Clause 267 stand part.
Amendment No. 364, in clause 268, page 119, line 20, leave out
'an on-premises alcohol licence in respect of premises' and insert
'a premises licence under the Licensing Act 2003'.
Amendment No. 365, in clause 268, page 119, line 23, leave out 'they think that'.
Amendment No. 366, in clause 268, page 119, line 25, leave out paragraph (a) and insert—
'(a) relevant representations relating to the licensing objectives have been received and upheld,'.
Amendment No. 367, in clause 268, page 119, line 33, leave out from '(3)' to end of line 36.
Clause 268 stand part.
Government amendment No. 363.
Government new clause 16—Gaming machines: automatic entitlement.
Government new clause 17—Pub gaming machine permits.
Government new clause 18—Removal of exemption.
Government new schedule 2—Pub Gaming Machine Permits.
Amendment No. 369 relates to the numbers of gaming machines of category C or D that will be
''available for use on premises to which this section applies.''
For many years, the pub industry has stressed the sense of granting four machines as a right. It is my understanding that only 1 per cent. of pubs—about 600 in total—have more than four machines. The granting of four machines automatically would remove almost 20 per cent. of businesses from the need to apply for more than two machines.
There are some 60,000 public houses in the UK, with the number of managed houses in decline during recent years. Some 18,700 are independently operated free houses. The remaining 29,600 pubs are mostly operated by independent small businesses under leases or tenancy agreement from breweries or pub-owning companies. Gaming on fruit machines has been a feature of the UK public house for around 40 years and represents the only but important source of gambling revenue on such premises. Machines offering £25 maximum prizes are in most public houses. Some 80,000 category C machines are sited in public houses throughout the country.
Those machines are significant income generators for the pubs. Their importance varies from pub to pub, but the viability of marginal businesses—approximately 5,000 to 6,000 pubs nationally—depends on them, as it does for clubs. As in clubs, machines enable costs in other areas, such as food, to be offset. Therefore, they are critical to a large number of pubs.
The industry neither envisages nor seeks an explosion of machine numbers and we would not support that either. The market for that does not exist. It is constrained by the price of entry, which includes a fixed duty fee and the machine rental. The industry believes that having four machines as a right would enable operators to meet market expectations where they exist, as they do at the moment, while easing the bureaucratic burden and without leading to an appreciable increase on machine numbers or problem gambling. The amendment seeks the right to four gaming machines on the grounds of better regulation and a reduction in the burden on the industry and local authorities alike.
Amendment No. 370 would remove subsection (7). The pub sector supports the legal backing for its voluntary action of preventing under-18s from playing gaming machines in pubs. We support its argument that self-regulation has worked well, and the industry as a whole welcomes the provisions prohibiting machine play by under-18s. However, it does not believe that there is any need for a code of practice to accompany that simple measure; it is for public house managers and owners to manage their premises properly and ensure that the law is obeyed. The industry accepts that, were that not the case, appropriate sanctions would have to be employed—a caution, a fine or the removal of machines from the premises.
Under the new Licensing Act, there has been a tightening of the rules on children in pubs. The new rules require that children under 16 years old must be accompanied by an adult in order to be present on premises being used exclusively or primarily for the supply of alcohol for consumption on those premises. Codes of practice by the gambling commission should cover only those activities that require an operator's licence under this Bill. Permissions for public houses would be given by local authorities, and it does not seem appropriate that the gambling commission should regulate those sectors that it does not license via codes of practice.
I was not intending to interrupt my hon. Friend's flow, but he has raised a question in my mind. By referring specifically to codes of practice with which statute will require individuals to comply, my concern is that they are not therefore codes of practice but statutory rules and that ''codes of practice'' is a misnomer. I do not know whether my hon. Friend, who is more learned in those matters than I, will be able to clarify that.
I thank my hon. Friend for that interesting question. When the industry guidance was published for the Licensing Act 2003, it was presented to Parliament as delegated legislation and we debated it and voted on it. I would think that certain codes of practice may come under guidance, and some may not. They may be issued, in the case of this legislation, by the gambling commission, and it will be for the commission to alter them as it sees fit. In the main, and in the final analysis, it ought to be the responsibility of Parliament to determine through statutory instrument serious codes of practice and serious guidance.
Perhaps my hon. Friend the Member for Hertford and Stortford was advancing a parallel that could best be described with an examination of employment law. There is a code of practice for the dismissal of staff, and if one does not follow it, one will find great difficulty in making that dismissal stick; whereas, if one follows the code and goes through its various phases as recommended, with the necessary appeals available to the employee throughout, a conclusion can be reached. Is that not a more accurate parallel? Our hon. Friend is saying that in this case it should be in the Bill as statute rather than as a code of practice.
I am sure that my hon. Friend is right. However, such questions would be better addressed to the Minister, as he is responsible for the legislation, not me. I am sure that, in most cases, codes of practice will be enshrined in the statutory framework. Otherwise, as in the example that has just been given, why would anyone bother setting them out in the first place? However, as I am not a lawyer, I cannot say whether all codes of practice are necessarily enshrined in statute. I have no doubt that the Minister will correct me if I am wrong. With that answer, I would be grateful if I could proceed.
Is the Minister offering to share his salary? Is it on the record that the Minister offered to share his salary—and pension contributions and car? [Hon. Members: ''And shares. And the red box.''] No, I do not want the red box.
