Charity Lottery Fundraising Caps

I beg to move,

That this House has considered the potential merits of removing the caps on charity lottery fundraising.

It is a pleasure to serve under your chairmanship, Mr Gray, and to bring forward this debate on the important work of Britain’s charity lotteries. I must first draw attention to my entry in the Register of Members’ Financial Interests as a vice-president of the Lotteries Council. The charity lottery sector is worthy of Members’ time, as I am confident today’s contributions will demonstrate, and I am grateful to Members present. As I found when researching the debate, the interest of Members from across the House is evident from Hansard and, as I am sure the Minister is aware, from the number of questions to his Department on this important topic.

Back in 2017, the now Lord Bellingham secured a Westminster Hall debate on the future of society lotteries and the limits on prize values. I remember it well because I attended. The debate was well supported by Members from all sides of the House. A little over six months after that debate, the Government concluded their consultation on society lottery reform, and recommended that the maximum draw prize increase to £500,000, that the draw limit be raised to £5 million and, most importantly, that the annual cap increase to £100 million. In 2020, a revised annual limit came into effect, albeit that it was a reduced amount of £50 million.

Today, charity lotteries, or social lotteries, as they are more formally known, generate over £400 million a year for charities and good causes the length and breadth of Great Britain, meaning they constitute a significant funding stream for many well known charities and local community groups alike. I am sure we will hear from Members today about some of their local charities that benefit from those lotteries. Charity lotteries are regulated via the Gambling Act 2005 and are subject to heavy bureaucratic burdens, though the national lottery is not. For example, charity lotteries are subject to stringent caps on annual sales, caps on sales in each individual draw, and caps on the prizes that operators are allowed to offer, and there is rightly a statutory minimum return to good causes—I completely agree with that.

To put it simply, despite existing to fund charities and good causes, the sector is mired in exactly the sort of red tape that our Conservative Government should be focused on eliminating. To be honest, given that charity lotteries predate the national lottery by at least three decades, it is somewhat baffling as to why such a heavy regulatory burden exists at all. From the mid-2000s, the idea took hold in some quarters that the national lottery required protection from charity lotteries, and that is a myth that I am keen to see debunked on the basis of the available evidence. For example, years of Gambling Commission industry statistics show continued growth in sales, and returns to good causes from both sectors have reached record levels.

The recent Culture, Media and Sport Committee report on the national lottery explicitly acknowledged that charity lotteries do not negatively impact the national lottery, and called out the oddly hostile attitude that Camelot has shown to the sector over the years. It is imperative that we do not lose sight of the fact that when both sectors thrive, it is the charities and good causes in all our constituencies that stand to benefit the most. The complementary nature of both funding streams cannot be understated—sorry, overstated; we must ensure Hansard gets that right.

I am sure that many Members present will be familiar with the People’s Postcode Lottery through their constituency or the effectiveness of its advertising, which, as well as admirably shining a spotlight on supported charities, has been known to feature the likes of Jason Donovan. I am certainly aware of fantastic work done in my constituency by a number of organisations that are in receipt of funding from the People’s Postcode Lottery. Such organisations help to deliver vital funding for voluntary sector groups of all sizes.

Funding has been delivered locally to RicNic, Walsall’s “own the stage” project, which provides drama-based classroom resources and workshops to get children to participate in the arts; the Canal & River Trust, which has restored the Black Cock bridge, a Victorian bridge that was built in around 1880 in Walsall Wood, over the Daw End Branch canal; the Royal Voluntary Service, which operates locally from Brownhills Memorial Hall on Lichfield Road, a building known locally as the Memo, where the RVS runs groups who help elderly and vulnerable people to keep active and socially engaged; the Walsall-based Cats Protection, which also has a retail base in my constituency; and Manor Farm Community Association, which was awarded funding for the Silver Connections outreach programme for older people. I could go on, Mr Gray, but I will not. I hope I have given you a flavour of the type of organisations in receipt of this support, and I am sure you have some in your constituency.

Given the huge benefits of those and many other organisations to communities across my constituency—a pattern that I know is mirrored in constituencies right across the country—I am proud to play my part as a champion of the low-risk, not-for-profit charity lottery sector, which exists to fund good causes, some of which I have just name-checked. That is the reason why I felt it was important to secure today’s debate.

