Gaming Machines and Social Responsibility

Lord Ashton of Hyde Excerpts

Thursday 17th May 2018 Lords Chamber

[The Parliamentary Under-Secretary of State, Department for Digital, Culture, Media and Sport (Lord Ashton of Hyde) (Con)]

My Lords, with the leave of the House, I will now repeat a Statement made recently by my honourable friend the Minister for Sport and Civil Society in the other place. The Statement is as follows:

“Mr Speaker, with permission, I wish to make a Statement on the gambling review and the publication of our response to the consultation on proposals for changes to gaming machines and on social responsibility requirements across the gambling industry.

The Government announced a review of gaming machines and social responsibility measures in October 2016 in order to ensure that we have the right balance between a sector that can grow and contribute to the economy and one that is socially responsible and doing all it should to protect consumers and communities from harm. Underlying this objective was a deep focus on reducing gambling-related harm, protecting the vulnerable and making sure that those experiencing problems are getting the help they need.

Following a call for evidence, we set out a package of measures in a consultation which was published in October last year. These included social responsibility measures to minimise the risk of gambling-related harm, covering gambling advertising, online gambling, gaming machines and research, education and treatment. The consultation ran from 31 October 2017 to 23 January 2018. We received more than 7,000 survey responses from a wide range of interested parties. We received more than 240 submissions of supplementary information and evidence from the public, industry, local authorities, parliamentarians, academics and charities.

We welcome the responses to the consultation and, in preparing our conclusions, we have reflected on the evidence, concerns and issues that have been raised. We have considered these responses, alongside advice that we have received from the Gambling Commission as well as the Responsible Gambling Strategy Board. We have set out measures on gaming machines, as well as action across online, advertising, research, education and treatment and, more widely, the public health agenda in regard to gambling.

Before I set out the detail of this package of measures, let me say up front that we acknowledge that millions of people enjoy gambling responsibly, and we are committed to supporting a healthy gambling industry that generates employment and investment. But over the process of this review I have met many people who have experienced gambling addiction, and those who are supporting them, including parents who, sadly, lost their son to suicide as a result of the impact of gambling on his mental health. In addition, I have visited the incredible treatment services that are there to support them. We are clear that gambling can involve a serious risk of harm for individual players, as well as for their families and the communities they live in, and we must ensure that they are protected.

The Government are satisfied with the overall framework of gambling regulation but, as part of our action to build a fairer society and a stronger economy, we believe that when new evidence comes to light we need to act to target any gambling products or activities that cause concern. It is also important to acknowledge that while gambling-related harm is about more than any one product or gambling activity, there is a clear case for government to make targeted interventions to tackle the riskiest products, with the objective of reducing harm.

One product in particular, B2 gaming machines or fixed-odds betting terminals—FOBTs—generated enormous interest throughout the review process. In consultation, we set out the evidence for why we believe that targeted intervention is required on B2 gaming machines and options for stake reduction. Although overall problem gambling rates have remained unchanged since the Gambling Act 2005, it is clear that there remain consistently high rates of problem gamblers among players of these machines. Despite action by industry and the regulator, a high proportion of those seeking treatment for gambling addiction identify these machines as their main form of gambling.

According to data for 2015 across Great Britain, 11.5% of players of gaming machines in bookmakers are found to be problem gamblers. A further 32% are considered at risk of harm. The latest data for 2016 for England finds that 13.6% of players of gaming machines in bookmakers are problem gamblers—the highest rate for any gambling activity. We are concerned that factors such as these are further amplified by the relationship between the location of B2 gaming machines and areas of high deprivation, with these players tending to live in areas with greater levels of income deprivation than the population average. We also know that those who are unemployed are more likely to most often stake £100 than any other socioeconomic group.

Following our analysis of all the evidence and advice we received, we have come to the conclusion that only by reducing the maximum stake from £100 to £2 will we substantially impact on harm to the player and to wider communities. A £2 stake will reduce the ability to suffer high session losses, our best proxy for harm, while also targeting the greatest proportion of problem gamblers. It will mitigate risk for the most vulnerable players, for whom even moderate losses might be harmful.

