Select Committee on Culture, Media and Sport First Report



153. Our principal conclusions and recommendations are as follows:

(i)We welcome the National Debt Office's moves to improve the returns to the Fund within the restrictions of its directions. However, Lottery proceeds are held in trust and it would not be appropriate for them to be placed in high-risk investments in an attempt further to improve the returns for good causes (paragraph 22).
(ii)We recommend that the Government commission and publish an independent scrutiny of the tax income lost as a result of the Lottery to ensure that tax neutrality is a valid concept (paragraph 23).
(iii)We consider the sale of Lottery tickets through retailers to have been a success. We welcome the much needed additional income to independent retailers provided by Lottery sales (paragraph 24).
(iv)We expect the retailers to continue to provide the main distribution method for Lottery sales during the next licence period. We expect the Commission to ensure that the operator maintains the current level of geographical coverage and that Camelot fulfils its commitment to maintain terminals that are not necessarily profitable as a community service (paragraph 30).
(v)We see no justification for the view that the Lottery is a tax, whether on the poor or anyone else. The purchase of a National Lottery ticket is a wholly voluntary decision, which players make to take part in the dream of winning a large amount of money (paragraph 33).
(vi)We agree with the National Heritage Committee's view that the licence-fee payer should not subsidise promotion of the National Lottery. It is not essential that the BBC is the broadcaster that covers the National Lottery draws. We note that, as the operator introduces new games, the broadcasting of multiple Lottery draws will probably alter the nature of the television coverage (paragraph 36).
(vii)The activities of numerous participants in the National Lottery have informed the public's opinion of that institution. There is no single view about the National Lottery as a whole that can be attributed to the British public. It is therefore important that all of those involved in the National Lottery's operation, regulation and distribution of proceeds conduct and promote themselves to the benefit of the Lottery (paragraph 38).
(viii)The National Lottery Commission and operator must continue to give priority to activities designed to reduce the incidence of under-age play. We do not consider it appropriate to raise the minimum age to play the Lottery (paragraph 41).
(ix)We recommend that the National Lottery Commission conduct its own survey into the impact on charities, including differential impact, of the National Lottery (paragraph 43).
(x)We welcome the efforts made by the pools industry to recover from the impact of the National Lottery on that industry. We recommend that the Government remove the restrictions on the pools industry where these restrictions hamper the ability of the pools to compete with the National Lottery (paragraph 47).
(xi)We recommend that the Government consider a relaxation of the prohibitions on society lotteries, including those on rollovers and the monetary limits on stakes and prizes (paragraph 48).
(xii)This Committee recognises the positive aspects of Bingo clubs. We recommend that the Government assist the Bingo industry by, at the very least, removing the prohibition on rollovers for the National Bingo Game (paragraph 49).
(xiii)We repeat the National Heritage Committee's recommendation that betting on the outcome of the Lottery should be permitted (paragraph 50).
(xiv)It is interesting to note the contrast between the Secretary of State's praise of the National Lottery Commission's "robust" decision on 23 August and the lack of equivalent praise for the decision on 19 December (paragraph 59).
(xv)Whatever the quality of the legal advice proffered to the National Lottery Commission, its decision to exclude Camelot from the process was the result of a fundamental error in failing to recognise that the relationship between the operator and its principal supplier could satisfactorily be altered (paragraph 66).
(xvi)We do not consider the Commission to have had the relevant skills or expertise prior to the appointment of Lord Burns. The Government was fortunate that someone of his quality was available. In 1999, this Committee concluded that the process by which the Chairman of the Commission is appointed was unsatisfactory. It has transpired that the failure of the Secretary of State to appoint someone to the Commission with the qualities required of the Chairman, prior to Lord Burns, was instrumental in the problems which arose during the selection process (paragraph 69).
(xvii)The Commission's decision was not influenced by the fact that one bidder was not-for-profit, but was based on identifying what the Commission considered to be an unacceptable level of risk associated with the bid. We recommend that the Government consider the financial and cost implications of a not-for-profit operator, and if it concludes, as it has previously, that the National Lottery could have such an operator, then the Government should publish in time for the next competition its conclusions on how such an operating structure would work (paragraph 80).
(xviii)The £15 billion for good causes that both bidders believed they could deliver would require an almost 50 per cent increase in Lottery sales. Such an increase would require either an increase in the average player's weekly expenditure on the Lottery, or an even greater proportion of the population being prepared to play regularly. The first requirement would be unwelcome, the second unlikely. This Committee therefore shares the Commission's scepticism about the levels of sales (paragraph 95).
(xix)The National Lottery has more to lose than to gain by indulging in the risks that innovation brings. If the price of reliability is less innovation in the Lottery's operation, it is a price worth paying. Camelot has a proven record of running the Lottery. That reliability is paramount because the implication of failure is the huge loss of revenue for the good causes (paragraph 98).
