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Amendment No. 211C deals with the local implications of LAAs. It seeks to ensure that responsible local authorities and partner authorities have more regard to local improvement targets in the LAA in the exercise of their functions over and above the regard that they would pay to other targets. I understand and agree that we want local improvement targets to be taken very seriously by partners, but we have to consider how that would work. I mentioned flooding as an example. It would be inappropriate for the Environment Agency or the fire authorities to be required to have more regard to LAA targets than to dealing with basic emergency situations. One needs to build in flexibility.

I am persuaded that we have the balance right in Clause 110. The duty to have regard will ensure that authorities will have to take account of LAA targets but, if there is good reason for not doing so, they will be able to have them revised.

I hope noble Lords are reassured by this explanation of the negotiation process—I may be being optimistic—and understand where we are coming from and what we have tried to put in place to ensure that this is successful from the local authority’s point of view.

Lord Graham of Edmonton: We have been in this situation before. Many people want the responsibility for doing things but ultimately run away from putting their hands up when something goes wrong. We have all been in local government and increasingly there is a tendency to blame the Government—not government at local, district or parish level, but “the Government”. I therefore see nothing wrong in this Government, whom I strongly support, being responsible but firm.

Many people too fondly believe that the general populace is anxious to be involved in local government and local affairs. I live in Loughton, in the middle of the Epping Council area, and the noble Lords, Lord Dixon-Smith and Lord Hanningfield, know that there neither their party nor mine has a look in. That does not mean that the Liberal Democrats have it. The Loughton Ratepayers Association, which, whatever it may be underneath, is an ostensibly non-political organisation, rules the roost politically. I was active in the Enfield area when the merger took place in the 1960s. At that time, Southgate Council, with a 20,000 Conservative majority, did not have a Conservative councillor; the council consisted of councillors representing rent and rate payers’ associations.

Various devices are used by people who run under a false banner. The Government are seeking to change the system and, in so doing, to give genuine opportunities for people to combine their talents and strengths at a community level. That is a good thing, which is why I support the Government.

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Baroness Hamwee: I am reassured by the Minister’s image of a cuddly Secretary of State, with which she started her explanation. She commented separately on amendments which need to be read together; for example, our proposal for removing the Secretary of State’s right of direction with regard to variation makes sense only if the right of direction for the original is taken out, which is what we were seeking to do.

The noble Lord, Lord Hanningfield, mentioned that the statement of intent is not part of the Bill and will not be part of the Act. I do not doubt the good faith with which the Minister explained what is in the statement of intent, but we have to respond to what is on the face of the Bill, and that is what lies behind these amendments.

The Minister gathered quite a head of steam in responding to Amendment No. 208 and told me first, secondly and thirdly why she could not accept it. I would point out, fourthly, that it has a spelling mistake in it. For that reason, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

[Amendment No. 209 not moved.]

Baroness Crawley: I beg to move that the House be resumed. In doing so, I suggest that the Committee stage begin again not before 8.30 pm.

Moved accordingly, and, on Question, Motion agreed to.

House resumed.

Gambling Act 2005 (Operating Licence Conditions) Regulations 2007

7.29 pm

Lord Davies of Oldham rose to move, That the draft regulations laid before the House on 11 June be approved.

The noble Lord said: My Lords, these are three statutory instruments of several that the Government are publishing in preparation for the implementation of the Gambling Act 2005 from 1 September 2007.

We are making good progress. The draft measures take us a step closer to establishing a comprehensive new regulatory regime for the gambling industry which, for the first time, places the protection of children and other vulnerable people at its heart, while ensuring that responsible operators have the flexibility to remain profitable. The instruments have been drafted with the licensing objectives of the Gambling Act 2005 in mind, and those are worth repeating here. They are to keep gambling crime-free, to ensure that gambling is conducted in a fair and open way, and to protect children and the vulnerable. The three provisions deal with gaming machines, lottery machines and operating licence conditions. All three have, over the past year, been the subject of consultation with the statutory regulator, the Gambling Commission, key stakeholders from industry and organisations with an interest in problem gambling.

