Gambling (Licensing and Advertising) Bill

Chris Evans Excerpts

Tuesday 5th November 2013 Commons Chamber

[Mr Whittingdale]

That is a matter for the Treasury, but I agree with my hon. Friend that a 15% rate would have a damaging impact. The Remote Gambling Association has suggested 5% as a reasonable level, but the Treasury will obviously have to examine that and strike a balance. The Treasury will need to bear in mind the risk not only that its revenues might suffer if consumers were driven from the licensed market to the black market but that consumers would suffer, as they would have none of the protections that would result from the new licensing requirements in the Bill. That seems to be at the heart of the issue, so although it is important that we should debate all the provisions in the Bill, the critical question will be determined not by the Minister but by her colleague in the Treasury.

One or two other concerns have been raised, particularly about the fact that this is an enormous new responsibility for the UK Gambling Commission, which will have to issue licences to a huge number of operators based in all parts of the world. The Select Committee had some concerns about the commission’s ability to do that and about the resource implications. The Gibraltar betting and gaming association has raised the concern that the change could result in brass plating, with the Gambling Commission merely giving an operator a tick because it does not have the resources to go to the other jurisdictions to question the regulating authorities. The UK Gambling Commission will have to rely on other regulators in a way not dissimilar from its reliance on those on the white list, so if it is to accept the regulatory approval of other regulators in different countries it is important that it satisfies itself that those regulators are doing a good job. That might require additional resources, and we expressed some concerns about the degree of the extra responsibilities that will be placed on the commission.

Let me return to the question of the consequence of consumers being driven into the black market. The industry is highly competitive and a very small difference in cost can result in operators offering more attractive odds than the licensed operators. On those grounds, there is a risk that people will look towards the black market.

[Chris Evans (Islwyn) (Lab/Co-op)]

The hon. Gentleman is making a succinct point, but does he agree that online customers are more promiscuous than their retail counterparts and will follow prices more closely than those who have a loyalty to the shop and the shop manager?

[Mr Whittingdale]

The hon. Gentleman is almost certainly right. Obviously, people go to high-street betting shops to bet, but they also do so for other reasons. They form friendships and it becomes a social environment. None of that exists in online gambling; it is being done in bedrooms by gamblers on their own, and they will look for the site where they can get the best odds. Therefore we need to look at measures to ensure that they do not go into the black market.

--- Later in debate ---

[Philip Davies]

My hon. Friend is absolutely right.

I want to touch on the levy, because a number of Members have suggested that we should be compelling companies that are currently offshore to pay it, just as onshore companies have to. I think that argument is a bit of a red herring. There is a perfectly clear and respectable argument for those offshore to pay the same as those onshore, including the levy, but I do not think that it would make a fat lot of difference to the money raised from the levy going from bookmakers to racing. I am delighted that an agreement has been reached between racing and bookmakers, but in my view, and that of others, including the hon. Member for Bradford South, who are better qualified than me to decide whether what I am saying is right, it seems that Ministers decide at the start how much the gambling industry should contribute towards racing—perhaps arriving at a figure of around £75 million—and then come up with a mechanism on the levy to deliver that.

If offshore companies are included in the levy, my suspicion is that exactly the same thing will take place. The Minister will think that £75 million is about right and will then change the mechanism so that it delivers that amount. Those people in racing who think that that is a way to get an awful lot more money from the betting industry are simply misguided, although I can see why they think it. It would not generate any more money; it would just change the formula by which these things are calculated.

[Chris Evans]

Before the hon. Gentleman moves on from that point, does he agree that horse racing makes up 23% of betting shops’ business, whereas the entire online business is 23%, and most online gambling is poker, bingo and other things, so we have to be very careful when we involve online companies in the levy?

[Philip Davies]

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

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

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

--- Later in debate ---

[Chris Evans (Islwyn) (Lab/Co-op)]

I refer the House to my entry in the Register of Members’ Financial Interests, and I welcome the Minister to her place. She is the Minister responsible for sports, and having served with her on the Justice Committee I know that she is level-headed and takes a non-partisan view on things. I think she is an excellent addition to the Department, but I caution her on one thing. I know that she loves tennis and is a bit of a tennis freak, but I hope that she looks at other sports as well.

I am pleased to speak about this Bill. Bookmaking was my family business—my mother and father were bookmakers, and in fact I am the son of a bookmaker and the son of a bookmaker’s son. Indeed, bookmaking was my first job after university, and like the hon. Member for Shipley (Philip Davies), I am sure, who also worked in betting shops, I could entertain the House with tales of the characters we would meet in betting shops. I know, however, that there has already been a warning about time, so I will limit my remarks to what is in the Bill.

In the past few years, the betting industry has suffered from an image problem. The country has a tradition of playing the football pools and of crossing its fingers each and every week in the hope of winning the national lottery, but people seem to look down their noses at the betting trade. There is a perception that there is a betting shop on every corner, and yet, when we talk about gambling, it is important that we understand the history of the industry. In the 1970s, there were 16,000 betting shops; today there are just 9,000. The idea that there are more betting shops is perception more than anything else. People can walk into any newsagent or supermarket and be offered a wide range of scratchcards and other gambling opportunities, but the bookie is blamed for so-called gambling problems in this country.

That is not all. The betting shop is blamed for the decline in our high streets. Betting shops are tarred with the same brush as the pawnbroker and the money shop. Rather than bash the betting industry, it is time to talk about our betting firms as a great British success story. The industry contributes £3.2 billion to UK gross domestic product each year and provides £1 billion in taxes. Betting shops directly employ 55,000 full and part-time jobs, which is the equivalent of 10% of the entire leisure industry. The work force are mainly women, some of whom have re-entered the workplace after having children, or students, who need flexible or part-time work while studying, as I did when I was at university.

