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Clause 21 — Amusement Machine licence duty

Orders of the Day – in the House of Commons at 6:30 pm on 28th April 2008.

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Photo of Justine Greening Justine Greening Shadow Minister (Treasury), Vice-Chair (Youth), Conservative Party 6:30 pm, 28th April 2008

I beg to move amendment No. 16, page 11, line 17, at end add—

'(3) The amendment made by subsection (1) ceases to have effect on 1st April 2009 unless the Secretary of State has made regulations under the Gambling Act 2005 which permit up to one-fifth of the gaming machines in bingo halls and arcades to be Category B3 machines (as defined in regulations made under section 236 of that Act).'.

Amusement machine licence duty is important not only to the many small businesses that are involved in gaming arcades up and down the country, but, further up the supply chain, to the various manufacturers and companies that service gaming machines. It is also important to the Treasury. It raised around £208 million in tax revenue for the Treasury in the financial year 2006-07, according to the British Amusement Catering Trade Association. Indeed, the association estimates that the industry's overall contribution through gaming arcades and the gaming machines that are also in bingo halls, for example, is even greater. The industry employs 26,000 people directly, so when employment taxes—for example, national insurance and PAYE—are included, the estimated total tax revenue from amusement arcades is a substantial £600 million.

Against that backdrop, the industry described the further increase in this year's Budget in amusement machine licence duty as a "missed opportunity", given the pressures that it faces as a result of the Gambling Act 2005, which was effected last September. The amendment is intended directly to assist an industry that is under pressure, and to strengthen the Treasury's ability to ensure that we retain a successful gaming and arcade industry, which can continue to contribute to the Exchequer.

The amendment would enable gaming arcades to have up to one fifth of their gaming machines as B3 machines, and unless the provision was in place by April next year, this year's Budget increases in amusement machine licence duty would lapse. The amendment would force the Government to revisit allowing more B3 machines per establishment than the current rules in the Gambling Act permit. The new rules restrict establishments to a maximum of four machines, irrespective of the venue's size. The Act also introduced a further change, reducing the maximum stake on B3 machines from £2 to £1, which has meant a dramatic fall in the turnover of gaming arcades.

Although the debate is about amusement machine licence duty, to explain my amendment properly and so that hon. Members at least understand my rationale for tabling it I need briefly to outline the dramatic effects of the Gambling Act. I could have tabled a further amendment on increasing the current limited stake from £1 to £2 for a £500 maximum prize on B3 machines, which the Gambling Act reduced. However, I believe that the amendment will give me the chance to make plain my concerns about the viability of the gaming arcade industry and the impact on the economies that it supports.

Many people who are involved in the gaming arcade industry have serious concerns about even its short and medium-term viability, if my amendment is not accepted. Those anxieties are especially prevalent in seaside communities, where a much larger base of the local economy is linked to tourism and the entertainment industry generally.

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Photo of John Penrose John Penrose Conservative, Weston-Super-Mare

I assure my hon. Friend that I have received numerous representations from people in my constituency who run establishments such as those that she describes. They are all suffering greatly. Many have experienced catastrophic falls in revenue and many wonder for how long they can continue. My hon. Friend is right and I cannot emphasise enough the seriousness of the position of that sector of the industry.

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Photo of Justine Greening Justine Greening Shadow Minister (Treasury), Vice-Chair (Youth), Conservative Party

My hon. Friend makes a helpful contribution, which illustrates the two key points that I want to make today. First, now is not the time to increase tax further on the industry through raising the amusement machine licence duty. Secondly, it is ironic that a fair amount of the Exchequer's tax revenue, which it already, and no doubt willingly, takes from the industry is under threat because the businesses are threatened. The concerns that my hon. Friend expressed are reflected in early-day motion 840, which 155 Members from all parties have signed.

The British Amusement Catering Trade Association has assessed that, since the introduction of the Gambling Act, revenues have collapsed by an average of 21 per cent. year on year. The amendment aims to ensure that the trend in collapsing revenues has a chance of being reversed by the Government well before the planned review of the impact of the Gambling Act, which is likely to be long drawn out. That review is currently planned to start in 2009. It could take many months— perhaps longer—so we will probably not see any action until 2010. As Dr. Ladyman said in a recent Adjournment debate:

"We cannot afford to wait for a six-month review, or even a three-month review. My constituents' businesses are going under now. We need to send a signal now."—[ Hansard, 22 February 2008; Vol. 472, c. 744.]

If the Committee supports the amendment, we would send that signal, which businesses need to give them hope that they can keep going until their problems are properly tackled.

Without the changes that the amendment proposes, the risk to Treasury revenues is significant. However, let me be clear: for Conservative Members, it is more important that those tax revenues are based on economic success and jobs. I am worried that, by the time we who raise our concerns tonight are proved right, it will be too late to protect those gaming arcade businesses and bingo halls, which are also affected by the changes that the Gambling Act introduced, and they will be lost.

