Meeting of the Parliament [Draft]

Meeting date: Thursday, February 1, 2024

Official Report 1041KB pdf

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Charity Lotteries (Sales Cap)

The next item of business is a members’ business debate on motion S6M-11319, in the name of Kenneth Gibson, on lifting the £50 million charity cap. The debate will be concluded without any question being put. I invite members who wish to participate to press their request-to-speak buttons.

Motion debated,

That the Parliament acknowledges the incredible amount of money raised by charity lotteries in the UK, including the Scotland-based People’s Postcode Lottery, the players of which have raised what it sees as a phenomenal £1.2 billion for good causes across the country; understands that the demand for funding from charities has greatly increased amid the cost of living crisis and the aftermath of the COVID-19 pandemic; believes that the current £50 million cap on annual charity lottery sales serves no purpose, and that it is impacting the ability of charity lotteries to increase the amount of funding that they can provide to charities and good causes; notes the view that charities, including those in the Cunninghame North constituency, will continue to miss out on millions of pounds of funding so long as the sales cap remains in place, and further notes the calls for the UK Government to remove the charity lottery annual sales limit as a matter of urgency so that charities across the country are not missing out on vital funding when they need it most.

12:49  

I am pleased to bring to the chamber this members’ business debate on the pressing need for the United Kingdom Government to lift the £50 million cap on charity lottery sales. I thank Scottish National Party, Conservative and Labour members who have supported my motion to enable the debate to take place.

Although lotteries policy is reserved, the issue impacts greatly on charity policy, which is of course devolved, and on many charities that are based in Scotland. Despite their existing to fund charities and good causes rather than to make private profit, charity lotteries are the only type of gambling or fundraising that have a cap on their sales. To illustrate the absurdity of the situation, figures that have been released by the Gambling Commission show that the total revenue to United Kingdom gambling firms in the past financial year was a staggering £10.9 billion, excluding reported lotteries.

It is now virtually impossible to attend or watch a football match without being bombarded by every conceivable type of gambling advert. According to the University of Glasgow researcher Dr Robin Ireland, a single English Premier League game between Newcastle Football Club and Wolverhampton Wanderers Football Club, both of which have gambling sponsors, resulted in 716 gambling exposures over the course of the game.

As members of the Scottish Parliament, the vast majority of us have seen first hand how devastating problem gambling can be for individuals, their families and, indeed, whole communities. Online betting, gaming machines and betting shops are all commonly cited sources of debt and despair for problem gamblers.

Charity lotteries are not, but as things stand under the UK Gambling Act 2005, only charity lotteries are the subject of an annual cap on sales. The cap serves no purpose other than to place an artificial ceiling on an important fundraising stream for charities and good causes that are doing phenomenal work in, for example, my Cunninghame North constituency, across Scotland and, indeed, across England, Wales and Northern Ireland.

The reason why the charity lottery sales limit exists at all is unclear. The only stakeholder opposition to raising the limit came from Camelot, which until today held the licence to run the national lottery. The company’s opposition came from a desire to diminish competition with the national lottery. However, that notion has been thoroughly debunked. Evidence has consistently shown that charity lotteries complement, rather than compete with, the unique position of the national lottery.

A 2022 report by the UK Digital, Culture, Media and Sport Committee into the future of the national lottery founder stated:

“society lotteries play a different role from the National Lottery and do not pose a threat to the National Lottery’s charitable giving.”

I know that the charity lottery sector has been struggling with the issue for many years now, so it is heartening to have cross-party support across the Scottish Parliament for this common-sense move to free up additional charity funding for good causes, at no cost to the taxpayer. I hope that today’s debate will send to Westminster a strong message about the long-overdue need for action.

On a UK-wide basis, charity lotteries generate more than £420 million per annum for charities and good causes of all sizes, and that amount is growing each year. The largest and best-selling operator is, of course, Scotland’s own People’s Postcode Lottery, which is a true Scottish fundraising success story. To date, its players have raised more than £1.2 billion for good causes, which is a scarcely believable number. Players now raise more than £18 million per month for good causes across Britain. From its central Edinburgh headquarters, it employs more than 400 people, two of whom—Nick Cook and Andrew Murray—join us in the public gallery. I thank the People’s Postcode Lottery for its debate briefing.

