(7 years, 10 months ago)
Lords ChamberMy Lords, before I introduce the amendment, I wonder whether we could reflect on the fact that we are missing rather an important person from the debate. The noble Baroness Heyhoe Flint was a keen and active Member of your Lordships’ House. She had several special interests apart from cricket and a wonderful raconteur’s skill of telling stories of her exploits at the crease. She was rather good at it. Whatever it was, it was always a delight to hear. She had a special interest in secondary ticketing, and in many of the debates held in your Lordships’ House on this issue, she was present and often contributed. She was responsible, along with the noble Lord, Lord Moynihan, whom I see in his place, for getting changes made to the Consumer Rights Act 2015, which brought in the first of what we hope will be a series of measures to improve and clear up this issue.
The amendment to the Consumer Rights Bill that we inserted in 2015 raised from a secondary legislation provision to a primary legislation provision a series of measures to improve and clear up the secondary ticketing market. It was done primarily to ensure that those who buy tickets for sports, arts and music events can do so in the sure and certain knowledge that their tickets are valid, that they will be able to gain access to what they want to see and that they are not being ripped off in the process.
It is fair to say that we got this only after a considerable struggle—and the noble Lord, Lord Moynihan, might wish to share with us some of the difficulties that he experienced—but one of the things that was necessary in order to achieve that victory was to agree to a report on secondary ticketing to be carried out by a distinguished person. That person was Professor Waterson. He has now done that and the report has come out. Those involved are entitled to take a moment to reflect on the fact that what we were saying in Committee on the Bill and what we did in moving amendments and getting them inserted into what became the Act was brought out by the professor’s report, which was a comprehensive piece of work that showed that the scale of the issue was as we described it and that there was a need for further action.
The Bill before us is an opportunity to do more work, and the group of amendments that I am introducing—and for which I am hoping to get support from the noble Lords, Lord Moynihan, Lord Clement-Jones and Lord Foster of Bath, and others as we go through it—is a mixed bag because there are still things that need to be sorted out. An issue that arose in the other place and which was very nearly accepted by the Government was the question of an offence caused by using digital ticket-purchasing software—so-called bots. They are a scourge of many people who organise and run events—particularly in the music industry, but they apply right across the piece. Automated software operated by a number of individuals creates a situation where virtually no tickets are available on the first release of an event, but they then appear very quickly at very much higher prices through secondary ticket outlets. This amendment would, we hope, stamp this out. It has been tried in a number of territories, including New York very recently, and it does seem to work, so we recommend that.
The other amendments deal with changes that we would like to see to improve the broader approach taken in the Consumer Rights Act which, in practice, needs to be taken to another stage. They are basically to do with greater transparency and accountability in how the secondary ticket market works. It is really important, however, that we get clear at the start that nothing in these amendments would stop the resale of tickets once purchased by an individual who wished to sell them because they could not attend the event or that they wanted to sell them on to other people in a closed circle. This is not about private purchases or operations. It is about those who go into the ticket market on a commercial basis, very often making huge amounts of money by exploiting people who do not understand and cannot get to the heart of the issue and therefore pay ridiculous prices. It also would help stamp out what is clearly a fraudulent activity that has been partially stopped by the changes made in 2015 but has not stopped completely. People buy what look on the surface to be valid tickets, but when they turn up at the venue they discover that they are not valid and are refused entry. This is fraud on an industrial scale, and probably the source of much money laundering and illegal activity, which was referred to by the police in their Podium report prior to the 2012 Olympics.
These amendments should be taken as a batch; they build on work in which this House has already been involved and they are the right changes to make this stage. I beg to move.
My Lords, I support the seven amendments in this group spoken to by the noble Lord, Lord Stevenson. I echo that it is particularly appropriate in many ways, albeit very sad, that we debate the often malicious and pernicious use of bots on the sad day of the funeral of my very close friend Lady Rachael Heyhoe Flint. One afternoon, she was purposefully striding down the Corridor outside the Peers’ Guest Room, and said, “I need you”. I jumped to attention and we headed off to the Department for Business, Innovation and Skills. I was totally unaware of why I was accompanying her on that occasion, or indeed the matter proposed for discussion. Rachael launched into a thinly veiled, front-foot attack on those in and around the secondary market, who fleece consumers to no benefit to cricketers, musicians, sportsmen and sportswomen, who are the ones who entertain them. Through her hard work and persuasive skills, I was galvanised into action. I thank the Government for the progress that we made in the Consumer Rights Bill at the time, as well as the Opposition and noble Lords from all sides of the House.
