I beg to move amendment 4, page 12, line 15, leave out subsection (2).
With this it will be convenient to discuss the following: Amendment 22, page 12, line 16, leave out '22' and insert '16'.
Amendment 23, page 12, line 16, leave out '22' and insert '17'.
Amendment 5, page 12, line 20, leave out '
Amendment 24, page 12, line 20, leave out '
I am delighted once again to make the case for bingo and speak out against the Government's damaging tax increases. We discussed this only a few weeks ago, on
"We have had a small, boutique, but extremely well proportioned debate".—[ Hansard, 13 May 2009; Vol. 492, c. 977.]
She was right. It encapsulated every one of the arguments that surround this issue. Mr. Hands made an important contribution to that debate, especially given the circumstances of the last week. I shall return to that point later.
Before I make my argument in detail, I want to say how astonished I was last week when the bingo sector held a demonstration in Old Palace Yard. It was a bright, noisy, colourful demonstration, and it will probably be the first and last time that I ever see people travelling from Caerphilly and Bristol, together with Caribbean dancing girls, to protest against Government tax proposals. Those people had come from around the country, not to represent the interests of the bingo companies, but to express the passion that communities have for their bingo clubs and their desire to protect them. I was delighted that many hon. Members attended the demonstration, including Nia Griffith. Unfortunately she voted with the Government on
The key point of principle in this debate was clearly laid out on
The hon. Member makes an important point, but does he detect a trend in this Finance Bill? The Government seem to want to hit the poorest the hardest. We have seen no compensation for the doubling of the 10p rate. We have just seen the APD proposals that will affect the poorest, and now they will be hit hardest by these proposals.
In an attempt to build an all-party consensus on my amendment, I might not follow the hon. Gentleman's logic in its entirety. It might be more accurate to suggest that, with a national debt approaching £1.6 trillion, complete chaos in the current account, and the Government's finances in turmoil, they are simply scrabbling about trying to fill the black hole from everyone's pockets in whatever sector they can find.
Might it be that the Government are being snobbish? Somehow they think that there is something infra dig about the bingo club, where they would not be seen going.
I am almost at a loss; the temptation is too great. It is a good thing that Mr. Timpson can comfortably go to the bingo with his wife. Mr. Illsley can also go to his local club. More Labour Members should go to their bingo clubs, which are mainly in working class communities, and see that those who go there are normal people. The Government should not be afraid of the working class, and nor should they tax them so outrageously.
I visited Mecca bingo in Taunton on Friday and met many people who, in the past, may have considered voting Labour, although I suspect that they will not do so in future. The hon. Gentleman mentioned revenue. I am told that Mecca bingo will pay some £10 million a year more as a result of being taxed at 22 per cent. rather than 15 per cent. To put that in context, £10 million is the additional borrowing that the Government run up every half an hour. The idea that the extra bingo taxes are likely to plug the hole in the public finances is fanciful. The reason must be something more serious or vindictive.
I was not aware of those figures, but they are very interesting. The public finances are in such a perilous condition that the Government are scrabbling around to fill the hole with whatever they can possibly raise.
Even if bingo clubs were taxed on the same basis as casinos, they would pay only 15 per cent. and that would be fair. However, if unamended, the Finance Bill will set in statute this profound unfairness, and that is what amendment 4 seeks to address.
The hon. Gentleman is right to reflect on the debate that we had on
That is absolutely right. I know that the hon. Gentleman went over that point in some detail during the last debate on this topic, and I would expect him to do so again.
On the point of the unrecoverable VAT—or of VAT in general—and the most recent history of the Government's appalling behaviour in relation to bingo, there is one qualitative difference between the debate today and that on
That is vital, because the Government argue that the sector will benefit from the removal of VAT with an increase in gross profits tax to 22 per cent. The sector and I, however, will argue that that is false because the rulings that we have had so far would tend to indicate that the Government were never entitled to levy the tax or collect that revenue in the first place.
I do not want to pre-judge the appeal, but as the Government have lost the first two rounds—the VAT and duties tribunal and the original High Court case—it appears to me that there is no certainty that the Court of Appeal will come to a different decision next time round. That means that we are voting on a point of principle about unfairness and, more important, on the impact of the rise of GPT from 15 per cent. to 22 per cent. on bingo clubs, communities, jobs and tax yield. I would argue, given what we have seen in the recent history of the bingo sector, that the implications of that tax have the potential, at least, to be pretty nasty in communities around the country.
Let us gently remind ourselves that the sector provides good quality community facilities and safe environments, mainly for women, in mainly working-class communities. The bingo companies invest in the clubs in those communities. That entertainment and investment might well be lost if, as we have seen, more clubs over and above the 40 that have closed recently close in the next few years. The sector provides employment and, again, the jobs are mainly based in working-class communities. If those jobs are lost now, with unemployment rising, employment falling and vacancies coming down massively, those lost jobs might be lost for good. The Government's old argument was that people who lost their jobs in bingo clubs could find new jobs elsewhere, but that becomes less valid as each day passes, as unemployment rises and as the number of vacancies comes down. We have already lost 4,000 jobs.
My hon. Friend is making a very powerful case. In Montrose, the local Gala club has closed down and it is very difficult for its former employees to find alternative jobs. The same sort of businesses in the town, which might have taken up that slack, are also suffering in the recession.
That is absolutely right. The closure of the club in Montrose was a tragedy for the town and for the borough. The jobs have been lost and my hon. Friend is right that it is difficult for those people to find replacement jobs. In the current climate, it is also nigh-on impossible to identify any other business that would seek to reinvest in such community facilities given the rate of returns, not least when we take account of the cost of borrowing money to invest in new facilities to replace those that are being closed.
In my constituency, the club has received substantial investment recently. The companies have a good track record of investing their money in local communities, which need such facilities.
That is absolutely right. We see the large clubs, the well-run clubs and the millions of pounds that are required to be and are invested and reinvested year after year, on a cycle, to refurbish them and bring them up to speed so that they continue to provide the good quality facilities that we all have in our constituencies. We do not want to see any of that investment lost.
Of course, it is not about investment, jobs or community facilities. As the clubs close, business rates fall, income tax take goes down, national insurance yield goes down, benefit costs increase and, of course, community facilities close. For all those reasons, we need to ensure a level playing field and fair taxation and to remove this quite extraordinary burden on bingo—of all sectors—when compared with all other gaming sectors.
The hon. Gentleman is making some interesting comments. Does he have any forecasts of how many clubs might close, and of how much loss of revenue there could be in total?
I do not have forecasts, but I suspect that the industry will be anxious that its pressure on the Government is successful so that we can avoid the eventualities to which the right hon. Gentleman refers. However, I am sure that the profitability of all clubs, and their investment profile over the next few years, is being looked at. In the recent past, 40 or so clubs have closed with 4,000 or so job losses, so we can see the sort of picture that might emerge if things remain very difficult.