Amendment No. 364 relates to clause 268 on the removal of exemption. The use of the term ''on-premises alcohol licence'' in the Bill is technically wrong and unnecessary in the context. Under the Licensing Act 2003, the licensing authority—in this case, the local authority—does not issue an on-premises alcohol licence but a premises licence, which is bound by the relevant terms. Such a licence may or may not include the permission to sell alcohol or to supply it for consumption on the premises. The term ''on-premises alcohol licence'' has been invented during the development of the Gambling Bill. It may have some relevance in colloquial terms in the Bill, but it does not exist in the 2003 Act. The amendment would not alter the powers given to the licensing authority under the Bill, but it would make it clear under what authority such powers were exercised—that a premises licence was issued under the 2003 Act.
Amendments Nos. 365 and 366 also relate to clause 268. Amendment No. 365 would remove the words ''they think that'' so that the subsection would state:
''A licensing authority may disapply a section under subsection (1) only if'', and in paragraphs (a), (b) and (c) the circumstances are described.
The clause permits the licensing authority to remove the permission for category C or D gaming machines that has been given by virtue of the possession of a premises licence under the 2003 Act where alcohol is supplied for consumption on the premises if it thinks—that is the key word—that the presence of the machines would not be consistent with the licensing objectives. The 2003 Act is clear that judgments as to the effect of a granting of a licence on the licensing objectives can be brought into play by the licensing authority only on receipt of valid representations by ''responsible authorities'' and ''interested parties''. Neither the council nor the licensing authority fall under those categories. Therefore, they cannot raise objections to the granting of a licence.
It is the job of the licensing authority to exercise its discretion as to the action to be taken in the light of representations. The Bill directly contradicts that principle, in that it grants the licensing authority the power to disapply the exemption on the basis of its own thought process. For the licensing authority to have such an ability on the basis that it thinks that something is not quite right is surely much too low a test, and the industry is concerned that some licensing authorities could misuse such a wide-ranging discretion to exercise their prejudice against small gaming in pubs, bowling alleys and the like without any proper control.
Amendment No. 367 would remove the power of the Secretary of State to impose further obligations on the holder of a licence held under the Licensing Act 2003 and makes provisions about the consequences of failure to comply with such obligations. Why are such provisions required? If they are required, why are they not included in the Bill? If the provision of gaming machines is enabled through the possession of a licence under the 2003 Act, the conditions apply to that licence and the sanctions available in the breach of any such condition are governed by that Act.
There is no advantage in seeking further and additional mechanisms through the Bill. If a licensee is in breach, in permitting under-18s to play the machine, for example, that would be open to a straightforward prosecution under the 2003 Act, while the enforcement authorities would be able to seek a review of that premises' licence. The power that is required is to enable the licensing authority to take appropriate action, such as removal of the machines. The granting of powers to the Secretary of State to impose further obligations appears misconceived and open-ended. Small-prize machines in premises covered by the Licensing Act are not going to lead to large-scale gambling bonanzas; nor is there any evidence of any issue with young persons' gambling in such places as pubs and hotel bars.
It is accepted that such machines need to be controlled and regulated. The industry is not seeking a proliferation of those machines, and although it believes that a modest increase in the prize level is needed to compete with all the deregulation that has occurred and is proposed, no one has been able to demonstrate that any real harm arises from the sector. We have had that debate on more than one occasion during the proceedings of the Committee. Why does the Secretary of State seek additional obligations and sanctions when the 2003 Act is perfectly capable of delivering the necessary controls?
I have a great deal of sympathy with many of the amendments referred to by the hon. Member for North-East Cambridgeshire, but I was surprised that the Committee did not hear more details of his analysis of the likely implications of the amendments that propose that the starting point for pubs should be an automatic requirement for four machines.
The hon. Gentleman has received, as have I, an excellent briefing from the British Beer and Pub Association, which has drawn our attention to a number of concerns about not only the clause but some of the amendments about which we shall hear more detail from the Minister in a moment. It expressed considerable surprise that without any detailed consultation with the industry the Government have proposed such significant changes as a new licence—a pub gaming machine permit—in their amendments, which has happened rather a lot during our deliberations. Quite rightly, the BBPA points out that a number of other establishments will be similarly affected. Those include hotel bars, nightclubs, bowling alleys and so on. It wonders and I wonder whether the Minister is shortly to bring forward further amendments to establish the new concept of a bowling alley gaming machine permit or a hotel bar gaming machine permit. No doubt the Minister can clarify that for us. So there is some surprise not only that the amendments were introduced without consultation but at their wording. There is understandable concern about the increased bureaucracy that they will leave in their wake.
As I said, we on the Liberal Benches are concerned about the amendment tabled by the hon. Member for North-East Cambridgeshire on the automatic entitlement to four machines. The British Beer and Pub Association suggested in its extremely helpful briefing that, were the hon. Gentleman's amendment to be accepted, it would lead to only a small increase—of approximately 5 per cent.—in the number of machines. That would be an additional 4,000 category C machines.
I am sure that the hon. Gentleman, who has done his homework on the Bill, would acknowledge that, were every pub in the land to take up an automatic entitlement to four machines, there would be in the region of 108,000 additional category C machines. I do not for a minute suggest that that would happen, but, although it is an extreme and unlikely scenario, he must accept that many of us are concerned about such potential. As we have expressed concern about the huge proliferation of machines that might occur under other aspects of the legislation, we are concerned about the hon. Gentleman's amendment.
Nevertheless, we are entirely supportive of some of the other points that the hon. Gentleman raised: for example, the strange use of language and the way in which that can be solved by using terms already in the Licensing Act 2003. I hope that, when the Minister speaks to the Government amendments and the clauses to stand part, he will explain clearly why he felt it necessary to propose such strange new permits, and how a bowling alley, for example, will be affected. Will it—rather strangely—have to apply for a pub gaming machine permit, and would the same be true of a hotel bar and the like?
