Examination of Witnesses (Questions 1
- 19)
THURSDAY 1 JULY 2004
RT HON
LORD MCINTOSH
OF HARINGEY,
MR ELLIOT
GRANT AND
MR GREIG
CHALMERS
Q1 Chairman: Good morning. We asked
to be reconvened, and here we are. May I welcome again the Minister
Lord McIntosh—actually, technically we are a new committee,
but you are appearing before us for a third time—and Greg
Chalmers and Elliot Grant from your Department who were also helpful
in various ways to the Committee in our first inquiry. For the
benefit of the large public gathering that is here again, I will
go through one or two announcements before we start. First, this
is a very narrow inquiry. We are looking only at casinos and,
in particular, at regional casino policy, and we will endeavour
to keep to that remit. Secondly, subject to the progress of our
inquiry, we hope to be in a position to publish the report on
the morning of 22 July, which is three weeks today. To do this,
we will have to agree the report on the morning of Thursday 15
July, which is two weeks today. It is quite a formidable task
for the Committee but no one has complained to the programme that
we have outlined. We will be taking evidence next week from a
number of witnesses from the industry, from a Minister from the
Office of the Deputy Prime Minister, and also from our regional
assemblies and people with an interest in the planning issues
relating to this. The interests of the members of the Committee
were well documented and remain on our website. Of course the
interests in relation to this inquiry relate only to casinos,
and I think the only interest which has been declared since we
started is my declaration that since we published our last report
I did pay a visit to a casino in Brighton—which was extremely
helpful in preparation for the work we are about to undertake.
A transcript of our evidence will be on our website within two
or three days, just as soon as our witnesses and I have cleared
the draft. Could I begin, Minister, by asking you perhaps to give
an explanation of the significant policy change in your response
to our first report. Would it be right to conclude that your new
policy is really about enforcing scarcity, and that you perhaps
now want to see a small number of large casinos rather than a
large number of small casinos as originally envisaged in the Budd
Report?
Lord McIntosh of Haringey: Chairman,
let me first of all thank you for inviting me back. I know you
are a new Committee but I am relieved to see that there are some
familiar faces here today. Thank you also for what you said about
the timetable. It is of course important to us that we should
have your report as quickly as possible and the fact that you
have seen possible to do that before the Houses rise for the summer
recess is very helpful indeed. In response to your question, no,
I do not think so. It is not enforcing scarcity. I think we have
to start from the fact that Category A machines, which have been
labelled by the press as "jackpot machines", are completely
new to this country. We do not have them at the moment. If we
are going to introduce them, we have to do so with extreme care,
until we know more about what the impact of them is going to be.
I would say that our policy is to limit the accessibility of jackpot
machines rather than to impose scarcity. The reason for that is
fundamentally about protection. In your previous incarnation you
have heard evidence about the anxiety people have and have expressed
publicly—and witnesses have expressed it to you—about
the risks involved with these machines. Our view is that the Gambling
Commission will have, under the Bill, the powers it needs to address
these risks, but nevertheless we want to take this gradually and
we want to impose controls on the machines and restrict accessibility
to them. Restricting these machines to the largest casinos means
inevitably that there will be fewer of these in other categories
because of the higher size threshold, so category A machines will
be available in fewer locations than would have been the case
under our previous proposals which means that most people will
have to go further to a casino where there are category A machines.
Having said it is about accessibility, clearly we will need to
monitor the situation. We will have to assess their effect on
participation and any impact on problem gambling. We do have the
flexibility in the Bill to alter the entitlement, but, again,
being cautious, we are minded to wait for the results of at least
two prevalence studies before considering any significant alterations
to the entitlements for the licensing regime.
Q2 Chairman: How confident are you
that this new policy will succeed in limiting problem gambling?
Because you are saying that access to Category A machines will
be by location—and we will come on to location later—but
those machines will still be there, still available to people.
If they are going to cause a difficulty, they are going to cause
a difficulty wherever they are.
