find a balance.
It is important that that balance should be set by the director general under the licensing conditions to the operator. It is quite properly a condition of licence and the director general will have to lay down extremely careful rules to the operators on how that will be carried out and how the information will be made available. That is properly a condition of licence and I see that the noble Lord, Lord McIntosh, agrees about that.
I turn to the points made by the noble Lord, Lord Airedale, about drafting. I may be able to help the noble Lord but I, too, am rather nervous about trying to draft on my feet. The national lottery is the sum total of all the lotteries promoted as part of it. "Run" is used to mean the overall operation: the systems, the business, the investment and so on. "Promote" is the normal legal term used for lotteries and means "operate". The Clause 5 licensee will run the whole operation with the games licensed under Clause 6. The due propriety obligation extends to every aspect of the operation, including Clause 5 operations and Clause 6 games. I hope that that explains matters to the noble Lord. I shall look carefully at what he has said when we consider the drafting because he may have made a point that the draftsman wish to take into consideration.
Lord Airedale: I, too, am much obliged to the noble Viscount. I shall look carefully at what he said.
6.15 p.m.
Viscount Astor: I return to the substantive part of the amendment. I am happy to repeat to the Committee the undertaking that the Government and the Home Office will look at ways to assess the changes to charitable income once the lottery is established. I make no apology for repeating that. We are already speaking to the voluntary sector about it.
I hope that I have been able to set at rest the minds of Members of the Committee. Not only would the amendments not work but their effect—they seek to protect charities—could be to damage charities by reducing the amount of money which the national lottery raises for good causes. On that basis, I hope that the noble Lord will withdraw the amendment.
Lord McIntosh of Haringey: I suppose that the debate will teach me not to put professional qualifications into what I say. After all, as Casey Stengel, the manager of the New York Yankees said, "It's terrible difficult to make predictions, particularly about the future".
It is true that there is no absolutely certain way in which to assess and calculate what will be the effect of the national lottery on charities. However, we are not quite so stupid as some people seem to think we are. The research that has been carried out has two virtues. First, it takes into account all the considerations that have been raised by Members of the Committee in the debate. It is recognised that a high proportion of the
1708
people who will wish to take part in the lottery simply want to have a gamble and they are not the kind of people who give to charities in any event.
It is recognised that a high proportion of charity giving is not of the kind which is subject to competition from the lottery. For example, the point was made about charitable bequests in people's wills. Obviously they will not be affected by the fact that somebody has bought tickets in a national lottery. All those matters have been taken into account.
At the end of the day the conclusion is that a net loss is calculated of between 4 per cent. and 7 per cent. to the charities as a result of the national lottery. That comes from not one source but from a whole number of sources, all of which reach the same conclusion, whether they are surveys of individuals about their charitable giving and their gambling behaviour or whether they are surveys of the charities themselves. I quite understand the qualifications which the Minister has about charities' own surveys and about surveys carried out in another country.
Lord Renton: The noble Lord has mentioned that numerous people have made these calculations. Did they all work on the same assumptions? Did they work on different assumptions, on unknown assumptions or what did they do?
Lord McIntosh of Haringey: There are no unknown assumptions about what people think they will do in the event of a national lottery being instituted. Any inquiry carried out on that basis would be on broadly the same assumption.
It is more difficult to make an assumption about the actual income from the national lottery because we do not know the form that it will take. If we say, for the sake of argument, that the donation income of charities is just over £3 billion and that, according to the evidence of charities, 7 per cent. of that would be lost, they are losing something like £230 million, which is the figure used by the noble Lord, Lord Mancroft, on Second Reading. If we say that this is a £1.5 billion national lottery of which 25 per cent. is to go to good causes and of that amount 20 per cent.—that is 5 per cent. of the total—is to go to the charities, then the charities will get out of the lottery £75 million or £80 million, which means that the net loss for charities is in the order of £150 million.
I do not believe that there is anything arcane about those calculations. They will not be exact. In fact, I believe that the figures appear to be more exact than they actually are but all the evidence points in the same direction. Therefore, at the end of this debate I am still confident that my assertion—that the likelihood is, unless action is taken, that there will be a loss to charities—has not been damaged in any way.
I turn briefly to the issue of the wording. I believe that the noble Lord, Lord Airedale, has it right. If there is any particular difficulty with the wording in Amendment No. 4, it is a defect in the wording of Clause 4. I rely on the Minister being able to secure the support of the parliamentary draftsman for the wording used.
I found the final points made by the Minister to be most interesting. He said—and he was moving

1709
towards it hesitantly; and there is some justification for being hesitant—that the issues were proper conditions of the licence. If they are proper conditions of the licence, is there any reason why they should not be put on the face of the Bill in Clause 4 just as the phrase "due propriety" has been included in the clause? In another place, the Government sought to counter comparable amendments to those proposed by saying that they were too general. But what could be more general than "due propriety"?
If there is a choice in the licence about the kind of conditions to be imposed on the operators, with one choice favouring charities and the other not—that is, if the word used in the amendment is "likely"—then the choice that would favour charities should be made. We are saying that that should be on the face of the Bill. I believe that all the debate that has taken place, even, if I may say so, the contributions from those who are worried about the wording of the amendments, has confirmed that it is right to do so. I wish to take the opinion of the Committee.
6.21 p.m.
On Question, Whether the said amendment (No. 4) shall be agreed to.
Their Lordships divided: Contents, 64; Not-Contents, 109.

Division No. 2

CONTENTS

Airedale, L.

Kilbracken, L.

Allen of Abbeydale, L.

Listowel, E.

Archer of Sandwell, L.

McIntosh of Haringey, L.

Birk, B.

Mayhew, L.

Blackstone, B.

Merlyn-Rees, L.

Bruce of Donington, L.

Milner of Leeds, L.

Carter, L.

Milverton, L.

Castle of Blackburn, B.

Murray of Epping Forest, L.

Cledwyn of Penrhos, L.

Newcastle, Bp.

Clinton-Davis, L.

Nicol, B.

Cocks of Hartcliffe, L.

Northbourne, L.

Congleton, L.

Pearson of Rannoch, L.

David, B.

Pitt of Hampstead, L.

Donoughue, L.

Plant of Highfield, L.

Elis-Thomas, L.

Redesdale, L. [Teller.]

Ennals, L.

Richard, L.

Ezra, L.

Rix, L.

Gallacher, L.

Rochester, L.

Glenamara, L.

St. Albans, Bp.

Graham of Edmonton, L.

St. Edmundsbury and Ipswich,

[Teller.]

Bp.

Hamilton of Dalzell, L.

Seear, B.

Hamwee, B.

Serota, B.

Harris of Greenwich, L

Shannon, E.

Hertford, M.

Stoddart of Swindon, L.

Hilton of Eggardon, B.

Strabolgi, L.

Hollis of Heigham, B.

Swinfen, L.

Holme of Cheltenham, L. Thurlow, L.

Thurlow, L.

Houghton of Sowerby, L. Turner of Camden, B.

Turner of Camden, B.

Hylton-Foster, B.

Wharton, B.

Irvine of Lairg, L.

White, B.

Jeger, B.

Williams of Elvel, L.

Judd, L.

Young of Dartington, L.

NOT-CONTENTS

Ailesbury, M.

Barber, L.

Aldington, L.

Belhaven and Stenton, L.

Archer of Weston-Super-Mare, L.

Birkett, L.

Blake, L.

Arran, E.

Blatch, B.

Astor, V.

Blyth, L.

Attlee, E.

Boardman, L.

Auckland, L.

Brabazon of Tara, L.

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Brougham and Vaux, L.

Mackay of Ardbrecknish, L.

Cadman, L.

Marlesford, L.

Caithness, E.

Merrivale, L.

Campbell of Alloway, L.

Mersey, V.

Carnegy of Lour, B.

Montagu of Beaulieu, L.

Carnock, L.

Morris, L.

Cavendish of Furness, L.

Mountevans, L.

Chalker of Wallasey, B.

Moyne, L.

Charteris of Amisfield, L.

Munster, E.

Clark of Kempston, L

Murton of Lindisfarne, L.

Colwyn, L.

Nelson, E.

Constantine of Stanmore, L.

Onslow, E.

Cranborne, V.

Orkney, E.

Crathorne, L.

Orr-Ewing, L.

Cumberlege, B.

Oxfuird, V.

Dacre of Glanton, L.

Perry of Southwark, B.

Davidson, V.

Prentice, L.

Denham, L.

Rankeillour, L.

Denton of Wakefield, B.

Reay, L.

Dormer, L.

Rennell, L.

Downshire, M.

Renton, L.

Elibank, L.

Renwick, L.

Elles, B.

Rippon of Hexham, L.

Elliott of Morpeth, L.

Rodger of Earlsferry, L.

Elton, L.

Russell of Liverpool, L.

Ferrers, E.

St. Albans, D.

Flather, B.

St. Davids, V.

Fraser of Carmyllie, L.

Saltoun of Abernethy, Ly.

Gainsborough, E.

Seccombe, B.

Gibson, L.

Simon of Glaisdale, L.

Gilmour of Craigmillar, L.

Skelmersdale, L.

Goschen, V.

Stewartby, L.

Hacking, L.

Strathclyde, L.

Hailsham of Saint Marylebone, L.

Strathmore and Kinghorne, E.[Teller.]

Halsbury, E.

Sudeley, L.

Harrowby, E.

Swansea, L.

Hayhoe, L.

Swaythling, L.

Henley, L.

Tebbit, L.

Hesketh, L. [Teller.]

Trumpington, B.

HolmPatrick, L.

Ullswater, V.

Hooper, B.

Vaux of Harrowden, L.

Howe, E.

Wakeham, L.

Jeffreys, L.

[Lord Privy Seal.]

Lauderdale, E.

Warnock, B.

Lindsey and Abingdon, E.

Whitelaw, V.

Long, V.

Wyatt of Weeford, L.

Lucas, L.

Wynford, L.

Lyell, L.

Resolved in the negative, and amendment disagreed to accordingly.
6.29 p.m.
Lord Allen of Abbeydale Lord Allen of Abbeydale moved Amendment No. 5:
Page 2, line 10, leave out ("and") and insert:
("( ) that nothing in the way that the National Lottery is run, and every lottery that forms part of it is promoted, shall encourage, directly or indirectly, excessive gambling, and").
The noble Lord said: In moving the amendment, which is also tabled in the name of the noble Lord, Lord Redesdale, I should like to speak also to Amendment No. 18, which stands in the name of the noble Lord, Lord Houghton of Sowerby.
I have never made any secret of the fact that I view with great distaste the addition to the gambling culture of the country which the Bill is intended to make. In the light of my experience as a Permanent Under-Secretary of State at the Home Office and some years as chairman of the Gaming Board, I view with particular apprehension the prospect of addictive or excessive gambling.
The proposed lottery is often referred to as just a piece of harmless entertainment; in other words, a piece of fun. However, with prizes of a size that we

1711
have never known, and bearing in mind the variety of games that are being talked about, the disproportionate use of lotteries by the lower income groups and also the threats to the young which we discussed earlier, I am not so sure.
Some of the information coming from across the Atlantic is distinctly disquieting. New Jersey, which was the first state to follow the example of Nevada in licensing casinos, set up a hotline in 1982 for people with gambling problems. In the first year there were no complaints to the hotline about lotteries but by 1987 21 per cent. of the calls were lottery related. A study in Delaware found that the incidence of what they described as pathological gambling had almost doubled after a daily lottery was introduced. In Canada, where big jackpots resulted from rolling over prize money, outlets reported that sales had doubled or tripled their normal level and that people were queueing for hours to buy tickets.
There are a number of forms of game or activities which the national lottery could adopt which could well be more harmful than others. I am not terribly well up in the jargon but I believe there are multiple tickets known as continuity features which include the rollover of prize money. I know the Government have promised that the national lottery will not be able to roll over unwon prize money for more than three games in a row. However, they have estimated that even this might result in a jackpot of between £4 million and £8 million. Other people have estimated that the figure might be much higher. It seems to me that if prizes of this size are allowed, there is a real risk that the lottery mania which has been experienced in other countries where large jackpots are available will begin to afflict the UK.
I believe that the instant win scratchcards are particularly addictive among young people. When you scratch the cards you find out immediately whether you have won something. If a player has not won anything, he can buy more cards and before he knows what has happened he has spent much more money than he can afford. This is particularly true of young people. Who will decide whether these games can be included in the national lottery? Will the Government lay down some sort of regulation, or will this matter be left to commercial enterprise? Unfortunately the noble Lord, Lord Merlyn-Rees, cannot be present but he has tabled some later amendments about instant prizes.
The Government have said they are anxious not to encourage excessive and addictive play. If they really mean that, there is a great deal to be said for putting it on the face of the Bill so that we can all be told from time to time just what is being done to carry out the obligation. I submit that this amendment is free from some of the drafting objections which were raised in connection with the previous amendment. If the Government refuse to put a commitment on this issue on the face of the Bill, they leave one with the great suspicion that they do not mind about the risks of addictive or excessive gambling and that the only thing they care about is raising money. I beg to move.
6.30 p.m.
Lord Redesdale: I wish to support the noble Lord, Lord Allen of Abbeydale. I shall do so briefly as he has covered most of the problems that could affect vulnerable people who will be tempted to bet on the national lottery. As the noble Earl, Lord Ferrers, pointed out on Second Reading, the national lottery should be regarded merely as a flutter. For a £l stake people gamble on winning a large amount of money but the odds against that happening are millions to one. The only people who will not realise that are vulnerable people such as the young or those who are afflicted by a compulsive gambling habit. Those are the people who should be protected. Obviously there is a conflict here because a company that will promote the national lottery will want to sell as many tickets as possible. We hope that will not be done at the expense of vulnerable people.
Earl Ferrers: I can understand the noble Lord, Lord Allen of Abbeydale, saying that he does not like addictive or excessive gambling. We would all go along with that. Within the duties and powers currently drafted for the Secretary of State and the director general there is the power to prevent games or their marketing which many of us would consider insidious—which might encourage people to chase their losses repeatedly, for example. That power is a means of controlling types of game. However, it is never possible to control all the potential effects of any new product. The director general will take a reasonable view, when a type of game is proposed, on whether it seems fair and honest for the players. Neither he, nor anyone else, can be expected to know whether an individual with a propensity to gamble will choose the national lottery as his outlet. In most cases this seems unlikely: serious gamblers generally choose games where they think they can influence their chances of winning with some element of skill.
Some people may gamble to an extent that harms them or their families. But the Home Secretary cannot be held responsible for individual behaviour. Government policy on gambling is based on the principle that the state should interfere as little as possible with individual liberty to take part in the various forms of gambling, but that controls are necessary to prevent crime, to ensure that players are aware of what they are letting themselves in for, and to protect the vulnerable, in particular young people. This is achieved by taking a reasonable view, for example, on the places where different types of gambling may go on, but the Government cannot be held automatically responsible for the behaviour of individuals. It is no part of government policy to prevent people gambling.
The Government and the director general will take action to prevent games where there is a possibility of damage to the interests of players, including those games which encourage excessive repeat play. But the way normal and acceptable games are played by particular individuals is not a matter which is suitable for statutory control.
The noble Lord, Lord Allen of Abbeydale, said that the amendments were free of the drafting objections

1713
applicable to others. However, they bump up against other objections. For instance, there is no way of determining in law what excessive or addictive gambling is or of determining when the Rubicon is crossed between normal and excessive gambling. It would be very difficult to prove or disprove that some form of indirect encouragement had been given to stimulate excessive gambling. I understand the anxiety of the noble Lord, Lord Allen, but to impose a duty of the kind set out in the amendment would not work.
Lord Airedale: The noble Lord, Lord Allen, mentioned scratch cards. I am worried about that as a possible source of fraud. I take it that there is no possibility of the seller of an ordinary lottery ticket knowing whether he is selling a winning or losing ticket. However, although I have never done it, I believe that one can buy a scratch card in a pub. Presumably, some of the cards held behind the counter are winning cards and others are losing cards. One hopes that the publican has no idea which is which.
There was a case not long ago where the Court of Appeal upheld the conviction of certain terrorists. After the Court of Appeal hearing a machine was invented which showed a police notebook to have been altered. The case went back to the Court of Appeal and the conviction was quashed. When one considers that case and the pace of technology nowadays, perhaps it would not be very difficult for a dishonest seller of scratch cards to find out which were the winning tickets. There is a basis for fraud there. Do we really want the national lottery to have anything to do with a game which may in some cases involve fraud?
Earl Ferrers: The noble Lord, Lord Airedale, has once again exhibited his fascinating imagination. I can assure him that there is no connection between the instrument which detected whether someone had written something in a police notebook contemporaneously and a scratch card. I believe that the noble Lord is concerned that the advent of technology could be such that a person in a pub might have an instrument which would enable him to detect the number on a scratch card. Obviously, that would be a fundamental objection to any such scratch card system. The director general will obviously have to keep his eye very closely on such forms of modern technology to ensure that that does not happen.
One cannot legislate for all conceivable eventualities. When a person scratches a scratch card he does not know whether he will be a winner and the person who sells him the scratch card does not know whether he will be a winner. While I understand the noble Lord's anxiety, I do not believe that he should be too worried. If such technology was developed in the future steps would have to be taken to ensure that the game was run fairly.
6.45 p.m.
Lord Houghton of Sowerby: I see that I have an amendment which is linked to the one moved by the noble Lord, Lord Allen of Abbeydale. I shall not go
1714
over the ground again. However, I notice one inconvenience in this Chamber, especially in Committee. If one leaves the Chamber for a few minutes—as the noble Lord, Lord Birkett, did, to lick his wounds—when one returns, one has lost touch with the position which the Committee has reached. There is nothing to tell one. Before the Minister stood up, I looked around when I heard my noble friend Lord Allen of Abbeydale speaking, and I thought, "Is this Amendment No. 5?" What does one do? There is no form of communication. However, I shall leave that point. There is much that is wrong with this place, and it would not be in order if I were to start on that subject.
I make only this observation. We have now gone over some of the ground of concern. Each time, we come to another field of concern in relation to the effects of the national lottery. One can see now why the public and Parliament have been so reluctant to embrace the idea in this country, notwithstanding strong pressure. There have been lotteries in Europe for a very long time, but those of us who had the privilege to travel in Europe many years ago saw that lotteries flourished where people were poorest. It may be the same today. They flourished in countries where the government wanted to get money out of the poorest people, which they could not do by taxation. By offering the inducement of prizes in lotteries they managed to do so.
Basically, this is an evil thing, and it has been from the beginning. It is not virtuous, even when embroidered with all the safeguards. It panders to something in human desire we have hitherto discouraged. It is now coming out full blast in a gambling system which comes into our midst under the cloak of good causes.
There is no answer to the questions we are raising. The Minister said that it cannot be proved. The measure will be the cause of constant parliamentary concern. There will be Questions to the Secretary of State at the Home Office on the organisation and running of the lottery. By the time we have finished with the Bill it will not be clear what good we expect it to do. What is it for? Whose interests is it to satisfy? Who has asked for it? Who will benefit? And so on and so forth. I shall not pursue the matter, but it arises constantly. It arose during the previous string of amendments and now we are dealing with a different field of anxiety. That anxiety will not be lifted by observations from the Front Bench that those fears are exaggerated.
There is no evidence from the running of lotteries anywhere in the world which makes us feel that we have a better answer than other countries. We know what is happening to the social system in the United States and in other countries. That springs from the desire for gambling games of one kind or another. It is as if humanity is being drugged. People must have excitement, risk, drugs and stimulants. One wonders how the human race will finish up. But that is a long story and a long way from now.
Lord Allen of Abbeydale: I was a little surprised that the noble Earl, Lord Ferrers, criticised the amendment on the grounds that "excessive gambling" is not a

