Examination of Witnesses

Gambling (Licensing and Advertising) bill – in a Public Bill Committee at 3:16 pm on 12th November 2013.

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Helen Grant, Alison Pritchard, Joanna Hemingway, Jenny Williams and Paul Morris gave evidence

Photo of Peter Bone Peter Bone Conservative, Wellingborough 3:46 pm, 12th November 2013

Good afternoon. I do not know whether we have saved the best for last, but we will find out. For the record, will the new panel introduce themselves to the Committee?

Helen Grant: I am Helen Grant, Minister for Sport, Tourism and Equalities.

Alison Pritchard I am Alison Pritchard, head of gambling at the Department for Culture, Media and Sport.

Joanna Hemingway: I am Joanna Hemingway, the DCMS lawyer on this Bill.

Jenny Williams: I am Jenny Williams, chief executive of the Gambling Commission.

Paul Morris: I am Paul Morris, lead on e-gambling and implementation at the Gambling Commission.

Photo of Graeme Morrice Graeme Morrice Labour, Livingston

I want initially to ask the Minister about some of the responses we heard earlier this afternoon from our witnesses, particularly the first set. As you know, Mr Bone, I was not around for much of this morning’s sitting as I was in Westminster Hall with you, so I was not able to hear what the witnesses from the industry said, but I will obviously read the transcript in due course. It was certainly suggested by at least one of the earlier witnesses this afternoon that the Bill lacks teeth in its enforcement measures. It was also suggested that the gambling code was not strong enough and that proposals for improving that did not go far enough. It was also suggested that the advertising code could be improved to protect, in particular, vulnerable consumers, those with gambling problems, young people and children. How would you respond to those comments?

Mrs Grant: Those are fair questions to put to me. At the moment, according to the Gambling Commission, which I am sure will elaborate on what I say, about 85% of remote activity in the United Kingdom is not regulated by the commission. We also know that remote gambling is on the increase year after year around the world, and I believe that it increased last year by approximately 10%. We have an opportunity here to do something significant to protect British consumers.

There is also an issue with creating a level playing field between all remote operators so that everyone is regulated whether they are offshore or onshore. We think that is important in terms of fairness.

On enforcement, I am sure colleagues will want to say more about that, in particular the Gambling Commission. There will always be grey areas to be considered and in those situations judgments on risk and proportionality will have to be made depending on the individual case, but I am satisfied that the Gambling Commission has the expertise, experience and tools to enforce the law.

Jenny Williams: You said that the present arrangements lacked teeth. I was surprised to hear that, because we have some of the most extensive powers of any of the regulators we deal with. I think there have been some misunderstandings: all the conditions that the gentleman from CARE was referring to are in our codes and technical standards—he might not be aware of our technical standards. Basically, the Gibraltar regulations are based on ours. There is a requirement on our licensees to offer pre-commitment levels to set the amount of time you spend. There is a requirement to offer  self-exclusion. There is a requirement to monitor players’ play and to decide whether to interact. There is all of that.

As the Minister said, we license only 15% by value, but for our licensees we can enforce all of that. However, there is a separate issue about what is required in addition to that. Although there was a lot of talk about data analytics and different ways of doing things—we are as keenly interested as anybody to find out what works—there is currently no consensus about which works properly and which can be counter-productive. For every bit of research that shows that an approach works, I could show you another saying that it has some downsides.

I am frustrated, as I suspect were the faith groups and the community groups, about the slow rate of progress on research, but it is now starting to gather momentum. The Responsibility in Gambling Trust has a big harm-prevention conference with some worldwide experts coming in to try to work out what we should be building into our codes to make them stronger. In that, we are streets ahead of the other regulators. That is because it is our population and we have the interest. We have the Responsible Gambling Strategy Board of independent experts advising us on what is to be done. As soon as it is clear that the codes ought to be more specific, we will make them more specific. However, at this stage it is not clear that that would not be counter-productive. So, as I say, on that level we have all the teeth we need for player protection if we can regulate all those supplying the British market—we currently only do 15%; that is where we are currently lacking the teeth—which is what the Bill provides.

54 Mr Leech:

Mr Boucher also said that additional work needed to be done to the Bill on avoiding consumers moving to the non-regulated market. The Treasury forecast that up to 20% of online activity might be in the unregulated market following the passage of the Bill suggests that additional work must be done to stop people moving to the unregulated market. From the perspective of the Gambling Commission, do you think you have all the tools you need? Is the Bill lacking anything you need to ensure that consumers are not encouraged into the unregulated market?

Mrs Grant: It is the same issue really. I am sure Jenny will elaborate and give me a nudge if she has not, but I think the Gambling Commission does have the tools and expertise to enforce the law, regardless of the amount of tax. I do not think the two issues should be conflated.

55 Mr Leech:

In that case, why is the Treasury predicting that up to 20% of online activity might be in the unregulated market?

