Olympic Games: British Companies
Debate between Lord Moynihan and Lord Stevenson of Balmacara
Lord Moynihan
My Lords, I apologise to the House as I should have declared my interest as chairman of the British Olympic Association.
Lord Stevenson of Balmacara
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?
Communications Act 2003 (Maximum Penalty for Contravention of Information Requirements) Order 2011
Debate between Lord Moynihan and Lord Stevenson of Balmacara
Lord Moynihan
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.
Lord Stevenson of Balmacara
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.
Gambling Act 2005 (Gaming Machines in Adult Gaming Centres and Bingo Premises) Order 2011
Debate between Lord Moynihan and Lord Stevenson of Balmacara
Lord Moynihan
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.
Lord Stevenson of Balmacara
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.