That was just a first yet important step. Today is the second opportunity to make further progress. I was very sad not to be at Rachael’s funeral today to pay my close personal, political and sporting respects, but she would have been the first to admonish me. She would have said, “Why on earth are you not down in Westminster putting on your pads, your gloves and picking up your bat, and going into the centre of the parliamentary wicket to hit those bots for six?”. I will do my best, captain. I will do my best. In paying tribute to her, because she was absolutely instrumental in the work that we undertook during the passage of that Bill, I must also pay tribute to Nigel Adams, Member of Parliament in another place, who has taken this to his heart and has done so much good work.
The whole issue of bots goes right to the heart of the disappointment of thousands of music and sporting fans who have on occasion faced the reality of having their credit card ready in their hand with minutes to go before the sale of tickets for a particular gig or match but no sooner do they go on sale than they sell out. Minutes later, tickets can be spotted on reselling websites. The new, hidden threat that is snatching tickets from under the noses of genuine fans is ticketing bots.
Music and sports fans have always battled against touts buying up tickets to make a quick buck by selling them on again at inflated prices. But now touts have a new cyberweapon that allows them to step up their game. These ticketing bots are software; they buy up huge numbers of tickets for events as soon as they go on sale. Buyers then use the secondary websites to sell them on. Reg Walker, who has done an enormous amount of good work on this at the O2, stated:
“They then harvest tickets at high speed and that effectively blocks out genuine fans from being able to purchase tickets at face value. These tickets are then immediately resold on secondary ticketing platforms”.
What then happens is that those who are sitting in their garages using bots programmed with all this information press the button immediately and get their 200 tickets, and sell them on to one of the four secondary platforms where nearly 80% to 90% of resale now takes place. In so doing, they do not necessarily always get all the tickets they want. Their preferred status and good relationship with the platform is critical to their next sale. So, if necessary, they will have the income on a very high-price ticket with a high margin to go out and counterfeit tickets to make up the gap between those they have committed to supply and the actual number that they have. That is why the wholesale harvesting of tickets by touts not only incentivises these individuals to create relationships with the main providers of the secondary market tickets, the providers even develop power-seller programmes to encourage the delivery of mass tickets.
This is all at the same time that you are trying to type in your name in order to get a couple of tickets, as the true fan of a music show at the O2 or a sporting event. The reality is that you have no chance. We have all tried it; I have tried it on many occasions and cannot believe that they have sold out before I have got down my name, address, credit card number and so on. It is no surprise, though, when bots are available purely for the benefit of the profit of the individual. No artists, no sportsmen and no fans benefit. That mark- up goes straight into the pocket of the individual who has got the ticket and the secondary sales platforms that provide those tickets at inflated prices to consumers.
(9 years, 3 months ago)
Grand CommitteeMy Lords, I am grateful to the Minister for referring specifically to Chapter 5 of Part 3 of the Act and for the interest shown, both in Committee and in the House, in the subject of the secondary market for tickets. As I understand it, the powers that are proposed should be seen as complementary and, indeed, supplementary, because there will be greater information sharing as a result of the order, which is narrow in scope.
I would like to ask my noble friend whether the Consumer Contracts (Information, Cancellation and Additional Charges) Regulations 2013 apply to the secondary ticketing market as well. If they do, they stand well alongside the proposals before the Committee and, indeed, the powers in the CRA 2015.
Before I may appear a little concerned about and critical of the pace at which a number of commitments that were given to the House seem to be progressing, I say straightaway that I could not be more grateful to the Minister personally for her commitment and the level of interest, time and diligence that she showed on this subject. However, as I hope she will be the first to agree, while investigative powers are clear, a prerequisite for those investigative powers to be effective is enforcement. If there is a lack of clarity over exactly what needs to be enforced, we have a problem. One reason why the review was due to be set up was to provide clarity over enforcement and how it would be implemented. As long ago as May, the Minister was hopeful that we would have that review. Many of us who are interested in the subject have waited with bated breath during the Summer Recess, week by week and month by month—May, June, July, August and now into September—and we are still hoping that the review will come very soon.