Grass-roots constituency projects and organisations such as the Arran Youth Foundations school holiday programme and Largs First Responders have received more than a quarter of a million pounds of People’s Postcode Lottery funding. Only last week, four winning tickets in a Saltcoats neighbourhood resulted in six charities—The Ayrshire Community Trust, Input SCIO, the Ayrshire branch of Breastfeeding Network, the Trussell Trust, Ayrshire Children’s Services CIC and the North Ayrshire Forum on Disability—receiving five-figure sums for local projects.

In respect of large national charities, Scotland-based organisations such as Children First, Maggie’s and the Ellen MacArthur Cancer Trust, which operates out of Largs, are in receipt of long-term multimillion-pound annual funding awards. It is clear that charity lotteries are an integral part of the charitable fundraising mix in communities up and down the country. The unrestricted nature of the funding only increases its importance.

However, People’s Postcode Lottery has raised concerns about the current restrictive limit and how it is impacting on its players’ charitable giving. As things stand, four of the 20 trusts that are administered by People’s Postcode Lottery have had to take action to ensure that they do not breach the £50 million annual sales cap—a figure that does not rise with inflation. That means that those trusts will not be able to increase the amount of funds that they give to the good causes that they support, even if ticket sales continue to increase.

Ten postcode trusts are set to be within 3 per cent of the legal sales limit in 2024, which means a larger funding gap and a growing number of charities being affected. The current £50 million annual sales cap that came into effect in July 2020 is well short of the £100 million that was identified as the UK Government’s preferred option in its 2018 consultation, towards which, it has since stated, it remains sympathetic. Due to high inflation and the cost of living crisis that we are experiencing that is, in effect, a year-on-year real-terms funding cut for those charities. Today, £50 million represents a 17.4 per cent decrease in real terms from when the cap was lifted in 2020.

People’s Postcode Lottery has highlighted the charities that are likely to be affected by annual sales caps, as well as the individual amount that they are projected to lose over the next five years—2024 through 2028—without the removal of, or significant reforms to, the annual sales limit. I will not mention all the dozens and dozens of charities on People’s Postcode Lottery’s website, but I will mention some. Dogs Trust is projected to lose £4.9 million; British Red Cross, £4.9 million; Save the Children, £4.5 million; Breast Cancer Now, £3.6 million; the Royal National Institute of Blind People, £3.2 million; Action Against Hunger £1.6 million; and Mary’s Meals, £1.3 million. At the top of the tree is Amnesty International, which will lose out on £5.7 million.

The problem will only grow in the years to come, unless the cap is raised or, better still, abolished. It is also worth pointing out that in each of the 20 postcode trusts are individual Scottish charities in their own right that are registered with the Office of the Scottish Charity Regulator, which has itself backed reform in the area. Over the next five years, 100 supported charities will lose an estimated £175 million or more in extra funding due to the lottery cap. It is frankly disgraceful and astonishing that good causes that are providing services to some of society’s most vulnerable people will lose out on essential funding due to an outdated and nonsensical regulation.

The UK Government has a real chance to make a difference to charities by removing the charity lottery annual sales limit, and it should act now. The Scottish Government and MPs across the board—including my wife, Patricia Gibson MP, who raised the matter last year and again, most recently, in the House of Commons on 11 January—back removal of the limit, as part of an overall strategy to ensure that we help the charity sector in Scotland to thrive.

I also know that its removal has received support across this Parliament. Successive cabinet secretaries for social justice have lobbied the Department for Culture, Media and Sport to ask the secretary of state to remove the annual sales limit as a matter of urgency. It is astonishing that it has not happened already, and I am sure that the minister will touch on that in her remarks.

If the Scottish Government had the powers, it could and would remove the limit, but, as things stand, it does not. I thank colleagues across the chamber for taking the time to debate and support this important issue, and I hope that the UK Government takes note of the strength of cross-party support in Scotland’s Parliament for the common-sense changes. I urge the UK Government to act to remove the charity lottery fundraising cap without delay. It will cost the taxpayer nothing and will be appreciated across the board.

We move to the open debate.

12:57  

I thank Kenneth Gibson for bringing this important matter to the chamber for debate.

