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Public Bill Committee Debates

Draft Categories of Gaming Machine Regulations 2007, Draft Gambling Act 2005 (Operating Licence Conditions) Regulations 2007 and Draft Gambling (Lottery Machine Interval) Order 2007

The Committee consisted of the following Members:

Chairman: Mr. Martyn Jones
Banks, Gordon (Ochil and South Perthshire) (Lab)
Butler, Ms Dawn (Brent, South) (Lab)
Coffey, Ann (Stockport) (Lab)
Devine, Mr. Jim (Livingston) (Lab)
Engel, Natascha (North-East Derbyshire) (Lab)
Foster, Mr. Don (Bath) (LD)
Greenway, Mr. John (Ryedale) (Con)
Lancaster, Mr. Mark (North-East Milton Keynes) (Con)
Marsden, Mr. Gordon (Blackpool, South) (Lab)
Milton, Anne (Guildford) (Con)
Pelling, Mr. Andrew (Croydon, Central) (Con)
Penrose, John (Weston-super-Mare) (Con)
Prosser, Gwyn (Dover) (Lab)
Stringer, Graham (Manchester, Blackley) (Lab)
Sutcliffe, Mr. Gerry (Parliamentary Under-Secretary of State for Culture, Media and Sport)
Ward, Claire (Lord Commissioner of Her Majesty's Treasury)
Younger-Ross, Richard (Teignbridge) (LD)
Hannah Weston, Committee Clerk
† attended the Committee

Fourth Delegated Legislation Committee

Thursday 5 July 2007

[Mr. Martyn Jones in the Chair]

Draft Categories of Gaming Machine Regulations 2007, Draft Gambling Act 2005 (Operating Licence Conditions) Regulations 2007 and Draft Gambling (Lottery Machine Interval) Order 2007

2.49 pm
The Parliamentary Under-Secretary of State for Culture, Media and Sport (Mr. Gerry Sutcliffe): I beg to move,
That the Committee has considered the draft Categories of Gaming Machine Regulations 2007.
The Chairman: With this it will be convenient to consider the draft Gambling Act 2005 (Operating Licence Conditions) Regulations 2007 and the draft Gambling (Lottery Machine Interval) Order 2007.
Mr. Sutcliffe: Good afternoon to you and to the Committee, Mr. Jones. I am delighted to have the opportunity to speak to the regulations. I am also delighted to see the wide range of experience represented in the Committee; my fast learning curve in the gambling and gaming industry is almost complete, but I know that there are many people here with expertise, so I shall look forward to their support during the debate.
These three important statutory instruments are among a number that my Department is publishing in preparation for the implementation of the Gambling Act 2005 from 1 September 2007. We are making good progress, as the draft measures take us a step closer to establishing a comprehensive new regulatory regime for the gambling industry that, for the first time, places the protection of children and other vulnerable people at its heart, while ensuring that responsible operators have the flexibility to remain profitable. The instruments have been drafted with the licensing objectives of the Gambling Act in mind. They are worth repeating; they are to keep gambling crime-free; to ensure that gambling is conducted in a fair and open way; and to protect children and the vulnerable. The three statutory instruments deal with gaming machines, lottery machines and operating licence conditions. All three have over the past year been the subject of consultation with the statutory regulator, the Gambling Commission, and key stakeholders from industry and organisations with an interest in problem gambling.
First, I will deal with the categories of gaming machine. The Categories of Gaming Machine Regulations 2007 define four classes of gaming machine, to be known as categories A, B, C and D. As required by the Act, the regulations also subdivide category B machines into five sub-categories and make it clear, where there is a reference to a category B machine in the Act, to which of those categories it shall be treated as referring. New categories are defined in the draft regulations primarily by the maximum stake and prize that they may offer. That approach has worked well in the past and is well understood in the industry, and we believe that it continues to form a sound basis for future policy.
The proposed stake and prize levels take their cue from the hierarchy of gaming machines suggested by the Act. It determines which type of premises may make the different categories of gaming machine available for use, depending on the nature and degree of regulation on the premises, whether the premises are established primarily for gambling, and the age of potential visitors. Broadly speaking, the proposed stake and prize limits replicate those proposed by the Government alongside the draft Gambling Bill in November 2004, which have already been implemented over the last two years under existing legislation. The Government have made a commitment to review the stake and prize levels proposed for 2009. Category A machines with unlimited stakes and prizes will be allowed only in one regional casino permitted by the Act. Those machines are new to the country and we think that it is right to take a cautious approach to their introduction.
Mr. Don Foster (Bath) (LD): The Minister is right to say that the Government want to adopt a cautious approach, but they are adopting a very cautious one to the opening of the regional casino. Will he give an indication of when we will hear something more about that matter?
