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Session 2001- 02
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Standing Committee Debates
Finance Bill

Finance Bill

Column Number: 67

Standing Committee F

Thursday 16 May 2002(Morning)

[Mr. Joe Benton in the Chair]

Finance Bill

(Except clauses 4, 19, 23, 26 to 29, 87 to 92, 131 and 134 and schedules 1, 5 and 38)

9.30 am

Schedule 3 agreed to.

Clauses 7 to 12 ordered to stand part of the Bill.

Schedule 4 agreed to.

Clause 13

General betting duty: spread bets

Question proposed, That the clause stand part of the Bill.

Mr. Howard Flight (Arundel and South Downs): I welcome you to the Chair, Mr. Benton.

Can the Minister confirm that the industry and financial services are happy with the new definition? I have not received any objections and I presume that there was consultation on the matter.

The Paymaster General (Dawn Primarolo): I confirm that there was consultation and that the industry and financial services are happy with the definition in the clause.

Question put and agreed to.

Clause 13 ordered to stand part of the Bill.

Clause 14

General betting duty: overseas bet-brokers

Mr. Christopher Chope (Christchurch): Will the Minister explain how these provisions are consistent with European Union law and the open market? It seems to be a protectionist measure and I had assumed, perhaps naively and not being a betting man, that there was an open market in betting within the EU. I had understood that one of the rationales for having our own national lottery was that if we did not, other European Union countries could sell their lottery tickets in this country.

Perhaps the Paymaster General will also address the issue of internet betting-- another subject with which I am not familiar--which may be affected by the clause.

Mr. Peter Luff (Mid-Worcestershire): Strictly for information, it would be helpful if the Paymaster General could give us some guidance on the treatment of the Channel Islands and the Isle of Man under the clause.

Dawn Primarolo: I am still thinking about the Channel Islands and the Isle of Man. They seem to follow me everywhere--

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Mr. Luff: Be nice to them.

Dawn Primarolo: I am extremely pleasant to them--

Mr. Luff: I am sure that we shall be inspired.

Dawn Primarolo: Always, as a recent statement by Senators of the Jersey Parliament will testify.

The hon. Member for Christchurch (Mr. Chope) asked whether the clause sits comfortably with European law. It does. It is common practice in member states closely to regulate the gambling industry. Like the hon. Gentleman, I cannot claim to have personal knowledge of the industry, but member states take different views on allowing gambling. The European Court of Justice decision on the Schindler case found that the United Kingdom was entitled to limit the distribution of material concerning the lottery. The Schindler ruling therefore supports the provision, which protects UK business from unfair competition and the UK betting customer from unwittingly betting with unregulated offshore bookmakers and brokers.

I cannot be drawn into offering hypothetical situations concerning what might happen if another country were to take a particular route on targeting. Although the provision on protection in advertising has hardly ever been used, it is necessary and is there in case we need to use it. As I said in my previous answer, it is to protect the UK betting industry from unfair competition and punters from unwittingly betting with unregulated bookies or brokers.

Of course, it is not always necessary to go as far as prosecution. When companies have breached the law in the past, what is politely called ''education and advice'' from customs officers has generally been sufficient to rectify the situation, and that approach will continue.

The hon. Member for Mid-Worcestershire (Mr. Luff) asked about the Channel Islands. I must be honest with him and state that we have not considered that dimension in terms of specific targeting. Although I would rather answer him on the record, I must say that I need to investigate further. I will send him a note that I will circulate to all members of the Committee. Should he wish to return to that question, I should be delighted to settle it with him. I do not believe that there is an issue there, but I should prefer to double-check and ensure that every member of the Committee is aware of the answer.

The provision is fully square with UK and European law. On anti-avoidance, the provision is there to protect and underline, and has never had to be enforced because we have used the persuasive powers of our customs officers.

Mr. Chope: Before the Paymaster General sits down, will she address the issue of the internet?

