Examination of Witnesses (Questions 119-139)
PETER DEAN
CBE, TOM KAVANAGH
CBE, GERALDINE MENEAUD-LISSENBURG
AND ELLIOT
GRANT
18 DECEMBER 2003
Q119 Chairman: Good morning. Can I formally
welcome Peter Dean, who has been Chairman of the Gaming Board
for Great Britain since 1998, our principal witness today. With
him is Tom Kavanagh, who has been the Secretary to the Gaming
Board for Great Britain since 1991, and some of us know him very
well; also Geraldine Meneaud-Lissenburg. She has taken up a post
as Transition Manager on the Gaming Board since February of this
year and is on loan from the Home Office and was previously Joint
Secretary of the Gambling Review Body. Lastly, there is a familiar
face to us, Elliot Grant, who is the Head of the Gambling and
National Lottery Licensing Division in DCMS and who is here to
comment should the need arise. Can I again confirm that this is
a public evidence session. A transcript will be produced and placed
on the internet. I think it is unlikely that there will be any
divisions today. Can I also remind our witnesses that a full declaration
of interests was made at the beginning of our first meeting on
Tuesday publicly and that information for witnesses and a note
of interests is available should anyone wish to see it. Perhaps
I can begin by asking some questions about the preparation that
is under way. What assumptions about the timing and final nature
of this draft Bill is the Gaming Board making in its preparations
to become the Gambling Commission and what preparations have you
made so far?
Mr Dean: We are assuming that
the Bill will be introduced during the course of the next session,
2004-05, and that it will receive Royal Assent in the summer of
2005. So far as the contents are concerned the assumptions we
are making are that the finally enacted law will not be substantially
different from what is in the current Bill and that has been foreshadowed
in the policy documents. By way of preparation there are a number
of things to say. First of all, the DCMS has recently appointed
four new members of the Gaming Board who will take up office on
1 January next year. We have an additional grant of £500,000
over and above the normal grant for the work of the Board to deal
with transition matters and with that we have engaged the services
of Geraldine Lissenburg, as you have just mentioned, Chairman,
and we have put in hand a considerable amount of preparatory work
with the assistance of consultants to help us chart the path from
the transition of the Board to the Gambling Commission.
Q120 Chairman: One question arising from
that is that you seem to imply that the Bill may not be introduced
until after the Queen's Speech in the autumn of next year. Our
understanding is that ministers may be hoping to have the Second
Reading in one House or the other by June or July of next year.
There is then the issue of getting the Bill cleared ahead of potentially
a general election, for which the first likely date will probably
be May 2005. You are taking those calculations into account?
Mr Dean: Nothing would please
us better than if the Bill were introduced in advance and sooner
than that.
Q121 Chairman: I can tell you that we
as a committee have been set this deadline of 8 April and we are
going to strain every sinew to ensure that we meet it. While on
that point, I suspect that as our inquiry progresses there may
be other questions that we would want to ask you which we will
put to you in writing.
Mr Dean: We will be very happy
to answer anything at any time.
Q122 Chairman: You have made the point
that there is an additional grant of half a million pounds and
you have got four new members. Are you satisfied that that is
sufficient given the enormous additional workload you are going
to face?
Mr Dean: Certainly not. We shall
need more money to get on with the transitional work next year.
The transition costs in themselves will amount to abut £7
million, of which £2.5 million will need to be spent during
the course of the next financial year, 2004-05. That money has
not yet been provided. We shall also need the necessary authority
to get ahead in this work. I understand that there are question
marks of a legal and constitutional nature as to what it is and
is not possible to do in advance of Second Reading or the Act
being passed into law. We are quite clear that work does need
to be got on with in the interests of orderly transition and we
are discussing that with the DCMS and I shall be surprised and
disappointed if we cannot find a way through to enable us to get
on with the work which needs to be done.
Q123 Chairman: I am sure that Mr Grant
will have heard your comments which have been made very publicly.
Lord Walpole is going to ask some questions about resources in
a moment on the issue of workload and transition, but before he
does it is very clear to us that in order for Parliament to have
a clear picture of what the new regulatory structure will look
like some work will have to be done on codes of practice and even
on potential statutory instruments. Are you taking that into account
in your assessment of resources?
Mr Dean: Yes, we certainly are.
It is our desire to get on with the codes of practice as soon
as we possibly can and certainly during the course of next year.
