HC Deb 16 May 1961 vol 640 cc1305-29

Motion made, and Question proposed, That the Clause stand part of the Bill.

1.15 a.m.

Mr. Mitchison

I want to know what this is about and so, I am sure, do other hon. Members, even at this late hour. Perhaps the Solicitor-General, whom I see present, will explain why it has been thought necessary to bring in this rather curious provision. When I first looked at it I had a hazy idea that if the right person exercised or did not exercise his power of selection in some way or another he determined the Derby winner, but, on looking at it more closely, I came to the conclusion that that could not be the purport of the Clause. Perhaps the simplest way out of the difficulty would be to ask the right hon. and learned Gentleman to explain what it means. I hold in my hand the decision in the case of the Commissioners of Customs and Excise v. Dodd and I still do not appreciate why this Clause is required.

The Solicitor-General (Sir Jocelyn Simon)

I suspect that the hon. and learned Member for Kettering (Mr. Mitchison), having read the decision to which he referred, knows very much more about this Clause than he is prepared to admit, but I am certainly ready to give a short explanation to the Committee.

It arose from the distinction which the law draws between a lottery on the one hand and a bet on the other. A lottery requires no more than a passive acceptance of a chance on the part of the participant. A typical lottery, as we all know, is the sweepstake or the church raffle. A thousand people each pay 1s. and are allotted a number each. The winning number is determined by lot and takes the prize or prizes. It is purely passive, therefore, on the part of the participant. In pool betting, on the other hand, one chooses a horse or football team and, since their chances are not equal, there is a real power of selection which is exercised. Therefore, it is a bet and not a lottery. The participant stakes his entry money in other words, on the chance of his forecast being more accurate than those of other entrants.

The law draws a further distinction arising out of the fact that pool betting is legal and pays a tax of 30 per cent. on the stakes. A lottery, containing no element of skill at all, is illegal unless it is a small lottery under the two Acts referred to in subsection (3) of this Clause. The object of the law is to draw a line as clearly as possible between pool betting on the one hand and lotteries, either lawful or unlawful, on the other.

The immediate occasion of this Clause, as the hon. and learned Member suggested, was the case of the Commissioners of Customs and Excise v. Dodd. Perhaps I may summarise very shortly and generalise the facts in that case. Each member of the association, which was in fact a football supporters' club, was allotted a standing combination of three code numbers. Each code number represented a football team, but the appropriation of the particular code number to the particular team was changed each week and—this is the important part—it was changed at random. Prizes were given to the holders of the combined codes which represented the three teams which that week scored in the aggregate the greatest number of goals or the least number of goals.

I hope that the Committee will appreciate from what I have said that, if the matter had stopped there, there was no liability for Pool Betting Duty. The participants were purely passive and there was no element of selection. Therefore, it would have been a lottery but it would have been illegal. However, there would not have been any liability for Pool Betting Duty.

To get over the difficulty of illegality, the promoters provided in the rules that the participants could apply to change their code number. That would enable them in effect to choose their teams. A few exercised their chance to change their code numbers. The object of that was to introduce an element of choice and thus render the competition a legal pool betting transaction and not an illegal lottery. On the other hand, as soon as it bore the appearance of legality the Commissioners of Customs and Excise naturally claimed that Pool Betting Duty was due.

The promoters then argued that so few participants in fact changed their numbers that they should be disregarded, invoking the de minimis rule. It was argued that the competition was not pool betting and should thus escape duty. The learned judge who tried the case when it was submitted to the arbitrament of the court upheld that contention. He said that regard had to be paid to what in fact happened and not to what the rules permit to happen.

The result of that is obviously unfair to other persons who have to pay Pool Betting Duty. It is clearly unfair that anybody should be able to play off in that way the Customs and Excise, on the one hand, against the police, on the other—in the one case pointing to the rules to show the police that it was not a lottery, and in the other case as against the Customs and Excise pointing to the practice to show that it was not pool betting.

Mr. Mitchison

It is not in the judgment, but I think that it is a fair comment from the beginning of the report that the question whether the weekly lotteries were exempt private lotteries was not determined. There was, therefore, no question of playing off the police against the Customs and Excise. The police did not come into the matter, so far as I can see.

The Solicitor-General

I agree that the judgment was not concerned with the legality. One can fairly surmise that the reason for giving a choice was to produce an appearance of legality in the transaction. The learned judge upheld the contention.

In addition to the element of unfairness, it would render the administration of the duty quite impossible. Liability to duty would depend on variations in practice in particular associations. Since it would turn on the application of the de minimis rule, it would obviously give rise to a series of apparently conflicting borderline decisions which would cause great dissatisfaction to those who fell just the wrong side of the line. In addition, it puts a large amount of revenue at risk. I am told that £2 million is at stake if it is limited to supporters clubs, either supporters of sporting clubs or charities. There would be a great temptation for commercial pool promoters, particularly smaller ones, to try to use some such artifice—I use that word without any intention of offence—in their competitions. If that be so, the whole £30 million of the duty would be at risk.