Dawn Primarolo: The whole clause is about the internet, and its heart is directed at dealing with internet betting in particular. The clause is based on European Community law and contains an anti-avoidance procedure. I do not know what will happen

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with regard to the Channel Islands, but I shall write a note. Customs officers are extremely persuasive, and we have always managed to avoid problems.

Mr. Chope: Will the hon. Lady explain how, when one is thinking about placing a bet on the internet, one knows whether an internet broker is based in the United Kingdom or overseas? That is a fundamental point that goes to the heart of the matter if we are creating new criminal offences.

Dawn Primarolo: To address the hon. Gentleman's point, perhaps it is best to explain how the provision will apply to online advertising.

The primary aim of the clause, as the hon. Gentleman has identified, is to make it an offence for a person in the United Kingdom to advertise the services of a bet broker that is not located in the UK. The responsibility is on the person advertising, not on the individual who goes on to the internet. A person in the UK advertising such services must settle the issue.

We are levelling the playing field with bookmakers. The main vehicles for advertising betting services are industry publications, such as the Racing Post—I do not know whether the hon. Gentleman reads that avidly, but I do not—and text services on terrestrial television, which I have not scrutinised either. Online advertising is a narrow issue.

As hon. Members should be aware, the legitimacy of online advertising that originates in other European member states will ultimately be determined by reference to the e-commerce directive. Although that is intended to facilitate the proper functioning of the internal market by ensuring the free movement of information services, including advertising, it contains provisions to protect consumer interests. The change in the clause relates to protecting UK betting business from unfair competition, and UK punters from unwittingly betting in unregulated, offshore bookies and brokers; it does not relate to restricting legitimate competition. It will reinforce powers that are already in place.

If the hon. Member for Christchurch is asking me whether I guarantee that some bright spark will not find a way through, given the creativity of some who use the internet, I can say only that I would mislead the Committee to give such an undertaking. However, to the best of our knowledge from consulting industry and from looking at the way in which it operates, the clause provides the best protection for the industry and the punter that we can afford with the powers available.

Mr. Flight: If a bookmaker in France, Gibraltar or wherever has a website, is there anything that we can do about someone looking up that website from the UK?

Dawn Primarolo: No, but I have tried to make it clear that the offence is committed by the person, or individual entity, who places the advertising on the internet. It is not an offence to bet with overseas bookmakers, but it is for bookmakers or brokers to

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advertise or promote services overseas. We are approaching the problem from the industry, not the individual punter, end. Hon. Members are stretching what little knowledge I have on betting almost to breaking point, but I am trying to be as clear as possible. The clause is not about individuals, but about regulating those who put advertising on the net in the first place.

Mr. Chope: I am grateful to the Paymaster General for explaining that, but can she say why it will be an offence for a person to be in possession of an advertisement? Surely, a consumer—a betting punter—may well want to store an advertisement on his computer. It seems that, by so doing, he will be committing an offence under the clause.

9.45 am

Dawn Primarolo: That brings us back to the issue of light touch, and the skills of Customs and Excise in recognising who has been carrying material and who is involved in the industry. The essential question is whether someone could be prosecuted for carrying the advertisements, even if that person were coming into the UK. The answer is no; he cannot be. If the hon. Gentleman were to do that and were stopped by Customs and Excise, he would have to ring the office of the Financial Secretary to the Treasury, which would immediately ensure that he was not prosecuted. He could not be prosecuted for carrying a paper or document carrying the advertisement. He would be guilty of an offence only if he distributed the advertisement or had brought it back with the express purpose of distributing it.

I know that the question of how that would be decided is a delicate issue, so I shall rest my case on the point that I made earlier about the anti-avoidance mechanism—the good judgment and persuasive powers of Customs and Excise to tell the difference and to educate people about the matter have worked until now. There is no reason to believe that they will not work in the future.

Mr. Luff: This is a very interesting issue. The more I think about it, the more fascinated I become. What will happen if a chap is on the internet one night, sees an advertisement for an overseas bookmaker, prints off the advertisement, goes down to the pub and says to his mates, ''Look, this is a better deal than the one at William Hill on the high street. Try this''? Is that person guilty of an offence?


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