Arrangement of Business
The Deputy Chairman of Committees (Lord Geddes) (Con)
My Lords, if there is a Division in the Chamber while we are sitting, this Committee will adjourn as soon as the Division Bells are rung and resume after 10 minutes.
Energy Bill Relief Scheme and Energy Bills Discount Scheme (Amendment) Regulations 2024
(1 week, 2 days ago)
Grand CommitteeRead Hansard Text Read Debate Ministerial Extracts
Lord Hunt of Kings Heath
That the Grand Committee do consider the Energy Bill Relief Scheme and Energy Bills Discount Scheme (Amendment) Regulations 2024.
The Minister of State, Department for Energy Security and Net Zero (Lord Hunt of Kings Heath) (Lab)
My Lords, these regulations, which were laid before the House on 16 December 2024, amend two schemes created by the previous Government in response to the energy crisis.
The amendments address an issue that was not considered in the rush to get the schemes into operation but which has now come to the fore as the schemes have been brought to an end. The issue is technical: both the energy bill relief scheme and the energy bills discount scheme, which I shall refer to as EBRS and EBDS respectively, supported non-domestic energy users, including businesses and heat networks. EBRS supported energy bills from October 2022 to March 2023, while EBDS supported bills from April 2023 to March 2024. Both schemes operated on a “claim back” model, meaning that suppliers paid out the discount to their customers before recouping those costs from the department.
Scheme funds were paid out on estimated and actual meter readings. As actual meter readings are received by energy suppliers, they rebill their customers, replacing earlier estimated bills, and the discount paid out by the department becomes settled. The department calls this process “actualisation”. Suppliers then come back to government to recover additional discount they have paid out or to pay back any excess discount resulting from an initial overestimation of the energy. This is right: the intention behind the schemes has always been for government to fund the discount to the consumer and not the energy suppliers.
The regulations require the Secretary of State to determine when a supplier should leave the scheme, based on an assessment that there will be no further material amount owed from the department to a supplier or vice versa. One of the supporting criteria to make that assessment is that a supplier has billed customers on actual meter readings to a threshold of 95% of gas supplied and 97% of electricity supported under the scheme, wherever possible. Once a supplier has left the scheme, it is unable to claim back any further money from the department for discounts that it has paid out on behalf of the schemes.
However, as the regulations currently stand, suppliers are still required to pay out discounts on any newly billed energy supplied during the periods of either scheme, when this situation could arise through no fault of their own; for example, when customers have moved premises and failed to notify the supplier or have been tardy in allowing access to meter readers. This could result in suppliers funding government support without the ability to recoup these costs from the department. This is contrary to the intention of the schemes. As a result, suppliers have been reluctant to leave the schemes, which must come to an end in a timely manner.
The amendments in this statutory instrument remove the obligation on suppliers to provide the discounts to customers, except in instances where the consumer has lost out due to poor practices by their energy supplier. In these instances, we have provided carve-outs to balance the interests of suppliers with the support and protection of consumers.
The first consumer protection is, when a supplier is rebilling a customer, it must still apply the discount for energy which was previously billed before the discount duties, even if the newly calculated additional consumption is exempt. The second protection relates to unbilled customers. When a customer receives a bill that falls within the scheme period, a supplier would be required to pass on the appropriate discount if it has not previously provided that customer with a bill. This is to ensure that the original policy intent of providing consumer support is realised. The third and final consumer protection is when unreasonable delay, or another failure on the part of the energy supplier, has led to the energy not being billed accurately or at all when the discount duties applied. An example might be if the bill was sent unreasonably late after exit from the scheme, rather than before. In those circumstances, the customer should not and will not lose their entitlement to the discount.
There is still an obligation on suppliers to repay the Government any discount they have recovered; for example, if actual consumption was lower than the estimated consumption and a discount is clawed back. Should any dispute arise between suppliers and customers in relation to these carve-outs, the resolution mechanisms would be those normally used in the industry: via a complaint to the Energy Ombudsman, where available; investigation and potential sanction by the regulator; or court action.
The amendment applies to energy suppliers in Great Britain. Separately, the regulations also amend the Energy Prices Act 2022 to allow the devolved Administration in Northern Ireland to make amendments to address this issue in the Northern Ireland scheme. This is because their power to amend their equivalent legislation has expired.
In very limited circumstances, it is possible that a customer could lose out on some entitlement to discount. If a supplier had already exited the schemes and had underestimated a customer’s energy consumption, the customer would not receive the discount on the additional newly billed energy unless the supplier was at fault, as I have just described. Given that the vast majority of energy supported by the schemes is based on actual meter readings, we do not expect many customers to be in this position.
Furthermore, our analysis shows that suppliers tend to slightly overestimate and that customers reduced consumption during the energy crisis, switching off non- critical operations to reduce costs. None of the suppliers that have left the scheme to date, nor any of their customers, has reported this risk materialising. We expect and hope that this amendment will give suppliers confidence to exit the scheme without the risk of ongoing financial liability through no fault of their own.
Energy prices for non-domestic consumers have dropped following record peaks, but of course we recognise that they remain high and pose issues for some businesses. We believe that our mission to deliver clean power by 2030 is the best way to break our dependence on global fossil fuel markets and permanently protect bill payers, including non-domestic consumers. In the short term, the Government are taking action to better protect businesses from being locked into unfair and expensive energy contracts. Last year, the Government launched a consultation on introducing regulation of third-party intermediaries such as energy brokers. This is aimed at enhancing consumer protection, particularly for non-domestic consumers. The consultation has now closed, and a government response will follow in due course.
The Government are also empowering businesses to challenge unfair and poor service from their suppliers. Since December last year, SMEs with fewer than 50 employees or that meet energy consumption or financial thresholds can now access free support to resolve issues with their energy supplier through the Energy Ombudsman service. This expands the service to 99% of British businesses, allowing them to access up to £20,000 in financial awards.
I propose to the Committee that this is a very sensible statutory instrument dealing with some issues that have arisen. It follows on from the previous Government’s decision and is consistent with what they sought to do. I beg to move.
Baroness McIntosh of Pickering (Con)
My Lords, I congratulate the Minister on the stamina he has shown over the last 48 hours. I welcome these regulations; had we remained in Government, I am sure that we would have done exactly the same—as was also said in the debate in the House of Commons.
The Minister alluded to the fact that energy prices are still quite high. I understand that within one of these regulations there is provision for an off-grid payment of £150. If that is the case, will his department look favourably on charities, public sector bodies such as schools and hospitals and, as he rightly mentioned, micro-businesses of under 15 employees—or even 50—so that they might remain eligible for that?
The noble Lord referred to unfair, and what I would call sharp, practices that are perhaps still going on. This is only anecdotal, and I cannot prove it, but there was a restaurant not too far from this building which I think partly closed and changed hands because they had an unbelievably high electricity bill in January last year, so I am delighted to hear that the Government have launched this consultation with a third party. It would be interesting to hear more about how those brokers might operate. What provision will be made to ensure that the brokers are reliable and able to operate within this sphere?
With that, I pay tribute to the previous Government for their work and the protection that was given to non-domestic customers, which was very welcome at the time. I recognise that we are still in a period of high energy prices and, with those few questions, I wish the SI a safe passage.
