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“Overall, the announcements in the Budget on the taxation of bingo are welcome to the industry.”—[ Official Report, 23 April 2009; Vol. 491, c. 434.]
I found that absolutely extraordinary, but the point is that no one really knows for sure, because the Government refuse to be definitive.
The current Exchequer Secretary, who is with us today, told us during the last sitting of the Public Bill Committee on 25 June:
“The £50 million is made up of the cost of recovering VAT on mainstage bingo, interval bingo and card rooms. The roundings are to the nearest £5 million, so although £20 million, £25 million and £5 million are not exact figures, they show the proportions.”—
That is an extraordinary lesson in mathematics: figures of £5 million, £20 million and £25 million can all be subject to a rounding error of £5 million. Yet that is what the Red Book calculations are based on. It is absolutely amazing.
Stewart Hosie: Can the hon. Gentleman think of any other Government assessment where it is possible to be out on three figures by 100 per cent., 25 per cent. and 20 per cent. on the basis of rounding?
Mr. Hands: The hon. Gentleman’s intervention speaks for itself; he makes his point extremely well.
The Government are being evasive, to say the least, on the figures, and I am afraid that the Exchequer Secretary’s letter to the Committee on 1 July did nothing to clear the matter up. I would be grateful at last to receive an explanation of where the figures come from.
In the letter, the Minister reiterated that the estimates for VAT revenue in the Red Book were rounded to the nearest £5 million. Unfortunately, that leaves some confusion about whether the figures revealed in written answers subsequent to the publication of the Red Book, but before the debate in the Public Bill Committee, were rounded to the nearest £5 million. I think that the implication is that they were. The Minister said:
“I do not know the exact details of everything”. ——[ Official Report, Finance Public Bill Committee, 25 June 2009; c. 618.]
That was certainly the impression that she gave, and her letter has served only to confuse the situation still further.
The industry has raised yet another concern about the Treasury’s methodology. We heard in previous debates that the Government’s revenue figures are based on their interpretation of the law, and not on the actual sums that they have been receiving. However, bingo operators are now suggesting—this was the point raised by the hon. Member for Barnsley, Central—that the Government failed to account for irrevocable VAT when producing the estimates. One industry estimate—we have probably seen the same estimate—put the total incremental irrevocable VAT at £21.7 million a year, assuming that it returns to a level of 17.5 per cent. next January. It is possible for the Exchequer Secretary to be precise—we have seen it, and she wants to be precise. Therefore, I invite her to answer right now whether the Treasury accounted for the irrevocable VAT and, if it did, what was the figure—preferably not rounded to the nearest £5 million—that applied in that case?
The Government are extremely unwilling to provide meaningful figures on the costs of changes in gaming duty and VAT on bingo, yet they have asked us to consider the totality of measures in clauses 20 and 112. That makes it difficult, if not impossible, for us to judge the fiscal effects of any of the five amendments before us.
Meanwhile, we have only just this week learned that the court action that Conservative Members, and the hon. Member for Dundee, East (Stewart Hosie), referred to in our deliberations on clause 20 and 112 is still ongoing. The Minister was thus wrong to tell us that the Government had until 30 June to make a decision on the appeal. That was wrong: she had longer and she used the longer period to make the decision. As it turned out, the Government had until this week and they have now appealed, despite the Minister’s assertion about the expiry date. We understand that the case will now go to the Court of Appeal. We tabled an amendment in the Committee of the whole House to the effect that no changes should be made until the court case was resolved. The fact that the proceedings are ongoing is important information for our deliberations today.
Given the level of uncertainty on both the legal and the revenue fronts, it is very difficult to assess the likely impact of any of the five amendments. Furthermore, we have already voted through the ending of VAT on bingo in clause 112, so we need to be careful to maintain a balance in the tax consideration of bingo while being mindful of the appalling position of the public finances that the Government have brought on us all. The Government are holding their cards close to their chest on the amount of revenue, but if they were to support
one or more of the amendments and show us that they could be afforded in terms of the Red Book, we would look favourably on that.