The Clause deals with the type of situation which I have described by providing that the liability to pay Pool Betting Duty depends not only on the practice but on the published rules. It says: For the purposes of the pool betting duty, the making of payments…shall be treated as bets— in the sort of circumstances I have described: if the payments are made on terms— that is, under the rules; by which the payors have a power of selection which may (directly or indirectly) determine the winner, notwithstanding that the power is not exercised. That, of course, is to cater for the position in which it is exercised in only the minimum of cases, as in Dodds' case. Subsection (2) prevents any element of retrospection, because all bets made by 28th April, 1961, would have been made in the knowledge of the imposition of the duty. Subsection (3) continues to exempt small lotteries as heretofore.

Mr. Denis Howell

I am delighted to hear the Solicitor-General give a legal explanation of a matter of great social consequence. Although it may take some time, I want to talk about the tremendous importance of these pools. I do not think that the Committee has been seized of the importance of what the Government are here trying to do. With very great respect to the Solicitor-General, whom I am always pleased to see, we do not want this dealt with entirely on a legal footing, and I hope that he will give an assurance that if the Government cannot say anything tonight they will look again at this Clause.

Judging from the figures given by the right hon. and learned Gentleman, there must be thousands of small pools, and they and particularly those that help Association football, cricket, Roman Catholic churches, and—I had better declare an interest—many sections of the Labour Party, to keep going will by this Clause have a 30 per cent. duty imposed on them. The pools affected by the Clause are run not for private gain but by enthusiasts of one kind or another for causes that do a great deal of good.

The Solicitor-General said that these pools provide the Revenue with £2 million a year. I find that most remarkable statement, because on 23rd June, 1959, Lord Chesham in another place, when asked how much these pools produced for the Inland Revenue, said that the information could not be given because the money was collected by over 1,000 local authorities. It is therefore remarkable that the right hon. and learned Gentleman can tell us now that £2 million or more is being collected——

The Solicitor-General

My noble Friend must have been talking of some other tax, because this tax is not collected by the local authorities but by the Commissioners of Customs and Excise.

Mr. Howell

I am obliged, but I briefed myself carefully on this, and if the Solicitor-General refers to the OFFICIAL REPORT of another place he will see that the noble Lord who asked the Question referred to information of the sort of which we have been speaking.

Notwithstanding that, there is no doubt that a great many people hope that the Government will look sympathetically at the situation, which is as follows. The Stockport County Club Supporters' Club, which provides a lot of money for the running of Stockport County took its case to the courts, and in December of last year Mr. Justice Lloyd-Jacob upheld its submission. The way in which it was run was that normally one was allocated three clubs which might be the highest or lowest scorers in a particular week, and if one did not like those clubs one could select another three. In the case of Stockport County and many other football clubs large armies of people are rendering a great service by running these pools and thus making it possible for football to carry on. There was great joy in the football world and in other quarters when this judge upheld the submission of the Stockport County Football Club supporters. It was thought that the Commissioners would probably appeal against the judgment, but in fact there was no appeal.

1.30 a.m.

It is infra dig, for the Chancellor of the Exchequer to introduce this proposal to legalise something which has been held in the courts as recently as December to be illegal, and to do it without telling Parliament the full implications of what he has done. I re-read his Budget speech. I knew of the previous decision. I had been asked by several football clubs, and particularly by Aston Villa and Birmingham City—two very illustrious clubs—to keep an eye on this matter because they were concerned about 30 per cent. of the wages of all their voluntary workers each week going into the Government coffers, though there was no suggestion in the Chancellor's speech that he would be doing this. But a close examination has proved that this is, in fact, the case.

I want to make out my case on social grounds. Nobody makes any money out of football. In fact, those much-maligned gentlemen, the directors of football clubs, put a great deal of money into the game, and numbers of these directors are "in the red." As we know, according to the laws of the Football Association, no shareholder is allowed to receive a dividend of more than 5 per cent. It is true to say that but for these pools there would be considerable difficulty in carrying on football in this country.

I regret this situation, as do many other people. Therefore, I cannot see why a football club or a football supporters' club, which takes shillings from people who pay voluntarily in order to keep the sport going, should be asked by the Government to contribute 30 per cent.—what a fantastic amount!—of all that is collected every week to the Commissioners of Inland Revenue and to the Treasury.

I have with me a letter from Aston Villa Football Club. They have been in difficulty in providing every week popular entertainment and recreation for large numbers of people. The same applies to Birmingham City, a club in my constituency. They therefore run football pools to help them keep the game going, and so do many lesser clubs which find it vital to run these pools. I am glad to see the Chancellor of the Exchequer here to listen to my appeal, even at this late hour. I ask him not to be swayed by purely legal arguments but to listen to the social case that some of us have put forward.

