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Justine Greening (Putney) (Con): I beg to move amendment No. 16, page 11, line 17, at end add—
‘(3) The amendment made by subsection (1) ceases to have effect on 1st April 2009 unless the Secretary of State has made regulations under the Gambling Act 2005 which permit up to one-fifth of the gaming machines in bingo halls and arcades to be Category B3 machines (as defined in regulations made under section 236 of that Act).’.
Amusement machine licence duty is important not only to the many small businesses that are involved in gaming arcades up and down the country, but, further up the supply chain, to the various manufacturers and companies that service gaming machines. It is also important to the Treasury. It raised around £208 million in tax revenue for the Treasury in the financial year 2006-07, according to the British Amusement Catering Trade Association. Indeed, the association estimates that the industry’s overall contribution through gaming arcades and the gaming machines that are also in bingo halls, for example, is even greater. The industry employs 26,000 people directly, so when employment taxes—for example, national insurance and PAYE—are included, the estimated total tax revenue from amusement arcades is a substantial £600 million.
Against that backdrop, the industry described the further increase in this year’s Budget in amusement machine licence duty as a “missed opportunity”, given the pressures that it faces as a result of the Gambling Act 2005, which was effected last September. The amendment is intended directly to assist an industry that is under pressure, and to strengthen the Treasury’s
ability to ensure that we retain a successful gaming and arcade industry, which can continue to contribute to the Exchequer.
The amendment would enable gaming arcades to have up to one fifth of their gaming machines as B3 machines, and unless the provision was in place by April next year, this year’s Budget increases in amusement machine licence duty would lapse. The amendment would force the Government to revisit allowing more B3 machines per establishment than the current rules in the Gambling Act permit. The new rules restrict establishments to a maximum of four machines, irrespective of the venue’s size. The Act also introduced a further change, reducing the maximum stake on B3 machines from £2 to £1, which has meant a dramatic fall in the turnover of gaming arcades.
Although the debate is about amusement machine licence duty, to explain my amendment properly and so that hon. Members at least understand my rationale for tabling it I need briefly to outline the dramatic effects of the Gambling Act. I could have tabled a further amendment on increasing the current limited stake from £1 to £2 for a £500 maximum prize on B3 machines, which the Gambling Act reduced. However, I believe that the amendment will give me the chance to make plain my concerns about the viability of the gaming arcade industry and the impact on the economies that it supports.
Many people who are involved in the gaming arcade industry have serious concerns about even its short and medium-term viability, if my amendment is not accepted. Those anxieties are especially prevalent in seaside communities, where a much larger base of the local economy is linked to tourism and the entertainment industry generally.
John Penrose (Weston-super-Mare) (Con): I assure my hon. Friend that I have received numerous representations from people in my constituency who run establishments such as those that she describes. They are all suffering greatly. Many have experienced catastrophic falls in revenue and many wonder for how long they can continue. My hon. Friend is right and I cannot emphasise enough the seriousness of the position of that sector of the industry.
Justine Greening: My hon. Friend makes a helpful contribution, which illustrates the two key points that I want to make today. First, now is not the time to increase tax further on the industry through raising the amusement machine licence duty. Secondly, it is ironic that a fair amount of the Exchequer’s tax revenue, which it already, and no doubt willingly, takes from the industry is under threat because the businesses are threatened. The concerns that my hon. Friend expressed are reflected in early-day motion 840, which 155 Members from all parties have signed.
The British Amusement Catering Trade Association has assessed that, since the introduction of the Gambling Act, revenues have collapsed by an average of 21 per cent. year on year. The amendment aims to ensure that the trend in collapsing revenues has a chance of being reversed by the Government well before the planned review of the impact of the Gambling Act, which is likely to be long drawn out. That review is currently planned to start in 2009. It could take many months—
perhaps longer—so we will probably not see any action until 2010. As the hon. Member for South Thanet (Dr. Ladyman) said in a recent Adjournment debate:
“We cannot afford to wait for a six-month review, or even a three-month review. My constituents’ businesses are going under now. We need to send a signal now.”—[ Official Report, 22 February 2008; Vol. 472, c. 744.]
