HL Deb 17 June 1993 vol 546 cc1667-720

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.


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 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 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 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 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 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 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 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 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 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 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 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 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 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.

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
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.
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.
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 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— 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 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, 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 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 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 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 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 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 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 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, 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 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 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.

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 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, 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 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 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 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 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 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 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 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
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.
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.
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 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 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 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 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 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 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 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.

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 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.