The same applies to other sports; rather more so. Very few cricket clubs or fishing organisations can continue their activities on behalf of the nation as a whole without running these football pools. It is absolutely shocking, it really is shocking, all sportsmen will agree, that the army of voluntary people collecting these shillings—and it is a big task, as we all know, week in and week out to get people to pay their shillings and to subscribe to the running of these sporting organisations—should have 30 per cent. taken from them.

Consider, too, how it affects Roman Catholic churches. I have no interest to declare there, but I know that large numbers of Roman Catholic churches—and I think the same applies to other denominations as well—find themselves in considerable financial difficulties these days. We know their educational circumstances. They have to find a tremendous amount of money for the upkeep of religious education as they see it. I do not want to argue that issue, but they believe passionately in religious education and they pay large sums of money to back up their belief. Why should the army of people supporting these hundreds of pools helping the Church and Church education have under this Clause to pay to the Government 30 per cent. of all they collect?

The Solicitor-General

Most of these church lotteries come under the two Acts mentioned in subsection (3) and, therefore, would be exempt.

Mr. Howell

With very great respect, they are not. These are a number of the betting pools which make up the £2 million, the considerable sum which the right hon. and learned Gentleman himself told us the Commissioners are recouping. One does not need to go to Harrow or Eton or Oxford or Cambridge to work out that the amount of money involved is considerable, if £2 million is 30 per cent. of the total.

And this money is entirely for good, honest social purposes, and these are people who are enthusiasts and the salt of the earth, people prepared to work day in and day out, week in and week out, to get money for the cause in which they passionately believe, whether it be a football club, a Labour Party organisation, or the Roman Catholic Church.

I say to the Chancellor that to put these organisations, which are entirely non-profit making, on a par with the large football pools which are profit-making organisations is, in my view, unjust, and I appeal to the Chancellor to reconsider it. I do not expect an answer tonight, although I suppose the Government thought carefully about this Clause before putting it into the Bill. However, they probably thought about it from the legal point of view and not about its effect on the sporting life of the country or on much of our best religious observance, which justifies us in drawing the attention of Members of this Committee to the Clause and the purpose behind it, and in expressing our very great regret at the fact that the Government are engaging in retrospective legislation and are trying to legalise something which Mr. Justice Lloyd-Jacob told us in December was illegal. In so doing the Government are clamping down on an army of voluntary people, a large army of good, worthy people.

I hope that at least we shall hear of better grounds for the Clause then the legal grounds and a better explanation than we have had hitherto from the Solicitor-General. I hope the Government will give an undertaking further to consider the matter, because many of us would like to raise it again at a later stage. We shall not vote on this tonight, but another time we should like hon. Members to have the opportunity to express themselves upon it on behalf of their constituents in the way we are sure they will wish to, when they understand the purport of it.

Mr. Loughlin

I thank my hon. Friend the Member for Birmingham, Small Heath (Mr. Denis Howell) for spotlighting the real significance of this Clause. I admit that while I appreciated the Solicitor-General's explanation of the legal aspects of the Clause, until my hon. Friend raised the issue he has I was not aware of its implication to the types of lotteries my hon. Friend mentioned.

Hon. Members will, as a result of my hon. Friend's comments, realise that the Government are imposing an additional tax which may place too onerous a burden on the activities on some of these organisations. Hon. Members should consider whether, in view of this, greater pressure should be brought to bear on the Chancellor on this issue.

If it is true, as the hon. Member for Small Heath has stated, that the Government are imposing a 30 per cent. tax on supporters clubs of one kind and another—including those supporting both amateur and professional football clubs—I envisage many hardships that may arise. A number of the football clubs in the third and fourth divisions might lose a certain amount of revenue and they might find it impossible to carry on their activities.

I am sure that the Chancellor realises that even now, with all the assistance of their supporters' clubs, many of the foot-ball clubs in the third and fourth divisions are finding it extremely difficult to carry on. The Government should face up to the social value of encouraging all types of sport, professional and amateur.

Further, there is much prestige to be gained from being able to send our sportsmen to all parts of the world to compete in sporting activities and in similar peaceful competitions. It is important that, along with the more prominent football clubs, there should be clubs in the lower divisions, and it is upon those clubs that this additional duty will hit the hardest. We must look to Association football for the production of the type of international player we wish to develop.

The young players we wish to encourage will not necessarily be found in the first division football clubs, but in the third and fourth divisions, where boys normally begin to develop their sporting talents.

1.45 a.m.

If we are discussing a tax that will impose too onerous a burden on the professional football clubs, what of the amateur clubs, whose income is derived from supporters' clubs of one kind or another, who are prepared to devote their time to running lotteries, and who have far greater need of this type of assistance than the professional clubs? Are we to say that we shall pass without discussion a tax that may well destroy many of the amateur football clubs?

