My Lords, I am grateful to the noble Lord, Lord Mancroft, for outlining the background to this amendment and the reason for it with such admirable clarity, born of the great experience that he has in this field. As a former chair and now vice-president of RNIB—which interests I declare—I put my name to the noble Lord’s amendment because I have had first-hand experience of the restrictive effect of the current regulatory regime for society lotteries on the charity’s fundraising potential, which I thought it relevant to place before the Committee in its consideration of this amendment.
Society lotteries are minnows by the side of the National Lottery but are nevertheless a useful tool in the fundraiser’s tool-box. They could be an even more useful tool if they were freed from the restrictions and red tape which the noble Lord, Lord Mancroft,
talked about and which significantly hobble fundraisers who seek to use society lotteries to maximise their income.
RNIB currently runs two society lotteries: one for RNIB itself and one for Action for Blind People, which is part of the RNIB group. It raises £8 million a year through its society lotteries, which provide valuable funding for vital services such as the RNIB helpline, sight-loss advisers in hospitals—who are there to pick people up at the point when they are told that they are going blind—and talking books, which many people describe as a lifeline.
Society lotteries are a successful fundraising vehicle for RNIB but, as I say, this success could be increased were there to be a relaxation of the limits imposed on prizes, draws and turnover. In particular, the charity is restricted in how much it can generate in charitable income through its society lottery due to the £10 million annual cap on turnover or sales. This is difficult to understand, as the noble Lord, Lord Mancroft, said, because this is the only form of fundraising that is capped in this way. RNIB thus well illustrates how charities can have their ability to raise funds restricted by unnecessary and burdensome regulation.
RNIB also has concerns with the regulatory regime which governs licensing. Society lotteries have achieved strong growth in recent years, reflecting their popularity with the public as means of raising money for good causes. However, if RNIB wants to sell more tickets, and thereby raise more money, it would be limited by the income and ticket sales caps. It would therefore have to register a new society lottery, which would mean that much needed charitable funds would be spent on duplicating auditing, legal, licensing and other bureaucratic costs.
As provided for by this amendment, an increase in the permissible amount of ticket sales for a single draw would enable RNIB to raise more money while, at the same time, limiting costs. An increase in the annual income cap would enable it to maximise its fundraising. Furthermore, if prize value limits were increased, more people could be attracted to play RNIB’s lotteries, thereby boosting the overall amount raised through tickets sales. In addition, as the noble Lord, Lord Mancroft, has explained, the 80:20 rule, whereby 20% of proceeds have to be returned as profit to the good cause, restricts new product launches and can stifle innovation. For smaller lotteries, such as Action for Blind People, the requirement that 20% must always be returned can stifle growth, as it makes it difficult to invest heavily in new acquisitions. This could be alleviated by allowing lotteries to apply the 20% rule to the financial year as a whole rather than to each individual lottery.
Society lotteries are a valuable form of fundraising, not just for the RNIB but for charities across the country. They provide much needed funding for highly valued services, and evidence shows that were modest deregulation to take place, it could allow good causes across the UK to increase the amount that they receive through this popular form of fundraising.