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Gambling Industry: Gambling Reforms

Volume 822: debated on Tuesday 17 May 2022


Asked by

To ask Her Majesty’s Government what assessment they have made of claims by the gambling industry that their proposed gambling reforms will reduce tax revenues.

My Lords, I beg leave to ask the Question standing in my name on the Order Paper and declare my interest as chairman of Peers for Gambling Reform.

My Lords, without speculating on our ongoing review, gambling duties are based on gross gambling yield. Any changes which reduced industry revenue would lower tax receipts. Conversely, changes which reduce harm could cut costs to the Government and some displaced spending would likely go to other sectors that pay tax. We will publish our White Paper in the coming weeks.

I am grateful to the Minister for his response. I am sure he will be aware that some £5 billion of gambling companies’ annual profits tends to come from people with gambling problems or those who are in danger of having them, costing lives and increasing the cost to the NHS. Reducing gambling harm would reduce NHS costs and, with spending displaced from gambling to more labour-intensive sectors, create up to 30,000 additional jobs and increase the funding going into the Treasury coffers, as demonstrated by the NERA report. Does the Minister accept that it is possible to reduce gambling harm and have a stronger economy by doing so?

The noble Lord is right that tackling problem gambling is good not just for the people affected by it but for the services which treat it. We are also aware that there is a black market in gambling and that problem gamblers may be liable to continue their problem gambling in that area. We are considering both these things as part of our review of the 2005 Act.

My Lords, does the Minister accept that I am not the only one in this House who is heartily sick to death of being force-fed gambling adverts before virtually any sporting event carried on commercial television? If there is a role for punitive taxation, it is surely to reduce this level of intrusive advertising, which hits particularly at young people.

We called for evidence on advertising as part of our review of the Act. Many people share the noble Lord’s frustrations. Public Health England’s evidence review did not find evidence that exposure to advertising and marketing was a risk factor for harmful gambling, but we are looking at all these issues as part of our review.

My Lords, under UK legislation the definition of gambling is tightly drawn. It excludes increasingly popular mobile phone apps such as social casino apps, which require money to get players started and, once they are hooked, they are given tokens within the game. Does the Minister agree that extending the definition would also lead to an extension of the gambling tax?

As the noble Viscount knows, we have looked also at the harms associated with online gambling. Indeed, while awaiting the White Paper and the outcome of our review, we have strengthened the rules on how online operators identify and interact with people at risk of harm. We are not delaying in taking action where that is needed.

My Lords, so far as we are concerned the Government continue to drag their feet on reforming gambling regulation, with reports suggesting that the White Paper has been delayed yet again. Gambling firms pay a significant amount in tax and there is a balance to be struck—we all like a flutter. However, with the Exchequer ultimately responsible for the significant costs of problem gambling, it is right that regulatory and fiscal arrangements are reviewed. Does the Minister believe it is right for firms such as bet365 to argue against proposals for a statutory levy while its boss takes home a salary of £250 million a year and £97.5 million in dividend payments?

My Lords, we have sought views from all interested parties as part of our review of the Act, including the industry, which is taking action in some areas. We are happy to engage with people on both sides of the argument. We called for evidence on the best way to recoup the regulatory and societal costs of gambling, which includes looking at a levy, and we will set out our conclusions in the White Paper.

My Lords, as a member of the APPG on racing, can I ask my noble friend how the new framework that he is considering will support our popular UK racing industry? Can he ensure that it competes with the Republic of Ireland and France, where the prize money at the bottom end is much better than in the UK?

We are certainly aware of the close relationship between racing and betting. As the noble Lord, Lord Bassam, rightly said, many people enjoy a flutter and do so without risk of harm. The main area of concern we are hearing from the racing industry is about affordability checks. These are important but must also be proportionate, and we are carefully considering the impact of all our proposals as part of the review.

My Lords, the vast majority of people gamble responsibly, and their harmless pastime supports 120,000 jobs in an industry paying £4.5 billion in tax and contributing £7.7 billion to the economy, so of course the Minister has got to consider the impact that new legislation might have on the public finances. While one problem gambler is one too many, should it not also be borne in mind that official Gambling Commission figures show that problem gambling has fallen to just 0.2% of the adult population, half the rate of the previous year?

The noble Lord is right: 40% of people gamble at least once a year, and if you also include people who only play the National Lottery then most people gamble. Most suffer no ill-effects from a pastime that they enjoy and brings benefits to the economy. However, we are also determined to tackle problem gambling and the misery it causes to many lives, and that is the balance we are trying to strike through our review.

My Lords, the majority of the online servers on which British people gamble are located in offshore tax havens. This means that profits from sales in the UK are booked elsewhere and not taxed in the UK at all. Can the Minister provide an estimate of UK corporation tax lost as a result of these arrangements?

I will not hazard such an estimate from the Dispatch Box, but in 2014 we amended the Gambling Act to introduce a point-of-consumption regulatory regime. Since then, every gambling firm which transacts with customers in Great Britain has to have a licence from the Gambling Commission, comply with licence conditions and pay duties on their earnings in this country.

The Minister has given a number of figures to the House, as have other noble Lords, but will he confirm that Public Health England, in its report of last September, put a figure of £1.2 billion on what it estimated to be the financial cost of problem gambling? It also emphasised suicide, mental health and all the other factors that come into play. Will he return to the question of the noble Lord, Lord Wigley, about aggressive advertising? What does he think the point of advertising is if it is not to influence people?

The point of advertising is to influence people and sometimes it is from gambling companies encouraging people who are not problem gamblers to gamble with them rather than their competitors, which is a legitimate activity. The noble Lord is right to point to the individual levels at which harms can be committed: one suicide is too many. We want to tackle problem gambling and that is part of the review of the Act.

My Lords, further to the question that has just been asked, would the Minister agree that this issue of advertising is not limited, although it is obviously a problem, to sporting programming? It is all over the place and is particularly evident on the catch-up services, where anyone can use the service—it is not age appropriate in any way. There is no question that the advertising is extremely aggressive and extremely seductive. The evidence that the noble Lord referred to from PHE is frankly quite counter- intuitive. Could the Minister tell us a bit more about what the Government intend to do about this?

Awaiting the outcome of our review, we have updated the gambling advertising code to ban adverts with a strong appeal to children, such as those involving Premier League footballers and other sports stars. We are very alert to the impacts of advertising on different groups, and will not hesitate to take action to rule out harmful practices. By calling for evidence on advertising as part of the review, we can keep abreast of the problem and come forward with appropriate proposals where needed.

My Lords, the noble Lord, Lord Bassam of Brighton, drew attention to the fact that one of the Select Committee’s recommendations was a statutory levy on gambling. How much is that still on the Government’s agenda? When bringing any proposals forward on that, will the Minister remember that the smaller, harmless end of gambling such as seaside entertainments would be hit by a punitive levy? Such a levy should be polluter pays and not on the smaller, more harmless end of gambling. I say this as Lord McNally of Blackpool.

And I reply as Lord Parkinson of Whitley Bay. I am very alert to the important role played by slot machines at the seaside. We are looking at this area. We have been clear for a number of years that, if the existing system of taxation and voluntary contributions does not deliver what is needed, we would look at a number of options for reform, including a statutory levy. We will set out our conclusions in the White Paper.