§ 5.33 p.m.
§ Lord Howell rose to call attention to the likely impact upon charities, trusts and foundations of the decision to hold a second weekly National Lottery draw; and to move for Papers.
§ The noble Lord said: My Lords, I am delighted to have the opportunity to call attention to the likely impact upon charities, trusts and foundations of the decision to hold a second weekly National Lottery draw. In doing so I am particularly glad to see that the noble Earl, Lord Effingham, intends to make his maiden speech, and I know that we shall listen to him with great interest and wish him well.
§ The words "the likely impact" in the title of the debate are something upon which I should like to comment. To quote a famous phrase: we do not have to look in any crystal ball in relation to this matter; the books are on our tables for us to see what the impact has been of the existing National Lottery and therefore we can calculate what the future holds.
§ Before dealing with the substance of the debate I must declare a number of interests. First, I was a member of the National Lottery Promotion Company which had in its membership Mr. Richard Luce of the other place, my noble friend Lord Birkett and myself, under the inspired leadership of Mr. Denis Vaughan. We promoted the National Lottery and I do not believe Mr. Vaughan received sufficient recognition of the work undertaken in promoting that good cause, which I have always supported and still do, despite some of the comments I shall make today.
§ When I was a Minister I instigated the Football Trust by persuading the football pools companies to allocate a large sum of money from their "Spot the Ball" competition. That created the Football Trust and the Foundation for Sport and the Arts, both of which have done excellent work. I am also a director of Wembley Stadium which hopes, in due course, to see some of the lottery money, though it is taking a long time to arrive and for the Government to make up their mind about the question of a national stadium. I predict that we may get an answer to that question any time now.
§ I want to declare an interest of personal involvement in a lot of charity work. I happen to be the president of CRAB (Cancer Research in Birmingham) which raised £1 million for cancer research over the past two or three years. My experience is that it is extremely hard work to persuade large numbers of people to sell badges, take out collecting tins and write to firms to obtain donations. I am therefore well aware of the impact there has been on that organisation. My last interest is that I am chairman of the Birmingham bid for the Academy of Sport. I do not know whether or not we shall win; if we do there is £100 million of lottery money on offer for it and I should therefore declare that interest.
§ My objective in raising this matter was to find the answer to the question why the decision was made to hold a second weekly lottery draw. Parliament was never told that there might be a second weekly lottery 1298 draw. Parliament was not consulted after the decision was taken which affects so many interests, including the betting industry—I am pleased to see the noble Lord, Lord Wakeham, in his seat—which I had hoped to include in my title but which seems to have got lost on the way.
§ Why has the Secretary of State been overruled? She appeared before the Select Committee in another place and in answer to a direct question clearly said that she could see no reason why we should have a second weekly draw. Within weeks she was overruled, presumably by the Prime Minister. Why—most important of all—have the affected parties not been consulted? When the Government take a step like this it is usual to make sure that all affected parties are given a hearing so that they can explain their interests and say how such a decision may affect them. No such courtesy was granted to them on this occasion.
§ With respect to the Minister the noble Lord, Lord Inglewood, we know the answer to the question before the debate begins; before I speak and before the Minister speaks. The Prime Minister spoke on this matter last Friday in his constituency. The Birmingham Post of Saturday, 16th November, reported that the Prime Minister defended the mid-week lottery due to start next year and said that he did not see why the "nanny state" should stop it. So there is going to be a mid-week lottery, "I, the Prime Minister, have spoken"; and all the interests concerned can get lost in the thought that they are trying to sponge on the nanny state. It was a regrettable comment.
§ I have heard from the National Council for Voluntary Organisations which represents all the charities—there are over 125,000 in this country. Most of these charities are bound to be affected, without consultation, by a second weekly lottery. They estimate that the loss to charities already suffered because of the first lottery amounts to £350 million in 1995. That figure is calculated as a result of a very detailed NOP survey. Although some of the large charities which depend on covenants and fixed donations are not as badly hit, what is revealed by the survey is that those charities which depend on raffles, street and door-to-door collections have suffered the most. The income from raffles is down 16 per cent.; from street collecting and from door-to-door collections the figure is down by 8 per cent.
§ What has the Prime Minister to say to them and the thousands of people who volunteer to stand rattling their tins making collections? He said, "You can spend more time in the snow and the rain, but do not expect to make any appeal to us, the nanny state, in order to help you. Why should the cry of despair from the charities produce any response, and especially why should they expect to be consulted?" I have great regard for the Prime Minister, but I am sorry to say that I consider his comments are a calculated insult; namely, that when charities make their appeal they are appealing to the nanny state.1299
The National Council for Voluntary Organisations has written about the impact of a second draw and stated,
A second weekly draw will further drain away funds from other forms of charitable fund raising, in particular charities reliant on traditional forms of fund raising, namely street collections … raffles and ticket sales".
§ That is the point that I have been making on their behalf. It is astonishing that no thought has been given to any of their considerations bearing in mind the thousands of volunteers who give up their time to make the wonderful voluntary work of this country so successful.
Then there is the question of the football pools. Their income is down 40 per cent. I also include the spot-the-ball pools. The football pools organisation tell me that they estimate a further drop in income this year of 20 per cent., which will put in great jeopardy the magnificent work that they are doing in restoring our football grounds and other works. The Football Trust has a shortfall of £35 million if it is fully to implement the Taylor report on football ground safety. I shall not say much about The Foundation for Sport and the Arts because the deputy chairman, the noble Lord, Lord Brabazon of Tara, is here and no doubt he will tell us about the situation there. I understand that at its peak that organisation was receiving £1.4 million a week and that figure has now been reduced to £700,000 a week. The secretary to the trustees, Mr. Grattan Endicott, tells me,
You will readily appreciate that a mid-week lottery will provide intense competition to the pools just when they are picking up the coupons each week. The benefits of their recent marketing efforts will be damaged and their finances would he in no condition to mount an extended defence to their (much reduced) market share. Where a further reduction in pool betting duty was a crucial need it now becomes an exercise in emergency relief for a storm-battered industry".
§ Those are very wise words. To put the matter in my own way, and not referring to the nanny state all the time, it ill becomes the Prime Minister to tell the pools industry to stop whingeing. That is really what he is saying. That industry is entitled to feel aggrieved.
§ I welcome the participation of the noble Lord, Lord Wakeham, who will no doubt tell us about the horse racing industry. It is a very important industry and I personally support its case. It is an industry which gives great pleasure to millions of people. It now finds itself in a difficult state. It has a legitimate concern, which I hope the Government will listen to. In all these matters, although the Prime Minister appears to be off-putting, I hope that the Chancellor of the Exchequer will show more imagination next week when he produces his Budget.
§ The questions for the Government are these: will the second weekly lottery reduce the pools tax? Will it reduce the betting tax? How do the Government intend to protect football, sports, arts, racing and especially the charities, from the proven effects of a second weekly lottery? But the nanny state is not dead. We all know that the Prime Minister deserves a great deal of credit for getting the national lottery going, but when his pet scheme is under threat because of a drop in income, particularly the danger to the scratch card scheme, at a stroke the Prime Minister invokes the nanny state 1300 without any consultation. The state will agree to a second weekly lottery and the problems will presumably then be solved.
§ There are other matters of concern such as addiction, which is a moral question. I believe that the Government have a duty to address it. I declare another interest. I spend £5 a week on the lottery. I make a further declaration: I have won five amounts of £10 on the National Lottery. But now I am put in a position which faces millions of people. If we have a second weekly lottery and we already have our numbers, do we have to double our stake to £10 in case the numbers come up in midweek when one may not have backed them? That is a clear incitement to addiction.
§ Although I am against a second lottery, I have a suggestion and I hope that the Minister will be helpful in his reply. Let us have a different kind of second lottery. Instead of having the same numbers 1 to 49 which apply to Saturday, will the Government and the regulator consider having the numbers 50 to 99 on Wednesday, so that we do not all feel compelled to stick to our numbers? It seems to me that that is a rational way to tackle this matter. I hope that that suggestion finds some favourable response.
§ Then there is the performance of the regulator, Mr. Peter Davis, before the Public Accounts Committee. Mr. Robert Sheldon compared his unfavourable performance as the regulator of the National Lottery when set against the performance of all the other public service regulators who had appeared before the committee. Mr. Alan Williams made some scathing comments about the way in which the regulatory regime had allowed Camelot to make a windfall profit of £7 million in a year on uncollected prizes. If the uncollected prizes were paid over to good causes, as we all want, it beats me why Camelot should be allowed to keep the interest. That is a matter that ought to be looked into. The National Audit Office has also complained about this matter as regards the £135 million shortfall in prize payouts with Camelot keeping the interest. So, the performance of the regulator is something that requires attention.
