A licence for trouble at the Lottery Commission

In the wake of the Dome, the Government faces more humiliation over the Lottery licence fiasco. But the politicians aren’t entirely to blame.

First it was the Dome, now it’s the National Lottery. The f, i, a, s, c and o keys on journalists’ keyboards have been worn smooth with overuse, and the country could eat a hearty breakfast off the egg on the Government’s face.

Superficially, these two public sector catastrophes have much in common. In reality though, they are rather different.

The Dome has been beset by practical problems and a degree of mismanagement, but the root of its problem lies in its political nature. It was designed as a political symbol, and politicians of both parties could not resist meddling. They failed to articulate what they wanted,frequently changed their minds, and made life hell for the project’s managers – which is why much of the ignominy heaped on the heads of politicians is justified.

The newspapers have also persisted in seeing the Lottery as a political issue. There have been calls for culture secretary Chris Smith’s resignation. But Smith has been working hard to distance himself from the shambles of the Lottery – and with some justification.

Responsibility for the cock-up lies not with the politicians directly but with the National Lottery Commission. It was they who decided not to award the new lottery licence at the end of August, but to continue negotiations with Sir Richard Branson’s People’s Lottery while casting Camelot into outer darkness. If the Commission has since found itself at the centre of a media firestorm resulting in the resignation of the chairman, Dame Helena Shovelton, it was a situation of its own making.

Its first mistake was to fudge the question of whether GTech, Camelot’s technology supplier, should be involved in the lottery. The Commission had serious doubts but didn’t rush to judgement – because if GTech were declared unfit, the Commission would have to suspend Camelot’s licence and we would have no Lottery. In the event, it got itself into the illogical position of tolerating GTech’s presence in the Lottery in the short term, while deciding its presence was intolerable in the future. It then made matters worse by failing to make this clear in a letter to Camelot.

The Commission’s second mistake came when it decided, after months of detailed evaluation, that neither bid was wholly acceptable. The commissioners’ instinct, we are now told, was to negotiate with both parties about how they could improve their offers. This suggestion seemed fair – but was vetoed by the Commission’s lawyers, the Treasury Solicitor (since sacked).

The lawyers warned that negotiating with both parties risked a legal challenge. As a result, the Commission embarked on a course of action which was itself challenged, and which the court decided was “conspicuously unfair” to Camelot and an abuse of power.

A commercial organisation might have decided to ignore legal advice that ran counter to its own instincts, but as a public body, the commissioners felt this wasn’t an option.

The Commission’s third failure was one of PR and presentation. Much of its work was carried out in secret – thanks, once again, to that fear of litigation. When it did break cover, it sometimes did so incompetently. On the day Camelot sought leave for judicial review, Camelot’s chief executive-designate, Dianne Thompson, arrived at the court accompanied by several PR minders. She appeared as immaculate as ever, smiling and looking like a winner. The Commission’s chief executive, Mark Harris, arrived with only a lawyer in tow, and scuttled into court, head down, looking furtive.

In PR terms, Camelot has played a blinder – showing a talent for aggressive news management more reminiscent of its rival, Branson. The Commission has been constantly on the back foot: a briefing with the acting chairwoman, Harriet Spicer, and the former chairman, Brian Pomeroy, late last week in the wake of Dame Helena’s resignation was the first time it had tried to take the initiative.

Camelot has cannily steered clear of direct attacks on Branson, the people’s hero, and concentrated instead on attacking the Commission in a series of anonymous briefings. The result: articles in the Daily Mail asking if the Commission’s members could run a whelk stall, and Dame Helena’s conviction that the media was running a campaign of personal vilification at her expense.

Occasionally, Camelot has gone too far. Having alerted journalists to links between several commissioners and Branson, it then went on to attack the Commission’s choice of new lawyers, Freshfields, on the grounds that the firm had once worked for Branson. The fact that it had also worked for Camelot and GTech was apparently overlooked.

But the fiasco could potentially become a political scandal as well. Ironically, Chris Smith’s determination to stand aside, maintaining that it would be wrong for him to interfere in the affairs of a body which was deliberately intended to be independent, has resulted in him being portrayed as an ineffectual do-nothing.

Meanwhile, things show every sign of getting worse. There are calls for the remaining four commissioners to resign, which would delay the award of a new licence still further and might even cause the process to be abandoned altogether – no doubt to Camelot’s delight. Then again, whichever company eventually wins, the loser is almost certain to go to court once again to challenge the decision.

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