Unfortunately, the reality is that many of those businesses, which are the lifeblood of many of our most loved seaside and coastal towns, are under pressure and are going to the wall. I am talking not only about gaming arcades that form the very identity of places such as Margate, Blackpool, Portsmouth, Hastings, Great Yarmouth and Ramsgate—I could continue—but about family businesses that have been passed down from generation to generation.

Such businesses are the lifeblood of their local economies and are often committed to those economies, alongside providing employment, too. They deserve to be supported by the Government. Instead, they are being undermined. The Government will not take note of their cries for help, even though the Under-Secretary of State for Culture, Media and Sport, who has responsibility for gambling, admitted only in February that there was a "serious problem". Ministers seem more concerned with saving face than with saving jobs and supporting local communities. My amendment challenges that most damaging attitude.

Gaming arcade businesses are being asked to compete with betting shops and casinos with one hand tied behind their back. The stakes and prizes of their machines cannot compete, and such businesses cannot have the number of machines that they need to stay profitable. My amendment aims to challenge that by removing the excessive control over the number of B3 machines to which an establishment is limited, and allowing up to 20 per cent. of any establishment's machines to be B3 machines.

Without my amendment, there is a danger that the Treasury's tax revenues will fall, not just because of lost amusement machine licence duty but from lost employment taxes from long-standing, often family-run, businesses. My concern is that such businesses are under so much pressure that many are in danger of going to the wall, as we have heard. My amendment seeks to prevent a lose-lose situation—in which everybody loses, not just, most importantly, the businesses concerned, but the Exchequer.

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Photo of Justine Greening Justine Greening Shadow Minister (Treasury), Vice-Chair (Youth), Conservative Party

I am grateful for the hon. Gentleman's intervention. That suggestion was supported by the British Amusement Catering Trade Association. Our party supports the proposal, along with the association's other suggestion, which is to reverse the reduction in the maximum stake from £2 to £1. Our amendment is fully supported by the industry that we seek to help.

Gaming arcades and the economies that they support are fundamental parts of their local communities. Indeed, the adult gaming centres in which B3 machines are often found support family entertainment centres, which support the wider communities and economies of which they form part. Nick Harding of BACTA says that there is already evidence to suggest that

"at this rate, half the industry will be gone in six months."

He also said that seaside operators are

"dying on their feet as a result of the Gambling Act."

My amendment seeks to challenge that.

Although the trigger for the problem was created by another Department—the Department for Culture, Media and Sport—the consequences are Treasury-related. They include small family-run businesses potentially going out of business and local jobs being lost.

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Photo of Mike Hancock Mike Hancock Liberal Democrat, Portsmouth South

I for one will be supporting the hon. Lady in the Lobby on this issue. I am delighted that she has quoted BACTA's comment about half of all amusement arcades going out of business in six months. However, arcades have lost more in the past six months than they have lost in the past 10 years. The damage done by the Gambling Act is already apparent not only in the amusement arcades but in the manufacturing industries that support them.

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Photo of Justine Greening Justine Greening Shadow Minister (Treasury), Vice-Chair (Youth), Conservative Party 7:15 pm, 28th April 2008

Again, we are hearing from hon. Members with direct experience of the communities affected and the stresses that the 2005 Act is putting on them. Based on the contributions that we have heard tonight, it would appear to be only a matter of time before the economic damage being done to the industry is transferred to Treasury revenue.

My amendment aims to challenge the Government's drive to continue raising the amusement machine licence duty against a backdrop of economic problems that put so much more underlying tax revenue from the broader gaming industry at risk. I am sure that many hon. Members in the Chamber will be aware of the Select Committee on Communities and Local Government report published back in February 2007 called "Coastal Towns". Even then, before the devastating impact of the 2005 Act, that Committee said:

"A number of coastal towns suffer from deprivation and their economic regeneration is of critical importance."

As I have said, the Minister with responsibility for licensing accepted in an Adjournment debate earlier this year that there was a "serious problem". My amendment is an attempt to address that problem. It would mean that those underlying causes, which are so badly holding gaming arcades back, preventing them from competing with other gambling businesses, would have to be addressed. Even if those causes were not addressed, however, there would at least be no raising of amusement machine licence duty, as the Budget proposes. Instead, the rates would be frozen. Without addressing the more fundamental issues—not just the number of B3 gaming machines allowed, but the need to increase the B3 machine stake from £1 to £2—this is no time for the Government to put further pressure on an industry that is already on its knees.

Even if the Department for Culture, Media and Sport is unwilling, the Treasury must listen to the pleas of the thousands of small gaming arcade businesses facing ruin. The 2005 Act is sucking the economic lifeblood out of seaside communities, bingo halls and gaming arcades throughout our country. Treasury Ministers must take the necessary steps to make their colleagues in the Department for Culture, Media and Sport listen and take action before it is too late for those economies and communities.