§ There is also growing concern about the difference in procedures between the English Sports Council and the Welsh Sports Council. I should like to know why, because it is certainly unjustified. In England the local authorities and the sports governing bodies are not allowed to have a say in decisions about lottery payments. What happens in Wales is totally contrary to that. There, the local authorities and the sports governing bodies are seen as having a great role to play.
§ There is also the question of increasing bureaucracy. It is one year ago next week since I spoke at a conference of the CCPR, drawing attention to the decision not to help St. Andrew's Church, Handsworth. That church is in an ethnic area where there is great poverty and unemployment. The church was told that it could not have a grant and was asked questions about its endowments and investments. As anybody who knows Handsworth will recognise, they were ludicrous questions to ask there. As a result of that intervention, the church was told that it would have a grant, but here 1301 we are, tone year later, and it has not yet received a penny although we hear that the National Lottery is supposed to be getting on with things. We need more decisions to be taken regionally—and they certainly need to be taken more speedily. I hope that the Minister will look into that point.
§ If I am to make a rounded assessment of the National Lottery I must say a word in praise of the Government's new initiative. I have mentioned the National Academy for Sport. Although I have some difficulties with some of the details, in essence it is a good idea which should be welcomed. A week or so ago funding was announced for our top sports people to give them an income on which to base their careers. However, there are still some problems. Birmingham and Sheffield, for example, have spent millions of pounds of their ratepayers' money on building first-class sports facilities. They have not had a penny from the lottery for that. That raises the question of when there will be some revenue funding to match the capital requirements. I was once told by a Treasury official, "Always remember, Minister, that every capital project has a revenue consequence", but I believe that if Birmingham and Sheffield have used money from their ratepayers' pockets, the Government should at least help them with revenue funding.
§ I have noted the time, so I turn finally to the question of our inner cities losing out because capital grants are not at the moment enabling local authorities and schools to be supported. Long leases should attract capital grants otherwise inner cities lose out. I hope that the Minister will look at that point also. More importantly, however, in view of the things that I have thought it necessary to say, I hope that the Minister will think it right to have a thorough-going review of the working of the National Lottery, which most of us wish to continue to support. My Lords, I beg to move for Papers.
§ 5.52 p.m.
§ Lord Wakeham
My Lords, first I should like to congratulate the noble Lord, Lord Howell, on raising this important matter today and on doing so with the broad scope and in the style which I have known for many years. I am delighted to see that he has lost none of his touch of years ago. However, I hope that a bust-up with a Select Committee of another place is not necessarily in itself grounds for criticism, as I had one myself just a few days ago.
We are delighted that the noble Earl, Lord Effingham, is to make his maiden speech in a few moments' time. I wish him well in that endeavour and hope that it will be the first of many speeches in this House. One's first speech here always has some tricky moments, but I am sure that the noble Earl will acquit himself extremely well.
I have no objection to the National Lottery. Indeed, I recognise that many good and important projects are developing from lottery funds and I wish them well. However, like most things in life, there is a price and it is on some aspects of that price that I wish to comment today. By comparison with the noble Lord, Lord 1302 Howell, I feel a certain inadequacy in terms of a lack of interests to declare. However, as some of your Lordships will know, I am the chairman of the British Horseracing Board and it is to the impact of the National Lottery on the great national sport and industry of racing that I wish to draw attention this afternoon. Lest any of your Lordships view the link between the terms of the Motion and horseracing as a tenuous one, perhaps I may reassure you that there are within racing a whole number of trusts, notably the Racecourse Holdings Trust and the Animal Health Trust, which receive support from the horserace betting levy, which has been very badly hit by the lottery.
The introduction in November 1994 of the lottery with only a single weekly draw had a serious effect on betting turnover and thus on the betting levy, which constitutes one of racing's most important income streams. In October this year a report by the Henley Centre showed that in 1995 levy income was £5.4 million or 10 per cent. below what it would have been but for the introduction of the lottery—money which will never be recovered. That same report showed that, compared to what would have been the case without the National Lottery, 400 betting shops had closed; 3,400 jobs were lost; overall government revenues fell by over £82 million or 10 per cent.; and betting shop profits declined by £52 million or nearly 35 per cent. Betting shop closures give rise to the risk of illegal gambling, and turnover, once lost, is unlikely to be recovered, at least in full.
The Government have been good to racing in many ways. The Chancellor's welcome decision last November to cut betting duty by 1 per cent. from last March appeared to have helped to stabilise the situation this year, but even before the mid-week lottery draw was announced last month, racing had made a cogent case to the Chancellor for a further reduction in betting duty of 1.75 per cent., allowing the punters' deduction to be reduced by a further 1 per cent. to 8 per cent. and for a direct transfer from betting duty to betting levy of 0.75 per cent. The resultant yield to racing of some £33 million should, we have proposed, be mainly used to provide for a significant injection of additional prize money—additional prize money which is desperately needed to enable us to attract adequate investment in ownership domestically, to maintain the quality of our bloodstock and to compete effectively internationally. All five Derby winners between 1991 and 1995 have been exported to Japan, where the prize money structure can support much higher nomination fees.
The average race in Japan has a first prize of something like £170,000, whereas for a similar race in this country the first prize is about £5,000, so we should not be surprised that Japan can afford to buy the best bloodstock in the world. Unless our prize money levels can be made more competitive with those in other major racing countries, there will inevitably be serious long-term damage to our racing and breeding industry. I do not talk of sudden disaster, but of a steady, long-term decline which I believe to be totally unacceptable.
1303 The mid-week lottery cannot but have a further depressing effect on betting turnover and the levy and reinforces an already overwhelming case for another duty cut. The Henley Centre report, to which I referred just now, concluded that, if expansion of the National Lottery has a similar effect on bookmaking as the current level of sales has had, for each additional 10 per cent. in lottery sales, gross turnover would fall by a further 0.8 per cent., the levy would be hit once again and betting industry profitability would be reduced by over £7 million. The Henley Centre further concluded that an expansion of the National Lottery of around 40 per cent. would completely eliminate the beneficial impact of last March's duty cut. I hope that the Treasury, the Department of National Heritage and the Home Office will liaise closely to ensure that the effects of the mid-week draw are properly and regularly monitored.
I congratulate the Government on the success of the National Lottery, but that success comes at a price in other sectors of the economy. I take this opportunity to send a last message to the Chancellor. The racing and betting industries employ over 100,000 people. In 1995 racing and breeding employed the equivalent of one in eight agricultural workers. It had a turnover of £600 million plus, and it generated tax revenues approaching £500 million. It employed assets which exceeded £2 billion. All of that will be at great risk if the over-taxation of betting and the consequences of the under-funding of racing are not tackled urgently and decisively. The inevitable negative impact of next year's mid-week lottery must be pre-empted by the introduction of a more level fiscal playing field next Tuesday. I strongly urge the Chancellor to recognise the case that we have made.
§ 6 p.m.
The Earl of Effingham
My Lords, I ask the indulgence of the House for my maiden speech. I thank the noble Lord, Lord Howell, for introducing this subject in your Lordships' Chamber.
In 1992 I retired from the Royal Navy in which I had spent the last 10 years based in London in the Ministry of Defence and in Washington DC working on naval intelligence. I declare an interest. I now work for the Royal British Legion, the leading ex-service charity, and I am responsible for the promotion of fund-raising and the co-ordination of welfare grants-in-aid in Essex.
What is the likely impact on charities of the first midweek lottery draw which will take place on 5th February? Foreign lotteries have conducted successful second draws in the short term but in the longer term have experienced a steady decline in sales. For every pound spent on a lottery ticket, 28 pence is divided equally among the five good causes: arts, sports, heritage, millennium and charities. It is estimated that the midweek draw will increase ticket sales by about 20 per cent. Experience overseas suggests that the split will be approximately 55 per cent. on the Saturday draw and 45 per cent. on the Wednesday draw.
Charity Aid Foundation has reported recently that, on the whole, donations have risen. The foundation admits, however, that matters may look less rosy as far as 1304 concerns contributions to street, house-to-house and static collections. To give the example of the Royal British Legion poppy appeal in 1995, the remembrancetide collections amounted to £16.3 million, which was an increase of £1.1 million (about 7 per cent.) over the previous year. The National Council for Voluntary Organisations, which has already been referred to by the noble Lord, Lord Howell, has been consistently critical of the impact of the lottery. It points to a 10 per cent. shortfall in individual giving and states that this is evidence that money previously given to charities is being redirected to the purchase of lottery tickets. It is also concerned that it may lead to a net loss of over £90 million for voluntary groups. Voluntary income growth has shown higher profits from charity shops and bigger corporate and trust donations. This has enabled charities to increase their income in the second quarter of this year by about 6.6 per cent., but local fund-raising income, on which many charities rely heavily, has stagnated.
