Branson capitalises on Camelot blunder but could he do better?

It was a great scoop by any standards and I can say so quite legitimately, as I had no hand in it. Marketing Week’s premature revelation of the Camelot directors’ pay rises not only led most news bulletins that night and front pages the following day, but prompted “outrage” from the Prime Minister. It caught Camelot on the hop, so much so that its chairman Sir George Russell was not even in the country to receive his dressing down from National Heritage Secretary Chris Smith.

But would things have been any different if there had been no leak? I suspect not. The row would simply have happened six days later.

For Camelot seems to have made no provision for the fact that the new Government intends to impose a windfall tax on utilities which pay fat cat salaries and to put the National Lottery on a not-for-profit footing. Nor that its directors’ bonuses go down badly with the people whose tickets pay Camelot’s wages and the tabloids that claim to represent them.

The fact that Camelot has done a first-class job in setting up and running the Lottery is, unfortunately, not strictly relevant here. In this matter, perception is all. A combination of bad decisions by some of the Lottery grant-givers and shortsightedness on Camelot’s own part has tarnished the image of an institution which in reality has produced huge benefits for many people and organisations.

Of course the ubiquitous Richard Branson has made the most of the situation, proclaiming that his “profit-for-charity” operation would have transformed the Lottery’s image. And since he is unrivalled at securing acres of favourable media coverage, his claim has to be taken seriously. But how different would life have been if he and Lord Young had won the licence with their Lottery Foundation?

Would the Heritage Lottery Fund have withheld the 13m from the Churchill Family? Of course not. When they made the grant, on the eve of the 50th anniversary celebrations of VE Day, they misguidedly thought there would be public rejoicing at the idea that the historic papers had been bought for the nation.

Would the Arts Council have held back the 70m from the Royal Opera House? Unlikely, since the Lottery only came about as a way of paying for the Opera House’s long-delayed redevelopment. Without the arts lobby which had campaigned for a lottery over many years, the National Lottery would not exist. If the Arts Council had then turned on its heel and given those millions to local unemployed artists instead, campaigners would have gone ballistic.

If Branson had been running the Lottery, how would he have dealt with these unpopular grants? He would have had no greater say in where the money went than Camelot. Would he have denounced them? Would he have threatened to resign? Such questions are relevant because he is now reviving his bid to run the Lottery after the year 2001, when Labour proposes to run it on a not-for-profit basis.

Had Branson won last time, he would have put his Lottery Foundation’s profits into a new trust for distribution to other “good causes”. Since Camelot’s profits are less than one per cent of the Lottery’s turnover, compared with the 28 per cent that goes to the good causes, this would not be a huge amount (47m, after tax, this year) – but still worth having, if you are one of the good causes that benefits.

Ah, but what about the profits of Racal, Gtech, Cadbury and the other conglomerates that own Camelot and benefit from their contracts to run the Lottery? That could add another one per cent to the Lottery Foundation’s small pot – unless of course the Branson operation lets its own suppliers of these services earn a profit for their shareholders.

Would the Lottery Foundation allow its suppliers to earn a profit or bonuses? Branson says it would have offered staff incentives based on the amount raised for good causes, not on profits (Camelot uses both measures for its bonuses). But assuming it raised as much as Camelot, those incentives might still be large enough to outrage the tabloids.

Would it cap directors’ salaries at 50,000 a year? What level of pay is acceptable for what Branson calls “a sinecure… not a business”? Surely the principle of profit and high pay for operators would be just as unacceptable to the tabloids and people who play the Lottery, at whatever level of the organisation it takes place?

But let us assume that Branson, with his magic PR touch, manages to solve that problem – and to raise even more money for the good causes than Camelot. How would his Lottery Foundation distribute its 47m a year without arousing the sort of controversy the National Lottery Charities Board attracts when handing out its 250m a year? Surely it would not neglect the Aids, lesbian and drug-dependency charities that so arouse the tabloids’ ire?

Would the Lottery Foundation give grants to groups that had applied to other lottery awards bodies? How would it decide who to turn down? Would Branson choose which groups to benefit?

In The Observer this week, Branson says the 13m Churchill Papers money could have been better spent on computerising the Citizens Advice Bureaux, which failed in its application for Lottery funds. Assuming he put his foundation’s money to that cause, this would leave him 34m out of this year’s profits to distribute to all the other good causes. Last year, the Charities Board alone had requests for several hundred million.

But Branson would still have to turn down more requests than he could satisfy, as all the grants bodies have found. By the start of this week, his right-hand man Will Whitehorn was already briefing journalists that his boss was unlikely to bid to run the Lottery.

Camelot may have mishandled its Lottery publicity, but would anyone else do it better?

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