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4.30 pm
Mr. Greenway: I shall be brief because I do not want the House to experience the problem highlighted by the hon. Member for Banff and Buchan (Mr. Salmond) of not having time to debate the most important amendment—in this case, arguably, on insurance companies—which is in the last group.
The Minister addressed the Bingo Association conference the other day and I had the pleasure of speaking soon after. In their cack-handed way, the Government have done two things. First, they have united a bingo industry that, in most other respects, is divided. The two big bingo club organisations, which have about half the bingo clubs between them, support the Government's proposal for bingo in casinos. That also means that a casino could be in a bingo hall if their deregulation plans are successful. It will be interesting to see how that develops. However, the rest of the
industry—all the smaller clubs—do not want that to happen. They would rather protect bingo as it is, but to do that the game has to compete with other forms of gambling. That is why the industry is united in its opposition to the Government's proposal. When I intervened on my hon. Friend the Member for Eddisbury (Mr. O'Brien), I said that it is annoyed and angry, but that is putting it mildly. As he argued, the Chancellor made a promise that he has not kept.The second consequence of the Government's actions is, in social terms, deeply disturbing. I do not suggest that only men go into betting shops and only women go into bingo halls, but the majority of punters who go into betting shops are men and the large number of people who go into bingo clubs are women. I hope the House accepts that generalisation. As a result of the change to gross profits tax for bets in betting shops, when the husband has a bet on the 3 o'clock at Doncaster he will pay less tax on the outcome of that race than his wife will pay when she spends an evening in a bingo club, because she will be taxed twice—on the VAT on the participation fee and as a result of the 15 per cent. profits tax that bingo proprietors will have to pay. That has been explained to the Government and I cannot understand why, having heard that message, they continue to set their face against the change.
The Minister said something interesting at the Bingo Association conference. It came as a surprise to most bingo proprietors present when he said that the Government did not intend to equalise the tax across different forms of gambling. That is not the impression given to the bingo industry in the suggestion that there should be a gross profits tax.
I am left with two thoughts. The first is that whatever the House decides to do, we have not heard the last of this. It would not surprise me to find that next time we debate the subject, the Labour Benches are not deserted. Right hon. and hon. Members from all over the country will be in the Chamber because their bingo club members, whose votes they will wish to garner at the next general election, will have urged them to be here.
My second thought is to question how the Chancellor could introduce this measure. What is he up to? What is the point of this proposal? Apart from the tidiness of moving to a gross profits tax for bingo, as for other forms of gambling—I can understand that and think, in general, it should be welcomed—what were his motives? The truth is—this is a general point in relation to the overall debate on the Finance Bill—he is saying, "I realise that I am for ever raising taxes. I want to announce a cut in tax." The proposal was sold on the day of the Budget as a cut in tax. The reality, however, is that there is no cut in tax. There is a cut in tax for people who go to the betting shop—that has been delivered—but there is no cut in tax for the 7 million people who play bingo. Gradually, as they discover that they have been cheated by the Government, they will be deeply angry.
I believe that the House will want to reconsider the measure. I hope that the Minister thinks long and hard before he rejects amendment No. 3. He should consider what the Government need to do about the problem now. If they do nothing, they will lose face in future.
Mr. Djanogly: In the face of a strong showing from the bingo industry and after much hard graft by my hon. Friend the Member for Eddisbury (Mr. O'Brien) the Government have announced an extra £10 million tax cut for bingo. The Government have not been shy in suggesting that that should create an extra £125 million in prize money, or as the Daily Express, obligingly for Labour, put it on 19 June:
- "Bingo—it's a £125 million bonus".
It seems that, to achieve their £125 million, the Government are maintaining that by cutting the tax 500,000 extra people will rush out and play bingo. Perhaps the Government have based that conclusion on the thousands of people who will now be looking for a return on their money following the Government's demolition job on ISAs. Whatever the Government's pie-in-the-sky reasoning may be, I can only note, as did my hon. Friend the Member for Eddisbury, the disbelief of the chairman of the Bingo Association in the Government's figures. He said that the £125 million would not happen today but was years off, and would be ruined in any event if the Government increased the tax on machines in bingo clubs.
This might be a good opportunity to ask the Minister whether the Government have any such intention. One wonders whether the Daily Express will now print "Bingo—it's a £125 million fraud." Somehow I doubt it.
John Healey: I welcome Opposition Members' contributions, especially that of the hon. Member for Ryedale (Mr. Greenway). I welcome his declared interest, he having stepped down from the Opposition Front Bench to take an interest in and devote more time to the gambling industry. I am glad that he participated in the debate.
I say to the hon. Member for Eddisbury (Mr. O'Brien) that whatever the wishes and whatever the expectations, especially within the industry, there is no mismatch between what my right hon. Friend the Chancellor of the Exchequer said in the Budget and what is delivered in the Bill. There was no promise to deliver direct equivalence between the gambling regimes, and no promise to abolish VAT on participation fees. The words "level playing fields" were not those of the Chancellor, and they were not mine. They were the hon. Gentleman's, and they might also have been those of some of his contacts in the industry.
Of course the bingo industry wanted more from the tax reforms. Indeed, it argued for more during consultation. It argued, unsurprisingly, as does the hon. Member for Eddisbury, for the full removal of VAT from players' participation fees. That would have cost at least another £50 million more than the proposals set out in the Budget and in the Bill.
I shall respond to some of the detailed points that have been raised and explain the purpose behind Government amendment No. 4.
Mr. Burnett: Before the Minister does that, perhaps he will help the House by telling us whether it is the Government's long-term aim to move to equality between bingo and betting and the pools. If it is their aim, when does he seek to achieve it?
John Healey: The short answer is no. The hon. Member for Yeovil (Mr. Laws) presses the same argument in relation to the excise regime for alcohol. It is certainly an objective to have a fairer balance between the different gambling and alcohol regimes, but it is not the Government's objective or policy to seek direct equivalence. I hope that that makes the matter clear and categoric for the hon. Gentleman.
I understand why the hon. Member for Eddisbury wants to claim credit for Government amendment No. 4 and for my decision that lies behind it. I made it clear during the debate on bingo duty reform in the Committee of the whole House that I was already in discussion with the bingo industry. I undertook that, following those discussions, I would consider how the calculation of the gross profits tax interacts with the treatment of VAT on bingo participation fees.
To recap briefly, our reform of bingo taxation was driven by our desire to boost the bingo industry and give players a better deal. The current tax structure discouraged innovation and penalised bingo companies that lowered their margins. My right hon. Friend the Chancellor announced in the Budget that we would therefore abolish duties on bingo players' stakes and added prize money and replace them with a 15 per cent. tax on bingo companies' gross profits—the difference between the amount spent on the playing of bingo and the amount paid out in prizes. The reform would have delivered a £25 million tax cut to the bingo industry.
During discussions with officials after Budget day, the bingo industry argued that the new tax structure would produce an unfortunate consequence in the interaction between the gross profits tax and VAT on the participation fees that bingo companies charge players for running games of bingo, and asked us to consider amending clause 9 to remedy that flaw. It also asked us to extend the period for the introduction of reforms, which were scheduled for 4 August, saying that it would take three months to put the arrangements in place. It said that it would prefer a new start date, and 27 October has been specified in the Bill. After discussions with the industry, and at its request, we have altered the definition of the accounting period for the purposes of the new tax so that it better fits the industry's accounting arrangements and record keeping. That demonstrates my commitment to consider carefully the arguments that the industry makes to the Government.
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