Gaming Machine Licence Duty

HC Deb 06 July 1981 vol 8 cc207-35 6.49 am

The Chief Secretary to the Treasury (Mr. Leon Brittan)

I beg to move, That increases shall be made in the rates of gaming machine licence duty chargeable under section 21 of the Betting and Gaming Duties Act 1972 and Part V of the Miscellaneous Transferred Excise Duties Act (Northern Ireland) 1972.

I shall not trouble the House with the general argument about the importance or desirability of the recoupment, still less about the nature of the Budget strategy. Even if Labour Members think that the desirability of the Budget strategy has changed between the date of the Budget and last night, I do not think that they will suggest that its desirability has changed significantly between last night and this morning.

This is the final motion dealing with the proposed changes in gaming and betting duties in the measures that my right hon. and learned Friend the Chancellor of the Exchequer announced to the House last week. The new rates of duty are as follows. In premises with local authority approval there will be a change from £20 to £25 for the lower rate for 2p machines. For the higher-rate—namely, 5p and lop machines—there will be a change from £25 to £60 for the 5p machines and from £100 to £120 for the 10p machines. In premises without local authority approval the lower rate for 2p machines—

Mr. D.N. Campbell-Savours (Workington)

rose—

Mr. Brittan

—will increase from £50 to £75. For higher-rate 5p machines there will be an increase from £100 to £200. Subsequent machines will remain at the existing figure of £200.

Mr. Austin Mitchell (Grimsby)

House!

Mr. Brittan

No. This is a different motion. The hon. Gentleman is confused at this hour in the morning.

Mr. Mitchell

Jackpot!

Mr. Brittan

That is much more appropriate. For peak rate for 10p machines there will be an increase from £300 to £400. These are changes that will be proposed by way of amendment to the Finance Bill.

6.54 am

Mr. Robert Sheldon (Ashton-under-Lyne)

We are dealing with the last of the four Ways and Means motions. The motion before us deals with the gaming machine licence duty. I tabled a question last Thursday to seek to ascertain the revenue to be raised from each of these duties. I went further, because I thought that it would be right to know the revenue raised from each of the various duties that were to be discussed today. We were able to make a fairly good guess at most of the duties, but it is not possible to make a guess at the various duties on gaming machines.

My question appears on the Order Paper on page 3318. I refer to written question 172, which was a priority question for Monday 6 July: To ask Mr. Chancellor of the Exchequer, what is the amount of revenue which will be raised for each of the 13 individual increases in the duties as set out in Press Notice 684, 2nd July 1981, paragraph 3 of the Notes to Editors. The 13 increases include, most importantly and relevantly for this debate, the various gaming machine licence duties The press notice contains six licences for which we wanted to know the expected revenue as a result of the increases. The Chancellor of the Exchequer replied: I shall let the right hon. Member have a reply as soon as possible.

That is unacceptable. We are here today to discover how much is being raised, to comment on that, and to discuss and debate the matter. When the office of the Chief Secretary or one of the Treasury Ministers was informed that that information was required, I was told to table a written question and I would receive the answer. The written question was tabled not only because of our rights but because of our duty and obligation to discover how much our constituents will have to pay as a result of the Ways and Means resolutions. We do not know, as we do not have the answer.

I should have thought that the obvious thing to do was to adjourn the debate until the Chief Secretary comes up with an answer and lets us have it, so that we can consider the matters before we debate them. However, we do not yet have the answer, which is scandalous.

Mr. Campbell-Savours

My right hon. Friend raises an interesting point. There have been a number of debates over the last four or five months when hon. Members including myself have increasingly been receiving that form of reply. Every month I put down a series of questions to the Department of Employment. I noticed yesterday that for the first time I received a series of answers similar to that which my right hon. Friend received. All my hon. Friends should express great anxiety about that interesting development. It means that, invariably, hon. Members come into the Chamber without all the material necessary to ensure an informed judgment and an informed vote—

Mr. Deputy Speaker (Mr. Bryant Godman Irvine)

Order. An intervention should be short.

Mr. Campbell-Savours

I shall complete my intervention by saying—

Mr. Deputy Speaker

I believe that the hon. Member has had ample time for his intervention.

Mr. Sheldon

My hon. Friend has said that this is not an uncommon situation. He is right in saying that the numbers of such holding replies have increased out of all proportion over the past year or so. However, this is one of a different kind. It followed a telephone conversation with the office of one of the Treasury Ministers—

Mr. John Golding (Newcastle-under-Lyme)

Will my right hon. Friend give way?

Mr. Sheldon

May I finish? Then I shall be happy to give way to my hon. Friend.

My question was intended to obtain information for today's debate, which might have been given in a press notice or in some other way in advance of the debate. I thought that it was an omission that should be remedied. That seems to be the view of Treasury Ministers. I accepted that. The Chief Secretary is to reply to the debate. Presumably he had been informed of the question that I put down. If he had been informed, I should have thought that the first thing that he would have done on rising to his feet was to put the matter right by giving, even belatedly, the figures for the revenue cost.

Perhaps the Minister of State is now walking in with those figures. If that is so, I shall be happy to give way to the right hon. and learned Gentleman so that the position is made clear. It is bad, even if the Chief Secretary has the figures, that we have not had time to look at them in advance so that we can consider them, assess what is being given and decide for ourselves how those matters should be conducted. Even without that notice, I hope that the right hon. and learned Member will now give the figures.

Mr. Brittan

I apologise to the right hon. Gentleman. There appears to have been a misunderstanding. [Interruption.] If the hon. Member for Workington (Mr. Campbell-Savours) is seriously interested in the answer, he should listen, but if he is interested only in screaming abuse from a sedentary position the House will draw its own conclusions as to his bona fides.

I have here an answer which I believed was in the right hon. Gentleman's hands. If it is not, I am sorry. On the 1981–82 figures, for cigarettes it is £60 million; for cigars, hand-rolling tobacco and other smoking and chewing tobacco, £5 million; for off-course betting, £8 million; bingo £5 million, and gaming machine licences £7 million. The estimates have not been further subdivided.

I know that the right hon. Gentleman will take it from me that it was anticipated, intended and expected that that answer would have been in his hands before the debate. However, I am sure that he will accept that the broad division is not in any way surprising and merely gives some slight further detail to the general picture presented both by my right hon. and learned Friend on Thursday and by myself earlier in the debate.

Mr. Sheldon

I am grateful to the right hon. and learned Gentleman for that reply, but only a few hours ago I picked up the holding reply that I read to the House, and it is strange that the further information was available before I received that reply. It is more than a slip-up. It is incomprehensible.

Mr. Campbell-Savours

Sinister.

Mr. Sheldon

Perhaps when the right hon. and learned Gentleman returns to his office he will find out why things happened in that way. This is not the first time, although this is the most important occasion.

The right hon. and learned Gentleman said that the figure to cover the various licences was £7 million. The absence of a breakdown is an unhappy precedent. We are dealing with different kinds of machines. We should distinguish between 1p machines, which are chargeable at the lower rate, and the more expensive sort. We should know how much revenue is attributable to each, so that we are aware of how many machines at the top end of the range will pay £400 per machine and how many will pay £25 at the lower end. The scale is not 10 per cent., more or less. The duty on one machine may be 16 times that on another.

The Chief Secretary has come to the debate singularly ill prepared. I was generous about the botch-up over the reply. We are dealing with revenue matters, which should not be treated lightly. It should not come as a surprise that we want the information. The right hon. and learned Gentleman should be better prepared. We are talking about extracting money from people's pockets, and we shall diligently exercise our right to know the different amounts that will have to be paid. We should be failing in our duty if we did not do that.

Mr. Golding

Can my hon. Friend tell me where the 1p machine fits in? We have figures for 2p, 5p and 10p machines. Is there a tax on 1p machines?

Mr. Sheldon

There used to be 1p machines, and colloquially they are still sometimes referred to in that way. Such is inflation under the present Government, however, that the lower limit has now doubled to 2p per play, but I shall deal with that more fully later.

I am sorry that we do not have the kind of breakdown that I should dearly have wished to use, if only to see the effect of the increases in taxation on the number of machines and to analyse, categorise and compare the amounts of revenue to be raised from different areas. There may be a profitable area which could be examined further to obtain more revenue from some of the more expensive machines, or the contrary may be the case. We simply have not the information to make a decision or a judgment on that. We can say only that £7 million is to be obtained from this area. Whether the amounts are right as between one end and the other is not a matter on which we can express an opinion. None of us has the information to express an opinion, let alone a judgment, and still less make a decision on how we envisage this will work in practice.

The gaming machines that we are discussing are largely slot-machine gambling games. Perhaps I may delineate some of the types. Slot-machine gambling has extended considerably, and there are many newer forms, as my hon. Friend the Member for South Ayrshire (Mr. Foulkes), with his great expertise in these matters, will no doubt inform the House in due course.

The Gaming Board does not deal with the problems of either the manufacture or the importation of these machines, although it has expressed its interest and concern in, and its desire to have some kind of control over, these areas of the industry's activities.