1715
phrase which is susceptible of legal definition. I wonder whether the phrase which is already contained in the clause we are considering—"with all due propriety"—is one which the courts can define with precision. I rather doubt it.
However, the noble Earl made one rather astonishing remark which, perhaps I may say with all deference, reflected extremely well on him. He stated that heavy gamblers only go in for games requiring some modicum of skill—a remark which plainly demonstrates that he is unfamiliar with what goes on in the West End casinos. A great deal of money is won and lost on games which involve no element of skill. I do not include blackjack in that observation.
I cannot say that I am satisfied with the explanation given. However, I do not propose to divide the Committee, although I consider Amendment No. 5 a better amendment than Amendment No. 4 on which we did divide. I shall read carefully what the Minister said before deciding whether to pursue the issue at a later stage. In the meantime I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Mancroft Lord Mancroft moved Amendment No. 6:
Page 2, line 12, at end insert:
(" (c) that no contract or other arrangement is made by or on behalf of the National Lottery or any lottery that forms part of it whereby tickets in such a lottery are only to be offered for sale on the basis that tickets in local lotteries or societies lotteries are not to be sold; and
(d) that no advertisement or other promotion of the National Lottery or any lottery that forms part of it seeks to compare the amount that may be won in such a lottery with the amount that may be won in a local lottery or a societies lottery.").
The noble Lord said: In moving the amendment, I start by saying to the noble Lord, Lord Houghton, that I sometimes feel out of touch even when I am in the Chamber of your Lordships' House. I do not need to be outside the Chamber to feel that.
The amendment was aired in another place. It is proposed in the belief that charitable and society lotteries need to be protected against the possibility of being swamped by the national lottery. The assurance was given in another place that such a situation could not arise and that the national lottery would not impose restrictions on its sales outlets. Those sales outlets would be free to sell lottery tickets if they so wished. Of course, we must accept those assurances. I am grateful to the Government for the attention that they have given to safeguarding the position of existing lotteries in aid of charities and societies.
However, I believe that there is need for more assurance. It would be better if a provision were incorporated on the face of the Bill that such restrictive practices will not be legal. Unless that happens I fear that many small lotteries will disappear and with them the income generated for the organisations which promote them. It will be too late to redress the situation after the damage has been done. We need to take steps to ensure that that does not occur in the first place.
I am sure that all of us—I certainly do—wish the national lottery to be as successful as it possibly can be, but not if that involves weakening or possibly
1716
destroying the existing charity lottery system which allows so many worthwhile organisations to continue splendid and worthwhile work.
We have discussed on both sides of the Chamber the situation in Ireland. The situation there is not clear; that is the problem. Both sides have produced evidence indicating either that the income appears to be good or that it is not. It is clear that although some of the larger charities in Ireland have done well, many of the medium or small sized charities have not. Before the national lottery in Ireland there were 22 charitable organisations running their own lotteries. There are now only six. The income from such lotteries fell by 60 per cent. Of the lottery tickets in Ireland, 98 per cent. are sold on behalf of the Irish National Lottery. If we were to reach a similar stage in Britain, with an overall annual income from lotteries of say, £2 billion, the small lotteries' share of that would be £40 million. That is very small compared with the present income of well over £200 million.
I appreciate that those figures are slightly different from the figures given by the noble Lord, Lord McIntosh, in a previous amendment. However, they are not markedly different. The proportions are much the same. Whichever figure one takes—even if one makes the position more favourable—it would still be a disastrous drop in income for those small charities. We should not allow that to occur.
We must give serious consideration to the issue at this stage. Rather than hoping that the situation which I have outlined does not occur, it would be better to ensure that such a situation could not occur and so protect the myriad of charities which wish to raise their own income. They wish to show their independence and decide for themselves the most appropriate way in which to raise income. I beg to move.
Lord Donoughue: I wish to speak to Amendment No. 15 which is grouped with Amendment No. 6. I support what was so ably said by the noble Lord, Lord Mancroft. I shall not delay Members of the Committee from dinner, or from the equally crucial matter of Amendment No. 8A.
All businesses incline to monopolistic practices. All businessmen speak in favour of competition—but they mean for others. The Irish National Lottery is but one example. I suspect that the Minister's response, as it was in another place, will be that there is no problem and that what is feared is forbidden under competition policies both in this country and in the EC. However, I do not believe that that is enough. The process of operating competition policies is very slow, as we know. By the time it had operated, frankly, the game would be over for many local and society lotteries. They would have been driven out and killed off. I should like an assurance from the Minister that the national lottery will not be allowed to operate an anti-competition policy by stipulating that its retailers should not retail other lotteries. How will that situation be avoided? Like the noble Lord, Lord Mancroft, I believe that it would be much better if the provision were on the face of the Bill.
Lord Holme of Cheltenham: I speak as a supporter of Amendment No. 6 and as a signatory to Amendment No. 15. The national lottery will be enormous business. It would be understandable, given its vast power of promotion—with advertising on television—if it attempted to negotiate what I believe is called a solus spot for distribution, using its muscle in the market place to say to retailers and other distributors, "Give us not only a special position but a solus position. Let us be the main purveyor of that particular product at your retailing point of sale".
The Government would rightly say, as the noble Lord, Lord Donoughue, stated, that it was a straightforward competition issue. It arises in other retail trades. There is currently a case before the European competition authorities about who may use ice cream cabinets. Can any ice cream company use them or only the company which placed them? The Government may say, "This is a straightforward competition issue", to be dealt with presumably by the Office of Fair Trading and the competition authorities.
Two problems arise from that potential government answer. First, the issue is bound to be dealt with retrospectively and in that time other smaller competitor charities which are running lotteries may have been forced out of business. Secondly, the Government have got themselves into a quite difficult intellectual position. They say that those small lottery charities are not really competition because the national lottery is an entirely different issue; it is not competitive; everyone will be able to tell the difference; and one is a bet and the other a charitable donation in disguised form. The Government are impaled on their own logic. If those other lotteries are, as I maintain, competitors, some of the statements made earlier by the Government are invalid. At all events it would be a wise precaution to include the provision on the face of the Bill in the way that Members of the Committee have asked.
Lord Swinfen: I have put my name down to Amendment No. 6. I also support Amendment No. 15. Both amendments seek to prevent a local monopoly position being brought about by the heavy muscle of the national lottery. It will be much bigger. It is likely that the operators will sell a much larger volume of tickets or chances, and even if the commission that they pay to the seller is the same as for a small local lottery, they are likely to force out the local lottery. The latter may be charitable, it may be that, as happens in some areas already, it is for the local authority or it may be for some local worthy cause. I feel that it is essential to make certain that the big lotteries are not allowed to use their monopoly position to force out the smaller lotteries.
I know that organisations such as sub-post offices and corner shops are all likely to wish to take on the national lottery. Often they have a precarious living to make. If there is any hint that one source of income may be withdrawn because they are prepared to offer the product of a rival, that which offers them the greatest profit, and possibly the more secure long-term profit, will be preferred.
1718
Of the two, I prefer Amendment No. 6 because it goes further than Amendment No. 15 by including advertising and promotion of the national lottery. It may be difficult to see how advertisements and promotion can seek to compare the amount to be won in the big lottery with that of small local lotteries. However, it can happen. I am sure that if we do not outlaw it in the Bill it will happen, to the detriment of the smaller lotteries.
The Government have said on many occasions that they do not wish to see the income of charities diminish. Some charities rely for a large proportion of their income on local lotteries run on a number of occasions during the year. Therefore, I support my noble friend's amendment.
7 p.m.
Lord Lucas: I too wish to add my support to the amendment of my noble friend Lord Mancroft. It seeks to prevent the operator of the lotteries from indulging in the very natural desire to squeeze out competition. I feel that the wording of the amendment is too narrow but perhaps it is impossible to make it wide enough because there are so many ways in which commerce can indulge in such practices.
I am sure that my noble friend will say, as was stated in another place, that the existing legislation provides a remedy for that, and that this pig already has wings. However, even such a well-endowed pig as the late Robert Maxwell was unable to obtain lift off and was sunk by the Evening Standard's monopoly of the distribution system. I hope that my noble friend will feel able to allow the director general to take action to prevent such abuses. He or she will be the only person in a position to be fast enough and flexible enough.
Viscount Astor: I appreciate the concerns behind the amendments. They seek to prevent those who deal in the national lottery tickets from entering into exclusive deals with retailers which would preclude the selling of other lottery tickets. Such a contract which sought to hold a retailer to an exclusive deal would have the potential to be anti-competitive and would be open to scrutiny and challenge by this country's competition authorities—principally the Office of Fair Trading—and also from Europe. There would be nothing to stop the operator from setting up its own shops or franchises which dealt exclusively with the national lottery product, but the operator would clearly be open to challenge if it were to enter into exclusive anti-competitive deals with general retail outlets; as, of course, would the pools companies or charitable lotteries.
The amendments are based on fears expressed by the charities as to what happened in Ireland where, I understand, the Irish National Lottery marketed itself very aggressively against existing lotteries. However, as I have said again and again this afternoon, our lottery is a very different animal from the one in the Republic of Ireland. Not only are we in a different situation in this country, but I argue that we have the benefit of being able to see what happened over there. Those who run small lotteries in this country will be

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quick to spot the tell-tale signs of uncompetitive behaviour and to alert the appropriate competition authorities if there is seen to be a problem.
However, I appreciate the concern of my noble friends Lord Mancroft, Lord Lucas and Lord Swinfen and other noble Lords. Therefore, I should like to take this amendment away and consider whether it could be a proper area for the licence conditions. With that assurance, I hope that the noble Lord will agree to withdraw the amendment.
Lord Mancroft: I thank noble Lords for their comments during the course of that short debate and my noble friend for the answer he gave. One or two comments came to my mind as he spoke. He referred to the national lottery in this country as a "different animal" and indeed it will be different from the Irish example. He also pointed out that the operators of charities of this country would have the benefit of being able to see whether restrictive practices take place. However, neither of those factors would give them the power to deal with the restrictive practices if they were to take place. It is true that we may be able to recognise the signs, but what would anyone do about them? Those are the important issues, which the Minister did not address. However, he was kind enough to say that he would take the amendment away and look at it and I am grateful to him for doing that. I hope that the Government will take on board the real concerns expressed gently but from all sides of the Committee. With that, I beg leave to withdraw the amendment.
Lord Donoughue: I also wish to thank the Minister and welcome what he said. The key to it is that the beginning of the process will be when the pattern of distribution is established. We must have it clear from the beginning that such practices are not on. However, I shall not move my Amendment No. 15.
Viscount Astor: To be absolutely clear what I said, it was that I should consider it as part of the licence conditions set by the director general to the operator. I believe that that is the right area to look at.
Lord Swinfen: Before my noble friend sits down, when are we likely to see the licence conditions?
Viscount Astor: That is a matter for the future. First, we have to pass the Bill, so that it becomes an Act, then the director general has to look at the bids that he will be offered by the various bodies, companies or whatever, which seek to operate the lottery. At that stage, the director general will issue a licence when he has chosen which entity should run the lottery. Then there will be the licence conditions.
Lord Harris of Greenwich: I should like to be clear exactly what the noble Viscount is undertaking to do. He indicated—very reasonably, in my view—that he is prepared to look at the question of whether the provision should appear in the licence, and we welcome that. However, we would welcome it even more if, at the next stage of the Bill, he is able to tell us whether the Government have come to a firm conclusion on the matter. Most of us wish to know the answer to that before the Bill leaves the House.
Viscount Astor: I believe that I have to stand by the words I used earlier. I do not think that it would be right for me to be drawn further at this stage.
Lord Harris of Greenwich: I am not asking the noble Lord to go further today. I am asking him to indicate whether he will tell us, before the Bill leaves this House—not today—whether the Government have reached a conclusion on the matter. Some of us would inevitably wish it to come back to the House if the Government were not prepared to indicate at some stage over the next few weeks whether they had reached a conclusion on the matter.
Viscount Astor: The noble Lord is not asking me, as he quite rightly said, to go further today, but on another day. I take note of what he said.
Amendment, by leave, withdrawn.
[Amendments Nos. 7 and 8 not moved.]
On Question, Whether Clause 4 shall stand part of the Bill?
Lord Birkett: I had intended to oppose Clause 4, but that was only in the hope that the Committee would like my Amendment No. 28, to which I spoke earlier this afternoon. Since the Committee did not, there is no point in my opposition to Clause 4 and I withdraw it.
Clause 4 agreed to.
Viscount Goschen: I beg to move that the House do now resume. In moving this Motion, I suggest that the Committee stage begin again at 8.10 p.m.
Moved accordingly, and, on Question, Motion agreed to.
House resumed.

Energy Efficiency of Buildings
7.10 p.m.
Lord Ezra Lord Ezra rose to ask Her Majesty's Government whether they are satisfied that sufficient is being done to improve the energy efficiency of buildings.
The noble Lord said: My Lords, I believe we are breaking new ground taking this Unstarred Question in the dinner hour. I should like to thank noble Lords who are participating in this debate for sacrificing that period.
I have asked this Question on the energy efficiency of buildings in the context of the Government's commitment that the UK will return its carbon dioxide emissions to 1990 levels by the year 2000. The significance of the energy consumption of buildings is that they account for half final energy usage and are therefore a major cause of carbon dioxide emissions.
It could well be asked whether the national target is sufficiently demanding. If the European Community as a whole is to stabilise emissions by the year 2000, and if countries such as Greece, Spain and Portugal are to be permitted to increase emissions in order to achieve their economic growth targets, it follows that the more affluent countries such as the United Kingdom should be aiming to reduce emissions significantly below 1990 levels. Such an example is being set by Denmark, which is seeking a reduction of

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20 per cent. by the year 2000, and by Germany, which is targeting a reduction of 25 to 30 per cent. by the year 2005. Why is the UK being so modest?
The Danish target is all the more laudable in the light of the achievements already made. For example, during the 1980s, residential energy consumption in Denmark fell by 33 per cent., whereas in the UK it marginally rose. During the 1980s Denmark's CO2, emissions per capita fell by over 12 per cent. During the same period the UK's fell by less than 4 per cent. One is bound to ask why Denmark is able to set such a significantly better reduction target starting from a far more efficient base. Clearly one of the reasons is that country's very positive commitment to improving the energy efficiency of both new and existing buildings. I should like to suggest various ways in which I believe we could act similarly in Britain.
In its report, Energy Use In Buildings and Carbon Dioxide Emissions, the Building Research Establishment identified that 44 million tonnes of carbon dioxide could be saved annually using cost-effective and technically proven methods of improving the energy efficiency of buildings. I should like to ask what is being planned to enable that target to be realised.
The United Kingdom has a legacy of almost 20 million poorly insulated homes. There is a grant scheme, as we well know, the home energy efficiency scheme, which is targeted at a minority of occupants; namely, those in receipt of social benefits. These are the people on low incomes whose homes are heated to a low standard and therefore the effect of any modest insulation measures will be largely, and quite rightly, taken up by improving their standards of warmth rather than by reducing energy consumption. This work is being spearheaded by Neighbourhood Energy Action (with which I have been connected for some years) which has already insulated over a million homes; but there are still about 6 million to go in this category.
The home energy efficiency scheme at present covers the installation of draught-stripping and loft insulation only. As walls are the biggest area of heat loss from a dwelling, one might well ask why the grants do not extend to wall insulation. By doing so this scheme would achieve further improvements in the level of comfort of occupants and a significant additional reduction in CO2, emissions.
I should like to comment on the proposed imposition of VAT on domestic fuel. I am in favour of the use of fiscal measures to promote energy efficiency. But for VAT to have this effect, some or all of the revenue generated must be returned to householders to stimulate them to apply energy saving measures. At present, with the exception of the scheme I referred to which applies to a limited sector of the population, there is no such incentive.
The Energy Saving Trust has been set up to help bring about a better use of energy. I hope that it will be provided with adequate resources. The trust needs quickly and vigorously to tackle the generally poor energy performance in the existing housing stock. A
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national programme aimed at systematically improving the standards of insulation of all existing houses would bring substantial benefits. I understand that the Energy Saving Trust says that it could implement activities to generate 40,000 new jobs by the year 1997 if resources were forthcoming.
A procedure which I believe can positively help to improve the energy efficiency of buildings is energy rating. The National Energy Foundation, a charitable trust based at Milton Keynes, has produced a system called the national home energy rating (NHER) which evaluates dwellings on a 1 to 10 scale. Unfortunately, the Government have encouraged the introduction of other home energy rating schemes and indeed have recently developed the standard assessment procedure evaluation method of their own. This proliferation can only be an impediment to the general acceptance of home energy ratings and it is to be hoped that a single government supported scheme becomes established soon. That was indeed proposed in the report on energy and the environment by the European Select Committee in June 1991.
While existing housing is the biggest single contributor of CO2, and therefore the principal target for energy efficiency measures, we should not forget that the existing stock is poorly insulated because it was constructed under building regulations which have been inadequate. If we are to ensure that the housing stock of the future is energy efficient, we have to strengthen the standards to which new housing is built. The design of a house today represents a commitment to a pattern of energy use for several decades ahead. This places a grave responsibility on house builders and on those who frame building regulations.
I was pleased to see the statement by the Government on 29th March that the proposals to review Part L of the building regulations have been brought forward because of growing environmental concerns. However, the proposals for revisions to this part seem inadequate. No improvements in insulation levels to walls, roofs or floors are proposed, apart from a small correction to the manner in which these levels are calculated. The preamble to the consultative document on Part L revisions states that they will achieve the elimination of 500,000 tonnes of carbon dioxide. But many believe that that estimate is exaggerated and that the measures proposed require substantial strengthening. Would the Minister care to comment?
If press reports are to be believed, there has been a recent development which threatens even the modest CO2, savings of the Government's proposals. Under the DTI's deregulation initiative, the task force looking at the construction industry appears to be considering the abolition of building regulations, including, one presumes, the part governing the conservation of energy. But there is no alternative to regulation if appropriate standards of energy efficiency in new buildings are to be achieved. I should be grateful for the Minister's confirmation that the press reports are inaccurate.
The requirement for higher standards of energy efficiency would be beneficial to UK business, and

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experience in countries such as Denmark shows what can be achieved. It could stimulate the market for UK products and create an incentive for development and innovation. This would generate export opportunities for products and manufacturing technology. For example, the German subsidiary of Pilkington has produced a sophisticated range of insulating glass as a direct result of the high standards of energy efficiency required in German buildings. If we are slow to improve the required standards of energy efficiency in UK buildings, then when these standards are ultimately introduced they are more likely to be satisfied by products produced in other countries. There are many examples of ways in which we have failed to develop new technology to meet higher standards because of our slowness in introducing those standards.
There are many benefits, therefore, which will accrue to UK business, to the national economy, to individual house occupants and to the global environment if the UK pursues a more vigorous energy conservation strategy for buildings. The techniques which can improve the energy performance of new and existing houses are proven and readily available. I hope that in his reply the Minister will indicate what further measures the Government have in mind.
7.20 p.m.
Viscount Mersey: My Lords, I am grateful to the noble Lord, Lord Ezra, for asking this Question. I speak in my capacity as the immediate past president of the Combined Heat and Power Association. The question of energy efficiency in buildings is particularly topical now that we have VAT on domestic fuel. In fact, it is nothing more than a partial implementation of the Community's carbon tax. Yet, as all noble Lords will know, the VAT is exceedingly unpopular. Noble Lords will also know that Sub-Committee B of the European Communities Committee, chaired by the noble Lord, Lord Ezra, examined the full carbon tax and rejected it, for much the same reason as the opponents of VAT on domestic fuel; namely, that it hits hardest the poor and the elderly.
However, there was one phrase in the proposed carbon tax that we did not hear in the Budget and that was the phrase "revenue neutral". If the Government collect extra taxes from carbon, they must reduce other taxes or increase other benefits. I agree with the noble Lord, Lord Ezra. I cannot see any financial objection to VAT on domestic fuel, if those who suffer are reimbursed by an increase in their pensions or some such thing.
But even that is merely financial and defeats the main purpose of a carbon tax, which is to lessen carbon dioxide emissions worldwide and avoid global warming. That, as they say, is the bottom line. That is what makes the energy efficiency of a building of such importance.
In this country our buildings are supremely inefficient. So I regard thermal insulation as of supreme importance. Conserving heat and power is much more important than any of the fancy non-fossil
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fuel power sources that are now in vogue: wind power, wave power, tidal power, hot rocks, fuel cells—you name it. They are exciting but they are not as important as loft insulation or double glazing. That is what I call the boring truth of energy efficiency.
On a bigger scale, it is inefficient to have thousands of small boilers heating thousands of small houses. A large boiler for a large town uses much less fuel. District heating schemes are good friends to the environmentalist. It is fascinating to see them working. For instance, in Denmark I saw a district heating network in Aarhus. It contained a loop of pipe stretching out to a hamlet 32 kilometres away. The water went out to the hamlet at 96°C. When it came back it was still 92°C, having heated the hamlet and travelled a total of 64 kilometres. The insulation of the pipes was near perfect. I understand that there is a bigger and even better network that heats the whole of Copenhagen. Denmark seems to be a most efficient country from the heat conservation point of view and I was interested to note that the noble Lord, Lord Ezra, also featured Denmark in his remarks.
I believe that I can forecast my noble friend's reply to what I have said; namely, that the Government are indeed keen to promote combined heat and power and that they are aiming for 4 gigawatts by the millenium. I must give the schemes in Sheffield, Teesside and the City of London their due. But those are mere flea bites compared with what is 'on the continent. As might be expected, Scandinavia leads the way, but even France is well ahead of us. They have a scheme which heats nearly half of Lyons. I do not believe that we have anything on that scale. Perhaps I could ask my noble friend whether he knows of any country in the Community which has less combined heat and power per capita than we do. But I am not a one-track minded combined heat and power man. Tonight I seek to find ways to use less energy. That is the objective.
In Helsinki I was shown a table of what it costs to heat one cubic metre of air up to 20°C throughout Europe. Noble Lords might think that the farther south one goes the less it costs because the weather is warmer. Surprisingly, it costs the same in Finland, where one starts with an outdoor temperature of −20°, as it does in Milan, where one starts with an outdoor temperature of +10°. That is because the energy efficiency of the buildings decreases as the ambient temperature increases. Thus, one can draw a line from Helsinki through Copenhagen, Hamburg, Zurich, Turin and Palermo and find that the heating costs are always about the same. The one exception is this country, where London should be about as efficient as Amsterdam. But with our history of plentiful coal, oil and North Sea gas, we seem to throw energy efficiency out of the window. In fact, we are only as efficient as Tangier.
I wonder whether my noble friend on the Front Bench could improve our energy efficiency a little by answering two questions. First, are there still two scales for carrying out an energy audit on houses? There used to be two. There was a scale of 10 under the Lady Mary Archer system and also a scale of stars. That was confusing. I wonder whether the two have

