The system that existed at that time of operating a white list to recognise the regulatory authorities of different jurisdictions appears, in the main, to have worked reasonably well. The Government, in putting forward the arguments for this Bill, have raised one or two concerns about how the current regime works. In particular, they have said that there is some confusion about the different regimes in different jurisdictions,

5 Nov 2013 : Column 139

and that consumers may sometimes be confused as to where responsibility lies and where they should go with their complaints.

There are undoubtedly some differences between the rules applied in different jurisdictions. I agree with the Remote Gambling Association that, in general, the industry is reasonably well regulated in the white list countries. As CARE—Christian Action Research and Education—has pointed out, one or two jurisdictions, particularly Gibraltar, operate slightly stronger regulatory conditions than those in the UK. In particular, the Gibraltar rules governing the reporting of suspicion that individuals might have a problem with their gambling habits are slightly stronger. The UK Gambling Commission might want to consider whether it can tighten its licensing conditions, particularly on problem gambling, which is rightly a great concern to everybody who considers gambling and the policies governing it.

Philip Davies: I challenge my hon. Friend, who does a fantastic job as the Chair of the Select Committee, to stand there and say with a straight face that he believes that the Bill is all about regulation. Might he concede that it is more to do with taxation than regulation?

Mr Whittingdale: My hon. Friend has made his view known during the course of our debates and I shall reach a conclusion on that point very shortly. As I say, however, the Government have advanced the argument that the Bill will result in major gains in consumer protection.

Paul Farrelly: Does the Chair of the Select Committee agree that the example of Full Tilt Poker, which was licensed by Alderney but not, as we understood it, by Malta, demonstrates the scope for greater regulatory co-operation, particularly in Europe?

Mr Whittingdale: The hon. Gentleman anticipates the next two words on my notes, which read “Full Tilt”. He is, of course, correct. Something went badly wrong with Full Tilt Poker, which was regulated by the Alderney gambling control commission. It is right that there should be a review of how that happened and I understand that lessons will be learned. There have certainly been concerns about some incidents in white list countries, and for that reason there might be some advantages to consumer protection of bringing the entire remote gambling industry under the licensing rules of the UK Gambling Commission.

The hon. Member for Eltham (Clive Efford) spent some time on match fixing and licence condition 15.1. He is quite right that the Select Committee received evidence on that and there is no doubt that all the major sporting bodies support the Bill, because they have expressed concern that some of the other regulatory authorities outside the UK have not always been particularly good at reporting suspicious activities. Indeed, if we consider the statistics, we can see that there have been far more reports of potential suspicious gaming activity from UK-licensed operators than from offshore operators. If licence condition 15.1 is applied to all those offering online gambling facilities to UK customers, I hope that that will result in more attention being given to the issue.

5 Nov 2013 : Column 140

I was also interested to hear the hon. Gentleman’s suggestion about spread betting. As my hon. Friend the Member for Shipley (Philip Davies) points out, there is difficulty in drawing a line between where sports betting stops and financial transactions begin. If it were possible for the Financial Conduct Authority to require suspicious activity to be reported to the relevant regulatory body, that would seem to be a sensible move.

Mr Sutcliffe: Would not having sports betting rights be a good idea, so that we could sort out the definition of financial transactions related to the market? If sports had their own betting rights and the ability to sell their sports to the betting operators, that would clarify any problems with the definition.

Mr Whittingdale: I think that would go rather further than defining sports betting and financial speculation and would have other implications that would need further consideration. I am not sure that I am convinced by the hon. Gentleman's suggestion, but I would certainly be happy to debate it with him later.

Let me return to the issue raised by my hon. Friend the Member for Shipley. The Government have made it very clear that the purpose of the Bill is to strengthen consumer protection and, of course, the Committee accepted the evidence given to us by the Minister on that point. It is important that that is its purpose, because if it had other purposes the Government might, as has been pointed out, be vulnerable to legal challenge. However, it seems entirely acceptable to argue that those people who sell gambling services to UK consumers should be required to pay UK tax. Although that might not be the purpose behind the Bill, if the consequence is that they come within the tax net, that would benefit the Exchequer and create a level playing field, which it is important we should have.

Some operators might even choose to return to the UK once the new licensing regime comes in. I realise that the level at which the tax is set is not an issue for my hon. Friend the Minister, but that is what will determine whether they return. Many of the remote gambling operators in Gibraltar and other jurisdictions have expressed concern that there is a danger that the tax will be set too high, which will have an impact on their operations and create an incentive for consumers to look elsewhere—to go outside the licensed operators to the black market. That is a serious threat, which I want to talk about.

Philip Davies: Is my hon. Friend aware that the Treasury has already given some estimates of the amount of money it expects from this measure? It believes that if the tax is imposed at a 15% rate, 20% of the UK market will be unlicensed, unregulated and not paying tax. That will mean that a higher proportion of people will be playing on unregulated sites.

Mr Whittingdale: That is a matter for the Treasury, but I agree with my hon. Friend that a 15% rate would have a damaging impact. The Remote Gambling Association has suggested 5% as a reasonable level, but the Treasury will obviously have to examine that and strike a balance. The Treasury will need to bear in mind the risk not only that its revenues might suffer if consumers were driven from the licensed market to the black market but that consumers would suffer, as they would

5 Nov 2013 : Column 141

have none of the protections that would result from the new licensing requirements in the Bill. That seems to be at the heart of the issue, so although it is important that we should debate all the provisions in the Bill, the critical question will be determined not by the Minister but by her colleague in the Treasury.

One or two other concerns have been raised, particularly about the fact that this is an enormous new responsibility for the UK Gambling Commission, which will have to issue licences to a huge number of operators based in all parts of the world. The Select Committee had some concerns about the commission’s ability to do that and about the resource implications. The Gibraltar betting and gaming association has raised the concern that the change could result in brass plating, with the Gambling Commission merely giving an operator a tick because it does not have the resources to go to the other jurisdictions to question the regulating authorities. The UK Gambling Commission will have to rely on other regulators in a way not dissimilar from its reliance on those on the white list, so if it is to accept the regulatory approval of other regulators in different countries it is important that it satisfies itself that those regulators are doing a good job. That might require additional resources, and we expressed some concerns about the degree of the extra responsibilities that will be placed on the commission.

Let me return to the question of the consequence of consumers being driven into the black market. The industry is highly competitive and a very small difference in cost can result in operators offering more attractive odds than the licensed operators. On those grounds, there is a risk that people will look towards the black market.

Chris Evans (Islwyn) (Lab/Co-op): The hon. Gentleman is making a succinct point, but does he agree that online customers are more promiscuous than their retail counterparts and will follow prices more closely than those who have a loyalty to the shop and the shop manager?

Mr Whittingdale: The hon. Gentleman is almost certainly right. Obviously, people go to high-street betting shops to bet, but they also do so for other reasons. They form friendships and it becomes a social environment. None of that exists in online gambling; it is being done in bedrooms by gamblers on their own, and they will look for the site where they can get the best odds. Therefore we need to look at measures to ensure that they do not go into the black market.

Paul Farrelly: Before the Chairman of the Select Committee perhaps over-eggs fears of the black market, will he explain why, in the last year, the gambling revenues of bet365—he was right that I would mention bet365, and I will do so again later—have risen from £12 billion to £20 billion, when it operates in the UK and pays tax on its sports betting activities at 15%, rather than the near 1% in Gibraltar?

Mr Whittingdale: I am delighted to hear of the success of the company based in the hon. Gentleman’s constituency, but he will remember that when witnesses from bet365 gave evidence to the Committee they said that it was

5 Nov 2013 : Column 142

becoming increasingly difficult for them to remain in the UK, and unless something was done soon, they might very reluctantly have to follow the exodus. Happily, I hope the Bill will address that, but as I said earlier, it all comes back to the rate of tax that is levied. We want a rate of tax that is attractive to online operators, so that they license themselves in the UK, and does not drive people into the black market.

However, other measures are also required, and one or two of those who have made representations on the Bill have said that the Government must consider taking other measures to prevent illegal gambling online. There are several ways in which that could be done. They are not dissimilar to the measures that we have been looking at in order to tackle online piracy.

There are three potential ways forward. The first is to work with payment companies to ensure that unlicensed sites cannot use the payment facilities offered by credit card companies. The second is IP blocking—actually, URL blocking—preventing access via the internet to certain websites. That has technical difficulties but is certainly worth exploring. In the third, search engines have a role. I expect that my hon. Friend the Minister will be aware of the vigorous debates that have taken place with Google about the extent to which it is willing to take responsibility to ensure that illegal websites, or websites offering illegal products, do not appear at the top of their search engine results. That too is an area where more work could be done to make it harder for consumers to be tempted by illegal online operators once the new regime is in place. Those are genuine concerns, which I hope the Government will address in the course of debate.

I shall flag up one more issue. An anomaly was identified to the Select Committee, about which we had considerable sympathy. Casinos are among the safest places to gamble. They have strong measures in place to prevent money laundering, to identify those at risk of problem gambling and, if necessary, to exclude individuals and so on. They also have experienced, well trained staff on the premises. For all those reasons, a casino is one of the safer places to gamble—certainly considerably safer than in a bedroom alone, where people are able to gamble for lengthy periods without any controls and to lose a huge amount of money.

Angie Bray (Ealing Central and Acton) (Con): I am delighted that my hon. Friend has raised this issue. Does he agree that we could usefully employ British bricks-and-mortar casinos, which have an excellent reputation for responsible gambling, to operate some of the online gambling on their premises, to allow them to monitor how it is working and, indeed, then help to frame any regulations that we might need in future?

Mr Whittingdale: That is an interesting idea, but my hon. Friend’s suggestion runs straight into the problem—the anomaly that the Select Committee received evidence about—that it still will not be possible for casinos to offer their own remote gambling facilities within their buildings. I could go into a casino and place a bet using my own iPad or iPhone or other online device, but when the Bill is passed, the casino will not be able to offer that facility through remote terminals, or by giving out their own devices. That seems an extraordinary anomaly, so the Select Committee suggested that the Bill should be

5 Nov 2013 : Column 143

amended to remove it, and to allow casinos to offer a remote gambling facility as well. I was disappointed that the Government appeared not to accept our argument, and I hope they will still think about that and perhaps allow an amendment to the Bill in the course of debate.

However, having said that, I have no doubt that the Bill is desirable because it strengthens the protection available to UK consumers who indulge in online gambling, and may have the additional benefit of resulting in some additional revenue, in due course, to the UK Exchequer. On that basis, I and the Select Committee support the Bill.

1.55 pm

Mr Gerry Sutcliffe (Bradford South) (Lab): It is a great pleasure to follow the Chair of the Select Committee. I refer Members to my declaration in the Register of Members’ Financial Interests. I am a trustee of the Responsible Gambling Trust, a great organisation that promotes research, education and treatment for problem gamblers. The entire gambling industry contributes to the fund on a voluntary basis. As the former Minister, I threatened that if it did not do so voluntarily, we would introduce a compulsory levy, but I am happy to report that it agreed and has raised over £5 million for research, education and treatment.

I mention that because I think the gambling industry is a very fair industry. Before I set out the context of the Bill, I notice that the deputy Chief Whip, the right hon. Member for Bath (Mr Foster), has arrived in his place, so I put it on the record that the Bill had its origins in my time as the Minister with responsibility for gambling and sport, on the prompting of the right hon. Gentleman. It was his idea to tackle the anomaly of remote gambling, so I place on record my thanks to him for his support during that time, when we were considering these issues.

I welcome the Minister to her position in the best job in government—the Minister for sport. It is unfortunate that it comes with gambling, tourism and other things on top, which is a bit of a problem. I am pleased that she has been able to get the Bill to the House today for its Second Reading; notwithstanding the comments that my hon. Friend the Member for Eltham (Clive Efford) made about the time that that has taken, at least we are here today.

We seldom have opportunities to discuss gambling in such a context. There is a lot of hysteria about fixed odds betting terminals and the proliferation of betting shops—topics that I am sure we can discuss in a quieter environment sometime soon—but gambling contributes a lot to our economy in jobs, taxation and betting companies’ support for sport. In our efforts to protect the consumer, we should not lose sight of the context of where the industry is and how good it is. Those are the principal points around the licensing objectives of the Gambling Act 2005—to protect the vulnerable, to provide consumer support, to keep crime out of gambling and to give a fair and open opportunity for the industry.

The 2005 Act came about following the Budd report in 2000. As I said in an intervention, the previous piece of legislation was in the 1960s. To those of us old enough to remember that, betting and gaming was seen as something dodgy—something associated with crime. It was illegal to advertise it. Betting shops were behind closed doors and frosted glass windows, and it was a

5 Nov 2013 : Column 144

very male-dominated environment. Gambling has changed tremendously over that period. One needs only to look at the success of the national lottery to see how gambling has become part of the psyche of people in the UK.