I hope that the Minister will also explain in more detail than I have been able to gather what discussions he has had with the industry on the matter and what his understanding of the industry's responses to the amendments has been. Certainly all of the conversations that I have had have led me to believe that inadequate consultation has taken place and that the amendments proposed by the Minister will create great problems for the industry.
As well as supporting the comments of my hon. Friend the Member for North-East Cambridgeshire said, and a great deal of what the hon. Member for Bath said, I want to stress one point. As I mentioned, I have a long-standing link with the licensed trade as one of the founder members and officers of the all-party beer group. I have been joint treasurer of that group ever since it was set up. What concerns me is the lack of transparency in what the Government are introducing in the new clauses and schedules.
The British Beer and Pub Association has told those of us with an interest in the matter that the application and removal processes, which grant decision-making powers to the licensing authority, unlike the Licensing Act 2003, are not based on due process of representation from third parties entitled to make objections. The licensing authority will be acting in a judicial matter when granting the licence in respect of alcohol and public entertainment under the 2003 Act, but will be judge and jury when considering gaming machine permits.
As well as introducing a novel concept, with all the weaknesses to which my hon. Friend the Member for North-East Cambridgeshire and the hon. Member for Bath referred, the Government have introduced a completely different regime. As a lawyer, I find it peculiar, to say the least, that those who are making the decisions are to be treated differently on the alcohol licensing side than on the gaming side—[Interruption.] Does my hon. Friend the Member for Hertford and Stortford want to intervene?
My hon. Friend is raising an important point, but I wonder whether he has considered those who may be unclear, given the opaqueness of the regulations, as to whether they will be affected. I am concerned that when regulations are unclear those who might be on the cusp of the compliance burden are, as law-abiding citizens, anxious to comply. Does he share my concern, which many smaller enterprises will share, at the lack of clarity in the Bill?
My hon. Friend is absolutely right and I agree with him. It is one of the unfortunate consequences of the Government producing legislation as they go along. My hon. Friend the Member for South-West Hertfordshire (Mr. Page) talked about the unsatisfactory way in which the legislation is proceeding. Major changes to the Bill are being introduced in the middle of our deliberations. I do not want to restart my argument with the Minister last week; I simply echo what the hon. Member for Bath said mildly about consultation—or the lack of it.
My hon. Friend the Member for South-West Hertfordshire has repeatedly said that it is not satisfactory that major industries in this country, which were able to put forward their views on the original proposals to the scrutiny Committee, on which he sat, have not had the opportunity to take into account these last-minute major changes. The issue is serious and the Government would be wiser, as the British Beer and Pub Association suggested, to take it away for more detailed discussion and to ensure that the proposals are along the same lines as the Licensing Act, and then return at a later stage with amendments that have been more carefully thought through. This rushed way of changing legislation as we go along is not a good use of parliamentary time or consistent with the traditions of this place, and it is very worrying for those in the industry whose concerns I wish to reflect.
I would like to pick up and run with my hon. Friend's comments; he is right. I have expressed concern about the way in which we seem to be making legislation on the hoof rather than taking a long and considered look at it. My hon. Friend referred to the scrutiny Committee, which was able to take evidence on parts of the Bill and make recommendations.
I have a difficulty and other hon. Members may have the same difficulty. Government amendment No. 360 states:
''leave out Clauses 267 and 268.''
My hon. Friend the Member for North-East Cambridgeshire has spoken to amendments to clauses that, according to the Government, will not exist. Also, we are debating clause 268 stand part in this clutch of amendments, although it is the next item for discussion. There is a mass of new clauses of considerable complexity and depth on today's amendment paper. In addition, new schedule 2, which deals with pub gaming machine permits, runs to six pages of legislation.
We on the Opposition Benches in this Committee are being bounced into agreeing legislation that has not been properly considered. It is all right for the Minister sitting there, folding his arms, taking a relaxed view, being able to ram everything through with his huge majority unless my friend the hon. Member for Barnsley, Central comes to our rescue again, but those are my concerns. I turn to the explanatory notes for help, but now I do not know whether the notes on clause 268 have any relevance to all the new clauses in front of us, so we really are flying blind.
I do not want to interrupt the excellent flow of my hon. Friend, but one concern that I know he will share, which he has not been able to share with the Committee, is about the significant question of competitiveness that would be posed to a number of businesses currently able to function if the legislation before us were to be passed without amendment. As someone with a general interest in the small business fraternity, it would appear to me that there are significant changes in the legislation that could restrict competitiveness. I think in particular of the ability of our pubs to compete with larger chains that may run competing hotels and restaurants. Will my hon. Friend comment on the issue of competitiveness?
I know that my hon. Friend takes a great deal of interest in the small business sector, as I did in my youth, which is why I understand his concern. The problem is that so many extra clauses have been rammed at us, and I am unable to give him a considered reply because they might deal with competitiveness. It is impossible to absorb six pages of legislation—new schedule 2—at a moment's notice.
My hon. Friend, who has tremendous experience in the area under discussion, is struggling to cope with the number of amendments and in particular with the nature of the original legislation that my hon. Friend the Member for North-East Cambridgeshire hopes to amend. If my hon. Friend the Member for South-West Hertfordshire cannot cope with the welter of changes that the Government are introducing, how does he think small businesses will be able to cope?