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yet been integrated. Secondly, can my noble friend give any hope that energy insulating materials will soon be VAT zero rated or exempt?
The answer to our energy problem is not anything as exciting as a tidal barrage across the Mersey. It is foam and cavity walls, blankets in lofts and double or even triple glazing in windows. If we conserve the energy that we now produce, that is much better than having to produce more of it.
7.26 p.m.
Lord Cooke of Islandreagh: My Lords, I also am grateful to the noble Lord, Lord Ezra, for tabling this question. The energy efficiency of buildings is a subject close to my heart. That is largely because the energy efficiency of buildings has the greatest potential for reducing our total energy requirement in the UK. Approximately 46 per cent. of total UK energy use is for heating buildings generally. For domestic heating it is about 30 per cent.
Energy conservation in buildings is one of those very rare matters on which everybody wins: the house owner will recover the cost many times over the life of the building and he will be more comfortable; the construction industry will benefit from the extra work; and the nation will benefit because fuel that is not used will be there for another day or can be exported, thus improving our balance of payments. Improving the energy efficiency of buildings will reduce the demand for fossil fuels and help in the reduction of carbon dioxide emissions. It will be a plus for everyone if the Government would only think straight and set out a consistent policy for energy reduction in buildings for the future.
Back in 1983 the then Secretary of State for Energy set an objective of improving the energy efficiency of buildings by 20 per cent. in 10 to 15 years, which would save about £4 billion per annum. I believe that the target set in 1983 should have been achievable. But I very much doubt whether we have improved by more than a few percent in the past 10 years, owing to lack of determination to tackle the matter.
I wish to develop further the matter of building regulations, which the noble Lord, Lord Ezra, mentioned, where it is very important to get our thinking straight. There were attempts in 1985 and 1990 at upgrading Section L of the building regulations, which deals with the insulation of the fabric of buildings. The consultation period has just ended for a further attempt to upgrade them. The result of the first two upgrades has been very small. The 1990 regulations were supposed to achieve a reduction in energy use of 20 per cent. but it is now estimated that only about 6 per cent. is being achieved because of trade-offs permitted in the regulations. For instance, it is possible to omit floor insulation if double glazing is fitted. That seems particularly stupid because double glazing can be added at any time whereas floor insulation must go in when the house is built. Those trade-offs were introduced in order to placate those who objected to the improvements because they either were considered too difficult or cost too much.
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The proposed new regulations are shaping up even worse. They have introduced a new concept "target 'U' value" where the under-performance of one element can be compensated by the over-performance of another. The absurdity of it is that the fabric of the building can be degraded if, for example, a condensing heating boiler is used.
For new buildings it is obviously important to ensure that the fabric of the structure is insulated to the highest practical value and that the fitting of condensing boilers or efficient refrigerators can be dealt with separately. These will change several times in the life of a house, which will be 50 years or more, so it is of fundamental importance to get the fabric right to start with. The Royal Institute of British Architects and most responsible bodies concerned with the construction industry have submitted proposals to that effect. The objectors are house building groups and others interested in house building. They say that the proposed "U" values will cost too much and will lead to problems. The department, following consultations, is tending towards trade-offs and other handicaps in relation to high fabric insulation.
The main problem arises with wall insulation, as pointed out by the noble Lord, Lord Ezra. Adding insulation to a traditional cavity wall presents technical problems. It is labour intensive, adds to the cost of building and is difficult to supervise. It is common for its performance to fall short of expectations by 20 or even 50 per cent. A variety of alternatives to cavity walls is standard practice in countries in Northern Europe, some of which have weather conditions similar to ours. If the wall problem can be overcome then "U" values of 0.35 or even 0.3 can be set for walls; 0.2 for roofs (as agreed by most authorities); and 0.25 for floors. That would result in the energy reduction in new houses approaching 50 per cent., provided that airtightness is dealt with.
I must declare an interest in insulation. My company manufactures insulation for the construction industry. But it manufactures insulation because of its interest in energy conservation, not the other way round. My family firm was part of the linen industry in Northern Ireland for 100 or 150 years. When our section of the industry faced terminal decline in about 1960 we sought an alternative activity. It was felt that to manufacture insulation would be a reasonable thing to do. It was hoped that the demand for it would rapidly increase. The difficulty of applying insulation effectively and economically to cavity walls soon became apparent. We studied construction methods in all Northern European countries, North America and Canada. Building systems do not always translate from one country to another, and a few false starts have been made. However, the firm now offers a fully developed building concept for which it has a certificate from the British Board of Agrement. This system is compatible with and uses traditional trades and skills except that bricklayers are not required. It is quick to build. Houses built in accordance with this system have an energy requirement one-third that of a similar house built to the current regulations. That is a reduction of

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66 per cent. The system offers a delivered "U" value for walls of 0.27. The reason I have gone into this in detail is to show that there is no valid reason for failing to go for "U" values that will produce astonishing reductions in new houses.
As to the cost of such a system, I offer two examples. A contractor is now commencing work on the construction of houses for the Focus Housing Association in Handsworth, Birmingham, using this system. The contract was awarded on cost in competition with houses built to the current regulations. This means that the reduction of 66 per cent. in energy use will not add to the cost. The system was also used to build a classroom accommodation block for Stafford independent grammar school in 1989. That is a building of 6,000 square feet with seven classrooms to accommodate about 130 pupils. Last year the bill for heat, light and ventilation exceeded £200 per annum for the first time—at £220. I do not know what those costs are for a normal school accommodation block of that kind but certainly it can be measured in the thousands. The cost of that accommodation block was competitive. The pupils moved in 13 weeks after the commencement of site works. There are many other proven building systems that can achieve similar results, and I suggest it is time that more attention was paid to them.
I hope that the Minister will direct his department to look more positively and constructively at the setting of high standards. I suggest that the standards that I mentioned earlier should be included in new building regulations and that the construction industry should be given two or three years' notice of that intention so that it has time to develop suitable methods to meet the standard without additional cost. We should then be moving towards substantial energy conservation in new buildings.
I support the view of the noble Lord, Lord Ezra, that the new regulations should require an energy rating certificate, such as the National Energy Foundation Certificate with minor modifications. I believe that that is a more suitable and relevant method of assessing buildings than the one presently proposed by the Government. Something must be done about the existing building stock because generally the waste is absurdly high. I applaud the Energy Saving Trust concept. I also believe that it must move more quickly and be funded one way or another so that its work can achieve much greater momentum in a short time and improve energy use in existing buildings.
I hope that the Minister will be able to encourage us today by concurring that new regulations will be looked at more positively.
7.38 p.m.
Lord Graham of Edmonton: My Lords, we are grateful to the noble Lord, Lord Ezra, for his initiative. It is not unique; it is regular and consistent. The House is indebted to the noble Lord who not only is uniquely qualified to speak on these matters but who also enjoys a high reputation outside the House. In raising this matter he is attempting to nudge and
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remind the Government, not that major steps have to be taken, but that the issue has to be kept constantly in focus.
All three previous speakers stressed that we are looking at a package of measures; not a single measure, cut, grant or initiative. What I believe we are learning, and the record will show, is that this Chamber is not short on suggestions. I know that the Minister will very fairly tell us a great deal about what is being done. What we want to encourage him and his colleague to do is to look at examples in other countries.
The issue of the sheer waste of energy literally going up the chimney needs to be recognised and blanched at. We ought to find a better way of getting the maximum use out of the energy that we burn. The Labour Party would want a national programme of energy efficiency work, with the linked objectives certainly of reducing carbon dioxide emissions and generating substantial amounts of long-term employment. Not too much was made of this—it is not directly appropriate—but in the present national economic climate and crisis, where we are trying to reduce £50 billion of debt, one of the factors that the Minister and his colleagues should look at, whenever they have the opportunity of examining these matters, is how many jobs can be created or how many jobs can be saved. We think that the highest priority in this economic recovery should be to save jobs—permanent jobs—to reduce the number of households which are unable to afford to heat their homes adequately and to achieve reductions in national energy demand—with environmental benefit and less reliance on imported coal, electricity and opencasting.
I want to make three positive proposals for the Minister and his colleagues to consider. First, there should be a scheme to provide a variety of packages of insulation and efficiency work at no extra cost to households, with a small subsequent premium being added in return to those households' unit energy costs. We suggest that this can be organised and funded by the regional electricity companies and British Gas. There could be worse ways of encouraging these bodies, which have made large profits since they have been privatised, than using some of them—not necessarily losing any of them—to provide the seed corn for encouraging better efficiency. It would be at no capital cost to the householder but it would be recouped in one way or another at a later date.
Secondly, we propose a change in the regulatory regime for the energy utilities, so that a direct incentive is built into their pricing mechanisms to promote energy efficiency. And thirdly, we propose a change to building regulations—a point that has been referred to by more than one speaker —to improve standards of insulation and thermal efficiency coupled with an energy audit to be carried out when major refurbishment takes place.
We believe that the work which could be achieved under the first of these initiatives, backed up by the others, could provide better standards of warmth and energy use for more than half a million homes a year, and could, for example, generate 50,000 permanent jobs. It could also remove more than 1 million tonnes

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of carbon dioxide output a year, rising cumulatively. After a 10-year programme, emissions totalling 55 million tonnes would have been prevented. There would be no additional cost to the taxpayer.
The Minister and his colleagues may look at these statistics with scepticism. I am certainly not able wholly to defend them in detail but this is what I have been told could be achieved if the Minister and his colleagues looked at the matter.
Can the Minister confirm that investment in energy efficiency has declined in the United Kingdom by 28 per cent. over the past two years? We believe that the Government should be launching a nation-wide programme to achieve better use of our energy. Although I am sure that the Minister will tell us of a small range of things being done, they do not add up in our eyes to what is required.
The Minister knows that the present position is bleak. Local authority expenditure under housing investment programme authorisations on improved insulation was £210 million in 1991–92 (cut from £280 million in 1989–90) on council housing stock; and £30 million in 1991–92 on grants for non-council dwellings. If the Minister denies that those statistics are correct he has to justify to the House how reducing the amount of money, funnelled through one source or another, to encourage councils to insulate their houses is improving the situation.
The Green House programme, to assist local authorities specifically for energy efficiency work, was £45 million in 1992–93 but was cut to only £5 million in 1993–94. Then there is the Home Energy Efficiency Scheme, which was mentioned by more than one speaker. It began in 1991 and offers insulation work to low income households, at reduced costs but requiring a client contribution. Thirty-five million pounds has been allocated in 1992–93 and the amount is set to remain the same in cash terms for the current year. How does that encourage the better use of energy?
The Energy Savings Trust has recently been established, with the former Cabinet Member, the noble Lord, Lord Moore of Lower Marsh, as its chairman, with the participation of British Gas and most of the regional electricity companies, and with a remit to promote energy saving. Its budget for the first year is only £6 million. Now £6 million in the billions of pounds that are at stake in wasting or saving energy is nothing short of a disgrace.
Some noble Lords have told us what other countries are doing. I am certain that the Minister will tell us that there are equally interesting examples in this country. I am told that Japan provides free energy audits for small companies, tax concessions on investment in energy-saving equipment and low interest loans from the Housing Finance Corporation to help pay for insulation and imposes a legal requirement on companies to employ qualified engineers as energy managers.
In Holland, the utilities are authorised to raise a levy of up to 2 per cent. on the price of gas and electricity in order to finance grants for the installation of high-efficiency boilers, insulation and low-energy light bulbs. In Wisconsin, in the United States, a
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similar provision exists for a 3 per cent. levy. Many of the states in the US have weatherisation programmes, and the US utilities are regulated according to a rate of return basis, such as we have suggested, which deliberately encourages energy efficiency promotion. In Germany, mandatory provision comes into force next year for the inclusion of low-emissivity glass in all new buildings; similar provisions already exist in Sweden. I hope that the Minister, while not being able to deny those initiatives, will encourage me to believe that there are equally good and sound initiatives being taken by his department.
We do not have to go abroad to see innovations in this field. Leicester City Council has filled the cavity walls in nearly 13,000 council houses, achieving cost savings of more than 50 per cent. because of economies of scale. It is also conducting an energy survey of all its housing stock, and has an imaginative scheme for selling low-energy light bulbs to tenants at cost price.
Glasgow City Council has a central energy conservation budget, and an automatic policy of improving insulation when refurbishing properties or tackling damp problems. By the city working together with community-based business Heatwise, 70,000 homes have been draught-proofed and insulated. Newcastle—I am proud to say, my own home town —has worked up a project, together with the European Commission, British Gas, Northern Electric and British Coal, aimed at reductions of CO2, emissions and any energy consumption in the city by the year 2000.
We debate this powerful and emotive topic against the background that around 7 million families in Britain cannot afford to pay for the warmth they need and that 3 million homes suffer from condensation and mould growth. Helping to reduce energy bills and promote greater warmth is of prime importance to any anti-poverty strategy. We believe that the needs of low-income households should be central to the work carried out under the scheme we propose. The noble Lord, Lord Ezra, has, more than anyone else, given the Minister an opportunity to remind us of what is being done. He has been reminded of what we believe can be done. I look forward with the noble Lord, Lord Ezra, and others to what he has to tell the House.
7.50 p.m.
The Parliamentary Under-Secretary of State, Department of the Environment (Lord Strathclyde): My Lords, I am delighted that this is a debate which is taking place at this far more charitable time of the evening than is normal for Unstarred Questions. I believe that that has helped the quality of the debate. I very much enjoyed the speeches to which I have listened.
A number of points have been made with regard to the government's policies and programmes to promote energy efficiency in buildings, but, before I respond to these, the House may find it helpful if I first describe the context within which the government's policies are set.
Although energy efficiency has been promoted for a number of years as a cost effective way of reducing

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energy costs in business, in the public sector and in the home, more recently the associated environmental benefits have become of increasing relevance and importance.
This environmental linkage was, of course, given clear focus by the Prime Minister's signing at the Earth Summit last year of the Climate Change Convention. When ratified, this will commit us to prepare and implement a national strategy for limiting our emissions of greenhouse gases, and to aim to return our emissions of carbon dioxide to 1990 levels by the year 2000. This entails finding reductions of 10 million tonnes of carbon by the end of the decade. It is a challenging target. We have already made considerable progress towards developing our national strategy to achieve it. I am of course aware of the aspirational targets set by some countries such as Denmark and Germany.
I say to the noble Lord, Lord Ezra, that I believe that the United Kingdom has performed well in recent years, with the Energy Efficiency Office programmes alone achieving annual savings of over £500 million. The United Kingdom GDP has increased by over 20 per cent. since 1979, while energy use is virtually unchanged, which is another indication of improved energy efficiency.
The most widely used indicator for comparing international performance is energy intensity—the ratio of energy used to GDP. That of course is not a perfect measure, but OECD figures show that our energy ratio has reduced by almost 25 per cent. since 1979. That is a better performance over this period than most of our major competitors, including Japan, the USA and Germany. Between 1982 and 1988 the UK's average ratio improved at twice the European Community average.
However, the focus should be on achieving co-ordinated worldwide action through ratification and implementation of the convention. The target for the year 2000 is only the first step. We will be playing a positive role in international discussions on what further commitments should be agreed under the convention going beyond 2000.
Meanwhile, the Government are conducting an extensive consultation exercise on the shape and balance of our national programme. Last December we published a discussion document on CO2 emissions which set out the options and opportunities for action by individuals, business and the public sector to help meet our national target, and invited views and commitments to action. This was followed by a series of workshops in March. The results of these consultations will be fed into the development of the national programme later this year.
The Government hold the widely-shared view that energy efficiency is one of the quickest and most cost-effective ways of reducing carbon dioxide and other emissions, although there are certain barriers to the natural operation of the energy and associated services market which result in a less than optimal take-up of potential cost-effective energy efficiency improvements.
It is for these reasons that we have been widening and strengthening the range of instruments available
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to encourage the take-up of such improvements, and increasing the resources for implementing them. Thus the budget of my department's energy efficiency office has increased by 75 per cent. in two years and now stands at some £70 million; and the energy saving trust, set up by the Department of the Environment, the Scottish Office and the private sector, in the shape of the gas and electricity utilities, has launched its first two schemes, with others under development. That is the sign of the very real commitment from the privatised utilities requested by the noble Lord, Lord Graham of Edmonton.
The Energy Efficiency Office has identified three main barriers to the efficient working of the market. These are: a lack of knowledge and information; the low priority given to investment in energy efficiency; and market distortions such as the lack of correlation between energy prices and environmental costs. To be effective, therefore, energy efficiency programmes must address one or more of these market barriers.
Bearing this in mind, perhaps I may now turn to issues raised by noble Lords during the course of the debate. The noble Lord, Lord Ezra, referred to the 44 million tonnes of carbon dioxide savings identified in a Building Research Establishment report. The report made clear that this figure referred only to potential technically achievable savings; potential cost-effective savings would amount to some 29 million tonnes, though the report pointed out that some of these savings would be taken in the form of increased comfort.
The largest proportion of the identified potential savings could come from wall insulation. The Government have been working with the cavity wall insulation industry through a number of programmes to increase the take-up of wall insulation, and further work in this area is planned.
The noble Lord, Lord Ezra, then asked whether grants under the Home Energy Efficiency Scheme (HEES) could be extended to cavity wall insulation. At present we prefer to concentrate on the basic insulation measures of loft, tank and pipe insulation and draught-proofing. As the scheme is cash limited, the adoption of a higher cost measure would reduce the overall number of homes which could be treated. There are therefore no plans at present to widen the scope of the scheme.
However, the future of the scheme will be considered in some detail after the completion of a review which is expected to start in the autumn. There are various ways in which the scheme might be developed, but it would not be profitable to speculate on these in advance of the review.
The noble Lord also suggested that the revenue generated by imposing value added tax upon domestic fuel could be used to stimulate energy efficiency improvements. The Government already fund a substantial programme of energy efficiency improvements for low-income households through the HEES. This provides an average grant of £150 for basic insulation measures. Thus, in addition to social benefits, the scheme provides considerable energy and

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carbon dioxide savings, the latter amounting to a potential annual saving of 0.7 tonnes of CO2, per household.
In addition, local authorities have substantial investment programmes to improve the energy efficiency of their housing stock, and are spending some £350 million on such measures this year.
Turning to the subject of home energy labels, raised by the noble Lord, Lord Ezra, and my noble friend Lord Mersey, the Government do not have the power to compel either of the existing labelling organisations to drop its own approach, although they have developed the standard assessment procedure to enable the two types of label to be compared. By promoting labels which incorporate the standard assessment procedure, and by proposing that it be incorporated in the building regulations, we hope to encourage a move towards a single system so that there is no confusion and greater acceptance by the consumer.
While on the subject of the building regulations, the noble Lord, Lord Ezra, suggested that the proposed improvements to the regulations do not go far enough. In fact, the new provisions represent a significant improvement on the existing provisions. The aim of the revision is to reduce CO2, emissions from buildings by incorporating cost-effective improvements in a way which does not introduce unacceptable technical risks and which maintains some flexibility for designers.
The noble Lord, Lord Cooke of Islandreagh, spoke most knowledgeably on that subject. The Government have recently consulted on a revision of the thermal efficiency provisions of the building regulations. We estimate that the proposed provisions will improve energy performance in the space and water heating of an average new dwelling by 25 per cent. to 35 per cent. compared with current provisions and save around 0.25 million tonnes of carbon a year by the year 2000. We are considering carefully our response to the consultation exercise.
Some consultees think the measures go too far; others, that they do not go far enough. Our job in government is to listen carefully to all representations in the context of the consultation exercise. However, I can reassure all noble Lords that there are no present plans to abolish Part L of the building regulations.
My noble friend Lord Mersey talked about the "fleabites" that were our policy on combined heat and power. I understand why he should think that because, compared with other countries in the European Community, we have a low incidence of CHP. The House will know that the Government have a target to double the present installed capacity of CHP to 4,000 megawatts by the year 2000, a target that we are very confident that we can meet. It would result in the reduction of UK CO2, emissions equivalent to between 3 million and 3.5 million tonnes of carbon per year. Last year I was delighted to attend with my noble friend Lord Mersey a presentation on a novel CHP scheme by Citigen for the Corporation of London. The scheme, which is currently being
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installed, will provide 30 megawatts in its initial stage and is the only one in Europe also to provide chilled water for air conditioning.
The noble Lord, Lord Graham, made an interesting and useful speech on energy efficiency. He referred to a number of things that we are doing already and asked whether we could do more. We have a national scheme to promote energy efficiency. The campaign, "Helping the Earth Begins at Home", has been hugely successful. The advertising campaign has been seen by millions of people and we are gradually seeing an increase in the amount of investment in energy efficient products.
It is important to recognise that government programmes and initiatives to promote improvements in the energy efficiency of buildings are carefully designed to meet specific purposes; all the programmes have objectives and targets against which progress can be measured, and the programmes and their objectives are regularly reviewed. Ultimately, however, improving energy efficiency in buildings depends on organisations and individuals taking actions which are essentially in their own interest. The debate has highlighted a number of important aspects of this subject, and I congratulate noble Lords, and particularly the noble Lord, Lord Ezra, on the useful contributions they have made.
Viscount Goschen: My Lords, I beg to move that the House do now adjourn during pleasure until 8.10 p.m.
Moved accordingly, and, on Question, Motion agreed to.
[The Sitting was suspended from 8.1 to 8.10 p.m.]