Mrs Grant: As far as tax is concerned or as far as regulation is concerned? You will have to confirm which is which, because the two are quite separate and quite different. The Treasury is doing what it is doing and we are doing what we are doing.

56 Mr Leech:

Forgive me if I have got this wrong, but my understanding is that the Treasury is predicting that after the Bill is passed, there is the potential for 20% of the market to be unregulated because there will be an increase in activity in the unregulated market.

Mrs Grant: I do not believe that that is right. I would like to pass this over to Alison.

Alison Pritchard : To clarify, the Treasury assessment is that there will be a 20% gap in the taxation that it would be able to obtain. That is not necessarily the same as an enforcement gap because although, yes, there may be an element that is unlicensed, it will also relate to issues such as tax avoidance and the administrative issues to do with acquiring tax from licensed operators. So the enforcement gap is not necessarily the same as the Treasury’s assessment of a taxation gap.

57 Mr Leech:

Has DCMS made any predictions of what the gap will be?

Alison Pritchard : We have not speculated on the size of any enforcement gap, but we believe that the regulator has the means to minimise it to a level that is not significant from a regulatory perspective.

58 Clive Efford:

On that question of resources, Jenny Williams, can you clarify something for us? In your evidence to the Select Committee, you were confident that the extra income received would be sufficient to support the work of the Gambling Commission, but in his evidence to the Select Committee, Tim Lamb said—he repeated it today when he gave evidence to this Committee—that you had expressed concern in private:

“We have had recent discussions with the Gambling Commission where they have raised the lack of resources as a matter of concern with us.”

That seems to contradict the evidence given to the Select Committee. Can you clarify the Gambling Commission’s position on resources?

Jenny Williams: Obviously, I was not at that particular conversation, but my expectation is that it slightly mixes up two quite separate points. One is that at the moment, we do not get fee income from 85% of the market that we are trying to enforce, and we will be getting more. There is a separate question about the cost-effectiveness of pursuing prosecutions as opposed to disruption or other types of activity.

For example, when we are doing sports betting integrity, we often start down a prosecution route and do some investigation. Then, when we have enough information, it may be much more effective to pass the information over to the sports bodies, which can then take civil-type remedies and take action against the sportsmen. That can be much more effective and much quicker. It was some combination of those two things, but there is no doubt that a full-scale prosecution is a very expensive thing, and that we are short of income from a lot of the people whose market we are helping to protect at the moment.

59 Clive Efford:

So will the additional income in future allow you to pursue those cases, or will it still remain too expensive to pursue them?

Jenny Williams: Well, no. It will always be a very expensive option, and there are probably much more cost-effective ways of doing it, but it will enable us to do them, and to help fund that activity. We spend a lot on that at the moment.

Mrs Grant: That is why, of course, the judgment risks will always have to be taken in each individual case.

60 Clive Efford:

So the Gambling Commission does not have any reservations about the resources available to it?

Jenny Williams: No. Of course, fees are reviewed every year. At the moment, we think that would help a great deal.

61 Jim Shannon:

This morning we had a presentation from the industry. Mr Roy Ramm said, in response to a question that I asked him, that the industry was prepared to consider regulation and to address the issues of problem gamblers and vulnerable people. This afternoon, we had the very good presentation by four individuals: one from the Salvation Army, one from the Quakers, a professor and Dan Boucher from CARE. All indicated, as my colleague just said, a need for teeth. Roy Ramm seemed to indicate that the industry needed teeth, and the groups indicated the same. Minister, it is nice to be working with you again; we have done Committee work together in the past.

Mrs Grant: Likewise.

Photo of Jim Shannon Jim Shannon Shadow DUP Spokesperson (Health), Shadow DUP Spokesperson (Transport), Shadow DUP Spokesperson (Human Rights)

In the Second Reading debate, we had the opportunity to make some comments. May I read into your responses what your line of thought is? I hope that I am doing it correctly. First, you said that you would not rule out ISP and financial transaction blocking. Secondly, you mentioned the fact that I had referred to the need for a one-stop shop approach. If it is appropriate to ask you at this time, as I hope it is, what are your thoughts on those two proposals for improving the legislation? I believe, from the presentations that we had from the group this afternoon and the industry this morning, that there is an understanding for change and an understanding of the need to have better teeth. Do not think of this as a criticism, because it is not. If the situation can be improved, that is good for everyone. What is your thinking?

Mrs Grant: We want to protect people. We want a system of robust, consistent regulation that protects British people. We want a level playing field and proportionate and reasonable action. We want to look after people. We will look at everything that we should be looking at to ensure that we reach that goal.

On Second Reading, the hon. Gentleman mentioned ISP blocking and I would like my colleague to say a little more on that. We have a wide range of criminal offences to rely on. There is the possibility of removing licences and there are fines. Many different things can be applied to protect people, but we have to ensure that anything that we decide to use has been trialled, actually works and has good evidence to support the fact that it will help.