In addition to confirming the complementary nature of charity lotteries, the DCMS Committee report to which I referred made clear recommendations on empowering charity lottery operators to set their own prize limits of up to £500,000, and on ensuring a level playing field with unregulated prize draws. Those are important recommendations that I would like the Government to adopt as policy. I urge my good friend the Minister and the Government to remove the annual sales cap on charity lotteries without further delay, to ensure that this vital fundraising stream can maximise its charitable returns. It is open to Ministers to deliver that crucial reform, and most of the other reforms I have mentioned, by way of a statutory instrument. I do not believe it needs parliamentary legislation, so I hope that the Government can find time for that.

An analysis undertaken by the People’s Postcode Lottery demonstrates that the £50 million annual sales cap on the sector is restricting the funding that can be provided to 40 large charity partners, depriving them of millions of pounds in funding annually. That is despite the success of the brand in generating lottery ticket sales well in excess of the £50 million permitted annually per licence. Newly released analysis shows that over the next five years, caps on annual sales will deprive more than 70 People’s Postcode Lottery-supported charities of some £200 million in vital funding. It almost goes without saying that charities can ill afford to lose those funds.

I was astonished when I heard that the People’s Postcode Lottery has to operate a structure encompassing over 40 individual gambling licences in order to comply with the law on annual sales limits. That creates a heavy burden of duplication, which constrains the scale and flexibility of the funds so generously raised by the lottery’s players. The over-regulation of charity lotteries means that some well-known charities—for example, Girlguiding, Keep Britain Tidy, Young Lives vs Cancer, the National Society for the Prevention of Cruelty to Children and the Royal Voluntary Service—are losing out. Put simply, the sector is mired in needless red tape that could easily be removed by us in the House of Commons with Government support.

The Government previously committed to a £100 million annual sales limit for charity lotteries. However, if they removed the cap completely instead of increasing it, that would benefit not only the largest operators but smaller charity lotteries such as Essex & Herts Air Ambulance and the local hospice lotteries. It would be a more efficient use of the Department for Culture, Media and Sport’s time, as it would remove the need to revisit the sales cap frequently. Operators such as those that I mentioned could also shed the additional licences associated with the requirements of the Gambling Act 2005, which operators say are difficult and costly for small not-for-profit lotteries to navigate.

It is completely unclear why the sales limits exist. In fact, the Gambling Commission is on record as saying that it has been

“unable to uncover any reference as to why these limits were put in place”.

The sales limits cannot affect player behaviour in any way, so they do not impact on sales, but they have a negative impact on the charities that receive funding, and they add to the bureaucracy for lottery operators. It seems counterproductive to continue limiting charities’ income in such a blunt manner, particularly at a time of growing charitable need.

Removing charity lotteries’ annual sales limits could better equip the third sector to support those most in need, without costing the Treasury or the taxpayers a single penny. That makes the argument even more compelling. I put it to the Minister that this aspect of the debate is very much worthy of the Chancellor’s consideration, as the change would be cost-neutral fiscally. Perhaps the Minister will put a good word in with the Chancellor ahead of the autumn statement.

As I draw my contribution to a conclusion, I draw attention to the striking support that lifting the cap on charity lotteries and these common-sense sector reforms have attracted from colleagues from across this House, as we see today. That speaks volumes about the value of the charity sector, and of charity lottery reform. I acknowledge that the Government have shown themselves willing to act in support of Britain’s charity lottery sector in recent years—my good friend the Minister comes from a background of fundraising in the charity sector. I commend the reforms to date, but it is clear that further action is required now.

I recognise that the Government have to manage many competing priorities, but charity lottery reform can be undertaken via a simple statutory instrument, or by including the changes in any new gambling Act. Reform has the support of over 100 of Britain’s best-known charities, the sector itself and Members from across the House. I politely call on the Minister to please prioritise action on this worthy issue.

I warmly welcome this debate, and congratulate the right hon. Member for Aldridge-Brownhills (Wendy Morton) on securing it and on her excellent speech. Members have made a strong case for removal of the charity lottery sales limits, although in some ways those are badly named; they would be better described as fundraising limits, as they effectively limit the annual fundraising by any one charity. Several of the lotteries run by the People’s Postcode Lottery are already at the limit, which prevents growth of the grants provided by those lotteries to the charities they support. However, even if they were not already at the limit, the fact that the People’s Postcode Lottery requires a bureaucracy of 20 separate trusts simply to get the funds that they raised distributed to the charities they support seems nonsensical to say the least.