Amendment 4 would keep the duty at 15 per cent. but amendment 5, also in my name, would delay the implementation of the change until 2010. The advantage of that is that at least we would have the certainty of the outcome of the Appeal Court hearing.
I shall listen to what other hon. Members say in the debate, but my instinct is to ask to press amendment 4 to the vote. Holding the rate at 15 per cent. is better in principle than simply seeking to delay the change, as that might give rise to a grey area. As I said, I shall listen to the debate, and especially to what the Minister says.
I said at the beginning of my speech that I had reread the debate from
"We have no wish to widen the gaping hole in the public finances. Instead, we wish to prevent the Government from pre-empting the legal process through this sudden change to their system—after all, it was the Government themselves who launched the appeal to the High Court."—[ Hansard, 13 May 2009; Vol. 492, c. 970.]
He was absolutely right. He backed the amendment, as did many of his Front-Bench colleagues, including the hon. Members for Fareham (Mr. Hoban) and for South-West Hertfordshire (Mr. Gauke), as well as the Opposition Treasury Whip, James Duddridge and many others. The Government have announced their intention to appeal the High Court decision, so today's debate on an identical amendment is framed in terms that are precisely the same as those that he used to define the debate on
I thank the hon. Gentleman for giving way. He is being quite accurate, but he is leaving out an important piece of information. He was not present for it but, in the interim between this debate and the debate of the Committee of the whole House, there has been a vote on clause 112 of the Finance Bill, which would remove VAT from bingo. That is relevant to today's debate.
I understand the black-hole argument perfectly clearly, but it does not apply here. The tribunals and the first High Court decision told us that the Government were not entitled to that VAT in the first place, and the Appeal Court ruling may confirm that. If the argument is that some of the Red Book's revenue yield forecasts will have to be changed, I refer him to what many Opposition Members have said. They have described the Red Book as "difficult to believe", and I shall put it no more strongly than that.
I thank the hon. Gentleman for giving way again. I think that he is referring to the assertions that I and various right hon. and hon. Friends have made about some of the growth forecasts and income projections for future years. It is very important that a proper distinction is made between what the Treasury will take in this year, and what it will get in future financial years.
What I am trying to do is prevent members of the Conservative Front Bench from wriggling out of their responsibilities to the bingo sector—and, more importantly, to bingo club members up and down the country. It is vital that we keep the assets and the jobs, and all the income and duty yields from national insurance, income tax, corporation tax and business rates. For all those reasons, we reject the proposal to raise the rate to 22 per cent. We must keep it at 15 per cent. and, on a point of principle, deliver fairness across all forms of gaming. Bingo must not be left hung out to dry.
It is always a pleasure to follow Stewart Hosie. As he points out, we have rehearsed these arguments previously, but he is right to say that the argument is about the closure of amenities for our constituents, the threat to bingo clubs and the facilities that they provide throughout the country, and the consequent job losses when such clubs close.
The hon. Gentleman referred to the history of the argument, beginning with double taxation. The bingo industry has long argued that it is the only form of gambling subject to double taxation, with VAT levied on participation fees and gross profits tax on the overall profits of the industry. The industry argued for some years that it should be given parity with bookmakers, casinos and the internet, where harder forms of gambling take place, with larger sums of money, yet those are not subject to double taxation. For example, when someone walks into a betting shop to place a bet on a horse race, there is no charge involved in placing that bet.
When I was preparing for today's debate, it occurred to me that we could go back a few years to arguments about bingo and other forms of gambling when advertising for bingo was not allowed, although it was allowed for other, harder, more commercial forms of betting. We seem to be involved in a similar argument now. There appears to be a bias against the bingo industry. In Committee on
Double taxation is not the only problem facing the industry. There are other issues, which have been outlined in the House previously—the general economic situation, the smoking ban and other issues, which the industry accepts and which we are not using in support of that industry. The present argument is about the level of gross profits tax and the ending of double taxation—the double-edged sword of increasing gross profits tax to 22 per cent., without giving the industry time to adapt to the removal of VAT on participation fees, to see where those funding streams were likely to settle. There is an argument over the figures, as the hon. Gentleman pointed out, and there is some argument about the amount of VAT raised.
My own constituency has suffered a bingo club closure. As I mentioned in the last debate, the remaining bingo club in my constituency has a membership of more than 20,000. These are important facilities in our constituencies. They have a large membership and it is important that we keep them as an amenity. The loss of a bingo club is a huge loss to the community, particularly if it is the only bingo club in town and a large number of people have to find an alternative leisure facility or go to another town to join another bingo club if that one remains open.
I strongly agree with the hon. Gentleman. I have experienced the same thing in my constituency, in Montrose. It strikes me that there is another aspect to the argument. Anyone watching certain TV channels will notice a huge growth in online bingo. I wonder whether it is healthy for people to sit and play bingo on a computer, rather than going to the more social setting of their local club.
The hon. Gentleman makes a valid point. I am not sure that it is healthy for anybody to sit in front of a computer terminal for any length of time, whatever they are doing. That relates to what I shall say shortly when I compare bingo with other forms of gambling. As opposed to someone sitting in front of a computer terminal at home with a credit card, playing bingo in relative secrecy, people play bingo at a club in an environment that is protected, regulated and managed. People are looked after by the management of the clubs, which by and large is good.
The industry looks to the Government for support, in view of the closures, the double taxation and the losses. It welcomed the ending of double taxation, as I have said. There has been considerable support across the House for ending double taxation and for the bingo industry; 129 Members have signed an early-day motion in support of the bingo industry, such is the popularity of bingo and the concern felt by hon. Members across the House about the effect of closures on their constituency or locality.
As the hon. Member for Dundee, East, mentioned, gross profits tax has increased from 15 to 22 per cent. That is a 46 per cent. increase in GPT. Even without going into the mathematics—even just looking at that increase—one can say that the fact that there was a 46 per cent. increase in GPT after VAT was removed tends to suggest that there was some compensating on the part of the Government. With that substantial increase, they are giving with one hand and taking back with the other.
It is on the VAT and GPT figures that the industry and the Government have once again parted company. The Government maintained, and Ministers said in a previous debate, that the overall taxation on bingo had fallen from about 34 per cent. to about 26 or 27 per cent. I think that Mr. Foster said that it was 27 per cent., taking into account other factors. The Government's estimate in the Red Book is that they will lose £50 million of revenue in VAT losses, but will gain £35 million from GPT, leaving a net gain to the industry of £15 million. It is those figures that the industry disputes. It does not believe that those figures are accurate or sustainable. I understand that the Bingo Association has provided the Government with figures to try to show that there is a dispute about the Government's numbers.
