Gambling Bill

Public Bill Committee, 14 December 2004.

Standing Committee B

Gambling Bill

Malcolm Moss (Conservative, North East Cambridgeshire)

On a point of order, Mr. Gale. Are we quorate? There seem to be more people on the Opposition Benches than on the Government Benches.

Roger Gale (Conservative, North Thanet)

Yes. We require eight Members and I can see eight.

Clause 263 - Application of sections 264 to 268

Malcolm Moss (Conservative, North East Cambridgeshire)

I beg to move amendment No. 368, in clause 263, page 117, line 9, leave out from beginning to 'and' in line 10 and insert 'which have a bar'.

Roger Gale (Conservative, North Thanet)

With this it will be convenient to discuss the following amendments:

No. 349, in clause 263, page 117, line 9, leave out paragraph (b).

No. 388, in clause 263, page 117, line 9, after 'alcohol', insert 'or food and alcohol'.

No. 389, in clause 263, page 117, line 9, after 'alcohol', insert 'and food'.

Malcolm Moss (Conservative, North East Cambridgeshire)

The clause aims to grant permission for gaming machines to those premises that are currently authorised by the Gaming Act 1968 to have a full on-licence under the existing liquor licence. That licence is due to disappear on the coming into force of the Licensing Act 2003, which regulates the sale of alcohol and deals with regulated entertainment. It will be replaced by a single licence that covers the sale of alcohol and the provision of public entertainment. The Licensing Act sweeps away the old distinctions between on-licences and off-licences, part 4 licences for restaurants and the like.

Welcome as that is, it has created difficulties in the Bill because the old definitions can no longer be relied on. We are not sure that the Bill needs to reinvent the old definitions and the invention of an ''on-premises alcohol licence'' does not appear either necessary or accurate, as the Licensing Act sees no need to make such a distinction and an alcohol licence on those terms does not exist under that Act. By defining such permission as being confined to those premises licensed under the Licensing Act

''which are used primarily for the supply of alcohol for consumption on the premises'',

we believe that many thousands of pubs would be excluded from offering category C machines, and we do not believe that that is the Government's intention.

The Government have given the industry assurances on a number of occasions that they will preserve the existing right in the case of those who have category C machines with their alcohol licence. The explanatory notes to the legislation, however, state specifically that hotels and restaurants would not be given such a right. Hotel bars currently have the right to gaming machines when they have a full on-licence. Often such bars are open to the public and are in effect pubs. Some pubs, on the other hand, have a heavy food focus and might be regarded more as restaurants.

It might be thought somewhat strange that it would be only premises that have a heavy emphasis on drinking that would be permitted to operate gaming machines. The reason why gaming machines are allowed under those licences is that there is a licensing test for the licensee, who is qualified under the Licensing Act, and there is also a premises licence, which is regulated by the local authorities. Both those licences can be removed in case of a breach of the law or condition attached to the licence.

In effect, the Bill introduces a restriction on the provision of category C machines, for which there is no apparent justification. It would also exclude the application of grandfather rights to those pubs that are not primarily used for the consumption of alcohol. Were such a definition to persist and be applied retrospectively, many pubs would be forced to remove category C machines. The money earned from those machines would be permanently lost for many of those small businesses.

The Bill appears to create a conflict with the definition of licensed premises under the Licensing Act. That Act prohibits the entry of children under the age of 16 where the premises are used exclusively or primarily for the consumption of alcohol. The guidance to the Licensing Act, however, explains that such a limitation

''would not necessarily apply to many restaurants, hotels, cinemas and even many pubs where the main business activity is the consumption of both food and drink.''

Pubs could be forced into a situation whereby the only way to have gaming machines would be to ensure that the premises were used primarily for the consumption of alcohol. That would be a retrograde step, reversing the development over recent years of family-friendly environments and encouraging a return to the enclosed drinking parlours of the past.

Mark Prisk (Conservative, Hertford and Stortford)

My hon. Friend is setting out an important point. Does he share my concern that the definition of ''primarily'' for the purposes of consuming alcohol will be difficult to enforce and could prove to be a bureaucratic nightmare for many of our local pubs?

Malcolm Moss (Conservative, North East Cambridgeshire)

My hon. Friend makes a good point. We had that debate when the Licensing Bill was in Committee. It is clear that the vast majority of our pubs offer food and that that is an important income-generating ingredient. We argued about the problem of those under 18 years old gaining access to the drinking areas of pubs by going to the restaurant, and we arrived at a sensible outcome. This clause throws that outcome into sharp question. We need clarification from the Government to ensure that this Bill does not act against the interests of an existing Act of Parliament.

The definition would also exclude many hotel bars, cinema and theatre bars, and bowling alleys and similar venues that have full on-licences under the Licensing Act 1964. All those venues hold permits for category C machines, and we have been presented with no argument for their exclusion. The simple amendment would narrow the definition to those premises that serve alcoholic drinks through the use of a bar. It would not exclude existing pubs and bars or hotel bars, but it would retain the restriction that restaurants without a bar would not be entitled to gaming machines.

The Minister and the Government may argue that it would be easy for a restaurant to set up a bar and thereby qualify for category C gaming machines, but the danger of that happening is quite remote. We would argue that many restaurants are primarily for food, that the ambience of such places is not conducive in the main to having gaming machines and that when a bar and a restaurant are combined, very few gaming machines are present.

Don Foster (Liberal Democrat, Bath)

I entirely agree with the comments made by the hon. Member for North-East Cambridgeshire (Mr. Moss). I could have regaled the Committee with much of the same commentary, since we obviously have a similar briefing. I could have amplified my comments by referring to those of the all-party leisure group on the matter, and to the equally trenchant comments of the hon. Member for Burton (Mrs. Dean), who made a similar argument to that of the hon. Member for North-East Cambridgeshire. I also could have referred to some commentary from Punch Taverns. All those individuals and organisations are deeply concerned by the language in this legislation.

The point of my rising is, first, to state that I agree with the hon. Gentleman, and secondly, to ask the Minister whether he would address the issue of grandfather rights either in response to this group of amendments or shortly thereafter, as there is an opportunity when we come to some amendments to a later clause. The Minister will be well aware that were he to go down the route that is proposed in the Bill, many pubs that raise their income predominantly through the sale of food and other services would suddenly not be entitled to the machines that they now have. That would be in marked contradiction to the Government's original thinking on the Bill. I refer particularly to a note by the Department on transitional arrangements for grandfather rights. Does the Minister wish to intervene on me for the benefit of the Committee to say whether it is his intention to address the issue now or later? If he is to do so later, I will draw my remarks to a close.

Richard Caborn (Labour, Sheffield Central)

The hon. Gentleman has raised this issue on a number of occasions. I can confirm that a policy statement that confirmed grandfather rights for pubs was published in February 2004 by my Department. It reads:

''Premises licensed for the consumption of alcohol under the Licensing Act 2003 should be entitled to continue to operate as many Category C or D gaming machines as are already authorised under those licences . . . If they wish to apply for more then they may do so''.

We will come to the point about grandfather rights later on.

Don Foster (Liberal Democrat, Bath)

There are two ways of interpreting what the Minister just said. If he is assuring me that we will discuss the issue of grandfather rights in more detail later, I am more than happy to draw to a close my remarks on the amendment that stands in my name and on others in the group. I merely say, as I began, that I entirely support the comments made by the hon. Member for North-East Cambridgeshire.

Eric Illsley (Labour, Barnsley Central)

I want to say a few words on the amendments in my name, which are designed to achieve exactly the same thing as those to which the hon. Member for North-East Cambridgeshire spoke.

There is concern in the licensing industry at the prospect of a different definition for premises serving alcohol under the Bill from that in the Licensing Act. There is a concern that certain pub premises that generate a lot of income from serving food could be excluded from the terms of the Bill. So, I ask my right hon. Friend the Minister to reconsider the definitions of licensed premises in order to clear up some of that confusion, and to give assurances to the licensing trade that pubs that serve food will not have to revert simply to selling alcohol to come under the provisions of the Bill.

Nick Hawkins (Conservative, Surrey Heath)

I support what has been said by all hon. Members who have spoken and, of course, in particular what was said by my hon. Friend the Member for North-East Cambridgeshire.

On the subject of the need for decisions on places that serve food to be made in the legislation as it approaches its final form, the Government need to take seriously one other issue: the supply of machines by unauthorised, rogue operators. The Minister and those who advise him may well be aware that that issue has been raised by a number of legitimate operators in the most recent edition of the British Amusement Catering Trades Association magazine, Coin Slot International, to which the hon. Member for Bath (Mr. Foster) has referred.

Don Foster (Liberal Democrat, Bath)

A great magazine.

Nick Hawkins (Conservative, Surrey Heath)

I agree with the hon. Gentleman that it is a great magazine.

I have worked with BACTA on a voluntary basis for many years and I always take seriously what is said by the legitimate part of the business of supplying amusement machines, particularly when it points out that there are difficulties with rogue operators. In addition to the points raised by the British Beer and Pub Association, by other people and by hon. Members this morning, I want the Minister to address briefly the care with which the Bill will deal with rogue suppliers, particularly in the pub trade.

There is a letter in the latest edition of Coin Slot International about amusement-with-prizes machines. It says that many legitimate operators have been forced to remove their machines because they cannot compete with rogue operators. The letter writer, Mr. Berg from Vendomat, talks about rogue operators who do not pay customs and excise duty, income tax, VAT or trading standards and Gaming Board licence fees. It is clear that there is a thriving trade in the improper supply of machines, and there is a worry among BACTA members that responsible traders will be driven out of business. There is a legitimate concern about pubs and hotels and even taxi firms, fish and chip shops, kebab shops and other places that serve food. I hope that the Government are considering the matter and that the Minister will be able to touch on it.

Richard Page (Conservative, South West Hertfordshire)

I, too, endorse the remarks of my hon. Friend the Member for North-East Cambridgeshire. I wish to emphasise one small point, and I hope that the Minister will accept our arguments.

Pubs are commercial operations. If they do not make a profit, the game is over. I am concerned that pub operators who want gaming machines will install them to the detriment of the positive, family-friendly atmosphere that has been built up through various changes over the years. Allowing gaming machines only in public houses that are primarily for the consumption of alcohol may drive us back to the enclosed drinking parlours of the past. I certainly would not want that. The family atmosphere that has been created over the years is a positive step forward and should be encouraged.

On the amendments of the hon. Member for Barnsley, Central (Mr. Illsley), I am with him all the way. If he wants to put them to a vote, I shall support him, and I would like him to know that before he makes any decisions.

Richard Caborn (Labour, Sheffield Central)

The point about the use of the word ''primarily'' has obviously excited the mob, and that is right.

We included the test of primary use to rule out the proliferation of gaming machines in every licensed restaurant. I believe that everyone agrees with the need to do that. As matters stand, however, people could probably drive a horse and cart through the provision, if they so wished, and I accept that we may have gone a little too far and created problems for premises that are more on the pub or bar side of the line, even though they may do more business selling products other than alcohol. We are trying to get the balance right, and we do take on board the considerable number of comments that have been made, including those from the trade itself.

Amendment No. 368 is on the right lines, but I cannot advise the Committee to accept it. It reflects useful discussions that the Department has been having with the pub trade, but it needs further consideration to ensure that we have a clear and practicable test. I can assure the Committee that the Government intend to table further amendments to enable gastro-pubs and family-friendly establishments, including hotel bars, to continue to offer category C gaming machines.

I will not be defending clause 263 as it is drafted; the Government will table amendments to reflect the view of the Committee.

