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I do not speak from the Front Benchand probably never willand my hon. Friend the Member for Hammersmith and Fulham (Mr. Hands) spoke with
great clarity on this subject. I just want to talk about the situation of that small family club in Rushden. The owner makes the point:
Bingo is a working class pastime. It has amazed me that after 30 years it is a labour government that has brought us to the brink of closure.
He wants to keep the club open because, if it closes, he
can see all those lovely warm grandmothers, everyones Nan, sitting in a lonely room, waiting to be picked up to go to her bingo night out which she loves. But its gone. So where can she go now for a night out, with a friend, or on her own because the staff and people are so friendly. Where?
It is that social element that I do not think that the Government have addressed at all. They must think again.
We are not casinos we are not bookies, we are totally different, we rely on lots of people so we need big venues, and the spending is small amounts, yet we are taxed more heavily?
I understand the increase in GPT can still be blocked and plead with you to do so, because, in short, its insane.
Tonight I will do everything I can to block it.
Mr. Don Foster: In many ways, this is an excellent continuation of the debate that we had on 13 May. Indeed, we have heard some of the old favouritesthe excellent introduction by the hon. Member for Dundee, East (Stewart Hosie) and the passionate speech by the hon. Member for Barnsley, Central (Mr. Illsley). There has also been some welcome new blood in the debatenot least the right hon. Member for Suffolk, Coastal (Mr. Gummer), who, I suspect, will be bitterly disappointed by those on his Front Bench in a few minutes when we come to vote.
Two things have been a common theme in the debate this evening. First, there is total incomprehension among people on both sides of the House of what the Government are proposing to do about bingo. Not a single person so far has spoken in support of what they advocate, whereas there has been a great deal of support for the variety of amendments before us. Secondly, it has come across loud and clear that not only do people oppose what the Government are doing but there is genuine passion for recognising the importance of bingo clubs in our communities and supporting them. Everyone who has spoken has shown understanding of the importance of what the roughly 600 bingo clubs provide in our communities. They provide much-loved entertainmentlargely, as my hon. Friend the Member for Taunton (Mr. Browne), who spoke from our Front Bench, has pointed out, for women, older people and people who are less well off. As we have all said, it is crucial to try to maintain that soft form of gambling so that we do not drive people into much harder forms.
The other thing that has come out in the debate is the fact that there is some surprise at the Governments incompetence as regards getting the figures right. Let us look, as many have done already, at page 153 of the Red Book. It is very clear what the Government think will happen. There is the very welcome removal of VAT on participationincidentally, may I be the only one to pay tribute today to the Government for helping bingo by increasing the number of machines that clubs can have? However, that removal of VAT, the Government
claim, will save the industry £50 million in the first year rising to £60 million in 2011-12. The bingo industry will then lose, through the increase in bingo duty, from 15 to 22 per cent. Many people have pointed out that those figures are meant to be an estimate; frankly, they are total fantasy. We know what is happening as a result of the Governments loss at the EU tribunal in respect of duty on interval bingo, gaming bingo and so on. Many of the companies are not paying that duty. The Governments figures are way out of order.
We have not yet had an answer to the question that the hon. Member for Hammersmith and Fulham (Mr. Hands) asked the Minister about whether the Government have taken account of irrecoverable VAT, but on the assumption that they have not, which I suspect is the case, that is a further example of the figures being way out of line.
The Government have done something that is incomprehensible because it will cause further damage to the bingo industry. Thirty clubs have closed in the past year, and more than twice as many since 2007. Only last week Gala, one of the major companies, announced that a further five clubs would close, and it explained to the Treasury that that was largely because of the taxation issue. No one can understand why the Government are doing something that could be so damaging to something so loved by people in our communities.
The right hon. Member for Suffolk, Coastal, among others, made it clear that there is another matter about which there is total incomprehension. Why have the Government failed to grasp the nettle of dealing with the different issues raised by the various forms of gambling in this country? Soft forms of gambling like bingo lead to very little addiction, but the harder forms like online gambling lead to high levels of addiction. Why can we not have a differential taxation policy, with a lower rate for soft forms of gambling and a higher one for the harder forms?
My hon. Friend the Member for Taunton was wrong about one thing. He said that online bingo was taxed at 15 per cent., but the truth is that it is rarely taxed at all, because the vast bulk of it is run through offshore websites that pay no tax in this country. Even if they are subject to European Economic Area regulation, or whitelisting, they do not contribute to the process. They certainly do not make any contribution, as they should, to the costs of research, education and treatment.
We need a differential tax regime. We certainly should not put the tax up to 22 per cent.; it should stay at 15 per cent. As the protesters in Trafalgar square and Westminster said recently, One and five, keep bingo alive!
Sarah McCarthy-Fry: I thank all those who have contributed to the debate, especially the hon. Member for Dundee, East (Stewart Hosie) and my hon. Friend the Member for Barnsley, Central (Mr. Illsley) for speaking to their amendments. I also thank the Front-Bench spokespersons from both Opposition parties, and I am grateful for the contributions from the right hon. Member for Suffolk, Coastal (Mr. Gummer) and my hon. Friend the Member for Stockton, South (Ms Taylor), as well as from the hon. Members for Wellingborough (Mr. Bone) and for Bath (Mr. Foster).