In particular, we note from gaming machine data that of the 170,000 sessions on B2 roulette machines that ended with losses to the player of over £1,000, none involved average stakes of £2 or below, but at stakes of £5 to £10 losses of this scale still persist. At a £2 stake it is very hard for a player to even lose more than £500 in a session. Out of approximately 600,000 sessions that involved losses of between £500 and £1,000, only 14 of those cases involved average stakes of £2 or below. However, losses of this scale also persist at even £5 or £10. Clearly losses of £500 or £1,000 in one sitting might be harmful to problem and non-problem gamblers alike.

The response to our consultation has been overwhelmingly in support of a significant reduction in B2 stakes. The majority of respondents to the consultation submitted opinions in favour of a £2 limit, indicating strong public approval for this step. This included local authorities, charities, faith groups, parliamentarians, interest groups and academics. I am grateful for the cross-party work that has been undertaken on this issue, and would like to pay particular tribute to the honourable Member for Swansea East and the right honourable Member for Chingford and Woodford Green.

Elsewhere in the industry we are, for the time being, maintaining the status quo across all other gaming machine stakes, prizes and allocations. We have, however, agreed to an uplift for stakes and prizes on prize gaming, which we consider sufficiently low risk.

We are aware that the factors which influence the extent of harm to a given player are wider than any one product, and include factors around the player, the product and the environment. The response therefore also sets out action on: increasing player protection measures on other gaming machines on the high street; increasing protections around online gambling, including stronger age verification rules and proposals to require operators to set limits on consumers’ spending until affordability checks have been conducted; doing more on research, education and treatment of problem gambling, including a review by Public Health England of the evidence relating to the public health harms of gambling; enhancing protections around gambling advertising, including a major multimillion-pound advertising campaign led by GambleAware, around responsible gambling, to be launched later this year; and filling the gaps in evidence around advertising and harm with substantial new research commissioned by GambleAware on the effects of gambling advertising and marketing on children, young people and vulnerable groups.

Looking ahead, we will also be considering the issue of 16 year-olds playing National Lottery products as part of the next licence competition for the National Lottery. We will aim to gather evidence on this issue with sufficient time to consider it fully ahead of the next licence competition.

Changes to B2 stakes will be effected through regulations in Parliament. The move will need parliamentary approval and, in recognition of the potential impact of this change for betting shops, we will also engage with the gambling industry to ensure it is given sufficient time for implementation. In addition, in order to cover any negative impact on the public finances, and to protect funding for vital public services, this change will be linked to an increase in remote gaming duty, paid by online operators. The Chancellor will set out more detail on this at the relevant Budget.

To conclude, we want a healthy gambling industry that contributes to the economy, but also one that does all it can to protect players and their families, as well as the wider communities, from harm. We will work with the industry on the impact of these changes and are confident that this innovative sector will step up and help achieve the necessary balance”.

My Lords, that concludes the Statement.

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[Lord Foster of Bath (LD)]

My Lords, in the other place in 2010 I proposed that the stake for a fixed-odds betting terminal be reduced to £2, and in 2015 my noble friend Lord Clement-Jones introduced a Private Member’s Bill in your Lordships’ House proposing the same. We knew then that FOBTs were blighting the lives of thousands of gamblers and their families, and that the betting shops blighting our high streets were getting something like 70% of their profits from these terminals, which were a catalyst for anti-social behaviour and serious crime. So we on these Benches very much welcome the Statement that has been made today.

However, as the Minister acknowledged in the Statement, this has been a cross-party campaign to get changes, and I, too, pay tribute to Carolyn Harris and all members of the All-Party Parliamentary Group on Fixed Odds Betting Terminals. Outwith politics, there have been many, including the churches—and I pay a particular tribute to the right reverend Prelate the Bishop of St Albans for the work that he has done —and many within the gambling industry itself who have also been campaigning for this change to take place. Many tributes have been paid to the late Baroness Tessa Jowell, and I support all them all. I will make one further one, because it was the noble Baroness who, as Secretary of State in 2005, introduced the legislation that allowed the establishment of fixed-odds betting terminals. It is to her enormous credit that she showed bravery and courage when, two years ago, she publicly acknowledged that she and her Government at the time had got it wrong. She would be the first to say that the decision today is the right decision for the families and individuals who have been affected, and for society—but I am sure that she would have gone further and said that there is still more to be done in relation to online gambling and the advertising of gambling.