This argument applies equally to cricket and to many of our athletic clubs. When, by virtue of the development that is taking place socially, we should be widening the field of activities of this kind instead of restricting them, does the Chancellor consider it wise to introduce this tax?

I do not gamble. I do not think that there is anything clever in it. I prefer to keep my money in my pocket and let other people do the gambling. I am not pleading for gambling. My hon. Friend the Member for Small Heath, has mentioned the Catholic Church. I do not think that the Catholic Church indulges in gambling because it likes it. It indulges in it on the basis of using the smaller evil to combat the larger one. I do not think that the Catholic Church would want to pursue this type of activity if it could find the income which, rightly or wrongly, it thinks should be devoted to the education of Catholic children as distinct from the State and secular kinds of education. The truth is that the Catholic Church cannot get that income other than by activities of this kind.

These people, who are devout and loyal to their religion, pay their shillings in this way every week. Some of them devote a great deal of their time in organising these lotteries, not because they believe in gambling, but because they believe in their religion. This is often the type of lottery in which there is a degree of selection, to which the Solicitor-General has referred.

I am not satisfied with the right hon. and learned Gentleman's answer that these lotteries will be outside the scope of the Clause. It may be that he can gave us further explanation and that I am wrong. Lotteries of this kind, however, are not run for profit. I do not think that the Catholic Church——

Mr. Wise

The Roman Catholic Church.

Mr. Loughlin

—is the only religious organisation that runs this form of lottery. It appears from the interjection of the hon. Member for Rugby (Mr. Wise) that, when I was referring to the Catholic Church I ought to have said the Roman Catholic Church. If we get on to that argument, we may become involved in an argument with the Archbishop of Canterbury, because he said that he was a Catholic. I do not want to be out of order, but I do not know how we can have a Roman Universal Church.

The Chairman

Order. The hon. Member is getting out of order.

Mr. Denis Howell

Do not be led astray.

Mr. Loughlin

If I am, I will return to the point that I was making before I was led astray. If hon. Gentlemen opposite are not bothered about the time we spend on this, neither am I. I do not want to deal with this on the basis of a filibuster. I do not want hon. Gentlemen opposite, and perhaps more important the Chancellor, to get the impression that I am trying to filibuster on this issue. An important point is involved here. I make no bones about it. During the discussions on this Bill there may be occasions when I shall have the right to filibuster as part of the normal opposition to the Government. Filibustering is a legitimate tactic of opposition, but I want to make it clear that I am not filibustering on this issue. I am trying to get the Chancellor to appreciate the social implications, or the possible social implications, of this tax.

This tax may impose too onerous a burden on voluntary organisations which are not bothered about profits. They may be sporting or religious organisations. If the Chancellor accepts that that may be the result of this tax, I appeal to him to look at this again to see whether he can devise some method to relieve non-profit making organisations of this proposed imposition.

Mr. Wainwright

This is an important Clause. It is obvious that the Chancellor has given a good deal of thought to it and decided to try to prevent people taking advantage of the law as it now stands.

If a participant in a lottery of this kind changed his numbers or changed his teams, under the Clause he could be liable to pay the Pool Betting Duty. The Chancellor ought to realise that these lotteries are often run on a voluntary basis to provide funds which can be helpful to the community.

People who run these pools sometimes find that interest flags when it is simply a matter of a member buying an envelope containing three numbers or the names of three teams which he does not know until he pays his shilling and opens the envelope. To revive the interest, the member is given the opportunity to select other numbers or teams, but that is not the purpose of the competition. The Chancellor should give the Clause a good deal of thought because the people who run these voluntary organisations make a great contribution, in particular for the benefit of sport.

The position of the various football clubs has been outlined, and it is no credit to the House of Commons—I do not blame the Government on this issue—that it does not make certain that sports associations have sufficient funds to provide a decent ground and to carry out club activities. I know that it would be costly to include League clubs in any such provision at present, but more could be done for the local amateur teams, as well as League club teams, if the Government made it possible for money from these sources to be allocated to them to improve standards throughout the country.

Although the Clause probably affects sports clubs more than any other section of the community, it has been mentioned that the Roman Catholic Church also participates in this kind of activity. There are also other sections of the community. Funds designed to provide comforts for old people are just as important as any that have already been mentioned and they are often provided by lotteries of this kind. People give up their time voluntarily week after week to raise money to provide comforts for the aged and we ought to make certain that funds of that kind are enabled to be continued. I beg the Chancellor to have another look at the Clause. This is supposed to prevent any retrospective payment. I warn the Chancellor that quite a few people may have committed the crime he envisaged. Winners may have been paid out, or the office may have paid out on some outing or some occasion which had been arranged between the dates in question. I should hate to think that the Chancellor would try to extract money from people who were committed to using it for other purposes.

2.0 a.m.

