Examination of Witnesses (Questions 380
- 399)
TUESDAY 13 JANUARY 2004
JOHN HEALEY
MP
Q380 Lord Wade of Chorlton: You also
stated that "The erosion of the traditional boundaries between
discrete gambling activities may raise questions about the suitability
of the current tax structure and also raises issues around compliance
costs and the administrative efficiency of such a system",
also referring to specific issues relating to remote gambling
and casino taxation. What is your timetable for addressing these
issues and which do you think is the most challenging of the two?
John Healey: The timetable is
rather as I indicated to the Committee earlier on—at least
at this point, as far as one can anticipate it. It is important
to get the principal regulatory decisions confirmed, and that
is certainly impossible to do definitively until this Committee
has passed its judgment. That would suggest that options for any
tax reform that may be appropriate would have to follow decisions
on regulation, which would suggest that any legislation (which
would, of course, be a matter for the Finance Bill) would not
be feasible before 2005. As I said earlier, it would need to be
aligned with the progress of settling and introducing deregulatory
reform that the Committee is looking at. I hope the memorandum,
to some extent, has pointed to the dilemmas and tensions that
both deregulation and some of the trends in the industry throw
up for us in tax terms. Essentially, as Members of the Committee
will know much better than I do, the structure of gambling taxation
has really evolved in silos. We have six different, essentially,
gambling taxation regimes. There are, in some ways, some strengths
from such a system: it allows us, for instance, to take account
of particular competitive costs or circumstances that one might
find in one part of the industry if not in the other. So the pressure
on the general betting activity from the movement on to the Net
and offshore is very different to the sort of pressures that there
are on the bingo industry, and it is possible to make taxation
decisions that reflect that. On the other hand, as I mentioned
in the memorandum, with new activities such as remote gambling,
the question really arises, do we treat these as an online facet
of an existing silo—in other words, an online variant of
betting or an online variant of bingo—or do we come up with
a different regime which is essentially about online activity,
so that you may have different types of activity, physical bingo
and online bingo, treated for tax purposes in a different way?
It is not easy to resolve. There are other more difficult, generic
questions, to answer your point directly, if I can, Lord Wade.
The question of how we deal with VAT, if there is any radical
reform across the board; whether or not there is a case, as some
argue, for unitary rates irrespective of the gambling activity;
whether indeed there is a good case for one-roof regimes where,
with resort silos or resort casinos, for example, you are likely
to have a number of differently taxed activities located in one
place, and the potential complexity there for businesses to comply
with having a number of different activities taxed in different
ways at different rates in the same location does throw up some
questions that, frankly, I have not faced before. I think the
most difficult question we face, actually, is none of those, although
I would suggest they are all complex and the Committee will well
understand that. I think the most difficult question that we face
would be how we look to reform regimes to reflect new developments
in the industry whilst, at the same time, weighing the concerns
of established activities and established businesses. I think
for me a cautionary point into this is the wide range of views
that we have had in response to the consultation we did on amusement
machine licence duty, where it is quite clear that any possible
reform is likely to have a highly differential effect with a very
wide range of winners and losers. I think you could scale that
up when you consider the regime of gambling duties right across
the board. That, I think, will be the Government's—in fact
for all of us wanting to see a way through this—most difficult
issue to resolve.
Q381 Lord Brooke of Sutton Mandeville:
In the interests of transparency, Mr Chairman, I think I should
probably start by saying sympathetically to the Economic
Secretary that I held his responsibilities in the middle-1980s
and, incidentally, in the context of Customs & Excise most
pleasurably. Do the tax yield implications of substitute expenditure
enter into the tax planning of the Treasury in the matters which
we are discussing today? If so, has Customs & Excise already
started work on what that substitute expenditure might be? Secondly,
and I am not really asking about the dimensions of substitute
expenditure, because I see those as what the eventual regulatory
process is, but I am asking whether analysis has been done of
the sectoral areas in the economy which would generate that substitute
expenditure.
