FOBTs claim another casualty

Yesterday Tracey Crouch MP resigned her position as Parliamentary Under-Secretary for Sport and Civil Society, although she was more colloquially known in gambling industry circles as the “Gambling Minister”.

Her resignation letter (below) makes it clear that she resigned in protest at what she called the UK Government’s “unjustifiable” delay until October 2019 of implementation of the reduction in the maximum stake of Category B2 gaming machines, otherwise known as fixed odds betting terminals (“FOBTs”), from £100 to £2 (as confirmed in the Budget 2018 policy paper of 29 October 2018).

Following her resignation, Tracey Crouch tweeted as follows:

It is with great sadness I have resigned from one of the best jobs in Government. Thank you so much for all the very kind messages of support I have received throughout the day. Politicians come and go but principles stay with us forever.

Interestingly, the Prime Minister’s reply to the letter of resignation (below) asserted that: “there has been no delay in bringing forward this important measure”, prompting the question why the Minister responsible for gambling policy thought so forcibly otherwise that she resigned.

Tracey Crouch’s resignation followed a series of Parliamentary questions posed to the Secretary of State for Digital, Culture, Media & Sport, Jeremy Wright MP, yesterday morning. They included questions from Labour Party MPs, enquiring whether Tracey Crouch was threatening to resign or had already resigned. The Secretary of State declined to answer those questions directly.

However, in relation to timing of implementation of the FOBT maximum stake reduction, he did answer the following question posed by Tom Watson MP, the Deputy Leader of the Labour Party:

Everyone on both sides of the House was led to believe that that cut would take place in April 2019, at the start of the new tax year. Why was that? Because in answer to a written parliamentary question, the minister herself said that the enabling statutory instrument would be taken this autumn and verbally confirmed, in a minuted meeting of the all-party group on FOBTs, that that would be the case.

In response, the Secretary of State said:

The hon. gentleman is right that the government announced in May that their intention was to reduce FOBT stakes from £100 to £2. As I have made very clear, that was the right decision to make, but they did not set out at that time the point at which the change would be implemented.

He says that everybody knew it would be in May 2019. That is his argument to the House today. I remind him of the text of early-day motion 1440, dated 20 June 2018 —after the announcement in May — and which has 48 signatures on it: ‘That this House…notes with equal concern that the stake is not due to be reduced until April 2020’.

In addition, we heard representations — understandably — from the all-party group saying that April 2020 would be too late. We agree, hence the decision taken is not to make this change in April 2020, but to make it earlier. I have heard language twisted to various uses in this place, but the idea that a move from April 2020 to October 2019 is a delay is going a little far. It is not a delay.

Further exchanges on this subject between the Secretary of State and MPs of all parties are set out within the relevant extract from Hansard that you can download below. There will no doubt be yet further developments in this long-standing saga. We will keep you posted.

UPDATES:

(1) On 5 November 2018:

  • Mims Davies (MP for Eastleigh) was appointed as Parliamentary Under Secretary of State at the Department for Digital, Culture, Media and Sport. She was previously Assistant Government Whip from January 2018 to November 2018, and Parliamentary Under Secretary of State for Wales from July 2018 to November 2018

(2) Also on 5 November 2018:

  • At a post-Budget scrutiny session before the Treasury Committee (that can be viewed here), Chancellor Philip Hammond MP defended the delay in implementation of the reduction in the maximum stake of FOBTs as follows (extracted from a transcript of the oral evidence):

Q192      Chair: Thank you. Before I hand over to others, I want to move on to fixed odds betting terminals. In the Government’s impact assessment, published in May this year, having taken into account conversations and consultation responses from independent bookmakers, it says, “Following the publication of the consultation response we will engage with industry further on an appropriate implementation period, which is initially expected to be nine to 12 months”. Why is this change to the maximum stake now not coming in until October 2019?

Mr Philip Hammond: Just to be clear, October 2019 will represent a period of 12 months from the Budget statement.

Q193       Chair: But not from the impact assessment, which says, “nine to 12 months” from the impact assessment and that will be May 2019.

Mr Philip Hammond: We have engaged with the industry. The decision was made to reduce the stake to £2. As you know, there has been a great deal of debate about the appropriate stake. Those who felt that the stake needed to be reduced to a level that effectively would eliminate these machines — and I have absolutely no love for these machines, I think they are terrible things — but the Government have to manage this process in an orderly and sensible way.

We are looking at a measure that will have very significant impact on the industry. The industry’s own estimate is that between 15,000 and 21,000 jobs will be lost as a consequence of the elimination of fixed odds betting terminals. Members of the Committee might take a view about that estimate, but it is very clear that there will be a significant number of jobs lost and that there will be a significant number of high street betting shops that will close. That is, people will have to go through the process of losing their jobs. By giving a sensible period of time for this to happen, we will be able to ensure that as many as possible of those job losses are dealt with through voluntary redundancy processes rather than compulsory redundancy processes.

As ever, with difficult decisions that the Government takes, there has to be a balancing of the different interests involved and the different concerns. People who have campaigned against these machines want to see the stake reduced and, therefore, the machines eliminated as quickly as possible. People who are affected by the change, either the high street betting industry or the online gaming industry — which will have to face higher taxes to make up the revenue losses — obviously want the maximum amount of time to adjust.

Originally, when we were consulting with the industry and with stakeholders, we were looking at April 2020. Those who were campaigning to remove the machines as early as possible were clear that they felt very strongly that we needed the 2019 date, and October 2019 was arrived at as a sensible compromise between the different interests.