The same end result—an advantage of about £15 million to the industry—could be achieved with a much lower rate of GPT, because the VAT receipts are lower. I have in my hand figures provided to me by the Bingo Association that demonstrate that, but I do not profess to understand everything on that piece of paper. Having surveyed 592 bingo clubs across the country, the industry is saying that if we assume a VAT rate of 17.5, and not 15, per cent., and a GPT rate of 18, and not 15, per cent., main-stage bingo would raise something like £20.8 million in VAT. Interval bingo would raise £39.8 million in VAT. There would be irrecoverable VAT at £21.7 million. That would leave an overall VAT figure of £38.9 million, balanced by GPT figures of £23.3 million. That would leave a balance in favour of the industry of £15.6 million. Those are the figures put forward by the industry to contradict the Government's figures in the Red Book. As I shall say later, the industry would like further consideration of the VAT and GPT figures that it has provided, because it feels that it can achieve the figures in the Red Book without such a huge hike in GPT.
Has my hon. Friend had representations from constituents who have looked at the figures for their local club, and who, in some of the smaller clubs in particular, find that the change in VAT is not bringing them the benefits that they were told it might? Is he concerned that some of the smallest clubs will therefore have the hardest time?
I am grateful to my hon. Friend for that intervention. I had not had that information, but she has made the point eloquently. I agree with her that it will be the smaller clubs that feel the pinch. Obviously, the bigger companies are more able to stave off losses, but at the end of the day the effect will be felt by the whole of the bingo industry.
The hon. Gentleman makes an interesting point, and I am sure that the situation throughout the industry will lead to similar instances elsewhere.
Even though the Government have halted VAT on participation fees, the industry still warns of further closures, and they are continuing. That suggests that the industry is still adversely affected by the changes to the taxation regime: it still hurts the industry to the point that more clubs are closing down. That suggests in turn that the industry's figures might be right and the Government's optimistic, because it is generally agreed that the Red Book VAT receipts figure of £50 million is something of an estimate. It is not that well defined. Perhaps the Government could look at the figure again, with the industry, to see whether there is a way forward.
The industry maintains that it is more heavily taxed than other forms of gambling, as the hon. Member for Dundee, East said. His amendment seeks to retain GPT at 15 per cent. to maintain that parity, and he made a strong argument for it. Again, he mentioned casino GPT, which is on a sliding scale. If that were applied to bingo clubs, it would give all bingo clubs an effective rate of 15 per cent., because of the banding that applies to the casinos.
The hon. Gentleman went through the reasons why we should support bingo, and I shall quickly touch on them to reinforce them, yet again, on behalf of our constituents. It is a softer form of gambling than others, such as internet gambling, casinos and so on, and it is attractive predominantly to women. Many women enjoy going to bingo clubs in groups, and sometimes with their husbands or whoever. They feel safe, it is a protected environment, they are looked after, and they cannot gamble too much of their money away. Daytime bingo sessions are sometimes the only entertainment that elderly members of our communities get in the week, and people very much look forward to going out with friends to enjoy bingo in the afternoons and so on. Those are often social occasions, and bingo clubs are a social amenity, but once they are gone there is little alternative other than, as Mr. Gummer said, online bingo in front of a computer screen, daytime TV or whatever.
Let us compare bingo with forms of gambling that are unregulated and not subject to the same regime, such as internet gambling, poker and in-play betting. I am not opposed to in-play betting, but we see adverts in the middle of a football match and we can imagine them playing in a public house, where at half time someone comes on saying, "Bet in play. You can bet on the next corner, goal or booking". If drink is involved and lads are watching a football match, a lot of money could be spent over the telephone betting, yet we are not doing anything about that form of gambling. We are, however, coming down pretty hard on bingo, and allowing closures to take place that affect a very soft form of gambling.
I now turn to the amendments. Obviously, I support and have added my name to amendment 4, tabled by the hon. Member for Dundee, East, which would return bingo to parity with other forms of gambling and retain the 15 per cent. rate. I think that it was Mr. Bone who referred to casinos, and the amount of money gambled in casinos is vast. We read in the newspapers stories of people losing tens of thousands of pounds in an evening in a casino, yet that will be taxed at 15 per cent. Bingo is a relatively modest form of gambling, yet that taxation is going up to 22 per cent. Where is the logic? The rate of tax on a form of gambling for the rich and privileged is lower than that on a very soft form of gambling for predominantly working-class people. I cannot see the logic of that. If we are to tax any gambling at 22 per cent., it should be the harder forms, including the gambling done at casinos.
Amendment 22 would make bingo duty chargeable at 16 per cent. rather than 22 per cent., while amendment 23 would make bingo duty chargeable at 17 per cent. I should have tabled a further amendment to make it chargeable at 18 per cent., because the figures provided by the bingo industry are based on a GPT figure of 18 per cent. The industry says that, on the basis of its figures, an increase in bingo duty to 18 per cent. would provide the same amount of money as that suggested in the Red Book. Furthermore, it could live with that; it would find that acceptable.
The amendments were tabled on the basis of figures provided by the industry, which maintains that those figures are more accurate and relevant to where we are at the moment. Through my amendments, I am inviting the Government to reconsider the figures, perhaps with the industry. They should consider a rate of 18 per cent., 17.5 per cent. or whatever. They should also look at the VAT figures suggested by the industry and the VAT returns, and get a more accurate prediction of how the bingo industry will be affected by the changes. The Government should try to determine a rate acceptable to the industry, to Members of the House and to our constituents. That would probably mean an end to the closures.
Amendment 24, also in my name, is similar to amendment 5, tabled by the hon. Member for Dundee, East. It would delay the implementation of the changes. I shall not add to the hon. Gentleman's comments about the court case, but there seems to be a sensible reason to delay the implementation of the measures and either return to parity or renegotiate with the industry until the court case has been decided. There is room for negotiation with the industry, to find out the true figures for the irrecoverable VAT and the returns from GPT. I hope that the Government will consider the amendments and the bingo industry figures, which I feel they have in their possession. I hope that they will think again.
I should start by saying that I am not a supporter of gambling; I do not like it or approve of it and I find it a pretty boring and unattractive way of spending money or time. However, I should not be imposing my views on the rest of the population. Clearly, large numbers of people get great pleasure from forms of gambling that do minimum harm, and I would have thought that bingo was one of them.
If I were trying to raise money to plug the enormous gap that the Government have created in the national finances, I would be considering the forms of gambling that manifestly do cause significant harm. In casinos, for example, people with more money than sense waste it in a way that is probably socially undesirable. Would it not be much better to increase the tax on casinos and decrease the tax on bingo? That seems an extremely logical argument—so logical that it is difficult to understand why the Government have not accepted it already. However, I have to say that the Government seem to be the most illogical I have ever had to deal with; they seem unable to see simple things in a simple manner.
In my constituency, bingo is concentrated in Felixstowe, a celebrated holiday town. It has a large number of older people, and bingo is an important part of the service that it provides for its residents and for people who come into the town. I want it to go on doing that. It employs people and provides others with something that they obviously enjoy and choose to enjoy. Why on earth should they pay more for that enjoyment than people who go off to Aspinalls and other such gathering places and watering holes? There is an innate snobbishness in this Government. They do not want to have a go at the people who go to the smart places along Curzon street and the rest—they do not want to fall out with them, oh no!
