HL Deb 05 March 2002 vol 632 cc197-214

7.26 p.m.

Lord Faulkner of Worcester

rose to ask Her Majesty's Government how they intend to respond to the Gambling Review Report.

The noble Lord said: My Lords, I start by thanking all noble Lords who have put their names forward to speak in this debate. I greatly look forward to hearing their contributions, although I fear that those contributions will mostly be rather short. I declare an interest in that I have been an adviser to Littlewoods Leisure and its predecessor company Littlewoods Pools since 1977. That was at the time of the Royal Commission on Gambling, which was chaired by Lord Rothschild. I am also an unpaid member of a number of committees, charities and boards, which receive or distribute funds that are derived from gambling.

I am grateful to the many organisations that have written to me in recent weeks about this debate on the Budd report. I agree with many of the points that they have made. If I do not mention all of those bodies this evening, I hope that they will forgive me. There was only one response with which I profoundly disagree; I shall come to that in a moment.

The terms of reference of the gambling review are set out on page 6 of the report. A combination of changing social attitudes and the arrival or e-commerce, the flight of United Kingdom bookmakers abroad and the threat of Internet gaming persuaded the Government to set up the review, and they were right to do so. The review also provided an opportunity to take stock of the gambling market as a whole, following the enormous impact made by the arrival of the National Lottery at the end of 1994. That changed for ever the traditional Home Office approach, which was enshrined in the Betting and Gaming Act 1960; that is, that the role of government was to discourage the stimulation of demand for gambling. Gambling is now seen as a mainstream leisure activity, and that is reflected in the fact that the Department for Culture, Media and Sport has taken over responsibility for it from the Home Office.

The opening paragraph of the Budd report would seem to provide as good a basis as any for a new public policy on gambling. That policy is, to ensure that…Permitted forms of gambling are crime-free, conducted in accordance with regulation, and honest". It is also to ensure that: Players know what to expect, are confident they will get it, and are not exploited", and that: There is protection for children and vulnerable persons". In following that approach, it would seem to be a fundamental principle that there are no artificial boundaries or distinctions drawn between the different forms of gambling, other than to make it adult only and to maintain sensible retail structures.

It is therefore all the more extraordinary that by far the largest gambling operator in the country—the National Lottery—should have been outside Budd's terms of reference. That was rather like asking a student to write an essay on the rise of fascism in the 1930s but to exclude any reference to the German Nazi Party. I suspect that the National Lottery was omitted to maintain the fiction, first propounded when the National Lottery legislation was going through Parliament in 1993 and 1994, that the National Lottery somehow did not involve gambling. However, Budd reports in paragraph 14.7, that, 80 per cent of people surveyed thought that doing the national lottery was gambling". Of course it is; it is a public monopoly, licensed by Parliament and run by private sector companies for the benefit of their shareholders. There is nothing wrong with that. It has generated huge sums of money for good causes, and it pays lots of tax. So, in my view, it is a pity that the opportunity was missed to include the National Lottery in the review of gambling. In particular, I should have like to know what Professor Budd and his colleagues would have had to say about the role of the National Lottery Commission, and about regulation generally.

This is the only regulator of a monopoly about which I am aware that has within its terms of reference the conflicting aims of both stimulating demand through the phrase, maximising the return to good causes", and protecting the public from the dangers of excessive play. The Government could have the opportunity to correct the situation when they legislate on Budd by placing the regulatory duties of the National Lottery Commission under the proposed gambling commission. I hope that they will give very careful consideration to that proposal.

Given the extraordinary favourable treatment that the lottery has been accorded by successive governments since it started, and its exclusion from the gambling review, we might have expected Camelot to respond to Budd in a measured and conciliatory way. But, sadly, not so. In every area where there is a possibility of some additional competition, such as the introduction of side betting and the deregulation of bingo, it preaches gloom and despair.

Let us consider, in particular, what Camelot says about society and charity lotteries, and Budd's very sensible recommendation that, the limits on expenses and prizes as a percentage of proceeds should be removed, subject to an overriding requirement that no less than 20 per cent of proceeds must go to a good cause". In its response, Camelot claims that these relaxations would reduce its payments to good causes by £1.28 billion over the seven-year licence period, threatening the very basis of the national lottery". For the year up to 31st March 2001, the Gaming Board reported that sales of chances in society lotteries amounted to just £107.1 million from the 5,049 lotteries registered. In the same period, Camelot sales were £4.983 billion—that is almost 50 times as much.

Camelot has over 95 per cent of the scratchcard market, with unlimited stakes and prizes, unfettered access to television, radio, and the printed media, as well as a vast advertising budget, 35,000 agents, the Post Office as a tame retailer, and a deal with the BBC that pays Camelot money for programmes that advertise its product. Are its management and marketing staff really so poor that they cannot cope with a little competition from society lotteries, which, although a minnow by comparison, do so much good for the causes that they support?