I will ask my colleague to say something about ISP blocking, about which the hon. Gentleman is especially interested.

Jenny Williams: This was looked into when the Bill was being drafted and proposals came forward in some detail from both the financial services people, for financial blocking, and Ofcom. Ofcom did a big report, with which I am sure you are familiar, on the difficulties of ISP or URL blocking and came to the conclusion that it is not cost-effective on the whole. You heard from the witnesses this morning that it is not that effective. It can be a disruption tool. Our colleagues in Italy, Norway  and around the world, with whom we have discussed the virtues or lack thereof a great deal, say that it is very labour-intensive and disruptive but not that effective. The general view that we and Ofcom came to is that if you have a good open market with a wide range of products and other ways of tackling the illegal market, it is a totally disproportionate use of resources and can have a lot of unforeseen effects. You can over-block or block legitimate businesses. At this stage, therefore, it is not thought to be a sensible thing to embark upon.

However, technology is changing and collaboration across Europe is changing. It could well be that the position is quite different in two to three years’ time. Everybody is looking at how e-commerce is developing not only for gambling, but on a much wider front. It is a watching brief. We do not think that it is sensible at the moment, but it might become sensible at a future stage, in particular if the black market were to become more of a problem than we expect, but we really do not expect it to be a significant problem in the UK market. Other commentators looking at this—those that do not have tax-related interests—share that view.

62 Jim Shannon:

If there continues to be a clamour for change, surely now is the time to make that change. Is that not correct?

Mrs Grant: I think we are making that change with this small but important piece of legislation, which my colleague on the other side of the room and others did a lot of work on to help make happen. If we are talking about protecting people, the fact that the Gambling Commission will require licensees to have policies, procedures and practices in place to promote socially responsible gambling and to request a much larger group of people—it is only 15% at the moment, but that could be increased considerably—to contribute to education and treatment of problem gambling is one of the most effective things that we can possibly do.

63 Paul Farrelly (Newcastle-under-Lyme):

I am sorry for being late, Mr Bone, but the security alert over lunchtime meant that I had to have meetings one after another. I have a few questions for the Minister, which I hope to put speedily and get some brief replies to. Earlier on, Minister, we talked about sports betting integrity and the bearing you might have on the Treasury to provide some funding for an integrity unit that gives some Government funding for consumer protection with all the millions that will be raised from this new regime. What do you think about that?

Mrs Grant: It sounds very interesting. But I would quickly add that tax is a matter for the Treasury. It has to raise it and it does a lot of the spending of it as well. The whole issue of sports integrity is important. It is close to my heart. This country is one of the leaders in relation to it. We work very closely with the International Olympic Committee and other international organisations.

64 Paul Farrelly:

You are a new Minister so it is probably unfair to ask you whether you have read Rick Parry’s review, but have you?

Mrs Grant: No, I have not. But obviously I have my own views. I may have been a Minister for only four weeks, but I have been a lover of sport all my life. I think we are doing well in this area. That is not to be complacent. We need to look at any new ideas that  might help the situation. Equally, I was a lawyer for 23 years before I became a politician. I am well aware of the fact that it is very easy to make more legislation. It is very easy to add various different things.

65 Paul Farrelly:

Will you meet—

Mrs Grant: Just a minute. We have a lot of effective criminal offences, including bribery, corruption and fraud—

66 Paul Farrelly:

Okay. So there is a list you are going to read from.

Mrs Grant: Which we should be using to deal with cheats and people who do wrong.

67 Paul Farrelly:

Will you meet the people who did that and then come back and say—

Mrs Grant: Did what?

68 Paul Farrelly:

The sports betting review—and then be charged with persuading your colleagues in the Treasury to spend some money on this?

Mrs Grant: I will be very happy to read the report thoroughly and then to have a conversation with the hon. Gentleman. We will see where we go from there.

69 Paul Farrelly:

And meet them?

Mrs Grant: Let us read the report first and then I will have a conversation with you.

70 Paul Farrelly:

Say you will meet them.

Mrs Grant: I will meet them.

71 Paul Farrelly:

Great. Second question: this is a very short Bill. It has been so crawled over, not least by our Select Committee. Why have the Government not accepted our recommendation that you should be able to bet online in casinos?

Mrs Grant: I touched on this earlier when I was asking Roy Ramm a question. Fundamentally, what the casino amendment seeks to do would undermine our current gaming machine provision. That cannot be right. We also feel that there should continue to be a proper balance—

72 Paul Farrelly:

So why is the Select Committee so wrong and you are a new Minister and you are so right?

Mrs Grant: Let me just finish, because I want to answer this properly and fully. First, it will undermine current gaming machine provisions. Secondly, we feel that there should be a proper balance in casinos of table play and machine play in order to protect jobs. It is a very important industry. I understand that completely. On the other side of that, I remind the hon. Gentleman that we have also agreed to increase stakes and prizes for B1 machines, which I am sure will help the industry.

