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Mr. Greenway: The Minister accepts that the placing of a bet in a betting shop carries no VAT, but the stake on a game of bingo, because it involves a participation fee—the entrance fee for the evening's games—attracts VAT. I understand the niceties of that. However, if the bingo industry told the Minister that it would re-examine its charging structure for playing bingo to achieve equivalence with the stake in a betting shop or a gaming machine, would he consider that carefully? It appears from what he is saying that he has set his face

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against a reduced VAT rate for bingo, which will remain standard rated as long as the route of participation fees is taken.

John Healey: The hon. Gentleman has made a serious point. It is correct that the gross profits tax on the betting industry is set at 15 per cent, but he will know better than any other Member that that is not the full picture, because bookmakers are required to add a levy from the gross profits that they make on horse racing as a contribution to supporting the industry, thus increasing in many respects the effective tax rate. Curiously but historically, VAT has been levied on bingo playing, but not betting, since the introduction of the VAT regime.

The hon. Gentleman referred to a speech that I made to the Bingo Association at its annual general meeting in May. I made it clear then that the reforms that we are putting in place are not necessarily a full stop for bingo tax reform. Just as happened with our reforms to gambling, betting and the lottery, we have monitored the present reforms carefully and are ready to consider good evidence and a well-argued case for further reform. Indeed, the Bill makes further reform to duty and tax, particularly on betting exchanges. We had a long discussion of that in Committee.

As a result of the discussions that the industry had with me and with officials following the Chancellor's Budget statement, amendment No. 4 has been tabled for consideration by the House. It builds on our original reform and will increase the tax cut for the industry from £25 million to £35 million, and reduce the effective tax rate—that is, tax as a percentage of profits—on the playing of bingo from 31 to 24 per cent., similar to the effective tax rates for the national lottery, casinos and gaming machines. The hon. Member for Ryedale cannot deny that that is a cut in the tax for the industry, as he seemed to do in his remarks.

4.45 pm

I have spoken to the bingo industry about the amendment, which I know it welcomes. In the Bingo Association's press release of 19 June, Sir Peter Fry, its chairman, said:

"The revision will make a significant difference, especially for smaller operators."

John Kelly, the chief executive of Gala, the biggest bingo operator, said that the change would benefit players. The industry, through its work with the Henley centre, has predicted that it can build on this initial £35 million tax cut, and estimates that by 2007 there could be an extra 500,000 visits per year and an extra £125 million in prizes and other benefits to players, compared with its predictions for the same date if we had continued under the old tax system. I can tell the hon. Member for Eddisbury that the industry also projects that this should improve its profitability.

I welcome the fact that the Opposition have indicated that they can support amendment No. 4 and the change. I believe that it achieves what their amendment No. 1 tries to do, so it may help if I explain why I would be reluctant to accept their version. [Interruption.] The hon. Member for Eddisbury encourages me to move on, so I shall simply say that Opposition amendment No. 1 would have produced a perverse outcome. It would have

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delivered only about three quarters of the revenue benefit delivered to bingo companies by our approach in amendment No. 4, and companies that have smaller margins or invest more would receive proportionally less benefit than companies that do not.

As I explained when rejecting a similar amendment in the Committee of the whole House, although we appreciate that the bingo industry wanted a bigger tax cut, we have delivered what we believe will boost bingo, give players a better deal and is affordable in the current situation of fiscal neutrality. To accept amendment No. 3 would require us to increase taxes elsewhere or to reduce spending elsewhere. We are not prepared to do either.

It is a curious reflection—I put it no stronger than that—that a party that is not prepared to match the investment that we are making in health, education and other vital areas of public services, should choose to make this a priority for a future regime.

Mr. Stephen O'Brien: The Minister is quoting again from the Labour lie machine handbook.

John Healey: In that case, I quote the hon. Gentleman's boss, the shadow Chancellor, who said:

"We are not bound by any of the pledges of the last election"—

pledges to match the Labour party's commitment to increase investment in health and education. The hon. Gentleman's leader said:

"I explicitly on three separate occasions when asked said we will not match Government spending plans. And I stand by that because our spending on the health service, on education, will be both different from a central Government standpoint and in terms of private and voluntary participation."

