Examination of Witnesses (Questions 160
- 171)
TUESDAY 20 JANUARY 2004
THE PEOPLE'S
LOTTERY
Q160 Michael Fabricant: Do you think
there is any merit, if you like, in the argument that, for the
Olympic Games at least, that Lottery should be run by a separate
company?
Mr Burridge: In a sense it is
a question of what are the advantages of a separate company running
it. If a separate company has a better game and a better retail
structure then you could say "Yes", but then they are
not effectively running it because they are using it through Camelot's
infrastructure. One of the issues about the Lottery since it started
is that every week we have a debate on how to spend the money
and only every seven years do we have a debate on how to raise
it and, self-evidently, what Camelot, or any operator, needs to
do is come up with better games which capture more the public's
imagination. If someone can do that for the Olympic Games then
that is fine under the Section 6 licence, and could go ahead under
the current constitution.
Q161 Michael Fabricant: You have
been a good advocate for the status quo so I simply ask you one
final question: is there anything that Camelot should be doing
that they are not doing now?
Mr Burridge: I have not intended
to be an advocate for the status quo because I do not think the
status quo is right. I looked at the status quo versus the proposed
alternative. Michael Grade was saying that South Africa had gone
to Camelot's advantage but actually it was an unfortunate choice
because, if you look into it, a decision was made to give it to
someone else and then there were happenings behind the scenes
and the decision was reversed outside the South African Parliament,
so it was not necessarily a triumph of logic. Almost all lotteries
in the world should be run with all profits going to good causes,
and I think there should be a National Lottery Commissioner as
distinct from the National Lottery Commission who would be the
chief executive, effectively, appointing the various people to
run it, and that everyone including the operator is chosen on
a regular basis. I do not know if you remember that, before the
last licence award, there was a glitch with some of the software
which meant that a number of players were not being paid their
full amount, and elements within Camelot decided to cover that
up. One of the problems with the current system is that the National
Lottery Commission has effectively no power to deal with that;
they can either say "You are fit" or "You are not
fit", and if they say that you are not fit then the whole
Lottery closes down and good causes will be the primary loser.
Q162 Chairman: On the other hand,
when we had a National Lottery commissioner it was believed that
he had too much power, and it was alleged that he misused it.
Mr Burridge: Not a commissioner
in the sense that he is a regulator. Effectively the State should
appoint people to run the National Lottery who are replaceable,
accountable, where the State should own the various infrastructure
and pay the costs, and then you would have a system where people
could apply to be operators, apply to be advertising, security
printers or whatever, and that would be changeable and you would
get competition on that basis because people would be competing
on the basis of their specialist skills.
Q163 Chairman: Do you think then,
as I certainly do, that the government ought to revert to the
commitment in the 1997 Labour Party manifesto, namely that the
Lottery would be a not-for-profit system in the public sector?
Mr Burridge: I do.
Chairman: I cannot ask for a better answer!
Q164 Mr Flook: From your perspective
can you give reasons why you think the government is therefore
pursuing the route it is, as announced last July?
Mr Burridge: There are two reasons.
One is they realise there are unlikely to be any competitive bids
next time round unless something changes—
Q165 Mr Flook: So just to develop
that, if that were the case and there were no competitive bids—
Mr Burridge: That Camelot would
effectively have the licence in perpetuity, which is a "bad
thing" and therefore one needs to inject competition. I am
not sure that they have, in the way that this has been drafted,
a realistic sense of what competition within this market place
is. Competition is very effective at providing people with alternatives
with which they can compete and drive the price down or whatever.
If anything, with the National Lottery, there is a vested interest
in driving the price up because the amount per play will gradually
be eroded over time. It is an issue all lotteries face rather
than a plea for huge increases in prices, but what competition
should do is provide better services, better marketing, better
games, better infrastructure, better retailer training and so
on, but those are not best achieved by just creating more competition
to run the various bits. You could argue that if we had a general
election every six months that would provide an increase in competition
but not necessarily an increase in the effectiveness of government,
and that seems to be the model that these proposals are heading
towards in that we are creating competition but not anything more
effective as an operating mechanism.
