Draft Categories of Gaming Machine (Amendment) Regulations 2014

The Committee consisted of the following Members:

Chair: Mr Christopher Chope 

Bradley, Karen (Lord Commissioner of Her Majesty's Treasury)  

Corbyn, Jeremy (Islington North) (Lab) 

Efford, Clive (Eltham) (Lab) 

Flynn, Paul (Newport West) (Lab) 

Fuller, Richard (Bedford) (Con) 

Grant, Mrs Helen (Parliamentary Under-Secretary of State for Culture, Media and Sport)  

Harrington, Richard (Watford) (Con) 

Hemming, John (Birmingham, Yardley) (LD) 

Hendrick, Mark (Preston) (Lab/Co-op) 

Jones, Susan Elan (Clwyd South) (Lab) 

Lumley, Karen (Redditch) (Con) 

Macleod, Mary (Brentford and Isleworth) (Con) 

Mosley, Stephen (City of Chester) (Con) 

Pincher, Christopher (Tamworth) (Con) 

Shannon, Jim (Strangford) (DUP) 

Sheerman, Mr Barry (Huddersfield) (Lab/Co-op) 

Stuart, Ms Gisela (Birmingham, Edgbaston) (Lab) 

Stunell, Sir Andrew (Hazel Grove) (LD) 

Rebecca Short, Committee Clerk

† attended the Committee

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Eighth Delegated Legislation Committee 

Wednesday 27 November 2013  

[Mr Christopher Chope in the Chair] 

Draft Categories of Gaming Machine (Amendment) Regulations 2014

8.55 am 

The Parliamentary Under-Secretary of State for Culture, Media and Sport (Mrs Helen Grant):  I beg to move, 

That the Committee has considered the draft Categories of Gaming Machine (Amendment) Regulations 2014. 

It is a great pleasure to serve under your chairmanship, Mr Chope. The regulations intend to increase existing stake and prize limits for some categories of gaming machine. Sectors of the gambling and leisure industries, such as bingo clubs, pubs, clubs and family entertainment centres, continue to experience difficult trading conditions, and gaming machines provide an important source of revenue for many businesses. Difficult economic conditions have had a marked effect on gaming machine manufacture and supply businesses, leading to job losses alongside a reduction in the total number of gaming machines in the regulated industry in recent years. The regulations will provide relief to struggling businesses and are estimated to secure a net benefit to business of about £34 million a year. 

The Government consulted earlier this year on proposals to increase stake and prize limits for some categories of gaming machine. We received many positive representations in support of the proposals, and we remain confident that the increases will not risk the licensing objectives in the Gambling Act 2005, which rightly include the protection of children and vulnerable adults from being harmed or exploited by gambling. In fact, as part of that review, the Government secured commitments from the gambling industry to develop, trial, implement and strengthen player protection measures. 

The new limits for category B1 gaming machines provide greater consistency with the level of gambling expected to take place in a casino, where stringent regulatory controls already exist. That will help stimulate capital investment in the industry and allow it to compete more effectively internationally. The Government recognise that casinos represent an appropriate venue for higher stake and prize gambling, but retaining controls over the level at which people can stake and win money on gaming machines, including in well-regulated environments such as casinos, remains important. 

The proposed increases for category B3A and B4 gaming machines, typically found in clubs such as working men’s clubs, political clubs, Royal British Legion clubs, sports clubs and snooker clubs, will provide support to the club and manufacturing sectors, while ensuring consistency with the licensing objectives. The increased prize limit for category C gaming machines, which are mainly found in pubs, bingo halls and arcades, is likely to encourage operators to replace their existing machines.

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That will help to invigorate the manufacturing market and will allow consumers to access a range of new and interesting products. 

I finally turn to category D gaming machines, found primarily in traditional seaside arcades. After considering advice from the Gambling Commission and following consultation with the industry, we decided to maintain the stake and prize limits on all those machines except penny fall machines. Those are distinct from the types of machine that replicate adult gambling products, both in appearance and in the mechanics of play. That will minimise any potential risk to public protection from gaming machines accessible to children. 

The Gambling Commission’s advice recommends that there is scope to increase gaming machine stakes and prizes as proposed in the regulations at minimal risk to the licensing conditions, provided that the industry makes progress in delivering on its social responsibility commitments. The Government consider the future of category B2 gaming machines, which have attracted much debate in the House, to be completely unresolved. While a precautionary reduction in stake and prize limits is currently unsupported by the available evidence, we remain concerned about the potential harm caused by these machines and are working hard to advance rapidly our understanding. I am clear that decisions on the future of category B2 gaming machines must be informed by robust and current evidence. 

In summary, player protection is at the heart of this package of measures. The proposed changes are underpinned by commitments from the gambling industry to increase player protection. Although this overall package represents an important growth measure for many struggling businesses, I believe that it strikes the necessary balance between creating the conditions for industry growth and maintaining the licensing objectives that underpin the Gambling Act 2005. I commend the regulations to the Committee. 

9 am 

Clive Efford (Eltham) (Lab):  It is a pleasure to debate this issue under your chairmanship, Mr Chope. I must say at the outset that I am very disappointed with the Government’s response to the consultation on the triennial review. The Government consulted on measures to protect vulnerable adults. The memorandums that accompany this statutory instrument cite a lack of evidence and say, “Well, let’s do nothing,” but there are things that the Government should have done. We would have expected the Government to accept that there is sufficient evidence for measures to be taken on player protection. 

It may not be sufficient only to take steps on the stakes that can be paid out on fixed-odds betting terminals, for instance, or to reduce the £100 stake that can be laid every 20 seconds without sufficient evidence to suggest what a suitable stake might be, yet there are measures that the Government could have introduced. I note that the Association of British Bookmakers tried to introduce its own voluntary code, which it anticipates that some bookmakers may move to some time in 2014. That is not a satisfactory situation. It is not a mandatory situation, where the Government step in and say that player protection will be delivered and decide on the measures to introduce. 

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The current system of exclusion is too easily circumvented. It requires people to accept that they have a problem and seek help to stop them gambling. Technology has moved on significantly, and it could provide more effective ways to monitor individual activity and flag up when someone is gambling too much, before they are prepared to admit or even be aware that they have an addiction and need to stop. The industry should be challenged to work together on new technology to enhance consumer protection. 

