Gambling and Lotteries

Lord Foster of Bath Excerpts

Monday 14th December 2020 Lords Chamber

[Lord Bassam of Brighton (Lab) [V]]

My Lords, I am grateful to the Minister for repeating this important Statement. Before turning to the detail, I note that it is becoming increasingly common for there to be a significant gap between the Commons Statements and our repeat of them. This is regrettable; I hope it will be addressed as we move into the new year.

The launch of this call for evidence on the effectiveness of gambling legislation is a welcome step, even if it has come much later than we on the Opposition Benches would have liked. As the Secretary of State said, advances in technology and shifts in how we live on a day-to-day basis mean that current regulation reflects a very different reality to the one we now live in. This consultation exercise represents a significant first step in recognising and responding to this challenge.

While high street betting shops must abide by a variety of rules, the regulatory picture for digital platforms is very different. In recent months we have seen some companies reducing their presence on the high street, but we know that online gambling is growing. Government initiatives in this area, while welcome, have been piecemeal. Industry bodies have taken steps to promote responsible gambling, including through November’s Safer Gambling Week, but we know that loopholes exist and are causing considerable damage.

With digital services there is the added challenge of jurisdiction, with some service providers registered outside the UK and therefore not currently within our regulatory orbit. We have discussed this very challenge recently in the context of audio-visual service providers and potential regulatory gaps arising from EU exit. Without prejudging the outcomes of the consultation and the next steps in the process, I hope the Minister can at least confirm that the department is cognisant of the issue. As I alluded to previously, we have been awaiting this project for some time. As with other policy areas such as online harms, we know that delays can result in genuine social costs. Can the Minister shed light on why it has taken so long to get to this point and outline the anticipated timescale beyond the consultation end date, which I believe is 31 March? While the technicalities involved in gambling regulation clearly necessitate a dedicated consultation and future legislation, it is nevertheless important not to look at these issues in isolation. For example, we know that adopting a public health-focused approach to gambling addiction could bring significant benefits to sufferers and their families.

The Statement cites work being undertaken by the Department of Health and Social Care to improve the support and treatment available to problem gamblers. We welcome this, but can the Minister confirm that the Department of Health and Social Care will be part of the broader regulatory discussions to ensure that future legislation supports, rather than undermines, its work on treatment?

There is a clear overlap between this gambling review and the Government’s wider online harms agenda, which, I am afraid to say, seems to have ground to a halt. By any conceivable measure, the DCMS is failing to protect people online. There is no draft online harms legislation to scrutinise and few indications of when it will arrive, or in what form. Can the Minister outline the state of play in relation to this? Can we expect to see concrete legislative proposals by Easter, for example?

We know that the department recently missed a statutory deadline under the Data Protection Act to provide provision relating to victims, including child victims, of data breaches. This news was broken to a select few noble Lords in correspondence on the day of the deadline. Can the Minister confirm why this milestone was missed and when the review is expected finally to take place?

While she is gazing into her crystal ball, perhaps the Minister might also provide news on the fan-led review of football governance. Given the close and important relationship between sports clubs and the gambling industry, it is crucial that these workstreams happen simultaneously, rather than sequentially. The Commons Minister said that work is under way on an informed basis, with the formal review to come as soon as possible. However, one Minister at the department told the Commons Select Committee to expect a consultation on the Electronic Communications Code this side of Christmas, whereas the noble Baroness told my noble friend Lord Stevenson of Balmacara on 10 December that timings were “still to be finalised”.

I apologise for failing to spread any festive cheer with this contribution, but all these issues are incredibly important. I appreciate that this has been a challenging year in many respects for government and for all, and I hope very much that 2021 will see us making meaningful progress on all fronts.

[Lord Foster of Bath (LD) [V]]

My Lords, I too thank the Minister for providing the opportunity to debate this Statement.

Since serving on the Commons committee that considered the Gambling Act 2005, I have seen the huge growth in gambling in this country brought about by that Act and by technological change, not least with the advent of the smartphone, enabling anyone to have 24/7 access to a mini-casino in their pocket, with high-speed games designed to keep people playing. With its spread throughout sport and television, children are seeing gambling as part of everyday life. The gambling industry and its profits have grown exponentially but, most worryingly, 60% of those profits are coming from just 5% of gamblers—those likely to be experiencing harm.

More recently, serving on the Lords committee on gambling, I received very clear evidence of the urgent need for action—not least that described in the committee’s 66 recommendations—from a statutory smart levy on the industry and a statutory duty of care to much stronger regulation of advertising and controls on affordability. Those recommendations, many of which do not need primary legislation, have widespread support in your Lordships’ House, as demonstrated by the nearly 150 Peers who have joined Peers for Gambling Reform, which I have the honour to chair and which seeks early implementation of those recommendations, so that those who wish to gamble can do so safely.

