National Lottery etc. Bill

HL Deb 17 June 1993 vol 546 cc1734-78

House again in Committee.

Lord Donoughue moved Amendment No. 8A:

After Clause 4, insert the following new clause:

("Secretary of State's duty to report to Parliament on the effects of the National Lottery —(1) As soon as possible after the first anniversary of the sale of tickets or chances in any lottery forming part of the National Lottery, the Secretary of State shall report to Parliament on the effects of the National Lottery on the matters specified in subsection (2). (2) The report shall contain information as to the effect on the National Lottery on

1. (a) the level of charitable income other than through the Charities Board;
2. (b) the level of revenue paid to the Levy Board from the betting levy;
3. (c) any other matters deemed appropriate by the Secretary of State.").

The noble Lord said: I shall speak also to Amendment No. 45. The Committee will be aware that I have interests in racing, although none of them is paid. Frequently, they lead to a financial deficit. There is a printing error in the Marshalled List. Subsection (2) should refer to the effect "of" the National Lottery" on the levy. My noble friend Lord McIntosh has spoken about the impact on charitable income. The Minister says that the impact on charities will be monitored. I need say no more on that subject, and I shall not expect the Minister to say more unless he chooses to do so.

I shall speak basically to paragraph (b) of the amendment. It requires the Secretary of State to report on the impact of the new lottery on betting duty. Amendment No. 45 places a similar duty on the director general. The Committee will recall that on Second Reading several noble Lords, including the noble Earl, Lord De La Warr, the noble Marquess, Lord Zetland, and the noble Lord, Lord Trevethin and Oaksey, expressed serious fears that the lottery will have a damaging effect on horserace betting and, via betting duty, on the racing industry's revenues.

It is estimated that the national lottery's turnover may be £4 billion. That must come from somewhere. There will be losers as well as winners. My fear is that racing may be a big loser. That would be ironic, following the Government's excellent recent tax concessions, and bearing in mind the parlous financial state of racing which led to those concessions. I shall not take up the time of the Committee repeating the well established financial figures and the difficulties of the racing industry. I cannot believe that it is the Government's intention to undermine their own good work in recently coming to the rescue of the industry.

We do not know what impact the lottery will have, but we soon will once it starts, as we assume and, on this side, trust that it will, after the autumn of 1994. The amendment is constructive. It builds in a simple process of monitoring, analysis and reporting. With that information, it will be possible to consider whether racing is being damaged, unintentionally, by the new lottery, and whether the tax regime should then be modified to mitigate that damage. Those are two distinct processes, and in the amendment I am speaking to the first only.

I should like to press the Minister to reply constructively. I believe that the amendment presents no problems to him, the Bill, or the working of the lottery. The Bill and the lottery continue unhindered by the clause, if accepted. It merely provides for the monitoring and reporting of facts: facts on the impact on betting duty and facts on the impact on charities, which we have already discussed. I believe that we should be given that information anyway.

It would be much better if the Secretary of State were to produce official figures. I note that on Amendment No. 4, the Minister gave an assurance, or I felt that he gave an assurance, that the impact on charities would be monitored by the Home Office. We merely ask that a similar process should occur with betting duty. If the Minister accepts that, it will be greatly to his credit, even if it upsets the odd bureaucrat. I shall press him to do that. It is an enjoyable experience anyway. I beg to move.

The Deputy Chairman (Lord Skelmersdale)

I should point out that there is an error in the Marshalled List. The word "of" should be substituted for the word "on" in line 5 of the new clause.

8.15 p.m.

Lord Mackay of Ardbrecknish

I was unable to be present on Second Reading, and so this is the first time that I have spoken on the Bill. I should declare an interest in that I advise a major bookmaking company. It is an important amendment because, as the noble Lord, Lord Donoughue, has explained, there will undoubtedly be an impact on the turnover of horserace betting. The Jockey Club estimates that it will be as much as 15 per cent. If we take that as a maximum, then in reality it may be a little less. But undoubtedly it will happen. There is much more certainty about an impact on bookmaking from the lottery than there is about the impact on charities that we discussed before the dinner break.

I suppose that it is not directly a problem for the Government if there is a drop in bookmakers' turnover, but what should be a problem for the Government is the knock-on effect. One knock-on effect which will interest the new Chancellor of the Exchequer is that there will be a reduction in the total take from betting duty. The more general concern, which the noble Lord has already mentioned, is that the racing industry will not receive as much money as it does presently from the betting levy. Any reduction in the betting levy for the horserace industry is bound to be felt severely. As we know, the industry is having difficulties, and the Government have recently, as the noble Lord said, recognised those difficulties. I do not believe that that recognition was due entirely to the by-election. The recognition was coming long before the by-election, as I think we could see in this place when the matter was raised by a number of Peers on a number of occasions.

The Government's action shows that they are concerned. It would be ironic if that concern, and the efforts to meet the concern of the industry, were put at naught by a reduction in the horserace betting levy as a direct consequence of the lottery. Some method should be found to monitor what happens to the horserace betting levy. I am sure that the Chancellor will he monitoring what happens to his tax return as a result of the lottery. It would be comparatively simple to undertake such monitoring whereas charities' monitoring would be complicated. It would be difficult to untangle the various impacts on charitable giving.

I support the noble Lord. I hope that my noble friend Lord Astor will be able to give some assurance that the Government appreciate the problem that could occur, that they are alive to it, will watch for it, and, if necessary, will take action to help the horseracing industry should it face a reduction in income.

Lord Cavendish of Furness

I should like briefly to support the amendment, in particular as regards the levy board revenue. Although I have declared an interest as regards other aspects of the Bill, I did not on Second Reading declare a triple interest, which I now do. I am the owner of a racecourse—that is Cartmel Races in Cumbria—I am a director and shareholder of that company and I am a racehorse owner, albeit on a modest scale.

I do not know what effect the Bill will have on the levy but some authoritative comments were made in the Chamber which are quite convincing. It is fair to say that owners are probably one of the largest contributors to racing. I have been an extraordinarily fortunate owner; almost unparalleled in the limited number of horses I have owned. Yet it is rare for my racing account to go into surplus. Few owners make money out of racing; nor should they, nor do they want to. They race horses because they love it and they are involved in racing because they wish to support the sport.

I do not believe that the racing fraternity could contribute more than it does to racing without damaging the sport to a great extent. Any diminution in the levy would be catastrophic to racing. The amendment tabled by the noble Lord, Lord Donoughue, has the merit of not crying foul; it simply asks for monitoring and reporting. It is reasonable that the Government should keep the matter under review and should report as the amendment provides. I hope that it will find favour with my noble friend Lord Astor.

Lord Swaythling

I too support the proposal put forward by the noble Lord, Lord Donoughue. I declare my interests as a member of the British Horseracing Board, as a member of the Horserace Totalisator Board and as the owner of some painfully slow and expensively hungry horses.

The effects of the National Lottery etc. Bill on the horse-racing industry could be serious. It has been estimated that there will be as much as £8.3 million reduction in the levy. That would be a most serious blow to racing. In dealing with this potential problem I urge the Government to be pro-active rather than reactive to an industry which employs more than 100,000 people and which already has severe financial problems despite the helpful measures introduced by the former Chancellor of the Exchequer. I support the amendment.

The Earl of Gainsborough

I too wish briefly to support the amendment for the reasons given by other noble Lords. It meets the case of having a national lottery, which is a new concept in this country. Irrespective of the racing industry and other allied industries, it is a good idea to look again at the situation after one year.

The proposal is not entirely non-political. The Government may not wish to deal with it precisely tonight but they should look at it. The Bill will have effects of which no one knows today, as was said earlier. A national lottery is an entirely new concept. If we look at the position after one year and report to Parliament on the effects of the lottery that would be good. I hope that the Government will take the proposal on board and consider carefully the principle behind it.

Lord Lucas

The lottery aims to raise £2 billion or so. This will all come from somewhere; it will all be money that has not been spent on something else. Many industries will suffer. Those we might guess at are sweets, cigarettes and beer on which expenditure may be cut down. Many industries will suffer as a result of losing turnover to the lottery. I hope that the Government will be very careful before they subsidise one particular industry—namely, horse-racing—as a result of losing turnover to the lottery just because it is something in which noble Lords like to indulge.

Lord Holme of Cheltenham

Given the chorus of unanimity from Members of the Committee in the racing fraternity perhaps I may say that we on these Benches support subsection (2) (a) of the amendment. I was struck by the mention of the Newbury by-election and the good that it has done the racing industry. Perhaps we may venture to hope that the Christchurch by-election will have a similar effect on the welfare of old-age pensioners.

Lord Birkett

Although I understand the anxieties of Members of the Committee who have spoken about horse-racing I wonder whether the proposal of the first anniversary of the lottery is a clever move. I have a strong suspicion that, whatever the fortunes of the national lottery, the first months, possibly even the first year, will show an enormous bulge. It will be a novelty for the nation. In the first months people may buy more tickets than they will ever buy later. As a great supporter of the lottery I hope that that is not so; I hope that it will continue to be as successful as possible. However, I wonder whether one year's statistics are not an invitation to jump to conclusions which might prove to be false.

Viscount Astor

I agree with everything that was said by the noble Lord, Lord Birkett. I am sure that he will be pleased to be in the happy position of having the Government agreeing with him as opposed to the earlier situation. Perhaps I too should declare a modest interest. The noble Lord, Lord Donoughue, is a director of Towcester Racecourse and he has an interest in racing. I too am a racegoer and I have also owned rather slow horses. I have even ridden rather slow horses in races and they were much slower then than when other jockeys rode them—but that is a different matter.

I turn to the amendment. The evidence from Ireland suggests that, following the introducing of the national lottery, the income from betting went up. That is an extremely important factor and we should not lose sight of it. Of course I understand the concern of those involved in racing. Perhaps I may point out that the director general of OFLOT will have no right to gather information on the income of the levy board or business to publish it. The income and turnover of the national lottery will be available from the operator and the levy board will make its annual report in the usual way. There will be no relationship between the one and the other. They are entirely separate entities.

As I said, I understand the concern of racing that its income may be affected when the lottery is introduced. The appropriate level for the betting levy is a matter for the bookmaking and racing industries to consider together. They will of course need to take into account all matters which appear relevant to their discussions. I repeat that it is a matter for agreement between those industries.

The noble Lord, Lord Holme of Cheltenham, mentioned subsection (2) (a) of the amendment. We had a substantial discussion on charitable income and its effect in relation to an earlier amendment. I do not think that I would be helping the Committee if I added to that discussion. I realise that the noble Lord, Lord Donoughue, wishes me to go further than I am able to, but perhaps he will accept that this is a matter for the bookmaking and racing industries.

Lord Donoughue

I thank Members of the Committee who have contributed to the discussion. I am pleased to say that the majority support the amendment. Perhaps I may say to the noble Lord, Lord Lucas, that the Government do not subsidise racing—and I am sure that he will not repeat that again. Racing subsidises Treasury revenues to the tune of nearly £0.5 billion per year. Racing is in fact different from chocolates and so on, in that it depends greatly on specific gambling revenues for which the lottery represents competition.

I agree with the noble Lord, Lord Birkett, that the first year's figures may be unreliable, but they will be interesting. In fact, we need to have the first year's figures and every year's figures. Whether or not the Government react to those figures is a matter for them. I am not dealing with that in the amendment. I say merely that the matter needs to be monitored.

I have listened to the Minister's response, which I felt was rather unsatisfactory. I do not believe that it is a matter for the bookmakers and the industry. The Government have initiated this major new measure in the gambling industry which may have enormous—or they may be minor—consequences for other aspects of the gambling industry, for charity and for racing. I say again that I see no reason whatever for the Government not to accept the amendment, which simply asks them to monitor and report. Parliament should have that important information.

I may wish to return to this issue on Report, which will not coincide with Ascot, and I shall expect even wider support, especially from the Benches behind the Minister. However, in the hope that the Government will return on Report with a slightly more constructive and encouraging approach, I am happy for the time being to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 5 [Licensing of a body to run the National Lottery]:

[Amendment No. 9 not moved.]

8.30 p.m.

Lord Holme of Cheltenham moved Amendment No. 10:

Page 2, line 36, at end insert: ("( ) A licence given under this section shall be subject to a formula obtained by the Director General which includes factors for efficiency and success.").

The noble Lord said: In moving this amendment, I intend to speak also to Amendments Nos. 11 and 19, which have been grouped with it in the name of the noble Lord, Lord Allen of Abbeydale, and others. All three amendments relate to the same area of concern; namely, the terms under which the operator will perform.