We need to ensure that people who have a problem with gambling are supported. The last prevalence study showed that 0.7% of people had problems with gambling. I say that to the Minister, because I remember from my time No. 10 and No. 11 saying, “Keep gambling off the front pages.” They were worried about the Daily Mail; they were worried about the anti-gambling media. Sometimes, that does not help us to have a legitimate debate about some of the issues that flow from the development of gambling.

I am delighted to be a member of the Select Committee. The former gambling Minister, Richard Caborn, was brave enough to tell the Committee that we did not get it quite right in the 2005 Act. What he meant was that the Act had got caught up in the wash-up at the end of the Session, where deals are done to try to get Bills through. The deal on numbers of fixed odds betting terminals and shops was not a worked-out formula—it is just that that was the debate at the time—so it is right and proper that we look at all the issues around the Gambling Act 2005. Although her officials will be guiding the Minister to view the detail of the Bill in terms of online issues, I urge her to look at wider issues and to try to put right some of the wrongs in the 2005 Act. The Minister will be waiting to hear the outcome of the research by the Responsibility in Gambling Trust, which will be ready next year and should give a detailed solution to the problems associated with fixed odds betting terminals.

I return to the subject of casinos, which the Chair of the Select Committee raised. The problem of the portability of the licensing of casinos has been around for a while. There are 68 licences, some of which have not been taken up, but buildings are maintained because the licence applies to the building. I hope the Minister will accept some amendments relating to casinos and the unfair treatment that casinos have received as a result of the Gambling Act. Casinos are some of the most highly regulated places in the gambling sector and consumers are well looked after by the casino operators. I hope there will be some flexibility on the issues of portability and online opportunities.

The Bill puts consumers at the heart of gambling. We considered the issue in 2008, with the support of the right hon. Member for Bath, now the Comptroller of Her Majesty’s Household. There was a need to make sure that consumers were protected. I know that the hon. Member for Shipley (Philip Davies) is concerned about taxation and he is right to be concerned about the level of that taxation, but that should not take away from the fact that the Bill needs to be enacted for consumer protection.

One of the things I did as Sports Minister was look at sports betting integrity, which is a parallel issue. My hon. Friend the Member for Eltham (Clive Efford), speaking from the Front Bench, raised the issue of the Pakistani cricketers. There have been numerous problems in relation to cheating, match fixing and so on, so we set up the sports betting integrity panel chaired by Rick Parry, which produced a report calling for education in sports for players of all age groups to make sure that they were aware of the risks from the type of gambling

5 Nov 2013 : Column 145

that could take place. Some footballers, for instance, think it is not cheating to kick the ball out to get two corners or two throw-ins, because some people bet on that, but it is cheating and we have to make sure that people are aware of that.

I hope that when we go through the detail of the Bill in Committee we will look at bodies such as the Sports Betting Group that were set up after the Parry report. Such bodies included people from football, cricket, rugby union, horse racing and many other sports, who have followed some of the recommendations of the Parry report. One of their great concerns is spread betting, a topic that has been raised. The issue of how spread betting is defined needs looking at. The Chairman of the Select Committee did not take up my offer of looking at sports betting rights, but I hope the Minister might consider including that in her discussions with the sports.

One aspect of the Bill that concerns me is the inability to pursue the online gambling organisations for a contribution to the horse racing levy. I was delighted when the Minister was able to announce the agreement reached between the betting companies and the horse racing industry on the levy. Online operators should contribute to the levy as well.

As I said, research, education and treatment are important, so I would welcome opportunities to increase support for the trust in promoting that.

The Minister should look at the European directive on money laundering. Although we are all agreed that money laundering is undesirable, the directive affects on-cost bookmakers and the limits on what they are able to pay out on bets. We require some flexibility on the directive, which went through 27-0 on its last reading. I urge the Minister to speak to the Federation of Racecourse Bookmakers about how the money laundering regulations might affect them.

The Bill is welcome. It is important that we have the opportunity to protect consumers and to do the necessary tidying-up in the gambling industry. I found the gambling sector to be mindful of its responsibilities to consumers and of its contribution to employment and our economy. I support the Bill and look forward to its Committee and remaining stages.

2.5 pm

Philip Davies (Shipley) (Con): I refer the House to my entry in the Register of Members’ Interests.

It is a pleasure to follow the hon. Member for Bradford South (Mr Sutcliffe), who was an excellent Minister in the Labour Government and is an excellent man. I am not saying that just because he is one of my constituents. I genuinely mean it. I do not think he votes for me, but I have not given up hope on him just yet. It is also a pleasure to follow my hon. Friend the Member for Maldon (Mr Whittingdale), who does a superb job chairing the Select Committee on Culture, Media and Sport and trying to bring a consensus to it, which is sometimes a challenge, but he does it with great skill.

I do not intend to divide the House on the Bill. I support its premise, but we are in a rather strange situation. The basis on which I support the Bill is not the one on which the Government are promoting it. It is the one basis on which the Government are desperate to

5 Nov 2013 : Column 146

pretend they are not introducing the Bill, even though it is clearly the case that the Bill is nothing to do with regulation; it is to do with taxation. I will deal with regulation in a moment.

We know what is behind the Bill and we do not need to guess: it is all about filling the Treasury’s coffers, although it probably will not fill them as much as the Treasury would like. The Chancellor made the objective clear in his Budget speech last year, when he said:

“One area where I am today making substantial changes is gambling duties. . . The current duty regime for remote gambling introduced by the last Government was levied on a ‘place of supply’ basis. This allowed overseas operators largely to avoid it, and much of the industry has, as a result, moved offshore. Ninety per cent. of online gambling consumed by our citizens is now supplied from outside the UK, and the remaining UK operations are under pressure to leave. This is clearly not fair—and not a sensible way to support jobs in Britain. So we intend to introduce a tax regime based on the place of consumption—where the customer is based, not the company—and, from this April, we will also introduce double taxation relief for remote gambling. These changes will create a more level playing field, and protect jobs here.” —[Official Report, 21 March 2012; Vol. 542, c. 803.]

It is perfectly clear what the Government are doing—the Chancellor could not have made it any clearer, and I fully support what he said. I thought there was a great deal of sense in it and I think most people here would agree with him.

The problem is that the Chancellor made no reference in his Budget speech to the need to introduce measures to improve player protection or to better regulate the gambling industry. I do not think that was accidental. It was perfectly obvious why. The Bill has nothing to do with regulating the gambling industry or improving player protection.

The Select Committee enjoyed hearing from the chief executive of the Gambling Commission and from the permanent secretary, struggling to think of any reasons why the current regime needed improving from a player protection perspective. I was slightly embarrassed for them. They were in a difficult position. They had come to argue the indefensible—that the Bill was all about regulation. When they were pressed to identify the issues that had caused all the problems and require new legislation, we did not get anything from them. The hon. Member for Newcastle-under-Lyme (Paul Farrelly) made the point about Full Tilt. If anybody can give an extensive list of all the problems that have been created by the current system of regulation, I would be very pleased to hear it, as would the other members of the Select Committee, I am sure. We did not hear much of it from the chief executive or from the permanent secretary.

Paul Farrelly: One of the main problems is the flight offshore. The hon. Gentleman referred to the 2012 Budget statement and the elimination of double taxation. Does he agree that that is extremely important if we are to encourage British firms based overseas to relocate here, because taxing their profits in Britain and elsewhere would make them uncompetitive?

Philip Davies: The hon. Gentleman is absolutely right. I intend to talk about taxation more widely a little later, because it plays a crucial role.

My understanding—I am sure that the Minister will correct me if I am wrong—is that the Bill is all about regulation because that is what is needed to satisfy the

5 Nov 2013 : Column 147

European Union and make it fit within its rules. Were the Government to admit that it is all about taxation, the European Union would be all over it like a rash and would rule that it is illegal because it interferes with tax competition and will upset other parts of the EU. That is why the Government have been desperately trying to pretend that the Bill is all about regulation, even though we know that it is not.

I am sure we all agree with what the Chancellor said in his Budget statement—I certainly do—but I am not entirely sure that it was particularly helpful to the Government more widely or to the Minister in this instance. The Chancellor talked about protecting jobs here, and I am sure that he had in mind the company that the hon. Member for Newcastle-under-Lyme represents, bet365. It should be commended not only for ensuring that it protects all the jobs in his area, but for the commitment it gives to the area more generally, because it sponsors the local football club and is involved in the local community. We should all congratulate bet365 on what it has done.

However, as my hon. Friend the Member for Maldon made clear, bet365’s representatives told the Select Committee in evidence that the company would be under pressure to leave if the current situation continued for much longer. Furthermore, they said that it was only really here because it was a privately owned company. They conceded that it would almost certainly have had to go offshore if it was a public limited company. The fact that it is a private company is what has allowed it to stay. Therefore, I do not necessarily think that we should criticise those that have gone offshore, because it was an inevitable consequence of the tax system and it would be naive to think otherwise.

I would prefer to try to allow bet365 to stay here, which of course we want, but it would be nice if our ambitions were a little grander. I would like to see some of the companies that are already offshore return to the UK, which is why the tax rate is so important. If we introduce a 15% tax rate, there is no chance of any of those firms returning. I encourage the Minister to encourage her Treasury colleagues to indulge in some negotiations with the betting companies to see what agreement can be reached, because I would much prefer us to set a tax rate that enabled them to come back or to bring back some of their operations. That would also mean an awful lot of jobs coming back here. That would be a much more sensible way forward, rather than seeing it as an immediate cash cow.

Mr Syms: Is not there a broader issue? Sometimes the Government take firms based in the UK for granted, which means the gambling and casino industries paying substantial sums in tax, and we must ensure that they are competitive as well.

Philip Davies: My hon. Friend is absolutely right.

I want to touch on the levy, because a number of Members have suggested that we should be compelling companies that are currently offshore to pay it, just as onshore companies have to. I think that argument is a bit of a red herring. There is a perfectly clear and respectable argument for those offshore to pay the same as those onshore, including the levy, but I do not think that it would make a fat lot of difference to the money raised from the levy going from bookmakers to racing.

5 Nov 2013 : Column 148

I am delighted that an agreement has been reached between racing and bookmakers, but in my view, and that of others, including the hon. Member for Bradford South, who are better qualified than me to decide whether what I am saying is right, it seems that Ministers decide at the start how much the gambling industry should contribute towards racing—perhaps arriving at a figure of around £75 million—and then come up with a mechanism on the levy to deliver that.

If offshore companies are included in the levy, my suspicion is that exactly the same thing will take place. The Minister will think that £75 million is about right and will then change the mechanism so that it delivers that amount. Those people in racing who think that that is a way to get an awful lot more money from the betting industry are simply misguided, although I can see why they think it. It would not generate any more money; it would just change the formula by which these things are calculated.

Chris Evans: Before the hon. Gentleman moves on from that point, does he agree that horse racing makes up 23% of betting shops’ business, whereas the entire online business is 23%, and most online gambling is poker, bingo and other things, so we have to be very careful when we involve online companies in the levy?

Philip Davies: I welcome what the hon. Gentleman says. We should be very careful before going down any of these routes and should look for any unintended consequences.

I do not think that the proposal will deliver the revenue that the racing industry thinks it will. If the Government are concerned that this will entangle them in a huge legal minefield in the European Union, it seems to me to be a pointless battle to get into when it will generate no extra money for racing anyway. I therefore urge the Minister, whatever representations she receives, to resist going down that route, because I think she will be led down a blind alley, whatever the superficial attractions.

I speak as a rather modest owner of racehorses—an owner of rather modest racehorses is probably a better description, to be honest—so I am really arguing against my own interests, because in theory increasing the levy yield is supposed to benefit people like me.

Mr Nuttall: Only if you win.

Philip Davies: Yes, the levy would kick in only if my horse won some prize money, and given how rarely that happens I suppose it would not make much difference. It is a distant dream one way or the other.

I want to concentrate on taxation, because I thought that the question I asked at the start of the Minister’s speech was rather simple and got to the nub of the issue. If this is all about regulation and player protection, surely the first question the Government must have asked is how many people are currently playing on illegal betting sites. I cannot believe that nobody has looked into that, because it seems the obvious question to ask. I did not hear an answer, and I am not sure whether there is one, but I venture that it will be at least 95%. If anybody wishes to argue with that, they are welcome to intervene.

James Duddridge: Why 95%?

Philip Davies rose—

5 Nov 2013 : Column 149

Mr Speaker: Order. For the record, that was an intervention from Mr Duddridge, but it was uttered from a sedentary position. It is better to stand up on these occasions.