Mr. Denis Howell

I am obliged to my hon. Friend the Member for Dearne Valley (Mr. Wainwright) for raising this point. I wanted to raise it myself. It has been drawn to my attention that the Commissioners of Inland Revenue have informed various pool offices and social organisations that they would not have to pay between 12th December of last year and the 28th April, but now they had better start putting money on one side. That seemed to me to be a regrettable procedure in view of the fact that this Clause had not then been discussed by Parliament. I agree with my hon. Friend that the servants of the Commissioners have no right to tell these people that they have to start deducting 30 per cent. from the gross takings each week because this Clause might be accepted by Parliament. That appeared to me to be a contempt of Parliament. I told people in my constituency connected with pools that in my view it was particularly regrettable that immediately the right hon. and learned Gentleman introduced his Budget the Commissioners of Inland Revenue were forecasting what the House of Commons was going to do. I am glad that my hon. Friend has mentioned this matter because many of these clubs have disposed of the money in the way he suggested.

Mr. Wainwright

I am grateful to my hon. Friend for his comments. It is not the intention of hon. Members on this side of the Committee to try to prevent the Commissioners of Inland Revenue carrying out their duty in relation to commercial pools. We have no intention of trying to safeguard the people who run pools for their private gain. But we think that the Chancellor should have another look at this Clause to see whether he can ensure that the people we have mentioned are not penalised.

Mr. Mitchison

I think that there may have been, and there may still be, some misunderstanding here, but I also think that there is a real point and that the Clause needs re-examination. I am going to put the position to the Committee as I understand it to be, and I should welcome any intervention from the right hon. and learned Gentleman if I misstate it.

As I understand it, lotteries have, in general, been illegal in this country for some time past, but under a recent Act small lotteries were legalised and there is no revenue question about small lotteries. If we take the case of something—to use a general word—the outcome of which depends on the number of goals scored or the successes of various football teams, and if those who take part in that thing have no power of selecting the teams which they back, then that operation, that thing, is a lottery. If it is a small lottery it is neither subject to taxation nor to prosecution provided, of course, it conforms with the conditions which govern the small lottery and bring it within the exemption which Parliament arranged in the general law a few years ago.

That exemption was introduced for very good and sufficient reasons of a social order, and, broadly speaking, those reasons were that various objects—some of them obviously worthy objects, none of them objectionable and many of them closely connected with our political life under modern conditions—were supported in this way. It was thought right that what had actually been done, because there had been a good many transgressions of the law in the matter, should in the future be made possible subject to proper statutory safeguards. That is the position so far as lotteries are concerned.

As I understand it, betting is a rather different matter. Betting has not been illegal in this country in the sense that lotteries have been. There have been many restrictions on it—I need not go into them all the Committee will know many of them, and I am sure that I do not know all of them—but betting has been subject, again fairly recently, in the form of pool betting to a 30 per cent. tax. Ordinary football pools—I am not now referring particularly to small pools—now have to pay this very considerable tax to the Exchequer. I am not questioning the wisdom of that tax in the case of the ordinary large pool.

In the case of the thing about which I was talking just now, something which depends, say, on the results of some football matches, if an entrant chooses the teams there enters into it an element of supposed skill, if one likes, or something near it, and, in consequence, that which would have been without such a choice a lottery becomes a bet. I hope that I have it fairly right so far.

What happened in the Stockport case was really a very extreme application, or an attempt to make an extreme application, of that element of choice. As I understand the Stockport case, there is no doubt whatever that the whole thing would have been a lottery and nothing more but for the exception which I am going to mention in a minute, because there was no element of choice at all. The entrants did not in most cases even choose a number, and it all depended on an entirely random selection made, I think, by the printer at one stage in the proceedings. The only possible exception was that in a very small proportion of cases the entrants were in a position not to choose the team, even then, but at least to choose a number. I understand that that is all they were allowed to do, but if I am wrong I hope that the right hon. and learned Solicitor-General will correct me.

The Solicitor-General

It is only on a matter of detail. The number attracted the team, and therefore there was a sufficient element of skill or forecasting to make it not an illegal lottery.

Mr. Mitchison

I do not want to waste time, but is the right and learned Gentleman sure that that is so? No doubt the number attracted the team, but did the person choosing the number know the team it was going to attract?

Mr. Denis Howell

Yes.

Mr. Mitchison

Then there was undoubtedly some element of choice in the matter. I quite agree with the right hon. and learned Gentleman that the precise degree does not matter. What happened was that the judge decided that there were so few cases where that right had been exercised that the element of skill and judgment in the whole bundle of transactions was so small as to be negligible, and on the principle of neglecting very small things he accordingly decided that there was no bet, and the Commissioners of Customs and Excise failed in their civil action to recover the duty.

Mr. Loughlin

Can my hon. and learned Friend clear up one point for me on the question of choice? In my constituency there are many amateur Rugby football clubs who run this type of lottery, in which the participants choose two numbers. The lottery is based upon the turning up, out of a drum, of a combination of two numbers. Whenever that combination turns up the one who holds it, having chosen it, wins. Does that constitute a choice and a selection in the sense to which my hon. and learned Friend and the right hon. and learned Solicitor-General referred?

