Examination of Witnesses (Questions 340-359)
RT HON RICHARD CABORN MP, MR ELLIOT GRANT AND MR DAVE BAWDEN
TUESDAY 2 JULY 2002
340. Minister, thank you very much indeed for coming. Would you please give our best wishes to the Secretary of State.
(MR CABORN) I WILL.
341. She was very meticulous in informing me about the reason why she could not be here and we hope that she will soon be restored to full health.
(Mr Caborn) Thank you very much. Can I just introduce my officials, who are Dave Bawden and Elliot Grant, two officials from my Department who have transferred from the Home Office to DCMS not so very long ago, a whole new experience for them.
342. Thank you very much indeed. I think Mr Bawden's transfer can be described as Llin Golding's triumph.
(Mr Caborn) Can I say, first of all, apologies for the Secretary of State and I will take your good wishes back to her, but I know also that the Committee had actually rearranged this date to suit the Secretary of State and that she was very thankful for. I know that actually she wants me to say how much she also welcomes the Committee's inquiry into our gambling proposals and, as obviously the Committee know, these are very important and indeed will be far-reaching changes and, therefore, it is right that the Committee and indeed Parliament as a whole should involve itself in the debate and considerations surrounding them, and I hope, Chairman, you know that there will be a debate on Friday on the floor of the House. Indeed our approach to these reforms, I hope, has been seen to be inclusive and indeed I think one of the facts which shows that is that we have had something like 5,000 responses to our consultation document and I think that clearly demonstrates that we have been quite inclusive. Indeed we will continue to have a dialogue with a wide cross-section of stakeholders and with those who have an interest in these issues as we develop our detailed implementation arrangements. Those on the Committee must concentrate at this stage on particular aspects of the proposals, but I hope over time you will be able to bring your scrutiny to bear on the full range of changes set out in A Safe Bet for Success. As the Committee knows, the gambling industry is an important one and, if I can just give you four statistics, the annual turnover is £46 billion a year, gross profit is £7.2 billion and indeed to the Exchequer it is about £1.5 billion annually, but I think, more importantly, it actually employs over 100,000 people in this industry. Therefore, it is a significant generator of economic activity and its products and services provide pleasure and recreation to millions of our citizens. From the Government's perspective, our proposals, as put, are about striking a new balance as set out in A Safe Bet. The proposal for controls and restrictions, which we believe are past their sell-by date, indeed will lead to this industry getting on to meet the demands of the customer and it has been significant in the discussions that gambling has effectively now become part of the mainstream leisure industry and we believe, therefore, the law should reflect that, but at the same time maintaining and in some cases considerably strengthening protections needed to ensure that gambling is, first of all, crime free, that children are protected and that people who gamble are treated fairly. We also significantly believe that our proposals safeguard the valuable contribution that the National Lottery pays to good causes and, therefore, in that context we do welcome the scrutiny that your Committee is putting to these proposals.
Chairman: Thank you very much, Mr Caborn.
343. I just want to concentrate on one particular area which is the issue of gaming machines because obviously this is somewhere where you have deviated from the policy recommendations from the Budd Report, and I am sure that is because of letters from lots of Members of Parliament, such as myself, about the pubs and clubs, working men's clubs and so on around the country, but could you just explain why you have gone down this different route?
(Mr Caborn) Well, I think what we have said is that we want to distinguish between amusement and indeed gaming and gambling and very clearly we thought that that needed to be clearly shown in our proposal and we have done that. Therefore, for amusement with prizes, we very clearly distinguish between the two because it seems to me that it is part of our heritage and, therefore, we believe we have accommodated that in a more effective way. In terms of the gaming machines, then we have graded those again we believe because in reorganising and moving the whole of the gambling industry into mainstream leisure, there needed to be some clear qualifications and we have done that, as I hope you can see, in pubs and the various categories, moving up through the licensing authorities and then into the casino, so we believe it is a very logical sequence, but we have distinguished between amusement and gaming.