John Healey: May I say, Lord Brooke,
that I entirely agree with your view of the very special responsibility
it is to be Customs Minister. It is a very special service with
an extraordinary range of responsibilities and some first-rate
staff. I appreciate the distinction you draw between questions
on the principle of substitution diversion rather than our ability
to judge the dimensions of that at this stage. The short answer
is yes, it figures very significantly, not just because it is
a potentially (as the industry will recognise and do recognise
in their Pion consultants' study) significant dimension for us
but, also, because the government's own approach to additionality
is set out in the Green Book, and that applies right across the
spectrum of taxation decisions. So, to quote the Green Book here,
the effect on net employment and net output is likely to be much
smaller than the direct employment and output effects of a particular
project. The industry is attempting to do this in its own study
producing both the net and gross impact. Now, we are still at
an early stage—and I think probably the industry would say
in their own workings as well—of trying to assess the likely
dynamics of any diversion. The industry study, and it is certainly
a plausible belief, is that there is likely to be some diversion
of existing gambling activity, particularly from some of the new
business models, the new resort-style casinos. I think it is plausible,
also, to believe there is likely to be some substitution and diversion
from other forms of leisure activity. I certainly know that in
my own area in Yorkshire, where we are looking at, potentially,
a development which could encompass a new resort-style casino
operation, some of the existing leisure operators from tourist
attractions to cinemas, to bowling alleys and theatres are all
concerned about the potential substitution effect. From the Treasury
point of view, our first task is to try and bottom out the data,
convince ourselves that the assumptions that we might build into
any model are as sound as they can be, and then ultimately make
any tax decisions based on that work concerned principally with
making sure that we see the net impact rather than any gross impact
as the yardstick by which we make those judgments.
Q382 Mr Meale: Can I start, Minister,
by firstly saying that it is refreshing to hear a Treasury Minister
actually use the phrase "tax scale increases might lead to
impoverishment of those least able to pay." I think that
is very refreshing from the Treasury, responsible for doing that.
The difficulties about modelling, which you mentioned a little
bit earlier, on tax-type modelling within the department, there
has been much criticism over the year, particularly by Customs
& Excise, that they use a particular type and range of modelling
based on the Oxbridge tax modelling techniques. It is refreshing
to hear you say those things early on about "a new way forward,
a new analysis". Are you going to rely upon the age-old methods
of tax-gathering rather than, as I say, this new innovative and
quite radical dimension that you mentioned earlier about looking
at the industry, how it is going to affect it and base it much
more on the needs of the industry and those that work in it rather
than gathering tax?
John Healey: I am not familiar
with the particular Oxbridge modelling, Mr Meale, whatever that
is.
Q383 Mr Meale: Can I just say, Minister,
if you have any doubts you might reflect and go back to Customs
& Excise and have a look at how they did it on beer and whisky.
That might give you a clue.
John Healey: As it happens, part
of my other responsibilities means I am looking very closely at
the various modelling in the whisky industry and spirits industry
at the moment. I think the memorandum sets out, and the Members
of the Committee know full well, that the sort of reforms that
we put in place in the taxation regimes in a number of the gambling
sectors already were closely based on analysis modelling before
we made the decision to go ahead. None of those, as far as I am
aware, rest solely on an Oxbridge model of that. I would suggest
that we are constantly, both in this field and more generally
in Customs, ready to refine the modelling that we use, whether
it is tobacco, gambling, alcohol or indeed VAT. Secondly, we have
quite widely shared the assumptions that we have made that underpin
the modelling that we undertake in order then to arrive at the
sort of taxation decisions that we have made. We will follow the
same principle of approach with the issues that we now face on
this.
