Joint Committee on the Draft Gambling Bill Minutes of Evidence


Examination of Witnesses (Questions 140-159)

PETER DEAN CBE, TOM KAVANAGH CBE, GERALDINE MENEAUD-LISSENBURG AND ELLIOT GRANT

18 DECEMBER 2003

  Q140 Mr Meale: The only thing I would like to say to you, Mr Dean, is that if you get any of the sport or leisure industries paraphernalia and you read that, you will see that there are many pages devoted to nothing else but recruitment and I advise you very strongly that if you are to be successful you need to start that process now, which is only a very short period of time before the Bill may come into being.

  Mr Dean: That is helpful advice which we will certainly note.

  Q141 Chairman: Returning to Lord Brookes' point, paragraph 326 of the policy statement which accompanied the Bill makes it absolutely clear that the Government's intention is that the Commission will seek to recover through licence fees the full cost of the operation and administration costs.

  Mr Dean: Yes.

  Q142 Chairman: I appreciate that it is early days but has any work been done yet on what this will mean for licence fees? Is the existing industry likely to face a substantial increase in licence fee costs?

  Mr Dean: I think the existing industry is probably expecting some increase in costs. No, we have not gone so far as to seek to predict what the allocation would be, but clearly the Commission is going to be larger, it is going to be more expensive than the Board, and therefore more fees will need to be recouped. On the other hand, the industry from which they are going to be recouped is going to be substantially larger.

  Mr Kavanagh: Can I add a point there because there is quite an important difference that we are looking for in the new legislation? The current Act only allows us to set one fee for each of the various certificates that we issue, so we can only have one fee for a bingo company or a machine supplier regardless of their size. We are looking in the new Bill for flexibility which will allow us to charge differential fees according to the size of the operation, so it may well be that particularly some smaller company will benefit in that respect in the new legislation.

  Q143 Chairman: Going back to when you think you might get Royal Assent, presumably you would expect to consult with the industry before that date over what this fee structure would be?

  Mr Dean: Certainly.

  Q144 Baroness Golding: How long do you estimate it will take to consult on and then issue the Commission's statement of policy for licensing and regulation, the series of codes of practice and the guidance to local authorities?

  Mr Dean: I cannot give you a precise answer to that question because we have not turned our minds to the mechanics of it. What I can say is that it is our intention to get on with this early next year as soon as we possibly can. How long it will take will depend to a degree on the consultative process. All these regulatory documents to which you refer will require consultation and they will be consulted on. There is also the technical problem that the documents themselves can only formally be validated once the Commission formally comes into existence. I do not see that as a practical problem because I see the process of consultation going on in a sense on a hypothetical basis so that the industry and the other interested parties are not surprised by anything that is in it and that the eventual validation by the Commission itself will be more or a less a formality later on. I see this work as starting next year and substantively being completed well in advance of the legislation coming into effect.

  Q145 Baroness Golding: Have you any fears that any of these things are going to lead to you becoming bogged down in negotiation and limiting the timescale that you have?

  Mr Dean: Again, without wishing to appear too sanguine about it, I do not see this as a fundamental difficulty. There are a number of codes already in existence which the Board has been engaged in in one capacity or another. Some of them have been issued by the Board; some of them have been issued by the industry, and we have consulted on them. Therefore, the notion of codes is not one which is strange to the industry and quite a lot of the content of the new codes, so far as they affect the practicality of the work in the industry, will take advantage of the work that has already been done in the existing codes. There are areas which have not been covered to such an extent, particularly those relating to social responsibility, problem gambling, and those will require care and attention and they will take time. No, I do not envisage this as bogging us down.

  Q146 Baroness Golding: The guidance to local authorities is going to be very important with regard to the shape of it. I wondered if that was going to be a priority.

  Mr Dean: It is certainly something which is very much in our minds. There is a sort of precedent at the moment because currently the Board gives quite extensive guidance to magistrates, which is issued annually. I am not for a moment saying that one can simply read across from that the sort of advice for local authorities, which will be very different, but it is an area which is not wholly unfamiliar to us. We are in touch with the local authorities' association where we are planning regular meetings with them, again starting in the new year. They are also keenly interested in this area and we shall be giving it priority.