Let me clarify the Conservative position. The Government seem to think that bingo duty should by its very nature be higher than other gaming duties, but we do not see it that way. We view the 22 per cent. bingo duty as an anomaly. We thus await the Government’s moves with eager anticipation. We would welcome moves that were properly costed, affordable and transparent, to bring bingo duty back into line with other gambling duties.
Mr. Gummer: Will my hon. Friend help me on one point? It seems to me that we have to defend the revenue, which is perfectly understandable. The Government woollied their way through yesterday, defending the revenue in one way or another and threatening us with all the awful things that might happen. In case voting for the substantive amendment sends out the wrong signal to those who think that they can get away either with anything or with unfairness, would it not be sensible to vote for the amendment proposing to put these matters off to a later day, on which we could all agree, thereby supporting the revenue and forcing the Government to be sensible?
Mr. Hands: I thank my right hon. Friend for that intervention. The correct course of action would have been for the House to vote in the Committee of the whole House for our amendment, which sought to postpone changes to the taxation of bingo until such time as both the court case and the financial implications had been resolved. Given, however, that we have voted through clause 112, which removes VAT on bingo and is the right thing to do, I cannot agree with my right hon. Friend’s position—unless the Government can show that one of the amendments before us can be afforded without leaving a hole in the Red Book.
Mr. Jeremy Browne: This has been an interesting debate. The right hon. Member for Suffolk, Coastal (Mr. Gummer) told us that we had entered a new era in politics, in which the Conservatives were the champions of the poor and downtrodden and the Labour party had abandoned those people. It now transpires that when it comes to deciding whether they are in favour of people who are poor and downtrodden, the Conservatives are minded to abstain. Perhaps that is a metaphor for the wider positioning of their party.
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Let me turn to the matter in hand, which is bingo. I have visited Mecca Bingo in Taunton on a number of occasions, and I was there again last Friday, speaking to staff and customers about their pastime and about the effect that the Government’s taxation of bingo would have on them as individuals. I was struck yet again by just how popular this form of activity is in my constituency, and indeed in many towns and cities across the country. Typically, 1,900 people visit Mecca Bingo in Taunton every week, and on Sunday evening, which is the most popular time of the week, the club will have about 400 customers.
I think it fair to say, and indeed we have all observed for ourselves, that this form of gambling is particularly attractive to women—a point made by the hon. Member
for Barnsley, Central (Mr. Illsley)—that it attracts older people, generally although not exclusively, and that it is more attractive to those with lower incomes than, say, visiting a casino. That is inevitably a generalisation, because we are talking about hundreds of thousands of people throughout the country who enjoy bingo, but I think it can be said that bingo is a form of gambling that is more likely to be undertaken by women, older people, and people in lower income groups. It is extraordinary that they should be targeted for a higher rate of tax than those who engage in other forms of gambling.
Mr. Alan Reid (Argyll and Bute) (LD): My hon. Friend is right. Bingo takes place in a controlled environment, and the losses that people can make are very small compared to the almost limitless losses that can be made by those who go to casinos or engage in activities such as online poker or even online bingo. It is nonsensical to tax it at a higher rate than those other activities.
Mr. Browne: I entirely agree. I think it is safe to say that online bingo, for example, is more likely to be undertaken by younger and more affluent people than those who visit bingo clubs. It does seem extraordinary that that form of bingo should be taxed at 15 per cent. while people going to clubs will be taxed at 22 per cent.
Mr. Hands: Is not online bingo also likely to be much more addictive than the bingo hall version?
Mr. Browne: I understand that it is. Moreover, there are no controls in the case of online bingo. Although it may be in the immediate financial interests of a bingo hall to allow a particular customer to gamble beyond his or her means, I suspect that in the vast majority of cases the owners demonstrate a degree of paternalism. They have a fair sense of how much money the regular visitors have and of what it is safe and reasonable for them to spend.
Of course, many people do not go to bingo halls just to gamble. The gambling is often almost a secondary or peripheral attraction. Many people’s main reason for visiting the hall is social: they want to meet friends, and catch up on news and developments. When I visited Mecca Bingo on Friday, it was stressed to me that there were many associated attractions, such as the provision of meals and other forms of entertainment. It seems that people regard going to bingo halls as being only partly about gambling.
