Examination of witnesses (Questions 287
- 299)
THURSDAY 23 NOVEMBER 2000
LORD BURNS,
MS HARRIET
SPICER and MR
MARK HARRIS
Chairman: Lord Burns, we are grateful
to you and your fellow Commissioner and the Chief Executive for
coming to see us today. We will move straight into the questioning,
and if there are any matters that you wish to intersperse into
your answers, in the way of a kind of opening statement, then,
of course, we will accept that, but we did decide a while ago
to dispense with opening statements. Mrs Golding.
Mrs Golding
287. Good morning. The Gambling Review Body.
The National Lottery is not going to be considered under the Gambling
Review. Why do you think this is; what would be the reasoning
behind it, as it is gambling?
(Lord Burns) The issue of the arrangements both with
regard to the Lottery and other forms of gambling is a matter
for the Department, they are not a matter for the Commission.
I personally have no views on that subject. It is not an issue
that I have thought about. What I notice is that my ex-colleague,
Sir Alan Budd, is conducting that Review.
288. The National Lottery Commission regulates
itself, but it also promotes the amount of money that is brought
into the Lottery; how can it do both things?
(Lord Burns) First of all, that is the task that it
has been given. This is not a task that it has taken on of itself.
This is a set of arrangements which have been set out in legislation,
and these are the arrangements under which we operate. I think,
so far, the experience does not cast any doubt upon the ability
to do both of those tasks. As you know, I am very new to this
job and to the organisation, but in reading the papers and looking
back at the background I am not aware of any serious conflicts
of interest between these two tasks.
289. Would you think that it would be advisable
to have a single regulator so that the concentration of the Lottery
Commission could be on promoting the Lottery, rather than regulation?
(Lord Burns) I do not have a view about that, I am
afraid.
290. You do not have a view at all?
(Lord Burns) I do not. I may say, it is not one of
the things that I have been asked to consider. I have taken on
a job, which has some specific responsibilities. I regard the
question of the overall arrangements for the Lottery, for the
legislation and for other forms of gambling to be a matter for
the Department. This is a matter for Government, and it is also
a matter for Parliament. I have taken on a job, with the Commission
which has some specific responsibilities that we have been given,
and, if I may say, that is very much the focus of my attention.
No doubt, when I have had a few months, a bit longer in this position,
I may reflect on some of those issues that you mentioned, but,
I am sorry, I am not in a position to help you on that question.
291. You do have the job of regulating yourself,
and are you saying you have not even considered it?
(Lord Burns) I have taken on a job which is an existing
job. There are a set of arrangements in place, there is legislation
in place, and that is what I am doing. In all honesty, I have
not considered the question of whether this is the right structure.
It did not seem to me that that was the first of my priorities.
I am quite happy, at some later stage, to reflect on that. But
I am very used to this issue, from my previous responsibilities,
of distinguishing between what is the role of the Department in
setting up the overall framework and what is the role of a particular
organisation in carrying it out. I have spent a lot of my life
in the first of those categories. For the moment, I am doing a
job which involves carrying out the arrangements which have been
set in place by Parliament.
292. Regulating and promoting, jointly?
(Ms Spicer) One fact that might be useful in this
regard is the current position of the UK Lottery as one with the
third largest turnover with the 34th in ranking per capita
spend; and, on that, I would place some degree of reassurance
that the regulatory and the commercial, if I can describe them
like that, duties have gone well together in the past, both with
our predecessors and the Commission. I hope that fact is helpful.
(Lord Burns) Does the Committee have some worries,
in terms of sorts of examples of where there have been conflicts
of interest between these responsibilities?
293. That is up to the Gambling Review Body,
but at least I would have thought that they would have looked
at it; but, obviously, you have no problems?
(Lord Burns) I did not set up the Gambling Review
Body and nor was I involved in it, and, in all honesty, I think
that one has to address those questions to the people who have.
(Ms Spicer) It does inform our every decision, on
the way through all licensing decisions of individual games, strategies,
down to the finest detail. The concerns, and the requests we make
for information of the operator are ones which very much require
player protection and success, in the terms of the Lottery, because
we are overseeing a lottery.
Chairman
294. Just following up the line of questioning
of Mrs Golding, you have been properly precise, Lord Burns, in
saying that you are not responsible for the assignment in the
terms of reference, you have terms of reference under law and
you carry them out. What I would like to ask you is this. Taking
into account the lack of confidence in the original supervisory
structure, under the original Act, and the problems that arose
with an individual, I am not casting any aspersions on that individual,
but with an individual in charge, which led the present Government
to create the Commission, but taking into account the series of
misjudgments which led first to Ms Spicer briefly taking over
the chairmanship and now to your taking over the chairmanship,
are you confident that the remit of the Commission, both in terms
of appointing the licensee and then in terms of supervising the
activities of the licensee, together with the other matters Mrs
Golding has spoken about, are you confident that those are matters
which can be carried out? Is the structure that you have been
asked to chair an impregnably viable structure?