Q384 Mr Page: Minister, you mentioned
taxation being carried out in silos and developed in silos. My
question is, I think, an almost impossible question for you to
answer but it is just to get your thoughts on how the Treasury
is approaching these matters. You mentioned that we have new gambling
activities coming in and you mentioned the betting exchanges and
things like that. As we all know, the casino operators desperately
want to know what is the taxation regime in order to determine
their investment. So, in short, what I would like to know is what
work is being carried out not for today and not for the model
of the day but the model for the future? What anticipation is
being made of future possible trends so that we can have a taxation
regime (I use the word "future-proof" rather loosely)
that is not subject to change unless necessary and one that the
industry can then work with with a degree of confidence and invest
with a degree of confidence?
John Healey: The principle of
trying to devise a regime that is future-proof is an important
ambition. I mentioned earlier in my comments that on the one hand
the industry quite understandably wants as great a clarity on
future tax structures and rates as it possibly can, because it
is an element of the investment decisions they are going to now
need to make. I quite appreciate that and I also quite appreciate
why they are arguing for as low a rate as possible in the context
of this discussion. They are also concerned, and this certainly
came through in the evidence on the amusement machine licence
duty and more generally, that we do not make decisions about tax
changes now which we thoroughly overhaul in a couple of years'
time. The ability now to get them right with a degree of certainty
and stability for the longer-term future—the sort of time
periods that investment decisions and returns need to be planned
over—I think is an important duty and responsibility on
my part as the Minister responsible for this. Whether or not and
to what extent it is possible entirely to future-proof such decisions
is a more complex and more open question. Clearly, one of the
drivers in the sectors, generally, recently, has been technology
and it is likely to remain a very important dynamic of change.
In many ways, Mr Page, I think technology creates more difficult
questions for those responsible for regulation than it does, perhaps,
for taxation. If I may explain as follows: essentially, the broad
principles on which we base the approach to taxation decisions
that we take in particular taxation regimes are largely consistent
and largely continuous. So, for instance, with indirect tax systems
in gambling we generally place the liability to account and pay
for gambling duties on the business rather than the player, and
I do not see that changing. On the other hand, in regulation,
if you look at what is happening in betting, whereas in the past
bets could only be placed either on courses or on licensed premises,
the technology has enabled betting exchanges to grow up, presenting
if you like a number of headaches for the regulators without a
change in regulation. It is in fact strictly, one could argue,
an "illegal" activity. Secondly, it creates some quite
serious challenges to the integrity of some of the sports with
which it is associated. Thirdly, in the end, the capacity for
such activity to move offshore and on to the web means ultimately
it is possible to evade that regulation and indeed taxation
altogether. So a very central issue, an important concern, and
responsibility which I take seriously and will be a feature of
the work we do, but in the end probably the implications of the
regulation are perhaps more profound and more difficult for the
regulatory regime rather than the taxation regime.
Q385 Mr Page: I am very grateful
for your answer. The only small point I would bring to your attention
is that intelligent anticipation would have given us a gross profits
betting tax rather than the other duty, and that would have meant
that a lot of companies would not have started to move offshore,
they would have stayed onshore. I am very grateful for the tax
change, I think it has been a tremendous advantage, but that is
the sort of thinking to the future which I think we must do so
we do not have the migration of companies and activities from
our shores and the loss of the duties and the taxation benefits.
John Healey: It may be a fair
area for argument as to whether or not we acted quickly enough,
but I would just suggest to you, Mr Page, we did act at that point,
by doing so we were able to bring what was going offshore back
onshore both through the change in the taxation regime and in
discussion with the industry—
Mr Page: I am not knocking it, I am saying
thank you very much, but if the thought had been there in the
first place we would not have had to get out of the hole we got
into.
Chairman: We did hear in the previous
session that some support for gross profit tax is a means to doing
precisely what Mr Page says. Unfortunately you were not here to
hear that but the transcript will be available.
Q386 Lord Mancroft: Minister, the
Treasury could, with a little bit of luck, be quite a significant
beneficiary from this new legislation. How much has the potential
for increased revenue as a result of the change to the gambling
industry been a motivator for this new legislation? What contact
has there been between the Treasury and the DCMS on this specific
issue?
