§ The Paymaster General (Mr. David Heathcoat-Amory)I beg to move amendment No. 80, in page 164, line 24, leave out from 'machines); to end of line 26 and insert
'for paragraph (b) there shall be substituted the following paragraphs—(b) a five-penny machine which is a prize machine without being a gaming machine or which (if it is a gaming machine) is a small-prize machine, or(c) a thirty-five-penny machine which is not a prize machine."'.
§ Madam Deputy SpeakerWith this, it will be convenient to discuss also the following: Government amendments Nos. 23 to 26.
Amendment No. 90, in page 166, line 21, at end insert
'after paragraph (a)—(d) there shall be inserted—(e) the machine is one that can only be played by the insertion into the machine of a coin or coins of a value exceeding 50 pence.".'.Government amendments Nos. 27 to 32, 81 and 34.
§ Mr. Heathcoat-AmoryMy right hon. and learned Friend the Chancellor announced, in his Budget speech, that he wanted to widen the coverage of gaming duty to cover amusement machines such as arcade video games. That is the purpose of clause 13 and schedule 3. The schedule is due to come into effect on 1 November 1995 for machines made available for play on or after that date.
Gaming machines have long been liable to duty, but the tax base for gaming machine licence duty was being eroded by competition from machines outside the scope of the existing duty. The amendments fulfil a pledge given in Committee that the Government would make changes to the provisions for the introduction of amusement machine licence duty.
The package is designed to meet the industry's concerns that the extension of the duty net captured too many machines that could not afford to bear the licence cost, even at the rate of £250 a year.
We listened carefully to the industry and we are grateful for the help it gave in framing the amendment in terms that it finds more acceptable. I am also grateful to my hon. Friends, particularly the hon. Members for Blackpool, South (Mr. Hawkins), who is in his place, and for Dover (Mr. Shaw), who were vigilant to ensure that the concerns of the industry were brought to my attention.
1576 We have already introduced amendments in Committee to give effect to the seasonal concession for all machines, including those newly brought within the scope of the tax.
The amendments, first, limit to the lowest rate—£250—all machines newly brought within the scope of the tax. That meets a concern of the industry that some of the new machines would otherwise be taxed at the higher gaming machine rates. The £250 rate for the new machines is less than half the rate that applies to the lowest category of gaming machines.
Secondly, the amendments define video machines according to the number of screens rather than to the number of playing positions, and this again meets a concern of the industry that a machine with two playing positions for one screen could be taxed at twice the normal rate. That will not be the case.
Thirdly, the amendments exempt from duty all new machines except quiz machines that can be played for an amount not exceeding 35p. That goes further than the 20p exception mentioned in Standing Committee. For instance, it means that machines that give three plays for £1 will be exempt. That will exclude many pinball machines.
Fourthly, we will limit the duty to video machines, quiz machines and pinball machines. That responds to a concern that, if we were to extend it wider than that, many arcades, particularly those in seaside resorts, could not afford to keep in play a number of machines which appeal to children. Therefore, a typical family entertainment centre would become a centre almost exclusively for adults.
Fifthly, the trade has requested the reintroduction of special licences, and I am willing to concede that. The envisaged reintroduced special licences would enable operators to move machines more freely between sites without incurring additional licensing costs. That is particularly important for machines that are marginal and that could be given a boost by transferring them from one site, such as a pub, to another site in order to cater for changes in demand.
That is a complex measure. We will need to discuss it with the trade and give it legislative effect in the next Budget. Meanwhile, I assure the House that the facility will be available from the introduction of the new duty on 1 November 1995 by extra-statutory concession. I think that the House will agree that we have gone a very long way towards meeting the industry's concerns and I commend all the amendments to the House.
§ Ms Dawn Primarolo (Bristol, South)Although I welcome the Government's amendments and their about-face on the issue, it is a shame that the Paymaster General did not have the good grace to acknowledge the hard work and the lobbying by hon. Members on both sides of the House in relation to it or the debate about it in Committee.
The Government proposed to introduce a new tax on amusement machines which hon. Members on both sides of the House lobbied against extensively. The trade association, which represents some 80 per cent. of the amusement machine industry, worked hard to educate the Government as to the folly of their original proposals. It pointed out that, in their rush to find more and more indirect taxes in order to try to fulfil their hollow promise of direct tax cuts, the Government would be taxing an industry to such an extent that City accountants Pannell, 1577 Kerr and Forster estimated that almost 3,000 jobs would be lost as a result of the original proposals and that they would cost the Government almost £50 million.
