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House of Commons
Session 2009 - 10
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General Committee Debates
Delegated Legislation Committee Debates



The Committee consisted of the following Members:

Chairman: Mr. Greg Pope
Atkins, Charlotte (Staffordshire, Moorlands) (Lab)
Cooper, Rosie (West Lancashire) (Lab)
Dean, Mrs. Janet (Burton) (Lab)
Ellwood, Mr. Tobias (Bournemouth, East) (Con)
Fabricant, Michael (Lichfield) (Con)
Flynn, Paul (Newport, West) (Lab)
Foster, Mr. Don (Bath) (LD)
Greenway, Mr. John (Ryedale) (Con)
Harris, Mr. Tom (Glasgow, South) (Lab)
Mates, Mr. Michael (East Hampshire) (Con)
Meale, Mr. Alan (Mansfield) (Lab)
Sanders, Mr. Adrian (Torbay) (LD)
Sutcliffe, Mr. Gerry (Parliamentary Under-Secretary of State for Culture, Media and Sport)
Walter, Mr. Robert (North Dorset) (Con)
Winnick, Mr. David (Walsall, North) (Lab)
Wright, David (Telford) (Lab)
Joanna Dodd, Committee Clerk
† attended the Committee

First Delegated Legislation Committee

Monday 1 February 2010

[Mr. Greg Pope in the Chair]