As I am sure has been rehearsed many times, the rate increase is part of a package of measures that includes making bingo participation fees exempt from VAT.
The principal aim has been to simplify bingo taxation; as we know, the industry has been asking for that for many years.
Alongside the removal of VAT on bingo in this Budget, the bingo duty rate of 22 per cent. represents a reduction from a level of around 35 per cent. in 2003. We have to look at the effective tax rate which, on a comparable basis, was estimated at 24 to 25 per cent. before the Budget. The basis of that estimate was explained in some detail to the industry, which accepted it in correspondence with the Treasury before the Budget. However, the industry has since argued that the Red Book costing of the removal of VAT from gambling participation fees was wrong.
Some hon. Members have mentioned the High Court case. We have made it clear in previous debates that costings were based on the law as it stood at the time of the Budget. Key assumptions in the costings came directly from information provided by the industry, so they are not a fantasy. That information from the industry included detailed modelling on the impact of extra irrecoverable VAT, as well as detailed information from smaller clubs.
I have listened carefully to the concerns expressed by hon. Members today and in Committee, and I have read the transcript of the debate in the Committee of the whole House. I recognise the importance of bingo to local communities that has been pointed out by all those who have spoken this afternoon, and that is why we acted to simplify the regime, removing VAT and lowering the effective tax rate to 22 per cent. That is down from the 35 per cent. that was in place as recently as 2003, and it is below the 24 to 25 per cent. range in the pre-Budget report. Let me stress again that that figure was agreed with the industry at the time.
That is not all that we have done. The Gambling Act 2005 removed the 24-hour rule and the old membership requirements. It also allowed bingo operators for the first time to retain stakes, to be paid out as prizes at a later date. The bingo sector has also benefited from changes to gaming machine law, so it is not true that we are not helping itand of course, the help that we are giving is ongoing. Despite my short tenure in this post, I have already met representatives of the industry, and that consultation will be ongoing.
All taxes are kept under review, but decisions are taken in the round at PBR and Budget time. All the amendments before us today would cost moneyup to £35 million a year, depending on the amendment. That would have to be found from tax increases elsewhere or cuts in public expenditure.
I will continue to engage with the industry. I have already asked for evidence and data from its representatives on the points that they have raised, some of which has been received and some of which we still await. The information will be rigorously analysed, as hon. Members would no doubt want us to ensure that the figures are accurate. We can assure hon. Members that we will continue to have discussions on the state of the sector and the impact of taxation in the run-up to the next PBR and Budget. I am afraid I cannot support any of todays amendments, but on my assurance that we will continue to work with the industry, I ask hon. Members to withdraw their amendments.
Stewart Hosie: We have had a good debate again. We should have these bingo debates more often. They seem to engender real information and real passion from real Members from real communities, which is always a good thing.
The hon. Member for Barnsley, Central (Mr. Illsley) delivered another excellent defence of bingo clubs and communities, and an excoriating critique of the Governments assessment of the proposed tax changes. The right hon. Member for Suffolk, Coastal (Mr. Gummer) deduced that the Government have a new doctrineto tax the poor to help the rich. The hon. Member for Stockton, South (Ms Taylor) made a gentle and thoughtful speech, and rightly made the case that the Government should think again.
The hon. Member for Hammersmith and Fulham (Mr. Hands) was right to say that there was no justification for a 22 per cent. tax on bingo. He knows that the Governments VAT assessment is flawed. We have just heard the weakest defence of it from the Minister in her summing up. The hon. Member for Hammersmith and Fulham knows that it is likely that the Revenue was never entitled to levy the tax in the first place, he knows that it takes cognisance, wrongly, of irrecoverable tax. He must not be conned by the Governments attempt to obfuscate. It will be shameful if the Conservative Front-Bench spokesman refuses to back one of the amendments today, when the only person supporting him is the Government Whip. That is how bad the Tory Front-Bench position has become.
The hon. Member for Taunton (Mr. Browne) drew attention to the sheer staggering ineptitude of the Government in not seeing the trouble coming down the track. He was right. He also said with some sympathy that the Minister had been given an impossible hand to play. The hon. Member for Wellingborough (Mr. Bone) spoke about the Flutters bingo club in Rushden. I feel as though I have been in it; the description was so intense and detailed. I am delighted that he said that he would support the amendment. The hon. Member for Bath (Mr. Foster) was right to say that not one speaker backed the Government in the debate, either today or on 13 May, and he expressed total incomprehension of the Governments actions.
The Minister said that the effective tax rate for bingo had fallen. I am not convinced. Even if that is true, I am convinced that it leaves a profound unfairness22 per cent. as opposed to 15 per cent. across the board. The only question is whether I should ask that we delay this for a year, or whether we should stick to the principle of fairness in the entire gaming sector. I think we must stick with the principle. I hope the Tories will find some principle in the next two minutes, and I seek leave to press amendment 4 to a Division.
Question put, That the amendment be made.
Mr. Mark Hoban (Fareham) (Con): I beg to move amendment 31, in page 15, line 40, leave out from unless to end of line 9 on page 16 and insertthey have been made in accordance with section 257 of the Banking Act 2009.
After the excitement of bingo we move to clause 25, which is less exciting but more important for revenue raising. [Interruption.]
Mr. Deputy Speaker (Sir Michael Lord): Order. Will hon. Members not staying for this debate leave the Chamber quickly and quietly?
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