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UNCORRECTED TRANSCRIPT OF ORAL EVIDENCE To be published as HC 843 i HOUSE OF LORDS House of COMMONS MINUTES OF EVIDENCE TAKEN BEFORE joint committee on the draft gambling bill (regional casinos)
draft gambling bill (regional casinos)
Thursday 1 July 2004 RT HON LORD McINTOSH OF HARINGEY, Evidence heard in Public Questions 1 - 78
USE OF THE TRANSCRIPT
Oral Evidence Taken before the Joint Committee on the Draft Gambling Bill (Regional Casinos) on Thursday 1 July 2004 Members present: Mr John Greenway, in the Chair
Witnesses: Rt Hon Lord McIntosh of Haringey, a Member of the House of Lords, Parliamentary Under-Secretary of State (Media and Heritage), Mr Elliot Grant, Head of Gambling and National Lottery Licensing Division, and Mr Greig Chalmers, Gambling Bill Manager, Department for Culture, Media and Sport, examined. Q1 Chairman: Good morning. We asked to be reconvened, and here we are. May I welcome 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 you're your Department who have also been helpful in various ways to the Committee in our first report. 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 or 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 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 the 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 on 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 prevalent 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 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 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. What 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 possible 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. Q20 Mr Meale: You said to Lord Donoughue and Lord Wade "We do not want to determine" but it seems that all the restrictions and numbers you are laying down are doing exactly the reverse. For instance, by restricting Category A machines to regional casinos, are you not in effect creating a monopoly for foreign investors/operators to come in? Lord McIntosh of Haringey: No, I do not think so at all. I cannot see where the word "foreign" appears. I cannot see what conceivable reason there should be why British companies should not be able to develop large scale casino activities, including regional casinos, if they want to, and they can do so either on their own or in partnership with anybody else. They have access to capital markets, they have the expertise. If they need expertise in management, they can hire expertise in management. There is no monopoly here. The principle behind the restriction of Category A machines - and I do not mind saying it as often as I get an opportunity - is the protection of vulnerable people, and the way in which we are approaching protection in an area where these machines are completely new to this country, where nobody has any experience of them in this country, is to limit the accessibility to them. That is our motivation. Q21 Mr Meale: If they have the expertise, they know how to operate, why then restrict it to areas regional rather than those clever, decent, known operators that are there already? Lord McIntosh of Haringey: But the clever, decent, known operators have exactly the same opportunity. Indeed, if they are clever and decent and known, they have a better opportunity to operate in the areas which the regional authorities decide are suitable. Q22 Mr Meale: Minister you also said you did not want to create scarcity, but by restricting to region are you not making it exclusive? In that respect you are achieving scarcity. Lord McIntosh of Haringey: I did not use the word scarcity. It was your Chairman who used the word "scarcity" in his first question. I said accessibility, because such evidence as we have - and we know the evidence about problem gambling is inadequate - is that there are particular dangers with unlimited stake/unlimited prize machines and those particular dangers are exacerbated if there is ambient access to them (in other words, if there are lots of them all over the place) and limited if accessibility is limited. That is the way we want to approach it. We believe we are behaving responsibly here in and in response to the concerns which have been expressed about problem gambling. The solution we have come to is in line with those who are most expert on the issues of problem gambling, and I think the limitation of accessibility is very difficult to argue with unless you want to move away from the precautionary principle which is at the back of the responses we have been giving to your Committee. Q23 Mr Meale: Minister, I can assure you that you did use the word "scarcity" in responding to the Chair, and you quite rightly state that he did bring that up. Coming to another point which you raised, Lord Wade asked you a question about the ratios of tables to machines. Where did you pluck the figure 25 from? You have 41 to unlimited, and you have other numbers here and there, where suddenly did you pluck out of your pocket the number 25. Lord McIntosh of Haringey: Where did you pluck your figures from? Q24 Mr Meale: Minister, I am asking the question. Lord McIntosh of Haringey: I am sorry, that was unworthy. Seriously, in August last year we set out certain ratios. People commented on those ratios and you commented on those