The proposals for a new tax on machines came on top of a 43 per cent. increase on gaming machine licence duty in the past two years. There is a good lesson for the Government to learn from this sorry episode: it is always better to consult and to listen to the industry before drafting legislation.
The Government have now made some very real concessions in the regime as proposed originally, such as exempting from duty videos and pinball machines costing 35p or less to play, and reintroducing the special licences that the Government originally proposed to abolish. That is a triumph not only for the industry but for the good sense that has prevailed among the Opposition, if not on the Government Benches. We are glad that progress has been made.
Nevertheless, the Government will have to monitor closely the impact of the new tax regime on the industry. I hope that they will give a commitment in stronger terms than the Paymaster General used to consult widely with the industry. There is no point in taxing an industry until it goes out of business, and the Government came very close to achieving that in this instance. We welcome the amendments, but I am sure that we will have to return to the issue again in later Finance Bills.
§ Sir Jerry Wiggin (Weston-super-Mare)Before I proceed, I should declare an interest as I am an adviser to the British Holiday and Home Parks Association, a number of whose members have amusement machines installed on their sites.
I rarely agree with the hon. Member for Bristol, South (Ms Primarolo), but on this occasion I believe that she made an extremely valid point about new taxes. Time after time, without ever learning the lessons from previous occasions, the Government introduce a new tax without consultation, without thought and frequently without any depth of knowledge of the industry concerned. It is then swiftly revealed that the effects of the tax are counter-productive and may lead to unemployment. In this case, far from raising revenue, it would have cost the Government money if certain alterations had not been made.
I commend to my hon. Friend the Paymaster General a study of the system which I understand prevails in America. A select committee of Congress, or its equivalent, anticipates a tax proposal not in quantum, but in its application, target and how it will be carried out for at least a year before it is introduced. That gives everyone who has an interest or expertise in the area the opportunity to set the matter straight. Therefore, when it is finally introduced, the legislation is clear, easily understood and has a beneficial effect.
§ Sir John Gorst (Hendon, North)Like my hon. Friend, I must declare an interest as I am an adviser to the industry. I remind him that when amusement licence duty was first introduced 26 years ago or more—by a Labour Government—the same thing happened. Roy Jenkins introduced it at a swingeingly high level which had to be slashed to meet the industry's ability to pay. As my hon. Friend says, it happens time and again under Government 1578 after Government. I hope that he is correct in urging the Government to consult any industry before taxing it in future.
§ Sir Jerry WigginI am grateful to my hon. Friend for reinforcing my point. I do not refer just to this tax; it is a wide point which I hope that the Government wil! take seriously.
There is some evidence of a welcome change and of new thinking within the Treasury. Perhaps my hon. Friend the Paymaster General will go down in history as one who made a mark on our legislative procedures by introducing a different way of tackling the taxation issue. I thank him for taking immensely seriously the representations from many of my constituents in Weston-super-Mare. I know that amusement arcade operators in Burnham-on-Sea in his constituency expressed the same opinions. In responding to them, I believe that we have arrived at a much better arrangement. The fact that the British Amusement Catering and Trades Association has accepted the changes is, I think, adequate confirmation that the present proposal is much more sound.
I am sorry that, because of the shenanigans of the Whips and the misfortune of having an early night, the motion on new clause 18, which would have allowed us to debate the matter, was not moved yesterday. The new clause proposed the exemption of caravan and mobile home parks from the tax on the ground that the sorts of entertainment machines provided on site to amuse the inhabitants of such parks during the British summer were not main revenue earners, but simply amusements to occupy people. The machines will have to be removed because the revenue from them is so small that it is not worth paying the tax.
All caravan and mobile home parks have to be registered with and licensed by the local authority; therefore, there was no difficulty in definition. The Government clearly were not going to smile on the new clause, but I hope that they will, however, do their sums, as the Customs and Excise goes about its duties, and work out that the cost of collecting from and checking those many remote sites will prove a negative operation. The revenue for the whole tax is minuscule. Indeed, I would question whether the total addition to the revenue has been worth the anguish that it has caused to a good many people.