John Healey: The possibility of
increased revenue to the Treasury has not been a motivator in
the design and framing of the deregulation proposals. Beyond that,
I am not aware of any discussion within Government in which the
possibility of substantial revenue gains to the Treasury forms
a part of the consideration in how to design the deregulatory
regime proposed in the draft Bill. The motivations for the legislation
I think are quite clearly set out and I do not need to rehearse
those. From the Treasury point of view, we strongly support what
we would regard as sensible deregulation and we do so generally
because it contributes to our broader objective, the Treasury
and Government objective, of increasing the productivity and potentially
the activity within the economy. So those are the motivations,
and the potential for any increased tax revenue has not formed
a part of that, though the potential for revenue risk and revenue
loss to the Treasury will form a part of the work I now do.
Q387 Lord Mancroft: I think that
is a very helpful answer. What assurances can you give that the
right balance will be struck between securing revenue for the
Exchequer whilst at the same time encouraging investment and innovation,
which will be one of the keys to the success of this legislation?
John Healey: It will indeed be
one of the keys to the success of the legislation and the design
of any tax reform which may be aligned to it, Lord Mancroft. Clearly
we have a responsibility to ensure that a fair contribution towards
general exchequer revenues is made from the industry in the future,
but clearly we also have a very strong concern in the Treasury
to promote and see stronger economic growth in the UK, and striking
the right balance will be one of the central decisions and judgments
that we will need to make.
Q388 Jeff Ennis: Taxes on gambling
are often seen as regressive. Do you have concerns that increasing
the opportunities to gamble will effectively be increasing a regressive
tax?
John Healey: The principle that
underpins the regulation of course and therefore the general Government
approach to this is that adults generally have to take responsibility
for what they do and are responsible for their actions, and one
of the objectives of the deregulation is to increase the choice
of these type of activities which may be available to people.
I suppose my principal concern as a Treasury Minister is that
the product that people chose to consume, the activities they
choose to engage in, are fairly taxed, based on a belief that
it is both fairer and a better balance if Government levies taxes
on consumption as well as income, and that it is a better balance
more likely to put in place a regime which properly gives incentives
to work, to save and also to invest. On the concern you have about
gambling duties being regressive, it is certainly true that gambling
duties are one of the more regressive taxation regimes—although
not as regressive as tobacco for instance—but I think probably
I would suggest a sense of perspective here. It is generally thought
people are by and large not spending a great deal on gambling
activities. If you look at the statistics, households on average
in this country spend £3.70 a week on gambling activities,
£2.50 of which is with the Lottery. So that gives me really
some grounds for not worrying too much about that as a problem.
I would worry much more if we were not able to put in place across
the rest of the taxation system the sort of provision we, for
instance, have for zero-rated VAT on food and children's clothes,
essentials which people do need, and if the taxation rates are
too high are indeed seriously regressive, particularly when attached
to essentials rather than if you like discretionary activities
which clearly gambling falls into.
Q389 Jeff Ennis: Generally speaking,
there is broad all-party support for this over-arching Gambling
Bill which will be welcomed when the gambling legislation comes
in. Are you concerned at the fact that the potential expansion
into gambling appears to be more industry-led, shall we say, than
demand-led? Is that a concern for you as a taxation minister?
John Healey: No. I would expect
the industry to be leading the arguments in the current context,
number one. Number two, the industry would expect me to treat
those with close scrutiny. Number three, some of the reforms we
have put in place to individual silo regimes if you like in the
gambling field have liberated and encouraged individual demand
rather than simply an expansion of supply. Clearly the impact
of the reform of betting duty has had that effect. I expect the
reform of bingo duty to have a similar effect. So I think we can
see some important demand drivers in this field, not just the
interests of the producers and suppliers.