Q194       Chair: I am told that the implementation is basically about changing software, so it can certainly be done within no more than a matter of months. The Member of Parliament for Chatham and Aylesford — the former DCMS Minister who resigned last week — has said in her letter that two people will take their lives every day due to gambling-related problems. It is the case that the Government have prioritised the preservation of jobs in the gambling industry over the addiction of those who suffer from these machines.

I go back to the point about the impact assessment. The impact assessment clearly says implementation nine to 12 months from May 2018. That is May 2019. You could, Chancellor, have taken a decision to bring forward the imposition of Remote Gaming Duty to spring 2019, if you really wanted to balance up the revenue loss.

Mr Philip Hammond: Yes, I could. That is clear. This is not about the revenue loss because the two measures will have to be implemented simultaneously and, although it would be harsh on the online gaming industry to give them such short notice, it is not impossible and not unprecedented to have a tax increase on that sort of notice.

I do not have the impact assessment with me, but I will look at it and I will write to the Committee. I cannot comment on what was said in the impact assessment now. All I would say is that I think my honourable friend, the Member for Chatham and Aylesford, is perhaps missing the point in saying that it is only a software change.

Chair: No, she has not said that. That is what I have been told.

Mr Philip Hammond: Okay. The industry has always been clear that a stake level of £2 means the machines are going. They will no longer be part of the business model of high street betting shops because they will not generate revenues that are sufficient to make an appropriate contribution, so they will be going. Those that have campaigned have always been clear about that: getting the stakes down to this level is effectively saying, “Let’s get rid of these machines” and that is a perfectly legitimate decision for the Government to make.

If I may say so, that is a tribute to the campaigning tenacity of my honourable friend, the Member for Chatham and Aylesford, who has always been clear that that was her objective. She and those who campaigned with her have won this argument. The stake will be reduced to a level that will effectively eliminate these machines. The job of the Government, I am afraid — and it does not always win plaudits — is then to implement these measures in a way that is balanced and fair and allows for an orderly transition. That is what we believe October 2019 will do.

Q195       Chair: I am going to hand over to Alison McGovern who I know wants to come in on this, but the trouble with that very rational analysis, Chancellor — and I would perhaps expect nothing less from Treasury and Treasury Ministers — is that it does not help the expected 300 people a day who may end up taking their lives, suffering mental health problems from gambling addiction. We know this is a social harm. The House has taken a decision to end it. The Government have taken a decision to end it and yet there appears to be a delay in implementation.

Mr Philip Hammond: With the greatest respect, there are very many social harms that we know about, and very many things that drive mental health problems and, sadly, occasionally suicides. In everything we do we are focused on trying to reduce that impact, but there are many other examples I could give you of steps that could be taken that would no doubt have a positive impact in some areas but, because they would have wider impacts, are not taken. We can all think of examples across the tobacco and alcohol sectors, for example.

Q196       Alison McGovern: Briefly, Chancellor, just further to that, you say that the Member of Parliament for Chatham and Aylesford has effectively won her campaign, which sort of begs the question as to why she has resigned. Can I make a suggestion: was it that there was an earlier draft of the Budget that had April 2019 as the implementation date in it and did somebody in the Treasury take that out of an earlier draft?

Mr Philip Hammond: Obviously I am not involved in the drafting of documents within the Treasury, so I cannot comment on what may or may not have been drafted by officials.

Q197       Alison McGovern: Are you aware of an earlier draft?

Mr Philip Hammond: No. As far as I am concerned, the original agreement between stakeholders was that we would go to the lowest consulted stake, which was £2, and we would give the industry the time it needed to adjust, which was April 2020. There was then quite a considerable pushback — not least by my honourable friend, the Member for Chatham and Aylesford — arguing that it was essential to have a 2019 date. After consulting again with stakeholders, we decided to bring the date forward to October and that is what I announced in the Budget.

Q198       Alison McGovern: She must have been under the impression that it was April 2019, otherwise why has she resigned?

Mr Philip Hammond: You will have to ask her. I cannot —

Q199       Chair: It was in the impact assessment and, Chancellor, you have agreed to go back and look at the impact assessment—

Mr Philip Hammond: I will.

Chair: — and we would like to hear from you once you have had a chance to do that.

Mr Philip Hammond: I think the Prime Minister made very clear in her letter to my honourable friend, following her resignation, what the Government’s position is on this; what our understanding of the sequence of events is.

Q200       Chair: It seems an unnecessary row to pick with the House, at a time when the Government need all the friends in the House they can have.

Mr Philip Hammond: Honestly, I do not see it as a row picked with the House. This is a very important, very substantial measure with very significant consequences. The most extreme version of the set of proposals that were consulted on has been agreed to, which should be a cause for celebration by those who want to get rid of these machines.

The only issue that we are debating now is the process by which we implement it. We recognise that there are many thousands of people who will be negatively impacted by this, through losing their jobs, or through having their businesses closed down. That is not to minimise in any way the damage that the machines themselves are causing, but just to recognise that we have to look at the interests of all stakeholders.

All of us will have constituents who are working in high street betting shops who will be negatively affected by this. If we can possibly manage this through a voluntary redundancy process, rather than a spate of compulsory redundancies, that will be very much beneficial.

(3) On 14 November 2018:

  • the Government announced that:
    • it is bringing forward the date of implementation of the FOBT maximum stake reduction (from £100 to £2) from October 2019 to April 2019 and
    • the increase in the rate of remote gaming duty from 15% to 21% will also be brought forward from October 2019 to April 2019.
Download article PDF: Hansard - FOBTs 01.11.18