I can imagine the noble Lord in many circumstances, but I had not thought of the bingo club as one of his habitual areas of interest. However, I do not want to make a personal comment about Lord Mandelson, although of course the opportunities are enormous.
There is a continuing theme of insensitivity throughout the whole Finance Bill. The Government seem to have no understanding of how what they are proposing will affect ordinary people. I cannot understand that. The Minister is somebody we all admire; we find her interventions most interesting and she is always most courteous in giving way. I cannot believe that she really wants to subsidise the people who can afford to go to casinos by charging more to the people who go to bingo clubs, and yet she has been defending a change in the taxation system that means that the poorest people are subsiding those who are richer. That does not seem very sensible, but she has defended it. No doubt—I fear this is inevitable—she will get up to explain why it is basic to Labour doctrine that the poor shall subsidise the rich. I find that pretty obnoxious.
Yesterday there was a very impressive speech—I am sure that you heard it, Mr. Deputy Speaker—by Mr. Field. The only thing that I disagreed with him about was his belief that only Labour Members have the poor at heart. I hope that a much larger constituency in this House believes that the reason we are here is to defend those who are least able to defend themselves, not only in terms of their liberties but their ability to exist comfortably in society, to earn a decent living, and to maintain their families in decency. That is why I came into this House. I do not like bullies of any kind; I want to stand up for the bullied rather than the bullies. This Government are constantly standing up for the people who can stand up for themselves, and not standing up for those who cannot. That is why I stand up for a lot of people whose enthusiasm I do not share, in the belief that they should be able to have it and be protected by this House in doing so. We should not only try to ensure that they pay the same level of duty as on other forms of betting but suggest that it might even be a comparatively lower one.
These people have already been hit very hard. I do not think the Government have ever really come to terms with some of the by-blows of their decision on smoking in public places. As an enthusiast for the environment, I am fed up with the fact that we have increased emissions in this country caused by outdoor heating that enables people to smoke outside pubs because nobody was prepared to take the sensible view that a room where no one was serving could be put aside for those who wanted to smoke. No, that could not be done—that was against the theology of the policy—so now we warm the heavens in order that people can smoke outside.
We must also face the fact that the smoking ban has had a direct effect on bingo clubs. I rather like a former Home Secretary who got into terrible trouble for suggesting that the ban would affect his poorest constituents most. I am not arguing that case again; I am merely saying that it has had a real effect on areas where people with limited means, and often with homes that are less comfortable than those of the Exchequer Secretary and her ministerial colleagues, gather together somewhere warm, pleasant and light where they can enjoy themselves. Now they cannot smoke, which may be good for them, but if we are also going to tax them heavily on their bingo because that might be good for them, that is an aspect of the nanny state that I could well do without.
It seems to me that if my constituents want to play bingo, they should be able to do so at a cost that is as low as we can provide for. The taxation should therefore at least be fair, which argues for a lower rate than forms of gambling that only people with greater resources can indulge in.
The Government are doing a most peculiar thing in first lauding themselves for doing something about double taxation and then proceeding to ensure that they make up for it by having bigger single taxation. That does not seem to me a wildly clever argument, because it does not convince anybody. Nobody thinks that the Government are actually being helpful; people just think that they are clearing up an embarrassing anomaly and deciding that they will get the money back in any case.
How much more sensible it would be if the Government came to the House and said, "We're going to tax the rich more than we do the poor. We're going to put up the tax on casinos sufficiently to make up for the taxation reduction that we're going to make on bingo halls." That is the sort of thing that I would expect from a Labour Government, but we now have to look to the Conservatives for every kind of social support for which we used to look to the Labour Benches. That is true right across the board. On every criminal justice Bill, I have time and again voted to the left of the Labour party. When we came to discuss the Iraq war, I voted against it because I thought it was wrong, and the Labour party voted for it. Now I have to vote for the poor on bingo, because the Labour party wants to tax them more.
What is really happening is that we are seeing the social revolution that will end on
May I just ask the right hon. Gentleman what his position is on his party's inheritance tax proposals?
I might ask the hon. Gentleman what his position on his party's proposals—
I am sure that I can be guided by you on that matter, Mr. Deputy Speaker. I wish I could not be.
We are now facing a Government in disarray. This is another small example of a Government who have lost the plot on every issue, of their just not thinking things through, not recognising what they are doing and not listening. It is not just the Prime Minister who does not listen; nobody else does either. There is a commonality of deafness that is much more serious than swine flu. It is a really serious problem, so I ask the Exchequer Secretary, who is a sensible Minister, to listen to us on this. She must recognise that it does not do the Government any good constantly to push forward with measures that disadvantage the already disadvantaged and advantage those who have already got enough.
It is time we recognised that there are serious gambling issues to consider. Online gambling is particularly serious: people do it in their own homes, in entirely uncontrolled circumstances, with no peer pressure or concern and no one to see. That is where the danger comes, and I would much prefer the Government to attack that through taxation than bingo, which is largely a happy, cheerful activity indulged in by happy, cheerful people who used to vote Labour.
I ask the Government to think again. The argument has been well presented three times in the Chamber that bingo is a pleasurable activity for many people, often the elderly and those on low incomes. It is clear that we all want the Government to reconsider.
I support the amendments that my hon. Friend Mr. Illsley has tabled, and if the Government give us no room for manoeuvre, I will vote for the amendments and against the Government. I do not do that easily, but I will do it.
It is important to understand that although Mecca thoroughly celebrated the removal of VAT, unrecoverable VAT has become a factor. The industry needs time to work out whether the funding stream is adequate and can ensure the quality and delivery of bingo halls—we do not know that yet. We know that the industry says that it can achieve the Red Book estimates and it wants time to do that. I therefore say to my hon. Friend the Exchequer Secretary, who has been a friend for many years, that the Government must show us that they will think again.
I think that we would all like gaming and gambling to be treated equally, but they are not. If the measure goes ahead, there will be bingo online. Mr. Gummer could not have introduced that issue better or more colourfully. Casino online and poker online, sports betting in betting shops, betting exchanges and football pools will all end up with 15 per cent. tax, though that does not apply to casinos. Yet bingo will face tax of 22 per cent. That is not fair.
Not only the money aspect but the other side of the coin concerns me. We speak passionately in the House about the leisure facilities that we would like afforded to our young people. We focus on that appropriately. However, there are not many discussions in the House about the leisure facilities that we should support for our elderly. Indeed, I do not think that I have ever heard a discussion in the House about that. We have talked about free bus travel, which is excellent, but we are considering a leisure activity. I am talking about 400 to 500 people who twice a week go to a pleasing environment, where they meet up—it is very sociable—eat a good meal for a reasonable price and thoroughly enjoy the afternoon or evening. They hope that they will win, although they often do not, but that is part of the game.