Camelot points out that under Section 5 of the 1976 Act a minimum of 20 per cent of sales proceeds from society lotteries must be given to good causes, yet it ignores the figures in Section 6 of the Gaming Board annual report for last year which show that 47.11 per cent of sales were retained by the good causes—that is substantially more than the 28 to 32 per cent provided by the National Lottery. That is despite a limit on society lottery prizes of either £25,000 or 10 per cent of the value of chances sold. As the maximum size of a society lottery is set at £1 million, the maximum allowable prize is just £100,000.

One great difference between the two is that people who buy society lottery tickets know precisely what good cause they are supporting, whereas they have no say in how the National Lottery good cause money is distributed. A typical charity that benefits from a society lottery is the Roy Castle Lung Cancer Foundation, based in Liverpool, of which I am proud to be a patron. It works in partnership with the University of Liverpool. It grants over I million each year to carry out research into the early detection of lung cancer, and supports lung cancer nurses at various cancer centres around the country. Its chairman of trustees, Sir Philip Carter, has written to me in the following terms: We applaud what the National Lottery has done for the country but we protest strongly at Camelot's intention to resist the Budd recommendations on relaxation of charity lottery regulations … We have never received one penny of government funding for our research programme nor have we received any funds from the National Lottery. That is why it is so important you do not deny us the opportunity of bringing in legitimate funding through a society lottery". In his letter, Sir Philip also points out that the foundation is likely to receive over three-quarters of a million pounds in 2002 from a lottery run on its behalf by Littlewoods Leisure. He goes on to say: Any increased support for the national lottery at the expense of charity lotteries will jeopardise this and have a devastating effect on organisations like the Roy Castle Lung Cancer Foundation". When my noble friend the Minister replies to the debate, I hope that she will be able to give us some indication of the Government's intended legislative time-scale. On the assumption that it may be a little while before we see a substantial Bill, will the Government at least act on the society lotteries front, and use existing regulatory powers to double lottery sizes and prize limits?

In conclusion, I hope that my noble friend will also be able to say that the Government accept the broad thrust of Professor Budd's recommendations, and that they agree that his team has produced an excellent report that will provide a way forward for gambling in this country through a fair and competitive framework for all participants.

7.36 p.m.

Lord Burnham

My Lords, the noble Lord, Lord Faulkner, is much to be congratulated on introducing this debate. But it is quite ridiculous to expect such an important subject to be covered in one hour. Before I begin. I probably should declare an interest as my wife is a director of the British Horseracing Board (BHB).

I have chosen to concentrate on one aspect of gambling, a fairly new one; namely, person-to-person betting. That it is a live subject is demonstrated by the fact that half the front page, page 2 and all of page 9 of yesterday's Racing Post is devoted to the subject. In P2P betting, as it is described, punters bet with each other, usually by means of the Internet. These bets are brokered by firms who take a commission, approximately 5 per cent, for their services. As BHB charges for the services that it provides on the basis of turnover, this makes nonsense when the turnover is the broker's fee—that is to say, 5 per cent. More importantly from the Government's point of view, there is a clear and major loss to the Revenue.

P2P is now big business with a steep growth curve. From a few thousand two years ago, it is now standing at ¤15.68 million a week for one firm, Betfair, alone. This makes it a major threat to on-course bookmaking. Some bookmakers are claiming that it is illegal on the grounds that it allows individuals to act as bookmakers. The Jockey Club's director of security, General Phipps, is calling for government action to regulate this form of betting. Illegal or not, there are clear dangers to the integrity of betting when it is so easy to lay a horse, or whatever, to lose.

The Budd report recommends that betting brokers should be licensed and regulated in the same way as bookmakers. This must be right, as must some way of ensuring that brokers and punters make a fair payment to whatever sport gives them a field in which to lay their bets. It is to be hoped that this policy will he adopted when the DCMS view on the report is published next month. It has to be said that the operators are co-operating, particularly where there may be suspicious betting markets. They are showing a clear understanding of the data protection issues and seem to wish to work with racing and other statutory authorities.

In general, not all of the report is rational; for example, it takes up an illogical stance on betting in pubs compared with drinking in casinos. But, generally, it is to be welcomed. I hope that other noble Lords will find time to cover the salient points in their skeletal three minutes.

7.39 p.m.

Lord Lipsey

My Lords, like my noble friend Lord Faulkner, I am shocked that the Government excluded the National Lottery from Alan Budd's otherwise excellent report. However, I am not surprised. As a government, it is not very often that you find a tax that is not only popular but one that also enables you to extract money from poor people's pockets and spend a large amount of it on rich people's hobbies. But they did exclude it and I regret that. However, in relation to one issue it has crept under the bar; that is, in the recommendations of Budd that betting should be allowed by bookmakers on National Lottery numbers. Here I declare an interest as a member of the board of the Tote.