I have three quick questions to the Minister. The first is that the Statement makes it clear that this move will need parliamentary approval and that there is still to be further consultation with the gambling industry to ensure that it is given “sufficient time for implementation”. I think that all of us are anxious for this change to take place as rapidly as possible. Can the Minister give us an indication of the timeframe that he envisages before we see a £2 maximum limit?

Many concerns have been expressed about the number of betting shops on our high streets. Although changes were made in 2015, will the Minister acknowledge that the planned changes to the National Planning Policy Framework would give an opportunity to enhance the powers that local authorities have to be able to take action if problems emerge in future following this change?

Finally, I welcome very much that Public Health England is to conduct an evidence review into the health aspects of gambling-related harm. We are all keen to ensure that enough money is made available by the industry to pay for research into, education around and treatment of gambling problems. Will the Minister tell your Lordships’ House whether the time has not come to change the current voluntary levy to a compulsory one? As I have said in your Lordships’ House before, it is very strange that the compulsory levy for horseracing raises 10 times more to support horses than the voluntary levy currently raises to support people. The time has come to change that.

[Lord Ashton of Hyde]

My Lords, I am very grateful to the two Front Benches for their comments. They are welcome to this announcement. It is a great pleasure to be congratulated for a change, and I genuinely am very grateful for that. I absolutely take noble Lords’ point that it was a cross-party effort to change this. As the noble Lord, Lord Foster, said, he has been around a long time and he has been at this particular subject for some time—I am glad that he is glad that what he wanted has finally come to pass. I, too, pay tribute to Carolyn Harris and the work of the cross-party APPG, and I am sure I shall have a chance to acknowledge other contributions later. I will also pass on the noble Lord’s mention of Tracey Crouch. She has taken this on as a personal crusade in many ways, so I will pass on those views.

As is only to be expected, a number of other points were raised, some possibly with disappointment, as were some questions. Both noble Lords mentioned the levy. This has been an ongoing discussion point. The reason we have not introduced a compulsory statutory levy at the moment is that we want the industry, Gamble Aware and the commission to build and improve on the voluntary system. We want them to do this voluntarily and with enthusiasm; we want them to be socially responsible and we expect them to make a lot of progress on this. This announcement today shows that if they do not, and if they are not socially responsible, we will be prepared to legislate. I am absolutely clear, as the Secretary of State has been, that if we do not get the right level of contribution and enthusiasm from the industry, we will consider legislation.

The noble Lord, Lord Griffiths, talked about children gambling and we absolutely understand the issues about children, the possible effect of online gambling on them and the normalisation of gambling, which is an issue to be aware of. Strict controls are, of course, already in place to prevent children gambling online or in individual premises. These are enforced by the Gambling Commission, which is actively looking at increasing the protections online. We have outlined in the response today some of the extra things that we are doing to protect children. The fact is that most gambling by children at the moment is legal—such as betting in playgrounds and so on. We are absolutely aware of the problems, and I can assure noble Lords that we will monitor this. The additional features that we have announced today will help, but this is not the end of the story; we will continue to monitor these things.

The noble Lord, Lord Foster, talked about implementation. We want to get on with this. We have waited long enough and we have sat and listened to a lot of representations from a lot of people. We have made this decision and we want to get on with it. However, this has to go through Parliament, and I hope noble Lords will give it their support when it arrives here. We want, equally, to engage with the gambling industry, because—quite possibly this is the only bad thing about today—there will be some job losses. There are mitigating factors in this: we have a very full employment situation, the possible job losses are spread around the country and there are measures to help, but there will be some involuntary redundancies as a result of this. Interestingly, however, the gambling operators’ own figures showed that there would be about 3,200 job losses by 2020, even if we had not changed the stake at all, because the mood of the public is changing on this. I cannot set out an exact timetable today, but obviously we want to carry on with implementation and do it as quickly as we can.

The noble Lord, Lord Griffiths, asked about contactless cards. We made clear at the consultation stage that we had concerns about the introduction of contactless payment on gaming machines, but there appears to be continued industry-wide support for the introduction of contactless payments. This gives the potential for corresponding player protection measures that could be introduced alongside this form of payment, because of the data that can be received from them.

