With this it will be convenient to discuss new clause 4—Review of impact of section 104—
“(1) The Chancellor of the Exchequer must review the impact on investment in parts of the United Kingdom and regions of England of the changes made by section 104 and lay a report of that review before the House of Commons within six months of the passing of this Act.
(2) A review under this section must consider the effects of the provisions on the volume of gambling, including—
(a) the number of people who take part in gambling,
(b) the amount of money spent on gambling, and
(c) the gross gaming yield.
(3) In this section “parts of the United Kingdom” means—
(c) Wales, and
(d) Northern Ireland; and “regions of England” has the same meaning as that used by the Office for National Statistics.”
This new clause would require a report on the effects of section 104 on the volume of gambling.
Clause 104 increases the thresholds for the gross gaming yield bands for gaming duty in line with inflation. Gaming duty is a banded tax paid by casinos in the UK, with marginal tax rates varying between 15% and 50%. To ensure that operators are not brought into higher tax bands because of inflation, gaming duty bands are increased in line with RPI inflation. That means that casinos continue to pay the same level of tax in real terms. The clause uprates the bands of gaming duty in line with inflation. That is expected by the industry and assumed in the public finances. The rates of gaming duty themselves will remain unchanged. The change will take effect for the accounting period starting on or after
New clause 4 seeks to place a statutory requirement on my right hon. Friend the Chancellor to review and publish a report on the impact of the increase in the gaming duty thresholds on the volume of gambling. The Gambling Commission publishes annually statistics on gambling participation, spend and gross gaming yield for each part of the sector, so an additional report would merely duplicate information that is already available. There is no change to the tax rate in the provision. Accordingly, the Government do not expect the change to have an impact on gambling participation, spend or gross gaming yield.
It is also important to say that new clause 4 is impractical, as the proposed publication deadline, together with the continued lockdown of casinos, would deliver an inconclusive report based on receipts data from a single shortened accounting period. I hope that the Committee is reassured by that and will therefore reject the new clause.
Clause 104 increases the bands for gaming duty in line with inflation, in effect freezing gaming duties for casinos. It is a relatively small measure, but clearly the taxation and regulation of gambling is extremely important. The Minister will know that hon. Members across the House have taken a keen interest in the issue. Will she therefore update us on the Treasury’s plans for gambling taxation more widely, including for online operators? In particular, what role does she see for taxation in this area as a way of tackling the adverse health effects that problem gambling can lead to?
The disadvantage of not speaking on every clause just for the sake of it is that sometimes people forget that someone is there.
I hear what the Minister says about new clause 4, but there is still a need for more reporting to Parliament. I appreciate that it is yet another one of those cases where the main responsibility lies with a different Government Department but the impact on the Treasury is substantial, which is why it is part of this Bill.
The Minister said that the increase is in line with inflation. Although that is technically correct, the headline rate of inflation is 3.1% and all of what are effectively income tax bands for the gambling sector are going up by 3.1%. Any increase in gross gaming yield is not caused by a price increase, as would apply anywhere else. If the gaming yield increases by 10%, that is because people are spending 10% more on gambling. The price of a bet on the grand national does not increase. What is happening is that either people are choosing to bet more than they were before, or more people are getting into heavier gambling than they were before.
Debt inflation is relevant to the income of low-paid workers, yet earlier when discussing clause 5, I think, there was a decision for them to get virtually no increase in their income tax bands for the next five years—0.5%, which is then frozen for four years. I would be interested to learn from the Minister’s response why the gambling industry needs to get its tax bands uprated for inflation every year, but hard-pressed workers who are only just making enough to get by are effectively seeing their tax bands increase by about a 10th of a percent compounded year on year.
Last year, the National Audit Office and the Public Accounts Committee reported on gambling regulation. Again, while the regulation is a matter for a different Department, we cannot ignore it here. Before the pandemic started, gambling was taking over the lives of 395,000 people in the UK. Of them, 55,000 are children under the age of 16. Another 1.8 million people were at risk of becoming problem gamblers, and it is likely that quite a few of those 1.8 million are now problem gamblers. No matter how locked down someone is, one thing they can do is gamble online, often with money they do not have, for 24 hours a day.