National Lottery etc. Bill
House again in Committee.
Lord Donoughue Lord Donoughue moved Amendment No. 8A:
After Clause 4, insert the following new clause:
("Secretary of State's duty to report to Parliament on the effects of the National Lottery
—(1) As soon as possible after the first anniversary of the sale of tickets or chances in any lottery forming part of the National Lottery, the Secretary of State shall report to Parliament on the effects of the National Lottery on the matters specified in subsection (2).
(2) The report shall contain information as to the effect on the National Lottery on

(a) the level of charitable income other than through the Charities Board;

(b) the level of revenue paid to the Levy Board from the betting levy;

(c) any other matters deemed appropriate by the Secretary of State.").

The noble Lord said: I shall speak also to Amendment No. 45. The Committee will be aware that I have interests in racing, although none of them is paid. Frequently, they lead to a financial deficit. There is a printing error in the Marshalled List. Subsection (2) should refer to the effect "of" the National Lottery" on the levy. My noble friend Lord McIntosh has spoken about the impact on charitable income. The Minister says that the impact on charities will be monitored. I need say no more on that subject, and I shall not expect the Minister to say more unless he chooses to do so.
I shall speak basically to paragraph (b) of the amendment. It requires the Secretary of State to report on the impact of the new lottery on betting duty. Amendment No. 45 places a similar duty on the director general. The Committee will recall that on Second Reading several noble Lords, including the noble Earl, Lord De La Warr, the noble Marquess, Lord Zetland, and the noble Lord, Lord Trevethin and Oaksey, expressed serious fears that the lottery will have a damaging effect on horserace betting and, via betting duty, on the racing industry's revenues.
It is estimated that the national lottery's turnover may be £4 billion. That must come from somewhere. There will be losers as well as winners. My fear is that racing may be a big loser. That would be ironic, following the Government's excellent recent tax concessions, and bearing in mind the parlous financial state of racing which led to those concessions. I shall not take up the time of the Committee repeating the well established financial figures and the difficulties of the racing industry. I cannot believe that it is the Government's intention to undermine their own good work in recently coming to the rescue of the industry.
We do not know what impact the lottery will have, but we soon will once it starts, as we assume and, on this side, trust that it will, after the autumn of 1994. The amendment is constructive. It builds in a simple process of monitoring, analysis and reporting. With that information, it will be possible to consider whether racing is being damaged, unintentionally, by the new lottery, and whether the tax regime should then be modified to mitigate that damage. Those are two distinct processes, and in the amendment I am speaking to the first only.
I should like to press the Minister to reply constructively. I believe that the amendment presents no problems to him, the Bill, or the working of the lottery. The Bill and the lottery continue unhindered by the clause, if accepted. It merely provides for the monitoring and reporting of facts: facts on the impact on betting duty and facts on the impact on charities, which we have already discussed. I believe that we should be given that information anyway.
It would be much better if the Secretary of State were to produce official figures. I note that on Amendment No. 4, the Minister gave an assurance, or I felt that he gave an assurance, that the impact on charities would be monitored by the Home Office. We merely ask that a similar process should occur with betting duty. If the Minister accepts that, it will be greatly to his credit, even if it upsets the odd bureaucrat. I shall press him to do that. It is an enjoyable experience anyway. I beg to move.
The Deputy Chairman (Lord Skelmersdale): I should point out that there is an error in the Marshalled List. The word "of" should be substituted for the word "on" in line 5 of the new clause.
8.15 p.m.
Lord Mackay of Ardbrecknish: I was unable to be present on Second Reading, and so this is the first time that I have spoken on the Bill. I should declare an interest in that I advise a major bookmaking
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company. It is an important amendment because, as the noble Lord, Lord Donoughue, has explained, there will undoubtedly be an impact on the turnover of horserace betting. The Jockey Club estimates that it will be as much as 15 per cent. If we take that as a maximum, then in reality it may be a little less. But undoubtedly it will happen. There is much more certainty about an impact on bookmaking from the lottery than there is about the impact on charities that we discussed before the dinner break.
I suppose that it is not directly a problem for the Government if there is a drop in bookmakers' turnover, but what should be a problem for the Government is the knock-on effect. One knock-on effect which will interest the new Chancellor of the Exchequer is that there will be a reduction in the total take from betting duty. The more general concern, which the noble Lord has already mentioned, is that the racing industry will not receive as much money as it does presently from the betting levy. Any reduction in the betting levy for the horserace industry is bound to be felt severely. As we know, the industry is having difficulties, and the Government have recently, as the noble Lord said, recognised those difficulties. I do not believe that that recognition was due entirely to the by-election. The recognition was coming long before the by-election, as I think we could see in this place when the matter was raised by a number of Peers on a number of occasions.
The Government's action shows that they are concerned. It would be ironic if that concern, and the efforts to meet the concern of the industry, were put at naught by a reduction in the horserace betting levy as a direct consequence of the lottery. Some method should be found to monitor what happens to the horserace betting levy. I am sure that the Chancellor will he monitoring what happens to his tax return as a result of the lottery. It would be comparatively simple to undertake such monitoring whereas charities' monitoring would be complicated. It would be difficult to untangle the various impacts on charitable giving.
I support the noble Lord. I hope that my noble friend Lord Astor will be able to give some assurance that the Government appreciate the problem that could occur, that they are alive to it, will watch for it, and, if necessary, will take action to help the horseracing industry should it face a reduction in income.
Lord Cavendish of Furness: I should like briefly to support the amendment, in particular as regards the levy board revenue. Although I have declared an interest as regards other aspects of the Bill, I did not on Second Reading declare a triple interest, which I now do. I am the owner of a racecourse—that is Cartmel Races in Cumbria—I am a director and shareholder of that company and I am a racehorse owner, albeit on a modest scale.
I do not know what effect the Bill will have on the levy but some authoritative comments were made in the Chamber which are quite convincing. It is fair to say that owners are probably one of the largest contributors to racing. I have been an extraordinarily fortunate owner; almost unparalleled in the limited

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number of horses I have owned. Yet it is rare for my racing account to go into surplus. Few owners make money out of racing; nor should they, nor do they want to. They race horses because they love it and they are involved in racing because they wish to support the sport.
I do not believe that the racing fraternity could contribute more than it does to racing without damaging the sport to a great extent. Any diminution in the levy would be catastrophic to racing. The amendment tabled by the noble Lord, Lord Donoughue, has the merit of not crying foul; it simply asks for monitoring and reporting. It is reasonable that the Government should keep the matter under review and should report as the amendment provides. I hope that it will find favour with my noble friend Lord Astor.
Lord Swaythling: I too support the proposal put forward by the noble Lord, Lord Donoughue. I declare my interests as a member of the British Horseracing Board, as a member of the Horserace Totalisator Board and as the owner of some painfully slow and expensively hungry horses.
The effects of the National Lottery etc. Bill on the horse-racing industry could be serious. It has been estimated that there will be as much as £8.3 million reduction in the levy. That would be a most serious blow to racing. In dealing with this potential problem I urge the Government to be pro-active rather than reactive to an industry which employs more than 100,000 people and which already has severe financial problems despite the helpful measures introduced by the former Chancellor of the Exchequer. I support the amendment.
The Earl of Gainsborough: I too wish briefly to support the amendment for the reasons given by other noble Lords. It meets the case of having a national lottery, which is a new concept in this country. Irrespective of the racing industry and other allied industries, it is a good idea to look again at the situation after one year.
The proposal is not entirely non-political. The Government may not wish to deal with it precisely tonight but they should look at it. The Bill will have effects of which no one knows today, as was said earlier. A national lottery is an entirely new concept. If we look at the position after one year and report to Parliament on the effects of the lottery that would be good. I hope that the Government will take the proposal on board and consider carefully the principle behind it.
Lord Lucas: The lottery aims to raise £2 billion or so. This will all come from somewhere; it will all be money that has not been spent on something else. Many industries will suffer. Those we might guess at are sweets, cigarettes and beer on which expenditure may be cut down. Many industries will suffer as a result of losing turnover to the lottery. I hope that the Government will be very careful before they subsidise
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one particular industry—namely, horse-racing—as a result of losing turnover to the lottery just because it is something in which noble Lords like to indulge.
Lord Holme of Cheltenham: Given the chorus of unanimity from Members of the Committee in the racing fraternity perhaps I may say that we on these Benches support subsection (2) (a) of the amendment. I was struck by the mention of the Newbury by-election and the good that it has done the racing industry. Perhaps we may venture to hope that the Christchurch by-election will have a similar effect on the welfare of old-age pensioners.
Lord Birkett: Although I understand the anxieties of Members of the Committee who have spoken about horse-racing I wonder whether the proposal of the first anniversary of the lottery is a clever move. I have a strong suspicion that, whatever the fortunes of the national lottery, the first months, possibly even the first year, will show an enormous bulge. It will be a novelty for the nation. In the first months people may buy more tickets than they will ever buy later. As a great supporter of the lottery I hope that that is not so; I hope that it will continue to be as successful as possible. However, I wonder whether one year's statistics are not an invitation to jump to conclusions which might prove to be false.
Viscount Astor: I agree with everything that was said by the noble Lord, Lord Birkett. I am sure that he will be pleased to be in the happy position of having the Government agreeing with him as opposed to the earlier situation. Perhaps I too should declare a modest interest. The noble Lord, Lord Donoughue, is a director of Towcester Racecourse and he has an interest in racing. I too am a racegoer and I have also owned rather slow horses. I have even ridden rather slow horses in races and they were much slower then than when other jockeys rode them—but that is a different matter.
I turn to the amendment. The evidence from Ireland suggests that, following the introducing of the national lottery, the income from betting went up. That is an extremely important factor and we should not lose sight of it. Of course I understand the concern of those involved in racing. Perhaps I may point out that the director general of OFLOT will have no right to gather information on the income of the levy board or business to publish it. The income and turnover of the national lottery will be available from the operator and the levy board will make its annual report in the usual way. There will be no relationship between the one and the other. They are entirely separate entities.
As I said, I understand the concern of racing that its income may be affected when the lottery is introduced. The appropriate level for the betting levy is a matter for the bookmaking and racing industries to consider together. They will of course need to take into account all matters which appear relevant to their discussions. I repeat that it is a matter for agreement between those industries.
The noble Lord, Lord Holme of Cheltenham, mentioned subsection (2) (a) of the amendment. We had a substantial discussion on charitable income and

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its effect in relation to an earlier amendment. I do not think that I would be helping the Committee if I added to that discussion. I realise that the noble Lord, Lord Donoughue, wishes me to go further than I am able to, but perhaps he will accept that this is a matter for the bookmaking and racing industries.
Lord Donoughue: I thank Members of the Committee who have contributed to the discussion. I am pleased to say that the majority support the amendment. Perhaps I may say to the noble Lord, Lord Lucas, that the Government do not subsidise racing—and I am sure that he will not repeat that again. Racing subsidises Treasury revenues to the tune of nearly £0.5 billion per year. Racing is in fact different from chocolates and so on, in that it depends greatly on specific gambling revenues for which the lottery represents competition.
I agree with the noble Lord, Lord Birkett, that the first year's figures may be unreliable, but they will be interesting. In fact, we need to have the first year's figures and every year's figures. Whether or not the Government react to those figures is a matter for them. I am not dealing with that in the amendment. I say merely that the matter needs to be monitored.
I have listened to the Minister's response, which I felt was rather unsatisfactory. I do not believe that it is a matter for the bookmakers and the industry. The Government have initiated this major new measure in the gambling industry which may have enormous—or they may be minor—consequences for other aspects of the gambling industry, for charity and for racing. I say again that I see no reason whatever for the Government not to accept the amendment, which simply asks them to monitor and report. Parliament should have that important information.
I may wish to return to this issue on Report, which will not coincide with Ascot, and I shall expect even wider support, especially from the Benches behind the Minister. However, in the hope that the Government will return on Report with a slightly more constructive and encouraging approach, I am happy for the time being to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 5 [Licensing of a body to run the National Lottery]:
[Amendment No. 9 not moved.]
8.30 p.m.
Lord Holme of Cheltenham Lord Holme of Cheltenham moved Amendment No. 10:
Page 2, line 36, at end insert:
("( ) A licence given under this section shall be subject to a formula obtained by the Director General which includes factors for efficiency and success.").
The noble Lord said: In moving this amendment, I intend to speak also to Amendments Nos. 11 and 19, which have been grouped with it in the name of the noble Lord, Lord Allen of Abbeydale, and others. All three amendments relate to the same area of concern; namely, the terms under which the operator will perform.
I must apologise because my amendment is rather infelicitously worded. It was dictated over the
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telephone and it would read better if it referred to a formula laid down by the director general rather than "obtained by the Director General".
In the Bill, the key determinant of what the good causes will receive ultimately is what the operator is paid. I am afraid that we must assume—although we shall attempt to change their mind later—that the Government will remain obdurate as regards the level of tax. If we accept that the prizes cannot be much below 50 per cent. in order to motivate people to take part in the lottery, and indeed to be fair in terms of prizes to those who participate, it stands to reason that what remains is split between the operator and the good causes; in other words, more to the operator means, by definition, less to the good causes.
There are estimates of what will be the appropriate costs of running an efficient national lottery. Based on the experience of other countries, those estimates vary between 5 per cent. and 15 per cent. On the other hand, while recognising that paying too much money to the operator will detract from what is available for the good causes, we need to accept that the lottery must be professionally run. It must be run in the best possible manner by the best talent available.
In other words, although I accept the word "administration" in Amendments Nos. 11 and 19 and I understand what is meant by that, I do not believe that that is an adequate description of what will be required of the operator. Clearly, the operator will need entrepreneurial management to make a success of this.
I take one aspect of the matter. There will be very high front-end costs. High promotion costs will be involved in launching the lottery, setting up systems to operate it and so on. Whoever does that must take a long-term view of the returns obtainable on that front-end investment. Therefore, we are not talking simply about a sub-contract for administration. We are talking about putting the lottery into the hands of entrepreneurial professional management.
The question is bound to arise: on what basis will the contract for operation be awarded? I suggest that a flat rate percentage, although it may help calculations of the rough and ready sort that we have been doing in the Committee today, is entirely inappropriate. It depends on the scale of the operation.
It occurred to me that the situation of this operator is not unanalogous to the privatised utilities, where there is, if not a monopoly, a quasi monopoly and a very large one at that. The company will be operating an enormous business. I said on Second Reading—and it is worth repeating in case one or two Members of the Committee did not hear it—that it is said that whoever runs the lottery will become almost immediately one of the Financial Times Stock Exchange Index top 100 companies. Therefore, we are talking about an enormous contract. Already we know that there are rumblings as various companies and consortia position themselves to bid for that enormous contract.
The purpose of the amendment—and, I think, the intention of all the amendments—is that the Government must be rather more forthcoming in the

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Bill about the kind of considerations that will go into deciding the formula by which the contract will be arrived at. My amendment is concerned with two criteria which occur in privatised utilities and the kind of formula that regulators must oversee where there is some reward for efficiency—a K factor—and success.
It would be inappropriate in Committee for me to try to lay down exactly what the formula should be. Therefore, I say in advance that I have no intention of pressing the amendment to a Division. However, I should appreciate—and it would affect our attitude on Report—a much clearer indication from the Government, given the enormous size of the potential contract and the direct effect that it has on the funds available ultimately for the good causes, as to what is their thinking on the criteria that will go into the award of the contract. I beg to move.
Lord Allen of Abbeydale: I wish to add only a few words to the speech that we have just heard, with which I very much agree. This matter must be run professionally and it is a very big affair. I am not particularly wedded to the form of words in the amendments in my name but I am very much with the noble Lord, Lord Holme, in asking the Government to be rather more forthcoming.
We are told very little about the kind of criteria which will lay down the conditions to be met. As has been pointed out, that is the only area in which there is any room for manoeuvre. If you have prizes at 52 per cent. and tax at 12 per cent. then the rest of the funds must be divided between the good causes and the operator. As I say, that is the only area in which there is room for manoeuvre.
I do not know whether the Government can give any idea of the kind of formula that they are thinking of as regards the amount of profit which the operators will be allowed to receive. When it all takes place, if it is discovered that the operators do rather better out of the lottery than any of the good causes, I believe that there will be a lot of trouble.
Lord Swinfen: I should like to support the amendment. My noble friend knows that, in my view, the proposed tax rate of 12 per cent. is too high. In my view, the only reason that the Bill has come before Parliament is to give the Treasury another opportunity to raise income. Some years ago there was no hint of it: people pooh-poohed the whole idea. As the noble Lords, Lord Holme and Lord Allen of Abbeydale, said, it is obvious that administration must be kept as tight as possible.
However, I should like to point out that the criterion laid down for good administration must not be a set percentage of the proceeds; otherwise, there will be a very grave temptation on the part of the operators to allow their administration costs to rise to just below that maximum ceiling and not make any efforts to reduce it and become more efficient. I believe that there are other methods of judging the administration, and its quality, in that respect. I say that we should not specify a set percentage figure.
Viscount Astor: The amendments have a sensible purpose, but I hope to put the Committee's mind at rest and demonstrate that they are not needed.
The director general's overriding duties are set out in Clause 4. Subject to propriety and the protection of the interests of participants, there is a need to maximise proceeds for beneficiaries. Putting further such requirements in the Bill is superfluous. I can assure the Committee that in order to carry out that duty, in issuing a licence the director general will necessarily be concerned to ensure both efficiency—that is the holding down of operating costs—and success. That is the maximisation of revenue. Those are key elements of any bid, and the director general will be looking to ensure the best outcome through the competitive bidding process. Included in the bidding process will be specific references to costs, and the director general will be looking to get the best deal which delivers the maximum amount to good causes. There will be a licence condition setting out the proceeds to be returned for good causes, and other key financial factors, and that licence condition will have the force of law.
I hope that I have demonstrated to the Committee that the spirit behind the amendments is accepted by the Government, but that the amendments themselves are unnecessary because the matters they cover will be dealt with in the licence which will be arrived at through the competitive bidding process.
The amendment of the noble Lord, Lord Allen of Abbeydale, proposes that the licence should contain measures to ensure and demonstrate that the administrative costs incurred are the minimum required for the proper running of the national lottery. The whole purpose of the competitive tendering process for letting the licences is to keep down the costs. A licence will clearly contain measures which ensure that the operator's costs start as low as possible and remain as low as possible, commensurate with the need to ensure that the lottery is run properly.
The noble Lord, Lord Allen of Abbeydale, asked me to be more forthcoming on conditions. I do not want to set a bench mark for bids. What we want is the best bid, through the commercial, competitive tendering process, which will return the maximum amount for good causes. That is the important point. That will come out of the bid and, following the bid, we will have the licence conditions set by the director general. With that explanation, I hope that I have been able to put Members' minds at rest. The intentions behind the amendments are also the intentions of the Government in that area.
8.45 p.m.
Lord Holme of Cheltenham: I welcome the noble Viscount's words. There is a certain feeling about today's debate of "Waiting for Godot"; in other words, that in time all will be revealed and that we should leave it to the director general and the Secretary of State. However, I put the following point to the noble Viscount. This Chamber, and indeed Parliament as a whole, spent weeks debating the terms upon which the television contracts should be awarded. They were decisions that affected our