There should be measures to protect staff. Many people are particularly concerned about high-speed, high-stakes gaming machines in betting shops. They are highly accessible and players can use them without interacting with staff, further weakening the effectiveness of self-exclusion and the monitoring of behaviour. The safety of those who work within the industry and deal directly with customers must be considered in any change to consumer protection. When money is at stake, emotions can run high, which can lead to violence against staff in the gambling industry. If staff are intimidated, they may not feel confident about enforcing consumer protection methods. 

This issue was highlighted in an article in the Daily Mail in March 2012 that featured a interview with a female member of staff in a betting shop who was required to work alone. She said: 

“If they kick off or get aggressive if I challenge them on ID or using dodgy notes, I’m all on my own. So I don’t challenge them.” 

Community, the union that represents staff, has been campaigning on this issue for some time and says that, if betting shop operators are serious about stopping problem gambling and protecting staff, single staffing must be addressed. 

Experts in the field talk about the sense of proportion when people are playing high-stakes machines. They describe people who play these machines as “getting in the zone”. Cycles of continuous play that lead to players entering the zone could be broken. All forms of high-stakes gaming machines should include some form of software to trigger a pop-up warning to remind players of the length of time that they have been playing and the amount of money that they have put into the machine. 

Professor Jim Orford gave evidence recently when we were looking at remote gambling. He said: 

“There are also things such as arranging breaks during play. Part of the problem with online gambling, or with any dangerous gambling, is the immersive nature of it—the fact that it is fast and quick and you can gamble again straight away. On poker sites, for example, I think I have read that you can play 70 hands in an hour”.––[Official Report, Gambling (Licensing and Advertising) Public Bill Committee, 12 November 2013; c. 36, Q90.] 

On FOBT machines, it is possible to play every 20 seconds, staking £100. Pauses break the immersive nature of these machines. Professor Orford, who has done a lot of work in this area, strongly recommends the introduction of that form of break for player protection. 

Another option to explore is whether continuous play could be further broken up by requiring players to load money into machines via interaction with staff. As well as breaking up play, that would make it easier to stop those who have self-excluded from playing on the machines. 

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It is also possible to place bets of up to £100 every 20 seconds on a B2 machine, which is a total of £18,000 per hour. Although that represents what can be staked and should not be taken as an indication of what can be lost in that time, it does underline the fact that the speed of play on B2 machines is much faster than someone could play roulette on a roulette table. The time between plays on B2 machines should be lengthened to allow players more time to reflect on what they are staking and better reflect the speed of play on a roulette table. 

In summary, more should be done to break up the speed of play—for example, pop-ups and interaction with staff—and decrease the speed of play on B2 machines. Staff must be given as much support as possible in enforcing consumer protection, and further research should be conducted into technological interventions. 

On FOBTs, the explanatory memorandum says on page 5, at point 14: 

“The main trade body in this sector, the Association of British Bookmakers (ABB), acknowledge the importance of gaming machines to the economic viability of betting shops.” 

One concern about the economic viability of betting shops is who is gambling in those establishments. We have heard a great deal about the number of betting shops, and we accept that there are no more than there were in 2005—the number is roughly the same—but they have moved. The issue is where they are located. There is sufficient evidence to show that these machines are driving betting shops to locate close to communities with high deprivation. 

A report from Professor Jim Orford published in August 2012 included figures based on peer-reviewed papers accepted for publication in the academic journal International Gambling Studies. A table in the report shows that, where FOBTs are present in betting shops, people with a gambling problem spend 23% of all the money that is taken by those machines. The Government have cited the success of those machines as the rationale behind some aspects of the regulations. I accept that there are no changes. However, there are no changes for player protection. When we see evidence that people who are vulnerable to gambling addiction are disproportionately losing money on these machines, we should take steps to ensure that we protect these vulnerable adults. 

The explanatory memorandum also says that, according to the ABB, 

“The percentage contribution of machine income to average betting shop profits was 39.9% in 2008 and rose to 49.4% in 2011.” 

Given the evidence that Professor Orford has presented on the disproportionate amount of takings that come from people who have a problem with gambling, I suggest doing more than we are today to protect players from using these machines. 

Turning to casinos, the Government have consulted on the increase of B1 category machines to a possible £15,000 without any statistical analysis to justify the change. The industry requested an increase of £10,000, and it was not clear during the consultation why the Government chose to include £15,000. The industry must have carried out a great deal of research before making a demand for an increase of the prize ratio from a £5 stake to a £10,000 prize. However, the consultation gave no indication of why that should be. 

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What we have here from the Government is a suggestion that we increase the prize to £10,000, but when these machines are connected within an establishment, the prize can actually go to £20,000. I find that suggestion a little strange. The Government stated in the consultation document that there was no evidence to prove a causal link between any form of gaming machine and problem gambling. However, they also stated more than once that there was definite proof that higher-stakes gaming machines are linked to problem gambling. They said: 

“However, the causal link between B2s and problem gambling remains poorly understood (although the association between gaming machines, particularly high stake, high prize machines and gambling-related harm is widely accepted); without such evidence there is a risk of introducing disproportionate and untargeted regulation that could cost jobs.” 

They continued: 

“However, there is strong consensus that although there may be a lack of evidence of a causal link between gaming machines (of whatever type) and problem gambling, it is a statement of fact that some players are harmed by gambling on machines”. 

If the Government believe that there is a link between high-stakes, high-prize machines and problem gambling, it would seem logical to complete the necessary research to pinpoint the problem before they increase the stakes and prizes on these machines. 

The memorandum that accompanies the impact assessment says in paragraph 7.4: 

“The Gambling Commission’s industry statistics (compiled from regulatory returns submitted by operators to the Commission) indicate the extent to which some sectors of the gambling industry have suffered in recent years. For example, the arcade sector has seen an average 21% reduction in revenues since 2007 and more than 290 arcades have closed since 2009/10 with a loss of more than 900 jobs.”— 

that sector has been hardest hit— 

“Similarly, data provided by the Bingo Association shows that 137 bingo clubs have closed since 2005, while net revenues declined by 27% between 2005-2010 and total industry profits dropped by 51% over the same period. According to data supplied by the British Beer & Pub Association, income from gaming machines across the pub sector has declined dramatically since 2002 which, to some extent, reflects the steady decline in pub numbers over the same period. We also understand that members’ clubs and commercial clubs rely on gaming machines as a source of income. Finally, while the casino sector has remained relatively stable since 2008, this has not translated into growth. Capital investment in the casino industry has declined sharply from 2007, with capital expenditure at the end of 2009 standing at less than half the level it was in 2004. In addition, the number of people employed by the industry has fallen by 10% over the same period”. 