For all those reasons, it was pointed out for some years that bingo had suffered unfairly from what was described as double taxation, and that the anomaly ought to be addressed. The Government have now done that, but, as the right hon. Member for Suffolk, Coastal rightly observed, in effect they said, “Here you are; we are giving to you with one hand,” but just as everyone was celebrating that great victory, the Government took away the benefits with the other. The overall effect on the bingo industry and the people who enjoy playing bingo is that the current situation is no better than it was before.
When I visited Mecca Bingo in Taunton last Friday, it supplied the following statistics to me: across the United Kingdom last year 31 Mecca and other bingo
clubs had closed and two had opened, which meant that there had been a net reduction of 29 bingo clubs. Some associated social factors may be at play in such closures, such as generational changes and a greater desire among people to spend more of their leisure time at home. The right hon. Member for Suffolk, Coastal speculated that the smoking ban may also have had an impact in some cases. It is, however, very hard to argue against the notion that the higher tax rate on bingo is making the situation worse, and making it harder for bingo clubs to be profitable.
Mr. David Heath (Somerton and Frome) (LD): Is that not what makes the Government’s decision to tax bingo more than other forms of gambling so odd? If their purpose is the suppression of vice, bingo is an odd target, as I am not aware of there being any particular links with organised crime, whereas if the purpose is to increase revenue, it is likely to have the opposite effect because of the consequent reduction in the size of the industry.
Mr. Browne: Absolutely, and I should like to refer to the very subject of revenue. During yesterday’s debate, we talked about beer duty. The problem in that regard is that because more and more pubs are going out of business on account of beer duty going up, the base from which the Government are collecting revenue is therefore falling. That is the case with bingo as well. If there is only one bingo club in a town—a seaside resort, let us say—and it is no longer profitable and therefore closes, the customers do not have an alternative place to take their custom. Many of them are unlikely to gamble online, and even if they did so, they would be taxed at a lower rate. The Government therefore forgo revenue as a result of that club closing.
Mr. Gummer: Has not the hon. Member for Somerton and Frome (Mr. Heath) given the clue to this? He says that the purpose may be the suppression of vice. He will, no doubt, remember that in the 19th century there was a Society for the Suppression of Vice and people added to its title, “For those with an income of less than £5,000 a year,” because it was not interested in that cause otherwise. This Government have, therefore, carried on a noble 19th century tradition.
Mr. Browne: Let me return to that theme in my concluding remarks, because that is an interesting observation.
As I have said, not only will the Government lose revenue when clubs close, but we should remember just how small the sums involved are. It has rightly been said that the total sums of money gambled on bingo are not great, so in the grand scheme of things the percentage tax take is not very significant. I am told that Mecca Bingo generates profits of only about £150 million a year. Therefore, the additional tax in respect of the differential between the rate that the Government have set and the figure that would be generated were bingo taxed in line with other forms of gambling is only a matter of a few million pounds a year. When one sets that against the backdrop of a public sector deficit this year of £175,000 million, it seems hard to argue that if the motivation behind this tax proposal is to plug the public finances, the Government will get very far using that particular plug.
Let us also consider the wider social costs. Although it is hard to measure those in absolute terms, I have observed—as, I am sure, have other Members—that many people who visit bingo clubs do not have many other social opportunities.The clubs provide those people with all kinds of support that they might not otherwise receive, and it might cost to provide such support in another form.
Most people would regard bingo as the safest and most benign form of gambling, and it is extraordinary that the Government should have got themselves on this hook. The point made by the right hon. Member for Suffolk, Coastal is surely the relevant political one for the Exchequer Secretary to consider. She must think about the sheer staggering ineptitude involved in a Chancellor, and a Department and its officials, not seeing this massive problem coming down the track. I do not blame her, because she was not at the Treasury at the time, but when she arrived and was given this brief she must have thought, “How on earth did the Labour party manage to get itself in a position where it is taxing bingo at a higher rate than other forms of gambling just before a general election?” If I were in her shoes, I would be appalled that I had been given such an impossible hand to play as a Minister and I would wonder whether my Government had completely lost their survival instinct.