344. At the moment the maximum stake in a working men's club, for instance, is 30p for a £25 potential highest prize and you are going to go to 50p as the maximum stake for a £25 prize, which is obviously increasing the stake, whereas in fish and chip shops and places like that you are intending to cut the stake from 30p to 10p. What is the rationale there?
(Mr Caborn) Well, because, as I say, we have distinguished between what is amusement and gambling and they are unlicensed premises which will have access to them by juniors and, therefore, we felt it right that they become amusements, not gambling, amusement with prizes and, therefore, the rationale is, as you say, for the 10p maximum stake and the £5 prize and that is the rationale behind it.
345. Moving on to a completely different issue about resort casinos, and in fact I originally thought we were only really going to be talking about Blackpool, but subsequently nearly every city that has been mentioned to us seems about to about to have a resort casino. Can I just ask you, one of the issues which has arisen somewhat out of this is that in America there is a direct benefit to the local community, a financial benefit often, by virtue of having a resort casino based in the area and that has been seen as one of the ways of gaining support for such an idea. That seems much more difficult in British local government law. Do you think that matters or does it not?
(Mr Caborn) At the end of the day it is a commercial judgment to be made and I think to some extent it will be how the local authority approach that as well and they have quite a power in planning. I think again, and I digress a little from your question, but we have tried to bring the local authorities into the main regulatory part of that side of the Commission both in terms of planning and the licensing. Why we do that is because we believe that local authorities have a wide responsibility for the regeneration of their areas and we want to give them the toolkit to do that, so if a local authority believes that gambling could be part of its economic regeneration development, then it has the power to do that, particularly through the planning regime. Again at the end of the day it would be whether they can attract the private sector to come into that and that is no different from anything else they may want to undertake.
346. One of the points which has been made to me recently is that it looks as if the Government next year will be looking at legislation on relaxing the laws on licensing on alcohol, liquor licensing and now we are doing it on gambling. Does this mean that, as far as the Government is concerned, the nanny state is dead?
(Mr Caborn) No, we are being realistic. One of the things which has actually struck me in this particular review is the lack of real orchestrated opposition, and I ask myself the question why. I think to a large extent in this area it is because of the advent of the National Lottery where 70 odd per cent of the British public gamble in one form or another, so, therefore, there has been a change in society and what we have done in the consultation since is to reflect what is happening in society. We are doing that and that is why I say we are moving gambling from the seedy side of the street into the mainstream leisure and we are legislating to that effect.
347. Could you give us a clue as to where you think the timetable is for change in the gambling laws? Do you anticipate round one in the Queen's Speech this year, God willing, or are you going to do it in one lot or several lots or how do you anticipate the changes?
(Mr Caborn) We have already made a number of changes and if I run down this, with casinos, we are removing the automatic ban on live entertainment by the 31st of this month, and also allowing alcohol on to the gaming floor and that is already implemented. With bingo, increasing stakes and prize limits and that will be in by 31 July. On society lotteries, doubling the stakes, sales and prize limits, that has already been implemented. On betting, removing restrictions on food and non-alcoholic drinks in betting shops, that will be done by 31 July. On machines, we are permitting notes and smart cards in machines by 31 March 2003, and with the pools we are clarifying the legality of on-line entries by 31 July of this year. On regulatory measures, there will be new money laundering controls for betting by 31 March 2003 and revised guidelines for adult machine areas in family entertainment centres by 31 March 2003. So where we have been able to take action without legislation, we have done that, but, as you know, Mr Wyatt, it is the authorities of the House which will determine whether we get a slot in the legislative timetable. We will make a bid for 2003-04 and we will just have to wait and see what the House authorities say.
348. In your thinking on resorts and also casino boats and ships and so on, do you anticipate an auction on the way the 3G was proposed three years ago or how? How will you decide, in other words, that Blackpool is better than Scarborough or Bournemouth?