I must apologise because my amendment is rather infelicitously worded. It was dictated over the telephone and it would read better if it referred to a formula laid down by the director general rather than "obtained by the Director General".

In the Bill, the key determinant of what the good causes will receive ultimately is what the operator is paid. I am afraid that we must assume—although we shall attempt to change their mind later—that the Government will remain obdurate as regards the level of tax. If we accept that the prizes cannot be much below 50 per cent. in order to motivate people to take part in the lottery, and indeed to be fair in terms of prizes to those who participate, it stands to reason that what remains is split between the operator and the good causes; in other words, more to the operator means, by definition, less to the good causes.

There are estimates of what will be the appropriate costs of running an efficient national lottery. Based on the experience of other countries, those estimates vary between 5 per cent. and 15 per cent. On the other hand, while recognising that paying too much money to the operator will detract from what is available for the good causes, we need to accept that the lottery must be professionally run. It must be run in the best possible manner by the best talent available.

In other words, although I accept the word "administration" in Amendments Nos. 11 and 19 and I understand what is meant by that, I do not believe that that is an adequate description of what will be required of the operator. Clearly, the operator will need entrepreneurial management to make a success of this.

I take one aspect of the matter. There will be very high front-end costs. High promotion costs will be involved in launching the lottery, setting up systems to operate it and so on. Whoever does that must take a long-term view of the returns obtainable on that front-end investment. Therefore, we are not talking simply about a sub-contract for administration. We are talking about putting the lottery into the hands of entrepreneurial professional management.

The question is bound to arise: on what basis will the contract for operation be awarded? I suggest that a flat rate percentage, although it may help calculations of the rough and ready sort that we have been doing in the Committee today, is entirely inappropriate. It depends on the scale of the operation.

It occurred to me that the situation of this operator is not unanalogous to the privatised utilities, where there is, if not a monopoly, a quasi monopoly and a very large one at that. The company will be operating an enormous business. I said on Second Reading—and it is worth repeating in case one or two Members of the Committee did not hear it—that it is said that whoever runs the lottery will become almost immediately one of the Financial Times Stock Exchange Index top 100 companies. Therefore, we are talking about an enormous contract. Already we know that there are rumblings as various companies and consortia position themselves to bid for that enormous contract.

The purpose of the amendment—and, I think, the intention of all the amendments—is that the Government must be rather more forthcoming in the Bill about the kind of considerations that will go into deciding the formula by which the contract will be arrived at. My amendment is concerned with two criteria which occur in privatised utilities and the kind of formula that regulators must oversee where there is some reward for efficiency—a K factor—and success.

It would be inappropriate in Committee for me to try to lay down exactly what the formula should be. Therefore, I say in advance that I have no intention of pressing the amendment to a Division. However, I should appreciate—and it would affect our attitude on Report—a much clearer indication from the Government, given the enormous size of the potential contract and the direct effect that it has on the funds available ultimately for the good causes, as to what is their thinking on the criteria that will go into the award of the contract. I beg to move.

Lord Allen of Abbeydale

I wish to add only a few words to the speech that we have just heard, with which I very much agree. This matter must be run professionally and it is a very big affair. I am not particularly wedded to the form of words in the amendments in my name but I am very much with the noble Lord, Lord Holme, in asking the Government to be rather more forthcoming.

We are told very little about the kind of criteria which will lay down the conditions to be met. As has been pointed out, that is the only area in which there is any room for manoeuvre. If you have prizes at 52 per cent. and tax at 12 per cent. then the rest of the funds must be divided between the good causes and the operator. As I say, that is the only area in which there is room for manoeuvre.

I do not know whether the Government can give any idea of the kind of formula that they are thinking of as regards the amount of profit which the operators will be allowed to receive. When it all takes place, if it is discovered that the operators do rather better out of the lottery than any of the good causes, I believe that there will be a lot of trouble.

Lord Swinfen

I should like to support the amendment. My noble friend knows that, in my view, the proposed tax rate of 12 per cent. is too high. In my view, the only reason that the Bill has come before Parliament is to give the Treasury another opportunity to raise income. Some years ago there was no hint of it: people pooh-poohed the whole idea. As the noble Lords, Lord Holme and Lord Allen of Abbeydale, said, it is obvious that administration must be kept as tight as possible.

However, I should like to point out that the criterion laid down for good administration must not be a set percentage of the proceeds; otherwise, there will be a very grave temptation on the part of the operators to allow their administration costs to rise to just below that maximum ceiling and not make any efforts to reduce it and become more efficient. I believe that there are other methods of judging the administration, and its quality, in that respect. I say that we should not specify a set percentage figure.

Viscount Astor

The amendments have a sensible purpose, but I hope to put the Committee's mind at rest and demonstrate that they are not needed.

The director general's overriding duties are set out in Clause 4. Subject to propriety and the protection of the interests of participants, there is a need to maximise proceeds for beneficiaries. Putting further such requirements in the Bill is superfluous. I can assure the Committee that in order to carry out that duty, in issuing a licence the director general will necessarily be concerned to ensure both efficiency—that is the holding down of operating costs—and success. That is the maximisation of revenue. Those are key elements of any bid, and the director general will be looking to ensure the best outcome through the competitive bidding process. Included in the bidding process will be specific references to costs, and the director general will be looking to get the best deal which delivers the maximum amount to good causes. There will be a licence condition setting out the proceeds to be returned for good causes, and other key financial factors, and that licence condition will have the force of law.

I hope that I have demonstrated to the Committee that the spirit behind the amendments is accepted by the Government, but that the amendments themselves are unnecessary because the matters they cover will be dealt with in the licence which will be arrived at through the competitive bidding process.

The amendment of the noble Lord, Lord Allen of Abbeydale, proposes that the licence should contain measures to ensure and demonstrate that the administrative costs incurred are the minimum required for the proper running of the national lottery. The whole purpose of the competitive tendering process for letting the licences is to keep down the costs. A licence will clearly contain measures which ensure that the operator's costs start as low as possible and remain as low as possible, commensurate with the need to ensure that the lottery is run properly.

The noble Lord, Lord Allen of Abbeydale, asked me to be more forthcoming on conditions. I do not want to set a bench mark for bids. What we want is the best bid, through the commercial, competitive tendering process, which will return the maximum amount for good causes. That is the important point. That will come out of the bid and, following the bid, we will have the licence conditions set by the director general. With that explanation, I hope that I have been able to put Members' minds at rest. The intentions behind the amendments are also the intentions of the Government in that area.

8.45 p.m.

Lord Holme of Cheltenham

I welcome the noble Viscount's words. There is a certain feeling about today's debate of "Waiting for Godot"; in other words, that in time all will be revealed and that we should leave it to the director general and the Secretary of State. However, I put the following point to the noble Viscount. This Chamber, and indeed Parliament as a whole, spent weeks debating the terms upon which the television contracts should be awarded. They were decisions that affected our society. Very large sums of money and issues of public policy were involved, as well as the very important commercial points to which the noble Viscount referred.

The director general will want—indeed, we all want—a good commercial deal. It is, however, a little bland to say that the best commercial deal is the best one. Any business awarding a contract of such a size, and most government departments awarding such a contract, would have desiderata, considerations and criteria a great deal more specific than "Leave it to us; we'll get the best deal we can".

As I said earlier, I do not intend to press the amendment tonight. However, I hope that between now and the Report stage the noble Viscount—and, indeed, the Government as a whole—will think about being, in the words of the noble Lord, Lord Allen of Abbeydale, a little more forthcoming about the way in which such momentous decisions will be made, rather than simply reassuring us that the spirit is the right spirit.

Viscount Astor

Perhaps I may assist the noble Lord, Lord Holme of Cheltenham. When I said "competitive", obviously that is crucial. But while the bid must maximise the proceeds for good causes, the director general will also have to look at all aspects of the bid; for example, whether it is sensible and whether it is well financed. There are many complicated aspects that he will consider, not just one particular element.

It will be most important to ensure that the bidding process is handled with care. In due course, a document setting out the licence heads and the areas covered will be available both in this and another place. The criteria for selection will be developed and may be complex. I can assure the Committee that two of those criteria will be the level of operating costs and the maximisation of the proceeds for the beneficiaries. I hope that the noble Lord, Lord Holme of Cheltenham, will appreciate that there is a limit to how much work we can undertake before the Bill receives Royal Assent.

Lord Allen of Abbeydale

Can the noble Viscount say whether that document will be available before the Report stage?

Viscount Astor

I am afraid that I cannot answer the noble Lord, Lord Allen, tonight. Perhaps I may write to him.

Lord Holme of Cheltenham

I am sure that it would help the Government as regards the passage of the Bill if they shared such important thinking with Parliament before we finally pass the Bill. Therefore, following the request of the noble Lord, Lord Allen of Abbeydale, I urge the noble Viscount to ensure that we have at least an outline of what is proposed before the Report stage. Having said that, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendments Nos. 11 and 12 not moved.]

Lord Houghton of Sowerby moved Amendment No. 13:

Page 2, line 40, after ("determined") insert ("provided that such sums shall in all cases be not less than 35 per cent of the total revenue of lotteries forming part of the National Lottery.").

The noble Lord said: The amendment deals with the determination of what is to be handed over to the lottery by lotteries that are formed within the ambit of the national lottery. Subsection (b) of Clause 5 provides for the licence to contain the obligations of the subsidiary lottery towards the main lottery. It says that it shall hand over such sums "as may be determined." I am not clear as to the meaning of the words "as may be determined". One does not want the amount handed over by the subsidiary lottery to be a lower percentage of the proceeds of the lottery than is the case with the main lottery. The amendment provides for the sum to be determined under Clause 5(6) to be not less than 35 per cent. of the total revenue of the subsidiary lotteries. I believe this is a technical point but it is material if there is to be some variation between the proportion of proceeds to be handed over by subsidiaries and that handed over by the main lottery. We are discussing a uniform minimum that is to be handed over to the national lottery. I hope the point is clear and that the Minister can give me a short reply. I beg to move.

Lord Holme of Cheltenham

Amendment No. 49 marches with the amendment of the noble Lord, Lord Houghton, and has much the same objective. We have four streams into which the money derived from the punter paying for his ticket will go. One stream will go to the Exchequer; that is, 12 per cent. One stream will go to the operator, which is an undetermined amount. One stream comprising 50 to 52 per cent. will go for prizes. What is left will go to the good causes. In other words, there are three fixed costs and one variable cost. There are three fixed commitments and one that is utterly contingent on the other three.

The Government have this measure the wrong way round. Many people in this country are rather reluctant to see a national lottery but they are prepared to go along with it if it helps good causes. They believe that the good causes should benefit from the lottery. However, this Bill leaves the good causes totally at the risk of the other three fixed elements. A wise government would have done this the other way round. They would have said that, whatever happens, they would ensure that 35 per cent. of the take would go to good causes. They might then have to consider such radical matters as whether the Exchequer should take so much money.

I hesitate to repeat what I said on Second Reading but I believe I was right and therefore I shall repeat it. I see no good case at all for the Exchequer receiving any money at all from this. I do not believe the lottery should be a tax raising stunt. I do not understand why the Exchequer should gain any money from it, but if it is to receive some money —the Treasury tends to get its finger into every pie—why should it not receive less than 12 per cent.? We have already talked about the possibility of linking the remuneration of the operator to the relative success of the lottery. We must look hard at the prizes. Clearly they have to be set at a level that is fair and motivating, but the Government should have asked themselves how much of this great national exercise they wanted to see going to the good causes. I recognise that 35 per cent. is a high figure. However, the Government should consider whether it is right that at best the good causes should receive that figure, but it might be a great deal less. The Government should consider whether that is adequate. I do not expect for one moment that the Government will accept this amendment but I wish they would think hard about it.

Lord Donoughue

I speak to Amendment No. 49. That amendment, together with Amendment No. 13, seems to me to reach the heart of our problem with this Bill. The Bill offers no guaranteed percentage at all to the good causes. Tax is set at a certain level and the administration is set at a certain assumed level—some consider it will be set at a level of up to 15 per cent. The Bill would therefore leave a possible percentage for the five good causes of somewhere in the 20 per cent. range. That means that each good cause would receive less than half of what the Treasury takes and roughly the same amount would be allocated for sales commissions by the operator.