The urgency is illustrated by the figures. There are nearly half a million problem gamblers—probably more—including over 60,000 11 to 16 year-olds, with each problem gambler impacting the lives of family, friends and local communities, and, most tragically, on average, one gambling-related suicide every day.

So although I welcome the review, will the Minister assure me that in those areas where overwhelming evidence for change exists, the Government will take action immediately? Sadly, I was not confident about this last week. I asked the Minister what further evidence the Government need to establish a gambling ombudsman. Despite the overwhelming evidence in the Lords report, she replied:

“The Government continue to have an open mind about the role of an ombudsman.”—[Official Report, 9/12/20; col. 1234.]


I hope that she will she reconsider. However, I welcome the work that has been done on VIP schemes and banning credit card gambling, as well as the work in relation to loot boxes and affordability. Can the Minister update us on progress and assure us that, where action can be taken quickly without waiting for the conclusion of the review, it will happen?

Gambling harm is a public health issue, and like the noble Lord, Lord Bassam, I was disappointed to see no formal role for the Department of Health and Social Care in this review. Will the Minister assure me that the review will take a public health approach and that mechanisms are in place to ensure that DHSC participates fully? The threat of major reform has led the industry to make some welcome, albeit limited, changes, but we are dealing with a vast, multinational industry that is obliged to protect its profits. Does the Minister agree that this review must be evidenced-based and avoid undue influence by industry lobbyists—lobbyists arguing, for example, that reform should be muted for fear of seepage to the black market? Of course we should look to measures to tackle the black market through payment processors and domain blocking, but does she agree with the Gambling Commission that the black market is not a significant issue and should not be used to drive down standards locally? Is she aware that some operators in this country are themselves operating in black or grey markets abroad? Will the Minister ask the regulator to look into this matter urgently?

Last week, I met the mother and the fiancée of Chris Bruney, who tragically took his own life because of a gambling addiction at the age of just 25. Chris was a bright and vibrant young man with his whole life ahead of him. To my mind, there can be no more powerful illustration of the need to reform our outdated gambling laws. I urge the Government not to delay.

[The Parliamentary Under-Secretary of State, Department for Digital, Culture, Media and Sport (Baroness Barran) (Con)]

I thank both noble Lords for their welcome of the Statement and our call for evidence. I would like to pick up where the noble Lord, Lord Foster, finished, on the all-too-often tragic impact gambling can have on people’s lives and the lives of their friends, families and, in particular, children. That is where our greatest priority in this review lies.

The noble Lord, Lord Bassam, talked about the Government’s response being both piecemeal and slow. I am a bit puzzled about how both can be true. We have aimed to be responsive and have made significant decisions in the last year to improve the safety of, and reduce the risk of harm for, gamblers, but we have now announced an extensive and broad call for evidence, which we hope will address some of the issues several of your Lordships have raised in recent months in this House.

The noble Lord, Lord Bassam, also raised the point about offshore gambling. I am happy to write to the noble Lord if I have misunderstood, but this was a point also raised by the noble Lord, Lord Stevenson, last week. In 2014, Great Britain introduced one of the first point-of-consumption regimes for regulating gambling, which means that any gambling company, based anywhere in the world, that provides services to GB customers, must comply with the Gambling Commission licence conditions and pay remote gambling duties to the Exchequer.

I am afraid the connection broke up at one point in the comments from the noble Lord, Lord Bassam, so I think I missed one of his questions. I know both noble Lords were concerned about the Department of Health’s role. The noble Lord, Lord Foster, talked about the importance of a public health approach. Treatment is not directly in scope of the Act review; the focus is predominantly the regulation of gambling, particularly the powers of the Gambling Commission. However, the Department of Health remains absolutely committed to working on and improving treatment and integrating both NHS and third-sector provision in this field.

The noble Lord, Lord Bassam, apologised for a lack of festive cheer. I hope I can bring a little festive cheer, in that tomorrow my right honourable friend the Secretary of State will make a Statement in the other place about the online harms consultation. He will be able to address some of the other points on the timing of legislation. I hope we will take that Statement speedily after it is made in the other place.

The noble Lord, Lord Foster, talked about the risk to children and the number of children who have a gambling addiction or are problem gambling. As I said, the safety of children is our first priority in this review. I thank him and other noble Lords who sat on the committee for their 66 recommendations. He will have seen that the vast majority of these are in scope of the call for evidence. I assure him that we will not wait, as we have not waited already, to implement them.