In a world in which sadly we have seen names such as Woolworths and HMV disappear from the high street, the gambling industry has been at the forefront of innovation and technology. I want to focus my remarks on that. When I left the industry over 12 years ago, online gambling was in its infancy. If people walked into a shop at that time, they would think the industry was in decline. The punters were mainly either coming up to retirement or retiring. The only thing in the shops that kept them going was the amusement prizes machines, the forerunners of fixed odds betting terminals.

In reality, the trade was changing. It is important to realise that the industry has been forced to be innovative and adaptable. More than a quarter of William Hill online customers place bets on their mobile, smartphone or iPad. The industry is continually changing. People who bet online would probably not have taken a trip to their local bookie to bet on a horse. If anybody turns on the television tonight to watch the football, the last things they will see before kick-off are adverts for odds on the first goal scorers. The people watching the adverts are not going to run off to their local bookies to put £5 on a match result. They will instead get out their smartphone or iPad and bet from the comfort of their living room.

Frankly, bookies have to be innovative. They must keep up in an ever-changing industry, and have found ways to reach customers who previously would not have looked at them at all. When we talk about businesses in this country, it is important that we look to gain positive aspects of all businesses, no matter what our perceptions of or prejudices against certain industries.

On the detail of the Bill, I do not think any hon. Member will disagree that the priority must be to protect the consumer. We need to ensure that we do not see sites operating illegally and offering bets to UK consumers. We need an assurance from the Government that the Gambling Commission has the appropriate powers to deal with illegal operators. As somebody who has worked in the industry, I know that the one thing we do not want in the betting trade are black market operators. I am sure the hon. Member for Shipley agrees that when we worked in the betting trade we were constantly competing with illegal betting operators, whether they operated out of the pub, the side street or their houses. We—the people who played by the rules and paid their taxes, and who had betting licences—were constantly undercut. I fear that the same thing could happen as a result of the Bill.

We must ensure that strong licensing conditions are in place but, at the same time, we must ensure that licensing conditions are imposed in a timely, effective and fair way. Black market operators should be run out of business as quickly as possible. I know that the Government have already rejected the idea of internet protocol address blocking and financial transaction blocking, but if we are serious about ensuring proper enforcement, we need to look at that again. I have some sympathy with the hon. Member for Shipley. I very often do not agree with him politically, but a lot of what he has said makes a lot of sense.

The hon. Gentleman mentioned the point-of-consumption tax. I agree with the findings of the Culture, Media and Sport Committee, which warned that the Government need to be careful with how steep they make that tax. We know that the UK retail betting industry is competitive. There is a huge focus on customer service and brand loyalty. As I said in an intervention on the hon. Member for Maldon (Mr Whittingdale), the Chairman of the Committee, online gamblers are far more promiscuous. They will shop around for the best price. They will not worry. There are two sets of customers: the customer who wants to bet heavily online and shop around for the best price, and the customer who has been going to his local shop for years. The latter likes the atmosphere of the bell ringing before the dogs go off. He likes running up to the counter quickly to place his bet. That is what he lives for. He also likes the staff—he likes sitting down for a cup of tea with them. He will not go online and shop around in that way, but others will.

As the hon. Member for Shipley has said, if the tax is set too high by the Treasury, it will stifle one of the most innovative industries out there. Betting is a growth industry. My hon. Friend the Member for Newcastle-under-Lyme (Paul Farrelly) mentioned the growth of bet365 over 13 years, which was down to the innovation it has shown online. However, if that tax is too high, I believe we will open a new market for, as I have said, unlicensed, illegal operators, which will not comply with the new regime and which can offer better odds than licensed operators such as Ladbrokes, William Hill, Betfred and bet365.

Modelling by Deloitte in its 2011 report “The Impact of a Point of Consumption Tax on the Remote Gambling Industry” demonstrated that a 5% rate of tax would mean that as many as 13% of UK online customers would move to the unlicensed or illegal market. At 10%, 27% of business would move to the illegal market. I would hate to see how many people would go to the illegal market if we set the rate too high at, for example, 15%. I mentioned Woolworths and HMV going out of business; I would hate to see companies that we have seen on our high streets for so long, such as Coral, William Hill and Ladbrokes, having difficulties and going out of business.

I started my career in an independent bookmakers—Jack Brown, which no longer exists. One sadness I have—anyone who has worked in the betting industry will know this—is that the independent bookmaker has disappeared from the high street. I went out on Friday night and saw an independent bookmaker. That was a novelty and a rarity, but when I was younger, it was a familiar sight. I am deeply concerned that, if we set the tax too high, the firms for which people have some sort of warmth and empathy will go out of business.

The Bill is important because, ultimately, its purpose is to protect consumers—that is what it should be about—but I would like to see more. When the Minister responds to the debate, I would like her to provide assurances that the Gambling Commission has sufficient resources to deal with the regulatory requirement it must undertake. We need to be extremely careful that we do not stifle a forward-thinking and forward-moving industry. The fact is that gambling is a growth industry. I do not want the Bill to do anything to change that. Ultimately, I believe we can learn something from the sector. It has been innovative and has responded to challenges in the market that would have brought down lesser industries. I think that Members across the House would agree that we can learn from that.

My final point—I do not want to take up too much time—is on GamCare. We see the adverts on the television and the internet. People can click on the icon and receive the help they need. We have heard a lot in the past about payday lenders; we can learn from that. We can also learn something about self-exclusion. I believe that the betting industry is almost paranoid about problem gamblers, but very often we can be proud of the industry. I will support the Bill, and I look to the Minister to give the assurances for which I have asked.