Mr. Sutcliffe: I am grateful for the hon. Member’s intervention—I think. He will be aware of the situation regarding the outcome of votes in the other place. I do not think that there is enough time from now until the recess to make any further decisions at this stage. The Department, the Secretary of State and I want to reflect on what has happened, and consult more widely with people about the implications.
The Chairman: Order. That is not part of the regulations that we are debating.
Mr. Sutcliffe: Thank you for keeping me in order, Mr. Jones.
I was discussing the situation in relation to category A machines. The previous Secretary of State, my right hon. Friend the Member for Dulwich and West Norwood (Tessa Jowell), made a clear commitment that we would not consider allowing other casinos to offer those machines until a proper assessment of their impact on problem gambling, based on the experience in the regional casino, had been undertaken. That remains our firm intention.
Category C machines, which will be permitted in pubs and the adults-only areas of seaside arcades, will have a maximum stake and prize of 50p and £35 respectively. Category D machines will be the only machines that children are permitted to play. They include “crane grabs” and “penny falls”, which, it is generally accepted, cause no harm to children, as well as the lowest stake and prize fruit machines commonly found at seaside arcades and travelling fairs. Because children are permitted to play those machines, we propose to reduce the maximum stake on all cash category D machines from the current 30p to 10p from 1 September.
I understand the concerns of hon. Members of all parties about the impact of allowing children to play gaming machines of any sort. This was subject to considerable debate during the passage of the Gambling Act, and the Government made it clear that they did not believe there was sufficient evidence to justify a ban at this stage. We will, however, continue to monitor the issue very carefully.
Mr. Gordon Marsden (Blackpool, South) (Lab): My hon. Friend sets out the existing position very clearly. I think that the move to reduce the figure from 30p to 10p will be widely accepted, if not welcomed. It certainly reinforces the point made by many of us from seaside and coastal towns and elsewhere, that it is important to retain the principle that families can play these machines chiefly for the purposes of amusement and the elusive teddy bear.
Mr. Sutcliffe: I have taken my grandchildren to such arcades, and yes, those teddy bears are very elusive. My hon. Friend is right, and I am happy that he accepts what we are trying to achieve.
The Government have a reserve power to make it an offence for a child or a young person below a specified age to use a category D machine, and we will not hesitate to use it if the evidence justifies it. The regulations are just one component of a range of measures that we are putting in place to ensure that players of gaming machines are properly protected. For the first time, it will be a specific criminal offence to permit a child to use gaming machines, other than those in category D. We have already prevented any further application for gaming machines in takeaway food shops, taxi offices and other non-gambling premises. That will see the removal of those opportunities for ambient gambling in some 6,000 premises by 2009.
Those regulations will be complemented by the Gambling Commission’s technical standards for manufacture, which will limit speed of play and ensure that machines offered in this country meet the strictest international standards. The commission will also ensure that all gambling operators have procedures and policies in place to ensure proper supervision of machines and to identify and support problem gamblers. Taken together, this will mean that we have one of the most robust regimes and systems of regulation for gaming machines anywhere in the world.
The Gambling Act’s definition of a gaming machine is deliberately wide. One exemption from the definition is made for machines that dispense lottery tickets or otherwise allow a person to enter a lottery. The order specifies the minimum amount of time that must lapse between the purchase of a lottery ticket and the announcement of the result by the machine, if that machine is to be exempted. If we did not impose that minimum time lag, there is a risk that operators would develop machines that enabled customers to enter a virtual lottery and which, to the player, would be all but indistinguishable from a gaming machine.
That is exactly what has happened under the existing legislation: manufacturers have developed lottery machines for members’ clubs that bear all the characteristics of gaming machines but have none of the protections while offering prizes of up to £2,000. Only gaming machines in casinos are permitted to offer prizes at such a level. That is an abuse, and the one-hour interval will ensure that it cannot happen again in future, while at the same time allowing charities and other good causes for the first time to raise more funds by selling tickets by machine.
Finally, while we make no apologies for forcing the removal of lottery machines from clubs, the Government recognise that those machines have offered an important source of revenue for working men’s clubs and miners’ welfare institutes. It was to assist clubs in that position that we proposed the introduction, with their support, the new category B3A gaming machines included in the Categories of Gaming Machine Regulations 2007.
The Gambling Act 2005 (Operating Licence Conditions) Regulations 2007 impose mandatory operating licensing conditions on casinos and bingo halls. In the case of casinos, the regulations deal with another form of equipment that is exempted from the gaming machine definition: wholly automated gaming tables. The regulations require that a minimum of four player positions be offered at each wholly automated gaming table.
