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Clause 6 - Licensing structure

National Lottery Bill – in a Public Bill Committee at 4:00 pm on 1st November 2005.

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Question proposed, That the clause stand part of the Bill.

Photo of Hugo Swire Hugo Swire Chair, Speaker's Advisory Committee on Works of Art, Shadow Secretary of State for Culture, Media and Sport, Shadow Secretary of State for Culture, Media and Sport

Clause 6 makes some alterations to the licensing structure. An order made under subsection (1) may

''make transitional or incidental provision . . . bring all or part of Schedule 1 into force . . . make different provision for different purposes'' and so forth. On the face of it, it seems straightforward.

I am sure, Mr. Gale, that you will correct me if I go wide of the mark, but that raises the question of the licence and the licensing structure surrounding it. This morning, under a different Chairman, we alluded to the granting of the licence, what form the structure would take and how the licence would be arrived at.

It was interesting to read—in The Mail on Sunday, I think—an article on Camelot, how the Government are now proceeding with the licence, the licensing structure and the disappointment of some of the contenders, who had hoped that the rules would be changed to give some of the potential new entrants financial assistance with the multimillion pound cost of bidding. I do not think that that has happened.

There is the question of Camelot's inbuilt advantage; its instant access to information on lottery playing trends when its competitors have to start from scratch. The issue is about whether the licensing structure favours any one applicant and whether the Minister will sell it as a piece of internal housekeeping once the licence has been granted.

At this stage, anything that prevents potential bidders from bidding—whether that be the costs involved, the duration of the licence or the whole licensing structure set out in clause 6—should be discouraged. We remember the last lottery selection process; it was described by Richard Branson, who we learn is not going to bid again, as a sham. I hope that   we are not left with a position in which the licence application and structure are to the liking of one bidder, but a deterrent to the others. Camelot won the last licence bid in 2000. This morning, the hon. Member for Bath (Mr. Foster) was keen to say how well the lottery was doing—

Photo of Roger Gale Roger Gale Conservative, North Thanet

Order. I shall offer the hon. Gentleman some guidance. Strictly speaking, this debate is about an order providing for the introduction of schedule 1. The hon. Gentleman is entitled to oppose that if he wishes, but he is beginning to move into a debate on schedule 1. I do not mind, but he will not be able to do that twice. He can either have the debate now, or when we arrive at schedule 1.

Photo of Hugo Swire Hugo Swire Chair, Speaker's Advisory Committee on Works of Art, Shadow Secretary of State for Culture, Media and Sport, Shadow Secretary of State for Culture, Media and Sport

I was coming to the end of my remarks, Mr. Gale, and do not seek to detain anyone. My concluding remark impacts on this issue; it is about what I said this morning about the slightly less optimistic sales of lottery tickets. I was corrected on that by the hon. Member for Bath and the Minister.

However, when Camelot was granted the licence in 2000, it said that it would raise up to £15 billion for good causes. Five years into the seven-year licence, it has delivered only £7 billion, so is expected to fall almost £5 billion short by the end of its contract in 2008. That is the salutary lesson; before we all pat ourselves on the back and talk about the tremendous success of Camelot and the last round of bidding, the facts need to be examined more closely. That is why the schedule and licensing structure need to be considered again carefully; to encourage, on a level playing field, as many potential bidders as possible.

Photo of Adam Afriyie Adam Afriyie Conservative, Windsor

Is my hon. Friend concerned, as I am, about clause 6(3)(c):

''An order under subsection (1) . . . may make different provision for different purposes''?

That seems incredibly broad. However, as I am fairly new to the House, perhaps I am misreading it.

Photo of Hugo Swire Hugo Swire Chair, Speaker's Advisory Committee on Works of Art, Shadow Secretary of State for Culture, Media and Sport, Shadow Secretary of State for Culture, Media and Sport

It is fairly broad, and perhaps the Minister will explain that to the Committee. Any clause that uses the formula

''may make different provision for different purposes'' is pretty open, and, on the face of it, would allow the Government to do pretty well what they wanted. I have tested your patience as much as I dare, Mr. Gale, and shall conclude my remarks.

Photo of Andrew Selous Andrew Selous Opposition Whip (Commons)

I want to clarify a small point. I should probably know the answer, not being an entirely new Member, and I ask the Committee for its indulgence, but clause 6(3)(e) states that an order under subsection (1)

''shall be subject to annulment in pursuance of a resolution of either House of Parliament.''

Does that mean that the House of Lords could, on its own, make a resolution, separate from the will of the House of Commons?

Photo of Richard Caborn Richard Caborn Minister of State (Sport), Department for Culture, Media & Sport

Yes.

We have had wide consultation on the licence, as hon. Members acknowledged. We are, in the clause, attempting to avoid what happened previously, when effectively there was one bidder. We want the National   Lottery Commission to have as many tools as possible to do what all members of the Committee would want; to get the best for the good causes out of a well run and effective lottery, and to ensure that no particular bidder, whether the incumbent or any other, is favoured. We have, with some difficulty, tried to bring that about, in a transparent way, through consultation on our November 2004 national lottery licensing and regulation review decision document. Clause 6 and schedule 1 are part of that approach.

The Government's clear and firm presumption is that there will be a single licence to run the national lottery, awarded by competition. Even though we want that to happen, we cannot guarantee it, so we have decided that in the extreme and, indeed, unwelcome circumstance of an unsuccessful competition, and mindful of the concern expressed by the Public Accounts Committee in its report on the second licensing competition, we should have a fall-back position.

