COMMONS AMENDMENT (Hansard, 22 June 1998)

§ Lord McIntosh of Haringey
My Lords, I beg to move that the House do agree with the Commons in their Amendment No. 1. In doing so I should like to speak also to Amendments Nos. 2, 4, 5, 6, 7, 8, 9 and 12. The Government are determined to ensure that the lottery is given the most effective regulation possible to provide the objectivity, independence and transparency that the public rightly demands. The Bill, when it left this House, recognised the importance of widening the experience and expertise brought to bear on the selection of the lottery operator. It made provision for an advisory panel to help the director general with that task. But we have looked at this again and, particularly in the light of recent events, the Secretary of State has concluded that there is more that we can do to ensure that the public can have confidence in the independence and objectivity of the regulator. In particular, a move away from a focus on a particular individual will help to remove any possible criticism as regards conflicts of interest, actual or perceived, which threaten effective regulation.
I should say at this point that none of what is proposed should be taken as any criticism of the acting director general or his staff, whose professionalism and commitment are not in question. These amendments therefore replace the post of director general and the advisory panel currently provided for in Clause 1 and Schedule 1 to the Bill with a new national lottery commission. That commission will consist of five members whom the Secretary of State will appoint. It will be a permanent body which will take on the same statutory functions and duties as the director general. Therefore, its role will be to ensure that the lottery is run and promoted with all due propriety and that the interests of all players are protected and, subject to those duties, to do its best to ensure the best possible return for the good causes.
The commission will be able to choose one of its members as a chair to run meetings and to act as spokesman for no more than a year at a time. No member will be reappointed immediately so the responsibility is rotated between members. I appreciate that noble Lords might find an analogy with the rotating presidency of the former Republic of Yugoslavia, but nevertheless, I hope that they will put such thoughts out of their mind and recognise the appropriateness of this solution.
32 This measure will avoid focusing attention and influence undesirably on any individual. The new commission will have in its armoury the power already contained within the Bill to fine licence holders. That fills a gap highlighted by the Select Committee on Public Accounts. Any fines levied will go to the good causes and not to the Treasury. The power to fine will apply in respect of existing licences as well as future awards. The commission will be supported in its work by the existing Oflot staff. The amendments will provide for their employment by the commission on the same terms and conditions as they currently hold, save that the commission will not be a Crown body and so its employees will not be civil servants. I believe that these provisions ensure a lottery which will inspire full public confidence. I commend these amendments to the House.
Moved, That this House do agree with the Commons in their Amendment No. 1.—(Lord McIntosh of Haringey.)

§ Lord Skidelsky
My Lords, I thank the Minister for his explanation of these changes, but I put on record my disquiet at the practice of legislating on the hoof. No hint of these amendments was given when the Bill passed through Committee nor when it was read a second time in the other place. The Government only introduced the necessary amendments in Committee in the other place, I believe, last month.
As the noble Lord stated, the intention was to restore public confidence in the regulatory system following events surrounding the resignation of Mr. Peter Davis, the previous director general. But it would be a great pity if governments felt that they had to legislate every time a regulator or regulatory system was criticised in the press. As everybody knows, public confidence in the regulator fluctuates with every newspaper headline. Who now remembers the events which gave rise to these amendments?
My present purpose is only to point out that the regulatory system for a natural monopoly should not be changed in response to passing events because any change in the regulatory structure in one sector is bound to have knock-on effects on the regulatory regime as a whole. The amendments introduced by the Government seem to pre-empt the consultation envisaged by the White Paper, A Fair Deal for Consumers: modernising the framework for utility regulations, published in March 1998. In that document the Government put forward three possible models for regulation as an alternative to an individual regulator. They were a statutory advisory committee to assist each regulator; the replacement of individual regulators by small executive boards and the replacement of individual regulators by small commissions. In these amendments the Government seem to have opted for the third model. Is this now the Government's preferred model for all monopoly regulation or will there be a different regime for each sector? What about the promised consultation? I hope that the noble Lord will answer these questions.
I am not particularly happy about the procedure for rotating the chairmanship of the commission around the five members every 12 months, quite apart from the example to which the noble Lord alluded. Is the rotation 33 also intended to be a general model for the regulatory system applying to other monopolies? If so, I see some disadvantages, not least the danger that it will produce a weak regulator and not a robust one, with everyone shuffling off responsibility to another member of the commission. I should be grateful if the noble Lord would answer the questions that I have raised.

§ Lord McIntosh of Haringey
My Lords, I am grateful to the noble Lord, Lord Skidelsky, for his response to these amendments, although he will not be surprised to know that I do not agree with the criticisms that he has made. He began by criticising us for legislating on the hoof, as he put it, with amendments which were first introduced in Committee in another place. The Government's intention to substitute a commission for the director general was in fact announced by the Secretary of State at Second Reading and therefore another place had a full opportunity to consider the issues involved.
As I am sure the noble Lord will recognise, it is not unheard of for government amendments to appear in legislation as it reaches the second House for consideration. Indeed, if there were no such possibility there would not be much point in having a bicameral legislature. I do not apologise for the fact that the Government have had second thoughts. The only question in my mind is whether they are better than the first thoughts. I propose these amendments on their merits and not on any analogy with the Yugoslav presidency or anybody else.
I do not accept the criticism that the Government are committed to legislating every time there is criticism in the press. The noble Lord will recognise that the issue of the relationship between the director general of Oflot and Camelot was rightly taken pretty seriously in the press as the Bill was going through Parliament. It would have been irresponsible for us not to think about that relationship not just in terms of individuals, but also in terms of what better security there might be for the objectivity, independence and transparency that we Want.
The noble Lord referred to the Green Paper on utilities, quite rightly and quite legitimately, but he acknowledged that what the lottery commission proposed is in line with one of the three models in the Green Paper. He asked me then whether we were going to take this proposal as pre-empting consultation on other utilities: the answer quite clearly is no. The National Lottery is different from utilities such as water or electricity, and it does not establish a precedent. If the noble Lord is concerned about a precedent I can reassure him, I hope, that no precedent is intended. The Government are considering and will consider the responses to the Green Paper on utilities and will proceed with all due propriety in that respect.
The noble Lord was worried about the proposal for the rotation of chairmanship and whether this would lead to weak regulation. I can only say that it is not the Government's intention to establish a principle of weak regulation. Provided we have members of the commission who represent expertise in the running of lotteries, gambling more generally, and the interests 34 of players, and who have the integrity which is necessary and which is indeed the essential pre-condition for membership of the commission, I see no reason to suppose that these ladies and gentlemen will not act very effectively as a commission to control the National Lottery.
There are other examples of commissions: for example, the Radio Authority and the Independent Television Commission. Admittedly the idea of a rotating chairmanship is more unusual, but the Government rest their case for these changes on the merits of the case rather than on any analogies with other bodies or indeed on any past history in the relationship between Oflot and the licence holder for the National Lottery. On that basis, I commend the amendment to the House.