`(1) Schedule 3 to the Betting and Gaming Duties Act 1981 (exemptions from bingo duty) shall have effect subject to the following provision:—
(2) In subsection 2(1) (inserted by Finance Act 1982) there shall be inserted the following paragraph—
"(aa) the said bingo is played as an activity of a non-profit making members' club or society"; or'. — [Mr. Greg Knight.]
§ Brought up, and read the First time.
§ Mr. Greg Knight (Derby, North)
I beg to move, That the clause be read a Second time.
I am sure that it has not escaped your attention, Mr. Deputy Speaker, that this clause has all-party support. Appended to the clause are the names of more hon. Members than are appended to any other new clause. The clause would remove all non-profit-making clubs from the scope of bingo duty in respect of bingo being played as an activity of the club. If the new clause were agreed to, it would cost the Treasury £2.7 million. For that reason, the House will want to know why I urge that the new clause should be approved.
Since 27 September 1982, non-profit-making clubs have been obliged to pay bingo duty in respect of bingo that exceeds certain thresholds. The decision to make clubs liable to duty is not, I understand, a cornerstone of the Government's economic strategy and it does not relate to any central Treasury principle. It was introduced, firstly, as a result of pressure from profit-making organisations that felt that they were facing unfair competition. I do not accept that point.
Secondly, I understand that at that time the then Chancellor of the Exchequer was experiencing some difficulty with Conservative Members who did not accept the Government's proposal to increase the duty on derv. Other ways had to be examined of raising finance. Because of the circumstances in which non-profit-making clubs were brought within the scope of the tax, I hope that my hon. Friend will accept that there was less consultation on this issue than I am sure he would have wished. If the new clause is accepted, non-profit-making clubs will be exempted from bingo duty.
The distinction between profit-making organisations and non-profit-making organisations is that the profit from bingo played in clubs such as Royal British Legion clubs, Conservative clubs and Labour clubs is usually used to finance other activities and does not go into the pockets of owners and shareholders.
In the Financial Times on 17 June there was an article headed:Ladbroke sells Rank its bingo clubs in £67m deal.The article reads:Rank Organisation yesterday become the largest licensed bingo hall operator in the UK with the agreed acquisition of Ladbroke Group's 36 bingo clubs and 42 high street amusement centres in a deal worth L67.5m.Quite rightly, these clubs have to pay tax, and I do not seek in any way to alter their tax liability, but non-profit-making clubs should be exempt. Mr. Deputy Speaker, you represent an area of Doncaster and you know that nonprofit-making clubs in Great Britain provide leisure activities for approximately 10 million people. In addition to providing entertainment, the clubs often sponsor and provide sporting activities.
In my part of Britain, the east midlands, many professional musicians got their first start in the clubs. If a youngster who is learning to play an instrument wants to go on stage and perform before an audience, often the only outlets—the only places which can give him an opportunity to do so — are the working men's clubs, Royal British Legion clubs or Conservative clubs.
237 Boxers like Tony Sibson often receive their first encouragement by way of the help given by non-profit-making clubs. Those clubs sponsor and assist young people and it is the modest bingo profit that is invariably used to help to pay for that sort of activity, rather than lining the pockets of proprietors.
In many areas the facilities in non-profit-making clubs are of social benefit to the communities that they serve. In such places bingo is primarily a fun game, a sort of low-powered gaming. Some people might even say it is a form of no-power gaming. Members do not gamble for high stakes of the sort that we see in the clubs operated for profit, many of which have taken over disused cinemas and other high street premises.
Many hon. Members may ask why this new clause is necessary. They may say that, after all, the present law provides for exemptions where the ticket sales from bingo fall below a certain level. I shall explain to the House why the present exemptions from bingo duty are inadequate and unfair.
At present, non-profit-making members' clubs are required to register with the Customs and Excise when prize money or money collected for the purchase of bingo tickets, whichever is the greater, exceeds £400 in a day or £1,000 in a week. When a club exceeds either of these thresholds it must within the following five days register for bingo duty with the local Customs and Excise office. Duty is then payable at the rate of 10 per cent. of the prize money or ticket money, whichever is the greater, in that week and in the following 12 weeks. Payment of the duty continues until 12 consecutive weeks occur in which the thresholds are not exceeded. At that time the club has a right to be deregistered.