I am slightly confused about the employment figures on page 6 of the impact assessment, so I would like some explanation from the Minister. The accompanying table shows that employment has gone up since 2009 by almost 1,000 members of staff. 

I would also like an explanation of the lack of investment in the casino industry, because the industry is not on its knees. The lack of capital investment could be explained by the restrictions on opening new casinos, rather than the state of the existing casino industry. What impact on the gambling industry are the Government looking for by increasing the prize money of B1 machines from £5,000 to effectively £20,000? Where is the evidence in the impact assessment that the industry is desperately in need of such investment? 

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Under the heading “Category B1,” the impact assessment later outlines the effect of the changes on casinos. Paragraph 59 on page 12, after talking about casinos, goes on to outline the impact on the beer and pub industry and the bingo industry. That seems to be using a problem in another industry to justify an increase for the casino industry that is totally unjustifiable and unnecessary. 

We get few opportunities to express our dissatisfaction with the Government’s position, particularly on FOBT machines. We entirely accept their argument that an increase in prizes may have a positive impact on working men’s clubs and social clubs, but we do not accept that, overall, the Government have done a good job of consumer protection or made a case that justifies their proposed changes and, more importantly, the changes that they are not making. 

Although we might accept that there is no evidence yet to suggest whether it is suitable to change the stakes and prizes for B2 machines, too—I accept the argument that empirical evidence is needed before making that giant leap, because it might just create another problem somewhere else—there is enough evidence that player protection is important and urgent. We need to act now. We even have research showing a clear link between an increase in the importance of FOBT machines to the betting industry and the number of people betting on those machines who are from deprived communities or who have a problem with gambling. The only opportunity that we will get to express our complete dissatisfaction with the Government’s lack of action on that is to vote against the regulations this morning. 

9.18 am 

Richard Fuller (Bedford) (Con):  The shadow Minister has spoken extensively, and I do not want to detain other Members by repeating a number of his points. I will focus my comments on his points on the problems associated with betting machines in high street bookmakers. I understand that the regulations do not increase the prizes to be gained from such machines, and I would appreciate it if the Minister could confirm that. 

This is a lost opportunity to make certain changes, not only to protect people who use the machines in betting shops, as the shadow Minister mentioned, but to express that it is not the Government’s role to intervene to effect structural change in the industry. As the report associated with the regulations notes, structural change is occurring in the bookmaking industry, which can be seen by the fact that the average proportion of betting shop profits from gaming machines has increased from just under 40% to nearly 50%, but the shadow Minister failed to say that that was in three years. 

The industry’s transformation has been rapid, and I am sure that that will have a significant impact on the economics of those businesses. I have no qualms about the business people who run our betting shops, and I am sure they pursue their industry with the highest levels of professionalism. As I said, however, it is not the Government’s job to intervene if there is significant structural change. I was concerned that paragraph 15 on page 6 of the impact assessment seems to suggest that, because of a decline in other areas of business, there was somehow some justification for the Government being perhaps lenient in their examining of this area, which is not the case. 

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I was also concerned by the points made about the progress that the industry is making in assisting the Government with their understanding of the impact of fixed-odds betting machines on complex addiction problems. The problems are not only with gambling addiction, but also the relationship between gambling addiction and drug and alcohol addiction. That is the cornerstone of the issue. The industry has a responsibility not to wait until it is convenient to provide the information that the Government need to make their assessment, but to be proactive in providing such information. Paragraph 79 on page 17 of the impact assessment states that 

“the Government expects to see a demonstrable commitment from the industry to share data, as outlined, and strengthen player protection.” 

By what yardstick is the Minister measuring the industry’s progress? I am sure that the industry wants to provide such information, but how will the Minister ensure that that happens? 

Finally, I draw the Committee’s attention to page 33 of the impact assessment. The present value of the impact of the measure on the gaming industry’s revenues is £141 million and there is a cost to industry of £42 million, so the net present value is £99 million. As there is a positive action on cost, the measure’s result is that the gaming industry will invest. It is not that it will cut back and that the revenue is there to assist them as their industry declines. The measure will increase revenues and the industry is looking to invest as a result of Government investment. Where is that money coming from? I do not believe that it comes from people who we would anticipate to be able to provide support for an industry that is going through structural decline, and I do not believe that it is the Government’s responsibility to ensure that that happens. 

9.22 am 

Jim Shannon (Strangford) (DUP):  I want to ask the Minister a couple of questions. Will the regulations cover coin machines in pubs, clubs and cafés? My constituents have raised several concerns about how that may affect them. The areas of highest prevalence and use of such machines seem to be areas of low income which have higher numbers of people on benefits, so where such machines are located is clearly focused. People who use the machines often have less money but live for the chance of winning £100, £200 or more, which would then perhaps pay for their shopping for the week after and the week after that. They hang on to the element of chance. What controls will be placed on pubs, clubs and cafés? They are three places that nearly everybody visits at some point and the machines sit seductively in the corner, attracting people towards them. It is important that we have some control and some protection for vulnerable people, those on low income and those on benefits, who seem to be those who use such machines the most. 

9.24 am 

John Hemming (Birmingham, Yardley) (LD):  As the Opposition have said, I would be sympathetic were the fixed-odds betting terminals limited to £2. We face, however, a constitutional difficulty in such Committees in that statutory instruments can be struck down by the

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courts, but a vote here has no dramatic effect and does not actually affect the outcome. I will be voting with the Government. 

The difficulty is that solid evidence would be needed to satisfy the courts were a judicial review taken out on the issue. I welcome the Government saying that they have not come to a final decision, because there is not only evidence of problem gambling, but anecdotal evidence of money laundering. Urgent effort needs to be put into obtaining the evidence that would make this statutory instrument and the change stand up to judicial review, because the danger is that they may not. 