Lord McIntosh of Haringey: The
fundamental protection we have, as I have just said, is the Gambling
Commission, the powers and responsibility, the duty, that the
Gambling Commission has to protect vulnerable people—and
protection of course is our motivation. The powers are going to
apply to all products, not just any new products that come onto
the market. In other words, they apply across the whole range
of gambling and they can shape their regulation as evidence accumulates
about the true causes of problem gambling. The new policy, as
is clear, involves a limitation on the accessibility of the new
Category A machines and it complements the powers that are already
in the Bill. It is not filling a gap in the controls that are
missing; you have to take it in addition to the protections that
we have already put into the draft Gambling Bill and which you
have already considered in your earlier deliberations. If you
add those things together, yes, I think that is the motivation
behind it, and that is the reason why we believe that we are moving
in the right direction for the protection of vulnerable people.
Chairman: In your response you accepted
that there were in fact three types of casino. You have introduced
this concept of a regional casino. Lord Faulkner wants to ask
you about it.
Q3 Lord Faulkner of Worcester: We
talked about resort casinos and you are now talking about regional
casinos. Perhaps I might ask you why you prefer the description
regional rather than resort.
Lord McIntosh of Haringey: Because
I do not want to lay down the nature of the facilities that there
will be in these casinos. Regional casino describes who will be
responsible for making them possible; in other words, for deciding
which areas are suitable for them. Resort somehow gives the impression
of sun, sea and sex—which I do not think is quite what we
want! There are all sorts of ways in which people enjoy themselves
and we do not want to impose a pattern upon people who come to
these casinos.
Q4 Lord Faulkner of Worcester: Will
the definition of regional casinos be contained in the Bill? Are
you going to rely on secondary legislation?
Lord McIntosh of Haringey: Yes.
Clause 143 at the moment sets out the two categories which you
rightly criticised. You said that we ought to have three categories
and we have agreed with you, and so we will add the new category
of casino licence for regional casinos to the Bill itself.
Q5 Lord Donoughue: Minister, bearing
in mind that the average size of casinos in other countries is
much larger than the proposed total customer area here of 5,000
square metres, it is possible, is it not, that our minimum size
threshold will not succeed in limiting the number of regional
casinos? Indeed, our industry estimate that that number will be
three or four times what, I think, the Department estimates. If
there is a proliferation of regional casinos, how can you prevent
a proliferation of Category A machines?
Lord McIntosh of Haringey: I do
not think it is our view that we are going to attempt to determine
the number of regional casinos that we have. We are saying that
there is a high threshold in terms of size, in terms of numbers
of tables, and there is a new threshold, as you recommended—well,
that is a limit at the other end—for the numbers of machines.
But there is also a new requirement for a public non-gaming area,
and that is very substantially higher than anything which Budd
recommended, for example. The role of regional government in these
matters is not to determine what the market should determine,
the actual number of regional casinos which will be viable. The
role of the regional spatial strategies will be to indicate the
areas where they consider it to be suitable for there to be regional
casinos. We are not taking part in any forecasting about the numbers.
Our belief is that the higher thresholds will themselves form
a limitation and that the identification of suitable areas will
form a guidance as to where they should be.
Q6 Lord Wade of Chorlton: Under the
new proposals, the size requirement for table gaming areas is
the same for both large and regional casinos. Does the definition
not merely create another cliff edge, encouraging large casinos
to be regional casinos and therefore risking proliferation of
the regional casinos?
Lord McIntosh of Haringey: No,
I do not think so. The Committee was concerned with our previous
proposals that large casinos, say of 38 tables and therefore 114
gaming machines, would only need to install three tables to get
the right to unlimited numbers of gaming machines. You were worried
about that and we took account of your worries, because it would
have meant that a very small increase in space and tables would
have lead to a massive increase in gaming machine entitlement.