Under normal circumstances in Parliament, this might not be a major concern. The reason why it is such a concern is because this review was placed in the Act and was time-limited to a year. It concerns me that we are now into September and we do not have a chair for the review or terms of reference for it, nor do we have details of the expert committee that would support that review. All that is absolutely essential. One reason why the measure was pressed so rapidly and given such importance and prominence in Parliament was that having a chair in place to see exactly how the ticket-touting market or secondary ticket market worked during the Rugby World Cup was clearly going to be advantageous. It was going to be able to help that committee to assess the effectiveness or otherwise of the legislation that had been passed in Parliament, and it was also going to provide a good deal of detailed information so that recommendations could be made in the light of direct hands-on involvement with those organising the Rugby World Cup, which already, as we have read in the papers only in the last week, is a matter of great concern to the consumers, many of whom feel that they are being fleeced. In addition to that, we were looking for a strategy for monitoring compliance. The Competition and Markets Authority is clearly important in that context, but we have heard nothing. There is no information on how best to provide requirements for sellers, advice to buyers or recourse to consumers. I understand that the police numbers specifically to tackle touting and associated criminality are very low.
Many rugby fans feel that they are currently being fleeced for tickets, which is a result of the lack of enforcement. The position that they face today is bleak, to say the least. I hope that my noble friend the Minister will be able to give us a little more clarity on when this review is going to be established. I hope that there will be an announcement very soon of a chair for the review; it is imperative that that is done and that the review is set up as a matter of urgency. At the Rugby World Cup, so many fans have been unable to get tickets because those who have managed to sweep the market have immediately put those tickets back on at a massive multiple of their face value. When that is directly in contravention to the regulations and rules stated by the organisers of the Rugby World Cup, we have a serious problem, compounded when Parliament has spoken about this issue and when the Government came back with amendments to lead on this issue so that we could protect consumers and not see sports fans fleeced.
My Lords, it was very good of the Minister to pay tribute to my hirsute appearance. I like to bask in the idea that I am fashionable at all, let alone fashionably bearded. Of course, it is entirely a summer beard, one of those that grow simply because one is too bored and lazy to take the trouble to shave it off. In my case I had an ulterior motive—I am sorry to bore the Committee in this way—because my son has just reached the age of 20 and fancies himself as a bit of a lad around town, and felt that it would enhance his appearance and approach to the wider world if he was to grow a beard, and we agreed to do it together. I shall not say who has won yet, but it is a fine bonding environment. Also it proves that you do not have to be a former Labour leader or indeed standing to be a Labour leader to wear a beard of some distinction. I hope that does not get too widely circulated by Hansard.
I thank the Minister for giving us a very interesting overview of where things stand with the Bill. For those of us who sweated through the long stages of this issue, it is nice to be refreshed again as to where we have got to on some of these key issues—not least the digital area, which is my particular responsibility, but also in the wider context on which my noble friend Lady Hayter led for us with great skill and expertise. It is her birthday today, and perhaps the Minister might in a spirited moment refer to that.
I have three points. I was intrigued by the announcement that there was to be a review of trading standards. I had not noticed that in earlier statements. When the Minister comes to respond, perhaps she could give us a little more on that. We made a point throughout discussions on the Bill that, while we admired the way in which the Bill set out to draw together and reshape our overall consumer protection, it was heavily dependent on the ability to police and exercise the powers that were being given. There were some doubts expressed by those who spoke in Committee and on Report who had knowledge and expertise in these areas of the difficulties being caused in local government as a result of cuts and changes there. I am interested in the broader approach taken by the review, in particular whether it will deal with the difficulties that have been caused by the reductions in manning levels and resources available, and by changes in local government, which are very complicated. That might take time to get together, but it would repay considerably on the success of the Bill.
