Select Committee on Public Accounts Minutes of Evidence

Examination of Witnesses(Questions 180-183)



  180. Can I turn to the range of sensitivity tests on page 43, appendix 8. Why were the estimates of the People's Lottery of how much they would give to good causes so much less than Camelot's in most of these categories? They were supposed to be a not-for-profit company. We have heard already that Camelot were expecting to make substantial profits, so what was different about the People's Lottery bid? Was it the start-up costs of getting the equipment to get the thing going? Why were they over the bid by so much?
  (Mr Harris) The key determinant in this part of the bid was the evaluation to which initially the Commission's consultants and members of staff came and then the Commission's judgments on that. The key determinant was on the levels of sales that they thought each bid was capable of achieving. The Commission and its advisers looked at the People's Lottery bid and in the People's Lottery bid there were a lot of assumptions about the extent to which the new matrix, the new game and a not-for-profit bid could produce a huge rise in play and also then assumptions that that huge rise in play would be maintained across the life of the licence and that people would not, as has been experienced in the first licence, start to drop out and say, "Okay, I am not winning, so I will not play." The bid was adjusted for those assumptions, and a range of other things as well, to levels that were considered more realistic. That feeds through in appendix 8 to a whole range of sensitivities that were tested to say, "Okay, that has been reduced, if you push this element back up, what effect does it have?" to get a sense of the effect of different adjustments that have been made.

  181. Finally, Chairman, a totally different subject, during the period of the first licence how many times did the on-line system fail?
  (Mr Harris) I do not have that piece of information to hand but I can certainly check the records and provide you with that information.

  182. That would be useful. It seemed to be headline news when it did. There was one Saturday when the volume of transactions quite early—
  (Mr Harris) There is a high performance standard that the system is available for 99.95% of time and that performance standard is met but there have been points and I can provide you with that. 3

  Mr Jones: 99.95 sounds not bad for an IT system.


  183. Thank you very much. On what terms did Hilary Blume resign? Was she subject to a gagging clause or were there normal standard terms of her resignation?
  (Mr Harris) Hilary Blume resigned. She made her own statement, there is no gagging clause, she has expressed her views on radio since.

  Chairman: Thank you very much for coming to see us. Anything that involves the raising and spending by the public of £32 billion is extremely important. We remain concerned about the vigour of the competitive process; we remain concerned about the slow progress towards access by the Comptroller and Auditor General; and we remain concerned about the probability of a true, vigorous market-place coming into play at the next round, and no doubt our Report will reflect this. To coin a phrase, sometimes the market is not enough. Thank you very much.

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Prepared 6 December 2002