Lord Offord of Garvel (Con)
My Lords, I commend the Minister for a pretty spectacular explanation of what is quite a complicated and technical exercise. These schemes were introduced, as was said, between October 2022 and March 2024 and, as we know, they gave much-needed assistance to non-domestic customers. We are dealing now with a small yet significant minority of consumers who have not received their finalised bills, due to ongoing delays in the actualisation process. My understanding is that these delays arise mostly from the use of estimated rather than actual meter readings, but they have created significant complexities for both suppliers and consumers, especially when one of the issues around this is the concept that the supplier can become “off-boarded” when they hit the actualisation thresholds, as mentioned by the Minister, of 95% for billed gas and 97% for billed electricity, which means they are no longer required to apply further discounts.
We agree that this is a legacy issue that needs to be dealt with. Our only issue—I am sure that the department is working on this—is the need to deal with unintended consequences, such as where a supplier is off-boarded but still has unbilled energy due to these administrative delays. The amendment allows for discounts to continue only in cases where a billing failure has occurred, but does that provide sufficient protection to the consumer if the errors are on the supplier’s part, for example?
Further issues might be that the amendment extends the rule limiting discounts on variable price contracts. Discounts can only be reduced, not increased, post off-boarding. Does that sufficiently accommodate fluctuations in wholesale energy prices that suppliers may face? Does it risk creating an imbalance in terms of supplier and consumer rights? Then there is the issue of disputes. While the original scheme allowed for disputes to be referred to the Secretary of State—a horrendous concept—the amendment seeks to close that avenue. I am sure that the department is all over this, but we need to ensure that, in the technicalities of actually making this happen, we get a fair balance between supplier and consumer rights. Otherwise, we support the passage of this SI.
Lord Hunt of Kings Heath (Lab)
My Lords, I am grateful to the noble Baroness, Lady McIntosh, and the noble Lord, Lord Offord, for the welcome that they gave to the statutory instruments. I say to the noble Lord that we think the statutory instrument will be sufficient. The carve-outs, which are relevant to the points he raised, are aimed at ensuring that consumers will be well protected from poor operational practice by suppliers.
The noble Lord also asked about disputes. The fact is that, if a supplier cannot resolve an issue with a customer satisfactorily, the customer can either directly refer the matter to the ombudsman, if eligible, or to Ofgem, or get in touch with the department, which will then refer the matter to Ofgem. Ofgem will then review the customer’s complaint and decide whether a formal investigation into the supplier is required. If the customer has exhausted other routes, they are obviously also able to seek civil restitution through the courts, but I hope that that would not normally be necessary.
On the non-domestic alternative fuel payment, it was indeed part of the support programme. Obviously, it served its purpose, and I accept the point the noble Baroness raised.
I have mentioned the carve-outs. I understand the issue about energy bills, and we know the pressure that this causes. We debated some of these matters extensively —I was going to say last night but it was actually this morning. I might leave it there. I am most grateful to noble Lords.
Electricity Capacity (Amendment) Regulations 2025
(1 week, 2 days ago)
Grand CommitteeRead Hansard Text Read Debate Ministerial Extracts
Lord Hunt of Kings Heath
That the Grand Committee do consider the Electricity Capacity (Amendment) Regulations 2025.
The Minister of State, Department for Energy Security and Net Zero (Lord Hunt of Kings Heath) (Lab)
My Lords, this instrument, laid before the House on 16 December 2024, seeks to make technical improvements and changes to the capacity market scheme—the Government’s main tool for ensuring security of electricity supply in Great Britain.
The capacity market was introduced in 2014 and is designed to ensure that sufficient electrical capacity is available to meet future predicted demand, to maintain the security of electricity supply. It provides all forms of existing and new-build capacity with the right incentives to be on the system to deliver when needed. It covers generation, storage, consumer-led flexibility—formerly known as demand-side response—and interconnection capacity.
Through capacity market auctions, held annually, one year and four years ahead of delivery, we secure the capacity needed to meet future peak demand under a range of scenarios, based on advice from the capacity market delivery body—the National Energy System Operator, or NESO.
Since its introduction in 2014, the capacity market has contributed to investment in just under 19 gigawatts of new, flexible capacity needed to replace older, less efficient plant as we transition to a net-zero economy. To date, the capacity market has been successful in ensuring that Great Britain has adequate electricity capacity to meet demand, and continues to be required to maintain security of supply and provide investor confidence. To ensure that the capacity market continues to function effectively, we regularly make adjustments to the implementing legislation, based on our day-to-day experiences of operating the scheme.
The draft instrument makes changes to eight regulations, to deliver technical improvements and changes that support the functioning of the capacity market, which have been identified and explored through consultation. This will improve security of supply. It will also accelerate investment in low-carbon technologies, increasing the role that they play in the capacity market, supporting the Government’s 2030 clean power mission.
Stakeholder feedback has identified a need to review the wider timescales associated with the settlement body’s calculation activities. This ensures that timelines for settlement remain appropriate. The “settlement body” refers to the Electricity Settlements Company, a private company owned by the Secretary of State, established to oversee the settlement of payments to and from suppliers and capacity providers. The draft instrument amends the timelines for the settlement body’s determination so that they are in line with those concerning penalty charges.
As part of the requirements under the Capacity Market Rules, some capacity market units must complete an extended performance test. This provides assurance that a capacity market unit from a storage-generating technology class can deliver capacity for the relevant duration. In effect, extended performance tests are a sub-function of the satisfactory performance days requirement, which requires a capacity provider to demonstrate availability during a delivery year. The policy intent is that failure to meet extended performance tests should have the same consequence as failure to meet satisfactory performance days. The draft instrument ensures that the regime is consistent and that the two demonstrations of performance are treated in similar fashion when failed.
To assist industry prequalifying for the capacity market, this draft instrument will further clarify that a capacity market unit can be prequalified only where no contract for difference has been awarded, unless the contract for difference in question has expired or terminated. The instrument also further clarifies that a contract for difference means a contract for difference or an investment contract entered into with a contract for difference counterparty, which has always been the policy intent.
Finally, multiyear agreements provide greater revenue certainty and are likely to incentivise further low-carbon participation in the capacity market, which improves market liquidity and can lead to a greater diversity of technologies. A new nine-year capex threshold introduced by this draft instrument will ensure that new and refurbishing projects, with costs that fall between the existing thresholds, are not prevented from entering the capacity market.
The instrument also enables participants to access a three-year agreement with a capex threshold of nought per kilowatt hour, available to low-carbon new build and unproven demand-side response capacity. It will remove barriers for low-carbon, low-capex technologies to access longer agreements in the capacity market. To ensure that projects meet the definition of low-carbon capacity, a low emissions determination, which is a decision that the delivery body may take, has been introduced by this instrument as a further reviewable decision type.
Two public consultations were conducted on the measures in this instrument. It contains a second phase of capacity market reforms, which was consulted on towards the end of 2023, on strengthening security of supply and accelerating investment in low-carbon technologies. Respondents were broadly supportive of the proposals included in this instrument.
We have also made a number of technical amendments to the Capacity Market Rules that support the regulations, which, as I said earlier, were laid before the House on 16 December 2024.
In conclusion, this is another instrument that follows from work that the previous Government did. It is self-evident that these technical changes are helpful and necessary, and I commend the regulations to the Committee. I beg to move.
Lord Offord of Garvel (Con)
My Lords, these regulations propose amendments to the Electricity Capacity Regulations 2014. While presented as essential to streamline the capacity market, we must be careful around one or two of the implications that arise.
As has been outlined by the Minister, the proposed changes stem from two public consultations held in 2023, which received broad support—especially for increasing the role of low-carbon technologies. However, there are some concerns: how will these regulations ensure long-term energy security, and will they genuinely accelerate the shift to a low-carbon system?
