SUBMISSION 16
Memorandum submitted by the British Beer
and Pub Association (BBPA)
Please find the attached submission from the
British Beer and Pub Association to the Committee's inquiry. We
very much welcome this opportunity to highlight the views of the
public house industry.
In preparing the submission, we have paid regard
to the published terms of reference. You will notice, however,
that our paper does not specifically respond to all the issues
identified. We have, instead, concentrated on those areas where
we have direct expertise, namely the impact of the proposals on
the industry and the social impact of the changes proposed and
the safeguarding of the young and otherwise vulnerable.
We hope that the evidence is of value to the
Committee and, of course, are very happy to provide any further
information that might be required.
Annex
EXECUTIVE SUMMARY
PUBS
There are 60,000 pubs in the UK with an annual
turnover of £18.4 billion.
The industry employs 650,000 people.
There are 77,000 fruit machines in pubs.
Pubs are the third largest contributor of gambling
revenue to the Treasury.
MACHINES IN
PUBS
Seventy per cent of new UK machines are manufactured
for pubs.
Machines contribute in the region of 20 per
cent of an average pub's profit.
Pubs are well controlled, essentially adult
environments, covered by licensing laws.
Of the 0.6-0.8 per cent of the UK adult population
that are problem gamblers, approximately 2.5 per cent relate to
fruit machines in pubs (Gambling Prevalence Study—2000).
KEY CONCERNS
WITH "A SAFE
BET FOR
SUCCESS"
There is an "anti-competitive tilt"
with an unjustified, disproportionate and over cautious approach
having been proposed for pubs, which would leave them competitively
disadvantaged
Machine Numbers
It is proposed that pubs be allowed two x £25
prize machines with Local Authority discretion to allow more in
appropriate cases this is compared with three x £250 machines
for clubs, four x £500 plus numerous £25 prize machines
for bingo halls the pub industry proposes four machines be allowed
as a right with more on application this proposal would reduce
needless red-tape and additional costs whilst maintaining controls
and not leading to a problematic proliferation of machines.
Protecting the Young and Vulnerable
It is proposed that "effectively controlled
and clearly identified areas" be introduced into pubs and
clubs this requires greater definition between DCMS and the industry
the industry believes the best results can be achieved through
good management and appropriate signage.
Machine Stakes and Prizes
Pubs welcome the increase to £25 maximum
prize from January 2002 the longer term industry aim of higher
prizes is modest in comparison to other sectors, supported by
the public, unlikely to increase problem gambling to any degree
and extremely important for the future of the industry.
We believe that time should be taken to fully
consider the consequences of the proposed new legislation and
plan implementation accordingly. We are grateful to DCMS for providing
an opportunity for dialogue through its industry steering group.
INTRODUCTION
The British Beer and Pub Association (BBPA)
is the trade association representing nearly two thirds of the
60,000 pubs in the UK. The pub industry has an annual turnover
of £18.4 billion, and employs in the region of 650,000 people.
There are 77,000 fruit machines in pubs, making it the third largest
contributor of all gambling revenue to the Treasury. The vast
majority of UK pubs are small businesses, many of which rely on
machine income for their business viability.
The Association welcomes many of the proposals
contained in "A Safe Bet for Success—Modernising
Britain's Gambling Laws" ("A Safe Bet"),
particularly the establishment of a single regulatory authority
in the Gambling Commission. However, the pub industry has some
fundamental concerns that need further consideration in order
to avoid a harmful impact on this important sector of industry.
We look forward to working with DCMS to resolve these concerns,
which are discussed in detail below.
BACKGROUND
Pubs are well controlled, essentially adult
environments, covered by licensing laws. Pubs account for around
70 per cent of new machine manufacture in the UK. Therefore, much
of machine industry's manufacture and supply is reliant on pubs.
Machines contribute in the region of 20 per cent of an average
pub's profit.
Fruit machines are important to pubs, but pubs
are equally as important to the machine industry. This must be
borne in mind when considering "A Safe Bet",
as the main reform proposals relate primarily to machine issues,
even though we did not understand this to be the initial imperative
for reform. Any new Act should retain flexibility in order to
avoid becoming prematurely outdated. There has been much focus
on resort casinos, but little apparent attention given to the
serious consequences for pubs, which are the social centre of
many communities in the UK. We are not yet convinced that the
possible ramifications of the proposed changes have been sufficiently
thought through in terms of the effects on the British leisure
retailing landscape, particularly with regard to the consequences
of the proposed changes to the competitive position of pubs.
We welcome the aims of "A Safe Bet"
which states "regulation should be confined to what is
necessary to keep crime out, protect the vulnerable, and ensure
that gambling products are fair to the consumer". The pub
sector has a good record in relation to being crime free and transparent.