There are many disagreements on policy across this Parliament daily, but it is encouraging that the issue of charity lottery funding does not appear to be one of them. It seems to be clear that needless and outdated bureaucracy is holding back the fundraising of Britain’s charity lotteries.

As has been noted, the sector raises almost £0.5 billion in funding each year, and analysis shows that, with the correct regulatory reforms, it could generate still greater funding. As regards the UK Government, it is only fair to acknowledge that UK ministers partially reformed the charity lottery annual sales limit at the turn of the decade to the present £50 million cap. However, it is also only fair to acknowledge that that fell short of that Government’s own preferred option to raise the limit to £100 million, which it promised to do but failed to deliver.

Given the time that has now passed, the most sensible course of action is the one that is being advocated by the charity sector—to remove the annual sales cap in its entirety. Removing the cap would future proof the sector and avoid the need for the Government to have to revisit the matter continually, which I think is in nobody’s interests. I am pleased that Scottish Conservatives continue to advocate for that important reform. That includes Douglas Ross, who has made representations to the Department for Culture, Media and Sport and to the Chancellor of the Exchequer.

The People’s Postcode Lottery’s analysis demonstrates that removing the annual sales limit would generate more than £175 million for charities over the next UK parliamentary session. It seems to be a fundamentally Conservative way to fund the third sector across the whole United Kingdom. To that end, I join others in urging the Chancellor of the Exchequer to consider the measure for inclusion in the forthcoming spring budget.

As the official regulator, the Gambling Commission has stated on the record that it is unclear why the annual cap exists in the first place. The commission has shown that returns to good causes from sales by the National Lottery and charity lotteries have reached record levels in recent years, and it is clear that both types of lottery can exist happily together.

It will come as little surprise to colleagues that I am not a great gambler—although I am happy to bet with Mr McLennan on which football team in Edinburgh will end up higher than the other at the end of the season, if he wants to give me his money.

I am concerned about the potentially harmful effects of the commercial gambling and betting industry. For that reason, it is important to place on the record that not-for-profit charity lotteries are recognised by the UK Government, the Gambling Commission and academia as low risk and quite distinct from the commercial gambling sector. I am pleased both that the People’s Postcode Lottery is headquartered here in my region and that its game is recognised as

“one of the safest in the worldwide gambling market”

by distinguished professor of behavioural addiction at Nottingham Trent University, Professor Mark Griffiths.

Maggie’s, the cancer centres charity, which does so much important work in the Lothian region supporting people on their cancer journey, currently receives £3 million every year from the People’s Postcode Lottery, but if the annual sales cap were to be lifted it could receive an extra £5.5 million over the next UK parliamentary session. As the owner of a former Holyrood dog of the year winner, I declare an interest, at this point. The Dogs Trust, which also receives £3 million every year, would be in line to receive almost £4 million in extra funding over the next five years, were the cap to be removed.

It is impossible to deny that the third sector, here in Scotland and across the entire United Kingdom, faces a major challenge in its funding environment. The scale of the challenge is such that it cannot be solved with ever greater amounts of public funding—and nor should we aspire for it to be so. As a society, we are stronger when civil society can flourish, which in the case of charities means deploying their expertise to support the most vulnerable people. Removing the annual cap on charity lottery sales would help to fund the third sector better at no cost to the public purse, so I am very happy to support the motion.

Thank you, Mr Balfour. It should be noted that Mr McLennan did not seek to intervene to pick up your gauntlet. That will not have gone unnoticed.

13:02  

I thank Kenneth Gibson for bringing this important debate to the chamber. It focuses on an important source of funding for many charities, and highlights a completely needless obstacle that many of them face.

I am a long-standing supporter of charity lotteries, which raise funds for good causes and are operated, as others have said, on a not-for-commercial-gain basis. However, those lotteries are being hampered in their ability to support deserving causes by an unnecessary and unreasonable funding cap, which was originally implemented by the UK Government to protect the national lottery from competition.

The Gambling Commission, in its advice to the UK Government seven years ago, stated that it believed that there was no need for such a cap to remain in place, given the record levels of both national lottery and charity lottery sales in recent years. During the UK Government’s 2018 consultation on charity lottery limits, its preferred option was raising the annual sales limit to £100 million. However, six years later, charity lotteries are still being constrained by a limit half that size. As Mr Gibson pointed out, when the UK Government could be bringing forward legislation to free up millions of pounds of funding for good causes, its continued lack of action on the issue is hard to fathom.

