James
Duddridge: My hon. Friend is right to question what is
happening. Conservative Members will remove themselves for 10 to 15
minutes to consult with Mecca Bingo and other bingo halls about the
bingo strategy that was previously
outlined.
Mr.
Hands: I thank my hon. Friend for that clarification. I
had thought for a moment that they were all friends of Dave Phillips
and were alerting him to the fact that his £58.50 debt is now in
Hansard.
The
Chairman: Order. We are getting a little noisy. We know
that the Speaker does not like a lot of noise, so can we keep things a
little quieter,
please? Mr.
Hands: Thank you, Mr. Atkinson. I would
appreciate confirmation that it is the case that larger casinos will be
the net losers and that the smaller operators—poker rooms or
casinos—will be the major beneficiaries. That is, I think, the
implication of the figures in the Red Book. Moreover, I should like an
analysis of the change in the effective tax rates to which large
casinos in particular will be subject. The National Casino Industry
Forum believes that the effective tax rate on the player-to-player
games will exceed 35 per cent. At the moment, the figure stands at 15
per cent. The forum has criticised the Government for a total failure
to consult. It
said: “None
of the changes announced have been discussed with the industry at the
various meetings held with ministers or officials from the Treasury (or
from DCMS), this despite previous assurances that it would do
so.” It
seems to fly against the Government’s stated aim of promoting
softer forms of gaming within casinos to then significantly increase
the tax on some of those forms of gaming. Will the Minister clarify why
the industry was not consulted, and what discussions took place with
the Department for Culture, Media and Sport with regard to the balance
of gaming within casinos and the likely effect of clause
113. Finally,
I should like some clarification as to the purpose of allowing
exemptions to be made by statutory order. I have already mentioned two
areas of exemption, and I am intrigued to know how the Government will
consider future exemptions or perhaps repeal some of the existing
ones.
10
am Under
what circumstances do the Government foresee the power being used?
Although such orders would be subject to the affirmative resolution
procedure, the possibility itself of an order coming before us that
would fundamentally change the tax status of one of these places could
create uncertainty. Old Conservative or trade union clubs offering
poker to members could be faced with a bit of a surprise. I realise
that that situation is not unique—it is a fairly well-known
feature of this place—but I would be interested to hear from the
Minister on what grounds she thinks that such an
order might be introduced. The notes in the Bill, and the paragraph on
this power in the Financial Secretary’s recent letter, do not
appear to explain those procedures, so I would be grateful for some
clarification. Sarah
McCarthy-Fry: I offer my condolences to the hon.
Gentleman; he appears to have been totally abandoned by every Committee
member from his party—was it something he
said? I
want to pick up on some of the hon. Gentleman’s points. The
thrust and reasoning behind the clause is for consistency with other
gambling sectors. It ensures that such gaming is exempt from VAT, but
subject to the relevant gambling duty. Card room fees will therefore
come under gaming duty. I also want to make it clear that pubs are not
included, because the clause limits gaming duty to high-stake gaming,
which, under social law, is permitted only on casino premises. Poker
played in pubs and elsewhere for small stakes and prizes will not be
drawn into the gaming duty by this measure. Someone mentioned that
originally card rooms were considered as a service and not a profit for
the house. The fees received for casino card rooms are now taxed on a
consistent basis with other gambling activities. That is the thrust
behind the
clause.
Mr.
Hands: The Minister says that fees will be taxed on a
consistent basis, but surely she must realise the fundamental
difference between a participation fee on poker and the house taking a
cut on something such as blackjack. Was she aware of the difference
when she considered the background to the
clause?
Sarah
McCarthy-Fry: I am certainly aware of that difference, but
we are considering gambling and gaming as a whole. I see the hon.
Gentleman’s point about narrowness, but we are looking for
consistency across gambling regimes.
I want to
return to the point about consultation. In autumn 2007, we announced
that we would reconsider the taxation of casino card rooms, and in 2008
and 2009 we received representations from the industry. Those suggested
that card rooms were just a small part of the casino model and that
many casinos did not offer player-to-player gambling. We concluded,
therefore, that for consistency with other gambling regimes, fees
should be VAT exempt, but be taxed under the relevant
gambling
duty. The
hon. Gentleman asked why we had included the option for exemptions
under affirmative order. We have done so in case the social law changes
the places permitted for high-stakes poker, in which case we would need
the ability to change the legislation here. The second part of the
clause was the result of a simplification request from the Gambling
Commission and the casinos sector. Previously, individual casino games
were listed in the Finance Act and new games had to be added through
secondary legislation whenever the regulator wished to trial new games.