  Q147 Dr Pugh: You are currently discussing the transition timetable with the DCMS. What is your ideal case scenario and why?

  Mr Dean: Again, the assumption that we are making is that Royal Assent is given in the summer of 2005. Between now and then therefore we need to get on with the fairly massive work to do with transition that has been touched on, that is to say, the planning, change management, project management, recruitment and so on. The Commission will not, as we see it, be up and running on the day of Royal Assent. The DCMS have issued a discussion paper which envisages a staggered timetable starting with the Royal Assent and, assuming that that is in, say, June 2005, the Commission would then be formally launched in September 2005. It would then invite licence applications under the new Act from, I think, January 2006 The Act would come fully into effect some time after that, probably in about September 2006, so there would be a staggered programme which would not as it were just end with Royal Assent.

  Q148 Dr Pugh: You are very comfortable with that timetable?

  Mr Dean: Well, it is a challenging timetable, but it is one which is entirely workable.

  Q149 Dr Pugh: Meanwhile, do you think there should be a moratorium on applications and the issuing of licences to prevent new developments evading the proposed minimum size rules?

  Mr Dean: We have had no evidence up to now of anybody making applications to the Gaming Board for certificates of consent, as they are called, for small casinos. On the contrary, the applications that have come to us, so far at least, in anticipation of the new legislation have been for large casinos or at the very least medium sized casinos. We have no evidence at all that there is a stampede. There certainly has not been a stampede and we know of no threatened stampede of companies seeking to get under the chicken wire for small casinos.

  Q150 Dr Pugh: So the answer to the question is no?

  Mr Dean: The answer to the question is no.

  Mr Kavanagh: It does need to be borne in mind that casino applications at present can only be made in the existing permitted areas and they are already fairly well served with fairly small casinos.

  Q151 Dr Pugh: Have you seen any other changes in licence applications which are attributable to the forthcoming regulations?

  Mr Dean: Yes, applications have come in from quite a number of companies which wish to take advantage of the more relaxed regime which will apply to casinos and large casinos in particular.

  Q152 Dr Pugh: Any particular genre or type or what?

  Mr Dean: We have had two or three from the United States who are major players in their respective jurisdictions, but not exclusively. There have been some British applicants as well.

  Q153 Lord Brooke of Sutton Mandeville: I am sorry to take the witness back to Baroness Golding's questions, but the issue of local authorities came into that exchange. During the licensing proceedings or the Licensing Bill there was real imprecision about the Government's intentions of reimbursing local authorities for their licensing role and that is now causing very considerable angst in terms of reality. If the local authorities were inadequately able to discharge their responsibilities under the Act because resources were not available to them, what implications would that have for you?

  Mr Dean: I find that very difficult to answer. All we can do is ensure that that unfortunate situation does not occur by liaising with the local authorities' association which we are planning anyway, and by the process of guidance which will be issued to them. If the local authorities simply were not able to play their part under the new legislation for lack of resources, that would clearly be an unsatisfactory state of affairs.

  Q154 Lord Brooke of Sutton Mandeville: I should say that the Local Authorities' Association played a more than adequate part in the transactions on the Licensing Bill. The outcome does not appear to have been wholly satisfactory.

  Mr Dean: As I say, I am hoping that by a process of close liaison with the local authorities we do appreciate that this is a new area for them and they show every sign of wishing to be heard and wishing to be ready for what requires to be done when it requires to be done. I suppose to some extent one can hope that, to the extent that the Licensing Bill has been an unfortunate precedent, lessons may be learnt from that.

  Chairman: I am sure that the planning issue which involves the local authorities will come up shortly when we talk about casinos and one or two other things. Can we move on now to the area of social responsibility?

  Q155 Lord Falkland: What is your overall view of the licensing objectives which appear to us to be (as they should be probably) onerous and complex? We realise that the Gaming Board at present has no powers in relation to problem gambling. How do you assess the challenges in balancing the licensing objectives with the obligation that you will have to permit gambling? Further to that, what tools will the Commission have to ensure that operators themselves minimise the social problems (of which we are all aware) that their businesses may create?

