Memorandum submitted by the British Amusement
Catering Trades Association (BACTA)
INTRODUCTION
1. BACTA (the British Amusement Catering Trades
Association) is the largest trade association for UK gaming. It
currently represents the interests of over 685 companies and 1,170
individuals, covering the entire supply chain from manufacturing,
through distribution and including retail premises. Our membership
includes family entertainment centres (seaside arcades), adult
gaming centres, clubs, pubs, bingo halls, casinos, betting offices
and bowling alleys, machine manufacturers and suppliers. The Association
aims to create an optimal trading environment for all sectors
and encourages good practice and social responsibility. We also
implement a voluntary Code of Practice which clearly defines responsible
working practices.
2. The Culture, Media and Sport Committee's
inquiry into the UK's tourism sector is very timely and BACTA
is pleased to have this opportunity to submit evidence to the
Committee. Our submission is focused primarily on the challenges
faced by those of our members which operate in the domestic tourist
sector, and the role of the DCMS as the Government department
with lead responsibility for overseeing our industry.
3. The key points of our submission are:
— Seaside resorts are a well-established
and important part of the UK's tourism industry, making a substantial
contribution to tourism volumes and values. BACTA members play
a pivotal role in the seaside tourist economy, both as visitor
attractions and important employers.
— Against the backdrop of growing competition
from an increasingly diverse range of sources for the general
public's leisure spend, BACTA members have had to endure a prolonged
and uncertain transition to a new regulatory regime under the
Gambling Act 2005. These factors, combined with the forthcoming
introduction of the ban on smoking in public places, have created
a very tough trading environment for our industry.
— To help mitigate the detrimental
impact of the current climate, BACTA is calling on Government
to provide specific assistance to our members by increasing the
stake for B3 gaming machines from £1 to £2 at the earliest
opportunity. This will help to alleviate the impact of the smoking
ban on our members" businesses and will assist them in meeting
seaside customer demand.
— BACTA is also urging the Government
to reintroduce a predictable cycle of triennial stake and prize
reviews, following an extended freeze on gaming machines stakes
and prizes. This is essential in order for our member companies
to forward plan with greater certainty.
— More broadly, Government must ensure
that coordinated, cross-departmental action is taken at a national
level to better promote the UK's seaside tourist experience. BACTA
urges the Committee to examine how the DCMS can more effectively
engage with its stakeholders across the tourism sector to this
end.
BACTA Members' Contribution to UK Tourism
4. BACTA members up and down the country have
been a central feature of the UK's tourism sector for many years.
In some areas, they have been an integral part of the traditional
seaside leisure experience for over a hundred years.
5. Seaside resorts are a well-established and
important part of the UK's tourism industry, making a substantial
contribution to tourism volumes and values. They offer a unique
and reasonably-priced leisure package for very many people around
the country. Data collected by the UK Tourism Survey 2005 show
that holidays to the seaside account for 31% of all UK holiday
trips and 34% of all UK holiday spend—proportionally more
than any other location type.
6. Millions of families visit BACTA's seaside-based
members every year, most commonly those operating seaside amusements
arcades or Family Entertainment Centres (FECs). There are approximately
1,000 FECs across the country, many of which are located in seaside
resort destinations. FECs provide family-orientated entertainment
in a safe environment, offering a wide range of family games and
low-stake, low-prize machines for all to enjoy.
7. These seaside leisure venues are often long-established,
and vary in size from Brighton Pier and large seaside arcades
to shop size units. Most are part of very small groups which are
usually owner-operated. They are generally at their busiest during
the summer season and at weekends, although many are open all
year, allowing them to keep permanent staff.
8. A BACTA-commissioned omnibus survey carried
out by ORB in 2001 illustrated the importance of FECs to the appeal
of coastal towns as leisure destinations. When those questioned
were asked what they thought the main attractions of a seaside
resort were, 27% of respondents identified amusement arcades—the
second most frequent answer after funfairs and rides, and ranked
above other factors including the weather, the location and presence
of piers in importance.
9. In addition to their importance in helping
to attract tourists to seaside resort town, FECs make a substantial
contribution to local seaside economies, as both visitor attractions
and major employers. They spend about £100 million per year
employing around 8,600 people (whole time equivalent) and indirectly
supporting tens of thousands more in their local economies.
Impact of Changing Leisure Habits
10. BACTA's seaside members, like other companies
and service-providers operating in the British seaside tourist
industry, are facing stiff competition from a growing range of
sources for the general public's leisure pound.
11. FECs often operate on very tight margins,
and changing leisure habits have contributed to a decrease in
their profitability in recent years. For example, the rise in
popularity of home gaming consoles has had a detrimental impact
on the sector. Another significant trend, affecting the UK tourism
sector more broadly, is the increasing demand for foreign holidays
stimulated by more available cheap flights.
12. According to Government statistics, the
number of visits abroad made by UK residents has more than tripled
since 1985 to a level of 66.4 million overseas visits in 2005.
