Lotteries Regulation

Statement

My Lords, with the leave of the House I shall repeat a Statement made in another place earlier today by Mims Davies, my honourable friend the Minister for Sport and—oh, I cannot remember what her title is. I am going to be in trouble now. The Statement is as follows:

“Mr Speaker, with permission, I would like to make a Statement in relation to lotteries. The National Lottery and society lotteries contribute around £2 billion a year to good causes in this country, forming the backbone of giving across the UK. As preparations start on the competition for the next licence to run the National Lottery, it is important that we ensure that the wider lotteries landscape is fit for the future and allows as much money as possible to be raised for good causes within a suitable framework. To ensure clarity ahead of the upcoming fourth licence competition, I am today announcing next steps on society lotteries, and launching a consultation on increasing the age limit for playing the National Lottery.

Turning to society lotteries, first, in June last year, the Government launched a consultation seeking views on proposals to reform the existing limits on society lotteries, which have not been raised for more than a decade. I am aware that there has been strong support from across this House for the Government to increase the sales and prize limits for society lotteries and that changes have taken a long time to come. Society lotteries are a vital source of funds for charities and other non-commercial organisations, and in 2018 alone raised more than £300 million. As not just the Minister for Lotteries but the Charities Minister, I want to support the third sector and grow the overall pie for everybody’s benefit. I am aware that society lotteries are a vital funding mechanism for hundreds of charities in many of our local communities, including air ambulances and local hospices.

The consultation aims to ensure that both society lotteries and the National Lottery are able to thrive and that society lotteries can continue to grow, while maintaining the unique position of the National Lottery and its ability to raise funds across the country by offering the largest jackpots. We heard strong arguments from both sectors, and I am grateful to everyone who shared their views. In coming to a final decision I have balanced needs across the sector to ensure that returns to good causes can grow overall.

I am pleased to announce that I will raise the per-draw sales limit from £4 million to £5 million and the maximum prize limit from £400,000 to £500,000 for large society lotteries. These increases will allow for significant headroom for most of the sector to continue to grow, and I am pleased that the Gambling Commission has agreed carefully to monitor these changes for any potential wider impact. This will enable us to analyse the impact of the changes over time.

In addition, I will raise the annual sales limit from £10 million to £50 million. In recent years we have seen charities forced to slow their fundraising from lotteries as a result of the current limits or to adopt costly alternative structures to avoid breaching them, increasing admin costs and diverting money away from good causes. Indeed, one charity told us that introducing such arrangements could cost £345,000, with further additional running costs of more than £100,000 per year. A £50 million annual limit will reduce or prevent administrative burdens for society lotteries, and I fully expect to see an equivalent increase when it comes to the amount of money directed to good causes as a result of the lower admin costs and this increase. I will be watching this closely.

I am aware that many Members support an even higher annual limit of £100 million. I too share this ambition. However, this is a significant increase and I want to be certain that moving to this much higher limit will in reality increase returns to good causes across the sector. I want to be assured that there is an appropriate regulatory regime in place. It is therefore my aim to launch a further consultation, looking at an additional tier of licence, with suitable additional requirements for those very largest lotteries.

It is also important that society lotteries demonstrate the highest levels of transparency. I am therefore pleased that the Gambling Commission is also planning to consult on measures to tighten the existing licensing framework for all large society lotteries, looking in particular at the information provided to players on how the proceeds of society lotteries are used and the good causes which benefit. We will also be looking to consider further how best to increase transparency in relation to executive pay and will seek further advice from the Gambling Commission. I will look to legislate, if necessary, if these measures do not go far enough.

Turning to small society lotteries, there was less support for changing the limits. Having considered the evidence carefully, I do not plan to increase these limits at this time.

I have previously committed to laying Camelot’s response to the society lotteries consultation in the Library and will also lay the other key responses that my department received.