That was a really cumbersome process, and this clause removes the need
to list these games individually in tax legislation. It should
facilitate the industry and the regulator in trialling new games
quickly and in the certainty that the tax law captures them.
Question
put and agreed
to. Clause
113 accordingly ordered to stand part of the
Bill.
Clause
114Remote
bingo
etc Question
proposed, That the clause stand part of the
Bill.
Mr.
Hands: The clause is branded as another tidying-up
exercise, but it gives rise to some anomalies that I want to probe. Its
intention seems to be to keep online bingo at a 15 per cent. rate. The
scope of remote gaming duty will be extended to include online bingo,
which will cease to be subject to standard bingo duty, which is what we
have discussed at some length on at least a couple of
occasions. The
irony, which my hon. Friend the Member for Cities of London and
Westminster mentioned, is that the Government will now tax online bingo
at 15 per cent., but bingo played in clubs at 22 per cent. I understand
why they want to make online bingo consistent with other forms of
online gambling, but the anomaly arises in calling it a tidying-up or
simplification exercise. It will benefit the online community who sit
around at home and play online over perhaps more mature people who go
to bingo clubs and take part in a social activity. What is the sense of
that? If
anything, I would have thought that the bias should be away from online
and, although regulated, unsupervised gambling to gambling in the
supervised and regulated environment that bingo clubs provide. I would
be interested to know what assessment the Government have made of
people migrating from bingo clubs—we all know that online
penetration in communities that might typically be found in bingo clubs
has increased enormously over the past 10 years —to
playing bingo online on, for example, a home
computer? Remote
gaming duty is chargeable on games when players participate using the
internet, telephone or interactive TV, but not when another gambling
duty is charged. The Government are moving bingo from another category
into the category subject to remote gaming duty. Because remote bingo
was subject to standard bingo duty, some inconsistencies arose between
online bingo and other online gambling. The issue is where to have the
consistency. Should it be with online bingo and other forms of online
gambling, which is what the Government propose, or with social club
bingo and internet bingo? I may have laboured the point too long, and
perhaps the choice is
clear. Clause
114 makes the opposite decision from the previous one. It prevents a
tax rise that would otherwise be likely to cause a loss of revenue in
practice as operators and internet users take further advantage of the
lower tax rate on internet sites hosted abroad. As I said on clause 19,
the overall revenue from remote gaming duty is so low that the
Government cannot disclose it because it would compromise its
obligations to the one significant operator left in the UK. The intent
in the clause seems to be to have a negligible effect on the present
arrangements for remote bingo, but I am wondering what effect it might
have on the arrangements for club bingo. No doubt it will
succeed in its first aim to create consistency, but we want
to hear from the Government what consideration has been given to
migration between two forms of
bingo.
Mr.
Jeremy Browne: We have a remote Conservative party here to
discuss duty on remote bingo, although I must be careful how many
stones I throw as I am the only representative of Britain’s
strongly growing third
party.
Mr.
Hands: Perhaps the hon. Gentleman will confirm that the
only member of the Committee who has never attended it is his boss, the
hon. Member for Twickenham (Dr.
Cable).
Mr.