The noble Lord, Lord Foster, said that there was overwhelming evidence for the appointment or creation of an ombudsman. Our starting point is that operators must be held accountable for their failings, and the review will look at the current system for redress. We will look at the pros and cons of different approaches and take a decision based on the evidence put forward. Again, I encourage all noble Lords and those in their networks to submit evidence.

Finally, I hope I can reassure the noble Lord that the review and the decisions taken from it will be based on evidence. He raised concerns about the power of lobbyists. Obviously, we have to look at all evidence fairly, but much evidence in this space is contested. We hope we will be able to resolve some of those contested areas and move forward with a gambling regime fit for the digital age.

Gambling Legislation

Lord Foster of Bath Excerpts

Wednesday 9th December 2020 Lords Chamber

[Baroness Barran (Con)]

I am slightly puzzled by the noble Lord’s question, because the location of the gambler is where our laws prevail, irrespective of the location of the operator.

[Lord Foster of Bath (LD) [V]]

My Lords, what further evidence do the Government need to establish a gambling ombudsman?

[Baroness Barran (Con)]

The Government continue to have an open mind about the role of an ombudsman. We are gathering evidence on the effectiveness of the regulatory regime and whether the Gambling Commission needs additional powers. We are already considering commission proposals for a fees uplift.

Streaming Platforms: Age Ratings

Lord Foster of Bath Excerpts

Tuesday 8th December 2020 Lords Chamber

[Baroness Barran (Con)]

My understanding is that the system that has been agreed between Netflix and the BBFC is that Netflix takes a self-rating approach in line with the BBFC’s classification, which is then verified and audited by the BBFC. Both parties appear to be content.

[Lord Foster of Bath (LD) [V]]

My Lords, far more parents allow their young children to play 18-plus-rated video games than allow them to watch 18-plus-rated films. Indeed, one survey showed that 86% of parents do not follow video game age restrictions. What more can be done to persuade parents and others buying video games as Christmas presents for children to understand the harm that can be done to children by not taking seriously the age rating of video games?

[Baroness Barran (Con)]

The noble Lord raises an important point. We would like to see the Pan European Game Information—PEGI—age ratings, which are used for physical copies of games, also used for online games, and we are pursuing that actively.

Audiovisual Media Services (Amendment) (EU Exit) Regulations 2020

Lord Foster of Bath Excerpts

Friday 27th November 2020 Lords Chamber

[Lord Foster of Bath (LD)]

My Lords, earlier versions of the AVMS directive regulated linear and, subsequently, online demand TV. This new version effectively replicates all of that but adds to the existing measures, adding video-sharing platforms and bringing them into scope for regulation. As we have heard, the SI, which came into force on 1 November, appears to be a faithful transposition of it into UK law. I therefore welcome and support it—but, rather like the noble Lord, Lord Moynihan, for what it is. Picking up the point made by the noble Lord, Lord Naseby, I also note that, despite the start date of 1 November, the regulatory regime will not be fully operational until late summer next year. Perhaps the Minister can confirm that I am correct and explain why we have not got on with it sooner.

For far too long, video-sharing platform owners have denied any responsibility for material posted on their sites. They have hidden behind the various safe harbour provisions, such as those contained in the US Digital Millennium Copyright Act. For example, when Paramount Pictures sued YouTube for $1 billion for allowing users to upload Paramount material more than 150,000 times, YouTube got away without paying any damages. Fortunately, that is now changing, and VSPs are beginning to recognise that they have some responsibility—hence, for example, the action taken against the postings of Donald Trump.

Of course, the majority of VSPs serving the UK are headquartered outside the EU—not least in the United States—so it might appear that they are exempt from regulation. However, as the Government and the Minister have pointed out,

“most, if not all, US based prominent VSPs will have some form of physical presence in Europe.”

So, UK users of most VSPs will have the protection ushered in by the SI, though often by other EU regulators rather than by Ofcom. However, future trade deals could undermine this if, for example, American-style safe harbour provisions are insisted upon, as they were by the United States in their recent deal with Canada and Mexico. Can the Minister provide an assurance that in discussions with the US over any trade deal there will be no agreement to dilute these provisions?

The noble Lord, Lord Blunkett, picked up on a point referred to by many other noble Lords, including the noble Baroness, Lady Ritchie, my noble friend Lord Clement-Jones, and the noble Earl, Lord Erroll—that we need a tougher regulation than this will herald in. It is a much lighter regime than could be brought in and, we hope, will be brought in with the online harms legislation. We have had months, in fact years, of delay with getting this legislation, so can the Minister give a categorical assurance that the response to the consultation on online harms will be published before the end of the year and that draft legislation will follow shortly afterwards?

