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House of Lords

Thursday, 30th March 1995.

The House met at three of the clock (Prayers having been read earlier at the Judicial Sitting by the Lord Bishop of Worcester.): The LORD CHANCELLOR on the Woolsack.

National Lottery: Sales and Revenue

Lord Donoughue asked Her Majesty's Government:

    What were the total revenues of Camelot from the National Lottery by 4th March 1995 and, in granting the licence to Camelot to operate the lottery, what was Her Majesty's Government's estimate of the time it would take Camelot to recover its start-up costs.

The Parliamentary Under-Secretary of State, Department of National Heritage (Viscount Astor): My Lords, National Lottery sales until Saturday, 4th March totalled £927 million. The total revenues of the Camelot Group cannot be determined until the end of the financial year when adjustments may be made so that it meets its licence commitments for the year in relation to retailer commissions, prize payments and payments to the National Lottery Distribution Fund.

Over the seven-year duration of the licence Camelot is expected to retain between 5 per cent. and 6 per cent. of revenue to cover operating costs and profit. The Director-General of the National Lottery has stated that Camelot's retention of revenue was the lowest of the eight applicants for the Section 5 licence.

Lord Donoughue: My Lords, I thank the Minister for that reply, which is in line with Camelot's latest statements. On the basis of that information we may assume that the lottery revenue in the first year, including the switch card, will be in the region of £4 billion a year. That is very good. It is a success. Camelot's gross take will be between £1.5 billion and £2 billion over the seven years of the licence. Will the Minister confirm the figures that Camelot has given that at present the percentage of the revenue going to good causes is 26 per cent. rather than the 28 per cent. originally promised, the percentage going to prizes is 48 per cent. rather than the 50 per cent. originally promised, and the percentage currently going to Camelot is 11 per cent. rather than 5.8 per cent.?

Does the Minister agree that the profits to Camelot from the gross take of between £1.5 billion and £2 billion over the seven years are bound to be very high, however much it inflates its costs? Was such a high return the Government's original intention or, in disposing of this public monopoly licence to print money, were the Government taken a little for a ride?

Viscount Astor: My Lords, I cannot comment on the speculative figures quoted by the noble Lord, Lord Donoughue. We do not know what the turnover of the National Lottery will be in the future. That will depend on its success. I can tell the noble Lord that it was Parliament's decision that the National Lottery should be run by a private sector company, regulated by an

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independent regulator. In his evaluation of the eight bids the Director-General of the National Lottery took many factors into account. He selected Camelot because, in his opinion, it maximised the return for good causes, which is the purpose of the National Lottery, and Camelot's retention of revenue was the lowest of all the applicants.

I can tell the noble Lord the figures so far. Up to the 19th week there have been sales of £1,120 million; prizes of £505 million, including a jackpot of £156 million; 177 jackpot winners and 21 million winners overall. Tickets are now being sold in 19,000 different outlets. So far the proceeds for good causes amount to £292 million.

The Viscount of Falkland: My Lords, can the noble Viscount give a layman's answer to a layman's question? What is the relationship between the profit of the operating company when the lottery is operating evenly and any increases which one hopes will arise in moneys available for good causes? Is there a relationship between the two that can be readily understood?

Viscount Astor: My Lords, there is certainly a relationship between the success of the lottery in selling tickets and maximising the amount available for good causes. Camelot has been granted a licence to operate the lottery until 30th September 2001. After paying 5 per cent. commission to retailers, Camelot will retain between 5 per cent. and 6 per cent. to cover operating costs and any profit. Obviously, the better it does maximises the amount for good causes, which is after all the purpose of the lottery.

Lord Clark of Kempston: My Lords, does my noble friend agree that whatever profit Camelot makes, the Chancellor of the Exchequer will receive corporation tax? Does he also agree that the Exchequer will also benefit from the profits made by retailers, on which they will pay corporation tax?

Viscount Astor: My Lords, my right honourable friend the Chancellor of the Exchequer will do rather well. Not only will he take a sum of money from the sales of lottery tickets but, as my noble friend said, he will also receive money should corporation tax become payable.

Lord Shepherd: My Lords, the Minister said that the Chancellor of the Exchequer will do very well. Has he any evidence yet as to the consequences for other charities, such as Save the Children? I have heard that there has been a considerable fall in the moneys going to such charities as a consequence of the lottery. Has the Minister any evidence to that effect?

Viscount Astor: My Lords, it is extremely difficult to predict or analyse charitable donations. There is no evidence so far that charitable giving has suffered since the introduction of the National Lottery. Commitments were made during the passage of the Bill that the Home Secretary would monitor charitable income following the launch of the National Lottery. That monitoring has already started. The Home Office intends to report to Parliament in the future. It will also report to Parliament

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on the level of betting levy in the spring of 1996. The Government believe that the public will continue to buy tickets for society lotteries in order to support their sports club or favourite cause. The Lotteries and Amusements Act 1976 was amended to allow for greater prizes and larger levels of turnover for the promoters of small charities.

Lord Stoddart of Swindon: My Lords, can the noble Viscount confirm that since the advent of the National Lottery there has been a considerable adverse effect on the income of the pools promoters? Has he any evidence to show that as a result the pools promoters will reduce the very generous contributions that they make to the sports and the arts?

Viscount Astor: My Lords, the Government have taken heed of that possibility, and in response to a request from the pools companies we have relaxed the ban on advertising for the pools on TV and radio. That comes into effect shortly. The Government will then monitor the effect on pools turnover as a result of those changes.

Lord Ezra: My Lords, will the noble Viscount confirm that it is the Government's intention to count the disposal of the proceeds of the National Lottery as part of public expenditure? If that is so, will he indicate whether it follows that there would be some corresponding reduction in government funding in the areas in question?

Viscount Astor: My Lords, the Government have always made it clear that there will be no case by case reductions in the conventional public expenditure programmes to take account of awards from the National Lottery.

I should tell your Lordships that the Sports Council has already made some awards. The Arts Council this morning made its first awards which included £29,000 to Great Grimsby Borough Council for the purchase of a grand piano. It will probably be the grandest piano ever seen in Great Grimsby.

Nuclear Weapons: ISIS Proposals

3.10 p.m.

Lord Jenkins of Putney asked Her Majesty's Government:

    What is now the role and purpose of British nuclear weapons and whether they have considered or will consider the policy options put forward by the International Security Information Service.

The Parliamentary Under-Secretary of State, Ministry of Defence (Lord Henley): My Lords, our nuclear deterrent is the ultimate guarantee of this country's security and makes a valuable contribution to NATO's strategy of war prevention. While we welcome contributions to the non-proliferation debate, this

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Government already pursue the policies which they consider most effective to prevent the proliferation of nuclear weapons and promote peace and stability.

Lord Jenkins of Putney: My Lords, although that may be the case, do the Government agree with me that the three options in the article I have in mind cover the field well and provide the possibility of a better development than the present position? If the House will forgive me, perhaps I may say this briefly—-

Noble Lords: No!

Lord Jenkins of Putney: My Lords, perhaps I may ask the Minister whether he has read the article in question and whether he recalls that there are three options. The first is to continue as we are; the second relates to nuclear disarmament; and the third is to take a fresh approach to the nuclear question on an international basis. That proposal is made by Mr. John Gordon, a distinguished civil servant and one-time adviser on these matters in the Foreign Office. Therefore, will the noble Lord not dismiss the idea as being put forward by a candidate for nuclear disarmament?

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