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The Viscount of Falkland: My Lords, we on these Benches thank the Minister for repeating the Statement and receive it with mixed feelings. We appreciate some of the thinking underlying the Statement and the White Paper; they appear almost simultaneously. I have been able only to glance over the White Paper.

At first sight the Government seem to take a curious view of the National Lottery which is rather removed from reality. When the issue was debated in your Lordships' House the main objection from the Opposition was that should funds become available in the amounts predicted--indeed, they far exceeded them--the Government of the time would be tempted to use them for purposes which should be met out of

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taxation. The present Government are doing just that by adding to the good causes the proposals in the White Paper.

While some of us had qualms about the wisdom of a national lottery and the effect that it would have on poor people's income and spare time, there is no doubt that the lottery has been extremely successful. I agree with the noble Baroness. It has been successful because it has been efficiently run. We are anxious to hear more, as we undoubtedly shall, about how the Government will approach the running of the lottery after Camelot's contract expires. The Government seem to have reversed somewhat on the proposal after many high moral words about "not-for-profit" lotteries rather than "non-profit" lotteries--a carefully worded phrase. They seem to accept that a profit is necessary. Calling it a people's lottery is rather good jargon. It is rather like talking about a fair profit or a just profit.

I hope that my noble friends on these Benches will agree that it is extremely unwise to tamper with something that is going so well. Often in a commercial company someone comes up with an idea, and you say, "We'll give you a commission for your idea", although you do not think much of it. Then that person starts to make more out of the commission on the idea than the chief executive. The accounts department always tries to knock down the commission. Because of the extreme success of the lottery and the agreement reached--after all, Camelot takes only 1p out for every card filled in--it has made extremely large amounts of what the Government term profit. That is profit, and profit well earned. I believe the Government will agree with me that there were some unseemly pictures of Camelot executives making V-signs for victory when they heard of their increased emoluments as a result of the success of the lottery. But that was the mistake of the company's public relations. I hope that the Minister can assure me that when the matter is fully examined, the Government will ensure that the criteria established by Camelot will be at least matched by those the Government propose to put in its place. Whatever else Camelot has done, it has made the lottery extremely attractive for those who buy tickets twice a week. If it had not been so efficient, we should have seen a marked drop-off in the turnover of the lottery.

Perhaps I may mention one or two other areas of anxiety which the noble Lord may be able to answer in some measure. I refer to the idea that now certain areas of health, education and environment will be given the chance to dip into the lottery pot. How are the Government able to justify amounts going to those areas which one would normally expect to be funded out of Treasury moneys, out of central taxation?

What is the difference, for example, between a teacher being trained to be more efficient and productive in his or her profession when that is paid for out of government initiatives through taxation and what is suggested in the White Paper? Is teacher education now to be subject to the fluctuations of a gambling activity? Surely, it should be treated as an activity with a certain, rather than uncertain, end. The lottery may not be as profitable in future as it has been.

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There is another curious matter which we shall have the opportunity of discussing. The White Paper rightly points out the great blessings of talent in our country. No one would disagree with the conclusion that such talent exists. We are to dip into the lottery pot to make sure that what is produced and invented as a result of that talent will now be exploited and we shall be able to gather in more of the profits than we were previously required to do. As I am sure the noble Lord will agree, it has always been a cultural fact in this country that, for all our great talent, we often do not reap the rewards, from the film industry, the motor industry or whatever, because we do not apply long-term thinking in many areas. Sadly, in marketing and other areas, we are out-performed by other nations, notably the United States and Japan, closely followed by other areas of the Far East. I am therefore interested to know what impression the Minister believes taking money from the lottery fund will have on changing what is a cultural phenomenon in this country; namely, that the fruits of our many talented people are picked up and exploited by other countries, which often make the profits. We rightly begrudge them those profits, because they are based on our ideas. Is this an appropriate area in which to use these moneys?

Finally--I am sorry to be so tedious about this matter--does the Minister not agree that it would be better initially to attempt to continue with the way in which the lottery performs now and try to bring about a greater take-up of funds available in the five areas presently designated--in particular, charities, sports and the arts. Only about 25 per cent. in total of the funds available are taken up, and for all kinds of reasons. Some people are chary about applying, and in many cases there is difficulty in choosing. Mistakes have been made and always will be. How is it that the Government now propose to follow the very grandiose scheme in the White Paper when there is a sad need to make sure that the distribution of funds as already structured is more fully and completely achieved?

Lord McIntosh of Haringey: My Lords, I am grateful to the noble Baroness and to the noble Viscount for the way in which they responded to this admittedly complex Statement about what is an admittedly complex White Paper. I am happy to confirm at the outset that the noble Baroness's maiden speech at the time of the original establishment of the lottery was prophetic. She correctly anticipated the benefits that would come from the lottery. I am happy to join her in congratulating all those--it was not a party political matter--who supported and encouraged the establishment of the National Lottery and contributed to its success, acknowledged in the Statement and in the White Paper.