Today, I am also announcing a 12-week consultation on the minimum age for playing National Lottery games. The current licence period has seen a range of technological developments which have changed how we play the National Lottery, and changes in people’s gambling behaviours. Therefore, as we fully consider what the fourth licence might look like, I believe it is right to consider whether it remains appropriate to sell all National Lottery games to those under 18 as part of future-proofing it for the duration of the next licence.

Eighteen is widely recognised as the age at which one becomes an adult, gaining full citizenship rights and responsibilities. At present, all lotteries can be played from 16, one of the few exceptions to the age limit of 18 for gambling products. In addition to the option to raise the minimum age to 18 for all National Lottery games and retain the current limit of 16, I am seeking views on a differentiated approach that would increase the minimum age for instant-win games only. This includes scratchcards and online instant-win games.

My initial view, based on the evidence reviewed so far, is that such a split could be the best approach. This takes into account that the risks of harm associated with playing the National Lottery are the lowest of any form of gambling, but we know that the risk of harm is slightly higher for instant-win games than for draw-based games such as lotto. Given that the National Lottery matters so much to so many people, I am keen to see further evidence in this area and to hear what others think, including hearing from operators, distributors and retailers about any potential impacts and benefits of any change.

This year the National Lottery celebrates its 25th birthday and Mystic Meg herself could not have predicted how successful it has been in that time, raising over £40 billion to support our local communities, protect heritage, enhance the arts and transform funding across sport. The National Lottery has been at the very heart of creating, protecting and driving much of what we love. Each week it raises around £30 million for good causes. Since 1992, it has funded over 4,000 world-class UK Paralympians and Olympians. Each year it invests around £325 million in protecting some of our most prized national heritage, and it has funded the development of our artistic talent and access to art. It has ensured access to sporting opportunities for people in all communities and, alongside all this, it supports over 10,000 charitable causes each year with over £500 million of funding. I thank National Lottery players, the 12 distributors, the Gambling Commission and my department for making this possible.

Importantly, the announcements that I have made today both give clarity to those interested in running our National Lottery when the current licence expires in four years’ time, and provide society lotteries with the greater capacity to continue and increase their work across many colleagues’ constituencies. I look forward to seeing the real benefits that these changes will have for the charities and good causes supported by our lotteries across the UK. I commend this Statement to the House”.

My Lords, before I begin, I would like to mention my noble friend Lord Judd. I am sure the whole House will join me in wishing him all the best for a speedy recovery.

Hear, hear.

I thank the Minister for repeating the Statement made in the other place. On this side, we welcome the Statement but somewhat regret that the Government have taken seven years to make up their mind about how to deal with the society lottery sector. Although society lotteries were in existence at the time that the National Lottery was established, I do not believe anyone expected then that they would continue to thrive without having some effect on the National Lottery.

The Statement makes mention of the extraordinary sums that have been made available to good causes through lotteries—something we should all celebrate. This country embraced both the National Lottery and the society lotteries. It is right that the Government review regulations from time to time to make sure, as the Minister said, that they achieve a balance between enabling the sustainable growth of society lotteries and protecting the unique position of our UK-wide National Lottery.

I have three questions for the Minister. First, the Statement made it clear that there is concern about the proportion of funding going to good causes, the level of executive pay and other transparency issues. It suggested that the Gambling Commission may need to look closely at this, to the point where legislation may be required. Does this mean that the Government are concerned about the efficacy of the present regulations, does it apply to all society lotteries, and can a bit more be said about the timescale for this process? I am concerned that, if something is going wrong, we should act relatively quickly.

Secondly, can the Minister say a bit more about the timescale for the regulations bringing in the new annual sales limits and prize funds? When there was a change to the lottery limits in 2009, the implementation was immediate, but we are hearing that these changes might not happen until 2020. It is not clear what evidence is being sought on the ambition to move to £100 million per annum. Can he say more about that and about what sorts of timescales will be involved?