We do not know how much problem gambling costs public services. The lowest estimate is over a quarter of a billion pounds, and the highest puts it at well over £1 billion. The financial year on which those two reports are based, 2018-19, showed that the total gross gambling yield, so the money they take in minus the winnings they pay out—effectively the gambling industry’s gross profit—is £11.3 billion. There are indications that in the following year it was up to £14 billion. Gaming duties bring in about £3 billion to the Treasury, which is why we are discussing it today. The Gambling Commission, which is supposed to regulate all of that, has a separate levy by way of the application of licence fees paid by the industry and set by the Secretary of State for Digital, Culture, Media and Sport. That brings in the princely sum of £19 million—million with an “m”—to try and regulate an industry with gross profits of £11 billion, with a “b”. It is clear that it is not an equal contest.
As with so many of the clauses we are discussing, the impacts on thousands of our constituents and, in the case of problem gambling, the horrific and often tragic impacts on them, may not be in the scope of the Bill, but it would simply be unacceptable for us to ignore those impacts when we consider the relatively small part that the Treasury plays in the Government’s relationship with the gambling industry. It is not acceptable to look at clause 104 as just a revenue raising exercise for the Treasury, although sometimes it seems that that is all the interest the Treasury takes in it.
I commend the work of my hon. Friend Ronnie Cowan and other members of the all-party parliamentary group on gambling related harm for their work in developing recommendations for the improved regulation of the industry. When the time comes for the Government, led by the Department for Digital, Culture, Media and Sport, to implement those recommendations or something very similar, which they will have to do, the moral imperative is now on the Government to act. It will simply not be morally acceptable for the Treasury’s interest in that £3 billion to get in the way of addressing what is now one of the greatest social diseases affecting these nations.
Why is it that children cannot watch major sporting events without having gambling advertising forced at them all the time, for example? Why are they allowed to advertise gambling during peak-time TV when children are watching? The reason that is relevant to the Bill is that advertising is designed to encourage people to gamble more, and by gambling more they are helping to fill the Treasury’s coffers. I can understand the reluctance to let go of any part of that £3 billion, and I know that there are hard decisions to be made about how to replace it, but 395,000 lives being scarred and sometimes ended by problem gambling is an issue we cannot afford to ignore.
It is worth reminding hon. Members that this measure is a change to gambling taxation and is not related to the regulation of gambling activity, which is a matter for DCMS—I am sure the hon. Gentleman knows that. I take his point about the health effects and the impact on families. The Government continue to monitor the effectiveness of existing gambling controls. DCMS has launched a review of the Gambling Act 2005 with a call for evidence. This closed at the end of March and the Government will respond in due course.
We will also look at how we can ensure that the impact on the sector itself is proportionate, given that much of the casino industry has been closed down for the last year. We believe that the sector is already making a fair contribution to public finances, so this is not necessarily the time for an increase.
Revalorising gaming duty bands in line with inflation, as the Government have done, is assumed in the public finances. Freezing the bands would have a very small impact on the public finances, while pushing smaller, generally regional casinos into high duty bands, hence why we have done this in this way
I remind the Committee that the top rate of gaming duty is currently 50%. The system ensures that casinos pay their fair share of overall gambling tax receipts. This measure does not represent a tax cut. Given DCMS’s call for evidence, I am sure this is an area that Parliament will return to again and again.
Dame Angela, I just have some questions for the Minister on gambling taxation more widely, particularly for online operators. Could she elaborate on that? What work is being done to tackle the adverse effects that problem gambling can lead to?
On the hon. Lady’s second question, that is a matter for DCMS. On her first question, I referred to that in relation to the tax rate. That is something that we in the Treasury will look to do along with DCMS as part of its review.
Just to assist the Chair, if Members wish to come back in, could they wave, leap up with vigour or just indicate to catch my eye? Otherwise, I may get past the moment and they will have lost their chance.