In a normal week the majority of unlicensed clubs—that is, working men's clubs — do not reach the thresholds. Usually it is only in weeks during which a bank holiday occurs and in which, understandably, the number of club functions is greater that the threshold is reached and the club needs to register. The clubs find that, because bank holidays occur in virtually each quarter, many of them reaching the thresholds on perhaps only five, six or seven weeks of the year require to be registered for the whole of the year.
I have a letter dated 10 April from Her Majesty's Customs and Excise. It is addressed to the secretary of the Manningham ward Labour club, Whetley lane, Bradford, west Yorkshire. The letter could equally have been written to a Royal British Legion club, a Conservative club or a Liberal club. In the letter, the senior officer says:Dear Sirs … I am writing in connection with our recent visits and discussions regarding the bingo played in the Club and the liability to Bingo Duty when the small-scale bingo exemption limits are exceeded.Examination of your Bingo Duty Finance Record Book has shown that the small-scale bingo exemption limits were exceeded during weeks ending 30 December 1984, 6 January 1985, 29 December 1985 and 5 January 1986 thus rendering all the bingo played in the Club during those particular weeks, and in each of the twelve succeeding weeks, liable to Bingo Duty.The senior officer goes on to tell the club that it is liable for the sum of £2,183.77.
I draw this matter to the attention of the House to show that the mechanism not only causes problems in terms of record keeping, but is inequitable because in many cases clubs breach the threshold in one week, a week in which there is a bank holiday, and are then obliged to pay bingo duty for the following 12 weeks. If the trigger mechanism 238 operates on every bank holiday, the club may find that it has to be registered all year and has to pay bingo duty during that time when for most of the year the income from bingo falls well below the thresholds.
The other difficulty experienced by non-profit-making clubs is that, unlike the organisations that are making money for shareholders, the non-profit-making clubs are managed by unpaid volunteers and quite often the extra paper work is unduly onerous. Many clubs are finding it difficult to get officers to serve on the committee; that is because of the onerous duties placed upon them by the provisions.
I hope that the House will accept the new clause and will exclude all non-profit-making organisations from the ambit of bingo duty. If my right hon. Friend the Minister feels that he cannot accept the new clause as drafted, I ask him to consider another point. Before 27 September 1982 non-profit-making clubs were exempt from the bingo duty provisions. They were brought within the provisions on that date, as I have said, following pressure from the commercial bingo clubs.
I have looked into the matter and have found that no non-profit-making club was consulted before such clubs were brought within the ambit of bingo duty. I do not entirely blame the Government for that, because at that time the non-profit-making clubs did not have an umbrella organisation by which they could be represented nationally and through which they could let their views be known. That is no longer the case, because in the last couple of years the Committee of Registered Clubs Association was formed specifically to look after the interests of the non-profit-making clubs and especially to make representations about legislation that affects the club movement.
If my right hon. Friend the Chief Secretary cannot accept the new clause today, I hope that he will give an assurance that during the next 12 months, and before next year's Finance Bill, he will meet members of the association, or at least listen to their views. If he gives that assurance, I may consider not pressing the new clause to a Division. But given the difficulties that I have outlined to the House, I hope that my right hon. Friend will at least be prepared to enter into a dialogue with the Committee
§ Mr. Meadowcroft
I rise to underline the point made by the hon. Member for Derby, North (Mr. Knight). This is, indeed, an all-party matter. Sometimes, particularly when we discuss Treasury matters, hon. Members find that they have a collective opponent in the form of Treasury Ministers. We have to gather our strength and concentrate on the arguments that the Treasury may throw up. In this instance, we must point out that the income involved is crucial to the survival of those clubs.