I am grateful to my noble friend for that comment because that is the first time we have heard formally that there will be an expert group supporting the chair of the review. Can she take on board—I do not expect her to respond today—and come back later to confirm that the expert group reflects the key interested parties? That means that the arts promoters and event promoters, who have been particularly concerned for many years about abuse within the secondary market, as well as the leading spectator sports that are keenly interested in this issue, will be represented on the expert group.
To continue that point, it would be helpful to know how this is to be shaped and organised. I agree that there is a lot of expertise out there but it has not always been brought in. It would be useful if we could be reassured that the range of representation on the expert group will be sufficient to make sure that all the points are picked up.
I am grateful to the Minister for what she has said about the CMA. It is perfectly appropriate for it to carry on its work independently. However, it is the lack of transparency about where it is in the game that causes us the most concern. We were completely unaware that negotiations were taking place between the CMA, or its predecessor body—probably the OFT—and the secondary ticket market. That meant that everything we thought we were hearing needed to be refocused because it was untrammelled by other people’s considerations. The point that I was trying to make was, without in any sense trespassing on the independence of the CMA, it would have been helpful to know whether a programme of work was going on at the same time. The fact that the CMA will be an adviser to the expert group, which presumably will report to the Secretary of State, will make matters a lot easier. I suspect that that is where the matter should lie but I should like confirmation from the Minister.
My Lords, I apologise to the House as I should have declared my interest as chairman of the British Olympic Association.
My Lords, just to get a flavour of what we are actually talking about, when the Olympic torch started out from Plymouth, LOCOG officials confiscated leaflets advertising an Olympic breakfast at a local café. The officials said that flaming torch bacon and egg baguettes were on the menu, which contradicted their guidelines. According to the Office for Budget Responsibility, GDP is set to grow by 0.1% because of the Olympics. Presumably, that figure would have been much higher if the enterprise of the supplier companies had not been so grievously shackled in their marketing and advertising operations that we have heard about. Is the conclusion that we have to draw from this sorry episode that the Government have missed a golden opportunity here by caving in to LOCOG and to the IOC, to the detriment of our supplier companies?
My Lords, I also support the government proposals before the Committee. I echo the comments of my noble friend about the effectiveness of BACTA, the trade body for the British amusement industry. It is good to see highly professional trade associations working with small, family-run businesses, many of which are based at the seaside and more than 500 of which are members. BACTA does excellent work and has done so for several years.
What struck me about the Minister’s speech was that she looked at the economic impact over the past five or six years; indeed, she went back as far as 2006 at one stage in her statistical analysis. Over the past five years, the reality is that the serious decline has happened in the past two years. In other words, the economic impact of this is getting more and more serious. We can see that from the background against which, over the past two years, there have been approximately 200 arcade closures, representing some 800 job losses. However, there are many more than those 800 when you consider the part-time nature of positions over the summer. In addition to the loss to local businesses, there is a direct knock-on effect on related enterprises such as souvenir, gift and high street food and beverage shops, many of which are based in seaside resorts. The life-blood of those seaside resorts is local businesses—those gift shops and high street shops. It is good to note that the work being done by so many of these small, family-run businesses at the seaside generates local activity and employment.
However, those businesses are under very serious economic constraints, because of which the Prime Minister made a pre-election pledge to throw a lifeline to the traditional British amusement industry by reversing changes made under the Gambling Act 2005 to the operation of amusement machines. These proposals give effect to that pledge and would see a return of a maximum stake for category B3 machines from £1 to £2, as the Minister said, and an increase in machine entitlement to 20 per cent of machines sited, or four machines, whichever is the greater. According to some of the estimates in the impact assessment, this small change that the Committee is considering would raise in the order of £8.3 million for the industry. I ask my noble friend: is that the correct figure? If so, the financial assistance will alleviate some of the pressures threatening the industry since the introduction of the Gambling Act 2005, and other economic pressures felt by the sector. I therefore support the measures.
Out of interest, I ask the Minister whether, given the proposed increase, the next generation of machines will have the capacity to take a £2 coin, or will we have to plug in two £1 coins? We have not touched on the related issue of whether the Government are considering increasing the prize limit from £500 for category B machines in the future and, if so, when.
