National Lottery - Question for Short Debate

– in the House of Lords at 6:27 pm on 16th July 2018.

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Photo of The Earl of Clancarty The Earl of Clancarty Crossbench 6:27 pm, 16th July 2018

To ask Her Majesty’s Government what steps they are taking to maximise the income from the National Lottery and its use for the arts and good causes.

Photo of The Earl of Clancarty The Earl of Clancarty Crossbench

My Lords, I was going to start this debate by saying that we are a select group this evening, but I understand that the gap is filling up, which is very welcome. I look forward to hearing everyone’s contributions and, of course, the response from the Minister.

The National Lottery, on its inception by John Major’s Government in 1994, became very quickly a popular national institution and to date has raised over £38 billion for good causes involving 535,000 projects—an achievement, and a continuing achievement, that the British public should be extremely proud of.

At the outset I should like to mention a couple of extraordinary statistics relating to film production which have caught my eye. To date, 14 Oscar winners and 42 BAFTA winners have been significantly funded by the National Lottery, and last year a lottery-funded film, Ken Loach’s “I, Daniel Blake”, won the top prize at Cannes, the Palme d’Or. Nor was this the first lottery-funded film to win a prize at Cannes. These achievements alone illustrate how much the National Lottery has become a truly important feature of our cultural landscape, without even touching on the enormous significance of the lottery for so many areas of the arts, heritage, sport and community projects, about which I am sure we will hear more during the course of this debate.

I believe that this is the right time to have a debate about how we ensure the continuing success of the National Lottery—in other words, to take a health check. I tabled this debate in February, hearing that, after many years of continuing growth, returns from the National Lottery in 2016-17 slipped by 15%. So the question is: is this a temporary blip—and one hopes that it is—or are there other longer term concerns? Whether or not related to that fall, which has this year been slightly reversed, there are key concerns that need addressing, which I will come to. The decline in income led directly to a Public Accounts Committee report with recommendations that was published on 28 March. I understand that in a matter of months the process of awarding the new licence will begin.

Next year will be the 25th anniversary of the National Lottery, so my first question to the Minister is: what plans are there for that celebration? I hope there will be plans for a big celebration including television documentaries on the lottery’s achievements in all the different sectors, with full involvement from all the media, including the BBC which played host to the National Lottery for so many years. This week also happens to be National Lottery in Parliament Week and I hope that, among other events, your Lordships will visit what will be a hugely informative and entertaining display in the Upper Waiting Hall, as well as the reception tomorrow.

There are challenges ahead. A key concern is the threat posed by other potential rivals, in particular the umbrella society lotteries. The arguments for complementarity and competition are separate. If we believe in the prime importance of the National Lottery, and there are many good reasons why we should, it is important that there is clear blue water between the National Lottery and other lotteries, yet that gap is being increasingly narrowed. The Government’s current consultation on lottery reform ends on 7 September this year, and I hope that relevant comments made in this debate will be understood to contribute to that consultation. The Government’s preferred option, which I disagree with, is to increase quite substantially the sales and prize limits from limits which were previously set to try to ensure that the National Lottery was not affected.

What the Government ignore in the consultation is the impact on the National Lottery of an increasingly closely perceived association within the marketplace between the National Lottery and the umbrella society lotteries that, to a certain extent, already exist. As Camelot’s excellent briefing tells us, in 2010 the National Lottery represented 85% of lottery advertising, yet, worryingly, by 2017 this had been reduced to 45%. Camelot says that it cannot be correct that these industrial-scale umbrella society lotteries with combined sales of around £370 million are spending more on advertising than the National Lottery with sales of £6.952 billion. Camelot argues that an expenses cap for these lotteries needs to be reintroduced and it recommends that it is set at 15%, the limit that existed before the Gambling Act 2005.

When I walk into my local Tesco Express, I see, away from the main counter, side-by-side the National Lottery stand holding the forms for selecting your own draw numbers and the Health Lottery stand. Not only does the Health Lottery stand mimic the style of the National Lottery, it has emblazoned on it the advertising, “Only £1. That’s half the price of Lotto”, the clearest evidence that the Health Lottery sets itself up as an aggressive rival to the National Lottery. This is wholly unacceptable. It would be fair to say that businessman Richard Desmond has an understanding of how this type of competition works. One only has to think of how he launched OK! magazine as a rival to the established Hello! magazine using a very similar visual design to clever effect.

The effect of this and other advertising, such as the presence the People’s Postcode Lottery now has in television advertising, is surely inevitably not only to risk money being taken away from the National Lottery but to muddy the waters between them. Although it is good that the main television promotion of the National Lottery has returned to Saturday night TV at prime time, it is on ITV within an ad break, which means that it is disallowed as an advertised programme. At the very least there is the danger that the public start to see the umbrella society lotteries as equivalent to the National Lottery. There are some, I am sure, who will even perceive the Lotto and Health Lottery stands I have referred to as being part of the same operation when we should be doing everything possible to maintain the National Lottery’s distinctiveness.

This brings me to a second, related concern. It is one of the recommendations of the PAC report that,

“Camelot should work with the Lottery Distributors to better publicise the link between good causes and the Lottery and communicate the contribution to good causes … at the point of sale”.

I strongly agree. One of the things that really needs to be done is to reconnect the public with the original reasons for setting up the lottery in the first place, and of course the 25th anniversary next year is a perfect opportunity to do so. Although many now play and check the results online, 75% of the public still play through retail outlets. Camelot has rightly increased participating retailers from 28,000 in 2011 to 46,000 today, and has plans to extend into other supermarket brands. At present the public get little idea of the good causes currently represented at these sales points other than, for instance, being directed to the National Lottery website among other text on the back of scratchcards.