It does not seem to be the Government’s policy to work with charity lottery operators to provide the best legal and regulatory environment possible for growing the funds that operators provide to the communities that we all represent. I do of course recognise the need to get a balance in the marketplace, so that fundraising by the national lottery is also maximised and not impacted in any way—in fact, I was proud to host an event in Parliament yesterday celebrating the launch of the new national lottery strategy; the Minister was in attendance—but as was said, that has been reviewed and discussed multiple times, and no evidence is forthcoming that removing the sales limit would impact the national lottery in any way. Indeed, it is difficult to see how it could, as the sales limit does not impact consumer behaviour in any way. I also note that in the last few years, since the 2020 changes to the limits, the national lottery has shown record sales and funding for good causes, proving yet again that the argument about a negative impact on the national lottery is a red herring.

As the Minister may be aware, prior to entering Parliament I was an ambassador for the Jo Cox Foundation, which was set up to take forward the work of my sister. It has a focus on tackling loneliness and community building. I therefore have experience, as I know the Minister does, of the challenges of running a charity, including the need for reliable, long-term sources of funding. It is clear that the operational environment for charities is more difficult than ever.

It is a real pleasure to serve under your chairmanship, Mr Gray. I sincerely congratulate the right hon. Member for Aldridge-Brownhills (Wendy Morton), not only on securing this important debate but on her fantastic speech, in which she sought to persuade the Minister by various means. Indeed, the Minister has been persuaded by a number of women today, though I must not forget the hon. Member for Strangford (Jim Shannon).

Like many other speakers today, I want to put on record my support for removing the charity lottery sales limits, and for the fundraising work done by charity lotteries, which is hugely beneficial in loads of ways. There has been a lot of discussion in Parliament over the last couple of years about problem gambling, and I share many of the concerns raised, but charity lotteries have a product that could not be more different from online betting and casinos, both in terms of problem gambling risk and the purpose of the activity, which is to raise funds for good causes as opposed to private profit. However, charity lotteries are not just about raising funds for good causes; the players, who ultimately raise the funds, get to have a little fun, and perhaps win a prize, while doing good for charities. It is a great model.

In February last year, over 600 of my constituents shared a £7.9 million cash pot when the People’s Postcode Lottery’s monthly millions draw landed in Wishaw. Players won between £8,000 and £368,000, and I can truly testify that there was a great deal of excitement in Wishaw. Of course, many local businesses will have benefited too. Charity lotteries can provide a bit of fun and excitement, as well as supporting good causes.

Charities in my constituency have also benefited. Over £100,000 has been provided to community charities, including Basics Food Bank, Wishaw YMCA and the North Lanarkshire Disability Forum. I am a great supporter of all those local charities. Larger charities that have received funding include the Scottish Wildlife Trust, which runs the Garrion Gill nature reserve, and Street League, which does fantastic work using sport as a pathway to get young people into employment.

It is always a pleasure to serve under your chairship, Mr Gray. It is also a real pleasure to hear from the right hon. Member for Aldridge-Brownhills (Wendy Morton), who set the scene so well. It is ladies who are leading the debate, but I am happy to add my support. The hon. Member for Motherwell and Wishaw (Marion Fellows) certainly set the scene too. I did not know that Wishaw had benefited from the People’s Postcode Lottery—well done. We heard from the hon. Member for Batley and Spen (Kim Leadbeater) about her visits around her constituency and the clear benefits of charity lotteries.

We do not have the People’s Postcode Lottery in Northern Ireland. We are not allowed it—for whatever reason, our laws prevent it—but it is advertised on the same TV stations that we all watch, so we feel somewhat concerned that we cannot participate. It is the law of the land. Nobody is trying to stop us; it is just that the gambling laws in Northern Ireland are a devolved matter. I know that the Minister will summarise that issue.

As all the hon. Ladies who have spoken referred to, charity lotteries generate moneys for good. On Friday, the National Lottery Community Fund—I have a really good working relationship with it, as all MPs do—notified me, as it always does, of the moneys coming to my constituency, and I want to use that to illustrate what can happen if the opportunities are there.

I understand that deciding whether or not to gamble is a personal choice, just like deciding whether to take alcohol. Similarly, the overuse of either is not good for an individual or, indeed, for a family unit. That is why I believe in the regulation of gambling, to the extent that we can regulate it, but I also believe in adding layers of protection where possible, for the sake of family units. That being said, I am aware of the wonderful work done by lotteries throughout the United Kingdom; the hon. Ladies all illustrated that very clearly and I know that the Front-Bench spokespeople will too.