The position could become worse. There is nothing in the Bill to stop the tax rising as the Bill does not deal with that. We know now that this Government believe in increasing taxes. They have been increasing taxes and they will further increase taxes. The Government have a horrendous PSBR problem which we on this side of the Chamber totally sympathise with as the problem is far worse than when the IMF was brought in in 1976. Given those kind of constraints, I submit that the 12 per cent. figure is not even secure and that the Chancellor may in future be tempted to push it higher. Administration costs may well rise in pursuit of turnover.

As the noble Lord, Lord Holme, said, this measure is the wrong way round. The good causes are the residuals and their percentage, which is already too low, can be squeezed down further. But what is the real purpose of the lottery? We believe that its real and only purpose is to support the good causes. Its purpose should not be to generate rising tax revenues. The 12 per cent. figure I have mentioned is twice the average figure that is paid by the European lotteries. It is a quite outrageous figure. We must protect the good causes, and the figure that has been suggested in the amendment seems a reasonable figure to guarantee. That figure can be achieved but the tax level must be constrained or reduced, as must the administrative costs. I believe that is the right way to proceed. We support these amendments.

Lord Swinfen

My name is added to Amendment No. 49. I support both these amendments. The figure of 35 per cent. for the good causes that has been mentioned is reasonable. It is not too low. If it could be raised higher, I would support that. Those of us who propose these amendments have been extremely reasonable in asking the Government for this proportion. As I said on Second Reading, the tax level of 12 per cent. is too high. The promoters of the lottery will have to set up a massive computer system. It would not be difficult to guarantee the 35 per cent. figure for the good causes if the tax was not taken off the takings that the promoters will obtain from the punters but instead was removed from the prizes that are handed out. If the computers are programmed properly, the promoters would suffer no additional expense in doing that and it would help to ensure that the good causes received a proportion of 35 per cent.

Lord Simon of Glaisdale

I have not so far intervened on this Bill but I hope I may do so now to demur, with respect, from the dangerous rhetoric of the term "good causes". The percentage allocated to the good causes has been compared to the percentage seized by a rapacious Treasury. Many years ago when I went to the Treasury I had heard for years how rapacious it was and how it called in money from the innocent populace and no doubt accumulated it. When I entered Treasury chambers I made a careful search. Perhaps the noble Lord, Lord Barber, did the same. That search yielded nothing. However, both our initial jobs also involved the Inland Revenue. So I went down to Somerset House. I was introduced to an official called the Revenue Secretary. In his office there was a large safe. "Ah", I thought, "at last I shall see all this bullion that the Treasury rakes in". So I asked that it should be opened. There was nothing in it, not even a crust of bread or a quarter bottle of wine. So much for what the Treasury gets as opposed to the good causes.

The Treasury is really no more than an accounting agency. Money is paid in to the Consolidated Fund and paid out according to the decrees of the Committee of Ways and Means. It is paid out on such items as the armed services, the National Health Service and welfare. Is not the defence of the realm a good cause? Is not the health of the populace a good cause? What about the welfare of those who are most unfortunate? Is that not equally a good cause?

Therefore, I hope that we shall hear no more of the Treasury —uttered with a hiss every time it is mentioned—compared with the good causes.

9 p.m.

Lord Donoughue

Before the noble and learned Lord sits down perhaps I may ask him whether he went to visit Mr. George Soros or various foreign exchange dealers to discover what the Treasury had done with some of our money.

Viscount Brentford

As I put my name to the first of the two amendments I should like to speak in support of the amendments. I do not mind particularly which one is adopted, but I fully endorse the arguments that have been made in support of them. I shall not take the line of the noble and learned Lord and either attack or defend the Treasury. I should like to see law that is clear and understandable so that we all know where we are. At present the Bill is too vague.

As has already been suggested, I can see the good causes being squeezed out. I am sure that the Treasury will not be squeezed out because it has powers which others do not. I therefore plead that a minimum amount should be written into the Bill. I agree entirely that 35 per cent. is a reasonable minimum. Whether we like it or not, the objective of the national lottery is to provide additional money for those causes. I believe that we should write into the Bill a minimum proportion, and 35 per cent. seems a reasonable figure. I am therefore happy to support the amendments.

Lord Birkett

This is exactly the formula which I favour for the running of a lottery. The figure of 35 per cent. is exactly right, if one assumes that prizes absorb 50 per cent. and 15 per cent. goes on administration. However, the problem is that if one sets down 35 per cent. as an automatic figure and leaves the rest to fight it out, there is a natural law in the world of lotteries which decrees that if one reduces the amount of money for prizes to less than 50 per cent. of the whole the lottery declines. I cannot say what makes that natural law work in that way, but it seems to be the experience of all the countries which have lotteries.

Therefore, if one starts with 35 per cent. and the Government insist upon taxation, despite all our endeavours to dissuade them, the only way in which that 35 per cent. can be maintained is by reducing the amount that is devoted to prizes. I suspect that if one does that the amount one receives in cash, whether or not it is 35 per cent., will be less than if the formula were more vague.

I believe that the same natural law applies to the taxing of prizes but not the whole. In the experience of the lottery world to tax the prize money and leave the rest alone is also guaranteed to result in the decline of the lottery. Tax has to be on the whole amount or there should be no tax.

Having said that, I believe that this is the ideal way of handling the matter. I believe that prizes should indeed amount to 50 per cent. of the total. I believe that administration should amount to no more than 15 per cent. and that 35 per cent. should go to the good causes. That leaves a small hole in the Government's calculations, but it is a hole which I think they ought to live with.

Viscount Astor

I certainly do not intend to argue with the noble and learned Lord, Lord Simon of Glaisdale, as to whether or not the Treasury is a good cause. I shall leave it to other Members of the Committee to decide for themselves. However, I point out to the noble and learned Lord that we state in the Bill the good causes which we believe should be supported from the money which is paid into the distribution fund. The Bill states that we will pay into the fund 20 per cent. for the arts, and the same amount for sport, the national heritage, charities and projects to mark the year 2000 and the beginning of the third millennium.

All of us are concerned that the lottery should live up to our intentions. If it does not there would be no point to this legislation. That is why the Bill places a statutory duty on the Secretary of State and on the director general to ensure that the maximum amount possible is available for distribution to good causes.

It may help the Committee if I explain further how the bidding process for the Clause 5 licence will work. We envisage that potential operators will be invited to set out in detail their financial strategy for the lottery. This will cover their prize strategy, their operating costs, the returns for good causes and their forecast turnover. In considering their bids the director general will, among other things, consider the realism of their financial strategy and judge their proposals for maximising turnover and hence maximising the money for good causes. But once the bidding process is completed and the successful operator has been chosen, key elements will of course be set in licence conditions. The Government wish to ensure that the maximum should be raised for good causes. That is why we propose a process of competitive bidding, the result of which is then set in licence conditions which will have the force of law.

Any amendment on the lines of those proposed this evening would, paradoxically, probably mean that arts, sport, heritage, charities and millennium projects receive less money, not more. Setting a proportion of 35 per cent. for good causes would impact on the prizes which can be offered, limiting the attractiveness of the lottery to potential players and inhibiting its success. The important thing is the total amount which goes to good causes, which will depend not only on the proportion which potential operators might make available for good causes but, more crucially, on the likely overall turnover of the lottery.

It is absolutely clear from worldwide evidence that the most important single factor in generating lottery turnover is the amount returned to the players in prizes. That factor will do more than any other to determine whether our lottery will be successful. If the amount available for prizes is held down, the turnover will undoubtedly suffer. That is the opposite, I think, of what this amendment hopes to achieve.

As the noble Lord, Lord Birkett said, successful lotteries worldwide devote around 50 per cent. of their turnover to prizes. On that basis, our lottery might achieve a turnover of £1.5 billion, or perhaps even £2 billion. If the returns to good causes were to be set at 35 per cent. we must consider what effect that would in fact have. It is not possible to squeeze the amount for taxation. That has been set by the Chancellor at 12 per cent. It is not possible to squeeze by very much the amount for operating costs: the operator will have necessary costs which cannot be avoided —equipment has to be bought, staff have to be paid. So the area which could be squeezed would be the amount returned in prizes. But if the amount returned to players in prizes is less, then fewer people will play and the turnover will be lower.

Baroness Seear

We all fully understand that. What we argue about—we have not had an answer—is why the Government have to take 12 per cent. The remainder is very simple arithmetic which we do not need to have spelt out to us. To say that the Chancellor has to have 12 per cent. is not an answer: it is an assertion.

Viscount Astor

I am glad that the noble Baroness, Lady Seear, understands my simple arithmetic.

Baroness Seear

May I ask the noble Viscount why he assumes that I cannot understand his extremely simple arithmetic?

Viscount Astor

I am sure that the noble Baroness understands simple arithmetic, complicated arithmetic, and realms of algebra and geometry that I should find immensely perplexing.

Lord Clark of Kempston

And trigonometry.

Viscount Astor

And, as my noble friend reminds the Committee, trigonometry too.

We have a difference of opinion. The noble Baroness seems to feel that we have put the cart before the horse. I seek to show the noble Baroness that the horse is before the cart: it is in the right place.

The Chancellor has set his rate of tax. That cannot be moved. As the Committee knows, it is not possible for this Chamber to put down amendments which affect that rate of tax. We have to deal with the real world in which we find ourselves. That is why, with the explanation that I have given, the 35 per cent. cannot work.

I am sorry if I bored the noble Baroness. Her mind was obviously working much faster than mine. However, having given that, I hope, simple explanation perhaps the noble Lord, Lord Houghton, will feel able to withdraw his amendment.

Lord Holme of Cheltenham

Before the noble Lord responds on the first amendment, perhaps I may say that I believe the Government Front Bench would be wise to note the support from around the Chamber for Amendment No. 49, which stands in my name. Although I do not intend to press it today, it is a matter to which we shall return at Report stage. I am sure that the Government will use the intervening time to deal with the issue. Of course, we cannot deal with tax matters in this Chamber, as we well know. However, Chancellors change. I read that tax policies are not inviolable. Who knows, there may be some new thinking!

Lord Houghton of Sowerby

The best thing that I can do is to ask leave to withdraw the amendment so that the Committee will have time to go into the arithmetic a little further.

Amendment, by leave, withdrawn.

[Amendments Nos. 14 and 15 not moved.]

Clause 5 agreed to.

Clause 6 [Licensing of bodies to promote lotteries]:

[Amendments Nos. 16 to 19 not moved.]

Lord Redesdale moved Amendment No. 20:

Page 3, line 22, at end insert: ("( ) No licence under this section shall permit the running of a lottery by telephone.").

The noble Lord said: This is a probing amendment. I wish to ask the Government whether they have any plans to limit the use of telephones as a means of running a lottery. I draw the Minister's attention to remarks in Standing Committee A of another place in which the Minister, Mr. Key, said: In the regulations that the Secretary of State will initiate, we intend to ban telephone sales, games that encourage excessive playing and addictive games".—[Official Report, Commons, Standing Committee A, 16/2/93; col. 126.] A lottery should not be run via the telephone because of the dangers that exist of large numbers of young people misusing telephones. I do not believe that a lottery run on those lines would be of benefit to people, apart from those who run it. I look forward to the Minister's reply. I beg to move.

Lord Swinfen

Before my noble friend replies, if the Government are contemplating that lotteries should be run by telephone—and I say "if"—how will they ensure that those under the ages of 16 or 18 do not take part? They may buy lottery tickets, wasting their parents', relatives' or friends' money by using one of the numbers which run up the telephone bill remarkably fast. I can never remember the numbers.

Viscount Astor

The noble Lord, Lord Redesdale, has drawn our attention to the possibility that the telephone, perhaps the most commonly owned piece of modern technology, might be used by the lottery operator in a way which might be considered insidious, let alone improper.

There are concerns about possible use of "cold calling" as a means of selling tickets. This marketing technique is perhaps most often used to sell double glazing to householders. Not all of those householders take kindly to being telephoned.

The director general will be able to consider whether any use of telephone marketing—if that is indeed proposed by the potential operator—is likely to constitute a nuisance to potential players. Should this technique be used, and should it cause people annoyance, he will also be able to act on receipt of complaints. He will therefore have the power to prevent this happening. But it would not be appropriate to limit the lottery in statute for all time, when an acceptable marketing technique using telephone lines may be possible, and freely available to other businesses.

In addition, the first amendment would have the effect of outlawing the use of any telecommunications network in operating the lottery. This sort of network is, of course, one of the main ways of establishing links to the on-line computer terminals. I am sure the noble Lord did not intend that effect.

The Government have already made it clear that they are minded to direct the director general not to license potentially addictive games or those which exploit the player. I think that perhaps that is the safeguard that Members of the Committee seek and I hope with that explanation the noble Lord will withdraw his amendment.