Draft Gambling Act 2005 (Operating Licence Conditions) (Amendment) Regulations 2010
4.30 pm
The Parliamentary Under-Secretary of State for Culture, Media and Sport (Mr. Gerry Sutcliffe): I beg to move,
That the Committee has considered the draft Gambling Act 2005 (Operating Licence Conditions) (Amendment) Regulations 2010.
Good afternoon, Mr. Pope. It is a pleasure to serve under your chairmanship. The purpose of the regulations is to increase the maximum participation fee for prize gaming in bingo premises, and the maximum amounts that may be paid in money prizes in respect of such gaming. The regulations refer to a type of gaming where players are notified of the prizes in advance, rather than where the winnings are made up from the stakes of all the participants. Prize gaming forms an integral part of the business model for the bingo industry. Many operators have traditionally offered what is referred to as “prize” or “interval” bingo under prize gaming rules—smaller, faster games run in between sessions of main-stage bingo.
The industry generally regards prize or interval bingo as an essential revenue stream, which can account for up to 20 per cent. of bingo sales in some clubs. Members of the Committee will be aware that, last year in June, the Government introduced the Gambling Act 2005 (Limits on Prize Gaming) Regulations 2009. The regulations increased the limits on participation fees and prize levels for prize gaming in a number of different premises. It was the Government’s original intention that all venues entitled to offer prize gaming should benefit from an uplift in stake and prize levels. However, prize gaming in relation to bingo premises is regulated under a separate framework within the Gambling Act 2005, with a separate parliamentary procedure and, as a result, the 2009 regulations can be applied only to adult gaming centres, family entertainment centres and fairs. Since June 2009, the Government have held discussions with several stakeholders about whether the new prize gaming limits ought to be applied to prize gaming in bingo halls. Following those discussions, we have now concluded that there are no reasons why the new limits should not be applicable to bingo.
Throughout our discussions, the Government have considered three key points: first, whether the economic and social case for increasing prize gaming limits in adult gaming centres, family entertainment centres and fairs could be applied equally to the bingo industry; secondly, whether any new limits could translate straight across into the bingo industry’s business model or needed to be refined in order to meet the industry’s needs; and thirdly, whether an increase in prize gaming limits risks undermining the character of bingo premises as softer gambling environments.
Michael Fabricant (Lichfield) (Con): I am merely being a devil’s advocate, but what is the Minister’s response to those siren voices that say that the order would encourage excessive gambling on the machines?
Mr. Sutcliffe: The hon. Gentleman will know that the whole purpose of the Gambling Act was to put the consumer at the heart of the situation, and the protection of vulnerable people is a key element of that. As hon. Members will know, I am mindful that such issues are at the forefront of people’s minds when we discuss gambling in the House, and it is right and proper that we make sure that we do not do anything that harms the situation. Most people accept that bingo is one of the softer gambling environments.
When the Government reviewed stake and prize levels for category C and D gaming machines in 2008, they included proposals for prize gaming. That was in response to a number of compelling points made by stakeholders. We could not ignore the fact that the issues raised in respect of prize gaming and the needs of small businesses such as seaside arcades were comparable to those raised in connection with category C and D machines. In June 2009, following two public consultation exercises, the Government duly increased the participation fee and prize levels for prize gaming in certain venues accordingly.
4.34 pm
Sitting suspended for a Division in the House.
4.46 pm
On resuming—
Mr. Sutcliffe: I was making the point that many bingo premises continue to feel the effects of a severe long-term economic downturn across the industry. My Department has stepped in before, to help where it can, most notably in February last year when we increased the number of B3 gaming machines that bingo premises could offer, but many operators still appear to be facing difficult trading conditions. Prize bingo generates significant levels of income for many bingo clubs and the Government want to see those businesses benefit in the same way as adult gaming centres and family entertainment centres did in June 2009. The regulations will enable bingo operators not only to maintain important, long-established revenue streams but to develop and maximise them to their fullest potential.
The current regulations governing prize gaming limits in bingo premises operate on a slightly different basis from those in respect of other types of premises. They specifically distinguish between premises where games are played in the presence of children and those where they are not, allowing operators to offer different maximum prizes accordingly and reflecting the different levels of risk that each type of premises poses in relation to the licensing objectives of the Act. At present, bingo clubs can offer a maximum stake of 50p and a maximum prize of £35 if children are permitted on the premises, and a maximum prize of £50 if they are not.
Following discussions with a number of stakeholders, the Government have reached the conclusion that this difference in maximum prize levels between games played in the presence of children and those that are not should be preserved. To do otherwise would run the risk of undermining an important revenue stream, especially for the many smaller and medium-sized clubs. Therefore, the regulations we are debating today will introduce a new maximum stake of £1 and a maximum prize of £70 if those less than 18 years of age are permitted on the premises when a game is being played; where under-18s are not present, we propose a maximum prize of £100.
The Government must keep to the forefront of their mind the licensing objectives and the risk that the new limits might pose to them. The prize gaming limits implemented through the Gambling Act 2005 are intended to reflect Parliament’s view that prize gaming should remain a low-risk gambling activity suited to those venues more oriented towards the family or the wider community. The limits were considered necessary to mitigate the effects of any significant commercial exploitation of the prize gaming rules that might otherwise undermine the nature and character of prize gaming as a low-level gambling activity. Such concerns were paramount when the Government’s original proposals regarding prize gaming were included in the two public consultation exercises on category C and category D gaming machine limits carried out in 2008. None of the responses to those consultations raised any issues that would suggest problems with the similar proposals in the regulations.
In September 2009, I wrote to stakeholders informing them of the Government’s plans with regard to the introduction of new prize gaming limits to bingo premises. Following further discussions, I am confident that the new limits for bingo balance the needs of the industry with the Government’s commitment to consumer protection. The regulations ensure that the bingo industry can, in difficult economic times, secure established revenue streams and develop further a product that is hugely popular with players while still retaining the character of prize gaming originally intended through the Gambling Act.