I mentioned at Second Reading, and I am happy to put this on the record today, that I am quite content to look at the entire issue of gaming provision in casinos. That does not need to be dealt with in the Bill. We do not need primary legislation to deal with many of the issues that the casino people want.

73 Paul Farrelly:

Okay, Minister: you are determined to resist any amendment on that, are you? Just two final questions about the Gambling Commission. What is your view on the Gambling Commission consultation on what would otherwise be called the Full Tilt conversation, which is about disclosure and separating consumers’ money from company money? In particular, what do you think are the merits of the halfway house that is a proportionate response called the quistclose trust? You are a former lawyer, and this is well established in UK law.

Mrs Grant: It sounds like something off “Strictly Come Dancing”. Jenny, this is something that you are doing. Can you elaborate and provide sufficient detail?

74 Paul Farrelly:

After Jenny has elaborated—very briefly, because time is short—I would like to ask the Minister for her views.

Jenny Williams: The matter of quistclose trusts is something that had taxed the industry lawyers’ minds. To expect the Minister in the first four weeks to have got to the bottom of quistclose accounts is—

75 Paul Farrelly:

She is a lawyer.

Jenny Williams: Absolutely, but it has not been a priority to brief the Minister on that. That is no doubt our fault; if we had realised that that was going to be the subject, we would have done so. You have obviously read the report, and the problem with quistclose accounts, as you will know, is that they are very easy to break by mistake. They do not apply to overseas jurisdictions. I am not sure that you could have a quistclose account, for example, in Gibraltar, although I do not know. Although they have their attractions because they are a rather cheaper way of protecting clients’ funds, we are not sure that requiring them for licensees would necessarily be wise, because it might give them a false protection.

76 Paul Farrelly:

Let me cut you off. bet365, the biggest, has that arrangement, and it is the most successful. My final question is about the licence conditions. Minister, having read that review and consultation, what do you think about the Gambling Commission’s possible intention to focus on the location of an individual when they place a bet, rather than their normal place of residence?

Mrs Grant: Are you talking about point of consumption?

Mrs Grant: We need that for this Act to happen.

77 Paul Farrelly:

This is about making the legislation work. Should it not be the place of residence rather than just where they are in the world?

Mrs Grant: I think we are quite satisfied that it is the difference between the tax definition and our definition. You are quite satisfied, are you not, that we have defined it correctly?

Jenny Williams: Yes, and we have been having a lot of discussions with the RGA and with bet365 about this difference in definition. Although it would be wrong for me to put words in their mouths, I think they are getting more comfortable with it, and they understand why we think that “in Great Britain” is the appropriate definition for this Bill, which is about protecting consumers in  Britain and not about who should pay tax and offset tax arrangements. That is what the tax definition is much more about.

78 Paul Farrelly:

But should it not be place of permanent residence? That is really simple.

Jenny Williams: It is not actually that simple, and it would produce all sorts of avoidance and problems that we are trying to avoid in terms of coverage of people in the UK. As I have said, when you work through the different categories of people and the effect that this would have, for example, on a licensee in Kahnawake and people playing on a Kahnawake site, you see the problems that would produce for us for enforcement. I think you will see that for our purposes, it is a much better definition.

Photo of Peter Bone Peter Bone Conservative, Wellingborough

I will call Angie Bray next, but Mr Efford is being very patient and time is getting on.

79 Angie Bray (Ealing Central and Acton):

I shall be very quick. I wanted to ask the Minister for some clarification. She has just said to Paul Farrelly that she is not looking to support any amendments that might come through the Committee, but she will know that I was also quite interested in what Roy Ramm of the National Casino Forum had to say about the position that bricks-and-mortar casinos find themselves in, and the fact that the Select Committee’s recommendation has not been accepted by the Government. There was a little to-ing and fro-ing, if I may say that, between the Minister and Mr Ramm this morning about whether casinos sought unlimited gaming through being allowed to operate online. I think that he was trying to make clear that that was not necessarily what they sought. I note that the Minister said on Second Reading that she is open to having another look at some of these issues. Even if that does not mean accepting amendments, may I assume that that is an issue that she might be prepared to look at again?

Mrs Grant: Absolutely on both fronts. I will not accept the amendment, but I want to get this right. I do want to work with the casinos and other partners to ensure that we are fair, reasonable and proportionate. I am very happy indeed to review the whole issue of gaming machine provision in casinos.

80 Clive Efford:

Minister, you heard the answers from the Financial Conduct Authority earlier. Are you satisfied that its arrangements are sufficient for regulating spread betting?

Mrs Grant: Yes. I was able to put questions to Nick and Helen and we are quite satisfied that they are doing a good job. That is not to say that the FCA may not wish to make changes in the future. I know that it works closely with the Gambling Commission and spread betting operators to ensure that some system of co-operation is in place to inform of any suspicious market activity.