Working to remove the annual sales cap is an SNP manifesto pledge and an issue that the Scottish Government has supported for many years. I understand that the Scottish Government has made representations to the UK Government about it on numerous occasions, frustratingly without progress. The legislation on the matter is, unfortunately, fully reserved to the UK Parliament.

Several of the fantastic charities based in Scotland that the People’s Postcode Lottery supports, such as Maggie’s centres and Mary’s Meals, are seeing their funding indefinitely capped due to the outdated charity lottery annual sales limit. That is despite the People’s Postcode Lottery’s desire to increase its activity in support of charities. It is estimated that, over the next five years, Maggie’s may lose out on £5 million of additional funding, while Mary’s Meals may lose out on more than £1 million. During a cost of living crisis, when charities are on the front line of providing support across the country, how is that fair? What end does such a cap serve?

Charity lotteries have raised hundreds of thousands of pounds for good causes in my constituency, with organisations such as the Stornoway Trust, the Bernara Community Association and Western Isles Foyer benefiting from vital funding.

Players, as well as charities, benefit from those lotteries. When my constituents in North Uist and Bernaray won £3 million through the People’s Postcode Lottery, the prize was shared between 101 fortunate individuals. Much of the winnings were spent locally, which gave an economic boost to the whole community.

Charity lotteries provide transformative funding to charities. To pick up on a theme raised by Mr Balfour, they do so in a way that deliberately does not include highly addictive forms of gambling, such as scratch cards. The lotteries therefore pose a very low risk of gambling-related harm to players. They exist to fund and support good causes, and it makes no sense at all that they should face far more regulation than the purely for-profit bookmakers, which make astronomical sums of money for their shareholders and pose a much higher risk of gambling-related harm. I urge the UK Government to break a long-standing habit and do something positive, which would be to remove the unfair and illogical annual sales cap on charity lotteries.

13:06  

It is a pleasure to contribute to the debate. I thank Kenneth Gibson for securing the debate and for his opening speech, which set out in detail many views that we would all share, across the chamber, about why the cap feels arbitrary and unfair, and why reform is so necessary. Mr Gibson got to the heart of the difference that charity lotteries can make in communities such as Cunninghame North or, more widely, across West Scotland, which I represent.

I declare an interest in that, in a previous life, I had the job of setting up a charity lottery for Enable Scotland when I worked there. I know the difference that that lottery has made, even in its infancy, although it is probably not reaching the cap at this stage. It certainly makes a difference in the funding for charitable projects for people who have a learning disability. We see that in the variety of organisations that are supported, including our hospice movement across West Scotland, which relies on charity lotteries to support its work.

We have heard about the important work that has been done by the People’s Postcode Lottery and the limitations that have perhaps been placed on it due to the cap. In my local community in East Renfrewshire, I have seen funding from the People’s Postcode Lottery make a real difference, whether that is community organisations supporting older people and reducing isolation or organisations such as Back to SchoolBank in East Renfrewshire, which provides new uniforms and school equipment to children. Those organisations have benefited from funding from the People’s Postcode Lottery. It is a real shame that that is limited by the effects of the cap.

In the context of higher and higher demands on our third sector, and at a time when we see funds being stretched further and further, it does not make any sense to cap the ability to generate funds and, in turn, share funds with organisations that need them. Analysis carried out by the People’s Postcode Lottery has demonstrated that the annual sales cap on the sector restricts funding that can be provided to its 40 large charity partners. As we have heard, that is millions of pounds annually that could be doing more good in our communities and is currently being restricted from being raised in the first place. We have heard from colleagues across the chamber that a variety of organisations would share that view, including, not least, the Gambling Commission, the Charity Commission in England and Wales and, I am sure, Office of the Scottish Charity Regulator.

It is clear that there is consensus across the chamber and in the House of Commons on lifting the cap. Indeed, I was reading the Hansard of the Westminster Hall debate that was held in July, to which Patricia Gibson MP and others contributed. I was pleased to see the efforts of Opposition parties in coming together to say that the cap needs to change, that it will not cost the taxpayer money and that it will improve charities. In responding for Labour, my colleague Alex Davies-Jones called on the minister to take action, take a step forward, get a move on with removing the cap through consulting the charities and organisations that are most directly impacted and find a way to do that. If the current UK Government is not willing to do it, it can get out of the way and let another party come in and take the issue forward, because it is important and it commands consensus.