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society. Very large sums of money and issues of public policy were involved, as well as the very important commercial points to which the noble Viscount referred.
The director general will want—indeed, we all want—a good commercial deal. It is, however, a little bland to say that the best commercial deal is the best one. Any business awarding a contract of such a size, and most government departments awarding such a contract, would have desiderata, considerations and criteria a great deal more specific than "Leave it to us; we'll get the best deal we can".
As I said earlier, I do not intend to press the amendment tonight. However, I hope that between now and the Report stage the noble Viscount—and, indeed, the Government as a whole—will think about being, in the words of the noble Lord, Lord Allen of Abbeydale, a little more forthcoming about the way in which such momentous decisions will be made, rather than simply reassuring us that the spirit is the right spirit.
Viscount Astor: Perhaps I may assist the noble Lord, Lord Holme of Cheltenham. When I said "competitive", obviously that is crucial. But while the bid must maximise the proceeds for good causes, the director general will also have to look at all aspects of the bid; for example, whether it is sensible and whether it is well financed. There are many complicated aspects that he will consider, not just one particular element.
It will be most important to ensure that the bidding process is handled with care. In due course, a document setting out the licence heads and the areas covered will be available both in this and another place. The criteria for selection will be developed and may be complex. I can assure the Committee that two of those criteria will be the level of operating costs and the maximisation of the proceeds for the beneficiaries. I hope that the noble Lord, Lord Holme of Cheltenham, will appreciate that there is a limit to how much work we can undertake before the Bill receives Royal Assent.
Lord Allen of Abbeydale: Can the noble Viscount say whether that document will be available before the Report stage?
Viscount Astor: I am afraid that I cannot answer the noble Lord, Lord Allen, tonight. Perhaps I may write to him.
Lord Holme of Cheltenham: I am sure that it would help the Government as regards the passage of the Bill if they shared such important thinking with Parliament before we finally pass the Bill. Therefore, following the request of the noble Lord, Lord Allen of Abbeydale, I urge the noble Viscount to ensure that we have at least an outline of what is proposed before the Report stage. Having said that, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 11 and 12 not moved.]
Lord Houghton of Sowerby Lord Houghton of Sowerby moved Amendment No. 13:
Page 2, line 40, after ("determined") insert ("provided that such sums shall in all cases be not less than 35 per cent of the total revenue of lotteries forming part of the National Lottery.").
The noble Lord said: The amendment deals with the determination of what is to be handed over to the lottery by lotteries that are formed within the ambit of the national lottery. Subsection (b) of Clause 5 provides for the licence to contain the obligations of the subsidiary lottery towards the main lottery. It says that it shall hand over such sums "as may be determined." I am not clear as to the meaning of the words "as may be determined". One does not want the amount handed over by the subsidiary lottery to be a lower percentage of the proceeds of the lottery than is the case with the main lottery. The amendment provides for the sum to be determined under Clause 5(6) to be not less than 35 per cent. of the total revenue of the subsidiary lotteries. I believe this is a technical point but it is material if there is to be some variation between the proportion of proceeds to be handed over by subsidiaries and that handed over by the main lottery. We are discussing a uniform minimum that is to be handed over to the national lottery. I hope the point is clear and that the Minister can give me a short reply. I beg to move.
Lord Holme of Cheltenham: Amendment No. 49 marches with the amendment of the noble Lord, Lord Houghton, and has much the same objective. We have four streams into which the money derived from the punter paying for his ticket will go. One stream will go to the Exchequer; that is, 12 per cent. One stream will go to the operator, which is an undetermined amount. One stream comprising 50 to 52 per cent. will go for prizes. What is left will go to the good causes. In other words, there are three fixed costs and one variable cost. There are three fixed commitments and one that is utterly contingent on the other three.
The Government have this measure the wrong way round. Many people in this country are rather reluctant to see a national lottery but they are prepared to go along with it if it helps good causes. They believe that the good causes should benefit from the lottery. However, this Bill leaves the good causes totally at the risk of the other three fixed elements. A wise government would have done this the other way round. They would have said that, whatever happens, they would ensure that 35 per cent. of the take would go to good causes. They might then have to consider such radical matters as whether the Exchequer should take so much money.
I hesitate to repeat what I said on Second Reading but I believe I was right and therefore I shall repeat it. I see no good case at all for the Exchequer receiving any money at all from this. I do not believe the lottery should be a tax raising stunt. I do not understand why the Exchequer should gain any money from it, but if it is to receive some money —the Treasury tends to get its finger into every pie—why should it not receive less than 12 per cent.? We have already talked about the possibility of linking the remuneration of the operator to the relative success of the lottery. We must look hard at the prizes. Clearly they have to be set at a level that is fair and motivating, but the Government

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should have asked themselves how much of this great national exercise they wanted to see going to the good causes. I recognise that 35 per cent. is a high figure. However, the Government should consider whether it is right that at best the good causes should receive that figure, but it might be a great deal less. The Government should consider whether that is adequate. I do not expect for one moment that the Government will accept this amendment but I wish they would think hard about it.
Lord Donoughue: I speak to Amendment No. 49. That amendment, together with Amendment No. 13, seems to me to reach the heart of our problem with this Bill. The Bill offers no guaranteed percentage at all to the good causes. Tax is set at a certain level and the administration is set at a certain assumed level—some consider it will be set at a level of up to 15 per cent. The Bill would therefore leave a possible percentage for the five good causes of somewhere in the 20 per cent. range. That means that each good cause would receive less than half of what the Treasury takes and roughly the same amount would be allocated for sales commissions by the operator.
The position could become worse. There is nothing in the Bill to stop the tax rising as the Bill does not deal with that. We know now that this Government believe in increasing taxes. They have been increasing taxes and they will further increase taxes. The Government have a horrendous PSBR problem which we on this side of the Chamber totally sympathise with as the problem is far worse than when the IMF was brought in in 1976. Given those kind of constraints, I submit that the 12 per cent. figure is not even secure and that the Chancellor may in future be tempted to push it higher. Administration costs may well rise in pursuit of turnover.
As the noble Lord, Lord Holme, said, this measure is the wrong way round. The good causes are the residuals and their percentage, which is already too low, can be squeezed down further. But what is the real purpose of the lottery? We believe that its real and only purpose is to support the good causes. Its purpose should not be to generate rising tax revenues. The 12 per cent. figure I have mentioned is twice the average figure that is paid by the European lotteries. It is a quite outrageous figure. We must protect the good causes, and the figure that has been suggested in the amendment seems a reasonable figure to guarantee. That figure can be achieved but the tax level must be constrained or reduced, as must the administrative costs. I believe that is the right way to proceed. We support these amendments.
Lord Swinfen: My name is added to Amendment No. 49. I support both these amendments. The figure of 35 per cent. for the good causes that has been mentioned is reasonable. It is not too low. If it could be raised higher, I would support that. Those of us who propose these amendments have been extremely reasonable in asking the Government for this proportion. As I said on Second Reading, the tax level of 12 per cent. is too high. The promoters of the lottery will have to set up a massive computer system. It
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would not be difficult to guarantee the 35 per cent. figure for the good causes if the tax was not taken off the takings that the promoters will obtain from the punters but instead was removed from the prizes that are handed out. If the computers are programmed properly, the promoters would suffer no additional expense in doing that and it would help to ensure that the good causes received a proportion of 35 per cent.
Lord Simon of Glaisdale: I have not so far intervened on this Bill but I hope I may do so now to demur, with respect, from the dangerous rhetoric of the term "good causes". The percentage allocated to the good causes has been compared to the percentage seized by a rapacious Treasury. Many years ago when I went to the Treasury I had heard for years how rapacious it was and how it called in money from the innocent populace and no doubt accumulated it. When I entered Treasury chambers I made a careful search. Perhaps the noble Lord, Lord Barber, did the same. That search yielded nothing. However, both our initial jobs also involved the Inland Revenue. So I went down to Somerset House. I was introduced to an official called the Revenue Secretary. In his office there was a large safe. "Ah", I thought, "at last I shall see all this bullion that the Treasury rakes in". So I asked that it should be opened. There was nothing in it, not even a crust of bread or a quarter bottle of wine. So much for what the Treasury gets as opposed to the good causes.
The Treasury is really no more than an accounting agency. Money is paid in to the Consolidated Fund and paid out according to the decrees of the Committee of Ways and Means. It is paid out on such items as the armed services, the National Health Service and welfare. Is not the defence of the realm a good cause? Is not the health of the populace a good cause? What about the welfare of those who are most unfortunate? Is that not equally a good cause?
Therefore, I hope that we shall hear no more of the Treasury —uttered with a hiss every time it is mentioned—compared with the good causes.
9 p.m.
Lord Donoughue: Before the noble and learned Lord sits down perhaps I may ask him whether he went to visit Mr. George Soros or various foreign exchange dealers to discover what the Treasury had done with some of our money.
Viscount Brentford: As I put my name to the first of the two amendments I should like to speak in support of the amendments. I do not mind particularly which one is adopted, but I fully endorse the arguments that have been made in support of them. I shall not take the line of the noble and learned Lord and either attack or defend the Treasury. I should like to see law that is clear and understandable so that we all know where we are. At present the Bill is too vague.
As has already been suggested, I can see the good causes being squeezed out. I am sure that the Treasury will not be squeezed out because it has powers which others do not. I therefore plead that a minimum amount should be written into the Bill. I agree entirely that 35 per cent. is a reasonable minimum. Whether

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we like it or not, the objective of the national lottery is to provide additional money for those causes. I believe that we should write into the Bill a minimum proportion, and 35 per cent. seems a reasonable figure. I am therefore happy to support the amendments.
Lord Birkett: This is exactly the formula which I favour for the running of a lottery. The figure of 35 per cent. is exactly right, if one assumes that prizes absorb 50 per cent. and 15 per cent. goes on administration. However, the problem is that if one sets down 35 per cent. as an automatic figure and leaves the rest to fight it out, there is a natural law in the world of lotteries which decrees that if one reduces the amount of money for prizes to less than 50 per cent. of the whole the lottery declines. I cannot say what makes that natural law work in that way, but it seems to be the experience of all the countries which have lotteries.
Therefore, if one starts with 35 per cent. and the Government insist upon taxation, despite all our endeavours to dissuade them, the only way in which that 35 per cent. can be maintained is by reducing the amount that is devoted to prizes. I suspect that if one does that the amount one receives in cash, whether or not it is 35 per cent., will be less than if the formula were more vague.
I believe that the same natural law applies to the taxing of prizes but not the whole. In the experience of the lottery world to tax the prize money and leave the rest alone is also guaranteed to result in the decline of the lottery. Tax has to be on the whole amount or there should be no tax.
Having said that, I believe that this is the ideal way of handling the matter. I believe that prizes should indeed amount to 50 per cent. of the total. I believe that administration should amount to no more than 15 per cent. and that 35 per cent. should go to the good causes. That leaves a small hole in the Government's calculations, but it is a hole which I think they ought to live with.
Viscount Astor: I certainly do not intend to argue with the noble and learned Lord, Lord Simon of Glaisdale, as to whether or not the Treasury is a good cause. I shall leave it to other Members of the Committee to decide for themselves. However, I point out to the noble and learned Lord that we state in the Bill the good causes which we believe should be supported from the money which is paid into the distribution fund. The Bill states that we will pay into the fund 20 per cent. for the arts, and the same amount for sport, the national heritage, charities and projects to mark the year 2000 and the beginning of the third millennium.
All of us are concerned that the lottery should live up to our intentions. If it does not there would be no point to this legislation. That is why the Bill places a statutory duty on the Secretary of State and on the director general to ensure that the maximum amount possible is available for distribution to good causes.
It may help the Committee if I explain further how the bidding process for the Clause 5 licence will work. We envisage that potential operators will be invited to set out in detail their financial strategy for the lottery. This will cover their prize strategy, their operating
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costs, the returns for good causes and their forecast turnover. In considering their bids the director general will, among other things, consider the realism of their financial strategy and judge their proposals for maximising turnover and hence maximising the money for good causes. But once the bidding process is completed and the successful operator has been chosen, key elements will of course be set in licence conditions. The Government wish to ensure that the maximum should be raised for good causes. That is why we propose a process of competitive bidding, the result of which is then set in licence conditions which will have the force of law.
Any amendment on the lines of those proposed this evening would, paradoxically, probably mean that arts, sport, heritage, charities and millennium projects receive less money, not more. Setting a proportion of 35 per cent. for good causes would impact on the prizes which can be offered, limiting the attractiveness of the lottery to potential players and inhibiting its success. The important thing is the total amount which goes to good causes, which will depend not only on the proportion which potential operators might make available for good causes but, more crucially, on the likely overall turnover of the lottery.
It is absolutely clear from worldwide evidence that the most important single factor in generating lottery turnover is the amount returned to the players in prizes. That factor will do more than any other to determine whether our lottery will be successful. If the amount available for prizes is held down, the turnover will undoubtedly suffer. That is the opposite, I think, of what this amendment hopes to achieve.
As the noble Lord, Lord Birkett said, successful lotteries worldwide devote around 50 per cent. of their turnover to prizes. On that basis, our lottery might achieve a turnover of £1.5 billion, or perhaps even £2 billion. If the returns to good causes were to be set at 35 per cent. we must consider what effect that would in fact have. It is not possible to squeeze the amount for taxation. That has been set by the Chancellor at 12 per cent. It is not possible to squeeze by very much the amount for operating costs: the operator will have necessary costs which cannot be avoided —equipment has to be bought, staff have to be paid. So the area which could be squeezed would be the amount returned in prizes. But if the amount returned to players in prizes is less, then fewer people will play and the turnover will be lower.
Baroness Seear: We all fully understand that. What we argue about—we have not had an answer—is why the Government have to take 12 per cent. The remainder is very simple arithmetic which we do not need to have spelt out to us. To say that the Chancellor has to have 12 per cent. is not an answer: it is an assertion.
Viscount Astor: I am glad that the noble Baroness, Lady Seear, understands my simple arithmetic.
Baroness Seear: May I ask the noble Viscount why he assumes that I cannot understand his extremely simple arithmetic?
Viscount Astor: I am sure that the noble Baroness understands simple arithmetic, complicated arithmetic, and realms of algebra and geometry that I should find immensely perplexing.
Lord Clark of Kempston: And trigonometry.
Viscount Astor: And, as my noble friend reminds the Committee, trigonometry too.
We have a difference of opinion. The noble Baroness seems to feel that we have put the cart before the horse. I seek to show the noble Baroness that the horse is before the cart: it is in the right place.
The Chancellor has set his rate of tax. That cannot be moved. As the Committee knows, it is not possible for this Chamber to put down amendments which affect that rate of tax. We have to deal with the real world in which we find ourselves. That is why, with the explanation that I have given, the 35 per cent. cannot work.
I am sorry if I bored the noble Baroness. Her mind was obviously working much faster than mine. However, having given that, I hope, simple explanation perhaps the noble Lord, Lord Houghton, will feel able to withdraw his amendment.
Lord Holme of Cheltenham: Before the noble Lord responds on the first amendment, perhaps I may say that I believe the Government Front Bench would be wise to note the support from around the Chamber for Amendment No. 49, which stands in my name. Although I do not intend to press it today, it is a matter to which we shall return at Report stage. I am sure that the Government will use the intervening time to deal with the issue. Of course, we cannot deal with tax matters in this Chamber, as we well know. However, Chancellors change. I read that tax policies are not inviolable. Who knows, there may be some new thinking!
Lord Houghton of Sowerby: The best thing that I can do is to ask leave to withdraw the amendment so that the Committee will have time to go into the arithmetic a little further.
Amendment, by leave, withdrawn.
[Amendments Nos. 14 and 15 not moved.]
Clause 5 agreed to.
Clause 6 [Licensing of bodies to promote lotteries]:
[Amendments Nos. 16 to 19 not moved.]
Lord Redesdale Lord Redesdale moved Amendment No. 20:
Page 3, line 22, at end insert:
("( ) No licence under this section shall permit the running of a lottery by telephone.").
The noble Lord said: This is a probing amendment. I wish to ask the Government whether they have any plans to limit the use of telephones as a means of running a lottery. I draw the Minister's attention to remarks in Standing Committee A of another place in which the Minister, Mr. Key, said:
"In the regulations that the Secretary of State will initiate, we intend to ban telephone sales, games that encourage excessive playing and addictive games".—[Official Report, Commons, Standing Committee A, 16/2/93; col. 126.]
A lottery should not be run via the telephone because of the dangers that exist of large numbers of young people misusing telephones. I do not believe that a
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lottery run on those lines would be of benefit to people, apart from those who run it. I look forward to the Minister's reply. I beg to move.
Lord Swinfen: Before my noble friend replies, if the Government are contemplating that lotteries should be run by telephone—and I say "if"—how will they ensure that those under the ages of 16 or 18 do not take part? They may buy lottery tickets, wasting their parents', relatives' or friends' money by using one of the numbers which run up the telephone bill remarkably fast. I can never remember the numbers.
Viscount Astor: The noble Lord, Lord Redesdale, has drawn our attention to the possibility that the telephone, perhaps the most commonly owned piece of modern technology, might be used by the lottery operator in a way which might be considered insidious, let alone improper.
There are concerns about possible use of "cold calling" as a means of selling tickets. This marketing technique is perhaps most often used to sell double glazing to householders. Not all of those householders take kindly to being telephoned.
The director general will be able to consider whether any use of telephone marketing—if that is indeed proposed by the potential operator—is likely to constitute a nuisance to potential players. Should this technique be used, and should it cause people annoyance, he will also be able to act on receipt of complaints. He will therefore have the power to prevent this happening. But it would not be appropriate to limit the lottery in statute for all time, when an acceptable marketing technique using telephone lines may be possible, and freely available to other businesses.
In addition, the first amendment would have the effect of outlawing the use of any telecommunications network in operating the lottery. This sort of network is, of course, one of the main ways of establishing links to the on-line computer terminals. I am sure the noble Lord did not intend that effect.
The Government have already made it clear that they are minded to direct the director general not to license potentially addictive games or those which exploit the player. I think that perhaps that is the safeguard that Members of the Committee seek and I hope with that explanation the noble Lord will withdraw his amendment.
Lord Redesdale: I thank the Minister for his reply and hope that it will be one of the requirements of the director general to look carefully into the telephone lotteries. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.[Amendment No. 21 not moved.]
Lord Houghton of Sowerby Lord Houghton of Sowerby moved Amendment No. 22:
Page 3, line 22, at end insert:
("( ) A licence under this section shall include a condition that no unclaimed prize money in any one lottery shall be allowed to roll-over to any subsequent lottery.").
The noble Lord said: This amendment deals with the question of roll-over of prize money from one lottery to another. I understand that the Government