It seems strange that it should be banned in the first place. One can bet on whether it will be a white Christmas, on the Booker Prize, on the name of the next Archbishop of Canterbury and on whether Prince Charles will ever be king. However, one cannot bet on lottery numbers. I could understand that if the amount of money that such betting would cost the lottery were very great. The question is: is it?

With the aid of Europe Economics and MORI, the bookmakers produced a substantial study—I have read it; it is a convincing piece of work—which states that such betting would not have much effect on the National Lottery. Indeed, it might even increase sales because, in case they did not get all six numbers but got three or five, some people would place money on the results in order to hedge their bets. However, the National Lottery has said that over the lifetime of the licence period it would cost it sums of £400 million and more. If that were so, it would of course be an important argument.

But the National Lottery—a publicly set-up body—has decided to keep its report secret. It claims to have reports from the Henley Centre and PricewaterhouseCoopers which bear it out, but it will not publish its research. I believe that that is an affront to public policy-making. We need to hear both sides of the case in order to make a judgment. I am shocked that the National Lottery—a body which relies on the integrity of figures—should deprive the debate of figures in this way. It is cheating and it should not he permitted.

However, I do see a way forward. I believe that bookmakers should be allowed to bet on numbers but, just as bookmakers are about to have to pay a licence fee to the British Horseracing Board for the use of horse-racing data, it seems to me that it would be sensible for bookmakers to pay a fee to the National Lottery in order to accept bets on its numbers. Instead of there being a conflict situation in which the bookmakers say "yes" and the lottery says "no", that would produce something which, in my experience, is rather rare in gambling—a situation in which everyone wins.

7.42 p.m.

Lord Wade of Chorlton

My Lords, I am most grateful to the noble Lord, Lord Faulkner, for bringing forward this matter for debate. My interest is in seeing development in Blackpool. Therefore, I want to speak in support of the resort casinos which are proposed and encouraged in the report.

In speaking, I have the support of about 71 per cent of the people in Blackpool, all the major organisations in Blackpool, the Blackpool Challenge Partnership, the right reverend Prelate the Bishop of Blackburn, the RDA and many other important organisations in the North West. It is calculated that the type of casino that would be built in Blackpool, given the right opportunity to do so, would in the short term produce some 3,000 jobs, possibly rising to 25,000 jobs once the business had gathered momentum.

It is an interesting fact that the number of people who come to Britain for their holidays is decreasing and that those who go away from Britain for their holidays do so more and more often because we no longer provide the information, entertainment and leisure complexes that people can find elsewhere in the world. Four hundred thousand English people go to Las Vegas every year. That certainly did not happen in my younger days. Then, going to Las Vegas would have been the most daring thing that one could possibly imagine doing.

Therefore, the aim is to try to create new and exciting leisure activities in Blackpool, which at present, it must be admitted, is a dying town. Its economic development is possibly smaller than that of any other area in the North West. Its GDP is declining annually. The type of people who visit the town would not support the exciting shops and activities that were there in the past.

Therefore, I strongly believe, along with many others, that the development of high-quality resort casinos which offer a wide range of restaurants, facilities, entertainment and gambling would be a tremendous boost to what could, again, be one of the best central places in the UK for people to visit and spend money. If we want to create jobs and opportunities in the North West, we must attract people who will spend money. In order to do so, there must be enormous investment and people who are prepared to make sacrifices and work hard to make it happen.

They are likely to do so only if we create a legal framework which allows them to invest their money with confidence. They must know that they will receive the support of the Government, the local authorities and all those who can make such a great development possible. I look forward to the time when I can see along the front at Blackpool splendid resort hotels which draw in people from around the world and machines which take a great deal of foreign money.

7.45 p.m.

Lord Corbett of Castle Vale

My Lords, I congratulate my noble friend on raising this issue. I declare an interest as honorary vice-president of the Lotteries Council, which represents a patchwork of those who rely on local lotteries for an essential part of their income—that is, sports clubs, charities and hospice supporters, the organisations which are the stuff of strong and vibrant communities.

Tickets for those lotteries are often sold door-to-door in all weathers. Some are sold by dedicated volunteers; others by direct mail to supporters. None of them represents the remotest threat to the comprehensive network of about 25,000 retailers who handle National Lottery ticket sales. This field is a rare case of there being room for the Goliath of the National Lottery and the David of small charities.

The test that I would make to illustrate the point is this: do I gamble £1 on a National Lottery ticket because I know that I have a 14 million-to-one chance of becoming a multi-millionaire and that only 28p of that £1 goes to good causes, or do I gamble £1 because I know that 47p of it will go to the good local cause in my area? In that sense, it is a choice between personal gain and community gain. It would be good if Camelot could arrange to tell us how many National Lottery winners have put some of their massive winnings back into the community of which they are—at least, they were at the time that they bought the ticket—a part.

The small charitable lotteries want only to raise the limit of the £1 maximum stake, the £1 million maximum single lottery proceeds, the £100,000 maximum single prize and the £500,000 maximum annual turnover, all of which have been in place since 1993. None of this will lead to an unwelcome or socially damaging upsurge in gambling; nor, as I said, is there any real threat to the National Lottery.