Certainly much more can be done to clearly and boldly publicise individual projects, and in particular projects that are local to the retail outlets. Just as an example, I am sure that shoppers at my local supermarket would love to know that their contributions, and indeed local winners’ contributions, have been used to fund the wonderful Mary Rose Museum in Portsmouth, where it is natural for me to take friends and family who visit me in Hampshire. To this end, I suggest to the Minister, in consideration of a closer liaison between the operator and the distributors, that Camelot’s National Lottery website and the Good Causes website could be usefully amalgamated, with good causes themselves being easier to identify by both sector and local area.

To be fair, Camelot itself has been very aware of these concerns. Perhaps more can be done internally to make the operation more effective but the Government should listen carefully to what Camelot has to say, not as another self-interested lottery operator but as having been the guardian of the National Lottery for 24 years, with all the experience that that has entailed and a successful record of running it. It should be noted, too, that the original “crossed fingers and smiley face” logo continues to be recognised by 95% of the public, and that in itself is an achievement. Something that the Government have got right is the closing this year of the loophole that allowed other lottery operators to offer bets on EuroMillions, which we are very grateful for.

The particular concern over the 15% drop has been in part because the distributors need to have the confidence that the income from the National Lottery will be reliable over a number of years. This affects long-term projects in particular. The Heritage Lottery Fund tells me that very few projects have been dropped after the initial delivery grant following a process that supports the best quality of projects in as geographically comprehensive a manner as possible, but uncertainties over the year-to-year reliability of funding will quite quickly affect the decision-making over what projects can be safely sustained. Someone working in this area said to me last week that if we are not careful we may find ourselves sleepwalking into a position of no return. The Government have to decide whether they want to allow increasingly unfettered competition or to properly and unequivocally support a much-loved institution that also happens to be a precious national asset. I hope the Government will opt for the latter and that, as a consequence, the National Lottery will continue to go from strength to strength.

Photo of Baroness Andrews Baroness Andrews Deputy Chairman of Committees, Deputy Speaker (Lords) 6:38 pm, 16th July 2018

My Lords, it is a great pleasure to follow such an excellent, comprehensive and forensic speech. I congratulate the noble Earl on securing this timely debate. We have the PAC report and in the past few weeks we have had the Government’s response to it—and of course we have the Government’s own review of society lotteries. All that makes for an opportunity to raise some fundamental questions about whether we can expect the same sort of success from lotteries in the future as we have had in the past.

I have to declare an interest as the deputy chair of the Heritage Lottery Fund and chair of the Heritage Lottery Fund in Wales. Like other distributors, we are responding to the implications of meeting increasing demand with falling resources in the past year. We are trying to bring as much creativity and foresight as we can muster, and I am grateful to the noble Earl for referencing that.

Since 1994 the HLF really has exceeded the best expectations in securing and revealing our heritage. In doing so it has, uniquely, worked across the four countries of the UK. I have often spoken in this House about the great value of our heritage of language, landscape and historic environment. It is a treasure that continues to grow year on year in terms of our economic prosperity, particularly in areas such as Wales, but it also contributes uniquely to the resilience of our communities, to a sense of belonging, to pride, to identity and to continuity. It is beyond praise.

Understanding that is the first step to understanding how to put it to work in the best sense in future. It is important to set out the scale, as the noble Earl did: £38 billion has been invested in the National Lottery. The Heritage Lottery Fund’s role has been to distribute £7.7 billion, which has been invested in more than 42,000 projects. I could spend the rest of the evening describing just some of them. It is very difficult to choose which.

Wherever you look—whether it is the extraordinary vitality of our global museums in London; whether it is the small, remote cottage of Hedd Wyn in the mountains of Snowdonia, a sadly deceased poet who died during the First World War before he learned that he had won the bardic poem in the National Eisteddfod in 1917; whether it is saving the very awkward capercaillie bird in Scotland, which seems to have a death wish for all sorts of different reasons; or whether it is saving a great painting or a lost park—all these things make up the pleasure and pride of communities. I pay tribute to all those people who, over those 25 years, have worked so efficiently to do such a great job.

But it has depended on the continuing success of the National Lottery itself. Until 2012 we could take that for granted, but the first recommendation of the PAC report pointed to the fact that, since the renegotiation of the contract in 2012, Camelot’s profits have gone up but the returns to good causes have gone down by 15%. Significantly, the Government agree with most of the PAC’s prescriptions for change. Put simply, fewer people are playing the lottery. We need to know why. The noble Lord has talked about society lotteries, but I shall not pursue that because he gave such a good account of it.

Other possible issues include the change in the price of the tickets, the changing nature of the games themselves or the fact that the lottery brand is now rather too familiar. The Government have said that they are looking at a range of strategic changes and the validity of expectations that are held of them. The review will conclude in the autumn, and we look forward to that. The Camelot briefing for tonight, which was very helpful, set out the four areas in which it is focused on driving change: an improved range of games, an enhanced retail offering, updated digital capability and a reinvigorated brand. All that needs to happen.

My question to the Minister is: what will be the test for success for Camelot? It is encouraging that it is addressing decline, but do the Government really think that the proposals will make a fundamental difference? What else might the Government invite Camelot to consider? In particular, when there is such an increase in online gambling, is there not a case for a review of the impact of online gambling on the lottery? Has the Gambling Commission done any research or made any estimates about that relationship?