I am conscious of time, so I will leave it there. The strength of feeling in the Scottish Parliament and at UK level shows that it is time to do the right thing and remove the cap.

13:10  

I, too, am pleased to be contributing today, and I congratulate my colleague Kenneth Gibson on securing the debate and calling for the removal of the annual sales limit in charity lottery fundraising.

The idea that there could be a restriction on funds raised for the betterment of society is a bit baffling. However, under the UK Gambling Act 2005, society lotteries are subject to a maximum sale of £50 million, as we have already heard. The limitation is seemingly in place to uphold their primary purpose and to ensure that their fundamental mission of raising funds for good causes remains intact. However, a striking disparity emerges when we consider that other forms of gambling, particularly those that are deemed harmful, operate freely without similar constraints.

To provide some insight, I note that the Gambling Commission reported that, excluding all the reported lotteries, the gambling industry generated an eye-watering total revenue of £10.9 billion last year; that figure was already cited by Kenneth Gibson, but it is certainly worth repeating. Not only is that gambling revenue amassed by preying on society’s most vulnerable people, but it exacerbates issues such as homelessness, crime, fractured relationships and mental health problems; it even contributes to suicide rates. The impacts are far reaching and profound.

Meanwhile, we impose a £50 million limit on society lotteries from which no private profit is gained and funds instead go towards organisations that diligently work to eliminate some of the very inequalities that gambling supports. That is nothing short of ludicrous.

Faced with the post-pandemic era and the relentless squeeze of the cost of living crisis, charities and voluntary organisations are grappling with the dual challenge of increasing demand while their resources are diminishing. As a result, around half such organisations are struggling to deliver their essential core services. That is outlined in the “Third Sector Tracker Report” by the Scottish Council for Voluntary Organisations. To put it simply, organisations are absolutely crying out for a funding lifeline and, with society lotteries generating an impressive total of £420 million annually and displaying signs of significant growth, they are well placed to provide that essential support.

I, too, welcome to the public gallery the representatives who are here today from the People’s Postcode Lottery, and I thank them for the leading role that they have played in the campaign and for their tireless efforts to remove the absurd upper limit.

Reading the briefing for the debate today, I found it disheartening to learn that, taken over the next five years, the existing cap on annual sales will jeopardise a staggering £175 million in crucial funding for 100 supported charities. It is clearly ridiculous that such a substantial contribution to charities is being seriously hindered by the outdated legislation, especially, as we have already heard, when it would cost the public purse absolutely nothing.

Nevertheless, community grants from the People’s Postcode Lottery of £26,400 have been distributed across my constituency of Uddingston and Bellshill, and that support has translated into tangible benefits for various projects that affect people on the ground. Examples include funding for equipment for the nurture in nature initiative and funding that was awarded to Viewpark Gardens allotment and community gardens, which allowed it to buy a range of seeds, plants, food containers and gardening tools for its grow in the community projects. The funding has been transformational, and my team is happy to encourage and support more local organisations to apply to society lotteries. I am grateful to Paul O’Kane for highlighting Enable Scotland, too.

Although lotteries policy is a reserved matter, I hope that the UK Government is listening closely to today’s debate and the call to remove the charity lottery fundraising cap. The growth of the fantastic organisations in our community and voluntary sector should be celebrated and nourished. We cannot and should not put a limit on social good, and it is time for the UK Government—to use Paul O’Kane’s words—to get a move on and sort it out.

13:15  

I thank Kenneth Gibson for organising today’s debate on the £50 million cap on charity lotteries and for setting out so clearly what he described as the “absurdity” of that unique limit.

It is lovely to have consensus today, although it is not a surprise, given how ridiculous the cap is. The fact that we have all agreed on that highlights how inarguably absurd the cap is, particularly when we consider that, as Kenneth Gibson and Alasdair Allan mentioned, such lotteries are a less addictive form of gambling than the potentially harmful forms of gambling that are not subject to the same limit. Stephanie Callaghan was right to mention that charity lotteries often play a part in supporting people who have suffered harm as a result of gambling addiction.

