House of Commons Hansard Debates for 10 Feb 1995

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I have just received a document containing details of the foundation's grants for the period 1 October to 31 December 1994. It is a weighty document. The grants are spread throughout the length and breadth of the country. I have also been given a list of the recipients in Lancashire for last year. I note that groups in my constituency which have received funds from the foundation include the Wharrey sports club, Salesbury bowling club, the Longridge News playtime and the Ribchester festival, which is an excellent music festival in one of my smaller villages. It received £10,000. In 1993, the West Bradford village hall received £60,000 from the foundation. If it had not received that money, the facility which people enjoy in that area would not have gone ahead. We should be extremely careful about any action which endangers those funds. The foundation gave funds to more than 11,000 organisations nationally.

Mr. David Alton (Liverpool, Mossley Hill): I emphasise what the hon. Gentleman has said and I know that his view is shared by all parties in the House and throughout the country. Many people appreciate the contributions that the Foundation for Sport and the Arts has made to vital components of community life in our great cities and villages. Does the hon. Gentleman agree that underlying his remarks, with which I fully concur, is the need to treat the pools industry and the national lottery on an even basis, on all fours? Both should be given precisely the same opportunities not just to advertise but in relation to matters such as roll-over provisions: either they should both be allowed to do it, or neither should be allowed to do it.

Mr. Evans: That is indeed the only way to assist the pools to compete fairly into the future.

Since the introduction of the national lottery, income to the Foundation for Sport and the Arts and the Football Trust has fallen dramatically by some 17 per cent. The Football Trust's income has gone down even more because spot-the-ball competitions have been hit even more harshly by the national lottery.

Mr. Peter Bottomley (Eltham): As my hon. Friend is a newsagent, he may have noticed that one newspaper decided to drop its spot-the-ball competition when it discovered that it had put the ball in the picture and everyone was winning.

Mr. Evans: I am sure that some readers still submitted entries with crosses elsewhere.

The Football Trust's publication shows the good work that it does in relation to football fields throughout the country. I notice especially that it gave £500,000 to Blackburn Rovers. Irrespective of which football club hon. Members support, I am sure that we all wish that team well in gaining the premier league championship.

Mr. George Howarth (Knowsley, North): I am not sure that I concur with the hon. Gentleman's last remark, but I am grateful to him for giving way. Will he confirm that the income to the pools industry has been declining, and that the contribution to the Foundation for Sport and the Arts has therefore also been declining? Will he confirm that as a result of the decline in their revenue

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some of the smaller pools companies are actively considering withdrawing from what is a voluntary arrangement?

Mr. Evans: I understand that that is the case. Vernons is seriously considering the possibility of withdrawing voluntary contributions, which would be an great shame as they have done a lot of good. I congratulate Sir Tim Rice on the hard work that he has put in as chairman of the Foundation for Sport and the Arts.

The hon. Member for Mossley Hill mentioned some of the problems and inequalities faced by the pools companies in relation to the national lottery. I was trying to get through my speech without mentioning the words "level playing field", but it is just too difficult. I congratulate the Home Office on allowing the pools companies, rather belatedly, to advertise on radio and television and I urge the Independent Television Commission and Radio Authority to get a move on so that the pools companies can advertise as soon as possible. Broadcasting is the most powerful medium to sell any product and the sooner it can be done, the better.

The Bingo Association of Great Britain has also contacted me. It wants the same sort of ability to advertise because its turnover has suffered since the introduction of the national lottery. The take-out from the pools companies is part of the problem. The pools companies pay 37.5 per cent. in pools betting duty, 2.5 per cent. to the Football Trust, and 2.5 per cent. to the Foundation for Sport and the Arts. In addition, 5p in every £1.05 is taken in stake money. We should compare that with the fact that the national lottery pays 12 per cent. in betting duty, and 25 to 28 per cent. to the "good causes". The disparity of 80 per cent. is vital, especially to smaller pools companies. That matter must be dealt with.

The roll-over is another contentious issue for the pools companies. It is a complex issue. Those companies must wait for the national lottery to roll over before they can start to trigger their own roll-over. They have only a limited time to use the roll-over, after which it is lost and they have to wait for the national lottery to roll over again. I hope that we can consider the roll-over issue again. We should consider either freeing up the ability of the pools companies to roll over far more freely or stopping roll-over altogether. Many hon. Members have made representations about the enormous prizes generated by the roll-over and those who considered the National Lottery etc. Act 1993 in Standing Committee never thought that prizes would ever get up to £18 million, so perhaps there is a case for examining that matter again.

The other point concerns retail outlets. Pools coupons placed in retail outlets are restricted to weekend football matches. They should be allowed to include some mid-week sporting occasions, which pools coupon collectors are able to have on their coupons. To have a division between pools collectors coupons and shop coupons seems strange. I hope that we will consider that matter.