First, the Government seek to remove the 10-year reapproval requirement for the capacity market, allowing it to operate indefinitely without regular reviews. While this may offer stability, we ask whether this move risks stagnating the market’s ability to adapt to fast-evolving technologies and changing energy needs. Do we not need to maintain regular scrutiny of such a critical, dynamic sector, especially in the next 10 years when technology is moving rapidly?
Secondly, the regulations aim to establish the capacity market as a permanent fixture and remove any reference to it as temporary. This again raises the question of whether this shift represents a real commitment to security of supply or whether we are entrenching an outdated system that may fail to evolve with the energy sector and the technological advancements to which we have referred.
Thirdly, while the regulations repeal provisions from the EU electricity regulation that are deemed unnecessary, we must ask whether we are simplifying the system too much and whether this could leave gaps that harm flexibility and responsiveness during crises.
Fourthly and finally, the Government are focusing on low-carbon technologies. However, can renewables, such as wind and solar, provide the same reliability as traditional generation during peak demand or system stress? Will prioritising low-carbon technologies risk energy security? How will the Government ensure that the capacity market remains competitive and attracts investment in both low-carbon and reliable generation technologies?
These regulations raise a couple of critical questions. First, how will the Government ensure that the removal of the 10-year reapproval requirement does not result in stagnation, particularly as energy generation technologies evolve rapidly? Secondly, given the emphasis on low-carbon technologies, what measures are being taken to ensure that infrastructure is in place to integrate these technologies into the grid without compromising system reliability?
Lord Hunt of Kings Heath (Lab)
My Lords, I am grateful to the noble Lord, Lord Offord, for his general support for what is proposed in these regulations and for his specific questions in relation to the implications for long-term energy security and whether there is a risk of stagnating the market. He also asked whether we are going to keep this under regular review.
I should start by saying that the capacity market has been operating since 2014 and has worked pretty well. I acknowledge that. We see no reason why we cannot continue with it. In a sense, the permanent nature of the system that the noble Lord referred to is a perfectly reasonable response to the fact that the system is tried and tested. I should also say that it has supported investment in just under 19 gigawatts of new-build flexible capacity, including low-carbon technologies, since its introduction. That is solid evidence to suggest that the system can deliver the capacity needed to meet future peak demand and respond to the kind of challenge that he raised about introducing low-carbon technology into the frame as older capacity starts to be replaced.
I take the noble Lord’s point about keeping this under review. We absolutely are going to keep this under regular review. We have to do so. That is so important. We are committed to ensuring that the right policy tools are in place for delivering the secure and affordable energy system we need. I can confirm to the noble Lord that we regularly assess the performance of the capacity market and explore improvements to the scheme. We do not hesitate to bring to your Lordships’ House and the other place further changes in relation to further statutory instruments.
This is all intended to improve security of supply. We believe that accelerating investment in low-carbon technologies can increase the role they play in the capacity market. Our evidence since 2014 suggests that the mechanism that we have put in place is going to work. I am quite confident that we are right to say that this should be a permanent feature. Having said that, I thank the noble Lord for his constructive response to this SI.
Gambling Levy Regulations 2025
Baroness Twycross
That the Grand Committee do consider the Gambling Levy Regulations 2025.
Relevant document: 13th Report from the Secondary Legislation Scrutiny Committee (special attention drawn to the instrument)
The Parliamentary Under-Secretary of State, Department for Culture, Media and Sport (Baroness Twycross) (Lab)
My Lords, I shall speak also to the Gambling Act 2005 (Operating Licence Conditions) (Amendment) Regulations 2024. Both sets of regulations were laid before the House in draft on 12 and 10 December 2024 respectively.
Two decades have passed since the Gambling Act 2005 was introduced. Leading gambling firms operating in this country are now some of the world’s most successful companies. With cutting-edge technological capabilities and deep insight into customer behaviour, the gambling industry and gambling behaviours have undergone monumental change, from the smartphone to the huge increase in online gambling. Our manifesto set out a commitment to
“reducing gambling-related harm … strengthening protections”
for those at risk. We know that harmful gambling can have massive financial, emotional and mental health impacts on individuals, families and communities across our country.
The 2023 gambling White Paper laid the foundations for what is before us today as we introduce draft regulations for stake limits on online slots and a statutory gambling levy to fund research, prevention and treatment. The Gambling Act 2005 (Operating Licence Conditions) (Amendment) Regulations 2024 introduce statutory maximum stake limits on online slots games of £5 per game cycle for adults aged 25 and over, and £2 per game cycle for young adults aged 18 to 24.
Online slots are the highest-risk gambling product. They have the highest rate of binge play and the highest average losses of any online product, and are associated with long playing sessions and high levels of use by people experiencing gambling harm. Online slots are also the fastest-growing gambling product. In the past five years, this yield has grown by 61% and growth is not slowing down. However, there are currently no statutory stake limits for online slot games, unlike their land-based counterparts. As the popularity of slots grows, so does the risk for vulnerable people. Now is the time to act and stem the growing tide of unaffordable losses for people most at risk of gambling harm.
We have designed these stake limits to target those most at risk of harm while ensuring that the impact on operators is proportionate. The lower staking limit for younger adults is an important intervention, as our research showed that younger people may be at an elevated risk of gambling harm. The industry’s trade body, the Betting and Gaming Council, welcomed the decision to introduce stake limits. If these regulations are agreed, there will be a transitional period to ensure that gambling operators have sufficient time to implement the changes.
Today, we are also proposing draft regulations for a statutory gambling levy. From April, all licensed operators will be required to pay an annual levy to the Gambling Commission. The rates at which licensed operators pay the levy are set down in the legislation and licensees are at risk of losing their licence if they do not pay. The levy represents a watershed moment: a significant uplift in the investment dedicated to this area; greater government oversight; and a renewed commitment to further understanding, tackling and treating gambling harms.
The significant contributions that the gambling industry has made to support research, prevention and treatment since the introduction of the Gambling Act 2005 have been crucial. This has allowed an expansion of the support and treatment options available for those in need. I am clear that the third sector will continue to play a key role in the future of research, prevention and treatment, but we now need a sustainable and equitable funding system so that all licensed gambling operators are paying their fair share. The levy provides us with an opportunity and the resources to put in place the right projects and services, clear objectives and robust governance.
To create a world-leading funding and commissioning system, we are mobilising existing expertise and infra- structure. Working with UK Research and Innovation, NHS England, appropriate bodies in Scotland and Wales, the Gambling Commission and the third sector, we are transforming the current system to deliver better access, outcomes and services for people across our country. To ensure that there is sufficient trust, expertise and authority in the use of the levy funding for prevention, I confirmed to the House this morning that we will appoint the Office for Health Improvement and Disparities in the Department of Health and Social Care to take on the role as lead commissioning body in this area for England, alongside appropriate bodies in Scotland and Wales.
Prevention remains a crucial part of the government’s efforts to tackle gambling-related harm. An effective prevention plan seeks to identify the right mix of interventions to be applied at both the population and individual level. That is why the Government are increasing dedicated investment, allocating 30% of levy funding to the prevention stream, alongside the significant funding allocated for research and treatment. Ring-fenced investment in this area will help to encourage innovation and support a strengthened, integrated and co-ordinated approach to prevention in Britain. Working closely with appropriate bodies in Scotland and Wales, OHID will develop a comprehensive approach to prevention and early intervention, supporting improvement across the respective nations.