Wholly automated roulette is typical of that sort of game: a real roulette wheel spins automatically at regular intervals and is connected to electronic terminals on which customers place their stakes. Wholly automated gaming tables were granted an exemption from the general gaming machine definition included in the Gambling Act because the Government accepted that the equipment, which may be provided only in casinos, merely provided an automated means of playing a real casino game. Those games will be regulated along broadly similar lines to the real version of the game: they will not be subject to any statutory stake and prize limits; the equipment must comply with strict technical specifications that the Gambling Commission will set; and operators must have in place strict monitoring policies and procedures to ensure that customers are protected.
The proposal to require a minimum number of player positions is needed to prevent the development of wholly automated casino games for very few people, which would be indistinguishable from unlimited stake and prize gaming machines. That would risk undermining the justification for exempting the equipment from gaming machine definitions in the first place. For bingo halls, the regulations would impose monetary limits on any prize gaming they wished to offer, unless it was prize bingo. Prize bingo is not subject to the controls because bingo halls can offer all types of bingo under the new Act, without monetary limits. Therefore, the regulations concern only prize games of other sorts played on bingo premises.
Prize gaming is one of the lesser-known and lesser-used permissions under the Act. It was originally permitted in bingo halls as a low-stake form of amusement within what is known in the industry as “main game” bingo. The Government are determined that that form of gaming should remain at a low level. The strict monetary limits in the current legislation have worked well to control any harmful effects, and the proposed new limits will ensure that those safeguards are maintained.
The Government listened carefully during consultation to Bingo Association representations that some differential treatment may be possible for adult-only premises offering prize gaming, without prejudicing the intention that prize gaming should remain at a low level. We therefore decided to allow bingo halls, but strictly only those that do not allow under-18s to enter the premises, to offer a maximum cash prize of £50, which will double the level currently permitted. Separate regulations will impose limits on prize gaming in arcades and other venues permitted to offer that form of gaming. I therefore commend the measures to the House.
3.3 pm
Mr. John Greenway (Ryedale) (Con): First, may I formally welcome the Minister to his position? I did not make that comment in yesterday’s debate in Westminster Hall because time was short, although I have done so privately. It is fortunate that he has come into the position at the end of a long process, and much of the argument, some of which has been extremely heated, has largely passed. The purpose of the statutory instruments is to put in place the final detail of some of the regulatory arrangements in the Act.
As the Committee will know, I chaired the Joint Scrutiny Committee, which looked at all of this before the normal parliamentary process. Before that, I was for several years the shadow spokesman both on Home Affairs and Culture, Media and Sport, and I considered the Budd review and the whole process. I sense that we are coming to the end—thank goodness!—and that when we get to 1 September the Act will be in place and we will therefore need to see how things turn out. For that reason, I think it was right for the Act to be structured to enable such regulations and statutory instruments.
We want the legislation to be time proof so that it can deal with technological change. This is the first review for 40 years. However, in revisiting and, on occasions, increasing the limits of stakes and prizes, we must keep in mind the impact on the consumer—particularly vulnerable people and children—should they take part in gambling activity, albeit illegally.
I remind the Committee that I am the chairman of the Responsibility in Gambling Trust, and we think it right to take a cautious approach when there is doubt. In September, the Gambling Commission will publish the outcome of its prevalence study and none of us knows what it will report. My instinct is that it will report an increase in the prevalence of gambling and in the number of people with a gambling addiction. Because of that, we need constantly to review the various limits, which is what the statutory instrument mechanism allows.
When considering the specifics of the provisions, we should keep in mind the concerns of the industry. Fixed-odds betting terminals, of which there are 25,000 in betting shops, are hugely profitable for bookmakers and hugely popular with punters. The jury is out on whether they contribute to gambling addiction in a harmful way, but they allow a stake and prize limit not available in comparable gambling premises. There will come a point when the matter of whether there will be a reduction is laid to bed once and for all. The betting shop industry needs certainty, and that question cannot be held over its head for ever. The limits must be kept under review as time passes anyway.
There is still a great deal of resentment from casinos that machine numbers in the existing estates have not been allowed to expand. That resentment is even greater, because the 17 other casinos under development are currently stalled. This is the only opportunity I have to point out to the Minister that if he decides to reconvene the Joint Committee, pretty well all of its members are willing and able to serve, if both Houses wish it. We would need to appoint two more people, because sadly one member, Tony Banks, has died and another, Richard Page, is no longer here. However, the Minister might want to do that.