It is inevitable that the National Lottery has hurt some good-cause local charities. The small lotteries are simply asking for increases which will help them to sustain their community-enhancing role. I ask the Minister to assure your Lordships that the Government will consider those points and leave aside for another day the wider suggestion of the Gaming Board that all limits for lotteries should be removed. There may well be a case for that, but I believe that the smaller local lotteries have a stronger case in seeking a rise in the limits, as I have just described. The small lotteries need those modest increases now. Important as the National Lottery is, it should not be allowed to harm small lotteries any further as they do good for communities in ways which the National Lottery cannot reach.

7.48 p.m.

The Lord Bishop of Wakefield

My Lords, I add my congratulations to the noble Lord, Lord Faulkner, on securing this debate. I have consulted other Christian denominations. We broadly welcome the report but we also have some particular concerns. In our view, the proposals about children and fruit machines do not go far enough. There is a very strong opinion within the Churches that the age restriction for these highly addictive machines should be raised to 18 across the board and that that should come into effect when the reforms are introduced rather than in five years' time.

We also believe that the age for participation in the National Lottery should be raised to 18. I regret that we are out of step with all other Western countries in being the only one to allow gambling under the age of 18. But I also urge the Government to consider including in the national curriculum education for children and young people about responsible gambling and the consequences of problem gambling.

I share concerns about on-line gambling, which rose from 339,132 sites world-wide in July 2000 to 2,348,208 last October—a rise of 700 per cent. I welcome the proposals for policing that, but I wonder how they will be implemented to avoid laundering and under-age play. There is also a strong view within the Church that alcohol should not be sold at gaming tables. Given the adverse effect that alcohol has on judgment and self-control, we believe that that is important. In our view, prohibition should remain.

As a Yorkshire Bishop, I am in the strange position tonight of speaking up for Lancashire and backing Blackpool's casino hopes. Their Bishop, my friend the Bishop of Blackburn, recently visited Las Vegas. He assures me that he did not have a flutter there, but he was persuaded that hotel casinos bring regeneration. The casino proposal is the only regeneration plan there is for Blackpool. Given the level of deprivation there, it is the lesser evil, but only if a substantial sum of casino profit goes to local regeneration in Blackpool, and support systems for those adversely affected or addicted are firmly in place and not left to chance.

In the same vein, I welcome the proposal for a gambling trust to promote research and treatment, but I would want to see business practices in the gambling industry develop in ways which would help to prevent addictive behaviour. In short, does the Minister agree that there must be no deregulation without greater social responsibility?

7.51 p.m.

Lord Mancroft

My Lords, I too am grateful to the noble Lord, Lord Faulkner, for this opportunity. I should declare an interest. I earn my living as chairman of a company licensed by the Gaming Board as an external lottery manager, and I promote a number of lotteries for charities with which I am involved, am chairman of the Drug and Alcohol Foundation, which is the largest provider of day care for drug addicts here in the City of Westminster. We provide care for people from 32 different local authorities. The deficit that we have, which every small charity has every year, is entirely funded by our lottery income. The building in which we operate in Dartmouth Street, which noble Lords are welcome to visit, is entirely paid for by lottery money.

The Lotteries Council, of which I am a member, and of which the noble Lord, Lord Corbett, is a distinguished vice president, is delighted that the report recognises the importance of lottery income to charities and sporting organisations. That income is, in many ways, more important than the income which comes from the National Lottery because it is much more flexible and easy to distribute. I hope that the Government take on board the importance of that income at a time when there has been a significant collapse in core funding for smaller charities. Society lotteries existed long before the National Lottery. They will never pose a threat to the National Lottery as Camelot has tried to suggest.

I understand that the Government do not want to do anything to risk the status of the National Lottery, but I can only emphasise that the commercial muscle of Camelot means that no charity or group of charities will ever challenge the National Lottery's domination of the marketplace. Camelot's control of the retail network makes it almost impossible for societies to sell their tickets through shops. I believe that my company is probably the only one with an on-line capacity remotely similar to Camelot's with, I suspect, the possible exception of Littlewoods. However, I can tell your Lordships that if we achieve 1 per cent of Camelot's business, we will have been successful beyond our wildest dreams.

I hope, therefore, as the noble Lord, Lord Corbett said, that we shall not have to wait for primary legislation to see enacted the recommendations in the Budd report in respect of stakes, prizes and expenses. I know of no reason why the Government should not act on Budd's recommendations, which are supported by the Gaming Board and the Lotteries Council, and bring them forward by deregulation.

My next point is in respect of frequency. I believe that the only reason that the Budd report focused on frequency was because of the information given to it by officials. Not one single submission focused on frequency; there was only the information given by officials, and that was not the full information. The hard data were not given to Budd. That is why Budd came to the conclusion he did, which is understandable but completely wrong.

