Gambling Bill

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The Minister for Sport and Tourism (Mr. Richard Caborn): Let me put the hon. Gentleman's remarks in the context of what we are asking the Committee to accept now and what the House was saying to us.

Let me deal first with the notion of limiting the number of regional casinos to eight—or, indeed to four, as would have happened had we accepted the official Opposition's amendment. All the evidence suggests that the demand is there. A lot of figures were bandied about in the trade, but there would probably have been between 20 and 30 regional casinos. Those casinos would have had 1,250 machines each. If we limited the number of regional casinos to eight and there was a market demand for 20 to 30 such casinos, there would be an unmet need. That is what the market was saying.

If we said that that need was going to be met and left the large and small casinos to the market, it would not be the case that the small casinos we have now, of which there are 136, would be anything like even the small casinos that will exist under the Bill. We are talking about eight or, indeed, 15 times—

The Chairman: Order. It is the job of the Chair to try to facilitate the debate. I was working under the assumption that the Minister was going to offer information to the Committee. I cannot allow him to make a speech at this stage because the hon. Member for Maldon and East Chelmsford (Mr. Whittingdale) has the floor.

Mr. Caborn: May I finish?

The Chairman: Briefly.

Mr. Caborn: I will be brief. I wanted to point out to the Committee that the 136 existing small casinos would not be the same as the eight small casinos and, therefore, that to say we will be judging the pilot on 150
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such casinos would be misleading and would not be a response to the concerns expressed on Second Reading.

Mr. Whittingdale: All the people I have spoken to from the industry—overseas investors and people from the UK industry—say that the concept of a regional casino is entirely different to that of a large or small casino. It is based on 20,000 people going through the door every week. Regional casinos will attract people who have never contemplated going to a casino before. They will go there because it offers all sorts of other attractions—restaurants, swimming pools, theatres and so on. It will be a new leisure experience. That is something that will not be offered by the other casinos. That is the business model of regional casinos and it is why investors believe that they will attract a new demand that does not at present exist in the UK. That is why investors are willing to invest such enormous sums in regional casinos. So, to say that because there are not going to be 20 regional casinos—there are going to be only eight—all the people who would have gone to the 20 regional casinos are going to want to go to large or small casinos is simply not right. It flies in the face of the business models that are being suggested for regional casinos.

It is interesting to note that all the overseas operators—MGM, Las Vegas Sands and other big international operators—have shown no interest in investing in large or small casinos. They do not meet their business model. Their business is large, leisure destination resort casinos, and that is an entirely different concept. I do not accept that there is a danger of a huge explosion in the number of large and small casinos as a result of imposing a cap on regional casinos.

2.45 pm

Even if there were such a danger, the Government have repeatedly said that the measures in the Bill were designed to prevent proliferation. The Secretary of State clearly said that economic measures through the imposition of a minimum floor requirement would restrict the number and only a certain number would be economically viable. The industry told us that there is demand in this country for 200 at most. The Government are proposing 24 new ones on top of the 137, so this would perhaps put the number up to 40 or 50 at most, and, clearly, those are not large or small. I simply do not accept that the Government had to impose two additional caps in order to avoid a massive proliferation.

Mr. Kevan Jones (North Durham) (Lab): Does the hon. Gentleman agree that, under existing planning law, the Government could have limited the number of large and small casinos by calling in planning applications and opposing casinos at the local level?

Mr. Whittingdale: The hon. Gentleman touches on a point that I was about to come to. I entirely agree with him. Other mechanisms are available that would allow local authorities to decide whether they felt that
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a casino was appropriate or would allow the Government to take a national view. We would not have been required to impose an arbitrary limit.

To decide then to pick eight small and eight large simply because we had decided to pick eight regional casinos seems utterly bizarre. A regional casino requires an investment of £100 million to £150 million or more—there will be only a small number of investments at that scale—whereas the investment of £6 million for a small casino is probably equivalent to building a brand-new Tesco. There is likely to be a huge potential demand, yet the Government are allowing only eight across the whole country. It is difficult to imagine what criteria could possibly be used to decide which eight local authorities will win the prize of being allowed to offer the opportunity to build a casino.

The imposition of a second, additional cap is crude, arbitrary and unjust, and we will certainly want to consider alternative methods—perhaps economic controls or the planning system—of strengthening the ability of local authorities to determine whether they wish to allow casino development. The Minister offers them a nuclear option of allowing none at all, but perhaps there should be greater scope for them to decide whether a small but not a large was appropriate. The arbitrary cap will have an enormously damaging effect on the existing industry, and flies in the face of everything that the Government have said the Bill is trying to achieve.