ratios, and most of the concerns which were expressed were that the ratios were in fact too liberal - had been of course a lot more liberal but were still too liberal - and ran the risk of having casinos which were dominated by machines rather than by tables. So we made a change to what we proposed as the ratio for small casinos from three machines per table to two machines per table. But, more important, we looked at your recommendation that the maximum size of machines in any casino should be 1,000 or 1,250. We looked at what that meant and we said, "Okay, let us have a higher minimum number of tables in order to get the maximum number of machines than for regional casinos." If we say there should be a minimum number of 50 tables to get the 1,250 maximum - which you proposed then that ratio is 25:1. It has a sort of rationality. Mr Meale: It does. Thanks very much. Q25 Chairman: Under your proposals you are saying that existing casinos and new small or large casinos will not have Category A machines. That means they will have Category B machines. Lord McIntosh of Haringey: Yes. Q26 Chairman: You have also said in response to us that you think that FOBTs in betting shops should be Category B machines. We made a comment that the stake and prize maxima that had been agreed with the Association of British Bookmakers in your memorandum of understanding with them were greater than the likely regime for Category B machines. That is why we thought they were Category B machines. This begs the question - and it may be you will think about this and respond to us in writing - whether you have a view, that, perhaps subject to Gambling Commission advice, there might be different regimes of stake and prize for Category B machines in different gambling premises. What might be suitable for a casino with a Category B machine stake and prize may be rather different from what would be appropriate for a bingo prize or for an adult gaming centre in the high street. Is it your view that there could be a range of stakes and prizes within the Category B definition? Lord McIntosh of Haringey: Yes, it is. It would not appear on the face of the Bill, of course, but certainly our view is that the Gambling Commission could well take that view, and I could see the sense in it. Q27 Chairman: So some of this machine entitlement in the small and large casinos for now Category B machines might allow them to introduce machines which are not perhaps in the market at the moment because of the existing limitations. Lord McIntosh of Haringey: This is the point I was trying to make earlier on. One of the freedoms which is being given to all casino operators is not to have types of machines which are laid down by statutory instrument but to have the freedom which you have talked about of being innovative in new kinds of machines. I think the issue of minimum stakes and minimum prizes will have to be laid down in secondary legislation and therefore would come to Parliament for decision. But, having said that, there are all sorts of ways in which you could achieve that. Q28 Chairman: Is it therefore feasible that that secondary legislation, those statutory instruments, could specify maximum stakes and prizes not generally but in relation to particular premises? Lord McIntosh of Haringey: Yes, it could do. Q29 Chairman: One of the responses to the Committee which we find most confusing is that, concerned as you are about proliferation - and we are glad that you have picked up that concern, because the Committee was concerned and it ran through our report - we did not think that FOBTs or FOBMs were appropriate to have in adult gaming centres or bingo clubs but you think they are, presumably because you will have a lower stake and prize limit on them than exists in betting shops. Lord McIntosh of Haringey: I do not want to commit myself to the fine-tuning which will not be in the legislation but I accept the principle behind what you are saying. I accept and I welcome that it is entirely possible that an effective argument could be put for having different limits for the same kinds of machines, the same category of machines, in different premises, and you might have different limits in adult gaming centres and in betting shops than in casinos. Mr Grant: Indeed, Chairman, that was already spelt out in the Government's previous proposals, where you will remember that a different maximum prize limit was envisaged for Category B machines in members' clubs as opposed to casinos. Q30 Chairman: In that case it was a restriction appropriate only to members' clubs, but it did introduce the principle, I do concede that. I am pressing you on this because you will, I am sure, be aware of the real disappointment and concern in the existing industry that if Category A machines are going to be restricted only to new regional casinos - and we will come in a moment to how many there might be - what new kind of product are they going to be able to offer? I think what you have said gives us sufficient information for us to explore that further. Lord McIntosh of Haringey: You do not need to press me. We are at one on this. Q31 Jeff Ennis: Does that mean that it will be for the Gambling Commission to determine after consultation with various sectors from within the industry the actual maximum prices for each