It is time that the Government started supporting local economies, especially in the seaside towns that form so much of our valued national heritage. Today the House has the chance to join the Conservative Opposition in voting to stand up for those seaside communities. I hope, too, that we will have the support of all those hon. Members who signed early-day motion 840. For the sake of the communities affected, I hope that we can all take that opportunity.

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Photo of Colin Breed Colin Breed Shadow Minister, Treasury

On the face of it, clause 21 is fairly innocuous in terms of raising revenue, but it has obviously raised huge concerns in many parts of the gambling industry. I represent a constituency with coastal resorts, and although the adult gaming centres and amusement arcades in those resorts are small they form part of the entertainment that many such resorts provide.

Acceptance of those facilities is slightly mixed. Not all my constituents have gone to the planners saying that they would like more of them. Indeed, demonstrations and campaigns have been mounted to stop certain businesses starting up. We need to strike a balance. Tourists like to use such facilities when they visit, but they are not necessarily the flavour of the month with local residents.

Nevertheless, such facilities have been around a long time and are, in the main, small family businesses. In the ordinary run of things, merely raising the duty by the rate of inflation would not be particularly onerous. However, as Justine Greening pointed out, a combination of the Gambling Acts, in some cases the smoking ban and the increase in alcohol duties has begun to put a lot of pressure on such businesses.

It is not only arcades that are affected; small pubs and bingo halls are also affected. I was interested to learn about the restriction to four B3 machines in bingo halls, because some such halls are rather large establishments that hold quite a few people. During breaks, people rush to use the machines, but if there are only four machines, there will be queues of people waiting to use them. Four machines might be an acceptable number in a small establishment, but it is not reasonable in a large bingo hall.

The Government should consider the whole situation and the effects of different aspects of their legislation and policy. Together, those measures have put particular pressure on such businesses, and it is time to pause and consider the situation in the round. They must consider the effects on businesses and coastal towns, which have many such businesses, and particularly the effects on revenue and jobs. A significant number of jobs are affected; I was surprised to learn how many people are directly or indirectly involved in this large industry. There are great concerns that our efforts to modernise the industry and squeeze a bit more revenue out of it are going to kill the goose that lays the golden egg.

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Photo of John Penrose John Penrose Conservative, Weston-Super-Mare

One of the original ideas that led to the changes was the trade-off whereby super-casinos were to come in and ambient gambling was to be reduced. Does the hon. Gentleman agree that that plan has evaporated because super-casinos are not going to happen, but that ambient gambling is still being hit? The Treasury therefore risks losing revenue from ambient gambling because those business are all going under, but without getting the extra uplift in revenue from super-casinos.

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Photo of Colin Breed Colin Breed Shadow Minister, Treasury

I could not agree more. That is exactly what has happened. Some of the smaller businesses involved in the gambling industry might have breathed a sigh of relief that the super-casinos were not going ahead, but they have suddenly realised that the panoply of Government policy on this issue is having almost the same effect of potentially putting many of them out of business.

There is time to address this issue. We support the amendment in the sense that it gives us the chance to pause, consider the matter in the round and see whether there is a better way of dealing with it. The duration of licences could be considered, as could the opportunities for rebates that the industry has proposed. The industry has put forward some very constructive ideas and does not seek to have things all its own way. It seeks a fairer way of dealing with these matters so that businesses can carry on and continue to provide employment, and so that attractions at resorts, including small family businesses, can continue. That would also mean that revenue would continue to come to the Treasury.

Unless we consider those issues, there will be a rapid demise in many of those areas. Some people who do not support the concept of gambling might think that is a good thing, but many people would be substantially affected by the demise of such businesses. It is time that the Government paused to consider the whole issue, including the effects of the Gambling Act 2005 and other measures that will be devastating for a significant number of businesses.

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Photo of Rob Marris Rob Marris PPS (Rt Hon Shaun Woodward, Secretary of State), Northern Ireland Office

I find the hon. Gentleman's position somewhat contradictory, unless he was making a speech on the clause stand part debate. The amendment does not ask for a pause, to use his word. It sets out a way forward, as perceived by Justine Greening. It does not ask the Government to pause and consider the evidence to see whether anything needs to be done and whether there is a problem, which seems to be what the hon. Gentleman suggests. That is not what the amendment asks for and I urge him to reconsider his support for it. As a result of that reconsideration, he might decide to vote against clause stand part, which would be a more logical position and would be commensurate with his earlier remarks.

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Photo of Colin Breed Colin Breed Shadow Minister, Treasury

I was trying to suggest that accepting the amendment, which relates specifically to B3 machines, would, with the reviews that are taking place, provide an opportunity to reconsider the particular aspect that the amendment covers. It would necessarily have to cover other areas as well.