I wish to examine a few specific concerns about the Government's suggestions as to how the process will work. First, I hope that the Minister can tell us a little more about the criteria that will be applied in determining which areas are chosen for development. As he said this morning, plans for the development of casinos are far advanced in several areas. Obviously, Blackpool is one, and the hon. Member for Blackpool, North and Fleetwood (Mrs. Humble) and my hon. Friend the Member for Surrey Heath (Mr. Hawkins), who used to represent Blackpool, spoke about it. But there are many others. We know about Caesars in Wembley and the football clubs up and down the country. The Minister himself said that almost every premiership club was considering the development of a casino or had incorporated one into its plans. One suspects that almost all of them will now be severely disappointed. The Minister said that they should not have presumed that the Bill would be passed, as legislation is always subject to parliamentary approval, but the Government had given them a firm indication that that would be the case. It would have required foresight beyond that of anyone in this Committee to have predicted that the Government would suddenly adopt this provision at the very last minute and, as a result, torpedo the investment plans of football clubs and others in many areas of the country.

My other point, which is of real concern, is the time scale that is being imposed for the process to be undertaken. In his initial statement, the Minister said that the advisory panel would start its consideration during 2006. That is considerably more than a year
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away. The Government seem to be doing their best to get the Bill on the statute book by the end of March, presumably before a general election, but there will then be a delay of more than a year before the advisory panel starts to work. We have been told that it will then not complete its work before the end of 2006. No operator will be able to start making firm plans until they know which areas have been chosen. As a result, the earliest that a regional casino is likely to be up and running and producing a return on investment is around 2009. That seems an extraordinary time scale. One international operator has already told me that if that is the time scale, it will abandon its plans to come to this country and go to a country where it will feel rather more welcome than it has felt here to date.

The time scale is unjustifiable. How can it possibly take that amount of time simply to identify the areas? A simpler way might be to say that there should be one per region, which would cut out the necessity for the advisory panel. The existing time frame may have the effect of preventing investment and may deter many of those who were previously looking to invest in this country.

The local authority of the hon. Member for Blackpool, North and Fleetwood has brought its concern to our attention. It stated:

    ''The Minister has stated that an announcement is unlikely before the end of 2006; it is only at this stage that the specified licensing authorities will be able to engage with potential operators and enter into a competitive procurement process. This will be followed by the lengthy scheme development, land assembly and construction processes. This could well project casino openings into the next decade and this should be avoided.''

Will the Minister consider whether there is some way in which the process could be speeded up? There is a real danger that on the present time scale it will not take place at all.

My second concern is that in determining the locations for the eight regional casinos, the major consideration clearly will be the regeneration benefits that they offer. That has been the driver behind much of the Bill. There is no doubt that an investment of the scale £150 million or more will provide a local economy with an enormous boost in job creation, regeneration and development. It is easier to judge competing applications in terms of regeneration benefits when discussing investment on that scale. However, the regeneration benefits of small casinos will not be significant, so what different criteria will be taken into account to decide where small and large casinos will be? It seems that the advisory panel will pick winners out of a hat because the Minister has given no indication of the primary considerations in deciding whether a particular local authority should be allowed to develop a small or large casino.

I would like the Minister to confirm another point. He will recall that we have always argued that regional casinos are most appropriately located in destination resorts and that they should not be located in urban centres. Placing them away from centres of population in places where people must make a conscious decision to visit them will be one means of avoiding a significant increase in problem gambling.

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I hope that he will say that one of the major considerations in the choice of location of regional casinos will not only be that of regeneration benefit, but the fact that they meet the original concept of destination resort casinos, which was the title of the developments until the Government dropped it and called them regional casinos. I hope that that, too, will be taken into account in the planning guidance.

Of enormous concern to the United Kingdom industry is the effect of the Government's proposals on the existing estate; the 136 casinos that are already up and running in the country. The Minister tried to explain in his opening remarks why the Government have decided that a wholly different regime will apply to existing casinos from that which will apply to new casinos. He talked about the need for a small number of new casinos in order to assess the impact on problem gambling. The threat from problem gambling will come from the new concept of category A machines and already plenty of evidence shows that the existing estate has not led to significant increases.

What the Government are proposing for the changes that will be allowed is small compared with the effect of the introduction of regional casinos. When it comes to deciding where the new casinos should be allowed, can the Minister say whether it will be presumed that they will not be located in close proximity to an existing casino? Clearly, if a new casino is allowed and operates under the new regime close to an existing casino, it will almost completely undermine the viability of that casino. To avoid such a situation, perhaps the right hon. Gentleman will say that the 24 casinos should not in general be allowed to be developed close to existing casinos.

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Prepared 11 January 2005