My hon. Friend flatters me. He is providing the Minister with ample opportunity to say later that this hon. Member is retiring from Parliament because he is past it, has had his day, and that it is no wonder that he cannot understand the legislation, because he is suffering from senior moments in every Committee. I will not follow my hon. Friend's argument, because I would probably be out of order as well. He raises a legitimate concern, however, which I cannot answer until I study and understand the impact that the proposed legislation will have. I will have to cling to the explanatory notes for clause 268 and hope that they have a touch of relevance to new clauses 16 to 18, Government amendment No. 363 and Government new schedule 2—pages and pages of legislation. I have been able to study the notes briefly, but not in depth or adequately enough.
During the brief reading to which the hon. Gentleman admits, he surely will have given some consideration to the references to fees chargeable. Has he given any thought whatever to the additional bureaucracy and fees that might be imposed on the establishments about which we are talking? In view of the earlier exchange that we had with the Minister, has the hon. Gentleman given thought to the possible need for a further amendment to include the establishment of gastro-pub in respect of gaming machines?
Unfortunately, proceedings up to clause 284 must be concluded by 5.30 this afternoon. The hon. Gentleman made a tempting and generous offer, but I must proceed with caution. However, he touched on an issue that I was about to come to, which is regulation. I noted during my brief examination of the new clauses that the Government have endeavoured to set out in the Bill the reasons why the licensing authority may take action in certain circumstances. I would like to commend them for that—I want to be perfectly fair and give praise where it is due—but I have a difficulty in that I have not had enough time to read and fully comprehend the new clauses, so I must proceed with caution in issuing any praise.
When we examine the explanatory notes on clause 268—I cling to them as the only rock in this rapidly moving sea of legislation—we find subjective comments. The notes state:
''The authority can only take away these rights where they think that . . . the premises are used mainly for gaming, or the intention is for them to be used mainly for gaming in the future.''
That is highly subjective. Having considered the other aspects of the new clauses, I wonder how the licensing authority will reach such opinions, and whether we will be driven into producing yet another regulation. I presume that the Government will have to issue regulations or guidance to licensing authorities to clarify what is meant by
''the premises are used mainly for gaming, or the intention is for them to be used mainly for gaming in the future.''
I would like to hear the Minister's comments on that.
Is it not amazing, after all this time and the review of the scrutiny Committee, on which my hon. Friend sat, that the Government are chucking out—deleting—two full clauses of the Bill? They may not accept our amendments, but, as my hon. Friend pointed out, they highlight the problems and discrepancies in the clauses. That is why the Government are to negative the clauses and have tabled new ones, but is it not astounding that they cannot get the Bill correct at this late hour?
I think that everybody on the Committee would admit—even the Minister himself, if he were to be candid and open, which seems to be the policy of some Ministers these days when discussing various actions inside the Government—that substituting one and one third pages of legislation, part of pages 118 and 119—
My research assistant has been doing the work for me and has come up with the necessary figure. It is a frightening situation. I am certain that the scrutiny Committee would have loved to have examined the relevant clauses and, if necessary, taken evidence on them to know how to proceed. I have again registered my concerns sufficiently on the problem. Knowing this Government, I have absolutely no doubt that I will be standing here later saying exactly the same about another set of withdrawn clauses, another set of new clauses and another ream of amendments. That is unsatisfactory.
What guidance and regulations will there be to the licensing authority on the subjective aspects of this legislation? There are many mechanistic points in the new clauses, such as the fact that a licence will be under threat if a child is seen operating a machine. That is fair enough and understandable. However, as I have suggested, there are subjective aspects. What will the guidance and guidelines be for establishing whether premises are mainly used for gambling? Will it be based on turnover, profit or usage compared with number of pints consumed? That is a sample question on a theme that runs through all of the amendments, so I look forward to hearing what the Minister has to say.
The issue of consultation was raised by a number of hon. Members, and I told the Committee last week that we informed the British Beer and Pub Association about the amendments before they were tabled. My officials have had further meetings with a representative of the association as recently as last Friday, and they inform me that that meeting was constructive and positive. They are grateful for the advice that they received from the association, which underlines the ongoing dialogue that we have had with the BBPA. I understand the association's concerns and preferred position that pubs should have an automatic entitlement to four machines rather than two, as we propose in the Bill. Apart from that, it is fair to say that the association appreciates the reasons behind the amendments, and I am grateful that it is working with us in considering the details of how the new regime will operate.
My right hon. Friend may or may not be aware that there has been a considerable amount of press coverage in Scotland about this legislation over the past few days. Criticism has been raised about whether bodies and organisations in Scotland have been sufficiently consulted. Will he confirm that he has had the opportunity to discuss these matters with the Scottish Executive, and that Scottish organisations, including Scottish Churches, have made general representations on the Bill? The impression given through much of the media in Scotland over the past few days is that there has been a complete lack of consultation. It would be reassuring to know what consultation has taken place with Scottish bodies and organisations.
There has been extensive consultation at the official level. Only yesterday the Scottish Minister with responsibility for gambling was in my office together with officials. We discussed the Bill and the intentions on implementing it. I understand that there have been consultations north of the border, although I have not been privy to them, as there have been south of the border. A separate Scottish consultation has fed into DCMS policy. Certain aspects of planning and premises licences will be dealt with differently, and we had a constructive discussion on trying to ensure that we dovetail that. Wider consultation has taken place and we will continue to work with the Scottish Executive at both political and official levels. As I said, as late as yesterday, I had a meeting with my counterpart north of the border. We are also discussing the matter with our colleagues in the Welsh Assembly.
I want to put one or two matters into context before being specific. The discussion about four machines was interesting. For the first time, there will be a minimum level for the number of machines and we have given clear assurances on grandfather rights. I hope that I have been able to reinforce them this morning.