If there is one theme running through this Finance Bill, it is that the Government seem to have had an unerring ability to identify groups in society that might be inclined to support the Labour party and to punish them with higher tax. It is no wonder that very few people now vote for the Labour party in elections, because it seems to be systematically trying to pick those people off and give them reasons to vote for other parties. Unless the Minister is able to respond to the concerns raised by her Labour colleagues and by Opposition Members, it will be no surprise if bingo players across the country draw the obvious conclusion, which is that the Labour party is no longer interested in having their support.
Mr. Bone: It is a great pleasure to follow the hon. Member for Taunton (Mr. Browne). As he made many of the points that I wished to make, I shall not repeat them. This is one of those occasions when, if every hon. Member had been here listening to the debate, rather than some of them hiding in their rooms, they would have supported the amendments proposed by those on both sides of the House. I have been sitting here waiting to speak for a while, and one of the pleasures has been imagining the hon. Member for Stockton, South (Ms Taylor), who made such a thoughtful speech, calling “Legs 11” and “Two fat ladies”. I really do not think that she could have been bad at that—but I digress.
My right hon. Friend the Member for Suffolk, Coastal (Mr. Gummer) made a powerful speech, and I agree entirely with him that the reason why we came into this House was to support the people in our society who are not well off, and who are vulnerable. Members on both sides of the House do that, but I have always believed that the Tory party has stood up for those people. I will be able to show again that we stand up for those people by supporting the amendments tonight.
I wish to discuss the Flutters bingo club in the centre of Rushden, the second biggest town in my constituency. Everyone who turns down the high street to go to the
post office or Barclays bank has to go past Flutters—the building is an old cinema—and people who pass by will always be struck by the happiness of the people going in and out of the club. It is a social club as much as a gambling one, and we certainly do not wish to lose such a facility in my constituency. Unemployment in Wellingborough has risen by 84 per cent. since Labour came to power, and I do not want any more people to lose their jobs.
The arguments that I wish to put forward tonight have been submitted to me by the director and the owner of the Flutters club. The club is not a big concern; it is not part of Mecca bingo or some such organisation. This family have been in the business since 1982 and I believe that they run three small bingo clubs, of which the biggest is the Flutters club in Rushden. I am very much looking forward to going to it at 2.15 pm on Friday. Now I am worried that I shall be asked to call “Legs 11” and “Two fat ladies”; we shall see.
The club’s regulars are there to socialise, and not really to gamble. The owners see them as part of the family. The club has already been hit by decisions that Parliament has made. The smoking ban, introduced in July 2007, damaged business, but it was supported by the owners of the club. They do not smoke, and they thought that the ban was right for the health of customers and staff. It has also been hit by online bingo. The owners hoped that the Government would not make their life more difficult, but, they say:
“new licensing laws, bureaucracy, and the punitive tax system kept piling on difficulties.”
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The owners point out that just as they saw the light at the end of the tunnel, with the Government seeming to recognise that double taxation was wrong and bingo clubs should be treated in the same way as other gambling establishments, along came the proposal to increase the gross profits tax. Hon. Members may think that the GPT is a tax on the profits of a club, but it is not; it is a tax on turnover. Whether a club makes any profit or not, it still has to pay tax on the gross.
It may appear that removing the VAT liability is a benefit for the club, but it will no longer be able to claim back input VAT. The Flutters club is falling a little into disrepair. The owners would like to refurbish, but they have had to put their plans off, because they will no longer be able to claim back the VAT. As their letter says, the owners would have been better off if VAT had been kept, at 17.5 per cent., and the GPT done away with.
As the owners say, the increase in GPT beggars belief. Although they want to continue the club, the danger is that they will have to close if things continue to get worse. Some 20 people would lose their jobs.
Bob Spink (Castle Point) (Ind): The hon. Gentleman is making a passionate and well-informed speech and I agree with everything he says. If the Conservatives ever win power and form the Government, will they cut the tax back down to 15 per cent.?
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