I know that we will get a thoughtful response from the Minister. We have had a marvellous Minister in Tracey Crouch and I am sure that the new Secretary of State has the licence renewal at the top of his very full in-tray. The Government need to get a grip on this. Things are changing. Brexit will bring the loss of structural funds which support the transformation of town centres, and it will cut our environmental funds, which help conserve rare species. Local authorities are no longer the active leaders that we wanted them to be: they are under the cosh. The whole funding environment is hugely, intensively competitive. Year on year, we in HLF know that, without our funds and without the extraordinary efforts of the voluntary and statutory sectors, our heritage will be at greater and greater risk.

That certainly makes for greater uncertainty for all the National Lottery distributors. It makes planning securely very hard. We have to keep income, reserves and commitments in line. It is becoming very difficult to do that. One of the most important recommendations in the PAC report concerns the difficulty of getting access to the information we need to manage forward programmes. So it is vital in this context that we get timely projections of income for returns to good causes, and that those projections are shared between the department, the regulator and the operator.

While the PAC and the Government, rather unusually in this report, pay tribute to the unsung heroes in the shape of finance directors, they cannot plan wisely or fairly unless they can rely on forward projections. For example, while there were improvements in income towards the end of 2017, which is acknowledged by the operator, they have fallen back since the beginning of this financial year—so we need action now. For some time now, all the distributors have been dealing with the challenge of irregular or infrequent forecasts. There was some improvement towards the end of last year, but there is still no agreed understanding of their income for this year or over the next few years, despite being over one-quarter of the way through the financial year. May I press the Minister to ensure that this work is done speedily and effectively to allow for sensible planning and distribution of funds to applicants for grants? These are people who may have spent years and, indeed, hundreds of thousands of pounds in putting in their application in which they have invested such hope and expectation. We owe it to them to be able to plan securely.

It is also important, as the Minister will appreciate, that the Government take advantage of what the lottery distributors already know in their expertise. They have built up a considerable level of experience on risk and projection but, for some reason, the department still declines to share the weekly sales data that DCMS holds. I do not understand this. I urge the Minister to take the message back to DCMS. To share the data would allow a more collaborative effort to identify trends and risks; it would avoid serious issues downstream. I would also really like to hear from the Minister that the Government and the Gambling Commission are going to focus on very strong competition for the next licence, including examining the structure of incentivisation within the licence, caps on marketing and the impact of the National Lottery levy on the operator. We need the best outcome.

I would also like to hear the Minister urge Camelot to intensify the good work that it has done already in trying to address some of these problems. It needs to do more. The 70th anniversary of the NHS is one obvious thing that Camelot should focus on and celebrate. It is trying very hard—and we have already heard about the opportunities that will be presented in the 25th anniversary year—but there is still much to be done. The noble Earl was quite right: we all want people who play the lottery to know more and enjoy more of what it means for good causes. Our own research at HLF has recently confirmed that people positively want us to fund projects with a social purpose, including in particular projects that deliver skills and training to young people.

We would love to tell more stories about the human impacts and the change that has been brought about in all corners of the UK. In Wales, for example, recent townscape heritage grants to Blaenavon and Newport will lift confidence and enterprise, as surely as they will lift community spirits. As for sharing the good news for lottery players, a start was made. Last December, the “Thank You” promotion meant that over 400 National Lottery-funded attractions offered special events or opened their doors free to members if they bought a lottery ticket with them—a simple idea and a wonderful success. We want more of that. Lately, we have funded some wonderful projects, such as Jodrell Bank, the NHS at 70, Gainsborough’s House and Lake Vyrnwy in Wales. These are the sorts of things that we really want to go on doing to the best of our ability. None of that would have happened without the National Lottery. The demand is relentless. It behoves the Government really to get a grip on the situation and attack the detail of the funding.

Photo of Lord Beith Lord Beith Liberal Democrat 6:48 pm, 16th July 2018

I intervene briefly in this debate, so well introduced by the noble Earl, with whose key points I very much agree. I also very much agree with the points made by the noble Baroness, Lady Andrews, who has done so much work in this area. In intervening, I declare my interest as president of the Historic Chapels Trust and the North of England Civic Trust, both of which have been able to save distinguished buildings and make them available for wider community use, thanks to the Heritage Lottery Fund. I am also chair of the heritage committee of the Methodist Church.

As the noble Baroness, Lady Andrews, said, we are in a very difficult funding environment with severe constraints on all the other key sources of funds for this kind of work, especially Historic England—in passing I must pay tribute to the help that it is giving the Historic Chapels Trust to seek a good administrative basis by working with the Churches Conservation Trust. Funding from local authorities is now under the most severe pressure and rarely available. As the noble Baroness, Lady Andrews, indicated, European funding streams are threatened. This leaves the Heritage Lottery Fund expected to do much of the heavy lifting of capital funding with much reduced resources.

It also raises the question of what happened to the concept of additionality and the view that was very strongly expressed when the lottery was introduced. It was going to enable us to do things which public funding could not normally finance. It has done many of those things, but it has crept increasingly into the gap left by the withdrawal of traditional public funding, particularly in local government care for the main buildings of a community. There is the added problem—this is not a criticism—that the policy objectives of HLF involve wider community use. This is quite understandable but it can limit the kind of project that can be undertaken at a time when it is virtually the only funder still on the scene. This poses a risk to some buildings and artefacts of exceptional aesthetic importance which are limited in their potential for wider community use and involvement.