National lottery customers can pick up their small winnings immediately from the retail outlet where they bought their ticket. I know that the pools companies would like the opportunity to allow small winnings to be paid through the retail outlet where a coupon has been picked up. I hope that we shall be able to consider that, too.

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The final issue of concern is the imbalance between the lottery and the pools companies in relation to the subsidy that Camelot can add to the jackpot to make the prize more appetising. The problem for the pools companies is that if they decided to add a subsidy it would be taxed at a prohibitive 37.5 per cent.

I am not saying that the pools companies should not be doing more to help themselves. They should certainly be using new technology far more. The problem for some of the pools coupon collectors is that they have to get coupons in by Thursday when the matches are on Saturday. I know from experience that, with the national lottery, Saturday night fever occurs on Saturday night and people come rushing in to buy tickets. By far the vast bulk of the money is taken on a Saturday night. If the pools companies were able to adapt more to new technology, they could increase the amount of money that is coming into the pools net.

There must be seen to be free and fair competition--the competition principle is extremely important. I always thought that competition would be introduced into the arena where the pools had a near monopoly. Now that we have a national lottery, we do not want to see the pools wither on the vine and the national lottery to be left with a monopoly.

We know that there will be a problem with mid-week games and that the national lottery expects to take vast sums of money. That will further deplete people's funds--they cannot spend the same pound twice. People are already taking their money from the pools and putting it into the national lottery, so something will have to be done about the extra competition from the mid-week games. We must consider the equalisation of out-take between the pools and the lottery. We need to remove the restrictions on the pools roll-over. Section 56 of the National Lottery etc. Act 1993 should be amended to permit the collection of small winnings from shop premises. Also, Camelot should be prevented from manipulating its prize money or the pools should be allowed to do the same. The subject is an important one. Over the past few days, knowing that this debate was to be held, many hon. Members have spoken to me on the subject. They will be keenly awaiting what my hon. Friend the Minister has to say to show that we care about the future of the pools industry in this country.

2.56 pm

The Parliamentary Under-Secretary of State for the Home Department (Mr. Nicholas Baker): I have listened with great interest to the issues raised by my hon. Friend the Member for Ribble Valley (Mr. Evans) on the football pools and the national lottery. By virtue of his retail experience, my hon. Friend is uniquely qualified to introduce the subject. I know that today's well-attended debate is of importance to a number of hon. Members. My right hon. and learned Friend the Chancellor of the Exchequer will be interested in what has been said in the debate.

We share the regret over the job cuts in Merseyside. No one can be complacent at the prospect of 95 jobs lost and others in the pools industry being at risk. However, although much has been said about the national lottery

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and the dip in the pools' fortunes, we need to be cautious in drawing firm conclusions about the long-term impact of the national lottery on any aspect of consumer spending.

Another consideration is that, although the football pools' turnover might have been affected in the first three months--my hon. Friend produced evidence to show that it has--the pools have still to take advantage of the new marketing opportunities afforded to them. The House had the opportunity to discuss many of the issues raised during the passage of the National Lottery etc. Bill, as a result of which important changes were made.

The Government have made significant changes to the regime under which the pools operate, giving them greater freedom to promote their business. The age limit has been reduced from 18 to 16. In addition, for the first time, roll-over of prizes has been allowed. We have removed a major impediment to the promotion of the football pools in allowing the distribution of football pools coupons through shops and other premises. The pools companies are working hard to exploit the opportunities afforded to them by those new outlets. They have been enterprising in using public houses as an additional outlet. There is nothing in the law to prevent that; there are no restrictions on the sort of premises that may be used.

I have an announcement which I hope will be welcomed by my hon. Friend. It relates to the issue of pools coupons in betting shops. We have considered the representations from the pools promoters and bookmakers to allow betting shops to pay out pools winnings. That would be in line with the bookmakers' normal business activities, so we propose to introduce an order to effect that change. We shall consult on the proposal in the near future and, at the same time, detail our proposals for fruit machines in betting shops. The Government have allowed sponsorship of television and radio programmes to give the pools access to the media, and the pools companies are already taking advantage of that freedom. For example, Vernons is sponsoring the holiday programme "Wish You Were Here" and we have gone further to relax the ban on broadcast advertising. Those are significant relaxations. My hon. Friend has welcomed the Government's decision to lift the ban on broadcast advertising by the football pools, which came about as a direct result of the Government's desire to remove unnecessary restrictions and regulations. The advertising rules were under review as part of the Government's wider deregulation initiative.

Unlike other forms of gambling, football pools are allowed free access to non-broadcast advertising and the Government think it right that that should be extended to all the media. I am pleased that the Independent Television Commission and the Radio Authority have already written to canvass views on revised broadcasting codes, which would permit the football pools to advertise on television and radio.