On the number of positions on wholly automated gaming machines, it was sensible not to insist on a maximum limit in the order. The minimum is not popular with all the casino industry, but on the whole it makes sense. I agree with the Minister about the importance of ensuring that automated gaming machines are not pseudo-gaming machines, but automated machines, whereby people can take part in casino-style gaming because there is no limits on stakes and prizes. Given the pressure of what I have described, one can understand that dynamic.
I hope that the Minister’s door will be open to people from the bingo industry. They are facing very tough and challenging times. The smoking ban will be a real problem for them, and it is understandable that they are disappointed about the decision on prize gaming limits. Bingo halls are effectively members’ clubs, and so it is equally understandable that they are looking for innovative and imaginative ways of bringing what they offer their members up to date. We should keep it in mind that they have some real concerns.
Mr. Foster: Does the hon. Gentleman agree that if we accept these provisions, which go wholly against what the bingo industry wants, particularly bearing in mind the difficult times that it faces, it would be appropriate for the Government at least to enter into discussions with the industry about having to pay VAT on participation fees?
Mr. Greenway: The hon. Gentleman, who is a good friend, tempts me to stray into a territory that is not within the scope of these measures. The bingo industry’s concern about the details in these provisions is as nothing compared with its dissatisfaction with the fact that VAT will be charged on participation fees. I think that the Minister has already grasped that point.
I will touch on lotteries. I remind the Committee that, for my sins, in the shoes of the late Stan Orme, I am the honorary president of the Lotteries Council, the members of which are mostly charities. I think that to allow automated, electronically printed tickets is a huge step forward that has been needed for a long time. That is a big plus.
The Minister knows that the one-hour interval is not welcome. I see his point entirely and understand the view that his officials have come to in the advice that they have given him about the need to distinguish lottery machines from normal gaming machines, particularly where a game could be a back-door way of getting around limits, but on the other hand, automated lottery machines can equally be said to be in competition with scratchcards, for which there are no limits—a good deal more research is probably needed on the harm that may be caused.
My concluding comment—this is probably the last time that we will speak in public after a very long legislative process—is that if one talks to people in the media or the general public about what they think the Gambling Act 2005 is about, they say that it is about deregulation and allowing an industry rampant opportunities for new gambling products, but my judgment is that, in the end, that is not what it is about. This legislative process is about protecting consumers. The Act and this secondary legislation are characterised by the protection of the consumer and vulnerable adults. Those are the key objectives of the Act.
My very last comment to the Minister is to encourage him, in his new job, to press forward and argue more forcefully for the consumer interest in the legislation. Consumers will be better off from 1 September than they are now, and the Government should put that m0essage across very strongly.
3.13 pm
Let me address a few issues in no particular order. I agree with the hon. Member for Ryedale that lottery machines are a welcome addition to what is on offer to those who seek to raise money for charities and other good causes. Nevertheless, given the limits on prize money and stakes, there is serious concern about the possibility that such machines could contribute to the growth of problem gambling. The Government are right to impose the one-hour limit. I welcome that, not least because all the research shows that such machines cause a particular problem through repeat play, when people start to chase losses. I shall return to that point shortly.
I am somewhat confused and a bit concerned about the exemption for identical machines located in what I shall call working men’s clubs. The new category, B3A, enables such machines, admittedly with lower pay-out levels, to operate without that one-hour interval. The Minister must explain to the Committee why a one-hour limit between play and the player being told whether they have won can be imposed in commercial clubs and so on, but not in working men’s clubs. If the key concern is repetition of play and the impact that that can have on the development of problem gambling, I fail to understand the Government’s rationale. I know that the Minister will tell me that the difference is in the amount of prize money, but the research evidence clearly shows that repetition of play and the chasing of losses are key, not the size of the prize. Therefore, I should be grateful for an explanation of that difference in treatment.
We know from the explanatory notes that a number of the orders have to be referred to the European Commission for agreement. Although we are only now, in July, debating whether to approve these orders, I note with interest that the Department notified the European Commission on 24 May. It was obviously very confident as to the outcome of our deliberations, but it seems to me it jumped the gun. We could be charitable to the Minister and say that that was sensible advance planning to speed up the process, given that his Department has been so woefully slow. However, the response from the European Commission is anticipated on 27 August. So far as I am aware, that is only a few days away from 1 September, when the legislation is due to come into force. Therefore, will the Minister tell me how the Government will respond if the European Commission says no or has reservations, bearing in mind that it will then have a further three months in which to determine what will happen? The Government will surely have prepared a response for the European Commission in the event that it is not happy. What will be the effect on the implementation of the legislation?