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The Categories of Gaming Machine Regulations define four classes of gaming machine, to be known as categories A, B, C and D. As required by the Act, the regulations also subdivide category B machines into five subcategories and make it clear, where there is a reference to category B machines in the Act, to which of those subcategories it shall be treated as referring. The new categories are defined in the draft regulations primarily by the maximum stake and prize that they may offer. That approach has worked well in the past and is well understood in the industry, and the Government continue to believe that it forms a sound basis for future policy. The proposed stake and prize levels take their cue from the hierarchy of gaming machines suggested by the Act. The Act determines which type of premises may make the different categories of gaming machine available for use depending on the nature and degree of regulation of the premises, whether the premises are established primarily for gambling, and the age of potential visitors to the premises.

Broadly speaking, the stake and prize limits proposed here replicate those which the Government proposed alongside the draft Gambling Bill in November 2004 and which have already been implemented over the past two years under existing legislation. The Government have committed to review the stake and prize levels proposed here in 2009.

Category A machines, with unlimited stakes and prizes, will be allowed only in the one regional casino permitted by the Act. The machines are new to this country, and it is right to take a cautious approach to their introduction. The Government made a clear commitment that we would not consider allowing other casinos to offer the machines until a proper assessment of their impact on problem gambling, based on the experience in the regional casino, had been undertaken, and that remains our firm intention.

Category B machines may be sited in a variety of premises, including casinos, betting offices, bingo halls and adult-only arcades, as well as members’ clubs and miners’ welfare institutes. Stake and prize limits will range from £2 stakes and £4,000 prize money in casinos, which are subject to the highest level of regulation, to £1 stakes and £250 prize money in snooker and other commercial clubs which are established for purposes other than gambling. Category B includes what have become known as fixed-odds betting terminals in bookmakers and are also permitted in casinos, which will have a maximum stake of £100 and a maximum prize of £500. Those machines are relatively new to the British market, and they will be regulated as gaming machines for the first time from 1 September. The Government will continue to keep the machines under close scrutiny and, if it becomes clear that they are becoming a particular source of problem gambling, we have powers in the Act to control them, which we will not hesitate to use.

Category C machines, which will be permitted in pubs and in the adult-only areas of seaside arcades, will have a maximum stake of 50p and prize of £35. Category D machines will be the only machines which children will be permitted to play. They include crane grabs and penny falls, which it is generally accepted

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cause no harm to children, and the lowest stake and prize fruit machines, commonly found at seaside arcades and travelling fairs. It is because children are permitted to play those machines that we have proposed to reduce the maximum stake on all cash category D machines from 30p currently to 10p from 1 September.

I understand the concern of noble Lords on all sides of the House about the potential impact of allowing children to play gaming machines of any kind, which was the subject of considerable debate during the passage of the Bill through Parliament. The Government made it clear during the passage of the Bill that they did not believe that there was sufficient evidence to justify a ban at this stage. However, we will watch things carefully after 1 September. The Government have a reserve power to make it an offence for a child or young person below a specified age to use a category D machine, and there will be no hesitation in using that power if the evidence justifies it.

It is also important to note that the regulations are just one part of the range of measures that are being put in place to ensure that players of gaming machines are properly protected. For the first time, it will be a specific criminal offence to permit a child to use gaming machines, other than category D machines. The Government have already prevented any further applications for gaming machines in takeaway food shops, taxi offices and other non-gambling premises. That will see the removal of such opportunities for ambient gambling in some 6,000 premises by 2009. Following extensive consultation with the industry and with problem gambling groups, the Government will shortly introduce regulations under Section 240, which will control key aspects of how gaming machines are used. They will include new requirements for machines to display information about where customers can get help and support for gambling problems and limits on how much money may be deposited in a machine.

