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Pool Competitions Act (Continuance)

Volume 986: debated on Thursday 19 June 1980

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10 pm

I beg to move,

That the draft Pool Competitions Act 1971 (Continuance) Order 1980, which was laid before this House on 21 May, be approved.
The purpose of the draft order is to extend the Pool Competitions Act 1971 for a further period of 12 months from July 1980. The initial lifespan of the Act was five years, but it contained provision for its extension by order for up to a year at a time, and it has been extended in each of the years from 1976 to 1979.

The Act was originally introduced to safeguard the position of certain charitable and sporting pools then in existence. These were fund-raising competitions by which certain organisations were enabled to support charities and sports. The Spas-tics Society, certain medical causes and some cricket and football clubs obtained income, and in some cases substantial income, from those competitions.

The promoters thought that these competitions—which I do not need to describe—constituted a form of lawful pool betting, but it was held in a judgment by the House of Lords that a competition of this sort was an unlawful lottery. That was because prizes were given, not for making correct forecasts but for holding numbers which happened to be lucky in a particular week.

In view of the large sums of money generated by these pool competitions for a number of worthy causes, the Pool Competitions Act 1971 was passed to enable the organisations which had been using these competitions to continue to raise funds. At present, about £3¾ million goes to the various beneficiaries.

The Act has been extended on four previous occasions, whilst the report of the Royal Commission on gambling was awaited and considered. The Royal Commission recommended in its final report—published in July 1978—that the Act should be allowed to expire in July 1979. The Commission did not regard the special provisions of the 1971 Act as necessary to enable fund-raising to continue, because charitable and sporting organisations can run ordinary lotteries instead.

The organisations affected were naturally concerned about the Royal Commission's recommendation that the Act should expire, and, in recognition of the difficulties which this would have caused for them, the House agreed last year to approve an extension of the Act for a further year until July this year.

The present position is that, without a further renewal order, the Act will expire on 26 July. When the House debated the Royal Commission's report on 29 October last year, my right hon. Friend the Home Secretary said that he hoped the House agreed that the best way to deal with the matter would be to continue the Act in force until Parliament had decided what changes should be made in the law on lotteries.

A number of the Royal Commission's recommendations on lotteries could not be implemented without substantive legislation, and I am not, of course, able to say tonight when such legislation may be introduced. I can say, however, that my right hon. Friend is currently preparing for presentation to the House regulations dealing with some of the aspects of lotteries criticised by the Royal Commission. He is also considering the case for increasing the monetary limits applicable to lotteries. As to the pool competitions conducted under the 1971 Act, it is proposed to invite the organisers of those competitions to discuss with the Home Office the scope for a permanent and satisfactory resolution of the temporary arrangements for which the Act provides. Bearing in mind the valuable work funded by these competitions, I hope that the House will meanwhile agree, by approving the draft order, that the Pool Competitions Act 1971 should be extended for a further year.

10.5 pm

In the light of the 21 minutes that I took in the previous debate two hours ago, I promise that I shall take no longer than five minutes this time.

Bearing in mind the scope of gambling in this country—£9,000 million is staked on it—we are not discussing either a major piece of legislation or a major portion of gambling in Britain. However, this sector of gambling is very important for the House because it directly benefits charities, and in that sense it is worthy of support. We appreciate the legal background that is forcing the Government into legislation. We are talking not just of small fry but of seven entities which, between them, have a not insubstantial share of the total gambling pool.

My interest in this matter derives from the fact that I should like to know what safeguards there will be for the public who indulge in this form of gambling. I am particularly interested in the safeguards or guidelines in terms of the insurance that these small companies buy. I am talking about insurance not simply to protect their premises or property in general but to protect those who gamble with them.

I wonder whether the public sector may have some relevance here. Are there standards of conduct within the public sector of gambling which may be relevant to the situation in the seven companies? Where better to look—I shall take no more than a minute on this—than at the Horserace Totalisator Board, which many regard as being a shining example of probity and decency?

