The Public Accounts Committee has delivered a firm rap on the knuckles to Mr Davis, director-general of Oflot, for not taking a sufficiently active role in regulating Camelot, the private company which runs the lottery. Most notably, the MPs say that Mr Davis has failed to introduce 11 of the 21 compliance procedures on matters such as how the draw is carried out, security, and protection of players' interests.
The committee says that the director general "should adopt a more proactive approach, promoting more the public interest, using his personal energy and the power of his legal status to that end."
Mr Davis has already been criticised for having accepted air tickets from GTech at the time that the company was involved in bidding for the lottery franchise. Yesterday's further criticism may lead to a new government deciding that a firmer regulator is needed.
Mr Davis has in the past received strong support from Virginia Bottomley, the Secretary of State for National Heritage, who wrote to Alan Williams, a Labour member of the PAC, last month saying: "Peter Davis has executed his role in a satisfactory manner."
Mr Williams said yesterday: "I think this report shows clearly that Mrs Bottomley is wrong. It is time for Oflot to have a new chief."
The committee also identifies a number of gaps in Mr Davis's powers, including the fact that he is unable to take any action over Camelot's "serious breach of the licence" resulting from the shortfall in the number of retailers selling lottery tickets. The lottery made pounds 6.4bn in its first 17 months of operation, pounds 720m of which was retained by Camelot.
The MPs point out that interest, worth pounds 6m from the shortfall in prize payments, is retained by Camelot, which means effectively it is being rewarded for its own failings, rather than the money being paid out to good causes. The MPs also criticised Mr Davis for not ensuring that the National Audit Office, the public-expenditure watchdog, has full access to Camelot's accounts.
The committee suggests that Mr Davis changed his explanation for this, as he now says there are legal barriers to full disclosure, having originally said he did not think that disclosure was necessary as he had the power to check Camelot's figures.
Public Accounts Committee: Payments to the National Lottery Distribution Fund, stationery office, pounds 8.80Reuse content