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have said that they intend to allow limited roll-over prizes for both the pools and the lottery. Roll-over is the unclaimed prizes from one lottery added to the prizes for the following lottery. In exceptional circumstances, it can lead to a large, inflated prize fund at some stage in the roll-over. I do not know whether it is called a jackpot, but at all events, it increases the attraction of a particular lottery against more normal lotteries.
In other countries, when unclaimed prizes have been accumulated down the line, there has been a terrific national crisis about the lottery which carries the enormous, boosted prize money, because so many people feel that they can win the lot and try to win the wonderful prize, far more than they would ever normally receive from a lottery. That is an undesirable variation of expectations in the course of the subscriptions to the lotteries. It can have undesirable consequences for one lottery against another and there may be an artificially inflated demand for tickets. All sorts of complications can arise if that process goes on too long. The idea is that each lottery occasion will stand by itself and the unclaimed prizes will not go down the line.
This amendment proposes to have no roll-over. Some people will say that there ought to be one and some will say that there should not be. I believe it is undesirable for the uncertain incidence of unclaimed prizes to inflate the amount available for prize money in a subsequent lottery. Let the lottery money he as much as may be, normally in the same area of token. That is the proposition here.
I do not know what the case is for roll-over, unless it is that it was once prize money and not claimed and should remain prize money. But I do not think that that is a principle upon which the lottery should be conducted when it leads to a considerable unevenness in the possible rewards for one lottery as against another, due entirely to the fortuitous incidence of unclaimed prizes. I beg to move.
Lord Donoughue: I wish to speak to Amendment No. 41, which is grouped with Amendment No. 22. Amendment No. 41 is what in my briefing was described as "a roll-over probe". I leave the Minister to contemplate that. It relates to where prizes are carried forward to ever more stratospheric levels. Our concern is the potential for abuse of roll-over in the promotion of the lottery in that lottery outlets could advertise very unrealistic and high levels of prizes. That also presents an opportunity for the Minister to reply to the very pertinent question of my noble friend Lord Houghton. The Minister should explain exactly what he meant at Second Reading when he spoke about limited roll-over. Perhaps he can tell us how that works.
As my noble friend Lord Houghton said, the use of roll-over in the United States has at times produced a frenzy and a mania as prizes rocket. United States research suggests that it can lead to addictive gambling. That is the point where the lottery would cease to be the soft gambling that the Government have often described it as and become very hard indeed—certainly much harder than horse-race betting. So it is our view that the roll-over must
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certainly be limited. We want to hear what the Minister's version of "limited" is, if it exists at all. At that point, if I may, I shall apologise to the House on behalf of my noble friend Lord Howell, whose name was attached to this amendment with mine. He had to leave earlier. It is his wife's birthday, and I think that all noble Lords would agree that he has the right priorities.
The point which my noble friend wished to make quite strongly is that he would like an assurance that under no circumstances will the pools, which have been given roll-over privilege, have the advantage of either having a roll-over before the lottery is in a position to use a roll-over or have more roll-over than the lottery. He wants a clear assurance on those points of timing and degree. My noble friend feels that grotesque levels of prizes which can result from roll-over would be very socially undesirable. He would like to know why we need to have roll-over. Why cannot the operation of the lottery be that, if there is not a winner (which is not very likely), the prizes can be distributed to those who come next in order for a prize? Indeed, that happens on the pools and could continue.
Viscount Brentford: In supporting the amendment I entirely agree with what has been said on this matter by both noble Lords. The first draft of Amendment No. 22 said that no major roll-over should be permitted, which again picks up the pools point. I do not like that in a legal document or statute because it is vague. That point needs to be crystallised. I have not seen wording in the pools legislation to allow them limited roll-over.
I echo the question put to my noble friend the Minister and ask him to explain how that would operate. I have no great objection to a reasonable, limited roll-over being permitted provided that it is small. But my preference undoubtedly would be for no roll-over at all and for the money to be distributed, as the noble Lord, Lord Donoughue, said, down the line. That would be my preference provided that what happens is clear and we do not let the lottery run the risk of the sort of "mania" (as the noble Lord, Lord Donoughue, expressed it) that can arise and has arisen in other countries which have that provision. I should like to know my noble friend's view on that but I should be happy to support a limited roll-over.
Lord Birkett: It seems to me that the amount of the big prizes is a very interesting factor in lotteries. I am told that most countries adopt the principle of a convex shape for prizes. That means that there is a lot of money at the top in very few but very big prizes and a lot of money at the bottom with a very large number of very small prizes (as it were on a £1 ticket prizes of £2, £5 or £10) and almost nothing in between.
It is the big prizes at the top that cause the excitement and are the draw for people. It has always seemed to me that if one has, for example, £4 million a week in big prizes to distribute, it is better to have four £1 million prizes than to have one £4 million prize. When the prizes get out of hand, compulsive gambling is a danger.

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There is a nice compromise, which I invite the Government to consider; namely, that one does not have a normal roll-over but a jackpot at Christmas: there is one enormous bonanza prize which makes everybody very excited at a festive season. The rest is not rolled over. Therefore there is only one cumulative jackpot which is exhausted every Christmas. That gives the excitement of one very big prize without spoiling the even distribution of prizes in the meantime.
Lord Swinfen: I should be interested to learn from my noble friend when he replies, first, whether the Government are contemplating allowing roll-over; and, secondly, how many times roll-over will occur and whether there will be a limit on it? If so, what happens when that limit has been reached and the prizes have not been won? Will the Treasury take the money? Will the promoters take it as profit? Will it be used to bolster good causes, as I would advocate?
The money was going to be given away by the promoters in any case. It would not have gone into their profits. It would not affect the way in which the Government propose to tax the money. The Government will take tax from what people pay when they buy a ticket. If roll-over takes place, I recommend that, when the limit is reached, it is added to the money available for good causes.
Lord Allen of Abbeydale: I do not want to repeat the points that I made when I spoke earlier. However, I understand that the Government so far have said that the roll-over should be limited to three occasions. As I said earlier, that of itself is likely to produce prizes which are too great and may encourage addictive gambling. I should also like to know the answer to the question asked by the noble Lord, Lord Swinfen. What happens if there have been three roll-overs and the prizes still have not been allocated?
Viscount Astor: The subject of roll-over is obviously an important concern for your Lordships. Roll-over happens in a draw or lotto when the numbers drawn at the end of the game are not held by any player. This is possible because players choose their own numbers, rather than as in a raffle each having one unique ticket out of a finite set. Prizes which are not won as a function of this game structure may be rolled forward to subsequent competitions. The Secretary of State will give a direction to ensure that prize money is never rolled forward more than three times. There is no question of unclaimed prizes being rolled forward. The Secretary of State is minded to direct that prizes which are not claimed should in the first instance be retained against a later claim and after a certain period should be paid into the distribution fund to be spent on good causes. This mirrors arrangements for society lotteries where prizes which are not collected, either through chance or the choice of a winner, are the property of the intended beneficiary. The position on prizes which are not won is different. It is in the nature of a draw lottery that a prize may not be won by any player. Likewise, prizes may well be won by more than one player. The
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Secretary of State will issue a direction to ensure that unwon prize money will not be rolled forward into following competitions more than three consecutive times. In the very unlikely event that the prize was not won after that, it would be distributed among lower level prizewinners.
The amendment of the noble Lord, Lord Donoughue, would give the Secretary of State power to make laws, breach of which would be criminal offence, concerning information which must be given to lottery players on the amount of money not claimed in the last competition which might be won in the following one. I can tell your Lordships now what that information will be: no unclaimed prizes will have been rolled forward. The noble Lord, Lord Donoughue, is concerned that, when they are considering buying tickets, players should know whether a roll-over has happened in the previous draw and, if so, how much has been added to the week's prize. It seems to me unlikely that the operator will not make this known since a roll-over in the lottery will be news and will attract attention. I suggest it would be inappropriate to use regulations to ensure that this information is available, for example making it a criminal offence if a retailer omitted to mention it to a single player.
We shall come later to the pools roll-over clauses in the Bill. My noble friend Lord Ferrers will be dealing with those. However, I can assure your Lordships that the pools roll-over will not have an advantage over the national lottery either in numbers of roll-over or in the timing of its introduction.
I hope your Lordships will be satisfied with that explanation as regards unclaimed prizes and that the amendment can be withdrawn.
Lord Houghton of Sowerby: I thank the Minister for that full explanation. I do not know whether there is any desire to take the debate any further. What the Minister has said does not meet the proposal in the amendment. However, I do not feel able to propose any alternative off the cuff. With the permission of the Committee, I will withdraw the amendment. We shall have to see whether we wish to do anything further.
Amendment, by leave, withdrawn.
[Amendment No. 23 not moved.]
Clause 6 agreed to.
Clause 7 [Licences under sections 5 and 6: further provisions]:
[Amendment No. 24 not moved.]
Viscount Astor Viscount Astor moved Amendment No. 25:
Page 3, line 33, at end insert ("(including, if the information is of a description specified in the licence, information for publication by him)").
The noble Viscount said: This amendment is intended to assist the director general in carrying out his important duty of protecting the interests of the participants in the national lottery by ensuring that there is no bar to him publishing information of a description which he has specified in the licence.
The kind of information he may specify might, for example, cover such matters as the progress of coverage across the country by online terminals, the numbers of prizes won, the number of complaints

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received, and other information relating to the performance of the national lottery which might be a matter of public interest and which should be capable of publication, but which might not form a normal part of the Clause 5 licensee's annual report and accounts under the Companies Act. These are measures in the interests of customers. I am sure that the Committee will agree that they are both fair and sensible and that they will be welcomed both within and outside the Chamber. I beg to move.
On Question, amendment agreed to.
[Amendment No. 26 not moved.]
Clause 7, as amended, agreed to.
Clause 8 [Variation of conditions in licences]:
Lord Holme of Cheltenham Lord Holme of Cheltenham moved Amendment. No. 27:
Page 4, line 26, at end insert:
("( ) The Director General shall publish the conditions from time to time pertaining to each licence granted under section 5 or 6.").
The noble Lord said: This amendment was part of a group of amendments, all dealing with the same issue, about the director general publishing the conditions contained in any licence that is granted. I hope that the Government will find the spirit of the amendments acceptable, because they are all about the openness set out in the Citizen's Charter. They are about making sure that the public and Parliament understand and know the conditions under which a licence was granted. In other words, this is an extension of the discussion we were having a short time ago. I hope that the Government will not find the amendment contentious. I do not intend to press it but it is important that any licence issued is publicly understood.
In this context, perhaps I may raise another matter that is relevant to this and which has been drawn to my attention. There is a need for the Government, in describing the conditions under which licences are awarded, to deal a little further with the question of what is a fit and proper licensee and what is meant by probity. In the case of the Gaming Act, concerning casinos and so on, quite close conditions are laid down by the Home Office as to who is a fit and proper person or company to exercise these important opportunities and powers. I would hope that at Report stage, as part of the policy of openness which this group of amendments is meant to encourage, the Government would want to expand on "fit and proper" and "probity". As I said some time ago in this debate, these are large contracts and it is in the public interest to know not only that they end up in the hands of people who are commercially viable but also that we can be sure that those people will be operating in the public interest. Having said that, unless the noble Viscount wants to come back, I intend to withdraw the amendment.
Viscount Astor: We debated most of this area when we dealt with Amendment No. 14. I appreciate what the noble Lord has said. I said then that it is our intention to make as much of the licence as possible available to both Houses and to make it as public as possible. I said that we would not be able to publish
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all the licence conditions in full because it is important that some things in the licence should be kept private for the security of the operation of the national lottery, whereas to publish them might undermine the lottery and breach that all-important security. I am sure that the Committee would not wish that to happen. I hope that that goes some way to reassure the noble Lord.
Lord Renton: Can my noble friend indicate whether each licence will be drafted in terms of the company to which the licence is given, or will the licences be in a general form applicable to all such companies?
Viscount Astor: There are two licences. There is the licence granted under Section 5, which is to the one lottery operator. There are further licences under Clause 6 to promoters of the lottery. Under that clause there may be more than one promoter and they might have different and varied licence conditions.
Amendment, by leave, withdrawn.
Clause 8 agreed to.
Clause 9 agreed to.
[Amendment No. 28 not moved.]
Clause 10 agreed to.
Schedule 3 [Revocation of licences]:
Viscount Astor Viscount Astor moved Amendments Nos. 29 to 36:
Page 27, line 16, leave out ("paragraph 6(1) (c)") and insert ("Part II of this Schedule").
Page 28, line 8, leave out ("twenty-eight") and insert ("twenty-one").
Page 28, line 9, leave out from ("notice") to ("and") in line 10 and insert ("either make written representations about the matter to him or notify him in writing of the licensee's intention to make oral representations,").
Page 28, leave out lines 12 to 14 and insert:
("(2) If, within the period mentioned in sub-paragraph (1) (c), the Director General receives neither written representations nor written notification of the licensee's intention to make oral representations, the revocation shall take effect at the end of that period.").
Page 28, line 27, at end insert:
("7A.—(1) The Secretary of State may make regulations as to the procedure to be followed where a licensee's intention to make oral representations is notified to the Director General as mentioned in paragraph 6(1) (c).
(2) The regulations may in particular make provision

(a) for the revocation of the licence to take effect if the licensee fails to comply with any requirements imposed by or under the regulations, and

(b) as to the hearing by the Director General of oral representations.").

Page 28, line 28, after ("any") insert ("written").
Page 28, line 29, after ("6(1) (c)") insert ("or any oral representations against the revocation of a licence are made in accordance with regulations under paragraph 7A").
Page 28, line 32, leave out ("him") and insert ("the licensee").
The noble Viscount said: My noble friend Lord Ferrers spoke to these amendments with Amendment No. 2. Therefore, with your Lordships' permission, I shall move them together. I beg to move.
On Question, amendments agreed to.
Schedule 3, as amended, agreed to.
Clause 11 [Directions to the Director General]:
[Amendment No. 37 not moved.]
Clause 11 agreed to.
Clause 12 [Regulations as to the promotion of lotteries]:
[Amendment No. 38 not moved.]
Lord Houghton of Sowerby Lord Houghton of Sowerby moved Amendment No. 39:
Page 5, line 33, after ("lottery") insert ("including a requirement that the odds against winning the jackpot shall be prominently displayed").
The noble Lord said: This amendment concerns a piece of additional information which must be published—that is, the odds against winning a jackpot. That will now be related to the diminished size of the jackpot, if there is one. There is no other point involved in the amendment except publication of the odds against winning inflated prize money in a particular lottery due to a roll-over. I beg to move.
Lord Renton: I lack expertise in gambling. Occasionally I go horseracing, but I do not often win money. I have never heard of a jackpot being part of a lottery. I always thought that jackpots came with gambling machines. We are not concerned here with gambling machines. If the noble Lord, Lord Houghton, knows something that I have missed, he should explain it to the Committee because, frankly, I do not see how jackpots apply to the Bill.
9.45 p.m.
Viscount Brentford: Perhaps I may say a word in support of the amendment. I am not sure about the technical use of the word "jackpot", but the purpose behind the wording is to discourage the addictive gambling instinct in a person who sees a prize of £1 million or £2 million and says, "Oh, perhaps I'll get that", and, quite unrealistically and wrongly for that person, goes in for it. If information about the odds is publicly available so that such a person can see that he is not likely to win, that will bring some realism into the national lottery. As I understand it, that is the objective of the amendment. Whether or not the wording is right, I would welcome my noble friend's views on giving such publicity to try to curb the addictive instinct.
Viscount Astor: My right honourable friend the Secretary of State is considering ways in which the overall odds against winning a prize might be made available to players, perhaps through inclusion on the tickets. The noble Lord, Lord Houghton, feels that any advertisement for the lottery should contain, prominently displayed, the odds against winning the jackpot. We have a problem. We do not know what they will be. The odds against scooping the pool may well seem very high, but there will be more than one prize and the lower-tier prizes are not to be sniffed at. Displaying only the odds against winning the jackpot could be misleading in itself since it would neglect to mention the multitude of other chances that a player may have to win.
I think that people who buy a lottery ticket know that the odds against winning a large prize are very high indeed. The public are well aware of that although we cannot point out what some of those odds might be because it depends on how many
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players are playing and whether there is a roll-over. Therefore, I must advise the noble Lord, Lord Houghton, that I think that his amendment is unnecessary.
Lord Houghton of Sowerby: I thank the Minister for that. I think that we had better reconsider the amendment alongside the earlier amendment regarding the restriction of the roll-over and look at the two together because the one is bound up with the other. We are dealing with an inflated prize—whether or not we call it a jackpot—due to a roll-over of unclaimed prizes from earlier lotteries. If the roll-over is to be limited to three consecutive occasions, that at least will prevent an accumulation of unclaimed prizes mounting up to some astronomical figure which would lead to a frenzy of people rushing to buy tickets for this gift from heaven of untold wealth. We do not want to see Trafalgar Square in a state of riot with people trying to buy tickets to win unclaimed prizes amounting to tens of millions of pounds. But that is not likely to happen anyhow. In order that we can look at the two amendments together, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Allen of Abbeydale Lord Allen of Abbeydale moved Amendment No. 40:
Page 5, line 35, at end insert:
("( ) the use which may be made in advertising and promotion of reference to charitable causes which may be likely to receive moneys from lottery proceeds.").
The noble Lord said: The purpose of this amendment is to place a duty on the Government to publish regulations about how the lottery can use either images or references to charitable causes in its promotional material. I believe that during the Report stage in another place the Minister said that he recognised that this matter was important and that the department would give it further consideration over the next year. I wonder whether that goes quite far enough.
There must be a temptation for lottery operators, in the massive advertising campaign that we shall experience, to want to use images of charitable work to a disproportionate degree. It is perhaps true that images of sick or undernourished children are more likely to encourage people to buy tickets than pictures of sports stadia or perhaps the unveiling of Prince Albert.
There are two risks here. First, although the Advertising Standards Authority and the broadcasting authorities will no doubt monitor lottery advertising in their ordinary, efficient way to ensure that it is legal, decent, honest and truthful, there is a strong feeling among charities that for charity one needs a little more than that. Long experience has shown that considerable skills are required to ensure that charitable work is presented to the public in a way that does not patronise or offend the people with whom charities are working. At the very least, there should be a requirement on promoters to obtain the consent of the charity before using its name, images or a description of its work in the promotion of lottery material.
The second danger takes us back to matters that we have discussed a great deal as the evening has worn on: that the more the emphasis is put on charitable work, the greater the risk that people will buy lottery tickets in the belief that they are helping charity work and will subscribe less to the appeals made directly by individual charities. There is an argument here for regulations to be made which could be prepared, presumably, in consultation with the voluntary organisations, the Advertising Standards Authority and the broadcasting authorities. It is an important matter from the point of view of charities. I hope that the Government, who have as I say, already shown themselves sympathetic, will be prepared to go just a little bit further. I beg to move.
Lord Renton: Although I do not agree with the exact wording of the amendment, its purpose is one which deserves the careful consideration and support of my noble friends on the Front Bench. If we had something which, in the course of the promotion of the national lottery, indicated that charities stood to benefit from it, that would to some extent reduce the fears expressed, mainly by noble Lords opposite, about the effects of the national lottery on charities. For that reason, the amendment deserves consideration.
Lord Birkett: I do not agree entirely with the amendment for the simple reason that, although I understand well the feelings of charities that they should not be subject to unfair competition, the whole point of the lottery, as I understand it, is not merely to have a lottery but to have it for what have become known as the good causes: the sports, the arts. the heritage, the Millenium Fund and other charities. It would be unduly inhibiting upon the operator of a lottery not to mention the obvious fact that that form of mild gambling has a beneficial spin-off that others do not. It was Benjamin Franklin, I think, who once described a national lottery of this sort as a tax paid only by the willing. That seems to be a good description. I do not see how the operator can be inhibited from pointing out the good that will result, albeit 35 per cent. or less—I agree—for the good causes. I believe that there should be no kind of deliberate rivalry between ordinary charities and this lottery. However, the operator cannot be quite as inhibited as the amendment suggests.
Lord Swinfen: The quality of the advertising is the important aspect of the amendment. In general, charities have a high and honest content to their advertising. Years ago some were rather disreputable. There is a grave concern in the charity world that in order to get people to invest in the national lottery the charity angle will be used as part of the advertising. It is feared that that will be misused to the detriment of charity as a whole. It is appreciated that a small proportion of what will be spent on the national lottery will go to charities. However, there is the danger that people will be turned off by bad advertising. They will be turned off not only the national lottery but from giving to charities in general.
Viscount Astor: There appears to be some confusion about the amendment and I shall try to help the Committee to sort it out. The amendment refers to:
"the use which may be made in advertising and promotion of reference to charitable causes which may be likely to receive moneys from lottery proceeds".
Let us look at what is receiving moneys from lottery proceeds. It is the good causes: the arts, sport, heritage, charities and the Millennium Commission. They are not all charities, and they are not going to give the money to charities. Charities are only a part. Therefore the amendment is confusing because it implies that the good causes are charities. That is not the case.
I had hoped that I had made it clear to the Committee earlier today that we do not want the lottery to market itself in a way that is confused with charitable lotteries. That was the thrust of my argument to the noble Lord, Lord Birkett, in respect of the first amendment. I believe that the amendment will not work. I understand the anxieties which Members of the Committee have about charities. I have said that the national lottery will market itself in such a way as to give players an opportunity to participate, which is fun, in an activity that gives them a chance to win a substantial prize. In the light of that and my earlier comments, advertising is quite properly part of the licence condition to which I referred. It is part of that licence condition which should be set by the director general.
Lord Allen of Abbeydale: I must have put forward my arguments with even less clarity than I normally manage. I found the Minister's reply quite incomprehensible. The amendment is aimed at charities; it is not aimed at good causes, if the noble and learned Lord, Lord Simon, will permit me to use the phrase. It is aimed at charities for two reasons. First, charities are the only ones which could suffer from clumsy advertising. If one handles the advertising in a clumsy way one can upset people concerning the disabled and children. That does not apply to all the other good causes which are listed in the Bill. Secondly, charities are the only one of the five good causes which are likely to suffer under the Bill for the reasons that have been mentioned time and again today.
Therefore, the amendment aims to protect to some extent the interests of charities. I understood that it was in line with what a former ministerial colleague of the noble Viscount said in another place. Perhaps the hour is so late that I am not able to take in what he said. I shall read the Minister's reply in Hansard and consider what must happen at the next stage of the Bill. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 41 not moved.]
10 p.m.
Viscount Brentford Viscount Brentford moved Amendment No. 42:
Page 5, line 35, at end insert:
("( ) the number of draws which may be held in any calendar month").
The noble Viscount said: This amendment asks for publicity. The idea is to push in front of the general