The noble Baroness rightly said that the principal point of the distribution of lottery funds to good causes was that it should be independent, that it should be at arm's length from government. The noble Viscount, Lord Falkland, made very much the same point. The noble Baroness rightly said that funds from the National Lottery should not be a substitute for public spending. I give the absolute assurance that that will not be the

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case. It is not our intention that funds, either from the existing distributors or from the new distributors--that is, the New Opportunities Fund and the National Endowment for Science, Technology and the Arts--should be under the control of government. The existing distributors have always worked, just as Camelot has worked, under direction and advice from government. That was not only established by the existing Act but was continued by subsequent directions. No one ever thought it improper for government to express their views, just as nobody thought it improper for the director-general of the lottery to express his views, where appropriate, on the activities of Camelot.

When we talk about initiatives in health, education and environment as being the first activities of concentration of the New Opportunities Fund, I confirm that these are not, and never were intended to be, core expenditure items from taxation. The provision of schools and buildings, the funding of teachers and education, is the role of taxation and of the Chancellor. I do not think that the Chancellor will in any way be smiling at what is proposed today. The specific example of teacher training was raised. What is proposed is a one-off attempt to deal with the problem that something like 40 per cent. of existing teachers have never received any training in information technology other than at a very basic level. This one-off attempt is necessary to bring them up to scratch in order that all children in all schools can benefit from teachers who understand information technology.

The same is true of the health centres that are proposed. Those do not come within the ordinary remit of the National Health Service and never have done. Some have been provided by local authorities and some by private initiatives, but it has never been a priority for the National Health Service to do what is proposed in the White Paper. I repeat, with all the strength at my command, that it is not our intention to depart from the principle of additionality which says that proceeds for good causes from the lottery should be in addition to those provided by public expenditure.

The noble Baroness questioned the idea of fining the lottery company in the case of serious breaches of the rules. The legislative framework proposed will be designed to ensure that the regulator has a range of sanctions available according to the nature of the operator and according to any breach of licence conditions. It will be up to him to choose the appropriate sanction. If he operates effectively, as I am sure he will, he will make sure that any fines come from the operator's income rather than from good causes.

I was slightly puzzled by the noble Baroness's reference to a panel of new businessmen. There will of course be distributors, both for NESTA and for the New Opportunities Fund. Indeed, the arm's-length nature of NESTA will be even greater than for the other funds. The intention is that the distributors will have an amount of capital and freedom to use the income from that capital as they think fit within the guidelines set down, and the amounts they have will be dependent upon the returns from that capital.

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I apologise to the noble Viscount, Lord Falkland, for the short time he has had to study the papers. It was my experience over many years that this has always been a difficulty for those in opposition. However, it has led him into error in thinking that we have succumbed to the temptation to use the National Lottery for purposes which would otherwise properly be met from taxation.

The noble Viscount is correct in saying that the National Lottery is efficient because it has been efficiently run; I certainly acknowledge that. But that does not mean that it is not possible to improve the efficiency of the National Lottery, the directions which are given to it and the way in which an operator is chosen.

Our primary concern in the choice of a new operator will be to maximise the return to good causes. We believe that the public will prefer to see that objective achieved by a not-for-profit operator; but, if we cannot have that within the primary objective of maximising income to good causes, then so be it. All we are ruling out at this stage is the two extremes, one, a state-run lottery run in effect by civil servants, which we do not think would be appropriate, and the other, a lottery with an open-ended profit commitment, which is what we have now. Camelot will, of course, be welcome to submit proposals within our guidelines to become the new operator after 2001.

I understand the thoughtful points which the noble Viscount makes about NESTA and about reaping rewards from our own skills and scientific, technical and artistic achievements. It is true that there are a number of organisations in the field, including particularly the higher education system, which already touch on the fringes of what we are trying to do with NESTA; but I believe that NESTA will be able to meet needs which other organisations cannot reach and bring together our effort in this area, as some other countries have succeeded in doing.

The final question which the noble Viscount asked was whether it would not be better to continue with the existing lottery system. I hope I have shown in my replies that what we are proposing will be an improvement which is possible because of the success of the existing lottery.

5.43 p.m.

Lord Taylor of Gryfe: My Lords, the Statement made by my noble friend certainly impresses, but I regret that I cannot share his enthusiasm. The test of the lottery is being judged purely in financial terms.

I should like to ask my noble friend whether, in pursuit of its policies, new Labour looked at the social consequences of the lottery and questioned whether they were consistent with our general view of the nature of the society we are creating. We are creating a nation of gamblers, a culture which thinks that there is easy money and success to be gained by gambling and buying tickets, whereas I assume that the Labour Party's new philosophy is to encourage initiative and energy. Was any analysis made of the people who buy lottery tickets and of the social consequences for those who are accumulating poverty and debt as a result of the new habit of buying tickets in the hope of success?

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I believe that the nature of our society and the consequences of the lottery should be questioned before we embark on this widespread enthusiasm for getting money for nothing.

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