I want to recognise the leading role that GambleAware has played. Its work to raise awareness of gambling harm and provide support for those in need has been invaluable. We want to build on the successes of the current system while improving and expanding the system to better serve those at risk. Until now, financial contributions from operators have been the only source of funding for the sector. This funding has established the National Gambling Support Network, overseen by GambleAware, which has helped people in need across the country. However, the levy will mean that there is sustainable, ring-fenced and trusted funding for the first time. This will be used across Great Britain for vital treatment, better understanding of the causes of harm and early intervention to support greater awareness and reduce stigma.
My decision on prevention is about building the future system on the strongest foundations. Through the levy, we are investing £100 million of public money to tackle gambling harm and it is right that key commissioning decisions on research, prevention and treatment are made by statutory bodies to ensure that funding is spent appropriately. This is why we are appointing OHID alongside UKRI and NHS England.
Robust government oversight will ensure that levy funding is getting to where it is needed most. The Government will set clear objectives for the system to maximise value for money. We will establish a levy board as the mechanism for the Government to closely monitor spending and the overall effectiveness of the levy. We want to be led by the evidence of what works across the system and so, alongside the levy board, we will organise an advisory group.
We are confident that we have designed the levy in an effective and proportionate way. It has been a priority to strike the right balance between managing impacts on licensees and ensuring that operators are paying their fair share. I recognise that some gambling businesses are facing a tough fiscal environment. These regulations reduce levy rates for a number of licensees compared with the rates proposed in the previous Government’s consultation. Both the Tote and on-course bookmakers will also pay the levy at rates much lower than other land-based operators such as casinos and bookmakers. Online operators will be required to pay significantly more.
These regulations represent the beginning of a new phase for gambling harm reduction, one where people in our country are better protected and aware of the risks of harmful gambling. The levy is a crucial first step to delivering this and I look forward to discussing it further in the debate today. I beg to move.
Lord Kirkhope of Harrogate (Con)
My Lords, first, I confirm that I have not been promoted and nor am I even a Whip who is able to take over in certain circumstances. I am not sure whether a colleague of mine will be here to answer this debate from the opposition point of view.
I would just like to say a few words because I know others wish to speak who are far more up to date in many ways than I am. I was the Minister in the Home Office responsible for gambling—or controlling gambling, I should say, perhaps—back in the mid-1990s. I welcome in general anything that improves the services available to those who have addiction or who are likely to be vulnerable to gambling, but I always took the view when I was Minister that we could develop these matters in a simple, one-by-one regulation way rather than in a great way. I was therefore very disappointed when the Labour Government came in in 1997 to see that they took a very strong and comprehensive approach towards gambling, which I never thought was appropriate.
I have worried ever since about its effect. I spoke in the House on an Oral Question earlier this week and said how disturbed I was at the level of gambling in front of all of us, particularly young people, today, both in television advertising, which I would not accept was sensible or proper, and, as we all know, in the burgeoning amount of advertising in sport, such as at sports grounds and in sponsorship. There has been a dramatic increase in the amount of gambling in this country, which has been deleterious and unacceptable. Therefore, I welcome anything that is going to help. I want to ask a couple of questions, if I may, on this.
First, the use of the levy—directional and focused—seems to be correct, but we need a little more flesh on the bones regarding the delivery of support. We have talked about organisations. A number of organisations, some known to the Government and some in the charity sector and so on, are there to look after people who have fallen for gambling in the wrong way and are looking after their addictions and so on. Will the dispensation of the money raised on this levy be wide enough and comprehensive enough to cover all the areas in which people are vulnerable and suffering? I am not sure that that is the case, so I hope that the Minister will give us some reassurances. I must say that I am not happy with that element.
Secondly, is the administering of the levy sufficiently watertight, or are there ways in which it can be avoided? The list of specifics where the levy will be applicable is fairly comprehensive, but I still feel that we need to be clear that this is an obligatory levy that cannot be avoided by various means that might be used.
Finally, am I wrong to assume that the Government will not be doing much else about gambling advertising? I would like to know because, as I have pointed out and as other people have raised with me on many occasions, this level of advertising is unacceptable, but we never seem to deal with it—indeed, it burgeons even more.
Lord Foster of Bath (LD)
May I ask the noble Lord to go a little further than saying it is “unacceptable”? There is very clear evidence—more in this country than in any country in the world—that gambling advertising, marketing and sponsorship is causing considerable gambling harm.
Lord Kirkhope of Harrogate (Con)
The noble Lord is right. I do not think I can go much further because I am just making my views clear. I have certainly had direct contact with a number of organisations, in the charity field and other fields, which think that the matter is out of hand. I said it was “out of hand” in the Chamber earlier this week. It is out of hand. Consequently, while I welcome these provisions, I am pleading with the Government to get greater control of this, because it is unacceptable. Of course, online gambling is another area where it has burgeoned completely, and that seems to be in greater need. I know there is reference to that in the second of these two statutory instruments. It is completely out of control as well.
I am sorry to be so negative about this. I welcome the levy, at least, and, notwithstanding my questions about dispensation, I support the Government in what they are trying to do.
Lord Watts (Lab)
I very much welcome this legislation, which is overdue. I was a member of the Select Committee that looked at gambling, and we were very concerned about the lack of action, so I am pleased to see that the Government are taking action and have brought this forward.
I have two questions, the first of which is about the distribution of resources. We found that there were a number of organisations which were sometimes in conflict with each other. There needs to be co-ordination to make sure that we get effective spend and that spending results in the things that we want to see. Secondly, I am concerned about the growth of offshore gambling. It grew by a sizeable amount last year and is growing very fast. It is unregulated and will not be touched by this legislation. Will the Minister say something about that? It is of concern to the industry as well as to the public.
Overall, this strikes the right balance. I disagree with the previous point that there is plenty of evidence; there is not plenty of evidence that we can scrutinise. There needs to be proper scrutiny and accountability.
Lord Foster of Bath (LD)
Would the noble Lord acknowledge that, in this country, there are 597 registered documents demonstrating a clear link between gambling advertising and gambling harm? That is more than in many European countries put together which, based on less evidence, have chosen to massively limit gambling advertising.
Lord Watts (Lab)
I agree that there is a lot of information out there, but I would like to see it scrutinised more professionally. Part of the problem we heard in the committee was that access to data made it difficult for the academic studies that were carried out to find the evidence needed. I hope that the instrument will allow academics to look at issues with gambling and the prevention of gambling addiction, and that it will be an effective measure to help people to avoid this trap.
The Lord Bishop of St Albans
My Lords, I declare my interest as a member of Peers for Gambling Reform. I congratulate the Minister on today’s announcement, which is very welcome as this is a major health issue. It is worth reminding your Lordships, a number of whom were on the Select Committee, of the shocking statistics and why we are having this debate. More than 60,000 teenagers and a third of a million adults are formally diagnosed with some sort of gambling addiction. It affects the lives of around 2 million adults. It is a debateable figure, but possibly more than 400 people take their lives over this serious issue every year, so I congratulate the Government on taking this seriously.
I will not say too much, because my colleagues will speak on this more, but I wonder if we could be told the rationale behind the £5 maximum stake. My understanding of the research is that it needs to be much lower, so it would be very helpful to understand how His Majesty’s Government got to that figure.