The lottery neatly clobbers charities from both directions. On the one hand, it hoovers up all of the £1 coins that might otherwise have ended up in collection tins. On the other hand, it also allows the public to make a donation with the expectation that they may win something rather larger in return. It is a fact that the lottery is played mainly by those who can afford the least but give the most. Religious organisations believe that it is an inherently bad thing to play the gambling habit and it compromises the moral standards of charities. Others have expressed rather more worldly concerns about the extent to which spending on lottery tickets eats into their income, and the evident public confusion about how much lottery money actually goes to good causes.
The impact of the lottery is based on limited and somewhat anecdotal information. Some charities, particularly those in the medical and social welfare fields, claim that their fund-raising has been seriously damaged as the lottery's fortunes have risen. Others say that, on the contrary, their income has been given a boost by lottery mania and point to the way that charity scratch cards have piggy-backed onto the Camelot and charity instant scratch card market. UK Charity Lotteries Limited, which is the largest operator of charity scratch cards, has seen its sales rise. The Royal British Legion's scratch card, which was launched in 1995, is a very successful example. There were four top prizes of £100,000, four million tickets were sold and £800,000 was earned for the poppy appeal, which subsequently provided revenue for the legion's central benevolent fund.
Many charities are victims of the lottery, but the overall picture is very mixed. Research has been carried out which shows that 69 per cent. of lottery players say that they are giving the same amount to charity as before. Sixteen per cent. are giving more, and approximately 15 per cent. are giving less. I believe that the motivation to play the lottery is nothing to do with giving but is to do with winning, and that it is an increasing addiction. While the Charities Board sits on a pot of millions, many less efficient charities will go to 1305 the wall. With about 4,000 new charities being launched each year, the situation resembles a pond of spawning fish in which the water level is dropping.
Finally, a second weekly draw will mean that those charities most affected will need to adopt a more proactive fund raising campaign if they are to survive. It may be that the first political party to make the charity sector a major issue can find itself a winner.
§ 6.8 p.m.
§ Lord Aberdare
My Lords, in nearly 40 years in this House I have never before had the opportunity to compliment a maiden speaker. To that extent, I too am a maiden. The noble Earl makes my task easy. He made an outstandingly good maiden speech which was fluently delivered. He spoke with deep knowledge of the subject. His involvement in charities in general, especially the Royal British Legion, is obvious. The Royal British Legion is a body for which we all in this House have the greatest respect. I believe that the noble Earl also has some qualification as a participator in the lottery, and is even a modest winner. I wish him all the best in his efforts to win the jackpot. I also hope that he will address us again on many occasions.
I should like to thank the noble Lord, Lord Howell, for giving us the opportunity to debate this subject and also for his kind words about the Football Trust. I should declare an interest in that I have been chairman of the trust since 1979.
I start by quoting from a speech made by Mark Antony, as reported by William Shakespeare:If you have tears, prepare to shed them now".A few lines further on in the speech one sees:I am no orator, as Brutus is:But as you know me all, a plain, blunt man".The plain, blunt truth is that the Football Trust has seen its income reduced by over 50 per cent. since the lottery came into being. Unlike the charities mentioned by the noble Earl, Lord Effingham, we have no access to lottery funds.
I shall confine myself to a few remarks on the position of the Football Trust. Our story began in 1975 when, as has already been mentioned by the noble Lord, Lord Howell, the Football Grounds Improvements Trust was established, set up by the late Cecil Moores of Littlewoods Pools and, to his great credit, by the noble Lord, Lord Howell. Its purpose was to help professional football with the cost of implementing the Safety of Sports Grounds Act. Then, in 1979, the Football Trust itself was formed, with the primary object of tackling hooliganism, which was a very great problem within grounds at the time. Both bodies were financed by a proportion of the receipts from spotting the ball, which was run by the Pool Promoters Association, now changed to Littlewoods spot the ball. Fulfilling that objective of combating hooliganism pioneered the installation of closed circuit television in all football league grounds. That has proved to be the single most important measure in the campaign against hooliganism. We can take a certain amount of credit for the fact that hooliganism within grounds is now rare.
1306 In 1989 there occurred the disaster at Sheffield Wednesday's Hillsborough ground in which 96 spectators lost their lives and 730 were injured. This led to the appointment of an inquiry by Lord Justice Taylor, and one of the most important recommendations of his report was that all football league grounds should be converted to all-seated accommodation. That entailed vast expense. To help with the considerable costs to clubs of achieving their targets the Government, in 1990, made a 2.5 per cent. reduction in pool betting duty on the condition that the proceeds were to go to the Football Trust, enabling us to grant aid the objectives of the Taylor report. At that point we merged the Football Trust and the Football Grounds Improvement Trust to form a new Football Trust 1990 to fulfil our new responsibilities.
So far we have concentrated our efforts on the clubs in the premier league, the first division of the football league and the premier league in Scotland. These three bodies were all required by the report to have their grounds all seated by the start of the 1994–95 season and we therefore had to give them priority in grant aid. We have now allocated some £91 million towards projects which have cost in total some £322 million.
Thanks to our substantial contribution we can take pride in the number and quality of our top football grounds. The hugely successful Euro '96 competition staged at eight host venues was testimony to that. Now we are determined that our efforts in respect of the lower divisions should be as successful, and this is where we are concentrating all our efforts on the smaller clubs. They have substantial, although of course less costly, needs but their means are much less, and that requires higher levels of grant aid in terms of percentages.
Just when we had reached this crucial stage we now face a crisis. This is entirely due to the run-away success of the National Lottery which has caused an enormous fall in the income of the pools companies. Since November 1994 the pools industry has lost between 40 and 50 per cent. of its business and the result for the income that we receive has been disastrous.
Before the lottery we received an annual income from the reduction in pool betting duty of some £22.5 million and from spotting the ball £14 million. This year the most we can hope for is from pool betting duty £13.5 million, as opposed to £22.5 million, and from spot the ball £4 million, as opposed to £14 million before the lottery. Next year the most optimistic assessments are down again to £11 million from the reduction in pool betting duty and £3 million from spot the ball. So your Lordships will understand why I invited you to shed tears at the beginning of this speech.
It seems likely that our total income over the 10-year period from 1990 to 2000 will now be about £167 million, against the original estimate of £200 million, a shortfall of £33 million, although if we were to implement the Taylor report in full we would probably require some £53 million to see the whole task through. Now it has been agreed that the lottery is to introduce a mid-week draw which will undoubtedly further reduce the income of the pools companies and our own income.
1307 We recognise the enormous benefits brought to many good causes by the lottery and we acknowledge its success. But we look on ourselves as a good cause too—the vital cause of spectator safety at football grounds. Despite an excellent first five years, our originally agreed aims are now at risk.
We fully support the case made to the Chancellor of the Exchequer by the Pools Promoter Association. It does seem to us unfair that the pools should pay betting duty at 26.5 per cent. and the National Lottery at only 12 per cent. A further reduction in pool betting duty would help the pools companies to consolidate their business and thus help prevent further decline in our Football Trust income.
We have put the case to the Chancellor of the Exchequer and to the Secretary of State for National Heritage, and we also seek an extension of time to reach our objectives. An extra three years on the same basis as at present until 2003 would restore our income to what was originally expected and give us the chance to plan a redevelopment programme in conjunction with the clubs over a longer timescale. We cannot makes sensible plans with individual clubs if we are in grave doubt about our future. Such an extension might appeal to the Government as it would not require any immediate cash commitment from them.
It is often said that football is awash with money and needs no support from the Government. This is true of the clubs at the top of the premier division, but for the rest the scene is very different. The 1996 annual review of football finance made by Deloitte and Touche made some salient points. Only 20 per cent. of clubs in the football league made an operating profit; 73 per cent. of clubs still have accumulated losses; and 38 per cent. have an overall deficiency on their balance sheet. Seventy-seven per cent. of clubs have borrowings outstanding at the bank and all divisions of the football league have now incurred operating losses for the past three years.
We intend to continue to press the premier league, which has benefited most from large television contracts, to make a significant contribution to the needs of the lower divisions. Coupled with government support, this could achieve our aim of ensuring that the implementation of Taylor does not flounder and that the needs of spectator safety continue to be met throughout football.