The new clause may seem to involve a small issue, but I am glad that it was selected. It has enabled hon. Members to point out just how crucial non-profit-making members' clubs are to their communities. In many areas, they are vital to the fabric of society. They are one of the few institutions to be run by ordinary working people, for their benefit. It is important to stress that we are not dealing with clubs where people legitimately and deliberately wish to make a profit or with the sort of clubs that the police are often worried about, which just try to get round the licensing laws.
239 We are dealing with clubs that are run by members for the benefit of themselves and that of their local community. It is thus important to discover how best they can be assisted. During a recession, they are particularly important to the fabric of society. However, I doubt whether many clubs are now highly profitable. Of the 25 or so in my constituency, I imagine that very few of them are financially viable. If we could lift even a small burden from them, it might help them and their community to survive.
If the law on charities was not so restrictive, many of those clubs—if not all of them—would probably qualify to be regarded as charitable. Much of the work that they do is akin to being charitable. Only today a letter from the secretary of a club in my constituency raised the problem of one of his members in relation to the DHSS. That is typical of the sort of work carried out by clubs on behalf of their members.
I am not a great bingo lover, but as a politician I have learned over the years that it is fatal to stop bingo going on in a local club. In this instance, I doubt whether the loss of income to the Treasury will break the Government, but that income makes a difference between survival and closure to some of those clubs. Therefore, I hope that the Chief Secretary understands the problems faced by many of our clubs, and that he will respond sympathetically to the new clause.
§ Mr. Terry Davis
Hon. Members on both sides of the House—or perhaps I should describe them as all-party Members — have supported this new clause, and I listened to the speeches made with great care and interest. In fact, I have a particular interest to declare in that, no doubt like the Chief Secretary, I am a member of several clubs in my constituency. I certainly endorse the remarks made by the hon. Members for Derby, North (Mr. Knight) and for Leeds, West (Mr. Meadowcroft) about the good work done by non-profit-making clubs.
I have some sympathy with non-profit-making members' clubs and with the problems that they encounter in the present economic climate. However, I am not sure that I can support the abolition of the duty on bingo in clubs. I was impressed by the arguments of the hon. Member for Derby, North, who said that the measure would cost only £2.7 million. I can see that that is a small amount of revenue for the Treasury to lose. But I am concerned about the precedents that the new clause would create. Consequently, I await with interest the Chief Secretary's reply.
I accept what the hon. Member for Derby, North said about the problems of registration. It seems grossly unfair that clubs should be required to register for 12 weeks after every bank holiday and so are always subject to that tax. But perhaps we should be pressing the Treasury to do something about the problem of registration rather than pressing for the abolition of bingo duty in respect of nonprofit-making members' clubs. However, that is a matter for the consideration of those hon. Members who are most concerned about this issue on behalf of the all-party group.
On behalf of the Opposition, I express some sympathy with the pleas that have been made, but I am not prepared to recommend that my right hon. and hon. Friends go into the Lobby if the new clause is pressed to a Division—at least not until I have heard the Chief Secretary's views.
§ The Chief Secretary to the Treasury (Mr. John MacGregor)
I know of the considerable interest that has been shown in this subject by my hon. Friend the Member for Derby, North (Mr. Knight). He has demonstrated it not only by pressing Treasury Ministers in correspondence on the matter, but by raising the issue in the House tonight. I entirely support him in his commendations of the worthy work done, and social contribution made, by the non-profit-making clubs. I also fully understand the point made by the hon. Member for Leeds, West (Mr. Meadowcroft) about those clubs being crucial to the fabric of society in some parts of the country. Indeed, the hon. Member for Birmingham, Hodge Hill (Mr. Davis) made the same point. Thus, there is all-party agreement on that.
The hon. Member for Hodge Hill said that he would wait until he had heard what I had to say before deciding what action to take. That is the first time that he has invited me to make up his mind for him, and I hope that he will do so again. As my hon. Friend the Member for Derby, North rightly said, before September 1982 any club promoting bingo in accordance with sections 40 or 41 of the Gaming Act 1968 was automatically exempt from bingo duty. Following complaints from commercial clubs that they were facing unfair competition from exempt social clubs, the whole basis of exemption was changed in the Finance Act 1982, and then modified in the Finance Acts 1983 and 1984 so that there is now exemption for clubs where there is a £400 daily limit and a £1,000 weekly limit for stakes as well as prize values.