Philip Davies: I very much agree, Mr Speaker. My hon. Friend’s idleness is not to be commended. I will bear that in mind in future and give priority to those who can be bothered to stand up when intervening.

The 95% figure is my hypothesis. Nobody here appears to disagree with it. If the Gambling Commission wants to supply us with information following the debate to gainsay that, I will be happy to read it, but I do not believe that anybody is seriously arguing that at least 95% of gambling takes place with people who are properly licensed and registered. The Government seem to have got themselves into a bit of a muddle. As I said in an intervention on my hon. Friend the Chairman of the Select Committee, the Government have not made it clear what they think is currently bet with illegal sites, but they have made a very good stab at guessing what will be bet with illegal sites after this Bill has come to fruition. The Treasury, which obviously has pound signs in its eyes as it sees the Bill progressing through Parliament, has already made its forecasts for the revenue it expects to get from it. The assessment of remote gambling taxation in its 2012 Budget policy costings suggests that if a place-of-consumption tax is imposed at a 15% rate, about 20% of the UK market will be unlicensed, unregulated and therefore not paying tax.

Paul Farrelly: Does the hon. Gentleman think that the Treasury really knows what it is talking about in making that stab in the dark, or does it perhaps not wish to over-egg expectations of the revenue it is going to raise, so that if it ends up at 95% it will have exceeded expectations?

Philip Davies: The hon. Gentleman may have no faith in the Treasury. I am happy to go along with the Office for Budget Responsibility, which wants to look at this to see what revenue can be expected. In fact, I am happy to look at anybody’s genuine predictions.

This is a Government Bill that is supposed to be about increasing regulation and player protection. However, the Government themselves admit in their own Treasury forecast that it will result in our moving from a situation where probably fewer than 5% of people are betting with unlicensed and unregulated sites to one where about 20% of people are likely to be betting in that way. Does that sound like a sensible strategy for a Government who are introducing a Bill to improve player protection and the regulation of the gambling industry? It is complete nonsense and it is there for all to see. This has nothing to do with regulation or player protection; it is about taxation and tax rates, as the Treasury made abundantly clear in its forecast.

Mr Nuttall: Does my hon. Friend think that the reason why the Treasury is using the 20% figure is that it accepts what I and, I suspect, my hon. Friend believe to be the case, which is that punters will seek the best odds and that this Bill will increase the costs on the operators and result in their offering less good odds than those who are not so regulated?

5 Nov 2013 : Column 150

Philip Davies: My hon. Friend is absolutely right. As an occasional punter myself, I can speak with some authority in saying that I am very interested in which bookmaker is offering the best odds—naturally; that is what punters do. In many respects, online horse racing punters have never had it so good in terms of the competitiveness of the odds and offers such as “best odds guaranteed”, which means that if someone backs a horse at a particular price and its starting price is bigger than the price they backed it at, they will get the bigger price—a fantastic offer for punters. All those offers will probably cease once this Bill comes to fruition, when the cost base of bookmakers will go up. That will be a bad thing for punters, who will lose out on the returns they get from their gambling. That is an inevitable consequence of the Bill; it is no good pretending that it is not, and we should be open and honest with people about it. If they still think it is a good Bill anyway, that is fair enough, but at least we should be honest about its implications. There are no painless panaceas whereby everybody will get more money out of it; somebody has to lose, and the loser is undoubtedly going to be the punter.

Because of the competitive nature of the market and the fact that many punters have become used to betting with concessions such as “best odds guaranteed”, some online betting sites will obviously see an advantage in going somewhere else—in being unregulated, not applying for a licence, and hoping that the fact they are not advertising on Sky TV, or wherever it might be, will be overcome by their offering concessions that punters have come to love and that give them much greater value. That is clearly what the Treasury has factored into its predicted revenues. Because it has built its prediction on a tax rate of 15%, it is crucial for everybody concerned that the tax rate introduced when the Bill comes into being is not 15%, because the lower the tax rate, the less the chance of people using unregulated sites and of companies that are currently licensed and regulated becoming unlicensed and unregulated. I support the Bill in principle, but the key part of it is not this Minister’s responsibility but the relevant Treasury Minister’s. I hope she will keep his feet to the fire to make sure that what she intends is not undermined by the Treasury.

Mr Laurence Robertson: My hon. Friend is making some excellent points. He talked about people being tempted to bet illegally, possibly because of the withdrawal of special offers. I am sure he is aware, because he has greater knowledge of this than me, that in several countries there is monopoly betting, usually a tote monopoly, and it is illegal to bet beyond that, yet because the internet is so very difficult to control, people in those countries do bet illegally every day, all the time.

Philip Davies: My hon. Friend is absolutely right. He undersells how much he knows about this subject; he is far more of an expert than me. When the Select Committee took evidence on gambling during a visit to Brussels, where we met European Union regulators and others in Europe, it was clear that levels of illegal gambling in countries with much greater restrictions than ours were far higher. We can predict what happens if the restrictions imposed are too onerous, because we have seen it in

5 Nov 2013 : Column 151

other countries. People go on to illegal sites. As my hon. Friend the Chairman of the Select Committee explained, the efforts made to try to stop people doing that are not particularly successful, as they can be got round. If the focus is on closing down internet sites, they will immediately reopen elsewhere. If it is on blocking credit card payments, people will use PayPal and other methods to get round those restrictions too. It is a pointless exercise. People who want to get round these restrictions will do so. Other countries have proved that, because they have tried them all and they have all spectacularly failed. Nothing will change in this regard, because the Bill is not really about regulation but taxation.

I am concerned about the impact with regard to the Gambling Commission, which, like all quangos and bureaucracies, likes nothing more than a bit of empire building. I suspect that it has seen the Bill and thought, “My goodness me, all our Christmases have come at once!” Whereas before it has had to accept the licensing and regulation from the white list countries, and accept the companies that are considered to be good enough, it can now get its teeth into every single one of them. It can go jetting around the world checking out whether all these individual companies should be a given a licence. Lord knows how many extra people it will need in order to satisfy itself that those companies are fit and proper to advertise their wares in the UK and get themselves an appropriate licence. This Bill is a bureaucrat’s dream. I would be interested to hear what steps are being taken to stop any empire building by the Gambling Commission, because I am sure that would be an unintended consequence of the Bill, allowing a huge bureaucracy to grow on the back of it.

I do not know what the great problem was with the white list. During our Select Committee hearings, I was scrabbling around trying to think of examples of problems. Only one sprang to mind, which was a notorious case where the legendary gambler Barney Curley pulled off a huge coup one day when he had four horses running at different meetings around the country; I think one was somebody else’s that he used to train. The first three won and the last one, fortunately for the bookmakers, lost, but with three out of four winners he still reportedly ended up making a profit on his bets of some £10 million. He was paid out by all the British bookmakers, but the regulator in Gibraltar, I think, allowed the bookmakers based there not to pay him out, which led to a huge dispute over a long period. I think I am right in saying that the situation was eventually resolved and they paid him out.

That is the only case I can recall where the regulation in one jurisdiction was fundamentally different from that in another and the returns to the punter were materially affected. Nobody who came to the Committee ventured that particular example—I ventured it—so they did not seem to be acutely bothered about it. I am not sure, therefore, what was wrong with the old regime.

Mr Syms: My hon. Friend makes a very good point. The Gambling Commission already charges high fees on the domestically based industry. Is there not a risk not only that it will chase revenue from remote firms, but that it may have to put up the fees for the whole industry, including those that are already paying their taxes?

5 Nov 2013 : Column 152

Philip Davies: My hon. Friend makes a very good point.

Mr Deputy Speaker (Mr Lindsay Hoyle): Order. May I suggest to the hon. Gentleman that it is not Friday today and that, although I know he is very keen on this subject, a few more Members want to get in?

Philip Davies: You are absolutely right, Mr Deputy Speaker: it is not Friday.

Mr Deputy Speaker: My worry is that you think it is a Friday, when you usually speak for hours—that’s what’s bothering me!

Philip Davies: For once, Mr Deputy Speaker, you are quite wrong. I have been racing through my comments, which I suppose is just like a Friday, when I do the same. I am trying to go through them as quickly as possible and I do not intend to speak for hours. I was just looking at the clock, actually, thinking that I should draw my speech to a close as soon as possible.

The final point on which I want to concentrate relates to taxation and what people may wrongly associate with this Bill. There is too much focus on the big gambling companies, such as William Hill, Ladbrokes and Coral. To be perfectly honest, I do not worry too much about the effect the Bill will have on them. They are big, successful and innovative companies and I am sure they have the wherewithal to cope with the Bill’s taxation regime. I am sure it will create some pain for them, but I do not have a problem with that. The reason why I support the Bill is that there is an awful lot to be said for companies offshore having to pay taxation in the same way as small, independent betting shops in this country. I do not worry about those big companies.

What I am worried about—I hope the Minister will consider this carefully—is the Bill’s likely impact on much smaller internet companies in the gambling industry, such as innovative start-up companies. If we look at the history of the gambling industry, we see that it is often the smaller companies that have driven much of the innovation and change that have been part of improving standards in a number of areas. My concern about the Bill’s new licensing system and the Treasury’s proposed taxation rates is that those companies will be priced out of the market before they can even reach a scale that would allow them to flourish. In effect, they will be strangled at birth and that would wipe out lots of innovation in the gambling sector.

That could easily be avoided, without altering the principles behind the Bill, through the introduction of thresholds or a tiered taxation system when the tax rates are announced. Both those alternatives would mirror the current income tax system, which has tiered rates depending on the size of a person’s income, a tax-exempt threshold at the lower end and graded percentage rates. The Government should look closely at introducing a tax regime that does not involve a simple, across-the-board 15% rate, but that takes into consideration the size of the companies concerned, their ability to pay and innovate, and the investment needed for that innovation, because lots of jobs—an underestimated number—are dependent on these small technology companies in the UK.

5 Nov 2013 : Column 153

People might say, “They’re based offshore. It doesn’t matter.” The companies are based offshore for gambling purposes, but they also employ lots of people in the UK who do their marketing and advertising and who create their TV adverts. We would lose lots of jobs in the UK if we priced such businesses out of the market.

Mr Nuttall: Does my hon. Friend agree not only that those companies employ British workers in this country, but that often, the workers based offshore are also from the UK?

Philip Davies: My hon. Friend is absolutely right. People ought to bear in mind a number of very small companies, such as Probability, NetPlay TV, Gamesys, Adobo Games and tombola, which advertises a lot on TV and is growing. Those companies employ lots of people in the UK, but if the Bill’s regime of a 15% tax rate had been in place when they started, they would never have got off the ground because it would not have been worth their while. The British economy cannot afford to lose those companies and the jobs they create. This is not about Ladbrokes and William Hill. I suspect they will survive whatever the rate of taxation. It is the smaller companies we should be thinking about.

I want to address one or two points that I do not think have been cleared up. Will software suppliers such as Oracle and Microsoft need to apply for a Gambling Commission licence, given that they are key suppliers to software providers of the online gambling and gaming industry? The Bill does not make it clear whether they will need a licence. I am not sure whether the Minister will be receptive to redrafting the Bill in order to make clear the extent to which software providers need to go down their supply chain to require suppliers to apply for a Gambling Commission licence. Italy, Denmark and France do not need software suppliers to be licensed. My understanding is that only Spain does, and that that is currently under review. I urge the Minister to consider that point and ensure that it does not happen.

Another point is the extent to which the staff and ultimate beneficial owners of applicants are required to provide personal information. With the possible exception of banks, no other industry will be required to provide so much personal detail, not just of directors but of virtually anyone in a senior position in the organisation. Why is that needed?

I support the principle of the Bill, but not for the reasons given by the Government for introducing it. Frankly, the regulation argument is nonsense and does not stack up at all. This is about taxation and on that basis I support the Bill, but only if the Government set the taxation at a sensible and affordable rate. Before we get to Third Reading, I hope the Treasury will indicate the likely taxation rates and whether it will consider tiered rates or a much lower rate. If the tax rate is too high, I may no longer support the Bill, because it could have unintended and damaging consequences.

Whatever revenue is raised will be good for the Treasury—it will get more in the future than it is getting now—so why not try the rate at 5% and see what happens? If there is no big issue, it could then increase it to 10%, and to 15% at a future date. Why go straight in at 15% and perhaps have lots of unintended consequences?

5 Nov 2013 : Column 154

It should be done incrementally: start at 5%, see how it goes and review it from there. I hope the Minister will take that on board and urge her Treasury colleagues not to damage what otherwise could be sensible legislation.

2.38 pm

Paul Farrelly (Newcastle-under-Lyme) (Lab): It is always a pleasure to follow the hon. Member for Shipley (Philip Davies), who is knowledgeable and free-thinking. I usually do so on the Culture, Media and Sport Committee in order to ensure that he does not have the final word.

