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Mr. Gareth Thomas: I endorse my right hon. Friend's comments. However, I ask him to keep under review the recommendation for the floor space devoted to table games in casinos to be 2,000 sq ft. Does he realise that there is much anxiety about that? Paul Bellringer of Gamcare suggested that the floor space should be 10,000 sq ft and that space of 2,000 sq ft would lead to many more casinos on the high street, perhaps threatening existing bookmakers and exacerbating problem gambling.

Mr. Caborn: We are in the process of consulting, and we are prepared to consider such representations. As my hon. Friend knows, my officials have maintained a close dialogue with Gamcare and others who have genuine anxieties about deregulation. Gamcare's approach has been positive; it welcomed the Budd report. We are trying to work out a way in which to implement the recommendations.

Of the nine recommendations that we rejected, the one that appeared to cause most concern was the recommendation that members' clubs should lose their entitlement to jackpot gaming machines. We received over 3,400 representations on that proposal. I would be surprised if any hon. Member had not written to me about the matter, and I have received strong representations from my city of Sheffield. I am sure that hon. Members have received letters on the subject. We listened to what people said and were persuaded of the harm that a ban would do. As an honorary member of the Working Men's Club and Institute Union, I shall now expect to visit any club in the country free of charge.

The Budd report may have reached the wrong conclusion about jackpot gaming machines, but it is important to consider its rationale on the matter. The review body was worried about children's access to the machines. We have had effective discussions with the industry and the clubs, and I thank hon. Members who have been involved in that. We have held constructive dialogue with them, and they accept the need to ensure that children do not have access to the machines. We are considering methods that will achieve that.

We also rejected the recommendation that side betting should be permitted on national lottery results. I accept that there are conflicting views. We acknowledge that the available evidence on the possible impact is conflicting and, some would say, inconclusive. However, in the context of the other opportunities that are being offered to the commercial gambling sector, the Government were not willing to gamble, as it were, with the future income for good causes that flows from the national lottery.

The reforms will not be cost free. My hon. Friend the Member for Harrow, West asked about the way in which we will regulate them. The gambling commission will be expected to recover its costs fully through licence fees paid by operators. The same will apply to local authorities; under our proposals, they will assume responsibility for licensing all gambling premises. In "A safe bet for success", we provided some initial estimates of the likely cost of the new regulatory arrangements.

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Our initial estimate is that the arrangements will cost between £11.3 million and £17.7 million. That is a net increase on current regulatory costs of between £5.7 million and £12.1 million. Those estimates will be refined as we develop detailed proposals for the way in which licensing and regulation will work in practice. The Government are clear that any additional costs will be a small price to pay for the increased freedoms and opportunities that reform will bring.

Where do we go from here? We will continue our dialogue with the industry and others in the coming months as we put more flesh on the bones of our proposals. We have had a good dialogue with those who have a vested interest and those who could be affected. As I said earlier, we aim to introduce a major gambling Bill as soon as parliamentary time permits. I hope that will happen in the 2003–04 Session.

In the meantime, I look forward to hearing hon. Members' opinions in today's debate, which we view as an important part of the consultation process. It will enable us to introduce legislation that is fitting for the 21st century.

9.59 am

Mr. John Greenway (Ryedale): I welcome the opportunity to debate the Budd proposals for modernising Britain's gambling laws. However, I think that the House will agree that it is disappointing that this important issue is being debated on a Friday, when many Members are unable to be present due to constituency commitments. Were this debate to have been held between a Monday and a Thursday, I think that a considerable number of Members would have been present because, as the Minister said, there is great interest in the issue across Parliament.

That said, the Conservative party welcomes the long overdue review of our gambling laws by Sir Alan Budd. It facilitates the reform of outdated gambling legislation and seeks to bring gambling even more into the mainstream of the leisure sector.

The Government's response to the report, by and large, has been measured, and we agree with and support many of their conclusions. However, there remain a number of areas in which, on points of detail, reconsideration may be appropriate, and the debate today greatly aids that process. I welcome the Minister's comment that more discussion can take place because we hope that this will not be the last word prior to the Government introducing a draft Bill. If that happens in 2003–04 at the earliest, there is plenty of time for further consultation and reflection.

In addition, and perhaps more importantly, the White Paper responses represent decisions of principle and policy. Those decisions, in turn, beg a great many more questions concerning the implementation of the proposals. I want to take the opportunity of this debate to outline what we see as some of the more important issues for the Government and the industry in the light of what the Government intend.

We agree that the national lottery income stream for good causes should be safeguarded, subject to the lottery's continuing success in the longer term. The national

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lottery's ability to operate under an exclusive contract should continue for the foreseeable future, and ensuring continuity of that income stream for good causes remains vital. Of course, right hon. and hon. Members would expect me to say that as it was a Conservative Government who established the lottery in the first place.

