Let's face it, we've backed a real loser

The lottery has pillaged the purses of millions, and it's time we acknowledged it will never deliver

As a pastime the National Lottery has exceeded all expectations, but now there's anxiety. It began last week with public outrage at how £12.5m of lottery funds was to be used to buy Winston Churchill's archive for the nation.

The Government was clearly taken aback by the public outcry, but this may just be the beginning, for the lottery is coming to symbolise a whole range of government weaknesses.

Take the spectre of quango sleaze. The Churchill dbcle created the impression that once again a quango is dispensing funds with little public accountability. This is an obvious Achilles' heel for the Government, and the political fallout was immediately evident: it was announced that the Heritage Select Committee would hold an inquiry into how lottery grants are distributed; and only days later concern was being voiced about why nearly £5m has been spent in start-up costs for the Lottery Charities Board.

The funds raised through the lottery have exceeded all predictions, leaving the five allocating bodies with a large pot of money and very little idea what to do with it. A growing army of consultants (doubtless charging non-charitable rates) are working behind the scenes advising them how to spend it. But neither the advisers nor the funding boards employing them are publicly accountable. How long will it be before eyebrows are raised about the political nature of some appointments? David Sieff, chairman of the Charities Board, was, for example, a member of the Board of Treasurers of the Conservative Party in a former incarnation.

The one good piece of lottery news this week seemed to be the Charities Board's announcement that charities whose work benefits the quality of life of poor people would be top of its list. On the surface, this is an eminently sensible idea. After all, the poor are the main purchasers of lottery tickets: what is taken from one hand is paid back to the other, a novel way of redistributing wealth. Since charities tackling poverty often find it hardest to raise funds, this is a good way of compensating them. Not surprisingly, this decision has attracted criticism, notably from the richer charities such as medical research and animal welfare, but they were never likely to rank highly as lottery beneficiaries.

Although the charities are split on the matter of who should get the money, they are united against the idea of the lottery for the simple reason that it is one of the least efficient ways of raising charitable money:charities receive 5p in the pound under the current system. And they fear the lottery will undermine public donations.

Latest figures from the National Council for Voluntary Organisations show that £71m has already been lost in donations. There is a growing unease that lottery monies, far from topping up charitable funds, may be replacing them. If the trend continues, charities overall will suffer a shortfall - even after lottery money has been allocated - of £57m this year. Thus, even this week's decision to fund charities targeted at the poor may be flawed in practice.

There is also growing unease about the business ethics of the venture. Virgin - one of the companies bidding for the lottery contract last autumn - offered a model of business practice which was entirely in keeping with the spirit and ethos of the lottery. The venture would be non-profit making: money raised would be ploughed back into other charitable initiatives instead of lining the pockets of shareholders.

But Richard Branson lost out to a profit-making company when the grey suits at Oflot (the lottery's regulatory body) chose Camelot on the grounds that their lower administration costs would free up more funds for good causes. Six months on, and with a speculative £150m-worth of profit made by Camelot in 24 weeks, the whole affair has the stench of another privatisation, a glorification of the profit motive over altruism.

Nor is Oflot's decision likely to have been cost-effective in the long term. Virgin's extra administration costs would have been more than cancelled out by its commitment to channel profits back into the charitable sector. And the huge profits generated thus far might also have helped those charities that now feel excluded. Moreover, because the spirit and ethos of altruism would have been embodied in the consortium itself, public confidence would have been stronger.

Instead, we have a company which has made a very quick buck and which can rely on baser instincts to keep the punters buying the tickets. One of the great commercial secrets of the lottery is the way it gets you hooked: there are many winners at the lower end of the scale, a few well- publicised ones at the top, and few prizes in between. Enough people win £10, and often enough, to keep the hope alive that one day this modest win will translate into the biggie. Thus are the seeds of addiction sown.

Some of the human costs of this addiction are now coming to light. Lottery fever is breeding a nation of compulsive gamblers, according to Gamblers Anonymous, which has been inundated with calls and predicts an epidemic. Given that most of the callers are poor, perhaps that organisation should be first in line for lottery funds.

But don't hold your breath. Even if they are successful, the money they receive may not offset other lost revenue, and alone may be insufficient to cope with the increased workload. Soon we'll be needing a government health warning stamped on our tickets to absolve Camelot and the Government from any responsibility for lottery stress disorder.

Six months after its celebratory launch, the costs of the lottery - to charities and to individuals - are becoming clear. But many are already addicted. And the greatest irony of all is that even the big winners often don't end up happier. Research shows that those who strike it rich through pools or lotteries lose as much as they gain, often getting cut off from families or friends. Indeed, most people's sense of well-being - mental as well as financial - is most likely to improve from winning just a few hundred or a few thousand pounds. But in Britain, the odds are stacked against this. Many will win small amounts, a handful the jackpot. But few of us will become happier this way.

And that's ultimately why the lottery is a parable of the troubles of modern Conservatism: promising prosperity and happiness but failing to deliver. Far from becoming a nation at ease with itself, we are instead fast becoming a nation of addicts, with the lottery a metaphor for a government which should by now know that its luck and its number is up.