§ 6.20 p.m.
§ Lord Brabazon of Tara
My Lords, I start by declaring an interest which I believe is well known to many Lords and was referred to by the noble Lord, Lord Howell. I am the deputy chairman of the Foundation for Sport and the Arts. I am grateful to the noble Lord for giving us the opportunity to debate this important subject. I, too, am concerned by the introduction of a second, mid-week lottery game and its negative impact upon charities and other good causes such as the foundation and the recently developed Sports Grounds Initiative.
The Foundation for Sport and the Arts was founded in July 1991 following negotiations between the football pools companies and the Treasury. We are entirely 1308 funded by donations from Littlewoods, Vernons and Zetters, at the rate of 8p. in every 105p. they collect (3p. of which comes from a reduction in pool betting duty).
The object was to widen the range of good causes which the pools could fund beyond football, to which my noble friend Lord Aberdare referred. We have succeeded in our objectives beyond our expectations, and our activities are supported and applauded not just by the thousands of organisations which have benefited from our support but also by politicians in all parties. The foundation's indefatigable and able secretary, Grattan Endicott, has received hundreds of letters of support from MPs and the recipients of our grants.
So far we have dispensed nearly £300 million of grants to over 21,000 organisations, very often to those projects which would not attract the interest of the lottery and, indeed, which also fall outside the remit of those covered by the National Lottery's grant giving bodies. We have often been praised for our rapid response to applicants which is borne from the fact that we are not overburdened by complicated administrative procedures and hierarchical structures.
In the past couple of years, however, we have faced considerable funding problems as a consequence of the effect that the National Lottery has had on the football pools companies, our sole source of income. Our income is now running at little more than half its pre-lottery levels: down from £68 million in 1994 to perhaps some £41 million this year. That means that a grant above £100,000 is now most unusual and an absolute ceiling of £150,000 has had to be adopted. All my fellow trustees and I are acutely aware of how these limitations translate into disappointment and dashed hopes.
The Sports Grounds Initiative, which came into being in May last year and which we fund, is also under threat. It was set up to provide for ground safety improvements in rugby, cricket and Vauxhall conference football clubs, and is ably administered by the Football Trust. In its brief life it has already donated nearly £5.5 million to 35 clubs, ensuring that millions of spectators at sports which have hitherto not had access to funding which league football has received through the Football Trust can watch their sport in comfort and safety.
And now we are told, after no consultation whatsoever, that there is to be a mid-week lottery to take place on a Wednesday, starting in February, which will provide intense competition to the pools just when their collectors are picking up the coupons each week. The benefits of their recent marketing efforts will be damaged and their finances would be in no condition to defend their much reduced market share.
The pools companies are subject to all manner of restrictions and commercial disadvantages which ensure that the national lottery always has the upper hand: the type and timing of events appearing on coupons; payment of winnings through shops; the ability to enhance the prize fund and rollovers, to name just a few. Some of these are now the subject of a government consultation on deregulation of the pools industry, and I welcome this. But even if the deregulation process 1309 goes through unscathed after the consultation process, it may be another year before the changes come into effect—another example of too little and much too late.
The dominance of the National Lottery is a matter of great public concern. It has acquired this position through a combination of factors: by the Government abandoning long-established national policy on the non-stimulation of gambling demand; by weak and ineffective regulation; and by stifling the ability of other companies to operate their legitimate business interests, thereby damaging their and their employees' livelihood and the grant-giving bodies which depend upon them.
We have to understand the environment in which we all now operate. The lottery has been given licence to break the long-standing and socially responsible conventions not to stimulate the demand for gambling. The pools companies always adhered to this and have been careful to promote their products in such a way as to conform to such ethics. The National Lottery has now changed the rules (and the stakes) in more ways than one. Never before has there been such strong endorsement of, or commitment to, a gambling product. The rules were turned on their head under the terms of the National Lottery Act 1993 but not for any other form of soft gambling.
The result is that businesses have been hit on a significant scale and the repercussions are still being felt. Employment in the pools industry has nearly halved and business has declined by a half. As a consequence the Foundation for Sport and the Arts has received notice from Vernons that it will end its 5p. contribution from 30th November and Zetters could well take a similar decision very soon. Only a significant reduction in the rate of pools betting duty in next week's Budget could bring about a change of heart. So the foundation's future is precarious. If we are to continue to fund good causes, the pools must be given the opportunity to regain some of their business and invest in new marketing initiatives. We need to level the playing field between the lottery and the pools companies; we must reduce pool betting duty significantly to 17.5 per cent. at most and we must support the Government's proposals to deregulate the pools industry. The foundation sinks before the pools do, so we have just cause for our fears and must rely upon obtaining equitable treatment. Indeed, I can see no justification in terms of taxation for the application of any different rate of taxation to one of these operations, so similar are they in form.
Noble Lords may ask why, with so much money now going to the good causes from the lottery, it is necessary for the foundation to survive at all. First, as I have briefly described, I believe we have a good track record in our grant giving. Secondly, I think it would be highly undesirable if the lottery gained a near monopoly in giving grants and we saw the disappearance of bodies such as the foundation, the Football Trust, to which my noble friend Lord Aberdare referred, and others like the Sports Aid Foundation, which has done such valuable work in funding our elite athletes. Curiously perhaps requests for our funds have not diminished since the lottery, and this is partly because of the demand for 1310 matching funding which the lottery requires. We are happy to provide that. Our only requirement is usually that we can have a piece of the project to call our own.
Like many others, I am deeply suspicious of Camelot's motives. It is asking for a second, mid-week game because it claims to be concerned that it will not be able to reach its £9 billion target for good causes. Is this not the company that has been reporting record takings? The average weekly sale of lottery tickets is approaching £70 million. For the year ended March 1996, Camelot retained a profit of £32.7 million after paying dividends of £18.4 million.
A recent report by the Public Accounts Committee in another place noted that:sales to the end of September 1995 were almost 70 per cent. higher than forecast in Camelot's application",and more recently as the noble Lord, Lord Howell, said, there have been press reports that Camelot is retaining £6 million in interest on unclaimed prizes. Does this sound like a company that is failing to meet its targets—whether for the nation or for itself?
I fear this second mid-week game will benefit one cause above all others: Camelot's shareholders. The damage the lottery has inflicted on the foundation and other charitable organisations cannot be underestimated. Now the lottery is being given yet another opportunity to stimulate gambling to the detriment of other sectors in the industry. I totally condemn this move and the regulator's role in this.
§ 6.30 p.m.
§ The Earl of Sandwich
My Lords, from the high quality of the debate and the strong feelings that are being expressed, it is clear that we owe a considerable debt to the noble Lord, Lord Howell, for initiating it. I am grateful to the noble Earl, Lord Effingham, for speaking on this subject in his excellent maiden speech. I intend to make a few more remarks.
I hesitated this morning before taking the plunge into this very deep and murky pool, the National Lottery debate, with all its turbulent currents of hot air and statistical jacuzzis. I accept that, as regards the charities, the evidence is conflicting. However, having heard the debate, I feel more confident that Camelot is making a mistake and that the public would be better off without a second lottery.
I shall confine my remarks, however, to the effects on certain charities and shall begin by saying that I acknowledge how much the voluntary sector has gained from the lottery. I have seen one figure indicating that two-thirds of all lottery benefits come to non-governmental organisations. That is only to be welcomed, as is the Government's general encouragement of the voluntary sector. I have a particular interest in the heritage and charities, including those giving help overseas, and, despite some reservations about additionality and the size of single prizes, I am pleased to see that so many smaller minority causes and organisations are now benefiting from the lottery because of the initiative of the individual boards.
1311 We all know from the press and ministerial statements that research into the effect on charities' income is ongoing and it is clear that we cannot depend on sample opinion polls. Nonetheless, as the noble Lord, Lord Howell, said, if there is preliminary evidence that some charity income has suffered we need to take the matter seriously, especially with regard to the smaller charities.
As has been pointed out, the National Council for Voluntary Organisations reported that there had been a 6.6 per cent. fall in charitable giving in 1993–95, while the Charities Aid Foundation claimed in May that the top 500 charities' income rose by 2 per cent. in 1994–95. The Institute of Charity Fund-raising Managers has confirmed the CAF's view that the overall impact of the lottery had been minimal, while it recognised that there was some effect on particular areas of fund-raising, such as street collections.