We should appreciate that those 400 to 500 people, who are on low incomes and retired, are spending time in pleasing surroundings, having inexpensive fun in a controlled environment. Again, the right hon. Member for Suffolk, Coastal made it clear that the environment is controlled, not only because people watch how much each other spends or perhaps drinks, but because if one person does not show up, a network starts up, with people asking, "What's happened to old Fred?" and there is serious concern. For me, therefore, bingo is a critical bit of kit.
I was once asked to call the numbers. I stress once; I was not exactly good at it, so I was not asked to do it again. The elderly thought that I was a deplorable caller; the management thought that training might possibly have helped. However, for me, it was important to see what was happening and to be part of it.
People have spoken about the employment opportunities. A critical aspect of those opportunities is that 70 per cent. of those employed in bingo are women. Bingo is an easy piece of the employment world for women to fit in with their families or their age, perhaps because their levels of activity are much more controllable in that environment than they would be in many others. We are talking about a particular group of women. They do not earn a fortune, but they earn enough to make life bearable. However, it is not just that those employed in bingo are women. Oftentimes, Mecca Bingo—and, I am sure, other organisations—give training. Youngsters get national vocational qualification opportunities.
All round, bingo is a good leisure activity which we should support. I therefore ask those on my Front Bench—I am asking them very carefully—please to think again. None of us will object to their thinking again; indeed, the whole House will appreciate it. Bingo is a small part of leisure activities overall and it will produce a small amount of money for the Treasury. However, that amount will be smaller if there are further club closures on top of the 90 clubs that have closed so far. Surely spending that small amount is worth while given that so many people enjoy so much from the activity.
Remarkably, clause 20, on the taxation of bingo, has attracted more amendments than any other clause in this year's Finance Bill, which reflects the Government's botched approach to such an important sector.
I spoke for more than an hour on clauses 20 and 112, and I hope to speak for a rather shorter time today. However, let me make the Opposition's position clear from the outset. We cannot see any reasonable or logical justification for bingo to be taxed at 22 per cent. while the remainder of the gaming industry is generally taxed at 15 per cent. We would like the anomaly to be rectified as soon as time and the public finances allow it. However, rather like Mr. Illsley, we have found it incredibly difficult to get any sense out of the Treasury about its figures on either bingo or the ongoing court case, the consideration of which formed the centrepiece of our amendment in the Committee of the whole House, which took place two months and two Exchequer Secretaries ago.
Although I do not necessarily share the anger about casinos expressed by my right hon. Friend Mr. Gummer, not least because many are in my constituency, I am fairly positive about a lot of the online offerings. What is most perverse, however, is that online bingo is charged at 15 per cent., yet bingo in a club, which has so many desirable social outcomes, for all the reasons so adequately pointed out by Ms Taylor, is charged at 22 per cent. That is a quite ludicrous state of affairs.
I thank my hon. Friend for that intervention. We touched on that issue in the debate on clause 114, which covers the duty on online gaming. As was pointed out, there is now an incredible anomaly, in that playing online bingo will now attract far less tax. Surely we should all recognise the social benefits of bingo clubs for their clientele. It is therefore an incredible anomaly that we should be taxing the online version significantly less than the club version.
The Bill's consideration in Committee of the whole House was, as I said, some two months and two Exchequer Secretaries ago, and we have seen some amazing figures since then. During the debate on clause 20 in May, I questioned the Government's figures for the cost of removing VAT from participation fees—in other words, the theoretical cost of the linked clause 112, which we have already debated. I was referring to the cost assuming that VAT was being paid in all areas.
We have now obtained more information on how the Government arrived at their figure of £50 million, through the answers to some written questions. On
That is the estimate relating to the £50 million in the Red Book, as I see it. In any case, the estimates for 2009-10 back up the argument that I made in the debates on clauses 20 and 112 that the industry will, in practice, pay more as a result of all the measures in the Finance Bill. We are not aware of any major operator paying VAT on interval bingo and, after the court ruling, it is hard to believe that any operator would even contemplate doing so. As I have said, a number were also withholding VAT receipts on main-stage bingo, and that number is now likely to swell. It is reasonable to conclude, therefore, that actual receipts would have been below £20 million for 2009-10, before the court ruling, and that they could now be zero.
However, the Red Book shows that the increase in bingo duty is expected to raise £35 million. Far from reducing the effective tax rate, as the Minister's pre-predecessor insisted, the Government's proposals appear to constitute a tax hike of at least £15 million. This matter cropped up yet again in the Budget debate, and the Financial Secretary was wide of the mark when he said:
"Overall, the announcements in the Budget on the taxation of bingo are welcome to the industry."—[ Hansard, 23 April 2009; Vol. 491, c. 434.]
I found that absolutely extraordinary, but the point is that no one really knows for sure, because the Government refuse to be definitive.
The current Exchequer Secretary, who is with us today, told us during the last sitting of the Public Bill Committee on
"The £50 million is made up of the cost of recovering VAT on mainstage bingo, interval bingo and card rooms. The roundings are to the nearest £5 million, so although £20 million, £25 million and £5 million are not exact figures, they show the proportions."—
That is an extraordinary lesson in mathematics: figures of £5 million, £20 million and £25 million can all be subject to a rounding error of £5 million. Yet that is what the Red Book calculations are based on. It is absolutely amazing.
Can the hon. Gentleman think of any other Government assessment where it is possible to be out on three figures by 100 per cent., 25 per cent. and 20 per cent. on the basis of rounding?
The hon. Gentleman's intervention speaks for itself; he makes his point extremely well.
The Government are being evasive, to say the least, on the figures, and I am afraid that the Exchequer Secretary's letter to the Committee on
"I do not know the exact details of everything". ——[ Official Report, Finance Public Bill Committee,
That was certainly the impression that she gave, and her letter has served only to confuse the situation still further.
The industry has raised yet another concern about the Treasury's methodology. We heard in previous debates that the Government's revenue figures are based on their interpretation of the law, and not on the actual sums that they have been receiving. However, bingo operators are now suggesting—this was the point raised by the hon. Member for Barnsley, Central—that the Government failed to account for irrevocable VAT when producing the estimates. One industry estimate—we have probably seen the same estimate—put the total incremental irrevocable VAT at £21.7 million a year, assuming that it returns to a level of 17.5 per cent. next January. It is possible for the Exchequer Secretary to be precise—we have seen it, and she wants to be precise. Therefore, I invite her to answer right now whether the Treasury accounted for the irrevocable VAT and, if it did, what was the figure—preferably not rounded to the nearest £5 million—that applied in that case?
The Government are extremely unwilling to provide meaningful figures on the costs of changes in gaming duty and VAT on bingo, yet they have asked us to consider the totality of measures in clauses 20 and 112. That makes it difficult, if not impossible, for us to judge the fiscal effects of any of the five amendments before us.