setting? Lord McIntosh of Haringey: No. I have said it will be done in secondary legislation and therefore it will be for the Secretary of State to make a recommendation to the Department. Q32 Jeff Ennis: Presumably that will be after consultation. Lord McIntosh of Haringey: Absolutely. The consultation will no doubt be carried out by the Gambling Commission but it is for the Secretary of State and Parliament to make these decisions. Chairman: The Commission's advice will be crucial in this. Q33 Mr Page: If I could turn the questioning to the determination of where these regional casinos will be located. When you gave evidence to us initially we were told that it was going to be "a matter for the market". In the latest policy determinations or statements that have come out you gave regional planning authorities the responsibility for deciding the location of regional casinos. The Under-Secretary of State from the Office of the Deputy Prime Minister told the Committee that there would not be a national strategy for the location of casinos, "I do not think it would be appropriate for us to have pinpoints on a map strategy from a national level as to where casinos should go." Could you put the policy on the record so that we all know where we are? Lord McIntosh of Haringey: Sure. I do not think there is any contradiction here at all. I think this is a two-stage process. The first stage of a process is for regional planning bodies in England - Wales and Scotland are separate on this - to decide how many areas, if any, they want to designate as suitable for regional casino development. They can decide where those areas should be and they can decide how widely they are drawn, whether they want to include a whole local authority area, as was done in 1968, or whether they want to define it more closely. That is entirely up to them. But then that is where the market kicks in. It is for the market to decide how many regional casinos would be developed in those areas and how well they do. It is not for us - it could not be for us - to judge what kinds of casinos will be successful. It is quite possible that there could be areas designated where nobody wants to go in and start a casino. On the other hand it is quite possible that there could be an area designated where several companies see a good business case, even with more than one casino in the same area. I do not see any contradiction in that at all. It depends on the nature of the region, it depends on the approach which the regional body wants to take, and then after that it depends on the commercial judgment of the operators. Q34 Mr Page: Could I ask you to develop this a little bit. When we went to France we found there was a very strong central direction on where there would be a casino and its location, and the market came in on just how much regeneration there was going to be provided in a local area. What would you do if you had two regions both working up their plans but in fact working in conflict with each other in the viability of a regional casino? Lord McIntosh of Haringey: Do you mean the boundary between one region and another? Mr Page: Yes. Q35 Chairman: A good example might be Bournemouth and Southampton. Bournemouth is in the south-west and Southampton is in the south-east. Lord McIntosh of Haringey: If they have any sense, they will talk to each other, will they not? Q36 Mr Meale: That is not usual in local government, is it! Lord McIntosh of Haringey: If they do things which are not attractive to the market, if they designate areas which are not attractive to the market, the market will not go there. Q37 Chairman: Does the Government have an optimum number of regional casinos in mind? Lord McIntosh of Haringey: No. I think that was obvious from what I said to Richard Page. No, we do not. Our concern is to protect the public, to protect children, to protect vulnerable adults. We think that if you take the package as a whole it will do that. We do not think the protection which is provided by the pattern of identifying suitable areas and then seeing what the market will bear is at all in conflict with that protection. You do not change protection if you have incrementally one or fewer regional casinos in any particular area. Q38 Chairman: But, given your very clear message that the purposes of policy is to avoid proliferation and an increase in problem gambling, at what point does the number of new regional casinos reach a stage where there are far too many? Before you answer, could I say the British Casino Association has already sent their written evidence to us saying that the proposals you put forward will probably lead to up to 40 regional casinos being developed, and if they each have 1,250 Category A machines, that is 50,000 machines. I can quite understand your reluctance to specify a target figure, because I understand your point about letting the market choose where it thinks there are possibilities here, but, if the purpose of this is to limit problem gambling, would not 40 with 1,250 Category A machines be far too many? Lord McIntosh of Haringey: I am interested in what the British Casino Association says - I treat their views with respect, as always - but I am not in the speculation business. I can say - and I do not think anybody can contradict this - that the number of