I broadly welcome the Bill. As my Select Committee colleague has said at length, it is clearly at the regulatory end of the welcome moves towards a major reform of the taxation system—to a point-of-consumption basis—so that companies pay tax on profits made from bets placed in the UK. The Bill is not about the appropriate level of that taxation. It focuses on other crucial aspects of the regime, namely, as it says on the tin, licensing and advertising of gambling. It is a crucial part of reforms of an industry that has hugely relocated, not only online, but offshore, principally to Gibraltar for most UK operators, and largely for tax reasons. I use the word “most” pointedly, because there is one huge and important exception, which is particularly important to my local area.

Mr Whittingdale: Which one is that?

Paul Farrelly: It is bet365, which is the biggest UK operator and perhaps now the biggest operator worldwide. However, the Chair of the Select Committee will have to be patient, because I will speak about that company a little later.

Notwithstanding the delays to which my hon. Friend the Member for Eltham (Clive Efford) referred, I congratulate the Government on introducing the Bill and on sticking to the timetable that they set out in 2012 to bring the reforms into force, after careful consideration and consultation, by the close of next year.

A replication of that resolve would be welcome on the wider related issue of corporate tax avoidance by huge multinationals, both on and offline, which has gained a head of steam in these straitened times. Although gambling, both on and offline, is treated differently from general business because it has licensing regimes, the design of an effective point-of-contact consumption tax system holds lessons about what tax authorities can do for themselves, without passing the buck to the interminable renegotiation of international tax treaties, which may well take a lifetime.

The Bill and the issues to which it relates have been well scrutinised in this Parliament. The experience of the UK since the passing of the Gambling Act 2005 has been referred to at length. That was the subject of a DCMS consultation that started in 2009, before the last election, which recommended the current course. The Select Committee endorsed that approach in the report that we issued in July 2012. This April, the Committee published another report welcoming unanimously and on a cross-party basis—although perhaps for different reasons—the main thrust of the draft Bill following extensive pre-legislative scrutiny. In January, the House staged a precursor to this debate on the private Member’s Bill promoted by the hon. Member for West Suffolk

5 Nov 2013 : Column 155

(Matthew Hancock), which was introduced by the hon. Member for Thirsk and Malton (Miss McIntosh) following his move to the Government Front Bench. I recall that that Bill was intended as a parade ring for the gambling concerns of the Newmarket and Thirsk race courses, but it covered much of the same ground as this Bill.

I will be brief and will not run around the Select Committee circuit, as the hon. Member for Maldon (Mr Whittingdale) has done. Once again, he has proven himself to be Essex’s own latter day Seabreeze in the way that he has galloped around the track. However, it is worth re-emphasising the extent of the flight of most online gambling offshore and the resulting loss of tax to the Exchequer. The new regime should, if carefully designed, encourage a more level playing field for the online operators who have stayed and for the rest of the traditional sports gambling industry in the UK.

The Chair of the Select Committee has waited long enough. Chief among the online companies that continue to base their sports gaming operations in this country is bet365. It is, in many respects, a modest company with a great deal to be immodest about. It certainly does not seek the limelight, but I do my best for it.

Bet365 is based at Festival Park in Hanley in the constituency of my hon. Friend the Member for Stoke-on-Trent Central (Tristram Hunt). In 1986, Festival Park was the site of Britain’s second national garden festival. The first was in Liverpool and the successive ones were in Glasgow, Gateshead and Ebbw Vale. They were a sort of biennial Olympics, or biennale as Boris would describe them, for Britain’s most deprived areas during the pain of the Thatcher era. Stoke was chosen after the closure of Shelton Bar steelworks in a north Staffordshire that was ravaged by the loss of its coal mines and many of its pottery makers.

Bet365 is a world-beating break from that legacy. It is one of the most phenomenal success stories in British business in the new millennium, having been started in 2000. With more than 2,000 highly skilled staff, it is now the largest private sector employer in north Staffordshire. It has led the local regeneration without a hand up or a handout from Government. In the last year, in a highly competitive industry, it has increased its pre-tax profits from online gaming by more than 50% to about £180 million. It has done that in just 13 years. As I have said before, £20 billion was wagered with bet365 in 2012-13, which is a 57% rise. That has happened because it is one of the industry’s most innovative and trusted players.

Unlike its online competitors in the UK, bet365 paid £31 million in corporation tax to the Exchequer last year. With betting duties and VAT, over the years it has paid hundreds of millions of pounds more. It also pumps a fortune into the local premiership football team, Stoke City, which is another source of pride and a sign of its commitment to the local area. Charities and good causes benefit from the Bet365 Foundation, the Stoke City Foundation and the Coates family themselves.

The reason bet365 remains in this country is not just that it is privately owned. It is because the Coates family—Peter, the Stoke City chairman, his daughter Denise, who was the founding force of the company, and her brother John, the joint managing director—believe in creating employment where they come from and in paying their fair share of tax.

5 Nov 2013 : Column 156

The firm is a leading member of the UK’s Remote Gambling Association, which John Coates has chaired and which does much to promote responsible gambling and the industry overseas. However, unlike other leading members, including household names such as Ladbrokes and William Hill, bet365 supports the changes in this Bill because it is mainly based here and not offshore. If it is so successful while paying taxation, why should its competitors not do so too? I do not think that the UK’s legislative framework should discriminate between a private company and a publicly quoted company, even if publicly quoted companies are motivated by profit maximisation.

I sympathise with some of the arguments that have been made by bet365’s competitors and by the RGA during the gestation of the Bill, which we have heard about today from the hon. Member for Shipley. I also welcome the change of tone from the RGA towards these reforms, which will surely happen. I hope that there is no challenge from the Gibraltar-based companies in Europe, because that would be a delaying tactic that is all about taxation.

In Committee and in the subsequent stages of the Bill’s passage, we must have the best possible scrutiny to get the legislation right. The success of the regime will depend on British consumers choosing to gamble with licensees who have chosen to go with the Gambling Commission. There will have to be effective enforcement to deter non-licensed companies from muddying the waters with a grey or black market. There are outstanding licensing issues on which the industry is being consulted. We must remember that this is an international industry in which operators hold licences overseas in reputable jurisdictions. As the RGA says, it is in everyone’s interests that the regulators work together.

As we have heard, it is crucial that we get the level of taxation right. It is also important to get the definition of what is to be taxed right. I hope that the Treasury is listening to the arguments from the industry for a gross profits tax, rather than a wider gross gaming revenue definition, which rather moves the goalposts from what the operators were expecting.

In listening to the industry, we must recognise that other jurisdictions, notably in Europe, have successfully introduced similar licensing systems and taxation on a point-of-consumption basis. That is reaping revenue for their Exchequers. One of the most recent countries to do so was Denmark. The duty there is 20%, which is higher than the 15% gross profits tax in this country. None of the major operators—all responsible members of the RGA—have seriously suggested to the Select Committee or to anyone else that they would not apply for a licence under the new regime established by the Bill, but instead join an unlicensed or grey market. They have not done so in Denmark, Germany, Greece or Spain. Frankly, the UK is too important a market and their reputations are too important for them to do so here. I repeat: if bet365 can be so successful and supportive of these changes, that also shows what the competition is capable of doing.

To conclude, once we implement this new system—by the close of 2014, I hope, and following parallel moves by other European countries—UK operators, including bet365, will not only have a greater degree of certainty for their future investment and growth, but in co-operating with, rather than resisting, the new British system, all

5 Nov 2013 : Column 157

those who claim to be a reputable UK company will be better placed to argue, particularly at European level, for fairer access to other major markets such as France and Italy, and to ask the UK Government to help support the industry in Europe and worldwide.

2.50 pm

Mr Robert Syms (Poole) (Con): I rise to support the Bill, although I am a little disappointed that it is so narrowly drawn as I think that major issues need considering. Gambling is very much part of modern life in Britain. We all cheered the Olympians in 2012, and a lot of that success was built on the national lottery. One needs only to look at the various books produced at Budget time to see how much the industry generates in taxation to pay for the things we want in this country, such as health, education or law and order.

Gambling is an important industry, and it is also part of our offer as a country that many people come to visit. We need only look at casinos in London to see that a high percentage of people in them are visitors to this country who have come to take advantage of the facilities and what we have to offer. Progress was clearly made in the Gambling Act 2005, but given the way the internet is developing, it is difficult without a crystal ball to work out what the future will bring. It is clear that we have lost a large slice of the industry to abroad because of the tax system, and it is therefore perfectly sensible for the Government to look at ways and means of tempting people back to the UK to make a bigger contribution.

We ought to be aware of concerns that we might load too much on the Gambling Commission because it might then load higher fees on to domestically based businesses. Many of those businesses found that the size of the commission compared with the old gambling board, and the number of people it employs, has put their fees up substantially over several years. Many issues must be considered and this Bill is part of the solution. I suspect that the other part of the solution, as we discussed earlier, will be in the Finance Bill following the Budget.

A number of important issues have been raised, include how we tempt offshore companies to come back. Do we tempt them back by setting a competitive rate? My hon. Friend the Member for Shipley (Philip Davies) made a strong argument for that, but there are a number of competing concerns. The domestic industry is clearly upset that people offshore can set better odds and therefore take customers, but we must also consider the rate we set, as that could ensure many more illegal sites in the UK, which raises the issue of problem gambling.

I think we have a responsible domestically based industry that, as I said, generates a lot of tax. It has codes and practices that it sticks to, and it is part of our offer as a country. It also expects a degree of fairness. When we talk about a level playing field, we must take into account the millions of pounds of investment, the thousands of people who are employed, and the tax they generate. The rate we set for remote gambling operations will be important, but the Gambling Commission and Treasury must also consider whether

5 Nov 2013 : Column 158

sufficient assets are deposited in the UK, or whether any entity subject to action by UK regulators or the authorities has assets in the UK that can be picked up. They must also consider whether people from remote companies have locally based directors who are responsible for what they do—that is important.

The hon. Member for Newcastle-under-Lyme (Paul Farrelly) asked whether there ought to be sanctions against individuals or businesses that provide facilities for offshore remote gambling companies. That is a difficult area and an absolute minefield, and there are tricky issues for the Government to consider, which means setting out a balance. In reality, however, because we are not getting tax from the remote industry, the UK has probably lost £1 billion or £2 billion in revenue over the past few years, and it is an area in which any sensible Government would look for reform.

A number of other issues have been raised, including why we have to wait until December 2014 before we bring in a new rate. By some estimates, the UK may well lose £200 million or £300 million by having that delay. The issue raised by the Culture, Media and Sport Committee is also important. Someone can gamble remotely on an iPad in the street, but when they go into a casino, which is safe, regulated, taxed, and where people have a duty to look after their general welfare, they are not allowed to. I was pleased after my earlier intervention when the Minister said that the Government might consider that issue during the passage of the Bill.

A number of points in the broader industry need addressing. The hon. Member for Bradford South (Mr Sutcliffe) mentioned the portability of casinos. A lot of our—very successful—industry still runs under the Gaming Act 1968, which is nearly 50 years old. Certain issues need looking at if we are to modernise the industry and for it to continue to be a success.

Mr Sutcliffe: That is why it is important to consider issues that have been wrong for some time and put them right in the Bill—I hope the Minister will win that battle. The temptation is to get the Bill through with its core values, but not to look at the wider issues. Perhaps this will be the only time we have to get it right.

Mr Syms: The hon. Gentleman raises a good point. We are dealing with a specific problem, and as my hon. Friend the Member for Shipley said, the driver is clearly the Treasury which sees an issue it needs to deal with to raise money. That does not mean, however, that no other aspects of the whole industry need considering and modernising. When the hon. Gentleman spoke earlier he mentioned the Daily Mail test, and I suspect all of us in politics get a little wary when talking about the gambling and casino industries and all those other industries. In reality, however, if the Government cannot amend the Bill, there is a good argument for introducing, certainly early in the next Parliament, another Bill to cover the broader gambling and casino industry, to make it a little more responsive to modern demand.

I was interested in comments by the hon. Member for Newcastle-under-Lyme about how bet365 had provided regeneration for Stoke. We should not underestimate the fact that the gambling industry is a factor in regeneration. It certainly was in Atlantic City, and one needs only to look at what is happening in the United States to see that many local governments and other

5 Nov 2013 : Column 159

areas have deliberately attracted and promoted that industry because it can help local areas. A Government who want certain areas of our country to prosper and regenerate could do a lot worse than looking at the gambling industry as a potential source of regeneration for some areas that are struggling in the modern world. I broadly support the Bill. I am a little disappointed with its scope because there is unfinished business in the broader gambling industry, but I look forward to the passage of the Bill. I hope that the clever people— the bright people with towels round their heads in the Treasury—will find a good way of generating money to help the public services that we all want.