The noble Lord, Lord Foster, asked about the powers of local authorities. Of course we understand the concerns about the number of betting shops on the high street. Although the numbers have been stable over the past year, they are actually in decline, and I think the effect of what we have announced today will mean that there will be less to be concerned about. We will have to see what the impact is and whether it is quite as bad as the industry says—we will have to see, as the figures are not absolutely clear. We will have to monitor that, and I can assure the noble Lord that we will do so.

I say again that I am very grateful for the welcome that noble Lords have given. Lastly, I agree entirely with the noble Lord, Lord Foster, about the bravery of Baroness Jowell, not only in facing her death but in being able to say that they had got it wrong. To his credit, Tom Watson for the Labour Party said the same this morning.

[The Lord Bishop of St Albans]

My Lords, I too welcome this Statement, which represents a significant progress in our efforts to bring about a sensible and ordered scheme of gambling regulation in this country. I also pay tribute to the Minister in this House, to the Minister in the other place, to the Secretary of State and to the Prime Minister for their moral courage in the face of a lot of opposition in making this excellent decision, not least to reduce the stakes for FOBTs down to £2.

I note that the report includes a whole section on gambling advertising. Many Members, in both Houses, are deeply concerned about the normalisation of gambling at a very formative time for children, not least because of the wall-to-wall adverts that are shown via various forms of media but especially online, and because of the development of games which in themselves are not gambling but are designed to encourage people to undertake these sorts of activities and normalise them for later in life. Could the noble Lord tell us a little more about how that might be addressed and when some of this will be implemented?

[Lord Ashton of Hyde]

My Lords, I am grateful to the right reverend Prelate, who has led on this subject and has, I know, spent a lot of time worrying about this and making positive suggestions. I am glad he is glad about this announcement.

Of course we understand the issues around children and advertising, and that is why gambling advertisements must not be targeted at children. They must not be shown around children’s programmes or include anything that appeals particularly to children or young people or that exploits them. Tougher guidance is being published on what that means by the Committee of Advertising Practice. As we set out in the consultation, the number of TV gambling advertisements seen by children has been going down each year since 2013. However, we are not complacent, and that is why we are setting out a package of measures on advertising today. We understand the right reverend Prelate’s point that advertising could normalise gambling for children, and that is why the strict controls on children’s advertising apply. As far as games and skins and things like that are concerned, the Advertising Standards Authority is aware and the Gambling Commission has cracked down hard on operators that try to get round the rules by using games and non-monetary prizes in games online.

[Lord Cormack (Con)]

My Lords, I add my thanks and congratulations to my noble friend. He should bask in this glory while he can, but may I just say to him that I hope the Government will have a target date for implementation? One understands that there has to be time, but could we please fix a date—the end of the year, perhaps—by which this will come into force? Every week that goes by adds to human misery. Could we perhaps also suggest to those who want to have a £2 flutter that they can benefit their communities if they buy lottery tickets?

[Lord Ashton of Hyde]

My noble friend makes a good point. I have spent many minutes—possibly even hours—not giving a timetable for various things, and I am afraid that I cannot be very specific today. I can only repeat to my noble friend what I said before. We have spent a lot of time considering this issue and have taken a lot of advice, and people have expressed strong opinions. We have now come to a decision and therefore want to implement it. There are procedures to go through —it has to go through Parliament—and we will do what we can to implement it. However, I am unable today to give a precise timetable, not least because the parliamentary timetable is somewhat uncertain.

[Viscount Falkland (CB)]

My Lords, I congratulate the Government on finally taking action on the casino gaming machines in betting shops. One must not be too harsh about the bookmakers, because the history here is of course that betting on horses and greyhounds—the traditional betting in betting shops—has declined enormously, as people tend now to bet more and more online. This will be a sad day for bookmakers, with the reduction of the amount to be bet on these machines. I do not know whether that is the right amount; I would not criticise it, but it will make the bookmakers’ position quite difficult. There will be job losses, and so on. When I was on the pre-legislative scrutiny committee on the draft gambling Bill I tried to persuade the Government and the DCMS officials of the problems with gambling, particularly on machines in betting shops. But since then four machines have been allowed. I argued the toss with Baroness Jowell, one of the nicest women you could possibly argue with, and it was a great pleasure to work against her. Along with a number of my colleagues, I did not like the Bill that came forward, because it did not deal with the realities. I say to my ex-noble friend Lord Foster that it is not right to criticise the owners—

[Viscount Falkland]

Does the Minister agree that the remarks of the noble Lord, Lord Foster, on the question of whether horses are valued more than people and the dangers of addiction and racing are somewhat misplaced? Racing has the greatest difficulty in funding national competitions. Could the Minister comment on that?