Despite all that, my hon. Friend is a fervent supporter of the pools and would like the Government to go even further to help the industry, which he says is unfairly treated in comparison to the national lottery. It is important to make clear the Government's position. We do not accept that the football pools are in the same position as the lottery. The national lottery has been set up under separate legislation and a tight regulatory regime. The Director General of the National Lottery has a statutory duty to protect the interests of all participants

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and to ensure that the lottery is run with all due propriety. The football pools are a commercial gambling operation, which are run under entirely separate legislative and regulatory arrangements. Although there are similarities in the way in which the two games are played--both are low-stake, long-odds games for large weekly prizes at the soft end of the gambling spectrum--the lottery is determined purely by chance, whereas the football pools are a form of pool betting, in which, like betting on horses and greyhounds, there is scope for the exercise of skill in forecasting results. That is a crucial difference, since pools companies may operate lawfully only because they are not lotteries.

My hon. Friend's main theme is the difference in tax regimes between the lottery and the pools.

Mr. George Howarth: I welcome the announcement enabling the pools companies to pay out in betting shops, which will go some way towards balancing opportunities with those of the lottery. However, the argument that the pools is a game of skill as opposed to a game of chance does not hold any water whatever. If anybody could win the football pools by skill, he or she would have to have terrific insight into events several days hence.

Mr. Baker: I am not prepared to offer a judgment on that, but I hear what the hon. Gentleman says. He is no doubt experienced. My hon. Friend's main theme is the difference in tax regimes between the two operations. Taxation of gambling is, of course, a matter for the Chancellor to consider. The rates of duty applied to different forms of gambling are varied and reflect a wide range of policy considerations. National lottery duty was set at 12 per cent. with the aim of being fiscally neutral--it was simply designed to replace the revenue which might otherwise have been lost when people bought lottery tickets instead of other taxable goods.

Pools betting duty is set somewhat higher at 37.5 per cent. However, there is a fundamental difference between the lottery and the pools. The pools companies are run primarily for commercial gain, while the national lottery primarily raises money for good causes. Of lottery turnover, 28 per cent. goes to good causes such as the arts, sport, charities, heritage and projects to celebrate the new millennium. Although pools companies also make generous contributions to sport and the arts, to which I pay tribute, they form a much lower percentage of their turnover and are not the main reason for their existence. The Government welcome and recognise the pool companies' generosity.

In his 1990 Budget, my right hon. Friend the Prime Minister, as Chancellor of the Exchequer, introduced a 2.5 per cent. reduction in pool betting duty, on condition that the revenue forgone by the Exchequer was given to the Football Trust. The trust uses that money to improve the safety and comfort of fans at football grounds and to implement the recommendations of the Taylor report following the Hillsborough tragedy.

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Football grounds have been transformed in recent years from old, dangerous and uncomfortable grounds, often with inadequate facilities and uncovered terraces, to a position where our stadiums are among the finest in the world. Altogether, some £387 million has been spent so far on major ground improvement schemes, of which £121 million has been contributed by the Football Trust. The trust also grant aids essential ground and safety improvements with funding from the pools companies' own "spot the ball" competitions. All told, that represents a major investment in the future of football in this country.

In his 1991 Budget, my right hon. Friend the Member for Kingston upon Thames (Mr. Lamont) introduced a further 2.5 per cent. reduction to help fund the Foundation for Sport and the Arts and to supplement the pools companies' own contributions. Sport and the arts have benefited considerably from grants provided by the foundation. In the three years since it was established, the foundation has already made awards of more than £200 million for almost 12,000 projects. The foundation is now considering extending its funding of arts and sports revenue costs. That is welcome news.

The pools companies deserve much credit for their support for the foundation. Their contribution to sport and the arts is a clear example of how the private sector can help to enhance the fabric of our communities. My right hon. and learned Friend the Chancellor of the Exchequer has reaffirmed the Government's commitment to retaining both these reductions. We certainly hope that those arrangements continue.

I should make it clear, however, that the difference between the total contributions to tax and good causes made by the pools companies and the lottery is actually very slight. I welcome the opportunity to set on the record the true comparison that should be made.

First, 5p of the payment made by the pools companies is, in fact, a donation from the pools players in addition to their stakes, so that for every £1.05 played by the player, 5p is paid to the Foundation for Sport and the Arts. Removing that element takes the pools companies' total contribution down to just over 40.4 per cent. Of that amount, 5 per cent. is paid to the FSA and the Football Trust in return for a reduction in the pool betting duty--it is effectively a donation by the Treasury, not the pools companies.

Secondly, the percentage of revenue which Camelot, the lottery operator, will contribute to the good causes can only be estimated at present, but it is likely to be about 27 or 28 per cent. of total revenue over the period of the licence. That would give a comparison of 39 to 40 per cent. to tax and good causes from the lottery and 40.4 per cent. from the pools, after adjusting the equation as I have just shown.

The motion having been made after half-past Two o'clock, and the debate having continued for half an hour, Mr. Deputy Speaker-- adjourned the House without Question put, pursuant to the Standing Order.

Adjourned accordingly at eight minutes past Three o'clock.

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