Gambling (Licensing and Advertising) Bill

David Nuttall Excerpts

Tuesday 5th November 2013 Commons Chamber

[Mrs Grant]

We will look at all the relevant information, and I am certainly happy to take another good look at what the Committee has said. The important thing for casinos is that they maintain a proper balance between table play and machine play, because we do not want them to become machine sheds, as some have suggested they might. I can confirm today that I am happy generally to review the issue of gaming machine provision in casinos.

[Mr David Nuttall (Bury North) (Con)]

Will the Minister tell us how the measures in the Bill are to be enforced?

[Mrs Grant]

We will go into this matter in considerable detail in Committee. Enforcement will be a matter for the Gambling Commission, which has many tools at its disposal to ensure that everyone is properly regulated and that the rules are complied with.

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[Philip Davies]

I welcome what the hon. Gentleman says. We should be very careful before going down any of these routes and should look for any unintended consequences.

I do not think that the proposal will deliver the revenue that the racing industry thinks it will. If the Government are concerned that this will entangle them in a huge legal minefield in the European Union, it seems to me to be a pointless battle to get into when it will generate no extra money for racing anyway. I therefore urge the Minister, whatever representations she receives, to resist going down that route, because I think she will be led down a blind alley, whatever the superficial attractions.

I speak as a rather modest owner of racehorses—an owner of rather modest racehorses is probably a better description, to be honest—so I am really arguing against my own interests, because in theory increasing the levy yield is supposed to benefit people like me.

[Mr Nuttall]

Only if you win.

[Philip Davies]

Yes, the levy would kick in only if my horse won some prize money, and given how rarely that happens I suppose it would not make much difference. It is a distant dream one way or the other.

I want to concentrate on taxation, because I thought that the question I asked at the start of the Minister’s speech was rather simple and got to the nub of the issue. If this is all about regulation and player protection, surely the first question the Government must have asked is how many people are currently playing on illegal betting sites. I cannot believe that nobody has looked into that, because it seems the obvious question to ask. I did not hear an answer, and I am not sure whether there is one, but I venture that it will be at least 95%. If anybody wishes to argue with that, they are welcome to intervene.

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[Philip Davies]

The hon. Gentleman may have no faith in the Treasury. I am happy to go along with the Office for Budget Responsibility, which wants to look at this to see what revenue can be expected. In fact, I am happy to look at anybody’s genuine predictions.

This is a Government Bill that is supposed to be about increasing regulation and player protection. However, the Government themselves admit in their own Treasury forecast that it will result in our moving from a situation where probably fewer than 5% of people are betting with unlicensed and unregulated sites to one where about 20% of people are likely to be betting in that way. Does that sound like a sensible strategy for a Government who are introducing a Bill to improve player protection and the regulation of the gambling industry? It is complete nonsense and it is there for all to see. This has nothing to do with regulation or player protection; it is about taxation and tax rates, as the Treasury made abundantly clear in its forecast.

[Mr Nuttall]

Does my hon. Friend think that the reason why the Treasury is using the 20% figure is that it accepts what I and, I suspect, my hon. Friend believe to be the case, which is that punters will seek the best odds and that this Bill will increase the costs on the operators and result in their offering less good odds than those who are not so regulated?

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[Philip Davies]

For once, Mr Deputy Speaker, you are quite wrong. I have been racing through my comments, which I suppose is just like a Friday, when I do the same. I am trying to go through them as quickly as possible and I do not intend to speak for hours. I was just looking at the clock, actually, thinking that I should draw my speech to a close as soon as possible.

The final point on which I want to concentrate relates to taxation and what people may wrongly associate with this Bill. There is too much focus on the big gambling companies, such as William Hill, Ladbrokes and Coral. To be perfectly honest, I do not worry too much about the effect the Bill will have on them. They are big, successful and innovative companies and I am sure they have the wherewithal to cope with the Bill’s taxation regime. I am sure it will create some pain for them, but I do not have a problem with that. The reason why I support the Bill is that there is an awful lot to be said for companies offshore having to pay taxation in the same way as small, independent betting shops in this country. I do not worry about those big companies.