The regulations will be complemented by the Gambling Commission’s technical standards for manufacture, which will limit speed of play and ensure that machines offered in this country will meet the strictest international standards. The Gambling Commission will also ensure that all gambling operators have in place procedures and policies to ensure proper supervision of machines, and to identify and support problem gamblers. Taken together, this will mean that we have in place one of the most robust systems of regulation for gaming machines anywhere in the world.

On the second instrument, the definition of a gaming machine included in the Act is deliberately wide. One exemption from the definition is made for machines that dispense a lottery ticket or otherwise allow a person to enter a lottery. The order specifies the minimum amount of time that must lapse between the purchase of a lottery ticket from a machine and the announcement of the result by the machine, if it is to be exempted. If no minimum time lag were imposed, there is a risk that operators would develop machines that enabled customers to enter a virtual lottery which, to the player, would be all but indistinguishable from a gaming machine.

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That is exactly what has happened under the existing legislation. Manufacturers have developed lottery machines for members’ clubs which bear all the characteristics of gaming machines, with none of the protections, and which have been able to offer prizes as large as £2,000. Only gaming machines in casinos are permitted to offer prizes at that level. This is an abuse, and a one-hour interval will ensure that this cannot happen again in the future, while allowing charities and other good causes for the first time to raise more funds by selling tickets by machine.

Finally, while there should be no apology for forcing the removal of lottery machines from clubs, the Government recognise that the machines have offered an important source of revenue for working men’s clubs and miners’ welfare institutes. To assist clubs in that position, we have proposed to introduce, with their support, the new category B3A gaming machine included in the Categories of Gaming Machine Regulations.

The Gambling Act 2005 (Operating Licence Conditions) Regulations 2007 impose mandatory operating licence conditions on casinos and bingo halls. In the case of casinos, the regulations deal with another form of equipment exempted from the gaming machine definition: wholly automated gaming tables. The regulations require that a minimum of four player positions be offered for each wholly automated gaming table. Wholly automated roulette is typical of this sort of game. A real roulette wheel spins automatically at regular intervals and is connected to electronic terminals on which customers place their bets. Wholly automated gaming tables were granted an exemption from the general gaming machine definition included in the Act, because the Government accepted that this equipment, which may be provided only in casinos—I emphasise that—merely provided an automated means of playing a real casino game.

These games will be regulated along broadly similar lines to the real version of the game: they will not be subject to any statutory stake and prize limits, the equipment must comply with strict technical specifications which the Gambling Commission will set, and operators must have in place strict monitoring policies and procedures to ensure that customers are protected. The proposal to require a minimum number of player positions is needed to prevent the development of wholly automated casino games for one or very few people, which would be indistinguishable from unlimited stake and prize gaming machines. This would risk undermining the justification for exempting this equipment from the gaming machine definition in the first place.

The regulations would impose monetary limits on any prize gaming that bingo halls wished to offer, unless it was prize bingo. Prize bingo is not subject to these controls because bingo halls will be able to offer all types of bingo under the new Act without monetary limits. Therefore, these regulations concern only prize games of other sorts played on bingo premises. Prize gaming is one of the less known and less used permissions under the Gambling Act 2005. Prize gaming was originally permitted in bingo halls

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as a low-stake form of amusement between what is known in the industry as main game bingo. The Government are determined that this form of gaming should remain at a low level.

The strict monetary limits in the current legislation have worked well in terms of controlling any potential harmful effects, and the new limits that we propose will ensure that these safeguards are maintained. During consultations, the Government listened carefully to representations from the Bingo Association that some differential treatment may be possible for adult-only premises offering prize gaming, without prejudicing the intention that prize gaming must remain at a low level. We have therefore decided to allow bingo halls, but strictly only those which do not allow under-18s to enter the premises, to offer a maximum cash prize of £50, which is double the present level. Separate regulations will impose limits on prize gaming in arcades and other venues permitted to offer this form of gaming.

I commend all three statutory instruments to the House. I beg to move.

Moved, That the draft regulations laid before the House on 11 June be approved. 20th Report from the Statutory Instruments Committee.(Lord Davies of Oldham.)

