HL Deb 15 February 1990 vol 515 cc1502-8

5.40 p.m.

Lord Allen of Abbeydale

My Lords, I beg to move that this Bill be now read a second time.

I should begin my speech by saying that I am still a director of a leisure company but that there is no question of any financial interest arising. Indeed, the main purpose of the Bill is to tighten up the control of the Gaming Board over the operation of casinos. In the main it deals with issues which were under consideration when I was chairman of that board and which have now, at last, come to fruition.

When Parliament legalised casino gaming in this country in 1960 it unfortunately provided no effective machinery of control. Although it is difficult to remember it now, there were at that time over 1,000 casinos in this country, with some very strange procedures for relieving the customer of his money. I refer to such practices as treble zeros on the roulette tables. There were also alarming indications of criminal undesirables moving into the area.

The Gaming Act 1968 provided drastic remedies. In particular it set up the Gaming Board and armed it with appropriate powers and under my predecessor, Sir Stanley Raymond, the first chairman of the board, the number of casinos was drastically reduced to about 120 and strict standards were applied. During my eight years as chairman we were constantly in the courts, with some success, and can claim, I think, to have secured an industry with a high reputation for fair dealing.

I was somewhat involved in the preparation of the 1968 Act. Therefore, I am only too conscious that to a large extent we were venturing into the unknown. On the whole it worked surprisingly well but, as might be expected, although the main framework remains intact, it has shown some signs of fraying at the edges. Account has also been taken of the findings of the Royal Commission on Gambling under the chairmanship of the noble Lord, Lord Rothschild.

A few amendments to the 1968 Act have already been made. The Bill before us is aimed at meeting one or two of the additional problems which experience has brought to light. I think that the legislation will commend itself to the noble Lord, Lord Renton, in that its first clause—and, indeed, the only clause of substance —is by way of being a purpose provision. The detailed provisions are all set out in the schedule.

There are four main proposals. The most important of these—and I shall come straight to this point —is the third one which is summarised in Clause 1(c). Under the 1968 Act the grant of a casino licence is a matter for the justices, but no one can apply for a licence unless he first holds a certificate of consent from the Gaming Board. That particular requirement, which provides the board with an opportunity of vetting those who want to run casinos, has been crucial to what has been achieved in keeping criminal elements out of casino gaming in this country.

In deciding whether to issue a certificate of consent, the board must have regard to many matters. It seems to me that I should spell out the principal ones.

First, there is the question of whether the applicant is likely to be capable of, and diligent in, securing that the provisions of the Act, and of any regulations made under it, will be complied with; secondly, that gaming on the premises will be fairly and properly conducted; and, thirdly, that the premises will be conducted without disorder or disturbance. To that end the board is then directed, in particular, to take into consideration the character, reputation and financial standing of the applicant and also of any other person who may benefit from the licence. Those requirements are all set out in the second schedule to the 1968 Act, and between them they add up to a pretty formidable list.

Under the Act the Board has power to revoke its certificate of consent if the conduct of the premises is being effectively controlled by a person other than the holder of the certificate. But this is where we run into a difficulty. If the holder of the certificate is a company and control of that company passes into other hands, the board has no power to intervene since there has been no change, technically, in the whole of the certificate. The holder's legal identity is still the same. The board may have doubts about the new individuals who control the company and consider that at the very least there ought to be some inquiry into them, but it has no authority to do anything of the kind.

The same problem arises if the balance of power in the parent company of a corporate licence holder changes hands. The board will have looked at the parent company when considering the original application as a person for whose benefit the club will be carried on; but there is no power for the board to intervene if the legal identity of the parent company remains unchanged, whatever it may think about the individuals then in charge.

The problem is not just hypothetical. It has, I fear, happened that in this way effective control of a casino on more than one occasion has passed into the hands of persons who, in the board's view, ought to have been scrutinised. The Royal Commission accepted that there was a problem in this respect which ought to be remedied. However, there are some difficulties about the solution it suggested. It involved the board taking the initiative and therefore picking and choosing among the companies concerned. After much thought and consultation, the best course seems to be that set out in the Bill. It provides for an automatic procedure.