Mark Prisk (Conservative, Hertford and Stortford)

I may have momentarily misheard the Minister, but I think that he referred to gastro-pubs. It is early in the morning, so this may be an indelicate subject, but will he clarify what he means by ''gastro-pubs''?

Richard Caborn (Labour, Sheffield Central)

I go to a gastro-pub with my grandchildren. About 10 or 15 years ago, we would probably never have taken young children into a pub. My family can now go into Derbyshire—my wife is teetotal, by the way—and take my two grandchildren into a nice pub, which is what I would call a gastro-pub.

Bob Russell (Liberal Democrat, Colchester)

Oh, I see!

Richard Caborn (Labour, Sheffield Central)

I know that people in Colchester have a little difficulty in grasping such northern terms. The term refers to the cuisine that is available in what the hon. Gentleman would have traditionally called a pub. They are now called gastro-pubs—that is a saying from Yorkshire. I would describe the menus that are provided in gastro-pubs, but that would be taking matters a little too far.

Don Foster (Liberal Democrat, Bath)

The hon. Member for Hertford and Stortford (Mr. Prisk) and I were discussing whether we heard the Minister correctly, and the Committee is grateful for confirmation that we did. However, he was asked to define a gastro-pub, and has done it solely by reference to the institution that he visits—very admirably—with his grandchildren and his wife. If that is to be the model definition for all time, perhaps he would be good enough to give us a few more details about that establishment.

Richard Caborn (Labour, Sheffield Central)

As I said—

Eric Illsley (Labour, Barnsley Central)

This is an interesting debate. I refer the Minister to an article that appeared in The Guardian Review magazine a few months ago, which was devoted entirely to gastro-pubs throughout the country. It gave examples from my region, from London and elsewhere. The best definition of ''gastro-pub'' that I can provide is a pub that provides food of such quality that people will attend merely for the quality of the cuisine, rather than because it is a place where they can drink alcohol. Examples from my neck of the woods would be The Kaye Arms and The Three Acres, both of which featured earlier on.

Roger Gale (Conservative, North Thanet)

Order. Before we ramble around the hostelries of northern England and their menus, it might be helpful if I were to make it plain that although I am quite prepared to permit such a fascinating discussion, I shall not be minded to permit a stand part debate.

Richard Caborn (Labour, Sheffield Central)

With that advice, and a dark look from the Whips, I shall get back to the script.

Amendment No. 349 would return to the clause to the form that it took when the draft Bill was published and would mean that any premises licensed for supplying alcohol for immediate consumption would be entitled to install two category C gaming machines and to offer bingo with low stakes and low prizes. As a result of comments on the draft Bill we decided that it would not be satisfactory to leave the clause in that form because it would extend machine entitlements far beyond the pubs and bars which now have them. It would have meant, for example, that a restaurant with a licence to supply alcohol became entitled to install gaming machines. There is no justification for any such large increase in what the Budd report called ''ambient gambling''.

However, in introducing paragraph (b), which the amendment would remove, we somewhat overshot the mark. Our intention was to make sure that pubs, bars and certain other licensed premises, such as ten-pin bowling alleys, were able to keep their current entitlement to install gaming machines, but that restaurants and other licensed premises did not acquire new entitlements. We acknowledge, however, that the test in paragraph (b) has caused concern to the legitimate pub trade, because some premises which are indisputably pubs may no longer satisfy the primary purpose requirement in the paragraph.

We have, therefore, undertaken to consider amending the paragraph to address those concerns. It would not be right simply to delete it. It would not be consistent with the policy of taking category D machines out of takeaways, such as fish and chip shops, to confer new rights to install category C machines on restaurants which had a licence and also provided takeaways.

I hope that, in light of that explanation and those assurances, the hon. Member for North-East Cambridgeshire will withdraw his amendment.

Amendments Nos. 388 and 389 have the same general purpose as the amendments already discussed, and I hope that my hon. Friend the Member for Barnsley, Central will also accept the assurances that I have offered to the Committee.

The hon. Member for Bath (Mr. Foster) spoke of the threat of illegal gaming machines. That threat has led us to grant the gambling commission robust powers of regulation, including the power to initiate prosecutions. Those are new powers, which show that we take the threat of illegal machines very seriously. On the question of grandfather rights, we will use the powers in schedule 15 to ensure that all premises that are authorised to provide gaming machines will be permitted to provide the same number of gaming machines under the new regime. If they want more, they will have to apply for them.

Don Foster (Liberal Democrat, Bath)

When the Minister says that premises will be entitled to have the same number of machines as before, is he referring to their entitlement—that is, two? If they already have four, will they be able to keep the four without having to apply for two more?

Richard Caborn (Labour, Sheffield Central)

Absolutely. There is no minimum threshold at the moment. We are introducing a minimum threshold in the Bill. The grandfather right applies to the status quo before the Bill is enacted. If premises already have four machines, they can keep four.

With that explanation of grandfather rights, illegal gaming machines and the amendments, I hope that the hon. Member for North-East Cambridgeshire will withdraw his amendment.

Malcolm Moss (Conservative, North East Cambridgeshire)

We are grateful to the Minister for his comments and assurances, but he has not answered our question and explained why the wording of our amendment is inadequate. He dismissed the amendment and said that the Government will return with their own amendments, but he did not say when, and it would be helpful to know that. If my proposed wording is so unacceptable, why was the Minister unable to say what wording the Government would find acceptable? I would like him to give a stronger assurance on the spirit of my amendment and the logic of my argument, which is to make it crystal clear that pubs that serve food as well as drinks will not be penalised in any way, shape or form by admitting children to premises where category C gaming machines are being played.

Richard Caborn (Labour, Sheffield Central)

I can give that assurance. We have not yet suggested a wording because we have been discussing the matter with the trade. We are accused if we do not discuss concerns with the trade and we are accused if we do. As I said, we have been having those discussions. Our debate has showed that the interpretation of the word ''primarily'' is important in this context and we want to get that right. I admit that we may have gone too far in paragraph (b). We want to make sure that the wording is right for the intention as well as for the action, and we want to ensure that some takeaways that have a bar do not gain an entitlement to have category C machines. There are matters that need further exploration, and we will reflect on the wording when we have discussed those with the trade. I have given a clear assurance to the hon. Gentleman that the description of the pub that he talked about will not be ruled out of having category C machines. Our intention is to maintain that entitlement, and we have no intention of affecting that.

Malcolm Moss (Conservative, North East Cambridgeshire)

And the timing?

Richard Caborn (Labour, Sheffield Central)

Amendments will be tabled on Report.

Malcolm Moss (Conservative, North East Cambridgeshire)

I am grateful for the Minister's clarification and I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 263 ordered to stand part of the Bill.

Clause 264 - Exempt gaming

Malcolm Moss (Conservative, North East Cambridgeshire)

I beg to move amendment No. 208, in clause 264, page 117, line 30, leave out from 'that' to end of line 31 and insert

'no child or young person uses a Category C gaming machine on the premises'.

The amendment follows a similar theme of clarifying the present situation. We have defined this condition of gaming in relation to the playing of a category C machine because that is the line taken by the Government in clause 256(6), which states:

''A club gaming permit shall, by virtue of this subsection, be subject to the conditions—

(a) that no child or young person use a Category B or C gaming machine on the club's

or institute's premises''.

We are taking similar wording from an earlier clause and inserting it as an amendment to clause 264 to clarify, as best we can, the issue concerning playing of category C machines in licensed premises.

Richard Caborn (Labour, Sheffield Central)

I am afraid that the Government cannot accept the amendment. It would in effect allow children to participate in non-machine gaming in pubs. Gaming in pubs will always be equal-chance gaming, such as bingo or certain card games. It will also involve relatively low stakes and prizes, and there cannot be participation fees. However, we take the strong view that it will remain an activity suitable only for adults. The words that the amendment is intended to delete concern participation in gaming. Under-18s should not take part in gaming in pubs. I am afraid that, as it is trying to change that, I cannot accept the hon. Gentleman's amendment and I hope that he will withdraw it.

Malcolm Moss (Conservative, North East Cambridgeshire)

I may have selected the wrong clause for amendment. This is a probing amendment. If the Minister will clarify that the Government do not intend to make it an offence for an adult to play a machine when a child is present in a pub/restaurant, that will cover the ground.

Richard Caborn (Labour, Sheffield Central)

I give that assurance.

Malcolm Moss (Conservative, North East Cambridgeshire)

On that basis, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 264 ordered to stand part of the Bill.

Clauses 265 and 266 ordered to stand part of the Bill.

Clause 267 - Gaming machines

Malcolm Moss (Conservative, North East Cambridgeshire)

I beg to move amendment No. 369, in clause 267, page 118, line 30, leave out 'one or two' and insert 'four'.

Roger Gale (Conservative, North Thanet)

With this it will be convenient to discuss the following: Amendment No. 370, in clause 267, page 119, line 15, leave out subsection (7).

Clause 267 stand part.

Amendment No. 364, in clause 268, page 119, line 20, leave out

'an on-premises alcohol licence in respect of premises'

and insert

'a premises licence under the Licensing Act 2003'.

Amendment No. 365, in clause 268, page 119, line 23, leave out 'they think that'.

Amendment No. 366, in clause 268, page 119, line 25, leave out paragraph (a) and insert—

'(a) relevant representations relating to the licensing objectives have been received and upheld,'.

Amendment No. 367, in clause 268, page 119, line 33, leave out from '(3)' to end of line 36.

Clause 268 stand part.

Government amendment No. 363.

Government new clause 16—Gaming machines: automatic entitlement.

Government new clause 17—Pub gaming machine permits.

Government new clause 18—Removal of exemption.

Government new schedule 2—Pub Gaming Machine Permits.

Malcolm Moss (Conservative, North East Cambridgeshire)

Amendment No. 369 relates to the numbers of gaming machines of category C or D that will be

''available for use on premises to which this section applies.''

For many years, the pub industry has stressed the sense of granting four machines as a right. It is my understanding that only 1 per cent. of pubs—about 600 in total—have more than four machines. The granting of four machines automatically would remove almost 20 per cent. of businesses from the need to apply for more than two machines.

There are some 60,000 public houses in the UK, with the number of managed houses in decline during recent years. Some 18,700 are independently operated free houses. The remaining 29,600 pubs are mostly operated by independent small businesses under leases or tenancy agreement from breweries or pub-owning companies. Gaming on fruit machines has been a feature of the UK public house for around 40 years and represents the only but important source of gambling revenue on such premises. Machines offering £25 maximum prizes are in most public houses. Some 80,000 category C machines are sited in public houses throughout the country.

Those machines are significant income generators for the pubs. Their importance varies from pub to pub, but the viability of marginal businesses—approximately 5,000 to 6,000 pubs nationally—depends on them, as it does for clubs. As in clubs, machines enable costs in other areas, such as food, to be offset. Therefore, they are critical to a large number of pubs.

The industry neither envisages nor seeks an explosion of machine numbers and we would not support that either. The market for that does not exist. It is constrained by the price of entry, which includes a fixed duty fee and the machine rental. The industry believes that having four machines as a right would enable operators to meet market expectations where they exist, as they do at the moment, while easing the bureaucratic burden and without leading to an appreciable increase on machine numbers or problem gambling. The amendment seeks the right to four gaming machines on the grounds of better regulation and a reduction in the burden on the industry and local authorities alike.