Mr. Mitchison

In the first place, I would not venture an opinion on a matter of that sort in the presence of the Solicitor-General, who will be so much better able to do so. Secondly, if I were to enter into it I would rather do so with my hon. Friend afterwards than at the moment. I am finding it difficult enough to find my own way through the thicket. Perhaps my hon. Friend will allow me to go on trying to do so.

The decision was against the Commissioners of Customs and Excise, but the facts of the case are rather peculiar, and I cannot see that the case has an enormous general application. In short, it depended on the fact that the element of choice in this collection of transactions, taken as a whole, was so very small. The present position in the case of lotteries promoted by supporters' clubs, or in aid of some religious or political organisation is that so long as they are small lotteries they are exempt from the tax, but the moment there is any element beyond the minimal element that there was in the case to which we have been referring—and I entirely agree with the right hon. and learned Member that the minimal element will always get smaller or larger, and probably larger—a 30 per cent. tax is attracted.

The Small Lotteries Act was brought in on what were really social grounds. It was brought in with the support of hon. Members of both political parties, because we all felt that, for good or ill, in the circumstances of the time it was the right thing to do in the case of the small lotteries. Exactly the same arguments apply to the case of a small pool directed to exactly the same purposes. It may well be, as my hon. Friend the Member for Birmingham, Small Heath (Mr. Denis Howell) pointed out, with his great experience of these matters, that it is a little more attractive to people to be able to select their teams.

2.15 a.m.

I do not think I have ever taken part in a football pool, but if I did I would do it on pure chance because I do not know enough about it. I sometimes think that people who speculate on the Stock Exchange would be as likely to be successful if they shut their eyes, used a pin, and then bought the stock on which the pin lighted. Probably they would be successful if they did that kind of thing often enough. That sort of thing ought not to be the basis of a distinction which may have considerable social consequences. There ought not to be chance between the police on the one hand and duty on the other which in the circumstances of these small pools may amount to a penal duty.

I see the right hon. and learned Gentleman shaking his head, but I hope he will take the head away and consider this matter again, considering the realities of a social question such as this. We all agree that small lotteries are allowed, subject to proper safeguards. If by a tiny change the small lottery becomes a small betting pool the penalty is a 30 per cent. duty. If I am wrong in the law, I trust that the right hon. and learned Gentleman will correct me, but so far I think I have carried him with me on this matter.

It would be a very small change to allow people to select, or make some step towards selection, what they are going to do. Probably the right hon. and learned Gentleman will say that if we once get lotteries and betting confused it will be hopeless. Surely we ought to try, for exactly the social reasons which induced us to pass the Act about small lotteries, to see if we cannot deal with small pools. I do not know what the revenue amount is. I do not think the right hon. and learned Gentleman knows what it is, but the broad considerations go far beyond that. There is no question here of cutting into some particular aggregate of tax; there is no question of a large amount. It is not right that the whole question of a heavy—I shall not use the word penal—tax of this character should depend on something which in actual circumstances is a very fine distinction, as the Stockport case showed.

I hope that if we let this Clause go through the right hon. and learned Gentleman will tell us—there are obvious reasons why we should not divide against it—that on social grounds he will at least give it the consideration it deserves. It is not a party matter. This is a matter which concerns both political parties as such. It also concerns a number of well-meaning bodies in the country. I hope the hon. Member for Wimbledon (Sir C. Black) will allow me to say that, while I am not expecting him to agree with me, there are many people who would feel that we ought not to allow so much to depend on what is a legal and rather small distinction.

The Solicitor-General

I intervene again only because of the very interesting and persuasive speeches we have had on this Clause and because I think there has been a certain misapprehension as to the scope of the Clause itself. We have had a good deal of discussion about small clubs, small weekly lotteries, lotteries in support of amateur rugby clubs, old people's clubs and so on. After I intervened in the speech of the hon. Member for Birmingham, Small Heath (Mr. Denis Howell) I checked and found that I was correct. There are only sixty sporting or charitable, and only one political, supporters clubs which produce this revenue of £2 million. All the other types of lottery or pool betting which have been mentioned by the hon. Members for Gloucestershire, West (Mr. Loughlin), Dearne Valley (Mr. Wainwright) and Birmingham, Small Heath are under the Small Lotteries and Gaming Act, 1956, or the earlier Act which it amended. That is the first thing.

The second thing is the answer to the hon. and learned Gentleman. When I shook my head it was to indicate that I did not agree with his suggestion that the distinction drawn by Mr. Justice Lloyd-Jacob, on which his decision was based, does not affect the small lottery and the small pool. Parliament decided that in the case of all small lotteries and pools where the total stakes were under £750 and various other conditions were complied with, first they were not illegal and, secondly, no duty was payable. They are all outside the provision.