When we started the consultation, the argument was for around four machines. We did a quick calculation of how many machines there are in pubs throughout the country at the moment. I thought that the average was 1.5 machines per establishment, but my officials tell me that it is marginally over one. Now, we are being asked to increase that to four from an average of around one. We have said that two should be the baseline and that, if an establishment wants more than two, it can go to its authority to ask for more. That is a good way of ensuring that we do not encourage an explosion in the number of machines, to which the hon. Member for Bath alluded.
We have approached the matter with common sense based on statistics. I told the British Beer and Pub Association that, at the moment, the average number of machines in pubs is just over one. There is no minimum limit at the moment and we are setting it at two. The BBPA is asking for four and I have asked it to explain the basis for asking for four. I heard the statistics given this morning, but they do not stand up in terms of the totality and I believe that we are moving forward sensibly and rationally.
No, I cannot. That will depend on the decisions made by the pubs. All I can say is that grandfather rights exist and the status quo prevails in terms of numbers. The information that I have is that there is just over one machine per pub on average. The legislation introduces a guarantee for the first time. If someone opens licensed premises, they may have two machines. The British Beer and Pub Association wants four, but we believe that that is excessive. However, we believe that some pubs will require more than two machines. We are introducing a flexible regime that will provide assurance to the public that there will not be an explosion in the number of machines.
Mr. Moss rose—
I shall just return to the Australian situation, although it is not an absolute parallel. It was interesting when hon. Members were talking about how the Government are reacting to significant changes. One reason for the problems in Australia was that, when licences for category A machines—the live machines with large payouts—were given to casinos, there was uproar from sports clubs. It was the reaction to that which allowed a proliferation of machines. I assure the Committee and the general public that we are not going down that road.
There may be arguments about how we have framed some of the amendments and how we are doing what we are doing, but we are steering a clear course on the use of machines. We have looked at international experience and we are not taking that course. It may be inconvenient for a few amendments here and there, but I assure the Committee that that is the course that we are taking, because we believe that it is right and in the interests of the public and the industry.
I agree that we do not want to go down the Australian route and I am glad that the Minister is pursuing a cautionary line. I have not looked into the precise details of the Australian situation, but he said that part of the problem in Australia was that category A machines were allowed in casinos, which caused an explosion in the number of machines in pubs. Can he clarify whether pubs were allowed to have category A machines, or did they have lower category machines with lower payouts and smaller prizes? Is he comparing like with like? Were pubs allowed to have category A machines as well?
Pubs and sports clubs were allowed category A machines. One must consider the different social infrastructure. A pub as we know it is not necessarily like a pub in Australia. Some sports clubs have high-rolling machines wall-to-wall. That was on the back of the argument with the Australian Government at the time because of what was done in casinos. There was a roll-on effect.
The key factor, however, is tying the number of machines to something. There has been consistency throughout about that. Do we tie the number of machines to a betting shop? In a casino, do we tie the number of machines to the number of tables operating? We must keep control of the number of machines and that is tied down clearly in legislation through the powers that we are giving to the new gambling commission.
The big money and profits are earned, and problem gambling arises, not from casinos as such, but from the number and proliferation of machines in all sorts of areas. That is what the Bill controls. We are incorporating that with a strict regime that takes things away from the 1968 Act and brings them to the gambling commission.
I am at a complete loss as to the Minister's logic. He said earlier that under the Bill grandfather rights will be given to all pubs that have machines at the moment. If a pub has four machines, it keeps four machines. If it has five machines, it keeps five machines. It does not really matter what the range is. At the moment, given the grandfather rights, all machines in pubs will stay. So, we are talking only about new pubs and new applications for gaming machines. How many new pubs come forward every week, month or year? I would not have thought it was that many.
The whole industry probably has an average of fewer than two machines each. In fact, 74 per cent. of pubs have two machines or fewer, so we are talking about only a small number, under market forces, that bother to pay for the extra machines and the accompanying rentals. In other words, the market itself constrains the number of machines because people just will not pay for them and the payback to the pub landlord is such that it is not worth having more than one, two or three machines. We are talking about only a small number of very large establishments. If this is about deregulation and removing the bureaucratic pressure, allowing four machines in new pubs—we are talking only about new pubs—is not a problem.
If a pub wants to apply for more machines, it can do so. The figure may be only 2 or 3 per cent., but the hon. Gentleman will know from when he and I were discussing the Licensing Bill that it is probably only 1 or 2 per cent. of premises in the middle of our city centres in some areas that create real problems with binge drinking and the like. We have to deal with that. Unfortunately, we have to legislate for those that are likely to try to take advantage. There are no limits at the moment. We are saying that it ought to be two machines and I am just trying to argue the rationale for that. We believe that the public want to be reassured and we are doing that. Equally, we are saying that, if there is a case for having more than two machines, that is fine and the case will go to the licensing authority.
I wonder whether the Minister could help me because I am slightly confused by the intervention by the hon. Member for North-East Cambridgeshire. Is it not the Minister's interpretation of the hon. Gentleman's amendment that the opportunity to go to four machines would apply not just to any new public houses, but to all public houses? Given that 90 per cent. of the 60,000 existing public houses currently have only two machines, that would mean that 90 per cent. could move to four machines automatically rather than having to apply. Although I accept the hon. Gentleman's analysis that many pubs are unlikely to do so because they have to pay both for the machine and for a permit, and the market will mean that the figure will not be the 108,000 that I referred to, the potential is greater than he suggested in his intervention.
There is that potential, theoretically. There are doubts about that. What the hon. Member for Bath said is absolutely right. The reality is that that has not happened. However, we are talking not about today but about tomorrow. We want a framework of law that will reassure people that there will not be a totally uncontrolled proliferation in gambling but will allow people who have legitimate claims to move their business forward. We believe that that is based on logic.
