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Dr. Stephen Ladyman (South Thanet): Far be it from me to agree with the hon. Member for Ryedale (Mr. Greenway), but his idea is excellent. One of my concerns about framing the legislation is what needs to be in the Bill and what we can afford to leave to the commission. A shadow commission would allow us to decide what works in the commission's hands and what needs to be in the Bill.

Mr. Greenway: I am grateful to the hon. Gentleman for his support. I think that it is already clear that we do not need to fall out with the Government on this matter—indeed, I hope that we can help them.

The society lottery community is not the only part of the present gambling environment that is fearful that it will be put at a competitive disadvantage by deregulation in other sectors of gambling. For example, the horse racing industry is being offered little if no opportunity to widen the distribution of its product, yet racing and bookmaking face a number of competitive threats from the new betting opportunities in communities where previously the local betting shop was the main or only gambling outlet. The hon. Member for Harrow, West (Mr. Thomas) made that point in an intervention.

Although the recent agreement between the betting industry and horse racing on a new five-year rights deal to settle their dispute over the horse racing levy is extremely welcome, racing and bookmakers are not in agreement about the places where off-course betting on horse races should be permitted. I hope that the new sense of partnership between racing and bookmakers will encourage bookmakers to maximise the proportion of turnover derived from betting on racing. Bookmakers are certainly disappointed that the Government have rejected the Budd recommendation to allow side betting on the outcome of the national lottery, especially as the lottery has permission to promote its own game, Hot Picks, which is side betting by any other name. The racing industry none the less agrees with the Minister and, on balance, so do we.

The key point for bookmaking and racing is that unless the racing industry can be confident in the belief that the present structure and distribution of betting shops delivers the maximum possible return for racing from betting on horse races, it will continue to press for other retail outlets to be permitted to offer small stake, big win prize betting opportunities on a set number of events.

One suspects that ministerial concerns about the impact on the national lottery of, for example, a Tote terminal in pubs is as important a consideration as the impact on betting shop viability. In that sense, the protection afforded to the lottery disadvantages both bookmakers and racing in a way that cannot be justified by any other argument. For example, there is little if any opportunity for repeat play and the immediate chasing of losses in the type of bet that I mentioned, about which the Budd review

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expressed concerns in recommending that the mix of gambling and alcohol should not be permitted. However, that argument is inconsistent with the agreement that alcohol should be allowed on the gaming floor. Indeed, I welcome what the Minister has done in bringing that about. People can already drink themselves silly while playing high-stake, high-prize machines in certain premises so, for that reason alone, we should continue to resist credit card payment in gaming machines.

The racing and bookmaking sectors are equally concerned to ensure that the integrity of both the racing product and the operation of betting shops is beyond reproach. The Jockey Club has constantly expressed concern about the sport's vulnerability to criminal activity, and I commend its briefing document for this debate to the Minister and his officials.

I know that the right hon. Gentleman agrees that the highest standard of integrity is crucial. I assure him that that is appreciated by the racing industry. None the less, will he have regard to the concerns of bookmakers—who generally have confidence in the present system—that the introduction of firmer regulation of the betting industry, especially the proposed replacement of magistrate licensing with a new role for local authorities, will be fair and consistent?

Racing's enthusiasm for early reform of the gambling laws, coupled with the anxieties of those in the betting industry about what that will mean for them, offer a further reason for the establishment of a shadow gambling commission, as it might aid progress and provide reassurance.

The publication of the Budd report a year ago and its recommendations on gaming machines prompted widespread concern across the gaming industry that the Budd review body held a particularly negative view on gaming machines in premises that are not dedicated for gambling. The Minister has already pointed out that he has sensibly rejected the proposal to ban jackpot machines from clubs, and we strongly agree. One of the few benefits of opposition is that I was able to announce our position long before the Minister could make an announcement. I am not making a political point by saying that—it was obvious that the proposal was a non-starter, and we welcome the Minister's comments.

We must ensure that children aged under 18 should not be permitted to play gaming machines. It would be sensible to ensure that the reformed legislation makes it a criminal offence to allow under-18s to play such machines. We agree with the Government's decision to reject the Budd proposal to allow local authorities to institute a blanket ban on gambling premises in a specified area, although the legacy of that recommendation has been to increase the anxiety and nervousness with which proprietors of premises in which gaming machines are situated view the proposal to strengthen the role of local authorities in licensing. Despite the rejection of the proposal, that nervousness is clear in various submissions to me.

The recategorisation of gaming machines seems sensible and should end the confusion about which machines are permitted in various locations. I agree with the Minister that it must be clear which machines can and cannot be played by children. However, the proposals in

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the Government's response to Budd about gaming machines in pubs and the future of amusement-with-prize machines in seaside arcades require further thought.

If the law is strengthened, as I have suggested and as I believe the Government intend, is it really necessary to insist that machines sited, for example, in public houses should be in separate areas? That would create serious administrative and logistic difficulties for pub landlords. Many licensed premises have an open-plan environment, especially those which encourage families and offer meals. Will the Minister explain why it is thought insufficient to rely on strong management, proper staff training and the successful prosecution of those who break the law? Furthermore, there would be clear signs on the machines stating "No under-18s to play". Indeed, Business in Sport and Leisure has carried out research that suggests that 92 per cent. of the public believe that the law currently forbids under-18s from playing because of existing signage to that effect.