As the Explanatory Memorandum makes clear, online harms legislation will enable us to also deal with the obvious problem of the UK’s inability, post 31 December, to have some say in the regulation of the numerous VSPs, such as YouTube and Facebook, which are heavily used in the UK but regulated in one of the other remaining 27 EU countries. Can the Minister confirm that the forthcoming online harms legislation will include measures that will enable Ofcom to regulate, in respect of online harms, all VSPs that serve UK audiences, regardless of the location of their primary establishment? Given that the Government plan to regulate the commercial behaviour of tech platforms, can she explain what she sees as the relationship, in relation to VSPs, between the role of Ofcom and the new Digital Markets Unit within the CMA?

On another point made by the noble Lord, Lord Moynihan, and my noble friend Lord Clement-Jones, does the Minister acknowledge that, even with such legislation in place, it will clearly be beneficial for the UK to continue to have some means of influencing discussions within the EU about future changes to the AVMSD? At the end of the year we will lose our membership of the EU bodies that bring regulators together, but we could become observers. Can the Minister update us on plans to do that? Can she also tell us whether she thinks it will be sensible for us to have more involvement in developing the work of the ECTT—the European Convention on Transfrontier Television?

Finally, I turn to a point raised by the noble Earl, Lord Erroll. Ofcom, in its regulatory proposals, says that there will be a requirement for what it calls “strict access control measures”—age verification measures—to protect children from restricted material that has the most potential to cause harm. Given the numerous areas in which robust age verification is needed, surely it is important that the Government do not leave this decision to Ofcom alone, as the noble Earl rightly pointed out. For example, it makes sense that measures required by Ofcom are aligned with those that the ICO will use for age appropriate design codes. What steps are the Government taking? Does the Minister believe that access control measures should conform to BSI 1296, and be subject to external audit, assurance and certification? Does she believe that VSPs can be trusted to carry out their own age assurances for high-risk content? I look forward to the Minister’s response, but I welcome and support this limited SI.

Legislative Reform (Renewal of Radio Licences) Order 2020

Lord Foster of Bath Excerpts

Friday 27th November 2020 Lords Chamber

[Lord Foster of Bath (LD)]

My Lords, I welcome the order and in doing so I particularly welcome, as others have said, the addition to it of small-scale multiplexes and the potential benefit that that could bring. Before I say anything further, however, I want to give huge praise to the Government for achieving something that I have never seen before. I have spoken in a number of debates recently and have had to look through explanatory memorandums that, frankly, I have not begun to understand. The explanatory document, as it is called, that we have been provided with for this debate is exemplary. I praise it and ask the Minister to pass on my thanks to all those in her department who were responsible for its production.

I have only two things to say about the order. The first is that the Minister referred to the announcement made back in February that there will be a review of digital radio. I believe that this is long overdue. The Government promised that when certain criteria of radio listenership were met, there would be a review. Those criteria were met in May 2018. In May 2019, the Government announced that they intended to have a review, but it took them until February 2020 to announce that review. We will not get the results until March 2021, and no doubt several months after that before we get a response from the Government on what they intend to do.

This will not be a pleasure for the noble Baroness, Lady Altmann, to hear, but I have long argued that we should be more urgently looking to have the same sort of radio switchover as we have had so successfully in relation to television. I am firmly convinced that were the Government to invest money in improving the digital infrastructure, there would be huge benefits not just in terms of radio listening, but so much more; that funds would be saved for the operators in that they would not have to have dual transmission; and that there would be an enormous benefit to the Treasury through the auction that could then take place of the analogue spectrum that had become available. I am disappointed that the Government have adopted what they call the “listener-led” approach, and I note that the Minister has said that she “reasonably thinks” it is likely that analogue will come to an end by the end of the current decade—another 10 years—which I personally believe is a wasted opportunity.

The other thing I want to remark on is the comments made by the noble Lord, Lord Kirkhope, and the noble Baroness, Lady Gardner of Parkes. Both referred to the vital importance of local radio. In my view, local radio has been diminished by the reduction of the requirements being placed on it. Now, far too often, as the noble Lord, Lord Kirkhope, pointed out, they are putting out the same music that you can hear on any other station. We need to look at ways of regaining genuine local radio that covers local news issues, holds local politicians to account and tells the stories that involve local people. That, sadly, is being diminished in this country. The addition of the small-scale multiplex and the possibility that that brings for new entrants is of course very welcome. It is one of the reasons I support this order, but of course there are other huge benefits in the order in that it will save the readvertising costs that would be incurred.