Lord James of Blackheath: My Lords, I commence with four expressions of regret. The first is to the noble Lord, Lord Davies, personally, because the poor noble Lord has already had enough of me for one day before he entered into this Chamber tonight. That he should get a second instalment this evening is a matter of regret. Secondly, I regret that this debate coincides precisely with the annual dinner of the all-party racing committee, which has rather depleted the resources of those who know much about the subject and who might otherwise have been here, instead of giving preference to their dinner. Thirdly, I regret that I made a mistake in declaring my personal interests in the Grand Committee last week, because it has been pointed out by a hawk-eyed analyst that I forgot to mention that I undertook the initial valuation of the value of the Tote on behalf of the Jockey Club. I apologise for that omission. My final regret is that we are not having an opportunity to debate all six instruments relating to the Gambling Act 2005 as an entity, because they hang together as one package. Taking them separately diminishes the strength of our argument.

In Grand Committee, we had a clear view that we were talking about instruments that had two primary purposes. The first was to overcome the problems that would result during Recess in the event that the Gambling Act came into force, because at the moment there is no legitimacy beyond 1 or 3 September for the continuity of the Tote, unless its licence to trade as an exclusive pool-betting arrangement is allowed to continue. Secondly, the levy must be reinstated if it is to have any means of supporting the economic vitality of racing in this country. We recognise that racing carries a total employment of between 150,000 and 200,000 people, and is therefore vital to the rural communities of this country.

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The instruments before this House simply do not do the job and they are not, as they stand, a package which will do what the Government believe, expect and want of them.

7.45 pm

Lord McIntosh of Haringey: My Lords, the noble Lord spoke on the order and regulations for something like 15 minutes in Grand Committee. I have a proposition to put to him. If he does not repeat his speech, I shall not repeat mine. At the moment, he appears to be speaking about something quite different which is nothing to do with these instruments—the Tote. But if he proposes to repeat what he said last week, when I thought that he talked himself out, would that not be a great pity?

Lord James of Blackheath: My Lords, I appreciate the noble Lord’s comment. However, I have read the Hansard account of what was said last week and I found a number of major errors committed by all of us—myself included. It would be welcome if they were corrected, because they go to the core of what is to happen.

I am not here to talk about the Tote. I have tried to exclude myself from that altogether, but one or two comments were made in error last week. Two of them relate to the Tote. The first—

Lord McIntosh of Haringey: My Lords, we are not debating the Tote this evening. I must ask the noble Lord, on behalf of the whole House, that we debate these instruments, not issues that are not contained in them.

Lord James of Blackheath: My Lords, the noble Lord emphasises the point that concerns me, which is that the instruments should have been taken as an entity to allow them all to be interrelated. However, I shall take the admonition that we should not now refer to the Tote at all. However, let us deal with my concerns on the instruments as they stand. First, I do not believe that they do the job expected of them by the DCMS in this instance. The repeat capacity of the ability of anyone playing a FOBT—a fixed-odds betting terminal—to increase the value of his stake by the repeated pressure of one touch pad has not been addressed by any statement to show how that will be controlled to fulfil what the instrument actually states.

Secondly, the statements that have been given in response to the Merits Committee on the control of so-called cartoon racing have not brought them within a clear definition of a FOBT, because there is still no explanation as to how that overcomes the fact that the race itself is separated from the betting medium. That is an outrageous means by which the bookmaker is able to control not only, perhaps, the outcome, but the value of the price returned for any horse deemed to be the winner. I do not accept the assurances given in written answers to the Merits Committee that a process is in place to police that. I would want to see the DCMS insisting upon and obtaining audited information to show that there is a systems audit that demonstrates the fairness of that system. It is not a FOBT, because there will always be a separation of betting from the screen. I cannot accept that there is a weighting of prices derived on

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the prices being offered from the money being bet on the screen, because I do not see that that is how the betting takes place. That issue is very serious.

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