First, these are essentially games of chance, rather than being rigged, although that may come as a surprise to some of my hon. Friends. They are supposed to be strictly games of chance. Secondly, they must take coins or tokens which can be purchased from the club or amusement arcade or whatever it may be. A number of them give prizes, while others are purely for amusement only and there is no monetary or other reward. At best, they might simply return the money that the player has placed in the machine. That category includes the space invaders and things of that kind.

Mr. Golding

My right hon. Friend seems to believe that these are just games of chance. Many of the machines now installed in clubs are not merely games of chance. Experience, judgment, mathematical knowledge and an understanding of the theory of probability must inevitably be possessed by anyone who is successfully and knowingly to play on many of these machines. One cannot go on a nudge without a great deal of knowledge.

Mr. Sheldon

I note what my hon. Friend says. I have not had the pleasure of playing some of the new machines. It follows that I have not lost any money on them, as my hon. Friend the Member for South Ayrshire may have done.

I was weaned away from gaming machines at an early age. When I was about 10 I went into an amusement arcade. I was on holiday, which is why I had what was for me the substantial sum of 6d. I exchanged my 6d coin for six pennies, placed one in a machine, and won an extra penny. That seemed a wonderful way of increasing my capital. I decided that I was on to a good thing. Every hon. Member present knows the conclusion, but it was not known to a 10-year-old. Within minutes I had nothing.

That was one of the best investments that I ever made, because any gambling instinct that I might have had went completely. Apart from the occasional game of cards in which money is of little relevance, at least as I play it, gambling has not formed part of my basic character. I believe that I owe that largely to that incident at an early stage in my life. For many other people, it does not work like that. So we see in the amusement arcades the embryonic person like myself starting to acquire an interest and dedication that I was fortunate enough to avoid.

I take my hon. Friend's point that some of the newer machines require a certain kind of skill, though I would not put it as high as he did. There is possibly adaptability to new ideas. There may be a quick reaction. But I look forward to acquiring more understanding of the machines, which I have only glanced at in a motorway cafe.

Mr. Golding

I must protest at the lack of knowledge of those on the Opposition Front Bench. They can be commended for their esoteric knowledge of economics and economic affairs, but I appeal to my right hon. Friend, when he returns to his constituency, to obtain some professional advice on these matters. He will find that it takes him a considerable time to master the machines in question. He is underrating the skill needed to perform on the machines to their full potential.

Mr. Sheldon

I must bow to my hon. Friend's knowledge, because he has some and I have none. I cannot continue what is a one-sided argument. It may be that the position is as he says.

Mr. Lawrence Cunliffe (Leigh)

I share the concern of my hon. Friend the Member for Newcastle-under-Lyme (Mr. Golding). We are not talking about ingenious systems in the so-called game of chance. There is now a degree of simple sophistication. It is like the economy: it is a stop-go system. There is a simple technique of freezing the numbers. One cannot accurately guess what will happen, but a simple mathematical calculation at least makes the game not entirely dependent on chance. In the interests of private enterprise, and because I am a fair-minded man, I cannot divulge the calculation.

Our insight is based not on experience but on constituents telling us about these matters and having us view the machines. I am certain that after this debate my right hon. Friend will have constituents at his surgery enhancing his knowledge. I appreciate the first-class job done tonight by my hon. Friend the Member for Newcastle-under-Lyme and other hon. Friends in educating our Front Bench spokesmen.

Mr. Sheldon

I am always surprised by the range of knowledge present and available in the House, and my hon. Friend is right to draw my attention to it. Again I must confess my lack of knowledge in comparison with that which he has acquired.

We are dealing with a number of different types of machine, the first of wich are the jackpot machines. These are to be found on various premises, including licensed casinos, bingo clubs, unlicensed clubs, miners' welfare institutes, and so on. In 1978 the total number of jackpot machines in use was less than 30,000 and they were mostly fruit machines—as they are now, very largely, but they are much more sophisticated—and by 1980 the figure had increased to about 37,000. They produce substantial sums of money for those fortunate enough to put in their money at the right time and do the right things with the handles, stoppers, or whatever they have.

Then we have the amusements with prizes, and these are to be found largely in fairgrounds, amusement arcades, pubs, cafes, especially transport cafes, where they are a very common feature, and shops. These amounted to a total of about 80,000 in 1978. By 1980 the number had increased to about 106,000. That represents a substantial number of machines in use at present.

The third category are machines for amusement purposes only. Those are to be found in fairgrounds, amusement arcades, piers, and so on, and they include pin-table machines, which were very common at the time that the Royal Commission was taking evidence but which are not quite as common today. There are much more sophisticated forms of amusement about which I hope to have my understanding broadened by the contributions of my hon. Friends.

For all these machines, there is a specialised repair and upkeep service. It requires a good deal of skill, because a machine that is taking money to be able to pay up to £400, which is the levy now being charged upon them, obviously will lose substantial sums of money if it is not in working order. A machine that is used 365 days a year will cost more than £1 a day, quite apart from the cost of the machine itself, which can be large, and, novelty being important in the gaming machine industry, the life of a machine in a prime site obviously is limited. In time, of course, they go to less attractive sites which have less rent to pay and which are less used. But they have only a limited period of life, so it is essential to keep them in proper repair.

Mr. Brittan

The right hon. Gentleman obviously has been able to get figures and, therefore, has not been operating on a substantially false basis. However, it might be convenient to remind him that the numbers of machines in the different categories are published in the annual Customs and Excise reports and therefore are available. But, for the record, the figures that the right hon. Gentleman quoted are not substantially inaccurate. The AWP machines at the lower rate totalled 4,600 in 1980, which is the latest year for which figures are available. The higher rate figure is 180,300. The jackpot machines are to be found in clubs and so on. At the lowest rate there are 100, at the higher rate 19,300 and at the peak rate 21,400.

Mr. Sheldon

I am grateful to the right hon. and learned Gentleman for those figures. They fill in some of the picture. We shall not have the opportunity at this late stage in the debate to work out the implications. If we had been given those figures before, we might have been able to work out how they affected different types of amusement arcades or places where these machines are to be found and to study the implications. I accept that we shall be dealing with such matters in the Finance Bill when we debate these amendments, and we shall then have a further opportunity for discussion.

I hope that the right hon. and learned Gentleman, the Treasury, his Department and his office will ensure that in future the sort of information that we require, for which we apply, is catered for more seriously than it has been in the past. I am grateful to the right hon. and learned Gentleman for those figures.

I was considering the repair and upkeep of these machines, which is a specialised business because of the speed of change and construction of the machines as well as the need to keep them in full working order.

I understand that in the initial stages 90 per cent. of the jackpot machines were not owned by the firms that had possession of them but were obtained on a hire and maintenance basis. There was an important change, because a number of consequences arose from it. On the other hand, the amusement arcades tended to buy such machines outright. We need to examine a number of factors concerning those machines that were bought outright and those that were taken in on a hire and maintenance basis.

I shall first deal with the astonishing change in the nature of this industry, in which, as recently as 1961, 95 per cent. of the machines in use in this country were imported. That situation has been reversed, and 95 per cent. of the machines are now manufactured in the United Kingdom. Thus, from being almost entirely an imported business we are now almost a home-based industry.

Mr. Campbell-Savours

Why is that?

Mr. Sheldon

My hon. Friend asks why that happened. I am sorry that I do not have the information. It is clearly a lucrative—

Mr. Speaker

Order. The right hon. Gentleman should address the House, not his hon. Friend.

Mr. Sheldon

My apologies, Mr. Speaker. We have been through a very long night and some of the strictest rules of order have lapsed during your absence. I am grateful to you for recalling us to the stern duties and obligations that we always have to you, Mr. Speaker, and the position that you hold.

Thus, we have changed from being essentially a foreign-based industry to being a home-based industry. About 95 per cent. of the machines now in use are purchased from United Kingdom manufacturers.

It is a highly profitable business, and I return to my original point about the large numbers that were originally taken by shops, clubs and premises on hire and maintenance. It being a highly profitable business, there was a danger that a criminal element would latch on to it, and that happened. A number of protection rackets forced club proprietors to install some of the machines on profit-sharing terms. One of the advantages of having the Gaming Board is that it can effectively reduce that and, in many cases, cut out this wholly undesirable pressure on clubs and other establishments to take the machines and give the owners a large share of the profits.

The remedy was certification of the suppliers by the Gaming Board, which effectively removed this menace, which was becoming quite serious, and there was a ban on profit-sharing arrangements.

I understand that the Gaming Board wants certification to be extended to all manufacturers, importers and converters of machines. At present its powers extend to certification just for retailers and those who maintain the machines. I am not in a position to judge how important these further developments might be, although I take note of them. The board has the power to ensure that those concerned with these machines are fit and proper persons. There are also Gaming Board inspectors.

In order to be fair to those who make use of these machines, we believe that the true rate of return should be known. In exchange for the large sums of money that the Treasury will now obtain from the levies, we also want to see a true rate of return. It has been suggested that each machine should state the rate of return—75 per cent., 65 per cent., or whatever. Those who think that the law applying to consumers should not stop at gaming machines would surely wish to see that development so that the person playing the machines has some understanding of what takes place.