Most of the time, there is no real conflict between the preservation and restoration of landmark buildings and the promotion of healthy communities. People attach enormous value to the buildings and places that have mattered in their lives and those of their ancestors, and which tell the story of their community. A community that loses its landmark buildings has its sense of deprivation further increased. We see that very much in some areas where the loss of buildings has been great and there is also significant deprivation.

It has been my privilege to support, and see the results of, great projects part-funded by the lottery. It is a moving experience to see the joy on people’s faces when buildings they thought they were going to lose are now available to them to use. This is cultural capital, wisely used. I recognise some of the issues raised by the noble Earl, but it cannot be left entirely to the lottery to fund things that matter in our society and are of beauty and quality. It has developed a valued role, but there are responsibilities that still rest with the Government and agencies such as DCMS, Historic England and others. They should take their share and be enabled to do so by public funding.

Photo of Lord Berkeley of Knighton Lord Berkeley of Knighton Crossbench 6:52 pm, 16th July 2018

My Lords, I am also grateful for the opportunity to speak in the gap. I approve of my noble friend Lord Clancarty’s debate and of what he is trying to achieve. However, it is important to sound one note of caution. It is easy to be congratulatory, but we should remember that this is about gambling, about which I have certain reservations. I have seen impoverished families spending far too much on tickets. That said, nobody is forced to buy a ticket. I buy one quite often, not because I really think I am going to win—although, like everyone, I enjoy the dream—but because I know that the money is going to some of the causes about which the House has heard.

As I go round the country and visit many arts centres, libraries and concert halls, I have been struck and impressed by developments which would not have happened without assistance from the Heritage Lottery Fund. In particular, I would be grateful if the Minister could address an important issue which has not been mentioned thus far: the extension of disabled access. Libraries, cathedrals, concert halls—sports grounds even—have a series of ramps that enable people to enjoy these great beauties, which they would not otherwise be able to do. We must remember that this money comes from all of us, so the whole of the general public should be able to benefit. That must include those less fortunate, either through circumstances or disability. That is a real achievement and I congratulate everyone involved in it.

Photo of Lord Kerr of Kinlochard Lord Kerr of Kinlochard Crossbench 6:54 pm, 16th July 2018

I too declare an interest, as a former trustee of the National Gallery, and I now help a wonderful museum in Glasgow called the Burrell Collection, which is in receipt of generous support from the Heritage Lottery Fund. Quite right too—it is marvellous.

I am a huge supporter of the Heritage Lottery Fund, particularly now that, as the noble Baroness, Lady Andrews, said, it has spread its largesse. At the beginning it was maybe a little too fixated on metropolitan good causes, but now one sees good being done right across the country, and these days the selection processes are done extremely professionally. I am therefore a huge supporter. I am less of a supporter of the lottery. I am uneasy about this tax, which is the most regressive tax in the United Kingdom. It is regressive in the way it is collected, because not many high-income households buy lottery tickets, and in the way it is spent. That can be exaggerated, but the point is that not many low-income households go to Covent Garden. There is a potential problem here: the combination is a little perverse. The lottery takes money from people who are least able to afford it and spends a fair amount of it on the entertainments of those who could certainly afford them themselves.

I cannot help thinking that voluntary donations to the HLF, collected by HMRC through the tax system, would be a more satisfactory way of supporting the Heritage Lottery Fund and extremely good causes. If one financed it that way, it seems that it would be possible for the HLF to come into the scope of gift aid. It might also attract the attention of the Carnegies and Rockefellers of our day, as it clearly does good across the same sort of range of good causes that Andrew Carnegie supported in his time. Therefore, mine is a slightly cautionary note—the same note that the noble Lord, Lord Berkeley, struck. I cannot believe that it would be a wholly unalloyed good to have an all-out campaign to sell more lottery tickets, but to ensure that the HLF has more money to use would be an unalloyed good.

Photo of Lord Foster of Bath Lord Foster of Bath Chair, Rural Economy Committee 6:58 pm, 16th July 2018

My Lords, it is becoming a bit of a lottery to know who will speak next. I congratulate the noble Earl on securing this debate, and I agreed very much on the various points he raised. I am delighted that I am following the noble Baroness, Lady Andrews, who, as my noble friend pointed out, has done so much in the field of heritage in this country. I hope that while the Minister will take account of everything the noble Baroness said, he will pay particular attention to her proposal that there be a proper review of the impact of online gambling on the National Lottery.

I congratulate all three noble Lords who jumped in to speak briefly. My noble friend Lord Beith is absolutely right to remind the Government that they must not rely on the lottery as the provider of many of the good things that we want to see in this country. I take entirely the point made by the noble Lord, Lord Berkeley, on the wonderful work that is done, particularly by the Heritage Lottery Fund. He referred also to taking into account the needs of a wide range of people, including, for instance, disabled access. I hear entirely what the noble Lord, Lord Kerr, says. He spoke eloquently in support of many of the good things that have happened but then raised concerns about the way in which the money is raised, and he has properly come up with an alternative. I confess that I suspect his alternative would not bring in anything like the sums of money needed to achieve the wide range of projects.

At its inception in 1994, my party opposed the National Lottery, but we were clearly very wrong. As the noble Earl rightly pointed out, it has brought in something like £38 billion and helped over half a million projects. He did not point out that it has also brought around £15 billion into the Exchequer’s coffers. However, I do not want to use what limited time I have got extolling the National Lottery. Rather, I want to raise a few areas where I think improvements could be made that would bring in even more money for good causes.