Amendment No. 370 would remove subsection (7). The pub sector supports the legal backing for its voluntary action of preventing under-18s from playing gaming machines in pubs. We support its argument that self-regulation has worked well, and the industry as a whole welcomes the provisions prohibiting machine play by under-18s. However, it does not believe that there is any need for a code of practice to accompany that simple measure; it is for public house managers and owners to manage their premises properly and ensure that the law is obeyed. The industry accepts that, were that not the case, appropriate sanctions would have to be employed—a caution, a fine or the removal of machines from the premises.

Under the new Licensing Act, there has been a tightening of the rules on children in pubs. The new rules require that children under 16 years old must be accompanied by an adult in order to be present on premises being used exclusively or primarily for the supply of alcohol for consumption on those premises. Codes of practice by the gambling commission should cover only those activities that require an operator's licence under this Bill. Permissions for public houses would be given by local authorities, and it does not seem appropriate that the gambling commission should regulate those sectors that it does not license via codes of practice.

Mark Prisk (Conservative, Hertford and Stortford)

I was not intending to interrupt my hon. Friend's flow, but he has raised a question in my mind. By referring specifically to codes of practice with which statute will require individuals to comply, my concern is that they are not therefore codes of practice but statutory rules and that ''codes of practice'' is a misnomer. I do not know whether my hon. Friend, who is more learned in those matters than I, will be able to clarify that.

Malcolm Moss (Conservative, North East Cambridgeshire)

I thank my hon. Friend for that interesting question. When the industry guidance was published for the Licensing Act 2003, it was presented to Parliament as delegated legislation and we debated it and voted on it. I would think that certain codes of practice may come under guidance, and some may not. They may be issued, in the case of this legislation, by the gambling commission, and it will be for the commission to alter them as it sees fit. In the main, and in the final analysis, it ought to be the responsibility of Parliament to determine through statutory instrument serious codes of practice and serious guidance.

Richard Page (Conservative, South West Hertfordshire)

Perhaps my hon. Friend the Member for Hertford and Stortford was advancing a parallel that could best be described with an examination of employment law. There is a code of practice for the dismissal of staff, and if one does not follow it, one will find great difficulty in making that dismissal stick; whereas, if one follows the code and goes through its various phases as recommended, with the necessary appeals available to the employee throughout, a conclusion can be reached. Is that not a more accurate parallel? Our hon. Friend is saying that in this case it should be in the Bill as statute rather than as a code of practice.

Malcolm Moss (Conservative, North East Cambridgeshire)

I am sure that my hon. Friend is right. However, such questions would be better addressed to the Minister, as he is responsible for the legislation, not me. I am sure that, in most cases, codes of practice will be enshrined in the statutory framework. Otherwise, as in the example that has just been given, why would anyone bother setting them out in the first place? However, as I am not a lawyer, I cannot say whether all codes of practice are necessarily enshrined in statute. I have no doubt that the Minister will correct me if I am wrong. With that answer, I would be grateful if I could proceed.

Richard Caborn (Labour, Sheffield Central)

The hon. Gentleman will be sharing my salary soon.

Malcolm Moss (Conservative, North East Cambridgeshire)

Is the Minister offering to share his salary? Is it on the record that the Minister offered to share his salary—and pension contributions and car? [Hon. Members: ''And shares. And the red box.''] No, I do not want the red box.

Amendment No. 364 relates to clause 268 on the removal of exemption. The use of the term ''on-premises alcohol licence'' in the Bill is technically wrong and unnecessary in the context. Under the Licensing Act 2003, the licensing authority—in this case, the local authority—does not issue an on-premises alcohol licence but a premises licence, which is bound by the relevant terms. Such a licence may or may not include the permission to sell alcohol or to supply it for consumption on the premises. The term ''on-premises alcohol licence'' has been invented during the development of the Gambling Bill. It may have some relevance in colloquial terms in the Bill, but it does not exist in the 2003 Act. The amendment would not alter the powers given to the licensing authority under the Bill, but it would make it clear under what authority such powers were exercised—that a premises licence was issued under the 2003 Act.

Amendments Nos. 365 and 366 also relate to clause 268. Amendment No. 365 would remove the words ''they think that'' so that the subsection would state:

''A licensing authority may disapply a section under subsection (1) only if'',

and in paragraphs (a), (b) and (c) the circumstances are described.

The clause permits the licensing authority to remove the permission for category C or D gaming machines that has been given by virtue of the possession of a premises licence under the 2003 Act where alcohol is supplied for consumption on the premises if it thinks—that is the key word—that the presence of the machines would not be consistent with the licensing objectives. The 2003 Act is clear that judgments as to the effect of a granting of a licence on the licensing objectives can be brought into play by the licensing authority only on receipt of valid representations by ''responsible authorities'' and ''interested parties''. Neither the council nor the licensing authority fall under those categories. Therefore, they cannot raise objections to the granting of a licence.

It is the job of the licensing authority to exercise its discretion as to the action to be taken in the light of representations. The Bill directly contradicts that principle, in that it grants the licensing authority the power to disapply the exemption on the basis of its own thought process. For the licensing authority to have such an ability on the basis that it thinks that something is not quite right is surely much too low a test, and the industry is concerned that some licensing authorities could misuse such a wide-ranging discretion to exercise their prejudice against small gaming in pubs, bowling alleys and the like without any proper control.

Amendment No. 367 would remove the power of the Secretary of State to impose further obligations on the holder of a licence held under the Licensing Act 2003 and makes provisions about the consequences of failure to comply with such obligations. Why are such provisions required? If they are required, why are they not included in the Bill? If the provision of gaming machines is enabled through the possession of a licence under the 2003 Act, the conditions apply to that licence and the sanctions available in the breach of any such condition are governed by that Act.

There is no advantage in seeking further and additional mechanisms through the Bill. If a licensee is in breach, in permitting under-18s to play the machine, for example, that would be open to a straightforward prosecution under the 2003 Act, while the enforcement authorities would be able to seek a review of that premises' licence. The power that is required is to enable the licensing authority to take appropriate action, such as removal of the machines. The granting of powers to the Secretary of State to impose further obligations appears misconceived and open-ended. Small-prize machines in premises covered by the Licensing Act are not going to lead to large-scale gambling bonanzas; nor is there any evidence of any issue with young persons' gambling in such places as pubs and hotel bars.

It is accepted that such machines need to be controlled and regulated. The industry is not seeking a proliferation of those machines, and although it believes that a modest increase in the prize level is needed to compete with all the deregulation that has occurred and is proposed, no one has been able to demonstrate that any real harm arises from the sector. We have had that debate on more than one occasion during the proceedings of the Committee. Why does the Secretary of State seek additional obligations and sanctions when the 2003 Act is perfectly capable of delivering the necessary controls?

Don Foster (Liberal Democrat, Bath)

I have a great deal of sympathy with many of the amendments referred to by the hon. Member for North-East Cambridgeshire, but I was surprised that the Committee did not hear more details of his analysis of the likely implications of the amendments that propose that the starting point for pubs should be an automatic requirement for four machines.

The hon. Gentleman has received, as have I, an excellent briefing from the British Beer and Pub Association, which has drawn our attention to a number of concerns about not only the clause but some of the amendments about which we shall hear more detail from the Minister in a moment. It expressed considerable surprise that without any detailed consultation with the industry the Government have proposed such significant changes as a new licence—a pub gaming machine permit—in their amendments, which has happened rather a lot during our deliberations. Quite rightly, the BBPA points out that a number of other establishments will be similarly affected. Those include hotel bars, nightclubs, bowling alleys and so on. It wonders and I wonder whether the Minister is shortly to bring forward further amendments to establish the new concept of a bowling alley gaming machine permit or a hotel bar gaming machine permit. No doubt the Minister can clarify that for us. So there is some surprise not only that the amendments were introduced without consultation but at their wording. There is understandable concern about the increased bureaucracy that they will leave in their wake.

As I said, we on the Liberal Benches are concerned about the amendment tabled by the hon. Member for North-East Cambridgeshire on the automatic entitlement to four machines. The British Beer and Pub Association suggested in its extremely helpful briefing that, were the hon. Gentleman's amendment to be accepted, it would lead to only a small increase—of approximately 5 per cent.—in the number of machines. That would be an additional 4,000 category C machines.

I am sure that the hon. Gentleman, who has done his homework on the Bill, would acknowledge that, were every pub in the land to take up an automatic entitlement to four machines, there would be in the region of 108,000 additional category C machines. I do not for a minute suggest that that would happen, but, although it is an extreme and unlikely scenario, he must accept that many of us are concerned about such potential. As we have expressed concern about the huge proliferation of machines that might occur under other aspects of the legislation, we are concerned about the hon. Gentleman's amendment.

Nevertheless, we are entirely supportive of some of the other points that the hon. Gentleman raised: for example, the strange use of language and the way in which that can be solved by using terms already in the Licensing Act 2003. I hope that, when the Minister speaks to the Government amendments and the clauses to stand part, he will explain clearly why he felt it necessary to propose such strange new permits, and how a bowling alley, for example, will be affected. Will it—rather strangely—have to apply for a pub gaming machine permit, and would the same be true of a hotel bar and the like?

I hope that the Minister will also explain in more detail than I have been able to gather what discussions he has had with the industry on the matter and what his understanding of the industry's responses to the amendments has been. Certainly all of the conversations that I have had have led me to believe that inadequate consultation has taken place and that the amendments proposed by the Minister will create great problems for the industry.

Nick Hawkins (Conservative, Surrey Heath)

As well as supporting the comments of my hon. Friend the Member for North-East Cambridgeshire said, and a great deal of what the hon. Member for Bath said, I want to stress one point. As I mentioned, I have a long-standing link with the licensed trade as one of the founder members and officers of the all-party beer group. I have been joint treasurer of that group ever since it was set up. What concerns me is the lack of transparency in what the Government are introducing in the new clauses and schedules.

The British Beer and Pub Association has told those of us with an interest in the matter that the application and removal processes, which grant decision-making powers to the licensing authority, unlike the Licensing Act 2003, are not based on due process of representation from third parties entitled to make objections. The licensing authority will be acting in a judicial matter when granting the licence in respect of alcohol and public entertainment under the 2003 Act, but will be judge and jury when considering gaming machine permits.

As well as introducing a novel concept, with all the weaknesses to which my hon. Friend the Member for North-East Cambridgeshire and the hon. Member for Bath referred, the Government have introduced a completely different regime. As a lawyer, I find it peculiar, to say the least, that those who are making the decisions are to be treated differently on the alcohol licensing side than on the gaming side—[Interruption.] Does my hon. Friend the Member for Hertford and Stortford want to intervene?

Mark Prisk (Conservative, Hertford and Stortford)

My hon. Friend is raising an important point, but I wonder whether he has considered those who may be unclear, given the opaqueness of the regulations, as to whether they will be affected. I am concerned that when regulations are unclear those who might be on the cusp of the compliance burden are, as law-abiding citizens, anxious to comply. Does he share my concern, which many smaller enterprises will share, at the lack of clarity in the Bill?

Nick Hawkins (Conservative, Surrey Heath)

My hon. Friend is absolutely right and I agree with him. It is one of the unfortunate consequences of the Government producing legislation as they go along. My hon. Friend the Member for South-West Hertfordshire (Mr. Page) talked about the unsatisfactory way in which the legislation is proceeding. Major changes to the Bill are being introduced in the middle of our deliberations. I do not want to restart my argument with the Minister last week; I simply echo what the hon. Member for Bath said mildly about consultation—or the lack of it.