Lord Redesdale

I thank the Minister for his reply and hope that it will be one of the requirements of the director general to look carefully into the telephone lotteries. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 21 not moved.]

Lord Houghton of Sowerby moved Amendment No. 22:

Page 3, line 22, at end insert: ("( ) A licence under this section shall include a condition that no unclaimed prize money in any one lottery shall be allowed to roll-over to any subsequent lottery.").

The noble Lord said: This amendment deals with the question of roll-over of prize money from one lottery to another. I understand that the Government have said that they intend to allow limited roll-over prizes for both the pools and the lottery. Roll-over is the unclaimed prizes from one lottery added to the prizes for the following lottery. In exceptional circumstances, it can lead to a large, inflated prize fund at some stage in the roll-over. I do not know whether it is called a jackpot, but at all events, it increases the attraction of a particular lottery against more normal lotteries.

In other countries, when unclaimed prizes have been accumulated down the line, there has been a terrific national crisis about the lottery which carries the enormous, boosted prize money, because so many people feel that they can win the lot and try to win the wonderful prize, far more than they would ever normally receive from a lottery. That is an undesirable variation of expectations in the course of the subscriptions to the lotteries. It can have undesirable consequences for one lottery against another and there may be an artificially inflated demand for tickets. All sorts of complications can arise if that process goes on too long. The idea is that each lottery occasion will stand by itself and the unclaimed prizes will not go down the line.

This amendment proposes to have no roll-over. Some people will say that there ought to be one and some will say that there should not be. I believe it is undesirable for the uncertain incidence of unclaimed prizes to inflate the amount available for prize money in a subsequent lottery. Let the lottery money he as much as may be, normally in the same area of token. That is the proposition here.

I do not know what the case is for roll-over, unless it is that it was once prize money and not claimed and should remain prize money. But I do not think that that is a principle upon which the lottery should be conducted when it leads to a considerable unevenness in the possible rewards for one lottery as against another, due entirely to the fortuitous incidence of unclaimed prizes. I beg to move.

Lord Donoughue

I wish to speak to Amendment No. 41, which is grouped with Amendment No. 22. Amendment No. 41 is what in my briefing was described as "a roll-over probe". I leave the Minister to contemplate that. It relates to where prizes are carried forward to ever more stratospheric levels. Our concern is the potential for abuse of roll-over in the promotion of the lottery in that lottery outlets could advertise very unrealistic and high levels of prizes. That also presents an opportunity for the Minister to reply to the very pertinent question of my noble friend Lord Houghton. The Minister should explain exactly what he meant at Second Reading when he spoke about limited roll-over. Perhaps he can tell us how that works.

As my noble friend Lord Houghton said, the use of roll-over in the United States has at times produced a frenzy and a mania as prizes rocket. United States research suggests that it can lead to addictive gambling. That is the point where the lottery would cease to be the soft gambling that the Government have often described it as and become very hard indeed—certainly much harder than horse-race betting. So it is our view that the roll-over must certainly be limited. We want to hear what the Minister's version of "limited" is, if it exists at all. At that point, if I may, I shall apologise to the House on behalf of my noble friend Lord Howell, whose name was attached to this amendment with mine. He had to leave earlier. It is his wife's birthday, and I think that all noble Lords would agree that he has the right priorities.

The point which my noble friend wished to make quite strongly is that he would like an assurance that under no circumstances will the pools, which have been given roll-over privilege, have the advantage of either having a roll-over before the lottery is in a position to use a roll-over or have more roll-over than the lottery. He wants a clear assurance on those points of timing and degree. My noble friend feels that grotesque levels of prizes which can result from roll-over would be very socially undesirable. He would like to know why we need to have roll-over. Why cannot the operation of the lottery be that, if there is not a winner (which is not very likely), the prizes can be distributed to those who come next in order for a prize? Indeed, that happens on the pools and could continue.

Viscount Brentford

In supporting the amendment I entirely agree with what has been said on this matter by both noble Lords. The first draft of Amendment No. 22 said that no major roll-over should be permitted, which again picks up the pools point. I do not like that in a legal document or statute because it is vague. That point needs to be crystallised. I have not seen wording in the pools legislation to allow them limited roll-over.

I echo the question put to my noble friend the Minister and ask him to explain how that would operate. I have no great objection to a reasonable, limited roll-over being permitted provided that it is small. But my preference undoubtedly would be for no roll-over at all and for the money to be distributed, as the noble Lord, Lord Donoughue, said, down the line. That would be my preference provided that what happens is clear and we do not let the lottery run the risk of the sort of "mania" (as the noble Lord, Lord Donoughue, expressed it) that can arise and has arisen in other countries which have that provision. I should like to know my noble friend's view on that but I should be happy to support a limited roll-over.

Lord Birkett

It seems to me that the amount of the big prizes is a very interesting factor in lotteries. I am told that most countries adopt the principle of a convex shape for prizes. That means that there is a lot of money at the top in very few but very big prizes and a lot of money at the bottom with a very large number of very small prizes (as it were on a £1 ticket prizes of £2, £5 or £10) and almost nothing in between.

It is the big prizes at the top that cause the excitement and are the draw for people. It has always seemed to me that if one has, for example, £4 million a week in big prizes to distribute, it is better to have four £1 million prizes than to have one £4 million prize. When the prizes get out of hand, compulsive gambling is a danger.

There is a nice compromise, which I invite the Government to consider; namely, that one does not have a normal roll-over but a jackpot at Christmas: there is one enormous bonanza prize which makes everybody very excited at a festive season. The rest is not rolled over. Therefore there is only one cumulative jackpot which is exhausted every Christmas. That gives the excitement of one very big prize without spoiling the even distribution of prizes in the meantime.

Lord Swinfen

I should be interested to learn from my noble friend when he replies, first, whether the Government are contemplating allowing roll-over; and, secondly, how many times roll-over will occur and whether there will be a limit on it? If so, what happens when that limit has been reached and the prizes have not been won? Will the Treasury take the money? Will the promoters take it as profit? Will it be used to bolster good causes, as I would advocate?

The money was going to be given away by the promoters in any case. It would not have gone into their profits. It would not affect the way in which the Government propose to tax the money. The Government will take tax from what people pay when they buy a ticket. If roll-over takes place, I recommend that, when the limit is reached, it is added to the money available for good causes.

Lord Allen of Abbeydale

I do not want to repeat the points that I made when I spoke earlier. However, I understand that the Government so far have said that the roll-over should be limited to three occasions. As I said earlier, that of itself is likely to produce prizes which are too great and may encourage addictive gambling. I should also like to know the answer to the question asked by the noble Lord, Lord Swinfen. What happens if there have been three roll-overs and the prizes still have not been allocated?

Viscount Astor

The subject of roll-over is obviously an important concern for your Lordships. Roll-over happens in a draw or lotto when the numbers drawn at the end of the game are not held by any player. This is possible because players choose their own numbers, rather than as in a raffle each having one unique ticket out of a finite set. Prizes which are not won as a function of this game structure may be rolled forward to subsequent competitions. The Secretary of State will give a direction to ensure that prize money is never rolled forward more than three times. There is no question of unclaimed prizes being rolled forward. The Secretary of State is minded to direct that prizes which are not claimed should in the first instance be retained against a later claim and after a certain period should be paid into the distribution fund to be spent on good causes. This mirrors arrangements for society lotteries where prizes which are not collected, either through chance or the choice of a winner, are the property of the intended beneficiary. The position on prizes which are not won is different. It is in the nature of a draw lottery that a prize may not be won by any player. Likewise, prizes may well be won by more than one player. The Secretary of State will issue a direction to ensure that unwon prize money will not be rolled forward into following competitions more than three consecutive times. In the very unlikely event that the prize was not won after that, it would be distributed among lower level prizewinners.

The amendment of the noble Lord, Lord Donoughue, would give the Secretary of State power to make laws, breach of which would be criminal offence, concerning information which must be given to lottery players on the amount of money not claimed in the last competition which might be won in the following one. I can tell your Lordships now what that information will be: no unclaimed prizes will have been rolled forward. The noble Lord, Lord Donoughue, is concerned that, when they are considering buying tickets, players should know whether a roll-over has happened in the previous draw and, if so, how much has been added to the week's prize. It seems to me unlikely that the operator will not make this known since a roll-over in the lottery will be news and will attract attention. I suggest it would be inappropriate to use regulations to ensure that this information is available, for example making it a criminal offence if a retailer omitted to mention it to a single player.

We shall come later to the pools roll-over clauses in the Bill. My noble friend Lord Ferrers will be dealing with those. However, I can assure your Lordships that the pools roll-over will not have an advantage over the national lottery either in numbers of roll-over or in the timing of its introduction.

I hope your Lordships will be satisfied with that explanation as regards unclaimed prizes and that the amendment can be withdrawn.

Lord Houghton of Sowerby

I thank the Minister for that full explanation. I do not know whether there is any desire to take the debate any further. What the Minister has said does not meet the proposal in the amendment. However, I do not feel able to propose any alternative off the cuff. With the permission of the Committee, I will withdraw the amendment. We shall have to see whether we wish to do anything further.

Amendment, by leave, withdrawn.

[Amendment No. 23 not moved.]

Clause 6 agreed to.

Clause 7 [Licences under sections 5 and 6: further provisions]:

[Amendment No. 24 not moved.]

Viscount Astor moved Amendment No. 25:

Page 3, line 33, at end insert ("(including, if the information is of a description specified in the licence, information for publication by him)").

The noble Viscount said: This amendment is intended to assist the director general in carrying out his important duty of protecting the interests of the participants in the national lottery by ensuring that there is no bar to him publishing information of a description which he has specified in the licence.

The kind of information he may specify might, for example, cover such matters as the progress of coverage across the country by online terminals, the numbers of prizes won, the number of complaints received, and other information relating to the performance of the national lottery which might be a matter of public interest and which should be capable of publication, but which might not form a normal part of the Clause 5 licensee's annual report and accounts under the Companies Act. These are measures in the interests of customers. I am sure that the Committee will agree that they are both fair and sensible and that they will be welcomed both within and outside the Chamber. I beg to move.

On Question, amendment agreed to.

[Amendment No. 26 not moved.]

Clause 7, as amended, agreed to.

Clause 8 [Variation of conditions in licences]:

Lord Holme of Cheltenham moved Amendment. No. 27:

Page 4, line 26, at end insert: ("( ) The Director General shall publish the conditions from time to time pertaining to each licence granted under section 5 or 6.").

The noble Lord said: This amendment was part of a group of amendments, all dealing with the same issue, about the director general publishing the conditions contained in any licence that is granted. I hope that the Government will find the spirit of the amendments acceptable, because they are all about the openness set out in the Citizen's Charter. They are about making sure that the public and Parliament understand and know the conditions under which a licence was granted. In other words, this is an extension of the discussion we were having a short time ago. I hope that the Government will not find the amendment contentious. I do not intend to press it but it is important that any licence issued is publicly understood.

In this context, perhaps I may raise another matter that is relevant to this and which has been drawn to my attention. There is a need for the Government, in describing the conditions under which licences are awarded, to deal a little further with the question of what is a fit and proper licensee and what is meant by probity. In the case of the Gaming Act, concerning casinos and so on, quite close conditions are laid down by the Home Office as to who is a fit and proper person or company to exercise these important opportunities and powers. I would hope that at Report stage, as part of the policy of openness which this group of amendments is meant to encourage, the Government would want to expand on "fit and proper" and "probity". As I said some time ago in this debate, these are large contracts and it is in the public interest to know not only that they end up in the hands of people who are commercially viable but also that we can be sure that those people will be operating in the public interest. Having said that, unless the noble Viscount wants to come back, I intend to withdraw the amendment.

Viscount Astor

We debated most of this area when we dealt with Amendment No. 14. I appreciate what the noble Lord has said. I said then that it is our intention to make as much of the licence as possible available to both Houses and to make it as public as possible. I said that we would not be able to publish all the licence conditions in full because it is important that some things in the licence should be kept private for the security of the operation of the national lottery, whereas to publish them might undermine the lottery and breach that all-important security. I am sure that the Committee would not wish that to happen. I hope that that goes some way to reassure the noble Lord.

Lord Renton

Can my noble friend indicate whether each licence will be drafted in terms of the company to which the licence is given, or will the licences be in a general form applicable to all such companies?

Viscount Astor

There are two licences. There is the licence granted under Section 5, which is to the one lottery operator. There are further licences under Clause 6 to promoters of the lottery. Under that clause there may be more than one promoter and they might have different and varied licence conditions.