There are 170,000 machines in operation in the country as a whole. There has been a large increase in the number of video games, and the duties vary considerably. Premises with local authority approval, including pubs, arcades, and so on, are chargeable at the lower rate for machines that charge up to 2p per play. The present tax on such machines of £20 a year will be increased to £25 a year. Machines that charge more than 2p per play are at present taxed at the rate of £25 for the first machine and £100 for subsequent machines. The tax will now rise to £60 for the first machine and £120 for the subsequent machines.

Then there are premises without local authority approval—licensed or registered clubs. We frequently see these machines in such clubs and sometimes we take part in the play. The tax on machines charging up to 2p per play will now be increased from £50 to £75. Machines that charge between 2p and up to 5p per play will now be taxed at the rate of £200 instead of £100 for the first machine and £200 for subsequent machines. That brings us to the peak machines that I have mentioned previously, the tax on which will be increased from £300 to £400 per machine.

The right hon. and learned Gentleman has given some of the figures. There are still a number of gaps that we shall wish to see filled before the Report stage of the Finance Bill when these matters will be further discussed. At any rate, we are aware of some of the figures and we shall need time to digest them.

It is a pity that we did not have the figures before. However, I am not sure whether the right hon. and learned Gentleman has the balance right between all these various machines. Although we still maintain our opposition to the revenue aspects of this matter and the way in which taxation is being reduced for the frivolous purpose of meeting the targets set three months or more ago, we would need to be satisfied that the right balance has been struck between the various machines that we are discussing.

Mr. K. J. Woolmer (Batley and Morley)

Has my right hon. Friend thought of the balance of effect on, for example, working men's clubs which are already being hit by a substantial increase in the price of beer? There is also the effect on fruit machines, quite apart from the general economic recession. Many hon. Members may not appreciate the value of the clubs and the role they play in their local communities. Does my right hon. Friend agree that the overall effect of these factors on the working men's clubs and the various other clubs around the country will be very considerable, and that it will damage one aspect of community life at a time when the clubs are among the few places to which people can go for cheap enjoyment?

Mr. Sheldon

My hon. Friend has given an important reason for needing to know the various rates of duty so that we can make the kind of calculation that he has in mind. If we had those rates of duty, we would be able to see how the working men's clubs had fared with problems such as the increase in the price of beer and the recession in general. Obviously, the calculations cannot be made quickly, and some consideration will be needed in order to make the assessment, which I am sure my hon. Friend would wish to see.

Mr. Campbell-Savours

Would my right hon. Friend comment on the way in which the tax is levied? Does not he think that it would be better if the tax could be raised on the amount of money that is put into a machine as against a general levy on an individual machine, particularly if the authorities are able to devise some system whereby the history of a machine can be monitored by way of technologically advanced apparatus being fitted to the machine, and to which the Revenue would have access? Would it not provide in certain circumstances for a greater take on certain machines which are located in areas where they are likely to be in receipt of larger amounts of money?

Mr. Sheldon

My hon. Friend deals with technical aspects of these machines which may arise, but what he suggests would lead to a considerable rewriting of the legislation, going much beyond what we are now discussing. But I am sure that the technological aspects of some of the newer machines will be surprising if they develop in these kinds of way. If that is so, obviously a more enlghtened Administration than the one we now have might want to look at them in a fundamentally different way. I look forward to that coming, but clearly the revenue aspects must always lag some time behind the technological changes.

Mr. Woolmer

It is the case, is it not, that these machines in clubs pay VAT on at least their net take, hence large revenue earners pay proportionately in addition to this form of taxation? At a time of inflation that is, as it were, an additional take out of those revenue earnings. I draw my right hon. Friend's attention to it, unless he thinks that the point is not covered to some degree already.

Mr. Sheldon

My hon. Friend is right. There is value added tax to be taken into account, but when one looks at the operations of working men's clubs it seems that the taxation is never ending. They have pay-as-you-earn gaming machines, VAT and beer duties to consider. They are chock-a-block with returns to be made to the Revenue.

Mr. Ray Powell (Ogmore)

The Customs and Excise collects 15 per cent. VAT on all fruit machines. Most clubs record the income and the outgoings of the machines. The tax on fruit machines has increased by 100 per cent. in two years of Tory Government. A licensing fee increase will mean a further substantial amount for a club committee to find.

Mr. Sheldon

That is true. Even before the increase, the sum was not inconsiderable. The increase will present a number of problems. Some clubs may have made no provision for the increase on the reasonable assumption that an increase had not figured in Budget discussions and that it was not to be found in the Finance Bill. They are not accustomed to wholly new taxation appearing in the month of July. This is very much an innovation and one that the Opposition do not wish to see repeated.

Mr. Campbell-Savours

I have already discussed a new form of revenue-raising to test the Government's reaction. Is it not significant that my hon. Friends were quickly on their feet to knock on the head any such principle? Hon Members have always been led to believe that Conservative Governments will not consider new forms of taxation. Yet my hon. Friends are now fearful that the Government should even be aware of new forms of raising taxation in case the argument that they need the money produces a further oral reply that could lead to another mini-Budget.

Mr. Sheldon

My hon. Friend has expanded our horizons. A debate on much of what hon. Members may have wished to discuss will not be possible because the information came to the House too late. There will be a chance for discussion on the Report stage of the Finance Bill, but it is a pity that the opportunity did not arise on the Ways and Means resolutions.

Mr. Golding

Will my right hon. Friend explain more fully those matters that hon. Members will not be able to discuss? I should have thought, following the speech of the Chief Secretary, that it would be possible to discuss these matters. What information do we lack in order to discuss them?

Mr. Sheldon

It is possible that if I had a few moments to spare, a pencil and a calculator, I would be able to make use of the figures that the Chief Secretary gave. If the information is complete—I cannot be certain about that because there has not been the opportunity to study it—one might be able to draw all the relevant conclusions. On the other hand, it might not be possible. I am certainly not in a position, standing at the Dispatch Box, to undertake complex calculations.

We should like to know the implications for the different machines. Where will the increase come from? Will it come from the big, medium or small machines, or from the machines in working men's clubs, the arcades or at the end of the pier? We should be able to make an assessment from the information given tardily by the Chief Secretary. However, I am prevented from coming to any conclusions.

Mr. Brittan

The right hon. Gentleman is making heavy weather of the matter. I do not want to rub it in, but, as a former Treasury Minister, he will be aware that the information which he claims that he cannot digest has not been dug up especially for him. It is published in the annual Customs and Excise report.

Mr. Sheldon

The Chief Secretary is not in a position to rub anything in. We asked him legitimate questions with plenty of time to spare and we did not receive the answers. The Chief Secretary should show proper humility. He has failed to give the House the information requested. We want the information to be supplied in a written reply. We want no arrogance from the right hon. and learned Gentleman. A proper sense of humility would be in order. Even then we might be less than amenable.

Mr. Golding

I can understand my right hon. Friend's sense of outrage and indignation at the Chief Secretary. However, if he had spent more of his youth on the nudge-and-hold machines his mathematics might be quicker. Perhaps my right hon. Friend should acquire practical experience.

Mr. Sheldon

I am afraid that I have left it too late to be able to acquire the skills and talents best learnt in one's youth. There comes a time when one realises the limits to one's skills. One then leaves it to others to show up one's defects.

We look forward to examining the figures which we hope will be supplied in a written reply. I hope that we shall he able to fill the gaps in our understanding about where the taxes will be levied, who will suffer the most and who will suffer the least. Will the people who suffer be those whom we wish to be affected most? We hope to come to a rational and sensible conclusion about how effective the operation has been.

In spite of their lack of information, my hon. Friends have discussed the matter more deeply than the Chief Secretary, who has adopted a cavalier attitude to the motions. He has dismissed them in a few sentences, apart from what he said in the first debate. The comprehension of my hon. Friends will surely convince him that what he has done is less adequate than that which my hon. Friends and myself have done and what they will do when the information is to hand.

7.44 am

Mr. George Foulkes (South Ayrshire)

I listened to the helpful introduction to the debate of my right hon. Friend the Member for Ashton-under-Lyne (Mr. Sheldon). I realise that the last time that I spoke was on the tobacco products motion, but that was 12 hours ago. We have experienced a long sitting between then and now. I am sure that you, Mr. Speaker, have returned refreshed and that we do not seem to be too frayed at the edges.

One notable aspect of our debates has been the difficulty in extracting information from the Government. Getting information from the Chief Secretary has been like pulling teeth. I tried to intervene during one of the right hon. and learned Gentleman's earlier speeches, to ask about the cost of the motion under discussion, and he would not even take my intervention.

Only at a late stage did the Chief Secretary give us the figures involved in each motion. The sum concerned in the motion before us is a mere £7 million. In the context of the Budget, it is tuning so fine as to be infinitesimal.