I have worked for many years with fund-raising charities for which street and door-to-door collections are a significant element in annual income. Like the noble Earl, Lord Effingham, I can say that there is considerable concern not only about the trend shown by this admittedly limited research but about the Government's apparent unwillingness to take seriously the importance of these collections and the value of "loose change" income. Christian Aid, the official agency of the British and Irish Churches, raises £9 million each year through its long-established and highly organised campaign known as Christian Aid Week, of which more than £5 million is derived from house-to-house collections. That is more than half. That campaign has seen a 5.5 per cent. fall during its latest year.
Christian Aid has written to the Secretary of State to express concern—a concern which she herself expressed—about Camelot's decision to go ahead with the second draw even before the results of the Government's own research were known. The concern of Christian Aid, and many smaller organisations which are reliant on voluntary income as well as planned giving, is that the midweek draw is bound to affect this well tried form of fund-raising, which is often at its most successful on Wednesday and Thursday evenings. We have heard about the British Legion, but the Alexandra Rose Day also suffered a recent drastic fall in income, and possibly for the same reason. The NCVO believes that since the lottery began charities' own lottery and raffle ticket sales are down by 16 per cent. and street collections by 8 per cent.
Whatever the truth of the preliminary findings, there can be no doubt that some traditional charities are extremely vulnerable to the second draw and many people have doubts about the wisdom of introducing it so soon. Peter Davis, the Director General of the National Lottery, admitted that his decision was based on what he called "new game developments"—I would call them "hype"—and could not take account of the effects on other competing bodies. In other words, the traditional charities are being bounced by the spirit of the game.
Not only the charities but some of the players may be under pressure from the midweek draw. Oflot's own figures admit that there are people spending more than 1312 £10 a week on the lottery even in households with annual incomes of less than £4,500. At that level of income it would be surprising if there were any loose change for telephone calls, let alone charities. And yet the charities' experience is that those who are in most difficulty themselves are often the most generous contributors. I am sorry that the right reverend Prelate and his colleagues are not in their places tonight, because there is a theological side to the argument which I am not qualified to put forward. It is the very spirit of generosity and personal involvement in the voluntary sector in all parts of the nation which should not be undermined by the urge to play the game again and again, with all the attendant false expectations which it inevitably brings.
I therefore hope that the Minister will look again at the particular case of personal giving through street and house-to-house collections. There is a distinction between the two. I also hope that he will bear in mind the suggestion of the NCVO that the Government should undertake a fundamental review of the allocation of funds to good causes. This would have the primary objective of increasing charitable funds and of making up for the overall fall in public donations as well as in areas of fund-raising which may be directly affected by the lottery. We have heard convincing cases from those involved in racing and football too. The churches and charities which have witnessed some of the less beneficial social effects of the lottery on local communities have been remarkably indulgent, even in Scotland where there has been a lot of opposition. I hope that the Government will listen to them too when they are monitoring the effects on charities of not one but two weekly draws.
§ 6.37 p.m.
§ Lord Newall
My Lords, I too thank the noble Lord, Lord Howell, for introducing the debate. We have spoken many times on sporting matters. I wish to add my congratulations to the noble Earl, Lord Effingham, on his excellent maiden speech. We hope that we shall hear him on many more occasions. His predecessor did not speak a great deal but I am sure that the noble Earl can remedy that.
I do not know how many of your Lordships know someone who has gone to the dogs. I believe that many do. I wish to say a few words about the effects of the National Lottery on a sport which I and millions of others hold very dear; that is, greyhound racing. At the outset I must declare my interest, as I have done on many occasions in this House. I am chairman of the British Greyhound Racing Board and I also sit on several charities' and trusts' boards.
According to Home Office figures, as a spectator sport greyhound racing is a little more popular than horse-racing. I know only too well the tough time it has gone through during the past year or so. Already this year we have lost tracks at Cradley Heath, Ramsgate and Sittingbourne. Middlesbrough, too, is due to close this month and threat of imminent closure hangs over Bolton, Canterbury and Hackney. That will reduce the total number of tracks from 39 to just 32—that is a decline of 18 per cent.—and who knows how long it 1313 will be before developers target other tracks with lucrative schemes to turn them into shopping centres, housing estates, carparks or whatever?
The blame for that must be attributed, at least in part, to the National Lottery. The decision to hold a second weekly draw will only magnify the difficulties that sports such as greyhound racing currently face. According to the Henley Centre, which was mentioned by the noble Lord, Lord Wakeham, and is a world-renowned forecasting centre—if the Government were to take no action on the level of betting duty in the forthcoming Budget—and I hope that they will—attendances will fall from the pre-lottery figure of 4.1 million to 3 million. The Government revenue will fall from £13.3 million to £9 million and the industry profitability will fall from £6.3 million to £2.6 million. I make no apology for producing various figures, because we are talking about money and money always comes in figures.
Clearly, the impact of a second weekly lottery draw, with an increase in ticket sales of 20 per cent. will add further to the woes of the sport. In recent years punters have benefited from a wide-ranging deregulation of the betting industry, thanks to the Government, but the sports on which they rely have fared adversely. I should stress that greyhound racing is not asking for any special favours from the Government but simply a recognition of the plight that it faces and the opportunity to be treated equitably with other leisure interests.
Last year, the BGRB commissioned Gerald Eve, chartered surveyors, to estimate the costs which the sport faced to meet new safety requirements contained in the Taylor report, which has already been mentioned. It calculated that greyhound racing has already spent £6.6 million in safety improvements but is still faced with a bill of an additional £4.8 million plus an annual charge of £1.1 million to keep tracks up to standard.
Unlike other sports which are eligible for lottery money or for support from bodies such as the Football Trust or the Foundation for Sport and the Arts, greyhound racing has no opportunities to secure additional funding from outside bodies. The only way that it can meet those costs is for the Government to reduce general betting duty and insist that the moneys accruing are ploughed back into the sport.
Once again, the off-course betting industry is asking the Government that any reduction in betting duty should go directly to the punter. This is what happened last year when the Chancellor cut betting duty by 1 per cent. The saving was passed on in its entirety to the punter. As a consequence, according to the bookmakers own body, BOLA, betting shop profitability increased by £27 million last year.
Yet, despite this increase in retained profitability, the betting industry short-changes the British Greyhound Racing Fund to the tune of £2 million a year—money which the Government intended to benefit greyhound racing, not the bookmakers. Back in 1992, the then Chancellor, Norman Lamont, cut betting duty by 0.25 per cent. and directed that the money accruing should be passed straight back to greyhound racing. This 1314 has not happened, as only 65 per cent. of the possible tally is given over to the greyhound industry, and that is from about 200 bookmakers out of a possible 2,000.
The problem is that, unlike horseracing, which has a statutory levy, no such mechanism exists for greyhound racing. It has to make do with bookmakers giving voluntary contributions to the Greyhound Racing Fund and that is sometimes not easy to pursue. Greyhound racing now desperately needs government assistance to allow the industry to compete on a level playing field with other sports. This year, particularly in the light of the decision to introduce a second weekly National Lottery draw, it is imperative that any reduction in General Betting Duty should be specifically directed to the greyhound racing industry—and I hope that the Chancellor will make it clear that bookmakers have a duty to pay out. After all, it is not their money. This will be used to upgrade facilities and stadia, as well as improving the security and integrity of the sport, which is vital if it is to survive and prosper. It will benefit all those involved with greyhound racing from trainers to race-track owners, from kennel-hands to the race-going public, as well as bookmakers, who rely on a healthy and vigorous sport for the profitability of their industry.
This year the British Greyhound Racing Board has asked for a 1 per cent. reduction in General Betting Duty, coupled with a request for the Government to put in place a statutory or other mechanism to ensure that all the monies intended to benefit greyhound racing do so. These two measures would go a long way to offset some of the harm posed to the sport by a second weekly lottery draw, and put us on the same footing as horseracing. Henley estimates that this would increase attendances by nearly 13 per cent.; increase customer revenues by 15 per cent., increase employment by 10 per cent. and increase the Government's own revenue from greyhound racing by almost 25 per cent.
Last week I had the pleasure of leading a delegation to meet the Exchequer Secretary to explain our case in person, and I know that many others have done that. He listened very carefully to what we said and gave us a sympathetic hearing. I left feeling optimistic that the Government have taken on board our concerns, but we must now wait and see what happens in the Budget next week as regards what they do about betting duty. I stress that this is a very important issue for the greyhound racing industry and one that is particularly close to my heart and that of the millions who love the sport.
§ 6.45 p.m.
§ Lord Donoughue
My Lords, I really must thank my noble friend Lord Howell for introducing this important debate and speaking with such authority. Also, I congratulate the noble Earl, Lord Effingham, on his impressive and enlightening speech.