Amendment, by leave, withdrawn.

Clause 8 agreed to.

Clause 9 agreed to.

[Amendment No. 28 not moved.]

Clause 10 agreed to.

Schedule 3 [Revocation of licences]:

Viscount Astor moved Amendments Nos. 29 to 36:

Page 27, line 16, leave out ("paragraph 6(1) (c)") and insert ("Part II of this Schedule").

Page 28, line 8, leave out ("twenty-eight") and insert ("twenty-one").

Page 28, line 9, leave out from ("notice") to ("and") in line 10 and insert ("either make written representations about the matter to him or notify him in writing of the licensee's intention to make oral representations,").

Page 28, leave out lines 12 to 14 and insert: ("(2) If, within the period mentioned in sub-paragraph (1) (c), the Director General receives neither written representations nor written notification of the licensee's intention to make oral representations, the revocation shall take effect at the end of that period.").

Page 28, line 27, at end insert: ("7A.—(1) The Secretary of State may make regulations as to the procedure to be followed where a licensee's intention to make oral representations is notified to the Director General as mentioned in paragraph 6(1) (c). (2) The regulations may in particular make provision

1. (a) for the revocation of the licence to take effect if the licensee fails to comply with any requirements imposed by or under the regulations, and
2. (b) as to the hearing by the Director General of oral representations.").

Page 28, line 28, after ("any") insert ("written").

Page 28, line 29, after ("6(1) (c)") insert ("or any oral representations against the revocation of a licence are made in accordance with regulations under paragraph 7A").

Page 28, line 32, leave out ("him") and insert ("the licensee").

The noble Viscount said: My noble friend Lord Ferrers spoke to these amendments with Amendment No. 2. Therefore, with your Lordships' permission, I shall move them together. I beg to move.

On Question, amendments agreed to.

Schedule 3, as amended, agreed to.

Clause 11 [Directions to the Director General]:

[Amendment No. 37 not moved.]

Clause 11 agreed to.

Clause 12 [Regulations as to the promotion of lotteries]:

[Amendment No. 38 not moved.]

Lord Houghton of Sowerby moved Amendment No. 39:

Page 5, line 33, after ("lottery") insert ("including a requirement that the odds against winning the jackpot shall be prominently displayed").

The noble Lord said: This amendment concerns a piece of additional information which must be published—that is, the odds against winning a jackpot. That will now be related to the diminished size of the jackpot, if there is one. There is no other point involved in the amendment except publication of the odds against winning inflated prize money in a particular lottery due to a roll-over. I beg to move.

Lord Renton

I lack expertise in gambling. Occasionally I go horseracing, but I do not often win money. I have never heard of a jackpot being part of a lottery. I always thought that jackpots came with gambling machines. We are not concerned here with gambling machines. If the noble Lord, Lord Houghton, knows something that I have missed, he should explain it to the Committee because, frankly, I do not see how jackpots apply to the Bill.

9.45 p.m.

Viscount Brentford

Perhaps I may say a word in support of the amendment. I am not sure about the technical use of the word "jackpot", but the purpose behind the wording is to discourage the addictive gambling instinct in a person who sees a prize of £1 million or £2 million and says, "Oh, perhaps I'll get that", and, quite unrealistically and wrongly for that person, goes in for it. If information about the odds is publicly available so that such a person can see that he is not likely to win, that will bring some realism into the national lottery. As I understand it, that is the objective of the amendment. Whether or not the wording is right, I would welcome my noble friend's views on giving such publicity to try to curb the addictive instinct.

Viscount Astor

My right honourable friend the Secretary of State is considering ways in which the overall odds against winning a prize might be made available to players, perhaps through inclusion on the tickets. The noble Lord, Lord Houghton, feels that any advertisement for the lottery should contain, prominently displayed, the odds against winning the jackpot. We have a problem. We do not know what they will be. The odds against scooping the pool may well seem very high, but there will be more than one prize and the lower-tier prizes are not to be sniffed at. Displaying only the odds against winning the jackpot could be misleading in itself since it would neglect to mention the multitude of other chances that a player may have to win.

I think that people who buy a lottery ticket know that the odds against winning a large prize are very high indeed. The public are well aware of that although we cannot point out what some of those odds might be because it depends on how many players are playing and whether there is a roll-over. Therefore, I must advise the noble Lord, Lord Houghton, that I think that his amendment is unnecessary.

Lord Houghton of Sowerby

I thank the Minister for that. I think that we had better reconsider the amendment alongside the earlier amendment regarding the restriction of the roll-over and look at the two together because the one is bound up with the other. We are dealing with an inflated prize—whether or not we call it a jackpot—due to a roll-over of unclaimed prizes from earlier lotteries. If the roll-over is to be limited to three consecutive occasions, that at least will prevent an accumulation of unclaimed prizes mounting up to some astronomical figure which would lead to a frenzy of people rushing to buy tickets for this gift from heaven of untold wealth. We do not want to see Trafalgar Square in a state of riot with people trying to buy tickets to win unclaimed prizes amounting to tens of millions of pounds. But that is not likely to happen anyhow. In order that we can look at the two amendments together, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Lord Allen of Abbeydale moved Amendment No. 40:

Page 5, line 35, at end insert: ("( ) the use which may be made in advertising and promotion of reference to charitable causes which may be likely to receive moneys from lottery proceeds.").

The noble Lord said: The purpose of this amendment is to place a duty on the Government to publish regulations about how the lottery can use either images or references to charitable causes in its promotional material. I believe that during the Report stage in another place the Minister said that he recognised that this matter was important and that the department would give it further consideration over the next year. I wonder whether that goes quite far enough.

There must be a temptation for lottery operators, in the massive advertising campaign that we shall experience, to want to use images of charitable work to a disproportionate degree. It is perhaps true that images of sick or undernourished children are more likely to encourage people to buy tickets than pictures of sports stadia or perhaps the unveiling of Prince Albert.

There are two risks here. First, although the Advertising Standards Authority and the broadcasting authorities will no doubt monitor lottery advertising in their ordinary, efficient way to ensure that it is legal, decent, honest and truthful, there is a strong feeling among charities that for charity one needs a little more than that. Long experience has shown that considerable skills are required to ensure that charitable work is presented to the public in a way that does not patronise or offend the people with whom charities are working. At the very least, there should be a requirement on promoters to obtain the consent of the charity before using its name, images or a description of its work in the promotion of lottery material.

The second danger takes us back to matters that we have discussed a great deal as the evening has worn on: that the more the emphasis is put on charitable work, the greater the risk that people will buy lottery tickets in the belief that they are helping charity work and will subscribe less to the appeals made directly by individual charities. There is an argument here for regulations to be made which could be prepared, presumably, in consultation with the voluntary organisations, the Advertising Standards Authority and the broadcasting authorities. It is an important matter from the point of view of charities. I hope that the Government, who have as I say, already shown themselves sympathetic, will be prepared to go just a little bit further. I beg to move.

Lord Renton

Although I do not agree with the exact wording of the amendment, its purpose is one which deserves the careful consideration and support of my noble friends on the Front Bench. If we had something which, in the course of the promotion of the national lottery, indicated that charities stood to benefit from it, that would to some extent reduce the fears expressed, mainly by noble Lords opposite, about the effects of the national lottery on charities. For that reason, the amendment deserves consideration.

Lord Birkett

I do not agree entirely with the amendment for the simple reason that, although I understand well the feelings of charities that they should not be subject to unfair competition, the whole point of the lottery, as I understand it, is not merely to have a lottery but to have it for what have become known as the good causes: the sports, the arts. the heritage, the Millenium Fund and other charities. It would be unduly inhibiting upon the operator of a lottery not to mention the obvious fact that that form of mild gambling has a beneficial spin-off that others do not. It was Benjamin Franklin, I think, who once described a national lottery of this sort as a tax paid only by the willing. That seems to be a good description. I do not see how the operator can be inhibited from pointing out the good that will result, albeit 35 per cent. or less—I agree—for the good causes. I believe that there should be no kind of deliberate rivalry between ordinary charities and this lottery. However, the operator cannot be quite as inhibited as the amendment suggests.

Lord Swinfen

The quality of the advertising is the important aspect of the amendment. In general, charities have a high and honest content to their advertising. Years ago some were rather disreputable. There is a grave concern in the charity world that in order to get people to invest in the national lottery the charity angle will be used as part of the advertising. It is feared that that will be misused to the detriment of charity as a whole. It is appreciated that a small proportion of what will be spent on the national lottery will go to charities. However, there is the danger that people will be turned off by bad advertising. They will be turned off not only the national lottery but from giving to charities in general.

Viscount Astor

There appears to be some confusion about the amendment and I shall try to help the Committee to sort it out. The amendment refers to: the use which may be made in advertising and promotion of reference to charitable causes which may be likely to receive moneys from lottery proceeds". Let us look at what is receiving moneys from lottery proceeds. It is the good causes: the arts, sport, heritage, charities and the Millennium Commission. They are not all charities, and they are not going to give the money to charities. Charities are only a part. Therefore the amendment is confusing because it implies that the good causes are charities. That is not the case.

I had hoped that I had made it clear to the Committee earlier today that we do not want the lottery to market itself in a way that is confused with charitable lotteries. That was the thrust of my argument to the noble Lord, Lord Birkett, in respect of the first amendment. I believe that the amendment will not work. I understand the anxieties which Members of the Committee have about charities. I have said that the national lottery will market itself in such a way as to give players an opportunity to participate, which is fun, in an activity that gives them a chance to win a substantial prize. In the light of that and my earlier comments, advertising is quite properly part of the licence condition to which I referred. It is part of that licence condition which should be set by the director general.

Lord Allen of Abbeydale

I must have put forward my arguments with even less clarity than I normally manage. I found the Minister's reply quite incomprehensible. The amendment is aimed at charities; it is not aimed at good causes, if the noble and learned Lord, Lord Simon, will permit me to use the phrase. It is aimed at charities for two reasons. First, charities are the only ones which could suffer from clumsy advertising. If one handles the advertising in a clumsy way one can upset people concerning the disabled and children. That does not apply to all the other good causes which are listed in the Bill. Secondly, charities are the only one of the five good causes which are likely to suffer under the Bill for the reasons that have been mentioned time and again today.

Therefore, the amendment aims to protect to some extent the interests of charities. I understood that it was in line with what a former ministerial colleague of the noble Viscount said in another place. Perhaps the hour is so late that I am not able to take in what he said. I shall read the Minister's reply in Hansard and consider what must happen at the next stage of the Bill. I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 41 not moved.]

10 p.m.

Viscount Brentford moved Amendment No. 42:

Page 5, line 35, at end insert: ("( ) the number of draws which may be held in any calendar month").

The noble Viscount said: This amendment asks for publicity. The idea is to push in front of the general public as much relevant information as possible. It seems to me that the number of draws to be held is an item of information which the general public is entitled to have. I beg to move.

Viscount Astor

This Bill has been drafted to ensure as far as possible that the regulation of the lottery operation is achieved through licence conditions, which have the force of law, and not in regulations, which are criminal law. Some people or organisations are not subject to licence conditions; for example, players or retailers. Their behaviour is therefore to be controlled through regulations made by the Secretary of State. The lottery operator will be subject to licence conditions and will face the risk of losing his licence for serious breach of those conditions. There is no need to place limits on his behaviour using criminal law.

In addition, I must add that the Government are not convinced of the need for the Secretary of State to limit the number of lotteries held in a given period. The Director General of OFLOT will be able to take a view, when an application for a Clause 6 licence is received, on whether there are already quite enough draws scheduled to happen in the period proposed. Exactly what frequency and variety of lotteries the people of this country will want is a commercial judgment to be made by the operator together with the director general, and this mixture may change over time. Therefore, I urge my noble friend to withdraw his amendment.

Viscount Brentford

The amendment seeks in no way to be restrictive. It merely asks for publicity so that people may know the facts. I appreciate fully that the number may vary from time to time. That is not an issue. We merely seek publicity. However, at this late hour, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 12 agreed to.

Clause 13 agreed to.

Clause 14 [Annual report]:

[Amendment No. 43 not moved.]

Lord Donoughue moved Amendment No. 44:

Page 6, line 32, at end insert: ("( ) The Director General shall include in his report under subsection (1) a report on the pattern of purchase of lottery tickets on a regional basis and across income groups.").

The noble Lord said: In speaking to this amendment I shall speak also to Amendments Nos. 69 and 91 and I shall introduce Amendments Nos. 70 and 90.