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public as much relevant information as possible. It seems to me that the number of draws to be held is an item of information which the general public is entitled to have. I beg to move.
Viscount Astor: This Bill has been drafted to ensure as far as possible that the regulation of the lottery operation is achieved through licence conditions, which have the force of law, and not in regulations, which are criminal law. Some people or organisations are not subject to licence conditions; for example, players or retailers. Their behaviour is therefore to be controlled through regulations made by the Secretary of State. The lottery operator will be subject to licence conditions and will face the risk of losing his licence for serious breach of those conditions. There is no need to place limits on his behaviour using criminal law.
In addition, I must add that the Government are not convinced of the need for the Secretary of State to limit the number of lotteries held in a given period. The Director General of OFLOT will be able to take a view, when an application for a Clause 6 licence is received, on whether there are already quite enough draws scheduled to happen in the period proposed. Exactly what frequency and variety of lotteries the people of this country will want is a commercial judgment to be made by the operator together with the director general, and this mixture may change over time. Therefore, I urge my noble friend to withdraw his amendment.
Viscount Brentford: The amendment seeks in no way to be restrictive. It merely asks for publicity so that people may know the facts. I appreciate fully that the number may vary from time to time. That is not an issue. We merely seek publicity. However, at this late hour, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 12 agreed to.
Clause 13 agreed to.
Clause 14 [Annual report]:
[Amendment No. 43 not moved.]
Lord Donoughue Lord Donoughue moved Amendment No. 44:
Page 6, line 32, at end insert:
("( ) The Director General shall include in his report under subsection (1) a report on the pattern of purchase of lottery tickets on a regional basis and across income groups.").
The noble Lord said: In speaking to this amendment I shall speak also to Amendments Nos. 69 and 91 and I shall introduce Amendments Nos. 70 and 90.
The purpose of the amendment is to provide for the monitoring of patterns of the purchase of lottery tickets and the patterns of distribution of proceeds. We want to do that in order to determine whether the national lottery money has been transferred from low to high income groups or from some regions to others.
Amendment No. 44 provides that:
"The Director General shall include in his report … a report on the pattern of purchase of lottery tickets on a regional basis and across income groups".
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Amendment No. 91 requires that the distributing bodies should include in their annual reports information about how lottery proceeds have been,
"distributed or applied on a regional basis and across income groups",
so far, we concede, as can be determined.
On the patterns of participation, we should note that research recently undertaken in the United Kingdom by Saatchi and Saatchi on behalf of the Sports Council supports the view that participation in the lottery is likely to be weighted towards those on lower incomes. The survey which examined the public's intention as regards the purchase of lottery tickets suggested that a larger proportion of those in social classes C1 and C2 will be more regular lottery participants than those in the AB category. Moreover, Professor John Kay in a report on the national lottery for the Gulbenkian Foundation notes that the findings by Saatchi and Saatchi to which I have just referred,
"are consistent with the results of surveys in other countries".
The general finding is that poorer people spend a larger proportion of their income on lotteries. A number of studies are quoted to support that view.
In a debate in another place much concern was expressed about the fact that national lottery advertising would be organised so as to target low income groups. Many were worried about that aspect, but the then Minister resisted any moves to meet that concern. We hope that the Government will now undertake to try to ensure that national lottery advertising is not specifically targeted on the poorer members of society.
As regards the pattern of distribution of the proceeds, we know that the aim of the lottery is to raise money for the arts, the heritage, charities and the Millennium Fund. Many fear that a large proportion of lottery money will be spent on high prestige projects such as Olympic stadia, opera houses or historic buildings. We are not opposed to that; indeed, we should like to see more of it. However, the research on the current patterns of the use of those facilities shows, perhaps not surprisingly, that people on low incomes are less likely to benefit from those projects than are high earners.
Therefore, if we put it together, the evidence suggests that the lottery is likely to be a form of regressive taxation. It will obtain a disproportionate amount of its revenue from the least well off and the proceeds will go disproportionately to finance services which the better off enjoy. We believe that it is most important that we should have the information about the patterns of participation and of distribution.
The amendments aim to ensure that we are aware of those patterns and ultimately, it is to be hoped, can secure a fairer geographic distribution and distribution across all social groups. I should point out that the amendments are very much at the heart of the approach of this side of the Committee to the Bill. I hope that the Minister will take them seriously because we take them most seriously. I should also mention that Amendment No. 91 concerns the structure and capacity of the distributing bodies to deal with the regional question. That is consequential to our main concern. I beg to move.
Lord Simon of Glaisdale: I should like to support the group of amendments under discussion so far as it relates to regional policy. I am not so occupied with Amendment No. 44, but Amendment No. 69, which refers to the "regional" distribution of the proceeds, seems to me to be most important. For reasons just indicated by the noble Lord, there is a distinct possibility of the distribution favouring real estate in the metropolis. We need to see a proper spread of the proceeds throughout the United Kingdom, particularly as regards sport, the arts and indeed charities.
Lord Redesdale: I thank the noble and learned Lord, Lord Simon of Glaisdale, for supporting the regions. I wish to speak to Amendments Nos. 70, 90, 91 and 110. We on these Benches feel that these amendments are particularly important because they concern the distribution of the funds around the regions. I count the North East as my home. The lottery is of a national character and the South East, and particularly London, should not be the main beneficiaries of it. The funds should be spread equally. These amendments seek to divide the money equally around the country.
I speak particularly to Amendment No. 110 which concerns the Millennium Fund. We have a distinct feeling that the Millennium Fund will bring with it a blaze of glory that will be centred on the capital. A large proportion of the moneys that are going to good causes will go to the Millennium Fund. Therefore we on these Benches feel that any money that is going to projects for the Millennium Fund should be divided around the country.
Lord Renton: So far as the regions are concerned, I hope that the money will be distributed to the regions according to their need and not according to the number of tickets bought in each region. I think it would be utterly wrong to try to distribute it on that basis. That makes me doubt whether all these amendments are right. As to the idea of the director general reporting about the pattern of purchase of lottery tickets across income groups, how on earth is he to find out except by asking people to which income group they belong when they buy tickets? That is unthinkable. I can imagine nothing more socially divisive. Good heavens, I am sure the Government could not agree to that being done. Therefore I have some doubt whether these amendments collectively deserve the enthusiastic support which the speeches in support of them have so far given. I hope that the Government will look rather critically at these amendments because they could do more harm than good.
Lord Lucas: I very much agree with what my noble friend Lord Renton has said. I have a great deal of sympathy for the underlying reasons that I detect behind these amendments—that the projects supported by this enterprise should be spread widely across the country. But to take the example offered by the noble Lord, Lord Donoughue, of the Olympic stadium in Manchester, what region does that benefit? It does not benefit a region; it benefits the whole country. What income group does it benefit? It
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benefits us all. How can one start subdividing that and saying, "Well Manchester has got that so it cannot have anything else"? That seems to me an entirely inappropriate way of going about things. To start measuring these things would create an enormous bureaucracy.
Lord Donoughue: I advise the noble Lord to do a little reading on the preparation for the Olympic bid, which, as Ministers know, has involved a considerable amount of professional research which demonstrates that the North West would benefit considerably.
Lord Lucas: I am not denying that the North West would benefit; I am just saying that we would all benefit from it. It is not something which is confined to the North West. Likewise, if one takes the example of the capital, I do not believe that new building in the capital, if it serves some national purpose, should be allocated purely to the capital's share of the money.
Lord Redesdale: I am grateful to the noble Lord for giving way. I am afraid that I have to disagree with him. If one lived in Newcastle and had never been to the capital, building a new opera house in London would hardly do one any good.
10.15 p.m.
Lord Lucas: Not to my credit, I have never been to Manchester, but I do not believe that the building of an Olympic stadium in Manchester would do me anything but good, whether or not I go there, because I am part of this country. I do not agree with the idea of spreading the benefits widely among the regions. I believe that the lottery has to do things of significance. How many regions do we have in this country? Do we have 10, 50 or 150? If we start subdividing the fund in that way we shall only ever do little things.
I agree that at the lower level, in relation to the smaller projects, particularly in the Millenium Fund, the funds should certainly be spread out among the regions. There is no reason why the money spent at village hall level should all go to Sussex. The benefits should be divided up. But the big projects should happen where they need to happen because of what they are and not because there should be some spreading out of the money across the whole country. The money should do significant things. It should do things for the whole country and we should not start arguing about whether they happen in particular corners of this country.
As to the underlying question of whether the money should all go into opera houses or into projects in London, I entirely agree with the spirit of the amendments that it should be shared around the country. I would not mind in the slightest if nothing happened in London. However, the idea that we should monitor exactly where the money is going and how it is being spent is complete anathema to me.
Baroness Seear: I do not believe for one moment that it was suggested that there should be a detailed arithmetical distribution. We seem to be rather arithmetic this evening. Surely the noble Lord, Lord Lucas, would agree that if the Olympics go to Manchester, while that does the whole country good,

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in terms of jobs, prestige and the general refurbishment of Manchester it will do more for the Mancunians than for Londoners.
Speaking as a Londoner, I am very conscious of the fact that a great many advantages are available to people in London which have never been available in the regions, unlike in a great many other countries. If one goes to countries such as Germany or Italy, one finds very good opera houses and theatres all over the country. One does not find the equivalent in this country, although there are important exceptions. That is something that we need to balance out. Surely a reasonable distribution towards the regions is very much to be desired.
Viscount Astor: Perhaps I may begin by dealing with the point raised by the noble Lord, Lord Donoughue, concerning low-income groups. We question the so-called evidence—I believe that he referred to Saatchi and Saatchi research—which suggests that people from low-income groups will participate more than any other group in the national lottery. In almost every other state lottery the profile of the playing population largely matches the profile of the population overall. We expect that the population as a whole will want to play the lottery in this country, as they do in other countries. For example, in Spain, 98 per cent. of the adult population participates in the national lottery.
I now turn to the general point concerning the regions. The amendments are intended to ensure that the distribution of lottery money across Scotland, Wales, Northern Ireland and England, and perhaps among the regions of England, is fair and reasonable. The Government are in complete agreement with that principle. However, I hope to explain to your Lordships why it would not be appropriate to set that in statute for all cases.
The Bill already makes provision for funds to be divided among the four countries of the United Kingdom in the sports sector. At present there are four independent sports councils, and for simplicity and transparency of lottery distribution in this case the proportions each will receive have been set out in the Bill.
The noble Lord, Lord Donoughue, proposes to do the same for the arts sector. However, the Scottish and Welsh Arts Councils are not at present independent bodies as the sports councils are but are technically committees of the Arts Council of Great Britain. The Government intend to establish new independent arts councils for Scotland and Wales. When that is achieved, Clause 21 of the Bill will be amended by order to make clear the shares which each will distribute.
In the heritage sector, only one body exists which is wholly independent of Government and has the wide remit, including both the natural and built heritage, which is required for lottery distribution. That is the National Heritage Memorial Fund, which currently makes grants across the whole of Great Britain. The Secretary of State will direct the National Heritage
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Memorial Fund to take account of relative populations and of need in different areas from year to year in making grant decisions.
The Charities Board will be required by the Bill to establish four committees with special responsibility for considering applications which are particularly relevant to each of the four countries of Britain. The board may also, if it wishes, set up committees for the regions of England, or other committees, possibly subject-based, if that seems appropriate to the board. The Home Secretary will expect the board to demonstrate a reasonable spread of expenditure, but will take account of the fact that some projects which are clearly located in one or other of the four countries are in fact for the benefit of everyone in the UK.
Lord Holme of Cheltenham: I thank the noble Viscount for giving way. He lays great emphasis on the Scottish and Welsh boards. In most instances Scotland and Wales are expressly dealt with; and that is as it should be, because with regard to heritage and art they have different traditions and cultures. However, the group of amendments that we are discussing relate to the other 85 per cent. of the country. It is worth remembering that England amounts to 85 per cent. of Great Britain. It is precisely the distribution within England that underlies the wish to see a regional dimension.
Viscount Astor: I understand the point made by the noble Lord. I stated with specific regard to charities that if the board wishes it can set up charities for the regions of England. It will be for the other boards to look very closely on how they distribute their funds within the regions. I am sure that they will do so. We are not prescribing how they should do that and exactly to which regions. It will be up to the boards.
However, let us not forget that the Arts Council has great experience already in distributing funds to the regions of England. Many of its grants are already made to the regions in the North and South. That is a fact. With that experience, I am sure that it will continue to do so with lottery money in the future.
I turn to the Millennium Commission. With the Millennium Commission, a statutory requirement to demonstrate a fair spread of expenditure over each year could undermine the whole purpose of the commission. The Government intend the commission to fund large, lasting capital projects. These, as the Committee well knows, do not come cheap, and funding may well take more than one year for each of the several projects envisaged. The Secretary of State has made it clear that he expects the commission to fund such projects in each of the four home countries—England, Scotland, Wales and Northern Ireland. The Millennium Commission will have more than one year at a time to achieve that.
Reports and accounts of the distributors' conduct over each year will be made available to Parliament, which will be able to consider whether shares have been fair or whether there were good grounds for any temporary shift in emphasis. I hope the Committee is reassured that the Government share its intentions in the matter, and that the amendments are not needed.
Lord Donoughue: Perhaps I may say to the noble Lord, Lord Renton, that the information on participation by income groups is not strange, difficult or undesirable. It is very easy indeed. It is done by most other countries which have lotteries in relation to their own lottery participation. It is professionally easy; it is professionally familiar; and we simply ask for an assurance that it should be done in this country as elsewhere.
On the regions, one of the central points was touched on by the noble Baroness, Lady Seear. The Government have stated that the proceeds go mainly to capital projects. We shall come later to deal with that. Capital projects mean big construction employment and they should go regionally, on a balanced basis. I absolutely agree with what the noble Lord, Lord Holme, said. We are dealing with the England problem. Unless there is commitment by the Government which is built into what is required of the distributing bodies, it could go very wrong. However, I seek to withdraw my amendment on the basis that we may return to it on Report.
Amendment, by leave, withdrawn.
[Amendment No. 45 not moved.]
Clause 14 agreed to.
Clause 15 agreed to.
Lord Wyatt of Weeford Lord Wyatt of Weeford moved Amendment No. 46:
After Clause 15, insert the following new clause:
Extension of powers of Horserace Totalisator Board

(".—(1) The Horserace Totalisator Board may hold a licence under section 5 or 6.

(2) The Horserace Totalisator Board may hold an interest in a body corporate the only or principal object of which is the holding of a licence under section 5 or 6.

(3) In subsection (2) the reference to holding an interest in a body corporate is to holding, or being beneficially entitled to, shares in that body or to possessing voting power in that body.").

The noble Lord said: I have to declare a personal interest in this amendment as I am chairman of the Horserace Totalisator Board. We run it as a commercial entity, independent of interference from the Home Office and we operate as a commercial venture. As is fairly well known, we also give all our profits to racing. We hope that we may be able to receive a chunk of the lottery, which may to some extent compensate for the inevitable loss to the racing levy from the introduction of the lottery. That happened in France. The amount decreased considerably when the lottery was introduced and I believe that the same will apply here. That is one of the reasons why the Tote wishes to be able to play a part in operating the lottery. The amendment is self-explanatory and I do not believe that I need waste the Committee's time any further on the issue. I beg to move.
Lord Benson: I support the amendment. The profits of the Tote are of critical importance to the horse-racing industry of the country. Its contribution at present is, I am told, of the order of £6 million. A decline in the profits of the Tote by reason of the lottery could have a most damaging effect upon the horse-racing industry. It therefore seems appropriate that the Tote should be entitled to hold a licence under
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the terms of Clauses 5 and 6 of the Bill. I can see no reason against that and I hope that the Government will smile upon the proposal.
Lord Donoughue: We on these Benches support the amendment and hope that the Government will look favourably on the Tote's bid. It would be helpful to racing, but that is not the only or the main issue. The fact is that it would be very appropriate for the Tote to participate in the lottery as an operator. The Tote would be British and I think that that is important. It would be unfortunate if the operating of this great industry went overseas. There is no need for that to happen. There are constraints on how far we can keep it national and we should certainly have to look at the Europeans, but I hope we would not look any further than that.
We are also impressed by what the noble Lord, Lord Wyatt of Weeford, said earlier; that he had been in discussions with the Post Office. That would be attractive to us also. Thus, basically we support the amendment.
On a subsidiary and sartorial matter, I wish to ask the noble Lord, Lord Wyatt, why he did not wear his top hat for us. We would all have enjoyed it. When we see the pictures down the corridors, we note that noble Lords in those days frequently wore top hats in this Chamber. I am unclear as to whether any rule prevents it, and perhaps the Minister will tell us. If not, I hope that next time the noble Lord will wear his top hat. There are many Peers who would like to see him topped!
Lord Graham of Edmonton: Especially on Gold Cup day!
10.30 p.m.
Lord Holme of Cheltenham: Before the Minister replies, perhaps I may say from these Benches that we are inclined to support this clause. It must be said, having listened to the noble Lord, Lord Wyatt, at some length on Second Reading, that the Tote has much of the capital equipment in place that other potential bidders do not have, and therefore it should be a contender. We are inclined to accept that. I hope that the noble Lord will not take it amiss if I say that by the time we get to Report stage it would be quite nice to find some other noble Lord advancing the interests of the Tote, rather than the noble Lord himself having to be embarrassed by doing so. I find the use of the word "we" in Parliament easier to be "of the Chamber" rather than of the particular organisation. I should find it very much easier to support the proposition if the noble Lord could, in turn, find other noble Lords to advance it rather than having to do it himself.
Lord Lucas: I wish only to ask a question of the noble Lord, Lord Wyatt. Is the noble Lord satisfied that the powers in subsection (3) are wide enough to allow for the possible complexities of a joint venture company?
Lord Wyatt of Weeford: Yes, I am.
Earl Ferrers: The noble Lord, Lord Wyatt of Weeford, has been chairman of the Horserace Totalisator Board for a number of years. The noble Lord, Lord Donoughue, said that he wished he would appear in a top hat. All that I can say is that that noble Lord has come with everything else other than the top hat. There he is on Ascot Day with his morning coat and his carnation, and indeed even his Royal Enclosure ticket on him. So he is minus only his top hat. I was interested to hear the noble Lord, Lord Holme of Cheltenham, say that he hoped that somebody else would move these amendments so as not to embarrass the noble Lord, Lord Wyatt. I am bound to say that I have never found the noble Lord to be in the slightest bit embarrassed by having to move amendments or lobby on behalf of the totalisator board.
During the time that he has been chairman, the noble Lord has done a great deal to turn the Tote around so that today it is a valuable contributor to the finances of the racing industry. He is to be commended on what he has done, and for his ingenuity in looking at new opportunities for improving the profitability of the Tote, which will benefit both the Tote and racing alike. He has made no secret of the fact that he sees the national lottery as an opportunity which the Tote would not like to miss.
As the noble Lord indicated, his new clause would enable the Tote to hold a licence under Clause 5 of the Bill to run the national lottery, or to hold a licence under Clause 6 of the Bill to promote lotteries as part of the national lottery. The noble Lord's new clause would simply put the Tote on exactly the same footing as any other operator in the betting industry. Any bid by the Tote to run the national lottery will be considered by the director general on precisely the same terms as bids from other applicants for a Clause 5 licence.
The noble Lord, Lord Benson, said that he hoped the Government would smile upon this amendment. I can tell the noble Lord that the Government do smile upon it, and we are content to accept it.
On Question, amendment agreed to.
Clause 16 agreed to.
[Amendments Nos. 47 and 48 not moved.]
Clauses 17 to 19 agreed to.
Clause 20 [Apportionment of money in Distribution Fund]:
[Amendment No. 49 not moved.]
Lord Donoughue Lord Donoughue moved Amendment No. 50:
Page 9, line 15, after ("appropriate") insert ("in the light of his duty under subsection (4) below").
The noble Lord said: In moving this amendment I shall speak also to Amendments Nos. 61, 68, 74, 88 and 89. The purpose of this group of amendments is to entrench the principle of additionality and to avoid the feared substitution which was a centre of concern in previous debates on the lottery. We seek that, in some cases, by suggesting forms of words—I draw the Minister's attention especially to Amendment No. 68.
Ministers here and in another place have said that it is not possible to entrench the principle of additionality. We do not accept that. We believe that having it on the face of the Bill is an improvement. If
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additionality is entrenched in the Bill, it will act as a discipline on both the Government and the distributing bodies to ensure that additionality is followed and that there is not substitution for previous public expenditure ends.
We also require, through Amendments Nos. 88 and 89, that the Secretary of State should report on the levels of funding to recipients. The idea is that it should be clear when published that it is additional. From the publication it will be clear that it is. Those are the purposes of the amendments. I shall speak again to Amendment No. 74 following the noble Lord, Lord Montagu of Beaulieu, on a slightly separate aspect. I beg to move.
Lord Holme of Cheltenham: I wish to speak briefly to both the principal amendment and Amendment No. 89, on which my name appears. The view is widely held in this Chamber that it is imperative that the funds raised by the lottery are additional to moneys disbursed by central and local government. The noble and learned Lord, Lord Simon of Glaisdale, an hour or two ago rebuked us for implying that the Treasury was rapacious. But we know that the Government have a consistent history in this matter. There is the example of the European regional funds. If they can find funding to replace that which is a normal charge upon them, they will do so with relish. When we look at the money raised from the national lottery, I believe that we are right to be suspicious that the recipients—the good causes, as we have been calling them today—could end up with no more money because what has been given with the right hand will be taken away with the left hand. That suspicion exists and is quite widespread in this Chamber and in another place.
We all know that it is extremely difficult to deal with the problem. It is difficult to legislate for people to be good. Although I support the other amendments also, Amendment No. 89 in particular is a way of helping to deal with the problem which the Government can readily concede. It attempts to deal with it through transparency and by ensuring that the Government in their annual report show exactly the level of funding by government departments and local authorities, for the financial year to which the report relates, to each recipient involving money distributed by the new body.
I hope that the Government can accept the amendment. It seems to me that it does not strike at the heart of government. It does not set an intolerable precedent. It does—if I may refer to the point again—follow the principle of the Citizen's Charter and the open government of which the Prime Minister speaks. Parliament and the public can then judge. We can attempt to make our own judgment as to whether there has been an attempt to replace public funding by the proceeds of the lottery.
Lord Montagu of Beaulieu: I speak especially to Amendment No. 74. When I tabled that amendment, as in the Second Reading debate several noble Lords raised the question of exactly how lottery funds would be distributed by agencies such as the National