In doing that, I am conscious that reports such as the NAO report last December, the PAC report in April this year and the recent review carried out by the new CEO of Camelot have already led to some improvements beginning to being made. These include, as the noble Baroness, Lady Andrews, said, an improvement in the range of games, more investment in outlets and upgrading the digital capacity. However, there are four areas in which work could still be done: additionality; umbrella lotteries, which have already been raised; taxation; and promotion of the lottery.

Your Lordships’ House will be well aware that it was John Major who established the principle of additionality: that National Lottery money should add to but not substitute for government expenditure. Sadly, this principle has not always been followed. Indeed, during the Blair years, the creator of the National Lottery, John Major, was highly critical of what Labour was doing, saying that,

“since it took power, Labour has diverted Lottery funding into areas that have historically been funded by the Exchequer”.

He went on to accuse Labour of,

“muddying … the waters between Exchequer and Lottery revenues”.

Interestingly, almost immediately after John Major criticised the Labour Party, the Conservative manifesto proposed a Club2School scheme to be funded from the National Lottery, along with a number of other schemes such as a school leavers programme. All three parties have been guilty of this. For instance, all three, with varying degrees of reservation, accepted the need for National Lottery funding to be made available to support the 2012 Olympic and Paralympic Games. The principles have of course been developed further: it is not just additionality now—we also talk about complementarity.

My point, however, is simple. Whatever the principles, there should be clear evidence that they are being adhered to; otherwise, money will leach out into things that the Government themselves should definitely be funding. I have always believed that the reports from lottery distributors should state precisely how they have met the additionality and complementarity principles. I argued for this as far back as 2005. However, over the weekend, I was reading the Big Lottery Fund’s annual report for this year, and all I found, on page 47, were the simple words that all the awards made in 2016-17 were “consistent with the principles”. There was no explanation of how that was done. Can the Minister explain what independent evaluation takes place to ensure that lottery funding meets the principles? Is he satisfied with the monitoring that takes place?

As other have already done, I want to touch on so-called umbrella lotteries. I recognise that, in recent times, action has been taken on lottery-style games being run by gambling operators, but it has taken since 2005, when that issue was first raised, for action to be taken. Also in 2005, I first raised the issue of umbrella lotteries. I pointed out that the online lottery, Monday, appeared to be offering a prize of £1 million, yet the then maximum prize allowed for a society lottery was £200,000. To achieve that £1 million prize, Monday brought together five so-called society lotteries that were not paying any tax. That was established in competition to the National Lottery.

Since then, we have seen the growth of these huge umbrella-type lotteries, particularly the People’s Postcode Lottery and the Health Lottery, which have been mentioned, which give less money to good causes and do not pay taxation in the same way. In fact, the Health Lottery returns only the minimum of 20% to good causes, paying no tax. They have a huge promotional budget—we have heard about the sort of tricks they get up to—far larger than for the National Lottery. They distort the lottery market and undermine the original intention that there should be a single, national lottery, and they reduce funds to good causes.

I first formally raised this issue with the then Secretary of State in 2006. I tried again in 2011 with the new Secretary of State, now the Foreign Secretary, and I am now taking my chance with the Minister. The Government’s current review of society lotteries provides an ideal opportunity at long last to address this particular issue, so can the Minister explain what action is being considered in relation to umbrella lotteries, whether the Government will reconsider a limit, say of 15% as has been proposed, on the level of expenses allowable to society lotteries, and what impact the Government believe the proposed increase in the maximum society lottery prize to £500,000 will have on returns for good causes? Surely, as research shows, increasing the jackpot still further encourages more participation in the umbrella lotteries and less in the National Lottery.

The umbrella lotteries have an additional advantage over the National Lottery. They do not pay lottery duty. So I turn briefly to taxation. As noble Lords will know, the National Lottery pays 12% lottery duty, which places it at a considerable disadvantage to the umbrella lotteries, and to gambling and gaming operators which provide far less to society. For many years, Camelot has argued for a change to a gross profits tax regime, arguing that it would give it greater flexibility to respond to the new market forces. Some 11 years ago, in the other place, the DCMS Committee looked at this matter and saw then that a change to GPT would add £50 million a year to good causes and additional money into the Exchequer. I know that discussions are under way, and I hope that the Minister can update us on this issue. I also hope that he will accept that it is important that this is resolved before we begin the discussions about the new competition for the next round of the National Lottery licence.

Finally, reference has been made to the issue of promotion. Public understanding of the good causes to which National Lottery funding goes is nowhere near as powerful an incentive to participate as the possibility of winning life-changing sums of money—I fully understand that. But it does still matter. This year, the PAC pointed out:

“We are concerned that awareness of the National Lottery’s support for good causes has fallen, and that this is likely to have contributed to reduced participation”.

More should be done to make communities aware of the benefits that the National Lottery has brought them. As the noble Earl, Lord Clancarty, pointed out, the 25th anniversary provides a particularly good opportunity to do that.

I live close to the sunken city of Dunwich in Suffolk. It has an excellent museum explaining how the sea has transformed a once-thriving city and port into a tiny hamlet. The museum boasts a sign saying, “Supported by the Heritage Lottery Fund”. I suspect that few people who visit that excellent museum are aware that the funding actually came from the National Lottery, so I welcome the news that Camelot, the National Lottery promotions unit and the lottery distributors are working together to,

“make The National Lottery and its purpose far more relevant and visible”.

That is vital. But I am especially pleased they will now start talking about a single, clear brand name “One National Lottery”. I hope that the Minister will be able to update us on progress in that area. I hope that he will also acknowledge that unless action is taken in relation to the huge promotional budgets of the umbrella lotteries, all of that effort may well go to waste.

