Will the new Lottery watchdog have bite?

Culture secretary Chris Smith has put the future of the National Lottery in the hands of a feminist, a former Conservative MP, a consultant and two do-gooders.

Smith last week named the five members of the new National Lottery Commission which will take over from the discredited regulator Oflot on April 1 (MW February 4). The NLC will be responsible for the regulation of the Lottery and the selection of its next operator after 2001.

Rather than having one director-general, the five-member commission will take decisions jointly. But will the new watchdog be able to regulate the Lottery better than Oflot?

Chosen from more than 500 applicants, the five commission members comprise: Harriet Spicer, former managing director of Virago Press; Robin Squire, former Conservative MP and junior education minister; Brian Pomeroy, senior partner at Deloitte & Touche Consulting Group and chairman of Centrepoint, a charity for young homeless people; Hilary Blume, founder and director of the Charities Advisory Trust and vice-chairman of the Finnart Housing Trust; and Dame Helena Shovelton, chairman of the National Association of Citizens Advice Bureaux and the Audit Commission.

The committee’s job will be to restore a degree of probity to the tarnished reputation of the National Lottery and avoid the failings of Oflot. Smith claims that the job of regulator is too much for one person, and that having a five-person commission will “result in less risk, actual or perceived, of conflicts of interests and will bring a wider-range of knowledge, experience and expertise”.

The decision to relaunch the regulator was taken after the forced resignation of the director-general of the National Lottery, Peter Davis, last February. Guy Snowden, chairman of Camelot consortium member G-Tech, had lost a libel case against Richard Branson after the Virgin chairman claimed Snowden had attempted to bribe him to withdraw his bid to run a non-profit-making Lottery. Davis resigned after being accused of “closing his ears” to the claims. Snowden also resigned. G-Tech sold its stake in the consortium to the other members.

These were part of Oflot’s dismal record in regulating the Lottery, and were not helped by Camelot’s unpopular decision to give its directors huge pay rises (MW May 28 1997). The operator’s profits of 70m also raised questions about whether the Lottery was being milked for the profits of a few.

The wisdom of having one person – the Oflot director-general – appointing and regulating the Lottery operator has been questioned. Smith’s solution, however, has not explicitly split that role. Instead the new Lottery Act passed through Parliament last year toughens regulatory powers and puts five people into the hot seat, a move that conveniently distances the Government from any future trouble.

The commission’s members will form a part-time board from April 1. They will appoint a chairman who will draw a notional full-time salary of 84,275, the same as Davis. The role will revolve between all members of the board, avoiding any concentration of power and spreading the risk of conflicts of interest.

But regulation of the Lottery is a complex business. Critics of Oflot argue that the director-general, even with the support of a deputy, had so much to do he could not plausibly track all Camelot’s activities. The new commission is part-time – according to the job description and sits, on average, two or three days a month, or five to eight days for the chairman. While one person can move decisively in regulating the Lottery, getting five people to agree may not be so easy.

This is why the role of the new chief executive, appointed by the commissioners, is so important. The chief executive will be responsible for the day-to-day management of the existing Oflot secretariat.

One former Lottery insider says: “It is rather like a quango. The chief executive will be doing all the main stuff. [In a way] the role has been split, they have a chief executive reporting to a policy board. I think most of the regulatory framework is now fixed.

“The tanker’s direction is set, moving it left or right a few degrees is what is open. That will come from the paid chief executive. [The board] will provide a check and balance between commercial interest and Government greed.”

The contenders for the new licence between 2001 and 2008 have yet to declare their hands, though it is likely that Camelot will repitch. Littlewoods, the Post Office and Rank are also understood to be considering the move. The commission will publish its invitation to tender at the end of this year.

It is, perhaps, no accident that three of the commission’s five members have explicit connections to charitable organisations. But the door is still open to Camelot because the commission is legally obliged to appoint the operator offering the greatest returns to the good causes.

The commission structure may help deflect Chris Smith’s criticisms of the way the Lottery is run, but it also needs to ensure that Camelot – or whoever takes over after 2001 – does not bring the Lottery into further disrepute.

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