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Photo of Rob Marris Rob Marris PPS (Rt Hon Shaun Woodward, Secretary of State), Northern Ireland Office

I suggest that the reviews are taking place and that that is not what the amendment would do. It states what the outcome should be, and does not say that we will look at the results of the review.

My difficulty with the way in which the hon. Member for Putney spoke to the amendment is that most of her speech was a series of assertions. I am not an expert on the gambling industry, although of course it exists in my constituency in Wolverhampton—we have bingo halls, casinos and a new venue coming on stream shortly—but given that we are making technical legislation in the Finance Bill, I would prefer to hear a little more evidence rather than simply being told that this is what the industry wants. The industry might be right, but we have been given that assertion without any evidence. I understand the concept of potential damage to the industry, but I should like to have a little bit of evidence.

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Photo of Justine Greening Justine Greening Shadow Minister (Treasury), Vice-Chair (Youth), Conservative Party

The evidence that we have is that revenues have fallen 21 per cent. year on year, and I am trying to avoid there being further evidence through more job losses.

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Photo of Rob Marris Rob Marris PPS (Rt Hon Shaun Woodward, Secretary of State), Northern Ireland Office

Again, the hon. Lady might be right, but the evidence provided in table C6 on page 187 of the Red Book envisages flat revenues of £1.5 billion this year and next year.

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Photo of Tobias Ellwood Tobias Ellwood Shadow Minister (Culture, Media and Sport)

I suggest that the hon. Gentleman should come here armed with the necessary information. He says that he does not have it, but the Government do. BACTA has made it clear that it has had many meetings with the Minister with responsibility for gambling and that it has tried to speak to members of the Treasury. The evidence is clear that the industry is suffering. It needs support, but is not getting it from the Government.

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Photo of Rob Marris Rob Marris PPS (Rt Hon Shaun Woodward, Secretary of State), Northern Ireland Office

It is not for me to produce evidence, as I have not moved the amendment. I seek to find out the reasoning behind it, and it is quite in order for a Member to ask for the reasoning behind an amendment. It is also in order to ask the Member who moves an amendment for evidence to support it, and to be put out if such evidence is not produced— [Interruption.] It was not produced by the hon. Lady in her speech, except tangentially. Neither did she explain the mechanics of what the amendment would do, apart from the £1 stake going up to £2. That may be all that would happen, but it behoves a Member who moves an amendment on a technical issue such as this—it is also very sensitive because it affects seaside communities—to produce a little more evidence.

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Photo of Colin Breed Colin Breed Shadow Minister, Treasury

Does the hon. Gentleman accept that this technical clause may work with other legislation to have a detrimental effect on a particular industry?

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Photo of Rob Marris Rob Marris PPS (Rt Hon Shaun Woodward, Secretary of State), Northern Ireland Office

I do not know because I have not been given the evidence. Perhaps the Minister will explain it if she catches your eye, Mr. Cook.

Finally, I find it sad that the hon. Members for Putney and for South-East Cornwall have said nothing—unless I missed it, and I stand to be corrected—about the potential problems of gambling, which is not a risk-free activity. There is a beneficial side to gambling in that many people enjoy it, but there is also a downside. A minority of people get into trouble with it, and hon. Members should always bear that in mind when considering the regime, and should mention it rather than being silent on the problems that gambling can cause.

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Photo of Tobias Ellwood Tobias Ellwood Shadow Minister (Culture, Media and Sport)

It is a pleasure to follow Rob Marris. He has raised several important questions, but many of them have already been answered. We have been here before and the relevant information is in the public domain. I suggest that following his comments today, he will be deluged with information from BACTA and its secretary, Lesley MacLeod-Miller, to convince him and to show him the state that the gambling industry is in.

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Photo of Tobias Ellwood Tobias Ellwood Shadow Minister (Culture, Media and Sport)

I should like to make a little progress, but I will give way shortly.

I commend my hon. Friend Justine Greening for introducing the amendment—an important amendment for the industry—and it is good to see that the shadow Treasury team is willing to listen and talk to other Departments. There is a dilemma in that the Treasury team is not willing to see the consequences of tax rises for the industries involved, so I am pleased that we are putting forward a proposal to remove the limit on B3 machines not only in adult gaming centres but in bingo halls. I underline my support for the removal of the £1 stake limit and its return to £2. To place that in its historical context, we had the same situation before the Gambling Act 2005, but there was no problem. They were called section 16 machines—that was old money—but they are now called section B3 machines.