The introduction of this levy is hugely helpful. For many years, operators made extensive profits—we have used that phrase in the House time and again—by privatising the profits and nationalising the costs. There are 14 gambling clinics paid for by us, via the NHS, with our taxes. The polluter clearly needs to pay for this pollution. Those gambling operators have hardly contributed even 0.1% of their GGY to support the treatment of gambling harms, so the regulations are good news. They send a signal about the seriousness with which His Majesty’s Government are taking this.
Just last week, a High Court ruling found that Sky Betting & Gaming unlawfully bombarded a problem gambler with more than 1,300 marketing emails over a two-year period, because he was identified as a high-value customer. Sadly, these sorts of people then hugely suffer.
My other concern is that, with the level of harm that is going on, we need to review the amounts for treatment before waiting for five years—which is how I understand it. I urge the Government to consider annual funding reviews, so that we can ensure that money gets to treatment quickly to support all those who are suffering.
Baroness Armstrong of Hill Top (Lab)
My Lords, I am not sure about declaring interests, because I have never understood how on earth I got involved in this issue. It is in an incredibly difficult arena where so many people have experienced trauma. I have never laid a bet or bought a lottery ticket. I grew up in a household that did not even have a pack of cards. None of us was exposed to anything around gambling, and nothing in my life has led me anywhere near it.
The reason that I became interested in gambling was gambling harm and what that does to people, particularly those with complex needs. I have been involved in that area of work over many years, particularly with regard to women. Those who were on the Select Committee will remember that I used to rabbit on about women when no one knew that that was an issue. Even that short time ago, we really did not address it in the Select Committee. It is very clearly an important issue, particularly around online gambling, as they are being used exploitatively in ways that we are only just becoming aware of, which I am very worried about. However, that is not what we are concerned with today.
I will not talk about the restriction on the amount that you can put into a slot machine, as that is not really my area of expertise, but I do want to talk about the compulsory levy and the move from where we are now to where we need to be. It is not very long to 1 April. With the amount of time that there is for transition, we need to make sure that there is a straightforward way ahead for those who are working on these issues, either in treatment or in prevention—and it is not as clear a division as we sometimes talk about it being. We are still a long way from knowing the amount of money that can be spent, who will spend it and how that is understood.
I congratulate my noble friend on getting the decision out today. She knows that I have some anxiety. I am not as convinced as colleagues in Peers for Gambling Reform that OHID is the right vehicle. First, OHID, virtually does not exist at the moment. It has been denuded since the change from Public Health England during Covid, and there are only three people in the Department of Health who now work for OHID. They are not in a position even to be thinking about what commissioning in this area means at the moment. There will have to be a big recruitment, very fast learning and a really clear understanding.
I love the National Health Service—my husband is back working for the NHS at the moment, even though he is 76—but, historically, it has not been good at enabling people themselves to take decisions in the journey through the change that they need to get out of their problems. Too often, it has told people what the answer is, what the treatment should be and what they need to do. My experience is that, until we get neighbourhood health organisations—I know that that is one issues being worked on in the 10-year plan—we are in danger of the NHS trying to tell people with lived experience and people running charities how they should behave, rather than seeing them as essential partners in the journey from very early prevention, when somebody first understands that they or somebody in their family might have a problem, through to when the heavy end of treatment is needed.
As an example of how it is really complicated to understand this, the previous Government said that the online help service, which is run by GamCare at the moment, is part of treatment and not prevention, when in fact, a lot of people ringing up are just asking, “Do I have a problem? Is there somebody I can talk to who might be helpful?” They are not ready for treatment or therapy as such; they want someone to help them understand the problems they are getting into and their alternative ways forward.
For me, it is a continuum between prevention and treatment. We have to make sure that funding does not totally separate those two, because then you will lose the strength of some of those voluntary organisations, particularly those that are run by people with lived experience, in how they help people through the different stages. Some are just treatment centres; if you think about the residential people or the NHS clinics, they are both into treatment. My concern as well is that, given the pressures that I know there are in the NHS, if the money goes through the NHS without any checks, there may be a push to spend it all on treatment clinics. That cannot happen, because that will mean that millions will lose that ability to engage before it becomes a big NHS issue.
On women, my experience is that they really do not want to let anybody in the state who has control over the future of their children know when they are getting into problems, because they are terrified that they will lose their children. So we have to handle this very carefully.
I know that the Minister is aware of these things, and I hope that OHID, as it grows and develops, will use people who are currently working in the commissioning area and who understand this, so that they are able to help negotiate the way forward.
On GambleAware, I thank the Minister for saying what she did. I was a trustee of GambleAware and used to get a bit annoyed by everybody out there saying, “Oh, GambleAware takes its money from the industry and it’s run by the industry”. I have never met anybody from the industry since 2005, I think. For me to be told that I was controlled by the industry was a bit of an insult, to put it mildly, when I know that that is not the case. However, I accept that too many people built this up into a great issue and so GambleAware could not continue it, but it has the expertise and the brand. It is contacted through its website about tackling gambling harm more than any other organisation in the world.
It has had incredible, really powerful campaigns in the last couple of years—for example, on stigma. It has also commissioned research: I encourage my noble friend sitting in front of me to look at the research from Bristol University, which has been peer reviewed very strictly, on the effect of harm from gambling advertising. It demonstrates that you can remove a lot of gambling advertising without affecting the main work of the gambling industry. It affects mostly those people who are on the edge of harm and who then get into it. It annoys me as a football supporter that I have to sit among all the advertising, but it does not push me into doing it.
So there are many things here. I know the Minister is aware of the issue of timing. There is much to be done to ensure that the network of providers in the voluntary sector does not end up being tipped over, because there is no certainty about its future. GambleAware is a charity and, because the trustees have responsibilities in its charitable role, it will need a deadline cut-off when it can reassure the people who use the network that there will be a future and that their money for the next year will be there.
Lord Browne of Belmont (DUP)
My Lords, while I welcome the Government’s intention to implement a statutory levy, as provided for in the 2005 Act, I am concerned that the levy set out in the draft regulations has not gone far enough, because it has been fixed at such a low level that it will make little difference to the lives of those who find themselves in gambling harm. The money raised will not allow adequate treatment or be sufficient to ensure that proper prevention and education measures are put in place.
Recent data from the Gambling Commission is concerning. For a number of years, it was suggested that gambling harm in the United Kingdom affected around 0.5% of the population. Now we have discovered that the problem is significantly greater than we previously thought. The latest data shows that gambling harm in the UK directly affects 2.5% of the adult population. This means that over 1.5 million adults in the UK struggle with the public health effects of gambling addiction.
The economic cost of gambling harm, according to the National Institute of Economic and Social Research, is approximately £1.4 billion annually, but this was based on the much lower figure of under 0.5% of the UK population and the costs are certainly much higher now when based on new data. Indeed, the costs may well be almost £5 billion. This figure encompasses increased healthcare expenditure, higher welfare support, criminal justice costs and homelessness services for those affected. Individuals experiencing problem gambling are nine times more likely to require hospital treatment and four times more likely to need homelessness support, which of course dramatically increases healthcare risks and the need for additional treatment. While the economic cost of gambling is significant, the cost to families and individuals caught in gambling harm is incalculable. Almost 500 people across the UK take their own lives each year due to gambling harm.
I believe that this levy is insufficient to deal with the costs of gambling harm. Clause 4 of the draft regulations sets out the level of the levy for each type of gambling operator. It is clearly right that those gambling licences, such as remote online gambling operators, which cause the most harm and pose the greatest risk are levied at the highest level. I welcome this graduated levy from low to high risk, but again underscore that the percentage rate or gross gambling yield set by the regulations is too low to have a meaningful impact.