Meanwhile, we have only just this week learned that the court action that Conservative Members, and Stewart Hosie, referred to in our deliberations on clause 20 and 112 is still ongoing. The Minister was thus wrong to tell us that the Government had until
Given the level of uncertainty on both the legal and the revenue fronts, it is very difficult to assess the likely impact of any of the five amendments. Furthermore, we have already voted through the ending of VAT on bingo in clause 112, so we need to be careful to maintain a balance in the tax consideration of bingo while being mindful of the appalling position of the public finances that the Government have brought on us all. The Government are holding their cards close to their chest on the amount of revenue, but if they were to support one or more of the amendments and show us that they could be afforded in terms of the Red Book, we would look favourably on that.
Let me clarify the Conservative position. The Government seem to think that bingo duty should by its very nature be higher than other gaming duties, but we do not see it that way. We view the 22 per cent. bingo duty as an anomaly. We thus await the Government's moves with eager anticipation. We would welcome moves that were properly costed, affordable and transparent, to bring bingo duty back into line with other gambling duties.
Will my hon. Friend help me on one point? It seems to me that we have to defend the revenue, which is perfectly understandable. The Government woollied their way through yesterday, defending the revenue in one way or another and threatening us with all the awful things that might happen. In case voting for the substantive amendment sends out the wrong signal to those who think that they can get away either with anything or with unfairness, would it not be sensible to vote for the amendment proposing to put these matters off to a later day, on which we could all agree, thereby supporting the revenue and forcing the Government to be sensible?
I thank my right hon. Friend for that intervention. The correct course of action would have been for the House to vote in the Committee of the whole House for our amendment, which sought to postpone changes to the taxation of bingo until such time as both the court case and the financial implications had been resolved. Given, however, that we have voted through clause 112, which removes VAT on bingo and is the right thing to do, I cannot agree with my right hon. Friend's position—unless the Government can show that one of the amendments before us can be afforded without leaving a hole in the Red Book.
This has been an interesting debate. Mr. Gummer told us that we had entered a new era in politics, in which the Conservatives were the champions of the poor and downtrodden and the Labour party had abandoned those people. It now transpires that when it comes to deciding whether they are in favour of people who are poor and downtrodden, the Conservatives are minded to abstain. Perhaps that is a metaphor for the wider positioning of their party.
Let me turn to the matter in hand, which is bingo. I have visited Mecca Bingo in Taunton on a number of occasions, and I was there again last Friday, speaking to staff and customers about their pastime and about the effect that the Government's taxation of bingo would have on them as individuals. I was struck yet again by just how popular this form of activity is in my constituency, and indeed in many towns and cities across the country. Typically, 1,900 people visit Mecca Bingo in Taunton every week, and on Sunday evening, which is the most popular time of the week, the club will have about 400 customers.
I think it fair to say, and indeed we have all observed for ourselves, that this form of gambling is particularly attractive to women—a point made by Mr. Illsley—that it attracts older people, generally although not exclusively, and that it is more attractive to those with lower incomes than, say, visiting a casino. That is inevitably a generalisation, because we are talking about hundreds of thousands of people throughout the country who enjoy bingo, but I think it can be said that bingo is a form of gambling that is more likely to be undertaken by women, older people, and people in lower income groups. It is extraordinary that they should be targeted for a higher rate of tax than those who engage in other forms of gambling.
My hon. Friend is right. Bingo takes place in a controlled environment, and the losses that people can make are very small compared to the almost limitless losses that can be made by those who go to casinos or engage in activities such as online poker or even online bingo. It is nonsensical to tax it at a higher rate than those other activities.
I entirely agree. I think it is safe to say that online bingo, for example, is more likely to be undertaken by younger and more affluent people than those who visit bingo clubs. It does seem extraordinary that that form of bingo should be taxed at 15 per cent. while people going to clubs will be taxed at 22 per cent.
Is not online bingo also likely to be much more addictive than the bingo hall version?
I understand that it is. Moreover, there are no controls in the case of online bingo. Although it may be in the immediate financial interests of a bingo hall to allow a particular customer to gamble beyond his or her means, I suspect that in the vast majority of cases the owners demonstrate a degree of paternalism. They have a fair sense of how much money the regular visitors have and of what it is safe and reasonable for them to spend.
Of course, many people do not go to bingo halls just to gamble. The gambling is often almost a secondary or peripheral attraction. Many people's main reason for visiting the hall is social: they want to meet friends, and catch up on news and developments. When I visited Mecca Bingo on Friday, it was stressed to me that there were many associated attractions, such as the provision of meals and other forms of entertainment. It seems that people regard going to bingo halls as being only partly about gambling.
For all those reasons, it was pointed out for some years that bingo had suffered unfairly from what was described as double taxation, and that the anomaly ought to be addressed. The Government have now done that, but, as the right hon. Member for Suffolk, Coastal rightly observed, in effect they said, "Here you are; we are giving to you with one hand," but just as everyone was celebrating that great victory, the Government took away the benefits with the other. The overall effect on the bingo industry and the people who enjoy playing bingo is that the current situation is no better than it was before.
When I visited Mecca Bingo in Taunton last Friday, it supplied the following statistics to me: across the United Kingdom last year 31 Mecca and other bingo clubs had closed and two had opened, which meant that there had been a net reduction of 29 bingo clubs. Some associated social factors may be at play in such closures, such as generational changes and a greater desire among people to spend more of their leisure time at home. The right hon. Member for Suffolk, Coastal speculated that the smoking ban may also have had an impact in some cases. It is, however, very hard to argue against the notion that the higher tax rate on bingo is making the situation worse, and making it harder for bingo clubs to be profitable.
Is that not what makes the Government's decision to tax bingo more than other forms of gambling so odd? If their purpose is the suppression of vice, bingo is an odd target, as I am not aware of there being any particular links with organised crime, whereas if the purpose is to increase revenue, it is likely to have the opposite effect because of the consequent reduction in the size of the industry.
Absolutely, and I should like to refer to the very subject of revenue. During yesterday's debate, we talked about beer duty. The problem in that regard is that because more and more pubs are going out of business on account of beer duty going up, the base from which the Government are collecting revenue is therefore falling. That is the case with bingo as well. If there is only one bingo club in a town—a seaside resort, let us say—and it is no longer profitable and therefore closes, the customers do not have an alternative place to take their custom. Many of them are unlikely to gamble online, and even if they did so, they would be taxed at a lower rate. The Government therefore forgo revenue as a result of that club closing.
Has not Mr. Heath given the clue to this? He says that the purpose may be the suppression of vice. He will, no doubt, remember that in the 19th century there was a Society for the Suppression of Vice and people added to its title, "For those with an income of less than £5,000 a year," because it was not interested in that cause otherwise. This Government have, therefore, carried on a noble 19th century tradition.
Let me return to that theme in my concluding remarks, because that is an interesting observation.
As I have said, not only will the Government lose revenue when clubs close, but we should remember just how small the sums involved are. It has rightly been said that the total sums of money gambled on bingo are not great, so in the grand scheme of things the percentage tax take is not very significant. I am told that Mecca Bingo generates profits of only about £150 million a year. Therefore, the additional tax in respect of the differential between the rate that the Government have set and the figure that would be generated were bingo taxed in line with other forms of gambling is only a matter of a few million pounds a year. When one sets that against the backdrop of a public sector deficit this year of £175,000 million, it seems hard to argue that if the motivation behind this tax proposal is to plug the public finances, the Government will get very far using that particular plug.