My hon. Friend the Member for South-West Hertfordshire has repeatedly said that it is not satisfactory that major industries in this country, which were able to put forward their views on the original proposals to the scrutiny Committee, on which he sat, have not had the opportunity to take into account these last-minute major changes. The issue is serious and the Government would be wiser, as the British Beer and Pub Association suggested, to take it away for more detailed discussion and to ensure that the proposals are along the same lines as the Licensing Act, and then return at a later stage with amendments that have been more carefully thought through. This rushed way of changing legislation as we go along is not a good use of parliamentary time or consistent with the traditions of this place, and it is very worrying for those in the industry whose concerns I wish to reflect.

Richard Page (Conservative, South West Hertfordshire)

I would like to pick up and run with my hon. Friend's comments; he is right. I have expressed concern about the way in which we seem to be making legislation on the hoof rather than taking a long and considered look at it. My hon. Friend referred to the scrutiny Committee, which was able to take evidence on parts of the Bill and make recommendations.

I have a difficulty and other hon. Members may have the same difficulty. Government amendment No. 360 states:

''leave out Clauses 267 and 268.''

My hon. Friend the Member for North-East Cambridgeshire has spoken to amendments to clauses that, according to the Government, will not exist. Also, we are debating clause 268 stand part in this clutch of amendments, although it is the next item for discussion. There is a mass of new clauses of considerable complexity and depth on today's amendment paper. In addition, new schedule 2, which deals with pub gaming machine permits, runs to six pages of legislation.

We on the Opposition Benches in this Committee are being bounced into agreeing legislation that has not been properly considered. It is all right for the Minister sitting there, folding his arms, taking a relaxed view, being able to ram everything through with his huge majority unless my friend the hon. Member for Barnsley, Central comes to our rescue again, but those are my concerns. I turn to the explanatory notes for help, but now I do not know whether the notes on clause 268 have any relevance to all the new clauses in front of us, so we really are flying blind.

Mark Prisk (Conservative, Hertford and Stortford)

I do not want to interrupt the excellent flow of my hon. Friend, but one concern that I know he will share, which he has not been able to share with the Committee, is about the significant question of competitiveness that would be posed to a number of businesses currently able to function if the legislation before us were to be passed without amendment. As someone with a general interest in the small business fraternity, it would appear to me that there are significant changes in the legislation that could restrict competitiveness. I think in particular of the ability of our pubs to compete with larger chains that may run competing hotels and restaurants. Will my hon. Friend comment on the issue of competitiveness?

Richard Page (Conservative, South West Hertfordshire)

I know that my hon. Friend takes a great deal of interest in the small business sector, as I did in my youth, which is why I understand his concern. The problem is that so many extra clauses have been rammed at us, and I am unable to give him a considered reply because they might deal with competitiveness. It is impossible to absorb six pages of legislation—new schedule 2—at a moment's notice.

Mark Prisk (Conservative, Hertford and Stortford)

My hon. Friend, who has tremendous experience in the area under discussion, is struggling to cope with the number of amendments and in particular with the nature of the original legislation that my hon. Friend the Member for North-East Cambridgeshire hopes to amend. If my hon. Friend the Member for South-West Hertfordshire cannot cope with the welter of changes that the Government are introducing, how does he think small businesses will be able to cope?

Richard Page (Conservative, South West Hertfordshire)

My hon. Friend flatters me. He is providing the Minister with ample opportunity to say later that this hon. Member is retiring from Parliament because he is past it, has had his day, and that it is no wonder that he cannot understand the legislation, because he is suffering from senior moments in every Committee. I will not follow my hon. Friend's argument, because I would probably be out of order as well. He raises a legitimate concern, however, which I cannot answer until I study and understand the impact that the proposed legislation will have. I will have to cling to the explanatory notes for clause 268 and hope that they have a touch of relevance to new clauses 16 to 18, Government amendment No. 363 and Government new schedule 2—pages and pages of legislation. I have been able to study the notes briefly, but not in depth or adequately enough.

Don Foster (Liberal Democrat, Bath)

During the brief reading to which the hon. Gentleman admits, he surely will have given some consideration to the references to fees chargeable. Has he given any thought whatever to the additional bureaucracy and fees that might be imposed on the establishments about which we are talking? In view of the earlier exchange that we had with the Minister, has the hon. Gentleman given thought to the possible need for a further amendment to include the establishment of gastro-pub in respect of gaming machines?

Richard Page (Conservative, South West Hertfordshire)

The hon. Gentleman opens up yet another vista.

Roger Gale (Conservative, North Thanet)

No, he does not.

Richard Page (Conservative, South West Hertfordshire)

Unfortunately, proceedings up to clause 284 must be concluded by 5.30 this afternoon. The hon. Gentleman made a tempting and generous offer, but I must proceed with caution. However, he touched on an issue that I was about to come to, which is regulation. I noted during my brief examination of the new clauses that the Government have endeavoured to set out in the Bill the reasons why the licensing authority may take action in certain circumstances. I would like to commend them for that—I want to be perfectly fair and give praise where it is due—but I have a difficulty in that I have not had enough time to read and fully comprehend the new clauses, so I must proceed with caution in issuing any praise.

When we examine the explanatory notes on clause 268—I cling to them as the only rock in this rapidly moving sea of legislation—we find subjective comments. The notes state:

''The authority can only take away these rights where they think that . . . the premises are used mainly for gaming, or the intention is for them to be used mainly for gaming in the future.''

That is highly subjective. Having considered the other aspects of the new clauses, I wonder how the licensing authority will reach such opinions, and whether we will be driven into producing yet another regulation. I presume that the Government will have to issue regulations or guidance to licensing authorities to clarify what is meant by

''the premises are used mainly for gaming, or the intention is for them to be used mainly for gaming in the future.''

I would like to hear the Minister's comments on that.

Malcolm Moss (Conservative, North East Cambridgeshire)

Is it not amazing, after all this time and the review of the scrutiny Committee, on which my hon. Friend sat, that the Government are chucking out—deleting—two full clauses of the Bill? They may not accept our amendments, but, as my hon. Friend pointed out, they highlight the problems and discrepancies in the clauses. That is why the Government are to negative the clauses and have tabled new ones, but is it not astounding that they cannot get the Bill correct at this late hour?

Richard Page (Conservative, South West Hertfordshire)

I think that everybody on the Committee would admit—even the Minister himself, if he were to be candid and open, which seems to be the policy of some Ministers these days when discussing various actions inside the Government—that substituting one and one third pages of legislation, part of pages 118 and 119—

Don Foster (Liberal Democrat, Bath)

It is eight pages.

Richard Page (Conservative, South West Hertfordshire)

My research assistant has been doing the work for me and has come up with the necessary figure. It is a frightening situation. I am certain that the scrutiny Committee would have loved to have examined the relevant clauses and, if necessary, taken evidence on them to know how to proceed. I have again registered my concerns sufficiently on the problem. Knowing this Government, I have absolutely no doubt that I will be standing here later saying exactly the same about another set of withdrawn clauses, another set of new clauses and another ream of amendments. That is unsatisfactory.

What guidance and regulations will there be to the licensing authority on the subjective aspects of this legislation? There are many mechanistic points in the new clauses, such as the fact that a licence will be under threat if a child is seen operating a machine. That is fair enough and understandable. However, as I have suggested, there are subjective aspects. What will the guidance and guidelines be for establishing whether premises are mainly used for gambling? Will it be based on turnover, profit or usage compared with number of pints consumed? That is a sample question on a theme that runs through all of the amendments, so I look forward to hearing what the Minister has to say.

Richard Caborn (Labour, Sheffield Central)

The issue of consultation was raised by a number of hon. Members, and I told the Committee last week that we informed the British Beer and Pub Association about the amendments before they were tabled. My officials have had further meetings with a representative of the association as recently as last Friday, and they inform me that that meeting was constructive and positive. They are grateful for the advice that they received from the association, which underlines the ongoing dialogue that we have had with the BBPA. I understand the association's concerns and preferred position that pubs should have an automatic entitlement to four machines rather than two, as we propose in the Bill. Apart from that, it is fair to say that the association appreciates the reasons behind the amendments, and I am grateful that it is working with us in considering the details of how the new regime will operate.

Ann McKechin (Labour, Glasgow Maryhill)

My right hon. Friend may or may not be aware that there has been a considerable amount of press coverage in Scotland about this legislation over the past few days. Criticism has been raised about whether bodies and organisations in Scotland have been sufficiently consulted. Will he confirm that he has had the opportunity to discuss these matters with the Scottish Executive, and that Scottish organisations, including Scottish Churches, have made general representations on the Bill? The impression given through much of the media in Scotland over the past few days is that there has been a complete lack of consultation. It would be reassuring to know what consultation has taken place with Scottish bodies and organisations.

Richard Caborn (Labour, Sheffield Central)

There has been extensive consultation at the official level. Only yesterday the Scottish Minister with responsibility for gambling was in my office together with officials. We discussed the Bill and the intentions on implementing it. I understand that there have been consultations north of the border, although I have not been privy to them, as there have been south of the border. A separate Scottish consultation has fed into DCMS policy. Certain aspects of planning and premises licences will be dealt with differently, and we had a constructive discussion on trying to ensure that we dovetail that. Wider consultation has taken place and we will continue to work with the Scottish Executive at both political and official levels. As I said, as late as yesterday, I had a meeting with my counterpart north of the border. We are also discussing the matter with our colleagues in the Welsh Assembly.

I want to put one or two matters into context before being specific. The discussion about four machines was interesting. For the first time, there will be a minimum level for the number of machines and we have given clear assurances on grandfather rights. I hope that I have been able to reinforce them this morning.

When we started the consultation, the argument was for around four machines. We did a quick calculation of how many machines there are in pubs throughout the country at the moment. I thought that the average was 1.5 machines per establishment, but my officials tell me that it is marginally over one. Now, we are being asked to increase that to four from an average of around one. We have said that two should be the baseline and that, if an establishment wants more than two, it can go to its authority to ask for more. That is a good way of ensuring that we do not encourage an explosion in the number of machines, to which the hon. Member for Bath alluded.

We have approached the matter with common sense based on statistics. I told the British Beer and Pub Association that, at the moment, the average number of machines in pubs is just over one. There is no minimum limit at the moment and we are setting it at two. The BBPA is asking for four and I have asked it to explain the basis for asking for four. I heard the statistics given this morning, but they do not stand up in terms of the totality and I believe that we are moving forward sensibly and rationally.

Mark Prisk (Conservative, Hertford and Stortford)

The Minister is setting out the Government's view. Can he tell the Committee how many establishments he expects to be affected?

Richard Caborn (Labour, Sheffield Central)

No, I cannot. That will depend on the decisions made by the pubs. All I can say is that grandfather rights exist and the status quo prevails in terms of numbers. The information that I have is that there is just over one machine per pub on average. The legislation introduces a guarantee for the first time. If someone opens licensed premises, they may have two machines. The British Beer and Pub Association wants four, but we believe that that is excessive. However, we believe that some pubs will require more than two machines. We are introducing a flexible regime that will provide assurance to the public that there will not be an explosion in the number of machines.

Mr. Moss rose—

Richard Caborn (Labour, Sheffield Central)

I shall just return to the Australian situation, although it is not an absolute parallel. It was interesting when hon. Members were talking about how the Government are reacting to significant changes. One reason for the problems in Australia was that, when licences for category A machines—the live machines with large payouts—were given to casinos, there was uproar from sports clubs. It was the reaction to that which allowed a proliferation of machines. I assure the Committee and the general public that we are not going down that road.

There may be arguments about how we have framed some of the amendments and how we are doing what we are doing, but we are steering a clear course on the use of machines. We have looked at international experience and we are not taking that course. It may be inconvenient for a few amendments here and there, but I assure the Committee that that is the course that we are taking, because we believe that it is right and in the interests of the public and the industry.