I am confident that the regulations do not prejudice the licensing objectives and, in particular, the protection of children and the vulnerable. The regulatory framework implemented by the Gambling Act recognises that gambling is not a homogeneous activity but, rather, covers a range of experiences reflected in the different types of gambling environments available to customers. As a result, the cornerstone of the Government’s gambling policy is to regulate gambling premises based on the levels of risk they pose to the licensing objectives in the Act.
Bingo is a low-risk gambling activity and hon. Members here today will know and appreciate the important social functions that bingo clubs perform in their constituencies and in many local communities. The bingo industry faces and continues to face significant economic pressures. Given the valuable role bingo clubs play in many people’s lives, the Government believe that it is right for the clubs to benefit from an increase in prize gaming limits in a similar way that other types of premises did in June last year. I am pleased to commend the regulations to the Committee.
4.50 pm
Mr. Tobias Ellwood (Bournemouth, East) (Con): I am delighted to serve under your chairmanship, Mr. Pope. I am grateful for the opportunity to discuss this statutory instrument. I am surprised it has taken so long, considering the length of time the Minister has had the information on his desk. Indeed, as he alluded, the information could have been contained in a former SI.
It is fair to say that the balls have not fallen kindly for the bingo industry under this Government. The industry has pleaded for a long time for the removal of VAT. Having to pay VAT and gross profits tax meant it was hit by a double whammy. When VAT was finally removed, the Government increased gross profits tax to counter that change. We also had the dilemma of the slot machine changes, which are still out of sync with other forms of gambling available on the high street.
The bingo industry is important for Britain. We are a nation of gamblers, and we cannot deny that. From the Conservative perspective, it is important to have the correct regulations, no matter what form of gambling. Gambling should be seen as a form of entertainment where someone is likely to lose rather than a form of investment where someone is likely to win. When people move from one category to another, there must be a safety net to look after them, once they have been identified.
Michael Fabricant: My hon. Friend represents a seaside town. Does he agree that places such as Blackpool also depend on the gambling industry in the shape of successful bingo halls?
Mr. Ellwood: My hon. Friend makes a valid point. In places such as Bournemouth and Blackpool, and other places across the nation, we are seeing adult gaming centres and bingo halls being boarded up and closed down simply because they have not received help during the economic downturn. If we do not look after the soft gambling, we will see people migrate to harder forms of gambling, and that cannot be good for Britain.
I pay tribute to the bingo industry. More than 3 million people play bingo in Britain. It is an important part of British life. It brings together many people in the community—many are elderly—who might not venture out if a bingo operation closed down. It keeps the mind sharp and provides a glue for bringing elderly people together. Lack of Government support means that, out of 560 clubs, more than a hundred have closed in the past three years and another hundred are currently under threat. Once we lose a bingo hall, it disappears for good and turns into something else. We cannot then bring it back overnight. Any help that the Government are able to provide is welcome.
The Minister has said this is an important statutory instrument designed to help the industry, but he has also—reading between the lines—acknowledged that this particular SI corrects last year’s mistake. Normally, the stakes and prizes of machines are unofficially linked with the stakes and prizes of prize gaming. When the Government announced in September 2009 that they were increasing the stakes and prizes for amusement arcades, they thought they were automatically increasing the stakes and prizes for prize gaming in bingo clubs. However, that was not the case, so here we are today playing catch-up and having to make the smallest of changes to bingo regulations.
As the Minister said, the Government proposal is clear. It will increase the maximum participation fee for prize-gaming in bingo premises from 50p to £1 and increase limits on prizes from games within bingo premises from £50 to £100 on adult premises and from £35 to £70 on all other clubs. However, keeping the small error in mind and packing it together with other issues that have cropped up, recognised by the bingo industry, one has to ask, “What is the relationship between the DCMS and the Treasury?” The measures should have been tied in with consultations on category C and D machines. We had the fiasco over the VAT and gross profits tax issue, to which I alluded before, and we are now entering another confusing chapter, which is whether to replace amusement machine licence duty with another gross profits tax. Again, we are not clear what the DCMS is trying to achieve. It seems that things are led not by that Department, but by the Treasury.
I suggest that the Minister takes the Exchequer Secretary to the Treasury on a date, perhaps even to a bingo hall, either in Portsmouth or Bradford, South. If that cannot be arranged, I am happy to invite them down to Bournemouth, where they can understand the impact of the delays in the creation of a sensible policy and the extra taxation that bingo is being hit with during these difficult times.
The Gambling Act 2005, to which the Minister referred, provided a huge change in the landscape of British gambling, but it raised more questions than it answered. I understand—I stand to be corrected if this is not exactly accurate—that more amendments have been made to the 2005 Act than any other parliamentary Act, two thirds of which were made even before the Act was signed by Her Majesty the Queen. There is urgent need for reform in UK gambling laws, and the DCMS and the Treasury have treated gambling with an arm’s length approach. There is an urgent requirement to reform the horse racing levy, and immediate action is needed to stem the tide of internet gambling companies moving abroad. We also have the fiasco of the roll-out of the 16 casinos—not one brick has yet been built. As my hon. Friend mentioned, we have a shadow hanging over the seaside arcades, and we also have the problems facing the bingo industry. However, all we are getting from this Government is consultation after consultation. Finally, we have the decision that we are making today, which of course is welcome. However, it is the tiniest of changes to the world of gambling, a mere tweak to bingo regulation and the smallest adjustment to gambling, when the customer, the industry and the gambling watchdogs, which my hon. Friend the Member for Ryedale will no doubt—he has gone. I was expecting my hon. Friend, who speaks so well on these issues and has done much work on rigging, to make some comments on the issue.
 
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Prepared 2 February 2010