I note the distinction you draw on licence condition 15.1 of the Gambling Commission code and your query on whether there is a gap. That is something that I am sure our witnesses will take away and consider and I will speak to them about in the future.

81 Clive Efford:

Minister, when your colleague the right hon. Member for Putney (Justine Greening) was Economic Secretary, she wrote that she believed the  FSA was using its powers, as part of its process of authorisation— requirements equivalent to those imposed by the Commission via licence condition 15.1—but that has not happened. It is unfair to ask you, but could someone from your Department enlighten us as to why, in spite of the Government’s expressed will, that has not happened?

Mrs Grant: I cannot say any more than what I have just said. You were able to take evidence from the witnesses this morning. They are looking at what more they can do to strengthen and underpin the requirement they have placed on the two sport spread betting organisations, and I am sure that they will do that. I would be happy to write to my right hon. Friend and to make inquiries at the Department if you would like that.

82 Clive Efford:

Well, she is not in that post any more, but that was an expressed desire on the part of the Government, with serious implications for sport, yet there has been no move to adopt licence condition 15.1 for spread betting, even though it was stated in this letter in 2011.

May I ask you, Ms Williams, whether you are happy with the anomaly that the FCA is not regulating spread betting in regard to licence condition 15.1 or its equivalent requirements?

Jenny Williams: Like all these things, the arguments are very finely balanced. Either you regulate by putting all the betting-type functions together or you put the people-type functions together, because spread betting is a different sort of betting from fixed-odds betting and the whole approach, as you heard, with the experienced investor is different. A lot of the people who do spread betting on sport also do spread betting on financial markets, so it is six of one and half a dozen of the other. We work with the FCA and the spread betting companies, which we also license for fixed-odds betting. Whichever way you do it, you will get some crossover and will need to work together. This works fine. You are quite right that it would be good to have the formality of guidance, and that would be a helpful push in that direction. If you think about priorities and what else the FCA has had on over the past couple of years, as well as some of the things that we have been concentrating on, such as the Olympics, you can see that this has not been the highest priority to push on, but it is being given a welcome push now.

Photo of Peter Bone Peter Bone Conservative, Wellingborough

Mr Morris has been very patient and wants to say something. I will come back to you, Mr Efford.

83 David Morris (Morecambe and Lunesdale):

Minister, can you give us the background of the relevant pre-legislative scrutiny that has brought us to this point? There has been quite a lot of in-depth questioning, but surely there must have been some sort of positive view to get us to where we are now.

Mrs Grant: I think that that is a good point. There has been considerable pre-legislative scrutiny by the Culture, Media and Sport Committee. It did an excellent job on that. I know that some members of that Committee are members of this Committee, and I thank them for that scrutiny. We are where we are with the Bill. I believe that the Bill is important and has to go through. It will be very good for consumer protection and fairness. I am  not sure that I can add any more. I cannot give you a list of the details of the evidence that was taken, but I know that considerable care was taken in getting us to this position. We looked at the Committee’s report, and that informed our judgment and led us to where we are today.

84 David Morris:

On that point, obviously the Bill has gone through the Committees and the issue crosses the political divides. Whatever we have to scrutinise has been drawn from the different Committees and the different views.

Mrs Grant: It has. The Bill is very much cross-party. There has been a considerable amount of consensus, and even today I sense that there is a fairly considerable amount of consensus, although there is inevitably—this is politics—some difference on certain details.

Alison Pritchard: I was going to add that we found the Committee process very helpful and valuable in steering us towards one provision, which we adopted in the Bill. That was the nature of the scope for which the licence would be required. Initially, the Bill talked about the equipment “being capable” of being used. We took that wording away, as the pre-legislative scrutiny Committee asked, and refined it to the equipment “being likely” to be used and people “knowing that it was likely” to be used.

85 Clive Efford:

May I move on to the betting levy? Why do the Government not just accept the clause that was in the Offshore Gambling Bill, in the light of the ruling of the European Commission on the French form of levy? There was a clause to introduce a betting levy for online operators in that private Member’s Bill, which was presented by her colleague, the hon. Member for West Suffolk (Matthew Hancock), and then taken up by her colleague the hon. Member for Thirsk and Malton (Miss McIntosh).

Mrs Grant: Unfortunately, the way the hon. Gentleman sets it out makes it sound very simple, but it is not. The levy, as he well knows, is 50 years old and was created in 1963. I completely accept that it does not necessarily reflect modern gaming and betting now. In my opinion as the new Minister, I feel we have to have a proper look at the levy and try to reform it, and that does not simply mean extending it to offshore bookies. That is one thing, but we also want reform.

On reform and extension, as I am sure I have said at parliamentary questions on at least two or three occasions—it also came up on Second Reading—I am very happy to consult on any workable proposal that is sustainable, enforceable and legally sound.