I know that time presses, but I hope that it will be in order if I thank my hon. Friend the Paymaster General once again for the amendments, which will be strongly supported in seaside towns and in the amusement areas of many of our tourist attractions. Ministers quite rightly on the one hand make a point about the importance of tourism, but then the dead hand of the Treasury manages to intervene and tax it. The two are not compatible. My hon. Friend has been going down the right course with the amendments.
§ Mrs. Margaret Ewing (Moray)Although I welcome amendment No. 80, I shall address myself to amendment No. 90, which stands in my name and that of the hon. Member for Meirionnydd Nant Conwy (Mr. Llwyd).
Like other right hon. and hon. Members, I have received extensive briefings from BACTA on this issue, so I do not intend to rehearse the arguments that have already been propounded by the hon. Member for Bristol, South (Ms Primarolo), from the Labour Front Bench. It is worth reminding the House, however, that BACTA 1579 contributed some £375 million to the Exchequer in 1994 in VAT and gaming machine licence duty. It is, therefore, an organisation that cannot be ignored. All of us have welcomed the way in which it has conducted its campaign in the context of the Finance Bill.
I have also received considerable representations from representatives of the licensed trade association in my constituency, which, of course, is also an area where tourism is of great significance. Whatever one's moral opinion of the various machines that operate in our tourist resorts, one must recognise that they play a significant part in ensuring employment and opportunities for people who wish to reside permanently in those areas.
Amendment No. 90 was tabled by my hon. Friends to establish the effects of the Government's amendments. Although BACTA is pleased with the changes which give some genuine relief to the industry, we must recognise that it is a new tax and that it was accompanied by a second substantial increase in gaming machine licence duty in two years, neither of which can be passed on. I put it to Ministers on the Treasury Bench that there should be a requirement to look at the possibility of having a 50p exemption, as I think that it follows Government thinking on the issue. A 50p exemption would give genuine relief to the low-earning machines that would otherwise be removed from site. We have to think of the small tourist areas—the villages, caravan sites, and small localities—where the machines are one of the attractions for people who come to the area. I also believe that a 50p exemption would catch some of the higher-earning machines and reduce amusement machine licence duty takes to an insignificant level. That is a matter that must be taken on board. I wonder why the Government have not considered extending the exemption that currently exists to skill with prizes machines, because there does not seem to be a particular difficulty in that. I do not know why they have drawn the line between the various machines that might be played.
I also ask the Paymaster General to make it clear to us whether he has worked out how many machines are currently on a 20p or 50p payment system, because there does not appear to have been a real Government assessment of that issue. We need to know the implications for tax take and assessment. Surely we have the right to know precisely what the Government are talking about.
The Paymaster General referred earlier to the fact that he would continue consultations with BACTA and other interested organisations, which, I assume, will include representatives of the tourism industry. Once he has completed those consultations, how does he intend to bring back his recommendations to the House? Will it be through statutory instrument, or does he intend to introduce further primary legislation? Is it something that we can anticipate in the Budget in November this year? It is extremely important to know the answer, because the people who have written to hon. Members, on both sides of the House, want to know how the matter will be progressed. I should be most grateful if the Paymaster General would announce what procedures he intends to follow.
§ Mr. Nick Hawkins (Blackpool, South)I wish to add briefly to the comments that have already been made and to add to them my thanks and those of my other hon.
1580 Friends who have been heavily involved in discussions with my hon. Friend the Paymaster General. I thank my hon. Friend and his colleagues on the Treasury Bench for their great courtesy and for the time and trouble that they have taken in welcoming the delegations and the various submissions that have been made.
I pay particular tribute to the leadership in the campaign and to my hon. Friend the Member for Hendon, North (Sir J. Gorst), who is in his place, and who has always fought the industry's cause strongly. Representing as I do the southern half of the world's leading tourist resort, it is no surprise that I pay tribute to him and to other hon. Friends, including my hon. Friends the Members for Weston-super-Mare (Sir J. Wiggin), for Hastings and Rye (Mrs. Lait)—who was extremely assiduous in supporting all the work that we did—and for Dover (Mr. Shaw), whom my hon. Friend the Paymaster General mentioned in his opening remarks.