In particular, the Government must understand that because Camelot prevents societies from selling their tickets in shops, we have to find alternative outlets. That is why we retail in pubs; not through choice but because we have no choice. The only type of lottery that works in a pub is a rapid-draw lottery. If the Government prevent us from running those kind of lotteries, there will be little future for society lotteries. I hope that the Government will bear that carefully in mind.

7.55 p.m.

Lord Donoughue

My Lords, this is clearly a sprint and not a test of stamina. The report seems to me to be sensible, constructive and speedy. Clearly, it starts from a free market philosophy. It suggests replacing a prescriptive regime with a more permissive one. I welcome the fact that it reduces moral nannying and excess regulation. It usefully accommodates the growth in on-line gambling, which was previously not covered by existing legislation.

However, it has defects. The price for its speed is sketchiness on detail, rather like most of us tonight. The general theme, modernisation and liberation, is one I support. It approaches gambling in an adult way. It allows adults to participate in what is a successful growth leisure industry in which Britain is a leader, especially in the application of computer technology. The report deals with the real moral and social issues. It ensures that children and criminals are not involved. It also refers to the problem of addiction. Here, I declare an interest as a past president of GamCare, the charity concerned with addiction. There is not a great problem, but it is serious for the individuals concerned. I welcome the proposal that some gambling revenues should fund research into the problems of gambling.

I shall now comment on a few specific issues. There are sensible proposals on casinos to make them more open; to abolish the 24-hour membership rules; to abolish permitted areas; to allow live music and more machines and to create a more enjoyable environment, which I support. As regards allowing resort casinos, I agree that that might regenerate some of our more depressing seaside resorts, one of which has been mentioned. In return, perhaps the new casinos might devote some of their revenues to supporting local social projects. That happens in France, where it is part of the deal in obtaining a licence. In passing, I note that Las Vegas, which was mentioned by the noble Lord, Lord Wade, has more catholic churches than Rome. I believe that the provision for repentance in resort casinos is a good idea. Blackpool would benefit more than most.

As regards licensing by local authorities instead of by magistrates, local authorities know the local scene. On horse race betting there are several concessions to bookmakers, including betting on the lottery, which I support. I hope that that means that more resources will be available for racing and that those two sides will settle soon. As regards banning slot machines in working men's clubs, I hope that that has no political chance. I trust that any quibbling over minor details will not deter Government from moving to speedy reform along the broad lines proposed by Budd. Gambling is a major leisure industry providing simple social pleasures for millions of people. It should not be overtaxed to drive it overseas or underground. It should be properly regulated and monitored, which Budd proposes. I hope that my noble friend will assure the House of government action soon.

7.59 p.m.

Lord Hodgson of Astley Abbotts

My Lords, perhaps I may add my congratulations to the noble Lord, Lord Faulkner, on giving us a chance to debate this important topic tonight. I should like to make a couple of brief points. My first point is that I support the broad thrust of the report where it seeks to sweep away artificial divisions and practices. Like several other noble Lords, I am against the nanny state and I welcome the approach. However, I do so subject to two provisos.

First, I spent 20 years of my career helping to develop the regulatory system in the City. We found that an integral part of an effective regulatory system is what we now call "transparency". Investors must know what they are letting themselves in for. In the hallowed present phrase, "Shares can go down as well as up". In that vein, I endorse the need for gamblers to be reminded constantly of what they can lose.

Secondly, there is the subject of the protection of young people. Here I follow the right reverend Prelate the Bishop of Wakefield. I was surprised that the report, having selected 18 as the age at which most people are mature enough to make decisions as regards gambling, then proceeded to propose that children should continue to be allowed to play on fruit machines. I fear that I find different permissible ages for different types of gambling to be unsatisfactory and unclear.

My second point concerns taxation. I found the report's treatment of tax issues and tax implications to be its weakest part. The Government need to be clear on their long-term tax strategy for the industry before legislation is introduced; otherwise tax and regulation may come into conflict.

Finally, there is the regulation of spread betting. I have already referred to my past membership of the board of the Securities and Futures Authority. We on the SFA were horrified when we were told that, as a result of a court case, we were going to have to regulate spread betting, and in consequence apply conduct of business rules, know your customer rules and financial prudential regulation to the spread betting industry.

It came about because a spread betting firm, more I suspect in hope than expectation, took a spread betting client to court to try to enforce a debt. In my view the judgment was and remains perverse. I urge the Minister to read paragraph 9.46 in the report. The example given there shows the clear illogicality of having spread betting regulated by the Financial Services Authority. I hope that the Government will think carefully about this matter before we come to the legislative process.

There are many other important issues worthy of debate; notably the proposed new licensing structure and its implications for a countrywide level playing field. I congratulate the review body on its meaty report. I again thank the noble Lord for introducing the debate today.

8.2 p.m.