locations with Category A machines, the regional casinos, will be smaller than the number of locations with Category A machines which would have been allowed in the proposals which we put to your Committee earlier this year. Chairman: That is clear. Q39 Lord Wade of Chorlton: From what you are saying it will be entirely up to the regional organisations to decide on where regional casinos go. Lord McIntosh of Haringey: No, it will be up to them to decide which areas are suitable. That does not mean that they will go there. Q40 Lord Wade of Chorlton: What other planning system will then come in? Suppose there is strong objection to where regional people want to see a casino - there is an application for it and there are strong objections - can that go through the same process and be called in by the Secretary of State for consideration by the Secretary of State? Lord McIntosh of Haringey: All of these casinos will have this threshold which the Office of the Deputy Prime Minister states as being capable of being called in. It is not to say that they will be called in but they could be. I think it is pretty likely that if there is an application in an area which has not been declared as being suitable by the regional authority the Secretary of State would call it in, yes. Q41 Lord Wade of Chorlton: So he might overrule the regional authority in those aspects, then. Lord McIntosh of Haringey: I do not think it is overruling the regional authority because the Secretary of State is not going to interfere in what the regional planning authority does in terms of identifying suitable areas for regional casinos. He might be overruling a local authority which is likely to grant permission for a regional casino in an area not decided by the regional authority as suitable. Chairman: We will explore this further with some question. Q42 Baroness Golding: Following on what Lord Wade said, Minister, many plans for casinos are already well advanced. Is it not possible that in fact they will have been granted planning permission before these regional strategies are in place? Lord McIntosh of Haringey: The only planning permission that can be granted now until the Act come into force is for a casino which has the limitations of the existing law. In other words, it would have to be a members' club; it could not have more than ten machines; it would have the 24-hour wait; it could not advertise. If people are putting in for more casinos on that basis, that is their commercial judgment, on which I do not make any comment. Q43 Chairman: What about grandfather rights? Lord McIntosh of Haringey: Those which are in place will have grandfather rights for what they have, yes. Q44 Chairman: Are you in effect saying that no consent currently granted could be interpreted as a consent for a premises to which a regional casino licence would be granted? Lord McIntosh of Haringey: We cannot interpret consent. Consent is for a casino under the existing law. Q45 Lord Faulkner of Worcester: I thought we heard the Minister say earlier on in reply to another question that some existing large casinos could, because of their status, be converted into regional casinos by expansion. Lord McIntosh of Haringey: Yes, they could. Q46 Lord Faulkner of Worcester: That could apply to these new casinos which Baroness Golding is asking about. Lord McIntosh of Haringey: If when the new law comes in they meet the criteria for a regional casino then they will have grandfather rights for a regional casino licence, yes. But they will have to operate until that time with only ten machines and as members' clubs. Q47 Baroness Golding: Yes, but I still do not understand how this is going to solve the problem, given the grandfather rights and the number of applications that are held in the country. How is it going to solve the problem of competing cities alongside each other, as the Chairman suggested earlier, wishing to have these regional casinos? And who is going to decide ultimately who gets them? Lord McIntosh of Haringey: The market is going to decide which ones make money. Q48 Chairman: In part your policy depends on the new regional spatial strategies making provision for existing casinos. But our advice - and we will delve into this next week - is that these strategies are two to three years down the track. If the new Gambling Bill gets royal assent before these strategies are in place, how does the market develop a regional casino if you cannot have a regional casino unless it fits the spatial strategy? Or do I have the policy wrong? Lord McIntosh of Haringey: No, you do not have the policy wrong, I just do not think that is the way in which those responsible for regional strategy are working or will work. As far as I am concerned, there is no reason why regional planning authorities, regional planning bodies should not now be starting work on their spatial strategies, as London already has, for example. There is no reason why they should not be declaring, as early as possible and publicly, their policy about suitable locations for regional casinos. It is in their interests to do so and I would encourage them to do so. Q49 Baroness Golding: Could I come back, Minister, to a problem we do not seem to have solved. How does your new policy solve the dilemma of competing cities within a region both wanting