Both BACTA and BALPPA—the British Association of Leisure Parks, Piers and Attractions—have been extremely active in making their case, supported by many smaller companies, even those which are not members of those leading organisations, and by individual employees. The size of my file on the matter well exceeds that on any other issue that I have had to take up in my three years in the House. It has been an extremely effective campaign, and I very much welcome the fact that the Government have listened. Before the hon. Member for Bristol, South (Ms Primarolo) is too confident in claiming credit for the Opposition, I should remind her that the day before the matter came before the Committee, of which she and I were members, she was asked by BACTA—the main lobbying organisation—not to press the Labour amendments to a vote. She told BACTA that she would not, but Opposition Members thought that they saw a short-term electoral opportunity—
§ Ms PrimaroloWill the hon. Gentleman give way?
§ Mr. HawkinsWhen I finish my point, of course I shall give way to the hon. Lady.
Having promised the lobbying organisation that the Labour party would not press the matter to a vote, the hon. Lady thought that she saw a voting opportunity to defeat the Government and broke her promise.
§ Ms PrimaroloThe hon. Gentleman has misled the House, and I shall produce the evidence for him in private. I hope that he will then come back to the House to correct the record. What he has said is not true.
§ Mr. HawkinsI am happy to welcome any submissions that the hon. Lady may make to me, but I should tell her that what I just said, and I hope that I was not misleading the House, came to me directly within five minutes of it happening from those—
§ Madam Deputy SpeakerOrder. I am concerned tonight only with the substance of the amendments before us. I do not want to hear a potted history of what did or did not happen.
§ Mr. HawkinsI am grateful, Madam Deputy Speaker. Let me end by thanking my hon. Friend the Paymaster General once again for his common sense and courtesy.
§ Mr. Brian Wilson (Cunninghame, North)At one point during Conservative Members' speeches, I thought that we were attending a consultants' convention. I have no interest to declare, other than a constituency interest.
1581 I, too, welcome the amendment. I was lobbied by arcade operators in my constituency, particularly Mr. Billy Cullis, who has arcades in Saltcoats, Largs and elsewhere in south-west Scotland. It is a pity that BACTA was required to line Rodin's with pinball machines to bring home a point that should have been obvious from the start. As has been pointed out by hon. Members on both sides of the House—particulary my hon. Friend the Member for Bristol, South (Ms Primarolo)—if there had been some consultation and cost-benefit analysis before the introduction of the original proposal, it would never have reached the stage that it reached.
7 pm
The proposal would have caused a loss of jobs in the industry, which would have increased the net burden on the state. It would also have led to the removal of machines that give innocent non-gambling pleasure to children in particular, softening the impact of arcades. If those machines had been taken away, we should have been left with rows of one-armed bandits—which would have been rather an odd aim even for a Government who are currently devoted to the promotion of gambling.
We welcome the changes that have been made, and I am glad that my constituents' interests have been safeguarded by my hon. Friend the Member for Bristol, South and other Opposition Members. The attempt by the hon. Member for Blackpool, South (Mr. Hawkins) to make a petty party point was pretty pathetic; let us not forget that we would not be discussing the proposal at all had it not been originally made by the Government of which he is a temporary supporter.
§ Mr. Elfyn Llwyd (Meirionnydd Nant Conwy)I support what has been said by the hon. Members for Cunninghame, North (Mr. Wilson) and for Moray (Mrs. Ewing). I was pleased to add my name to amendment No. 90.
The Government have gone some way towards meeting our demands, and I am grateful for that. The industry is very important to my constituency: in Barmouth, for instance, I have been lobbied persistently. I agree with the hon. Member for Cunninghame, North: without the good sense of those who lobbied, the changes would not have been made. The Government should have considered the matter in more depth before drafting their original proposals.
The hon. Member for Weston-super-Mare (Sir J. Wiggin) spoke of the anxiety caused to the industry by those initial proposals. They were draconian, and would have led to many job losses. I therefore give the Government amendment a guarded welcome, although I should have preferred amendment No. 90 to have been accepted. I hope that the Government will not make an even worse mess of things in the next Finance Bill. My speech may sound grudging, but I am nevertheless grateful for small mercies.
§ Mr. Peter Griffiths (Portsmouth, North)Let me join other hon. Members on both sides of the House in thanking my hon. Friend the Paymaster General for his flexible approach. I recall the first occasion on which Conservative Members visited him to discuss the matter: he was amazed to find his office filled to overflowing with Members of Parliament who had come to represent the views of operators of amusement arcade machines in holiday constituencies and elsewhere.