On extension, which deals with his point, the parafiscal levy and the EU decision, it became very obvious from that decision that the levy actually constitutes EU state aid. Therefore, if we are going to extend it, that would require the approval of the EU Commission, because it is an alteration. If we were to do that, it would certainly require careful consultation and consideration from betting, horse racing and all other interested parties. If we did not ask for approval and just did it, there would be huge risks. If we did it and the money was collected, and then the EU did not give approval, the money would have to be repaid. That would cause absolute  havoc. The other worry for me—after 23 years of being a pretty careful lawyer—is that, in doing it without permission, we could also unravel the more voluntary arrangements that we have with Betfair and the big four bookies.

The way I see it is that we got an agreement for four years, so we now have time to look at this and deal with it properly. That is what I intend to do. I know that the hon. Gentleman wants to try and move things through, and I can see why, but we have not even received an official translation yet of the judgment. Interpreting what one decision means in one jurisdiction and whether it applies in another, without an official translation, would be completely foolhardy.

86 Clive Efford:

With that in mind, to follow that up specifically—it is a direct follow-up question, because I asked the initial question purposefully—I should say that I agree to some extent with what the Minister is saying. Therefore, why not set the time scale and give yourself a reserve power in the Bill to go and do just that—consult and come back with a form of levy?

The Chair deferred adjourning the Committee (Standing Order No. 88).

87 Clive Efford:

Thank you very much, Mr Bone; that is very kind of you.

Minister, so why not have a reserve power in the Bill to do just that?

Mrs Grant: We want to know what the various options are before we start saying that we need extra powers. We may well have the means to do what we need to do anyway, but we do not know what we want to do until we clarify what is relevant and what is not.

88 Clive Efford:

But you have stated your intention to do it and to take it forward—you have just said that.

Mrs Grant: It is very much my intention to look at it, to consult, to consider, to speak to betting, racing and other interested parties and, probably, to take legal advice as well. Once we have carried out all of that, then we will move forward, and not before.

89 Clive Efford:

But as this piece of legislation demonstrates to us, getting legislative time to deal with that can be very problematic. Therefore, taking this opportunity to give yourself that reserve power would remove that obstacle to future regulation or legislation and allow you to deal with the issue of the levy.

Mrs Grant: I cannot say any more than what I have already said—that is my position. We do not need to take that action at this time.

Alison Pritchard: We are not certain that primary legislation would be needed to make amendment to the levy. It is possible that it could be done in secondary legislation. Until we know the options that are worked up, it is not possible to make that determination.

Photo of Peter Bone Peter Bone Conservative, Wellingborough

Mr Farrelly wants to come in on the levy.

Photo of Paul Farrelly Paul Farrelly Labour, Newcastle-under-Lyme

My question is not on the levy.

90 Clive Efford:

There is also an issue around the Betting, Gaming and Lotteries Act 1963, which effectively licenses the remote online operators. They therefore operate under the Act and should pay the levy, similar to other operators that are onshore and contribute to the levy. Have the Government had the opportunity to look at that?

Joanna Hemingway: On balance, we do not think that the 1963 Act applies to offshore bookmakers. It is fair to say that the definition of bookmaker is not tied to a place or establishment, but the Act is, to say the least, unclear and ambiguous as to whether it would apply offshore. In the absence of any express intention, it is fair to say that, on balance, we do not think that it would apply.

91 Clive Efford:

But if you look at section 55 of the 1963 Act, the term bookmaker is very broad. There is nothing there that describes a bookmaker that would exclude remote gambling operators.

Joanna Hemingway: It is true that there is no express intention for it to have an extraterritorial approach.

Photo of Clive Efford Clive Efford Shadow Minister (Culture, Media and Sport)

There is no express intention for it to have bookmakers in the high street.

Joanna Hemingway: So we think that you cannot automatically read across a point of consumption that is being brought into this Bill into the levy regime.

92 Clive Efford:

But if I opened a brand new bookmakers, a completely new company, on the high street now, would I be required to pay the levy?

Joanna Hemingway: Well, you are in the UK.

93 Clive Efford:

And the operators that are going to be licensed by the UK Gambling Commission, are they not deemed to be in the UK?

Joanna Hemingway: The gambling licence regime operates separately from the 1963 levy regime, so it is not the case that if you have a Gambling Commission licence you are necessarily a bookmaker within the meaning of the 1963 Act.

94 David Morris:

I want to question an anomaly in this. We are looking at the 1963 Act. It is a 60-year-old Act. There was no internet at that particular point and the definition of a bookmaker by and large has now exceeded where we were 60 years ago. On the point of levies, has the levy changed since then? If so, how many times has it changed and in what directions? I am quite perplexed about this. We are discussing gambling as it is today, but going back to an Act that is 60 years old and that has absolutely no comprehension of what could happen in the future.