I too am delighted to participate in the debate. I thank the right hon. Member for Aldridge-Brownhills (Wendy Morton) for bringing the issue to our attention. The Minister will not be surprised to hear that we in the SNP fully support the removal of the cap on charity lottery fundraising. He will be aware that last year the People’s Postcode Lottery published a report entitled “Limitless potential: The case for raising the cap on charity lottery fundraising,” which highlighted that charities are losing out on millions of pounds due to legal limits on lottery fundraising.

We all know that charity lottery funding can make a huge difference to communities across our constituencies. It is simply not right that capping charity lottery fundraising creates red tape, bureaucracy and, for some charities, stagnation of funds, causing groups in need of funding to miss out, potentially, on millions of pounds that could make such a difference to the lives of our constituents. Their efforts are being undermined by the cap.

In my constituency of North Ayrshire and Arran, £319,000 has been awarded to local charities, in 56 separate grants. In addition, numerous national charities with a footprint in my constituency, such as the Royal Voluntary Service, have received support. The Ellen MacArthur Cancer Trust operates in Largs, providing sailing trips for young people recovering from cancer. The trust has received £4.1 million of funding so far, and receives £450,000 each year to help change the lives of so many young people. With many other charitable groups in my constituency benefiting from funding, I know how important this issue is.

We need to remove the cap. The Minister will be aware that his Government committed to do so in 2020. It is not controversial or a contentious ask for the cap to be removed. Those calling for its removal should be pushing at an open door, but we have not seen anything done to progress that commitment. There is support across the House for the measure, so it is hard to understand why it has not happened. I hope the Minister will be able to respond positively to the calls he has heard today.

As ever, it is a pleasure to serve under your chairship, Mr Gray, and to respond on behalf of the Opposition. I congratulate the right hon. Member for Aldridge-Brownhills (Wendy Morton) on securing this important debate, and all Members from across the House for their contributions. It is rare that this House speaks with one voice, but on an issue of such importance it is great to see. I do not think that the Minister can have failed to hear the pressure from across the House. In a crowded policy field, charity lotteries often do not get the attention that they deserve; however, they do excellent work in supporting communities, as we have heard, especially where so-called Government investment has failed to appear, let alone deliver.

In my constituency of Pontypridd, many local charities and community groups have received funding by players of the People’s Postcode Lottery, myself included—I should probably declare an interest as a player of it. Already this year, Miss Tilley’s CIC, a social enterprise that works alongside disabled people in Pontypridd and Cardiff to help them access work, learning, volunteering and other opportunities, has received £25,000. That is a lifeline to a small charity. Last year, 13 other organisations based in my constituency received funding, including All Stars Gymnastics club, Llantwit Fardre cricket club, Rhondda Cynon Taf Scouts and Rhydyfelin Community Group. As I said, they are small local organisations delivering vital work in communities that would be unable to operate without that funding.

Those are community charities, but some of the country’s best known and well-loved charities working in my constituency are also in receipt of charity lottery funding. We have heard about some of them today: the Royal Voluntary Service, which has seven local groups; the Wildlife Trust of South and West Wales, which runs Y Gweira nature reserve; and the Ramblers, Breast Cancer Now, and Volunteering Matters, which have a presence in all our constituencies. Charity lotteries are not the only source of funding for those charities, but they are a vital one, especially as they provide unrestricted and ongoing funding, which is essential.

It is a pleasure to serve under your chairmanship, Mr Gray.

I thank my right hon. Friend the Member for Aldridge-Brownhills (Wendy Morton) for securing this debate and I thank everybody who has taken part. It has been good to take some time out from the complexities of the gambling White Paper and the questions about levies, betting terminals, casinos and loot boxes, and instead hear about and discuss the fantastic work of the society lottery sector, the great things that it does and the funding that it provides. That includes organisations such as the air ambulances, hospice lotteries, Age UK, the Royal British Legion and so many others up and down the country.

As I said in the House recently, in a previous role I set up a society lottery for the hospice that I used to work at, so I understand the important contribution that society lotteries make to charities’ incomes. I am absolutely committed to doing everything that I can to make sure that charities get as much money as they can. That is precisely why I fought for the £100 million with the Treasury: I went into battle to help with the current situation that many charities, which have been so brilliantly celebrated today, are facing.

