Sure-fire jackpot for Camelot

Finance Director Peter Murphy justifies his pay rise to the BBC's World Tonight

Prime Minister Outraged by Camelot Pay Rises

"If these reports are true," said a Downing Street spokesman, "his reaction is the same as that of the millions of people who buy Lottery tickets up and down the country - one of outrage."

He added that the Prime Minister had made reform of the Lottery a high priority. "This is the people's Lottery and the money raised from it should reflect the people's priorites."

And the Heritage Secretary, Chris Smith, has signalled an end to the "fat cat" culture and called an urgent meeting with Camelot's chairman. "If these reports are true, I find the position completely unacceptable," he said.

"I have invited the Camelot chairman, Sir George Russell, to an urgent meeting to explain the company's actions and discuss how public support for the Lottery can be maintained," said Mr Smith.

Saturday's winner of "people's" Lottery

The Liberal Democrat MP Robert Maclennan was highly critical of Camelot. "The only sure-fire winners of the National Lottery appear to be the overpaid Camelot executives," he said.

Maclennan: Lottery "licence to print money"

"Running a monopoly has always been profitable for top executives," he said.

Last year, Camelot managers received pay increases of nearly 40% - despite a fall in ticket sales and a massive drop in Lottery contributions to good causes. The chief executive of Camelot, Tim Holley, raked in a 53% rise taking his salary to £590,000 a year, and another director got a 90% raise.

But Mr Holley has defended the pay package and has also suggested that his company might be keen to bid for the not-for-profit contract which Labour intends to offer when Camelot's current licence expires.

Previously it had been assumed in many quarters that Labour's plans spelt the automatic end of Camelot's involvement in the Lottery.

Mr Holley said the Lottery was recognised "on the world stage as a great success" and that the directors' remuneration "reflected results.

"The reason that remuneration packages grew was because of payment from a long-term bonus scheme that has been put in place from before the start of the National Lottery," he said. "This is the first time there has been a payment from that, and if you look at the salaries of directors, such as mine, they went up by 7%."

Government proposals to reform the Lottery will be published in July. "We will be seeking a non-profit operator at the end of the current licence period," explained the Heritage Secretary.

Holley: 53% pay rise

Camelot said the figures were high because they included the first part-payment of long-term bonuses. The scheme rewards executives if they hit performance targets and could reach 140% of their base salary, they claimed.

A spokeswoman said the bonus was likely to be 120% with the first part-payment emerging in this year's figures with the remainder next year. "The scheme recognises the successful launch of the lottery and the first three years of operation," she said.

"They're all based on performance targets and based on returns to good causes and profit to Camelot. All payment to directors comes out of Camelot's costs and it doesn't mean less money to the government or the good causes. If they're not efficient, they don't get the bonus," explained the spokeswoman.

She said directors' salaries went up by 7.7%, and the pay package, not including the long-term bonus scheme, meant a pay rise of 12.8%. Pay scales were set following consultation with external pay panels, she added.

The total payment to good causes was £1.27 billion and £2.38 billion was handed out in prizes, she said. Camelot profits were £46.8 million after tax.