(xx)Future development of the Lottery will happen in a changing shopping environment. There is a greater reliance on electronic communication, with fewer face-to-face transactions. Consumers are demanding more immediate and self-service retailing (paragraph 103).
(xxi)We are concerned about the possible introduction of harder gambling into the National Lottery and expect the National Lottery Commission to ensure that the imperative to maintain Lottery sales does not infringe its primary task of ensuring the protection of players (paragraph 105).
(xxii)We agree with Lord Burns that the Commission's functions of regulation and selection may not necessarily be best performed by the same people. We recommend that the review announced by the Secretary of State considers how the evaluation process for the licence beginning in 2008 can be strengthened. This may involve broader involvement in selection than is necessary for regulation of operational issues (paragraph 109).
(xxiii)We consider it very likely that, unless further legislative action is taken, the National Lottery will become a perpetual private monopoly for the licensee. If this situation is to be avoided, it is likely that there will need to be a move away from a single licence towards separate licensing processes for different parts of the Lottery operation (paragraph 115).
(xxiv)We recommend that the Secretary of State require the National Lottery Commission to meet in public unless it is satisfied that, in the case of any particular issue under consideration, the interests of public disclosure are outweighed by the need for commercial confidentiality. With such a need to weigh these factors in the balance, we would not expect all meetings concerning commercial activities to be held in private. We further recommend that regular public meetings take place involving the operator and its suppliers at which they are cross-examined by the Commission (paragraph 117).
(xxv)We accept that there is a distinction between the National Lottery and other forms of gambling. The National Lottery was established by Parliament specifically to raise money for good causes. Other forms of gambling are commercial activities and any contributions they make to charities, although welcome, are incidental to their primary purpose (paragraph 123).
(xxvi)However, we are disappointed that the Government saw fit to exclude the question of the National Lottery's regulation from the current Gaming Review Body. This issue should therefore be considered by the review of the selection process announced by the Secretary of State (paragraph 124).
(xxvii)We support the need for an early review of the process for the selection of the operator of the National Lottery and the role of the Commission in that process. Such a review should be able to recommend changes to the legislation controlling the process and should report in time for any recommendations to be fully considered by this Committee's successors and for any legislative changes to be in place well before the selection of the operator for the licence beginning in 2008 (paragraph 126).
(xxviii)The review should also take account of the impact of changes on the current operator and consider, if necessary, what remedial action might be taken for the staff of the operator. Camelot should be given sufficient notice of changes that will affect the operation, the company or its employees (paragraph 127).
(xxix)We would accept that the Lottery can fund projects that are in those sectors usually associated with funding by the Exchequer, such as health and education. However, we treat with caution the Chief Secretary's assertion that some things should not be excluded from Lottery funding because they are too important. There is a fundamental unpredictability about the level of income of a lottery, and that factor supports the use of Lottery funds for time-limited projects that improve the quality of life, but are not so indispensable to the public that they receive funding from taxation (paragraph 134).
(xxx)The distribution bodies, operator and regulator should consider how to improve the public's understanding of Lottery distribution in general and of Lottery-funded projects (paragraph 137).
(xxxi)While the additionality principle can be of use in preventing the Treasury from substituting Lottery income for mainstream Government spending, nevertheless we believe that at some stage the rigidity of the additionality principle should be a matter for discussion (paragraph 138).
(xxxii)This Committee has considered aspects of the work of the original Lottery distributing bodies in previous Reports and we do not intend to revisit those issues here. We also do not propose to consider the vagaries of the distribution process. We note that, although improvements have been made, many concerns remain (paragraph 139).
(xxxiii)There is a misunderstanding about what the New Opportunities Fund is for and who can apply to it (paragraph 141).
(xxxiv)We recommend that the New Opportunities Fund take actions to increase awareness of its role, particularly among those that might benefit from its support (paragraph 141).
(xxxv)We cannot respond to individual requests for more funding of particular sectors, but it is clear that the Lottery is an important source of funding for those sectors and there is a continuing need for Lottery funding in the sectors it is already serving (paragraph 147).
(xxxvi)We do not propose any changes to existing good causes, either in their composition or their funding. However, the Government must allow the good causes to evolve and consider changes in the future. Furthermore we recommend that the emphasis on distribution of Lottery proceeds by the good causes should be shifted from major national projects to smaller projects which will have a more beneficial impact on local communities (paragraph 150).
(xxxvii)Any proposals for change should allow plenty of notice of changes to sectors and distribution bodies (paragraph 151).
(xxxviii)We expect the Government, in considering the good causes, to adhere to the principles under which the Lottery was established and ensure that it continues to enhance the quality of life (paragraph 152).

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