The Committee consisted of the following Members:
Chair: Siobhain McDonagh
† Ali, Rushanara (Bethnal Green and Bow) (Lab)
† Cairns, Alun (Vale of Glamorgan) (Con)
† Caulfield, Maria (Lewes) (Con)
† Coyle, Neil (Bermondsey and Old Southwark) (Lab)
† Eastwood, Mark (Dewsbury) (Con)
Efford, Clive (Eltham) (Lab)
† Everitt, Ben (Milton Keynes North) (Con)
† Fletcher, Mark (Bolsover) (Con)
† Garnier, Mark (Wyre Forest) (Con)
† Grundy, James (Leigh) (Con)
† Henderson, Gordon (Sittingbourne and Sheppey) (Con)
† Huddleston, Nigel (Parliamentary Under-Secretary of State for Digital, Culture, Media and Sport)
† Lamont, John (Berwickshire, Roxburgh and Selkirk) (Con)
† Linden, David (Glasgow East) (SNP)
† McGinn, Conor (St Helens North) (Lab)
† Nichols, Charlotte (Warrington North) (Lab)
† West, Catherine (Hornsey and Wood Green) (Lab)
Peter Stam, Committee Clerk
† attended the Committee
Seventh Delegated Legislation Committee
Tuesday 10 March 2020
[Siobhain McDonagh in the Chair]
Draft Gambling Act 2005 (Variation of Monetary Limits) Order 2020
I beg to move,
That the Committee has considered the draft Gambling Act 2005 (Variation of Monetary Limits) Order 2020.
It is a pleasure to serve under your chairmanship, Ms McDonagh—especially as this is my first Delegated Legislation Committee.
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. The order will increase 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. The order also increases the annual sales limit from £10 million to £50 million.
In July 2019, the Government announced proposals to help society lotteries, which are 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, on which so many people in this country rely. The current annual sales limit and per-draw sales and prize limits have been in place for some time. Indeed, the issue was looked at by the Digital, Culture, Media and Sport Committee in 2015, which led to the 2018 consultation. I am grateful to the Committee for raising this important issue.
I know that stakeholders on both sides have strong views; that is evident from the 1,600 responses that 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 in every constituency across the country. It is imperative that any changes enable both to thrive. As the Minister for both sport and heritage, I know at first hand that these sectors benefit considerably from funds raised by the national lottery.
The model of a single, large-scale national lottery has proved to be the most effective way to raise funds for good causes at scale. We heard through the consultation that many charities and other organisations value the funding they receive from society lotteries, and they often view it as complementary to national lottery funding. I 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 introducing 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 offering smaller prizes, with a focus on a specified good cause.
Society lotteries should have a clear focus on the charitable and not-for-profit purposes that they support. It is of the utmost importance that players know which causes they are supporting with their ticket and how much of their ticket price will support those causes. The Gambling Commission is currently consulting on additional transparency measures for society lottery licences. I want to take the opportunity to thank it for considering the issue, and I look forward to seeing its conclusions.
The most significant change is the annual sales limit increase to £50 million. For large charities operating at or close to the current limit, it is costly to add additional licences—even within an umbrella structure or a multiple society structure. For most societies, a £50 million limit would mean they no longer needed to hold more than one lottery operating licence, leading to cost savings and higher returns to good causes. The order includes transitional provisions to allow licence holders to benefit from the increased limit 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 future growth and the flexibility to increase the size and frequency of draws as the 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 therefore increase from £400,000 to £500,000. The Gambling Commission will carefully monitor the impact of the changes, and the Government will keep an eye on progress, to ensure in particular that additional funds are directed to good causes and do not lead to an increase in administrative expenses.
To satisfy ourselves in that regard, the Government will review the impact of the changes 12 months after implementation by looking at new data and evidence that emerges over the course of the year. As part of that process, we will look again at the case for a £1 million prize, the link between sales and the maximum prize, and returns to good causes. Once we understand the impact of the current changes, we will look at the case for a £100 million licence and any additional conditions that may accompany it.
By increasing the limit and reducing burdensome administrative costs, we will enable society lotteries to raise even more funds for the causes that they support. Research published just last month by the Gambling Commission shows that both the national lottery and the society lottery sector are growing, with participation up 2%, so the overall funds raised for good causes is growing—I welcome that development. Society lotteries clearly bring tangible benefits and I look forward to seeing the impact of the changes. I commend the order to the Committee.
It is a pleasure to serve under your chairmanship for the first time, Ms McDonagh. I am pleased to speak for the Opposition on this important statutory instrument, which has the potential to be beneficial for good causes and the UK charity sector. I welcome the Select Committee’s report, which laid the ground for this important change.
On the face of it, the SI is not controversial, but we will abstain because of some points of concern, which I will lay out. The limits on proceeds for society lotteries were set more than a decade ago and it is only natural for there to be an update on guidance and regulations after such a long period, to enable society lotteries to continue their good work in the community and in benefiting good causes.