Covid-19: Creative Industries

Lord Foster of Bath Excerpts

Tuesday 22nd September 2020 Lords Chamber

[Baroness Barran (Con)]

The noble Baroness raises important points. As I said earlier, we take this issue seriously. We were encouraged by some of the work done by the Creative Industries Council, which published its Diversity & Inclusion Progress Report in, I think, May. We are beginning to get more clarity on the baseline from which we are moving. There is better diversity monitoring, better strategies to develop a talent pipeline and clear strategies to address leadership. As I say, there is a great deal of work to be done and much in train.

[Lord Foster of Bath (LD) [V]]

My Lords, the BBC plays a crucial role in supporting our creative industries and developing greater diversity, with schemes such as its Diversity Commissioning Code of Practice. The new director-general has set a 50%, 20% and 12% target for workforce diversity at the BBC itself in terms of gender, race and disability. Does the Minister welcome this initiative, and is her department giving leadership by pressing for higher departmental workforce diversity targets than currently exist?

[Baroness Barran (Con)]

We absolutely welcome the announcement from the new director-general about targets. I believe I am right in saying that my department is one of the most diverse in Westminster.

Gambling Legislation

Lord Foster of Bath Excerpts

Thursday 10th September 2020 Lords Chamber

Asked by

[Lord Foster of Bath]

To ask Her Majesty’s Government what plans they have, if any, to review gambling legislation.

[The Parliamentary Under-Secretary of State, Department for Digital, Culture, Media and Sport (Baroness Barran) (Con)]

My Lords, the Government have committed to review the Gambling Act 2005 to make sure that it is fit for the digital age. We will announce further details in due course. However, we and the Gambling Commission are not waiting for the review to make gambling safer. Already this year, we have banned credit card gambling, tightened protections for online gambling in lockdown and consulted on further safeguards on product design.

[Lord Foster of Bath (LD)]

I thank the Minister for that reply. However, given that we have a third of a million problem gamblers, including 55,000 children, and one gambling-related suicide every day, action is urgently needed. I am delighted that the Minister acknowledges that some action can be taken without needing to wait for a review, and, in fact, without needing primary legislation. For example, we have a fairly tough regime for games that take place in physical premises—a regime that includes limits on stakes and prizes—but, bizarrely, no such one for online gambling. As the online gambling companies cash in on the pandemic, make more profit and put more lives at risk, will the Government now take urgent action to address this particular problem, as recommended by your Lordships’ Gambling Industry Committee?

Gambling Advertising

Lord Foster of Bath Excerpts

Thursday 25th June 2020 Lords Chamber

[Baroness Barran]

I thank my noble friend for his honesty and his question. We will obviously be reviewing a range of options when we come to review the Gambling Act. The evidence around the impact of advertising on problem gambling, as opposed to all gambling, is really not clear, with much suggesting that, particularly for young people, it is parents and their peers who have the greatest influence on their behaviour.

[Lord Foster of Bath (LD) [V]]

My Lords, among problem gamblers, 55,000 are 11 to 16 year-old children, many of whom use legal music and film download websites that are often funded by gambling advertising. Will the Government immediately consider legislation to enable these sites to be blocked, and not wait for the long overdue review of gambling legislation?

[Baroness Barran]

The noble Lord raises a very important point, which I am happy to take back to my colleagues in the department and the Minister responsible.

EU: British Musicians

Lord Foster of Bath Excerpts

Wednesday 3rd June 2020 Lords Chamber

[Baroness Barran]

I fear it is probably not appropriate for me to go into any detail about the nature of those negotiations. It has been said publicly that details on specific sectors will come in the next stage of the negotiations. The Prime Minister has been clear on multiple occasions as to his views on an extension to the negotiations.

[Lord Foster of Bath (LD)]

My Lords, at present a system is in place that prevents the double payment of social security payments when our musicians travel to EU countries. Can the Minister assure us that her department is pressing our negotiators to ensure that any bilateral deal includes continued access to this system? Will she publish her department’s analysis of the impact of failure to obtain such an agreement?

[Baroness Barran]

The department is leading a major programme of work across all our sectors which is trying to ensure that they, and our arm’s-length bodies, are well prepared for the end of the transition period in relation to this point and more broadly.

