Post Office joins new Camelot bid joins in lottery bid Camelot in lottery quest

THE RACE to land the next national lottery licence began in earnest yesterday when the Post Office and Camelot, the current operator, announced they were to make a joint bid. Taking advantage of its new-found freedom to operate more commercially, the Post Office said it would pay pounds 20m for a 20 per cent share in Camelot if the bid is successful. The National Lottery Commission is expected to announce the winner next year.

The announcement brought a swift response from Richard Branson, who is expected to launch a not-for-profit bid. His spokesman, Will Whitehorn, described the new partnership as an attempt by Camelot to improve its public image. Refusing to say whether Mr Branson was about to enter the fray, he added: "We remain confident that a bid with all profits for the good causes will win this time as there will be a level playing field. Camelot's bid will definitely be a for-profit bid."

John Roberts, chief executive of the Post Office, said the company had been in talks with "many" potential bidders over the past 18 months and confirmed that its outlets would be available to whoever won.

"The Post Office has chosen to join Camelot because we share a common vision for taking the Lottery forward in an exciting, efficient and socially responsible way," he said. "We wanted to get involved in the Lottery in a much bigger way last time but the previous government wouldn't allow it. This government has allowed us to have a bigger role."

He would not confirm whether the joint offer would attempt to run the lottery on a not-for-profit basis, but City observers expected it to attempt to turn a profit. The investment would make the Post Office an equal shareholder with ICL, Cadbury Schweppes, De La Rue and Racal Electronics.

Tim Holley, chief executive of Camelot, said he expected stiff competition for the licence, which will run from 2001. He predicted tough challenges from Richard Branson, Carlton and AWI, the lottery technology company.

"They are three very highly rated organisations," he said. "Richard Branson [has] an excellent reputation and excellent success in his business, Carlton have been very successful and if you look around the world AWI are involved in successful lottery businesses. They are three people who can reasonably be expected to be involved in bidding."

The Post Office has about 10,000 National Lottery outlets, half of which sell only Instants tickets. They account for 16 per cent of total sales. However, Mr Holley said the new partnership would not put the Post Office in a preferential position - commissions to all retailers would be the same.

Stephen Byers, the Secretary of State for Trade and Industry, welcomed the partnership. "I am pleased that we have been able to give greater commercial freedom to the Post Office," he said. "It is very important to safeguard the future of the thousands of sub-post offices in rural Britain.

"Getting involved with the National Lottery is a very good example of a forward-looking Post Office taking advantage of the powers and freedom we have given them."

However, David Chidgey the Liberal Democrat trade and industry spokesman, dismissed Labour's claims that the Lottery would save rural post offices as "at best nonsense and at worse a cynical smokescreen.

"The Post Office has made it clear that whoever wins the Lottery contract will remain suppliers of Lottery tickets, therefore making no difference to sub-post offices.

"To remove the threat of closure of half the network, sub-post offices need a guarantee that they will keep their core business of delivering pensions and benefits until they are fully automated and able to compete effectively. The future of the Post Office should not be left to chance."