a regional casino? Lord McIntosh of Haringey: As far as I am concerned, it is not competing cities, it is competing proposals for casinos. That is what the market has to determine. It is not for central government to intervene between Manchester and Salford or Dudley and Sandwell. Q50 Chairman: What about Manchester and Blackpool? Lord McIntosh of Haringey: That is for the north-west regional planning board. Q51 Chairman: But in your scheme of things both could happen. Lord McIntosh of Haringey: If the north-west planning board wants to do it that way, then that is what they can do, and they will be subject to the market judgment of those who are prepared to invest in casinos. Q52 Chairman: We will ask them that next because they are coming. Lord McIntosh of Haringey: Yes. Do. Q53 Baroness Golding: If they both get permission, how does this lead to protection of people against problem gambling? How do you prevent proliferation of Category A machines within a small area? Lord McIntosh of Haringey: You are putting the position where two cities or more than two cities close to each other are declared by one or more regional planning body to be suitable areas for casinos. The actual number of casinos will be determined not by the number of suitable areas that are being declared but the number of people who are prepared to put investment money in starting up regional casinos, and they will make their judgment on the basis of the market. Whatever judgment they make - and I am still not going to succumb to the temptation of forecasting what they might do in any particular case or in total - I can say without fear of contradiction that there will be fewer locations for Category A machines under the regime which we propose than under the regime which we proposed to you before. Q54 Jeff Ennis: Given the situation in which we find ourselves, Minister, in terms of regional planning boards and regional spatial strategies - and you said you would welcome them getting on with it now - should we as the Government not be giving them guidance and advice, to say that, because of the situation, we need to be getting on with this now, and not just leaving it to them? Lord McIntosh of Haringey: My impression is they are already talking to each other and thinking about it. I am not sure how it is that we are expected to know better than they do about the conditions in their own area. I know that all governments are supposed to be centralist when in office, but I am not centralist about this. There is already a change in the sense that the Planning and Compulsory Purchase Act 2004 is now in force and the regional planning guidelines which exist now will on commencement of the Act become regional, spatial strategies. The guidance being given by the Office of the Deputy Prime Minister is that they will wish to review as part of their regional strategies the policies that they want to adopt on casino development. There is no reason why they should not and very good reasons why they should. Q55 Chairman: We will explore this next week. What is important is that the Minister, Yvette Cooper, previously said that a regional casino, in her view, would be one where the region would take an interest in the casino development which would be regionally significant. That is to say, a large number of people from across the region would go to it as opposed to it simply being just a local facility used by the people in the town or in that particular area. Lord McIntosh of Haringey: I think "regional significance" is a term of art for the Office of the Deputy Prime Minister. It is defined. Our definition of a regional casino is consistent with the ODPM's definition of regional significance which has already been arrived at. Chairman: That is what we are going to try to test out. Q56 Mr Meale: Minister, I think you are being a bit complacent about competing cities and the situation which arises out of that. For instance, take Birmingham which has a policy of business tourism, business leisure and all the rest of it, next door to Wolverhampton. Wolverhampton has already a commitment to leisure, recreation, gaming and gambling. Birmingham is a very strong, powerful and influential city within the west Midlands area. The situation may arise where Birmingham exerts all its influence to maintain its position in terms of business and leisure tourism against a city next to it which already is into that area. What I want you to answer is what Lord Wade asked you earlier. Is it going to be a situation where normal guidelines apply? For instance, I have not always understood the guidelines for government. If somebody makes a planning application and there are objections, those can be weighed but where a public body, a local authority, says, "We have no objection" the Secretary of State calls it in. Will the normal guidelines which go with planning apply in respect of the new legislation which is coming in? Lord McIntosh of Haringey: No. The legislation we are bringing in is about the regulation of gambling; it is not an amendment to the planning policy. Existing planning guidelines will still apply. Q57 Viscount Falkland: Is there not happily an agreement between the government and the Committee on the strategy for using the machinery of destination gambling being the best measure for combating