Baroness Golding

My Lords, I want to thank the noble Lord for the opportunity to debate this important issue. I am not certain if I should declare an interest because I am a member of the all-party dogs group, or because I am a member of the all-party horse racing group, or because I jointly chair the All-Party Betting and Gaming Group. But anyway I declare an interest in that I have more than a casual interest in the gambling review.

I confess that I have read the Budd report from cover to cover. I agree with a large part of it. For example, I strongly agree with no betting in pubs, but strongly disagree with proposals to abolish jackpot machines in clubs.

There are many interesting recommendations in the report. There is the establishment of a gambling trust to oversee the causes and treatment of problem gambling. That then raises the questions of how it is to be funded and how it will link in with the provision made at present by GamCare. All gambling is to be regulated by a single regulator. That raises questions as to whether that should include the National Lottery and as to whether spread betting should continue to be regulated by the Financial Services Authority. Licensing of premises is to be undertaken by local authorities. Will that link in well with the abolition of the demand test and permitted areas rule?

Relaxation of the rules for casinos has long been needed and is very welcome. But must we wait for a Bill to abolish the 24-hour membership rule? Could not that he done quickly by regulation? We are desperate to encourage tourists. They do not understand why we still put this block on their legitimate enjoyment.

I am aware that the National Lottery for some reason was not included in the gambling review. But is it not time that it was made to stand on its own feet? There are very many charities—small and large—battling for available money. They do not have the advantages of a national lottery and often are not eligible for a grant from it, often because of complicated and impossible to fulfil requirements. Why should not the National Lottery be free to take its chances in expanding its income by, for example, putting its terminals in betting shops? I am aware that it has a duty to maximise its income, but surely not by giving it unfair advantages over other smaller lotteries and charities?

There are so many issues raised and so much that is good to be considered in this excellent report. I very much look forward to the detailed debate on the review and on all the interesting issues that it raises.

8.5 p.m.

Viscount Falkland

My Lord, I too thank the noble Lord, Lord Faulkner of Worcester, for this brief opportunity to discuss gambling in this country in the light of the Budd report.

I think that we can be reasonably proud in this country of over 150 years of sensible legislation which has supported public policy. Gambling has not been actively encouraged, but where it has taken place it has done so with the minimum of criminal activity and with as fair a deal as possible for the betting public. The overall success of this policy—this relates somewhat to what the right reverend Prelate was saying—is that it has sought to protect the young and the vulnerable.

Although relatively little is still known about the addiction of gambling, it affects quite a small proportion of people who gamble, as, indeed, alcohol addiction affects quite a small proportion of those who drink. There is much more to be discovered about this and there is much more help to be put in place for those who suffer. The policy has allowed the successful conduct of horse and dog racing, among other activities. There is a betting market created by bookmakers, whose integrity and efficiency must have surprised some other countries with tote monopolies who did not opt to go down that road.

Casinos in this country have operated usually profitably, some very profitably and within a firm regulatory environment. They have produced a good deal of useful foreign exchange for this country. The noble Lord, Lord Wade, mentioned the view in the report about the interesting Blackpool proposal. I do not share the view which seems to come out of the report that the regeneration of our seaside resorts should go entirely down that route. But this particular high-quality proposal which follows more closely what happens in Atlantic City is an interesting one.

The responsibility for gambling has now passed from the Home Office to the Department for Culture, Media and Sport. Only time will tell whether that is a good or a bad thing. Gambling is obviously now perceived as a leisure activity which is more important than the concern that our forefathers had with some of its social and moral worries. I hope that these issues will he addressed in the White Paper.

Here again I seem to be leaning towards the view expressed by the right reverend Prelate. Dangers do exist and will continue to exist wherever gambling takes place. Control and monitoring must surely be an important part of any legislation. I look forward with great anticipation to that part of the White Paper.

The Gambling Review Body report seeks to ensure an environment in which providers and consumers can both benefit. That is a useful and helpful aim. We remain to see whether they are successful in doing that. The explosion of spread betting and one-to-one betting, which is a complicated issue that was described by the noble Lord, Lord Burnham, need to have special attention paid to them by the Department for Culture, Media and Sport. We anticipate that that will also be dealt with in the White Paper. But it should be soon. How soon, perhaps the noble Baroness will be able to enlighten us.

8.10 p.m.

Baroness Anelay of St Johns

My Lords, I join in the general thanks to the noble Lord, Lord Faulkner, for this debate. In general, I welcome the plans to reform the law on gaming. It is a mess. Its reform needs to be considered against the background of a growth in leisure time, more relaxed attitudes to gambling in general and of course the new trends in gambling such as on the Internet and the person-to-person gambling which was so ably referred to by my noble friend Lord Burnham.

There are also weaknesses. My noble friend Lord Hodgson referred to the problems over taxation. The Budd report has stirred up fears in some parts of the leisure industry that the proposed deregulation could in some circumstances mean that the cure is worse than the disease.