Q390 Lord Faulkner of Worcester: I
wonder if I could take issue with your first reply to Jeff Ennis
about the regressive nature of gambling and just share an anecdote
with you; more than an anecdote, an experience? I was in Australia
in October and I was taken around a large number of gambling outlets
in Melbourne and Adelaide and what distinguishes the Australian
scene from Britain is the enormous proliferation of what are called
clubs and hotels which are populated with poker machines. These
are located almost exclusively in the working class areas of those
cities and they appeal to people who do not have a lot of money,
people who receive benefits, and they are very close quite often
to the places where benefits are paid out, and they get their
benefits from the equivalent of post offices and they go into
the bars and play on these machines. I tackled somebody there
who was a university professor and said, "Aren't you worried
about the incidence of gambling in your state?" and he said,
"I'm not worried about it, because the gambling pays for
things I like to do and if we did not have the gambling I would
have to pay more taxation." I found that a very hard attitude
to understand. What I am concerned about with your first reply
to Jeff Ennis is that you would appear to be sanctioning that
sort of approach where the complete freedom for adults to gamble
is paramount and the social considerations of who is doing the
gambling and the effect the gambling is having on people seem
to come second. I am sure I am misrepresenting you, but I would
like to give you an opportunity to correct that.
John Healey: I am very grateful
for the opportunity. Clearly none of us is looking at complete
freedom for adults to gamble. The whole nature of the Bill and
the Government's approach to this balances and puts in place the
sort of safeguards which may be required to stop such problems
getting out of hand. My argument is that is properly and most
effectively a matter for regulation and questions of access rather
than taxation. Gambling duties do indeed make a significant and
important contribution to the general exchequer, £1.3 billion
plus about a third of a billion on VAT and corporation tax as
well, but it is essentially for the provisions in this Bill and
the judgments which are made on regulation rather than the judgments
which are made on taxation which will help deal with what is clearly
a legitimate fear, particularly if it has been proved in practice
in parts of Australia, and certainly with your experience, Lord
Faulkner, something which the Committee will consider very carefully,
as indeed the Government will.
Q391 Lord Brooke of Sutton Mandeville:
Minister, like Lord Faulkner, I will follow up on a question
Mr Ennis asked you, and I am thinking particularly of his last
question where he raised the motivation and pressure for the legislation,
where it came from, and you answered him. Large-scale gambling
developments seem to be much more popular with local people when
there is a possibility of generating benefits for local communities.
Given this seems to be the case, would you consider permitting
the use of a local levy or a hypothecated tax?
John Healey: I think we can all
understand, and certainly in your days as a constituency MP you
will understand, Lord Brooke, as acutely as any of us do representing
constituencies, that where a significant development of any nature
is proposed in a local area, the local community and local authority
look to see what potential gain there may be and benefit for the
area. That is an established part of the planning system in a
sense, looking for planning gain as part of any development. On
the question of localised tax regimes, the short answer is no.
I hope that is clear!
Q392 Chairman: The clearest thing
this morning!
John Healey: Let me explain. There
are probably five concerns I have with the proposition. The first
is that hypothecation of that sort constrains the capacity and
ability of Parliament to determine the distribution of Government
spend. Secondly, gambling duties make an important contribution
to the general tax revenues used for a variety of purposes. Thirdly,
there are serious questions about the proposition we should treat
gambling in a different way from other forms of business. Fourthly,
there is a risk of substantial volatility in the tax-take where
it is based simply on a single or a small number of businesses
in the local area. Finally, there is a concern about equity in
that some areas clearly are in a better position to attract such
activity than others. For those reasons, that is not an approach
or a structure to taxation in these circumstances that I am attracted
to.
Q393 Lord Brooke of Sutton Mandeville:
All of us, I think, on the Committee greatly admire the candour
of a Treasury Minister saying what you said at the beginning of
the answer, and I can hear myself saying a number of the things
you subsequently said. Against that background, and I ask in the
context of another topical area out of curiosity, why did the
Treasury in the context of higher education arrangements let payments
in Scotland go back into a trust rather than go back into the
Treasury? One of the consequences of that of course was to make
it an attractive proposition to the Scots, that in fact their
higher education was going to benefit.