The National Lottery has been and continues to be a huge success story, transforming lives and communities. Ensuring that it continues to do so in the future means that the issues that I and others have raised certainly need to be addressed. I look forward to hearing the Minister’s response.

Photo of Lord Griffiths of Burry Port Lord Griffiths of Burry Port Opposition Whip (Lords), Shadow Spokesperson (Digital, Culture, Media and Sport), Shadow Spokesperson (Wales) 7:09 pm, 16th July 2018

My Lords, I thank the noble Earl, Lord Clancarty, for being as ever a watchdog in this area. He registered his intention to have this debate in February. It is a bit of a pity that it is happening today rather than tomorrow, because some of the results of the Question we are discussing about the outcomes of the National Lottery will be on display elsewhere in the building. We could have lavishly referred to all of that and thus made our case without having to speak about it. There is no doubt that, in terms of the good causes that are supported by the National Lottery, the whole face of our country has been changed, so the object of this debate is to ensure that we do not lose momentum. The expertise of the noble Lord, Lord Foster, and of the noble Baroness, Lady Andrews, speaks for itself.

I have some personal experience of the operation of the lottery. I was the president of the Methodist Conference in 1994 when the National Lottery was established. We have done fire and brimstone about gambling for quite a long time and I think it was expected that I would unleash my Welsh oratory to good effect as I denounced the incoming activity called the National Lottery—and indeed, since I love fire and brimstone, I was very tempted. But I had talked to people and become aware that the lottery was something very much in line with what the public wanted. I remember appearing on a television programme presented by my noble friend Lady Bakewell on this very subject. I limited myself to two areas of serious concern.

One has been mentioned adequately by several contributors to the debate; namely, that we hoped that the income raised would not be at the expense of government expenditure but in addition to it. That was one of the strong points that it seemed appropriate to make. The other point I wanted to make in those days was that it is well attested that gambling as an activity creates problems among a certain percentage of those who indulge in it. There have been many sociological studies and while the percentages vary—I have seen 6% and 12%—let us acknowledge that problems are going to be created. Why should the National Health Service pick up the tab for dealing with problem gamblers? Should there not therefore be a levy on all those involved in the gambling industry which could be given to the NHS to help it cope with the problems?

Having said all that, the Museum of Methodism on City Road whose refurbishment I oversaw benefited enormously from the Heritage Lottery Fund. It is quite right to say that we should get clearer branding on all this so that we know that it is one single entity that provides these moneys. So the chickens have come home to roost as far as Methodism is concerned—but let it be said that of the £2.5 million we spent, £2.25 million was raised elsewhere, with £250,000 from the Heritage Lottery Fund.

On the other hand, at the moment I am struggling with someone to try to raise money for a project to encourage black opera singers to find their way in the high culture world of opera. Of course, it does not have the right cachet and does not meet the criteria, but it is a worthy cause that would widen the pool of brilliance available to us so that when Covent Garden does benefit from the Heritage Lottery Fund, we could have a few performers inside who have also benefited from it—and why not? So tomorrow I shall be down on the terrace looking at all the wonderful things that have been done with this fund.

Camelot has written a briefing paper, which I—and other noble Lords, as I understand from the speeches so far—have read. It was a nice bit of common reading for us. Camelot recognises the very problems that we are discussing and has had an important set of meetings to evolve a strategy for the immediate future, knowing that there has been some staleness in the way things have been working and that financial returns have not been as good. Its four objectives, which were referred to by my noble friend Lady Andrews and others, include an improved range of products. Who am I to talk about EuroMillions, Lotto and Thunderball with any authority? But they do represent a widening of the variety of products.

Over the years, I have discovered that even something as fresh as a daisy today will be a wilted bloom tomorrow. Keeping things fresh and renewed is a very important part of the exercise. People are familiar with the National Lottery now. They are no longer thrilled by it. I remember “It could be you”. Do we not all remember that? All I can say is that I always bought my tickets—by proxy, of course: I am a Methodist minister and you have to be very careful about these thing—but it was never me and has not been thus far. For all that, I remember the thrill of the beginnings of National Lottery very well. I wish the Camelot operation well as it seeks to continue to refresh the product and give it continuing bite on the public mind, as it were. We have talked about the brand. I asked the Camelot members to whom I spoke about its retail activity and broadening its presence in the retail world. When high street shops are all shutting, is that necessarily where it ought to be? But they persuaded me that there are ways in which they can cope with all that.

The question of a balance between the National Lottery and society lotteries has been amply referred to. I have also spoken to people from society lotteries—at least, from one or two of the ones that we can cope with, I should say. There is a way of gathering things together under an umbrella and finding ways to avoid paying tax through loopholes and shortcuts. It is incumbent on the Government to look at that. It has been referred to again and again over the years. I trust that the Minister will assure us that the time has come to take this in hand.

I know that we have an ongoing consultation. I know that Camelot has set strategic objectives. Therefore, it seems that we are on the wrong side of things that are about to happen and which we cannot yet evaluate. I hope that the noble Earl, Lord Clancarty, will put down his name now for another debate in November, when we can see the results of the consultation exercise and how the impact of Camelot’s strategic goals is working out. There has to be a balance of some kind between the National Lottery and local expressions of a lottery. If the balance is right, they can be complementary, but it will need the wisdom of Solomon. I look to the Minister; my conversations with him have suggested Solomonic qualities in his character, so let us hope that it all works out well.