The purpose of the amendment is to provide for the monitoring of patterns of the purchase of lottery tickets and the patterns of distribution of proceeds. We want to do that in order to determine whether the national lottery money has been transferred from low to high income groups or from some regions to others.

Amendment No. 44 provides that: The Director General shall include in his report … a report on the pattern of purchase of lottery tickets on a regional basis and across income groups". Amendment No. 91 requires that the distributing bodies should include in their annual reports information about how lottery proceeds have been, distributed or applied on a regional basis and across income groups", so far, we concede, as can be determined.

On the patterns of participation, we should note that research recently undertaken in the United Kingdom by Saatchi and Saatchi on behalf of the Sports Council supports the view that participation in the lottery is likely to be weighted towards those on lower incomes. The survey which examined the public's intention as regards the purchase of lottery tickets suggested that a larger proportion of those in social classes C1 and C2 will be more regular lottery participants than those in the AB category. Moreover, Professor John Kay in a report on the national lottery for the Gulbenkian Foundation notes that the findings by Saatchi and Saatchi to which I have just referred, are consistent with the results of surveys in other countries". The general finding is that poorer people spend a larger proportion of their income on lotteries. A number of studies are quoted to support that view.

In a debate in another place much concern was expressed about the fact that national lottery advertising would be organised so as to target low income groups. Many were worried about that aspect, but the then Minister resisted any moves to meet that concern. We hope that the Government will now undertake to try to ensure that national lottery advertising is not specifically targeted on the poorer members of society.

As regards the pattern of distribution of the proceeds, we know that the aim of the lottery is to raise money for the arts, the heritage, charities and the Millennium Fund. Many fear that a large proportion of lottery money will be spent on high prestige projects such as Olympic stadia, opera houses or historic buildings. We are not opposed to that; indeed, we should like to see more of it. However, the research on the current patterns of the use of those facilities shows, perhaps not surprisingly, that people on low incomes are less likely to benefit from those projects than are high earners.

Therefore, if we put it together, the evidence suggests that the lottery is likely to be a form of regressive taxation. It will obtain a disproportionate amount of its revenue from the least well off and the proceeds will go disproportionately to finance services which the better off enjoy. We believe that it is most important that we should have the information about the patterns of participation and of distribution.

The amendments aim to ensure that we are aware of those patterns and ultimately, it is to be hoped, can secure a fairer geographic distribution and distribution across all social groups. I should point out that the amendments are very much at the heart of the approach of this side of the Committee to the Bill. I hope that the Minister will take them seriously because we take them most seriously. I should also mention that Amendment No. 91 concerns the structure and capacity of the distributing bodies to deal with the regional question. That is consequential to our main concern. I beg to move.

Lord Simon of Glaisdale

I should like to support the group of amendments under discussion so far as it relates to regional policy. I am not so occupied with Amendment No. 44, but Amendment No. 69, which refers to the "regional" distribution of the proceeds, seems to me to be most important. For reasons just indicated by the noble Lord, there is a distinct possibility of the distribution favouring real estate in the metropolis. We need to see a proper spread of the proceeds throughout the United Kingdom, particularly as regards sport, the arts and indeed charities.

Lord Redesdale

I thank the noble and learned Lord, Lord Simon of Glaisdale, for supporting the regions. I wish to speak to Amendments Nos. 70, 90, 91 and 110. We on these Benches feel that these amendments are particularly important because they concern the distribution of the funds around the regions. I count the North East as my home. The lottery is of a national character and the South East, and particularly London, should not be the main beneficiaries of it. The funds should be spread equally. These amendments seek to divide the money equally around the country.

I speak particularly to Amendment No. 110 which concerns the Millennium Fund. We have a distinct feeling that the Millennium Fund will bring with it a blaze of glory that will be centred on the capital. A large proportion of the moneys that are going to good causes will go to the Millennium Fund. Therefore we on these Benches feel that any money that is going to projects for the Millennium Fund should be divided around the country.

Lord Renton

So far as the regions are concerned, I hope that the money will be distributed to the regions according to their need and not according to the number of tickets bought in each region. I think it would be utterly wrong to try to distribute it on that basis. That makes me doubt whether all these amendments are right. As to the idea of the director general reporting about the pattern of purchase of lottery tickets across income groups, how on earth is he to find out except by asking people to which income group they belong when they buy tickets? That is unthinkable. I can imagine nothing more socially divisive. Good heavens, I am sure the Government could not agree to that being done. Therefore I have some doubt whether these amendments collectively deserve the enthusiastic support which the speeches in support of them have so far given. I hope that the Government will look rather critically at these amendments because they could do more harm than good.

Lord Lucas

I very much agree with what my noble friend Lord Renton has said. I have a great deal of sympathy for the underlying reasons that I detect behind these amendments—that the projects supported by this enterprise should be spread widely across the country. But to take the example offered by the noble Lord, Lord Donoughue, of the Olympic stadium in Manchester, what region does that benefit? It does not benefit a region; it benefits the whole country. What income group does it benefit? It benefits us all. How can one start subdividing that and saying, "Well Manchester has got that so it cannot have anything else"? That seems to me an entirely inappropriate way of going about things. To start measuring these things would create an enormous bureaucracy.

Lord Donoughue

I advise the noble Lord to do a little reading on the preparation for the Olympic bid, which, as Ministers know, has involved a considerable amount of professional research which demonstrates that the North West would benefit considerably.

Lord Lucas

I am not denying that the North West would benefit; I am just saying that we would all benefit from it. It is not something which is confined to the North West. Likewise, if one takes the example of the capital, I do not believe that new building in the capital, if it serves some national purpose, should be allocated purely to the capital's share of the money.

Lord Redesdale

I am grateful to the noble Lord for giving way. I am afraid that I have to disagree with him. If one lived in Newcastle and had never been to the capital, building a new opera house in London would hardly do one any good.

10.15 p.m.

Lord Lucas

Not to my credit, I have never been to Manchester, but I do not believe that the building of an Olympic stadium in Manchester would do me anything but good, whether or not I go there, because I am part of this country. I do not agree with the idea of spreading the benefits widely among the regions. I believe that the lottery has to do things of significance. How many regions do we have in this country? Do we have 10, 50 or 150? If we start subdividing the fund in that way we shall only ever do little things.

I agree that at the lower level, in relation to the smaller projects, particularly in the Millenium Fund, the funds should certainly be spread out among the regions. There is no reason why the money spent at village hall level should all go to Sussex. The benefits should be divided up. But the big projects should happen where they need to happen because of what they are and not because there should be some spreading out of the money across the whole country. The money should do significant things. It should do things for the whole country and we should not start arguing about whether they happen in particular corners of this country.

As to the underlying question of whether the money should all go into opera houses or into projects in London, I entirely agree with the spirit of the amendments that it should be shared around the country. I would not mind in the slightest if nothing happened in London. However, the idea that we should monitor exactly where the money is going and how it is being spent is complete anathema to me.

Baroness Seear

I do not believe for one moment that it was suggested that there should be a detailed arithmetical distribution. We seem to be rather arithmetic this evening. Surely the noble Lord, Lord Lucas, would agree that if the Olympics go to Manchester, while that does the whole country good, in terms of jobs, prestige and the general refurbishment of Manchester it will do more for the Mancunians than for Londoners.

Speaking as a Londoner, I am very conscious of the fact that a great many advantages are available to people in London which have never been available in the regions, unlike in a great many other countries. If one goes to countries such as Germany or Italy, one finds very good opera houses and theatres all over the country. One does not find the equivalent in this country, although there are important exceptions. That is something that we need to balance out. Surely a reasonable distribution towards the regions is very much to be desired.

Viscount Astor

Perhaps I may begin by dealing with the point raised by the noble Lord, Lord Donoughue, concerning low-income groups. We question the so-called evidence—I believe that he referred to Saatchi and Saatchi research—which suggests that people from low-income groups will participate more than any other group in the national lottery. In almost every other state lottery the profile of the playing population largely matches the profile of the population overall. We expect that the population as a whole will want to play the lottery in this country, as they do in other countries. For example, in Spain, 98 per cent. of the adult population participates in the national lottery.

I now turn to the general point concerning the regions. The amendments are intended to ensure that the distribution of lottery money across Scotland, Wales, Northern Ireland and England, and perhaps among the regions of England, is fair and reasonable. The Government are in complete agreement with that principle. However, I hope to explain to your Lordships why it would not be appropriate to set that in statute for all cases.

The Bill already makes provision for funds to be divided among the four countries of the United Kingdom in the sports sector. At present there are four independent sports councils, and for simplicity and transparency of lottery distribution in this case the proportions each will receive have been set out in the Bill.

The noble Lord, Lord Donoughue, proposes to do the same for the arts sector. However, the Scottish and Welsh Arts Councils are not at present independent bodies as the sports councils are but are technically committees of the Arts Council of Great Britain. The Government intend to establish new independent arts councils for Scotland and Wales. When that is achieved, Clause 21 of the Bill will be amended by order to make clear the shares which each will distribute.

In the heritage sector, only one body exists which is wholly independent of Government and has the wide remit, including both the natural and built heritage, which is required for lottery distribution. That is the National Heritage Memorial Fund, which currently makes grants across the whole of Great Britain. The Secretary of State will direct the National Heritage Memorial Fund to take account of relative populations and of need in different areas from year to year in making grant decisions.

The Charities Board will be required by the Bill to establish four committees with special responsibility for considering applications which are particularly relevant to each of the four countries of Britain. The board may also, if it wishes, set up committees for the regions of England, or other committees, possibly subject-based, if that seems appropriate to the board. The Home Secretary will expect the board to demonstrate a reasonable spread of expenditure, but will take account of the fact that some projects which are clearly located in one or other of the four countries are in fact for the benefit of everyone in the UK.

Lord Holme of Cheltenham

I thank the noble Viscount for giving way. He lays great emphasis on the Scottish and Welsh boards. In most instances Scotland and Wales are expressly dealt with; and that is as it should be, because with regard to heritage and art they have different traditions and cultures. However, the group of amendments that we are discussing relate to the other 85 per cent. of the country. It is worth remembering that England amounts to 85 per cent. of Great Britain. It is precisely the distribution within England that underlies the wish to see a regional dimension.

Viscount Astor

I understand the point made by the noble Lord. I stated with specific regard to charities that if the board wishes it can set up charities for the regions of England. It will be for the other boards to look very closely on how they distribute their funds within the regions. I am sure that they will do so. We are not prescribing how they should do that and exactly to which regions. It will be up to the boards.

However, let us not forget that the Arts Council has great experience already in distributing funds to the regions of England. Many of its grants are already made to the regions in the North and South. That is a fact. With that experience, I am sure that it will continue to do so with lottery money in the future.

I turn to the Millennium Commission. With the Millennium Commission, a statutory requirement to demonstrate a fair spread of expenditure over each year could undermine the whole purpose of the commission. The Government intend the commission to fund large, lasting capital projects. These, as the Committee well knows, do not come cheap, and funding may well take more than one year for each of the several projects envisaged. The Secretary of State has made it clear that he expects the commission to fund such projects in each of the four home countries—England, Scotland, Wales and Northern Ireland. The Millennium Commission will have more than one year at a time to achieve that.

Reports and accounts of the distributors' conduct over each year will be made available to Parliament, which will be able to consider whether shares have been fair or whether there were good grounds for any temporary shift in emphasis. I hope the Committee is reassured that the Government share its intentions in the matter, and that the amendments are not needed.

Lord Donoughue

Perhaps I may say to the noble Lord, Lord Renton, that the information on participation by income groups is not strange, difficult or undesirable. It is very easy indeed. It is done by most other countries which have lotteries in relation to their own lottery participation. It is professionally easy; it is professionally familiar; and we simply ask for an assurance that it should be done in this country as elsewhere.

On the regions, one of the central points was touched on by the noble Baroness, Lady Seear. The Government have stated that the proceeds go mainly to capital projects. We shall come later to deal with that. Capital projects mean big construction employment and they should go regionally, on a balanced basis. I absolutely agree with what the noble Lord, Lord Holme, said. We are dealing with the England problem. Unless there is commitment by the Government which is built into what is required of the distributing bodies, it could go very wrong. However, I seek to withdraw my amendment on the basis that we may return to it on Report.

Amendment, by leave, withdrawn.

[Amendment No. 45 not moved.]

Clause 14 agreed to.

Clause 15 agreed to.

