It is good practice for companies to change their auditors once in a while, and the same principle should probably apply to countries and operators of national lotteries. So yes, one can instinctively welcome the Gambling Commission’s surprise decision to ditch Camelot, which has had the national lottery gig since it was launched 28 years ago. No company should become part of the furniture.
What, though, has Czech group Allwyn, the new “preferred applicant”, promised to do differently to Camelot? It’s impossible to tell because the commission, at this stage, insists on cloaking its decision-making process in secrecy. Assurances that the process was “fair, open and robust” don’t count for much unless the outside world can see the methodology.
The clincher, we assume, was Allwyn’s idea that it can raise £38bn for good causes over the decade of the next licence which, even allowing for inflation and greater prosperity among punters over the years, would compare favourably against the £45bn-ish that Camelot has managed since 1994. But the £38bn figure is not yet endorsed by the commission, which merely referenced “increased contributions”.
Camelot will probably also have promised to up its game in terms of sums raised, as the other bidders will have done. So how did the commission set about judging the credibility of the various boasts? We’re not told.
A degree of paranoia on the part of commission is probably forgivable since the contract is lucrative for the holder (Camelot, owned by a Canadian pension fund, has made after-tax profits of £78m in each of the last two years) and legal challenges are possible, and perhaps likely. Even so, it’s hard to think of another piece of semi-public procurement with such minimal levels of disclosure at the point a victor is declared.
Allwyn has assembled an impressive cast of business and fundraising grandees, led by 2012 Olympics guru Sir Keith Mills, but the company obviously had to clear higher hurdles to win. The commission should loosen up and remember that lottery players are interested in who’s running the show and why. More transparency needed.
UK’s Russian luxury goods export ban hardly a gamechanger
Every fresh sanction helps but, let’s be clear, the UK’s ban on exports to Russia of “high-end luxury goods” (precise definition not yet clear) is not a gamechanger. The Department for Business’s last monthly update of the size of UK-Russian trade already contained some small numbers in the grand scheme of UK exports.
Total UK exports to Russia in the 12 months to the end of September 2021 amounted to £4.3bn, of which £2.6bn was goods. Cars, the biggest contributor at £386m, will be covered, one assumes, but pharmaceutical products, next in the list, probably won’t be. Either way, a focused hit to trade in the UK’s 26th largest export market, accounting for just 0.7% of total UK exports, is bearable.
Similarly, the imposition of an additional 35% tariffs on £900m-worth of imports also needs to be seen in context. Total UK imports of Russian goods in the same 12-month period amounted to £10.8bn. None of which is to play down the effect of tariffs if they are replicated among all G7 countries, especially those with bigger export volumes to Russia. There will be an impact. But, from a strictly UK perspective, asset freezes on oligarchs remain the main event.
UK tobacco firms are abandoning Russia. Let’s hope others follow suit
UK firms with operations in Russia are a different matter and here, commendably, comes another departure. Imperial Brands, the JPS and Gauloises cigarette firm, will seek “an orderly transfer of our business”, which probably translates as giving it away to a local operator who will look after the 1,000 employees.
There’s no surprise in that decision since Imperial had already suspended manufacturing and fellow FTSE 100 member British American Tobacco, after a rapid rethink last week, concluded that a full exit was the only credible course.
But one hopes, again, that such examples are copied abroad. JTI, the main subsidiary of Japan Tobacco, and US group PMI, which sells Marlboro and other brands outside the US, are still in a halfway house.
Both have suspended new investment in Russia and the latter has spoken about “scaling down” manufacturing operations, but those steps don’t match the ones now taken by the UK rivals. The calculation ought to be the same: tobacco duties flow directly to Kremlin coffers, so there’s every reason to leave.