  Mr Dean: On the first question, we thoroughly endorse the licensing objectives. They do in fact correspond quite closely to what we as a Board have long promulgated as being more or less universally accepted for the purposes of gambling regulation in developed countries around the world, so we have no difficulties with that. Furthermore, we regard it as highly desirable that they should be spelt out in Clause 1 of the Bill. It seems to me very desirable. So far as the relatively new area of problem gambling is concerned, whilst you are quite right in saying that the Board does not have a statutory remit in relation to problem gambling at present, that does not mean to say that we take no interest in the matter. We long have. We were early sponsors of GamCare and Tom Kavanagh is one of the trustees of the Gambling Industry Charitable Trust and Geraldine Lissenburg sits on its research panel. So it is an area in which we do take considerable interest now even though we have no formal statutory obligation to do so. The new obligations will be the subject of codes and the codes will be referred to as necessary in the licences which operators get and so there will be effective sanctions to ensure that they are enforced and that proper canons of social responsibility are observed. This is a problem which confronts regulators around the world and there are plenty of precedents upon which one can draw to devise the norms which should apply in this way.

  Q156 Lord Falkland: Thank you very much for that. The Committee notes that your Secretary, Mr Kavanagh, is a trustee of the Gambling Industry Charitable Trust. Would it be fair to ask him now to respond to the criticism which has appeared from some quarters that the Trust lacks independence and that perhaps there might be a separate body created charged with allocating funds which go to the Trust?

  Mr Kavanagh: I will do my best. In terms of independence the Trust is taking major steps to improve that. They have just appointed a new Chairman completely independent of the gambling industry and now that he has been appointed they are going to appoint more independent trustees, such as myself, so that they will then be in the majority of the total number of trustees. They are moving very significantly in the way of independence. What has also been discussed, and no doubt when you see the Trust they will be able to give you more detail, is that within the Trust we are moving to a situation where it will be the independent panel which will look at bids for resources, if you like, judge them and make recommendations to the whole Trust as to what should be accepted and what the amounts should be. Even within the Trust, therefore, there is a move to separate the activities of the independent trustees from the industry-based ones, so it is making a large move in the direction of independence. It is not planned at the moment to have two separate bodies.

  Q157 Lord Mancroft: Bearing in mind the new objectives you are going to have in the area of social responsibility and problem gambling, would it not be helpful for you to have a benchmark at the time the Bill is given Royal Assent to monitor problem gambling? Various people have suggested a new Prevalence Study should be established or some other form of research. Would it not be helpful to have that benchmark at that time so that you can monitor things going forward?

  Mr Dean: I am not sure that there is sufficient evidence of change since the 1999 Prevalence Study was done to justify a new Prevalence Study as it were immediately at the start of the Act. I am not suggesting that the industry has stood still but I do not know that there has been radical change such as to invalidate that. I do not think it is necessary and we certainly would not want to see anything which held up the progress of the Bill.

  Q158 Lord Mancroft: Would you have plans to put in place some body to monitor this as time goes by?

  Mr Dean: Oh yes, there will certainly be a series of studies to test what is happening over time.

  Q159 Chairman: I am asking my Clerk to look up the reference, but I do recall on Tuesday asking the minister, Lord McIntosh, about this issue. He made it quite clear that he wants to see a Prevalence Study. Lord Mancroft asked him if he had any plans to conduct a further Prevalence Study, as he has just asked you, and Lord McIntosh said: "The first step that we would do is conduct a simpler study of the prevalence of different forms of gambling closer to the date of implementation of the Act than that which we published in June 2000 . . .", so I think that is something that is going to be added to your workload.

  Mr Dean: It sounds as though I am in trouble with the minister. Clearly, we will do whatever is required. I perhaps need to discuss this with the minister anyway and we might have a view on it. What I would not want to see is resources diverted from what your Committee has identified as being a challenging task unless it is absolutely necessary.


 
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