The industry would also like to see something done about category D. I must declare an interest in the crane machines. I allow my children to waste money on crane machines so that I can explain to them how such machines would not be there if people were not making a profit out of them, and they therefore find out at an early age that to some extent gambling can be a tax on the innumerate. 

9.25 am 

Paul Flynn (Newport West) (Lab):  There are constituency cases that haunt us. I remember a woman of mature years who rang me and told me she was about to take her life. She had never gambled and she saw a programme on television that was based on gambling; the game had the same title as a popular television programme. She started gambling and in the early stages won £2,000, £6,000 and £10,000. She thought that that was a way to get a little nest egg. She and her husband already had a nest egg. They had been in business for many years and were near retirement. She went on gambling and of course she lost. A helpline told her, “You are on a losing streak now, but that is always followed by a winning streak. Just keep going. Gamble on a Saturday morning. That’s the best time.” And she went on and on until the entire savings that she and her husband had accumulated over a lifetime of work in a small business had gone, and she had not told her husband. She found another answer and went to the machines on the high street, where she rapidly got into deeper debt. 

We cannot look upon gambling as just another business that has a balance sheet. At its worst, gambling feeds off the vulnerable. The industry grows fat off other people’s weaknesses and miseries. I went into one of the shops in my local area where they kindly allowed me to play on the machines, which have been described as the crack cocaine of gambling. I did what an ordinary punter off the street might do, and lost several thousand pounds in a very short time. I was there for only a morning, but it is easily done. 

One cannot gamble immediately, but in seconds someone can lose huge sums of money. It is easy to see how someone on the high street looking to pay their debts or solve their problems, or get presents for Christmas, suddenly sees the possibility of answers to their problems in those machines. Payment is instantaneous and no great skills are needed. The Government have allowed a great permissiveness to happen. [ Interruption. ] I am sure nobody here has been approached by the industry, but we know how lobbying goes on and how the industry approaches MPs. Some industries finance political parties, but I am sure that that is not the case here, as Members would declare if they were under pressure or if they

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were being lobbied by the gambling industry to allow it to be more permissive and to allow it to make what the Minister said was an extra £34 million in profits. It is £34 million-plus, I am sure, from the pockets of gamblers. 

The industry descends on areas and exploits unemployment. For every 1% increase in unemployment in an area, there is a 20% increase in bookmakers’ activities. In the areas of greatest deprivation, including my area, and in areas of high unemployment, those vultures gather, and they exploit the misery and weakness of our constituents. 

I am told that there is not a country in Europe that allows the fixed-odds betting terminals to be on the high street as they are in this country. Why on earth are we encouraging that? Statutory instruments are rarely contested, as has been suggested, but we have to take a stand against this one. Campaigns have been run by newspapers. The Sunday People ran a campaign against these fixed-odds betting terminals, and it received an influx of people calling and writing in with their experiences and those of their friends and families—people who are hit by an addiction to gambling, which is as damaging as any other addiction. 

We heard this morning about the huge section of our country that is indebted in various ways, and the industry advertises on television and says, “We can solve all your problems. Don’t worry about debt, because we can consolidate it into one big debt.” They suggest that there is some way out—some easy escape from debt—but what they actually do, of course, is add to the debt. People owe a large amount because they have to pay these companies, which spread the debt over a longer period. 

I believe gambling is one of the curses of our age and the last thing we should do about it is be more permissive. That is what this statutory instrument would do and, as my hon. Friend the Member for Eltham rightly pointed out, we should oppose it as a very poor move and one that is likely to increase the misery and exploitation of our people. 

9.31 am 

Sir Andrew Stunell (Hazel Grove) (LD):  I apologise for arriving late to the Committee, Mr Chope. 

We need to understand that the absence of evidence is not evidence of absence. The fact that the industry has been so lethargic in exploring the questions that have been raised not only in this Committee, but over a number of years, is very regrettable. I hope that the Minister will give us a really strong assurance that the Government will not let the industry free ride on this issue. 

I support a number of the comments that have been made, especially by my hon. Friends the Members for Bedford and for Birmingham, Yardley, about the problems and difficulties that this industry creates. On the whole, they are experienced among not rich, middle-class electors, but those who are seeking an escape from their current life and lifestyle. The industry provides those people with a very attractive and extremely dangerous route, and of course because the industry makes a profit at their expense, their situation inevitably gets worse, rather than improving. 

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I hope that the Minister understands that there is a real sense of unease on both sides of the Committee about the lack of progress. As she assures us of the Government’s good intentions, I hope that she will also put some flesh on that by setting out a timetable for a review and a proper report back to the House, and for a real opportunity for the House to consider the matter much more broadly. 

9.32 am 

Mark Hendrick (Preston) (Lab/Co-op):  I welcome you to the Chair, Mr Chope, and I rise almost to express disbelief that the Minister should talk in this Committee about the benefits of machine gaming without mentioning any of the risks or dangers that arise from such activity. Many of us on both sides of the House who represent poorer and working-class constituents see the effect that such activity has on lives and families, and the impact that it is having on our inner towns and cities in particular, especially where there is a proliferation of betting shops and more opportunities to play these machines. 

The category B machines are obviously of particular concern. Any Labour Members who attend trades and labour clubs, and any Government Members who attend other political clubs and sports clubs, will regularly see people pouring literally hundreds of pounds into these machines, but very often getting very little back from them. 

The Minister mentioned how the activity helps some community clubs, and clubs in general. However, one of the problems with it is that it is so pervasive. If somebody in a club is drinking too much, and clearly has an addiction or a particular problem with drinking, they are very often asked to leave—if they become a problem customer, they are shown the door. However, if somebody is a problem gambler and is pouring money into a machine, they are not warned about their gambling or about being excessive. In fact, they are encouraged by such means as placing the machine next to the bar. That is done specifically so that any change put across the bar is put into the machine as quickly as possible. Additionally, a person may be drinking at the bar, and having a machine next to the bar means that there is a comfortable place to park a drink while using the machine. The companies that provide gaming machines to clubs and pubs use all sorts of techniques to maximise the profit from the machines, so I find it bewildering that the Minister did not mention any of the risks. 