Q166 Mr Flook: The subject of what
goes on in Europe has come up several times, and Camelot also
came up with their operating costs of 4.5% against a European
average of 14%, and most of that European average, particularly
in Belgium, presumably comes from State and government run lotteries.
Mr Burridge: Yes.
Q167 Mr Flook: So just to go back,
I know the People's Lottery had its own way of answering this
but, to take the Chairman's view and the 1997 Labour manifesto
view, it would effectively increase the cost—that is the
evidence we have from elsewhere in Europe—and therefore
deliver less to good causes?
Mr Burridge: Yes, but what you
are not doing is comparing eggs with eggs. Most of the Lottery
jurisdictions around pretty much everywhere in the world are much
smaller than in the United Kingdom and over a much greater land
mass, so if we were not the best we would be doing worse than
we are. We are a natural Lottery jurisdiction with over 55 million
adults in a relatively small geographical area with a predilection
for gaming that previously existed, so it was always going to
be the ideal Lottery jurisdiction. Richard Branson's first bid,
called the United Kingdom lottery foundation, correctly identified
through all the modelling we did that it was going to be much
more and Oflot, as I think they were then, said we were over-ambitious,
but we were much nearer the results that Camelot came up with,
so it is wrong to assume that comparative efficiency versus, say,
Belgium and maximising returns for good causes in the United Kingdom
is necessarily the same.
Q168 Chairman: We have already seen
that one myth, though still propagated, has been exploded—namely
additionality—and certainly, quite apart from other considerations,
the Olympic Games has ended that for good. What about the revenue
neutrality rule? Do you think that that has been demonstrated
to be observed in any way whatsoever?
Mr Burridge: Not particularly.
Q169 Chairman: Do you think it is
a good rule? Do you think that the advantages that were conferred
in the original legislation on the Lottery ought still to be maintained?
It was one thing to protect the Lottery when it was first launched
because nobody knew how it was going to go and the then government,
justified in my view when launching a Lottery, had wanted to make
sure it had the best possible start, but now that it is established
and it is a future in our lives, is there any justification for
going on and giving it the exceptional protection, advantages
and privileges of which it takes advantage?
Mr Burridge: In my view, there
are two aspects to that: firstly, what leads to the efficiency
claim is that it is a monopoly and, therefore, if you want to
go in for this sort of thing you have to do it via the National
Lottery, and added to that is the size of prizes, and therefore
the critical mass that you can create is a fantastically important
motivator, and you can see that with the jackpots; but, secondly,
the danger of it is that it is not sufficiently compelling to
Camelot to examine themselves through anything other than rose-tinted
glasses. In my view, and this is a personal view, they have not
marketed well, their games have been overcomplicated and not particularly
well thought through, they have managed to lose the winnability
and the fun elements out of Lottery which are compelling, and
the reason they have allowed that to happen is they have not internally
established the size of the problem they are facing, and part
of their cosiness would be down to the fact that there is a degree
of protection within which they operate.
Q170 Chairman: Obviously you have
what I might call technical criticisms of Camelot which one takes
seriously but, on the wider view, there is nothing to criticise
Camelot for, is there? They are doing what they are entitled to
do. They are conducting a Lottery in which, and I do not criticise
all of this, their prime objective is not to provide money for
good causes: but to get as many people as possible to play the
Lottery so they can make as much money as possible, and as long
as you have a system in which the Lottery is, in my view anomalously,
run by a private sector company, it is their perfect right to
conduct themselves in this way.
Mr Burridge: Absolutely. Nevertheless
I think, even allowing for that, they still could have done better
and therefore made themselves more money.
Q171 Chairman: Thank you very much
indeed, Mr Burridge. It is nice to see you, and thank you very
much for the evidence you have given. The fact that I happen to
agree with a very great deal of it in no way undermines our pleasure
in having you!
Mr Burridge: Thank you very much.
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