(Mr Caborn) Well, we shall not be able to decide that. That is a decision which to a large extent will be taken by the marketplace. Obviously the new Gambling Commission which will come in has considerable powers, more than the Gaming Board have got, as outlined in the proposals. It will be (a) by that licensing and (b) by the planning permission which will have to be sought from the local authorities and then on to the private sector to invest, so it will not be a decision for the Government in that sense, but more a decision of the licensing authorities and the local authorities.
349. That was not the feeling of some of the people who have given us evidence this morning, so that is interesting. The second part of that, which Chris has touched on, is that in America it seems that some of the betting comes back in income to the areas where the casinos are, and that was something we heard about Blackpool, that they would like to feel that some of the money that was taken on the table and taken in tax has come back to help with regeneration. What is your view on that?
(Mr Caborn) Well, at the moment there is no hypothecation, as you know, Mr Wyatt, into taxation. There is the introduction, by the Deputy Prime Minister or Business Improvement Districts which could well be, depending on how that actually goes out, there could well be advantages, plus the infrastructure which would be put in by private sector investment in those areas, but beyond that there will be no advantage, no tax advantage other than as, as I say, through the Business Improvement District proposals and there is no system in the Treasury in terms of hypothecation.
350. Lastly, we heard evidence in Scotland, it may be different in England and Wales, that the actual fee for licensing small one-arm bandits and so on did not actually cover the costs of the procedures and we were wondering whether there was any movement where local authorities could charge what they liked so that they recoup the cost of actually issuing the licence?
(Mr Caborn) I think Mr Bawden can give you the detail on that, but all I would say is that we expect local authorities who have them and the responsibilities which they will have as part of being financially tied to those, we believe that they should be fully recompensed and that that should come out of the licensing arrangements, but Mr Bawden will be able to give you the details of that.
(Mr Bawden) Thank you very much, Minister. I think one of the issues which has fallen out of this consideration over and above the policies is the disparity and the inconsistent system of certain types of licences in terms of duration and the cost of those licences and the amount of regulatory effort which goes into enforcing licensing provisions. We were all quite surprised to see that some licences are as low as £32 for premises having machines. The intention set out in A Safe Bet is that we will for each area of gambling activity, including machine locations, assess the regulatory risk that attaches to a particular activity and then assess the amount of enforcement and administrative effort which will go into supporting a regulatory regime for that gambling activity and set fees accordingly. I think the inference of that is that in respect of some of the machine-type premises, there will need to be an increase in licence fee charges to reflect the fact that currently there is little or no regulatory inspection or enforcement activity taking place and again the Gaming Board have indicated that there is a gap in that situation for the present time and they were not responsible and with the local authorities, issuing permits for these premises at £32 a time, there were hardly any local authority resources available to police them.
351. Minister, at the moment on the current figures there are 0.6 to 0.8 per cent of people with gambling problems, which is between a third and two-thirds of a million people. Is that acceptable?
(Mr Caborn) I do not think it is acceptable in that sense, but if one is going to deny an activity to the vast majority of people in this country, and we could go through many parts of life, but I think if one draws an analogy down of the deregulation in licensing, then the same argument was put the other way, but what we want is to get social and corporate responsibility, as far as the industry is concerned, to make sure that we protect the public and we can start looking in, I think, a more serious way than has probably been the case before into what are the problems or what are the causes of problems in gambling.
352. Do you think it is acceptable, as a Minister, to do anything which will actually increase social gambling and, therefore, increase social problems?
(Mr Caborn) I do not think anybody deliberately goes out to increase it. As I say, there is a balanced judgment that one has to make with these issues.
353. Earlier today we heard from Mr Peter Dean, the Chairman of the Gaming Board, that it is likely, and I stress the word "likely", that increasing access to gambling will increase gambling problems. In fairness to him, I do not think anyone has disagreed with that, so, Minister, if we increase access to gambling, we are going to increase problem gambling.
(Mr Caborn) I think that could well be the right approach to that. As I say, in many other walks of life, if you actually deregulated the use of alcohol, then you will actually probably increase the incidence of abuse of alcohol.