My hon. Friend the Member for Derby, North advocates removing all non-profit-making clubs from the ambit of bingo duty. If exemption was given to all members' clubs or societies of this sort, the commercial promoters of bingo would again face serious competition from the clubs. The number of commercial clubs has declined year after year, and if members' clubs did not have to pay duty on similar turnovers—I shall come to that point in a moment — that decline would be accelerated.
It is also possible that members' clubs, which may have restricted their playing of bingo in order to avoid breaking the exemption limits, would increase the amount of bingo played. Some hon. Members might argue that that would be a very good thing for the clubs. I can see that argument, but it would also increase the competition with commercial clubs.
Some hon. Members may know that in its pre-Budget representations the Bingo Association of Great Britain suggested that the exemption for members' clubs should be further restricted, as it still regards those clubs as representing competing interests. The Government have recently acknowledged the industry's difficulties by facilitating the introduction of a national bingo game. The problem is that the existing exemption limits are reasonably generous. In bringing non-profit-making members' clubs within the scope of the duty, we are talking about regular, high turnover bingo at what is really a commercial rate. I understand that the stake figures for quite a number of working men's clubs go up to £1,700 or £1,800 a week. I think that the accurate, up-to-date figure is 363 for the number of non-exempt, non-profit-making clubs. That is a very small proportion of all the clubs and societies, but in comparison with the commercial operators it is quite large. There are 513 commercial operators at present, involving some 900 outlets altogether. On the assumption that the clubs and societies 241 have one outlet each, they represent nearly one third of the total number of commercial outlets, and so there is a point to be made about commercial competition.
Commercial outlets have been under heavy pressure. Nearly 300 outlets have disappeared in the past four years. There is a question of balance. I would like to give the last figure so that all the figures have been given to the House. The cost of revenue lost would be some £3 million. That is a similar figure to that mentioned by my hon. Friend the Member for Derby, North.
A balance must be achieved. The changes made in 1982 and 1983 were intended to ensure fair competition between the members' clubs with a comparatively high turnover relative to the bingo promoters and the commercial bingo promoters. I am not sure that the case has been made to go back on the decisions that were taken then. There would be strong representations from those who make a profit out of bingo and who also provide a leisure facility in the community.
I would like to consider the specific points raised by my hon. Friend the Member for Derby, North. I have stated the reasons why we should not accept his new clause, which would sweep away all the requirements for bingo duty from clubs and societies. My hon. Friend made two specific points. First, he said that it is the mechanism which causes the problem. The hon. Member for Hodge Hill followed that point. My hon. Friend said that the mechanism caused problems in connection with record-keeping. I understand the problem of keeping paperwork for volunteers. However, any well-ordered club will have to carry out a considerable amount of record-keeping because the Customs and Excise, legitimately, in fulfilling Parliament's obligations, will go to clubs and societies from time to time and check whether they are above the exemption limits. A certain amount of paper-work would therefore have to be carried out.
My hon. Friend the Member for Derby, North made a second point concerning the difficulty about the way in which the exemption limit is established. He stated that there are specific parts of the year — for example, holiday periods — when some clubs suddenly find themselves above the limit and having an exceptional turnover for limited periods in the year. Under the present system, the clubs will have to register and pay duty for three months thereafter.
That provision was introduced because it would not have been practicable to treat each day or week separately. The new provisions were aimed at giving clubs the choice. It was reasonable to assume that most clubs would make the choice either to have bingo on a sufficiently substantial scale to be above the exemption limits for most parts of the year and accept that they would have to pay bingo duty, or they would wish to remain exempt throughout the year. In the latter case, when clubs ran into the specific problem—and there is evidence that many clubs do this—of the kind identified by my hon. Friend the Member for Derby, North of a high turnover in Christmas week or whenever, they could deal with that by reducing stakes in the Christmas period to keep below exemption limits. I am told that the number of clubs that are non-exempt has remained fairly static. That suggests that many clubs have been doing that.