2.58 pm

Chris Evans (Islwyn) (Lab/Co-op): I refer the House to my entry in the Register of Members’ Financial Interests, and I welcome the Minister to her place. She is the Minister responsible for sports, and having served with her on the Justice Committee I know that she is level-headed and takes a non-partisan view on things. I think she is an excellent addition to the Department, but I caution her on one thing. I know that she loves tennis and is a bit of a tennis freak, but I hope that she looks at other sports as well.

I am pleased to speak about this Bill. Bookmaking was my family business—my mother and father were bookmakers, and in fact I am the son of a bookmaker and the son of a bookmaker’s son. Indeed, bookmaking was my first job after university, and like the hon. Member for Shipley (Philip Davies), I am sure, who also worked in betting shops, I could entertain the House with tales of the characters we would meet in betting shops. I know, however, that there has already been a warning about time, so I will limit my remarks to what is in the Bill.

In the past few years, the betting industry has suffered from an image problem. The country has a tradition of playing the football pools and of crossing its fingers each and every week in the hope of winning the national lottery, but people seem to look down their noses at the betting trade. There is a perception that there is a betting shop on every corner, and yet, when we talk about gambling, it is important that we understand the history of the industry. In the 1970s, there were 16,000 betting shops; today there are just 9,000. The idea that there are more betting shops is perception more than anything else. People can walk into any newsagent or supermarket and be offered a wide range of scratchcards and other gambling opportunities, but the bookie is blamed for so-called gambling problems in this country.

That is not all. The betting shop is blamed for the decline in our high streets. Betting shops are tarred with the same brush as the pawnbroker and the money shop. Rather than bash the betting industry, it is time to talk about our betting firms as a great British success story. The industry contributes £3.2 billion to UK gross domestic product each year and provides £1 billion in taxes. Betting shops directly employ 55,000 full and part-time jobs, which is the equivalent of 10% of the entire leisure industry. The work force are mainly women, some of whom have re-entered the workplace after having children, or students, who need flexible or part-time work while studying, as I did when I was at university.

5 Nov 2013 : Column 160

In a world in which sadly we have seen names such as Woolworths and HMV disappear from the high street, the gambling industry has been at the forefront of innovation and technology. I want to focus my remarks on that. When I left the industry over 12 years ago, online gambling was in its infancy. If people walked into a shop at that time, they would think the industry was in decline. The punters were mainly either coming up to retirement or retiring. The only thing in the shops that kept them going was the amusement prizes machines, the forerunners of fixed odds betting terminals.

In reality, the trade was changing. It is important to realise that the industry has been forced to be innovative and adaptable. More than a quarter of William Hill online customers place bets on their mobile, smartphone or iPad. The industry is continually changing. People who bet online would probably not have taken a trip to their local bookie to bet on a horse. If anybody turns on the television tonight to watch the football, the last things they will see before kick-off are adverts for odds on the first goal scorers. The people watching the adverts are not going to run off to their local bookies to put £5 on a match result. They will instead get out their smartphone or iPad and bet from the comfort of their living room.

Frankly, bookies have to be innovative. They must keep up in an ever-changing industry, and have found ways to reach customers who previously would not have looked at them at all. When we talk about businesses in this country, it is important that we look to gain positive aspects of all businesses, no matter what our perceptions of or prejudices against certain industries.

On the detail of the Bill, I do not think any hon. Member will disagree that the priority must be to protect the consumer. We need to ensure that we do not see sites operating illegally and offering bets to UK consumers. We need an assurance from the Government that the Gambling Commission has the appropriate powers to deal with illegal operators. As somebody who has worked in the industry, I know that the one thing we do not want in the betting trade are black market operators. I am sure the hon. Member for Shipley agrees that when we worked in the betting trade we were constantly competing with illegal betting operators, whether they operated out of the pub, the side street or their houses. We—the people who played by the rules and paid their taxes, and who had betting licences—were constantly undercut. I fear that the same thing could happen as a result of the Bill.

We must ensure that strong licensing conditions are in place but, at the same time, we must ensure that licensing conditions are imposed in a timely, effective and fair way. Black market operators should be run out of business as quickly as possible. I know that the Government have already rejected the idea of internet protocol address blocking and financial transaction blocking, but if we are serious about ensuring proper enforcement, we need to look at that again. I have some sympathy with the hon. Member for Shipley. I very often do not agree with him politically, but a lot of what he has said makes a lot of sense.

The hon. Gentleman mentioned the point-of-consumption tax. I agree with the findings of the Culture, Media and Sport Committee, which warned that the Government need to be careful with how steep they make that tax. We know that the UK retail betting

5 Nov 2013 : Column 161

industry is competitive. There is a huge focus on customer service and brand loyalty. As I said in an intervention on the hon. Member for Maldon (Mr Whittingdale), the Chairman of the Committee, online gamblers are far more promiscuous. They will shop around for the best price. They will not worry. There are two sets of customers: the customer who wants to bet heavily online and shop around for the best price, and the customer who has been going to his local shop for years. The latter likes the atmosphere of the bell ringing before the dogs go off. He likes running up to the counter quickly to place his bet. That is what he lives for. He also likes the staff—he likes sitting down for a cup of tea with them. He will not go online and shop around in that way, but others will.

As the hon. Member for Shipley has said, if the tax is set too high by the Treasury, it will stifle one of the most innovative industries out there. Betting is a growth industry. My hon. Friend the Member for Newcastle-under-Lyme (Paul Farrelly) mentioned the growth of bet365 over 13 years, which was down to the innovation it has shown online. However, if that tax is too high, I believe we will open a new market for, as I have said, unlicensed, illegal operators, which will not comply with the new regime and which can offer better odds than licensed operators such as Ladbrokes, William Hill, Betfred and bet365.

Modelling by Deloitte in its 2011 report “The Impact of a Point of Consumption Tax on the Remote Gambling Industry” demonstrated that a 5% rate of tax would mean that as many as 13% of UK online customers would move to the unlicensed or illegal market. At 10%, 27% of business would move to the illegal market. I would hate to see how many people would go to the illegal market if we set the rate too high at, for example, 15%. I mentioned Woolworths and HMV going out of business; I would hate to see companies that we have seen on our high streets for so long, such as Coral, William Hill and Ladbrokes, having difficulties and going out of business.

I started my career in an independent bookmakers—Jack Brown, which no longer exists. One sadness I have—anyone who has worked in the betting industry will know this—is that the independent bookmaker has disappeared from the high street. I went out on Friday night and saw an independent bookmaker. That was a novelty and a rarity, but when I was younger, it was a familiar sight. I am deeply concerned that, if we set the tax too high, the firms for which people have some sort of warmth and empathy will go out of business.

The Bill is important because, ultimately, its purpose is to protect consumers—that is what it should be about—but I would like to see more. When the Minister responds to the debate, I would like her to provide assurances that the Gambling Commission has sufficient resources to deal with the regulatory requirement it must undertake. We need to be extremely careful that we do not stifle a forward-thinking and forward-moving industry. The fact is that gambling is a growth industry. I do not want the Bill to do anything to change that. Ultimately, I believe we can learn something from the sector. It has been innovative and has responded to challenges in the market that would have brought down lesser industries. I think that Members across the House would agree that we can learn from that.

5 Nov 2013 : Column 162

My final point—I do not want to take up too much time—is on GamCare. We see the adverts on the television and the internet. People can click on the icon and receive the help they need. We have heard a lot in the past about payday lenders; we can learn from that. We can also learn something about self-exclusion. I believe that the betting industry is almost paranoid about problem gamblers, but very often we can be proud of the industry. I will support the Bill, and I look to the Minister to give the assurances for which I have asked.

3.8 pm

James Duddridge (Rochford and Southend East) (Con): I thank the hon. Member for Islwyn (Chris Evans) for the timely completion of his speech, which allows me to leap to my feet. The hon. Gentleman gives my hon. Friend the Member for Shipley (Philip Davies) a run for his money as the champion of betting, and particularly of betting at bookmakers. I am not saying that out of bitterness because my hon. Friend called me idle—I should have been faster on my feet.

The hon. Gentleman makes a bid for being the champion of betting shops, rather like the hon. Member for Newcastle-under-Lyme (Paul Farrelly) made a bid for being the champion of online betting. I rise to identify my constituency as perhaps the epicentre of bricks and mortar casinos. Three of the 142 casinos in the UK are in my constituency, all within a mile and a half along the seafront. I will go on to talk in detail about a fourth that is opening up on those golden couple of miles.

Reflecting on the Minister’s introductory comments, it is brilliant to see her in her new job. I was a little worried in the first week. Most Ministers are instructed to hit the ground running, but, looking at comments from journalists, the Minister seemed to be flexing her sporting credentials in karate and throwing journalists around her private office. I am not sure how well that will work out for her in the long run, but if she ever needs me to do anything I will certainly think twice before disagreeing. Having said that, I would love to serve on the Public Bill Committee and will be in negotiations with her on one or two amendments I would like the Government to table if the Chair of the Select Committee does not table them.

I criticised the hon. Member for Eltham (Clive Efford) for the enormous list of measures he wants included in the Bill, so I hesitate to ask for more provisions—I want my little bit, but not necessarily his. The Bill is small, but I suspect that if the hon. Gentleman got everything he wanted, I would need a hand to get out of my seat and lift the Bill.

I want to focus on the interaction between online betting and bricks and mortar casinos. This is important not just in relation to deregulation or taxation—my hon. Friend the Member for Shipley hit the nail on the head; this is a much greater part of the process—but in what can be done online compared with what can be done offline in a bricks and mortar casino. As I said, there are 142 casinos in the UK, which means that 3% are in the constituency of Rochford and Southend East. While I am bragging—if you will allow me a brief diversion, Mr Deputy Speaker—I will say that 8% of UK piers, by metre, are in the constituency too. It is a wonderful place to go for entertainment, with the Genting Club, Genting Electric and Rendezvous casinos, and the soon to be opened Park Inn Palace hotel.

5 Nov 2013 : Column 163

My hon. Friend the Member for Poole (Mr Syms) made many good points, but I picked up in particular on his comments on regeneration. At a difficult time for the economy when high streets are not doing so well, Southend high street is doing well and the seafront is being regenerated. When I arrived in Southend more than 10 years ago, there was a beautiful but derelict 19th-century hotel, the Palace hotel. The Government used it to house asylum seekers on a temporary basis, before they could be found more suitable accommodation. That made the area, to a degree, a no-go zone. It is now a four-star hotel, and the company will be opening another casino. It may even be a five-star hotel; it certainly should be, given the quality of service I received. The gambling industry can be of significant benefit to constituencies, whether in Newcastle, from betting shops or from online casinos.

Genting casinos employ more than 170 members of staff in Southend and the company has invested millions in the economy. It supports the broader community through mayoral charities. All three casinos have been fantastic on responsible gambling. Governments always ask for more and more. I often wonder what more the industry can do, but as Governments tinker with taxation and regulation they feel they should ask for more without understanding fully what that could be. There is a tacit understanding, which is in many ways false, whereby the industry says, “We are trying to do more; what more can we do?” and the Department and Ministers do not have a hit list of what they want, because so much is already being done.

Mr Sutcliffe: The hon. Gentleman will recognise that Governments can sometimes apply pressure, which is what we did with the responsibility in gambling levy. That voluntary levy—voluntary donations from the gambling industry—is now worth more than £5 million, which shows that the industry does consider the problems that problem gamblers face.

James Duddridge: Absolutely. I have had a number of discussions about individual gamblers in Southend who have put themselves on the register and, as a result, have been protected. The protections are not, as a number of hon. Members have said, in the online arena and I am deeply concerned about that. While the Government are, to a degree, looking at online and bricks and mortar together, the two are still too polarised. I can put that down only to the Government wanting to divide and conquer the industry by setting up slightly different regulations, rather than operating en bloc, but they are disadvantaging one of the more high-performing sectors and that is ludicrous.

My hon. Friend the Member for Maldon (Mr Whittingdale) described the Essex sea breeze. In his penultimate point, he talked about online gambling in bricks and mortar casinos. It is ironic that a casino is able to advertise outside the Rendezvous casino, but games cannot be played online inside it, even if one takes in one’s own iPad or iPhone. Quite how we could stop people gambling on their own devices I do not know, but it would be much better to allow casinos to have gambling online within their own premises. That would bring it into the family that has greater protection for problem gamblers and into the tax net. The current position is ludicrous.