Let us also consider the wider social costs. Although it is hard to measure those in absolute terms, I have observed—as, I am sure, have other Members—that many people who visit bingo clubs do not have many other social opportunities.The clubs provide those people with all kinds of support that they might not otherwise receive, and it might cost to provide such support in another form.
Most people would regard bingo as the safest and most benign form of gambling, and it is extraordinary that the Government should have got themselves on this hook. The point made by the right hon. Member for Suffolk, Coastal is surely the relevant political one for the Exchequer Secretary to consider. She must think about the sheer staggering ineptitude involved in a Chancellor, and a Department and its officials, not seeing this massive problem coming down the track. I do not blame her, because she was not at the Treasury at the time, but when she arrived and was given this brief she must have thought, "How on earth did the Labour party manage to get itself in a position where it is taxing bingo at a higher rate than other forms of gambling just before a general election?" If I were in her shoes, I would be appalled that I had been given such an impossible hand to play as a Minister and I would wonder whether my Government had completely lost their survival instinct.
If there is one theme running through this Finance Bill, it is that the Government seem to have had an unerring ability to identify groups in society that might be inclined to support the Labour party and to punish them with higher tax. It is no wonder that very few people now vote for the Labour party in elections, because it seems to be systematically trying to pick those people off and give them reasons to vote for other parties. Unless the Minister is able to respond to the concerns raised by her Labour colleagues and by Opposition Members, it will be no surprise if bingo players across the country draw the obvious conclusion, which is that the Labour party is no longer interested in having their support.
It is a great pleasure to follow Mr. Browne. As he made many of the points that I wished to make, I shall not repeat them. This is one of those occasions when, if every hon. Member had been here listening to the debate, rather than some of them hiding in their rooms, they would have supported the amendments proposed by those on both sides of the House. I have been sitting here waiting to speak for a while, and one of the pleasures has been imagining Ms Taylor, who made such a thoughtful speech, calling "Legs 11" and "Two fat ladies". I really do not think that she could have been bad at that—but I digress.
My right hon. Friend Mr. Gummer made a powerful speech, and I agree entirely with him that the reason why we came into this House was to support the people in our society who are not well off, and who are vulnerable. Members on both sides of the House do that, but I have always believed that the Tory party has stood up for those people. I will be able to show again that we stand up for those people by supporting the amendments tonight.
I wish to discuss the Flutters bingo club in the centre of Rushden, the second biggest town in my constituency. Everyone who turns down the high street to go to the post office or Barclays bank has to go past Flutters—the building is an old cinema—and people who pass by will always be struck by the happiness of the people going in and out of the club. It is a social club as much as a gambling one, and we certainly do not wish to lose such a facility in my constituency. Unemployment in Wellingborough has risen by 84 per cent. since Labour came to power, and I do not want any more people to lose their jobs.
The arguments that I wish to put forward tonight have been submitted to me by the director and the owner of the Flutters club. The club is not a big concern; it is not part of Mecca bingo or some such organisation. This family have been in the business since 1982 and I believe that they run three small bingo clubs, of which the biggest is the Flutters club in Rushden. I am very much looking forward to going to it at 2.15 pm on Friday. Now I am worried that I shall be asked to call "Legs 11" and "Two fat ladies"; we shall see.
The club's regulars are there to socialise, and not really to gamble. The owners see them as part of the family. The club has already been hit by decisions that Parliament has made. The smoking ban, introduced in July 2007, damaged business, but it was supported by the owners of the club. They do not smoke, and they thought that the ban was right for the health of customers and staff. It has also been hit by online bingo. The owners hoped that the Government would not make their life more difficult, but, they say:
"new licensing laws, bureaucracy, and the punitive tax system kept piling on difficulties."
The owners point out that just as they saw the light at the end of the tunnel, with the Government seeming to recognise that double taxation was wrong and bingo clubs should be treated in the same way as other gambling establishments, along came the proposal to increase the gross profits tax. Hon. Members may think that the GPT is a tax on the profits of a club, but it is not; it is a tax on turnover. Whether a club makes any profit or not, it still has to pay tax on the gross.
It may appear that removing the VAT liability is a benefit for the club, but it will no longer be able to claim back input VAT. The Flutters club is falling a little into disrepair. The owners would like to refurbish, but they have had to put their plans off, because they will no longer be able to claim back the VAT. As their letter says, the owners would have been better off if VAT had been kept, at 17.5 per cent., and the GPT done away with.
As the owners say, the increase in GPT beggars belief. Although they want to continue the club, the danger is that they will have to close if things continue to get worse. Some 20 people would lose their jobs.
I do not speak from the Front Bench—and probably never will—and my hon. Friend Mr. Hands spoke with great clarity on this subject. I just want to talk about the situation of that small family club in Rushden. The owner makes the point:
"Bingo is a working class pastime. It has amazed me that after 30 years it is a labour government that has brought us to the brink of closure."
He wants to keep the club open because, if it closes, he
"can see all those lovely warm grandmothers, everyone's 'Nan', sitting in a lonely room, waiting to be picked up to go to her bingo night out which she loves. But it's gone. So where can she go now for a night out, with a friend, or on her own because the staff and people are so friendly. Where?"
It is that social element that I do not think that the Government have addressed at all. They must think again.
The owner goes on to say:
"We are not 'casinos' we are not 'bookies', we are totally different, we rely on lots of people so we need big venues, and the spending is small amounts, yet we are taxed 'more heavily'?
I understand the increase in GPT can still be blocked and plead with you to do so, because, in short, it's insane."
Tonight I will do everything I can to block it.
In many ways, this is an excellent continuation of the debate that we had on
Two things have been a common theme in the debate this evening. First, there is total incomprehension among people on both sides of the House of what the Government are proposing to do about bingo. Not a single person so far has spoken in support of what they advocate, whereas there has been a great deal of support for the variety of amendments before us. Secondly, it has come across loud and clear that not only do people oppose what the Government are doing but there is genuine passion for recognising the importance of bingo clubs in our communities and supporting them. Everyone who has spoken has shown understanding of the importance of what the roughly 600 bingo clubs provide in our communities. They provide much-loved entertainment—largely, as my hon. Friend Mr. Browne, who spoke from our Front Bench, has pointed out, for women, older people and people who are less well off. As we have all said, it is crucial to try to maintain that soft form of gambling so that we do not drive people into much harder forms.