That is what you call the "cliff edge" I guess. But
this is very different. The minimum size for a regional casino
is now over three times the size for a large casino. It would
mean a major expansion of a large casino to become a regional
casino and that would of course need a new premises licence and
it probably would need planning permission as well.
Q7 Lord Wade of Chorlton: I am not
sure that is entirely clear from your response to the Committee's
question at all, Minister. Although the large casino definition
(if we stick to the original definition, for ease of argument)
was where we looked at 10,000 square feet—and you are now
saying 1,000 square metres—on table gaming, no large casino
is going to be restricted just to 1,000 square metres of table
gaming. It would have significant floor space for machines and
it would also have presumably restaurants, bars and other areas,
all of which would require significant square footage. So when
you compare some of the proposals that were being put to us as
to the likelihood of some of the large casinos under which planning
consent had been granted, we actually find that the amount of
floor space is very little different from what you are proposing
in your definition for a regional casino.
Lord McIntosh of Haringey: We
are requiring substantially more non-gaming public floor space
from a regional casino than we are from a large casino. Clearly
there are premises all over the country, existing premises, which
would meet the large casino minimum requirements. I do not think
there is a very large number of premises which would meet the
regional casino minimum requirements.
Q8 Chairman: The point is there may
not be a requirement in the definition but the pragmatic outcome
will be that any casino meeting the large casino definition is
going to have significantly more than the required table gaming
if it wants to have machines and if it wants to have restaurants
and bars. I think the evidence we are beginning to get from the
industry suggests that there were a number of large casino developments
on the stocks which were not considering themselves to be a regional
or resort or destination casinos (whichever word you want to use)
but simply a local casino, but the size for which planning consents
are being granted is overall equal to or greater than the overall
size requirement in your regional casino definition. I accept
there is a difference between what the Bill will require and what
may be provided, but the suggestion that has been already put
to us—and I think we will hear more of this next week—is
that actually the resort casino threshold in your proposal has
been set too low.
Lord McIntosh of Haringey: I am
interested to hear what you say about the evidence being submitted
to you. Clearly the people in the industry or who are submitting
views to you have their own views about what are viable business
plans for different sizes and different configurations of casinos.
I do not have that luxury. The last thing I can do is to speculate
what people's business plans might be under certain circumstances.
I cannot put themselves in my place. All I can say, as I said
before, is that the difference between the minimum requirements
for a large casino and the minimum requirements for a regional
casino are very great and there is nothing like the threshold
that you rightly criticised on our previous plans.
Q9 Chairman: We could argue all morning
about whether the threshold is at the right place.
Lord McIntosh of Haringey: Surely.
It is always inevitably a little bit arbitrary, is it not?
Q10 Chairman: Yes. We will attempt
that. I think that is what you would like us to do. But could
we be clear that the objective of the policy is that the requirements
for a regional casino will be significantly greater than you envisage
a large casino providing.
Lord McIntosh of Haringey: Yes,
that is clear, but it must also be made clear that our objective
is not to enforce scarcity. I said that in response to your very
first question. Our motivation here is protection and the implementation
of the motivation of protection is to limit accessibility—which
is not the same thing.
Chairman: We will come back to one or
two of those points later but I want to keep to our agenda because
it is easier for everyone.
Q11 Dr Pugh: I have two questions.
The first is about aggregation. How will aggregation work within
the definition? Can the minimum size threshold for regional casinos
operate over a number of premises?
Lord McIntosh of Haringey: No.
It is an established principle of planning law that a licence
applies to premises. The ODPM people will explain it in more detail,
but, to me, as a layman, we are talking about "in the same
building, under one roof". It is a feature of policy about
the non-gaming area that it should be easily accessible from the
gambling areas or it could not perform its function of allowing
gamblers/customers to take a break from gambling. I think that
means it has to be in the same building. Whatever else people
do in buildings outside, whether they have hotels or restaurants
somewhere else in the same area, is up to them.
Q12 Dr Pugh: So you have to go with
the threshold, with it all under the one roof.