The hon. Member for Wolverhampton, South-West wanted evidence, so let us look at the Gambling Commission's prevalence study on areas of problem gambling. If we do so, we find that when it comes to machines under the banner of soft gambling, the figure is about 2.5 per cent. If we compare that with FOBTs—fixed-odds betting terminals—found in bookies up and down the country, the prevalence study report shows an addiction to gambling of 11.4 per cent. That is a huge difference, and that is perhaps where we should focus our attention, rather than the soft form of gambling.

Speaking as the shadow Gambling Minister, let me state the Conservative view that we need the right level of regulation for every type of gambling, whether it be penny arcades, the Crockfords casino or, indeed, internet gambling—another area that we have not even touched on, but I know that you, Mr. Cook, would correct me if I wandered down that road. Let us be clear: where is the evidence from this Government to justify hitting the soft forms of gambling such as bingo and the penny arcades? I do not like the term "adult gaming centres", which has a seedy ring to it. I see the Minister smiling and I hope she agrees that perhaps another term could be used.

These soft forms of gambling are part of our community, whether in seaside towns such as those in my Bournemouth constituency or some of the other places mentioned in our debate. May I place on record my sadness that so few Members are in their places, suggesting that they are not supporting their local tourism industries? That applies particularly to those who signed early-day motion 840, which calls for exactly the changes that we are debating today.

Another consequence of the Gambling Act 2005 is that we have seen a 21 per cent. downturn in the trade of adult gaming centres. That is what has happened. People are migrating out of the arcade centres and, indeed, the bingo centres and going across the road to the bookies, where there is a different and harder form of gambling, which now meets their desires. I have already mentioned the FOBTs, where £100 a bet can be put down every 20 seconds and scant regard is paid to what is actually being done. That is the consequence—the unintended consequence—of the Gambling Act 2005, which we have an opportunity to amend today. That is why we are proposing the amendment.

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Photo of Graham Stuart Graham Stuart Conservative, Beverley and Holderness 7:30 pm, 28th April 2008

My hon. Friend is making a very powerful case on behalf of, for example, businesses in Hornsea and Withernsea in my constituency. They are coastal towns facing many economic challenges, and getting taxation correctly positioned on arcades and other such businesses is essential to maintaining their economic well-being.

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Photo of Tobias Ellwood Tobias Ellwood Shadow Minister (Culture, Media and Sport)

I am grateful for my hon. Friend's intervention. His comment has been repeated up and down the country.

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Photo of Mike Hancock Mike Hancock Liberal Democrat, Portsmouth South

I just want to correct the hon. Gentleman. He referred to the move towards fixed-odds betting terminals as one of the unforeseen consequences of the Gambling Act 2005. They were well foreseen, particularly by those who now operate that sort of gambling; they saw it as an absolute cash cow in the making. The Government were told that that would be the consequence, but they did not listen.

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Photo of Tobias Ellwood Tobias Ellwood Shadow Minister (Culture, Media and Sport)

The hon. Gentleman makes a valid point. I was being generous to the Government in using that term. We have called for a review of the use of FOBTs. They are here to stay, but if people can walk into these bookies up and down the country and place a £100 bet without anyone even taking a look at what is being done and if about 11.5 per cent. of people are addicted, the Government should clearly be looking into that problem, rather than making changes that affect bingo halls and penny arcades.

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Photo of Rob Marris Rob Marris PPS (Rt Hon Shaun Woodward, Secretary of State), Northern Ireland Office

May I caution the hon. Gentleman? I did not say that I was against the amendment, which he seems to assume I was. I was merely questioning whether there was evidence for it. I am grateful to him for supplying some of that evidence, which his Front Benchers singularly failed to do. The import of the earlier part of his speech was that we have been here before, but I can assure him that I have sat on six Finance Bill Committees in a row, so I have some idea of what has and has not been discussed in this regard.

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Photo of Tobias Ellwood Tobias Ellwood Shadow Minister (Culture, Media and Sport)

I do not wish to challenge the hon. Gentleman's claim to being an intellectual tower when it comes to financial matters. What was clear from his intervention was that he was here either to delay proceedings—though I am sure that that was not his intention—or perhaps simply to learn, but it seemed that he was unaware of the impact of this legislation and its important consequences if passed. Now that the hon. Gentleman has heard the arguments, I certainly hope that he will join us in supporting the amendment, which is crucial to helping our communities, particularly our seaside towns. If you visit any of these places, Mr. Cook, whether they be bingo halls or arcades, you will see them boarded up; they are closing down at a colossal rate of knots. The last six months has seen more of these establishments closed than ever before, as Mr. Breed mentioned. That is what is happening to this important industry and it needs Government support.

We cannot wait for the standard review to take place. A review of stakes and prizes takes place about every two years, and the next one is due in 2009. We are delighted with the Conservative policy that we have heard today, but we cannot wait for a general election. We need action now, so the Minister has a fantastic opportunity to stand up and show some support for seaside towns, for the bingo halls that are closing all over the country and for the communities that rally round the soft form of gambling. That would be preferable to the continuing trend towards the harder forms of gambling.