Paragraph 6 on page 4 of the impact assessment states: 

“The Gambling Commission does not license pubs, clubs, working men’s clubs or family entertainment centres operating under a local authority permit, so they do not collect data for those businesses.” 

The fact that such premises do not collect data for those businesses does not necessarily mean that the Government cannot publish a report or carry out an inquiry to get access to such information. The hon. Member for Bedford says that that is not the job of the Government, but in my view the job of Government is to govern. If society has a problem with gambling, it is the Government’s job to get to the bottom of it, not to pass enabling legislation to make limits even higher and, in the case of casinos, offer limits that are over and above what the industry

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was asking for. It beggars belief if the Government are not representing and standing up for some of the poorest people in society who are incapable of managing the situation themselves. 

Sir Andrew Stunell:  I agree that it is hard to understand why the evidence is not available. Does the hon. Gentleman agree that if some of these machines are connected back to central servers, data on their use are readily available, if we ask the right people? 

Mark Hendrick:  Yes. Given the technology that the multibillion-pound gambling industry is using in this day and age, it beggars belief that it cannot collate the information that will allow the Government to govern and make informed decisions about what the limits should be, and about how machines should operate, where they should operate and at what times of the day. If anything, I believe that there is a deliberate attempt by the industry to cover up what is happening. The impact assessment does not give us a true overall picture of the situation. 

As my hon. Friend the Member for Newport West said, this practice is becoming the crack cocaine of Britain. Communities are becoming poorer. We have heard about an increase in employment, but there has also been a large increase in part-time employment, and low pay is the problem it always was. When I was a young apprentice many years ago, I remember seeing someone walking straight into a bookies with a week’s pay packet, handing it all over, and then going home to tell his family that he had no money for food and everything else that week. Such a thing still happens today. 

I must disagree with my hon. Friend the Member for Eltham in that I think that this issue is one for the clubs. The clubs may be affiliated to the trade unions, the Labour party or any other political party, but we should not turn a blind eye to the problem. I attend such clubs, as I am sure that he does, but it is important to address the problem of people losing fortunes in these places. 

People know what is happening with high-stake, fixed-odds machines. The Government know what is happening, but they have deliberately chosen not to take action. They are in fact helping the industry by increasing the limits. We know what is happening with Wonga and payday loans. We know what austerity is doing to poor and unemployed people, and people on low incomes. People are trying to get money from any source, and gambling seems like a quick fix. It is much more prevalent than it used to be. 

I have seen in my own town of Preston a huge increase in the number of betting shops and bookies. Payday loan businesses are taking over premises that were once shops, and reputable companies and businesses. They are blighting our high streets in the same way as charity shops—all of it is a sign of the times. When in the past we saw pawn shops with the three balls hanging outside— 

John Hemming:  Will the hon. Gentleman explain why the fixed-odds betting terminals are a symptom of austerity, given that they started to be introduced in 2001? 

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Mark Hendrick:  I am not being party political about this, but whenever they were introduced, they are not desirable nor the sort of thing that people should be allowed to use, and they certainly should not be in the multiplicity that we see on the high street today. If the hon. Gentleman wants to be political about this, in 2001, and for a good deal of the time under the previous Government, we had what was approaching full employment, but that is far from the situation today. Poor and unemployed people who have been hit by austerity measures are being drawn to the clubs and bookies to use these machines on a scale that this country has never seen before. 

9.41 am 

Mrs Grant :   I thank hon. Members for their contributions. While we are confident that the benefits to business that the regulations will create can be achieved with minimal risk to the Gambling Commission’s licensing objectives, hon. Members have raised a number of valid points, which I will attempt to address in turn. 

The shadow Minister made a number of comments about evidence and the justification for our intervention. The Government are clear that any proposals to increase stakes and prizes for gaming machines should be supported by robust evidence, and it is incumbent on the industry to provide this evidence. We are satisfied that the changes to stakes and prizes proposed in the regulations are supported by sufficient evidence. 

Clive Efford:  Do the Government contend that there is no evidence that FOBTs in betting shops represent a problem for problem gamblers? 

Mrs Grant:  If the hon. Gentleman will bear with me, a whole section of my speech is devoted to FOBTs, so I will come to that point in due course. 

We have published a regulatory impact assessment setting out the evidence base for the changes, drawing on data from the Gambling Commission’s industry statistics and various trade associations. The shadow Minister and many other members of the Committee rightly raised the question of problem gambling. The Government continue to monitor closely problem gambling levels. Work is already under way to advance our understanding of gaming machines and their impact. 

As I am sure the shadow Minister will know, the Responsible Gambling Strategy Board, an independent expert advisory body, is developing a strategy that will review the social impact of these regulatory changes and any associated changes in gambling behaviour. In addition, the Responsible Gambling Trust is carrying out research that aims better to understand how people behave when playing gaming machines and what helps people to play responsibly. In 2014, the Gambling Commission will publish its analysis of gambling prevalence data gathered in health surveys for England and Scotland, which will provide a latest indication of problem gambling rates. 

It is also worth noting that Great Britain has relatively high gambling participation figures, with 73% of adults participating, yet a relatively low rate of problem gambling. The problem gambling rate among adults in Great Britain is currently less than 1%, which is lower than in comparable jurisdictions such as the USA, South Africa

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or Australia. However, there is no room for complacency and I have challenged the industry to make progress on developing better mechanisms to identify problem gambling behaviour, to minimise gambling-related harm and to put player protection at the heart of the changes. 

The shadow Minister said that self-exclusion is easily circumvented, but the industry has given a commitment to deliver enhanced self-exclusion measures as part of its code on social responsibility. I have challenged it to make real progress by March 2014. If it does not, I will not hesitate to consider taking serious action on stakes and prizes. 

Paul Flynn:  We are being presented with a picture of a gambling industry that is conscientious and deeply concerned about the misery that it causes. One of the organisations involved in reducing the damage caused by gambling recently asked the university of Cambridge for help in carrying out trials to measure the addictivity of the new machines. The gambling industry, with sharp language, peremptorily refused to co-operate. Would the industry serve its own interests better if it showed a more conscientious attitude to the problems caused by addictivity and allowed such bodies to measure it? 