[Lord Ashton of Hyde]

I am very keen on people and horses, so I will not say that one is more important. On the noble Viscount’s point about the bookmakers, I understand about jobs, the difficulties that some bookmakers will face and the possible effect on racing. We have been clear that this will involve some job losses, but it is not right that a business operates on a business model that creates a significant amount of harm to some vulnerable people. As I said earlier on, we want a responsible gambling industry that is strong and secure. As regards racing, we are keen to support it; for example, we have already allowed the bookmakers on the course, most of whom have a gross gambling income of less than half a million pounds a year, not to have to pay the levy at all. We have put the statutory levy on online bookmakers, raising an extra £35 million a year, and we will monitor to review the rate of the horse race betting levy; we originally said that we would review it by 2024 but we have said that if necessary, when we see what the effect of these changes are, we will bring that review forward. Ultimately, however, this is the right decision for people in the gambling industry.

[Baroness McIntosh of Pickering (Con)]

My Lords, I speak as a member of the all-party group on racing. Does my noble friend not agree that the implication for market towns with a high proportion of betting shops is that they will have a disproportionately high number of job losses, with the internet companies being let off the hook?

[Lord Ashton of Hyde]

No, I do not agree. The evidence is that these betting shops are overwhelmingly in urban places and places with economic deprivation. The majority of them are in London, which alone has 22% of these shops. In addition, there is very high employment in this particular jobs market, so there is a good chance of people being able to get another job. A very important point is that the money spent on FOBTs and betting gaming machines will now be spent on other things in the economy, and sometimes it will be better spent than on FOBTs.

[Lord Wigley (PC)]

My Lords, I very warmly welcome the announcement of the £2 stake. Perhaps I may follow up on the words of the right reverend Prelate about the impact of advertising on children. Does the Minister accept that it is not just children’s programmes that need to avoid such advertising but, in particular, sports programmes which appeal to children? Will the Government take that into account?

[Lord Ashton of Hyde]

Yes, we will take that into account. That is why GambleAware is commissioning further research into the impact of marketing and advertising on children and young people. It will include how advertising influences attitudes to gambling, so I understand the noble Lord’s point. For example, that is why logos and so on are not allowed on sports shirts sold to those under the age of 18.

[Lord Campbell-Savours (Lab)]

My Lords, some of us predicted these problems when the Bill went through in 2005. Sadly, we were ignored. What assessment has been made of the possibility of drift into other high-stake gambling products as a result of this measure? I congratulate the Government on their courage in taking what I believe is an absolutely critical decision.

--- Later in debate ---

[Lord Ashton of Hyde]

I think that there is a possibility of drift, as the noble Lord called it, and we have certainly taken that into account. The most obvious point is that gambling will move online from betting shops, but there is an advantage in that, in that it is an account-based system. With the data that comes from online sources, gambling operators are able to spot problem gamblers using modern technology, artificial intelligence, algorithms and things like that. We have said to the gambling industry that we expect it to use this technology to improve the way in which it spots problem gamblers, and I think that it will be a lot easier for it to do that when it moves online. However, it is of course a problem and we will be monitoring it. We have put forward specific proposals in today’s response to address it.

[Lord Sherbourne of Didsbury (Con)]

My Lords, I too congratulate the department on undertaking a very effective consultation exercise and then taking very decisive action. Does my noble friend the Minister agree that this is an example that other government departments could usefully follow?

[Lord Ashton of Hyde]

I am sure that the Secretary of State would agree with that. The difference here is that it was a very popular decision, which always makes it easier.