The proposed tiered structure in Clause 4 aims to raise between £90 million and £100 million annually when fully implemented. Again, this falls way short of what is needed. Back in 2019, in evidence given to the Select Committee on the Social and Economic Impact of the Gambling Industry by Dr Anna van der Gaag, it was estimated that treating a person in gambling harm costs around £600 per annum. Uplifting that figure by a modest 10% over the last six years would give a figure of £660 per annum needed to treat every person in gambling harm. This means that we need about £1 billion every year just to treat every person currently in gambling harm, and this would require a levy of £1 billion just to stand still. The levy proposed by the draft regulations will raise a mere one-tenth of what is needed for treatment. That leaves no money in the pot for research and prevention and is likely to leave nine-tenths of those with gambling harm not helped at all.
The gambling industry generates over £15 billion in profits annually. These draft regulations will levy approximately 0.67% of industry profits. This seems disproportionately low relative to the scale of the issue. I urge the Minister to think again about the levels set in the draft regulations and at the very least consider raising the levy for the most harmful remote gambling licences to at least 5%.
Finally, while these regulations will apply only to Great Britain, I want to raise a very specific issue in respect of Northern Ireland. It is not right to say that gambling is fully devolved to the Northern Ireland Assembly. By virtue of Section 5 of the Gambling (Licensing and Advertising) Act 2014, it is an offence to advertise and thereby operate remote gambling in Northern Ireland without holding a GB remote gambling licence. People in Northern Ireland, which has a much more significant gambling harm problem than the rest of the United Kingdom, are targeted by companies holding GB remote gambling operator licences. Remote gambling, the most harmful type of gambling, is therefore not devolved.
Every remote gambling company that targets adverts to people in Northern Ireland and thereby causes harm in Northern Ireland, does so because of their GB licence issued by the Gambling Commission. While the Northern Ireland Assembly must move forward swiftly and introduce a levy for terrestrial gambling, it is certainly morally if not legally arguable that these regulations, in respect of the remote elements of the levy, should apply to Northern Ireland. I urge the Minister to consider how Northern Ireland could be included in these regulations as regards remote gambling, which is, at least in part, no longer devolved, as I have said.
In conclusion, the current funding uncertainty is detrimental to the treatment and support pathways for many hundreds of people who are registering each day with many different charities, such as GAMSTOP. I call for clarity on the levy and for the legislation to be tightened as soon as possible.
Lord Hay of Ballyore (DUP)
My Lords, I shall be very brief. I want to make a few comments regarding the stake limits set by the Gambling Act 2005 (Operating Licence Conditions) (Amendment) Regulations 2024. I am unsure of the rationale set out in the regulations for setting a limit of £5 for over-25s. Given that terrestrial gambling is limited to an average of £2 across all gaming machines, and given the higher risk of gambling harm from online gaming, it seems difficult to understand what the Government’s rationale is in setting a limit of £5 for remote operators in these regulations.
It seems almost too obvious to point out, but most terrestrial gambling operators close, while online casinos are open 24 hours a day. How can a higher limit be appropriate for a more harmful product that cannot be switched off? A holder of a remote licence, given the continuous operation and the much lower level of fixed costs, such as premises and staffing costs, is much more profitable than its land-based equivalent. Remote licence holders have a gross gambling yield that is almost twice that of their terrestrial equivalent. Given that the harm is greater online and they accrue more revenue, it is difficult to understand why the limit has been set at such a high level.
The Gambling Commission, as part of its risks algorithms data study found that 52% of gamblers placing stakes of above £2 and up to £5 were most at risk of gambling harm. Given the increased risk, it seems difficult to understand why the limit has been set in such a way that those most at risk of gambling harm are not protected from that risk. It is my view that even a £2 limit on remote stakes is too high. Even when spinning at a very low stake size of between £1 and £2, evidence from the Gambling Commission survey in 2021 highlights that more than one in five gamblers suffer high or medium levels of harm. Additionally, online slots are associated with binge gambling and long gambling sessions, accounting for over 70% of single-product gambling sessions that last over three hours. Clearly, remote gambling is highly addictive and a sustained harm that people find difficult to escape from.
If £2 is too high a maximum for over-25s, it is clearly much too high a level for those aged 18 to 25. Given the difficulty faced by young people, the risk is much higher and the stake limits should be much lower. I am concerned that the evidence does not support a limit of £5 for over-25s and £2 for 18 to 25 year-olds. The clear evidence is that these limits should be lower. I urge the Government to think again and ensure that these regulations properly protect those who find themselves at risk of harm.
I am concerned that, if these draft regulations are passed, the risks of remote gambling will not be reduced and they will have a limited or no impact on reducing gambling harm and protecting those who are most vulnerable. Unlike other noble Lords, I am not convinced that these regulations go far enough and do what needs to be done. We all know that addictive gambling creates major problems not only for the individuals involved but for the families who suffer in all this. The Government could go much further and look again at the issue and the regulations before us.
Lord Foster of Bath (LD)
My Lords, I declare my interests as chairman of Peers for Gambling Reform and as a vice-chair of the APPG on Gambling Reform. I assure the Minister that, today, I will say nothing further on advertising, but I will be back on that subject later.
I begin with a very strong welcome for these two statutory instruments. Many of us have campaigned for many years to achieve what they bring. However, having said that, it is clear that we need to get them absolutely right.
I start with the SI on stake limits. Noble Lords are aware that, with the mass adoption of smartphones, the evidence grew that online slots—accounting for more than half of gambling revenues online—were causing a great deal of harm. So the campaign began to try to get the same £2 stake limit for online gambling as had been achieved by the successful, although lengthy, campaign to get a £2 maximum stake on fixed-odds betting terminals, which was introduced in 2019.
We welcome the £2 limit for younger players announced in the statutory instrument, but Peers for Gambling Reform, the APPG, the noble Lords behind me and the right reverend Prelate have all rightly expressed real concern about the £5 limit for other players. We fail to understand why the Government went for it. Unfortunately, I can provide a possible answer: I think it is based on the Government’s ill-judged desire to grow the gambling sector.
As the Minister knows, I have been very concerned. For instance, at the GambleAware conference at the end of last year, she said,
“I believe it is possible to have an industry that is growing and that is safer for consumers”.
Frankly, I find it hard to understand how a Government who acknowledge that gambling should be treated as a public health issue can also claim to want to help the gambling industry grow. Reducing gambling harm simply is not compatible with growing the size of the gambling industry, as was made clear in the recent report by the Lancet public health commission on gambling.
Lord Watts (Lab)
Is the noble Lord trying to suggest that all forms of gambling are addictive? There are millions of people who regularly enjoy a bet. It is possible to grow a business and still not increase the number of people who have an addiction. Most people do not have an addiction; is that not correct?
Lord Foster of Bath (LD)
No, I do not accept that basic premise. Indeed, I suspect that the Minister supports these statutory instruments. The instrument concerning the levy makes clear that there are different levels of contribution for various parts of the gambling sector, which is based on an assessment of the risk. The noble Lord and I would both accept that bingo, for example, does not create a great deal of harm, but the research clearly indicates that it creates harm, nevertheless, and that is why it is included in the levy. I entirely accept that the size of the harm varies.