Gambling Act 2005 (Variation of Monetary Limits) Order 2020

Lord Foster of Bath Excerpts

Monday 9th March 2020 Grand Committee

[The Parliamentary Under-Secretary of State, Department for Digital, Culture, Media and Sport (Baroness Barran) (Con)]

My Lords, Section 99 of the Gambling Act 2005 imposes monetary limits on the per-draw and annual proceeds of any lottery promoted in reliance on a lottery operating licence. This order will amend the per-draw sales limit from £4 million to £5 million. As a consequence, the maximum prize limit will increase from £400,000 to £500,000, due to the rule that the prize must not exceed 10% of per-draw proceeds. This order also amends the annual sales limit from £10 million to £50 million.

In July 2019, the Government announced proposals to help society lotteries: that is, fundraising lotteries run by charities and other non-commercial organisations such as sports clubs or local community groups. Last year, society lotteries raised over £330 million, in support of a diverse range of charities, including hospices and air ambulances, which so many in this country rely on. The current annual sales limit has been in place since it was implemented in 2007, and the per-draw sales and prize limits have been in place since 2009. Indeed, the issue was looked at by the DCMS Select Committee in 2015, which recommended that the department and the Gambling Commission examine the sector in some detail. This led to the 2018 public consultation. I am grateful to the committee for raising this important issue.

I know that stakeholders on both sides have strong views, evident in the 1,600 responses the department received to its consultation. A key consideration in developing the changes being debated today has been the relationship between the National Lottery and society lotteries. Together they raise around £2 billion a year, improving our communities and life in this country in countless ways. It is imperative that any changes enable both to grow, and that society lotteries’ growth is not at the expense of the National Lottery. As Minister for Civil Society I can say that this is particularly close to my heart, as the sector benefits considerably from funds raised by the National Lottery.

I can assure the Committee that we have considered in detail the relationship between society lotteries and the National Lottery. The final package is underpinned by independent, evidence-based advice from the regulator, the Gambling Commission. It has advised that the changes I am bringing forward today will preserve the balance in the sector and maintain the key distinction between the National Lottery, which offers the largest prizes in support of many good causes, and society lotteries, which offer smaller prizes with a focus on a specified good cause.

I say very deliberately that society lotteries should have a clear focus on the charitable and not-for-profit purposes they support, and it is of the utmost importance that players know which causes they are supporting with their ticket and how much of the ticket price is going to support the cause. I am therefore delighted to see that the Gambling Commission is currently consulting on additional transparency measures for society lottery licences. I take this opportunity to thank it for its consideration of the issue and I look forward to seeing its conclusions.

The most significant change is the increase to the annual sales limit to £50 million. The current limit of £10 million is restrictive for larger society lotteries wishing to grow. Some have set up additional lotteries or an umbrella structure to facilitate growth, which incurs high administrative costs and can be bureaucratic to operate. For large charities operating at or close to the existing limits it is costly to add additional licences, either within an umbrella structure or a multiple-society structure. For example, in response to the consultation, Cancer Research UK estimated that moving to a multiple-society model would cost around £345,000 to set up, with additional annual running costs of around £130,000, thereby reducing the proportion of income for its charitable purposes.

For most societies, a £50 million limit would mean that they no longer need to hold more than one lottery operating licence, leading to cost savings and higher returns to good causes. It also means that society lotteries approaching the current annual sales limit can continue to grow and raise valuable funds for their beneficiaries without stopping or slowing their draws, as some do at present. This order includes transitional provisions to allow licence holders to benefit from the increased limits straight away on a pro rata basis, rather than having to wait until the beginning of the new calendar year.

For the vast majority of the sector, increasing the per-draw sales limit incrementally from £4 million to £5 million, combined with the new annual limit of £50 million, will provide both the headroom for further growth and the flexibility to increase the size and frequency of draws as operators wish. Where individual per-draw lottery sales exceed £250,000, the maximum prize cannot be more than 10% of the proceeds of that lottery. The maximum prize limit will increase from £400,000 to £500,000. We know that most society lotteries only offer relatively small prizes compared to their sales, but this change will allow for some additional flexibility, while remaining distinct from the largest prizes offered by most National Lottery games.

The Gambling Commission will be monitoring the impact of the changes carefully and the Government will keep a keen eye on progress, in particular to ensure that additional funds are directed to good causes and do not lead to an increase in administrative expenses. To satisfy ourselves in this regard, the Government will review the impact of the changes 12 months after implementation, looking at new data and evidence that has emerged over the course of the year. As part of this, we will look again at the case for a £1 million prize, as well as the link between sales and the maximum prize, and returns to good causes. Once we understand the impact of the current changes, we will also look at the case for a £100 million licence and any additional conditions that may accompany that.