Order. I hope that the hon. Member will not continue with that line of argument. I see no reference to the Horserace Totalisator Board in the Act.

There is no mention of it, Mr. Deputy Speaker, but I seek your guidance. I wonder whether one can draw lessons from the way in which the public sector is operating for the benefit of the consumer and whether such lessons can be transferred to the private sector. The only point I wanted to make about the Horserace Totalisator Board was whether the methods by which the insurance companies operate mean that there is a competitive bidding process. I am seeking to elicit information on that. In other words, when a firm of insurance brokers is replaced, is there a competitive——

I think that the hon. Gentleman has had his minute. I have been very fair with him. There is nothing of relevance to the Tote in the order.

If you rule me out of order, Mr. Deputy Speaker, perhaps I can find another occasion when this can be raised.

Although the total sum of money involved is only £30 million, this is a matter over which the House has a right to exercise control. I hope that legislation will be introduced after the consultative process has been gone through. It is regrettable that so long has elapsed since the problem first emerged. That is a classic example of the slowness of decision-making. I hope that the problems will be swiftly resolved so that the organisations concerned can see the future with some kind of certainty. At present, uncertainty is hanging over them. I hope that the consultation will soon be completed and legislation introduced.

10.8 pm

There is no danger of this horse galloping off the course. I wish to express my full support for the order tonight and stress my keen desire for a permanent solution to the problem of large charitable lotteries.

In our work for the disabled, I and all my colleagues who serve on the all-party disablement group have become aware of the vital importance of these pool competitions to organisations such as the Spastics Society and the National Fund for Research into Crippling Diseases. One-fifth of the income of the Spastics Society comes from pool competitions organised by Top Ten Promotions in Bristol. Can one imagine the consequences for all the wonderful work that is done in local Spastics Society homes and schools if its £800,000 income from those competitions was lost? Action Research provides more than £1 million a year for much-needed research into crippling diseases. Nearly half of that sum comes from its cancer and polio research fund pools competition.

No one wants to see that absolutely essential research come to an end. I welcome the assurance that my right hon. Friend the Home Secretary intends to seek a permanent and satisfactory solution to the problem. I hope that he will quickly complete his consultations with charitable and sporting organisations and that the existing uncertainty can be ended.

These years of uncertainty have substantially affected the income of the National Fund and the Spastics Society. The research money available for desperately needed projects has suffered because of the decline in value of existing income.

Some 15,000 people are employed by the promoters of the one pools competition series organised by the National Fund. About 35,000 others are employed by licensees of these competitions. Despite all efforts to raise money by alternative means because of the uncertainty, that friendly and effective approach to raising revenue remains the most effective method. The continuing threat of closure stemming from the temporary nature of the annual ritual of legislation has almost halved the real incomes of those competitions. There is, therefore, great difficulty in recruiting the necessary staff.

I plead for permanent legislation to permit the long-term running of charity pools, which will afford security of income to medical research.

10.12 pm

I do not endorse the eulogies of the previous three speakers. I have always envied people such as the hon. Member for West Lothian (Mr. Dalyell) who are able to get exceedingly angry on a large number of issues. The hon. Gentleman does it well. However, if anyone has a right to get angry, it is legislators in the tenth year of the continuation of an interim measure.

We have rightly conducted gambling in this country in two ways. We say that when there is an element of skill such practices will come under the control of the Gaming Board and certain taxes will be paid. That is right and proper. When there is no element of skill, the practice becomes a lottery and pays the taxes that accrue to lotteries—with tax-exemption on such sums as find their way to a charity. In 1969 an action was brought against a company that was on a fiddle. I say "a fiddle" deliberately. Legally it was not a competition that involved skill but pretended that giving numbers gave it the right to transcend normal lotteries but supported charity. As the hon. Member for Exeter (Mr. Hannam) rightly said, much-needed money can be gathered by such means for charities or sport. For both those reasons the Pool Competitions Act 1971 came into being. It was recognised as an ugly and faulty piece of legislation and was given a life of five years, with an option of further single years if a more satisfactory way could not be found to gather money for good causes. Since 1976, continuation orders have been made annually. Sucessive Ministers have said that those orders were made because a Royal Commission on gambling had been set up. That occurred in 1976 and 1977.