Finally, we had a debate on fixed-odds betting terminals. With a sigh of collective relief on all sides of the House, we welcomed the fact that the Government seemed committed to taking a £2 stake as the norm, rather than something between £2 and £100. Then we were all disconsolate because of the time it is taking to implement that decision. None of guessed in that debate that it would be so intricate. I remember the Minister’s colleague trying to explain the critical path to implementing what we had all decided was a very good thing. So let us remind ourselves that we have recognised the problematic nature of betting on lotteries and decided to stop it. I hope that it will not be as intricate to deal with what we have decided in this instance as it has been in the other.

Well: gambling. A Methodist minister at the Dispatch Box going on about getting a wholesome approach to all these matters. The noble Lord, Lord Beith, a friend of mine, talked about those projects where the money applied led to the widening of access to the project that was being refurbished. I cannot see why, if that works for a chapel of the north of England, it cannot work for the Covent Garden opera house, which also ought to have its access widened so that little old ladies with Zimmer frames can go in and listen to the treasures of music as much as anybody else.

Photo of Viscount Younger of Leckie Viscount Younger of Leckie Lord in Waiting (HM Household) (Whip) 7:20 pm, 16th July 2018

My Lords, I do not know about Solomonic characteristics, but I am pleased to respond to this debate. I sincerely thank the noble Earl, Lord Clancarty, for raising a discussion on the National Lottery at this pivotal point in its history. We have nearly succeeded today in having as many or more speakers in the gap than those who put their names down to speak in the first place, such is the noble Earl’s popularity. As he said, we stand on the cusp of the National Lottery’s 25th anniversary year and work has begun to consider the shape of the National Lottery when the current licence expires in 2023.

I start by addressing a question raised by the noble Baroness, Lady Andrews, and the noble Lords, Lord Berkeley and Lord Foster, about the importance of the relationship between online gambling and the National Lottery, and the link to the next bidding round. It is an important issue and it will certainly be considered by DCMS and the Gambling Commission as we consider the design of the next licence.

Before we get into the details, I will set the scene. We believe, as some noble Lords have said, that the National Lottery has been an undeniable triumph since it was launched by Sir John Major in 1994 with the objective to raise money to enhance the sports, arts, heritage and charity sectors in this country. It is easy to forget that the lottery also raised funds to help us mark the millennium. Its performance has far outstripped the initial expectations of £1 billion for good causes per year. In fact, more than £38 billion has been raised over the National Lottery’s 24-year lifetime, as was mentioned. This has meant that more than 500,000 good cause grants have been awarded across the whole of the UK. Every single local authority has benefited by an average of more than 1,200 awards.

So many individuals and organisations have benefited. I will select just a few to mention here. The National Lottery has supported the small and seemingly simple, yet very important, such as funding the travel costs to allow World War II veterans who would otherwise not be able to attend to take part in commemorative visits. It has allowed the United Kingdom to excel increasingly at the Olympic and Paralympic Games; supported more than 42,000 heritage projects, including the restoration of more than 19,000 historic buildings and monuments; and of course, as the noble Earl so eloquently mentioned, funded the overarching gamut of art and culture, inspiring and uniting us.

So, as the noble Baroness, Lady Andrews, said, it is vital that the National Lottery continues to thrive, but equally we must acknowledge that this relies on people continuing to buy tickets. As the noble Earl said, while ticket sales, and thus amounts generated for good causes, naturally fluctuate year on year, there have been undeniable challenges recently. Recent years have seen lower levels of good cause income than we might have hoped for. The noble Lord, Lord Griffiths, might be right that there is, as he put it, a certain staleness in it. However, the sums raised are still not insignificant—namely £1.6 billion in 2017-18.

But let me be clear: we are concerned about the fall in income. The noble Baroness, Lady Andrews, raised some points about this. We understand the difficulties this drop in income means for distributors. The Gambling Commission has provided detailed econometric modelling of future national lottery returns to distributors. That modelling was last shared in March this year. She also raised a linked point about the sharing of data by the department, but I reassure her that DCMS is also working with the Gambling Commission to ensure that distributors have all the information they need to plan ahead—it is an important point.

So, what are the Government doing about this? As soon as the income drop became apparent in 2016, the Government engaged immediately with the lottery distributors, with the Gambling Commission, which regulates the National Lottery, and with Camelot, the National Lottery operator, to agree a series of remedial actions designed to return the National Lottery to its strongest possible position. This remains work in progress. Returns to good causes appear to have stabilised in the 2017-18 financial year, following the 15% drop in 2016-17, but the Government know that there is more to do and we continue to drive this strategy actively. Last year, Camelot undertook a thorough strategic review of its business and has brought in a wide range of measures to improve results. This has already seen the return to television of the National Lottery draw results and the introduction of additional games. Further measures are in the pipeline to reinvigorate and extend the portfolio, with new products such as an annuity-based game, allowing winners to receive a monthly prize over a long period. Further details will be forthcoming on this.

Lottery distributors themselves are also working with Camelot to improve the public’s perception of the National Lottery and ensure that players are aware of the good causes they are supporting. Some valuable points were made on this by the noble Lord, Lord Foster, who was particularly concerned—this was a clear focus of his speech. Events, such as the Heritage Lottery Fund’s “Thanks to You” campaign last December, are building an association between the sale of lottery tickets and the local good cause projects that these tickets ultimately fund. I deliberately use the word “local” because lottery funding has reached all corners of the country. In addition to successful film-making, which was mentioned this evening, and saving the capercaillie, which, as a Scotsman, brought a smile to my face, the lottery funds allotments in Angus, pottery in Port Talbot, theatre in Thurrock, bell-ringing in Belfast, wildlife in Westminster and cricket in Rugby.