problems in gambling? Is there not an inconsistency which arises in your planning proposals to have regional casinos in town centres? If category A gaming machines are available on the high street, does this not increase the possibility of problem gambling that you and we are so keen to avoid? Lord McIntosh of Haringey: I am not sure I agree with you about what destination gambling means. Destination gambling does not mean you have to make it as difficult as possible to get to the destination. It means that choosing a destination for gambling is making a choice as opposed to constant exposure to gambling opportunities in non-gambling areas, which is what is coming to be called "ambient gambling" rather than destination gambling. We do not think that inaccessibility, in the sense of being a long way from where people are, is a necessary criterion. We think that wherever they are, whether they are in town centres, whether they are in suburban areas or whether they are outside, these casinos will not be the kind of things that people will come across in their ordinary, daily life. People, if they want to gamble in these new casinos, will choose to go to them rather than going because they happen to walk past them every day. Q58 Viscount Falkland: Could I seek to refine the definition that you make of destination casinos? Is it not a question of distance which makes the decision of he or she who wishes to gamble a key part of the decision? The fact that you have to travel an appreciable distance either for a weekend or for a holiday involves a decision to go and gamble. The fact that you have the facility on the high street, it seems to me and probably to other Members of the Committee, does create a possibility of a temptation, if I can put it as strongly as that, for people to visit the casino on the high street which makes the possibility of gambling much greater. Lord McIntosh of Haringey: I was not attempting a definition of destination gambling. I think the key point is your word "decision". People making a decision is the important thing. The decision will be different for different people. For some people, it will be driving to somewhere else for the day or the evening. For some people, it will be something closer to home. It depends on where you live, the population density and all of those things. I do not think there is any presumption in favour of inaccessibility defined as being 50 kilometres, 50 miles or whatever it may be. The important thing is, in a destination regime, you are making a decision to go where gambling takes place rather than find it thrust up against you. Q59 Chairman: One aspect of this which we have not listed as something to ask you this morning but which has occurred to me is that the licensing of these premises by local authorities will be subject to Gambling Commission advice and guidance yet to be published. Lord McIntosh of Haringey: That is right. Q60 Chairman: Is it your feeling that you would expect that advice and guidance to have regard to the problem of accessibility? You used the phrase "ambient gambling". The phrase that Baroness Golding and I might use after our visit to Australia is "street corner gambling". This may be an issue of appropriate location as something that could be covered in the Gambling Commission's guidance. Lord McIntosh of Haringey: It is certainly a matter which local authorities will have to make judgments about and, yes, I can imagine that the Gambling Commission would give them guidance on that, but I am not sure how precise the guidance could be because different conditions apply in cities, in towns and in the country. Q61 Lord Mancroft: Could we return to something Lord Wade raised earlier which is the powers of the Secretary of State to call in applications for regional casinos? Will that become by default a means of deciding an application? If that is the case, does that not lead to national planning for casinos via a back room route? Lord McIntosh of Haringey: Both we and the Office of the Deputy Prime Minister are agreed that we do not want national arrangements to plan the structure of the casino market, but they will be able to give you more detail when you talk to them next week. Our position is - and I think they share this - that we have these call in powers, and they exist not just for casinos but for all sorts of planning applications, so that the Secretary of State can support regional policy where a planning application departs from regional policy and guidance. Q62 Chairman: There is potential for quite a puncture, is there not, between the big city council and the regional planning body? If Manchester and Blackpool have made their minds up that they are committed to these casino developments that we know about that are very well advanced and the regional planning body, which is the regional assembly, likely to remain unelected in my view, is going to say, "Sorry, you can only have one" I can see some potential for friction. Lord McIntosh of Haringey: I will not share your predictions on regional assemblies but the calling in powers of the Secretary of State are intended in part to deal with that potential for friction. Q63 Lord Faulkner of Worcester: It will not make any difference whether there is an elected regional assembly or an unelected one? Lord McIntosh