Again, this leads to the legal and constitutional block that I
referred to a moment ago. We need to clear that but once that
is cleared we shall certainly proceed with the draft of the consultation
on the codes of practice. That is not the only matter which needs
to be attended to. Statutory instruments clearly also have to
be put in place and to some extent the codes cannot themselves
be drafted until we know what is going to be in the statutory
instruments.
Q124 Chairman: But that raises another
question. You have said twice now that the constitutional position
does need to be cleared. When will that be done and what is your
understanding of how it will be cleared? As you know, I did suggest
that a shadow Commission might be established. That would require
legislation and we understand the reason why. This is so fundamentally
important to the progress of this whole objective that we cannot
let it pass.
Mr Dean: Chairman, I quickly get
out of my depth on this matter. From the point of view of the
standing of the Board, once the four new members are in place
from 1 January next year the way I see it is that the Board will
function wearing two different hats. We will continue, obviously,
discharging our statutory duties as the Gaming Board but we shall
also operate as the prospective Commission. What I cannot tell
you at this stage, and this really is in the hands of the DCMS,
is to what extent we are able to get on with the work which needs
to be done in that latter capacity. We are talking to the DCMS
about that and they know our views very well.
Chairman: We are happy to assist if that
proves to be necessary in the new year.
Q125 Lord Walpole: The latest estimate
of your present running costs is quoted as being between £9
million and £11 million. This does not include any transitional
or implementation costs. How much do you estimate this is going
to be? If I may ask you a supplementary, and of course I refer
you to paragraph 14 of your memorandum which says that you are
going to have to build up early on, I am extremely concerned about
the resources you will need. It looks to me as if your staff,
according to your consultants' report, will rise to about 200.
This is less than three-fold and your supervising job will be
250 casinos, some substantially larger than those which are here
at the moment, supervisory responsibilities, betting offices,
unlawful gaming and enforcement and prosecutions and all the rest
of it, not to mention anything about anything on-line. Does this
signal a different approach to supervision and monitoring and
can you explain? I know that is a mouthful.
Mr Dean: Not at all. On the question
of the resources, you are quite right. The figure of £9 million
to £11 million is the figure which we estimate for the continuing
running costs of the Commission.
Q126 Lord Walpole: As you are at the
moment?
Mr Dean: No, no; the continuing
costs of the Commission once it is up and running. Our present
costs are around £4 million. You are quite right: that does
not include transition costs. Those have been separately estimated
at around £7 million, of which the £2.5 million needs
to be spent in the next financial year. Indeed, there is a lot
of work to be done and that is why that figure is as it is. We
have gone with our consultants into what is required to be done
both in transition and in steady state thereafter with some care
using the best estimates available to us about workload, both
in relation to the existing industry as expanded and in relation
to the wholly new areas such as remote gambling and betting. We
are confident that the figure that you have quoted should be adequate
to do the regulatory job. The three-fold increase is actually
quite substantial. One would expect an increase of that nature
to be sufficient to cope with more than a proportionate increase
in the size of the industry regulated.
Q127 Lord Walpole: It is less than three-fold,
is it not?
Mr Dean: Yes. The point I am seeking
to make is that I would not necessarily expect a linear relationship
between the size of the industry and the size of the regulator.
Q128 Lord Walpole: Are you happy about
the way the Gaming Board is currently funded and would you prefer
funding arrangements for the Gambling Commission—what would
you prefer for the Gambling Commission?
Mr Dean: We are not happy with
the way the Gaming Board is currently funded. This is by way of
a running sore which goes back more than a decade, probably two
decades. In simple terms the Gaming Board receives and always
has received a grant in aid for which we have to compete against
all the other requirements of the department in question, currently
the DCMS, without any necessary immediate regard to the requirement
for the job to be done. The arrangement which we would prefer,
and which I believe is contemplated, is a net running cost basis
under which we will be able to estimate the work that needs to
be done and raise the fees from the industry necessary to discharge
that task, all, of course, subject to full accountability.
Q129 Lord Mancroft: Mr Dean, could I
start by saying that I think we all in this committee—although
I have not asked any of them—think that the Board has done
an extraordinary job on very limited resources for a substantial
time and we congratulate you on that. I just want to go into your
answers to Robin Walpole. We are thinking in terms of increasing
the role two and a half times. That is a massive increase in the
industry, and you have had transition costs of £2.5 million
to £7 million, that sort of figure. DCMS has given you £500,000.
There seems to be a bit of a gap between those, bearing in mind
that you are looking forward to the new Act hitting the statute
book in 2005, which I think is a bit ambitious. It may be done.