A certain degree of liberalisation has been proposed for most
other sectors, but not for pubs, where the only identifiable barrier
to more freedom is in respect of protecting the vulnerable. The
Gambling Prevalence Study indicated that of the 0.6-0.8 per cent
of the adult population that are problem gamblers, approximately
2.5 per cent relate to pubs. Therefore, of the total adult population,
a very small number of problem gamblers could be attributed to
machines in pubs. The pub industry proposals of more competitive
prize levels and up to four machines as a right, with more on
application, would not lead to a proliferation of machines in
pubs, nor we believe to any appreciable impact on the numbers
of problem gamblers. The proposals would however reduce bureaucracy
and be more consistent with the treatment of other leisure retail
sectors.
An unjustified, disproportionate and over-cautious
approach has been taken by "A Safe Bet" in respect
of the pub sector, which leaves us competitively disadvantaged.
Key Concerns for the Pub Sector
The table below summarises the position with
regard to the recommendations contained in the Budd Report and
A Safe Bet, and highlights some of the inconsistencies and subsequent
competitive concerns that arise for the pub sector.
| Budd Proposals |
A Safe Bet |
| General | |
Local authorities ability to impose blanket
bans on gambling activities
| Rejected
|
Introduction of a Gambling Commission
| Supported
|
Advertising restrictions lifted
| Supported
|
Public Houses
|
|
£25 prize machines only
Inflation-only reviews of stakes & prizes
"Grandfather rights" to retain existing machine numbers
New premises allowed up to 2 machines maximum
No betting or gaming
Up to £1,000 prize bingo
| Periodic Reviews of stakes & prizes takings into account 'other' factors
No grandfather rights—pubs to have to re-apply to retain their existing machine numbers
2 x £25 Category C machines as of right, with more on application
Machines to be sited in "effectively controlled and clearly identified areas"
£1,000 bingo accepted "in principle"
Betting and other forms of gambling in pubs to be kept under review
|
Private Members Clubs
|
|
Removal of 3 x £250 jackpot machines and
replaced with 2 x £25 machines
| Retain up to 3 x £250 jackpot machines
Machines to be sited in "effectively controlled and clearly identified areas"
|
| Cafes & Take-Aways |
|
Removal of all machines
| Retained £5 max prize/10p max stake machines as accessible to under-18s at Local Authority's discretion
|
Adult Arcades
|
|
£25 cash machines permitted
| Allowed 4 x £500 Category B machines, subject to review, plus £25 Category C machines
|
Licensed Betting Offices
| |
4 x £500 Category B or £25 Category C machines.
No mixed types of machines.
Sale of alcohol prohibited
No mention of fixed odds machines with unlimited jackpots
| Allowed to mix £500 Category B machines and £25 Category C machines to the maximum limit of 4 machines
Introduced limit of £500 prize for fixed odds machines and included them in the total of 4
Sale of hot food but not alcohol permitted
|
Bingo
|
|
4 x £500 machines and additional £25 machines
No membership requirements
More freedom on bingo games
| Endorsed Budd's proposals
|
Casinos
|
|
Unlimited stakes & prizes
8 unlimited stake and prize, linked machines per gaming table
End of 24 hour membership rule
Alcohol on the gambling floor
Able to offer liquor, food, entertainment, betting, bingo
| Endorsed Budd's proposals
|
We have identified the following key issues arising for the
pub sector:
Machine Numbers
We welcome the progress made in A Safe Bet with regard
to allowing pubs to have a number of £25 machines as of right,
with more on application, but believe that this number should
be four rather than two. This would avoid unnecessary bureaucracy
with costly applications to local authorities. Furthermore, comparisons
with all other sectors as outlined in the above table, clearly
show the unfavourable treatment of pubs despite no evidence that
numbers of machines in UK pubs present a particular problem. We
are not seeking a proliferation in the numbers of machines permitted
in pubs, which are totally different in respect of machines compared
to jurisdictions such as Australia, where a large number of jackpot
machines have become a problem. We believe that any proliferation
of machines that might arise is a much greater issue in respect
of the proposals for other sectors. The Association is aware of
the potential dangers in this regard and our paper of December
2001 to the DCMS on machine numbers provided evidence that four
machines would be an appropriate number.
A critical point in A Safe Bet will be the detail
surrounding local authorities' "discretion to allow more
inappropriate cases". In order to ensure consistency and
fairness, we believe there must be a national formula to avoid
unreasonable withholding of permission to site additional machines.
We have proposed that this is a matter for discussion with DCMS
and seek to resolve this as soon as possible.
We are disappointed that A Safe Bet has not retained
the Budd proposal that pubs be allowed to retain their current
numbers of machines. This will mean that 11,000 pubs will have
to re-apply to local authorities simply to maintain the status
quo. Again, there is no evidence that current machine numbers,
which have been individually approved by magistrates, have caused
any problems that should lead to their removal. We believe that
a removal of existing rights may have implications under the Human
Rights Act.
Control of access by under 18s
The pub industry has always supported legislation preventing
under 18s from playing gaming machines. Indeed, the industry introduced
a voluntary code of practice shortly after the introduction of
all cash machines in 1996. Since that time, there has been no
evidence of specific problems concerning the playing of machines
by under-18s. According to a MORI poll in October 2001, 92 per
cent of adults surveyed believed that it was already a legal requirement,
demonstrating the effectiveness of the voluntary code.