I ask the Minister to consider and look further into the evidence that she has received. I know that the Under-Secretary of State for Culture, Media and Sport is keen to support this measure but feels that his hands are tied, so I hope that the Exchequer Secretary will be able to stand up today and say, "Watch this space."

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Photo of Mike Hancock Mike Hancock Liberal Democrat, Portsmouth South

May I first congratulate Justine Greening on what I thought was an excellent speech, putting the case on behalf of an industry that has been badly let down? Throughout the negotiations on the Gambling Act 2005, including the pre-consultation, the Government promised to listen to the case that BACTA and others were putting forward not just to safeguard themselves but in an attempt to work with the Government. When the Gambling Bill came out, it was clear that the Government had totally ignored all that advice and guidance. Labour Members voted gladly to support that, without realising the damaging consequences to the industry. I am grateful to Rob Marris for his advice not only to vote for the amendment but, if it fails, to vote against the clause stand part. I think that we should take that good advice.

If I look around my part of the south coast and south Hampshire I see that Portsmouth, Hayling island, Fareham, Gosport and the Isle of Wight have seen a decline in the arcade industry. Many establishments have already closed or been converted and some are in the process of conversion now. I do not share the concerns of my hon. Friend Mr. Breed about people demonstrating or campaigning—it is more about campaigning against new practices, as I do not believe there is a campaign in the country to try to close these operations. The Government are doing an effective job on their own bat by doing that.

The amendment offers an opportunity for the Government to say that they realise that the industry is important in employing tens of thousands of people—not just in the front line in the arcades, fairgrounds and on piers, but in the manufacturing industry in respect of servicing the machines. Countless thousands of people will lose their jobs. If they were all concentrated in one or two constituencies, there would be a national outcry and the Government would be forced to take action. Because those people are mainly dispersed around the coastline and in the city centres, the Government can choose to ignore the problem—there may only be a few dozen here or there, perhaps 50 in a city such as Portsmouth, so they can ignore it. I would say, however, that the Government ignore it at their peril. They not only disadvantage the industry when those arcades are closed down, as many people who enjoy the facilities offered there will be equally disappointed when the bingo halls are forced to close, like the arcades that are already closing.

The different parts of this industry all have families and voters, so I urge the Government to listen carefully to tonight's debate. They have an opportunity to go some way to start to listen to the industry. They promised that they would, but ignored it in the Gambling Act. If we see what Mr. Ellwood talked about—people migrating from arcades to the real danger of heavy gambling, which the hon. Member for Wolverhampton, South-West mentioned; lots of people share his concerns—there will be an even bigger increase in the problem.

The hon. Member for Bournemouth, East mentioned a figure of 11.2 or 11.4 per cent., but the report says that the figure is 11.4 per cent. and rising. That is the dilemma that the industry has to combat.

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Photo of Tobias Ellwood Tobias Ellwood Shadow Minister (Culture, Media and Sport)

The hon. Gentleman is making a powerful speech and I am pleased that he supports the amendment, but is he aware that bookies are opening in the north of England and elsewhere with a licence to be a bookmaker even though people cannot bet on a horse on those premises? They are opening so that the four FOBTs can be based there. Those are the money-making machines.

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Photo of Mike Hancock Mike Hancock Liberal Democrat, Portsmouth South

I agree entirely, and I think that that pattern will quickly be followed around the country, because word will spread that that is a way to make money. The Government are truly cutting off their nose to spite their face. If the Treasury could calculate how much revenue it has lost in tax take from the closures over the past 12 months, it would be surprised and would see that it has already lost more than it will ever gain over the next two or three years.

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Photo of John Gummer John Gummer Conservative, Suffolk Coastal

Does the hon. Gentleman agree that the problem is as bad if not worse in smaller towns such as Aldeburgh and Felixstowe in my constituency? These arcades have been hugely important because, on wet days, families have been able to spend a short time together at little cost; they have been able to have family enjoyment. Such activity is wholly different from that which goes on in places of the sort being talked about.

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Photo of Mike Hancock Mike Hancock Liberal Democrat, Portsmouth South

The right hon. Gentleman comes late to the debate, but he comes with a pertinent point. That is the added quality that such amusement arcades—in city centres and small towns, as well as in the coastal cities of our country—offer to the family. In many areas, those arcades are one of the last places where the family can go on a wet day, having planned to do something else, and not have to spend a lot of money to have some fun as a family. That is what the Government have not recognised.

I will be delighted if the Minister says that she welcomes the amendment and will accept it. Perhaps she can persuade her colleagues to support it, because that would start the process of honouring their commitment to the industry, recognising its importance and giving those who see such arcades as one of the small pleasures in their life the opportunity to see that continue.