Julie Kirkbride (Conservative, Bromsgrove)

I agree that we do not want to go down the Australian route and I am glad that the Minister is pursuing a cautionary line. I have not looked into the precise details of the Australian situation, but he said that part of the problem in Australia was that category A machines were allowed in casinos, which caused an explosion in the number of machines in pubs. Can he clarify whether pubs were allowed to have category A machines, or did they have lower category machines with lower payouts and smaller prizes? Is he comparing like with like? Were pubs allowed to have category A machines as well?

Richard Caborn (Labour, Sheffield Central)

Pubs and sports clubs were allowed category A machines. One must consider the different social infrastructure. A pub as we know it is not necessarily like a pub in Australia. Some sports clubs have high-rolling machines wall-to-wall. That was on the back of the argument with the Australian Government at the time because of what was done in casinos. There was a roll-on effect.

The key factor, however, is tying the number of machines to something. There has been consistency throughout about that. Do we tie the number of machines to a betting shop? In a casino, do we tie the number of machines to the number of tables operating? We must keep control of the number of machines and that is tied down clearly in legislation through the powers that we are giving to the new gambling commission.

The big money and profits are earned, and problem gambling arises, not from casinos as such, but from the number and proliferation of machines in all sorts of areas. That is what the Bill controls. We are incorporating that with a strict regime that takes things away from the 1968 Act and brings them to the gambling commission.

Malcolm Moss (Conservative, North East Cambridgeshire)

I am at a complete loss as to the Minister's logic. He said earlier that under the Bill grandfather rights will be given to all pubs that have machines at the moment. If a pub has four machines, it keeps four machines. If it has five machines, it keeps five machines. It does not really matter what the range is. At the moment, given the grandfather rights, all machines in pubs will stay. So, we are talking only about new pubs and new applications for gaming machines. How many new pubs come forward every week, month or year? I would not have thought it was that many.

The whole industry probably has an average of fewer than two machines each. In fact, 74 per cent. of pubs have two machines or fewer, so we are talking about only a small number, under market forces, that bother to pay for the extra machines and the accompanying rentals. In other words, the market itself constrains the number of machines because people just will not pay for them and the payback to the pub landlord is such that it is not worth having more than one, two or three machines. We are talking about only a small number of very large establishments. If this is about deregulation and removing the bureaucratic pressure, allowing four machines in new pubs—we are talking only about new pubs—is not a problem.

Richard Caborn (Labour, Sheffield Central)

If a pub wants to apply for more machines, it can do so. The figure may be only 2 or 3 per cent., but the hon. Gentleman will know from when he and I were discussing the Licensing Bill that it is probably only 1 or 2 per cent. of premises in the middle of our city centres in some areas that create real problems with binge drinking and the like. We have to deal with that. Unfortunately, we have to legislate for those that are likely to try to take advantage. There are no limits at the moment. We are saying that it ought to be two machines and I am just trying to argue the rationale for that. We believe that the public want to be reassured and we are doing that. Equally, we are saying that, if there is a case for having more than two machines, that is fine and the case will go to the licensing authority.

Don Foster (Liberal Democrat, Bath)

I wonder whether the Minister could help me because I am slightly confused by the intervention by the hon. Member for North-East Cambridgeshire. Is it not the Minister's interpretation of the hon. Gentleman's amendment that the opportunity to go to four machines would apply not just to any new public houses, but to all public houses? Given that 90 per cent. of the 60,000 existing public houses currently have only two machines, that would mean that 90 per cent. could move to four machines automatically rather than having to apply. Although I accept the hon. Gentleman's analysis that many pubs are unlikely to do so because they have to pay both for the machine and for a permit, and the market will mean that the figure will not be the 108,000 that I referred to, the potential is greater than he suggested in his intervention.

Richard Caborn (Labour, Sheffield Central)

There is that potential, theoretically. There are doubts about that. What the hon. Member for Bath said is absolutely right. The reality is that that has not happened. However, we are talking not about today but about tomorrow. We want a framework of law that will reassure people that there will not be a totally uncontrolled proliferation in gambling but will allow people who have legitimate claims to move their business forward. We believe that that is based on logic.

I return to the point on which many of the Opposition amendments are predicated—it is the BBPA that is saying that it wants to move to an average of four machines per establishment. I say that there is no rationale for that on today's operation or in the future.

Mr. Moss rose—

Richard Caborn (Labour, Sheffield Central)

We are probably labouring this point a bit, but I give way.

Malcolm Moss (Conservative, North East Cambridgeshire)

The BBPA does not want an average of four machines per establishment. It just wants the Bill to allow pubs four machines if they want them, without having to go through a bureaucratic process and pay extra money. The point is deregulatory. Given that market forces mean that the average is about two machines per establishment at the moment, there is no imperative in the industry to have more than a small number of machines. If the Government are happy with that, which they say that they are because they will give grandfather rights across the board, I cannot understand why we need to discuss all these clauses that add more and more bureaucracy. We are now talking about permits, which mean more work for the local authority, when we do not have a basic problem.

Richard Caborn (Labour, Sheffield Central)

That is the hon. Gentleman's view. It is one that he believes sustains his argument. We do not. We believe that it is necessary to take those powers so that we can reassure people that, if there is an increase in the number of gaming machines, it will be under controlled conditions. We believe that is the right way to move forward.

New schedule 2 is similar to schedules 8 and 11—in fact, it is a reproduction of them. I hope that that reassures the hon. Gentleman.

Anybody would think that we had changed the policy, but we have not. The late changes are not major changes of substance. One would have thought from the debate that we had changed it substantially. Pubs have no legal entitlement to a particular number of gaming machines, but the established practice is that they are allowed to install at least two all-cash amusement-with-prizes gaming machines, which have a £25 prize. Pubs can apply for additional machines and a licensing justice can allow more. Where pubs are large, it is common for a proportionate number of additional machines to be authorised so that customers who want to play can have reasonable access to them. Licensed ten-pin bowling alleys are in the same position. The Bill proposes that pubs and equivalent premises should be entitled to two category C machines and have the ability to apply for additional machines if the size of the premises or other factors justify that.

On amendment No. 369, I see no reason to amend the Bill to double the automatic entitlement. It may be that a number of pubs choose not to take up their full quota, but the amendment would sit oddly with the general policy of precaution on machines. As I said, if pubs can make a reasonable case for having more than two machines, they can do so. However, such matters should be decided on their merits by the licensing authority and not left solely to the pubs themselves. Pubs that have already been allowed to install more than two machines will be entitled to keep them under grandfather rights. We recognise the case for that.

I do not agree with amendment No. 370, which would be inappropriate. It would remove the requirement to make gaming machines available in accordance with the relevant provision of the code of practice issued by the gambling commission. To fulfil the licensing objectives at the heart of the Bill, it is important that gambling commission codes of practice are followed regardless of the type of premises that the gaming machines are located in. It would be wrong for category C machines in an adult gaming centre to be operated differently from the same machines in, for example, a pub. I therefore ask the hon. Gentleman not to press the amendment.

Amendment No. 364 is unnecessary because clause 262 sets out the definition of an ''on-premises alcohol licence'', referring to the relevant part of the Licensing Act 2003. I hope that, with that explanation, the hon. Gentleman will not press the amendment.

Amendments Nos. 365 and 366 restrict a licensing authority's discretion when removing entitlements under clause 268. It is important that licensing authorities are given sufficient powers to take entitlements away where necessary and amendment No. 365 will unnecessarily limit their discretion. Amendment No. 366 will require representation to be received by the licensing authority before action can be taken under subsection (2)(a) of clause 268.

Malcolm Moss (Conservative, North East Cambridgeshire)

I am not sure why the Minister is responding to my amendments when the Government amendments would delete both clauses anyway.

Richard Caborn (Labour, Sheffield Central)

I am giving the rational arguments for rejecting the amendments. It is right to do so, but if the hon. Gentleman does not want me to, that is fine.

That point was raised last night, and it is a fair one. I was asked why the Government go into such great detail. One could be critical of what we have done during stand part debates. It is interesting that many people look to stand part debates for an explanation of a clause both now and later. It is right to give reasons why we take certain actions. Someone was critical because we have not debated all the clauses on stand part—we would have spent a lot of time on that if we had. However, the hon. Gentleman has a valid point, and it could well be that, at some stage, the arguments will go straight into the record without us having to give them all in Committee.

Malcolm Moss (Conservative, North East Cambridgeshire)

In his comments on amendment No. 370 the Minister mentioned that it was unhelpful that the code of practice under clause 23 and the involvement of the gambling commission would not be brought to bear in this matter. The Government amendments delete clause 267, so subsection (7) will go, as I proposed in amendment No. 270. However, nowhere in new clauses 16 and 17 do I see any reference to the codes of practice. I wonder whether the Government have missed that.

Richard Caborn (Labour, Sheffield Central)

I can deal with that point straight away. I am aware that subsection (7) is reproduced in new clause 16. That subsection ensures that a person making a gaming machine available for use under the clause must do so in accordance with the relevant provisions of the code of practice issued by the gambling commission under clause 23. [Interruption.] Sorry, I should have said that the subsection is not reproduced in new clause 16.

While the hon. Gentleman is digesting that, I shall turn to amendment No. 367, on which a point was raised relating to the additional conditions to the on-premises alcohol licences. Those provisions are not reproduced in new clause 18. I therefore ask the hon. Gentleman not to press the amendment.

I turn to Government amendment No. 363, new clauses 16 to 18 and new schedule 2. The purpose of the amendment is to assure clarity in gambling regulation and in alcohol regulation under the Licensing Act 2003. Where something is authorised under the Bill, the mechanism underpinning the authorisation should be found in the Bill and not the 2003 Act.

New clause 16 provides that premises with an on-premises alcohol licence issued under the 2003 Act will be automatically entitled to up to two category C or D gaming machines. That is largely similar to clause 267(1), but the entitlement will be subject to the conditions that the alcohol licence holder notifies the licensing authority that issued the alcohol licence and pays a small notification fee.

Nick Hawkins (Conservative, Surrey Heath)

The Minister has just referred to a small fee. The question of the fee did not appear in the Government's regulatory impact assessment because the new clause has been tabled since that assessment was drawn up. The matter has been raised with me by several organisations, including the BBPA. The Government did not originally intend to raise fees, and several organisations, including the BBPA, are anxious to know what the fee will be, what it will cover and whether there will be substantial administration costs for the newly required piece of paper.

Will there be any difficulty with enforcement? The industry accepts that under-18s should not play category C machines and has voluntarily incorporated notices in pubs to that effect for years. Indeed, such notices are standard on machines in pubs, bars and clubs.

Richard Caborn (Labour, Sheffield Central)

It is a notification fee. Throughout the Bill, cost recovery is the overriding premise for all fees charged, so the fee would be low. The cost is for administration and enforcement by the licensing authority.

Under new clause 17 on-premises alcohol licence holders will also be able to apply to the licensing authority for a pub gaming machine permit, which will enable more than two gaming machines to be made available for use. Previously, any application for additional gaming machines would have been approved through conditions attached to the alcohol licence under clause 267(2). We no longer consider that the correct approach, since an entitlement to make gaming machines available goes beyond the scope of an alcohol licence under the Licensing Act.

