There should be an inquest into this fiasco as a matter of priority

Peter Ainsworth

The National Lottery Commission rejected both bids - by Camelot and Sir Richard Branson's People's Lottery on Wednesday for technical reasons.

But the lottery commission will start exclusive talks with Sir Richard Branson's consortium, leaving the People's Lottery group in a prime position to win the licence.

Mr Smith said he welcomed the "robust way" in which the commission had done its job as an independent regulator.

'Dither, indecision and delay'

The commission says it will aim to iron out the difficulties with the People's Lottery bid within a month.

And Mr Smith said he looked forward to a "speedy and constructive conclusion to the further work."

But shadow culture secretary Peter Ainsworth said Mr Smith should have been "outraged by this waste of time, effort and money".

He said: "It's hardly surprising that he should welcome dither, indecision and delay when his stewardship of the Department for Culture, Media and Sport has been characterised by all three.

"The Lottery Commission should have clarified their concerns about the two bids two months ago when they delayed the decision originally.

"There should be an inquest into this fiasco as a matter of priority."

'Fair process'

Lottery Commission chair Dame Helena Shovelton told the BBC: "We conducted a very long and fair process."

She said their priorities had been protecting players and ensuring the lottery was run with integrity.

"I would not see this as a fiasco," she told BBC News 24.

It would have been easier to delay the decision, but after discussions with lawyers, found it was not possible, she said.

Gerald Kaufman, chairman of the Commons Culture, Media and Sport Select Committee, said the process could result in a completely new way of running the lottery.

"Without any reflection on any of the bidders, I congratulate the committee on its thorough job to make sure that it gets the best possible operator."

Mr Kaufman said: "I know that if the People's Lottery do not meet the requirements, they are going to ask the government to find a way of running the Lottery. That could be very interesting and provide a new way of running the lottery."