I also note that the Minister said that the lottery machines will enable a wide range of charities and other good causes to raise money. He is right, of course, and I have already said that I welcome that. Will the Minister therefore explain why the national lottery, one of the key providers of funds to charities and other good causes, will be not be allowed to have such machines? I note with interest that a trial of the machines for the national lottery was planned, yet the Department decided to prevent it from going ahead. Will the Minister explain the rationale for not including machines for the national lottery in the categorisations that we are discussing?
At the beginning, I expressed my concern about the delay in bringing forward statutory instruments in relation to various aspects of the implementation of the Gambling Act. Today, we are debating the categories of machines, so only today will we discover whether Parliament will approve the Government’s proposals. When Parliament approves them, as I imagine that it will, it will be up to the Gambling Commission to do the work—no doubt it is already doing it—on the technical specifications that will be needed to meet the requirements of the category definitions. That means that at some point there will have to be an order about technical standards flowing from this statutory instrument. When I wrote to the Department, I received a letter saying that that order will not be presented to Parliament until August, when, as the Minister is well aware, Parliament will not be sitting.
Mr. Sutcliffe: So far.
Mr. Foster: Indeed. I hope that we will not be brought back for that particular reason. It might prove necessary, however, because it could prove to be a significant issue. If the technical standards are not to be approved until August, when we will not be here, I presume that they will be put in place anyway and that we will have a retrospective opportunity to debate them, which will create huge uncertainty in the industry.
More importantly, representatives of the industry have told me that a long period of time is necessary to reconfigure machines to meet the various requirements that the Minister has mentioned, such as changes to the limits on the speed of play and on sums that can be deposited and changes to the labelling of the machines. Those things all take time. I understand that to devise and develop a new machine from scratch to meet the requirements of the new categories would take a minimum of six months. To make changes to existing machines so that they meet the technical requirements flowing from the new categories might take less than six months, but it would take more time than will be available between August and 1 September.
There is a danger that, of the 300,000 machine throughout the country, a number will not be able to operate, because they do not meet the specifications. Such machines will therefore be unavailable for use for up to six months. What are the Government’s plans in respect of that problem? Due to the delay in this statutory instrument and those that flow from it, the industry is in a huge quandary about what will happen. It has been suggested that the implementation of the requirement to meet the category definitions in the statutory instruments could be delayed until the end of November, for example. That is one possible solution; another is for the industry to have some freedom to continue using the machines in the interim period. I would be grateful to hear from the Minister. He must be well aware of the problem, because I wrote to the Department about it in April. I am sure that he has a solution, and I would be delighted to hear it.
The Minister has made exactly the right decision about automated casino machines, as the hon. Member for Ryedale has said. Although I accept the hon. Gentleman’s point that the industry is not particularly happy about the minimum of four chairs around the machine, most operators already have that number anyway. The minimum meets what they already have, so it should not be too much of a burden for them. It is the right approach to distinguish such machines from other types.
The hon. Member for Ryedale is right about the bingo order. The big issue at the moment for the bingo industry, which is going through difficult circumstances—a number of bingo halls have already closed—is double taxation. The industry is being charged for VAT on participation, unlike any other form of gambling. Because that is a significant worry for the industry, it is therefore not too surprising that it has grave concerns about the prize limits that the order imposes. The Minister knows that it would like higher prize and stake limits.
As the hon. Member for Ryedale has said, people could operate at much higher levels with only a scratchcard, which anybody can get easily. Although I accept that VAT is the bigger issue, I have grave concerns whether the level is being set correctly in respect of bingo.
With those relatively few remarks, I look forward to the contribution from the hon. Member for Guildford and to the Minister’s response.
3.26 pm
Anne Milton (Guildford) (Con): I welcome the comments of my hon. Friend the Member for Ryedale and the hon. Member for Bath. The Minister and I are in the not dissimilar position of not having seen this legislation through all its stages. My hon. Friend and the hon. Member for Bath know a considerable amount about it and their contributions to this debate are useful. I hope that the Minister will take on board some of their comments, many of which have already been expressed to me by those involved in the industry.
I shall start with the categories of machines. I repeat my hon. Friend’s comments about the existing casino estate, which is an unresolved issue for the industry. The fact that the existing casinos were unable to convert to new style casinos continues to cause considerable resentment, because the existing casino estate feels that it has always operated responsibly. It allowed an opportunity for people who wanted to gamble to do so and did not throw it in our faces or unduly stimulate gambling. It feels let down by the fact that it cannot expand into the same markets.