The noble Lord, Lord Beith, spoke about the importance of funding our historic buildings through the Heritage Lottery Fund and he is right. I also echo the thoughts of the noble Lord, Lord Berkeley, about the lottery providing important funds for heritage. In the last financial year the Heritage Lottery Fund provided £20 million for places of worship and has ensured that the same proportion will be spent this year, so the breadth is pretty wide.

The noble Earl, Lord Clancarty, voiced concerns that society lotteries, such as the Health Lottery or the People’s Postcode Lottery, pose an increasing threat to the National Lottery’s monopoly position—this addresses the points raised by the noble Lords, Lord Foster and Lord Griffiths, as well as the noble Earl, about so-called umbrella lotteries. I reassure the House that we continue to look at this issue very carefully and have taken expert advice from the Gambling Commission. The noble Earl may be surprised to hear that current evidence suggests that while players see the two types of lottery as distinct, there is little danger of product substitution. The evidence shows that players are drawn to the National Lottery because of its life-changing prizes and the ability to support a broad range of causes, while they often play society lotteries to directly support a specific charity or cause.

However, to help ensure that this distinction is maintained—as the noble Earl said, this is important—this year the Gambling Commission introduced stricter requirements for branded society lotteries, such as the Health Lottery, to be clear with players about the cause that each draw is being held to support. Society lotteries are now also required to make players aware of how much of what they raise goes to good causes. The Government value the place of society lotteries in raising money for charities and good causes—more than £250 million last year, supporting causes such as the Royal British Legion, the RNLI, and air ambulances across the UK. The noble Lord, Lord Griffiths, made the point that there is a balance to be struck between national and local, and the Government remain committed to ensuring that both society lotteries and the National Lottery are able to thrive side by side; indeed, we have heard from many organisations that receive valuable funding from both.

Photo of Lord Griffiths of Burry Port Lord Griffiths of Burry Port Opposition Whip (Lords), Shadow Spokesperson (Digital, Culture, Media and Sport), Shadow Spokesperson (Wales)

I think we were worried about the level playing field in terms of taxation and conditions for operating and so on. I wonder if there is an answer to some of those concerns.

Photo of Viscount Younger of Leckie Viscount Younger of Leckie Lord in Waiting (HM Household) (Whip)

Indeed. Some points have been raised on that issue and I will come to it later, but if I do not manage to address it, I will certainly write to the noble Lord.

The recently launched consultation, which has been mentioned today, outlines measures aimed at finding the right balance between enabling the sustainable growth of society lotteries while protecting the National Lottery’s unique position. I invite noble Lords with an interest to engage with the consultation before its closing date of early September. I echo the noble Earl in saying that we welcome all views on this matter. The noble Earl raised some important points about the contributions and this debate will be taken account of in the consultation.

In conclusion on the matter of falling sales, we believe that Camelot’s revised strategy will go a long way to address this issue, supported by the distributors and, of course, DCMS.

The noble Lord, Lord Berkeley of Knighton, spoke about disabled access. He made an important point that all areas of visitation must have the correct disabled access. The point has been noted.

As has been mentioned, we will be celebrating the 25th anniversary of the National Lottery in a little over a year’s time. Work is under way to ensure that we make the most of this opportunity to further showcase the National Lottery’s singular ability to deliver life-changing outcomes, both in the awards it makes to good causes and in the value of prizes that can be won by lottery players. To reassure the noble Earl, the Government are looking forward to celebrating this important anniversary. Working together with Camelot and the distributors, we will make everybody aware of what this great institution has made possible over the past 25 years. Detailed plans are being advanced and further details will be announced in due course.

The National Lottery has had an unparalleled impact on 21st-century Britain. Across the country the lottery is not just well known but has a recognised brand name, as the noble Earl said. This is not surprising if you stop to consider that the majority of National Lottery money goes straight to the heart of our communities, locally and nationally. Some 71% of the grants made are for £10,000 or less; in other words, small amounts of money going to community-led projects that make a big impact. Less than 1% of the grants awarded exceed £1 million.

Furthermore, as the noble Earl said, this week is National Lottery in Parliament week. As the noble Earl did, I encourage noble Lords to visit the Upper Waiting Hall, where one can learn more about the Lottery and its history, and participate in a range of competitive activities—to keep noble Lords on their toes before we break up for the Summer Recess.

More seriously, we must ensure that we retain the warmth of public sentiment for the National Lottery among existing players and attract new participants. It is critical to ensuring that income is maximised to continue delivering awards across the breadth of this country and to the widest array of good causes. There are some questions that I still have to answer and I will write to all noble Lords. Noble Lords can be assured that this is a clear imperative of the Government and is a core objective in the department’s single departmental plan—

Photo of Lord Foster of Bath Lord Foster of Bath Chair, Rural Economy Committee

I think there is some confusion in your Lordships’ House. I will read the Minister a quote from the Gambling Commission, which said:

“The relatively low prizes and generally limited distribution footprint are key factors that have traditionally differentiated”, the society lottery sector from the National Lottery. Do the Government still believe that that distinction should be maintained?

Photo of Viscount Younger of Leckie Viscount Younger of Leckie Lord in Waiting (HM Household) (Whip)

That is a question that should be put to the consultation. This debate will allow these sorts of questions to be put to the consultation. I reassure the noble Lord that that will be taken into account.

To conclude, we hope to see the National Lottery continue to flourish, both now and for the next 25 years.

House adjourned at 7.34 pm.