If the Committee supports the amendment, we would send that signal, which businesses need to give them hope that they can keep going until their problems are properly tackled.
Without the changes that the amendment proposes, the risk to Treasury revenues is significant. However, let me be clear: for Conservative Members, it is more important that those tax revenues are based on economic success and jobs. I am worried that, by the time we who raise our concerns tonight are proved right, it will be too late to protect those gaming arcade businesses and bingo halls, which are also affected by the changes that the Gambling Act introduced, and they will be lost.
Unfortunately, the reality is that many of those businesses, which are the lifeblood of many of our most loved seaside and coastal towns, are under pressure and are going to the wall. I am talking not only about gaming arcades that form the very identity of places such as Margate, Blackpool, Portsmouth, Hastings, Great Yarmouth and Ramsgate—I could continue—but about family businesses that have been passed down from generation to generation.
Such businesses are the lifeblood of their local economies and are often committed to those economies, alongside providing employment, too. They deserve to be supported by the Government. Instead, they are being undermined. The Government will not take note of their cries for help, even though the Under-Secretary of State for Culture, Media and Sport, who has responsibility for gambling, admitted only in February that there was a “serious problem”. Ministers seem more concerned with saving face than with saving jobs and supporting local communities. My amendment challenges that most damaging attitude.
Gaming arcade businesses are being asked to compete with betting shops and casinos with one hand tied behind their back. The stakes and prizes of their machines cannot compete, and such businesses cannot have the number of machines that they need to stay profitable. My amendment aims to challenge that by removing the excessive control over the number of B3 machines to which an establishment is limited, and allowing up to 20 per cent. of any establishment’s machines to be B3 machines.
Without my amendment, there is a danger that the Treasury’s tax revenues will fall, not just because of lost amusement machine licence duty but from lost employment taxes from long-standing, often family-run, businesses. My concern is that such businesses are under so much pressure that many are in danger of going to the wall, as we have heard. My amendment seeks to prevent a lose-lose situation—in which everybody loses, not just, most importantly, the businesses concerned, but the Exchequer.
Rob Marris (Wolverhampton, South-West) (Lab): Why one fifth?
Justine Greening: I am grateful for the hon. Gentleman’s intervention. That suggestion was supported by the British Amusement Catering Trade Association. Our party supports the proposal, along with the association’s other suggestion, which is to reverse the reduction in the maximum stake from £2 to £1. Our amendment is fully supported by the industry that we seek to help.
Gaming arcades and the economies that they support are fundamental parts of their local communities. Indeed, the adult gaming centres in which B3 machines are often found support family entertainment centres, which support the wider communities and economies of which they form part. Nick Harding of BACTA says that there is already evidence to suggest that
“at this rate, half the industry will be gone in six months.”
He also said that seaside operators are
“dying on their feet as a result of the Gambling Act.”
My amendment seeks to challenge that.
Although the trigger for the problem was created by another Department—the Department for Culture, Media and Sport—the consequences are Treasury-related. They include small family-run businesses potentially going out of business and local jobs being lost.
Mr. Mike Hancock (Portsmouth, South) (LD): I for one will be supporting the hon. Lady in the Lobby on this issue. I am delighted that she has quoted BACTA’s comment about half of all amusement arcades going out of business in six months. However, arcades have lost more in the past six months than they have lost in the past 10 years. The damage done by the Gambling Act is already apparent not only in the amusement arcades but in the manufacturing industries that support them.
7.15 pm
Justine Greening: Again, we are hearing from hon. Members with direct experience of the communities affected and the stresses that the 2005 Act is putting on them. Based on the contributions that we have heard tonight, it would appear to be only a matter of time before the economic damage being done to the industry is transferred to Treasury revenue.
