In Question Time in the House of Lords a succession of Labour Peers (including me) pressed the Government on their attitude to the Health Lottery run by Richard Desmond of “Daily Express” and “Asian Babes” fame, which only pays just over the legal minimum of 20% of the money raised to the good causes it supports.

Here are the exchanges:

Gambling Commission: Health Lottery

Question

2.41 pm

Asked By Lord Faulkner of Worcester

To ask Her Majesty’s Government what assessment the Gambling Commission has undertaken of the contribution being made to good causes by the Health Lottery.

Baroness Garden of Frognal: My Lords, the Gambling Act 2005 requires that at least 20 per cent of the proceeds of a society lottery go to the good cause that it supports. Each of the 51 society lotteries that are promoted under the umbrella brand of the Health Lottery must comply with this requirement. We understand from the Health Lottery that 20.3 per cent of the proceeds of each individual society lottery will go to the relevant good cause, addressing health inequalities in specific geographic areas of Great Britain.

Lord Faulkner of Worcester: My Lords, may I ask the Minister two questions? First, is she aware of the great concern that has been expressed by the beneficiaries of legally run society lotteries in the health sector, which have benefited immensely from those local society lotteries, about what is seen as the unfair competition from the Health Lottery? Is she aware that the hospice movement is particularly alarmed, because it depends very heavily on society lotteries? In Worcester, for example, our two hospices receive £70,000 a year from the South Worcestershire Hospices Lottery, which pays 50p in the pound—not 20p in the pound—to those good causes.

Secondly, notwithstanding what the Gambling Commission may have decided initially about the Health Lottery’s legality, how can it be legal to have 51 community interest companies linked to the Health Lottery which have no independent existence, but which all have the same three directors and all operate out of the same virtual office? How is that legal?

Baroness Garden of Frognal: My Lords, the noble Lord has great expertise in these matters. In his first question, he raises the concern about the hospices. We share the concern about the potential impact on society lotteries, although a number of existing health-related charities have been supported through the Health Lottery arrangements so far, and we will ensure that the impact on other society lotteries is monitored.

On the noble Lord’s second question, about the legality, he will also be aware that compliance with the requirements of the Gambling Act 2005 is a matter for the Gambling Commission, which has issued the necessary licences for the Health Lottery. As with any major scheme entering the market, however, it will work with the operator to ensure that what is delivered is actually compliant. We expect initial findings from that monitoring to be with us by next March.

Lord Addington: My Lords, would my noble friend give some thought to the idea that charities which are created to allow a lottery to be organised might be against the spirit that was initially taken on in this field? If that is right, will she undertake that the Government might look at the whole legal framework? If it is against the spirit, we can change the rules.

Baroness Garden of Frognal: My noble friend makes a very valid point that, so far, the legality has been in the matter of the fact of the law. However, as I have mentioned, there will be ongoing monitoring and, as he so rightly says, all these things can be changed if it turns out that the spirit of the law is not being respected.

Lord Brooke of Alverthorpe: My Lords, are the Government content with the system that they have in place for monitoring the operations of the Gambling Commission and, if not, what can they do about it? Are they content that Mr Desmond is a fit and proper person, given what was said at the Leveson inquiry last week and the failure of his organisations to associate themselves with the independent press commission, and that this is the way forward given some of the issues which now surround the operation of this lottery?

Baroness Garden of Frognal: My Lords, as I say, it is for the Gambling Commission to look at this. We recognise all the issues around Mr Desmond and his other organisations, but those are not perhaps directly relevant to this. One thing that the Government have done is to merge the Gambling Commission and the National Lottery Commission, which we expect will make regulation easier and create cost savings but also help to produce a more robust form of monitoring.

Lord Collins of Highbury: My Lords, may I press the Minister on the issue of what I consider, as I think many would, an apparent loophole exploited by the Health Lottery with its 51 separate companies? Will she give an assurance that this loophole will be examined and perhaps closed by the Government, bearing in mind that the Health Lottery has a turnover of £510 million a year and is in effect an alternative national lottery, affecting funding not only for other health charities but for the arts in general?

Baroness Garden of Frognal: My Lords, the noble Lord raises an important point about the issue of whether the Health Lottery will impact on the National Lottery. We are well aware of the vast amount of good work that the National Lottery does for the arts and a whole range of charitable organisations in this country. This is the first time that a lottery has been set up in this mode, with 51 society lotteries under an umbrella. It is a new model, which is why we are looking to the Gambling commission to report back to the Government on how it is going to operate. Of course, the Health Lottery has been going for only eight weeks so it is early days as yet to see how it will pan out, but I hope that the noble Lord will rest assured that the Government are monitoring the situation.

Lord Haskel: Following on from my noble friend Lord Faulkner’s question, should the Minister not be speaking up for those charities that give 50 per cent of their income rather than those that give only 20 per cent?

Baroness Garden of Frognal: My Lords, I am sorry if I was not speaking up loudly. One indeed commends the society lotteries that give on average 51 per cent to good causes overall, which is a much more significant proportion than 20 per cent. The question remains whether this will be a form of raising additional funding for good causes, and only time will tell whether that is the case.

Lord Harris of Haringey: My Lords, is it not the case that the public assume that a much higher proportion of the money that they put into these lotteries is going to the good cause concerned? Should the Government not be looking to raise the 20 per cent threshold to a more realistic figure? That may then squeeze out those who see setting up these lotteries as a way of making extra cash for themselves rather than for the charities that they are supposed to be supporting.

Baroness Garden of Frognal: My Lords, the raising of the threshold has been under discussion. We feel that at the moment, with the Health Lottery still so new, this is not the moment to change the thresholds for the lotteries as a whole. As I say, though, we are monitoring the situation since, as far as we are concerned, it is a new set-up in the lottery world. We shall wait and see, with the promise of a report of that monitoring early next year.

Lord Brooke of Sutton Mandeville: When I had the privilege of moving the Second Reading of the National Lottery etc. Bill in 1993, I gave way 28 times in the hour it took me to complete my speech. It was perfectly clear at that time that scrutiny of the lottery was being carried out extremely effectively by Parliament. I hope that the amount of time that we need to scrutinise this new development will be shorter rather than longer.

Baroness Garden of Frognal: I bow to my noble friend’s expertise over many years in this area. I share his hopes that the scrutiny will be shorter rather than longer.

Lord Faulkner of Worcester: If the Minister reads the prospectus of the Health Lottery, she will see that in order for it to meet its targets of paying money to the 51 community companies it will need to raise something in the order of £250 million a year from the British public. Where does she think that money is going to come from? Surely it will be from existing charity giving, existing society lotteries and the National Lottery.

Baroness Garden of Frognal: My Lords, this is one of the things that we shall need to look at. At the moment, the Health Lottery is raising £2 million to £3 million a week compared with the National Lottery which is raising somewhere between £150 million and £190 million a week. So the latter is still far and away the major source of public money in this area but, to pick up an earlier question, it is very important that the public are made aware of just how much of their money is going to good causes from the Health Lottery compared with how much goes to good causes from society lotteries and indeed the National Lottery.”

Apart from the Minister (Baroness Garden) and interventions from LibDem Lord Addington and Tory Lord Brooke of  Sutton Mandeville, only Labour peers seemed interested in the issue.

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