Alison Pritchard: I do not have the history of the levy in front of me at the moment, going back to a time before I was born, and before many in this room were born, I am sure. The Minister has made it clear that we do want to make progress on this issue. We do need to understand the various options that might be possible, and then we can seek and acquire the legal advice around these specific issues that are being raised today.

Photo of David Morris David Morris Conservative, Morecambe and Lunesdale

I stand corrected. It is a 50-year-old Act. My maths is not that good today.

95 Paul Farrelly:

Mr Bone, I have three questions, two of which will compliment Conservative colleagues of mine on the Select Committee. First, I was very comforted, Minister, by the answer you gave to my hon. Friend the Member for Ealing Central and Acton earlier on that you might consider sympathetically an amendment, not in this place but possibly in the Lords. Why will you not make a difference on casinos by not resisting a sensible amendment here? Mr Bone, it is a bone of contention for you that we propose sensible amendments here in the Commons that are resisted by the Government but then are accepted in the Lords. So why will you not consider one here in the Commons on casinos, following the Select Committee report?

Photo of Peter Bone Peter Bone Conservative, Wellingborough

I have absolutely no views on anything in this Chair.

Mrs Grant: I am not prepared to say any more or offer any more than what I have done on the Floor of the House and what we have done here today. What I am suggesting is a sensible and reasonable way forward. I am pretty sure that we do not need primary legislation in order to do what many supporting casinos want us to do. It can be done through secondary legislation. What I have said is a sensible and reasonable course to take and I stick with that.

96 Paul Farrelly:

Time is brief. The opportunity is here and it would be just two lines. My hon. Friend the Member for Shipley, the often controversial Philip Davies, put a question to you about the economics at the Treasury. In the Treasury’s modelling this regime will capture 80% of the current market at the current tax rate. In your new role as the Minister for the Bill and for this new regime, what representations on consumer protection have you made to the Treasury about how you might capture 95% in terms of the general tax rate?

Mrs Grant: The two are clearly very separate issues. If you have tangible issues that you want me to put to the Treasury Minister who is dealing with this issue, I am happy to do that. Our officials speak with and liaise with each other on issues.

97 Paul Farrelly:

Have you made any representations at all?

Mrs Grant: In relation to what?

Photo of Paul Farrelly Paul Farrelly Labour, Newcastle-under-Lyme

The level of tax and therefore the capture in the white market rather than the growing black market.

Mrs Grant: This Bill—the Bill that I am responsible for—has nothing to do with tax.

98 Paul Farrelly:

Have you made any representations over tax?

Mrs Grant: It is nothing to do with tax. It is to do with consumer protection.

Photo of Paul Farrelly Paul Farrelly Labour, Newcastle-under-Lyme

Have you made any representations over tax?

Mrs Grant: I haven’t.

Alison Pritchard: We have had ongoing dialogue with the Treasury—

99 Paul Farrelly:

The Minister has not. That is fine. My last question: you will agree, Minister, that it is important in terms of capture that you are not only taxing at the right level but are taxing the right definition. So what is your view of a gross profits tax compared with a gross gaming revenue tax? [ Interruption. ] No, it is a question for the Minister. Should it be a gross gaming revenue tax or a gross profits tax?

Mrs Grant: I am not going to fall out with the Chancellor of the Exchequer. Tax issues are for his Department. I am sure you can put that question to him.

100 Paul Farrelly:

Can you tell us what the difference is?

Mrs Grant: It is not for me to decide a definition.

Mrs Grant: Tax is a matter for the Chancellor of the Exchequer. He is very well placed to deal with it.

Photo of Peter Bone Peter Bone Conservative, Wellingborough

Order. I do not think that we are on the Bill at the moment, Mr Farrelly; I think we have moved away somewhat.

Photo of Peter Bone Peter Bone Conservative, Wellingborough

I think Mr Efford should have the last say.

101 Clive Efford:

That is a dangerous thing to say, Mr Bone. May I move on to the issue of dormant accounts? The Department commissioned a report that was written by the right hon. Member for Bath (Mr Foster). One thing he highlighted was the difficulty in identifying just exactly how much betting companies hold in dormant accounts and in unclaimed winnings. The Bill seems to give an ideal opportunity to require online companies to report on what they actually hold. The Government have committed themselves to regulating on this matter, subsequent to the Bill’s becoming an Act, and the Bill would be an opportunity to make sure that the information is there so that the subsequent legislation is relevant. Why are we missing that opportunity, Minister?

Mrs Grant: It is not really a case of missing an opportunity. The Government have made it clear that we are happy to consider the proposals in the report of my right hon. Friend the Member for Bath, who knows a lot about these issues. Once again, we do not believe the Bill is the correct vehicle. We do not think that is needed. The proposals and ideas he has brought forward, some of which are very interesting, need proper consideration and proper consultation. That will happen in due course, after the Bill has, I hope, become an Act of Parliament. Clarifying the extent of the problem and the extent of what is in dormant accounts has shown that it is pertinent that we know what is in overseas accounts. The current Bill should be effective in helping to provide that type of information.