Two thirds of these visits were holidays. Over the same period,
spending on visits abroad by UK residents experienced a real terms
fourfold increase, to £32.2 billion. This represents a major
and ongoing challenge for home-grown tourism.
13. The detrimental impact of these trends on
those of our members that operate in the tourism sector has knock-on
effects across other sections of our industry. In particular,
manufacturers of amusement machines sited in FECs have suffered
a decline in demand for their new products as the profitability
of FECs themselves has decreased. Broader uncertainty about the
ongoing reform of gambling regulation has further depressed demand
for new machines—an issue that is covered in more detail
below.
14. In addition to the changing travel habits
of the UK population, broader societal trends are creating longer-term
challenges for the seaside tourism sector. Against this backdrop,
it is vital that both central and local government gives due consideration
to how they can most effectively support domestic tourism, both
at the seaside and elsewhere.
15. A key pre-requisite for seaside areas is
to be able to compete more effectively with inland cities and
urban areas, and overseas destinations, for leisure customers.
Central to this is the development of comparable transport connections.
We would certainly welcome greater Government focus on how transport
links into coastal towns could be improved and the transport facilities
offered to tourists and day-tripper by these towns enhanced.
16. A common complaint from many of our members,
for example, is the inadequate provision of car parking in seaside
towns. Families are the lifeblood of the seaside tourist industry
and many families choose, for convenience, to travel to coastal
resorts by car. It is important that local councils and planning
authorities make proper provision for reasonably-priced and accessible
car parking in order to avoid discouraging families from coming
or returning to coastal towns.
17. Furthermore, with competition for the population's
leisure time and money continually growing, it is essential that
seaside towns are visible as well as accessible. It is vital that
local authorities, Regional Development Agencies and highway authorities
work with the private sector and make sufficient resources available
to ensure that seaside tourist destinations are effectively marketed
and, equally as importantly, sign-posted. Seaside resorts will
continue to be sustainable over the longer-term only if people
know how to access them and are sufficiently tempted to make the
journey.
18. The Communities and Local Government Select
Committee recently issued a report on coastal towns, which noted
the important economic role of tourism in such areas. BACTA supports
the report's recommendations that the Government should conduct
an immediate study on coastal tourism, ensure that action is taken
at a national level to promote visiting the seaside, and consider
the merits of introducing a national coastal tourism strategy.
We urge the Culture, Media and Sport Committee to add its support
to such an approach.
Impact of Regulation and Reform
19. BACTA is keen to draw to the Committee's
attention a number of concerns we have about the ongoing reform
of gaming regulation which is being overseen by the Department
of Culture, Media and Sport, in partnership with the new DCMS-sponsored
sector regulator, the Gambling Commission.
Implementation of Gambling Act 2005
20. BACTA supports the objectives of the Gambling
Act 2005. However, the process of legislative reform and implementation
has contributed significantly to the tough trading environment
in which BACTA's members operate. Like the gaming industry as
a whole, our seaside-based members have had to endure a prolonged
period of regulatory uncertainty during this period. This began
with the publication of the Budd Report on the reform of gaming
regulation in 2001, and continued through Parliamentary scrutiny
of draft legislation and the passage of the Gambling Act into
law in 2005. It has persisted during the implementation phase,
with many important aspects of the new regulatory framework being
dealt with through secondary legislation. Full implementation
will not take place until September 2007—over two years
after the legislation was passed.
21. BACTA has worked constructively with DCMS
and the Gambling Commission during the implementation phase to
ensure that the framework established by the Gambling Act is implemented
in an effective and practical way. However, whilst we fully recognise
and sympathise with the huge time and resource constraints that
DCMS officials have been working under, we have a number of general
concerns about the implementation process.
22. In respect of forward planning and consultation,
the Department's implementation programme and timetable has often
been unclear, resulting in the setting of curtailed and unrealistic
timeframes and a "stacking" of consultation papers.
In addition, the large consultation meetings with stakeholders
that have been periodically convened by the DCMS during the implementation
process, while serving as a useful forum for updates on general
progress, have not proven to be an appropriate forum for dealing
with some of our more detailed and complex concerns.
23. Furthermore, some important substantive
issues and concerns that we have raised during pre-consultation
exercises with the DCMS have on occasion not been addressed, or
have been inaccurately represented, in formal consultation papers.
There has also been a lack of hard cost-benefit analysis of key
proposals, such as the fees that operators will have to bear under
the new regime, and a lack of co-ordination between the DCMS and
Gambling Commission has been evident during the process. Collectively,
these issues have made effective scrutiny of the reforms by BACTA
and other stakeholders very challenging.
24. As proposals related to critical areas of
policy have taken some time to emerge, or have evolved during
the implementation process, the long-term impact of the new regime
on our industry has remained unclear. Because of this, the investment
decisions of our seaside-based members (as with our members located
inland) have, unsurprisingly, been cautious. This causes damage
further up the supply chain, harming the machine manufacturers
and operators who are dependent in part on demand from the FEC
sector.
