I welcome this opportunity to address the House on the comprehensive report produced earlier this year by the Review Group on the National Lottery. This is an opportunity for Deputies to express views on the recommendations of the report and on any other matter relative to the national lottery before final decisions are taken.
I will set out the background to the setting up of the group and outline its main findings. I will give further information about the fund set up to aid private charitable lotteries in direct competition with the national lottery for which a sum of £5 million was voted by means of Supplementary Estimate for the Department of Finance last July. I will deal with future developments in the market in which the national lottery is operating and which is changing fast. I will also refer to the sales of UK lottery tickets here about which there has been recent media publicity.
The national lottery recently celebrated ten years of successful operation. The lottery has already contributed more than £700 million for activities such as youth and sport and arts and culture and has supported initiatives in favour of the health and welfare of the community. But for the success with which the national lottery has been operated, much of this funding would not have been possible.
Ironically, the great success of the lottery in providing funding for the qualifying categories has been a cause of controversy from time to time. Not surprisingly, demands for lottery funding consistently exceed the available resources and there are inevitably disappointed applicants, notwithstanding that the disbursement of lottery grants is subject to similar controls as apply to public funding generally. Nonetheless, it is vital that the lottery's players and the public generally should have confidence in the methods by which allocations are decided and that there should be maximum transparency. Public trust and confidence are of paramount importance to the operation of a national lottery. Concerns such as these were central to the deliberations of the review group.
The review group was appointed by the Minister's predecessor, Deputy Quinn, in December 1996. There were three independent members: the chairman, Mr Niall Greene; Mr Richard Burrows, Irish Distillers; and Dr. Kathleen Lynch, UCD. The group also contained representatives of the Departments of Finance, Arts, Culture and the Gaeltacht, Education, the Environment, Health and Social Welfare.
I take this opportunity on behalf of the Minister for Finance and myself to thank the chairman and the other members of the group for all the work they did to produce a thorough and wide-ranging report which dealt fully with all the issues submitted to them. It is clear that the group worked painstakingly and considered all the possible options in relation to the terms of reference. All future reviews of the lottery will, I believe, refer to this report as a repository of very useful information on the development of the lottery.
The terms of reference of the group primarily required it to look closely at the impact of spending financed from the surplus of the national lottery with particular attention to the allocation of funds administered by Departments under discretionary schemes involving financial support for voluntary agencies such as sporting and community bodies. The group was also asked to review the arrangements and procedures for processing applications for national lottery funding and make recommendations for maximum transparency in the allocation of lottery resources. Submissions were invited from individuals and interested parties by way of public advertisement. Approximately 130 submissions were made to the group from a wide range of interests throughout the community. All submissions were considered by the group. In carrying out its task, the group reviewed the development of the national lottery since its establishment in 1987 and took account of previous reports and research into the lottery. This was with a view to enhancing public understanding of the contribution of the lottery to the community and, if possible, improving the responsiveness of lottery funding to the needs of the community.
Under the National Lottery Act, 1986, lottery funding may be provided for the following purposes: sport and other recreation; national culture — including the Irish language; the arts and the health of the community. Further categories were later approved by Government when sales greatly exceeded initial expectations. These categories are: youth; welfare; national heritage and amenities. Lottery funding was also provided on a once-off basis for the Dublin Millennium in 1988 and EXPO '92. As Deputies will appreciate, the benefits of lottery funding have been apparent in every area of the country and have been made available to a large number of voluntary and community groups.
Before I discuss the group's findings in greater detail, it is worth noting that, while it made suggestions for improved administration of lottery funding, the group considered that decisions on lottery allocations should remain the responsibility of the Government rather than, for example, being given to an independent body.
The main recommendation of the group is that, in future, the allocation of lottery resources should be directed entirely to the support of voluntary and community activity. This would be intended to bring about a much closer association, than has been the case heretofore, of lottery support with a wide range of services and activities at the heart of the community. In this way, the benefits of spending on the lottery — approximately 33p of every one pound spent on a lottery ticket goes to good causes — could be more clearly demonstrated than under the present arrangements. The recommendation entails a realignment of lottery funded expenditure involving, on one hand, the transfer to lottery funding of some support for voluntary and community bodies currently provided by the Exchequer and, on the other, the transfer to the Exchequer of support for statutory bodies now funded from the lottery. The group was satisfied that the initial impact of these changes would not involve any extra cost to the Exchequer.