The Bill proposes that where a person becomes a controller of a body corporate which holds a certificate of consent, that body corporate must apply to the board for continuance of the certificate; and a person becomes a controller if he, either alone or with associates, controls 15 per cent. of the voting power —a definition lifted from banking legislation. When an application is made, the board will then consider whether the certificate of consent should remain in force and will apply the criteria to which I referred earlier.

Coupled with that main provision in the Bill, filling as it does a gap in the present control of casino gaming, is the fourth objective set out in the first clause. There is already provision in the 1968 Act requiring a licence-holding body to notify the board of changes in the directors. This Bill would add a provision requiring the notification of changes in shareholding so as to assist the board in identifying possible new controllers of casino companies. The effect of paragraph 6 of the schedule is that the board will receive a copy of any notification made under the Companies Act of a shareholding of 5 per cent. or more; and, as I understand it, that percentage is soon to be reduced to 3 per cent.

Those are the main provisions of the Bill. However, the opportunity is being taken to bring up to date provisions contained in the 1968 Act about gaming club records, especially cheque transactions. Althought the existing regulations about keeping records have, in general, been observed, it is not all that much use to a Gaming Board inspector visiting a casino in the North-West if he finds when he arrives there that the records are kept at the company's headquarters in London. It is of even less use if those records are kept on a computer with no print-out available at the casino. The Bill provides that records or copies must be kept on the premises or be accessible from those premises and that they can be made available to be taken away in a legible form by an inspector or by the police.

Lastly, there are proposals to deal with fees and remove an anomaly which has always niggled me. At present there is no fee payable to the Gaming Board for the issue of a certificate of consent. But it may well be that the applicant who is turned down is rejected only after painstaking and expensive inquiries. It seems wrong that he should pay nothing and the Royal Commission agreed. The proposal in the Bill is the simple one of providing for a standard fee to be payable on application for a certificate of consent. This part of the Bill, unlike those parts on changes of ownership, would apply to applications relating to bingo clubs, but it is not calculated to cause any concern to those responsible for that industry.

If the Bill is given a Second Reading, I propose at a later stage to put down two highly technical amendments designed to take account of some minor differences in the statute law relating to Scotland. I hope by that stage to have understood the technical difficulties. The proposals in the Bill represent modest but, I think, highly desirable changes. If we are to have a casino industry at all, it is right to do what we can to ensure that it is as honest and efficient as possible. The powers sought in the Bill would help to that end and I commend it to your Lordships. I beg to move that the Bill be read a second time.

Moved, That the Bill be now read a second time. —(Lord Allen of Abbeydale.)

5.52 p.m.

Baroness Ewart-Biggs

My Lords, perhaps I may first say how much I appreciate the occasions on which it is for me to respond from this Front Bench to propositions put forward by the noble Lord, Lord Allen. I always welcome these opportunities for two reasons. The first is that the noble Lord, Lord Allen, always presents his propositions with such clarity that I am able to comprehend what they are. Secondly, I have every anticipation of being in agreement with his objectives. In the case of the Gaming (Amendment) Bill, I certainly agree with the objectives that he has in mind. I am most grateful for his clear presentation.

I agree that the primary purpose of the Bill is welcome. It is to extend the powers of the Gaming Board to vet a company which holds a licence permitting casino gambling. As I understand it, as the law stands at present under the 1968 Act, a gaming company could be taken over by undesirable elements without the board being empowered to intervene. As the noble Lord, Lord Allen, pointed out, a hazardous situation could possibly arise here.

The Bill aims to prevent such a situation arising and it therefore serves to plug a loophole which has existed ever since the 1968 Act came onto the statute book. I understand that this was pointed out at the time, and frequently since then. As I understand it, the new procedure will only apply to casinos. However, one of the other amendments which relates to the keeping and production of records in connection with gaming club premises licensed under the 1968 Act will also apply to bingo clubs. That is the only change for them.