To conclude, by increasing the limits we will enable society lotteries to raise even more funds for the causes they support by reducing burdensome administrative costs. Recent research published just last month by the Gambling Commission shows that the National Lottery and society lottery sectors are both currently growing, with participation up two percentage points for both, meaning that overall funds raised for good causes are growing. I welcome this approach. It is clear that society lottery funding brings tangible benefits. The Carers Trust stated in its response to the consultation:

“Unrestricted funding gives us the flexibility to allocate funds to projects and posts which are harder to fundraise for, and contribute towards our overheads and running costs.”


I look forward to seeing the impact of these changes on organisations working in my sector, and I commend the order to the House.

[Lord Foster of Bath (LD)]

My Lords, I apologise, but this is not quite as simple a statutory instrument as the Minister has said. There are a number of issues and questions that I want to put to her. I was delighted that, on 19 November last year, we were able to celebrate the 25th anniversary of the National Lottery and the staggering £40 billion that it has been able to give to good causes since it was introduced by John Major in 1994. Equally, we should celebrate the incredible work done by small-scale society lotteries that have provided funds for hospices, schools, clubs and many other good causes alongside the National Lottery.

My concern is that the original, untaxed society lotteries were characterised by relatively low prizes and generally limited distribution footprints. Those factors traditionally differentiated them from the National Lottery and, as the Minister said, that distinction helped them both to thrive and funds to go to good causes because they were not in competition.

However, then came the idea of grouping together a number of these society lotteries under a single umbrella; two key examples are the People’s Postcode Lottery and the Health Lottery. I have argued on many occasions that, although both of them undoubtedly do good work, they are being allowed to operate contrary to the concept of there being a single national lottery.

As I intend to demonstrate, notwithstanding what the Minister said, they are already having a damaging impact on the National Lottery. Currently, they are run by private external lottery managers and their revenues have increased dramatically, from £179 million to £736 million over the last 10 years. The measures in this statutory instrument look set to cause even greater damage to the National Lottery than has already been done. We must gauge the measures being proposed against the impact that they will have on the National Lottery.

Your Lordships’ Committee on the Social and Economic Impact of the Gambling Industry, of which I am a member, has already taken evidence on some of these issues. From that, we know that running concurrently to the legislative process we are discussing today—the Minister has already referred to this—is a public consultation by the Gambling Commission in response to concerns about transparency raised by the previous Lotteries Minister.

Public trust and confidence are vital to preserve the integrity of both the lotteries and the charities that operate and rely on them. Where sales are in the hundreds of millions of pounds and the purpose is charitable, it is only right that the levels of transparency are high—higher than they are now. Players should be able easily to find out how often prizes are awarded, how good causes are chosen and how their money is spent.

For example, we know that the National Lottery has operating costs of about 5% of revenue but, as the Select Committee heard in January when both Camelot and the People’s Postcode gave evidence, the People’s Postcode Lottery has operating costs of 28%; it spends almost as much on operating costs as it does on giving to charitable causes—in marked contradiction to what the National Lottery does. I also understand that the Health Lottery spends more on expenses than it returns to good causes, although this information is not easy to ascertain. Indeed, DCMS noted that

“the two sector leaders currently return amongst the lowest proportion of revenue to good causes.”

So, the Minister says how good these society lotteries are—indeed, the individual small ones are—but we discover that the amount of money that these combined umbrella lotteries give to good causes is almost similar to the amount they spend on administration. I hope that the Minister can assure us that she will watch this issue carefully so that we can make changes leading to higher returns to good causes. As a first step, and before any result of the consultation is seen and any major final decisions are made, can the Minister at least ask those two umbrella lotteries whether they will make public the information on the various issues that I have just raised?

--- Later in debate ---

[Baroness Barran]

I start by thanking both noble Lords for their careful scrutiny of the instrument that we are discussing, and for their questions. Perhaps I might start by trying to reassure the noble Lord, Lord Foster. I spend my life trying to reassure noble Lords, but I will try again. Our clear aim is to set a framework that encourages both the National Lottery and society lotteries to thrive. We will monitor the impact of the changes very carefully, and we will not allow the growth of society lotteries to come at the expense of the National Lottery. I hope that that goes some way towards confirming our intent.

The noble Lord, Lord Griffiths, said that part of the purpose of the instrument was to remove the pressure to create umbrellas out of bodies. None of us is quite clear about that; it feels uncomfortable. But, by raising the limit to £50 million, all the current society lottery providers, with the exception of the People’s Postcode Lottery, will be able to move from an umbrella structure back to a single structure. This goes back to the point raised by Cancer Research UK in its response to the consultation: that that will remove some administrative costs, which will allow more money to go to good causes. I think that all of us can align on that. I understand that the People’s Postcode Lottery has also indicated that it will seek to reduce the number of lotteries under its umbrella. So I hope I have addressed that point.