My Lords, on these Benches we welcome the Statement and much of the direction of travel on this. It may not be the way that we would do it, but it is certainly not something on which we would want to make a huge stand. What I particularly like about the Statement is that it emphasises again and again the fact that we have a National Lottery that does certain things and has underpinned certain types of activity in our society which simply would not have happened without it.

John Major has said on several occasions how important he thinks it is; he brought it in because the dread hand of the Treasury would not otherwise have allowed us the types of sporting heritage, assistance for the arts, et cetera, that we have had. It was a realpolitik response to what was going on, and it should be preserved. I like the definition that these are two separate things: the National Lottery and the society lotteries.

When it comes to the details of, for instance, the age limitation, I am afraid much of my gut reaction is with the noble Lord, Lord Collins. I cannot see any real argument against raising the limit in relation to the instant scratchcard. There is that instant little buzz—although it is a long time since I have done it—that anyone who has bought one will recognise: “I just missed that; maybe I will have a second go”. That is not something we should be giving to a 16-year-old. If we keep the age limit at 16 for the National Lottery, the wait for a draw is sometimes several hours; by raising the age limit to 18, we would be removing that. I hope the change comes in.

The framework for the society lotteries could probably be described as “steady as they go”. Will the Minister give an assurance that things will be speeded up after the long wait we have had? Will there be greater clarification on when we can expect everything to come again, just to emphasise the development and the structure of what is going to happen in the future? I know he has mentioned it before, but a little more clarification would help. Will he also give a little more reassurance about the fact that we will make sure that the National Lottery and the society lotteries are kept apart, doing different things for different functions?

I thank both noble Lords for their comments. Certainly, I completely agree from this side of the House with the noble Lord’s remarks about the noble Lord, Lord Judd. I hope he is back here soon.

The noble Lord, Lord Collins, asked three questions. As far as transparency is concerned, it is not that there is worry about the regulatory regime at the moment. Society lotteries have been regulated by the Gambling Commission for more than 50 years and we think they have been a success. There are not many larger society lotteries, but we need to keep an eye on them. If we increase their limits, we need to make sure that there is transparency. It is only right that we should review that and look at some of these problems. That does not imply that we are worried that there is a problem at the moment. The Gambling Commission will review the evidence on this.

The noble Lord also asked when these limits will be implemented. The plan is that there will be secondary legislation in the autumn, subject to parliamentary time—I always have to say that. The plan is to have the statutory instrument in the autumn, and then the implementation will take place when the Gambling Commission has to change the licence requirements in April, so we expect this to be in 2020. We want to get on with this, so we aim to do the legislative part when we come back in the autumn.

On the minimum age for the lottery, on the one hand, we are celebrating the fact that for 25 years the National Lottery has been a tremendous success—it has raised £40 billion for good causes; on the other hand, if we want to change it, or prepare for changes in the new licence competition, we need to get evidence on this. That is why we are asking for a consultation to change what has been a successful lottery. We recognise that there are different dangers associated with instant gratification games, such as scratchcards, and the lotto, which is the least harmful form of gambling, according to the evidence. It is reasonable to ask for consultation on that. Both noble Lords mentioned under-16s.

My Lords, I thank my noble friend for doing all he can to protect the exclusive position of the National Lottery. John Major’s legacy is in fact one of the most positive legacies of any Prime Minister in peacetime. He deserves the thanks of all parts of the House for that. But I enter one note of caution. Is my noble friend aware that the munificent grants from the National Lottery have recently begun to decline in the heritage sector? The assisted places of worship scheme has been abandoned, which does not mean that money is not being given to places of worship but there is no longer one exclusive earmarked pot. I am glad to see the noble Baroness, Lady Harris, with her interest in Ripon Cathedral—mine, of course, is in Lincoln—nodding vigorously. Will my noble friend keep his eye on this? Anything that significantly reduced the impact of the National Lottery in the field of heritage, sport and the arts would be a blow to all parts of the nation.