Lord Wyatt of Weeford moved Amendment No. 46:

After Clause 15, insert the following new clause:

Extension of powers of Horserace Totalisator Board

1. (".—(1) The Horserace Totalisator Board may hold a licence under section 5 or 6.
2. (2) The Horserace Totalisator Board may hold an interest in a body corporate the only or principal object of which is the holding of a licence under section 5 or 6.
3. (3) In subsection (2) the reference to holding an interest in a body corporate is to holding, or being beneficially entitled to, shares in that body or to possessing voting power in that body.").

The noble Lord said: I have to declare a personal interest in this amendment as I am chairman of the Horserace Totalisator Board. We run it as a commercial entity, independent of interference from the Home Office and we operate as a commercial venture. As is fairly well known, we also give all our profits to racing. We hope that we may be able to receive a chunk of the lottery, which may to some extent compensate for the inevitable loss to the racing levy from the introduction of the lottery. That happened in France. The amount decreased considerably when the lottery was introduced and I believe that the same will apply here. That is one of the reasons why the Tote wishes to be able to play a part in operating the lottery. The amendment is self-explanatory and I do not believe that I need waste the Committee's time any further on the issue. I beg to move.

Lord Benson

I support the amendment. The profits of the Tote are of critical importance to the horse-racing industry of the country. Its contribution at present is, I am told, of the order of £6 million. A decline in the profits of the Tote by reason of the lottery could have a most damaging effect upon the horse-racing industry. It therefore seems appropriate that the Tote should be entitled to hold a licence under the terms of Clauses 5 and 6 of the Bill. I can see no reason against that and I hope that the Government will smile upon the proposal.

Lord Donoughue

We on these Benches support the amendment and hope that the Government will look favourably on the Tote's bid. It would be helpful to racing, but that is not the only or the main issue. The fact is that it would be very appropriate for the Tote to participate in the lottery as an operator. The Tote would be British and I think that that is important. It would be unfortunate if the operating of this great industry went overseas. There is no need for that to happen. There are constraints on how far we can keep it national and we should certainly have to look at the Europeans, but I hope we would not look any further than that.

We are also impressed by what the noble Lord, Lord Wyatt of Weeford, said earlier; that he had been in discussions with the Post Office. That would be attractive to us also. Thus, basically we support the amendment.

On a subsidiary and sartorial matter, I wish to ask the noble Lord, Lord Wyatt, why he did not wear his top hat for us. We would all have enjoyed it. When we see the pictures down the corridors, we note that noble Lords in those days frequently wore top hats in this Chamber. I am unclear as to whether any rule prevents it, and perhaps the Minister will tell us. If not, I hope that next time the noble Lord will wear his top hat. There are many Peers who would like to see him topped!

Lord Graham of Edmonton

Especially on Gold Cup day!

10.30 p.m.

Lord Holme of Cheltenham

Before the Minister replies, perhaps I may say from these Benches that we are inclined to support this clause. It must be said, having listened to the noble Lord, Lord Wyatt, at some length on Second Reading, that the Tote has much of the capital equipment in place that other potential bidders do not have, and therefore it should be a contender. We are inclined to accept that. I hope that the noble Lord will not take it amiss if I say that by the time we get to Report stage it would be quite nice to find some other noble Lord advancing the interests of the Tote, rather than the noble Lord himself having to be embarrassed by doing so. I find the use of the word "we" in Parliament easier to be "of the Chamber" rather than of the particular organisation. I should find it very much easier to support the proposition if the noble Lord could, in turn, find other noble Lords to advance it rather than having to do it himself.

Lord Lucas

I wish only to ask a question of the noble Lord, Lord Wyatt. Is the noble Lord satisfied that the powers in subsection (3) are wide enough to allow for the possible complexities of a joint venture company?

Lord Wyatt of Weeford

Yes, I am.

Earl Ferrers

The noble Lord, Lord Wyatt of Weeford, has been chairman of the Horserace Totalisator Board for a number of years. The noble Lord, Lord Donoughue, said that he wished he would appear in a top hat. All that I can say is that that noble Lord has come with everything else other than the top hat. There he is on Ascot Day with his morning coat and his carnation, and indeed even his Royal Enclosure ticket on him. So he is minus only his top hat. I was interested to hear the noble Lord, Lord Holme of Cheltenham, say that he hoped that somebody else would move these amendments so as not to embarrass the noble Lord, Lord Wyatt. I am bound to say that I have never found the noble Lord to be in the slightest bit embarrassed by having to move amendments or lobby on behalf of the totalisator board.

During the time that he has been chairman, the noble Lord has done a great deal to turn the Tote around so that today it is a valuable contributor to the finances of the racing industry. He is to be commended on what he has done, and for his ingenuity in looking at new opportunities for improving the profitability of the Tote, which will benefit both the Tote and racing alike. He has made no secret of the fact that he sees the national lottery as an opportunity which the Tote would not like to miss.

As the noble Lord indicated, his new clause would enable the Tote to hold a licence under Clause 5 of the Bill to run the national lottery, or to hold a licence under Clause 6 of the Bill to promote lotteries as part of the national lottery. The noble Lord's new clause would simply put the Tote on exactly the same footing as any other operator in the betting industry. Any bid by the Tote to run the national lottery will be considered by the director general on precisely the same terms as bids from other applicants for a Clause 5 licence.

The noble Lord, Lord Benson, said that he hoped the Government would smile upon this amendment. I can tell the noble Lord that the Government do smile upon it, and we are content to accept it.

On Question, amendment agreed to.

Clause 16 agreed to.

[Amendments Nos. 47 and 48 not moved.]

Clauses 17 to 19 agreed to.

Clause 20 [Apportionment of money in Distribution Fund]:

[Amendment No. 49 not moved.]

Lord Donoughue moved Amendment No. 50:

Page 9, line 15, after ("appropriate") insert ("in the light of his duty under subsection (4) below").

The noble Lord said: In moving this amendment I shall speak also to Amendments Nos. 61, 68, 74, 88 and 89. The purpose of this group of amendments is to entrench the principle of additionality and to avoid the feared substitution which was a centre of concern in previous debates on the lottery. We seek that, in some cases, by suggesting forms of words—I draw the Minister's attention especially to Amendment No. 68.

Ministers here and in another place have said that it is not possible to entrench the principle of additionality. We do not accept that. We believe that having it on the face of the Bill is an improvement. If additionality is entrenched in the Bill, it will act as a discipline on both the Government and the distributing bodies to ensure that additionality is followed and that there is not substitution for previous public expenditure ends.

We also require, through Amendments Nos. 88 and 89, that the Secretary of State should report on the levels of funding to recipients. The idea is that it should be clear when published that it is additional. From the publication it will be clear that it is. Those are the purposes of the amendments. I shall speak again to Amendment No. 74 following the noble Lord, Lord Montagu of Beaulieu, on a slightly separate aspect. I beg to move.

Lord Holme of Cheltenham

I wish to speak briefly to both the principal amendment and Amendment No. 89, on which my name appears. The view is widely held in this Chamber that it is imperative that the funds raised by the lottery are additional to moneys disbursed by central and local government. The noble and learned Lord, Lord Simon of Glaisdale, an hour or two ago rebuked us for implying that the Treasury was rapacious. But we know that the Government have a consistent history in this matter. There is the example of the European regional funds. If they can find funding to replace that which is a normal charge upon them, they will do so with relish. When we look at the money raised from the national lottery, I believe that we are right to be suspicious that the recipients—the good causes, as we have been calling them today—could end up with no more money because what has been given with the right hand will be taken away with the left hand. That suspicion exists and is quite widespread in this Chamber and in another place.

We all know that it is extremely difficult to deal with the problem. It is difficult to legislate for people to be good. Although I support the other amendments also, Amendment No. 89 in particular is a way of helping to deal with the problem which the Government can readily concede. It attempts to deal with it through transparency and by ensuring that the Government in their annual report show exactly the level of funding by government departments and local authorities, for the financial year to which the report relates, to each recipient involving money distributed by the new body.

I hope that the Government can accept the amendment. It seems to me that it does not strike at the heart of government. It does not set an intolerable precedent. It does—if I may refer to the point again—follow the principle of the Citizen's Charter and the open government of which the Prime Minister speaks. Parliament and the public can then judge. We can attempt to make our own judgment as to whether there has been an attempt to replace public funding by the proceeds of the lottery.

Lord Montagu of Beaulieu

I speak especially to Amendment No. 74. When I tabled that amendment, as in the Second Reading debate several noble Lords raised the question of exactly how lottery funds would be distributed by agencies such as the National Heritage Memorial Fund, the Arts Council and the Sports Council, which are already grant aiding heritage, arts and sports projects in a variety of ways.

It has been generally understood, perhaps not correctly, that lottery funding will not be available to top up programmes which are already funded by taxpayers' money. The intention is to ensure that the Government are not tempted to reduce support from the Exchequer for activities and areas to which they are already committed; in other words, to ensure that lottery funding remains additional to public money.

Without wishing to challenge that excellent principle, perhaps I may remind my noble friend that a number of projects are and will remain seriously underfunded. Historic building grants from English Heritage cannot keep pace with the rising cost of repairs to buildings. The purchase grants of museums and galleries have been frozen since 1985. The garden grants scheme for historic houses never got off the ground through lack of resources.

My noble friend is probably aware—but certainly should know—that it is the understanding and fear of many organisations who hope to be involved in distributing money from the lottery that they will be unable to support projects and schemes that theoretically will be eligible for funding through established government schemes. That will virtually preclude everything that is worthwhile. I am sure that that is not the intention of the Bill or the Government, or the understanding of the general public. This amendment has been tabled to encourage the Government to give a specific undertaking on two points. First, that the National Heritage Memorial Fund will not be debarred on doctrinaire grounds from drawing on lottery money if necessary to continue to do what it has done so superbly since its inception; that is, to be the rescuer of last resort when an important part of Britain's heritage is at immediate risk.

Secondly, I ask my noble friend to confirm that the National Heritage Memorial Fund will be able to continue to use its undoubted skill in negotiating partnerships between such bodies as English Heritage, the National Trusts, the National Art Collection Fund, and so on, which in the past have saved such places as Calke Abbey and the Cholmondley Holbein. It is vital that the National Heritage Memorial Fund is allowed to use lottery money in partnership with such organisations and the private sector. Perhaps one of the best present examples is Brighton West Pier, which is literally falling into the sea. Only a partnership scheme between Brighton Council, English Heritage and the National Heritage Memorial Fund using lottery money can possibly save it.

The object of paragraph (c) of the amendment is to ensure that the National Heritage Memorial Fund is able to spend money on small as well as grand projects. The National Heritage Act 1980 uses the test of "outstanding" for the purposes of grants by the fund's trustees. This was clearly appropriate for the type of grant expected to be made with public money when the fund was set up, but it is clearly inappropriate for the range of potential beneficiaries intended to receive lottery funds. For example, a small village hall in need of repair in a remote location will clearly be an ideal beneficiary for national lottery funds. However, it seems unlikely that under the terms of the 1980 Act such a hall can be considered to be "outstanding" and eligible for help.

It is important for the future success of the national lottery that everyone concerned has a clear understanding of how the Government intend the problem to be resolved. I believe that all of us will want to hear an undertaking from the Government that there will be no guidelines or instructions from the Department of National Heritage, or particularly the Treasury, to limit the range of funding decisions open to the trustees of the distributing bodies. I hope that after listening to my noble friend's reply I will be reassured and able to withdraw my amendment.

Lord Donoughue

My name is added to Amendment No. 74. The noble Lord, Lord Montagu, has excellently and succinctly expressed the basic concern in the heritage sector that the Treasury is issuing instructions that no lottery proceeds should go to heritage projects that are currently eligible for government funding, even though they are not actually receiving funds and in some cases are unlikely to receive any. I think that the purchase of land of high conservation value is often cited. The amendment will provide the two undertakings asked for and stated by the noble Lord, Lord Montagu. I support his request for government clarification.

10.45 p.m.

Lord Charteris of Amisfield

Perhaps I may say a few words on Amendment No. 74. First, however, I declare my interest in that for the first 12 years of the National Heritage Memorial Fund's existence I had the honour to be its chairman. I agree with the thought behind the amendment but it should not really be necessary. Paragraphs (a) and (b), although addressed to the National Heritage Memorial Fund, should really be addressed to the Treasury, which, as the noble Lord, Lord Donoughue, and others have said, does not quite seem to hoist in the true philosophy of additionality.