Business in Sport & Leisure states that its main criticism is about the concept of "ambient gambling". Does the Minister agree that, from this understandable view of gaming, there then follows a series of recommendations which fly in the face, it would seem, of the way in which the gaming industry works in the UK and, if implemented, could mean the closure of a significant number of leisure outlets, especially perhaps private clubs and seaside arcades? For example, does the Minister agree that we should reject recommendation 70 and leave alone the current regime of a jackpot machines in not-for-profit clubs?

Amusement arcades are one of the significant attractions of United Kingdom tourism resorts. After all, they create family entertainment and are for the most part well managed. The recommendation that local authorities could impose blanket and retrospective bans on established gaming businesses in their area has alarmed the leisure industry. For example, John Bollom of Mumbles Pier, Swansea says in Game On, the submission of the British Amusement Catering Trades Association: It's bad enough finding the funds to invest in the business on an on-going basis without worrying whether or not the local authority will implement a blanket ban to shut us down in a year's time". My noble friend Lord Wade was right to direct our attention to the economic potential offered by the development of resort casinos. On this occasion, I am happy to follow the lead of the perhaps unlikely alliance between my noble friend and right reverend Prelates—I say Prelates in the plural because I include the right reverend Prelate the Bishop of Bradford—in hoping that Blackpool may be given an early boost by Budd in that regard.

I am aware that the leisure industry has made representations to the effect that the proposal to allow large-scale use of machines in casinos means that, instead of having casinos that provide a social, leisure atmosphere, we might end up with warehouse environments of mindless gaming, with wall-to-wall machines. Will the Government consider a pragmatic solution of a step-by-step approach whereby deregulation could be applied to areas where the local community was overwhelmingly in favour? I am of course thinking directly of Blackpool.

Many noble Lords, such as my noble friend Lord Mancroft, referred to the National Lottery. It is vital that the Minister directs us to the Government's view of how the lottery could or should be affected by the Budd report. I look forward to hearing the Minister's response.

8.12 p.m.

Baroness Blackstone

My Lords, I am grateful to my noble friend Lord Faulkner for raising this important topic, and I have listened with great interest to what he and others have said during this debate. I accept that, as the noble Lord, Lord Burnham, said, it is somewhat frustrating that speakers have had such a short time, but I must say that many interesting points have emerged.

I am afraid that I must for now disappoint any noble Lords—including the noble Baroness, Lady Anelay—who may be hoping for a foretaste of the Government's decisions on the review. As noble Lords will know, the report makes 176 recommendations about all sectors of the commercial gambling industry and about sports club and charity lotteries. I shall certainly not attempt to summarise the report tonight—my noble friend Lord Donoughue had a pretty good crack at that and I cannot improve on what he said.

Sir Alan Budd and his colleagues have, as we expected them to, produced the most important analysis for 20 years or more of gambling regulation in Great Britain. As many speakers have said, it is a thorough and impressive piece of work, and I pay tribute to it. It was imperative to have such a report because the controls that have served us well since the 1960s are increasingly out of date and need of modernisation. The Government are not alone in that view—it was expressed just now by the noble Baroness.

In publishing the report last July, we began a process of public consultation. We received almost 300 substantive responses from all parts of the commercial gambling industry and from others with an interest. Separately, we have also received more than 3,000 letters from people commenting on one or another aspect of the report's conclusions. There has been broad support for the review's conclusion that there can be substantial deregulation of the gambling industry consistent with ensuring that crime is kept out, that there is protection for children and vulnerable people and that consumers—the punters—get a fair deal. On the other hand, there has been disagreement about some of the review's more specific proposals.

It is now for the Government to decide how to take forward the necessary reform, and I can tell the House that we anticipate being able to make an announcement within a few weeks. It would be quite wrong for me to indicate our intentions before such an announcement.

We decided that we needed a review because our current laws on the commercial gambling industry—apart of course from the National Lottery—date from the 1960s and 1970s. Many people argue, especially with the advent of the National Lottery, that our controls are too restrictive and do not reflect the more relaxed, less condemnatory, attitudes to gambling that people have nowadays. That has been the general tenor of this debate. Irrespective of whether that is true, there were important reasons for subjecting the controls to the thorough, dispassionate analysis that Sir Alan Budd and his gambling review team have provided.

When our present controls were devised, no one had heard of the Internet, interactive or digital TV or even of mobile phones. But those are now important ways of delivering gambling and they are outflanking our current system of control, which is based largely on the notion that most commercial gambling will be carried out in premises such as a casino or a betting office. We have already heard from a number of speakers that that is no longer the case.

At the same time, we consider a properly regulated gambling industry to be an integral part of the leisure industry and indeed of the economy. But our restrictive controls discourage that. They are overly complex and difficult to deregulate. The Government looked to Sir Alan and his team for a rigorous, detailed and independent examination of those important questions.

