Examination of Witnesses (Questions 40-59)
16 DECEMBER 2003
LORD MCINTOSH
OF HARINGEY,
MR CHRIS
BONE, MS
ELIZABETH HAMBLEY
AND MR
GREIG CHALMERS
Q40 Chairman: Perhaps in due course you
could communicate that to us?
Lord McIntosh of Haringey: Yes,
with pleasure.
Q41 Mr Meale: I agree with you that £3
million target is very low and will possibly have to be re-visited
very, very quickly because of the scale of problems which are
out there and the jobs which such a Trust would be expected to
take with problems one could foresee. Could I just return to the
question about Camelot. I was grateful that my honourable friend
Lord Faulkner raised this issue, but it is important because any
previous attempts by charities dealing with this matter to get
any kind of resources out of Camelot have actually resulted in
a lack of response. I do press you to get in touch again with
Camelot and say, "You have a part to play, as well as everybody
else". Their reasoning is that, because of their dual role
in providing funds for good causes, it is not within their remit
. I would suggest to you, sir, you have indicated that it is,
that you contact them quickly.
Lord McIntosh of Haringey: I have
said that if I have not written to Camelot I should have done.
If I have not done then I will do, and I will report to you their
response.
Chairman: That is very clear and very
helpful.
Q42 Viscount Falkland: In the Policy
Statement you state that inducements (loyalty cards, for example)
should not be prohibited in all their forms because some are thought
not to be harmful. Have you or will you try to distinguish between
what is a harmful and a harmless inducement—for example,
should a casino be able to offer free drinks?
Lord McIntosh of Haringey: Let
me start by saying, I think loyalty cards have very significant
advantages. In the United States—where they are not of course
required and where free entry into casinos is possible, in Las
Vegas you can just walk in off the street—all the casinos
have loyalty cards which are taken up by about 80% of their customers.
Casinos like it because it helps them in marketing terms and because
it enables them to identify those who should have inducements.
I am going to come back to that. We should like it because it
enables us to identify people who are gambling; it enables us
to get information about where they come from and who they are—I
do not mean who they are individually but what kind of people
they are; and, of course, the casinos keep records of the amount
they gamble. This could be helpful in the control of problem gambling;
it could be helpful in identifying the effects of gambling on
individuals and communities. I think there are very strong positive
reasons for saying that loyalty cards are not in themselves harmful
and should not in themselves be discouraged. Having said that,
I rather agree with the British Casino Association regarding voluntary
self-denial, which says they just give concessions off the premises;
in other words, they will give complimentary meals and complimentary
drinks but they will not pay for plane-loads of gamblers to come
across from Malaysia, the United States, Saudi Arabia or wherever
it is. I am quite sympathetic to that point of view.
Q43 Viscount Falkland: You do not see
anything inherently harmful about offering free alcoholic drink?
Lord McIntosh of Haringey: No,
it fits in with the Gaming Board guidance. The Gaming Board says
that complimentary drinks and meals are allowed. I see no reason
to override that Gaming Board decision.
Q44 Viscount Falkland: Could I come on
to children. Do you and your advisers feel that more should be
done to educate children, particularly very young children, about
the risks involved in gambling, which goes back to my question
about definition? If so, how would you approach this? By whom
do you think the education about problem gambling should be given?
As in the world of addiction to substances, such as alcohol and
drugs, it has been proven very, very satisfactory to have those
who are recovering from the addiction to do that. Maybe you have
some ideas about that?
Lord McIntosh of Haringey: The
short and unequivocal answer to your first question is, yes, I
think more should be done to educate children about gambling.
I am a statistician and, therefore, I am particularly indignant
about the gamblers' fallacy. You would be astonished how many
people think the outcome of the last event has an influence on
the outcome of the current or the next event, and do not understand
the independence of events. After all, the basis of all gambling
so-called systems is the "gamblers' fallacy". I think
the most important thing is to teach it in maths teaching in schools,
because I think the problem is to get people to understand what
gambling is, rather than the issues of problem gamblers.
Q45 Viscount Falkland: Thank you, that
is very, very useful because you have gone back to answering more
completely my previous question. Those who are not able to fit
this ideal situation and be able to grasp these things but insist,
in their fantasy world, on grasping at fallacies are potentially
problem gamblers.
Lord McIntosh of Haringey: They
could be, yes. I do not mean to rule out what you say about having
reformed gamblers helping to treat people who may be at risk of
problem gambling. Gamcare do some of that and it is very valuable
and I do not want to knock it at all, but I think that is more
for adults and your original question was about children.