I thank my noble friend for her comments—it was, again, another eloquent opening speech. I emphasise that given the speed of economic decline in this sector it would perhaps be of value to the Government in the future to revise the levels we are talking about today on a more frequent basis than they have done in the past.
My Lords, I start with a complaint. In volunteering to undertake this slot—no pun intended—I felt peculiarly disadvantaged because I have never knowingly interacted with a gambling machine of any type. I may have led a very sheltered life but it has never come my way. There is plenty of space in here so we could have had a demonstration or a machine to play with while the Committee sat for hours on earlier orders. At least we would have better understood the mechanics, if not the economics, of the industry. I hope that when the Minister replies she will respond to that in an appropriate way.
There is no concern about the aim here, which is to allow the business more flexibility to respond to the economic climate. I recognise the unintended consequences of the current regime, where operators are manipulating the rules by artificially splitting premises. I wonder what an artificial split of premises is, but I think we get the picture.
The key is that in the Government’s judgment this will not undermine the central aim of the Gambling Act 2005, which is, of course, public protection and ensuring that gambling is crime free, fair, open and protects children and vulnerable adults. We have heard reassurances from the Minister and I do not think that these changes will undermine that.
The noble Lord, Lord Clement-Jones, referred to the Gambling Commission, which is the Government’s principal adviser in this area. It is interesting that its various comments, which are seeded throughout the impact statements and other documents that we have seen, suggest that gambling machines are becoming a little less popular—although the decline is relatively small—and that they do not seem to lead to problem gambling. In our regime, prizes are quite low by international comparison, and the combination of that and a robust licensing regime suggests that there is room to make the changes proposed.
On the other hand, the recommendation from the Gambling Commission is that we should not look at changes in areas such as B3 machines in isolation, a point picked up by other noble Lords; we need a wider prospectus when we are considering changes. That point did not come through well in the documents that I saw. This is a complicated situation, and not only within the venues and places we are talking about. Changes here will redouble pressures for changes elsewhere, as has been mentioned. In some senses— although one does not wish to restrict choice in these matters—if we are really concerned about the growth in gambling, any increase in availability is, in principle, a bad thing.
On the consultation, I read in the documents that there were 92 consultees—mainly from the industry, although there were some consumer groups—and that they were offered a wide range of options, ranging from do nothing to changes in relation to floor space. Like the noble Lord, Lord Clement-Jones, I was perplexed that the Government did not accept the advice from its principal adviser, the Gambling Commission, on this matter and went for option 5, the model wanted by the industry. The Gambling Commission wanted option 6, which required that the increased number of machines permitted should be related to floor space, which is the common sense and logical position. Anything else would be rather odd to calculate as you would have an assessment of the total number of machines and then a proportion of that subject to a floor limit. That does not seem a robust way of doing this. The size of the premises is important because it will reflect the number of people who can use it. That would be a better way but, nevertheless, it will be interesting to hear the Minister’s response on this.
There are three or four points on which the Minister might reflect before she responds. Clearly, the Government have to balance the growth in popularity of the B2 machines in betting offices and the impact of the proposal on other gambling centres, which might draw customers away, rather than try to maximise the spend from existing customers in existing premises. That would be a problem, and I am not sure whether the view is that that will be the case. I think that it is not the case, but we nevertheless need to keep an eye on this.
I agree with the noble Lord, Lord Clement-Jones, that there will be a need for a regular review of this whole area, not just because of the integrated way in which all the various venues and machines fit together, but because we do not know enough about the way that gambling trends are going—particularly problem gambling trends. If we are talking about 500,000 people, that is a sufficient number for us to want to keep an eye on the situation. We do not really know what will be the total number of machines, consequent on the changes, and it would be interesting to have regular feedback on that.
There is mention in the documentation of the impact of tax on the way that the industry will work, and there is the suggestion of a machine games duty. I am not sure whether the level for that has yet been set, or whether that proposal has been implemented. When the Minister responds, can she give us some information on that, because it will be an important aspect of this? It would also be useful to track more accurately the change in takings. The figures that the noble Lord, Lord Moynihan, mentioned were startlingly large. If the measures indeed generate more than £8.3 million in additional revenues in this area, we would like to know about that. It was also mentioned somewhere in the documentation that the Government are a bit doubtful about the BACTA figures on generating income. Again, it would be helpful if the Minister could respond on that.
