Clause 9

Finance Bill – in a Public Bill Committee at 1:30 pm on 10th May 2007.

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Amusement machine licence duty

Question proposed, That the clause stand part of the Bill.

Photo of John Healey John Healey The Financial Secretary to the Treasury

We turn to amusement machine licence duty which is a slightly esoteric and long-standing excise duty. It is nevertheless important to those who run establishments in which gaming machines form a valuable revenue source. Since 27 October last year, our social regulation, or our social law, has allowed machines with a 30p stake and a £25 jackpot—in tax law, the so-called category C machines that are in pubs, clubs and arcades—to increase their maximum stake and prize to 50p and £35. In return, the industry agreed to a stronger code of social responsibility on the operation of these machines.

The definitions of gaming machines in excise law have traditionally followed those in social law. We have had this discussion before in Finance Bill Committees. However, as things stand, the definition of a category C machine in tax law can be amended only through primary legislation in a Finance Bill. The clause therefore amends the definition in line with social law, effective from22 March this year.

An operator of category C gaming machines can now increase the maximum prize that their machines offer from £25 to £35 without becoming subject to a higher level of duty. This is the first opportunity that we have had to legislate for this change, and I hope that members of the Committee—there are eight Members on each side who last year supported the cause of an increase in stake and prize levels by backing early-day motion 1503—will be glad that their campaign and their arguments have found favour, first with the Department for Culture, Media and Sport and now as reflected in our taxation change.

I also should confirm to the Committee that the change has been widely welcomed by the industry. The national president of the British Amusement Catering Trade Association, the trade federation that takes an interest in amusement machines, welcomed the Budget decision by saying that

“it’s a big thank you to Mr. Brown...It’s good news.”

In addition to bringing tax law in line with social law, clause 9 also amends the existing excise legislation so that in future we are not in this position. In future, commissioners may by order increase the maximum stakes and prizes permitted for each category of machine for the purpose of amusement machine licence duty. The clause will prevent tax law from getting out of step with social law, and I commend it to the Committee.

Photo of Paul Goodman Paul Goodman Shadow Minister (Childcare), Treasury

We have received no hostile representations on the clause, so do not intend to oppose it. I feel slightly apprehensive because I recollect that during the proceedings on a statutory instrument in the past year in which the Financial Secretary and I participated—unfortunately, my researchers have been unable to locate the debate—he disclosed the fact that the statutory instrument in question had been necessary because an error had crept into the legislation which the Government, the official Opposition, the Liberal Democrats  and everyone else had entirely failed to spot. Despite that caveat, as we have received no hostile representations on the clause, we do not intend to oppose it.

Photo of Rob Marris Rob Marris Labour, Wolverhampton South West

My hon. Friend the Financial Secretary said that the stake had gone up from 30p to 50p, which is a 67 per cent. increase, and that the maximum prize had gone up from £25 to £35, which is a 40 per cent. increase. It seems that the two percentages are out of kilter, and that there is a bonus for the gambling industry. Perhaps he could say a little more about that and allay my fears that that is the case.

Photo of John Healey John Healey The Financial Secretary to the Treasury

My hon. Friend may be aware that there is a system of regular review of stakes and prizes for gaming machines. It is conducted under the auspices of the DCMS, which has policy responsibility for the area. A review has been conducted and completed, and a recommendation was made to raise the stake to 50p and the prize to £35 for this category of machines, which is one of the most popular types of machine at many venues.

The DCMS, in part because it was considering the implications of changes in social regulation through the Gambling Act 2005, did not implement the stakes and prizes review recommendations. Finally, the Minister for Sport made the decision last autumn that, in fact, we would make that change. That was a decision for the DCMS. It set the new prize and stake levels. What we are doing in this tax legislation is simply bringing the tax category and tax treatment in line with the changes that have already been made in social regulation. I hope that that helps the hon. Gentleman.

Lastly, if the hon. Member for Wycombe really wants me to, I will track down the details of the debate that he asked about. I am just a little surprised, because normally his researchers are very good at such matters.

Question put and agreed to.

Clause 9 ordered to stand part of the Bill.