[Lord McNally (LD)]

My Lords, will the Minister take a more sober judgment? In 2005 this House, and Parliament as a whole, thought that it had done a magnificent thing in stopping the advent of super-casinos. It was the euphoria of stopping them that allowed for the introduction of gambling machines to go through almost unnoticed. There is a danger in the euphoria here also. I think that the noble Lord, Lord Campbell-Savours, and others are right. It is the growth of online gambling and the changes in technology that afford it that will give us the next problem. I urge that the research and analysis into online gambling is carried out with rigour and it is not simply left to the industry to self-regulate, clever as it may be with its artificial intelligence and its algorithms. Independent research is needed, which can advise government in the future, otherwise this problem will come back in another form.

[Lord Ashton of Hyde]

I take that point. I am absolutely not suggesting that today’s announcement is the end of it. We will be very specific: the Gambling Commission is looking at requiring operators to set limits on customer spending until affordability checks have been concluded and at bringing forward stricter licence requirements for gambling companies to interact with vulnerable customers. This is not something that we are just letting them get on with; it is being required of them. If a company were to break such stricter licence requirements, it could lose its licence. There would be very serious sanctions if a company did it wrong. The Gambling Commission is also examining proposals to prohibit reverse withdrawals and the use of credit cards for online gambling. We will continue to pay close attention to the operators’ progress in using behavioural data to identify problem gamblers. We are not just sitting back and saying that this is it. We are monitoring it. The Gambling Commission continues to monitor it and is putting in stricter conditions.

[Lord Browne of Belmont (DUP)]

My Lords, I very much welcome the Statement today and congratulate the Minister on achieving the £2 stake. We have heard that problem gamblers could now turn to online sites in a big way. Does the Minister therefore agree that this is the time for the Government to look again at introducing measures, such as those that operate in Sweden, to restrict late-night internet gambling and, as he said, ensure that only debit cards and not credit cards can be used as a means of paying the stake?

[Lord Ashton of Hyde]

I have said that this is not the end. As an aim, we want to encourage responsible gambling, so of course we will take into account suggestions such as that from the noble Lord. We are not against gambling, but we want it to be responsible. There is opportunity to monitor it more if it is done online, because of the data that goes backwards and forwards. We will look at these things and we expect policy-making on this to be evidence-based. One thing we will do is increase the research to make sure that we have good evidence that this is a problem, as we have on FOBTs, and that the solution will achieve the result that we want.

[Lord Stevenson of Balmacara (Lab)]

My Lords, several noble Lords have mentioned that this is a package and have welcomed the reduction in the stake for FOBTs, which I endorse entirely. However, the 78-page document that accompanies the Statement is a bit thin on action, so I wonder whether the noble Lord can respond to two points. On advertising, which is really important, we are getting guidance on tone and content and on children and young people, and the welcome, if limited, news that a “responsible gambling” message will appear during TV adverts. At least there is action, but it is not exactly action at a punitive level against the harms we see already. On online gambling, which around the House we are all agreed is the next big problem, all we seem to be getting is a round table and a clear plan of action to come forward at some future unspecified date from the Gambling Commission. Is there not a need for more urgency across this range of issues?

[Lord Ashton of Hyde]

I do not agree that this is just a series of guidance. First, as far as advertising is concerned, plenty of things are happening already. There are strict controls on gambling advertising. There are rules to prevent it being aimed at children. Those apply across all advertising, so that is happening already. There has also been progress on measures that were mentioned in the consultation, such as strengthening rules on gambling advertising. The Committee of Advertising Practice has published tough new guidance already on protecting the vulnerable. From June, a responsible message will appear on the screen. The Gambling Commission has consulted on expanding sanctions for a full breach of the advertising code. I mentioned before the social responsibility provisions that the Gambling Commission can produce.

Not only that, we are suggesting more. There is a multimillion-pound, industry-funded safer gambling advertising campaign. That is not a small amount: it is £5 million to £7 million for two years running, which is a social advertising campaign equivalent to a big health campaign such as the Drink Drive campaign, which was remarkably successful. Further guidance on protecting children will be produced later this year. Guidance is important to enable people to do what we have asked them to do. GambleAware has commissioned significant research on the impact of marketing and advertising on children and young people. These things are designed to strengthen existing protections, so I am afraid that I reject the criticisms of the noble Lord, Lord Stevenson.