No one can deny that society lotteries have had a significant impact on good causes in the UK; the £330 million that they raised last year alone has helped to transform lives and communities in Britain and beyond. Members on both sides of the Committee will be aware of specific local funding that has been made available in their constituencies, which we all welcome. In a decade of austerity, the philanthropic urges of the local community have often been what has kept us all alive. In the past few years, society lotteries have grown significantly; the postcode lottery, to name but one, has seen a sales growth of a staggering 1,560% in the past decade. Clearly, that growth feeds into good causes and should be welcomed.
It is vital that any eventual Government review into gambling should include the requirement for large-scale society lotteries to publish a full breakdown of their operating costs and proceeds, so that they are held to the same standards as the national lottery. Stakeholders have some concerns about, for example, a lack of transparency and the payment of executive salaries in smaller charities that make the leap towards becoming bigger—due diligence is required there. On occasion, the Gambling Commission has not had the best reputation for sharp teeth, so we will watch carefully to see how the 12-month review period goes.
Transparency is needed on the level of advertising within some of the charities. When each of us places a bet or gets involved in one of the smaller lotteries, we all hope that that a big proportion of that money goes to a good cause rather than to an overblown executive salary or the advertising section of the charity.
Although I am keen to see charities receive increased funding, particularly after a decade of austerity, we need more protections and an even playing field between the larger players, such as the national lottery, and the smaller ones. I am yet to be convinced that the Gambling Commission is as robust as it needs to be, as has been demonstrated in a number of areas. The Government must redouble their efforts to protect the charity sector, smaller groups and, importantly, the general public who play the national lottery or smaller lotteries, so that there is an even playing field and transparency, and so we know broadly how much of the money placed into the lottery actually goes to the good cause and how much goes back to the charity.
In conclusion, I welcome the 12-month Government review, but we cannot fully vote for the statutory instrument due to our concerns about the big step that the Government are taking by increasing the amount that the charity sector can go up to without the necessary regulatory environment and protections.
It is always a pleasure to see you in the Chair, Ms McDonagh. I want to make it clear that the Scottish National party will not oppose the statutory instrument. Fundamentally, lotteries can provide money for good causes, but it is important always to consider gambling through the prism of public health. For too long, the liberalisation of gambling policy has been allowed free rein; so often, it is communities such as my own in Glasgow East that have paid the price. Thankfully, there is a unanimous view across the House that the liberalisation of the Gambling Act 2005 has been a disaster for many communities, so I am glad that there is a wider review of that legislation. It is a testament to the hard work of the hon. Member for Swansea East (Carolyn Harris), my hon. Friend the Member for Inverclyde (Ronnie Cowan) and the right hon. Member for Chingford and Woodford Green (Sir Iain Duncan Smith) that we have got to that stage, and I welcome it.
The statutory instrument will see local charities benefit from higher grants, which I very much welcome and the Scottish National party supports. The people’s postcode lottery was kind enough to send a briefing. I spoke earlier about the importance of grants for local charities; organisations in my own constituency have benefited, such as St Timothy’s primary school, Belvidere Village Community Group, Young Movers, the Parkhead Youth Project, the Men’s Health Forum and Connect Community Trust. They all do excellent work, and that is worthy of support.
However, in the ’17-18 financial year, 14 charities in my constituency submitted applications to the people’s postcode lottery, for amounts totalling over £130,000. Those applications could not progress—not because they were not of a very high calibre, but because of the current limits that this statutory instrument seeks to remedy. It is for that reason that the SNP will not oppose it, and I look forward to more groups in my constituency benefiting from funding from the people’s postcode lottery and other lotteries.
I thank the hon. Members for their comments. Let me give a little reassurance about the issues they raised. In our manifesto, we committed to a review of the Gambling Act to make sure that it is fit for the digital age; more details on the scope and timescales will be announced in due course. On transparency, the Gambling Commission is conducting a consultation on new transparency measures, which closes this Thursday. It is important that society lotteries demonstrate the highest levels of transparency, so the Gambling Commission consultation seeks views on guidance that will require 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.
With regard to the potential increase in limit to £100 million, the initial increase to £50 million will enable us to monitor the impact of the sector and build on an evidence base, particularly with regard to the effect on good-cause returns. We want to be confident that the changes will increase good-cause returns across the sector, and that the regulatory framework is right for fundraising at this scale.
The national lottery is a uniquely important part of British society. Each year, it raises around £1.6 billion for good causes in the heritage, arts, sports and communities sectors. That amounts to an impressive total of £40 billion over the last 25 years. Society lotteries play their role, too—they raise over £330 million a year for good causes, and that is increasing year on year. It is right that we do everything that we can to support both sectors to grow and thrive, to optimise the valuable contributions they make to funding good causes across the country.
Question put and agreed to.