Clause 114

Finance Bill – in a Public Bill Committee at 10:00 am on 25th June 2009.

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Remote bingo etc

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

Photo of Greg Hands Greg Hands Shadow Minister (Treasury)

The clause is branded as another tidying-up exercise, but it gives rise to some anomalies that I want to probe. Its intention seems to be to keep online bingo at a 15 per cent. rate. The scope of remote gaming duty will be extended to include online bingo, which will cease to be subject to standard bingo duty, which is what we have discussed at some length on at least a couple of occasions.

The irony, which my hon. Friend the Member for Cities of London and Westminster mentioned, is that the Government will now tax online bingo at 15 per cent., but bingo played in clubs at 22 per cent. I understand why they want to make online bingo consistent with other forms of online gambling, but the anomaly arises in calling it a tidying-up or simplification exercise. It will benefit the online community who sit around at home and play online over perhaps more mature people who go to bingo clubs and take part in a social activity. What is the sense of that?

If anything, I would have thought that the bias should be away from online and, although regulated, unsupervised gambling to gambling in the supervised and regulated environment that bingo clubs provide. I would be interested to know what assessment the Government have made of people migrating from bingo clubs—we all know that online penetration in communities that might typically be found in bingo clubs has increased enormously over the past 10 years —to playing bingo online on, for example, a home computer?

Remote gaming duty is chargeable on games when players participate using the internet, telephone or interactive TV, but not when another gambling duty is charged. The Government are moving bingo from another category into the category subject to remote gaming duty. Because remote bingo was subject to standard bingo duty, some inconsistencies arose between online bingo and other online gambling. The issue is where to have the consistency. Should it be with online bingo and other forms of online gambling, which is what the Government propose, or with social club bingo and internet bingo? I may have laboured the point too long, and perhaps the choice is clear.

Clause 114 makes the opposite decision from the previous one. It prevents a tax rise that would otherwise be likely to cause a loss of revenue in practice as operators and internet users take further advantage of the lower tax rate on internet sites hosted abroad. As I said on clause 19, the overall revenue from remote gaming duty is so low that the Government cannot disclose it because it would compromise its obligations to the one significant operator left in the UK. The intent in the clause seems to be to have a negligible effect on the present arrangements for remote bingo, but I am wondering what effect it might have on the arrangements for club bingo. No doubt it will succeed in its first aim to create consistency, but we want to hear from the Government what consideration has been given to migration between two forms of bingo.

Photo of Jeremy Browne Jeremy Browne Shadow Minister (Treasury)

We have a remote Conservative party here to discuss duty on remote bingo, although I must be careful how many stones I throw as I am the only representative of Britain’s strongly growing third party.

Photo of Greg Hands Greg Hands Shadow Minister (Treasury)

Perhaps the hon. Gentleman will confirm that the only member of the Committee who has never attended it is his boss, the hon. Member for Twickenham (Dr. Cable).

Photo of Jeremy Browne Jeremy Browne Shadow Minister (Treasury)

I do not think that my hon. Friend the Member for Twickenham has attended the Committee yet. However, if you will allow me, Mr. Atkinson, I would like to point out briefly that the hon. Member for Tatton (Mr. Osborne) and the shadow Chief Secretary to the Treasury do not seem to regard the Committee as sufficiently important to take an interest in its affairs. Given the level of public debt, I regret that.

Let me turn to clause 114 because I want to explore briefly the point made by the hon. Member for Hammersmith and Fulham. I do not have a particular attachment to gambling per se. In a liberal society, I am happy for people to choose to spend their money as they see fit, although I realise that in some cases—albeit fairly exceptional ones—doing so can have a detrimental effect on their finances, health or social circle. However, that is a decision people make and we should not seek to inhibit those decisions, unless there is an overwhelmingly compelling reason for doing so.

