Statutory Gambling Levy

Scott Benton Excerpts

Tuesday 7th June 2022 Westminster Hall

[Carolyn Harris]

I agree entirely, and I will talk about exactly that later. It is clear to see that the voluntary levy is not fit for purpose. What is the solution? Well, a solution is already in place and available: it is set out in the Gambling Act 2005. There are already provisions in legislation for the Government to place the collection of levy donations on a statutory footing should the voluntary arrangement be shown not to work, which clearly it does not. DCMS should use existing powers to require operators to pay an annual levy to the Gambling Commission. A joint advisory levy board should then be given oversight of the levy paid. That would be a formal cross-Government working group led by the Department of Health and Social Care. The levy board should oversee a comprehensive assessment of the evidence base of gambling-related harm and the limitations of the current voluntary system.

It is also crucial that the levy is graduated or smart. By that I mean that when considering the options for calculating the statutory levy, officials have devised a formula that requires companies offering potentially more harmful gambling products to pay a correspondingly higher proportion of the levy—more simply known as a “polluter pays” principle. This has precedent in New Zealand, where the gambling problem levy is set by an Order in Council and reviewed every three years. A lottery provider, bingo hall or high street bookie or casino will pay far less than a giant monopolised online gambling operator. There is also precedent in the UK: the Financial Conduct Authority already operates a similar system for financial services organisations, where a statutory levy is imposed on firms to fund free-to-client debt advice according to the “polluter pays” principle.

[Scott Benton (Blackpool South) (Con)]

The problem with having a statutory levy is that it would hit land-based gambling companies—casinos, bingo halls and the high street shops—when they are just emerging from the pandemic. I appreciate that the hon. Lady suggested they would be levied at a slightly different rate, but the problem is that if those businesses go out of business, we could see a huge cost to the Exchequer from loss of taxation revenue, lost jobs in communities and an economic hit on the high street. Does she not consider that to be a likely outcome of a statutory levy?

[Carolyn Harris]

I certainly do, but I just stated that the statutory levy would be graduated so that land-based high street bookies, on-street casinos and bingo halls would not pay the same levy as online companies who make a lot more profit than the individual companies, who will also have overheads of staffing costs and business rates. I acknowledge all that, but the proposal is aimed at making sure that the polluters pay the most.

If it was brought in by the DCMS, a 1% levy on industry revenue would provide £130 million of funding for research, education and treatment. That would massively improve the disparity between other nations’ spending and that of the UK. Australia spends £368 per gambler, Canada spends £329 per gambler and New Zealand spends £413 per gambler. The UK spends £19 per gambler. If we had funding for research, what could we do? We would finally be able to hold a proper prevalence survey, not wholly inadequate telephone surveys of a few hundred people, to ascertain exactly how many people in the UK are suffering gambling-related harm, so that we can get them the help they need. There would be improvements in research and data for clinical outcomes, along with the quality of data collection, to ascertain how gambling treatment clinics are performing and what more could be done to improve treatments.

With better and more certain funding for education, we can prevent people falling into the hands of gambling operators in the first place. We can highlight ways to set up banking blocks, deposit limiters, advice services and many more tools, not only to teach people about the dangers of some gambling products, but to signpost those who are already addicted towards help.

Finally, and probably most importantly, we come to treatment. Treatment for gambling addiction in the UK is completely inadequate. Chronic underinvestment in the gambling treatment system, as a result of the current voluntary levy, has led to a scenario in which treatment is unregulated, unaccountable and fails to use the evidence base in its strategies. Only between 2% and 3% of people with gambling problems enter the treatment system, all of whom are self-referrals. With a statutory levy, that can change.

It is clear that the statutory levy is vital to the success of the gambling review, but the industry would disagree. It would say that the largest companies have donated £100 million already, with more to follow, and it would label as anti-gambling those of us who call for this levy. I would call the industry anti-reform. That £100 million is well under what would have been collected by a statutory levy, and there is no continuity or certainty in that funding. Clinicians, the Gambling Commission and GambleAware all say that current funding levels are insufficient.

The industry claims that the introduction of a flat- rate levy would be unfair to some land-based sectors, such as casinos, bingo and high street bookies, because those sectors might contribute to less harm but would be disproportionately affected by a levy as a result of the potential impact on jobs. That is a deliberate misinterpretation of the position. The whole point of a levy is that the less harm that is caused, the less need there is to pay for the consequences of that harm. If some sectors harm less than others, it makes perfect sense for them to pay less. That is what is meant by a smart levy, based on the “polluter pays” principle.

--- Later in debate ---

[Scott Benton (Blackpool South) (Con)]

It is a pleasure to speak under your chairmanship, Mr Betts. I refer hon. Members to my entry in the Register of Members’ Financial Interests and thank the hon. Member for Swansea East (Carolyn Harris) for securing the debate.

With the current review of the Gambling Act 2005 drawing to its long-awaited close—hopefully; we have been here many times before over the last 18 months—this is certainly an opportune moment to be debating this subject. Far too often, emotion, instead of evidence, drives the debate about betting and gaming in this country. Nowhere is that felt more keenly than in the discussion about how problem gambling is tackled through research, education and treatment—RET.

Some 22.5 million British adults enjoy a bet every single month. According to the independent regulator, the rates of problem gambling in the UK are falling, having reduced to 0.2% now from 0.6% just 18 months ago. Although of course one problem gambler is one too many, those figures are positive compared with other European countries. The rate is 2.4% in Italy, 1.4% in Norway and 1.3% in France. One could therefore conclude that the regulated market in Britain is relatively successful in keeping rates of problem gambling fairly low.