In July 1978 we got the Rothschild report. That report carefully considered the Pool Competitions Act. It concluded :
"There is no case for allowing the Pool Competitions Act 1971 to continue beyond July 1979 …the activities of the companies licensed to promote charity supporting pools should in any event not be allowed to continue in their present form for more than a limited period. They will, we believe, continue unchanged until July 1979. We recommend that the Pool Competitions Act 1971 should not be extended after that date and simply be allowed to lapse."
I am conscious of the good work that many people do ; I am also conscious of the money that accrues to charities and sports clubs, including the pools competition that benefits the constituents of my hon. Friend the Member for Berwick-upon-Tweed (Mr. Beith) and Berwick Rangers football club as a result but I am equally conscious that seven companies now operate, and at least three of them make more than they distribute.

I should start at the end with a company that has been mentioned by the hon. Member for Exeter—namely, Top Ten Promotions Ltd. According to the last recorded figures, it had a revenue of about £10,900,000. I should like to explain how, with the aid of the Act now under consideration, that £10,900,000 was spent. Some 38·3 per cent. went on expenses to Top Ten Promotions Ltd. Pool betting duty represented 28·5 per cent. I remind the House that pool betting duty is levied at 33 per cent., which is a beneficial rate for charitable lotteries, and no betting duty is levied on the proportion of money distributed to charities or sport. As a result, 66·8 per cent. went to the Treasury and to Top Ten Promotions Ltd.

The prizes represented 24·7 per cent. The charities and sport beneficiaries got 14·3 per cent. Therefore, of nearly £11 million only £1½ million reached the goal which contributors sought to support.

Is it not true that all door-to-door collection competitions and local lotteries find that the expense of operating such systems is high? That must be taken into account when considering the figures for raising money for any cause.

I am grateful for that intervention. However, while the expenses of other firms are high, none are as high as those of Top Ten. The hon. Gentleman will be proud to see that Top Ten's 38·3 per cent. is not matched by a single other operator of the seven who are on the fiddle that is authorised by continued extensions of the Act.

Singette Limited, the company that started it all, because a prosecution was brought against it in 1969 establishing that what it was doing was outwith the law, has expenses of 34·5 per cent. and its pool betting duty totals the same percentage. Its prizes are more generous at 27 per cent. Between 14 per cent. and 16 per cent. seems to be the recognised contribution to charity or to sport.

My contention is a simple one. There must be better fiddles to provide money for charity without paying for a lot of people to operate them, paying for companies to make substantial profits and paying some of the taxed money that goes towards buying tickets to pay more tax. The Government have rightly excluded from taxation the portion that goes to charities.

Pembroke (C & P) Limited has expenses of 37·5 per cent.—high, but not as high as those of Top Ten. Not one of the four sports-supporting companies has expenses of more than 30 per cent. and one, Rangers Pools Limited, has expenses of only 22 per cent. It is significant that Rangers Pools managed to raise £3,072,000 on expenses of 22 per cent. It gave 15 per cent. to beneficiaries and 33 per cent. in prizes, which is more satisfactory.

I said at the beginning of my speech that this is a fiddle, and I mean that the raising of money under the guise of charitable bequests, when people become rich as a result and punters think that they are getting half the money in prizes while the other half goes to sportsmen, is something that we should look at most carefully.

I do not wish to be angry or to make any particular point, except to say that the care and dedication with which Governments set up Royal Commissions and with which Royal Commissions take evidence and report to the House must be rewarded with greater care than we accord them. The Rothschild report said :
"After the Small Lotteries and Gaming Act 1956 came into force, most societies which had been making use of simple pool competitions for fund raising turned to the use of small public lotteries instead."
The reason for the Act was to ensure that charities were not cut off from a lifeline. But they have had 10 years in which to find a better lifeline and to reorganise the charitable pool so that more money goes to charities, less in expenses and none in taxes. It is significant that successive Governments have not taxed charitable contributions made through this means.