I am also happy to know that the provisions of the Bill have been discussed fully with the British Casino Association, which has made it clear that it is in agreement with and, I understand welcomes, the provisions. I also believe that the Bingo Association of Great Britain has made no objection to the parts which affect its clients.

I did not hear him say this, so perhaps I may ask the noble Lord whether the changes put forward in the Bill are in line with the recommendations made by the Royal Commission chaired by the noble Lord, Lord Rothschild, or whether they are slightly at variance. With the advent of the 1990s, in particular the changes that will come about as from 1992, casinos may well come under new pressures. There will be new arrivals from the Continent and elsewhere and therefore this preventive measure will be timely in order to safeguard such a vulnerable and delicate area of our national life. Therefore it seems desirable to take this course at this time. The noble Lord, Lord Allen, has made clear the role of the management of a casino. It would be highly desirable to make sure that the person running the casino at that time should be the person deserving to have the licence.

Finally, perhaps I may make one more point. Even during my relatively brief period of speaking on home affairs from these Benches, I know that this is the third gaming amendment Bill to come before the House. In January 1986 we had the first Bill with regard to the use of cheques, as the noble Lord, Lord Allen, said. There was another Bill in January 1987 —it always seems to happen at the beginning of the year —about the extension of hours during which casinos could open. Now, in February 1990, we move on to the third Bill on licences.

I wish to ask the Minister how long he feels this piecemeal reform of our gaming laws will continue. Does he not believe that the time has come to review the 1968 Act? That Act was passed a long time ago and there have been a number of changes in our social life in regard to gaming. It worries me that changes in such a sensitive area should be treated by a series of Private Members' Bills rather than the Government developing a comprehensive policy to counter the adverse consequences of gaming. Having worked out what has changed in the intervening period, the Government should be able to fashion new legislation accordingly. I can see that that will not happen at present. In the meantime I am happy to support the Bill so ably put forward by the noble Lord, Lord Allen, this evening.

6 p.m.

Earl Ferrers

My Lords, I agree with the noble Baroness, Lady Ewart-Biggs, that the House will be grateful to the noble Lord, Lord Allen of Abbeydale, for the clarity with which he introduced the Bill and for explaining exactly what it intends. I noted that the noble Baroness was happy to be in agreement with him; I share that contentment.

I thought that it might be helpful if I were to indicate the Government's attitude to the Bill. I am glad to be able to confirm to your Lordships that the Government wholeheartedly support the Bill. The noble Baroness, Lady Ewart-Biggs, asked how long we would stick with this piecemeal legislation. I know that she will be aware of the great effect that the 1968 Act had on gambling and gaming. It has been found appropriate to patch up one or two of the loopholes. I do not think that means that there should be a root and branch alteration of the gaming laws. This is yet another small but useful Bill which seeks to close a loophole. The noble Lord, Lord Allen of Abbeydale, said that the principal provision of the Bill, which is defined in paragraph 5 of the schedule, is to close a worrying loophole in the Gaming Act 1968. By that loophole a person may acquire a significant interest in a company which holds a licence for a casino without that person ever having to go through the usual vetting procedures in order to determine his trustworthiness.

As the noble Lord, Lord Allen, will know only too well, as he was Permanent Under-Secretary of State in the Home Office at the time that the 1968 Act was introduced, it proceeds on the principle that no one can claim a right to provide commercial gaming. It is a privilege which is to be conceded subject to the most searching scrutiny.

The task of vetting applicants for gaming licences is assigned to the Gaming Board. Only if the board is satisfied that the applicant is likely to be both capable and diligent in securing compliance with the Act will it issue a certificate consenting to the application for a licence.

The transfer of a casino licence involves the same vetting procedure. If a person other than the holder of the certificate of consent is in control of the casino or of the gaming, the Gaming Board may revoke the certificate of consent. This has the effect of shutting down the casino in question, and the licence automatically falls. The successful operation of this system of certificates of consent and licences is the foundation of the probity of gaming in this country.