Q46 Chairman: Minister, we have spent
some time with you this morning on the social implications because
we do recognise the importance of that balance within the overall
equation.
Lord McIntosh of Haringey: That
is why it is one of our three objectives.
Chairman: Absolutely. We want to move
now to the economic implications and to different aspects of the
industry as a whole.
Q47 Mr Page: Minister, this is a very
wide subject and you may wish to provide extra information in
writing to the Committee later. Could I ask what calculations
your Department have made on assumptions they have made over what
will be the volume changes to gambling? For example, how much
will move inside the existing gambling envelope; how much will
be additional; do you expect any "tourism gambling"
to come in; what are your calculations on that?
Lord McIntosh of Haringey: I think
at this stage I should say I entirely accept what the Chairman
said at the beginning that this is an inquiry not into gambling
but into the Gambling Bill. I see gambling reform, which would
be introduced by the Gambling Bill, as having three aspects: one
is regulation, and that is clearly what the Bill is about, and
that is most of what you have been covering; the second is the
tax regime; and the third is the location regime. You will not
fully understand the gambling reform unless you have all those
three legs of the stool in place. We had to do the regulation
first because, until we had got an idea of what the regulation
was going to be and were able to present it to you for your consideration,
we could not really say what it is that is going to be taxed,
or what it is that is going to be subject to a location regime.
We have now started on the process in discussion with the Treasury,
with Customs & Excise and with the Office of the Deputy Prime
Minister on clarifying the options on tax and location. Now we
have something to put to them we have agreed with the Treasury—I
met the Economic Secretary to the Treasury on this subject last
week—that we and Customs & Excise will produce a range
of models on the effect of the regulatory reform which we are
now proposing. We will do this over the next two or three months
and we will look at that in terms of options for a tax regime.
You are entitled to be informed of that process, and I am sure
you will wish to call the Economic Secretary to the Treasury to
you, perhaps towards the end of your consideration rather than
the beginning of your consideration. I hope that answers the specific
question you have made about finalising the details of the tax
regime. If I may volunteer, the same thing is going to happen
with ODPM. Until we had a regulatory regime it was not possible
to make our best estimates as to what the effect would be, for
example, on tourism casinos, on resort casinos, and we did not
have anything to debate with the Office of the Deputy Prime Minister.
I am in contact with them. We are going to proceed over the next
few months with a further refinement of the rather broad statements
we made about location in our August 7th statement—Keith
Hill and myself—and you are entitled to be kept in touch
with that and given as much information as we can give you.
Q48 Mr Page: I have to express a slight
surprise that you have not done some preliminary calculations
on the volumes of gambling and what will be the effect. To what
extent have you involved companies that will be investing in the
gaming industry; to what extent have you spoken to them and looked
at their estimates to see if that is compatible with the aims
and objectives of this Bill?
Lord McIntosh of Haringey: I am
sorry if I gave the impression that we had not made our own estimates.
The Regulatory Impact Assessment is just that—it is our
own assessment of the likely economic effects—and we do
estimate in the Regulatory Impact Assessment that the average
annual increase in gambling expenditure will be approximately
£500 million. That is based on our understanding of the present
market and an assessment of the possible effects of change. It
is not that we have not done anything. We have also listened and
read the estimates made by the industry—for example, the
report of the cross-industry group.
Q49 Chairman: Does that fit with your
own assessment?
Lord McIntosh of Haringey: I do
not want to take responsibility for the cross-industry group's
assessment. I think that is what I might call "consensus
modelling" rather then econometric modelling. They have based
it on industry assumptions which do not always have a sound statistical
basis.
Q50 Mr Page: I accept that but there
is a slight difference in these particular figures which I was
getting round to. The Committee is naturally concerned about problem
gambling. To what extent have you examined any change in behavioural
gambling in doing your calculations or in your future calculations?
Lord McIntosh of Haringey: I hoped
I had already answered that question because, yes, we do believe—although
we are budgeting, so to speak, for an increase in gambling expenditure—our
focus is on destination rather than casual gambling, and the extent
to which we intend to restrict the potential explosion of machine
gambling both inside casinos and in betting offices, in bingo
halls and so on will in themselves help to restrict the level
of problem gambling. I do not know that there is any definitive
evidence about machine gambling and the effects on problem gambling;
but, instinctively, I think a lot of us do feel that machine gambling,
particularly high stake, high pay-out and high speed machine gambling,
is particularly dangerous. I do not think that I could justify
that definitively though.
Q51 Lord Donoughue of Ashton: Minister,
I did not quite grasp if you fully answered Richard's question
about within the envelope of transfer of expenditure, such as
a potential displacement, say, from betting shops and so forth.