John Healey: The answer is simply
devolution. This is a devolved area of policy-making that is a
responsibility for the Scottish Parliament, and that is the system
they have put in place there. With gambling taxation, we have
a unified UK regime at present. It is not, I have to say, Lord
Brooke, a dimension to the potential tax issues we may face, and
I cannot really consider it. I am not obviously immediately attracted
either to devolution or disintegration of a unified UK tax regime
on gambling. The answer on fees of course is devolution.
Q394 Chairman: But it has been put
to us that if you want to have significant regeneration of seaside
resorts, such as Blackpool, were they to be able to take
up the opportunity of becoming an international casino resort,
there would have to be investment from the companies setting up
those casinos into the local infrastructure. Is this something
that the Treasury has taken a view upon? It may not necessarily
be done through hypothecated tax, but is it your judgment it could
be done through planning agreements?
John Healey: It would indeed need
investment. It would not, as I have suggested to the Committee,
need a local levy or hypothecation in that way. Conceivably, it
could be encouraged through the planning regime, it could conceivably
be encouraged at local authority level, it could also be a matter
that Regional Development Agencies concerned about projects of
strategic economic importance in their region would be interested
to take a view on. To use the metaphor I suggested to the Committee
earlier, planning policy, the way these sort of issues are dealt
with, is one of those chairs which needs to be brought to the
table of the deregulation in the Bill.
Q395 Chairman: But you accept that
the tax regime obviously has a bearing on how generous the investing
casino company could be?
John Healey: The tax structure
and tax rates are likely to form—and certainly the industry
would argue it is an important dimension—a dimension in
their ability to prepare convincing investment plans. That is
clearly a relevant factor.
Q396 Mr Meale: Minister, as you know,
the DPM has been involved over the last few years in quite a number
of cases where the principle of hypothecation of tax has actually
been supported. The London Underground, public-private partnerships,
there is a whole range of them. We have been told the betting
yield from this will be £2.2 billion, which is a considerably
large amount of money, and we have also been told that probably
there is going to be investment in only three or four areas which
are going to have to bear the brunt of all that. We have seen
examples elsewhere in the world, particularly New York State but
elsewhere, where tax revenues and profits have been hypothecated
to stay in a particular area to deal with that. Bearing in mind
these previously different approaches to hypothecation, for instance
in airport areas and taxes gathered from fuel at airports, why
can we not look at the concept of these communities—as I
say, there are not going to be many of them—actually retaining
some of this revenue?
John Healey: To be honest, I am
not sure some of the designated funding streams, whether PFI credits
or PFI partnerships or regeneration projects which are designated
and targeted at particular areas like the New Deal for Communities
or the Neighbourhood Renewal Fund, constitute hypothecation under
the auspices of the Office of the Deputy Prime Minister. However,
I think there are often better ways of getting resources into
local areas that require major projects or require regeneration
than looking to the tax regime to do it. You ask a more general
question, why can local authorities not hold on to some of the
essentially business tax returns from the companies in their area.
One of the five problems I have with this proposition of a local
levy for resort-style casinos is that it would be a return to
the local authority and local people based on perhaps a single
or a very small number of companies. In fact, you may have seen
in the Pre-Budget Report the Chancellor delivered in December
before Christmas confirmation that the Government will introduce
what we are calling a local authority business growth incentive.
This is where all local authorities stand to gain additional funding
based on the increase in economic activity in their areas. If
we had had that in place over the last three years, it would have
been worth a total of an extra £1 billion to local authorities.
It seems to me to be a similar principle you are interested in
but a much more stable and sustainable base on which to stay,
"We want local authorities to take a greater interest in
the economy and the health of the labour market in their area",
where they are playing a part in local economic growth, than there
are rewards in order to incentivise and give that proper attention.
I would suggest that is a better and more stable and sustainable
way of doing the sort of thing you are looking for than simply
looking at a rather narrow sector with a very small number of
potential companies and looking to follow that model with them.