On bingo, I do not consider it to be my obligation as a politician to promote people’s participation in bingo purely as a form of gambling—they may or may not choose to play bingo, and that is their decision. However, there is virtue in the social aspects of bingo, and I can see merit in us trying to encourage or, at any rate, not impede those sorts of activities. What seems so perverse about the clause is that it does not recognise that bingo clubs provide some sort of beneficial social service—albeit on a commercial basis and if it is in their interests to do so—whereas the online version does not provide any of those benefits at all. If the Government were looking to discriminate in favour of one form of bingo over the other, one would imagine that the discrimination would not be aimed at the more social form of the game.

As the MP for Taunton, I have been to Mecca Bingo there. In discussions on previous clauses, it has been said that many people who choose to go to bingo have reasonably low incomes and that they do not spend a vast amount of money there. Bingo is an opportunity for people to meet friends. Meals are often provided at reasonably low cost and people enjoy the atmosphere and social aspect of attending a bingo hall. All of those advantages do not, of course, exist in the online form. Of course, the game at a bingo hall is also supervised, so unless the establishment is run by people with little social compassion, they would be in a position to intervene if someone were perhaps spending more money than they ought to given their means. Of course, that opportunity to intervene in a compassionate way does not readily exist in relation to the online form, which is to be given preferential tax treatment.

Photo of Mark Todd Mark Todd Labour, South Derbyshire

I have a genuine query. If the hon. Gentleman does not know the answer, perhaps the Minister will. Is there any reason why online facilities could not be  offered within a bingo club, because that would provide access to many of the services that he rightly mentioned? There are other aspects to being present in the bingo hall that are not directly related to playing the game in a particular form.

Photo of Jeremy Browne Jeremy Browne Shadow Minister (Treasury)

I defer to the Minister or her officials on that, but I am not aware that there is any bar to doing so.

Photo of Peter Atkinson Peter Atkinson Conservative, Hexham

Order. I am not sure how relevant that is to the clause.

Photo of Jeremy Browne Jeremy Browne Shadow Minister (Treasury)

A further point is that we assume—perhaps because Committee members are all of working age, or perhaps for another reason—that internet access is universal. One could be forgiven for thinking that. On television and radio programmes, it is often said that more information will be made available on the website, and using the internet has become part of our daily dialogue. Of course, most people do have access to computers and the internet, but we should not forget that many people do not. Millions of people in this country neither have access to the internet nor know how to use a computer. I am inevitably generalising when I say this, but that is more likely to be the case if people are older and poorer. In both of those categories, particularly in relation to those on low incomes, there has been a big catch-up and far more people on low incomes have access to the internet than was the case. Let us be frank about it—some of the social activity in bingo halls is targeted at the tastes not of younger people but the more mature market. It seems strange that those who are older or on lower incomes, who may enjoy the social aspects of bingo, are taxed at a higher rate than those who are younger or on higher incomes, and who may have internet access at home. That is a perverse approach for any Government to take, but particularly a Labour Government.

The Exchequer Secretary has come to the Bill quite late in our deliberations, but I suggest that there is merit in consistency. We should probably be trying to achieve uniformity and iron out some of the inconsistencies. I have some sympathy with the hon. Lady, because the Finance Bill is typically the largest and most complex piece of legislation, and she will be immersed in detail. She is giving us the orthodoxy that she is required to produce on behalf of the Government, but familiarising herself with the Government’s position is a huge undertaking without looking to challenge some of those assumptions.

If the Exchequer Secretary were to step back for a moment and consider the matter as a politician rather than as someone whose job is to ensure that the official line is communicated to Parliament—for example, if she were to listen to the representations made by the hon. Member for Plymouth, Devonport—she must surely see that the Government are unnecessarily bringing on themselves huge grief and unhappiness. Much of that will come from people who, in other circumstances, might consider voting for Labour at the next general election.

Not only would it be right to take a reasonable and consistent approach to taxation, but it would be in the Government’s interests. As the Labour party is rightly seeking to appeal to the electorate, the Government should look again at this area of taxation. It is shot through with anomalies, and on the whole those anomalies are least fair to the oldest and poorest in society.

Photo of Brian Jenkins Brian Jenkins Labour, Tamworth 10:15 am, 25th June 2009

I wish to make a few points on remote gambling. One or two matters have been raised during the debate—some might refer to the previous clause—and I should be grateful if my hon. Friend the Exchequer Secretary were to answer them.