The Rothschild report said :
"The Act requires the Board to ensure that a reasonable proportion of the turnover goes to the nominated charities".
Perhaps that is my argument with the Pool Competitions Act. The Minister, the Opposition spokesman—the hon. Member for Halifax (Dr. Summerskill)—and I have all sat in Committee discussing the word "reasonable" almost interminably. The point is that "reasonable" does not mean anything, and in this case it certainly does not mean enough. I agree with the Rothschild Commission that there is no doubt about the merits of the deserving causes, mainly in the field of medical research but also in the provision of sport. But the Commission also says :
"The particular activity conducted by the three charity supporting pools, which consists of a mixture of lotteries, so-called gift schemes and prize competitions with an entry fee … is thoroughly undesirable".
The Minister has read the Rothschild report. I am sure that anyone interested in the matter has read it. I shall not on this occasion divide the House, although I believe that we are trying to perpetuate a thoroughly unsatisfactory piece of legislation. I wish to give notice of my objection if the Government continue this discredited Act for yet another year on the same lines whereby the public at large are misled into buying a ticket which they think benefits a charity and actually provides unnecessary tax and inadequate presents, and helps a company to make a substantial profit at the end of the year.

I do not suppose that the House will divide, but I shall not make this speech should the Act come up next year. I shall give the Act what publicity I can and hope to find the support that I think my argument deserves.

10.26 pm

Like many hon. Members, I have a distinct sense of déjà vu in listening to this debate. I have been involved in it over successive years both from the Government side and now from the Opposition side. The Act, as we have heard, was originally for five years. This is the fifth successive occasion on which the House is being asked to extend it for yet another year. I should like to ask the Minister how many licence-holders now rely on these competitions for fund raising. There were only seven last year. Is the figure still seven, or has it become less since we last debated the matter?

The original Act was meant to be only temporary in effect while we waited for the Royal Commission on gambling to report. This accounted partly for three of the annual extensions. The Commission reported in July 1978, nearly two years ago. That can no longer be made an excuse.

I know that the hon. Gentleman said it. I agreed so much that I am saying it again. We can no longer make waiting for the Commission's report an excuse to extend the Act. In its report, the Commission recommended that we should not extend the Act, mainly on grounds of logic. Yet there is no doubt that hon. Members on all sides of the House, except the hon. Member for Isle of Ely (Mr. Freud)—although he may have other supporters—appreciate the case made by several charities that they rely very much upon the great benefits that they gain from the 1971 Act. The Spastics Society particularly has put forward a convincing case.

The Minister told the House last June that he wished to extend the Act for another year in order to
"give all concerned an opportunity for further consideration of the matter".—[Official Report, 27 June, 1979 ; Vol. 969, col. 592.
We have had 12 months further to consider the matter. The Government have been in office for more than a year. The Commission reported nearly two years ago. Will the Minister therefore say what progress he is making in his consideration of the recommendations of the Royal Commission, in particular of the law on lotteries and the recommendation concerning the 1971 Act?

The hon. Gentleman said in opening this debate "Of course, I am not in a position to tell the House". I do not understand why "of course" he is not in a position to tell the House, as he has spent more than a year in office. I agree that talks with the charities are desirable.

The reason why I said that I am not in a position to tell the House when legislation will be introduced is that there is a firm convention that one cannot commit the Government to future legislation dates.

I am asking not for a specific date but for some indication. Shall we renew the Act for 10 years or 20 years, or are the Government considering putting their ideas about lottery legislation to the House next Session?

Lord Belstead announced in another place that his right hon. Friend was currently preparing for presentation to the House draft regulations relating to the Royal Commission's recommendations. That has to be something—and they have been doing that for only nine years.