The other thing that has come out in the debate is the fact that there is some surprise at the Government's incompetence as regards getting the figures right. Let us look, as many have done already, at page 153 of the Red Book. It is very clear what the Government think will happen. There is the very welcome removal of VAT on participation—incidentally, may I be the only one to pay tribute today to the Government for helping bingo by increasing the number of machines that clubs can have? However, that removal of VAT, the Government claim, will save the industry £50 million in the first year rising to £60 million in 2011-12. The bingo industry will then lose, through the increase in bingo duty, from 15 to 22 per cent. Many people have pointed out that those figures are meant to be an estimate; frankly, they are total fantasy. We know what is happening as a result of the Government's loss at the EU tribunal in respect of duty on interval bingo, gaming bingo and so on. Many of the companies are not paying that duty. The Government's figures are way out of order.
We have not yet had an answer to the question that Mr. Hands asked the Minister about whether the Government have taken account of irrecoverable VAT, but on the assumption that they have not, which I suspect is the case, that is a further example of the figures being way out of line.
The Government have done something that is incomprehensible because it will cause further damage to the bingo industry. Thirty clubs have closed in the past year, and more than twice as many since 2007. Only last week Gala, one of the major companies, announced that a further five clubs would close, and it explained to the Treasury that that was largely because of the taxation issue. No one can understand why the Government are doing something that could be so damaging to something so loved by people in our communities.
The right hon. Member for Suffolk, Coastal, among others, made it clear that there is another matter about which there is total incomprehension. Why have the Government failed to grasp the nettle of dealing with the different issues raised by the various forms of gambling in this country? Soft forms of gambling like bingo lead to very little addiction, but the harder forms like online gambling lead to high levels of addiction. Why can we not have a differential taxation policy, with a lower rate for soft forms of gambling and a higher one for the harder forms?
My hon. Friend the Member for Taunton was wrong about one thing. He said that online bingo was taxed at 15 per cent., but the truth is that it is rarely taxed at all, because the vast bulk of it is run through offshore websites that pay no tax in this country. Even if they are subject to European Economic Area regulation, or whitelisting, they do not contribute to the process. They certainly do not make any contribution, as they should, to the costs of research, education and treatment.
We need a differential tax regime. We certainly should not put the tax up to 22 per cent.; it should stay at 15 per cent. As the protesters in Trafalgar square and Westminster said recently, "One and five, keep bingo alive!"
I thank all those who have contributed to the debate, especially Stewart Hosie and my hon. Friend Mr. Illsley for speaking to their amendments. I also thank the Front-Bench spokespersons from both Opposition parties, and I am grateful for the contributions from Mr. Gummer and my hon. Friend Ms Taylor, as well as from the hon. Members for Wellingborough (Mr. Bone) and for Bath (Mr. Foster).
As I am sure has been rehearsed many times, the rate increase is part of a package of measures that includes making bingo participation fees exempt from VAT. The principal aim has been to simplify bingo taxation; as we know, the industry has been asking for that for many years.
Alongside the removal of VAT on bingo in this Budget, the bingo duty rate of 22 per cent. represents a reduction from a level of around 35 per cent. in 2003. We have to look at the effective tax rate which, on a comparable basis, was estimated at 24 to 25 per cent. before the Budget. The basis of that estimate was explained in some detail to the industry, which accepted it in correspondence with the Treasury before the Budget. However, the industry has since argued that the Red Book costing of the removal of VAT from gambling participation fees was wrong.
Some hon. Members have mentioned the High Court case. We have made it clear in previous debates that costings were based on the law as it stood at the time of the Budget. Key assumptions in the costings came directly from information provided by the industry, so they are not a fantasy. That information from the industry included detailed modelling on the impact of extra irrecoverable VAT, as well as detailed information from smaller clubs.
I have listened carefully to the concerns expressed by hon. Members today and in Committee, and I have read the transcript of the debate in the Committee of the whole House. I recognise the importance of bingo to local communities that has been pointed out by all those who have spoken this afternoon, and that is why we acted to simplify the regime, removing VAT and lowering the effective tax rate to 22 per cent. That is down from the 35 per cent. that was in place as recently as 2003, and it is below the 24 to 25 per cent. range in the pre-Budget report. Let me stress again that that figure was agreed with the industry at the time.
That is not all that we have done. The Gambling Act 2005 removed the 24-hour rule and the old membership requirements. It also allowed bingo operators for the first time to retain stakes, to be paid out as prizes at a later date. The bingo sector has also benefited from changes to gaming machine law, so it is not true that we are not helping it—and of course, the help that we are giving is ongoing. Despite my short tenure in this post, I have already met representatives of the industry, and that consultation will be ongoing.
All taxes are kept under review, but decisions are taken in the round at PBR and Budget time. All the amendments before us today would cost money—up to £35 million a year, depending on the amendment. That would have to be found from tax increases elsewhere or cuts in public expenditure.
I will continue to engage with the industry. I have already asked for evidence and data from its representatives on the points that they have raised, some of which has been received and some of which we still await. The information will be rigorously analysed, as hon. Members would no doubt want us to ensure that the figures are accurate. We can assure hon. Members that we will continue to have discussions on the state of the sector and the impact of taxation in the run-up to the next PBR and Budget. I am afraid I cannot support any of today's amendments, but on my assurance that we will continue to work with the industry, I ask hon. Members to withdraw their amendments.
We have had a good debate again. We should have these bingo debates more often. They seem to engender real information and real passion from real Members from real communities, which is always a good thing.
Mr. Illsley delivered another excellent defence of bingo clubs and communities, and an excoriating critique of the Government's assessment of the proposed tax changes. Mr. Gummer deduced that the Government have a new doctrine—to tax the poor to help the rich. Ms Taylor made a gentle and thoughtful speech, and rightly made the case that the Government should think again.
Mr. Hands was right to say that there was no justification for a 22 per cent. tax on bingo. He knows that the Government's VAT assessment is flawed. We have just heard the weakest defence of it from the Minister in her summing up. The hon. Member for Hammersmith and Fulham knows that it is likely that the Revenue was never entitled to levy the tax in the first place, he knows that it takes cognisance, wrongly, of irrecoverable tax. He must not be conned by the Government's attempt to obfuscate. It will be shameful if the Conservative Front-Bench spokesman refuses to back one of the amendments today, when the only person supporting him is the Government Whip. That is how bad the Tory Front-Bench position has become.
Mr. Browne drew attention to the sheer staggering ineptitude of the Government in not seeing the trouble coming down the track. He was right. He also said with some sympathy that the Minister had been given an impossible hand to play. Mr. Bone spoke about the Flutters bingo club in Rushden. I feel as though I have been in it; the description was so intense and detailed. I am delighted that he said that he would support the amendment. Mr. Foster was right to say that not one speaker backed the Government in the debate, either today or on
The Minister said that the effective tax rate for bingo had fallen. I am not convinced. Even if that is true, I am convinced that it leaves a profound unfairness—22 per cent. as opposed to 15 per cent. across the board. The only question is whether I should ask that we delay this for a year, or whether we should stick to the principle of fairness in the entire gaming sector. I think we must stick with the principle. I hope the Tories will find some principle in the next two minutes, and I seek leave to press amendment 4 to a Division.