Charity lotteries play an important role in funding thousands of good causes in Scotland, from large national charities that operate across the country to grass-roots good causes that are focused on their local communities. In my Highlands and Islands region, charity lotteries have raised millions of pounds for local good causes, such as Inverness Highlanders junior ice hockey club, Aviemore and Glenmoor Community Trust and the Ledge.

Charity lotteries also support large charities, such as Maggie’s and Guide Dogs, that have a presence across all of Scotland. Having just visited Maggie’s Highlands, I know that even the smallest amount of money can make a huge difference to the people whom it supports. Mary’s Meals, which was founded in my region, has received almost £4 million from charity lotteries across the years. Valued partners of the Scottish Government, including Crisis and the British Red Cross, which I work closely with in our efforts to support asylum seekers and other new Scots, are also missing out.

The Scottish Government fully supports the removal of the charity lottery annual sales cap. As Alasdair Allan pointed out, we have written to the UK Government about that on numerous occasions. Simply put, it would free up more funding for charities at no cost to the taxpayer. Unfortunately for charities across Scotland, the merry-go-round of secretaries of state at the Department for Culture, Media and Sport has led to that important campaign not getting the attention that it deserves. It is bizarre that the UK Tory party, which is purportedly the party of scrapping red tape and regulation, has allowed an outdated and unneeded limit to remain in place for the 12 years for which it has been in power.

I was glad to hear Jeremy Balfour, on behalf of the Scottish Conservatives, urge the Chancellor of the Exchequer to take action and agree that the current limit falls short even of the preferred option in the UK Government’s previous consultation—indeed, it sits at half that level. He is right that removing the cap would be in everybody’s best interests. Unfortunately, the infighting and chaos in his party down south have directly led to charities missing out on millions of pounds of essential funding at a time when it is needed more than ever.

After more than a decade of Tory austerity, many charities face incredible demand for their services, coupled with skyrocketing costs as a result of inflation. Those charities often fill the gaps in areas where the UK state has pulled back, and they should be given the opportunity to receive as much funding as possible. In Scotland, we have many charity lotteries, such as the People’s Postcode Lottery and the Scottish Children’s Lottery, which raise millions of pounds of funding each month. Regardless of whether Paul O’Kane’s Enable Lottery is currently harmed by the cap, I know what good work Enable Scotland does, and there should not be a limit on its aspiration to help as many people as possible.

Players of the People’s Postcode Lottery alone have raised more than £1.2 billion for good causes, which is a truly astronomical sum of money that has made a real difference to thousands of organisations, including many in my region of the Highlands and Islands. Recently, those that have benefited have included An Talla Solais in Ullapool, which is a fantastic organisation that I had the privilege of visiting last year, as a local MSP and in my ministerial role, to learn about how the opportunities that it offers help to address social isolation and loneliness in Ullapool, as well as tackling depopulation in the area by retaining local artists and offering those who have left the option to return. Last year, the organisation received £18,000 from the People’s Postcode Lottery.

People’s Postcode Lottery support for Transition North Ronaldsay has had a widespread positive effect, including regular beach cleans, an extremely beneficial community garden and the promotion of sustainability throughout Orkney’s northern isles. That group got £24,950 from the People’s Postcode Lottery last year.

I was shocked to learn that figures from the People’s Postcode Lottery show that dozens of charities are set to miss out on millions of pounds of funding over the next five years, due to the current £50 million cap. To highlight just one example, Mary’s Meals faces a funding shortfall of more than £1.1 million over the next five years, because of that cap.

The charity sector, charity lotteries and politicians from all parties have been calling for further reform for some time. I can see no logical reason why the outdated law should remain in place. It is, frankly, unclear why there is any limit in place when all that does is to act as a blocker on the ability of charity lotteries to raise funds.

Scotland’s brilliant charities deserve access to the largest possible amount of funding. As Kenneth Gibson said, we would be happy to make changes here in Scotland if we had the power to do so, but we do not. I, and the rest of the Scottish Government, will, as a matter of urgency, continue pushing the UK Government regarding those limits and calling for the cap to be removed, and I am sure that many colleagues here today will do so too.

13:21 Meeting suspended until 14:30.  

14:30 On resuming—