354. Is that not socially irresponsible?
(Mr Caborn) I do not think it is socially irresponsible. I think what we are trying to do is to mitigate against the worst circumstances and that is in fact what we have legislated for both in terms of how we construct our responsibility and, more importantly, how we try to engage an industry which has not been engaged before in terms of providing facilities to, firstly, try and stop that source and, secondly, to mitigate that in terms of the circumstances.
355. Well, I would suggest that that is not so in fact because Sir Alan Budd, when he was asked what the motivation was for the review in the first place, one was, and I paraphrase, removing controls and restrictions, two, he suggested that the existing ones were designed to be restrictive and, when pressed, he said that actually he came from a point of view that you should not have restrictions unless you actually needed them, and he was looking at individual restriction. What I would suggest to you is that removing restrictions, which most people with any knowledge of it would suggest is likely to increase gambling problems, is, for a Minister to do, socially irresponsible.
(Mr Caborn) I do not accept that and Sir Alan Budd will defend his Report. What we have done is gone out and consulted on Budd extensively and had a dialogue with both the industry and organisations like GamCare and based upon that we have reflected on it and we have now come up with our proposals, so just as Sir Alan Budd would defend his Report as a very good piece of work, I would defend our proposals as the Government.
356. And your proposals do not seem to do anything about these machines, AWPs or whatever, as my colleague has already touched on. You say there has been no organised opposition to the proposals, but actually there have been a lot of voices voicing concerns about these machines because police off the record, and you have two ex-Home Office officials here with you who will be aware of this, off the record they say that they are a magnet for disorder, problem number one. Problem number two, children have a lot of access to them. Problem number three, the licensing and control of the licensing is very difficult to do because there are very large numbers and very few inspectors to go round. There really is quite a large number of voices which suggest that there is a big problem here and you are not addressing it.
(Mr Caborn) With all due respect, I think we are addressing that and I think if one looks at the situation we have now, then what we are proposing, considering the time particularly, in terms of amusement for prizes, the definition at the moment is drawn quite widely. We have actually redrawn the boundaries there and, as we have indicated, local authorities now in terms of the licensing of these will have the responsibility, along with other agencies like the police, like Customs & Excise, but chiefly local authorities in AWPs will have the responsibility for regulating that and inspection and we will provide the resources to do that because the industry and the licence fee will provide, so I think there are a number of areas which will actually tighten the situation to what it is today.
357. You say you will provide the resources to pay for the inspectors presumably, which is what is needed. Do you have any idea how many inspectors will be needed?
(Mr Caborn) It will be a decision of the local authority, along with the new Gambling Commission and we will obviously pitch the licence fee as one which will cover the cost and, as I said, I do think it is the corporate and social responsibility of the industry which is emerging and I think that is reflected in part by the fact that they responded to the Budd proposals for the trust and £1 million has been raised and we will be moving to make sure that that is an independent trust. I think that is the response by the industry and they know very clearly that if that does not happen, then we will take reserve powers and legislate for that.
358. It has been put to us that the amount of money received for processing licences for the very small ones is a very small fee. I have forgotten and perhaps somebody might able to remember, but it was something like £35 or £40. It is only a small amount.
(Mr Caborn) It is £32.
359. It comes nowhere near covering the administration costs. If it was quadrupled, it probably still would not. If you make the licence for the small ones cost-effective to include inspectors, not just the admin costs, but inspection as well, it is actually going to be a very high figure, I suggest. Now, that will potentially wipe out a lot of the small machines, which may actually be a good thing, but if that was the case, if you were faced with working men's clubs, fish and chip shops all saying, "But that means we can't have them any more", would you say, "Well, I'm sorry, but that is the cost", or would you back off?
(Mr Caborn) Well, I think we have made a commitment in going into legislation that we accept that we will cover the costs of local authorities licensing and policing the machines in the establishments, as we have said. They still want some details out of us, therefore, I cannot give you the figures, but that will be part of the ongoing debate and further scrutiny from this Committee and we will come back and tell you what those figures are, and we have said very, very clearly what we said in the Report how we are going to deal with this.