5 Nov 2013 : Column 164

The Minister indicated that she was sympathetic to the point. I am interested to hear, in her concluding remarks, how that sympathy will play out. Does she expect Back Benchers, on limited resource, to start tabling probing amendments, or will the Government table a new clause that we can all consider? The latter would be my preference, rather than the unfair process of the Select Committee coming up with an idea, an hon. Member pushing it forward in the Bill Committee, the Government considering it, the consultation perhaps not coming back on Report, and then, quietly, the Select Committee’s work coming out as a Lords amendment at the end of a long day, and the Government saying it is just an additional tidying-up matter. There should be a greater degree of transparency. I would like the Minister to introduce a new clause which we can all look at, rather than relying on us to write one up on the back of a fag packet—be it plain or with pictures.

It has been a pleasure to contribute to the debate. I hope to have the pleasure of being a member of the Bill Committee, where I can talk more about Rochford and Southend East and the value of bricks and mortar casinos.

3.18 pm

Jim Shannon (Strangford) (DUP): I congratulate the Minister on her new position and look forward to her response to the debate.

Hon. Members have referred to taxation and regulation, but I would like to focus on enforcement, in particular in relation to problem gamblers and others who are vulnerable. When I read the Bill and realised it would provide a regulatory framework for online gambling providers that are not based in white-listed jurisdictions, I was pleased that at long last we would have regulation—that had to be good. I have also received advice on the Bill and some concerns have arisen, in particular relating to those who are vulnerable.

At the moment, online gambling providers located in jurisdictions that are not on the white list can access the UK market, despite the fact that they are not regulated by the UK Gambling Commission or by a domestic regulatory regime deemed sufficiently robust to justify their being deemed a white list jurisdiction. The only thing they cannot do is advertise in the UK. The fact that companies not subject to proper regulation can access the UK should concern anyone who knows anything about the social problems associated with gambling.

Problem gambling is a desperately destructive social phenomenon that brings real suffering and economic cost. According to the Gambling Commission, 450,000 people in the UK suffer from problem gambling, the effects of which should not be underestimated: it can take families to breaking point and beyond and sometimes lead to suicide. As a modern society, it is incumbent on us to ensure that the regulatory framework for gambling provides the greatest possible protections for vulnerable and problem gamblers, and it is certainly wrong that hitherto we have adopted such a laid-back attitude to gambling websites that we deem not to be properly regulated. To this end, the Bill’s proposal to subject providers from beyond the UK and white-listed jurisdictions to UK regulation comes not a moment too soon.

In scrutinising the Bill, however, some questions arise. All online gambling providers seeking to access the UK market will be required to get a licence from the Gambling

5 Nov 2013 : Column 165

Commission before they can advertise their services, but there is no clarity on enforcement, and the claim that the Bill protects the vulnerable will completely disintegrate if companies without a licence are not prevented from accessing the UK market. If licensing is not backed up with an enforcement mechanism, the Bill will simply result in an increase in online gambling advertising. Some online providers that currently have access to the UK market but which cannot advertise here would be able to advertise, while those that cannot advertise would be able to access the UK market on the same basis as today. That is not the right step forward.

I know the Bill gives the Secretary of State regulation-making powers, which could be used for enforcement purposes, but if we are serious, as I believe the Government are, about creating a progressive legislative framework that shows proper regard to the vulnerable, why not put enforcement mechanisms in the Bill to make it clear from day one that if an online gambling provider from outside the UK market wishes to access that market, it must have a licence? It would be perfectly possible to make that plain by amending the Bill to prevent such companies from accessing the UK by using financial transaction blocking measures, which have proved successful in other countries that have gone down the same road. I seek an assurance from the Minister, therefore, that the licensing regime will be backed up with a clear enforcement mechanism that makes it absolutely clear, in the Bill, that if a company outside a white-listed jurisdiction does not have a licence, it will be prevented from accessing the UK market by a financial transaction blocking measure or similar mechanism. I look forward to her response.

My concerns do not end there. Our current regulatory framework incentivises online gambling providers located in the UK to relocate to white-listed jurisdictions beyond the UK. The vast majority of UK-facing online gambling providers have left the UK for nearby white-listed jurisdictions, such as Alderney and Gibraltar, which are subject to a different regulatory regime and one that has often exhibited greater regard for problem gamblers than the UK regulatory framework. My concern, therefore, is that if we remove the incentive for gambling providers to locate outside the UK, problem gamblers in the UK will find many key providers less responsive to their needs—unless, while removing the incentive, we also make our regulatory framework for problem gamblers at least as robust as the best white-listed jurisdictions.

The Minister might be tempted to say that licensing is a matter for the Gambling Commission, and of course it is, but it is also a matter for the House, which created the commission when the current legal regime was introduced. We cannot, therefore, pretend that a significant change in that regime does not require us, the legislature, to review the capacity of the commission to deal with the new challenges emanating from the Bill. I would like a strong assurance that she will review the regulatory regimes of white-listed jurisdictions—the regimes from which British consumers of many online gambling services have benefited in recent years—and the regard they show for problem gamblers and the vulnerable, and ensure that when the Bill takes effect our regulatory regime will be made as sensitive to the needs of problem gamblers as the regulatory regimes of the very best

5 Nov 2013 : Column 166

white-listed jurisdictions. If we do not do that, the unintended consequence of the Bill will be that British customers accessing the many providers currently based in white-listed jurisdictions might actually enjoy fewer protections than they do now.

Finally, even if the Bill is accompanied by proper enforcement mechanisms preventing providers from beyond the white list accessing the UK market, and even if we ensure that the return of online gambling providers to the UK does not erode protections by enhancing our regulatory regime with respect to care for problem gamblers, the Bill will still result in an increase in advertising for online gambling in the UK. Although online gambling is not associated with the highest problem gambling prevalence figures, it does have one of the higher figures for problem gambling. Unlike other gambling opportunities, it is available 24/7; one can access hundreds, if not thousands, of gambling websites without leaving one’s house or bedroom.

I and my constituency office are often confronted by people with addictions, be it drink, drugs or gambling, and I am aware of the illusion of the gambler when they make the gamble, their depression when it is not successful and their guilt when they realise they have spent money they could not afford to spend. We cannot ignore the vulnerable or problem gamblers. As online gambling providers not on the white list access advertising opportunities for the first time, the Bill will make people in the United Kingdom, including problem gamblers, more aware of opportunities to gamble online. If the House is to vote for measures designed to result in an increase in online gambling in the UK, which is effectively what the advertising provisions propose, we should complement it with enhanced assistance for problem gamblers, who will face additional advertising challenges as a result of the Bill.

One mechanism developed to help problem gamblers is self-exclusion, which empowers a problem gambler on “a strong day”—even on their strongest days, some of those I have met are still not strong—to exclude themselves from the services of a gambling provider for a fixed period. Although in principle this is a good thing, in the context of online gambling it is useless: there are so many online gambling providers—hundreds if not thousands—that it would be impossible to self-exclude from them all. One answer to that dilemma has been proposed by academics, including Dr Sally Gainsbury, author of “Internet Gambling: Current Research Findings and Implications”, published in 2012, in which she states that “a significant limitation” of self exclusion

“is the lack of collaboration between different online gambling sites and venues, so that excluded individuals may find it easy to gamble at another site or venue.”

Will the Minister indicate how we can address that issue? Again, she might say it is a matter for the Gambling Commission, but again I would say: yes, but it is also a matter for the House, which created the commission and established the legislative framework that the Bill significantly amends. I believe that it would be appropriate for us to put in place a system that provides problem gamblers with a credible, meaningful, one-stop-shop self-exclusion mechanism. I should like to hear her thoughts on that matter.

I fear that, if the concerns that I have outlined are not addressed, the effect of the Bill will simply be to allow some people who cannot currently advertise in the UK

5 Nov 2013 : Column 167

to advertise online gambling opportunities, and to erode the level of protection afforded to problem gamblers on the many sites accessed by the UK market. We must seize the day and ensure that those things do not happen. We must ensure that providers from beyond the white list who do not have a Gambling Commission licence are prevented from accessing the UK market, and that the UK licensing regime is made at least as robust as those in the best white list jurisdictions, so that problem gamblers and vulnerable people can be protected in the context of the increase in advertising through the provision of a one-stop-shop self-exclusion mechanism.

3.29 pm

Mr John Leech (Manchester, Withington) (LD): I am delighted to have this opportunity to speak in favour of the Bill. It will go a long way towards creating a level playing field for the onshore betting industry and towards reversing the trend of remote gambling companies setting up their businesses abroad to avoid the Gambling Commission’s regulatory regime and to avoid paying tax on transactions in the UK.

I pay tribute to the former sports Minister and my parliamentary colleague on the Culture, Media and Sport Committee, the hon. Member for Bradford South (Mr Sutcliffe), for recognising in April 2009 that changes would be required to keep up with the technological advances in online gambling. As a “Yorkshire United” supporter, he might not know anything about football, but it is fair to say that he knows a fair bit about gambling, and he was a pretty good Minister in his time in the Department. I also pay tribute to the fact that he took into consideration the arguments of my right hon. Friend the Member for Bath (Mr Foster), who had been arguing the case for reform throughout the whole of the last Parliament.

As a result of the Bill, remote gambling will be regulated at the point of consumption. All operators selling into the British market, whether from here or abroad, will be required to hold a Gambling Commission licence, which will level the playing field for British-based licence holders. The Bill will also repeal section 331 of the Gambling Act 2005, removing the offence of advertising foreign gambling and consequently the distinction between white-list and EEA countries and non-EEA jurisdictions. Instead, in order to advertise to British consumers, all operators will have to hold a GC remote licence, regardless of where they are based.

The changes will provide increased protection for British consumers, because all remote gambling operators will be subject to robust and consistent regulation, as well as being required to support action against illegal activity and corruption in sport, and to comply with licence conditions that protect children and vulnerable adults. They will also be required to contribute to research, education and treatment in relation to British problem gambling.

As the Chairman of the Select Committee, my hon. Friend the Member for Maldon (Mr Whittingdale), pointed out, the Committee carried out pre-legislative scrutiny of the Bill. It is perhaps not surprising that its provisions have not been well received by either the remote gambling operators or the overseas regulators. The Remote Gambling Association has questioned whether

5 Nov 2013 : Column 168

the legislation might fall foul of European Union law by creating a restriction on trade between EU states, but the Department’s response has been fairly robust, arguing that the Bill is necessary and proportionate for enhancing consumer protection for British citizens. Our Committee was satisfied that the Government had considered the question of compatibility, and we accepted their confidence that any legal action would be unsuccessful.

The Remote Gambling Association has argued that the change in legislation will send punters to unregulated sites on the black market where there is no regulatory regime. That view has been backed up by the Gibraltar Betting and Gaming Association, which has claimed that online gaming customers will migrate to unregulated and non-compliant operators who have a significant market advantage over the regulated and compliant operators, resulting in completely the opposite of what the Government are trying to achieve. That point was raised by the hon. Member for Shipley (Philip Davies).

I do not believe that that will be the case, however. Jenny Williams, the chief executive of the Gambling Commission, has made it clear that there will be little scope for significant expansion of the black market when there are already few restrictions on the type of gambling available and when advertising is freely available within the regulated market. The Department has also made it clear that this is not about more restrictive regulation; it is simply about consistent regulation.

The RGA has also claimed that this is all about tax. In giving evidence to the Select Committee, it declared that the provisions were a

“backdoor method to tax off-shore operators”.

They are not, but that would certainly be a welcome consequence—unintended or otherwise—of the Bill. Critics of the offshore remote gambling industry, and supporters of the Bill, legitimately point out that in many cases operators ended up as offshore remote gambling sites to avoid paying tax in the first place. The RGA told our Committee that about 7,000 people were working in the UK for remote gambling companies based offshore, but it could not answer my direct question about how many are working offshore. It effectively admitted, however, that it was only a fraction of that number. Let us be honest: these companies are effectively UK-based, barring certain technicalities, and they are based abroad only to avoid paying tax and to be able to compete with their genuinely foreign-based competitors.

The Department for Culture, Media and Sport is adamant that this is not about taxation, but the legislation will have the good unintended consequence of paving the way to ensuring that foreign-based operators are taxed on any gambling taking place in the UK. Our Committee report got it right when it stated:

“Whether or not this is the case, we regard it as a legitimate and desirable outcome of the change in the licensing regime that in future remote gambling companies doing business in the UK should be subject to the same taxation requirements, whether they are based onshore or offshore.”

Philip Davies: I am grateful to the hon. Gentleman for quoting so extensively from our Select Committee report, but does he agree that we were very careful in our wording about what the Government were doing? We said that we were

5 Nov 2013 : Column 169

“satisfied that the Government has considered the compatibility of the proposed legislation with EU law and we note its confidence that any challenge to the legislation would be unlikely to succeed.”

We merely noted the Government’s confidence; we did not necessarily share it.