Finally, there is mention of further research being carried out by the Responsible Gambling Strategy Board and the Responsible Gambling Fund that could feed into this regular review. The outcome of that will be awaited with interest.
My Lords, my intervention on this will be very brief. I echo my noble friend’s comments about the Minister’s excellent introduction. I should like the Minister to give us a little more clarity, if possible, on the consultation outcome. The rise from £50,000 to a maximum of £2 million, based on a value judgment, is large. Descending on the £2 million is the issue that I shall focus on. Could the Minister, in replying, let us know a little more about the level of response to the consultation exercise which was supportive of the figure of £2 million? The Explanatory Note includes a breakdown of small groups and groups that took different views, but I should be grateful if the Minister could tell us whether there was overwhelming or significant majority support for the proposal that she has brought to the Committee today.
My Lords, I, too, welcome the Minister’s introduction, which was extremely fulsome and interesting. Like other noble Lords who have spoken, I understand and broadly welcome the objectives of the order. However, I, too, have a number of points that I want to draw out and the Minister to respond to when she is able to do so.
We understand that the need for the order is the EU directive and the requirement to implement the better regulation directive. The Minister said that she had no discretion on that, but there is quite a lot of discretion within the directive because it does not specify a figure of £2 million, as has already been mentioned by the noble Lord, Lord Clement-Jones. It is a ministerial decision that this is the way to be “appropriate”, “effective” and “dissuasive”—the terminology used. Is it appropriate? Will it be effective? Will the net effect be dissuasive? That point came through in earlier speeches and I shall be interested to hear the Minister’s response.
As far as we can tell, Ministers have judged that £50,000 in fines is not dissuasive. Whichever way we read the impact statement—it was rather a heavy read—the evidence may support that level of penalty as regards certain companies, and certainly for those where the returns are much greater than £50,000 for an alleged breach of not providing the information. However, is it really appropriate to increase fines by 40 per cent in order to remedy a lack of provision of information? It is not exactly on the same scale as the examples given by the Minister. The only real example that I could find was where companies were undertaking short-term scams, although it was not clear what those were—perhaps we could have a discussion about them in the response—or what sort of returns there were on them. If they were that profitable, I should like to know more about them.
To explain, we are not really against the order but there are some questions. Is £2 million the right figure? The argument that it is the same figure that they have used in other places is not sufficient. We need to know more about what the £2 million does in terms of dissuasion and whether it is indeed appropriate and effective. Has consideration been given to another penalty? We were given one option, which was discussed, but it would not be difficult to think of a more dissuasive penalty in a situation whereby, as a result of the lack of the provision of information, the company concerned gained significantly in its trading activities. It is quite hard to see what that would be, but let us assume that that is the case. If the company made a significant profit as a result, perhaps the appropriate and dissuasive penalty would be the removal of that gain.
The potential impact on a smaller company certainly came through in some of the responses but has not really been picked up on. Many companies in this field do not have profits greater than £50,000 per year. To be fined at the level of £2 million is an awesome thought.
We were told that there was a large consultation but I agree with noble Lords that the information about who was actually consulted is not available. We were told that the responses were broadly supportive but we were unable to identify—certainly by size or by range—what those companies were. On reading the impact statement, it seems that the evidence used was only the 11 cases that have been considered by Ofcom since 2005, of which three were multiple occurrences. So we are talking about only eight different cases, which seems to be quite a small sample on which to base such a draconian increase.
In making a judgment that this measure is appropriate and proportionate, the Government are acting as both judge and jury. I am not sure that that is the right way to approach this. I would have liked to have seen more quantitative evidence in the impact statement.
The comment made in some of the paperwork is that as a result of this change there may well be an increase in the number of appeals made against such fines. That will obviously cost and it may be that the overall effect is not significant. In her summation, the Minister said that this would be good for business and good for consumers. I am not sure. This is more likely to be another example of gold-plating what is required by the EU directive, which is aimed at providing only appropriate, effective and dissuasive powers. It is not a fixed amount. It is perhaps not so much gold-plating but platinum-plating. It is hardly a light touch; rather, it is a heavy plundering.