This greater emphasis on voluntary and community groups is one that I welcome. Many of those involved in voluntary and community projects aided by the lottery in the past have found that the assistance provided was the catalyst to enable some very important progress to be made in the provision of facilities or otherwise. While not wishing to prejudge the outcome of the consideration of the report, the greater direction of lottery funds towards the voluntary and community sector can only help to enhance the image of the national lottery. For many years, while in Opposition, I argued strongly for this and I welcome the recommendations in the review.
Taken with other recommendations of the group for improved administration of lottery grants which I shall outline later, the group considered that such changes would contribute to a clearer picture of the uses to which lottery funding is put. In publishing the report in June 1997, the previous Minister also envisaged that publication would provide an opportunity for consultation between the relevant Departments and the voluntary and community agencies concerned.
I heartily encourage the Departments and public bodies concerned as well as the beneficiaries of lottery funding to look closely at the review group report. As I indicated earlier, the Government has not taken any final decisions in relation to the group's recommendations. One issue which the review group decided to investigate was the controversial one of how much lottery spending could be considered as substituting for Government spending and how much was additional.
While the earlier intention had been that all spending should be additional, it was decided in the late 1980s, at a time of retrenchment in public spending and particularly as the lottery had generated far more resources for the Exchequer than originally anticipated, that lottery funding should be made available to mainline expenditure programmes, especially in the health sector, which would otherwise have been curtailed or even terminated.
The review group commissioned independent research from Mr. Terry Baker of the ESRI which found that it would be reasonable to regard 50 per cent of lottery funded expenditure as additional spending. This is very much higher than figures that have sometimes been put forward. It also means, when account is taken of how lottery sales exceeded original expectations, that notwithstanding the substitution, the total amount of additional spending generated by the lottery was much greater than expected when it was set up.
The national lottery has become a part of everyday life in Ireland. It contributes approximately £100 million per annum to good causes.
The National Lottery Act, 1986, specifies that the Government decides the amounts to be spent from the beneficiary fund in each of the designated categories. The proposed expenditure is shown by Vote and subhead each year in the Estimates for public services for the various Departments concerned. If an activity is financed under the same Vote both from the lottery and from general Exchequer revenue, there are two separate subheads in the relevant Vote to make this clear.
Lottery funded expenditure is subject to the same public financial discipline and procedures as Government spending generally. In practice, the Government considers provisions for lottery funded spending during the annual Estimates process in exactly the same way as it considers the Exchequer funded expenditure. It is a matter for the Government to adjudicate on the spending proposals of those Departments which have operational responsibility for lottery funded grants and schemes.
This process helps to ensure that allocations of lottery resources reflect actual needs and priorities. It is then largely a matter for the spending Departments themselves to allocate the funds, within the approved subhead provision, among individual projects or schemes. There is full accountability to the Dáil and, especially, to the Public Accounts Committee for this spending.
It might be helpful if I briefly set out spending under the main national lottery categories which shows how much the lottery has contributed since its establishment. The figures relate to the period up to the end of 1996: health of the community and welfare £241 million; youth, sports, recreation and amenities £233 million; arts, culture and national heritage £171 million and the Irish language £52 million. These large sums have benefited every region.
In its consideration of the arrangements for the disbursement of lottery funds, the review group was mindful in particular of the recommendations made by the Committee of Public Accounts in
1994. These were aimed at ensuring as far as possible that there were standard application forms, clear criteria for making grants and adequate procedures for follow-up to ensure that the funds were spent as intended.
The detailed recommendations included the following. There should be a standard application form for lottery grants which, apart from the normal details, would, as a minimum, set out the purpose for which the grant is being sought, the number of people who benefit from the work of the organisation seeking the grant and the sources of the organisation's funding, separately identifying sources of State funding to prevent possible overlap or duplication. There should be a structured process to ensure objectivity in the evaluation of competing applications for funding by reference to agreed predetermined criteria. The recommendations of the line section in the Department should clearly show the justification for the grant and its amount. In the light of the report of the Committee of Public Accounts, the Department of Finance issued in October 1994 comprehensive revised guidelines to Departments covering all aspects of administration of national lottery grants.
