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9.45 pm
Mr. Gardiner: Ornipathology has never been my strong point, but when the hon. Member for Kingston and Surbiton (Mr. Davey) complained about the death of the goose that laid the egg, my heart did not bleed. Anxiety has been expressed in Committee tonight about the way in which the proposals may affect employees in the industry. I have received from my constituents--whom I have told that I would raise the issue tonight--letters addressed to "Dear . . . ", saying:
- "I am writing in connection with the serious threat posed to the London casino industry and particularly to my employer"--
- "by the proposed increases in gaming duty announced in the Chancellor's recent budget.
These proposals have serious implications for jobs within the casino industry in London."
We heard from the hon. Member for South Cambridgeshire (Mr. Lansley), correctly, that 3 per cent. of the effect of the measure would apply to provisional casinos--
Mr. Gardiner:
I am sorry. We have heard that 3 per cent. of the effect would apply to provincial casinos and 90 per cent. to the London casinos. I believe that that effectively deals with the intervention by the hon. Member for Eastbourne, showing that the bulk of the measure is aimed at London casinos.
Sir Teddy Taylor:
First, I am not the MP for Eastbourne. Apart from that, the proposed increase would require casinos in my constituency to pay more than an extra £300,000 in duty, which is a lot of money and amounts to an increase of 56 per cent. It cannot be said, therefore, that the increase does not matter; it matters a great deal to the medium casinos.
Mr. Gardiner:
The facts are clear. A 2.5 per cent. tax rate is being levied on the casino's gross gaming yield--
Mr. Lansley:
Will the hon. Gentleman give way?
Mr. Gardiner:
I am afraid that I must press on because of time. In usual circumstances I would give way, but I think the hon. Gentleman will agree that we must keep our comments short before a 10 o'clock closure.
Mr. Lansley:
There is no closure.
Mr. Gardiner:
I will press on.
On the impact that these measures are likely to have on jobs in the industry, I cannot conceive that the additional levies will be passed on to employees, the cost of whom is minute in comparison with the profits that these companies make.
The hon. Member for South Cambridgeshire referred to problems that might arise with the balance of payments and his concerns about overseas earnings. He said that he did not want to deter the high rollers from coming to London and frequenting London casinos. As the hon. Member for Kingston and Surbiton pointed out in his arguments about the edge that must be applied, those costs will not be transmitted to the high rollers because they are limited by the edge that the casinos are allowed, by law, to charge.
Mr. Lansley:
The hon. Gentleman referred to gross gaming profit, but he will realise that it is in fact gross gaming yield. I argued not that the players--"high rollers" is a pejorative term--will be deterred by a change in the edge, but that the casinos might have to contemplate the relative competitiveness of operating in London compared with other locations.
Mr. Gardiner:
That is a spurious argument. London is an international centre, and any major casino that can locate here will want do so in order to get its market share in situ. London will not suddenly be denuded of casinos as a result of this measure.
Mr. Fallon:
The hon. Gentleman represents a London constituency. Is he seriously defending a sudden increase--introduced without warning--of 40 per cent. on the duty that top London casinos will bear? How can he, as a London Member, say that casinos in London will be unaffected and will sail on, competing on an equal footing with casinos in Amsterdam or Frankfurt, while bearing an unexpected increase of that kind?
Mr. Gardiner:
I want to nail the statement that the hon. Gentleman has now made twice in the Chamber. He has claimed that there is an increase of 40 per cent. I am sorry, but the duty will increase from 33.33 per cent. for the top rate to 40 per cent. According to my mathematics, that makes an increase of 6.7 per cent. It is important to appreciate that the top band will increase by only 6.7 per cent. It is spurious to claim that there is an increase of 40 per cent.
There is a change in the banding, which will certainly impact on the revenue collected by the Exchequer. However, that puts an obligation on Her Majesty's
Opposition to state where they propose to get the additional £25 million in revenue which this measure would raise. There is no question of it damaging jobs in the industry or of casinos leaving London. There is no question either that the Opposition will be extremely hard pressed to state from where that £25 million should come.
Dawn Primarolo:
I am amused by the image that the hon. Member for Sevenoaks (Mr. Fallon) has of my hon. Friend the Paymaster General. He apparently believes that my hon. Friend possesses some qualities that I do not and that I do not know enough about casinos and have never visited any. Presumably, the hon. Gentleman believes that I do not have a playgirl image--although he felt able to make a pun about the fact that my first name is Dawn. I suppose that, in some respects, that reveals his perception of these matters--which seems rather shallow.
The hon. Gentleman advanced the case that the previous Government were benign to the casino industry because it was important to the economy. Yet they kicked manufacturing industry all around the room in terms of their support for it.
The proposal is not ill thought out. I shall deal with the amendment and with the Government's intentions. If the amendment was designed to encourage the Government to reconsider the proposal, the rather ungenerous tone in which the hon. Gentleman advanced his case would lead me to suggest to the industry that it should look for another spokesperson in the House, who concentrates more on the industry's case and less on scoring political points against the Government. The hon. Member for Rochford and Southend, East (Sir T. Taylor) advanced that case and described the difficulties that he foresaw.
The previous Government did not consult on every tax rise. For various reasons, the Chancellor does not usually consult on changes to duty rates. For example, consultation may not be undertaken on measures that could lead to a temporary distortion in market behaviour. Clearly, the City did react to the increase in gaming duty, and consultation before the Budget may have exacerbated the problem. The Opposition's point about consultation is therefore spurious.
Mr. Fallon:
I pointed out that 30 per cent. of the value of two companies quoted on the stock exchange was wiped away within days of the announcement. Does the hon. Lady accept that it might have been better to consult, at least on the detail of what she was proposing?
Dawn Primarolo:
The hon. Gentleman's Government did not consult on putting VAT on fuel. Indeed, they promised not to do so, and then they did it. Now the Opposition have the cheek to say that this Government do not engage in proper consultation.
Some serious points were made in the debate, and I shall reply to those. That is how the Committee would expect us to respond. The argument covered four categories: the phasing of the introduction of the increase; bad debt; indexation; and the structure of the bands that are being introduced, to which the hon. Member for Rochford and Southend, East referred particularly. He argued that the burden of the increase falls less on the profitable casinos and more on those in the middle band.
Reducing the bands would not result in casinos other than the top, most profitable clubs paying increased amounts of duty. The Government's proposal is deliberately designed to spread the burden of the tax, attaching it to those casinos most able to bear it. It is the Government's opinion that the industry pays an unfair level of tax: it could pay additional tax. The industry's response has not been to dispute whether it could afford to pay the increase or whether it should pay it, but to argue about the distribution of the tax.
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