I begin by assuring the noble Lord, Lord Newall, that some of us do indeed have experience of going to the dogs. For myself, I was briefly a bookie's assistant at Earls Barton in the mid-1940s and matters have been downhill ever since. I begin also with a conclusion from this debate: that nobody in this House today has supported the decision of the Government—in other 1315 words, the Prime Minister—to hold a second lottery draw. Nor, I hear, did the Secretary of State. There is no respectable justification for it.
Looking at this matter more generally, we are witnessing a boom in gambling in Britain. We are in danger of creating a bonanza society where citizens see that the purpose of life is to win the big one, have the six numbers come up rather than the rewards and satisfaction of work. Over the past 30 years, changes in the dominant political and social philosophies in our society have certainly encouraged that mentality. The loosening of life styles in the 1960s and 1970s, which I must say I both supported and enjoyed, prepared the ground for a more permissive approach to gambling. The Thatcherite emphasis on the priority of short-term financial gain over all other considerations has elevated materialism in general and gambling in particular.
The Tory commitment to deregulation in the past decade has also progressively weakened the previous prevailing principle of government that gambling should be controlled and never stimulated. But the lottery is the single biggest step in the expansion of gambling in Britain. With it, the Government and the regulator are there to encourage maximum gambling. Gambling is now a government-inspired, publicly-encouraged, economic good. For many people, the lottery has hijacked hope.
The lottery has also very particularly led to the expansion of other gambling because other forms of gambling demand and are given deregulation and expansion to compensate for the damage to them caused by the advantages given to the lottery. Therefore, we now have in this country a gambling spiral or an upward ratchet effect. The Government have now again moved up the ratchet or the spiral with the second draw and, having given the lottery that second weekly draw, they will again have to compensate the casinos with less regulation, the pools with numbers betting on other sports, the betting shops with betting on the lottery—I support that—and the Tote with betting, I imagine, on everything. And so it goes on.
The Labour Party and I in this House did not oppose setting up the lottery; nor do I now. There is not the least prospect that it would be ended. However, we have been concerned that it gives too much profit to the monopoly operator; it distributes too much good cause money to the already privileged; that it needs to be more accessible and accountable; and above all, that it is doing great damage to disadvantaged competitors—to the betting shops, the racing industry and its levy with hundreds of betting shops closing and millions of pounds lost to the great racing industry. In that context I support all that the noble Lord, Lord Wakeham, said. I believe that the Chancellor must cut betting duty in the Budget. The lottery is damaging charity revenues, especially those of small and local charities. I agree with all that the noble Earl, Lord Effingham, said in that regard. The NCVO estimates that it has lost £350 million since the start of the lottery.
Ironically, the lottery also damages the charity sources of matching funds to whom the beneficiaries of lottery grants apply for funds to match their lottery 1316 grants. There is a vicious circle here. The beneficiaries of lottery grants are required to provide matching funds, but the often charitable sources and foundations they approach for matching funds are seeing their funds reduced because of the lottery. The Football Trust and the Foundation for Sport and the Arts have suffered and that has damaged and reduced the fine work they have carried out. We have heard what the noble Lords, Lord Aberdare and Lord Brabazon of Tara, have said about that. The noble Lord, Lord Wakeham, my noble friend Lord Howell, the noble Lord, Lord Newall, and other noble Lords have presented an impressive array of facts and figures on the damage that is being done by the lottery. I do not propose to repeat those figures.
Perhaps here I should declare an interest as an unpaid director of a racecourse, as the co-owner of a jumping horse which has never jumped in public, and as the president of a charity concerned with gambling addiction and rehabilitation. At this point I wish to stress my concern—this was mentioned by my noble friend—as regards the dangers inherent in increased gambling addiction. I do not refer here to the small punter, as ate many noble Lords opposite and many other noble Lords including my noble friend and myself. I refer to problem gambling, which is growing and has terrible consequences for individuals and for families. All the evidence across the world shows that as gambling increases, so does the scale of gambling addiction. Gambling addiction evolves from soft to harder forms, from the lottery draw, to scratch cards, to slot machines, and, finally, to instant video gambling.
Gambling addiction particularly affects the young. There is evidence that one in five of children in the 12 to 15 age group participates illegally in the lottery. A second weekly draw would double the danger posed to children. We should note that gambling addicts are just as sick as alcoholics or heroin addicts. My main point is that all the anxieties that I and other noble Lords have mentioned would be magnified if there were a second weekly lottery draw. The damage done would be that much greater.
As I have said, initially we supported the lottery, while waiting to hear the results of monitoring and analysing of the risks. Now the Government are irresponsibly increasing gambling on the lottery and thereby increasing the damage that is done by it before they have acquired any real knowledge of the consequences of that. When the Bill was going through this House I persuaded the Government to agree to monitor the impact and damage in two areas: the racing industry and charities. I have seen little evidence of the results of that monitoring and research.
I have also called publicly for more research into the impact of gambling on individuals, families, social groups and social behaviour. As the noble Earl, Lord Sandwich, mentioned in his excellent speech, we should note that the cost of this mathematically bad bet on the lottery falls disproportionately on the poor. The poorest 30 per cent. spend roughly twice as large a proportion of their income on the lottery as do the richest. We need to conduct research into all these matters, but I see little evidence of that. The Home Office should be doing more in that regard. In my view Camelot, which 1317 represents the largest "creaming off' organisation of our generation, should be required to spend a fixed percentage of its huge profits on research into the impact of gambling. The gambling industry should finance more research. However, that is not happening. It is irresponsible of the Government dramatically to increase the amount of gambling on the lottery when we do not know the personal and social consequences of that. Under a smokescreen of raising more money for good causes, the Government are encouraging gambling in our society, increasing Camelot's profits and increasing the Treasury's tax take. That is what it is all about.
Finally, there is the scandal of additionality, especially in the arts. The lottery is being used as a smokescreen to disguise serious cuts in grants to the arts. Lottery money is used to cover cuts in direct funding, but the lottery grants do not replace that funding. For example, 33 regional theatres have a deficit of £8 million. Further cuts in Arts Council funding that are expected in the coming Budget will result in several theatres closing down. We have our great museums such as the British Museum which, for the lack of £5 million a year, may be forced to charge customers. The lottery does not touch or rescue them but it is the Treasury's excuse for cutting their funding. A second weekly draw would allow the Government to make further excuses to cut more direct funding and thereby kill off more theatres.
As I said, we have supported the principle of the lottery so far. We are not killjoys. I am a paid up member of the Cavalier Tendency. We do not propose to abolish it although we may soon have serious news for the operator and the regulator when, shortly, we launch our policy document. Like my noble friend Lord Howell I question the wisdom of holding a second weekly draw, as has every speaker in this debate. It is wrong to stimulate gambling with no knowledge of, or without having done research on, the consequences for charities, the racing industry, betting, the pools, greyhound racing, and particularly the consequences for personal and social behaviour and especially gambling addiction.
I understand what is going on; it is a political matter. The Government, having no other policy successes, are desperate to trumpet the success of the lottery. According to the Government, the greater the amount of gambling, the greater is the success of the lottery. It is time we had a government who could do better for Britain than that. With the lottery, as with the Government, enough is enough.
§ 7 p.m.
§ The Parliamentary Under-Secretary of State, Department of National Heritage (Lord Inglewood)
My Lords, I am most grateful to the noble Lord, Lord Howell, as I am sure is the whole House, for initiating this debate so shortly after the National Lottery has celebrated its second birthday. The 104th draw was made last Saturday and the official anniversary took place on 14th November. Many points have been raised; 1318 I shall try to cover them all. I shall cover many, but as regards those that I do not, I hope that noble Lords will allow me to write to them.
I should like to thank all contributors to this evening's debate. I wish to pay particular tribute to the noble Earl, Lord Effingham, for such an excellent maiden speech. I am sure that we all much look forward to the contributions he will make to the future business of this House.
I should like to touch briefly on three aspects of the success of the lottery: first, its success in its own terms; secondly in terms of the funds it has raised for the good causes; and thirdly, the extraordinary way in which it has embedded itself in the psyche of the nation during its two year life.
No one can dispute that the lottery has been enormously successful in its own terms with sales far greater than anyone predicted when its licence was awarded and awards more widespread and larger than had been dreamt of. Total sales are fast approaching £10 billion and an independent study by Terri la Fleur, a leading world lottery expert, has shown the UK lottery to be the most successful and efficient in the world. The midweek draw which is due to be launched in the new year, and to which I shall return, will build on that success.