There has been a sustained effort by the Government to ensure there is full public confidence in the arrangements for disbursing lottery funds. As the Department which co-ordinates financial policy and under the aegis of which the National Lottery Act, 1986, operates, the Department of Finance has set out procedures for Departments which should be followed in approving funding for lottery assisted projects to ensure best practice. These aim to ensure that clear criteria apply for each discretionary scheme, that all interested persons will have due opportunity to apply for the funding available and that all applications are treated on an equal footing.
I wish to return briefly to the review group's consideration of the question of having an independent body set up to decide lottery allocations. It has been suggested by a number of commentators that decision making for lottery surplus distribution should be devolved to an independent board or boards. Such a framework is operated, for example, in the case of the UK lottery. The view has been put that such an arrangement would facilitate the achievement of openness and transparency in lottery funding to which the review group was asked to address itself. The possibility of establishing an independent board was also mentioned in a number of the submissions made to the review group in response to its public advertisement.
The main case made in favour of an independent board is that it would remove the scope for political influence in the making of grant allocations. It has also been suggested that such a body would have a stand-alone identity which would facilitate public access to lottery funding and that it would generally be more open, more representative and fairer than the existing system. It is also argued that an independent body would display a more imaginative approach to lottery allocation. The review group acknowledged that the claimed advantages of an independent board have merit. However, the group was mindful of other considerations. In the sectors towards which lottery funding is directed, the State has a considerable involvement and infrastructure already in place. The Arts Council, Bord na Gaeilge and other such bodies or agencies, with the Departments which sponsor them, are channels through which lottery funding can be efficiently routed.
Moreover, many projects in the voluntary and community sector are both Exchequer and lottery funded. It did not appear to the group that the addition of a lottery surplus distribution board into this mix would achieve more than would reforming the procedures in line with the other recommendations in the report. It could lead to considerable incoherence in both policy making and implementation in the community and voluntary sector.
The group also felt there was no reason to believe an independent board would be better placed to adjudicate on competing demands, given that the demands generally exceed available resources. Any new board would inevitably represent a range of interests of one type or another. The one certainty is that it would raise the costs of distribution given that the current distribution system is without any charge on the lottery proceeds. The group also concluded that the current arrangements whereby Ministers are accountable to Dáil Éireann for lottery spending should be maintained. A new independent board would not be accountable to the electorate in the same direct way.
The sheer size of the annual surplus available for distribution from the lottery — approximately £100 million — means that issues of priority and of consistency with public expenditure generally must be reflected in decisions on lottery allocations.
I will summarise for Deputies the principal recommendations of the Review Group. The allocation of national lottery funds should continue to be made by the Government rather than by an independent body. The subsequent disbursement of lottery funds should be made in partnership with the voluntary and community sector.
The surplus revenues of the national lottery, other than those in the reserve fund, should, in future, be devoted entirely to the support of community and voluntary activity in the areas of youth services, sports, the arts, the Irish language, welfare, health, social services and community development. The transition would initially be carried out on the basis of no net extra cost being borne by the Exchequer.
The needs of the most disadvantaged groups within the voluntary and community sector should be prioritised in the allocation of lottery funds within individual programmes and due regard should be had to gender and regional balance.
Application procedures for support from programmes funded by the beneficiary fund should be standardised and means of access to them made more publicly visible. The Government should, from time to time, publish more details of how the funding is distributed over various sectors. Decision making on applications should reflect a commitment to the principle of partnership with the client base.
The National Lottery Act 1986 should be amended to provide for the procedures which must be followed when national lottery funds are being allocated. A process should be put in place to enable the Government to identify, from time to time, suitable major projects with an enduring impact which could be provided for from lottery resources.
A national lottery beneficiary and monitoring committee should be established to oversee the implementation of the recommendations made in the report and to maintain a continuous oversight of the disbursement of the beneficiary fund.
On the charitable lotteries fund to which I referred earlier, although it did not arise directly from the work of the review group, I am particularly pleased to be able to announce the arrangements for the operation of the £5 million charitable lotteries fund. In July 1997, the Minister for Finance moved a supplementary estimate of £5 million on the vote for finance which was approved by the Dáil. This is to provide an annual amount for a three year period from national lottery resources to supplement the income of the promoters of private charitable lotteries whose lottery products are competing directly with similar national lottery products.