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Heritage Memorial Fund, the Arts Council and the Sports Council, which are already grant aiding heritage, arts and sports projects in a variety of ways.
It has been generally understood, perhaps not correctly, that lottery funding will not be available to top up programmes which are already funded by taxpayers' money. The intention is to ensure that the Government are not tempted to reduce support from the Exchequer for activities and areas to which they are already committed; in other words, to ensure that lottery funding remains additional to public money.
Without wishing to challenge that excellent principle, perhaps I may remind my noble friend that a number of projects are and will remain seriously underfunded. Historic building grants from English Heritage cannot keep pace with the rising cost of repairs to buildings. The purchase grants of museums and galleries have been frozen since 1985. The garden grants scheme for historic houses never got off the ground through lack of resources.
My noble friend is probably aware—but certainly should know—that it is the understanding and fear of many organisations who hope to be involved in distributing money from the lottery that they will be unable to support projects and schemes that theoretically will be eligible for funding through established government schemes. That will virtually preclude everything that is worthwhile. I am sure that that is not the intention of the Bill or the Government, or the understanding of the general public. This amendment has been tabled to encourage the Government to give a specific undertaking on two points. First, that the National Heritage Memorial Fund will not be debarred on doctrinaire grounds from drawing on lottery money if necessary to continue to do what it has done so superbly since its inception; that is, to be the rescuer of last resort when an important part of Britain's heritage is at immediate risk.
Secondly, I ask my noble friend to confirm that the National Heritage Memorial Fund will be able to continue to use its undoubted skill in negotiating partnerships between such bodies as English Heritage, the National Trusts, the National Art Collection Fund, and so on, which in the past have saved such places as Calke Abbey and the Cholmondley Holbein. It is vital that the National Heritage Memorial Fund is allowed to use lottery money in partnership with such organisations and the private sector. Perhaps one of the best present examples is Brighton West Pier, which is literally falling into the sea. Only a partnership scheme between Brighton Council, English Heritage and the National Heritage Memorial Fund using lottery money can possibly save it.
The object of paragraph (c) of the amendment is to ensure that the National Heritage Memorial Fund is able to spend money on small as well as grand projects. The National Heritage Act 1980 uses the test of "outstanding" for the purposes of grants by the fund's trustees. This was clearly appropriate for the type of grant expected to be made with public money when the fund was set up, but it is clearly inappropriate for the range of potential beneficiaries intended to receive lottery funds. For example, a small
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village hall in need of repair in a remote location will clearly be an ideal beneficiary for national lottery funds. However, it seems unlikely that under the terms of the 1980 Act such a hall can be considered to be "outstanding" and eligible for help.
It is important for the future success of the national lottery that everyone concerned has a clear understanding of how the Government intend the problem to be resolved. I believe that all of us will want to hear an undertaking from the Government that there will be no guidelines or instructions from the Department of National Heritage, or particularly the Treasury, to limit the range of funding decisions open to the trustees of the distributing bodies. I hope that after listening to my noble friend's reply I will be reassured and able to withdraw my amendment.
Lord Donoughue: My name is added to Amendment No. 74. The noble Lord, Lord Montagu, has excellently and succinctly expressed the basic concern in the heritage sector that the Treasury is issuing instructions that no lottery proceeds should go to heritage projects that are currently eligible for government funding, even though they are not actually receiving funds and in some cases are unlikely to receive any. I think that the purchase of land of high conservation value is often cited. The amendment will provide the two undertakings asked for and stated by the noble Lord, Lord Montagu. I support his request for government clarification.
10.45 p.m.
Lord Charteris of Amisfield: Perhaps I may say a few words on Amendment No. 74. First, however, I declare my interest in that for the first 12 years of the National Heritage Memorial Fund's existence I had the honour to be its chairman. I agree with the thought behind the amendment but it should not really be necessary. Paragraphs (a) and (b), although addressed to the National Heritage Memorial Fund, should really be addressed to the Treasury, which, as the noble Lord, Lord Donoughue, and others have said, does not quite seem to hoist in the true philosophy of additionality.
I should like also to say a few words about paragraph (c) and the test of "outstanding". It is very necessary from the point of view of the National Heritage Memorial Fund that the criterion of "outstanding" should be maintained whenever it is a question of dealing with something on a national basis. On the other hand, something could be outstanding for a local area or for a region. For instance, in my time the National Heritage Memorial Fund bought two pictures for the Aberdeen Gallery. It would never have dreamed of spending money on them if they had been going to the National Gallery or to the Tate Gallery, but they were in fact of great outstanding interest in Aberdeen.
Perhaps I should mention at this stage with regard to outstanding that we have talked today as if the National Heritage Memorial Fund was concerned only with the built heritage. I should like to point out to Members of the Committee that only 50 per cent. of the National Heritage Memorial Fund's money

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during the first 12 years of its existence was spent on the built heritage. Much was spent on museum objects, on pictures, on gold and silver, on furniture and on glass as well as on such diverse things as bats, bees, birds, butterflies, bogs, fens, flats, mountains, moors and all the joys and beauties of the wilderness, to say nothing of helping to raise the "Mary Rose" to the surface, spending money on trade union banners and on industrial archaeology. With this hugely wide scope, if the fund is to survive, it must stick, except occasionally with regard to a local area or region, to the criteria of "outstanding".
Baroness Birk: I wish to say a few words in support of what the noble Lord, Lord Charteris, has just said as I was in on the beginning of the National Heritage Memorial Fund. He is right that the conditions and criteria that were laid down at that time should be adhered to. The amendment put forward by the noble Lord, Lord Montagu of Beaulieu, makes quite sure that the fund is on the right map and will not be pushed aside, overlooked or in any way dealt with which is to its detriment.
Lord Gibson: I support those of the amendments which seek to protect the principle of additionality by making it clear in the report at the end of the year what has been spent and how so that the lottery funds are, as it were, ring-fenced. That is wholly desirable. But I am not so happy about the amendments which seek to protect the principle of additionality by distinguishing between the various objects to which the money can be given. We should run into serious danger, as I tried to emphasise in my Second Reading speech, if we go so far in the direction of protecting additionality that we prevent the money from being spent as wisely as it should be. I hope that that can be borne in mind.
Lord Swinfen: My name is attached to Amendments Nos. 68 and 88. I am very concerned about additionality. We must remember that in paragraph 7 of the Government's White Paper, A National Lottery: Raising Money for Good Causes, the Government themselves wrote:
The Government is firmly of the view, however, that the proceeds should not be directed towards the main areas of public expenditure, and that it would be inappropriate for the lottery to be seen as a way of funding the National Health Service, education or similar major programmes. However, there is no objection in principle to including amongst the beneficiaries of the national lottery charities operating in the health and educational areas".
Many voluntary organisations which would hope to get funds as a result of the national lottery are operating, and have been operating for a very long time, in conjunction with local authorities and in some instances, with national government. That is increasing under Care in the Community. The charity for which I work does that with physically disabled people. It has considerable difficulty in negotiating with local authorities to obtain a proper price for the places in the homes which it runs for very severely disabled people. That is because the local authorities themselves are under financial pressure.
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There will be a grave temptation for local authorities and central government to say that the money which the voluntary organisations obtain as a result of the national lottery should be used to help to pay for some of the provision. At the moment most voluntary organisations are not being paid by the local authorities the full cost for the places for the disabled people whom they are looking after. They are having to make up the balance from voluntary donations. There is a danger that those donations, as has already been said this evening, will be decreased by the advent of a national lottery.
Therefore, it is extremely important that some form of ensuring that additionality is properly accounted for is on the face of the Bill. If the Government are not prepared to accept any of this series of amendments this evening, I hope that my noble friend on the Front Bench will be able to assure the Committee that they will come forward at Report stage with a satisfactory amendment of their own.
Lord Cavendish of Furness: I have sympathy for the intentions behind all the amendments in this group, but especially I wish to support Amendment No. 74 in the name of my noble friend Lord Montagu of Beaulieu. At Second Reading I declared my personal interest as a commissioner of English Heritage, but, as Members of the Committee well know, until relatively recently my noble friend was the distinguished chairman of that body and remains without question far better qualified than I to speak on heritage matters.
In consequence I shall seek not to cover the ground which he has so ably explored. The heritage community supports the concept of a lottery. It has welcomed the commitments of the Department of National Heritage and is grateful to Ministers and officials for the immense amount of work which they have done in bringing forward a Bill which strives to meet all concerns. Nonetheless, there is still more work to be done.
The Department of National Heritage has consistently stated its view that the grant-in-aid of the Sports Council, the Arts Council and the National Heritage Memorial Fund should be kept separate from lottery money. This diktat has taken two main forms: projects partly funded by grant-in-aid could not be topped up by lottery funds, as has been said, and projects which fall within the scope of programme funding, regardless of whether any money is available, might be ineligible for lottery grants.
I and a number of other noble Lords cited examples at Second Reading of the anomalies such a principle would give rise to. They read like a new edition of Catch 22. The most important projects—the ones which by implication fall within the programmes of English Heritage and the National Heritage Memorial Fund—might fail if lottery money is denied to them because, as everyone knows, there is never enough money to satisfy even the highest priority calls on our resources. Those outside our programmes—by definition the less important projects—might fare better since they could claim lottery money.
We have been repeatedly reassured that these consequences are not intended by the department and that the concept of additionality would not work like

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that. However, the statements made by my noble friend Lord Astor and by Ministers both in Committee and at Report stage in another place are clear: "Don't mix grant-in-aid and lottery money —and, if you do, woe betide you".
It seems plain to me that the Department of National Heritage genuinely wants to see lottery and public funds put to the best possible use - and that is excellent. The basis for the distinction between programme and lottery funding would appear to stem from a fear that the Treasury will seek to reduce our funding if it believes that we are replacing -"replacing" being the operative word, although the noble Lord, Lord Donoughue, used the word "substitution"—grant-in-aid with lottery money. My response to this would be that this issue is not about hoarding away a secret cache of public funds; still less is it about failing to put public money to the best possible use. I am sure that the Public Accounts Committee in another place would have something to say about that. Quite the opposite: it is about making priority funding go further. Surely that makes sense.
What the department seems to be saying is, "Beware of the bogeyman; you have only yourselves to blame if you cross him". Is it not more sensible to see how the bogeyman can be civilised? The bogeyman is more than keen to encourage the funding of major projects by partnerships between government and other sources of finance. What we are talking about here is not very different.
So I would say to my noble friend Lord Astor in his capacity as a spokesman for the Government and not just for the Department of National Heritage that the distributors will go to great lengths to show Parliament, the public and the Treasury that they are making the best possible use of the resources available. They will not misuse taxpayers' money simply because complementary funding could be available. These are highly competent bodies, run by highly competent people. They would, I believe, amply repay the Government's full trust.
Viscount Astor: These amendments attempt to reach some sort of mechanism which gives statutory protection to additionality. There are two approaches: to make the Secretary of State satisfy himself and report on additionality or to make the distributive bodies themselves undertake this.
I have doubts as to the practicality of the amendments which seek to make the distributors satisfy themselves that in making grants they are not substituting for public expenditure, and then to list the income from various sources in their annual report. There are likely to be many hundreds of beneficiaries from each distributing body. They will get grants from a number of sources at a number of different times in the year. The likelihood of there being a clear and consistent position available at the time of year when the distributor makes his annual report is remote. We would have an incomplete and possibly misleading picture which would tell us very little about additionality. It would be impossible to know why any particular source of funding had increased or
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decreased and the evidence would be impossible to interpret. The extra administrative burden placed on the distributing body would be enormous and costly.
The amendments also make reference to local authorities. Consider how much more difficult it would be to gather and present any meaningful information on local authority spending in this area, demonstrating the effect of the national lottery.
This Bill is very thorough in the way in which it sets out how the money is to be distributed and in the way it distances government from that distribution. In this respect it is unique among lottery legislation in the world. Ministers have stated their clear intention that the lottery money will be additional to that provided by public expenditure. It is just not, however, practicable, to frame a legislative provision which circumscribes the Government's ability to manage their public expenditure responsibilities in the way that they judge appropriate. This Bill, with its separate framework of distribution, and its transparent accounting, does all that is practicable to enshrine additionality. The two sets of figures will be freely available: programme expenditure from bodies' annual reports, as now, and lottery money from a new report on how the money is spent and the new transparent and separate accounts.
It is essentially up to the distributing bodies themselves to look at what they are funding and to avoid areas where there might be difficulty with regard to additionality. There can be no hard and fast rules, but good practice which will emerge over time.
I know that there have been concerns in the heritage area. The rules under which the National Heritage Memorial Fund will work are the most flexible applied to any heritage organisation. It is difficult for me to respond categorically to those Members of the Committee who have asked whether this or that particular case would be in or out. The trustees must decide what does and does not receive grant, working within the very broad directions that we shall issue on such matters as the presumption in favour of capital projects and of the need for a partnership contribution.
I can assure the Committee that the scope of the trustees' powers is extremely wide and the Bill will extend the scope further. They will be able quite properly to fund restoration and conservation work as well as acquisition, and joint funding projects with grant aid from other organisations such as English Heritage are not ruled out. But I do have to make clear the importance of making every effort to distinguish what is funded from the lottery from what is already provided for. That is the essence of what we are saying about additionality and which perhaps we have not put over sufficiently clearly until this evening. It does not mean that everything that the lottery supports must be quite new and distinct in nature from anything which is done now. That is clearly not possible and would lead to the absurdities which some of your Lordships so vividly pointed out on Second Reading. There is no intention to prescribe the funding decisions of the NHMF in that way. I hope that my noble friend Lord Montagu and the noble

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Lord, Lord Donoughue, will accept that the concerns expressed in their amendment are therefore unfounded.
There is another point to their amendment—the proposed removal of the "outstanding" criterion in grant decisions. The NHMF was set up to operate under that condition. It looks, on the face of it, pretty stern, but it functions really as a general quality requirement for grants, and is of course dependent on the interpretation of the trustees. The trustees have always interpreted it imaginatively, responsively and responsibly. The Government cannot accept the removal of that requirement. It would bring with it the suspicion that somehow a good quality application would receive government money, but shabbier efforts could always try to compete for some lottery cash. There is no shortage of good quality potential projects in this country. The requirement serves both applicants and the trustees, and is operated with flexibility and breadth. It should continue to stand.
The Treasury has issued no guidance. Under Clause 24, there is an intention that directions will be issued at a high level in favour, for example, of capital and partnership. They will not cover exclusively the issue of additionality. The preservation of that principle will be a matter, as I have said, for the trustees of the fund. My noble friend Lord Montagu is worried that the powers of the NHMF to fund projects of outstanding scenic, historic, aesthetic, architectural, or scientific interest may be too restrictive in relation to lottery applications. The trustees of the fund have always exercised their powers with flexibility and wisdom. I am sure that they will continue to do so.
The lottery-funded programmes will need to develop their own characteristics and ways of operating which will mark them out from existing programmes. This is an opportunity for fresh thinking and new approaches—new thinking not just for its own sake but because we have the challenge of directing additional resources in new ways to old and often familiar problems. It is in that frame of mind that the trustees will wish to avoid the danger of taking on what was already provided for with public sector grants, and ensure that the lottery has a genuinely additional effect.
I hope that I have been able to reassure the Committee with that lengthy explanation, and that the Committee will agree that the amendment should be withdrawn.
Lord Birkett: Before the Minister sits down, I was not clear from his reply about the danger outlined by the noble Lords, Lord Donoughue and Lord Montagu, that a project in receipt of or even eligible for government funds may not have the other half of those funds. Is he, for example, not reassuring us that, where refurbishment of the east wing of a famous and valuable building is funded by a government source, the National Heritage Memorial Fund cannot use lottery money to finance refurbishment of the west wing? I have not understood the Minister.
Viscount Astor: I do not believe that that is the case. I had hoped that I had been reasonably clear. It is difficult for me to give examples because it will be up to the trustees of the National Heritage Memorial Fund. Perhaps in going further than I ought, I believe that the example of the noble Lord, Lord Birkett, is good. He asked about the west wing in circumstances in which the east wing had been refurbished. The west wing would be a separate project.
Lord Montagu of Beaulieu: I thank my noble friend for clearing the air considerably. His reply will come as a great relief to many people who had got the wrong end of the stick. Perhaps that was the fault of the Government for not explaining themselves clearly. I am glad that my amendment and others have given the Government the opportunity to explain the situation. In view of that, I shall be happy to withdraw my amendment.
Lord Donoughue: I thank the Minister for his reply and beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Viscount Astor: I beg to move that the House do now resume.
Moved accordingly, and, on Question, Motion agreed to.
House resumed.

Trade Union and Employment Rights Bill
Returned from the Commons with the amendments agreed to.

London Underground (Jubilee) Bill
Returned from the Commons with the amendments agreed to.
House adjourned at seven minutes past eleven o'clock.