Mrs Grant:  The hon. Gentleman makes an important point. The issue is serious. The industry has given commitments on player protection harmonisation, and the Gambling Commission is looking at evidence on the impact of gambling. We must all do everything to put us in the best possible position to make assessments and proper, informed decisions. I will certainly look into the hon. Gentleman’s suggestion, and if I have to write some letters, I will of course do so. I thank him for raising the matter. 

The shadow Minister also raised staff safety, and rightly so. The Safe Bet Alliance, which is run by bookmakers in conjunction with the police, has been successful in reducing instances of harm to staff. Local authorities can add conditions to licences—for example, to insist on more than one member of staff being on a premise. 

The shadow Minister queried the increased figure of £15,000 on casino machines. We consulted on a range of options to consider best value for players and operators. I am sure he appreciated that casinos are the safest environment for higher stake and higher prize gambling. The Gambling Commission has advised that there is scope for the increases without harming licensing objectives. 

The shadow Minister referred to employment in the industry, which fell between 2004 and 2009, although it has recovered to some extent since then following the opening of a large casino in Stratford in 2011. The Government want to support all sectors where we can, but we do not want growth at any price. 

The shadow Minister, the hon. Member for Strangford, my hon. Friend the Member for Bedford, the hon. Members for Newport West and for Preston, who spoke passionately, and my right hon. Friend the Member for Hazel Grove referred to strengthening player protection. The Government have secured commitments from the industry to introduce greater player protection measures, and social responsibility codes are being reviewed

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throughout the industry. In some cases, the codes include commitments to introduce voluntary money and time limits for players and some machine categories, and to improve voluntary self-exclusion mechanisms. I know the latter point is important to the hon. Member for Strangford, who has made many speeches on the issue. Enhanced player warnings and messages are also possible. 

A lot is being proposed and in establishing periodic reviews of stakes and prizes we have an opportunity to revise limits up and down. Decreases can be applied should the industry not implement public protection measures effectively, or should evidence suggest that reductions are warranted. I shall monitor progress of implementation carefully and if I am not satisfied that progress is being made in the direction of player protection I shall not hesitate to take appropriate action. 

My hon. Friend the Member for Bedford queried how we will measure the industry’s progress on player protection. As I have said, I have made it clear to the industry that it must demonstrate, whether by a round- table meeting or otherwise, that the protections being implemented are effective. I shall also chair a ministerial conference on player protection next year. 

Sir Andrew Stunell:  I appreciate what the Minister is saying. She is doing her best to reassure us. Will she say something about the timetable for next year? She said that some kind of review process would take place, to finish in the early part of the year; but now she has talked about that happening during the year. Will she tighten that up a little, and tell us when it would be legitimate for coalition Members to raise questions with her about progress? 

Mrs Grant:  It would be legitimate for my right hon. Friend to raise questions with me about this important matter at any time. I will always make myself available to answer them. I think that 2014 is a key date, because the industry has made a commitment to implementing the player protections by March. That is the first key point in my mind. I want progress by March 2014. 

My right hon. Friend will, however, know that a huge piece of research by the Responsible Gambling Trust is expected, but it will not be presented until the autumn. That is also a trigger point in my view, because if the research gives me cause for concern about the need for further action, I shall not hesitate to take that action. 

John Hemming:  One other question that was raised was whether machines were used for money-laundering, and whether the Minister might ask the regulatory authorities or police for advice. 

Mrs Grant:  I shall mention the question of money-laundering, but I confirm that I am happy to seek further advice on that important issue. 

Mark Hendrick:  I want to follow up the question by the right hon. Member for Hazel Grove. Clearly the Minister is making a great deal of play of the hope that the industry will address the problematic measures we have highlighted. What might the Government themselves do to measure the impact on families and communities of gaming machines or betting shops? The industry will say what it wants the Government to hear. When will the Government get their own information? 

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Mrs Grant:  A considerable amount of research is being done. The Gambling Commission is working on the issue. We are holding conferences and we shall look at health surveys—and, in fact, at every piece of relevant evidence—to make sure we come to the right decisions. However, the industry needs to present its progress to me. We shall of course make our own checks. I am in no doubt that I shall liaise with the shadow Minister and with others across the House on the issues, and I shall not shut my ears to concerns. If I become aware of cause for concern I shall act. 

Jeremy Corbyn (Islington North) (Lab):  I am sorry I missed the Minister’s opening remarks. In her review and examination will she also look at the intensity of machines in certain areas, an issue raised by my hon. Friend the Member for Newport West? In less than 1 mile of road in my constituency there are 14 bookmakers, four payday loan companies and three pawnbrokers. That is far too many of each of those businesses, which prey on the most vulnerable people. The issue affects many of us who represent inner city and poorer communities. 

Mrs Grant:  The hon. Gentleman makes a good point. As he will be aware, local authorities have wide-ranging powers to take action to deal with problems in various localities. 

Jeremy Corbyn:  I am sorry, but local authorities do not have wide-ranging powers to take action: that is the whole problem and that is why I am asking the Minister to look into this matter. I also ask her to speak to colleagues in the Department for Communities and Local Government. We need local authorities to have the powers to restrict the number of such outlets in particular areas. 

Mrs Grant:  We are obviously going to disagree: I believe local authorities have many powers to take the action that is needed. 

Jeremy Corbyn:  They do not. What powers? 

The Chair:  Order. We can have only one person speaking at a time. 

Mrs Grant:  I am happy to continue the good dialogue that we already have with our colleagues at the Department for Communities and Local Government. 

Jeremy Corbyn:  Will the Minister give way? 

Mrs Grant:  No, I will make some progress. But I am happy to speak with colleagues from the Department for Communities and Local Government. 

Jeremy Corbyn:  What powers do local authorities have, then? 

Mrs Grant:  I will pass on the concerns the hon. Gentleman has raised today. 

Ms Gisela Stuart (Birmingham, Edgbaston) (Lab):  Will the Minister give way? 

Mrs Grant:  I will make a little progress, but there may well be time at the end for the hon. Lady’s intervention. 

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I will go back to the point raised by the hon. Member for Strangford about what controls there are on machines in pubs, clubs and cafés. 