I have read the report of the House of Lords debate. I appreciate that the Government intend to introduce regulations. That is a far cry from legislation on lotteries. The House had a full day's debate on the Royal Commission's report last October.

The Home Secretary has said that he will deal with lottery legislation and the future of the Act together. That is understandable. What started in 1971 as a temporary arrangement has become a ritual annual parliamentary event. I share the view of the hon. Member for Isle of Ely that it is time that the House was given some indication, however vague, about when the issue is to be put on a regularised basis. There should be a satisfactory and permanent arrangement for the societies covered by the Pool Competitions Act.

10.32 pm

With the leave of the House, I shall reply to the debate. It had more of an edge of controversy than I expected, but there is nothing wrong with that.

I am glad that my hon. Friend the Member for Exeter (Mr. Hannam) and the hon. Member for Halifax (Dr. Summer-skill) believe that we are right in bringing forward the order and accept the need for continuing the Act for another year. About £3,750,000 finds its way to charities as a result of the parliamentary process with which we are engaged this evening. Nobody has questioned whether that money is well spent. I hope that the House will support the order.

The hon. Member for Walsall, South (Mr. George) raised a matter which is relevant to what the hon. Member for Isle of Ely (Mr. Freud) said. I refer not to the issue which was ruled out of order but to the safeguards. The hon. Member for Isle of Ely was critical and he was echoing some of the criticisms in the Rothschild report about the way in which the system operates and the amount of money that ends in the hands of the beneficiaries and the amount that ends in the hands of the companies. He gave a figure which, of course, covers all their adminstrative costs and expenses rather than their profits only. I think that if one wished to probe more deeply one would have to look at the profit element as well.

The Minister will know that the football pools companies are bound by statute to publish the expenses and profits that they take from the pools. They are vastly lower than those of the company I have quoted.

I think that that is partly because of the nature of the way in which the thing operates. There are certain fairly strong safeguards. It is not as if pools existed in a wholly unregulated condition. It is the duty of the Gaming Board to supervise them. They must obtain a licence from the Gaming Board, and a prescribed proportion of the turnover has to be paid over to the benefiting society. The figure for that is about 15 per cent.

The pools must also submit audited accounts to the Gaming Board, and there has to be a quarterly certificate which states that the conditions have been observed. I think that it is misleading if the impression is spread around that there is no control of the activities of these forms of pool.

We believe that the money that goes to charities is of great importance. That is not to say that we necessarily think that this is the right way of doing it for all time. Obviously, we are bound to take notice of what the Rothschild Commission had to say about this even if we do not necessarily follow that in every detail. We have made it clear that this is a matter which we intend actively to review.

We have been accused of a form of failure for not having come forward with legislative proposals, but I think hon. Members will have noticed that it has been quite a busy legislative year. One or two Bills have been going through the House and we have not all been going home as early as, with a bit of luck, we shall go home tonight. We have been here night after night and have had a busy time. We cannot possibly tackle everything at the same time.

However, I should like to tell the House that I have said that we will straight away go ahead with discussions with the parties concerned to try to find the right way of dealing with the problem. I hope that those discussions will come up with something fruitful.

Reference has already been made to what my right hon. Friend and my hon. Friend the Minister responsible for sport had to say in the debate on the Rothschild Commission last autumn. That shows that we are actively concerned with the question of lotteries as a whole. Regulations are to be brought in which I do not think will deal with the question of pool competitions. This is a question that would have to be dealt with by statute. Active consideration is being given to the question of when we should bring in new legislation.

Having said that, I think that I have covered the major points that have been raised in the debate. In a short, sharp way, this has been a useful little debate. It has served to concentrate the mind of the House on an important topic. I believe, however, as I have always said, that it is right that the House should pass the Order. If it were not passed, grave and serious damage would be done to a number of extremely important and worthwhile causes.

Question put and agreed to.

Resolved,

That the draft Pool Competitions Act 1971 (Continuance) Order 1980, which was laid before this House on 21 May, be approved.