The Budd report recommended that a maximum of two machines should be permitted in pubs and other premises that have a liquor on-licence. The Government's response was that local authorities should have discretion to grant more permits. However, that is entirely arbitrary and takes no account of the fact that some public houses are significantly larger than others—in some cases the equivalent of three or four pubs are in the same building. The Minister will know that the trade in general thinks that licensed premises should be allowed up to four machines as of right, with further machines permitted on application. There is concern that limiting pubs to two machines could create serious administrative difficulty for local authorities and that about 12,000 licensed premises might have to reapply for permission for additional gaming machines. I hope that we can come to a sensible agreement on that point.

There is huge relief that the Budd proposals to restrict low-stake, low-prize machines, such as those in seaside arcades, to cash prizes only have been rejected. The hon. Member for South Thanet (Dr. Ladyman) led the campaign on that and, as he knows, he had Opposition support. Nevertheless, there is disappointment that the Government intend to reduce the current maximum stake on amusement-with-prize machines, recategorised as category D machines, to only 10p and the maximum prize to £5 or equivalent value.

There is no doubt that we need more research on that matter—as we have constantly pointed out. However, we must not predetermine the outcome of that research. There appears to be no mechanism that will subject those minimum stakes and prizes to review in future. Will the Minister consider giving the gambling commission the requirement to undertake such a periodic review in the light of the outcome of the research?

Dr. John Pugh (Southport): Does the hon. Gentleman agree that such machines could become uneconomic and that, in effect, they are among the more innocent forms of gambling?

Mr. Greenway: Yes. Indeed, the hon. Gentleman anticipates my next comment.

It should be beyond argument that children must be discouraged from playing even amusement-with-prizes machines without supervision. However, for many

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families a visit to the amusement arcade is an integral part of their seaside experience—it certainly was for me and it did me no harm. Those arcades are also a vital part of the seaside local economy. Like the Minister, I came from a very strict background, where gambling was frowned on, yet we were allowed to play amusement and prize machines at Blackpool. With seaside tourism already under pressure, we must take care not to impose unjustified restrictions without clear evidence that harm is being done; otherwise, as the hon. Member for Southport (Dr. Pugh) said, there will come a point where these machines become uneconomic and a valuable part of the seaside experience will be lost.

The future of seaside tourism is an integral feature of another major Budd recommendation, which the Government have accepted: the removal of current restrictions on the location of casinos, giving rise to the opportunity to create Las Vegas-style casino resorts. However, we need to be clear in our minds as to what we mean by a casino or a resort casino. It should not mean wall-to-wall high-pay-out slot machines. It should mean the availability of gaming in a leisure mix. That is why the ability to enjoy live entertainment, a drink and a restaurant all within the same premises makes sense and will make the casino experience something that people look forward to, as an event that is out of the ordinary and not something that they would wish to partake of every day, or even every weekend.

The popular game of bingo is inextricably linked to the deregulation process, because it provides the opportunity to include bingo in casinos. As the Minister knows, the industry is divided on the sense of that, as many smaller operators fear that it will lead to a decline in the number of stand-alone bingo clubs. We must listen carefully to those in the industry who have expressed a fear that over time the local bingo club might lose its original primary identity and be transformed into a casino dominated by gaming machines with unlimited stakes and prizes. What was once a soft gambling environment, where the housewife or pensioner could enjoy social company and a bit of fun at a limited cost, may be gradually transformed into a hard gambling environment, where the opportunity to lose money is unlimited. Players are not always conscious of the addictive effects of trading up and chasing losses. I shall discuss the consequences for increased problem gambling in a moment.

Of course, it is quite likely that such a hard gambling environment will have little appeal to a great many people who enjoy bingo now, although, with bingo turnover profits already in decline, the order that the Minister is going to lay might begin to reverse that process; we hope so. Nevertheless, the temptation for bingo hall proprietors to maximise alternative income streams will prove hard to resist.

A key question for the reform process is whether the new regulatory framework should at least provide the opportunity to protect bingo as a distinct form of soft gambling. Many in the industry believe that it should, while others believe and argue that we should leave it to the market. However, there is a real danger that the relaxation of planning and licensing could lead to bingo being used as the first step towards the establishment of an amusement arcade with amusement machines in, for example, retail outlets in resorts that cater for adults only. That would not be a bingo hall in the soft gambling

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environment; it would become a very hard gambling environment. However, it would have an adverse impact on bingo-only premises. We should have a mind to that.

Although we are in general agreement with the Government's decision to deregulate the casino industry, we have real concerns that deregulation should not lead to proliferation and a consequent rise in problem gambling. Even the creation of, for example, a casino resort experience such as that proposed by the Blackpool challenge partnership would be undermined if deregulation leads to the establishment of small casinos in just about every small working-class town in the north-west. Why should people want to go to a resort casino in Blackpool if they already have a casino opportunity in Wigan, Skelmersdale, Burnley or, as I suggested to the hon. Member for Knowsley, North and Sefton, East, even Knowsley? For that reason I believe that the suggestion made by the Blackpool challenge partnership that Blackpool might be a pilot area has attractions. I hope that the Minister and the Government will consider it. There are reasons to doubt that the market or the Government's proposal for a minimum floor space of 2,000 sq ft alone will provide adequate barriers to entry.