25. We would urge the Committee to consider
how the DCMS could more effectively engage with its stakeholders
across the tourism sector, whether through better coordination
with and across its sponsored bodies, more effective two-way dialogue
with regulated companies and their representative bodies, or more
effective use of the resources at its disposal.
Gaming Machine Stakes and Prizes
26. The continued competitiveness of our industry
is reliant in part on a periodic uprating of gaming machine stake
and prize levels. This process, which is overseen by the DCMS,
allows our members to keep pace with increasing costs and provides
a basis for them to effectively plan ahead and meet customer demand
for new products.
27. For the last 20 years, it has been industry
practice for a triennial review of stakes and prizes to take place.
This has been a crucial mechanism through which FECs have been
able to maintain their appeal within seaside tourism sector. However,
following the 2004 triennial review, the DCMS announced that it
would not implement any of the stake and prize increases recommended
by the Gaming Board of Great Britain. This effective freeze on
stakes and prizes, the first since the inception of the triennial
review process, has contributed to a sharp decline in demand for
traditional UK gaming machines. It has been very damaging for
the industry: annual sales of Amusement-with-Prize (AWP) machines,
the core industry product, declined from over 60,000 in 2002 to
around 35,000 in 2006.
28. BACTA campaigned vigorously for an increase
in stakes and prizes since the non-implementation of the 2004
review, and an increase was eventually granted by the DCMS, effective
from 27 October 2006. (However, operators will not be able to
take full advantage of the change until a consequent revision
machine duty levels is made to reflect the new stake and prize
levels. This is expected in Budget 2007). The uprating in stakes
and prizes was the first rise for six years. It will provide a
much-needed boost to amusement machines manufacturers, and to
FECs and our other members who are reliant on new machines to
maintain their appeal to tourists and other customers.
29. Looking further ahead, the DCMS has announced
that it will undertake another review of machine stakes and prizes
in 2009, two years after the full implementation of the Gambling
Act. It is absolutely crucial that the triennial review process
is fully reinstated following this promised review, in order for
BACTA's member companies to once again be able to plan ahead with
a degree of certainty.
Increasing the Stake for Category B3 Machines
30. Despite the increase in stakes and prizes
announced last autumn, the economic climate remains very challenging
for BACTA members in seaside areas and throughout our industry
supply chain. It will become even more difficult with the introduction
later this year of the smoking bans in Wales, Northern Ireland
and England. Whilst BACTA supported a comprehensive ban on smoking,
coping with its implementation will be one of the biggest challenges
for our industry in 2007.
31. We are therefore seeking as much support
as possible from Government to assist our members during the difficult
transition phase. We have made representations to HM Treasury
for a number of changes to machine duty levels that would help
bolster the industry through the year ahead. In addition, and
just as importantly, BACTA is urging Government to increase the
stake of the new Category B3 gaming machines—being introduced
from September 2007 under the Gambling Act—from £1
to £2 at the earliest possible opportunity.
32. The £1 stake that is currently proposed
for the new B3 machine category will be a significant reduction
on the stake level currently available to the many customers who
visit our AGC members in seaside locations and elsewhere. Our
research shows that the average amount staked on the machines
that B3 will replace is £1.81. We are very concerned that
our members' customers, who have become accustomed to this level
of stake, will migrate to other gambling venues offering higher
stakes and harder forms of gambling when the new machine category
is introduced. The increase in the B3 stake to £2 is, we
believe, a modest and straightforward reform that would help to
ameliorate the impact of the machine category changes on our members.
Introduction of Regional Casino
33. The Gambling Act 2005 includes provisions
to establish one regional casino, eight large casinos, and eight
small casinos as a means of driving economic regeneration. The
Secretary of State for Culture, Media and Sport has accepted the
Casino Advisory Panel's recommendation that the new regional casino
should be cited in Manchester. At the time of submission, Parliament
had not voted on the recommendation.
34. BACTA remains to be convinced of the economic
benefits that the regional casino will ultimately yield to Manchester
and the North West of England. We are very concerned that the
establishment of the regional casino in Manchester will simply
result in the displacement of leisure and tourism spend from existing,
often family-owned, businesses located in the North West to a
large multinational company.
35. The impact of the regional casino on the
existing leisure and tourism sector must be monitored closely.
BACTA is of the firm view that a full evaluation of the economic
and social consequences of a new regional casino is required,
lasting at least three years from its opening, before any further
decisions are taken by Parliament.
CONCLUSION
36. BACTA members' long standing presence in
coastal towns gives us a unique and knowledgeable insight into
the workings of the seaside tourism sector. Given the difficulties
presented to our members by changing travel habits and the challenges
of adapting to a new regulatory regime for gaming, the development
of a national-level, cross-Government strategy, focused on supporting
UK tourism and regenerating the coastal towns that play such an
important role in the domestic tourist sector, is much needed.
We stand ready to play a full and active role in the development
of such a strategy, and hope that the Committee's inquiry provides
a spur for the DCMS and other departments to pursue this in more
detail.
March 2007
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