Mr Meale: I am not looking for it at
all, I am just posing the question.
Q397 Lord Faulkner of Worcester: A
quick question on the regulatory impact assessment, Minister.
The Cabinet Office guidance says that an RIA should contain an
assessment of the benefits and costs of a proposal as the central
analytical component of the RIA, yet the one produced by the DCMS
on this Bill does not contain any monetary assessment of the benefits
of the proposals. Do you think it should?
John Healey: Clearly setting monetary
assessments of the potential benefits of future changes is difficult.
It is complex, it is uncertain, it requires sometimes heroic assumptions
which, whether it is a potential investor, a potential developer
or a Government, one does one's best to try and narrow down and
ground as much as possible. In fact, the RIA does have an important
feature, and it is on page 19, in paragraph 1.78, where it suggests
that the projected annual average increase in net expenditure
on gambling would rise by at least £500 million over the
period 2004-05 to 2008-09. That is probably around 6 per cent
of the £7.8 billion that was last year spent on gambling.
So there are figures in there. There is that specific figure which
was, at the stage the Government prepared the regulatory impact
assessment, our best estimate. Part of the work, to bring the
Committee back to our starting point, that now needs to be done
by formalising the work between DMS officials, Treasury officials
and Customs officials, is to see whether or not we can get a more
reliable and more robust assessment, if you like, of the potential
economic impact. Clearly, after this Committee has made its recommendations,
and in advance of any legislation, an up-dated regulatory impact
assessment would and will be produced, and that will draw on any
sounder economic modelling that we are able to produce within
Government.
Q398 Chairman: That Option 3, as
you point out, does produce that figure but it does also suggest
that other costs might be a potential reduction in income for
good causes by the National Lottery, and possible costs for the
NHS and other agencies. Are there any figures available to the
Treasury which you can share with the Committee as to what those
costs might be? From our first evidence session this morning,
there is some concern that the Bill could have an adverse impact
on National Lottery proceeds, for example. It might be something
you want to look at and write to us on.
John Healey: I can answer you
now, Mr Chairman. I regret we do not have hard figures, and this
in a sense refers us back to the proposition Lord Brooke was questioning
me about. The principle and plausible assumption that there is
going to be substitution and some diversion I think is sound.
Our ability to assess the dimensions, as Lord Brooke put it, still
requires further modelling work but it is clearly something we
will be doing.
Q399 Lord Donoughue of Ashton: Minister,
provisions in the draft Bill will extend the use of credit cards
for gambling purposes. Surely such easy credit card use will significantly
increase the levels of gambling and will significantly increase
the levels of problem gambling, because it makes possible rapid
gambling, chasing losses and gains beyond the real resources of
many individuals involved, with the consequential increase in
consumer debt which many commentators—the Treasury, I do
not know—consider already high. Do you have any concerns
about this? Is it right for the Government actually to promote
these consequences?
John Healey: The Government is
concerned about this. I would suggest to the Committee it is reflected
in the nature of the deregulation proposals which are part of
the draft Bill, where the extension of the scope to use credit
cards or credit in this area is actually rather restricted. So
that is the first point. The second is that much of the work that
the consumer protection part of the Department of Trade &
Industry has been doing is relevant in more general terms to these
sort of concerns, and the Department of Trade & Industry may
have some valuable information to provide the Committee on the
sort of plans in the Consumer Credit White Paper and other safeguards
which we are putting in place. On the general debate which is
being conducted at the moment about levels of debt, in the context
of a stable and steadily growing economy, in the context of record
historic levels of employment, in the context of interest rates
being close to their lowest levels since the 1950s and inflation
low and stable, I would suggest to the Committee that in many
ways the debt that people generally now have is affordable in
a way that in previous periods it was not. For me, the important
measure of that is the proportion of interest payments which households
have to make, if you like, as a proportion of their disposable
income. Figures for total interest payments are now just 7.1 per
cent of disposable income compared, for instance, to a rate in
1990 which was over 15 per cent.
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