Alison Pritchard: I want to add that there are existing powers in the 2005 Act that would allow a Secretary of State to require as a licence condition that operators provide that type of information. Jenny, is that right?

Jenny Williams: Yes, that is right.

102 Clive Efford:

So you would not feel the need to use this piece of legislation for those requirements?

Mrs Grant: No.

103 Clive Efford:

If I may, I will move on to the issue of public protection and kitemarking. We heard from some witnesses earlier that there was an inconsistency in how advice and information from the Gambling Commission are presented on websites to advise people about what is a licensed site, the dangers of using unlicensed sites, where they can get help if they have a problem, and so on. Why does the Bill not require there to be a standard kitemark on every website?

Jenny Williams: Because the Bill does not need to say that. That is put on the licence condition when someone is given a licence. You say, “You must do X, Y and Z”. One of the things which we have been looking at a bit more following the Select Committee session is the way in which we require “licensed by the Gambling Commission” to be displayed. We think that it is quite right that this could be a lot clearer. What we propose to do, when we actually manage to license most of the market, instead of only a very small proportion of it, is require the number to be used in such a way that you can click straight through to our website and see whether it is a genuine licence, what its status is, whether it has been sanctioned in some way and whether the issue has been addressed—that sort of thing.

It is a very fair point. If you go on to any of the websites at the moment and compare the overseas websites, particularly those for casinos, and try to work out who licenses them, you will see that there is an absolute mess down at the bottom. Sometimes it is in white on black, and this does need a licence condition making it clearer. That was a helpful suggestion from the Select Committee, and we have done some work on it.

104 Clive Efford:

The question has to be why that has not been done before, if it has been identified as a problem.

Jenny Williams: Well, when we regulate so little of it, I suppose that we have to decide what to concentrate on in terms of priorities. As I say, we regulate very little of the overseas casino industry at the moment.

105 Clive Efford:

You started your first answer by suggesting that you were disappointed that the people from CARE who were here earlier were not aware of your technical code and the full conditions of your licensing code. As they are involved in monitoring the industry and are well informed people, does it not alarm you that they were not aware?

Jenny Williams: Yes, it does. There is a lesson for us in that. One of the things which we have on our list, as it were, when we again license more of the industry, is to do much more of a public education campaign and make it much clearer. Obviously we are going back to the community groups, which we talk to a lot. I had not actually realised that they were not aware of it, so that was a lesson for me too.

106 Clive Efford:

There is clearly an incentive for the industry to constantly develop technology to allow people to gamble. Inevitably, they are not as incentivised to deal with problem gambling and to use technology to  identify that. Do you feel that more pressure needs to be put on the industry to develop that sort of technology for public protection?

Jenny Williams: Yes. My chairman has been making speeches to that effect, calling on the industry to get on the front foot and to do more, and indeed for the industry to contribute more and to get on with it. Yes, absolutely.

107 Clive Efford:

That suggests to me that a system of only having a code does not work, because why has the code not then been beefed up in that regard?

Jenny Williams: The problem is knowing what to put in the code. We have the powers to put things in the code, but until you are clear exactly what to put in and you have the techniques developed and evaluated—as I say, things are moving a bit faster now. We have experts coming in later this year, so I am hopeful that things are starting to move and that we will have a clearer idea of what to actually prescribe in the code.

Photo of Peter Bone Peter Bone Conservative, Wellingborough

It is entirely up to you, Mr Efford, but Mr Farrelly indicates that he wants to ask a very short question.

108 Paul Farrelly:

It is really the same question from the Select Committee. Given that this is all about raising more money for the Treasury, Jenny—as we have got to know each other in the Select Committee—are you satisfied that you can cope with your extra  responsibilities without any extra money within your current budget?

Jenny Williams: I do not accept that presumption. For me, this is about regulation and about consumer protection, and it is about the fact that at the moment I do not have the resources from 85% of the British market.

109 Paul Farrelly:

But can you cope with your new responsibilities within your existing resources?

Jenny Williams: Well, with the additional income, and we will build up our resources. I do have quite considerable resources already, which is not to say that in a couple of years’ time I will not say to the Select Committee that I would like a little bit more. At the moment I am reasonably confident, but it depends what happens.

Photo of Peter Bone Peter Bone Conservative, Wellingborough

I am afraid that brings us to the end of the extra time allocated for the Committee to ask questions of these witnesses. On behalf of the Committee, I thank the witnesses very much. The Committee will sit again for line-by-line consideration of the Bill next Tuesday.

Ordered, That further consideration be now adjourned. —(Karen Bradley.)

Adjourned till Tuesday 19 November at twenty-five minutes past Nine o’clock.