I asked whether the Government proposed a mini-Budget recoupment of the £25 million revenue that will be lost as a result of the changes in the special tax on banking profits announced by the Financial Secretary to the Treasury in Committee on the Finance Bill. The Chief Secretary said that the figure included in the Red Book for the special tax on banking deposits was a guess and that the new guess of £375 million was not much different from the original guess of £400 million, and, therefore, no fine tuning was necessary.

There are so many guesstimates in the Red Book that they make a debate about £7 million absurd. We were not sure whether the fall in the consumption of tobacco will be 15 per cent., as the Treasury estimates—my right hon. and hon. Friends and I predict that it will be more—and there are doubts about the amounts of special petroleum revenue tax and special petroleum duty.

Note (b) to table 2 in the Red Book, which deals with relief for investment in new corporate trade, states: This estimate is highly uncertain. Note (i) on capital transfer tax and the limitation of the cumulation period of 10 years states that the cost "cannot be estimated". There is so much uncertainty in all the figures that it is outrageous and ridiculous for us to spend so much time discussing the fine tuning of £7 million.

Figures relating to gaming machines are available from Customs and Excise and, in a more truncated form, in the report of the Gaming Board of Great Britain. Those figures were publicly available, but not until tonight did we hear from the Chief Secretary how the levy was to change for each category of machine.

As my right hon. Friend the Member for Ashton-under-Lyne said, we cannot work out the implications of such fine tuning and whether the lower-rate machines, the amusement machines or the jackpot machines are being penalised. It makes a difference. Action on one type of machine could affect cafes, public houses, arcades and pleasure fairs, and major changes on other machines could affect clubs, particularly working men's clubs. There is not a balance between the increases for jackpot machines and amusement with prizes machines. As my right hon. Friend the Member for Ashton-under-Lyne said, we need time to work out the implications and the balance of where the tax is being increased.

The other factor that makes the whole debate somewhat ridiculous is that the tax on gaming machines was restructured as recently as 1980. The Treasury, Customs and Excise and all the operators are just beginning to become used to a restructured tax, which is now to be changed.

Mr. Golding

My hon. Friend is speaking rather too quickly for those of us who are English and wish to take notes. It would be helpful if he would slow down a little. The points are serious. I have not before heard the point about restructuring. I beg him not to proceed so quickly. We might finish too early.

Mr. Foulkes

I shall certainly slow down. I know that my hon. Friend has problems with my accent. I confess that I have similar problems in reverse. I know that he wants to get the facts right. I apologise, but it is now the usual time for me to get up. I am getting my second or third wind and moving into top gear. I shall slow down.

The Finance Act 1980 provided for a restructuring of the duty on machines with effect from 1 October. The duty on 1p machines was removed. The Government introduced a single lower rate of duty of £20 a year, which they now propose to increase to £25 a year. That rate was introduced only on 1 October, yet they have already proposed an increase. At the same time, they introduced the new low rate of £50 per year, which it is proposed to raise to £75—an increase of 50 per cent. That rate was introduced only in October of last year, but it is now to rise by 50 per cent. There is a peak rate of £300 per year on the jackpot machines. Someone spoke about the North when he meant the North of England. We in Scotland consider that to be the South. The North is near Inverness. My hon. Friends from the North of England are worried about the peak rate on the jackpot machines. It will he increased from £300 to £400—an increase of 33⅓ per cent. Those are dramatic increases.

The report of the Gaming Board for Great Britain mentions the use of the 50p coin. I know that my hon. Friend the Member for Leigh (Mr. Cunliffe) is interested in that. The report also refers to the small recording microprocessor. My hon. Friend the Member for Workington (Mr. Campbell-Savours) wishes to refer to that. There are devices for keeping an eye on machines. We have all heard about the spy in the cab. This is the spy in the jackpot machine. The interrogator devices would cost about £13 for the simplest one. It would keep an eye on the machine, using the new techniques of the microprocessors. The more complex devices for keeping a close watch on the complicated jackpot machines could cost up to about £500.

Mr. Dennis Skinner (Bolsover)

Are they Japanese?

Mr. Foulkes

My hon. Friend raises a good point. If they were British-made, that might provide a stimulus for industry. I suspect that they are Japanese.

Mr. Don Dixon (Jarrow)

There is no need for any sophisticated equipment in machines in working men's clubs. Every ½p that goes out or comes in is published in the balance sheet.

Mr. Foulkes

That is right. I do not need to add anything to my hon. Friend's intervention. Apart form the 50p coin and these amazing interrogator devices, the main feature that attracted me in the report of the Gaming Board for Great Britain was contained in paragraph 92 on video games. The report states: It seemed that opinion within the trade was divided on whether video games would continue to gain popularity or whether interest would start to die away".

Unhappily, my Bill did not get the support of the House, because Conservative Members were aware of the huge sums that were being made by some of their friends by extracting money from young people. Conservatives did not want to take account of my Bill.

The report goes on to say that although there appeared to be agreement that players tended to seek new and more sophisticated games"— that is something that I said— …We heard that some videos went out of fashion soon after they were put out on site and that it was sometimes difficult to recoup the cost of the machines. I have not heard that. My information is that the machines are proving extremely popular. The report adds: We for our part"—

Mr. Speaker

Order. The machines may be popular, but we are dealing with duty.

Mr. Foulkes

I am coming to that, Mr. Speaker. If the machines are popular and their numbers increase, they will provide an ideal potential source of revenue for the Government, which they have overlooked.

The hon. Member for Aberdeenshire, East (Mr. McQuarrie) challenged the Government on the increased duty on derv when the House was discussing the Budget. We are here because the Government are not increasing the duty on derv by the amount that they originally intended. Let us not forget that they are still increasing the duty on derv. We are not talking about a reduction of the duty.

Mr. Speaker

Order. We are talking not about derv but about the gaming machine licence duty.

Mr. Foulkes

Are we not discussing the gaming machine licence duty in terms of replacing the increase in duty on derv, Mr. Speaker?

Mr. Speaker

We are discussing whether the duty shall be imposed on gaming machines. The derv issue is for another occasion.

Mr. Foulkes

I shall accept your ruling, Mr. Speaker.

Mr. Harry Cowans (Newcastle upon Tyne, Central)

Perhaps my hon. Friend will cast his net rather wider and tell the House what the effect would be if a gaming machine were operated by petrol and were gaining the Government duty on the one hand and receiving it on the other. Will he cast his mind in that direction?

Mr. Foulkes

It is five minutes to 8 o'clock in the morning, and even with my second or third wind I do not think that I could manage to put my mind to that question. If my hon. Friend catches your eye, Mr. Speaker, I am sure that he will be able to elaborate on it.

The hon. Member for Aberdeenshire, East spoke about introducing a tax on space invaders instead of increasing the tax on existing gaming machines. The existing machines are probably taxed to the limit. As some of my hon. Friends have said, we have probably extracted as much money as we can from the existing machines. However, the game of space invaders is ready for the taking. It is estimated that there are about 80,000 space invader machines. If we introduced a tax of £100 on a £400 machine, that would give the Government £8 million.

When I was trying to get my Bill introduced, the hon. Member for Brigg and Scunthorpe (Mr. Brown) challenged me. Unfortunately, Conservative Members opposed the Bill. Since then I have received many letters from people throughout the country who agree with me that we should have some form of licensing and a tag on video machines. The hon. Member for Fulham (Mr. Stevens) said to me in passing the other day that he had been criticised in his local newspaper because he did not support my Ten-Minute Bill.

Mr. Speaker

Order. There are 10 minutes for introducing a Ten-Minute Bill. The hon. Member would be well advised to forget that matter and deal with the gaming machine licence duty.

Mr. Foulkes

I am trying to say that the people who are writing to me, as well as supporting the licensing of space invader machines to control their bad effects, want to license them to bring in revenue—the sort of revenue about which we are talking in the Ways and Means gaming machines licence duty proposals. I am saying that not just jackpot machines but those machines also should be included in the proposals.

Mr. Speaker

Order. That is what the hon. Gentleman cannot do. He could go round the world and choose everything to be included rather than the duty that we are discussing. The House is discussing whether that duty should be imposed. That is the issue that is before the hon. Gentleman.

Mr. Skinner

On a point of order, Mr. Speaker. Earlier today we were discussing raising about £80 million in various forms, which arose from the Government's failure to control their Back Benchers in respect of the derv tax. On a number of occasions we gave the reasons why the Government—not you, Mr. Speaker, nor my hon. Friends—have gone round the world, so to speak, to find ways and means of raising money under the Ways and Means resolution from—

Mr. Speaker

Order. The hon. Member will raise a point of order, or he must sit down.

Mr. Skinner

I am suggesting that when my hon. Friend speaks, as some others have done, on how the money can be raised, he is right to suggest that there are various other proposals—

Mr. Speaker

Order. It happens that it is not the hon. Member's view that is important in this matter. I have given a ruling that we are discussing the gaming machine licence duty and whether it should be imposed. That is what the House must discuss.

Mr. Foulkes

I accept the ruling, Mr. Speaker. I am looking at the Ways and Means resolution on gaming machine licence duty.