Mr. Deputy Speaker: Order. We are straying a little far from bingo.

John Healey: I am grateful for your reminder and admonishment, Mr. Deputy Speaker.

To accept amendment No. 3 would require us either to increase taxes or to make spending cuts elsewhere. We are prepared to do neither. Our bingo reform is designed to deliver a boost to bingo and a better deal for players. Government amendment No. 4 builds on the original £25 million tax cut by further reducing the tax on bingo by £10 million. That is a good deal for the bingo industry and its players. I commend the Government amendment to the House and look forward to the hon. Member for Eddisbury withdrawing amendment No. 1. I hope that, in the light of my comments, he will not press his other amendment; if he does, I will ask my hon. Friends to resist it.

Mr. Stephen O'Brien: I listened carefully to the Economic Secretary. I am grateful to my hon. Friends the Members for Ryedale (Mr. Greenway) and for Huntingdon (Mr. Djanogly) for their contributions. I understand that any acknowledgement that the Government's decision to table amendment No. 4 was prompted by our actions will not be forthcoming. Of course, if amendment No. 1 was not grouped with other amendments, I would be happy to withdraw it, but as it is not a lead amendment I cannot do what the Minister invites me to do.

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The Minister said that the Government amendment is more generous than ours. That comes as no surprise. As I explained, it is uniquely in the Government's gift to change the rate of VAT. The Opposition had to work extraordinarily hard to find a way that did not contravene the Standing Orders of the House as they apply to the Finance Bill to raise the issue and at the same time make our point about the deep anger and anxiety felt by bingo players and the bingo and gaming industry.

The Economic Secretary frankly admitted that the playing field was not intended to be level and that no promise of direct equivalence was made, and said that the Chancellor had not used those phrases. However, in his Budget speech, the Chancellor used the phrase "just as" and said that bingo tax would be

"replaced in the same way as the tax on"—[Official Report, 9 April 2003; Vol. 403, c. 278.]

other forms of gaming. I understand that Members of Parliament are in the business of words when we trade arguments and make our case, but I am conscious that the words we use have direct intended meanings for those outside this place who listen carefully to what we have to say. I know that if I used the phrases "just as" and "in the same way as" in this context, all those who were listening would perceive my intention to be to produce a level playing field and direct equivalence. That is what the Chancellor hoped would be perceived by the bingo players and bingo clubs of this country.

As my hon. Friend the Member for Ryedale said, there was tension in the bingo industry between small clubs and the large ones, all of whose interests need to be protected. To the very large number of bingo players in this country the clubs are an important source of entertainment, profit and revenue and community facilities—we should not lose sight of the importance to our local communities of such clubs, not least the Top Ten bingo club in Winsford in my constituency. It is a spurious use of spin to suggest that the Government may use words without being too worried about the precise effect that those words have. Above all, Governments are judged on their actions, and in this respect the Government have been found wanting in not having brought bingo into line with other forms of gaming, namely, pools and betting on horse racing.

It is a further spurious use of spin to suggest that a £10 million tax reduction will lead almost immediately—no time line was cited—to a £125 million benefit to the bingo industry. Notwithstanding its welcome for the £10 million cut, the industry has been criticised and castigated by commentators. When holding the Government to account, we should emphasise the importance of matching the words in the Chancellor's Budget statement with the deeds that the Government propose through the Finance Bill. That view must be reflected, given the deep anger and anxiety I mentioned earlier and—to answer the point made by the hon. Member for Torridge and West Devon (Mr. Burnett)—given that there was no commitment and no expectation in respect of time.

I think that we have flushed out the Government's true belief and intent. Unfortunately, they are not matched by what I believe were the intended consequences of the words that the Chancellor used. It is incumbent on us to hold the Government to account

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on that basis, so I ask my hon. Friends and all those in the House who believe that the future of bingo depends on an equal competitive position in respect of other forms of gaming, as was intended and as was the price for moving to gross profits tax, to join me in the Lobby to support the amendment.

Question put, That the amendment be made:—

The House divided: Ayes 185, Noes 304.

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