Humbug must not lay low the Kingdom of Camelot

`No one buys a lottery ticket or a scratchcard as a way of donating to good causes, they do it because they think they might just win. If the profit motive is the spur to purchasing a ticket why should it not also be what drives sales of them?'
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There have been two pay stories in the papers this week. One concerned the salary increase given to the directors of lottery organiser Camelot. The other was about the pay-off that Charles Koppelman, the chairman of EMI's North American music business, will receive.

The directors of Camelot got an extra pounds 650,000 in their pay packets last year for exceeding their performance targets in 1995-96, hence earning more money for good causes than budgeted. Mr Koppelman is to receive a severance package of pounds 30m for failing to run the company satisfactorily.

However much Camelot pays its directors it will not and cannot, under the terms of its seven-year franchise, affect the money available for good causes or prizes. By contrast, Mr Koppelman's pay-off will find its way, however modestly, into the price of every CD that HMV sells.

Which story caused the most uproar? Which story got the most coverage? Which story says more about the humbug that surrounds the issue of pay? There is something in the British psyche that deems it permissible to make a fortune out of winning the lottery, but not out of running it.

But are pay increases on this scale an outrage, as Tony Blair would have us believe? Is running the lottery really just money for old rope? And even if Chris Smith, the National Heritage Secretary, is right that Something Must Be Done About It, what precisely is the right prescription? Handing it over to a non-profit making organisation? Imposing a windfall tax.? Shaming Camelot's directors into handing their bonuses back to charity?

First, the hypocrisy of it all. The lottery is designed to appeal to our sense of greed, not goodwill. No one buys a ticket or a scratchcard as a way of donating to good causes, they do it because they think they might just win. If the profit motive is the spur to purchasing a ticket why should it not also be what drives sales of them?

Since its launch, the lottery has brought in pounds 12bn of which pounds 3.3bn has gone to good causes and pounds 6bn has gone in prize money. Only 5 pence in every pound spent goes to Camelot - 4p to fund its own costs and 1p in profit. However much the lottery brings in, Camelot can never earn more than 1 per cent in profit which makes the idea of turning it into a "not- for-profit people's lottery" a marginal exercise.

Who is to say that a non-profit making organisation would raise more money for good causes than the private enterprise approach? Put another way, if you had to choose between two retailers to promote your product would you place your business with the Co-op or with Tesco?

Even if the amounts of revenue raised were similar, who is to say that running costs would not eat a bigger hole in the cake, especially if, God forbid, the running of the lottery was entrusted to an arm of government?

Mr Smith says he has not ruled out including Camelot within the Government's windfall tax. But what windfall does he want to tax? The Government already takes 12p in every pound in the shape of lottery duty. If he wishes to tax Camelot any more then he has to explain what incentives will be left to encourage it to maximise revenues in the remaining four years of its franchise.

Terminating its contract early would be foolhardy. Licensing rival lottery consortia, as the Institute of Economic Affairs suggests, would force Camelot to operate in a competitive market. But would it raise more money? A single lottery guarantees big prizes and big prizes encourage people to buy tickets.

Not everything in the Kingdom of Camelot is perfect. But if Mr Smith wants to make changes to the lottery then he should start with the way it is regulated by Oflot and the way money is handed out via the National Lottery Distribution Fund. The payment of pounds 13m to Winston Churchill for the archives of his father did more to undermine public confidence in the lottery than anything Camelot is ever likely to do.

This has been a strangely silent week for Gordon Brown. Seven whole days have gone by and not a single seismic announcement from the Chancellor's office. Admittedly, the earth-shattering economic news has been happening elsewhere in Europe. As cataclysmic events go, the Treasury would have needed to pull something spectacular out of the hat to beat the row between the Bundesbank and Chancellor Helmut Kohl or the trouncing of the government in the French elections.

But there are announcements that need to be made and made soon. On Monday Mr Brown will divulge to the Commons the date of his first Budget. The betting is on 2 July which would presage a change in tradition from announcing the Budget on a Tuesday. Whether it will also herald a big Budget tackling the broad fiscal sweep or just the specific measures Labour is committed to is less easy to divine.

There is one other announcement which remains even more urgent. That is the identities of the four external appointees who will sit on the Bank of England's Monetary Policy Committee. The committee meets for the first time next Thursday and Friday and can, if it so wishes, vote to increase interest rates. The snag is that unless Mr Brown gets his skates on, that momentous decision will be left solely to the internal members already nominated - the Governor, Eddie George, the Bank's chief economist, Mervyn King, and the executive director, Ian Plenderleith.

Although Eddie can hardly wait to get his hands on the levers of monetary policy, the Bank is as anxious as anyone that decisions on interest rates should not be left to a bunch of insiders. This week we named three of the four outsiders that the Chancellor proposes to appoint and said that a decision on the fourth had been held up because of the difficulty finding an appointee with experience of business as opposed to economics. Since then there has been a deafening silence from the Treasury. Watch this space.

Ted Heath abolished resale price maintenance in 1964. Last year the Net Book Agreement went the same way. Fixed pricing of over-the-counter medicines is being reviewed. Now we learn that the Monopolies & Mergers Commission is to recommend the end of manufacturers' Recommended Retail Prices for electrical goods. All this has been done, of course, in the name of consumer choice, diversity and value for money. Odd, then, that in the 33 years since Mr Heath's seminal act, the number of retail outlets in Britain has fallen, according to Verdict Research, from 470,000 to 260,000 while prices have risen by 980 per cent.

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