The clause therefore would provide the Secretary of State with the reserve powers to introduce the new licensing structure set out, as you said, Mr. Gale, in schedule 1. That would enable more than one licence to be issued, to promote lotteries forming part of the national lottery. We believe that that would offer the greatest alternative scope and the combination of innovation and efficiency that the lottery would require to remain successful.

If the Secretary of State did not need to take such action, she would make an order, but only after consulting the National Lottery Commission. The statutory instrument could bring in schedule 1 in whole or in part, and would be subject to a negative resolution procedure.

Photo of Adam Afriyie Adam Afriyie Conservative, Windsor

I may, as I said before, be a bit naïve, as I am quite new to the House, but will the Minister explain how clause 6(3) is restrained with respect to the power to

''make different provision for different purposes''?

I suspect that there is a mechanism, but how is the provision restrained from giving a Secretary of State licence to do whatever they like, in any way they like?

Photo of Richard Caborn Richard Caborn Minister of State (Sport), Department for Culture, Media & Sport

But it is not the Secretary of State who will do it; the National Lottery Commission will conduct the negotiations and report back to the Secretary of State. We are trying to create conditions under which the National Lottery Commission, from as large a field as possible, can extract what is, in its view, the best possible outcome for good causes in an efficiently-run lottery, probably the best run lottery in the world. That is the object of the exercise. We believe that clause 6 and schedule 1 will, as happened with previous provisions, give the National Lottery Commission that maximum negotiating capability.

That comes off the back of two past experiences with lottery licensing which were not particularly good; I accept that. There has also been wide consultation, in terms of the review decision document on national lottery licensing and regulation. We have distilled all that. We believe that   we are giving the National Lottery Commission a good framework. Then it will have to report back to us. It will not be the Secretary of State who carries out the negotiations; it will be the National Lottery Commission.

Photo of Adam Afriyie Adam Afriyie Conservative, Windsor 4:15 pm, 1st November 2005

I understand the Minister's answer, but I was being fairly specific. Subsection (3)(c) concerns me. It states:

''may make different provision for different purposes''.

I just wonder what the restraint is. Could provision be made for allocating money to something that was not a good a cause? Where is the restraint in paragraph (c)? It seems very open. The other provisions are constrained by other parts of the legislation, but I cannot see how paragraph (c) is constrained in any way.

Photo of Richard Caborn Richard Caborn Minister of State (Sport), Department for Culture, Media & Sport

The decision will have to be justified against the criteria. The acid test is whether good causes get the maximum amount of money. Everyone will be looking at that. This will not take place in isolation. We hope that there will be a series of bidders. The expressions of interest to date look quite healthy. There will be a serious competition. My personal view is that we will not be in a position where we will have to depart from having one licence. I hope that that is the case because that will be the best way to extract the maximum that we can. We have all the conditions, including the 15-year maximum licence. There will be one criterion that will be used to make a judgment; what is best for good causes? The National Lottery Commission will have to report back. Like every other non-departmental public body, it has restraints on it. However, it also has enough flexibility to maximise the take.

Photo of Andrew Turner Andrew Turner Shadow Minister (Cabinet Office)

The Minister is trying to be helpful, and is succeeding. None the less, my hon. Friend the Member for Windsor (Adam Afriyie) has raised an important point because the Minister appears to be explaining that there are things that are contained in neither the clause nor the schedule that do in fact restrain, or which he thinks will restrain, the actions of the Secretary of State under subsection (1). However, there is nothing written down, until Hansard is produced as a result of today's debate, that encapsulates the objective of raising the maximum amount for good causes. Is that the case?

Photo of Richard Caborn Richard Caborn Minister of State (Sport), Department for Culture, Media & Sport

I do not quite follow the hon. Gentleman's logic. We have a system under which the Secretary of State is responsible, in the end, to Parliament. She has delegated to the National Lottery Commission, within certain parameters, the responsibility to negotiate a new licence for the lottery. What we are debating in relation to clause 6 and schedule 1 relates to the conditions under which it will carry out that negotiation. The endgame is to extract, from, we hope, a good field of applicants, the best outcome for the good causes. We are not talking about a constraint on the Secretary of State. It is the National Lottery Commission that will carry out the   negotiation and report back to the Secretary of State, and, by that means, to Parliament.

The provisions give powers and flexibility to enable the National Lottery Commission, first, not to get into the situation in which it was previously; secondly, to have a structure that will engage many bidders; and, thirdly, to ensure that we can extract the maximum amount from those bidders for good causes. That is the sole object and therefore the constraint. I do not follow the rationale of the point that was being made. I might be being a bit thick about that. That is the object and I believe that it is contained in the Bill. That is why I want the clause and schedule 1 to stand part of the Bill.

Photo of Andrew Turner Andrew Turner Shadow Minister (Cabinet Office)

So, the Minister is saying that, on the application of the National Lottery Commission, the Secretary of State would consider making an order and would then make such an order, subject to parliamentary annulment? Is he saying that it is not that the Secretary of State who is taking the initiative, but the National Lottery Commission?

Mr. Caborn indicated assent.

Photo of Richard Caborn Richard Caborn Minister of State (Sport), Department for Culture, Media & Sport

I have nothing to add.

Question put and agreed to.

Clause 6 ordered to stand part of the Bill.