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Photo of Angela Eagle Angela Eagle The Exchequer Secretary, Member, Labour Party National Executive Committee

It is a pleasure to make my first contribution to what will be a long process. I am sure that we will all get more than used to listening to contributions from all parts of the Committee as we consider the Bill upstairs following two days of debate in the House. I for one am looking forward to it.

Justine Greening moved amendment No. 16 on gaming machines. I want to spend a little time taking the Committee through the current situation to set it in context. Gaming machines are subject to amusement machine licence duty, which is payable in respect of a licence that entitles a person to make a machine available for play.

AMLD taxes dutiable gaming machines and is charged at different rates based on machine type and the duration of the licence, which is what the B3 category mentioned by the hon. Lady refers to.

It may help the Committee if I briefly outline the background to AMLD. In 2006, we aligned the categories of AMLD with the Gambling Act categories. Aligning machine categories with the Gambling Act was a simplification measure because it gave operators more consistency between the tax and regulatory regimes.

The hon. Lady's amendment would make tax changes contingent on changes to the social law. Traditionally, the social law is a matter for the Department for Culture, Media and Sport and the Gambling Commission. The taxation of all gambling is clearly a matter for the Treasury. I would have some worries about mixing up the two.

During the alignment with the Gambling Act, which does not regulate non-gaming machines, we removed AMLD from non-gaming machines—for example, pinball and video machines, which are more than likely to be in amusement arcades of the kind that hon. Members have been talking about in today's short debate. Quite a lot of those machines have been exempt since 2006. We also exempted from AMLD many of the small-stake and small-prize machines. Those are the ones that are found in family oriented seaside arcades.

For the purpose of this tax, there are six categories of gaming machine—A, B1, B2, B3, B4 and C—which are determined by reference to the stake limit of the machine and the maximum prize available from the gaming machine. The cost of an annual licence ranges from £760 to £5,160, depending on the category. The cost depends on the category of machine and the duration of the licence applied for. Licences can be taken out for any period of between one and 12 months. Rebates are available in monthly chunks for licences that cease to be useful for gaming machines that are no longer in use.

AMLD is a fixed cost, so, because of inflation, the value of revenue raised for any given number of machines will diminish over time. Clause 21 makes a routine revalorisation for all rates of AMLD. That is not an increase; it merely maintains the real value of the licence.

Amendment No. 16 would lead to a reduction in the cost of all amusement machine licences on 1 April next year—not just for B3s, but for all of them, including those at the higher end, which people were objecting to so much earlier in the debate—unless the Secretary of State for Culture, Media and Sport made regulations that allowed a fifth of the gaming machines in bingo halls and arcades to be category B3 machines. It would return AMLD in April 2009 to the level of August 2006, which would cost £15 million.

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Photo of Tobias Ellwood Tobias Ellwood Shadow Minister (Culture, Media and Sport) 7:45 pm, 28th April 2008

Will the Minister expand on why it would cost £15 million to make that change? We probably all agree that this is perhaps not the right domain for her to make it, but she has heard—I hope—a convincing argument as to why it should be introduced. We have taken the opportunity to put the case. Will she now have words with her counterpart in the DCMS and say that, unless there are changes, she will receive less revenue from bingo halls and amusement arcades?

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Photo of Angela Eagle Angela Eagle The Exchequer Secretary, Member, Labour Party National Executive Committee

Clearly, we keep those issues, as well as those of the effect of taxation, under close review, but the hon. Gentleman is right to point out that the DCMS is the Department that deals with the social law. The changes that he wants to be made in relation to the number of category B3 machines allowed in bingo halls and amusement arcades are a matter for my DCMS colleagues.

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Photo of David Taylor David Taylor Labour, North West Leicestershire

The Minister has heard from Members on both sides of the Committee various descriptions of the trends that have long been in place regarding the run-down in the number of bingo halls and amusement arcades. How relaxed is she about that run-down in fiscal and social terms? Not everybody who was once a user of amusement arcades will migrate to the heavy end of the spectrum. For a lot of middle aged and elderly people, amusement arcades represent a social outing and a small piece of enjoyment while they are out shopping. By no means are they problem gamblers.

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Photo of Angela Eagle Angela Eagle The Exchequer Secretary, Member, Labour Party National Executive Committee

I agree with my hon. Friend that people who use amusement arcades or go to bingo halls are not necessarily problem gamblers; I suspect that few of them are. As hon. Members have said, a series of changes has taken place under the Gambling Act, which, after all, has been working only since October 2007. Hon. Members are calling for a review. Clearly, there will be a review, but we must remember that the major changes to social law have been working for only a short time and it may be slightly early to have a full review of the Act.