I have been asked by several speakers, including my noble friend Lord Faulkner, what is the legislative timetable for change in controls on gambling. Given the speed of developments in the commercial and media worlds, there is a strong case for bringing our laws up to date as quickly as possible. It will come as no surprise when I say that a complete transformation of the law on gambling would require the replacement of three large Acts of Parliament passed in 1963, 1968 and 1976, together with some smaller Acts and a huge number of statutory instruments. So that is a big task, but the Government recognise the case for urgency. While a Bill on the subject may be unlikely during the next Session, we are of course considering how quickly we can introduce one thereafter.

As noble Lords have said, there may also be opportunity to change the law in advance of that by relaxing some of the controls in existing legislation. I cannot be specific about that other than to say that we will give it serious consideration.

My noble friends Lord Faulkner and Lord Lipsey asked why the Government did not ask Sir Alan Budd to examine the National Lottery. We asked the review body to consider the effects of its proposals on National Lottery income, and the report contains a chapter about that. It was not a case of one law for Camelot and another for society lotteries.

I assure my noble friend that the Government do not think, as Ministers in the previous administration were once quoted as saying, that the National Lottery is not a form of gambling. Of course it is. In fact, we had just subjected the National Lottery to a major review that resulted in the National Lottery Act 1998, so the Budd review period of 1999 to 2000 was really not the time to put the National Lottery through yet another evaluation, especially as it fell right in the middle of the competition to run the lottery for the next seven years.

Now that the competition is over and the National Lottery is back into a period of stability, we will conduct a review, looking particularly at what we need to do to ensure that there continues to be viable competition for the contract to run it. However, that was not a reason for the Government to hold up the Budd review, which everybody agreed was urgently needed and long overdue. I shall leave Camelot to defend itself against the forceful criticisms made by my noble friend Lord Faulkner of Worcester of its comments on the Budd recommendations.

With regard to society lotteries, raised by my noble friend Lord Corbett of Castle Vale and the noble Lord, Lord Mancroft, the Government agree that the most important proposals are those to do with the maximum size of society lotteries—how many tickets they can sell and what their top prize can be. There are strict limits. For instance, there is a limit of £100,000 on a top prize. We will announce views on the matter soon as part of our overall announcement on gambling reform, but I want to say how much the Government understand the lotteries' frustration with the present limits and their desire to move beyond them. Society lotteries do an enormous amount of good and the Government want to see them prosper.

The right reverend Prelate the Bishop of Wakefield talked about problem gambling. Whether we call it addictive gambling, a compulsion or an obsession, there is no doubt that it is a serious issue, and it can ruin the lives of individuals and their families. As the Budd report says, it is an under-researched phenomenon, both its causation and its cure. A recent study indicated we have a relatively low incidence of problem gambling, at least by comparison with some other countries. Depending on the measure used, the study showed that between five and eight British adults in every thousand are affected. I suppose that we can take some comfort from that.

The gambling review's recommendations about investigating and treating problem gambling are among the most important in the report. They are especially important because, as the report says, some of the recommendations, particularly those on liberalising casinos, could have the effect of increasing the number of people with a gambling problem. The report recommended that the industry set up a voluntary fund to support more research and more resources for treatment. It also suggests that, failing that, there should be a government levy.

On the whole, the gambling industry takes a responsible attitude to the issue. Much work is being done by leading figures in the industry to set up such a fund, and there are pledges totalling around £800.000 for it. I say to the right reverend Prelate that there will be no deregulation without greater social responsibility.

My noble friend Lady Golding mentioned gaming machines, particularly those in pubs. I entirely understand her concerns. We shall certainly take into account her views and those of others on the issue.

The noble Baroness, Lady Anelay of St Johns, talked about deregulation and casinos. The gambling review proposes a significant deregulation of the industry and recommends the removal of many of the restrictions on online gambling. It proposes the abolition of most of the money and other limits that constrain bingo and charity lotteries. It suggests that casinos should be able to have linked gaming machines and unlimited stakes and prizes. As the report acknowledges, there is a danger: small, backstreet casinos were a significant problem after the deregulation of the early 1960s, and it is important that we do not see uncontrolled proliferation or expansion that outstrips the capacity of the regulator to police it properly. The Government agree that it is an important area, and the package of measures proposed by Budd is crucial.

Several other issues were raised but I do not have time to cover them. To the noble Lord, Lord Burnham, I say that the Government are aware of the increasing popularity of person-to-person betting. It is a new form of betting and has been made much easier by advances in technology. Budd recommended that betting exchanges should be licensed and regulated, and the Government are considering that recommendation.

The noble Lord, Lord Wade of Chorlton, made a great plea on behalf of casinos in Blackpool and was supported by other speakers, including the right reverend Prelate the Bishop of Wakefield. I believe that Blackpool will benefit if some of the report's recommendations are implemented.

Our announcement, to be made in a few weeks' time, will make it clear which of the report's 176 recommendations we accept, which we do not and where we consider that further work is needed. It will also set out the Government's overall strategy on the major overhaul of the controls of gambling that everyone accepts is needed.