The difficulty is in rolling six regulatory authorities into one, under the 2003 Act, and, through the Gambling Bill, bringing the 1968 and 1976 Acts into a modern setting, but keeping the main principles. How an those provisions be dovetailed to ensure that the people operating in the real world are not affected or, if they are, that it is for the better? That is why we have reflected on what has been said and tried to ensure that the provisions are as practical as possible and that issues do not fall on the sidelines. We have tabled the amendments to make the provisions clearer. I hope that the discussion that we have had with the industry will achieve that objective.

Malcolm Moss (Conservative, North East Cambridgeshire)

In clause 268 there is another reference to an on-premises alcohol licence. In my remarks about amendment No. 369 and others I pointed out that that term does not exist under the 2003 Act, so what does it mean? In deleting clauses 267 and 268, do the Government accept that it does not exist?

Don Foster (Liberal Democrat, Bath)

That is covered in new schedule 2.

Richard Caborn (Labour, Sheffield Central)

I shall come back to that in a moment. I have given the reasons for the provisions in this Bill on the on-premises alcohol licence. The challenge was whether to include such a licence in the Bill. It is defined in clause 262(b), which states that

'''on-premises alcohol licence' means a premises licence under that Part which authorises the supply of alcohol for consumption on the licensed premises.''

I am informed that that links the provisions to the 2003 Act.

New schedule 2 sets out a new procedure that is separate from the alcohol-licensing regime. New clause 18 enables a licensing authority to remove the right from a licensee to provide exempt gaming under clause 264 or to make gaming machines available for use under new clause 16. I am aware that our amendments do not address the concerns regarding premises that hold an on-premises alcohol licence but which may not fall squarely into the category of being used primarily for the consumption of alcohol.

Those concerns are not being ignored. I am aware of the concerns of the BBPA and others about the provision relating to gaming machines in premises with an alcohol licence. We are considering, with the association, what we can do to meet those concerns. We have given a commitment that pubs and licensed premises such as ten-pin bowling centres can continue to operate gaming machines, and we will honour that commitment. With that, I hope—

Don Foster (Liberal Democrat, Bath)

With respect, the Minister cannot just stop at that point. He has not explained whether the other types of premises will be required to have their own permit, and whether it will be called a bowling alley permit or whatever; we need answers on that. The Minister said earlier that the Government are now listening to the concerns about the new amendments expressed by the BBPA and others. Should we expect amendments to these amendments later? Will those amendments take into account concerns about whether individual licensing authorities could determine the fee, the shape that the application form will take, and what information is to be provided?

Will the Minister explain why there is suddenly to be an annual fee instead of a three-year fee? We have heard nothing about that. We had no explanation why, in paragraph 10(1) of new schedule 2, there is reference to ''An occupier of premises''. The occupier could be just a tenant, and not the holder of the licence, who is covered in paragraphs 8 and 9. Why have we got the strange notion that the licensing authority can cancel a permit when paragraph 15(1) says that

''gaming machines are being made available for use on the premises otherwise than in accordance with the permit''?

However, as it says earlier in the same new schedule that one cannot attach conditions to the permit, I am not sure what people will be in breach of—presumably the permit just says, ''You have permission to have two machines'' or whatever. Many questions remain unanswered. I hope that we will hear rather more from the Minister.

Richard Caborn (Labour, Sheffield Central)

I shall try to give the hon. Gentleman that information. First, we are aware that the name ''pub gaming machine permit'', which seems to have exercised hon. Members this morning, appears to limit the premises that may apply for it. That is not the intention, and we shall table further amendments to rectify that. We will make the name all-embracing to ensure that it can apply to all the premises to which I referred this morning.

The hon. Gentleman asked about the decision of licensing authorities to remove exemptions. Licensing authorities have more discretion under the Bill than they do under the Licensing Act, and we think that that is right, because the two have different purposes. We need sanctions appropriate to gambling, and we need the authority to be able to assess the impact of the licensing objectives. As I said, we are bringing about two fairly major changes in broad entertainment.

First, we are trying to streamline licensing and entertainment legislation by rolling six regulatory authorities into one. I hope that, when Committee members talk about bureaucracy and red tape, they acknowledge that light-touch regulation. The 2003 Act will be policed properly, and those who do not comply with it could well have their licence removed. That is one change.

Secondly, we are trying to link that with our modernisation of the gambling provisions under the 1968 Act, which we are doing by establishing the gambling commission and a new legal framework. I will not say that we have got every word right today, but we are listening carefully to the industry—we were asked to do that, and we are doing so—and will reflect what it says.

These are minor amendments. They do not substantially change our policy, the direction that we set out in our consultation, or what the pre-legislative scrutiny Committee advised. We accepted the vast majority of the Committee's recommendations, which are still very much embodied in the Bill.

Don Foster (Liberal Democrat, Bath)

I am not sure what point the Minister is making. These are not small amendments; they are significant amendments that may have a large impact on the institutions that we are talking about—predominantly pubs, but many others, too, as the Minister rightly said. However, he said specifically that he was determined to ensure that there would not be an increase in bureaucracy.

If the Minister is not going to answer the other points that I raised in my intervention, will he at least tell the Committee whether every licensing authority will set its own fees, establish the lay-out of the application form and determine the information that has to be provided? Or will that process be standardised throughout the country, so that the many pubs that are part of a large chain will not have to provide different sets of information for each application to a licensing authority?

Richard Caborn (Labour, Sheffield Central)

There will be some amendments, which will be minor—although hon. Members will have their own view on that—and they will take into account the concerns of the BBPA.

The hon. Gentleman asked about breach. People can be in breach of a permit by providing, for example, more machines than are permitted. There are a number of ways in which permits could be breached.

Don Foster (Liberal Democrat, Bath)

Can the Minister give another example?

Richard Caborn (Labour, Sheffield Central)

I have no doubt that I could give the hon. Gentleman plenty of examples, as I did a little earlier on gastro-pubs. If he wants a list, I will ensure that we provide a list of examples of how permits could be breached. I am sure that when he has that information he will agree that what we are doing is right. The Secretary of State will set the fees.

Several hon. Members rose—

Roger Gale (Conservative, North Thanet)

Order. Only one Member can take the Floor at one time.

Don Foster (Liberal Democrat, Bath)

In saying that the Secretary of State will determine the fees, the Minister has just answered one of my questions. However, I raised two related issues. Will the Secretary of State determine the shape of the application form and the information to be made available, or will each licensing authority make its own judgment? [Interruption.]

Roger Gale (Conservative, North Thanet)

Order. I have to say that the patience of the Chair is being tried considerably. It is not proper for officials continually to pass notes to the Minister in this fashion.

Richard Caborn (Labour, Sheffield Central)

I agree with you, Mr. Gale.

I shall give the hon. Gentleman specific answers on the detail of the amendments. Permits can be breached if children are playing machines, or if there are too many machines. I could provide a list of other breaches, but that should not be included in the Bill. We are establishing a gambling commission to deal with the issues, and we can debate that. I will write to the hon. Gentleman and to other Committee members.

Richard Page (Conservative, South West Hertfordshire)

The hon. Member for Bath has, with just a few questions, punched a number of serious holes in the provisions. Although the Minister says that the Government amendments contain nothing of any great substance and that the policy remains intact, there are areas of doubt.

To reinforce what the hon. Member for Bath said—and as I mentioned in my brief contribution half an hour ago—I ask to what extent the licensing authorities will be asked to act in unity and to give uniform treatment in interpreting the administration of the licences. The Minister says that there will be a fee just to cover costs, but, with respect, I have seen how the councils and licensing authorities use fees as a means of raising revenue, rather than just to cover the direct costs. Will there be any central direction? I want to know whether the Government are considering that. Far be it from me to support regulations, but there has to be some regulation in this instance.

The Minister said, before speaking to the Government amendments, that he had consulted the BBPA, and we got the impression that it had ticked the box, but now he is saying that he is willing to consult it on the new clauses. Has the BBPA agreed and signed up to this raft of new clauses and the new schedule, or are there still some substantial queries that it cannot answer?

Richard Caborn (Labour, Sheffield Central)

I repeat yet again that we are introducing two detailed Acts of Parliament that will have a significant impact on this industry. We want to get that right. We are rolling six regulatory authorities into one, which involves the complex Licensing Act alone, although that is not operational yet. We are modernising through the Gambling Bill, by partial deregulation and by setting up a new regulator. We are ensuring that the regulation be brought smoothly into operation when the legislation is implemented. That does not happen simply overnight. We are working hard with all those who have an interest, and they are providing an injection of common sense. If we have to return to the Committee or the House with a few amendments to ensure a smooth transition when the two new Acts of Parliament are implemented, we will do so. However, if everyone wants everything stated in the Bill, it will not be a Bill of 300 or so clauses; it will triple in size or be even greater.

The gambling commission will provide guidance on the standard approach. We are trying to give local authorities much more power, allowing them to be proactive in running their economy to ensure that regeneration and wealth creation can take place. Entertainment, recreation and gambling are sectors in a major industry, which forms a major part of our economy, so major modernisation is taking place. Those sectors are big employers and big wealth creators, and we are modernising the way in which they operate. That is what we are trying to achieve with the Bill. Not everything will be stated in the Bill—a lot will be left to the gambling commission. We want to achieve consistency and to give local authorities the freedom to become much more proactive than reactive in driving their economies forward. That is the object of the exercise and we believe that we will achieve it.

Malcolm Moss (Conservative, North East Cambridgeshire)

I am a bit concerned about the so-called consultation that is supposedly going on. As I understand the new clauses and the new schedule, particularly those measures relating to pub gaming machine permits, I do not believe that the BBPA or the industry as a whole would have signed up to them willingly. On the one hand, they are being told by the Minister that grandfather rights will apply to all the gaming machines that they currently have. They have never been a problem and the Government are happy that they should retain that number. We have already had the argument that the vast bulk of establishments, more than 70 per cent., have two or less machines. They have always had the opportunity to have more, so I cannot understand why the Government want to set the limit at two, rather than at four, which would mean that those who have between two and four did not have to keep reapplying.

On the permits, do all those pubs that have now been given grandfather rights to keep their machines still have to apply for a permit to have them? Is that deregulatory? Is that attacking costs?

The prescribed fee has been mentioned, but we do not know what size it will be. When discussing the Licensing Bill we were told not to worry about fees and assured that they would be modest. Yet, in certain local authority areas, particularly those such as Westminster and Camden who have huge numbers of licensed premises, the fees will in no way cover the cost of doing all the work that they have to do. In the end, the cost will fall on the head of the council tax payer in those particular local authority areas.

We do not know what size the fee will be, but we know that there will be an added cost for pubs. They are being told that it is okay to have the machines that they currently have under grandfather rights but, just in passing, that they need to apply for a permit to have a machine. What is the point of that? If this matter is all about permits for new machines in new premises—new pubs—it is a heck of a lot of legislation to crack a tiny nut.

The Minister has not said why permits are needed. I did not hear clearly the words, ''We are going down this road because we need to do A, B or C.'' It may well be that the Licensing Act does not cover the machines in pubs—I am sure that it does not.

It being twenty-five minutes past Eleven o'clock, The Chairman adjourned the Committee without question put, pursuant to the Standing Order.

Adjourned till this day at half-past Two o'clock.

Standing Committee B

Clause 267 - Gaming machines

Peter Pike (Labour, Burnley)

I remind the Committee that with this we are discussing the following:

No. 370, in clause 267, page 119, line 15, leave out subsection (7).

Clause 267 stand part.

No. 364, in clause 268, page 119, line 20, leave out

'an on-premises alcohol licence in respect of premises'

and insert

'a premises licence under the Licensing Act 2003'.

No. 365, in clause 268, page 119, line 23, leave out 'they think that'.

