Select Committee on Public Accounts Minutes of Evidence


APPENDIX 1

Supplementary memorandum submitted by Mr Mark Harris, Chief Executive, National Lottery Commission

  The following note contains the additional information which I agreed to provide to the Committee during oral evidence on Wednesday, 22 May 2002.

Question 69: If the ticket sales had been on the projection that The People's Lottery had given, and that they would give all the profit to good causes, how much more would have gone to good causes?

  In its Statement of Reasons for the decision to grant the licence to run the National Lottery to Camelot, dated 19 December 2000, the Commission stated:

      "22.  At the same sales levels the commitments offered by The People's Lottery would lead to larger contributions to the NLDF than would Camelot's. At the bidders' principal forecasts, in which The People's Lottery's sales figures are higher than Camelot's, The People's Lottery would contribute some £160 million more a year than Camelot. At sales of £5 billion a year, The People's Lottery would contribute some £110 million more a year than Camelot. These figures are based on the bidder's own cost assumptions. They would be affected by The People's Lottery's cost performance, as they take account of a secondary contribution to the NLDF that consists of any surplus that The People's Lottery generates."

  The figures quoted above are expressed in cash terms. The National Audit Office Report quotes figures as net present values, showing the present worth of the future flow of money. The net present values of the two figures quoted above over the full seven year term of the licence (at October 2001 prices) are £933 million and £596 million respectively.

  The figures quoted above are based on common sales levels for each of the two bids. In its Statement of Reasons, the Commission explained the basis for its final decision as follows.

      "8. Although The People's Lottery offers higher contributions than Camelot at the same sales levels, this fact is outweighed by two considerations. The first is that the Commission has concluded that Camelot is on balance likely to deliver more sales over the licence period than The People's Lottery. The second is that the accumulation of risks that is inherent in The People's Lottery's bid, particularly in the early stages, is uncomfortably high by comparison with those posed by Camelot's bid."

Question 181-182: During the period of the first licence how many times did the on-line system fail?

  During Camelot's first seven-year licence period, there were 37 incidents that caused total unavailability of the on-line system. The total period that the whole system was unavailable was 8 hours and 44 minutes. The system is scheduled to be available from 6 am-11 pm every day except Christmas Day. During the first licence period, the system was scheduled to be available for a total of 42,602 hours.

  The on-line system availability performance standard referred to in the response to Q182 measures the overall availability of service at the retailer on-line terminal, taking into account loss of service due to central system, retailer network and retailer on-line terminal failures.

  The performance standard is 99.5% availability, an annual basis. It is maintained on a rolling year-to-date basis measured over four-week periods. On this basis, Camelot has consistently achieved 99.8% availability throughout the first licence period. There have only been two four-week periods, both in 1995 (the first year the Lottery was operational), when performance for the relevant period dropped below 99.5%. On each occasion performance for the relevant period was 99.4% availability.

Mark Harris

Chief Executive

National Lottery Commission

20 June 2002


 
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