Mr Leech: I thank the hon. Gentleman for his helpful intervention. My impression from the evidence we took was slightly different from his; perhaps I am a little more confident about the Government’s potential for success if anyone in the industry decided to take further action.

While the Bill has its opponents among the remote gambling industry, it also has its supporters within it. Rank fully supports the Gambling Bill, even though it paves the way for measures that it estimates will cost approximately £10 million a year. It sees it as an important opportunity to provide greater consumer protection for British gamblers. Similarly, the British Horseracing Authority, the Sport and Recreation Alliance and the National Casino Industry Forum all welcome the Bill.

The Bill is, however, limited in scope, and many within the industry would have liked it to go further, whether it be in relation to the horse racing betting levy, British terrestrial casinos being able to offer their dedicated online products in their casino buildings, tackling the inequity of bingo taxation, which has not been mentioned so far, or even addressing very legitimate concerns about the proliferation of B2 machine use and its impact on problem gambling. I recognise that this Bill cannot address all those issues within its legislative scope, but perhaps the Minister will in her closing remarks recognise that many other issues remain unresolved and give some indication that the Government will seek to address them.

3.37 pm

Mr Laurence Robertson (Tewkesbury) (Con): It has been a good debate with many powerful arguments being made. I am in favour of the general thrust of the Bill and its intentions, although like my hon. Friend the Member for Shipley (Philip Davies), I believe that the reasons for introducing it go beyond regulation and consumer protection. I sat in some of the same meetings as my hon. Friend, when we debated potential levels of taxation, and he is right to say that the Bill is mainly about providing the Government with the ability to tax—a point to which I will return.

Let me state one or two non-declarable interests. I am a joint chairman of the all-party group on racing and bloodstock, and the Cheltenham race course is in my constituency. I have a deep interest in horse racing, which is financed largely if not entirely through the levy that comes from bookmakers and from sponsorships that also come from bookmakers. Another non-declarable interest is that through the all-party group, I organise charity dinners in this place, which are heavily supported by bookmaking companies. The last one took place just a few months ago, and we raised £48,000 for charity. Over the last five years—not entirely under my joint chairmanship, as my predecessors should be included— we have raised £234,000 for charities, and it has come largely from bookmakers. I thus want to pay tribute to

5 Nov 2013 : Column 170

the legitimate and well-run companies in bookmaking and to recognise the role they play in communities, in charities and in helping to finance horse racing.

As has been said, the Bill is quite limited in scope. It does not deal with taxation and does not mention the levy.

Mr Brian Binley (Northampton South) (Con): My hon. Friend mentions taxation. Does he agree that the Treasury seems to be turning a deaf ear to the pleas of, for instance, those who play bingo, which is being taxed much more heavily than almost every other form of gambling?

Mr Robertson: I shall have to accept my hon. Friend’s word on that, as I always do on everything. I have no expertise in the taxation of bingo.

The Bill identifies what might be termed a loophole, although it would be better described as an inconsistency. Companies that locate some of their online business offshore are not regulated, taxed or subject to a levy. I understand why that inconsistency worries a number of people, and I am happy to go along with the proposal to create a level playing field.

As I have said, the Bill does not at this stage refer to a tax or a levy, although it was suggested earlier today, probably by more than one speaker, that a recent European Union ruling was likely to give the Government an opportunity to extend the levy to companies that are based offshore. That might well bring in more money for horse racing, but I accept what was said by my hon. Friend the Member for Shipley. There have been some estimates of how much money it would bring in, which I think may have been exaggerated.

My hon. Friend was understandably concerned about the smaller bookmaking companies, but when it comes to the extra tax and the extra levy, I think we should be a little concerned about the larger ones as well, because we are talking about a very highly taxed industry. As well as the ordinary corporation tax and other taxes that apply to all businesses, it is subject to machine games duty, and to the general betting tax and levy.

Philip Davies: Should we not also recognise that bookmakers are giving an increasing amount of money to horse racing through picture rights, which is dwarfing the amount raised by the levy?

Mr Robertson: The bookmakers give money to horse racing through picture rights, through the levy, through voluntary sponsorship of races and indeed through hospitality. As my hon. Friend says, the amount of money they put into racing cannot be measured just by the levy, and we must be careful not to tax them too heavily. Last week, during DCMS questions, a number of Members attacked the so-called clustering and proliferation of betting shops. I pointed out that over the last 20 years the number of betting shops has actually halved. I am not sure that that can accurately be described as proliferation.

The pressures on betting shops and bookmakers have increased. As was mentioned earlier, the amount of money that certain individual shops make is very small, and the number of independent bookmakers has been reduced. Creating a level playing field should not mean heaping more tax on bookmakers. We should view the

5 Nov 2013 : Column 171

position another way. Yes, we should be searching for that level playing field, but the level could be a great deal lower than it is at present.

Rather than imposing a 15% tax on bookmakers who are based offshore, should we not try to attract them back onshore by reducing the overall burden of taxation, not just for those based abroad but for those in this country? It would be rather perverse to impose a 5% tax on those based in Gibraltar, for example, and a 15% tax on those based here. The levels should be compatible, but lower. I fear that imposing a 15% tax on bookmakers based in such places as Gibraltar would have a negative effect.

I mentioned in an intervention that I have been to countries—I am not going to name them—where there is a tote monopoly and it is illegal to bet outside that monopoly, and I have sat next to people as they have had illegal bets. That is not a clever situation. It is not something I was proud to witness, but it goes on. That is the real world.

We must be careful not to drive businesses from being legitimate and based in Gibraltar, for example, to being based anywhere else in the world and taking bets from this country, completely unregulated and without paying a penny in tax or levy. That would be the complete opposite of what the Government are trying to achieve. There would be no protection for consumers, and we know the internet is notoriously difficult to regulate. That is no fault of this or the previous Government; it is just what has happened.

A few years ago a company called Betfair stole a march on the entire betting industry by creating a betting exchange business. It was hugely successful, and Betfair puts a lot of money into racing, but that move took the entire country and industry by surprise. Nobody knew how to compete with or respond to it. That is the way of the world, however. That is the way things are going.

That is the way things have gone in this House, too. When I arrived here 16 years ago, there were no such things as iPads. Now, they can be used in Committees, and some Committees have even gone paperless: papers are not circulated and instead they use the iPad, which links into the internet. Things have changed, and we do not know how they will change over the next five or 10 years. It is difficult to regulate what goes on via the internet, and we should not pretend that we can. We have to ensure that we do not inadvertently, through well-intentioned measures, make the situation worse.

Mr Deputy Speaker, I am aware that you are anxious to get on to the next debate so I will not say any more. I entirely agree with many of the points made today, and I do not want to repeat them. I am basically in favour of the Bill and a level playing field for taxation, levy, regulation and customer protection. But as the Bill proceeds, I urge the Minister and the Government to ensure that we do not inadvertently make the situation worse.

3.47 pm

Clive Efford: As always when we discuss issues relating to betting and horse racing, this has been a good debate. It has also been very informative, as Members with a great deal of knowledge of the subject have contributed. I pay tribute to the Chairman of the Culture, Media

5 Nov 2013 : Column 172

and Sport Committee, the hon. Member for Maldon (Mr Whittingdale), who has conducted inquiries into gambling, horse racing and betting. I was grateful for his comments on licence condition 15.1 and the issues relating to the Financial Conduct Authority, which are important and which we will have to address. I hope the Minister takes that on board. There are also important issues related to match fixing and resources for the Gambling Commission.

Many Members have paid tribute to my hon. Friend the Member for Bradford South (Mr Sutcliffe) for his contribution over many years, both as a Minister and in opposition. He is extremely well-informed and passionate about these issues, and I commend his commitment to education and treatment for people with gambling problems. He talked about the problems created by some aspects of the 2005 Act which were dealt with in the wash-up, and rightly said they need to be addressed. He also raised the issue of the definition of spread betting, and I hope the Minister takes that on board when considering any future amendments. He alone raised the issue of money laundering and how it affects on-course betting operators.

The hon. Member for Shipley (Philip Davies) is always fascinating to listen to. Even if we do not agree with everything he says, he makes his points eloquently. He described himself as modest and of course, that is a word we all immediately think of when we think of him. He expressed his concerns about taxation levels and his desire that online operators locate back in the UK. I was struck by his passionate appeal for recognition of the contribution that small companies make—particularly in innovation and the number of people they employ in this country—and the effect that overtaxing them will have, particularly when they are developing in their early stages of trading. That is an important point and the Government should take it on board. He also showed a healthy scepticism about civil servants who are empire building, which we all share. It is not fair to accuse the Gambling Commission of that in this case, given that there is such widespread support for what we are trying to achieve in the Bill.

My hon. Friend the Member for Newcastle-under-Lyme (Paul Farrelly) made a passionate case for companies relocating to the UK, and highlighted the fact that bet365 has not been disadvantaged by remaining onshore. He pointed out that it has made a significant contribution to regeneration in his area, employing more than 2,000 people. It is the largest employer in north Staffordshire, and I believe he said that it achieved a profit of £180 million. He also called for sanctions to deal with those providing facilities for those who are avoiding the licensing system. Effective enforcement is something we will want to pursue in considering this Bill. He also referred to the importance of getting taxation right.

The hon. Member for Poole (Mr Syms), like a number of other Members, expressed disappointment at how narrowly drawn the Bill is. He, too, referred to regeneration and casinos. My hon. Friend the Member for Islwyn (Chris Evans), the son of a bookmaker, expressed concern, as one or two other Members did, about people criticising the proliferation of betting shops. I wish to put it on the record that I have never criticised such proliferation. There are not more betting shops following the 2005 Act, but there is concern about the locating of betting

5 Nov 2013 : Column 173

shops close to areas of deprivation. Even the betting industry has recognised that that is an issue, and if we are going to deal with it, local government should be able—

Mr Laurence Robertson: Will the hon. Gentleman give way?

Clive Efford: I will not, if the hon. Gentleman does not mind, because I have been given only a few minutes to wind up. Local government should be given the powers to review whether there are too many betting shops in a given area. My hon. Friend the Member for Islwyn, too, expressed concern about the impact of taxation on the industry.

The hon. Member for Rochford and Southend East (James Duddridge) spoke about the capacity for casinos to contribute to regeneration. He also talked about the need to protect online customers who may have a gambling addiction, as did the hon. Member for Strangford (Jim Shannon), who made a passionate plea for effective enforcement and protection from exploitation of vulnerable adults.

The hon. Member for Manchester, Withington (Mr Leech) largely spoke about the importance of the Select Committee report, but he also called for a level playing field in the industry. The hon. Member for Tewkesbury (Mr Robertson), too, expressed concern about the taxation of the industry and the impact it may have on small businesses, in particular, which might be harmed if taxes are set too high. He also referred to the clustering of betting shops, which I have mentioned.

Many hon. Members have called for the Bill to be extended in relation to enforcement protection, particularly for adults at risk of developing, or with, a gambling addiction. Some hon. Members also called for a one-stop shop for self-exclusion across the industry, which is an important factor that we should be looking at, as this is an opportunity for us to set a standard by which we can protect vulnerable adults.

A number of hon. Members called for spread betting regulation, and I hope that the Government will listen and that there will be sports betting rights for those sports that have to pay out much of the money that they generate for themselves so that they can protect their integrity when it is challenged by irregular activities in the betting industry. We must have regard to the concerns that those sports organisations have, and I hope that the Minister will consider consulting the governing bodies to consider what can be done in the Bill to address their concerns.

Whenever we discuss such matters, the debate is always extremely well-informed because the hon. Members who contribute have a great deal of background knowledge. I hope that the Minister has been listening to what has been said today and to the calls for further amendment to the Bill so that we can reach a broad consensus on both sides of the House that will allow us to develop a regulation system for the gambling industry in the UK that has the full support not only of Members of this House but of the people we represent and that sets the standard for regulation across the world.

5 Nov 2013 : Column 174

3.55 pm

Mrs Grant: With the leave of the House, I thank all Members who have taken part in the debate. I shall try to remember everything that has been asked and to deal with as many of the questions as possible. I am glad to see that the Bill has support on both sides of the House and that most hon. Members are in favour of bringing in robust and consistent regulation of remote gambling.

Through the Bill, remote gambling will be regulated at the point of consumption. That will mean that all operators selling or advertising in the British market, whether from here or abroad, will be required to hold a Gambling Commission licence. The Bill will increase protection for Britain-based consumers and will level the regulatory playing field with all remote operators, allowing British-based operators to compete on an equal footing.

The shadow Minister, the hon. Member for Eltham (Clive Efford), raised a great number of issues in his opening speech, including the levy, fixed odds betting terminals, enforcement and compliance. I will touch on all those issues in my speech, subject to the time available. I can confirm that we continue to engage with and consult the industry, as does the Gambling Commission, to ensure that issues of detail are dealt with very carefully. Of course, in Committee we will have an evidence sitting followed by a scrutiny sitting, which should deal with any clarification that he needs.