For my aid, I referred to the report of the Gaming Board, which is directly relevant to the matter. Under the heading "Gaming Machines", on page 27, which we are discussing today in regard to licence duty, video games are specifically mentioned. As far as the Gaming Board is concerned, video games come under the category of gaming machines. In their consideration of the increase that should take place, the Government have suggested increases in the existing machines to which duty is applicable. In other words, they have dealt with the jackpot machines and the amusement with prizes machines. The 1p machines have already been exempted from duty. However, they have not dealt with the video machines.

I am not trying to go round the world. Far be it from me on this occasion to go round the world. All that I am doing is referring to the Gaming Board's annual report. I am not even attempting to go into space.

Machines that are classified by the Gaming Board as gaming machines but which are not subjected to tax by the Government in their proposals should be taxed. I have received letters from many people. For example, a gentleman from Bolton wrote to say that he thought that those machines should be subject to licensing and licence duty. He said: The one machine that I see in my weekly travels has a most unsavoury behaviour pattern in its programme in that, should it suffer a 'defeat', it prints out a line of filthy and obscene expletives. That was a new one on me. Even with my experience of the machines, I had not discovered that kind. I am sure that you, Mr. Speaker, more than anyone, would want to see such machines curbed. There should be control over and licence duty on such machines.

A letter from Oxfordshire states: May I draw your attention to the use of these machines in railway station buffets, where, together with one-arm bandits"— I accept that one-armed bandits are subject to duty— they are available for use by children. I will not go into the problems that I had in this respect, only to make the point that my local railway staff's only concern was that they had a platform ticket. That is the only worry that the railway staff had about children using those machines, which are not subject to tax.

I have another letter from a Mr. Cresswell in Streatham attacking the Government for the increase in the number of machines. He says: This Government of the quick buck will have a lot to answer in the future. That is right. Week in and week out in the Committee on the Finance Bill the Minister of State said "We need the money".

Where better to go than Finchley, the area that the Prime Minister purports to represent, for support for the need to control and license the machines? Mrs. Dunhill states: Local residents are most anxious that this centre be stopped. The letter then asks for information.

There is a great deal of support for curbing the machines.

Mr. Dixon

I do not know whether my hon. Friend is aware of what happened on South Tyneside. A head teacher put a space invader in a school, without the knowledge of the governors. As soon as they heard about it, they instructed the head teacher to get it out. The children were spending their dinner money on the machine.

Mr. Foulkes

I was not aware of that. I shall add the incident to my chronicle.

Mr. Campbell-Savours

There is a danger that the incident on South Tyneside will be related to the Secretary of State for Education and Science, who is eagerly looking for new sources of revenue. Headmasters in various parts of the country object to the pressure on them from education authorities, which are having to raise revenue to cater for school needs as a result of public expenditure cuts.

Mr. Speaker

Order. That is far from the subject under debate.

Mr. Foulkes

I was about to draw my remarks to a close. I am grateful to my hon. Friend the Member for Workington for the additional information.

I am anxious to control access by children to space invader machines. However, where such machines are available to adults they could provide a substantial source of revenue to relieve the burden on other machines that have been milked to the maximum. Working men's clubs are already suffering from the law of diminishing returns.

We now have someone in the Chair who is much more alert than the previous occupiers, so I have probably said as much as I can say.

Mr. Woolmer

I hesitate to introduce a note of dissent, but is not my hon. Friend confusing gaming machines and gambling machines with entertainment machines? Are we not considering a tax on gambling, not an additional tax on entertainment? If he goes along this line, is there not a danger of seeking to provide an entertainment tax on things because of a certain moral objection that he feels about certain issues? In introducing this argument, is he not confusing a tax on gambling with seeking to introduce an additional tax on something that I understand provides not prizes but what might be called entertainment, even if my hon. Friend does not agree with it?

Mr. Foulkes

I understand my hon. Friend's point. I believe that the Gaming Board itself recognises that space invaders and other video games are in a grey area. They are not strictly gambling in terms of there being an opportunity to win a prize if one is, allegedly, lucky. I think that it is a matter of luck rather than skill. I take issue with my hon. Friend the Member for Leigh on that point. Nevertheless, as I have said, the Gaming Board report classifies these as gaming machines rather than gambling machines, so they may be classified as entertainment. I do not have the opportunity to put forward all the evidence, but if my hon. Friend reads my contribution on the Ten-Minute Bill he will find further evidence on this.

Mr. Woolmer

I recall it well.

Mr. Foulkes

My hon. Friend recalls it well. I hope that he will at least begin to be convinced that there should be some opportunity to raise funds in this way. I certainly suggest that as an alternative to the proposals before us.

8.11 am

Mr. K. J. Woolmer (Batley and Morley)

The motion asks us to accept an increase in duties on gaming machines. I oppose it, in part because of the proposals themselves and in part because of what they represent as part of a whole series of measures put before the House today which will become part of the Finance Bill.

In the last few weeks, the Government have managed to introduce additional tax on cigarettes, matches, lighters, beer, bingo and now on fruit machines and gaming machines. I suggest that we cannot consider this matter in isolation. It is part of a whole series of taxes which inevitably will have and is already having an effect on people's living costs. It has certainly had a real effect in the clubs and pubs around the country.

Whereas we in the House make a great deal of the big decisions of Governments, I know from my conversations with people that it is increases on cigarettes, beer, bingo and now fruit machines that people will notice every time they go out for a little pleasure—and, goodness knows, they need a little pleasure and light relief in the present gloom. As I said earlier, a pub or a club is almost the only place to which people can now go for a bit of pleasure, a bit of light relief from the almost untrammelled gloom of unemployment, rising prices and now falling living standards.

I saw in Tuesday's newspapers that the latest figures indicate that a fall in living standards has started over the past three months, with a decline of 1½ per cent. in that period alone. It is that fall in living standards which is being brought about by the catalogue that I have outlined, and this measure is yet another turn of the screw. Having been voted down on earlier motions relating to cigarettes and bingo, and having lost the votes in the Finance Bill Committee on beer, matches, lighters and so on, we should not complete a sorry tale by letting the motion go through.

In the Committee last year the Minister of State confided that he occasionally erred and strayed, occasionally pulling a handle or pressing a button on one of the machines. It was in a mood of apology that he said that he had transgressed in that way. Some of his hon. Friends asked "Why should we not take more taxes out of working men's clubs? After all, the money only goes to subsidise beer prices." As I said then, if the Government paid as much attention as working men's clubs do to trying to keep beer prices down, they would face a much happier electorate.

Mr. Dixon

The revenue also goes toward retired members' trips, donations to charity, hospitals and so on at Christmas. It is not primarily to subsidise beer prices.

Mr. Woolmer

I was coming to those matters. However, the money helps to keep down beer prices. Passing the motion would result in slightly higher beer prices—halfpence or one penny on a pint. I do not deride the achievement of working men's clubs in keeping down prices.

Mr. Allen McKay (Penistone)

In the clubs that I know, the money also pays for children to go to the seaside. The duty of £400 would pay for a busload of 40 children, who will now be deprived of a visit to the seaside. Because of the Government's policies and the unemployment rate, it might be their only holiday.

Mr. Woolmer

My hon. Friends continue to be a step or two ahead of me. I entirely agree with them, and I shall come to these important points.

When we faced an increase in the duty last year, Conservative Members sneered at the idea that it would reduce the ability of clubs to provide beer that was cheaper than in public houses. That ability is not to be derided. I shall come a little later to the additional benefits provided by clubs.

Mr. Campbell-Savours

My hon. Friend will be disturbed by the knowledge that children's holidays will be snatched. Should we not rephrase the old description "The milk snatcher" to read "Thatcher, Thatcher, the kiddies' holidays snatcher"?

Mr. Woolmer

I shall come to the additional effects on clubs—

Mr. Dixon

I take issue with my hon. Friend's statement that the revenue from the machines subsidises beer prices. I do not know what happens in his neck of the woods, but in the North the beer prices are kept down because the brewery belongs to the workers, and in effect they keep the private breweries' prices down. The revenue from the machines goes primarily to charities, old people's and children's outings and entertainment in the concert room.

Mr. Woolmer

I see that I had better turn to that welcome attribute of the clubs. If I do not, I fear that my hon. Friends will keep drawing my attention to it.

I agree that these areas of activity will also be damaged, because the overwhelming bulk of the money involved goes in that direction. Again, last year—and I suspect that it would have happened again this year if more Conservative Members had bothered to turn up to consider this proposal—there was the objection that the profits from these gaming machines should not be used to provide concerts, outings and so on. However, I and my hon. Friends feel that that is an important function of the clubs. As my hon. Friend the Member for Penistone (Mr. McKay) said, the matter is capable of being brought down to the effects on individual people.

A club is likely to have to pay out, as a result of this impost, probably an additional £200 a year, given the limit of two machines at any time in a club. That will come down to knocking on the head a children's treat or an old persons' treat at Christmas.

There is no escaping this. The Government may want the House to pass this motion and say that it will not hurt anything. I suggest that it will hurt something. If £200 goes, something in the club will go. What goes will be a children's treat or a little help for the old folk at Christmas, so that, instead of having a couple of pints of beer free, they will no longer be able to have that additional bonus at Christmas time.