Through my wider ministerial role, I have seen at first hand the real impact that funding from charity lottery players has in supporting a huge range of good causes, and it often sits alongside grants from the national lottery. For example, just last week I visited the London LGBTQ+ Community Centre in Blackfriars, which receives funding from the National Lottery Community Fund. Ahead of the Eurovision final in Liverpool, I saw the support that the fund had given to Daisy Inclusive UK for the work it is doing with youth social action groups in that city.

Members have articulated the tremendous amount of work that goes on in their constituencies. Indeed, the People’s Postcode Lottery has supported a range of projects in my constituency, including some that have been mentioned—the Woodland Trust, Magic Breakfast and Farsley Community Orchard. I also recognise the fact that many good causes receive funding from both the national lottery and society lotteries. The V&A in Dundee received over £19 million from the national lottery and £1.2 million from the People’s Postcode Lottery.

I think we all recognise and welcome the changes that the Government made at the time, but having listened to the Minister I want to press him on two points. First, does he accept that there is a place for both the national lottery and the society lotteries? We are not talking about either/or; it is not competition. When we get it right, both sectors can benefit.

Secondly, I appreciate that when there is a consultation there will be lots of different stakeholders to accommodate, but when it comes to the People’s Postcode Lottery specifically, the issue is that charities are being negatively impacted and that, with a bit of tweaking and adjustment from the Government, charities could benefit a lot more.

I take those two points. I absolutely agree that society lotteries and the national lottery can coexist; they have done throughout the existence of the national lottery. I will come to the point about the People’s Postcode Lottery in a moment.

Just last week, I met the current operator of the national lottery. It reminded me that the national lottery was purposefully set up to be the most efficient way to get money to good causes. It is important to remember that since it began in 1994, more than £47 billion has been raised for good causes. That is significant, and it equates to the national lottery raising more than £30 million each week. The majority of that funding goes straight to the heart of all our communities. We obviously need to ensure that that continues, because it delivers to a diverse range of groups and organisations in our communities. Given my wider portfolio, I know it is also critical for sport provision and elite sports. It is important to think about that.

In recent months I have learned a great deal about the complexities of transitioning from one national lottery licence to another and about transitioning for the first time to a new operator. It is clear that our objective for the lottery sector is for the national lottery and society lotteries to thrive together. It is also important to remember that our Secretary of State has a statutory duty to enable national lottery receipts to be maximised, and the continued growth of society lotteries needs to sit alongside that.

From the evidence that I have seen, we seem to have got the balance right to date, but, as with most things, there may be a tipping point, and I continue to bear that in mind. We last reviewed the 2020 reforms 12 months after they were implemented. We concluded that there was not yet enough available evidence to determine the full effect of the changes, and we wanted to see more substantive data over a longer period before considering any further changes. It still feels like the right approach to me, but I strongly believe that an evidence-based approach is always the right one. That is why we got the gambling White Paper into a good place: because it was all based on evidence.

May I press the Minister a little more on that? If he is not willing to deal with it immediately, would he look at it as a matter of urgency, given the number of charities that are being detrimentally affected?

My right hon. Friend has obviously seen a copy of my speech, because I am coming to that in a moment. We will need to carry out a consultation—we have to do that— take account of those views, study the evidence, seek the views of other Government Departments and find time in a busy parliamentary schedule to bring any proposals to the House. It is not as simple as might sometimes be portrayed. Nevertheless, I have heard in the debate, and throughout my time in post, that there is a desire for us to be clearer about when any such review may take place, so I will ask officials in the Department to consider the matter in more detail with the Gambling Commission to see what is realistic. I will provide an update in the autumn to those who have attended this debate.

As I said, I met the People’s Postcode Lottery just this morning, and my priority remains delivering our ambitious commitments in the gambling White Paper, because I think there is some serious work that needs to be done there. I am also keen to ensure the smooth transition of the fourth national lottery licence and to make swift progress on the horserace betting levy review, which is really important. In this morning’s meeting, the People’s Postcode Lottery recognised the considerable work that we are trying to get through.

The consideration of any further changes to the framework for society lotteries needs to be considered in the context I have set out, but I have committed to continue to explore what flexibility there already is within the system to get us through the interim period ahead of any further detailed review. In the meantime, I am confident that, thanks to the millions of people who enjoy playing the lottery or buying a scratchcard, both society lotteries and the national lottery will continue to raise much-needed funding that benefits so many people. For many independent society lotteries there is plenty of headroom. I recognise many of the points that have been made about the specifics of the People’s Postcode Lottery and assure Members that I will keep a close eye on the matter.