What I am worried about—I hope the Minister will consider this carefully—is the Bill’s likely impact on much smaller internet companies in the gambling industry, such as innovative start-up companies. If we look at the history of the gambling industry, we see that it is often the smaller companies that have driven much of the innovation and change that have been part of improving standards in a number of areas. My concern about the Bill’s new licensing system and the Treasury’s proposed taxation rates is that those companies will be priced out of the market before they can even reach a scale that would allow them to flourish. In effect, they will be strangled at birth and that would wipe out lots of innovation in the gambling sector.

That could easily be avoided, without altering the principles behind the Bill, through the introduction of thresholds or a tiered taxation system when the tax rates are announced. Both those alternatives would mirror the current income tax system, which has tiered rates depending on the size of a person’s income, a tax-exempt threshold at the lower end and graded percentage rates. The Government should look closely at introducing a tax regime that does not involve a simple, across-the-board 15% rate, but that takes into consideration the size of the companies concerned, their ability to pay and innovate, and the investment needed for that innovation, because lots of jobs—an underestimated number—are dependent on these small technology companies in the UK.

People might say, “They’re based offshore. It doesn’t matter.” The companies are based offshore for gambling purposes, but they also employ lots of people in the UK who do their marketing and advertising and who create their TV adverts. We would lose lots of jobs in the UK if we priced such businesses out of the market.

[Mr Nuttall]

Does my hon. Friend agree not only that those companies employ British workers in this country, but that often, the workers based offshore are also from the UK?

[Philip Davies]

My hon. Friend is absolutely right. People ought to bear in mind a number of very small companies, such as Probability, NetPlay TV, Gamesys, Adobo Games and tombola, which advertises a lot on TV and is growing. Those companies employ lots of people in the UK, but if the Bill’s regime of a 15% tax rate had been in place when they started, they would never have got off the ground because it would not have been worth their while. The British economy cannot afford to lose those companies and the jobs they create. This is not about Ladbrokes and William Hill. I suspect they will survive whatever the rate of taxation. It is the smaller companies we should be thinking about.

I want to address one or two points that I do not think have been cleared up. Will software suppliers such as Oracle and Microsoft need to apply for a Gambling Commission licence, given that they are key suppliers to software providers of the online gambling and gaming industry? The Bill does not make it clear whether they will need a licence. I am not sure whether the Minister will be receptive to redrafting the Bill in order to make clear the extent to which software providers need to go down their supply chain to require suppliers to apply for a Gambling Commission licence. Italy, Denmark and France do not need software suppliers to be licensed. My understanding is that only Spain does, and that that is currently under review. I urge the Minister to consider that point and ensure that it does not happen.

Another point is the extent to which the staff and ultimate beneficial owners of applicants are required to provide personal information. With the possible exception of banks, no other industry will be required to provide so much personal detail, not just of directors but of virtually anyone in a senior position in the organisation. Why is that needed?

I support the principle of the Bill, but not for the reasons given by the Government for introducing it. Frankly, the regulation argument is nonsense and does not stack up at all. This is about taxation and on that basis I support the Bill, but only if the Government set the taxation at a sensible and affordable rate. Before we get to Third Reading, I hope the Treasury will indicate the likely taxation rates and whether it will consider tiered rates or a much lower rate. If the tax rate is too high, I may no longer support the Bill, because it could have unintended and damaging consequences.

Whatever revenue is raised will be good for the Treasury—it will get more in the future than it is getting now—so why not try the rate at 5% and see what happens? If there is no big issue, it could then increase it to 10%, and to 15% at a future date. Why go straight in at 15% and perhaps have lots of unintended consequences? It should be done incrementally: start at 5%, see how it goes and review it from there. I hope the Minister will take that on board and urge her Treasury colleagues not to damage what otherwise could be sensible legislation.