The guidance that the Government issue to local authorities on the planning aspects of casino developments and, of course, the robust licensing and regulatory framework that the new gambling commission will need to put in place, are crucial elements of the ability of Government to deregulate and yet control expansion. Indeed, the more I read the White Paper, the more it seems to me that its authors within the Department for Culture, Media and Sport recognise that. I do not think that we are talking about a difference of concept. We now need to progress to considering the ways in which that will be achieved, and that is one reason why a shadow gambling commission would be such a good idea.

Local authorities will need to have regard to many considerations. For example, in assessing the proposed location, they will need to have regard to the current practice that casinos remain open until 6 am. While the industry is keen to ensure that there is consistency of decision making and an appeal process where outcomes can be reasonably predicted, many existing casino operators have expressed concern that if the planning process is too easy we could see the creation of a significant number of relatively down-market establishments, which characterised the industry in the early 1960s, before the current legislation was introduced. I was in the police at west end central when the Gaming Act 1968 was introduced, and I have seen some of these places in London. The casino industry has now been professionalised and brought into a world of total integrity and probity. We do not want to return to the previous situation, but there are dangers that if the process is too easy, that is precisely what will happen.

Other responsible elements within the gaming industry generally have equally expressed anxiety that deregulation should not lead to the creation of what are little more than gaming machine warehouses. These would have high social costs but bring low economic benefits. As I have indicated, they would also be to the detriment of economic regeneration if they discouraged the development of specialist resort casinos.

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We believe that the gambling commission must have the powers necessary to discourage that type of approach, and the necessary power and responsibility to ensure that persons seeking licences are beyond reproach and that criminal elements are prevented from permeating an industry that currently has impeccable standards of integrity and probity. In that, controls to prevent opportunities for money laundering are vital.

Another issue for planners could be to require the operators of new casino developments to demonstrate how their proposals will aid the regeneration of the area in which they hope to locate. That could be particularly appropriate for planned developments in seaside resorts and other tourism destinations. Arguably, planning guidance might be framed so as to be generally favourable towards granting consent in locations where the leisure industry is crucial to the economy.

The support or endorsement of the regional development agency may be another factor to consider, as the RDA is well placed to judge where a casino development fits into the plans for urban renaissance within the region, and its view would be of benefit.

The ability to demonstrate tangible benefits to a local community might also be relevant. That is certainly the view and intention of the Blackpool challenge partnership. It wants to support good causes from gambling profits, although its ability to do so will of course depend on the tax structure that the Government introduce. An accusation was levelled at the Government that higher taxation was behind the deregulatory process. I was actually asked at the Bingo Association conference whether our response was generated by concerns about how much revenue we might make when we get back into government. Well, we might well be back in government when these proposals are implemented, but I agree with the Minister—I do not believe that taxation is driving this agenda. However, taxation is crucial to the ability of gambling to benefit the local communities in which these casinos are likely to be placed, so when may we expect to see some guidance on the likely taxation environment? It will be important to have the Government's view on that by the time that Parliament begins to deal with the Bill.

The concept of community benefit sits well with the attitude of the gambling industry at present about social responsibility and the need to minimise the negative social consequences of deregulation. That brings me to the final point that I want to address: the proposal for the establishment of a new gambling trust, to which the Minister also referred. The British Casino Association and others have taken the lead in working with other trade bodies in the industry to establish the gambling industry charitable trust. I am sure that there is no need for me to restate the excellent initial progress that has been made by the trust, but its future funding remains an issue yet to be finally resolved.

Although I am sure that responsible elements in the industry will be willing to provide their fair share of the cost of supporting the trust's work in helping people who develop problems with their gambling as well as researching the issue, that apparent willingness is no guarantee that the entire industry will be as forthcoming or that the necessary funding will be secured. Some

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people in the gambling industry have already commented that it would be a bit rich if they were asked to pick up the social cost of developments that they advised against at the start.

The Minister has said that, if necessary, the Government will impose a statutory scheme. I should be grateful to him if, in his winding-up speech, he would give the House and the industry some indication of the basis on which a statutory scheme would be established. If he cannot do so today, perhaps he will consider doing so in the weeks ahead. We agree that the imposition of any levy must apply to the entire industry, not merely to the members of the trade bodies.

We generally support the Government's approach, although of course we are concerned that deregulation should not lead to an increase in problem gambling, with the difficult social consequences that that would bring. Nevertheless, I hope that we can work with the Government to establish a common way forward and that, in that spirit, the Minister will accept that what I have said today is intended to be constructive and helpful in ensuring that this once-in-a-lifetime opportunity to create a gambling environment more appropriate to contemporary society is properly secured. Proceeding at a sensible pace and always with a clear eye on the importance of social responsibility and economic regeneration will help to achieve our objective.

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