We will not accept an amendment on spread betting. The current arrangements work well, with the FCA and the Gambling Commission working closely together. They are also working with operators that offer spread betting to ensure that suspicious betting behaviour is reported to regulators and that licence code 15.1 is adhered to.

The hon. Member for Bradford South (Mr Sutcliffe), the shadow Minister, my hon. Friends the Members for Shipley (Philip Davies) and for Tewkesbury (Mr Robertson) and many other hon. Members asked about horse race betting levy. I understand why the issue has been raised, but the Bill cannot be the vehicle for other measures that have been neither fully considered nor consulted on. I also want to consider the question of levy reform more broadly as there might be other options that should be considered and there should be proper consultation before any measures are put in place. I will consult on any options that are sustainable, enforceable and legally sound.

My hon. Friend the Member for Maldon (Mr Whittingdale), the hon. Member for Bradford South, my hon. Friend the Member for Poole (Mr Syms), the hon. Member for Manchester, Withington (Mr Leech) and my hon. Friend the Member for Rochford and Southend East (James Duddridge) all raised issues about online gambling, or the lack of it, in casinos. The suggested change in the Government’s position that has been mooted would undermine existing regulatory controls on gaming machine provisions. It would also allow casinos to offer an unlimited number of gaming machines with unlimited stakes and prizes within their premises. The Government see no reason why such machines should be offered on an unlimited basis in casinos, when all other categories of gaming machine remain subject to control. That would risk fundamentally changing the character of casinos and, very sadly, turning them

5 Nov 2013 : Column 175

into something that looks like a machine shed. There may be a case to consider greater flexibility in casino regulation, as I mentioned in my opening speech, but that would need to be subject to proper impact assessment and consultation, and the Bill is not, in my opinion, the appropriate vehicle at this stage to change casino policy.

The subject of problem gambling was rightly raised by numerous Members today, including the hon. Member for Bradford South, my hon. Friend the Member for Rochford and Southend East and the hon. Member for Strangford (Jim Shannon). I would say to them that despite the relatively low rates of problem gambling, there are obviously very high participation rates for gambling, at around 73%. The Gambling Commission 2010 prevalence survey showed that fewer than 1% of the adult population are problem gamblers, but the Government acknowledge that while only a very small fraction of gamblers develop problems, that can of course result in significant problems, not just for those people but for those close to them. That is why protecting children and vulnerable adults from harm is a key component of our remote gambling policy. The Bill would require operators to have effective policies and procedures in place in relation to socially responsible gambling, and to contribute to research, education and treatment in relation to problem gambling, as part of complying with the Gambling Commission licence conditions.

Lady Hermon: Will the Minister give way?

Mrs Grant: I am afraid I will not, because I have very limited time and still have an awful lot to say.

The level of taxation was discussed by many hon. Members, including my hon. Friends the Members for Maldon and for Shipley, the hon. Members for Newcastle-under-Lyme (Paul Farrelly) and for Islwyn (Chris Evans) and my hon. Friend the Member for Poole, to name but a few. The remote gambling Bill and the Treasury’s remote gambling taxation reforms are, while complementary, completely independent of each other and we absolutely reject the assertion that the licensing reforms are being pursued in order to generate tax income. The Bill includes, as Members know, no provision for the increasing of tax. Reform is entirely justified on its own merits for public participation and public protection reasons, regardless of the state of any tax plans.

On black and grey markets, I apologise to my hon. Friend the Member for Shipley if I did not answer his question fully earlier, but I can now say that I am confident that the Gambling Commission has the necessary tools to enforce the licence requirements and to deter illegality and black-market activity. It is not meaningful to try to speculate about the size of the black market, which by its nature is unknown. Whatever the size of any black market, the Gambling Commission will make risk-based decisions on when and where it may need to intervene.

Finally, on the extent of the tax, it will be no surprise to learn that I am telling the House that tax is a matter for the Treasury, which I know continually keeps these matters well under review.

On enforcement and compliance, I assure the shadow Minister and all the hon. Members who raised the issue that where illegal operators attempt to target British-based consumers, the Government and the Gambling Commission

5 Nov 2013 : Column 176

are confident that action can be taken through existing enforcement mechanisms to disrupt and stop unlawful gambling. Such action would include action on illegal advertising, player education and, ultimately and if necessary, prosecution. There will always, of course, be grey areas where judgments of risk and proportionality will need to be made in each individual case.

The hon. Member for Bradford South, the former Sports Minister, who knows a considerable amount about these matters, rightly mentioned sports betting integrity and cheating. Britain is proud to lead the way in approaches to sports betting and integrity. However, we do not believe that there is a need at this stage to introduce in this country a new criminal offence of match-fixing. We believe that existing law and sports rules are sufficient, but we will keep the matter carefully under review.

My hon. Friend the Member for Shipley asked whether software producers need to be licensed. The Gambling Commission is working with the industry on the issue. In the meantime overseas software suppliers will be able to continue to supply British licensees.

I thank the hon. Member for Islwyn for his kind comments and reassure him that I do sports other than tennis. He asked me for two assurances—first, that the Gambling Commission will take action and has capacity to stop illegal betting effectively, and secondly, that the tax rate is not set too high. On the first issue, the commission will fully implement its regulatory responsibilities in line with the requirements of the Bill, and I will continue to discuss with the commission its needs to ensure that it has the necessary capacity, resources and expertise. On the second issue, as I have already said, tax rates are a matter for the Treasury and I will not venture this afternoon on to its turf.

The hon. Member for Strangford queried whether the Bill would be enforced by ISP blocking or something similar. There is mixed evidence on the effectiveness of ISP blocking, but we do not rule anything out.

Finally, on the matter of fixed-odds betting terminals, which was mentioned by several hon. Members today, although we have decided not to reduce stakes and prizes on these machines at this stage, it is a priority for the Government that we develop a much better understanding of the impact of these machines, and further work is already under way. The research being conducted by the Responsible Gambling Trust into category B machines is very important and it would be wrong to pre-empt this work. Furthermore, we believe that the Bill is not the right legislative vehicle to deal with such difficult issues.

In conclusion, this is a small but important Bill that will increase protection for remote gambling consumers based in Britain. It is not empire-building by the Gambling Commission, as was suggested by my hon. Friend the Member for Shipley. It is about protection and proper oversight and it will ensure that all remote gambling, wherever the operator is based, is licensed by the Gambling Commission and subject to that body’s robust and consistent standards of controls. I look forward to debating these issues in Committee, and I commend the Bill to the House.

Question put and agreed to.

Bill accordingly read a Second time.

5 Nov 2013 : Column 177

gambling (licensing and advertising) bill (Programme)

Motion made, and Question put forthwith (Standing Order No. 83A(7)),

That the following provisions shall apply to the Gambling (Licensing and Advertising) Bill:


(1) The Bill shall be committed to a Public Bill Committee.

Proceedings in Public Bill Committee

(2) Proceedings in the Public Bill Committee shall be completed on the first day on which it shall meet.

(3) The Public Bill Committee shall have leave to sit twice on that day.

Consideration and Third Reading

(4) Proceedings on Consideration shall (so far as not previously concluded) be brought to a conclusion two hours after the commencement of those proceedings.

(5) Proceedings on Third Reading shall (so far as not previously concluded) be brought to a conclusion three hours after the commencement of proceedings on Consideration.

(6) Standing Order No. 83B (Programming committees) shall not apply to proceedings on Consideration and Third Reading.

Other proceedings

(7) Any other proceedings on the Bill (including any proceedings on consideration of Lords Amendments or on any further messages from the Lords) may be programmed.—(Karen Bradley.)

Question agreed to.

Gambling (licensing and advertising) bill (ways and means)

Motion made, and Question put forthwith (Standing Order No. 52(1)(a)),

That, for the purposes of any Act resulting from the Gambling (Licensing and Advertising) Bill, it is expedient to authorise an extension of the cases in which:

(1) a penalty may be imposed under section 121 of the Gambling Act 2005, and

(2) a levy may be imposed under section 123 of that Act.—(Karen Bradley.)

Question agreed to.

5 Nov 2013 : Column 178

Backbench Business

Water Industry

4.8 pm

Charlie Elphicke (Dover) (Con): I beg to move,

That this House has considered reform and infrastructure of the water industry and consumers’ bills.

I move the motion also in the names of my hon. Friends the Members for South Swindon (Mr Buckland) and for Skipton and Ripon (Julian Smith). I thank the Backbench Business Committee for allowing time for this debate. The subject has been in the news recently, so the debate is timely, and it is positive that the House should have the chance to consider the issues in relation to the water industry and what reforms, if any, ought to be introduced.

Julian Smith (Skipton and Ripon) (Con): Before my hon. Friend starts his main remarks I would like to pay tribute to him for his work in leading the debate since early this year and for securing this debate and, hopefully, some exciting announcements from the Government.

Charlie Elphicke: I thank my hon. Friend for his customary generosity.

I will turn to the pressures that hard-working families are facing as we come out of a very difficult economic time for our country. The fact is that most people do not particularly care about politics. They vote us in every few years and decide the Government of the day, but they do not consider politics on a daily basis; they consider how they are going to keep the wolf from the door. They consider how they are going to get through the day, provide for themselves, their families and loved ones, raise their children, manage to pay their bills and get a better paid job. The Government have been very effective in ensuring that there is more employment and a return to economic growth, from rescue to recovery and onward to greater economic strength for our country.

Part of keeping the wolf from the door is dealing with the utility bills that cost all our constituents so much money. That is why water reform matters. People do not really have a choice, because there is not much competition. It is a natural monopoly and people have to pay their water bills. There is an opportunity to foster more competition and ensure that the industry is more effectively regulated than it has been. For many years nothing was done to keep on top of the water industry, particularly before this Government were elected. Now we have an opportunity to make further changes and look more closely at what the issues are and what might be done.

Before the Government were elected, there was a settlement with Ofwat and the water industry that was to last for five years. The assumptions on which the settlement was made have since altered. Retail prices index inflation has risen more quickly than it was expected that construction inflation would rise, and interest rates have been lower than expected. The result has been excess profits for the industry. Ofwat figures highlight a return on regulated equity in excess of 20% in some cases. Investment was allowed to fall in real terms after 2007, while customer bills have risen by

5 Nov 2013 : Column 179

more than inflation. Dividend payments are often greater than the profits made, which some would say is particularly unattractive.

Rehman Chishti (Gillingham and Rainham) (Con): I, too, pay tribute to my hon. Friend for the work he has done to bring the issue to light. In relation to bills and affordability, does he agree that it is completely and utterly unacceptable that bills have risen by 60% over the past 10 years, which clearly shows that the previous Government did absolutely nothing to help the consumer?

Charlie Elphicke: I thank my hon. Friend for that intervention. Certainly a better deal needs to be driven for the consumer than was driven by the previous Government. They also permitted a culture of industrial-scale tax avoidance, which was wrong.

Alec Shelbrooke (Elmet and Rothwell) (Con): I, too, congratulate my hon. Friend on all his fine work on the water industry. Would he care to comment on the fact that we have seen a 60% rise in water bills yet still face rather serious and sporadic water shortages? Is it not true that the public have really seen no return for their higher bills?

Charlie Elphicke: My hon. Friend makes a powerful point. Ensuring that we have investment in the infrastructure that the country needs is really important.

Frank Dobson (Holborn and St Pancras) (Lab): In view of the hon. Gentleman’s commitment to the issue, I hope that he will confirm that the only time there have been reductions in water charges was under the previous Labour Government.

Charlie Elphicke rose—

Andrew Percy (Brigg and Goole) (Con): Then they went back up again.

Charlie Elphicke: Then they went back up again, as my hon. Friend remarks. Under the previous Government the water industry was allowed to become 100% mortgaged to make the tax avoidance work. There have been excessive pay rises in the boardroom at a time when hard-working families have not seen substantial pay rises. That has been very hard to justify and people look askance at that.

Mr Charles Walker (Broxbourne) (Con): My hon. Friend wisely talks about infrastructure. One of my concerns regarding the east and south-east of England is that water companies have been extracting water to the detriment of our rivers and not building reservoirs. Indeed, the last major reservoir in the south-east—the Queen Mother—was built 40 years ago. In the meantime, millions more houses have been built, placing more pressure on a valuable resource that tends to come out of the aquifers in the ground.

Charlie Elphicke: My hon. Friend makes exactly the right point. In my constituency, in Dover and Deal in east Kent, we depend on the aquifers. There is water abstraction and water stress, and compulsory metering has been in place for some time. We need to look more closely at the national planning and national infrastructure planning aspect, which I am sure hon. Members will raise.