No. 366, in clause 268, page 119, line 25, leave out paragraph (a) and insert—

'(a) relevant representations relating to the licensing objectives have been received and upheld,'.

No. 367, in clause 268, page 119, line 33, leave out from '(3)' to end of line 36.

Clause 268 stand part.

Government amendment No. 363.

Government new clause 16—Gaming machines: automatic entitlement.

Government new clause 17—Pub gaming machine permits.

Government new clause 18—Removal of exemption.

Government new schedule 2—Pub Gaming Machine Permits.

Malcolm Moss (Conservative, North East Cambridgeshire)

Welcome back to the Chair, Mr. Pike. Before I was interrupted by the lunch break, I was discussing permits and asking a few questions about whether they will be required by pubs exercising their grandfather rights in order to retain the same number of machines. I was discussing also the prescribed fee if that were the case. Earlier, the Minister was unable to provide any idea about the scale of the fee, but perhaps he has some further information that will be of use to the Committee.

Currently, in order to get a machine into a pub, a case must be put to a magistrates, and—I presume—the applicant gets a piece of paper akin to a permit. I presume also that one must pay a fee per machine or per permit. If a fee is charged, it would be useful to know what it is, what the Government's thoughts are about the fee alluded to in new clause 16(2)(b), which is to be prescribed by the Secretary of State by regulation, and whether that fee will be akin to the current charge.

We have before us an amendment that strikes out two clauses, some new clauses in lieu of them and a new schedule. The British Beer and Pub Association is particularly exercised by the way in which the local authority—the licensing authority—can literally step in and question, and presumably remove, the permit for machines in a particular pub. Under the Licensing Act 2003, the local authority has a similar power to move in and revoke the licence that it has offered or given to a pub or establishment. Before the local authority can do that, however, it must go through several different stages, which involves taking information from the general public, such as interested parties, local residents and people who have drawn the authority's attention to the matter, or from responsible authorities such as the local police. Before the local authority can even write to the pub, saying, ''It has come to our notice that—'', it needs firm evidence from either interested parties or responsible authorities.

In the Bill and in new clause 18, which the Government propose as a replacement for one of the existing clauses, the licensing authority can just make an order disapplying section 264. The legislation does not mention interested parties or responsible authorities; the local authority can just go in. An amendment considered earlier would have removed the words, ''think that'', which make it far too easy for a local authority to move in and do something about the machines at a particular pub or location.

At the heart of our amendments is the desire to clarify the situation so that the discretion in the hands of the local authority is not so open-ended and wide-ranging that it can muscle in as and when it chooses. It must have concrete evidence that something is amiss. We are attempting, as I am sure are the Government, to protect children from harm—to ensure that no under-18s play the category C and perhaps category D gaming machines.

Nick Hawkins (Conservative, Surrey Heath)

My hon. Friend will recall that I said in a debate this morning that organisations such as the British Beer and Pub Association had referred to making local authorities both judge and jury, which the Licensing Act 2003, with which my hon. Friend dealt in Committee, manages carefully to avoid. Does he agree that one reason why the BBPA is right to be worried about any legislation that says simply that authorities can act if they think that something is the case, is that it is terribly dangerous and moves away from the traditional way in which courts have previously considered issues such as this, and alien to the way in which our law has developed over the centuries?

Malcolm Moss (Conservative, North East Cambridgeshire)

My hon. Friend makes an extremely valid point. I believe that the Government have realised that the words ''think that'' are probably inappropriate, as they have struck out the clause in which they occur. They have not replicated the words in the new clauses. They have concluded that the wording is inappropriate and are seeking to address the matter in a different way, but even in new clause 18 we do not have the comfort zone—the back-stop—of a requirement for proper evidence, a proper hearing and an appeals procedure.

Nick Hawkins (Conservative, Surrey Heath)

My hon. Friend says that the Government have not replicated the words, but paragraph 15(1) of new schedule 2 states:

''The licensing authority which issued a permit may cancel it if they think that''.

In fact, the Government have gone back to ''think that'' in the new schedule.

Bob Russell (Liberal Democrat, Colchester)

They have had second thoughts.

Nick Hawkins (Conservative, Surrey Heath)

As always, I am grateful for the wit of the hon. Member for Colchester (Bob Russell).

Malcolm Moss (Conservative, North East Cambridgeshire)

I am grateful to my hon. Friend for pointing out that wording in the new schedule, as I had not seen it. He is absolutely right, and the Government have not addressed an issue that is of concern to the industry. I hope that they will address it at a later stage. We shall have to wait for what the Minister has to say.

A new definition in new schedule 2, which deals with the pub gaming machine permit, caught my eye. Paragraph 1(1) states that the licence holder ''may apply''. I would have thought that such permits would be mandatory. In other parts of the Bill, one is breaking the law if one does not have a permit, so I do not know why the word ''may'' occurs in this instance. If someone needs a permit, they have to apply to get one. It would be interesting to hear the Minister's comments on why the word ''may'' is used in that sub-paragraph rather than the word ''shall''.

Paragraph 5(1) states:

''A licensing authority may not attach conditions to a permit.''

Again, some clarification is needed. It seems that the process simply involves stamping a piece of paper; in other words, if one applies for a permit, they will get one. If conditions cannot be attached in any way, shape or form, why bother applying for a permit in the first case? If applicants will not be examined, if their background will not be researched, why bother with a permit?

Then we come to paragraph 9, which deals with fees. It refers to the payment of

''a first annual fee to the issuing licensing authority within such period after the issue of the permit as may be prescribed''.

In other words, one pays an up-front charge to the local authority for getting the permit, and then it

''shall pay an annual fee to the issuing licensing authority before each anniversary of the issue of the permit.''

Every year it will cough up another fee—for the privilege of what? The local authority will certainly have recouped the cost of the initial processing of the permit. I am at a loss to understand why one has to pay an annual fee. Of course, the fee may well simply be a way of giving local authorities yet another income stream, which I have to admit they drastically need, but it seems unfair on the permit holders that they have to pay an annual fee for the privilege of the permit.

It would be fine if the local authority were to say, ''We need to send our man or woman out there to conduct spot-checks to see whether under-18s are playing the machines.'' I understand that that is a possibility. It would be helpful to have the point clarified by the Minister. If, on the other hand, local authorities acted only on evidence from members of the public or responsible authorities about misuse and illegal playing of machines, I see no reason why there should be a group of spies nipping around to have half a pint and checking whether children are playing a category C machine at that moment. We need more clarification on that.

I turn to paragraph 21 of new schedule 2.

Don Foster (Liberal Democrat, Bath)

The hon. Gentleman is giving a detailed analysis of the new schedule. Before he jumps to the end, I ask him whether he shares a concern that I raised earlier with the Minister. Paragraph 10 says that

''An occupier of premises in respect of which a permit has effect commits an offence if without reasonable excuse he fails to produce the permit on request for inspection by —

(a) a constable,

(b) an enforcement officer, or

(c) an authorised local authority officer.''

In those circumstances, does the hon. Gentleman not question, as I do, why the occupier is referred to when, in paragraphs 9(1) and 9(2) reference is made to the holder of the permit? The occupier of the premises could be a tenant, so it would be strange if the tenant was the person guilty of the offence that was a result of something that should be the responsibility of the holder of the permit. Does the hon. Gentleman share my confusion?

Malcolm Moss (Conservative, North East Cambridgeshire)

I could not have put the point better. I am sure that the Minister heard that exquisite argument. The hon. Gentleman has raised an important issue. There are possibilities as to why a different word is used, but we ought to know the reason for the distinction between the holder of the permit in one paragraph and the occupier in another.

I was leaping forward to paragraph 21. It says:

''A licensing authority shall—

(a) maintain a register of permits''.

For what purpose does it have to have a register of permits? Further on, the paragraph says that:

''The Secretary of State may make regulations—

(a) requiring licensing authorities to give to the Commission specified information about permits . . .

(b) requiring the Commission to maintain a register provided to it''.

So it goes on.

This is bureaucracy gone mad. We are using paper at a rate of knots to achieve nothing. Most pubs have got one or two machines. Permits are given for a lifetime, unless the holder breaks the law, in which case the local authority will move in and remove them. Why do we need to keep a register of permits and pay somebody to keep that register up to date? Some parts of the new schedule defy logic.

I have covered most of my main points. At the heart of the matter is the need for pubs and licensed premises to have the comfort that a local authority or a particularly officious official in a local authority cannot muscle in and cause difficulties for them on a whim or because, based on his own thought processes, he believes something is amiss. Many pubs and licensed premises rely financially on the income from those machines. We need something tighter in the Bill so that licence holders have recourse to a procedure that is fair and equitable on all sides. We had that in the Licensing Act. I really do not know why the Government have not replicated that in the Bill. The new clauses and new schedule represent a complete change in the way in which this area of the Bill is written. Two clauses have been taken out. We have tabled amendments to achieve the ends that I have talked about.

I will be prepared to withdraw my amendment if the Government are prepared not to press their changes. Earlier we heard that they may well amend the amendments and new clauses that they have tabled. If that is the case, why not leave the Bill as it is? We will not press our amendments, the Government will not press theirs and we can revisit the matter on Report when they have had a little more time to think about the issues. I understand that the consultations with the British Beer and Pub Association are proving extremely profitable on both sides. Perhaps the Government can come to some arrangement that satisfies all groups.

Don Foster (Liberal Democrat, Bath)

Will the hon. Gentleman reflect on what he has just proposed? We would have difficulty supporting one of his amendments—that relating to an automatic entitlement to four machines. I hope that he may be prepared to exclude that from the deal that he seeks to broker with the Minister on behalf of the Committee.

Malcolm Moss (Conservative, North East Cambridgeshire)

I thought that I explicitly said that I would not press any of my amendments, including the one that seems to offend the hon. Gentleman.

Don Foster (Liberal Democrat, Bath)

I was seeking to point out that, were the hon. Gentleman unsuccessful in his negotiations with the Minister, I hope that he would not be minded to press that particular amendment to a vote at this stage.

Malcolm Moss (Conservative, North East Cambridgeshire)

I am sorry. I misunderstood the hon. Gentleman. I am not setting a condition. It is an open-ended deal. The Minister can accept it if he likes, but I suspect that he probably will not. In the interests of getting proper and efficient legislation on to the statute book, the Government ought to reflect on the arguments that have been advanced. They have indicated some sympathy with—

Don Foster (Liberal Democrat, Bath)

The tenor.

Malcolm Moss (Conservative, North East Cambridgeshire)

Yes, they have indicated some sympathy with the tenor and approach of the British Beer and Pub Association. It is in the Government's interest not to press the changes at the moment, but to reflect on them and to come back with something that does the job better for all parties.

Julie Kirkbride (Conservative, Bromsgrove)

I congratulate my hon. Friend the Member for North-East Cambridgeshire (Mr. Moss) on a well argued case. He displayed a huge command of the detail of what the Government are proposing. I agree that those proposals are extremely flawed. I suspect that some of his experience was gained during the passage of the Licensing Act, which he took through the House on behalf of Her Majesty's Opposition and which had similar flaws to those in the Bill.

The thing that comes over most strongly is the bizarre bureaucracy that the Government wish to establish in relation to relatively innocuous gaming machines in pubs. The Government have a reputation for bureaucratising every aspect of our lives. Since 1997, regulation has come at something of a pace. The level of bureaucracy established in the new clauses seems, as my hon. Friend has suggested, completely unjustifiable and incomprehensible.