For the past few decades, the industry has rightly shouldered the financial responsibility for that work by paying a voluntary levy to fund independent charities tackling problem gambling. Despite that, anti-gambling campaigners are demanding a new, statutory levy on the industry—a tax by another name—to fund RET. That poses one obvious question: would funds generated through a statutory levy and given to the Department of Health and Social Care really make a tangible difference to the delivery of RET and to problem gambling in the UK? The clear answer is no.

The current system is making good progress, and in any event, a blanket levy would not raise materially more money for RET than is raised at present, but it would disproportionately hammer casinos and bingo halls, where just a 1% hit on turnover equates to a 10% hit on profit. That could put many bingo halls, casinos and other land-based operators in places such as Blackpool out of business, costing thousands of jobs and the Exchequer vital revenue, as I alluded to previously.

[Paul Blomfield]

The hon. Gentleman says that the current system is making good progress, but the latest National Gambling Treatment Service statistics from GambleAware show that 49% of users have a risk level that indicates that they remain at risk at the end of their treatment. Does he think that that is good progress?

[Scott Benton]

There is clearly more work that we can do in this area, but it would help if the NHS had a long-term strategy for dealing with the issue, which it lacks at present. I will say more on that point in a few moments.

Under current arrangements, all companies regulated by the Gambling Commission are expected to make a voluntary contribution of 0.1% of turnover. To put that in context, in 2019-20 that figure was £10 million. Most of the funding goes to GambleAware, which is a totally independent charity. The industry has no say whatever on how that money is spent. In its five-year strategy published last year, the charity says that it expects to see that income increase to £39 million by the year ending 2024. As the hon. Member for Swansea East alluded to, the four largest gaming companies—Entain, William Hill, Flutter and Bet365—have agreed to increase their contributions to 1% of turnover. That is an additional £100 million over a four-year period to tackle the issue, with all of that funding going towards tackling and preventing the causes of problem gambling.

As I said in response to the intervention from the hon. Member for Sheffield Central (Paul Blomfield), the NHS still does not have a long-term strategy to tackle problem gambling. It was only in 2019 that the Department of Health announced it would open 15 new NHS clinics for addicts. Despite that, only five are open so far, with three more supposedly coming online later this year. Meanwhile, it is the industry and charities that have spent the last two decades trying to tackle the issue. Currently, charities use about 160 locations for face-to-face counselling services—part of an already mature network of clinics, treatment centres and outreach programmes that are making a real difference right now.

A statutory levy would risk charities’ existing funding models by taking cash out of their coffers and putting it into the NHS, which, sadly, is not yet set up to delivering those services.

[Ronnie Cowan (Inverclyde) (SNP)]

Has it crossed the hon. Member’s mind that the difficulty for the NHS in rolling out its plan for 15 clinics is the lack of guaranteed funding, which is exactly the strategy that a smart statutory levy would cover?

[Scott Benton]

The issue has been around for decades. Obviously, the gambling review is long awaited. Hopefully, that will help to address the issue, but it is unmistakable that the industry has taken voluntary steps over the years to try to tackle the problem. What we need is a consensus on the most appropriate way forward. For the reasons outlined, I do not think that a statutory levy is the answer, but I am open to hearing all Members’ views, so I am attending the debate to hear both sides of the argument.

A clumsy one-size-fits-all approach would have a disproportionate effect on land-based operators, which are only just recovering from the pandemic. In truth, it would be catastrophic on those businesses, because, like the rest of the hospitality sector, they have many fixed costs to fund, including staff, business rates, tax and licences. A tiered system would take that into account and better protect jobs.

[Carolyn Harris]

If the hon. Gentleman refers to Hansard to read the comments I made earlier, he will see that I reiterated everything that he has just said, so I do not quite understand his comments.

[Scott Benton]

I suspect the hon. Lady is referring to her opening remarks. I appreciate that she spoke about the differential system between online operators, which she suggested were the worst polluters, and land-based operators. The problem is that many land-based operators run on a very small profit margin, so even a very small statutory levy could put them out of business. The high street is already struggling, and I am afraid it would be a double whammy when we simply do not require it.

[Craig Whittaker]

The one area where we already have a levy is the horse-racing sector, which has a strong link with gambling and betting. What does my hon. Friend feel that an additional levy on that sector will do to those jobs and on horse-racing?

[Mr Clive Betts (in the Chair)]

Order. I remind hon. Members that seven minutes was the guideline.

[Scott Benton]

Time is short, so I will not directly respond to the points made by my hon. Friend the Member for Calder Valley (Craig Whittaker), but I suspect he knows my feelings about an additional statutory levy, which is essentially a tax. It could create problems for horse-racing at a time when we are already considering other prohibitive measures that would affect sponsorship, and other elements of the debate that could have a further impact on horse-racing and, indeed, all sports.

Third sector charities are already effective and are making real progress. In contrast, a statutory levy looks like a retrospective solution to a problem that simply does not exist at the level that anti-gamblers want policymakers to believe. Is it really designed to help research, education and treatment, and the wider public as a whole, or is it a punitive measure to placate the anti-gambling lobby? A statutory levy will not boost funding for RET. The money is already in the system, and there is a bigger, broader commitment for the future. The Government need to tread carefully if they are to avoid hurting businesses and putting thousands of jobs at risk.