I should like also to say a few words about paragraph (c) and the test of "outstanding". It is very necessary from the point of view of the National Heritage Memorial Fund that the criterion of "outstanding" should be maintained whenever it is a question of dealing with something on a national basis. On the other hand, something could be outstanding for a local area or for a region. For instance, in my time the National Heritage Memorial Fund bought two pictures for the Aberdeen Gallery. It would never have dreamed of spending money on them if they had been going to the National Gallery or to the Tate Gallery, but they were in fact of great outstanding interest in Aberdeen.

Perhaps I should mention at this stage with regard to outstanding that we have talked today as if the National Heritage Memorial Fund was concerned only with the built heritage. I should like to point out to Members of the Committee that only 50 per cent. of the National Heritage Memorial Fund's money during the first 12 years of its existence was spent on the built heritage. Much was spent on museum objects, on pictures, on gold and silver, on furniture and on glass as well as on such diverse things as bats, bees, birds, butterflies, bogs, fens, flats, mountains, moors and all the joys and beauties of the wilderness, to say nothing of helping to raise the "Mary Rose" to the surface, spending money on trade union banners and on industrial archaeology. With this hugely wide scope, if the fund is to survive, it must stick, except occasionally with regard to a local area or region, to the criteria of "outstanding".

Baroness Birk

I wish to say a few words in support of what the noble Lord, Lord Charteris, has just said as I was in on the beginning of the National Heritage Memorial Fund. He is right that the conditions and criteria that were laid down at that time should be adhered to. The amendment put forward by the noble Lord, Lord Montagu of Beaulieu, makes quite sure that the fund is on the right map and will not be pushed aside, overlooked or in any way dealt with which is to its detriment.

Lord Gibson

I support those of the amendments which seek to protect the principle of additionality by making it clear in the report at the end of the year what has been spent and how so that the lottery funds are, as it were, ring-fenced. That is wholly desirable. But I am not so happy about the amendments which seek to protect the principle of additionality by distinguishing between the various objects to which the money can be given. We should run into serious danger, as I tried to emphasise in my Second Reading speech, if we go so far in the direction of protecting additionality that we prevent the money from being spent as wisely as it should be. I hope that that can be borne in mind.

Lord Swinfen

My name is attached to Amendments Nos. 68 and 88. I am very concerned about additionality. We must remember that in paragraph 7 of the Government's White Paper, A National Lottery: Raising Money for Good Causes, the Government themselves wrote: The Government is firmly of the view, however, that the proceeds should not be directed towards the main areas of public expenditure, and that it would be inappropriate for the lottery to be seen as a way of funding the National Health Service, education or similar major programmes. However, there is no objection in principle to including amongst the beneficiaries of the national lottery charities operating in the health and educational areas". Many voluntary organisations which would hope to get funds as a result of the national lottery are operating, and have been operating for a very long time, in conjunction with local authorities and in some instances, with national government. That is increasing under Care in the Community. The charity for which I work does that with physically disabled people. It has considerable difficulty in negotiating with local authorities to obtain a proper price for the places in the homes which it runs for very severely disabled people. That is because the local authorities themselves are under financial pressure.

There will be a grave temptation for local authorities and central government to say that the money which the voluntary organisations obtain as a result of the national lottery should be used to help to pay for some of the provision. At the moment most voluntary organisations are not being paid by the local authorities the full cost for the places for the disabled people whom they are looking after. They are having to make up the balance from voluntary donations. There is a danger that those donations, as has already been said this evening, will be decreased by the advent of a national lottery.

Therefore, it is extremely important that some form of ensuring that additionality is properly accounted for is on the face of the Bill. If the Government are not prepared to accept any of this series of amendments this evening, I hope that my noble friend on the Front Bench will be able to assure the Committee that they will come forward at Report stage with a satisfactory amendment of their own.

Lord Cavendish of Furness

I have sympathy for the intentions behind all the amendments in this group, but especially I wish to support Amendment No. 74 in the name of my noble friend Lord Montagu of Beaulieu. At Second Reading I declared my personal interest as a commissioner of English Heritage, but, as Members of the Committee well know, until relatively recently my noble friend was the distinguished chairman of that body and remains without question far better qualified than I to speak on heritage matters.

In consequence I shall seek not to cover the ground which he has so ably explored. The heritage community supports the concept of a lottery. It has welcomed the commitments of the Department of National Heritage and is grateful to Ministers and officials for the immense amount of work which they have done in bringing forward a Bill which strives to meet all concerns. Nonetheless, there is still more work to be done.

The Department of National Heritage has consistently stated its view that the grant-in-aid of the Sports Council, the Arts Council and the National Heritage Memorial Fund should be kept separate from lottery money. This diktat has taken two main forms: projects partly funded by grant-in-aid could not be topped up by lottery funds, as has been said, and projects which fall within the scope of programme funding, regardless of whether any money is available, might be ineligible for lottery grants.

I and a number of other noble Lords cited examples at Second Reading of the anomalies such a principle would give rise to. They read like a new edition of Catch 22. The most important projects—the ones which by implication fall within the programmes of English Heritage and the National Heritage Memorial Fund—might fail if lottery money is denied to them because, as everyone knows, there is never enough money to satisfy even the highest priority calls on our resources. Those outside our programmes—by definition the less important projects—might fare better since they could claim lottery money.

We have been repeatedly reassured that these consequences are not intended by the department and that the concept of additionality would not work like that. However, the statements made by my noble friend Lord Astor and by Ministers both in Committee and at Report stage in another place are clear: "Don't mix grant-in-aid and lottery money —and, if you do, woe betide you".

It seems plain to me that the Department of National Heritage genuinely wants to see lottery and public funds put to the best possible use - and that is excellent. The basis for the distinction between programme and lottery funding would appear to stem from a fear that the Treasury will seek to reduce our funding if it believes that we are replacing -"replacing" being the operative word, although the noble Lord, Lord Donoughue, used the word "substitution"—grant-in-aid with lottery money. My response to this would be that this issue is not about hoarding away a secret cache of public funds; still less is it about failing to put public money to the best possible use. I am sure that the Public Accounts Committee in another place would have something to say about that. Quite the opposite: it is about making priority funding go further. Surely that makes sense.

What the department seems to be saying is, "Beware of the bogeyman; you have only yourselves to blame if you cross him". Is it not more sensible to see how the bogeyman can be civilised? The bogeyman is more than keen to encourage the funding of major projects by partnerships between government and other sources of finance. What we are talking about here is not very different.

So I would say to my noble friend Lord Astor in his capacity as a spokesman for the Government and not just for the Department of National Heritage that the distributors will go to great lengths to show Parliament, the public and the Treasury that they are making the best possible use of the resources available. They will not misuse taxpayers' money simply because complementary funding could be available. These are highly competent bodies, run by highly competent people. They would, I believe, amply repay the Government's full trust.

Viscount Astor

These amendments attempt to reach some sort of mechanism which gives statutory protection to additionality. There are two approaches: to make the Secretary of State satisfy himself and report on additionality or to make the distributive bodies themselves undertake this.

I have doubts as to the practicality of the amendments which seek to make the distributors satisfy themselves that in making grants they are not substituting for public expenditure, and then to list the income from various sources in their annual report. There are likely to be many hundreds of beneficiaries from each distributing body. They will get grants from a number of sources at a number of different times in the year. The likelihood of there being a clear and consistent position available at the time of year when the distributor makes his annual report is remote. We would have an incomplete and possibly misleading picture which would tell us very little about additionality. It would be impossible to know why any particular source of funding had increased or decreased and the evidence would be impossible to interpret. The extra administrative burden placed on the distributing body would be enormous and costly.

The amendments also make reference to local authorities. Consider how much more difficult it would be to gather and present any meaningful information on local authority spending in this area, demonstrating the effect of the national lottery.

This Bill is very thorough in the way in which it sets out how the money is to be distributed and in the way it distances government from that distribution. In this respect it is unique among lottery legislation in the world. Ministers have stated their clear intention that the lottery money will be additional to that provided by public expenditure. It is just not, however, practicable, to frame a legislative provision which circumscribes the Government's ability to manage their public expenditure responsibilities in the way that they judge appropriate. This Bill, with its separate framework of distribution, and its transparent accounting, does all that is practicable to enshrine additionality. The two sets of figures will be freely available: programme expenditure from bodies' annual reports, as now, and lottery money from a new report on how the money is spent and the new transparent and separate accounts.

It is essentially up to the distributing bodies themselves to look at what they are funding and to avoid areas where there might be difficulty with regard to additionality. There can be no hard and fast rules, but good practice which will emerge over time.

I know that there have been concerns in the heritage area. The rules under which the National Heritage Memorial Fund will work are the most flexible applied to any heritage organisation. It is difficult for me to respond categorically to those Members of the Committee who have asked whether this or that particular case would be in or out. The trustees must decide what does and does not receive grant, working within the very broad directions that we shall issue on such matters as the presumption in favour of capital projects and of the need for a partnership contribution.

I can assure the Committee that the scope of the trustees' powers is extremely wide and the Bill will extend the scope further. They will be able quite properly to fund restoration and conservation work as well as acquisition, and joint funding projects with grant aid from other organisations such as English Heritage are not ruled out. But I do have to make clear the importance of making every effort to distinguish what is funded from the lottery from what is already provided for. That is the essence of what we are saying about additionality and which perhaps we have not put over sufficiently clearly until this evening. It does not mean that everything that the lottery supports must be quite new and distinct in nature from anything which is done now. That is clearly not possible and would lead to the absurdities which some of your Lordships so vividly pointed out on Second Reading. There is no intention to prescribe the funding decisions of the NHMF in that way. I hope that my noble friend Lord Montagu and the noble Lord, Lord Donoughue, will accept that the concerns expressed in their amendment are therefore unfounded.

There is another point to their amendment—the proposed removal of the "outstanding" criterion in grant decisions. The NHMF was set up to operate under that condition. It looks, on the face of it, pretty stern, but it functions really as a general quality requirement for grants, and is of course dependent on the interpretation of the trustees. The trustees have always interpreted it imaginatively, responsively and responsibly. The Government cannot accept the removal of that requirement. It would bring with it the suspicion that somehow a good quality application would receive government money, but shabbier efforts could always try to compete for some lottery cash. There is no shortage of good quality potential projects in this country. The requirement serves both applicants and the trustees, and is operated with flexibility and breadth. It should continue to stand.

The Treasury has issued no guidance. Under Clause 24, there is an intention that directions will be issued at a high level in favour, for example, of capital and partnership. They will not cover exclusively the issue of additionality. The preservation of that principle will be a matter, as I have said, for the trustees of the fund. My noble friend Lord Montagu is worried that the powers of the NHMF to fund projects of outstanding scenic, historic, aesthetic, architectural, or scientific interest may be too restrictive in relation to lottery applications. The trustees of the fund have always exercised their powers with flexibility and wisdom. I am sure that they will continue to do so.

The lottery-funded programmes will need to develop their own characteristics and ways of operating which will mark them out from existing programmes. This is an opportunity for fresh thinking and new approaches—new thinking not just for its own sake but because we have the challenge of directing additional resources in new ways to old and often familiar problems. It is in that frame of mind that the trustees will wish to avoid the danger of taking on what was already provided for with public sector grants, and ensure that the lottery has a genuinely additional effect.

I hope that I have been able to reassure the Committee with that lengthy explanation, and that the Committee will agree that the amendment should be withdrawn.

Lord Birkett

Before the Minister sits down, I was not clear from his reply about the danger outlined by the noble Lords, Lord Donoughue and Lord Montagu, that a project in receipt of or even eligible for government funds may not have the other half of those funds. Is he, for example, not reassuring us that, where refurbishment of the east wing of a famous and valuable building is funded by a government source, the National Heritage Memorial Fund cannot use lottery money to finance refurbishment of the west wing? I have not understood the Minister.

Viscount Astor

I do not believe that that is the case. I had hoped that I had been reasonably clear. It is difficult for me to give examples because it will be up to the trustees of the National Heritage Memorial Fund. Perhaps in going further than I ought, I believe that the example of the noble Lord, Lord Birkett, is good. He asked about the west wing in circumstances in which the east wing had been refurbished. The west wing would be a separate project.

Lord Montagu of Beaulieu

I thank my noble friend for clearing the air considerably. His reply will come as a great relief to many people who had got the wrong end of the stick. Perhaps that was the fault of the Government for not explaining themselves clearly. I am glad that my amendment and others have given the Government the opportunity to explain the situation. In view of that, I shall be happy to withdraw my amendment.

Lord Donoughue

I thank the Minister for his reply and beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Viscount Astor

I beg to move that the House do now resume.

Moved accordingly, and, on Question, Motion agreed to.

House resumed.