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Lord Donoughue: My Lords, the order has been satisfactorily scrutinised and we on this side certainly in no way oppose it. The steps proposed are acceptable but are really part of what we see as a belated process enabling betting shops to upgrade their facilities to modern standards. That is very good. But they should not be seen or represented as in any way a serious step in resisting the damage done by the National Lottery to other aspects of the gambling industry. The number of shops is down by one-third, with serious implications for jobs and with the contribution to racing seriously threatened. It is unfortunate that so far the Government have not been willing to do anything about that. The order does not contribute either.

The biggest step of redress would be to enable the shops to sell National Lottery tickets or to have betting on lottery numbers. We accept that that means an amendment to the 1993 Act. I wonder whether the Government have a serious argument against that. I wonder whether the House is aware--it is quite bizarre--that the Irish can bet on our National Lottery numbers and the British can bet on the Irish national lottery numbers but the British are not allowed to bet on the British lottery numbers. I am not convinced that enabling that would in any way threaten the success of the lottery. I cannot see that small bets of, say, 100-1 on three or four numbers would compete with the 14 million to one chance of the lottery. Therefore, I should like it put on record that we hope the

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Government will think more about this issue. We welcome the order but only on the basis that it is a first small step.

I recommend Members of the House to read the order if they want to know the extent to which the state still gets involved in minute distinctions between whether there are prizes of £3 or £4 or £4 or £10. We welcome the fact that betting shops can now sell some publications. However, I wonder why they are not allowed to sell ordinary newspapers which have very good racing coverage. One wonders why betting shops are not allowed to sell novels or mathematics textbooks, which would enable punters to calculate their losses more accurately. On the age question, I am still puzzled as to why 16 year-olds can gamble on the lottery in the lax environment of the newsagent but cannot in betting offices, which are strictly regulated. Our preference is that the age should be 18 for both.

We look to further changes in deregulation in order to redress the balance that is currently distorting the gambling industry to the detriment of parts of it and particularly the racing part.

The Earl of Courtown: My Lords, I thank the noble Lord for his support, albeit somewhat guarded, for this deregulation order. He raised a number of points, some of which I think were outside the scope of the order. I realise that he wanted to make those concerns known in the House.

He asked about the age of participants in gambling. The proposal restricts access to 18 year-olds only. We take the view that that is the appropriate age for participating in gambling and betting on this scale, but for softer forms of gambling--lotteries and the football pools--a lower age limit of 16 applies. I note his suggestion about books, newspapers and even computers. I shall pass on his concerns to my right honourable friend.

On Question, Motion agreed to.

Deregulation (Industrial and Provident Societies) Order 1996

11.47 a.m.

The Minister of State, Department of Social Security (Lord Mackay of Ardbrecknish) rose to move, That the draft order laid before the House on 22nd April be approved [20th Report from the Delegated Powers Scrutiny Committee].

The noble Lord said: My Lords, I am pleased to commend this order to the House. It was only recently that deregulation orders for friendly societies and credit unions were debated in your Lordships' House. The draft order presently before the House continues the theme of releasing the burden of unnecessary regulation from mutual societies, so allowing them to go more freely about their business for the benefit of their members.

Industrial and provident societies number in their ranks some of the smallest and most community-based of the mutual institutions. Many of them are run by

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volunteers in their spare time. They include agricultural co-operatives, working men's clubs and housing associations. But together they hold assets of £35 billion.

This order lifts from many of the smallest societies the obligation to arrange, and pay for, a professional audit each year, when their limited funds might be better directed elsewhere. Such societies often have the support of capable local accountants or others willing to give their services for free, but have until now been forced to employ auditors with the requisite professional recognition. Other changes include extending the time available for societies to file their accounts and reducing the number of members needed to form a society.

The proposals in the draft order have the strong support of the many societies which responded to the Government's consultation exercise. The order goes a long way to freeing them from bureaucracy while keeping in place the necessary protection for their members. I commend the order to the House. I beg to move.

Moved, That the draft order laid before the House on 22nd April be approved [20th Report from the Delegated Powers Scrutiny Committee].--(Lord Mackay of Ardbrecknish.)

Lord Eatwell: My Lords, the proposals before us today weaken significantly the audit requirements for friendly societies. I found the Treasury's rationale for that rather slight. The noble Lord said that they often have the support of local accountants who offer their services for free. Yes, indeed, but what about those members of a friendly society who do not have a local accountant providing those services? What confidence can they have that the society is being appropriately audited and that financial management is proceeding in an appropriate and prudent manner? This weakening suggests a failure within the deregulation procedures to take adequate account of the concerns of the public, particularly those people for whom regulations of this kind were first designed to protect their investments.

I must refer to the inadequacy of the documents prepared by the Treasury since at no point has it told us what are the fiscal implications of these measures. There may be none, but the documents should say so. Friendly societies have various fiscal rights and privileges and a change, for example, in the number of members who are required will allow friendly societies to be of different sizes and smaller groups of people to form friendly societies who previously could not have done so. Surely, that has some fiscal implication: what is it?

Lord Mackay of Ardbrecknish: My Lords, all these proposals were consulted on and the societies and the other interested parties who responded all did so in a favourable direction. That is the basis on which deregulation orders proceed.

Lord Eatwell: My Lords, the noble Lord may have noticed that the Treasury memorandum points out that the National Consumer Council objected to the changes in auditing procedures.

Lord Mackay of Ardbrecknish: My Lords, yes indeed; but the bulk of the people who responded

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approved of the suggestions which were put forward. The National Consumer Council has every right to object, but that objection cannot be taken as a veto of the approval of other people who responded to the consultation.

The relaxing of the order requirement is in fact for non-deposit taking societies and it brings them into line with companies. Some societies will be subject to these less onerous order requirements and they may even be exempt from the audit altogether. Full professional annual audits will still be required for deposit takers, societies registered with the Housing Corporation, or its Scottish or Welsh equivalent; societies with subsidiaries or which are themselves subsidiaries and societies whose assets and turnover exceed the new limit. So I do not believe that this order removes a protection.

As regards the decision about the audit requirement, the members must vote annually to decide whether they wish to accept anything less than a full audit. Legislation still requires the societies to keep proper books of account and requires officers to account for the money. The chief registrar also lays down what must be in annual returns and accounts for those are monitored by him. Officers must also sign statements each year that the accounts present a true picture of the society's affairs. The same thresholds are already in place for companies. This proposal achieves parity, allowing more effective competition for those societies in the same market as the companies. The main point is that the members have to vote annually to decide whether or not they wish to take advantage of this particular piece of deregulation.

It is difficult to quantify costs because many of the deregulation aspects are quite small and just reduce the amount of bureaucracy. As regards the less onerous audit requirements, it is estimated that this particular proposal will reduce societies' costs by £3 million a year. So I believe that these are important but small reductions in the bureaucracy. As I say, I do not believe, and neither did the deregulation committee here or that of the other place, that in any way these proposals lessened the protection provided by law for these societies. With those observations I hope that the House will accept the order.


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