Mr. Golding

Has my hon. Friend addressed his mind to the fact that there is so much short-time working at present that the overheads of the clubs have gone up dramatically? With short-time working and unemployment. our constituents have not the money to spend in the clubs. Revenues have fallen fast. The Government are imposing heavy charges. How are clubs to survive, given the squeeze that is being put on them?

Mr. Woolmer

My hon. Friend is right to talk about the ability of clubs—and, I do not doubt, public houses as well—to pay this additional impost. It must be reduced at a time when people's pockets are that much tighter. Again, it is the kind of thing that clearly the Chief Secretary, in his rather slipshod approach to the detail of the motion, has not thought through.

When money is tight, although people may appear to go out as much as before, they must have a drink fewer. They sit around a table that bit longer and cannot afford that extra round, or they have halves instead of pints. It is a hardship to someone who has worked hard all his life to go out without the brass in his pockets to buy a drink.

Mr. Robin F. Cook (Edinburgh, Central)

My hon. Friend referred to the increased levy paid by a number of clubs with a couple of gaming machines. Perhaps I can help him to put that increase in perspective. I have before me the figure of revenue from the gaming machine duty in 1979–80, which is the last complete financial year for which there are figures. The revenue from gaming machine duty during the last financial year was £13.9 million—just under £14 million.

My hon. Friend will recall that we were assured by the Chief Secretary only an hour ago that the increase from this motion would be £7 million. That is almost 50 per cent. of the total revenue from this duty for the last financial year. That is a significant increase, and I am sure that my hon. Friend will agree that it will mean a sharp increase in the money paid by some clubs and operators of gaming machines. That must have a bearing on the activities to which my other hon. Friends have referred.

Mr. Woolmer

My hon. Friend has made a substantial point. I had been developing the suggestion made by my hon. Friend the Member for Penistone that one could bring this discussion on the tax down to the level of the individual club where, in concrete terms, it would affect kiddies' treats and so on.

In the aggregate, at least £3 million or £4 million will be paid by working men's clubs that would not otherwise be paid. In those terms, that brings home the millions of pounds which, collectively, people put into workers' co-operatives in the form of working men's clubs to provide treats for children and old folk, for concerts, and so on. Though it appears to be an extra £100 on the first gaming machine, when it is put together £3 million or £4 million will be extracted from the clubs.

I suggest that that is unreasonable and not what the House intends. There is the presumption that a tax will come out of someone's pocket and it is reasonable to assume that he can afford it. Who will pay for that? What will be the effect of the tax? Will somebody who is fairly well off now pay something that he can afford to pay? That will not be the result. The result will be that less money will go into activities of the type that I have outlined. That is my second reason for objecting to the proposal.

Mr. Skinner

Is my hon. Friend aware that the problem goes much deeper than the many examples that he has given to the House and the impact that the tax can have on the income from the machines that provide all the benefits to which he has referred? Much of the money is used for entertainment. Many of these clubs put on big acts of one kind or another. There are bound to be protests from Equity and others who belong to the entertainment profession, who, as a result of the lack of money coming from the machines, will have to scale down their entertainment enterprises.

We return to the old problem, which the Conservatives are very good at stirring up—unemployment. Whereas they have cast their net on the jobs front far and wide, the tax will have a serious effect on the jobs of those in the entertainment business. The clubs will have to go further down the scale and introduce acts that are perhaps not as good as hitherto.

That will reduce the number of people going into the clubs and thereby reduce the turnover for the clubs from the sale of beer and so on. The result will be a descending spiral, resulting in more and more job losses as a result of not having the money available to bring in top-class entertainment.

Mr. Woolmer

That appropriate intervention brings me to the third reason why I oppose the measure. My hon. Friend the Member for Bolsover (Mr. Skinner) has explained clearly that at the end of the day to tax people more means fewer jobs. If clubs have less money to spend, someone along the line does not receive money for doing work of one kind or another. For example, a club may provide a children's treat and it may be argued that much of the labour is voluntary. However, if the money that would be spent on soft drinks, crisps and so on is no longer available, someone somewhere along the line is employed less.

Either immediately or somewhere along the line, we cannot take that money away—in this case the figure is £7 million—without destroying dozens and even hundreds of jobs. A sum of £7 million represents purchasing power. If we assume an average income of £5,000 a year, or £100 a week, we can quickly work out that that means the loss of more than 1,000 jobs as a result of this £7 million reduction.

Mr. Bob Cryer (Keighley)

Does my hon. Friend accept that this additional tax is being imposed at a time when clubs are already facing difficulties? For example, my entry in "Who's Who" is already inaccurate, because my club no longer exists. The Workers Union Social Club (Keighley) has gone out of business because of the financial difficulties that many clubs now face. The problems will now be exacerbated, thus creating the unemployment about which my hon. Friend has been talking. Perhaps he ought to recommend to the Government an alternative tax on their kinds of clubs—perhaps a tax on each dining table for the gentlemen's clubs that they inhabit.

Mr. Woolmer

My hon. Friend reminds me that I should have declared a non-financial interest as a trustee of a Labour club in East Leeds. I have watched with concern the effects of the recession on that club, whose accounts I know well. I share my hon. Friend's view that it is difficult to believe that the Government could not have found this £7 million by taxing some other activity that is followed by much wealthier people.

The origin of all these measures is the fact that the Government were faced with the loss of the derv revenue. I wonder what induced them to sit down and think about this tax. I am at a loss to understand why. I cannot imagine anyone saying "We must raise £7 million of revenue, and we must pick on working men's and social clubs and children's treats and Christmas treats."

A moment's thought would have told the Government that that was not a fair way of levying this money, which, while small in national terms, is significant for many local communities.

Mr. Dixon

Will my hon. Friend also turn his mind to the point made by my hon. Friend the Member for Keighley (Mr. Cryer)? When a club closes down, the local authority loses the rates on the premises, and that comes on top of the expenditure cuts imposed by the Secretary of State for the Environment, which are affecting social services, housing and every other service at local authority level.

Mr. Woolmer

My hon. Friend is developing the point that if we reduce spending by increasing taxes by £7 million it causes a loss of jobs, a consequence of which is further costs elsewhere in the community. On the one hand, if the enterprise closes down, there is a loss of rate revenue. On the other, if a person is put out of work, that £7 million becomes a false income, because it will be offset by unemployment benefit and the like. We have advanced this argument in many economic debates. We have said that the Government's attempt to reduce their borrowing requirement is often a false economy, because they must pay hundreds of millions of pounds in unemployment benefit and so on.

This mini-debate shows that that is true at the local, small-scale level. An increase of this sort has effects of the kind which, nationally, we deplore in present Government policies. The Government say that they are improving the financial position of the country, whereas in reality, as the months go by, the position is demonstrably getting worse. Instead of reducing the borrowing requirement by reducing taxes, the Government find that as unemployment keeps rising, more benefits have to be paid out, rate income falls, so that rates go up, and they then get into quarrels with local authorities.

I do not want to get drawn into the wider debate but rather wish to show the relevance of these matters to the measure. Have the Government considered why they want to impose this £7 million worth of additional taxation? On the face of it, it would seem either that they have not thought about it or that their social values are not those of the majority of people.

Mr. Golding

I wonder whether my hon. Friend, when he began speaking, realised the seriousness of the position. The interventions have heightened his point about the increasing difficulty being faced by clubs as a direct result of the tax, added to all the other impositions, taken together with short-time working and unemployment. Surely the Minister must acknowledge that the case seems to get stronger minute by minute and that later this morning it will become almost unanswerable.

Mr. Woolmer

I agree that the interventions have been extremely helpful and have brought home even more clearly the problems being faced in this area of trade. If we were dealing with a local Labour-controlled council putting up the rates, we would be told only too clearly that the local authority was threatening the business life of the community and that it was the final straw that would break the camel's back. Yet here is a measure that will put at least £200 a year on to social and community organisations. If it was the local authority putting it on in the form of a rates rise, there would be uproar. Indeed, there has been not only uproar but threats by the Secretary of State for the Environment that that is sufficient to start changing the constitutional relationship between local authorities and the Government. Clearly there is something that can be regarded as serious, but I should not want to be drawn down the lines of the wider debate. I prefer to stick to the proposal that is before us and the reason why I oppose it.

Before my hon. Friend drew my attention, quite rightly, to the recession, I was expressing my doubts about whether the Government had thought the matter through. The question whether the clubs and pubs can afford the extra tax is relevant. If the economy were booming, and if the brewers were making large profits, I should not object to this kind of tax on gaming machines in public houses. In general, those profits tend to go to the brewers.

That was the interesting fact that came out in the Finance Committee last year. Whereas in working men's clubs and social clubs the burden of the tax will be borne by the members of the clubs, on the whole the additional duty on public houses will tend to be taken away from the brewers. This is an important difference.

I should like to touch briefly on the point made by my hon. Friend the Member for Newcastle-under-Lyme (Mr. Golding) about the effect of the recession on the ability of clubs to afford the extra burden of £3 million or £4 million.