My amendment aims to challenge the Government’s drive to continue raising the amusement machine licence duty against a backdrop of economic problems that put so much more underlying tax revenue from the broader gaming industry at risk. I am sure that many hon. Members in the Chamber will be aware of the Select Committee on Communities and Local Government report published back in February 2007 called “Coastal Towns”. Even then, before the devastating impact of the 2005 Act, that Committee said:
“A number of coastal towns suffer from deprivation and their economic regeneration is of critical importance.”
As I have said, the Minister with responsibility for licensing accepted in an Adjournment debate earlier this year that there was a “serious problem”. My amendment is an attempt to address that problem. It would mean that those underlying causes, which are so badly holding gaming arcades back, preventing them from competing with other gambling businesses, would have to be addressed. Even if those causes were not addressed, however, there would at least be no raising of amusement machine licence duty, as the Budget proposes.
Instead, the rates would be frozen. Without addressing the more fundamental issues—not just the number of B3 gaming machines allowed, but the need to increase the B3 machine stake from £1 to £2—this is no time for the Government to put further pressure on an industry that is already on its knees.
Even if the Department for Culture, Media and Sport is unwilling, the Treasury must listen to the pleas of the thousands of small gaming arcade businesses facing ruin. The 2005 Act is sucking the economic lifeblood out of seaside communities, bingo halls and gaming arcades throughout our country. Treasury Ministers must take the necessary steps to make their colleagues in the Department for Culture, Media and Sport listen and take action before it is too late for those economies and communities.
It is time that the Government started supporting local economies, especially in the seaside towns that form so much of our valued national heritage. Today the House has the chance to join the Conservative Opposition in voting to stand up for those seaside communities. I hope, too, that we will have the support of all those hon. Members who signed early-day motion 840. For the sake of the communities affected, I hope that we can all take that opportunity.
Mr. Colin Breed (South-East Cornwall) (LD): On the face of it, clause 21 is fairly innocuous in terms of raising revenue, but it has obviously raised huge concerns in many parts of the gambling industry. I represent a constituency with coastal resorts, and although the adult gaming centres and amusement arcades in those resorts are small they form part of the entertainment that many such resorts provide.
Acceptance of those facilities is slightly mixed. Not all my constituents have gone to the planners saying that they would like more of them. Indeed, demonstrations and campaigns have been mounted to stop certain businesses starting up. We need to strike a balance. Tourists like to use such facilities when they visit, but they are not necessarily the flavour of the month with local residents.
Nevertheless, such facilities have been around a long time and are, in the main, small family businesses. In the ordinary run of things, merely raising the duty by the rate of inflation would not be particularly onerous. However, as the hon. Member for Putney (Justine Greening) pointed out, a combination of the Gambling Acts, in some cases the smoking ban and the increase in alcohol duties has begun to put a lot of pressure on such businesses.
It is not only arcades that are affected; small pubs and bingo halls are also affected. I was interested to learn about the restriction to four B3 machines in bingo halls, because some such halls are rather large establishments that hold quite a few people. During breaks, people rush to use the machines, but if there are only four machines, there will be queues of people waiting to use them. Four machines might be an acceptable number in a small establishment, but it is not reasonable in a large bingo hall.
The Government should consider the whole situation and the effects of different aspects of their legislation and policy. Together, those measures have put particular
pressure on such businesses, and it is time to pause and consider the situation in the round. They must consider the effects on businesses and coastal towns, which have many such businesses, and particularly the effects on revenue and jobs. A significant number of jobs are affected; I was surprised to learn how many people are directly or indirectly involved in this large industry. There are great concerns that our efforts to modernise the industry and squeeze a bit more revenue out of it are going to kill the goose that lays the golden egg.
John Penrose: One of the original ideas that led to the changes was the trade-off whereby super-casinos were to come in and ambient gambling was to be reduced. Does the hon. Gentleman agree that that plan has evaporated because super-casinos are not going to happen, but that ambient gambling is still being hit? The Treasury therefore risks losing revenue from ambient gambling because those business are all going under, but without getting the extra uplift in revenue from super-casinos.