A Safe Bet introduced the concept of "effectively
controlled and clearly identified areas" for machines. This
is potentially a matter of great concern to pubs, as it is not
clear how such areas might be created and the industry would be
strongly opposed to the introduction of physical barriers such
as walls, ropes, lines or screens. There is no doubt that such
disproportionate measures would change the nature and atmosphere
of pubs. It is more logical and useful to take a responsible management
approach, coupled with the use of appropriate signage, to control
access. This approach would avoid unnecessary bureaucracy and
needless cost to pubs. Should pubs be required to introduce physical
barriers this would encourage machines to be sited in peripheral
areas to the detriment of both control and income.
Gamcare have indicated support to the BBPA in respect of
our proposals on controlled areas, and agree that the management/signage
route is a much better approach. The existence of a law prohibiting
under age play, together with appropriate sanctions, should provide
sufficient deterrent without unnecessary red-tape.
We are hoping to work closely with DCMS to thrash out the
detail in this area that is so vital to pubs.
We welcome the clarity that A Safe Bet provides in
terms of age related access to gambling. However, we are disappointed
that the National Lottery remains an anomaly in this important
area of social responsibility.
Machine Stakes and Prizes
The Association is pleased that A Safe Bet has recognised
the value of regular reviews of stakes and prizes, taking all
matters into consideration, rather than endorsing the restrictive
inflation-only approach advocated by Budd.
The £25 prize requested by the industry at the last
Triennial Review, and which was subsequently recommended by the
Gaming Board, was based on a longer term approach. This vision,
supported by MORI market research, advocated a £50 prize
in 2004 based on survey results showing strong public support
for a prize level of £78.
Historically, there has been concern expressed over the level
of maximum prizes of machines in pubs from a "problem gambling"
perspective. The experience of a move in the last ten years from
£4.80 tokens to £25 cash is that such fears have proved
unfounded with pubs having a very low level of problem gambling
prevalence.
The Association will continue to seek higher, more comparable
and fair levels of prizes compared to other controlled leisure
retailing sectors.
The Gambling Industry Charitable Trust (GICT)
The pub industry supported the establishment of the GICT,
and is represented on the Board of Trustees.
Competition Issues
It is the view of the BBPA that the proposals contained in
A Safe Bet on gaming machines will disadvantage pubs, which
will suffer an unjustified, anti-competitive tilt in comparison
with other leisure sectors. There is no supporting evidence of
the need for such a restrictive approach to pubs.
Whilst the term "ambient gambling" as coined by
Budd, does not appear in "A Safe Bet", its essence
remains, with artificial lines of demarcation being retained between
sectors which in reality are becoming increasingly similar. For
example, a casino or a bingo hall can offer a late night drink
in the same way as some pubs. Pubs, the vast majority of which
are small businesses, may not want to compete with table gaming
or bingo, but will be competitively disadvantaged in respect of
machines. It is anticipated that a significant number of bingo
halls in the UK will convert into casinos, primarily to take advantage
of the new machine legislation.
There does not appear to be any logic or consistency of approach
when a pub admitting only over 18s or even over 21s, can only
provide Category C £25 machines, whilst a club or bingo hall,
which may allow access to under-18s, can provide Category B machines.
In the case of bingo, A Safe Bet also proposes to remove
membership requirements, with the general public having open access.
This creates a greater similarity between pubs and bingo halls
whilst the proposals relating to machines create a greater gulf.
THE WAY
FORWARD
The Association requests the support of the Select Committee
in urging the DCMS to actively seek to resolve the issues of concern
to the pub sector.
Specifically, we have identified the need for further detailed
discussions on the following:
Machine numbers—We would welcome discussions
with DCMS to identify the grounds for permitting or refusing "more
on application" with a view to ensuring that the needs of
pubs are met through a fair, transparent and consistent approach
being taken at local level;
Controlled and clearly identified areas—the
Association wishes to work with the DCMS to agree a management
approach on underage play;
Stakes and prizes—We wish to pursue our longer-term
aim of higher prizes for machines in pubs, and appreciate the
opportunity to do so through the retention of the Review process.
Permitted activities—The Association welcomes
the proposal to allow bingo with up to a £1,000 prize per
week in pubs and would very much wish to discuss this in more
detail with DCMS. We recognise the importance of keeping other
forms of gambling in pubs under review in the light of the significant
change that the Review may bring about.
Whilst we understand other leisure retailing sector's desires
to implement changes as soon as possible, particularly in respect
of machines, we believe that the Government should take time to
fully consider the consequences of the proposed new legislation
and plan implementation accordingly. It is clear for example that
Payment Method Deregulation is a practical and well supported
measure across all sectors which can and should proceed without
further delay. However, we recognise that most other proposed
changes, not least the inter-relationships with Liquor Licensing
Reform, need to be fully evaluated and we are very grateful to
DCMS for providing an opportunity for dialogue through it's establishment
of an industry steering group.
3 May 2002
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