As I have already mentioned it has also been a huge success measured by the amount it has raised for good causes. To date, a total of £2.7 billion has been raised for sport, the arts, charities, heritage and the millennium with the distributing bodies making nearly 9,500 awards to nearly 11,000 projects. The availability of money of this kind for these sectors over such a short time is truly revolutionary.
Another remarkable development is the way in which the lottery has already become ingrained in our collective consciousness. Camelot estimates that 65 per cent. of the adult population regularly play the lottery and that around 90 per cent. have played at some time. There can hardly be a dinner party or pub the length or breadth of the land where it is not one of the main topics of conversation.
Much has been said, both before the introduction of the lottery and since, about the effects of the lottery on charities' incomes. Indeed, much has been said on the matter by noble Lords today. Concern was expressed when the 1993 Act was passing through Parliament that it would lead to a decline in their income. Because of that the Government undertook to monitor charities' incomes before and after the lottery began to analyse what changes, if any, took place in order to identify the reasons for them.
That research, involving the analysis of a large and representative sample of charities' accounts, is being carried out in conjunction with the National Council for Voluntary Organisations. It began earlier this year, and interim results are expected in the spring.
Nonetheless, there has been no shortage of claims that the lottery has caused a decline in personal charitable giving. Such claims are not, however, substantiated by the available evidence. The true picture is mixed, with some studies of public surveys indicating a fall in some 1319 types of donations—most notably via purchases from charity shops—and others showing an increase in other types of donations; for instance, unplanned giving. And in any event have any changes which may have occurred during the life of the lottery been caused by it, or have they merely occurred at the same time?
The only reliable conclusion which one can draw now is that it is impossible to draw reliable conclusions about individuals' giving to charities based on what people say they give. That point was made by the noble Earl, Lord Effingham, and the noble Earl, Lord Sandwich, albeit expressed in a slightly different way.
To put it briefly, there is no evidence that the lottery has led to a decline in giving to charity. What, however, is quite clear is that the lottery has generated a brand new source of money for good causes. That is the money distributed by the distribution bodies of which about 85 per cent., representing over £2 billion, has gone to charities in the first two years.
The National Lottery Charities Board alone has made more than 4,700 grants worth over £319 million to charities and voluntary organisations working primarily with young people and those facing disadvantage, and it will shortly be announcing further awards to organisations concerned with health, disability and care. In response to the point made by the noble Earl, Lord Sandwich, I can confirm that the allocation of lottery funds to good causes will be reviewed once in the lifetime of every Parliament.
In addition to the grants made by the board, well over half of the grants made by the other 10 lottery distributors across the United Kingdom have gone to charities and voluntary organisations. The National Council for Voluntary Organisations has estimated that from lottery ticket sales in 1995 alone, over £890 million will go to charities and voluntary organisations. Add to that the partnership funding which all the lottery distributors, except the National Lottery Charities Board, require and it is clear that, whatever else the lottery may or may not have done for charities, it has created a new, very rich, source of money which they can apply for in pursuance of their objects. In response to the point made by the noble Lord, Lord Donoughue, I wish to emphasise that the National Lottery Charities Board does not require matching funding; and that other distributors accept funding in kind, for example, voluntary effort in the building of a capital scheme. There is no evidence of problems with obtaining matching funding.
I should also like to put on record the achievement of Camelot, which has often been pilloried, quite unfairly, for its part in successfully setting up and running the lottery. It would be fair to criticise it had it made a mess of it; but to castigate it for doing the opposite is surely perverse. Noble Lords may be aware that the company has recently announced the setting up of the Camelot Foundation with an initial injection of £5 million. The foundation is expected to make Camelot one of the most generous corporate donors in the UK measuring its donations as a percentage of its profits, and is in addition to the support which it has already given to over 300 charitable groups for a total of over £1.5m.
1320 I am also aware of concerns over the effect of the coming into being of the lottery on the football pools industry and thus the Foundation for Sport and the Arts and the Football Trust. It is clearly a matter for each individual whether he or she wishes to spend money on the pools or on the lottery, or anything else, for that matter.
Since the advent of the lottery appears to have persuaded some of those who previously played the pools to abandon them in favour of the lottery, I am aware that the foundation and the trust will receive a pro rata reduced amount of money to distribute.
Against that background, a number of significant concessions have already been made to the pools industry, in response to its concerns about the impact of the lottery on them. Not least of those is the reduction in pool betting duty by 11 per cent. The ban on broadcast advertising by pools companies has also been lifted. The Government look forward to evidence that the pools companies will make use of these changes to regulations.
In the case of the Foundation for Sport and the Arts—I am most grateful to my noble friend Lord Brabazon for his explanation of the foundation's work—of course, its beneficiaries' loss is far outweighed by the gain represented by the sums which the lottery is raising for sport and the arts. Hence these activities are not collectively themselves disadvantaged per se by the decreased turnover of the pools. The Government are not aware of any serious threat to the long term future of the foundation which should still serve to distribute albeit reduced sums to sport and the arts.
In the case of the Football Trust—1 have listened carefully to the remarks of the noble Lord, Lord Howell, and my noble friend Lord Aberdare—the Government remain committed to ensuring the Taylor Report work is completed by the end of the 1999–2000 season on schedule. In May of this year the Football Trust benefited from a further 0.5 per cent. reduction in pool betting duty which should be worth up to £3 million a year. The reduction in pool betting duty concession for the implementation of Taylor will cease in March 2000. The future of the trust after this date is a matter for the trustees and the football industry. The Government also look to the football authorities to ensure that the vastly increased revenue that the game is now receiving from television and other commercial sources is distributed to enable clubs in all divisions to meet Taylor on schedule. I am sure that your Lordships will support this, and I know that the Premier League is considering help. Any further reduction in pool betting duty is a matter for the Chancellor of the Exchequer to whom many of the messages have been addressed this evening. Indeed, I feel that I stand here as a surrogate for him—except as regards the noble Lord, Lord Donoughue, who seems to know more about the plans of the Chancellor of the Exchequer than possibly even he himself knows.
Concerns have also been voiced by my noble friends Lord Wakeham and Lord Newall about the effect which the lottery has had on betting and consequently on horse-racing and greyhound racing. There have been calls for the Government to allow sidebetting on the 1321 lottery to help alleviate those effects. The Government are firmly against sidebetting on the lottery which destroyed the last national lottery we had in this country, because it will reduce the turnover of the lottery and thus the amount raised for the good causes. Evidence from Ireland supports this argument. If such a reduction occurred Camelot would, no doubt, seek to introduce new games. This is likely to precipitate a ratchet effect with both bookmakers and Camelot seeking to outdo each other. In turn this is likely to encourage people to gamble who would not otherwise do so. Allowing sidebetting would blur the distinction between the lottery and other harder forms of gambling. Bringing them closer together is also likely to encourage people to gamble who would not otherwise do so.
I am anxious to be quite clear that while the lottery may have reduced the betting industry's turnover to some extent, proper quantification is unclear and is the subject of debate among economists. Moreover, we must not overlook the changes that have been taking place in the industry, for reasons entirely unconnected with the lottery.
The nature of the lottery is that it is gambling based on the selection of seven randomly selected numbers. This is in contrast to the backing of horses and greyhounds, which, if successful, is usually based on a careful appraisal of factors such as form and breeding. What is interesting about the preliminary analysis of changes in punters' behaviour in betting on horses is that the kind of ill-informed flutter characteristic of, for instance, the Grand National is apparently unaffected.
The betting industry therefore appears to be facing problems in an area of its activities which would seem least susceptible to competition from the lottery. Moreover, in any event, surely it is a matter for the punter to bet on what he wants.
Of course, one of the characteristics of betting on horses and greyhounds in this country is that a proportion of the stake placed is handed over to the Horserace Betting Levy Board and the British Greyhound Racing Board respectively for the benefit of the sports concerned. Clearly, therefore, a decline in this kind of betting has a direct and damaging impact on these industries.
When faced with such a problem, surely the right approach is to identify the specifics of the difficulty, as noble Lords have done this evening, rather than indiscriminately cross-subsidise horse-racing and greyhound racing from other forms of betting if the public changes its betting habits.
I now turn to the question of the lottery regulator and the mid-week draw. Under the terms of the National Lottery etc. Act 1993, the licensing of a mid-week draw is a matter for the director-general of the National Lottery, not the Government. The Secretary of State did, however, emphasise, from the moment she was aware of the possibility of Camelot seeking a mid-week draw each week that the director-general must ensure that his decision was entirely compatible and could be seen to be compatible with the provisions set out in Section 4 of the National Lottery etc. Act. These require him to 1322 exercise his functions in the manner he considers most likely to secure that the National Lottery is run with all due propriety, that the interests of participants in the lottery are protected and, subject to these overriding considerations, maximise the revenue to the good causes.