The noble Lord asked me whether I was prepared to accept that the vast majority of gambling does not create harm. The answer is no, I will not accept that —I shall not accept it when 2.5 million people in this country are suffering from gambling harm. I will not accept it when more than one gambling-related suicide per day takes place in this country. I will not accept it when the evidence shows that anybody, regardless of age or background, can suffer gambling harm. So, no, I will not accept the noble Lord’s premise.
I was trying to explain that the £5 limit is due to the bizarre desire on the part of the Government in believing that they can reduce gambling harm yet increase the size of the sector. The fact that they want to do that, and the complication that it causes, was made very clear when this instrument was debated in the other place. The Minister, Stephanie Peacock, said—and it is so revealing—that
“we know that those who do reach that higher limit are at higher risk. This statutory instrument”
aims
“to balance tackling gambling harms with supporting industry”.—[Official Report, Commons, First Delegated Legislation Committee, 29/1/25; col. 7.]
Those are the Minister’s very words; she admits that the £5 limit means that there will be a greater amount of harm, yet she is prepared to tolerate it because the Government want to expand the industry. That is despite the Gambling Commission data from 2023 showing that 52% of gamblers staking over £2 and up to £5 are flagged by the commission as at risk. Despite that, the Government have bowed to the industry in the way that I have just described.
That is in marked contrast to what the previous Conservative Government did when they introduced a £2 stake for fixed-odds betting terminals. They came under exactly the same pressure from the industry, which did not want that stake limit. The then Secretary of State, Matt Hancock, said:
“When faced with the choice of halfway measures or doing everything we can to protect vulnerable people, we have chosen to take a stand. These machines are a social blight and prey on some of the most vulnerable in society, and we are determined to put a stop to it and build a fairer society for all”.
They took a stand against the pressure from the gambling industry and, while I welcome the £2 limit, I am disappointed that we have the £5 limit going forward. I hope that the Minister will at least assure us that the SI provides sufficient flexibility for the Government to change that limit if they realise and accept the error of their ways.
I turn to the other statutory instrument and the introduction of the statutory levy to fund research, prevention and treatment. The Minister knows full well how delighted I am that this is now being introduced. I am absolutely delighted, as others have said, that the announcement has been made, even today, about the introduction of OHID and similar bodies in Scotland and Wales to be the prevention commissioner. I am well aware of the enormous amount of work that has gone on to get us to this position, and I pay tribute to the Minister, her predecessors and the very large number of civil servants who have worked so hard to get us where we are today.
However, the Minister knows that the work is not over; a great deal has to be done. For example, we have heard already from the noble Lord, Lord Kirkhope, the right reverend Prelate and others that there is real concern that the amount of money that will come in will be insufficient. After all, the £100 million that will come in from the levy, approximately, is more or less comparable with the amount of money that we are already getting in through current voluntary contributions. As others have said, all the research evidence clearly shows that the cost to the country of gambling harm is at least £1 billion, and some estimates are very much higher.
As my friend the right reverend Prelate pointed out, on the polluter pays principle, many would argue—and I would be one of them—that the level should be very much higher than in the current instrument, but it is a welcome start. I hope that the Minister can confirm that nothing will prevent the Government, should they come to a different view about the appropriate level, being able to change it, even, if necessary, on an annual basis, since the levy is an annual one—although there is a nine-month period for the first one.
In a recent letter, for which I thank her, the Minister said:
“We are pursuing this landmark reform to put the independence of the future system beyond absolute doubt”.
I welcome that, but does she acknowledge that some gambling companies may still choose to make voluntary contributions? If we want to ensure that independence, we need transparency about that. Does she accept that it will be important that those voluntary donations are clearly identified and recorded, and we know to whom the payments are made? She will be aware that the Gambling Commission has just announced that it is no longer going to require that evidence to be collected. I hope she might be willing to persuade the commission that, for the sake of the transparency that she talks about and for the clarity of independence, it might think again about it.
The noble Baroness, Lady Armstrong, is 100% right to say that the key issue now, having got to where we are, is how we deal with the interim period between where we are now and the full introduction of the levy. A safe transition is vital to ensuring that there is no system degradation, prevention work continues and people at risk or experiencing gambling harm can access the support they need. That means two things: continuity of income to pay for the services and urgent decisions on the allocation of such funds. On the first, even though we may disagree about what level it should be at, can the Minister confirm that the Government have received categorical assurances that the industry will continue to make appropriate voluntary payments until the first statutory payments kick in? Can she also tell us to whom those payments are to be made? On the second, the fund allocation, the Government have consistently and rightly said that the role of the third sector will continue to be vital in this new research, prevention and treatment system. I fully support that. I accept that over time, the new commissioners may choose to commission different things and from different providers. But assurances are needed that, albeit over time in a modified form, the vital third sector experience and expertise, and the important contribution from the wider lived-experience community, will be sustained in the new system. Will the Minister confirm that?
In the immediate term, urgent decisions are needed. Many organisations need to know, in some cases within just a few weeks, whether their service is expected to continue at least over the next couple of years. Gordon Moody, for example, provides a range of gambling treatment services, including residential therapy, which means that it has significant fixed costs, but the reserves are sufficient to support it for only three months. Clearly, that service and others involved in the National Gambling Support Network need urgently to know what funding, if any, they will receive.
I am sure that the Minister and her officials are well aware of this challenge, but it would be reassuring to have her confirmation of that and some indication of how the Government plan to proceed. While there is still much to be done, these two statutory instruments are important and welcome landmarks on the road to tackling gambling harm. I welcome them.
Baroness Twycross (Lab)
My Lords, this has been an important and interesting debate and I am grateful to all noble Lords for their insightful contributions and for their work over many years. It is clear from today’s discussion that we all share the commitment to protecting the British public from gambling-related harm. The Government want to do that while ensuring that those who want to gamble can continue to do so as safely as possible.
I am determined to get this regime right. As outlined, the online slots stake limits are an important and proportionate intervention aimed at people most at risk of gambling-related harm. This is a timely regulation, as online slots games continue, as mentioned earlier, to grow in popularity and gross gambling yield. These limits will bolster existing safer game design requirements to ensure that online slots games are safer to play. Online slots stake limits should serve as a maximum stake that customers should choose to stake up to, rather than as a new default that operators drive customers towards. Operators currently offer stakes from as little as one penny per spin, and we would expect a range of staking options far below the maximum available.
To reassure noble Lords, the Secretary of State will review the limits within five years. The statutory levy will be charged to all licensed gambling operators, replacing and building on the current system based on voluntary donations.
Lord Foster of Bath (LD)
Regarding the other part of my question, can the Minister confirm that it would, however, be possible to make a change within a one-year period?
Baroness Twycross (Lab)
I can confirm that. I have lots of inserts in my brief, so I will get to other points later in my response.
The levy will be charged in a way that recognises the higher levels of harm associated with some online products, which a number of noble Lords noted, and the higher operating costs in the land-based sector. This will guarantee that all operators pay their fair share, while ensuring that any impacts are proportionate.
Working in partnership with the appropriate bodies in Scotland and Wales, and the third sector, we are entering a new phase in the Government’s efforts to tackle and treat gambling harms. We will closely monitor the impact our approach is having on the ground, with a DCMS-led levy board maintaining clear oversight of the system. We will also conduct a formal review within five years and take action as needed. I am happy to set up a briefing meeting with interested noble Lords to go through the more technical aspects of the levy process and how the Government’s oversight of it will work in practice.