Nevertheless, I accept that that does not meet the point. I stress that because it might be useful for some clubs to know that that is one way out of the difficulty. However, I can make no commitment to my hon. Friend the Member 242 for Derby, North beyond saying that I would consider his point and see whether there is a way of dealing with it to meet the problem of the very high turnover in specific parts of the year. I do not make a commitment to bring some measure on that point back to the House next year. I would like to consider it and I am grateful to my hon. Friend for raising the matter in the House.
My hon. Friend's other main point related to the umbrella organisation — the Committee of Registered Clubs Association. I would obviously be willing to receive representations about that. Whether we need to have a meeting is a matter I must leave open. These days I lead a hectic life and if necessary one of my hon. Friends may have to deal with that. I cannot make a commitment to regular meetings but I would be willing to receive representations. If we considered that a meeting would be sensible, we would have one.
I especially welcome the idea of an umbrella organisation. I would be happy for my Department and for the Inland Revenue to engage in discussions with such an organisation. In the past there have been difficulties in explaining to many smaller clubs the position on bingo duty and difficulty in publicising that position. There have been difficulties in dealing with arrears of duty when a club has strayed over the limits.
There is merit in having a body which represents, if not all clubs—as that would be difficult to achieve—many more than previously. I welcome my hon. Friend's point about the umbrella organisation and I would certainly welcome the opportunity to receive representations arid consider certain points. I hope that I have explained why the new clause goes further than I would be prepared to recommend to the House that we should go tonight.
§ Mr. Terry Davis
I must thank the Chief Secretary for his comments as he has helped to make up my mind. He has been very forthcoming to his hon. Friend the Member for Derby, North (Mr. Knight) in agreeing to receive representations and to meet representatives of clubs. The main point appears to be the requirement for registration based on a limited experience of high turnover. There are several ways in which that could be tackled. Instead of being required to register if turnover exceeds a limit in one week, the limit should have to be exceeded for three consecutive weeks or perhaps for a certain number of weeks in a year, which would take care of the peaks. There are ways around that problem. I am grateful to the Chief Secretary for agreeing to receive representations and perhaps we can return to this point next year. In the meantime, I can assure the hon. Member for Derby, North that if the Chief Secretary does not have time to meet representations from clubs the Labour party Front Bench would be delighted to do so.
§ Mr. MacGregor
Long may the Labour party Front Bench have plenty of time on their hands to do that.
The hon. Member for Birmingham, Hodge Hill (Mr. Davis) has made a reasonable point. We ought to see whether the mechanism is causing unnecessary problems and if there is a way around that. On that basis, I hope that my hon. Friend the hon. Member for Derby, North (Mr. Knight) will understand why I cannot accept the new clause and I hope that he will be prepared to withdraw it.
§ Mr. Knight
I am grateful for the wide measure of support that I have received on this issue from both sides 243 of the House. Unfortunately, many of the hon. Members who supported the clause were unable to be present this evening. I do not know whether they are out playing bingo somewhere, but I have received their apologies for absence.
I am also grateful for the comments of the hon. Member for Birmingham, Hodge Hill (Mr. Davis). He is correct to say that it is primarily the mechanism which is causing many of the clubs difficulty. I was sorry to hear that the hon. Member for Leeds, West (Mr. Meadowcroft) does not like bingo. However, as the House will know, the hon. Member for Leeds, West is a musician. He must therefore appreciate that bingo in clubs has given employment to many musicians because without bingo in many cases there would be no way of funding entertainment in clubs.
I am extremely grateful to my right hon. Friend the Chief Secretary to the Treasury. I do not necessarily agree with his comments on why he cannot accept the clause. I still believe that there is some merit in the clause. In view of my right hon. Friend's generous comments, however, and the welcome sign that he would be prepared to receive representations and, if necessary, to attend a meeting, I am sure that all concerned with the clubs movement will warmly welcome his comments. In the spirit of my right hon. Friend's gesture, I beg to ask leave to withdraw the motion.
§ Motion and clause, by leave, withdrawn.