I completely agree with my noble friend. Heritage causes, among others, are very important and have benefited hugely from the National Lottery, which gives about £1.6 billion a year to good causes. I cannot remember the exact figure for national heritage, but I think it is £300 million to £400 million of that. It is a reasonably significant amount. I certainly will keep an eye on it. The Minister, whose name I have forgotten—I did not forget her name, I forgot her title; I know what her name is—is keen to make sure we continue to provide as much as we can for good causes, which certainly include heritage. In many ways the structure we have prevents Governments directly getting into exactly what is provided for through the National Lottery, which is good, but I certainly take my noble friend’s point about heritage, which continues to be a very important part of what the National Lottery supports.

My Lords, to take on the comments of the noble Lord, Lord Cormack, about cathedrals and places of worship, I declare my interest as high steward of Ripon Cathedral, where we have just lost an essential part of a planning development because we have no money from the National Lottery Heritage Fund, in spite of producing a very good plan. Will the Minister look at how the lottery heritage fund gives out money and the criteria it uses for these very special places of worship around the country?

I am sorry to hear that the noble Baroness’s cathedral has not received what she hoped it would get. That is, of course, the problem with the lottery: it gives out an awful lot of money, but sometimes it also has to say no. I say only that it is worth trying again. I have heard of cases where requests have been denied but when they try again they are successful. It is not up to Ministers to take up special cases and treat them unlike others, but I encourage her to try again, because Ripon Cathedral is obviously a good cause. I hope she succeeds next time.

My Lords, I hope your Lordships will allow me: unfortunately, I was detained and did not hear the Minister’s Statement. I welcome what he has said about the principle that, while the society lotteries are very worthy and excellent in their way, the Government still have a care to protect the National Lottery, for all the reasons he said.

I declare an interest as a member of the board of the National Lottery Heritage Fund. I will talk to the noble Baroness afterwards about how we have had to make decisions, but I emphasise the point made by the noble Lord, Lord Cormack. We have had an extremely hard few years planning our commitments in the face of declining incomes, and the competition has been extraordinarily tough. We still make every effort to fund places of worship. We are incredibly lucky in this country—we have so much heritage and so much ecclesiastical heritage—and we try our very best to be fair in all that we do. There are so many excellent and equal claims on our resources that we have to be scrupulous and transparent in our decisions. I hope the noble Baroness will forgive me if I leave discussing it for a later occasion.

I am grateful to the noble Baroness for her question—or perhaps her statement—and for her efforts in the very difficult job that she does.

The consultation which preceded this found that views were very polarised. Supporters of the National Lottery were fearful that an increase in limits to society lotteries could affect it. We were very careful to strike a balance between the interests of the National Lottery—and all its good causes—and society lotteries, which are very important for individual charities, and have a place. By doing what we have done, we think we have struck the right balance. The Gambling Commission has confirmed that there is no evidence so far that society lotteries have affected the National Lottery. Indeed, over the years, both sectors have increased. The noble Baroness talked about National Lottery funds, and sales going down. That position has now stabilised, following the actions that the National Lottery has taken. It is about £1.6 billion on a stable basis every year.

My Lords, in answer to the noble Lord, Lord Collins, the Minister said that consultation on raising the age from 16 to 18 had to take place to ensure that it did not damage the success of the lottery and the revenue that was coming in. Can I ask the Minister two questions? First, what percentage of revenue comes into the National Lottery from those aged 16 to 18? Secondly, what positive arguments can the Government put forward for young people aged 16 to 18 gambling on the National Lottery?

I think I said that we need an evidence base to change legislation for the National Lottery, as it has been such a conspicuous success. The noble Lord implies that it is not the right thing to do. Technological changes to the way that people can play the lottery now are a concern, but in going out to consultation we are not presupposing the rights and wrongs. We are saying that if we are going to change what has been a very successful institution, we need evidence, and we want to ask people what they think about it.

Talking of evidence, do we have any evidence about what strata of society, in terms of income, tend to buy most lottery tickets? Is it the less affluent or the more affluent, and is there any evidence as to how that is split?