1582 Following the amendments, the Government's proposals are much more flexible. The hon. Member for Cunninghame, North (Mr. Wilson) has already pointed out that we have now extended the gap between machines intended purely for amusement and pleasure and those based on an element of gambling and gaming. The difficulties probably arose because the two types of machine were muddled when the original proposals were made.
I thank my hon. Friend the Paymaster General for what he has done, but we should also pay tribute to the way in which the industry has lobbied us. Many hon. Members have referred to that, and have also named specific individuals. Like those in traditional fairs, many operators of amusement arcades are marvellous characters, and it is a pleasure to be lobbied by them. That is not always the case when the House is heavily lobbied. We all enjoyed our contacts with representatives of the amusement business, and with those who operate the small machines.
I am particularly grateful for the exclusion of such machines as the traditional crane, which I used to play many years ago when I was a child. It really represents the spirit of the seaside, and, given the weather in this country, parents welcome it.
My hon. Friend the Paymaster General can take considerable credit for the way in which the matter has been handled. I think that the industry feels a certain satisfaction with Parliament's response to its genuine concerns.
§ Mr. Heathcoat-AmoryI am grateful for the general acceptance that the extension of the tax has had a happy outcome. I am particularly grateful for what was said by my hon. Friends the Members for Portsmouth, North (Mr. Griffiths) and for Blackpool, South (Mr. Hawkins), who were closely involved in the discussions that took place.
Let me tell my hon. Friend the Member for Portsmouth, North that I never intended to damage the industry, or drive out of business people who add to the richness and gaiety of our national life. We have all experienced the valuable family entertainment that is provided in our constituencies. There are also expensive machines that cater for the more adult player: those are not gaming machines, but they cost a good deal nevertheless. We intended to shift the burden to broader shoulders as far as possible, and to make things easier for seaside arcades and operators who may have only a few machines.
I understand the point made by my hon. Friend the Member for Weston-super-Mare (Sir J. Wiggin) about seasonal caravan parks, which often have only a few machines. It would be sad if those operators felt that they could not continue. I think that my hon. Friend will agree, however, that the seasonal licence greatly assists caravan park owners, who can obtain a six-month licence for the summer months and operate the machines for eight months: effectively, they are given two months free of charge. The exemption for any machine costing less than 35p a play automatically excludes many smaller machines catering for holidaymakers.
The hon. Member for Bristol, South (Ms Primarolo) issued a number of strictures about the need to consult. I take it from what she said that Labour, if it ever gained power, would always consult on any tax changes. Perhaps our successors, who may one day witness that phenomenon, will remember the pledge.
1583 The hon. Member for Moray (Mrs. Ewing) asked me about skill with prizes machines, sometimes called quiz machines. Why were they included? The answer is that they can give the player up to £10 in prizes. I remind the hon. Lady that they will be taxed at only £250 a year, whereas comparable gaming machines that can give out prizes and cash amounting to only up to £6 are already taxed at £535 per annum. I think that she will agree that it is fair to include the quiz machines in the tax.
The hon. Lady asked me about the legislative vehicles for those changes. I confirm to her that all the changes are in the Bill, with the exception of the special licences that we shall introduce. Because of their complexity, they cannot be drafted in time for the Bill. They will be in the next Finance Bill. I make it clear that an extra-statutory concession will ensure that the benefits, or their equivalent, will be available from 1 November until the date when the next Finance Bill comes into law. I hope that hon. Members on both sides of the House will agree that the tax is right and proper and that the House will give the amendments its consent.
§ Amendment agreed to.
§ Amendments made: No. 23, in page 164, line 30, leave out from beginning to end of line 42.
§ No. 24, in page 165, leave out lines 14 to 18 and insert—
(1) | (2) | (3) | (4) |
'Period (in months) for which licence granted | Machines that are not gaming machines | Gaming machines that are small-prize machines or are five-penny machines without being small-prize machines | Other machines' |
§ No. 25, in page 166, line 15, leave out 'and'.
No. 26, in page 166, line 21, at end insert 'and
(e) the machine is a gaming machine, a video machine or a pinball machine.'.
No. 27, in page 166, line 22, leave out 'An amusement machine' and insert
'A machine constructed or adapted for the playing of a game'.