I offer a word of caution to the Minister. My short experience in this role has demonstrated to me that the gaming industry is a powerful lobby. There are a large number of other groups out there to which I hope the Minister will give an equal ear. The whole of the Act needs to be kept under review. The Salvation Army, for instance, produced a report three years ago that examined whether people felt that they had sufficient opportunities to gamble. Some 93 per cent. of people said that they did. There is no doubt that, if the industry wants to make money out of gambling, it will have to stimulate some demand. It is possible that the British Casino Association would also advance that evidence. If the Minister could reassure us that he will give an equal ear to both the industry and the other groups that have voiced considerable concerns about the impact of the Act, that would be an important message for other groups to hear.
Moving on to the lottery machine intervals, there is some fascinating information available that one looks at and then one glazes over, particularly in respect of the categories of machines. I am sure that many officials in the Department also feel like that.
Mr. Greenway: No.
Anne Milton: My hon. Friend obviously feels that he has got the information there in his head, but as I say, it is quite interesting, when one gets into it—it really is.
I welcome the fact that the Government have listened to the working men’s clubs and the miners’ welfare institutions and created a new category of machine. There is a big difference from the gambler pumping in the pound coins in a large casino and not moving for 12 hours to somebody having a small flutter on the machine.
Mr. Marsden: The hon. Lady is making a very important point, which the Minister also touched on. She is saying that the gambling that takes place in a social context, in which many of the people know each other, is a very different kettle of fish from the traditional gambling that we are talking about. I also say gently, in respect of quoting the opinion polls that she mentioned, that this is one of the things that is sometimes misunderstood. The nature of the new gambling opportunities offered in the Act involve more social environments, such as restaurants and other facilities, and is very different from existing gambling. I wish that some of the groups with strong moral and other concerns recognised that distinction.
Anne Milton: Absolutely. The hon. Gentleman does not have to say things quietly and gently. He can say them noisily if he wants. He is right. I quoted the Salvation Army’s report, which said that 93 per cent. of people feel that they have enough opportunity to gamble. It is interesting to note that 73 per cent. of the population regularly gamble. When I look at that figure, I think to myself, “I do not gamble.”, but in fact, I do, because I have occasionally bought a lottery ticket. I note the sharp intake of breath when I said that I gambled. Most people do not think of buying a lottery ticket as gambling.
It is important to separate the two groups. Some of the clubs that I referred to play an important role in our communities. Generally, I welcome the fact that the Government have listened to those groups because they are struggling to survive. I do not think that we will be fully aware of their important social function until they disappear. The same could be said of the bingo halls.
Moving on to the last order, I was on the Select Committee on Health when we examined the possible ban on smoking in public places. I remember well the evidence that the Bingo Association gave. It said that there was no way that it could say anything other than that the ban on smoking in public places was a good idea. It supported the ban and was very grown-up in its attitude. It must have been aware what impact such a ban would have. For those on the Committee who are not aware what happened in bingo halls, let me explain. People played bingo. There was then an interval in which people had a cup of tea or coffee, they played the machines and they had a fag. The trouble is people cannot now have a fag. They go outside to have a fag and do not play the machines. That means a considerable loss of income for the bingo halls.
There is a tiny percentage of people who play too much bingo and get themselves into debt, but the problem is small. As with the working men’s clubs, the bingo halls play a valuable role in the community. There are not many left and people are very loyal to them. They are a social outlet and somewhere that people can go when they live alone. They help reduce social exclusion and isolation. In paragraph 7.8 of the explanatory notes, there is a huge range of views, as there is on all these orders, and all those to come. I have no doubt that we will continue to be lobbied, and that many different views will be expressed about what is being suggested.
The Government’s intention to keep an open mind about the regulations and the Act is important to ensuring that the Act does the two things that it was intended to do: protect children and vulnerable people, and ensure that problem gambling does not increase. The differentiation between adult-only premises and those that allow children is extremely important. Perhaps we should canvass the opinion of all MPs and see whether anyone can claim to have won one of those bears—[Laughter.] It appears that an unnamed member of this Committee, speaking from a sedentary position, has indeed won a bear. It is nice that that will be on the record.
I was brought up near the seaside. I remember going on to Brighton pier as a child with my family, and I have taken my own children there. Differentiating between mild and fairly harmless gambling and other gambling is extremely important.
We look forward to the Government’s response on the location of the eight small and medium casinos, although they are not the subject of these proposals. The Minister is new to his role and we give him a warm welcome; I hope he will remain open-minded.
That point demonstrates why we must be so open-minded about gambling and problem gambling. Testing the social and economic impact of the Act is important for those groups such as the Churches that have made a strong moral case for their views. It is vital that the Government’s research, which I look forward to, has the confidence of those organisations.
The Minister nodded when the hon. Member for Bath was talking about bingo halls and VAT, and I sincerely hope that he will look at that issue, too.
