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Mr. Laws: I have three questions. First, is it Government policy for bingo taxation to be neutral in relation to other forms of gambling? Secondly, following the Budget, is it neutral in that sense? Thirdly, if it is not, what would it cost the Exchequer in an average year to achieve neutrality?
The Temporary Chairman: The Committee is grateful to the hon. Gentleman for his brevity.
5.15 pm
Mr. George Osborne : I shall not be quite so brief, Sir Nicholas; nevertheless, I hope to make a relatively short contribution. I congratulate my hon. Friend the Member for Eddisbury (Mr. O'Brien) on an excellent speech. I always suspected that he was an expert on the bingo industry—even before he went to Winsford to present the prize. In fact, I have gone one better than him and called bingo numbers on several occasions in Cheshire. I discovered that when the number 10 is pulled out, it is called "Tony's den". That is something that the right hon. Member for Birmingham, Ladywood (Clare Short) wants to change, and I would approve of that.
On a serious note, my hon. Friend the Member for Eddisbury is right to bring to the House's attention the very real concerns of the bingo industry and of bingo players across the country, and he has done so in a very eloquent way. As he said, the Chancellor's objective was
to create the right environment for bingo to maintain its role in the community and to reach maximum growth; indeed, the Economic Secretary told us last year that reform will not only benefit bingo players and bingo companies, but strengthen the increasingly important role played by bingo clubs within the wider community and help to ensure that the next 20 years are ones of growth and success. That is what the Economic Secretary set out to achieve, so presumably he was very disappointed when the Bingo Association told him that, as a result of the proposals announced in the Budget, clubs will be no better off, and in some cases will be worse off than before. If that is what the industry is saying, he will presumably want to think again about these proposals extremely carefully.My hon. Friend the Member for Eddisbury referred to KPMG's interesting study on this issue, carried out in 2000, with which Members are doubtless very familiar. It found that the effective tax burden on the bingo industry was 34.1 per cent., which is considerably higher than that on arcades, at 19.9 per cent., on casinos, at 21.7 per cent., on pools, at 15 per cent., or on betting generally. It is true that this reform would reduce somewhat the effective rate of tax on the industry, but only to 30.7 per cent., which is still far above that for all other forms of gambling. Such a rate would continue to discriminate against the bingo industry. Indeed, because of the way in which the reforms are structured, they may lead to an increase in the burden for smaller clubs—a point made by my hon. Friend and by the hon. Member for East Carmarthen and Dinefwr (Adam Price).
The industry feels that the proposals announced in the Budget are a betrayal. Given that they were introduced to help the industry, the Economic Secretary should listen on this occasion. I welcome the fact that the Government have already tabled an amendment to delay the implementation of some of these proposals; that was a particular concern of the industry. Nevertheless, that does little to help smaller bingo clubs in particular.
I end my contribution by pointing out what the Bingo Association itself had to say:
- "Bingo clubs and players want fair play. They want to be treated in the same way as those who bet and play the pools."
Mr. Stephen O'Brien: In that context, my hon. Friend might find it interesting to note that the Bingo Association wrote to the Economic Secretary on 8 May; indeed, I have a copy of the letter in front of me. It states that in advising him,
- "Customs and Excise have leant very heavily on the Nottingham University Business School's evaluation of GPT on bookmakers."
Mr. Osborne: Indeed it is, and I should hate to think that Customs and Excise—or, indeed, the Treasury—did not have a proper understanding of the bingo
industry. However, in the light of these proposals and of our knowledge of the industry, that appears to be the case. The Bingo Association makes a very straightforward point: it wants the Chancellor to live up to his promises. It believes that current proposals should be amended to include VAT exemption from participation fees, removing the unfair discrimination against millions of women—and presumably men—who play bingo, and giving bingo clubs across the country, many of whom are struggling to survive, the chance of future success.
John Healey: The hon. Member for Eddisbury (Mr. O'Brien) urged me to make a considered response to his points, and I shall attempt to do so. I want to deal thoroughly with the issues because millions of bingo players in every constituency across the country are potentially affected and should potentially benefit from our proposals. First, I shall explain the background and purpose of the reforms and explain our decisions. Secondly, I shall respond to Opposition Members' plea to make the reforms more generous and deliver a bigger tax saving to the bingo industry. Thirdly, I shall assure the House that Ministers and our officials have listened to the industry about the changes necessary to make the reforms work as well as possible, and I shall explain the amendments that the Government have tabled to that end.
The reforms are the latest elements of our wider programme to reform the taxation of gambling in this country by replacing across the board duty regimes that have been in place since the 1960s with simplified systems of taxation that reflect the modern age and support the future competitiveness of the UK's gambling industries. Following our reforms to betting and pools taxation, my right hon. Friend the Chancellor announced in the last Budget that he would examine the scope for abolishing the duty on bingo players' stakes and replacing it with a tax on bingo companies' gross profits. What the Chancellor proposed is what we are now doing—abolishing bingo duty and moving from a turnover to a gross profits tax.
That was the main purpose of our consultation last summer. As a result we have been able to deliver reform in the Budget in a way that both modernises the tax system and gives real financial support to the industry. Although the hon. Member for Moray (Angus Robertson) has just taken his place, I will give way to him. [Interruption.]
Angus Robertson (Moray): May I confound the intervention from a sedentary position to the effect that I was just placing a bet? Unfortunately, I have had parliamentary duties elsewhere and I am grateful to the Economic Secretary for allowing me into the debate. What message would he give to the Carlton Clubs in Inverness, which has many bingo establishments, including several in my constituency? The clubs have written to me complaining that they will have to pay an additional £500,000 this year, limiting the company's ability to increase prizes or to reinvest.
John Healey: I would say to the Carlton Clubs that we would be delighted to see any detailed analysis of evidence that would bear that contention out. It goes against the analysis that we have undertaken, against
the discussions that we have had with the bingo industry and against the research commissioned by the Bingo Association on behalf of the industry, which was submitted to us as part of the consultation process. I shall touch on that again in my later remarks.
Mr. George Osborne: Once the Financial Secretary has examined the detailed analysis, which I am sure that the hon. Member for Moray (Angus Robertson) will forward to him, and it turns out to be correct, will he re-examine the Government's proposals?
John Healey: Just as we have done with betting taxation and pools taxation reform, so we shall do with bingo taxation reform—monitor implementation, be prepared to receive fresh evidence and, if a good case can be made, consider further reform and refinement of the regime that we are putting in place. I will return to the point later.
I shall now deal with the second set of three questions asked by the hon. Member for Yeovil (Mr. Laws) this afternoon. Our approach to the reform of bingo taxation is consistent with our approach to betting and pools, but it is not neutral across the gambling regimes because industry-specific factors need to be taken into account. For example, with the challenges faced by the betting and gambling industry, we were mindful of a strong move towards moving betting offshore and on to the web. That consideration clearly applies to that part of the gambling industry, but not to bingo. Introducing a neutral regime across the different gambling industries is not our policy aim. Therefore, we have not calculated the cost to the Exchequer of pursuing that objective.
Mr. Laws: I thank the Minister for giving way, and for his candid response that he has not achieved tax neutrality across all forms of gambling. Given the special factors that he mentioned in relation to one particular sector of the gambling market, does he see any prospect of moving towards neutrality? Is that his objective in the years to come?
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