(Lord Burns) There are a number of quite difficult
and complicated issues here, which in time I would like to reflect
on. There is no doubt that the job that the Lottery Commission
has to do for the bulk of the seven years is a very different
job from the job that it has to do in the seventh year, when it
comes to selecting an operator. And one immediately has to ask
oneself the question, is it necessarily the same organisation
that should do both of them? Does it require the same sort of
Commissioner, the same set of relationships, does it require the
same skills, or does it require different skills? This is not
something which I have a view on at this stage. But, inevitably,
there will be some questions asked in this direction, and in time,
when I get more than the odd few moments that I have had since
I started this job, it is something that I will reflect on. But,
again, I should emphasise here, I do believe that this is a matter
for the Department and for Ministers. You raised the question
of should the same people be promoting the Lottery and should
they be doing the regulation. I may also say, should they be the
same people who are actually asking the questions about how they
are set up and their future. It seems to me that it is better
that other people should ask those questions; it is better that
we should do the job that we have been given.
295. It is a huge job though, is it not? If
one looks at other quangos, if you will forgive me for using that
word, they may have large responsibilities, the ITC may have very
large responsibilities, OFTEL may, etc, etc, but the structure
that you have the responsibility of overseeing deals with sums
of money far larger than any other activity in this country, apart
from state-funded structures like the National Health Service
and education, and so on, it is an enormous thing to do. You are
obviously a man of very great experience in the public sector;
do you believe that a quango of this kind is the appropriate way
of dealing with such an enormous enterprise and the disbursement
of very, very large sums of money, though you are not responsible
for the actual disbursement of them?
(Lord Burns) My observation, in the brief period that
I have been at the Commission, is that the job of the ongoing
supervision of the Lottery, of making sure that it is carried
out correctly, on a week-by-week, month-by-month basis, is done
perfectly well within the structure that we have. They are large
sums of money, but it is not that there are lots of complicated
relationships between them. It is simply that the sums of money
themselves are large sums of money going to particular pockets.
But the decisions that are involved in those, I think, are manageable
within the structure, and as far as I can see have been carried
out very well. The bigger issue that I referred to earlier, which
is this one-in-seven-years job of appointing a new operator, is
a rather different type of activity from that. That, clearly,
is a very, very big commercial decision, as we saw both in 1994
and this year. It raises a lot of questions, there is a lot of
attention given to it, and it is appointing a big contract. Obviously,
we had a National Audit Office report from the previous time when
this operator was appointed, and, by and large, it was a good
report. It was complimentary about the process, and it did not
really raise any questions about the way in which it was done.
No doubt, when this particular process is complete, there will
be another National Audit Office report. There will be other occasions
on which we can look back and say how it was handled and did we
reach the right decision? Was it done in the correct way? But,
I think, that I regard as a job for later.
Mr Maxton
296. If Camelot are right in saying they are
the most successful lottery operator in the world, why was their
contract not renewed, why were they not given the licence?
(Lord Burns) There is a clear obligation upon the
Commission to appoint a lottery operator subject to criteria that
are set out in the legislation. Simply because somebody has been
doing a good job does not necessarily mean that somebody else
cannot do a better one.
297. They claim, not a good job, they claim,
the best job?
(Lord Burns) They claim that they are doing the best
job. I am saying, because they have done a good job does not mean
that somebody else cannot do a better job. There was a competition
for the first occasion on which the operator was appointed. I
do not think anybody has really questioned that there should not
have been some kind of competition for the appointment for this
period. It is important then that that job is done well. I should
say, at this stage, Chairman, and I have indicated this to you
in writing, the whole question of undertaking the sensitive task
of evaluating these bids is something that we are engaged in at
the moment. I think it is important that I do not get into very
much detail about this. I have a set of responsibilities which
require that I conduct this in a fair and even-handed way. I cannot
begin to disclose elements of our thinking, as far as the choice
between the present two bidders is concerned. In general terms,
I can answer, and I have sought to answer Mr Maxton's question,
that I think simply because someone has done a good job does not
mean that there should not be a competition the next time round.
I think it is important that this should have been looked at again
in depth.
298. Let me ask you about one of the criteria
then, before moving on. Is the fact that the Government itself
is in favour of a non-profit-making operator for the Lottery something
which influenced the decision that you took?
(Lord Burns) No; that is not influencing our decision.
Our decision is being influenced in terms of the legislation that
has been set out and the criteria that are in the legislation.
And it is bounded by the invitation to tender which was set out
at the beginning of the process. That stated quite clearly that
various kinds of financial structure were possibilities for the
next operator, but I do not regard that as something which it
is for me to take into account.
299. Can I just switch a little. One of the
concerns which was expressed last week, which you may have read,
was from those who represent, if you like, the front line, the
sellers of the Lottery tickets in the shops, that if a new licensee
took over there would be a spill-over period, where they may have
to have two different machines in their shops for a period of
time, and that would cause them very considerable difficulties.
Are you taking that into account?
(Lord Burns) The whole process of designing the competition,
and the whole question of the time period for the hand-over has
been designed to try to smooth that, in the event that there was
a change of operator. In general, it is important, if there is
to be the right competition in this process, that one has to have
the possibility that the operator will change. If there is the
possibility that the operator will change, we have to envisage
the possibility that there will be some extra activities that
have to take place that would not take place if the same operator
were to remain in place. And I think one has to accept that at
the outset, if you are having a competition, and if you are trying
to use the process of competition to get the best returns for
good causes. And so I think one has to accept that that is part
of the process. Because if you were to rule that out then it means
you cannot have a competition. If you cannot have a competition,
it seems to me that that is not in the best interests of good
causes. Obviously, one has to take into account all of the risks
surrounding the outcomes, in terms of looking at both bidders.
But I would be very reluctant to say that one has to draw the
line and say there should be no inconvenience as a result of change.
It seems to me that some inconvenience as a result of change is
inevitable in a process that involves competition.
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