The Chairman: Minister, do not feel constrained to answer any questions about the placing of casinos and the timing thereof.
3.39 pm
Mr. Sutcliffe: Thank you for your protection, Sir John. I think I have set out the position in response to the hon. Member for Bath.
This has been a worthwhile debate. It was educational for me to hear hon. Members’ views on the proposals and on wider issues relating to the Act and I am grateful to them for the constructive way in which they put their points of view. I particularly want to express my thanks and those of my predecessor to the hon. Member for Ryedale for his work in the industry and as chair of the Responsibility in Gambling Trust. I look forward to going through those issues with him in greater detail.
Mr. Greenway: I advise my colleagues that they will shortly be receiving a letter from me outlining the progress we have made with RIGT. The information will be available to coincide with the rolling out of the Act in September.
Mr. Sutcliffe: I thank the hon. Gentleman for that announcement. I am sure that other hon. Members will be keen to hear what he has to say about it. I was also struck by what he said about looking at the measures with a view to protecting the interest of the consumer. As a former Minister with responsibility for consumer affairs in the DTI, I was at the forefront of looking at a range of issues from the consumer’s perspective, and I shall follow that in future discussions, even if we are coming to the end of our discussions about these measures.
The hon. Gentleman was right to point out the time scale of gambling legislation—it is more than 40 years since we lasted looked at such matters. It is important to move forward with the protections because of the change of environment and technology.
I was particularly struck by the intervention made by my hon. Friend the Member for Blackpool, North and Fleetwood. She spoke about the balance that needs to be struck on the issues when we address them. I understand the reasons the there are anti-gambling groups, but there must be an acceptance or acknowledgement of the framework in which we operate in our modern society.
I also pay tribute to my right hon. Friend the Member for Sheffield, Central (Mr. Caborn), who steered and developed the measures. The Committee will have much respect for his work.
I shall try to go through the points in the same constructive manner in which they were made. If I fail to answer any particular point now, I shall write to hon. Members. The hon. Member for Ryedale spoke about fixed odds betting terminals, and I agree with him that they are on probation. The Government will continue to monitor them closely, as we will do with all categories of machine. He asked about reconvening the Joint Committee to consider an issue that he does not want to talk about, but it is a possibility. We will consider that suggestion in the light of the Joint Committee’s excellent work. We might look to go down that route again, but I shall not make a firm commitment today.
The hon. Gentleman spoke about how the measure is enabling in nature, which is true. As I have said, we need to respond to technical developments and to new problems as they occur. As the hon. Member for Guildford has said, we can review the monetary limits on a regular basis, and we will review the stake and prize limits for gaming machines in 2009.
I have already spoken about the hon. Member for Ryedale and his work for the Responsibility in Gambling Trust, for which I am grateful. He spoke about how the limit for existing casinos should be kept at 20 machines, while new casinos have higher entitlements. I understand the industry’s concern, but the Government have doubled existing casinos’ entitlement from 10 to 20, and we believe that the higher entitlements should be limited to new casinos so that a proper assessment can be made in relation to problem gambling among other things.
The hon. Members for Ryedale, for Bath and for Guildford spoke about the problems of the bingo industry. I am well aware of the issue of the smoking ban, as are my hon. Friends.
Mr. Foster: On that point, the hon. Member for Guildford quite rightly raised the bingo industry’s concerns about the effect of the smoking ban and—crucially—pointed out that the industry supported the ban. In view of the Minister’s remarks, I hope that he will look sympathetically at the measures that are being developed by the bingo industry to find means by which people can play and smoke cigarettes immediately outside premises. Currently, there is a technical problem in that the involvement of machinery to enable that would be deemed a remote gambling machine, which would be subject to a different tax regime. I hope that the Minister will look at the issue sympathetically, and that he will discuss it with the industry.
Mr. Sutcliffe: I am grateful to the hon. Gentleman.
Mr. Jim Devine (Livingston) (Lab): I am grateful, having won a teddy bear. [ Laughter. ]
There is a large bingo hall in my constituency, which reported an initial drop in income and clientele after the smoking ban, but it is now reporting a substantial increase. I think the fact that bingo halls were very smoky areas put a lot of people off. The initial difficulties that were quite rightly identified are, in fact, unproven.
Mr. Sutcliffe: I am grateful for that intervention. Both interventions were about the future of bingo and what is happening to the industry. The Government recognise the importance of the role of bingo players in our communities. We all have bingo halls in our constituencies, and we know that about 3 million people play. Clearly, we are talking about a large sector of the population.