I return to the point on which many of the Opposition amendments are predicated—it is the BBPA that is saying that it wants to move to an average of four machines per establishment. I say that there is no rationale for that on today's operation or in the future.
Mr. Moss rose—
The BBPA does not want an average of four machines per establishment. It just wants the Bill to allow pubs four machines if they want them, without having to go through a bureaucratic process and pay extra money. The point is deregulatory. Given that market forces mean that the average is about two machines per establishment at the moment, there is no imperative in the industry to have more than a small number of machines. If the Government are happy with that, which they say that they are because they will give grandfather rights across the board, I cannot understand why we need to discuss all these clauses that add more and more bureaucracy. We are now talking about permits, which mean more work for the local authority, when we do not have a basic problem.
That is the hon. Gentleman's view. It is one that he believes sustains his argument. We do not. We believe that it is necessary to take those powers so that we can reassure people that, if there is an increase in the number of gaming machines, it will be under controlled conditions. We believe that is the right way to move forward.
New schedule 2 is similar to schedules 8 and 11—in fact, it is a reproduction of them. I hope that that reassures the hon. Gentleman.
Anybody would think that we had changed the policy, but we have not. The late changes are not major changes of substance. One would have thought from the debate that we had changed it substantially. Pubs have no legal entitlement to a particular number of gaming machines, but the established practice is that they are allowed to install at least two all-cash amusement-with-prizes gaming machines, which have a £25 prize. Pubs can apply for additional machines and a licensing justice can allow more. Where pubs are large, it is common for a proportionate number of additional machines to be authorised so that customers who want to play can have reasonable access to them. Licensed ten-pin bowling alleys are in the same position. The Bill proposes that pubs and equivalent premises should be entitled to two category C machines and have the ability to apply for additional machines if the size of the premises or other factors justify that.
On amendment No. 369, I see no reason to amend the Bill to double the automatic entitlement. It may be that a number of pubs choose not to take up their full quota, but the amendment would sit oddly with the general policy of precaution on machines. As I said, if pubs can make a reasonable case for having more than two machines, they can do so. However, such matters should be decided on their merits by the licensing authority and not left solely to the pubs themselves. Pubs that have already been allowed to install more than two machines will be entitled to keep them under grandfather rights. We recognise the case for that.
I do not agree with amendment No. 370, which would be inappropriate. It would remove the requirement to make gaming machines available in accordance with the relevant provision of the code of practice issued by the gambling commission. To fulfil the licensing objectives at the heart of the Bill, it is important that gambling commission codes of practice are followed regardless of the type of premises that the gaming machines are located in. It would be wrong for category C machines in an adult gaming centre to be operated differently from the same machines in, for example, a pub. I therefore ask the hon. Gentleman not to press the amendment.
Amendment No. 364 is unnecessary because clause 262 sets out the definition of an ''on-premises alcohol licence'', referring to the relevant part of the Licensing Act 2003. I hope that, with that explanation, the hon. Gentleman will not press the amendment.
Amendments Nos. 365 and 366 restrict a licensing authority's discretion when removing entitlements under clause 268. It is important that licensing authorities are given sufficient powers to take entitlements away where necessary and amendment No. 365 will unnecessarily limit their discretion. Amendment No. 366 will require representation to be received by the licensing authority before action can be taken under subsection (2)(a) of clause 268.
I am giving the rational arguments for rejecting the amendments. It is right to do so, but if the hon. Gentleman does not want me to, that is fine.
That point was raised last night, and it is a fair one. I was asked why the Government go into such great detail. One could be critical of what we have done during stand part debates. It is interesting that many people look to stand part debates for an explanation of a clause both now and later. It is right to give reasons why we take certain actions. Someone was critical because we have not debated all the clauses on stand part—we would have spent a lot of time on that if we had. However, the hon. Gentleman has a valid point, and it could well be that, at some stage, the arguments will go straight into the record without us having to give them all in Committee.
In his comments on amendment No. 370 the Minister mentioned that it was unhelpful that the code of practice under clause 23 and the involvement of the gambling commission would not be brought to bear in this matter. The Government amendments delete clause 267, so subsection (7) will go, as I proposed in amendment No. 270. However, nowhere in new clauses 16 and 17 do I see any reference to the codes of practice. I wonder whether the Government have missed that.
I can deal with that point straight away. I am aware that subsection (7) is reproduced in new clause 16. That subsection ensures that a person making a gaming machine available for use under the clause must do so in accordance with the relevant provisions of the code of practice issued by the gambling commission under clause 23. [Interruption.] Sorry, I should have said that the subsection is not reproduced in new clause 16.
While the hon. Gentleman is digesting that, I shall turn to amendment No. 367, on which a point was raised relating to the additional conditions to the on-premises alcohol licences. Those provisions are not reproduced in new clause 18. I therefore ask the hon. Gentleman not to press the amendment.
I turn to Government amendment No. 363, new clauses 16 to 18 and new schedule 2. The purpose of the amendment is to assure clarity in gambling regulation and in alcohol regulation under the Licensing Act 2003. Where something is authorised under the Bill, the mechanism underpinning the authorisation should be found in the Bill and not the 2003 Act.
New clause 16 provides that premises with an on-premises alcohol licence issued under the 2003 Act will be automatically entitled to up to two category C or D gaming machines. That is largely similar to clause 267(1), but the entitlement will be subject to the conditions that the alcohol licence holder notifies the licensing authority that issued the alcohol licence and pays a small notification fee.