The director-general, in exercising the power vested in him by Parliament, judged that the introduction of a mid-week draw was consistent with these duties and allowed the licence to be changed accordingly.
I must emphasise that the protection of players is the requirement that is uppermost in the Secretary of State's mind and both my department and the director-general will monitor carefully the effect of the mid-week lottery to ensure that the interests of the participants are not being undermined and that the players continue to receive the level of protection which they are accorded by the Act.
Of course, the Government recognise that some gambling causes problems of addiction for some people, just as, sadly, problems of addiction exist in a number of other lawful areas of human activity. Lottery draw games of this kind (long odds and long periods of time between the purchase of a ticket, the determination of the winning and the receipt of any prize money) are very unlikely to cause problems for anyone and present a very low risk in this regard. Many countries around the world have had draw games of this kind for many years and in those countries—this is a most important point—there is no evidence that people have developed addiction to games of this kind. This is as true of a weekly draw as it is of a twice-weekly one.
Perhaps the most important aspect of the new mid-week game, and one which has not been mentioned sufficiently, is the effect that it will have on the amount raised for the good causes. Noble Lords may be aware that sales of lottery tickets have been decreasing slightly in recent months. Experience in other countries suggests that the introduction of a mid-week draw is likely to increase the turnover of draw games by about 20 to 30 per cent. (from £70 million to £85 to £90 million a week); and likely therefore to push the turnover of the lottery back to its peak level of about £5.5 billion a year. This important step will therefore help the National Lottery to raise money for good causes.
The Government are committed to maintaining full public confidence in the operation and regulation of the lottery and are aware that there are concerns over the system of regulation. Parliament decided after considerable debate that the best way to build public confidence in the lottery was to give the director-general of the National Lottery the power to license the operator of the lottery and to regulate the operation under the terms of the licences granted. He is not alone in combining roles of this type. He operates similarly to the Independent Television Commission and the Radio Authority in this respect.
Nevertheless, the Government will be reviewing the operation of the lottery before the current Section 5 licence is due to expire in 2001 and will consider the role of the regulator at that stage.
1323 In response to criticisms of the director-general himself and the way that he has overseen the lottery, the Secretary of State has made it clear that she has confidence in him. That confidence has certainly not been diminished by his decision to allow a mid-week draw.
I am aware that Camelot recently published figures which suggested that those with less money spent more on the lottery. The Government consider that the figures produced by the Family Expenditure Survey are statistically better founded and hence are more reliable. They have consistently shown that those with the lowest incomes spend least on the lottery and those with the highest the most.
§ Lord Donoughue
My Lords, will the Minister allow that that is a very particular interpretation of the Family Expenditure Survey figures? What he is describing is the absolute amount spent, which is not meaningful. If he would quote to the House the percentages of income spent, as I quoted, from exactly that survey, he would see that poor families spend nearly twice as much in percentage terms. Of course they spend less in absolute terms, but that is not meaningful.
§ Lord Inglewood
My Lords, the point raised by the noble Lord is important; however, it was not clear from the contribution that he made. It is estimated that the average household, according to the Family Expenditure Survey figures, spends something like £2.30, £2.40 or £2.50 a week on the lottery. That must be set against, for example, an average expenditure of £5 a week on cigarettes or £12 on alcohol. The important consideration is whether it is the Government's business to tell people how to spend their money? We do not believe that it is the Government's business. The amount of money spent on the lottery by people in exercising their choice is as I have described it. Indeed, I go further. Even if it were thought that the Government should tell people how to spend their money, given the figures I have described, would the lottery be the right place to start? It would not be.
I emphasise again some of the beneficial effects which we believe the lottery is having in this country. The lottery is helping urban regeneration and providing employment. These things matter, not only to local and central government but perhaps most of all to the people who will gain work and benefit. It is bringing benefits to rural communities. In addition to the flagship projects about which one can read frequently in the national newspapers, a trawl through any of the local newspapers in this country shows how much of an impact some of the smaller projects, with which one is possibly not so familiar, are having throughout the country. These things are important and must not be overlooked in the context of the impact of this very recent development in our country.
The noble Lord, Lord Howell, made a short point about what is apparently a better manner of distributing lottery funds in Wales as opposed to distribution in England. As the noble Lord knows, the structure of sport in Wales is somewhat different from that in England. The reason why the procedures are slightly different, 1324 I understand, goes back to that. However, I assure the noble Lord that, so far as the Sports Council is concerned, it consults local authorities in order to receive a view from the people on the ground.
§ Lord Inglewood
My Lords, I will willingly take the point up with the noble Lord outside the Chamber if that is helpful.
The lottery is encouraging people to take part. It is creating facilities for people to take part in sport, for example, or providing musical instruments. In turn, that helps the cohesion of local communities. It is improving access to information. It is helping developments in the countryside, in tourism and in the leisure industry. Many of the lottery projects that are going forward are positively and deliberately environmentally beneficial—for example, the millennium forest in Scotland or the Sustrans national cycleway.
The department is continuously reviewing the way in which the lottery works in order that we can achieve the best results. It is still young. The Government recognise that it must evolve if it is to be effective in the public interest in the areas where it is needed most.
We shall continue to assess the impact that the lottery is having, both on the sectors representing the good causes and more widely, including the charitable and voluntary sectors. It is still a little too early to identify exactly what its overall impact might be, although that will clearly affect our thoughts on what might be done to make lottery funding even more accessible and more beneficial.
In conclusion, I hope that I may have allayed your Lordships' fears over some of the consequences and perceived consequences which the introduction of a second weekly draw might have. I should like to remind your Lordships of the great things that have already been achieved with lottery funds and the even greater things that I am confident will be achieved in the months and years ahead.
§ 7.19 p.m.
§ Lord Howell
My Lords, I am most grateful to all Members of the House who have taken part in this debate. It is certainly important to those of us who have spoken. I am glad to congratulate the noble Earl, Lord Effingham, on a striking maiden speech, particularly as he was able to bring experience of an organisation like the British Legion. As we have seen, it relies enormously on people collecting on street corners, in factories and in shops for the legion's wonderful appeal.
I share the view of my noble friend Lord Donoughue that we have heard tonight from every speaker except the Minister a catalogue of potential disaster. That was underlined by the many diverse interests whose representatives spoke in the debate. It would he wrong and invidious to attempt to mention them all. Noble Lords will forgive me if I do not go down the road of talking about football clubs, the sport and arts foundation, as well as racing. That is horse racing and 1325 dog racing, and I share the view of the noble Lord, Lord Newall, that dog racing ought to be on equal terms with horse racing or any other interest.
I thank the Minister for giving us such a courteous, well thought out and reasoned speech, as he always does, even if we do not entirely agree with his remarks. On this occasion, I thought he put up a noble effort in defending the impossible. When the whole House is united in its indignation and concern, it takes great courage for the Minister to speak.
However, in his speech I detected some strands of hope. Even at this late hour, with the Budget only days away, I hope that he will draw attention to the remarks of noble Lords because he has an opportunity to act in some areas, and that is important. It is odd that the Minister should tell us that there were reasons for believing that we had the most successful lottery in the world; but he then went on to say that as yet it was impossible to draw conclusions about charity giving. I agree that we cannot draw conclusions yet. But what on earth is he doing, in advance of those conclusions being drawn, authorising a second weekly lottery? It seems to me to undermine the Government's case.
He said, "We can't interfere with people's right to choose how they spend their money". Of course; it is not the Government's duty. But the Government's duty is to hold the balance and ensure justice and fairness between one activity and other activities which might be affected by it. Although he said that it had nothing to do with the Government, he sought to defend their actions by saying that the Secretary of State had relied on Section 4 of the Act to draw the attention of the regulator to how he should conduct his business. If it is not the Government's duty to tell people how to spend their money, I am glad it is the Government's duty to tell the regulator how he should behave in connection with spending the money.
In thanking everyone, I wish to make one last point. Before he sat down, the Minister told us that all these matters would be reviewed in the year 2001. That is far too late to review some of the difficulties that have been outlined in the House. I ask the Government to think again about it. That leads me to express the hope that if they do not do so, then long before 2001 another set of Ministers will carry out their duty to the nation and to the industries concerned.
I thank noble Lords for the pleasant way in which they have received the debate and beg leave to withdraw the Motion for Papers.
Motion for Papers, by leave, withdrawn.