More broadly, the noble Lord, Lord Foster, questioned whether the changes could have a negative impact on the National Lottery. As the noble Lord knows, the Gambling Commission has advised that changes to the limits will have minimal impact on the National Lottery. The reforms are designed to allow society lotteries to raise more money for the good causes they support, but they take very careful account of the relationship between the society lotteries and the National Lottery. The distinctions remain in terms of the size of prizes and the frequency of draws, so we continue to believe that substitution between the two is likely to remain minimal.

The noble Lord cited the Camelot report in terms of the negative impact on National Lottery sales. Again, I can only reiterate the Gambling Commission’s advice, which was based on independent research. It does not believe that it has had a negative impact, and obviously that impact will be carefully monitored. The latest research, published just last month, shows participation in the National Lottery and society lotteries going up by about 2 percentage points. I believe that that evidence was given to the committee that the noble Lord sits on.

The noble Lord also asked about reasonable costs. Obviously with the National Lottery there are economies of scale, but the noble Lord will also be aware that society lotteries have been in existence for a lot longer, and we have a diverse range of business models. The minimum acceptable return that has been agreed with society lotteries is 20%, but obviously the average is 45%. The People’s Lottery is at 32%, but we know that it hopes to increase that. Again, the one-year review will look at this in detail.

[Lord Foster of Bath]

I vowed I would not intervene, but on this I really must, because it is incumbent on the Government at least to define what they mean by “reasonable” in this context. For example, does the Minister think it is reasonable that the People’s Postcode Lottery is spending on advertising 75% of what the National Lottery spends? Is that reasonable when the People’s Postcode Lottery is currently only 5% of the size of the National Lottery?

[Baroness Barran]

I am sure the noble Lord will understand that the decision on what the People’s Postcode Lottery spends on its marketing budget is for it. What we look at for reasonableness is the growth in money going to good causes, and, given that both parts of the sector are increasing at the moment, we are comfortable with that, but we will keep it under close review.

On transparency, which both noble Lords raised, and the consultation that the Gambling Commission is undertaking at the moment, the Government absolutely agree that society lotteries need to demonstrate the highest levels of transparency. The consultation seeks views on new guidance which will allow society lottery operators to provide players with more information about their odds of winning a prize, how good causes are selected and the breakdown of lottery proceeds. I know that my honourable friend the Minister here would not be afraid to legislate if there were concerns about transparency.

The noble Lord, Lord Foster, asked about reintroducing the expenses cap. He will be aware that that was removed in 2005 and, since then, the approach has been to focus on the minimum return of 20%, with flexibility for operators to split the balance. Obviously, the return is currently significantly higher than that, so there are no current plans to reintroduce the cap. The Gambling Commission consultation will also make players aware of how to access information about the breakdown of proceeds before they buy a ticket.

Returning to the noble Lord’s question about reasonably incurred levels of expenditure, I should have added that that is handled by the Gambling Commission, as the regulator for the sector.

Turning to taxation models for the National Lottery, we have discussed them, and options for changing to a gross-profit tax model, with the Treasury, but that remains a matter for the Treasury to decide on.

[Lord Foster of Bath]

I apologise profusely, but too often we hear from Ministers that decisions on taxation are a matter for the Treasury. I entirely accept that that is true, but there is a duty on, in this case, her department to provide evidence to the Treasury to suggest that it should seriously consider making a change to taxation that would, in this case, benefit good causes and the Treasury itself. My question now is simply: has her department recently provided any of the clear, detailed research evidence that shows that a change would make the benefits that I suggest? Has it done it or not? If it has not, will it agree to so do?

[Baroness Barran]

The answer is yes. As the noble Lord is aware, the fourth national licence competition will open in April, and both my department and the Treasury have been looking at the case for how the taxation system should work. I have managed to reassure the noble Lord on one thing, which I shall regard as a triumph.

As we have all agreed, the National Lottery is a uniquely important part of British society. Each year, it raises about £1.6 billion for good causes in the heritage, arts, sports and community sectors; that has amounted to an impressive total of £40 billion over its 25 years. Society lotteries raise more than £330 million a year for good causes, and that amount is increasing year on year. It is right that we do everything we can to support both sectors to grow, thrive and optimise the contributions they make to funding good causes across the country.