If a small community in the country does not have internet access, but access is provided by a social club, one can enter that social club and for a small charge gain access to online gambling from the monitors in cubicles around the room. What tax or duty will the provider of that facility have to pay? That is an interesting point, and I hope that the Minister has an interesting answer.

It is possible that a community 20, 30 or 40 miles down the road has access to the internet, and individuals there can gain access to remote bingo at home. If they cannot, and someone has made provision for it out of the goodness of their heart, what tax would they pay for making such provision?

It is okay for the Government to say that they will collect tax on the gambling duty regime, but what if the site provider does not have a site under our tax jurisdiction? What are we going to do then? Are we going to start chasing around the world for different sites, or for offshore site providers who might be run by a Mickey Mouse company? The resident of that island might be an ex-dom tax resident of Britain. Such people may be collecting the duties from bingo but not paying them over. Do we collect the tax in this country? Will the Minister say whether that is possible? If it is, I would point out one of two of the difficulties that we had clearing up problems with gambling in the horse industry.

There are questions at both ends of the remote problem, and I would be grateful to hear some comments from the Minister.

Photo of Adrian Bailey Adrian Bailey Labour, West Bromwich West

I welcome you to the Chair, Mr. Atkinson. Like other Members, I visit my local bingo halls. I have two very large Mecca Bingo halls in my constituency—in Oldbury and Wednesbury. They play a very valuable part in the social life of the community, particularly for the elderly. I have listened to the arguments, both in the bingo halls and from the Minister today, and there are a number of areas I do not feel totally comfortable with at the moment.

First, there seems to be an absence of, shall we say, verifiable statistics to deal with the revenues and incomes of the various forms of taxation. Secondly, there is the  principled argument, elaborated on by the hon. Member for Taunton. I compliment him on raising some very important points: the difference and seeming inconsistency between the gaming rates on bingo, which is in a comfortable controlled environment, and those on remote gambling, which is not so controllable and is potentially used by far more vulnerable people.

Photo of Alison Seabeck Alison Seabeck Chair, South West Regional Select Committee

On a linked point, and picking up on a comment made by my hon. Friend the Member for Tamworth, when is online not online? Would it be possible for a bingo hall to have a big screen, with an online game going on from somewhere, with people participating? How would that be taxed? Does my hon. Friend share my concern and hope that the Minister will answer that?

Photo of Adrian Bailey Adrian Bailey Labour, West Bromwich West

My hon. Friends the Members for Tamworth and for Plymouth, Devonport have raised a very important point that does not seem to have been fully explored.

The substantive point that I want to make is that online gambling is a private and uncontrollable activity. Given the greater predilection of the younger generation to conduct such activity online, they are disproportionately vulnerable to some of its social consequences. Considerable research needs to be conducted to rationalise our taxation policy in this area so that it is more consistent with what I think we all agree are appropriate social aims. I conclude my comments there. I await the Minister’s response, but advocate considerably more research, with perhaps modifications made at subsequent Budgets to realise those social aims.

Photo of Sarah McCarthy-Fry Sarah McCarthy-Fry Parliamentary Secretary, HM Treasury

The clause, as the hon. Member for Hammersmith and Fulham rightly points out, corrects a deficiency in the original legislation for remote gaming duty. The duty on remote gaming operators based in the UK ensures that our original policy intentions are delivered. The policy intention has always been that remote bingo should be part of remote gaming duty and should not come under the bingo duty. Without the clause, there is a danger that remote bingo will be left entirely untaxed. The clause ensures absolute clarity.

Some wider and very interesting issues were discussed. There was a question on what assessment the Government had made of the move from club to online bingo. We monitor the development of online and remote forms of gambling, and its impact on club-based gambling. Department for Culture, Media and Sport Ministers are currently undertaking a review of the regulation of online and remote forms of gambling. I am sure that that will inform further thinking on the matter. I hope that my hon. Friend the Member for West Bromwich, West will take comfort from that.

The Chairman adjourned the Committee without Question put (Standing Order No. 88).

Adjourned till this day at One o’clock.