We believe that the performance of the National Lottery Commission has been unconvincing thus far. We are unimpressed by the reports of the reforms planned by the Secretary of State for Culture, Media and Sport. We understand that the right hon. Lady is unwell and send her our good wishes for a speedy recovery so that we can hear more of what she plans for the commission and other matters. However, it seems relevant, given that this is a wide-ranging debate, at least to pose the question whether we need a separate regulator—a lottery commission—or whether the Government should be moving towards the lottery coming under the same regulatory supervision as the new gambling commission will provide.

We agree that the creation of a new single regulator for all gambling is a good idea. However, the case for continuing to exclude the national lottery indefinitely is not entirely persuasive. We note the Government's White Paper commitment to review the issue, but suggest that it may need to be decided quickly so as to accommodate any change in the forthcoming Bill, even if the proposal is permissive. As the right hon. Gentleman has said, gambling deregulatory measures come before the House all too rarely in the form of primary legislation.

We accept that the national lottery should continue to enjoy the exclusivity of a single licence, but we must also bear in mind the value and importance of society lotteries, which raise much needed funds for many national and local charities. Similar lotteries are run for the benefit of local football clubs—most professional league clubs have one—and many are facing financial crisis. The income stream from such lotteries has been seriously dented by the creation of the national lottery. That was anticipated when the lottery was established by the inclusion of charities. It was not originally intended to do so but charities were included during the legislative process as one of the good causes. Nevertheless, it was also envisaged that society lotteries would continue to exist. We need to be sure that the regulatory regime in which they operate is not unduly restrictive, or more than is necessary, to ensure the pre-eminence of the national lottery.

The Budd recommendation that maximum stakes and prizes for society lotteries should be abolished met with huge resistance from Camelot. The Government's response to allow doubling of stakes and prizes makes sense. In fact, at the Lotteries Council conference—where the right hon. Gentleman was stuck on a train one day and I got stuck in traffic coming back the next day— I suggested that a doubling would be a sensible compromise. So we welcome the changes introduced by the statutory instrument that took effect last month, to which the right hon. Gentleman referred, as was evidenced by our passive response to the measure.

The Government should consider whether they need to do more. The Lotteries Council is also pressing for roll-overs or accumulators to be permitted. It took me a while to work out what the effect would be, but I understand that that would involve only a proportion of prize money, there would be a limit on the number of lotteries over which the roll-over would operate and,

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consequently, the amount payable. Within those limits, such rollovers, which would be very useful to the society lotteries, would be unlikely to pose any threat to the national lottery. I hope that when the Minister has time and meets up with the Lotteries Council again next year, this can be examined further.

Despite the White Paper's suggestion to the contrary, charity lotteries frequently return a bigger proportion of money to good causes than charities will ever receive from the national lottery. The hon. Member for Knowsley, North and Sefton, East (Mr. Howarth) knows the work that Littlewoods does in promoting and supporting many of these lotteries. Should right hon. and hon. Members wish to have this information to prove my point that I am making, it is available.

Whatever Ministers decide now, these issues will come up again in the future. There will be a need to keep these stakes and prize limits under further review. So we think that in the longer term, it could well make better sense to include both the national lottery and the society lotteries under the same regulatory umbrella, subject of course to the caveat that some of the smaller lotteries have local authority licensing. That would ensure a more even- handed approach, notwithstanding the general requirement to protect the national lottery's exclusive national licence. There is a precursor for this, because when the Government decided to move the legislative responsibility for gambling from the Home Office to the Department for Culture, Media and Sport, some people wondered whether there would be a conflict between the national lottery, which the Department for Culture, Media and Sport has the responsibility to promote, and other forms of gambling, but it has not worked out that way. The same could well be true of a single regulator.

It would in my view be unforgivable if Parliament and the Government unfairly disadvantaged the future prospects of society lotteries and, as a consequence, damaged the fundraising activities of the many worthy charities that depend on society lotteries for their income. A single regulator would help facilitate an independent judgment on the right regulatory environment, and the gambling commission would be well placed to do that.

As to the success of the commission more generally, much will depend on the quality of the new regulator and those appointed to the commission. They will need wide experience of a complex industry and it is important that they command confidence and respect not only within the industry but from the public. The commission will have a crucial role in shaping the new landscape post- deregulation, especially in the growth of harder gambling opportunities, casinos and the increased use of machines in dedicated premises. It is important that they make a good and certain start. I wonder, therefore, whether the Minister has considered establishing a shadow commission. That might help the Government and the industry facilitate and manage change with consistency and confidence. The commission would clearly have a major role in, for example, determining the suitability of applicants and their planned projects for new casinos. There is much work to be done in this area, as I will explain later.

A shadow authority would have the time in advance to work with the Government and the industry to put in place the structures that the new process will require and give direction to the industry in the new gambling environment. The concept of a shadow authority has

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worked well for the financial services industry in the creation of the Financial Services Authority. We hope that Ofcom, which has been created as a shadow authority by the Department for Culture, Media and Sport, will also be a success. I hope that Ministers will consider whether a shadow gambling commission makes equal sense, so that we avoid the big bang of a new regulator coming in on the day that the Bill receives Royal Assent.

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