Browne: I do not think that my hon. Friend the Member for
Twickenham has attended the Committee yet. However, if you will allow
me, Mr. Atkinson, I would like to point out briefly that the
hon. Member for Tatton (Mr. Osborne) and the shadow Chief
Secretary to the Treasury do not seem to regard the Committee as
sufficiently important to take an interest in its affairs. Given the
level of public debt, I regret
that. Let
me turn to clause 114 because I want to explore briefly the point made
by the hon. Member for Hammersmith and Fulham. I do not have a
particular attachment to gambling per se. In a liberal society, I am
happy for people to choose to spend their money as they see fit,
although I realise that in some cases—albeit fairly exceptional
ones—doing so can have a detrimental effect on their finances,
health or social circle. However, that is a decision people make and we
should not seek to inhibit those decisions, unless there is an
overwhelmingly compelling reason for doing
so. On
bingo, I do not consider it to be my obligation as a politician to
promote people’s participation in bingo purely as a form of
gambling—they may or may not choose to play bingo, and that is
their decision. However, there is virtue in the social aspects of
bingo, and I can see merit in us trying to encourage or, at any rate,
not impede those sorts of activities. What seems so perverse about the
clause is that it does not recognise that bingo clubs provide some sort
of beneficial social service—albeit on a commercial basis and if
it is in their interests to do so—whereas the online version
does not provide any of those benefits at all. If the Government were
looking to discriminate in favour of one form of bingo over the other,
one would imagine that the discrimination would not be aimed at the
more social form of the game.
As the MP for
Taunton, I have been to Mecca Bingo there. In discussions on previous
clauses, it has been said that many people who choose to go to bingo
have reasonably low incomes and that they do not spend a vast amount of
money there. Bingo is an opportunity for people to meet friends. Meals
are often provided at reasonably low cost and people enjoy the
atmosphere and social aspect of attending a bingo hall. All of those
advantages do not, of course, exist in the online form. Of course, the
game at a bingo hall is also supervised, so unless the establishment is
run by people with little social compassion, they would be in a
position to intervene if someone were perhaps spending more money than
they ought to given their means. Of course, that opportunity to
intervene in a compassionate way does not readily exist in relation to
the online form, which is to be given preferential tax
treatment.
Mr.
Todd: I have a genuine query. If the hon. Gentleman does
not know the answer, perhaps the Minister will. Is there any reason why
online facilities could not be
offered within a bingo club, because that would provide access to many
of the services that he rightly mentioned? There are other aspects to
being present in the bingo hall that are not directly related to
playing the game in a particular
form.
Mr.
Browne: I defer to the Minister or her officials on that,
but I am not aware that there is any bar to doing
so.
The
Chairman: Order. I am not sure how relevant that is to the
clause.
Mr.
Browne: A further point is that we assume—perhaps
because Committee members are all of working age, or perhaps for
another reason—that internet access is universal. One could be
forgiven for thinking that. On television and radio programmes, it is
often said that more information will be made available on the website,
and using the internet has become part of our daily dialogue. Of
course, most people do have access to computers and the internet, but
we should not forget that many people do not. Millions of people in
this country neither have access to the internet nor know how to use a
computer. I am inevitably generalising when I say this, but that is
more likely to be the case if people are older and poorer. In both of
those categories, particularly in relation to those on low incomes,
there has been a big catch-up and far more people on low incomes have
access to the internet than was the case. Let us be frank about
it—some of the social activity in bingo halls is targeted at the
tastes not of younger people but the more mature market. It seems
strange that those who are older or on lower incomes, who may enjoy the
social aspects of bingo, are taxed at a higher rate than those who are
younger or on higher incomes, and who may have internet access at home.
That is a perverse approach for any Government to take, but
particularly a Labour Government.
10.15
am The
Exchequer Secretary has come to the Bill quite late in our
deliberations, but I suggest that there is merit in consistency. We
should probably be trying to achieve uniformity and iron out some of
the inconsistencies. I have some sympathy with the hon. Lady, because
the Finance Bill is typically the largest and most complex piece of
legislation, and she will be immersed in detail. She is giving us the
orthodoxy that she is required to produce on behalf of the Government,
but familiarising herself with the Government’s position is a
huge undertaking without looking to challenge some of those
assumptions.
If the
Exchequer Secretary were to step back for a moment and consider the
matter as a politician rather than as someone whose job is to ensure
that the official line is communicated to Parliament—for
example, if she were to listen to the representations made by the hon.
Member for Plymouth, Devonport—she must surely see that the
Government are unnecessarily bringing on themselves huge grief and
unhappiness. Much of that will come from people who, in other
circumstances, might consider voting for Labour at the next general
election.
Not only would
it be right to take a reasonable and consistent approach to taxation,
but it would be in the Government’s interests. As the Labour
party is rightly seeking to appeal to the electorate, the Government
should look again at this area of taxation. It is shot through with
anomalies, and on the whole those anomalies are least fair to the
oldest and poorest in society.
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