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Standing Committee B
Tuesday 30 November 2004
(Morning)
[Mr. Roger Gale in the Chair]
9.30 am
The Chairman: Good morning, ladies and gentlemen. Welcome to the first sitting of the new Session. Housekeeping arrangements and the usual rules will apply, but before we resume I wish to point out that the Bill has been reprinted, as amended by our discussions in Committee in the previous Session. Some page and line numbers have been changed, so it might be convenient for hon. Members to avail themselves of copies of the reprint, otherwise there might be a little confusion. Clause 33
Territorial application
Question proposed, That the clause stand part of the Bill.
Mr. Malcolm Moss (North-East Cambridgeshire) (Con): The clause relates to the territorial application of remote gambling. At the 11th hour, those involved in offshore remote gambling are saying that there are problems with the clause and that things depend on our definition of equipment. At present, many offshore remote gambling institutions have their remote servers offshore, although they run the business from this country, as a result of which their management teams, offices, administration and banking facilities are here. If the clause catches all the operations—an all-in or all-out situation—the institutions say that they will probably move their whole operation offshore, in which case jobs and facilities will be lost here.
In the uncertain period before the Bill kicks in as an Act, there is a big question mark, especially in relation to the taxation regime, over whether the institutions should come in or stay out. Until the institutions know that, they are not willing to make firm decisions and, to avoid a remote gambling licence kicking in during the intervening period, they might move everything offshore.
We must consider what the Government mean by subsection (4)(a) to (d). Paragraph (d), for example, says:
''to accept payment in respect of gambling''.
Most internet gambling is carried out through banking systems onshore in this country, and the Government seem to be suggesting that everything related to the businesses would trigger the need for a licence. It would be helpful to have on the record what the Government intend by the provision and to know whether they have had discussions with the organisations involved, such as Sporting Bet and
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others. We want matters dealt with in a sensible and pragmatic way to ensure that we retain at least some facilities and jobs, whether or not the final decision is to operate onshore or offshore.
I understand that, in other countries, the location of the remote server—the computer—is the key, and not the ancillary activities that may be part of the overall operation. Will the Minister explain the Government's thinking? Have they had discussions about the matter and are they aware of the concerns that have been expressed by that section of the industry? Do they intend to put such matters right in the Bill or leave them to be dealt with under the guidelines of the gambling commission at a later date?
Mr. Richard Page (South-West Hertfordshire) (Con): In view of the fallout of my remarks during a previous sitting, I shall be more circumspect today.
The Minister will remember that one reason why I firmly support the general principle of the Bill is that technology has moved on. Life has become much more exciting and, if we do not have proper gambling legislation to regulate the new technologies, we will not only be in several difficulties in respect of the moral and financial aspects of gambling, but drive the operators and their businesses offshore. So, I support my hon. Friend. This clause should be read in conjunction with clause 84(2).
We must understand that, because of the way in which the technology has developed, the legislation that we produce will almost inevitably always be behind the curve; the technology will be there, and we shall have to try to license and regulate it. Unless we get it right, there is a danger that people will take their business elsewhere. My hon. Friend mentioned the location of banking facilities, and if they are not in one place, there is no reason why the management systems will not follow them.
The mobility of interactive and internet activities is an aspect of internationality that is not, I think, fully understood. Australia is desperately trying to keep out a certain internet betting exchange, but as night follows days, it will not succeed. Those in Australia who want to use such betting exchanges will inevitably achieve their aim in some shape of form. The Australian authorities must simply try to ensure that exchanges are run as well as possible under their control and their regulations, and that they are not located in some other country.
I would be grateful if the Minister fleshed out as far as possible what the clause will mean. My hon. Friend mentioned the regulatory and tax regimes, which must be set at an appropriate level so that companies—obviously, this includes British companies—will be interested in locating their offshore activities in the UK. That would bring with it the advantages that we discussed, such as inward investment, job creation and new revenue for the Treasury. Indeed, I understand that given the way things are going, the Treasury desperately needs more money to fund its programme for the future.
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I therefore look forward to the Minister's comments and particularly to his assuring the companies that will be looking at banking regimes and at where to locate their headquarters.
Mr. Nick Hawkins (Surrey Heath) (Con): I want to add briefly to the comments by my hon. Friends the Members for North-East Cambridgeshire (Mr. Moss) and for South-West Hertfordshire (Mr. Page). My concern is that companies should be able to rely on whatever the Minister says on behalf of Her Majesty's Government about the views of Her Majesty's Treasury. I always suspect—as I did throughout the process that led up to the Bill and to this Committee—that the Treasury is working the Department for Culture, Media and Sport by remote control. We all know that the Treasury is the most powerful Department, whichever party is in power. The Government originally wanted a free-for-all for these casinos because the Treasury's eyes had lit up at the prospect of lots of extra tax, but they were forced into their humiliating retreat part way through this Committee's deliberations.
Although that is history, we still need to be sure that companies will be able to rely on the Minister's words today as an absolutely cast-iron guarantee that the Chancellor will not come along later to change the rules and change the territorial basis on which companies' tax treatment and operations are treated. I therefore make it absolutely clear that what the Minister is about to say must be written in stone, so that the Chancellor, in his pre-Budget statement in a few days' time, or in the next Budget, will not suddenly change the basis of what we are debating today.
The Minister for Sport and Tourism (Mr. Richard Caborn): I say to the hon. Member for Surrey Heath (Mr. Hawkins) that the standard line of the Treasury, whatever Government are in power, is that tax and other matters are always kept under review. The hon. Gentleman will get that standard answer from any Treasury of any Government.
Clause 33 establishes the territorial scope of clause 30, and draws a distinction between facilities for remote gambling and facilities for non-remote gambling, which is sometimes better known as ''bricks and mortar'' gambling. As far as the latter is concerned, the clause establishes that if every action a person took in providing a facility for gambling were taken outside Great Britain, no offence could be committed. However, if any such thing were done here, the system of regulation set out in the Bill would apply.
The position will be similar on remote gambling. We do not seek to regulate gambling operations that are run wholly offshore, but if any part of the remote gambling equipment were located here, the full system of regulation would apply. We do not want a company to establish some aspects of its operation here, and some abroad, and to succeed in falling between the two regulatory stools.
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The clause provides a definition of remote gambling equipment for those purposes. That definition makes it clear that genuine internet cafes, for example, would not need a gambling commission operating licence just because their customers used their terminals to gamble on offshore websites. We would rather that customers who decided to gamble remotely used well regulated British websites, but if they decided to do otherwise, there should be no penalty.
The hon. Member for North-East Cambridgeshire inquired whether we are keeping the issue under review; the answer is yes. We are aware of the issues that he raised and are considering whether further changes are needed. However, we need to make sure that the key gambling equipment is properly regulated.
Mr. Moss: That is very helpful. I am sure that those involved in the industry will be heartened by the Minister's comment that the issue is under review and that changes may be needed in the future. He has mentioned the word ''equipment'' two or three times; what does he mean by equipment? What is the Government's definition of the word in relation to remote gambling? Would such equipment be just a server, or the computer equipment used to register people online or process their payments? That is the key: what does ''equipment'' really stand for?
Mr. Caborn: To complete what I was saying, we are in discussions with the trade associations and, if there are to be changes, we hope to bring them back. Because it is important also to ensure that users are properly paid if they win, and that the customer register is sound and ensures that children are prevented from playing, limiting regulations to one piece of computer equipment may not be good enough.
To be absolutely clear, I shall write to the hon. Gentleman with our exact definition of equipment. That is important, and we shall try to get it on the record in a better form than I have just presented.
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