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Clause 11
Mr. Michael Fallon (Sevenoaks): I beg to move amendment No. 14, in page 5, line 33, leave out subsection (1) and insert--
'(1) In the Table in section 11(2) of the Finance Act 1997 (rates of gaming duty) the figures in the left-hand column under the heading "Part of gross gaming yield" shall be increased on 1 April each year in line with the increase in the retail index of prices over the previous twelve months.'.
The Second Deputy Chairman of Ways and Means (Mr. Michael Lord): With this, it will be convenient to discuss amendment No. 15, in page 5, line 39, leave out '£1,500,000' and insert '£3,500,000'.
Mr. Fallon: We now turn to gaming. Perhaps it is appropriate, as the night draws on, that we turn to the
tables. I would not suggest for a moment that you are an habitue of any other table than that at which you are presiding, Mr. Lord. However, you may not be aware, as the rest of the Committee may not be aware, that gaming is a big industry in Britain. There are 115 casinos in this country, 21 of which are in London. The industry employs 12,000 people, one third of whom are employed in London. Gaming is not just a big industry, but a successful one that attracts overseas visitors and earnings to Britain. Gross overseas receipts last year were £879 million. The industry contributed £141 million to the public revenues in tax in 1996-97. When we were in office, we recognised the success of the industry. In the latter part of our time in government, we did not propose the increases in duty contained in the clause to which our amendment is addressed. On the contrary, we proposed a programme of sensible deregulation. I declare an interest as an unpaid member of the Government's deregulation task force, which, from 1995, sought to make it easier for casinos to open in new areas and to modernise the industry, allowing advertising and making it easier for people to be members of casinos. Above all, we treated the industry with respect. This Government have changed that. Without warning, they have slapped a £25 million increase on gaming duty. The industry calculates that the figure may be nearer to £30 million. I see the Paymaster General nodding. I am glad to see him confirm that the Government's figures may be wrong on that. By nodding, he has proved my point. The increase has been slapped on the industry arbitrarily. For £3 million casinos, the increase in duty is 12 per cent. For £5 million to £12 million casinos, the increase is about 50 per cent. For £20 million casinos, the increase is 30 per cent. The top rate of duty has been upped by 40 per cent. There is no logic behind the progressive increases in duty. This is a dawn raid with a vengeance.
Mr. Gardiner: I stand to be corrected by the record, but I believe that the hon. Gentleman said that the duty was being upped by 40 per cent. I trust that he meant upped to 40 per cent. from the old rate of 33.33 per cent.
Mr. Fallon: Subsection (2) increases the top rate of duty to 40 per cent. I am talking about the various bands in subsection (1). The increases are varied and arbitrary, depending on the size of yield. The increase could be 12 per cent., 50 per cent., 30 per cent. or 40 per cent. In the middle bands, the increase is around 50 per cent. An arbitrary, illogical, irrational increase has been foisted on the industry. The industry was not consulted. It was not informed or warned, and there was no discussion of the issue. I am doubly grateful that the Paymaster General is here this evening. When we were discussing corporation tax yesterday, he lectured us on the importance of consultation. He said:
- "I regret to tell him that the Opposition have to learn that the Government--as we will discuss later when we come to individual savings accounts and other matters--are prepared to consult, to listen and to change policy, as we have done. That is nothing of
- which we should be afraid or ashamed. We recommend that the Opposition learn from that."--[Official Report, 27 April 1998; Vol. 311, c. 66.]
Mr. Fallon: The Whip says, "Hear, hear," but there was no consultation, no warning and no proper discussion with the industry on gaming duty before the tax was suddenly imposed. Indeed, it is suggested not only that the industry was not informed but that the Home Office, the industry's sponsoring Department, was not aware of the proposed increases until the Budget was announced. All that from a Government who claim to be pro-business. We read in our copies of the Evening Standard on Friday that there might be further tax cuts for business, but tonight we are debating a clause that imposes a tax increase on business. Casinos across the country were pole-axed on Budget day. Just in case the Paymaster General or the Financial Secretary does not quite realise what he or she is doing, I shall lay out for them the effect on the two biggest operators in London. There are 21 casinos in London, and 10 of those are controlled by only two groups: London Clubs International and the Capital Corporation. Within days of the Budget announcement, 30 per cent. of the value of their share prices was wiped out. That was the effect of this arbitrary, irrational, cack-handed attempt to grab more revenue from the casino industry. I do not want to hear any excuse from Government Front Benchers in response to our amendments, or any suggestion that duties may be higher elsewhere in Europe--they may be higher. Other casinos in Europe--perhaps the Paymaster General knows some of them--have fewer invigilators, and pay their staff in tips rather than salaries. On amendment No. 14, I do not want to hear the Financial Secretary say--if I can have her attention--that we did not index gaming duty. We did not have to. We understood the industry; indeed, we were proposing a programme of deregulation to help it. We were not in the business of suddenly slamming on a 40 per cent. increase in gaming duty. The amendments offer the Financial Secretary a way out. Amendment No. 15 would reverse one of the most damaging increases. Amendment No. 14 would index duties for ever. At least then the industry would know where it stood. It would be protected from dawn raids in future; it would not suddenly face an arbitrary increase. [Interruption.] I am surprised that Ministers find the matter funny when 12,000 jobs are at stake. Amendment No. 14 would index increases so that there could be no temptation for Ministers suddenly to impose quite savage, arbitrary and ill-thought-out increases in duty. Apart from those two suggestions out, there are plenty of other ways out of the impasse. I understand that various talks are going on between the industry and officials, who now accept the ill-thought-out nature of the Financial Secretary's proposals. The other ways out include phasing the various increases--if she really insists on them--over three years. It is not often that an industry that is suddenly taxed by a so-called business-friendly Government sees 30 per cent. of its value wiped out on the stock exchange. There is a case for phasing the increases over three years.
Perhaps the Financial Secretary will admit that the various banding increases have not been worked through properly. She might be prepared at least to look at the way in which the increases impact. In the end, it is up to the Financial Secretary. She must decide how to justify inflicting such increases on one of our most successful British businesses. If she does not, the industry will know that similar increases may be levied each consecutive year. The industry attracts a considerable amount of overseas earnings, which could quite easily pass over to Amsterdam, Frankfurt or any of the European capitals with which the Paymaster General is so familiar. If the Financial Secretary does not listen, it will be clear that she is not prepared to defend this industry, and that she regards it as some kind of milch cow for future tax revenue. Amendment No. 14 gives some protection and puts the industry beyond the grasp of the Financial Secretary. It will ensure that future duty increases are only ever linked to the annual rate of inflation. That kind of safeguard was not necessary during our term of office, but it is certainly necessary now.9.15 pm
Sir Teddy Taylor (Rochford and Southend, East): We have just discussed a series of measures to give the Government more cash from taxing alcohol, hydrocarbon oil, tobacco and other items. The Government will receive a great deal of extra cash, which I hope they spend wisely. I hope, in this case, that the Financial Secretary will agree to have a second look. I want to persuade her that the proposal is irrational and unfair, and will seriously affect jobs.
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