Jeremy Corbyn:  On a point of order, Mr Chope. When a Minister says local authorities have powers to restrict something but does not seem able to tell us what those powers are, is that a proper way for her to reply to a debate in Committee? 

The Chair:  One thing is certain: that is not a point of order but a point of debate. 

Mrs Grant:  I would like to make some progress; if there is time at the end I will say something more on the matter if I feel it is appropriate, but I think I have made my position very clear. Obviously the hon. Member for Islington North and I differ in our view. Local authorities have wide-ranging powers to take action, including article 4 directions to remove permitted development rights if they think that the permitted development is causing concern to a particular community. I cannot be any clearer than that, I am afraid. 

Paul Flynn:  Will the hon. Lady give way quickly? 

Mrs Grant:  No, I will make some progress and finish the answer that I am trying hard to give to the hon. Member for Strangford. The pub industry is overhauling its code on player protection and social responsibility. That will lead to enhanced warnings and messaging, along with responsible gambling helpline numbers on the machines themselves. I expect clubs to uphold their social responsibility commitments. Gaming machines are not permitted in cafés, as the hon. Gentleman probably knows. 

I will move on to fixed-odds betting terminals, an issue that was raised by the shadow Minister, as well as my hon. Friend the Member for Bedford and a number of other Members. In our review, we sought quantifiable evidence on the impact of a reduction in stake and prize limits for those machines. However, to answer the shadow Minister’s earlier question, the evidence we received was inconclusive. Formal advice from the Gambling Commission and the Responsible Gambling Strategy Board states that a precautionary reduction in stake and prize limits is currently unsupported by available evidence. 

Despite the lack of evidence the Government remain concerned about the machines and consider the future of B2 machines to be unresolved. There is no green light for them to remain in their current form until the next triennial review. Work is well under way rapidly to improve our understanding of the machines and their potential impact. An important element of that work is the research by the Responsible Gambling Trust that I referred to, which is due in autumn 2014. That research aims to identify where there is robust evidence that consumers might be experiencing problems and should advance our understanding of the machines and their potential impact. 

Richard Fuller:  On a point of order, Mr Chope. Is it in order for those in the Gallery to pass information to members of the Committee? 

The Chair:  That is not in order, no. I hope it is not happening. 

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Mrs Grant:  It is not clear at this stage that a reduction in stake would make the machines less of a risk to problem gamblers. Enhanced player protection measures could be more effective, and the Government have challenged the industry to make rapid progress in developing such measures. That includes commitments from the Association of British Bookmakers to implement enhanced player protections by March 2014, such as suspension in play when voluntary limits are reached, automatic alerts when customers have been playing for 30 minutes and enhanced responsible gambling messaging. The Government have made it clear that if the industry does not make sufficient progress in implementing these measures, or cannot demonstrate that they have been effective—it is for them to demonstrate that to me—the Government may act on a precautionary basis anyway. 

The Prime Minister has reconfirmed the Government’s commitment to a fair and decent approach on category B2 gaming machines that prevents problem gambling. That is exactly the approach we are taking. It is for those reasons that the measures I have outlined are so important, and why the Government consider the future of the machines to be unresolved. 

The hon. Member for Birmingham, Yardley astutely raised the issue of money laundering. I acknowledge the inherent risk of money laundering in gambling, which is why strong powers are already in place to keep financial crime out of gambling. The Proceeds of Crime Act 2002 places a duty on gambling operators to be alert to money laundering attempts and to report such attempts to the National Crime Agency. The Government expect all gambling operators to ensure that their anti-money laundering procedures are consistently and effectively applied to minimise risk and maintain good controls. 

I hope that my response goes some way to satisfying Members. Our discussions have rightly focused on public protection and the need to ensure that problem gambling is kept to an absolute minimum. Considering the advice from the Gambling Commission and industry commitment to make enhancement to existing social responsibility measures, the Government are satisfied that the risks to problem gamblers and vulnerable people presented by the proposals is minimal. The measures will bring benefits to business, in terms of much needed revenue, and to customers, by allowing them to enjoy a broader range of products and gamble in a socially responsible way. I commend the regulations to the Committee. 

10.2 am 

Clive Efford:  I am afraid that the Government have not satisfied the Opposition on this issue, particularly regarding FOBTs in betting shops. The regulations are the consequence of the consultation the Government held earlier in the year, to which we responded. For the Minister to stand there and say that more information is being sought, while we make a decision on changing stakes and prizes for some categories of machine, seems to be putting the cart before the horse. If the Government are waiting for further information, surely it is logical that we wait until we have all of that information before making these changes. 

As part of question 2 of the triennial review, the Government asked about suitable protections for vulnerable people who might be gambling. They received responses

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on that. When the Minister says that there is no evidence to support a change to stakes and prizes for FOBTs, we accept that. I said in my opening remarks that we accept that we cannot change from the current position until we know what it is suitable to change to. My complaint is that having consulted on protection issues and receiving ample evidence of the need for measures to be taken, the Government are not doing anything. 

The Government should be requiring the gambling industry, particularly the betting shops in relation to B2 machines—the FOBTs—to introduce a break in play and to delay the rate of play, which can be far faster than roulette. Someone can play roulette on one of these machines faster than they can play actual roulette. They can stake £100 a time, every 20 seconds. That does not mean people can lose £18,000 in an hour, but it does mean, as we heard from my hon. Friend the Member for Newport West, that they can lose significant sums in a very short time. 

Evidence presented by Professor Orford—his document has been published and peer-reviewed—says that 23% of the income from these machines comes from people who have a problem with gambling. The Channel 4 “Dispatches” TV programme calculated on the basis of gross gambling yield that equates to £1,295 million, so we are talking about a significant sum from people who have a problem with gambling. 

The Minister’s argument is that we are asking for a change in the stakes and prizes, but we are not: we are saying, “Wait until we have the evidence so that we can make that change.” 

Paul Flynn:  It is many years since I was on the county council, but I vividly recall that local authorities had little power to ban the one-armed bandit shops that were infesting towns 30 years ago. We were told it was hopeless to try to oppose them. The legal fees were £25,000, and these people were sending round a barrister employed by the betting industry who was so skilled that we would lose the case. There is the same frustration among local authorities now, who feel that the Government, instead of going down the road of localism, are allowing the laws to be permissive to allow these shops to multiply. Does my hon. Friend not think that the Government are moving at a snail’s pace to deal with the effects of addiction, but at a breathtaking pace to improve the profits of the gambling industry? 