of Haringey: No. Q64 Jeff Ennis: When you gave evidence to us in December, you acknowledged that very large casinos can provide significant benefits to the areas in which they locate. The government's response to our report however rejects our recommendation that the very largest casinos should be required to contribute regeneration benefits. Can you explain your position on this issue? Lord McIntosh of Haringey: Yes. I think the word "rejection" is too strong. The position is that your words were "should be required to contribute regeneration benefits". We are saying that planning obligations may be sought to secure an acceptable development. That is not simply a matter of what we want. We want the same thing as you. We want regeneration; we want economic benefits, but it is a matter of planning policy. It is contrary to planning policy, as can be explained to you next week, to require casino operators to contribute regeneration benefits. I think the spirit of our policy is very much the same as yours. It is just a matter of what we can do in the Regulation Bill which is not a new Planning Bill. Q65 Jeff Ennis: That would be the main priority in terms of the RPBs drawing up their spatial strategy in locations? Lord McIntosh of Haringey: We believe that regional casinos, by their very nature, will contribute significant economic development and regeneration benefits through the casino itself and the associated ancillary activities. On top of that, what local authorities can negotiate in terms of planning gain is up to them but clearly they will want to do so if they can. Q66 Jeff Ennis: What will be the process through which RPBs will achieve regeneration benefits? Lord McIntosh of Haringey: What the regional planning bodies will do will be to choose the most appropriate locations for regional casinos in their areas and they will do it where they see regeneration as being most needed, I imagine. Q67 Dr Pugh: It would be possible for regional planning bodies, as regeneration is a necessary condition for them to allocate a particular scheme to a particular area, to come along and say, "That is where a casino would work." There are no regeneration benefits but that is where it would work. "That is where a regional casino would take off and really do good business", but it would not necessarily have any regeneration benefits to the town. They could just make a straight, commercial decision that that is where the industry would like to go? Lord McIntosh of Haringey: We are not dictating to them what they should do but I think, if anybody were to do that, that would be confusing the two roles, the role of the regional planning body to maximise the regeneration benefit by identifying areas which are suitable and the role of the industry in determining what propositions are actually viable. The point about that is that, in determining suitable areas, whatever motivation they have for doing it, they cannot ensure that casinos will be built. The people with the money have to make that decision. Q68 Dr Pugh: You said necessarily casinos have all sorts of good, economic spin-offs for the area where they are viable so they could go to an area that is substantially plush, well developed and doing rather well and it would be a very good area where casinos would also work. A regional planning body could allocate a scheme to that area, could they not? Mr Chalmers: I do not disagree with the theory of what you are saying. When regional planning bodies draw up regional, spatial strategies, what they will be doing in that process is consulting a number of people and definitely amongst them would be local authorities and regional development agencies, amongst whose responsibilities are regeneration and the economic development area. I do not think we disagree with the theory of what you are saying but people involved in consulting on the RSSs will have one of their key objectives as regeneration. Q69 Dr Pugh: It is likely that they will pick on an area that has regeneration possibilities but it is not necessary that they must? Mr Chalmers: I think so. Q70 Lord Wade of Chorlton: Is it not rather odd that planning can insist upon environmental benefits but cannot insist upon economic benefits? Lord McIntosh of Haringey: You cannot force anybody to go ahead with a development, can you? Q71 Lord Wade of Chorlton: No, you cannot, but if they do go ahead you can insist on environmental conditions that they apply. That is in planning law, but apparently from what you are saying you cannot insist on economic benefits. Lord McIntosh of Haringey: The way in which economic benefits for a region will in my view be optimised is if the regional planning body identifies those areas which will maximise economic regeneration benefits. Q72 Dr Pugh: They are not under an obligation to do it? Lord McIntosh of Haringey: No. Chairman: It is all a question of what you mean by regeneration. If there is a 20 acre site that is just a big hole in the ground in the middle of Manchester, somebody comes along, builds a casino, a hotel, five restaurants, a discotheque and a number of other things, I cannot quite see that that is anything but regeneration. The real question is: is that the appropriate place in which to have a regional casino with the potential of 1,250 category A machines. That