The safest way to approach the matter without giving commitments today is to say that I need to speak to the industry—as a new Minister, I am happy to do so—in order to understand its problems. I am well aware of the VAT issue. That is a matter for the Treasury, but again, I am happy to speak to the industry to find out what its difficulties will be in the near future. Hopefully, we can resolve some of the issues and understand the transitional problems. I am sure that my hon. Friend the Member for Livingston is right that there are ways to develop the issues.
The hon. Member for Bath chided the Government and the Department about the laying of orders in August. I understand that that is not outside our parliamentary processes, because orders can be laid in August. He will know that about 45 orders have been or will be laid to implement the Act, and there is tremendous pressure to get them correct, deal with the consultation and so on.
Mr. Foster: Will the Minister tell the Committee straight away how many orders remain to be presented between now and 1 September?
Mr. Sutcliffe: It is about 14, of which a small number, hopefully, will be laid in August. I give him that commitment.
The hon. Gentleman went on to talk about the European Union and notification. It is our view that the order is unlikely to prove controversial. It will primarily affect lottery ticket vending machines in clubs, which are not produced in great numbers compared with the total number of gaming machines available in the UK, and is unlikely to be of interest to other member states. We notified the European Commission at the end of May under the European technical standards directive.
Mr. Foster: The Minister suggests that because there are only a few machines, the European Commission will not worry about them. I am sure that he has seen the advertisements by people who are producing machines to meet the specification. I suspect that there will be large numbers of machines.
Mr. Sutcliffe: I was alluding to one reason why the Government do not think that the European Union will see it as a controversial issue, and why we should be okay in terms of the approval. The hon. Gentleman also asked about category B3A machines. It was a question of judgment about the machinery. We are concerned that clubs are effectively offering the kind of high-prize gaming permitted only in casinos. The new B3A category was developed through discussion and consultation with a variety of bodies.
Mr. Greenway: This is an important point for the Committee to grasp. It may be obvious, but I am not sure from our conversation that it is. As I understand it, the clubs will be allowed a B3A machine instead of a lottery-type machine with a one-hour interval, but that B3A machine will come within the total limit of three machines per club. It is likely that there will not be that many of them, because clubs will also want to keep their ordinary B4 machines.
Mr. Sutcliffe: I am entirely grateful to the hon. Gentleman for setting the record straight and helping me get my mind around exactly what the difference is.
We have discussed European notification. We see no reason for the European Commission to say no. It will obviously be a problem if it does, but from the soundings and advice that we have taken, we feel that that is unlikely. I hope that that reassures the Committee.
The hon. Member for Bath asked about the national lottery and the use of ticket terminals. The national lottery will not be regulated by the instruments generally, so we are considering the question separately with the National Lottery Commission to see what can be done. The important point that is concerning him is perhaps key to the whole matter. At the end of the day, we want to make sure that the industry is in a position to deal with matters in a spirit of fruitful consultation. The Government’s view on that is not quite the same as the hon. Gentleman’s, however. The overwhelming majority of machines will require little or no adjustment in order to comply from 1 September, and when adjustments are necessary, we will give industry the lead times to comply with section 240 regulations. If the industry has genuine concerns, it might be useful for officials to meet with industry representatives to ensure that we can sort out any real issues.
Mr. Foster: I am grateful to the Minister for his categorical statement that the Government will give a lead time to the industry. The implication is significant, and I am sure that he thought long and hard before using those words. Labelling might seem a relatively small task, but machines have to be labelled according to the categories that we are discussing. The industry estimates that the cost of that exercise alone will be something in the region of £3 million. The operation is not a small one, and the industry is being asked to undertake it in a very short space of time.
Mr. Sutcliffe: I want to make it clear what I am saying, so that there is no uncertainty. I believe that the overwhelming majority of machines will require little or no adjustment in order to comply by 1 September. If there is a problem, I am happy for the industry to explain it, and if we accept the severity of the problem, a lead time will be given for compliance with the section 240 regulations. I acknowledge that there has been a great deal of work between officials and the industry to try to achieve the best position that meets everyone’s requirements.
I am grateful for the comments of the hon. Member for Guildford in welcoming the regulations in general terms. It is important to keep the Act under review and to review what happens, particularly in relation to problem gambling. The first results of studies will be published in the autumn, and will provide us with benchmarks that we shall be able to consider.
I commend the orders to the Committee.
Question put and agreed to.
That the Committee has considered the draft Categories of Gaming Machine Regulations 2007.


That the Committee has considered the draft Gambling Act 2005 (Operating Licence Conditions) Regulations 2007.—[Mr. Sutcliffe.]


That the Committee has considered the draft Gambling (Lottery Machine Interval) Order 2007.—[Mr. Sutcliffe.]
Committee rose at seven minutes to Four o’clock.

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