Clive Efford:  I absolutely agree with my hon. Friend. We need more urgency, which is why we need to draw a line in the sand today to say, “Up with this we will not put.” 

We have had FOBT machines since around 2001, and the 2005 Act limited the number of machines in betting shops to four, so these machines have been around for a long time. The question has to be, why do we not have the evidence that is necessary for us to take decisions? However, we do have evidence that shows there is a problem with gambling, and there needs to be more urgency from the Gambling Commission and the Government on this issue. 

The Association of British Bookmakers is introducing a voluntary code of self-exclusion, but it is very similar to the voluntary code that is in place right now, which does not work. I do not know whether anyone has bothered to go to their local betting shop to see the self-exclusion process, but there is a photocopied photograph

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pinned up in the back room of the betting shop, and the person working in the shop either has to memorise it or just to know the person when they come in. It has to be much more sophisticated than that if we are serious about exclusion. 

With all due respect to people in the betting industry—they are fine people, and I have met them interminably and talked to them about all forms of betting—if such a large percentage of their income, as Professor Orford suggests, comes from people who have a problem with gambling, there is a disincentive to have an effective self-exclusion policy. That is why we are here today putting pressure on the Government to say, “It’s our responsibility as regulators to protect the most vulnerable people in our community.” 

We have heard from the right hon. Member for Hazel Grove, who pointed out to all of us that the technology is there to deal with this; the information is gathered in a way that we could, effectively, do that. We should, therefore, be putting more pressure on the industry to have a more effective self-exclusion policy. 

Mark Hendrick:  With reference to the point made by the right hon. Member for Hazel Grove, which I followed up on, and this reliance on the industry to do something, the Government have no clear idea of what they regard as success in dealing with this problem. They are saying, “Let’s look at what the industry is saying. Is the industry saying things are improving or not improving?” They have indicated no way of measuring any success in dealing with this problem. 

Clive Efford:  Yes, that is absolutely correct. What we heard too much about from the Minister was a reliance on the industry to explain itself and to give her the evidence, rather than the other way round. There are all sorts of things that seem to be confused about this. We have had a consultation on the triennial review but when taking decisions we are told there is still more information being gathered, so we cannot take certain decisions. It seems inconsistent. 

Mrs Grant:  I want to be very clear on this—I thought I had been clear. The action that we are taking at the moment is, in our opinion, supported by evidence. However, as I mentioned, we are waiting to see what the industry—having made the commitment to act—does by March 2014. That is not a very long time to wait. If I am not satisfied that proper, sufficient progress has been made, I will take action. I also want to see one of the biggest pieces of research ever undertaken on this particular matter, and that will be produced later in 2014. Again if I am not satisfied with that research—that is not the industry being satisfied, that is me being satisfied—or if it gives the impression that there are going to be issues or there are problems and concerns, I will take action. 

Clive Efford:  It sounds as though we will have another review. We will review this review next year. If next March is such a short time away and it is such a staging post for this industry, why are we here now? Why not wait until that point in time to make those decisions? Why not wait until the end of this research that will give us more information? This is ill thought out and has not been thought through. The Gambling Commission needs to put more pressure on the industry; the lack of evidence

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shows that the Gambling Commission has not really been putting enough pressure on the industry to carry out this sort of research. We have had these machines since 2001. 

On the issue of casinos and employment, I am still a bit confused about the figures. The number of employees has gone up by 900 and overall it is 14,000 members of staff. I do not think that one casino can account for all that increase because if the average were 900 employees per casino, there would be a lot more employees in that industry. I am still not convinced about the rationale put forward for the increases in the industry—it is not an industry that is on its knees by any stretch of the imagination. I do not think the case has been made for quadrupling the prize money on these B1 machines and I would be loathe to support that at this stage. 

We are not satisfied with the Government’s position on this. We do not think that there is sufficient evidence. On working men’s clubs, I would say to my hon. Friend the Member for Preston that I accept his concerns about vulnerable people using those machines but I believe that social clubs are environments where they would care for people who are members of their clubs and look out for anyone who has a problem. If I were going to have high-stakes machines anywhere, working men’s clubs would certainly be one of the places where I would expect them to be monitored in an appropriate way and where the clubs would care for their members. I accept there will be exceptions to that rule, but on the whole they would. My hon. Friend made the point about austerity with regard to FOBTs. I accept the point that the hon. Member for Birmingham, Yardley made that these existed before austerity became a policy of the coalition. Nonetheless, as the impact assessment tells us, in the period 2008-09 the proportion of money taken in betting shops went up from 13.9% to 49.4% from these machines. So during a period of austerity, when the betting shops in which these machines are located were relocated to areas close to areas of deprivation, the proportion of takings in these betting shops from these machines has been going up, and we have to wonder why and how that has been achieved during a time of austerity when everybody else has been feeling the squeeze. 

We are not satisfied with the Government’s position on this. We accept that there are some elements of this statutory instrument that we would support, but overall there has been a lack of care for vulnerable people, particularly in relation to the machines in betting shops. The Government have not acted on the evidence that shows that there are some measures that could have been taken, aside from changing prizes and stakes, that could have assisted in protecting those people. 

We get few opportunities to express our total dissatisfaction with the Government on this position, and that is why we will vote against this measure today. 

Question put.  

The Committee divided: Ayes 9, Noes 7. 

Division No. 1 ]  


Bradley, Karen   

Grant, Mrs Helen   

Harrington, Richard   

Hemming, John   

Lumley, Karen   

Macleod, Mary   

Mosley, Stephen   

Pincher, Christopher   

Stunell, rh Sir Andrew   

Column number: 23 


Corbyn, Jeremy   

Efford, Clive   

Flynn, Paul   

Hendrick, Mark   

Jones, Susan Elan   

Shannon, Jim   

Stuart, Ms Gisela   

Question accordingly agreed to.  

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That the Committee has considered the draft Categories of Gaming Machine (Amendment) Regulations 2014. 

10.17 am 

Committee rose.

Prepared 28th November 2013