is the question that the Committee is still a little bit confused about. Q73 Jeff Ennis: The way it seems to be developing - and obviously the commercial situation is paramount to regional casinos - it appears to me that the industry will go for the regional areas that identify large city centres such as Manchester, Birmingham or wherever as the potential regional casino development areas over and above, shall we say, more peripheral areas which do not have the same advantage in terms of population. Effectively, we are determining a policy here which is steering the very large casinos to city centres rather than to peripheral areas that will have more economic regeneration advantage. What do you say about that? Lord McIntosh of Haringey: I do not know that it is necessarily the case that peripheral areas will have more economic regeneration benefits. Certainly there is a presumption in ODPM planning policy first of all that you should not have development if you can avoid it, which kills the economic viability of town centres. There is a sequential process set out in various government planning policies about town centres. Q74 Chairman: We will explore this. Lord McIntosh of Haringey: You will get other people to answer about that but I do not want to make any assumption that either town centres, out of town centres, rural areas or any others are more or less likely to produce economic regeneration benefits. It is the regions who know that, not me. Q75 Viscount Falkland: There has been a regeneration philosophy perhaps running through all of this which goes back as far as Budd and it is something with which we all agree. When we went to France, we were impressed with their regeneration philosophy as it relates to casinos which is aimed uniquely towards the provision of benefits in the area of culture, the arts and tourism. You can do that in a dirigiste environment such as France but, going back to your remarks about what you can and cannot do within the planning regime you take that on board, but are you confident with the situation we have here that regeneration benefits of any kind can be achieved if developers are not obliged to deliver them? In your view, will regeneration take priority over other planning gains? Lord McIntosh of Haringey: I do not think this is an either/or case. This comes back to what you said, Chairman, about a 20 acre vacant site somewhere in Manchester. Regional casinos bring significant regeneration benefits as we have said by themselves, because if they are occupying a vacant site and providing economic activity, employment and ancillary employment and so on they are bringing regeneration benefits of their own. Then there is the issue of planning gain and you are saying that in France you are admiring the hypothecation of planning gain for arts, culture and so on. Of course I am sympathetic to that, but planning gain is to be obtained by local authorities for viable developments and they can do it whether they are casinos or any other development. They can define it as they wish. If they wish to see the construction of an arts centre or a conference centre, an access road, a car park ---- Q76 Viscount Falkland: Or a theatre? Lord McIntosh of Haringey: Yes, or anything they like. I guess they can do so. Examples of contributions made through planning obligations include as we say in the annex, public transport improvements, affordable housing, open space provision, social, educational, recreational or sporting facilities and environmental protection. You can add culture to those if you like. Why not? Q77 Chairman: One of the reasons why we suggested that there should be a requirement - in other words, a very overt feature of both planning and the licensing of these casinos - was to make the process more transparent and, by doing that, to avoid opportunity for corruption. How do you feel that what you are proposing will avoid the opportunity for corruption? Lord McIntosh of Haringey: The issue of corruption is a much wider issue than casinos. Local planning authorities, regional authorities, must all, whatever the nature of the development, act within the law. Yes, casinos are potentially profitable developments but so are shopping centres and so are all sorts of developments. They have to operate within the law and their decisions can be subject to judicial review but there is an additional protection as far as gambling is concerned which is the protection of the Gambling Commission because the Gambling Commission has, as one of its three objectives, keeping gambling crime free. That includes stopping people attempting to bribe regional planning authorities or local authorities. I do not think they would be very keen if there were any suggestion of corruption. Indeed, I venture to say that I do not think corruption is endemic in local government in this country at this time. Q78 Chairman: It is back to the Gambling Commission's guidance to local councils. That is going to be a very interesting feature of the new proposals. Minister and your two colleagues, you have been very generous with your time once again. It has been extremely helpful and we thank you both for your attendance. The Committee stands adjourned until 9.30 on Tuesday 6 July. Lord McIntosh of Haringey: Thank you for your consideration and courtesy. |