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Photo of David Heathcoat-Amory David Heathcoat-Amory Conservative, Wells

The Government have just conducted a very panicky emergency review of their ill-judged proposals on the taxation of low-paid people. Why can they not attribute the same urgency to a review of the destruction of a seaside industry, about which the Minister has been warned in the past and which has now taken place? A very serious situation faces hundreds, or even thousands, of businesses employing very many people. Will the Minister show the same urgency over that as she showed over the 10p tax rate?

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Photo of Angela Eagle Angela Eagle The Exchequer Secretary, Member, Labour Party National Executive Committee

If the right hon. Gentleman had been listening to what I was saying, he would know that it is not for the Treasury but for the Department for Culture, Media and Sport to conduct such a review. I will not say from the Dispatch Box that I will do things that are properly a matter for colleagues in another Department.

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Photo of John Gummer John Gummer Conservative, Suffolk Coastal

I find it a little difficult to understand what the Minister is saying about the distinction between community action and taxation. When the Chancellor of the Exchequer announces that the cost of cigarettes is to rise considerably, he always says "I am doing this to safeguard the health of the nation." It is not possible to distinguish between the two issues. All we are asking is for the Minister to promise that she will tell her colleagues that the review must take place, otherwise she will lose money.

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Photo of Angela Eagle Angela Eagle The Exchequer Secretary, Member, Labour Party National Executive Committee

My colleagues in the Department for Culture, Media and Sport are keeping these matters under review, as they keep the social law relating to gambling under review. Even as we speak, they are examining issues relating to specific gaming machines and stakes. It is not for me to announce what my colleagues in the Department for Culture, Media and Sport are going to do. The fact is that gambling law and the social law relating to it are a matter for them and for the Gambling Commission, while taxation is a matter for Her Majesty's Treasury.

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Photo of Mike Hancock Mike Hancock Liberal Democrat, Portsmouth South

If taxation is indeed the responsibility of Treasury Ministers, accepting the amendment would demonstrate that they recognised the damage that this change would do to the industry, and that they would be denying themselves revenue rather than increasing it. That in itself would put down a marker for the Minister's colleagues elsewhere in Government, indicating that she for one is prepared to listen, to recognise the size of the problem, and to act.

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Photo of Angela Eagle Angela Eagle The Exchequer Secretary, Member, Labour Party National Executive Committee

The hon. Gentleman has raised two issues. Of course we are sensitive—I am sensitive—to the health of particular industries and how their activities are affected, but he seems to be suggesting that this industry is in difficulty because of the revalorisation of amusement machine licence duty. Although he may well have a point, the issues affecting the industry range more widely than whether we revalorise amusement machine licence duty as a tax. They also involve some of the changes resulting from the gambling legislation, and the changes in the social law. However, that is a matter for my colleagues in the Department for Culture, Media and Sport.

Category B3 machines are high-price gaming machines with a maximum stake of £1 and a maximum prize of £500. As we were told by the hon. Member for Putney, adult gaming centres and licensed bingo halls are permitted a maximum of four such machines. My colleagues in the Department for Culture, Media and Sport are considering the case for assisting bingo halls and arcades, but the Government's underlying approach to gambling regulation is rightly a precautionary one. We must weigh the industry's demands that we help it through economic difficulties against any danger that higher-stake, high-prize machines may pose to the public.

As I have said, amusement machine licence duty is a fixed cost, so because of inflation the real value of revenue raised by it will diminish over time. Reducing AMLD rates in 2009 to their August 2006 levels would cost £15 million. The Department for Culture, Media and Sport has said that it is considering the industry's case for assistance, and it would be wrong to pre-empt the process by making an explicit link between the social regulation of gaming duties and levels of amusement machine licence duty.

I hope that, given that explanation, the hon. Member for Putney will withdraw her amendment.

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Photo of Justine Greening Justine Greening Shadow Minister (Treasury), Vice-Chair (Youth), Conservative Party

If we were ever in doubt over whether this is a joined-up Government, we have just discovered the truth: they definitely are not. The Minister can hardly be bothered to talk to her colleagues in the Department for Culture, Media and Sport. She says that we should not mix up social law and Treasury law, but I am afraid that this is a social law which is having an economic impact. To say that it has nothing to do with the Treasury is an entirely inadequate response to the fact that companies are going out of business at this moment. The Minister ought to be willing to act. This is no way in which to treat the businesses that are so vital to seaside communities, and I therefore wish to press the amendment to a vote.

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Question put, That the amendment be made:—

The Committee divided: Ayes 221, Noes 309.

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Division number 155 Finance Bill — Clause 21 — Amusement Machine licence duty

Aye: 221 MPs

No: 309 MPs

Ayes: A-Z by last name

Tellers

Nos: A-Z by last name

Tellers

Absent: 111 MPs

Absents: A-Z by last name

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Question accordingly negatived.

Clause 21 ordered to stand part of the Bill.

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