As the noble Lord, Lord Allen of Abbeydale, has explained, there is nevertheless a loophole in the system which makes it possible for new controllers of a company to hide behind the corporate veil of the company and to escape the scrutiny of the Gaming Board. This loophole could be exploited by undesirable elements in order to acquire control of a casino through the back door. The noble Lord, Lord Allen, will know better than any of us not only from his experience as Permanent Under-Secretary of State at the Home Office but also from his many distinguished years as chairman of the Gaming Board, that we cannot afford to underestimate the ingenuity of criminal elements who cover the rich rewards which may be made from hard gaming in this country.

The noble Lord has described the position which existed before the controls, which are contained in the 1968 Act, were in place. This Bill seeks to remove this loophole in the Act and thereby to uphold the principle that only those persons of suitable character and reputation should be in a position to provide commercial gaming in this country.

The procedure by which this objective is achieved, as was clearly set out before us by the noble Lord, Lord Allen of Abbeydale, strikes me as being a very tidy one, and I must congratulate the noble Lord on the situation which he has put forward.

In effect, by these provisions, the Gaming Board will be enabled to look beneath the corporate veil of the company to see whether there have been any real changes of control, and who is now in fact running the company. It is eminently reasonable for a company, which has come under new control, to submit to such examination, and it should cast no slur on its reputation. All such changes, whether for good or ill, will fall to be examined in this way. I know that the Gaming Board welcomes the proposals wholeheartedly and that these proposals have the backing of the industry which is properly concerned to prevent the entry of criminal elements into gaming.

The noble Lord has also clearly and fully set out the other principal provisions in this Bill, and I do not propose to go over that ground again. I shall confine myself to saying that they all represent useful developments in the law on gaming. Some, such as the provisions of fees, affect bingo clubs as well as casinos. None are in any way detrimental to either industry.

The Bill provides for a necessary extension of the Gaming Board's powers. It has been welcomed by both the industry and the Gaming Board; and to this I can add the endorsement and full support of the Government. I wish the noble Lord, Lord Allen every success with it.

6.5 p.m.

Lord Allen of Abbeydale

My Lords, I am much obliged for the reception which the Bill has received both from the Government and from the Opposition. I should add however a few words of personal explanation. As the noble Earl said, I was the Permanent Under-Secretary of State at the Home Office at the time the 1968 Act was going through Parliament. I cannot claim to have taken a detailed part in every piece of legislation that the Home Office promoted at that time. However, I was upset by what was happening in this area in the 1960s and therefore I became quite closely involved personally in the matter and I visited several casinos. I believe I can claim to be the only Permanent Under-Secretary of State to have been served with orange juice by a Bunny girl at two o'clock in the morning.

As regards the legislation in general, I go along with the noble Earl when he said that there is no occasion for a root and branch revision of the 1968 Act. The main framework of that Act has stood up very well. However, I believe there is a case for considering at an appropriate time a consolidation measure which might bring together the results of the various bits of tinkering which have been made to that Act as the years have gone by.

I believe the only question that the noble Baroness asked concerned the relevance of what the Bill suggests to the recommendations of the Royal Commission. There were two proposals. One concerned the application for a certificate of consent. The Royal Commission went along in principle with the desirability of doing something but it favoured a procedure whereby the board would pick out the cases where it thought further inquiry was necessary. That was a rather invidious procedure. It seems much better to have a purely automatic procedure in which all concerned come before the board without a procedure having been started off which, as it were, raises an air of suspicion about the company which is subject to investigation and questioning.

The other proposal concerned the payment of fees for a certificate of consent. There again the Royal Commission went along with that in principle but it proposed a rather complicated procedure. I believe it considered that the costs of the investigation should be paid up to a maximum of £200, if the inquiries were limited to this country, and that inquiries abroad would have to be separately costed and the applicants would have to be asked whether they would pay the extra costs of such inquiries. That appears to be somewhat complicated. I believe that in the interests of simplicity and straightforward operation the proposal in the Bill is preferable. I beg to move.

On Question, Bill read a second time, and committed to a Committee of the Whole House.