No. 28, in page 166, leave out lines 35 to 44 and insert—
'(1B) A machine constructed or adapted for the playing of a game is a video machine for the purposes of this Act if—
- (a) a micro-processor is used to control some or all of the machine's functions; and
- (b) the playing of the game involves information or images being communicated or displayed to the player or players by means of any description of screen, other than one consisting only in a blank surface onto which light is projected.
(1C) For the purposes of this Act an amusement machine is a prize machine unless it is constructed or adapted so that a person playing it once and successfully either receives nothing or receives only—
- (a) an opportunity, afforded by the automatic action of the machine, to play again (once or more often) without paying, or
- (b) a prize, determined by the automatic action of the machine and consisting in either—
- (i) money of an amount not exceeding the sum payable to play the machine once, or
- (ii) a token which is, or two or more tokens which in the aggregate are, exchangeable for money of an amount not exceeding that sum.".'.
'for "a gaming" there shall be substituted "an amusement"'and insert
'for "a gaming machine" there shall be substituted "a machine of any description".'.
No. 30, in page 166, line 47, leave out from beginning to end of line 7 on page 167 and insert—
'(3) For subsections (5) to (9) of that section there shall be substituted the following subsections—
(5) For the purposes of sections 21 to 24 above a machine (the actual machine) in relation to which the number determined in accordance with subsection (5A) below is more than one shall be treated (instead of as one machine) as if it were a number of machines (accountable machines) equal to the number so determined.
(5A) That number is—
- (a) except where paragraph (b) below applies, the number of individual playing positions provided on the machine for persons to play simultaneously (whether or not while participating in the same game); and
- (b) where—
- (i) that machine is a video machine but not a gaming machine, and
- (ii) the number of such playing positions is more than the number of different screens used for the communication or display of information or images to any person or persons playing a game by means of the machine,
- the number of such screens.
(6) Subsection (5) above does not apply in the case of any machine which is an excepted machine for the purposes of section 21 above or in the case of a pinball machine.
(7) Any question whether the accountable machines are, or are not, machines falling within any of the following descriptions, that is to say—No. 31, in page 167, line 7, at end insert—shall be determined according to whether or not the actual machine is a machine of that description, with the accountable machines being taken to be machines of the same description as the actual machine.".'.
- (a) gaming machines,
- (b) prize machines,
- (c) small-prize machines, or
- (d) five-penny machines,
'. After section 25 there shall be inserted the following section—
"Power to modify definition of 'amusement machine'
25A.—(1) The Treasury may by order modify the provisions of section 25 above—
- (a) by adding to the machines for the time being specified in subsection (1)(e) of that section any description of machines which it appears to them, having regard to the use to which the machines are put, to be appropriate for the protection of the revenue so to add to those machines; or
- (b) by deleting any description of machines for the time being so specified.
(2) An order under this section may make such incidental, consequential or transitional provision as the Treasury think fit, including provision modifying section 21 or section 25(5A) above for the purpose of—
- (a) specifying the circumstances (if any) in which a machine added to section 25(1)(e) above is to be an excepted machine for the purposes of section 21 above; or
- (b) determining the number which, in the case of a machine so added, is to be taken into account for the purposes of section 25(5) above.".'.
No. 81, in page 167, line 16, at end insert—
'(2) In subsection (2) of that section—
- (a) after the definition of "United Kingdom" there shall be inserted the following definitions—
'video machine' has the meaning given by section 25(1B) above;
'prize machine' has the meaning given by section 25(1C) above;and
(b) after the definition of a "five-penny machine" there shall be inserted the following definition—
'thirty-five-penny machine' means an amusement machine which can only be played by the insertion into the machine of coins of an aggregate denomination not exceeding 35p;".
(3) After subsection (2) of that section there shall be inserted the following subsection—
(2A) References in sections 21 to 25 above and in this section and Schedule 4 to this Act to a game, in relation to any machine, include references to a game in the nature of a quiz or puzzle and to a game which is played solely by way of a pastime or against the machine, as well as one played wholly or partly against one or more contemporaneous or previous players.".'.
No. 34, in page 167, line 19, at end insert—
' In section 32(3) (orders subject to affirmative procedure), for "or 14(3)" there shall be substituted "14(3) or 25A",'.—[Mr. Wells.]