What do your calculations tell you that you can tell us about
the assumptions that it will not all be an overall increase but
just a transfer from some existing gambling operators, who have
provided a perfectly good service to the public so far, to a new
one?
Lord McIntosh of Haringey: The
figure I gave in answer to Richard Page was a net figure. I will
not bore you with the figures but it is all set out in the Regulatory
Impact Assessment. We do set out what we see as the gross increase
from new forms of gambling, or the extension of existing forms
of gambling, and the extent to which it had to be netted out by
losses to other sectors.
Q52 Lord Mancroft: You used the interesting
expression "restrict the potential explosion of machine gambling"
and I think we all understand that. How does that sit with the
agreement that the bookmakers have now come to with the Gaming
Board and your Department on fixed odds betting terminals?
Lord McIntosh of Haringey: It
sits very well. The problem we had was there was a legal doubt
as to whether fixed odds betting terminals were gaming or betting.
There was a legal action between the Gaming Board and the Association
of British Bookmakers. If the Association of British Bookmakers
had lost they would have been devastated; and if the Gaming Board
had lost there was the danger that we could have an unrestricted
explosion of gaming machines in betting offices which could expand
to accommodate them because there were no rules under the existing
legislation. That is why we encouraged the Gaming Board and the
Association of British Bookmakers to get together to have a voluntary
code which restricted the numbers of fixed odds betting machines,
the maximum stake, the maximum pay-out and the minimum speed of
play. The object of that exercise was to have a voluntary code
which would, as closely as possible, replicate what the Gaming
Board wish to impose in the legislation itself. I am very pleased
that we succeeded in doing that, and in doing that before you
started your public consideration.
Q53 Baroness Golding: Does this mean
FOBTs are still on probation and, if so, how are they going to
be monitored?
Lord McIntosh of Haringey: Yes,
that is what the Secretary of State said, and she was right. We
have a voluntary code, if it does not work then we will urge the
Gaming Board to talk again to the bookmakers. There is always
the option of resuming the legal action if necessary. For example,
if the Association of British Bookmakers does not achieve full
compliance among all bookmakers, not just the ones who are their
members, then the Gaming Board will think again about legal action.
Q54 How will it be monitored?
Lord McIntosh of Haringey: I think
it is very evident, and is evident to the Gaming Board Inspectors,
where there are fixed odds betting terminals which are not in
accordance with the agreements
Q55 Tony Wright: On that particular problem,
if there is a voluntary code which has been accepted by Budd why
not put that in legislation? At the end of the day if they did
drift away from it that would be covered in the legislation? Obviously
they have agreed to this particular code.
Lord McIntosh of Haringey: They
have agreed to this particular code and we will see how it works,
and it is on a probationary basis but all sorts of things can
change. The power of the ABB to enforce that code has to be proved.
Machines themselves change. There are now not just one, two, three
and four categories of machines but a whole spectrum of machines
and we have to be able to keep the regulation up-to-date with
any changes that take place. We could not do that in legislation;
we have to do it by agreement and by guidance and by Codes of
Practice.
Q56 Lord Mancroft: Presumably the review
of prizes and stakes will include fixed odds betting terminals
at some stage in the future?
Lord McIntosh of Haringey: Yes,
indeed.
Q57 Lord Mancroft: Although the 30-second
play is fixed, is it?
Lord McIntosh of Haringey: Nothing
is fixed. This was negotiated between the Gaming Board and the
Association of British Bookmakers.
Q58 Lord Mancroft: You are content with
that, for today?
Lord McIntosh of Haringey: We
were content with the outcome of those negotiations but, as the
Secretary of State said and as Llin Golding reminded us, this
is on probation.
Q59 Chairman: I think in the early declaration
that we made a number of us indicated our general love of the
racing industry. Notwithstanding the Bill which was published
recently in relation to the tote and the levy, your Department
does still have responsibility for racing in those connections.
I think the question we really should ask you is: in coming to
this agreement with the bookmakers, was there a sense within the
Department that the financial future of the number of betting
shops may well be dependent on the profits they earn from some
of these machines?
Lord McIntosh of Haringey: I do
not think I wish to express a view on that. This was an agreement
between the Gaming Board and the bookmakers. They were urged by
us to reach an agreement because we saw the risk of a legal judgment
which would declare them only to be betting terminals rather than
gaming terminals. They saw the risk as well which is why they
fell in with this agreement, but it is not our agreement.
Chairman: You have said several times
and referred to focusing on destination. I presume by that you
mean that people go to premises specifically to gamble; and the
two destinations we have particularly at the moment are casinos
and bingo clubs.
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