The Minister has just referred to a small fee. The question of the fee did not appear in the Government's regulatory impact assessment because the new clause has been tabled since that assessment was drawn up. The matter has been raised with me by several organisations, including the BBPA. The Government did not originally intend to raise fees, and several organisations, including the BBPA, are anxious to know what the fee will be, what it will cover and whether there will be substantial administration costs for the newly required piece of paper.
Will there be any difficulty with enforcement? The industry accepts that under-18s should not play category C machines and has voluntarily incorporated notices in pubs to that effect for years. Indeed, such notices are standard on machines in pubs, bars and clubs.
It is a notification fee. Throughout the Bill, cost recovery is the overriding premise for all fees charged, so the fee would be low. The cost is for administration and enforcement by the licensing authority.
Under new clause 17 on-premises alcohol licence holders will also be able to apply to the licensing authority for a pub gaming machine permit, which will enable more than two gaming machines to be made available for use. Previously, any application for additional gaming machines would have been approved through conditions attached to the alcohol licence under clause 267(2). We no longer consider that the correct approach, since an entitlement to make gaming machines available goes beyond the scope of an alcohol licence under the Licensing Act.
The difficulty is in rolling six regulatory authorities into one, under the 2003 Act, and, through the Gambling Bill, bringing the 1968 and 1976 Acts into a modern setting, but keeping the main principles. How an those provisions be dovetailed to ensure that the people operating in the real world are not affected or, if they are, that it is for the better? That is why we have reflected on what has been said and tried to ensure that the provisions are as practical as possible and that issues do not fall on the sidelines. We have tabled the amendments to make the provisions clearer. I hope that the discussion that we have had with the industry will achieve that objective.
I shall come back to that in a moment. I have given the reasons for the provisions in this Bill on the on-premises alcohol licence. The challenge was whether to include such a licence in the Bill. It is defined in clause 262(b), which states that
'''on-premises alcohol licence' means a premises licence under that Part which authorises the supply of alcohol for consumption on the licensed premises.''
I am informed that that links the provisions to the 2003 Act.
New schedule 2 sets out a new procedure that is separate from the alcohol-licensing regime. New clause 18 enables a licensing authority to remove the right from a licensee to provide exempt gaming under clause 264 or to make gaming machines available for use under new clause 16. I am aware that our amendments do not address the concerns regarding premises that hold an on-premises alcohol licence but which may not fall squarely into the category of being used primarily for the consumption of alcohol.
Those concerns are not being ignored. I am aware of the concerns of the BBPA and others about the provision relating to gaming machines in premises with an alcohol licence. We are considering, with the association, what we can do to meet those concerns. We have given a commitment that pubs and licensed premises such as ten-pin bowling centres can continue to operate gaming machines, and we will honour that commitment. With that, I hope—
With respect, the Minister cannot just stop at that point. He has not explained whether the other types of premises will be required to have their own permit, and whether it will be called a bowling alley permit or whatever; we need answers on that. The Minister said earlier that the Government are now listening to the concerns about the new amendments expressed by the BBPA and others. Should we expect amendments to these amendments later? Will those amendments take into account concerns about whether individual licensing authorities could determine the fee, the shape that the application form will take, and what information is to be provided?
Will the Minister explain why there is suddenly to be an annual fee instead of a three-year fee? We have heard nothing about that. We had no explanation why, in paragraph 10(1) of new schedule 2, there is reference to ''An occupier of premises''. The occupier could be just a tenant, and not the holder of the licence, who is covered in paragraphs 8 and 9. Why have we got the strange notion that the licensing authority can cancel a permit when paragraph 15(1) says that
''gaming machines are being made available for use on the premises otherwise than in accordance with the permit''?
However, as it says earlier in the same new schedule that one cannot attach conditions to the permit, I am not sure what people will be in breach of—presumably the permit just says, ''You have permission to have two machines'' or whatever. Many questions remain unanswered. I hope that we will hear rather more from the Minister.
I shall try to give the hon. Gentleman that information. First, we are aware that the name ''pub gaming machine permit'', which seems to have exercised hon. Members this morning, appears to limit the premises that may apply for it. That is not the intention, and we shall table further amendments to rectify that. We will make the name all-embracing to ensure that it can apply to all the premises to which I referred this morning.
The hon. Gentleman asked about the decision of licensing authorities to remove exemptions. Licensing authorities have more discretion under the Bill than they do under the Licensing Act, and we think that that is right, because the two have different purposes. We need sanctions appropriate to gambling, and we need the authority to be able to assess the impact of the licensing objectives. As I said, we are bringing about two fairly major changes in broad entertainment.
First, we are trying to streamline licensing and entertainment legislation by rolling six regulatory authorities into one. I hope that, when Committee members talk about bureaucracy and red tape, they acknowledge that light-touch regulation. The 2003 Act will be policed properly, and those who do not comply with it could well have their licence removed. That is one change.
Secondly, we are trying to link that with our modernisation of the gambling provisions under the 1968 Act, which we are doing by establishing the gambling commission and a new legal framework. I will not say that we have got every word right today, but we are listening carefully to the industry—we were asked to do that, and we are doing so—and will reflect what it says.
These are minor amendments. They do not substantially change our policy, the direction that we set out in our consultation, or what the pre-legislative scrutiny Committee advised. We accepted the vast majority of the Committee's recommendations, which are still very much embodied in the Bill.
I am not sure what point the Minister is making. These are not small amendments; they are significant amendments that may have a large impact on the institutions that we are talking about—predominantly pubs, but many others, too, as the Minister rightly said. However, he said specifically that he was determined to ensure that there would not be an increase in bureaucracy.