Lord McIntosh of Haringey: Yes.
Q13 Dr Pugh: That is the essence
of the thing.
Lord McIntosh of Haringey: Yes.
Q14 Dr Pugh: Could I ask you a second,
unrelated question. In your differentiation between regional and
large casinos, has any research been done by the Department into
the varying client bases for these sorts of premises; in other
words, of the sort of people the regional casinos will attract
rather than, for example, the large casinos?
Lord McIntosh of Haringey: No,
not in the Department, but research came my way only within the
last few days from the United States of the profile of users of
very large casinos there as compared to smaller casinos.
Q15 Dr Pugh: What broadly does it
show?
Lord McIntosh of Haringey: It
is true that they are very different. I do not have it at my fingertips.
I will gladly see that the Committee does have a copy of it.
Dr Pugh: That would be useful. Thank
you.
Chairman: That would be very helpful.
Q16 Lord Mancroft: Minister, we all
agree with you, I am sure, that protection is one of the most
important things. Going back to the beginning of this, I think
everybody is agreed that the existing casino industry in this
country was very well regulated, did not have problems, and was
an industry that we could be proud of. But the evidence we are
getting already from the existing industry is that the impact
of your proposals now is not going to be, shall we say, very helpful
to them. Do you not think those proposals are unfairly balanced
against the existing industry?
Lord McIntosh of Haringey: I think
what we are proposing—including both what we proposed before
and what we are proposing now—is an enormous opportunity
for the existing casinos in this country. It could create a more
dynamic and more competitive consumer sector; it can provide more
scope for casinos to innovate, more scope for them to meet consumer
demands. But let's go back to what has not changed in our policy:
the demand test is going; the membership requirement is going;
the enforced 24-hour waiting is going; the ban on advertising
is going. Casinos will be able to provide betting; large and regional
casinos will be able to provide bingo; and casinos will not be
limited to the games spelt out in the statutory instruments as
they are now. The Gambling Commission can give agreement to more.
These are all new freedoms for anybody who wants to start casinos
large and small and they are all interpreted in different ways.
I can imagine that some casinos would want to stay as members'
clubs; some of them will not be interested in having machines
at all; others will develop as part of wider entertainment complexes.
There is no unfairness in this. It is the commercial judgment
of the current operators, whether they are in this country or
anywhere else. There is no difficulty for people in this country
having access to capital for good investments. I cannot see that
there is any unfairness in what we are proposing.
Q17 Lord Mancroft: Certainly the
existing industry, as it is, will not be allowed to have Category
A machines and any new industry will.
Lord McIntosh of Haringey: But
they do not have Category A machines now. It is not that new businesses
running casinos have any advantage over existing businesses running
casinos. The Category A machines in regional casinos will be available
to applicants whether they are in the existing casino industry
in this country or elsewhere. That is surely the right way to
proceed.
Q18 Lord Walpole: So you think the
new small and large casinos can be viable businesses under the
Government proposals.
Lord McIntosh of Haringey: We
would hardly have set up a regime of this kind if we thought they
were not thought to be. But it is not our view that matters; it
is the market's view that matters. The role of Government in this
matter is to give the regional bodies the power, indeed the obligation,
to decide whether or not there are suitable areas in their region
for regional casinos. It is for the market to decide what businesses
do well and what business models do well; it is not for us to
decide. There is nothing that makes it impossible for a new casino,
operated by somebody already in the business . . . Remember, the
people in the business here have the expertise, they know how
to operate in this country, they have inevitably an advantage
over anybody coming in, and they can have a casino with a mixture
of casino games and betting and general entertainment. These matters
have to be tested in the market place; they cannot be laid down
by Government.
Q19 Lord Walpole: Minister, of course
you are quite right, it is for the market to decide and always
will be. Do you think that is why the share price of the existing
casino industry fell so markedly after your last response?
Lord McIntosh of Haringey: I never
comment on share price changes.
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