Mr. Mitchison

I told the right hon. and learned Gentleman that I did not know much about this. He never believes me when I tell him that. I want to get this quite clear. Is it the case that in a betting pool of the size of the small lottery there is neither penalty nor duty?

The Solicitor-General

The hon. and learned Gentleman is quite correct. It does not matter whether it is a pure lottery or whether there is an element of selection so that it becomes a pool. We are concerned only with the sixty or so supporters clubs which are affected by the Stockport decision. The hon. and learned Gentleman said that will not be of general application. There have been applications for repayment of duty by a number of those sixty clubs.

That brings me to the second preliminary point, which was made by the hon. Members for Dearne Valley and Small Heath. It is the date from which the Clause operates. It operates from 28th April, not from Budget day, which was 17th April, so that anybody whose winnings are determined by reference to an event occurring after 28th April would, so far as we know from the way these pools are run, have entered into the transaction in the knowledge of my right hon. and learned Friend's proposal. Although the Commissioners of Customs and Excise were criticised for approaching the various supporters clubs after the publication of the Bill, I submit that what they did was reasonable, right and fair to the clubs, otherwise they might distribute the whole of the stakes and subsequently find themselves in very grave difficulty if they became liable for duty.

Mr. Wainwright indicated assent.

The Solicitor-General

I see that the hon. Member for Dearne Valley agrees with that. It was no more than being helpful to the clubs and their members——

Mr. Wainwright

I am still perturbed about the people who may share out all the funds they have at present and might be liable, as individuals, to some heavy charge.

The Solicitor-General

Provided they have not made any distribution by reference to any event occurirng after 28th April they are perfectly safe.

I come now to the merits of the matter, because although the hon. Member for Small Heath very fairly declared his interest in the Labour Party, he rather modestly failed to declare the distinguished contribution he has himself made to football. He and his hon. Friend put the matter on social grounds. I do not dispute that these sixty associations that are known are pursuing a very valuable course, but their function can continue as it has in the past. All that must happen is that they must continue to pay the duty as they have in the past.

They have, in the past, managed to perform the functions for which they were formed with the payment of the duty, and I can see no reason why they should not continue to do so. The hon. Member for Gloucestershire, West spoke of the imposition of an additional burden. There is no additional burden; this is a burden that these associations have been bearing in the past, and all we are doing is to plug a small hole that has appeared as a result of this decision.

The hon. Member said that, in effect, we must have a relief from duty according to the purpose for which the competitions are promoted. That was not the intention of Parliament. As the hon. and learned Member for Kettering (Mr. Mitchison) said, Parliament passed the Small Lotteries and Gaming Act for that express purpose for, as he said, good and sufficient reasons of a social order. Parliament itself drew a distinction between the small lottery for a social purpose and these large lotteries, and this would otherwise really be a derogation from the intention of Parliament.

Further, one could not possibly limit the payment of the duty according to whether one approved or disapproved of the purposes for which the pool was promoted. The hon. Member for Small Heath obviously approves of the football, charitable and the Labour Party pools, but one can think of many objects for which one could form supporters' clubs of which he would disapprove very strongly—but they would equally be free of duty of the Clause were not passed. One cannot even limit it to the non-commercial associations. It would not be very difficult for the smaller commercial pools to change their rules slightly so as to take advantage of this loophole. For those reasons, I submit that the Clause should be passed by the Committee.

Mr. H. Wilson

I do not claim to follow everything that has been said on this Clause—the more so as I was out during part of the debate—and perhaps the right hon. and learned Gentleman will tell me whether the question I am about to put is a very meaningful one, or whether he has already answered it, or both.

I gather that some of the undertakings concerned have, over a period of time, been paying duty which, under the law as we understand it to be at the moment, they perhaps should not have been paying. I gather that the Solicitor-General said that a number of them had applied for a refund of duty paid. If the right hon. and learned Gentleman has not already made it plain, could he say whether the Customs and Excise will repay in all these applications?

2.30 a.m.

The Solicitor-General

This is an important question. The position is that any person can claim the repayment of money which he has wrongly paid. It is open to any defendant ordinarily to resist such a claim on the ground that it was paid under a mistake of law. It is sometimes difficult to determine whether the mistake is a mistake of fact which does not prevent repayment, or a mistake of law which is a ground of resisting repayment.

The Crown does not automatically plead a mistake of law as a ground for resisting repayment of money wrongly paid to the Executive. The distinction that it draws is that if it is shown that the money, if repaid, will get back into the hands of the people who originally paid it, then the Crown does not plead a mistake of law. It is not clear at the moment in these particular cases how far the money can get back into the hands of the people who originally paid it.

Mr. H. Wilson

I am obliged to the right hon. and learned Gentleman for making that so clear, and although we still have grave doubts about this Clause, as I am sure my hon. Friend the Member for Birmingham, Small Heath (Mr. Denis Howell) will confirm, and we shall certainly want to come back to it at a later stage of the Bill, perhaps at a more convenient hour, I think it might be in order to congratulate the right hon. and learned Gentleman on this occasion on the fact that he has not sought to make this Clause retrospective in its effects.