Mr. Dixon

Will my hon. Friend also mention the fact that it is not unknown for breweries to make contributions to Tory Party funds? The proposal could therefore be counter-productive. Working men's clubs are not always unpopular with Tory candidates at the time of general elections. Many times Tory candidates have requested permission from secretaries to visit clubs.

Mr. Woolmer

My hon. Friend is right. I suspect that the brewers, and perhaps to an even greater extent those in charge of the construction industry, now smile ruefully over the contributions that they made to the Conservative Party at the election. This impost is another turn of the screw and a painful reminder to the brewing industry that the party elected to help it make more profits eats away increasingly at those profits.

The question that I wish to raise is whether it is reasonable to expect organisations that will be liable to pay the additional tax to be able to meet that demand. If brewers were doing well, and if the economy were booming, I should not object too strongly, bearing in mind that there is a big difference between the duty paid in public houses and that paid in clubs. Club machines pay double, and in some cases well over double, the duty paid in public houses. This gives heightened importance to the position of clubs and social clubs. If the brewers were doing well, I should swallow the first part of the measure.

All hon. Members will, I think, agree that both clubs and public houses are being squeezed. In parts of most towns where the recession has taken hold there is considerable competition for clients. Clubs that manage, by their efficiency and by purchasing from their own federation breweries, to sell beer more cheaply are attracting clients from public houses.

I accept that that is not the situation in every club. As trustee of a club, I have to check the balance sheet to see how the club has fared in comparison with other clubs. It would be an exaggeration to say that some clubs are doing well. However, they manage to keep a fair amount of custom by charging attractive prices. Public houses sometimes object, but clubs, like everyone else, are affected by the recession. This does not mean simply a four-day or even a three-day working week. It can often mean a week on and a week off. Some mills are working only one week in three.

It will be realised that the community that surrounds two or three mills is very close. If one or two major mills are engaged on short-time working, the effect is felt in retail establishments around them. With 25 per cent. male unemployment m Batley, it will be appreciated that some clubs are not making much money.

Mr. Golding

Did I hear my hon. Friend say that he was a trustee of a club? If he is, should he not tell us the name of the club and the impact of the motion on it? Surely we should have some information—

Mr. Speaker

Order. The hon. Member for Batley and Morley (Mr. Woolmer) has told us three times that he is a trustee of a club. We need not go into further details.

Mr. Woolmer

I referred to my interest in the East Leeds Labour club, which is not in my constituency. I joined the club when I was a councillor in the area, and I keep my interest in it. I was drawing on my own experience. I am sure that other hon. Members have similar experience.

Clubs are faced with difficulties when asked to pay additional money. When bar, bingo and draw ticket sales are down, paying such extra sums is difficult. The effect will be felt not by brewers and people who can afford it but by individuals who look forward to the bonus that might brighten up their lives. When one is out of work, it is enjoyable to take one's children on a treat to the seaside.

I wonder whether the Government inquired what the effect would be. My right hon. Friend the Member for Ashton-under-Lyne (Mr. Sheldon) asked for details. When the Minister drew up the proposals, he could not have examined the consequences carefully. If he thinks about the consequences, he might reconsider pushing the proposals to a Division. If his purpose was to ask the House to think again, we might have done him a service by asking detailed questions. Perhaps I do the Minister an injustice, but I thought that a piece of paper had arrived mysteriously in front of him.

Mr. Brittan

The hon. Gentleman is mistaken.

Mr. Woolmer

I can see that I did the right hon. and learned Gentleman an injustice, so I withdraw my remark.

There was nothing in the Minister's opening speech to show that he recognised the consequences for clubs and social organisations, which are hard hit already. Some individuals will lose as a result of these proposals.

Mr. Cryer

Will my hon. Friend comment on the likelihood of the Minister's advisers belonging to the Carlton, the Athenaeum or others of the elite group of gentlemen's clubs, as against being members of working men's clubs? Most senior civil servants are members of the Carlton and other such clubs, so that they can mix congenially with Ministers, and they do not have a clue about working men's clubs and, therefore, are not likely to give sensible advice about taxation matters affecting those clubs.

Mr. Woolmer

That is what I was concluding. If the Government had had any contact with the community life with which my hon. Friends and I are regularly in touch, they would appreciate that their proposal is mean, petty and unnecessary. The Government should withdraw the motion, recognise that the sum involved can be lost in the wash and do a service to thousands of youngsters and elderly people who will have the rest of their year spoilt by this mean and petty action.

Several Hon. Members

rose—

Mr. Speaker

Mr. Leon Brittan.

8.51 pm

Mr. Brittan

Although the hon. Member for Batley and Morley (Mr. Woolmer) was, at least until his final few sentences—

Mr. Campbell-Savours

On a point of order, Mr. Speaker. It appears that the Government intend to move another early closure. I know that you have been busy most of the night, but other occupants of the Chair will have drawn to your attention the fact that the Government Chief Whip has repeatedly moved premature closures.

Is the fact that the Chief Secretary has been called to speak an indication that our business is to be curtailed and that a motion involving a large sum of public money is not to be fully debated? Only two Back-Bench Labour Members have been given the opportunity to speak in this highly important debate.

Mr. Speaker

The debate on this motion began at 6.49 am.

Mr. Brittan

Although—

Mr. Cunliffe

On a point of order, Mr. Speaker. It was generally recognised that contributions to our debates through the night would come from the Opposition. Some of us have sat here for 14 hours without being called. We were given to understand that if we reached a certain deadline, mutual agreements would be operated. Some of us are distressed by this supernatural technique that has been developed for tax raising. It can be employed when it suits the Government, but we—

Mr. Speaker

Order. That is not a point of order for me. I have not been here through the night, but I have been here since 7.15 am and I have had a chance to study the length of the speeches that have been made. The hon. Gentleman may find in that an explanation why he was not called.

Mr. Campbell-Savours

rose—

Mr. Speaker

Order. The point raised by the hon. Member for Leigh (Mr. Cunliffe) was not a point of order. I was merely acting out of courtesy. If the hon. Member for Workington (Mr. Campbell-Savours) has a point of order relating to our Standing Orders or our rules, I will take it. Otherwise, he would be ill advised to pursue it.

Mr. Campbell-Savours

On a point of order, Mr. Speaker. You said that some hon. Members had prolonged the debate on these motions. Am Ito assume that because some hon. Members have sought to prolong the debate, for whatever reason, other hon. Members are to be prevented from expressing their opinions on an important matter?

Mr. Speaker

The hon. Gentleman knows exactly what happens in the House.

Mr. Brittan

I was about to say that although the hon. Member for Batley and Morley was, until his last few sentences, in an especially seductive mood in suggesting that I should withdraw the motions, and although he showed considerable knowledge, understanding and sympathy for the problems of those who house the machines, I am afraid that, not only because he changed his tone but on the merits of the case, I am unable to accede to his seductive approach.

I can say something that will, I hope, be of some assistance to the House. I recognise, not only by what the hon. Gentleman said but by what many other hon. Members said, that it is well understood that where machines may be popularly categorised in one group, the circumstances in which they are used, their ownership, the extent to which they are used and the degree of profitability vary very much. I had prepared that point to make myself on a defensive basis in case it was suggested—and almost anything can be suggested in the House—that it was a vehicle for taxation that had been inadequately used. I had intended to point out many of the facts that have been raised about the varying usage of the machines. For that very reason we felt it necessary to be careful to avoid hardship by an excessive increase.

Naturally, that must be a matter of judgment. My right hon. and learned Friend the Chancellor has taken the view that the extent of the increases are reasonable. I adhere to that view. As I foreshadowed a moment ago, that is by no means the end of the matter. We recognise the force of some of the points that have been made. Plainly, it would not have been practicable to restructure the duty or to extend its scope overnight. It would not have been possible to give full consideration to the various points made here and others that will be made elsewhere.

We have asked the Commissioners of Customs and Excise to review the whole question of machine taxation, and especially the possibility of introducing an ad valorem form of duty with a view to possible changes in next year's Budget. I am anxious to explain that, as in the other matters that I said are under review, it in no sense implies a decision in any direction but genuinely involves a review in which any interested body, whether through Members of Parliament or by other means, is most certainly welcome to contribute by sending his view to the commissioners. It will be considered.

I can say, I hope without any suggestion of falseness, that the debate that has taken place today will undoubtedly provide useful material for the review. The measures that we are putting before the House are necessary for the reasons that I have already outlined, but they do not represent a final view on the structure of taxation on machines.

Mr. Robert Sheldon

I want to check that the review will be published and that time will be allowed for comments and criticism to be made before the Government reach a final decision.

Mr. Brittan

There will be time for comments and discussion before a final decision is reached. That is why I have announced the review now. The intention is that any possible changes will be made in the course of next year's Budget. That is the general time scale. I am not undertaking to publish the outcome of the review. I do not wish to commit myself to that. However, if decisions are taken that involve changes—there is no commitment that there should be change—there will be ample opportunity to discuss them in the course of next year's Budget. There will also be ample time for representations to be made and views to be expressed, however far-reaching they may be.