If the Minister is not going to answer the other points that I raised in my intervention, will he at least tell the Committee whether every licensing authority will set its own fees, establish the lay-out of the application form and determine the information that has to be provided? Or will that process be standardised throughout the country, so that the many pubs that are part of a large chain will not have to provide different sets of information for each application to a licensing authority?
There will be some amendments, which will be minor—although hon. Members will have their own view on that—and they will take into account the concerns of the BBPA.
The hon. Gentleman asked about breach. People can be in breach of a permit by providing, for example, more machines than are permitted. There are a number of ways in which permits could be breached.
I have no doubt that I could give the hon. Gentleman plenty of examples, as I did a little earlier on gastro-pubs. If he wants a list, I will ensure that we provide a list of examples of how permits could be breached. I am sure that when he has that information he will agree that what we are doing is right. The Secretary of State will set the fees.
Several hon. Members rose—
In saying that the Secretary of State will determine the fees, the Minister has just answered one of my questions. However, I raised two related issues. Will the Secretary of State determine the shape of the application form and the information to be made available, or will each licensing authority make its own judgment? [Interruption.]
I agree with you, Mr. Gale.
I shall give the hon. Gentleman specific answers on the detail of the amendments. Permits can be breached if children are playing machines, or if there are too many machines. I could provide a list of other breaches, but that should not be included in the Bill. We are establishing a gambling commission to deal with the issues, and we can debate that. I will write to the hon. Gentleman and to other Committee members.
The hon. Member for Bath has, with just a few questions, punched a number of serious holes in the provisions. Although the Minister says that the Government amendments contain nothing of any great substance and that the policy remains intact, there are areas of doubt.
To reinforce what the hon. Member for Bath said—and as I mentioned in my brief contribution half an hour ago—I ask to what extent the licensing authorities will be asked to act in unity and to give uniform treatment in interpreting the administration of the licences. The Minister says that there will be a fee just to cover costs, but, with respect, I have seen how the councils and licensing authorities use fees as a means of raising revenue, rather than just to cover the direct costs. Will there be any central direction? I want to know whether the Government are considering that. Far be it from me to support regulations, but there has to be some regulation in this instance.
The Minister said, before speaking to the Government amendments, that he had consulted the BBPA, and we got the impression that it had ticked the box, but now he is saying that he is willing to consult it on the new clauses. Has the BBPA agreed and signed up to this raft of new clauses and the new schedule, or are there still some substantial queries that it cannot answer?
I repeat yet again that we are introducing two detailed Acts of Parliament that will have a significant impact on this industry. We want to get that right. We are rolling six regulatory authorities into one, which involves the complex Licensing Act alone, although that is not operational yet. We are modernising through the Gambling Bill, by partial deregulation and by setting up a new regulator. We are ensuring that the regulation be brought smoothly into operation when the legislation is implemented. That does not happen simply overnight. We are working hard with all those who have an interest, and they are providing an injection of common sense. If we have to return to the Committee or the House with a few amendments to ensure a smooth transition when the two new Acts of Parliament are implemented, we will do so. However, if everyone wants everything stated in the Bill, it will not be a Bill of 300 or so clauses; it will triple in size or be even greater.
The gambling commission will provide guidance on the standard approach. We are trying to give local authorities much more power, allowing them to be proactive in running their economy to ensure that regeneration and wealth creation can take place. Entertainment, recreation and gambling are sectors in a major industry, which forms a major part of our economy, so major modernisation is taking place. Those sectors are big employers and big wealth creators, and we are modernising the way in which they operate. That is what we are trying to achieve with the Bill. Not everything will be stated in the Bill—a lot will be left to the gambling commission. We want to achieve consistency and to give local authorities the freedom to become much more proactive than reactive in driving their economies forward. That is the object of the exercise and we believe that we will achieve it.
I am a bit concerned about the so-called consultation that is supposedly going on. As I understand the new clauses and the new schedule, particularly those measures relating to pub gaming machine permits, I do not believe that the BBPA or the industry as a whole would have signed up to them willingly. On the one hand, they are being told by the Minister that grandfather rights will apply to all the gaming machines that they currently have. They have never been a problem and the Government are happy that they should retain that number. We have already had the argument that the vast bulk of establishments, more than 70 per cent., have two or less machines. They have always had the opportunity to have more, so I cannot understand why the Government want to set the limit at two, rather than at four, which would mean that those who have between two and four did not have to keep reapplying.
On the permits, do all those pubs that have now been given grandfather rights to keep their machines still have to apply for a permit to have them? Is that deregulatory? Is that attacking costs?
The prescribed fee has been mentioned, but we do not know what size it will be. When discussing the Licensing Bill we were told not to worry about fees and assured that they would be modest. Yet, in certain local authority areas, particularly those such as Westminster and Camden who have huge numbers of licensed premises, the fees will in no way cover the cost of doing all the work that they have to do. In the end, the cost will fall on the head of the council tax payer in those particular local authority areas.
We do not know what size the fee will be, but we know that there will be an added cost for pubs. They are being told that it is okay to have the machines that they currently have under grandfather rights but, just in passing, that they need to apply for a permit to have a machine. What is the point of that? If this matter is all about permits for new machines in new premises—new pubs—it is a heck of a lot of legislation to crack a tiny nut.
The Minister has not said why permits are needed. I did not hear clearly the words, ''We are going down this road because we need to do A, B or C.'' It may well be that the Licensing Act does not cover the machines in pubs—I am sure that it does not.
It being twenty-five minutes past Eleven o'clock, The Chairman adjourned the Committee without question put, pursuant to the Standing Order.
Adjourned till this day at half-past Two o'clock.