How do you get from where you are now to there with tuppence in
your back pocket when you need £7 million?
Mr Grant: The position is that
the department has increased the Board's grant by half a million
pounds in the current financial year, which is what was agreed
to be necessary for the work to be done in the initial stages
of preparation. I could certainly confirm the Board's estimate
for the additional £2.5 million needed for the coming financial
year, and that is working its way through the formal departmental
budget allocation process at the moment. It is a question of timing,
not of amount.
Q130 Lord Mancroft: But the year is April
to March, is it not?
Mr Dean: Yes.
Q131 Lord Mancroft: So you will get the
next piece of pocket money in April 2004 and then you have got
just over a year to probable or possible enactment. It is a very
tall order for you, is it not?
Mr Dean: It is challenging but,
as I say, we have programmed this with some care with the assistance
of consultants and believe that it is do-able, given the resources
which have been indicated in the previous answers.
Q132 Lord Walpole: And presumably quite
a lot of the money you have been given recently has gone on your
consultants' report.
Mr Dean: Yes, it has.
Chairman: We expect to have the Economic
Secretary before the committee in mid January to talk about tax
and I give you an assurance that we will ask him about this as
well, given Mr Grant's answer.
Q133 Lord Brooke of Sutton Mandeville:
In a parallel case, Ofcom's initial costs have emerged into the
public domain and Ofcom have indicated that this will require
quite substantial recovery from the industry because of the rise
which has occurred. Are you envisaging the same thing might happen
with yourselves and, if so, what proportion of the rise would
be likely to fall on the industry?
Mr Dean: We certainly do not envisage
any overrun, let alone an overrun of Ofcom proportions. I do not
think there is more that I can say.
Lord Brooke of Sutton Mandeville: That
answer is perfectly satisfactory.
Q134 Mr Meale: Details of the high level
of staff are discussed in Schedule 2. However, that is really
about the members going over to the Commission after it has been
formed. There is a need to give us details about what staffing
requirements are going to be. Can you give us any idea of that?
Mr Dean: Do you mean to say during
the transition process? We certainly can supply details of that
because there will be a particular bulge in requirement to cope
with the transition itself.
Q135 Mr Meale: Can you tell me how will
the staffing be different from the Board? How big a difference
is there between the two?
Mr Dean: The differences will
be of two sorts. In the first place there is an increase in the
sort of work which the Gaming Board currently does by way of vetting
all the new applicants who enter the industry, monitoring those
who are in it and so forth, so there will be an enlarged requirement
of that sort. There will secondly be a requirement for a wholly
new type of staff to deal with the areas where the Gaming Board
currently is not involved, in particular the regulation of betting,
on-line activities, and also coping with illegal gambling, which
is currently outside our remit, so there will be a requirement
for new staff not doing the things we currently do.
Q136 Mr Meale: I appreciate that there
needs to be a massive recruitment campaign to try and get this
up and running.
Mr Dean: Yes, and there will be.
Q137 Mr Meale: I think you would accept
that you might find some difficulties in that recruitment. These
people who are available at the moment are premium and there already
is a huge industry out there looking for the same kind of people
all the time. This will offer new growth potential. How are you
going to recruit them?
Mr Dean: I am not complacent about
the difficulties of that, but I think the matter needs to be kept
in perspective. We are talking about a Commission whose size will
be about 200 people as opposed to the current 80, so we are not
talking about a massive number of people. So far as the necessary
skills are concerned, there are various resources open to us.
Some we can obtain on a consultancy footing as necessary if permanent
staff are hard to come by. I do not exclude the possibility of
some secondments from the industry. It is not something we have
discussed with the industry at all but it seems to me in principle
a sensible way to go and something which the industry might very
well help us with.
Q138 Mr Meale: Have you tried to set
up some kind of proposal for recruitment before the Bill comes
up?
Mr Dean: It is too early to do
that. We have made plans in so far as we can see the goal that
is necessary to be achieved, but I think that is work for next
year.
Q139 Mr Meale: But surely if you have
identified the areas where you are going to need the expertise
now is the time to go out there and see, perhaps to the universities
or whatever, if there is potential for recruitment there and so
planning and investment that you could be doing now.
Mr Dean: As I say, there is a
limit to what we are actually able to do right now for the reasons
which we discussed earlier. We have only relatively recently identified
the sort of work that needs to be done and I think that next year
will be the appropriate time to get on with it.
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