9 am

Mr. Lawrence Cunliffe (Leigh)

I shall try to speak as rapidly as possible, because I am informed that mutual agreement, conventions and reciprocation have been arrived at and will be observed by the members of the hierarchy. We have covered the broad spectrum of tax and fiscal measures that arises from the motion. I know from personal experience and knowledge of many clubs and associations that the measure will have an adverse effect on many such organisations, which will consider the Government to be imposing serious and savage increases in duty.

I do not want to enter into a fiscal statistical slug-out in discussing how revenue should be apportioned. However, many clubs are dependent entirely upon the massive source of revenue that fruit machines, one-armed bandits and space invaders provide. That applies to many voluntary sporting associations. For example, many cricket associations are training cricketers. They are able to do so because of the funds that they derive from one-armed bandits and fruit machines. The Rugby Union is another classic example. Many of the rugby clubs would never be viable without this source of revenue. They do a worthwhile and creative job.

Some hon. Members have referred to the various charitable institutions that benefit from revenue gained from fruit machines, one-armed bandits and space invaders. I shall give some classic examples from the North-West. The Atherton Labour club in my constituency provides entertainment for 150 disabled people from all parts of the metropolitan area. It does so on a non-political basis. The disabled are brought to the club by bus and they are entertained throughout the evening by various types of artistes, varying from brass bands to cabaret. That is done every Thursday. Conservative friends help at the club, in the volunteer section, to look after the disabled.

There are examples of club associations that provide hospitals with free beds every year. Beds are donated by the various clubs in the area and they are presented to the area health authority. Such activity subsidises State finances to a degree. The State would have to provide the finances if the voluntary service were not forthcoming.

I am afraid that the Government's proposals will have an adverse effect on the examples that I have given of club and association activity. Many of the clubs and associations have had to bear savage rate increases. They have had to try to absorb increased energy costs. The general recession has caused consumer spending to decline within the clubs. We heard that 85 per cent. of bingo players are women. With regard to fruit machines, space invader machines, and so on, we are finding that the ratio is 60 to 40 male-dominated. Therefore, it is a different ball game and a different kettle of fish.

Different ways of trying to find different tax measures to cover the problem generally have been mentioned. Most of the fruit machines operate on a commission basis. The percentage is paid from the takings on the machine. As the licences increase, as is bound to happen, one can lay Chester Cup odds that the clubs and associations will have to bear the brunt of the increase.

We have talked about various manias. We have moved from bingo mania to betting manias. We started with Beatlemania, but more bingo cards are being sold today than the number of Beatles records that were produced.

The Minister referred to alternative sources of revenue, which was interesting. One Conservative Member talked about doubling bob-a-job week to bring in tax revenue, create jobs and produce alternative sources of revenue. The Conservatives have a supernatural instinct for producing fiscal and tax measures that were not dreamt of by any British Government or are unprecedented. That is their business.

Mr. Austin Mitchell

They are desperate.

Mr. Cunliffe

That is right. We saw the hole-in-the-corner tactic tonight when the Minister introduced certain measures that had not been revealed to any hon. Member. such a hole-in-the-corner method and tactic makes a mockery of the debate. We cannot make a rational and sensible judgment of the effects of such a thing. Nevertheless, that is considered to be a fair political tactic. There is no doubt that the majority party is top of the pops in dreaming up such schemes. At the end of the day, working-class people and the ordinary people have to pay out their hard-earned cash for the Government. Dispensations are granted for gambling casinos, on the basis of tourism. I know what is best for the nation. We produce athletes, cricketers, rugby union players, footballers and even orators from our political institutions. That is the best form of investment that we can make.

We have dealt with how we should help people to make up their minds. The nation will know that the promised tax cuts were artificial. Many of the young people and those predominant in the bingo circle voted for such tax cuts, little dreaming that there would be a reverse in a short period. The chickens are now coming home to roost. The Conservative Party is known not only as the party of unemployment but as the arch tax manipulator and the architect of being thoroughly professional in that occupation. I am afraid that on the next occasion the women in the bingo halls and the young people who expected tax cuts and jobs will not forget the Government's policy. [Interruption.]

Mr. Speaker

Order. I have been patient with the hon. Gentleman.

Mr. Cunliffe

The whole wretched affair—the duty being imposed—is a reprisal for a rebellion on the Government Benches. I know that we are not debating derv. However, I find all the measures utterly squalid, second-rate and unbecoming for anyone with honest political integrity. We are prepared to talk for another 20 hours. The capital gains tax lobby rightly engineered our opposition. We support that lobby through and through.

The Parliamentary Secretary to the Treasury (Mr. Michael Jopling)

rose in his place and claimed to move, That the Question be now put.

Question, That the Question be now put, put and agreed to.

Question put accordingly:—

The House divided: Ayes 97, Noes 30.

Division No. 253]	[9.10 am
AYES
Alexander, Richard	Marshall, Michael (Arundel)
Ancram, Michael	Maude, Rt Hon Sir Angus
Baker, Nicholas (N Dorset)	Mawby, Ray
Banks, Robert	Maxwell-Hyslop, Robin
Beaumont-Dark, Anthony	Mellor, David
Benyon, W. (Buckingham)	Miller, Hal (B'grove)
Berry, Hon Anthony	Mills, Iain (Meriden)
Biggs-Davison, John	Moate, Roger
Blackburn, John	Morgan, Geraint
Boscawen, Hon Robert	Neale, Gerrard
Boyson, Dr Rhodes	Neubert, Michael
Braine, Sir Bernard	Newton, Tony
Bright, Graham	Onslow, Cranley
Brinton, Tim	Osborn, John
Brittan, Leon	Page, John (Harrow, West)
Brooke, Hon Peter	Page, Richard (SW Herts)
Brown, Michael(Brigg & Sc'n)	Pattie, Geoffrey
Browne, John (Winchester)	Proctor, K. Harvey
Butcher, John	Rees, Peter (Dover and Deal)
Carlisle, John (Luton West)	Renton, Tim
Carlisle, Kenneth (Lincoln)	Roberts, M. (Cardiff NW)
Clark, Hon A. (Plym'th, S'n)	Roberts, Wyn (Conway)
Clarke, Kenneth (Rushcliffe)	Sainsbury, Hon Timothy
Cope, John	Shaw, Giles (Pudsey)
Cranborne, Viscount	Silvester, Fred
Dover, Denshore	Skeet, T. H. H.
Dunn, Robert (Dartford)	Speed, Keith
Fairgrieve, Russell	Speller, Tony
Faith, Mrs Sheila	Spicer, Jim (West Dorset)
Fell, Anthony	Stainton, Keith
Fenner, Mrs Peggy	Stanbrook, Ivor
Fookes, Miss Janet	Stevens, Martin
Gardiner, George (Reigate)	Stradling Thomas, J.
Griffiths, E.(B'y St. Edm'ds)	Taylor, Teddy (S'end E)
Griffiths, Peter Portsm'th N)	Thomas, Rt Hon Peter
Grist, Ian	Thorne, Neil (Ilford South)
Gummer, John Selwyn	Trippier, David
Hamilton, Hon A.	Viggers, Peter
Hawkins, Paul	Waddington, David
Hawksley, Warren	Wakeham, John
Heddle, John	Watson, John
Henderson, Barry	Wells, Bowen
Jopling, Rt Hon Michael	Wheeler, John
Lang, Ian	Wickenden, Keith
Le Marchant, Spencer	Williams, D.(Montgomery)
Lester, Jim (Beeston)	Wolfson, Mark
Lyell, Nicholas
Macfarlane, Neil	Tellers for the Ayes:
MacGregor, John	Mr. Donald Thompson and
Major, John	Mr. Alastair Goodlad.
Marlow, Tony

NOES
Campbell-Savours, Dale	Foot, Rt Hon Michael
Cocks, Rt Hon M. (B'stol S)	Foulkes, George
Cowans, Harry	George, Bruce
Craigen, J. M.	Golding, John
Cryer, Bob	Hamilton, James (Bothwell)
Cunliffe, Lawrence	Hardy, Peter
Cunningham, Dr J. (W'h'n)	Harrison, Rt Hon Walter
Dixon, Donald	McKay, Allen (Penistone)
English, Michael	Mitchell, Austin (Grimsby)

Morris, Rt Hon C. (O'shaw)	Tinn, James
Morton, George	Wainwright, R.(Colne V)
Powell, Raymond (Ogmore)	Welsh, Michael
Prescott, John	Woolmer, Kenneth
Robertson, George
Robinson, G. (Coventry NW)	Tellers for the Noes:
Sheldon, Rt Hon R.	Mr. Joseph Dean and
Skinner, Dennis	Mr. Frank Haines.

Question accordingly agreed to.

Resolved, That increases shall be made in the rates of gaming machine licence duty chargeable under section 21 of the Betting and Gaming Duties Act 1972 and Part V of the Miscellaneous Transferred Excise Duties Act (Northern Ireland) 1972.