I turn now to the wide range of questions and points raised in what was an interesting debate, starting with the point made by the noble Lord, Lord Browne of Belmont, that the £100 million that will be raised by the new statutory levy will not be enough. I note that we are nearly doubling the level of funding in the system. We will monitor the impacts of the levy and formally review the system within five years, including levy rates. Any change would be subject to full consultation, and we would need to be led by the evidence.
Although it has been welcome that operators have voluntarily contributed to the current levy, it is no longer fit for purpose and the Government’s priority is to ensure sufficient long-term funding for research, prevention and treatment to tackle gambling harm, in line with our manifesto commitment. This is part of a suite of protections that we and the Gambling Commission are introducing to prevent harm before it occurs.
On the Government’s timing of the levy, the noble Lord, Lord Foster, mentioned the need for charities to have some certainty over funding. I am grateful for the significant uplift in funding of research, prevention and treatment that the industry has provided in recent years. Without this support, it is unlikely that the expansion of treatment services would have been possible up to the point of getting the statutory levy. We have received a commitment from the Betting and Gaming Council that its financial contributions will continue until the levy is in force. Operators should make their final contributions to charities as soon as possible to maximise the time ahead of their first levy payments. We have received reassurances on that point.
I strongly agree with my noble friend Lady Armstrong that the work carried out by GambleAware, not least on stigma, is hugely valuable. My officials and I met GambleAware yesterday, and we will support it through a safe and smooth transition. It is a real priority for me that the right services in the current system are maintained for the future; we do not want to see a cliff edge where, with good intentions, we cause unintended harm. I will write to Minister Dalton, as she starts her new role, to set out my priorities to see a smooth transition for OHID and to engage with all key stakeholders. We are keen to make sure that operators maintain their level of contributions to networks such as the National Gambling Support Network to ensure that they have the funding they need. As I mentioned, we have received reassurances from the industry that funding for services will be maintained in the transition.
Points on stake limits were raised by the noble Lords, Lord Hay of Ballyore and Lord Foster, among others. I appreciate that there are concerns that the £5 stake limit is higher than the £2 fixed-odds betting terminal limit, but a £5 limit brings online slot machines in line with their closest land-based machine counterparts. We believe that a higher limit is justified online by the extra protections afforded by account-based online play, such as monitoring data for signs of harm, safer game design and checks for financial risk.
The right reverend Prelate and the noble Lords, Lord Hay and Lord Foster, asked how we decided where the stake limit should be set—why £5? In our view, a £5 stake limit will protect those most vulnerable to serious harm while balancing the impact that this measure will have on the industry. Primarily, we considered consultation responses, expert evidence and harms data related to each of the staking levels and determined that the £5 limit targets those customers most at risk of harm. I note that the average stake on online slots is 60p.
The noble Lord, Lord Foster, quoted Minister Peacock in the debate in the other place. The evidence shows that people staking high amounts are more likely to experience gambling harm. The £5 stake limit is a targeted intervention to protect those most at risk. These stake limits build on other rules introduced by the Gambling Commission in 2021 that make online slots safer to play. Those requirements slowed the speed of play to a minimum of 2.5 seconds per spin. A raft of rules will reduce play intensity, including a ban on autoplay features, as well as features which speed up the display of results or which can give the illusion of control, such as turbo or slam stops. The evidence shows that these features increase the risk of harm to customers.
The noble Lord, Lord Kirkhope, asked about R&D funding from the levy. Research, prevention and treatment are the key areas where we think investment is most needed to reduce gambling harms. We will monitor the impact that levy funding is having on the ground and will step in as needed. As I mentioned previously, we will formally review the levy within five years.
The right reverend Prelate the Bishop of St Albans and the noble Lord, Lord Browne of Belmont, mentioned gambling-related suicide. I am aware of the truly devastating impact that harmful gambling can have, including contributing to suicide. I have visited the National Gambling Clinic and seen at first hand the excellent work the service provides for those in acute need. We are committed to working cross-government on this issue, including with the Department of Health and Social Care on its suicide prevention strategy. Statistics around things as complex as suicide should be used carefully, and we will continue to work with the Gambling Commission to develop the evidence base on gambling-related suicide, which will be important going forward.
The noble Lord, Lord Browne, referenced the statistics in the Gambling Survey for Great Britain. Although the harm statistics seen in the gambling survey are higher than previous statistics from health surveys, this does not necessarily represent an increase in problem gambling, as the two surveys have different methodologies and the results cannot be compared like for like. The Government are committed to ensuring that the potential harm that can ensue from gambling is limited, and we are strengthening protections for those at risk. However, we need to make sure that when we are comparing statistics, we use them carefully, and I am keen that as part of the investment in research, we have a really strong evidence base going forward.
On advertising, which the noble Lords, Lord Kirkhope and Lord Foster, and the right reverend Prelate raised, the Gambling Commission is introducing new requirements for operators to allow customers to have greater control over the direct marketing they receive and has consulted on measures to ensure that incentives such as free bets are constructed in a safety-responsible manner. There is work ongoing with the DHSE and the Gambling Commission to develop a new evidence-based model for independently developed messages to increase awareness of gambling harms, replacing industry ownership of safer gambling messaging.
However, I am clear that standards can be raised and, as I set out at the GambleAware conference on 4 December last year, more needs to be done to improve the protections. We have set the gambling industry a clear task to further raise standards to ensure that the levels of gambling advertising and sponsorship do not exacerbate harm, and that work will be monitored closely.
My noble friend Lord Watts asked about offshore or illegal gambling. The Gambling Commission is committed to preventing illegal gambling in all its forms. Its latest corporate strategy commits to increasing investment and resources to tackle illegal gambling.
The noble Lord, Lord Browne, asked about Northern Ireland. We recognise our shared interest in a commitment to the reduction of gambling harm. Gambling regulation is, as the noble Lord noted, devolved in Northern Ireland, where it falls under separate legislation. Unlike Great Britain, Northern Ireland does not have an independent gambling regulator, and we stand ready to support the Northern Ireland Executive in plans to reform regulation in this space.
The right reverend Prelate the Bishop of St Albans and a number of other noble Lords asked when we would review the levy. We recognise that the levy represents a significant change for the sector. We will monitor the levy system closely to ensure its effectiveness and to ensure that it delivers on our objectives. Although we will formally review the levy within five years, we will closely consider any necessary changes earlier, including revised regulations to change levy rates.
The noble Lord, Lord Foster, queried how the Government can see this as part of growth alongside the commitment to tackle gambling harm. I appreciate that the noble Lord is unlikely to agree with me on this point but I believe it is possible to have an industry that is both growing and becoming safer for consumers. I want to see a safer, more responsible gambling industry and a sector we can be proud of—which offers good jobs, brings social value and which people enjoy—alongside making sure that we do whatever we can to reduce gambling harm in all its forms, both for people experiencing gambling harm themselves and their families and the wider community.
In conclusion, I am really grateful to all noble Lords who have contributed today. I am always happy to meet—I know that I owe the right reverend Prelate the Bishop of St Albans a meeting—but I have spoken to a number of noble Lords present today about this issue. I am grateful to noble Lords for everything they are doing to raise issues in this area, and I beg to move.
Gambling Act 2005 (Operating Licence Conditions) (Amendment) Regulations 2024
Baroness Twycross
That the Grand Committee do consider the Gambling Act 2005 (Operating Licence Conditions) (Amendment) Regulations 2024.
Relevant document: 13th Report from the Secondary Legislation Scrutiny Committee (special attention drawn to the instrument)