As Deputies will be aware, the provision of this funding is in response to the difficulties expressed for some time by private charitable lotteries in operating within the constraints of gaming and lotteries legislation. It has long been contended by the charitable lotteries that, because of the prize restrictions which apply under the Gaming and Lotteries Act 1956, they are not in a position to market lottery products alongside the national lottery. This fund will enable a measure of support from lottery resources to be targeted at the charitable lotteries. I am happy to announce that applications for the fund are now being invited by my Department by way of advertisement in national newspapers. These advertisements appeared in the newspapers yesterday, Wednesday, 8 October.
I would like to make clear, however, that this is a very focused initiative which is intended to address the circumstances of those private lotteries which have products in the marketplace in direct competition with the national lottery. It was never intended that this fund would be a vehicle for supporting charitable fundraising generally. Such a measure would require funding greatly in excess of what is being provided.
I will outline some of the main aspects of the scheme, full details of which are now being made available to interested parties. Applications are invited from the promoters of private charitable lotteries conducted under the provisions of existing gaming and lotteries legislation which were in operation on 1 July 1997. The applications should reach my Department no later than 31 October 1997. It is intended that support from the fund will be allocated by reference to the audited gross sales of the eligible charitable lotteries.
Applications for assistance under the scheme will be evaluated by an independent committee to be set up by the Minister for Finance expressly for the purposes of advising him as to whether applications meet the eligibility criteria laid down for the scheme. Subject to the availability of funds and to the other conditions of the scheme being met, it is intended that eligible charities would be assisted in proportion to the volume of their average annual gross lottery turnover in the three most recent years of account as certified by the organisation's auditors.
The lottery promoter must be an organisation independently established for charitable purposes. Documentary evidence, such as registration with the Revenue Commissioners, will be required. The lottery tickets must be generally available to members of the public, within the area of their circulation, on a comparable basis to national lottery products.
It is the Government's intention to review the operation of the fund before the expiry of the third year's funding. Although necessarily limited in its compass, the fund should support the work of the charitable lotteries.
The general thrust of the fund is entirely in line with the central recommendation of the review group of enhanced support from the national lottery for community and voluntary agencies.
The national lottery has up to now been a great success as is evidenced by the amounts that have been made available through the beneficiary fund. As with any business, however, the national lottery has to keep abreast with developments in the market place. The lotteries market is one in which great changes are taking place, aided by the new technologies of today which create a whole new range of business opportunities.
The total gaming market is becoming more competitive in terms of the number, professionalism and image of gaming operators. It is likely that the next few years will see the introduction of many gaming opportunities that are new to Ireland. Technological developments and the falling cost of computer hardware will tend to remove some of the traditional barriers to entry into the gaming market.
With the continued interest of the European Commission in ensuring fair competition across the EU, the traditional monopoly enjoyed by state lotteries may come more into question in the years ahead. All these developments will pose a major challenge and anything which would have the effect of diminishing national lottery sales and, consequently, the surplus available for the beneficiary fund would obviously be of major concern. It will be a concern of Government, in consultation with the national lottery company, to face all of these challenges.
There has been some recent publicity on the position regarding the sale of UK lottery tickets in this jurisdiction. It is true the Department of Justice is examining concerns raised by the European Commission about the compatibility of certain sections of the Gaming and Lotteries Act, 1956, with the requirement of non-discrimination in the regulation of the operation of lotteries. The Commission's concerns, however, were stated not in relation to our position on the sale of the UK lottery tickets but on a purported prohibition by the Irish authorities on the purchase of UK premium bonds by Irish citizens.
The operation of lotteries other than the national lottery, which is provided for under the National Lottery Act, 1986, is covered by the Gaming and Lotteries Act, 1956. The Government has received legal advice regarding the sale of UK lottery tickets here. It is our view that such sales are illegal here and the Garda authorities have taken steps to advise retailers accordingly.
I thank the review group again for their excellent work and assure them that their recommendations will be fully considered by me and the Government. I look forward to a very interesting discussion during the course of this debate. I am anxious to take on board any ideas, suggestions or new approaches that Members of the House may have.