Mr. Breed: I could not agree more. That is exactly what has happened. Some of the smaller businesses involved in the gambling industry might have breathed a sigh of relief that the super-casinos were not going ahead, but they have suddenly realised that the panoply of Government policy on this issue is having almost the same effect of potentially putting many of them out of business.
There is time to address this issue. We support the amendment in the sense that it gives us the chance to pause, consider the matter in the round and see whether there is a better way of dealing with it. The duration of licences could be considered, as could the opportunities for rebates that the industry has proposed. The industry has put forward some very constructive ideas and does not seek to have things all its own way. It seeks a fairer way of dealing with these matters so that businesses can carry on and continue to provide employment, and so that attractions at resorts, including small family businesses, can continue. That would also mean that revenue would continue to come to the Treasury.
Unless we consider those issues, there will be a rapid demise in many of those areas. Some people who do not support the concept of gambling might think that is a good thing, but many people would be substantially affected by the demise of such businesses. It is time that the Government paused to consider the whole issue, including the effects of the Gambling Act 2005 and other measures that will be devastating for a significant number of businesses.
Rob Marris: I find the hon. Gentleman’s position somewhat contradictory, unless he was making a speech on the clause stand part debate. The amendment does not ask for a pause, to use his word. It sets out a way forward, as perceived by the hon. Member for Putney (Justine Greening). It does not ask the Government to pause and consider the evidence to see whether anything needs to be done and whether there is a problem, which seems to be what the hon. Gentleman suggests. That is not what the amendment asks for and I urge him to reconsider his support for it. As a result of that reconsideration, he might decide to vote against clause stand part, which would be a more logical position and would be commensurate with his earlier remarks.
Mr. Breed: I was trying to suggest that accepting the amendment, which relates specifically to B3 machines, would, with the reviews that are taking place, provide an opportunity to reconsider the particular aspect that the amendment covers. It would necessarily have to cover other areas as well.
Rob Marris: I suggest that the reviews are taking place and that that is not what the amendment would do. It states what the outcome should be, and does not say that we will look at the results of the review.
My difficulty with the way in which the hon. Member for Putney spoke to the amendment is that most of her speech was a series of assertions. I am not an expert on the gambling industry, although of course it exists in my constituency in Wolverhampton—we have bingo halls, casinos and a new venue coming on stream shortly—but given that we are making technical legislation in the Finance Bill, I would prefer to hear a little more evidence rather than simply being told that this is what the industry wants. The industry might be right, but we have been given that assertion without any evidence. I understand the concept of potential damage to the industry, but I should like to have a little bit of evidence.
Justine Greening: The evidence that we have is that revenues have fallen 21 per cent. year on year, and I am trying to avoid there being further evidence through more job losses.
Rob Marris: Again, the hon. Lady might be right, but the evidence provided in table C6 on page 187 of the Red Book envisages flat revenues of £1.5 billion this year and next year.
Mr. Tobias Ellwood (Bournemouth, East) (Con): I suggest that the hon. Gentleman should come here armed with the necessary information. He says that he does not have it, but the Government do. BACTA has made it clear that it has had many meetings with the Minister with responsibility for gambling and that it has tried to speak to members of the Treasury. The evidence is clear that the industry is suffering. It needs support, but is not getting it from the Government.
Rob Marris: It is not for me to produce evidence, as I have not moved the amendment. I seek to find out the reasoning behind it, and it is quite in order for a Member to ask for the reasoning behind an amendment. It is also in order to ask the Member who moves an amendment for evidence to support it, and to be put out if such evidence is not produced— [Interruption.] It was not produced by the hon. Lady in her speech, except tangentially. Neither did she explain the mechanics of what the amendment would do, apart from the £1 stake going up to £2. That may be all that would happen, but it behoves a Member who moves an amendment on a technical issue such as this—it is also very sensitive because it affects seaside communities—to produce a little more evidence.
Mr. Breed: Does the hon. Gentleman accept that this technical clause may work with other legislation to have a detrimental effect on a particular industry?
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