Mr. Denis Howell

I take it that there will be opportunities to return to this matter, in which case I shall not now make the very long speech which I had intended to make if we did not get a satisfactory answer from the Government because this is a very important matter.

The sixty organisations about which we are talking are among the most important sporting, religious and political organisations in the country. I should like to refer to a letter which I have received from Aston Villa Football Club. Incidentally, this letter was written on behalf of Birmingham City Football Club, too, and I may say that it is a great achievement when Birmingham City and Aston Villa write a similar letter to an hon. Member urging their case.

I hope the Chancellor of the Exchequer is listening, because I would remind him that it is the custom to invite Chancellors and other Government officers to Wembley on important football occasions. We are very pleased to see them there to get some relief from their work. But we also like to feel that they earn their corn, so I hope the right hon. and learned Gentleman is listening.

Mr. Loughlin

Is my hon. Friend suggesting that he would penalise the Chancellor by taking his ticket from him?

Mr. Howell

No, the attendance of the Chancellor of the Exchequer at the Cup Final must have a civilising influence.

Mr. Loughlin

On the Chancellor?

Mr. Howell

The secretary of Aston Villa says in the letter to which I have referred that Birmingham City and Aston Villa supporters associations feel very strongly about the imposition of this tax, as a 30 per cent. betting duty on football pools was in the first place intended to be levied against those pools which were operating for private gain. That is the kernel of the whole issue. Many of the small pools, as the Solicitor-General has quite rightly pointed out, can operate under the Small Lotteries and Gaming Act and do not pay this duty, but when they reach a certain stage in their growth and want to pay out bigger prizes than they are allowed to pay under that Act, they operate in this other way. In fact, they are penalised for their success by the imposition of this 30 per cent. betting duty.

I make this plea to the Chancellor of the Exchequer, as it is such an important matter. The economics of football clubs are in great difficulties, and many of us who are interested in these matters had hoped that the Wolfenden Committee's Report on Sport would have been implemented long ago so that we could have had some assistance. Unfortunately, this has not been the case.

The Government are not assisting sport by implementing that Report, and here they are imposing tremendous hardship on people who are trying to help themselves. These football clubs have now agreed to pay the maximum wage, for example; the sporting organisations have saddled themselves with great additional financial burdens, and that is of great importance to the life of the country. One of their reasons for doing so was Mr. Justice Lloyd-Jacob's judgment, which made it clear that, as from the date of that judgment in December last year, they were going to retain the whole of the money they themselves raised through their voluntary helpers for the purposes of those sports.

I do not want to make this a political argument, because I do not believe politics enter into sport and I should be reluctant to be driven to the conclusion to which the Government are driving us. All I am asking is that the Government take back the Clause and look at it again. These organisations which are too big to come under the provisions applying to small lotteries are still not very big organi- sations; and then there are the religious organisations; and all are being penalised as though they were lotteries run for private gain. That cannot be right.

The Solicitor-General told us it would be impossible to draw the Clause in such a way as to eliminate lotteries running not for private gain. I honestly do not believe the Solicitor-General. I have a much higher regard for his capacity in the law than he appears to have himself. I am sure that if he were to apply himself to the task he would be able shortly to find a form of words which would eliminate from the Clause 60 lotteries which are run for the best possible social purposes, not for private gain. That is what we are asking him to do, to look at the Clause again as a social matter.

The arguments are overwhelmingly against the Government. Here are people who, because they have worked assiduously and have been successful, have made improvements to their grounds and for their causes, are to be penalised to the extent of 30 per cent.—because of their very success, and despite their great needs. I appeal to the Chancellor or the Solicitor-General please not to take a purely financial, Inland Revenue view of this, but please to look at the grave social implications of what they are doing to people who ought to be encouraged.

I could say a great deal tonight about, for example, people making great capital gains gambling on the Stock Exchange and who get away with their cash. The treatment of them does not bear very good comparison with the treatment the Government are meting out to these organisations of one sort and another which admittedly are gambling but whose gambling is being treated much more hardly than that of people gambling on the Stock Exchange. One does not want to make this comparison, because one hopes the Government will listen to what one says here.

I hope the Government will look at the Clause again between now and Report and that they will give a little help and encouragement to people trying to do something of their own volition for sport, education, religious beliefs or political beliefs, without calling upon other people financially. That is all we are asking the Government to do. I hope the right hon. and learned Gentleman will tell us he will look at the social purposes before we reach Report. Let him not just rely on the Treasury brief or legal brief, to which he has kept so religiously tonight. I have a great admiration for his legal capacity. It is to his humanitarian capacity I appeal on this occasion. I hope I shall not have appealed in vain.

Question put and agreed to.

Clause ordered to stand part of the Bill.