That reflects the Government's obsession with the paper chase and creating jobsworths in local government without producing anything that is of any benefit to the public. Of course, someone has to pay for it, and we are worried—as with the Licensing Act—who that might be. To a certain extent, it will be the pubs, and I have great sympathy with their predicament. They are right to say that there are many threats to their profitability at the moment, coming largely from the Government's agenda. It is a vibrant sector, which must be successful if the Government's employment record is to be successful—they often like to tell us that it is. We need pub jobs. They are a good way of soaking up flexible employment opportunities throughout the UK.

Bob Russell (Liberal Democrat, Colchester)

Soaking up?

Julie Kirkbride (Conservative, Bromsgrove)

Forgive me. I fear that, yet again, the Bill will be akin to the Licensing Act in damaging the pub industry throughout the UK. If it does not damage the pub industry by creating new licences that have to be paid for, it may end up attacking local ratepayers—a worse outcome for politicians—who are already exercised about council tax. Despite the Government's largesse in the recent Budget announcement, I fear that that will be a big issue in the run-up to the general election. Someone has to pay for what the Minister proposes in the clauses, and neither the pub industry nor council tax payers are fair targets. Both communities will be deeply unhappy when they realise what is in the offing.

The lack of a consistent case in the Government's arguments throughout the passage of the legislation is bizarre. When we first set out to allow a different style of casino in the UK—the Las Vegas-style casinos with category A machines—the Government were more than happy to allow the market to decide where those creatures would be placed. The Government spent an awful lot of time on Second Reading saying that there was no problem and that the market would ensure there was no rise in the number of problem gamblers because of the proliferation of hard gaming casinos. They told us that we could rely on the balance between demand and supply to create a fairly benign environment. That was their argument concerning category A machines in regional casinos, as they have come to be called.

The Government did not get away with that argument and they subsequently presented the option of just having 12—still too many in my opinion, but nevertheless it is a cap. If it was okay to limit the number of regional casinos, which are much more damaging beasts as far as problem gambling is concerned than category C machines in a pub, why cannot the argument apply to pubs?

This morning, I questioned the Minister when he prayed in aid the experience of Australia. We are pleased that the Government are cautious about changing our gaming laws, having been to Australia to see what a complete disaster was brought about when it changed its laws on gambling. We are encouraged by their caution, but the worry in my mind is that the caution is misplaced. It did not exist with the important issue of category A machines, but it exists in spades with the fairly benign regime that has existed for many years in the UK.

No one has ever suggested that there is a problem in pubs on the street corner that want to have or to keep gaming machines that are much less addictive in encouraging punters to play on them. Category C and D machines are completely different from category A machines. I would not mind how many casinos the Government allowed throughout the country if they were not proposing to put category A machines in them.

Clive Efford (Labour, Eltham)

The hon. Lady suggests that category C machines are less addictive than category A machines. On what does she base that statement?

Julie Kirkbride (Conservative, Bromsgrove)

I base it on the experience of America and Australia where there have been serious problems when category A machines have been introduced. In areas where casinos offer that sort of entertainment, problem gambling is much more prevalent in the local population than in areas with access to category C and D machines, which do not have gambling problems in their communities. Category A machines seem to have an impact.

The idea of regeneration and money to spend in those communities would not exist if money did not follow the introduction of category A machines. That happens only if more people are enticed to play them. Some people are enticed to play them without a problem arising, but for others it destroys their lives and the lives of their families. If the Minister had been to Earls Court not so many months ago, he might have seen a display of gaming machines. I had never been launched into such a different world as the one that surrounded me when I walked into Earls Court that day. Very clever people spend their lives producing machines that are designed to entice players to spend more than they can afford, not just what they can afford. That is the point of them.

Nick Hawkins (Conservative, Surrey Heath)

It would be useful to put on the record the fact that my hon. Friend is, I think, referring to the Amusement Trade Exhibition International that the British Amusement Catering Trades Association organised at Earls Court.

Julie Kirkbride (Conservative, Bromsgrove)

My hon. Friend is assiduous about such matters. That was the exhibition that I visited. I am sure that he was also there but, sadly, we did not meet. He was also right to tell me that there will be eight and not 12 regional casinos, but that is still too many.

To return to my original point, the issue is the bureaucratic measures that the Government are seeking to introduce for pubs that want to have more than two gaming machines. Under the present benign regime for gaming in the United Kingdom, which offers plenty of opportunities and creates few problems in relation to those opportunities, the average number of gaming machines in pubs is just over one, although more are allowed. That means that many pubs throughout the country do not want machines, would not think of having them and would find that their clientele—I would be one—did not want to go into them if a wretched machine was dinging in the corner all the time. However, other pubs find them a useful way of maintaining reasonable profitability.

The market has already decided that only a certain number of pubs would find gaming machines attractive and that many others would not go near them with a bargepole. Given that the market has already established that loudly and clearly for the Minister, why can he not see for once that the way forward is not to create enormous bureaucracy and a paper chase to restrict pubs to two machines? If a pub is changing and wants more slot machines, or a new pub is being introduced, there could be a simple rule that it could have up to four, because few would take up that offer. Those that did would almost certainly be allowed to have them anyway under the Government's procedures for bureaucratising the process. It is a demand-driven issue. We have already established that, on average, only one gaming machine exists in pubs. Why not let those pubs that attract a clientele who enjoy gaming machines have their four machines without creating such bureaucracy? The country pubs that do not want machines should not have to have them. From a historical perspective, the market has been shown to work.

I hope that the Minister takes up the offer on the new clauses from my hon. Friend the Member for North-East Cambridgeshire. More discussions with representatives of the pub industry would be valuable. A much more reasonable compromise could be achieved, which would be good for everybody. It would be good for local council tax payers if we could cut the paper chase. It would be good for pubs to reduce bureaucracy—the average pub manager runs the gauntlet of bureaucracy every time he opens the door to his customers. It would also be good for the UK if government in general stopped wrapping people up in red tape. It is a significant and potent charge against this Government that everything they seek to do, they seek to do by regulation, and by overly bureaucratic regulation.

The measures under discussion are the perfect example of bureaucracy gone mad. I hope that the Minister has listened to the arguments from Opposition Members and to what the broad brush of Opposition want to do with the new clauses, despite our differences with the Liberal Democrats over details. I hope that he will think again on Report.

Peter Pike (Labour, Burnley)

May I make it absolutely clear in response to what has just been said that only one amendment, No. 369, has been moved? There are a number of amendments in the group. In accordance with normal practice Government amendment No. 360 is not selected—amendments to delete clauses are not selected, as I told the Committee earlier. I will put the question at the appropriate stage, when the clauses stand part of the Bill, and Members can vote against the amendments if they do not want them to be accepted.

Later, we will reach the Government amendments and new clauses in the group. They are being debated but they have not been moved. The Minister can say, if he wishes, what he intends to do at that stage, but those amendments have not and will not be moved during this debate. I hope that that clarifies the position for all members of the Committee.

Richard Caborn (Labour, Sheffield Central)

I have great sympathy with the concerns of the hon. Member for Bromsgrove (Miss Kirkbride) about the proliferation of machines. She argued from a very good standpoint. Some of her arguments do not fit the conclusion, but we will leave that. It amazes me that here we are debating a permit, which probably includes a little bit of bureaucracy, but the amount of bureaucracy that will be removed has not been considered. I have referred to the Licensing Act 2003 on several occasions. In that legislation, we are condensing six licensing regimes into one. By any standards, that will save hundreds of millions of pounds over time, and that saving will, I hope, be reflected in efficiency and prices as well.

The Gaming Act 1968, again by any standards, is bureaucratic and draconian, but even if one wants only to change the amount of money put into a slot machine or the amount paid out as a prize, we in Parliament have to do so by statutory instrument. The aim in 1968 was to drive crime out of gambling, and as a result, one of the most draconian Acts ever—which included the casino licence, the most difficult licence to obtain—was put on the statute book. The authorities go back about four generations to ensure that there are no criminals in one's family, so it is a bit difficult to get a licence these days. Yet we are arguing about issuing a permit because it will supposedly bring down the industry. Quite honestly, I have never heard such claptrap in my life. Hon. Members should stand back and look at what we are trying to achieve. We are removing bureaucracy; we are streamlining the system, which the industry has broadly welcomed; and we are modernising in a way that many people did not believe possible.

Julie Kirkbride (Conservative, Bromsgrove)

The Minister is being careful about what he chooses to draw the Committee's attention to. Even if I were to accept the Government's argument—I will in part, for the sake of this debate—the fact is that more bureaucracy could be removed and that would not be a bad thing to do. Therefore, if the Minister says that he is getting rid of some of it, that does not mean that he should not try a little harder to get rid of the other bits to which we object. If he were really being honest—I shall not press the indulgence of the Chair too much on this point—he would admit that the Government have introduced many other measures that the pub industry is upset about. The licensing of gambling is just one small part of the bureaucracy that has been the hallmark of this Labour Government.

Richard Caborn (Labour, Sheffield Central)

I shall not go down that avenue. I should be delighted to discuss the leisure and hospitality industry, and what the Government have done to try to streamline it, modernise its skill base and bring it into the modern electronic age. There are many parts to the hospitality industry, and this sector is one of them. If one were to link it with tourism, the figures would speak for themselves. It is clear that the measure is about removing bureaucracy, and streamlining the sector and making it fit for the 21st century.

Julie Kirkbride (Conservative, Bromsgrove)

I wonder whether the Minister would let us know when he last had a conversation with Mr. Bob Cotton, who represents the leisure industry. I do not believe that he would tell the same story.

Richard Caborn (Labour, Sheffield Central)

I probably speak to Bob Cotton every week.

Bob Russell (Liberal Democrat, Colchester)

At the Sheffield trades and labour club.

Richard Caborn (Labour, Sheffield Central)

Not at the Sheffield trades and labour club but in London. I work closely with Bob Cotton on the hospitality and tourism industry, and he is on the committee that I just set up for the implementation group on tourism. I speak with him on many occasions. Just to digress—

Peter Pike (Labour, Burnley)

Order. Please return to the amendments.

Richard Caborn (Labour, Sheffield Central)

I just want to put it on the record that Bob Cotton's job on the hospitality for the Olympics was absolutely superb—first class. It is very good working with him. I shall now try to answer some of the specific questions that have been asked.

I understand the concern expressed by the hon. Member for North-East Cambridgeshire about the licensing authority's judgment when considering removing the exemption to allow gaming machines. However, I genuinely believe that it is right that an authority's use of judgment is not restricted. New clause 18 goes further than clause 268 in setting out the steps that an authority must take when considering making an order to remove entitlements to gaming machines. It states that the authority must notify the licence holder of its intention to make such an order. It also states that the authority shall consider representations made by the licensee and hold a hearing if one is requested. If an authority decides to proceed with an order, it must inform the licensee in writing of its reasons for doing so. There is also a full right of appeal in the magistrates court against the making of an order. We believe that it is right to establish such checks and balances.

On application for a grandfather permit, the licence holder will have to apply for a permit and pay a fee. The permit will be granted automatically. Just to give a feel for the figures—the hon. Member for North-East Cambridgeshire asked for them—the present fee for a permit is £32, and I would expect the new figure to be about that.

The hon. Gentleman asked why no conditions would be attached to the permit. The application will confirm the appropriateness of the applicant. The permit itself is clearly defined and needs no conditions.

The annual fee pays for enforcement and for inspections to ensure that there is not an excessive number of machines and that they are of the right category. Budd raised the problem of taxi offices and, to some extent, fish and chip shops and so on. The authorities had real difficulties policing such places. The problem had got out of hand, particularly in the capital, where some establishments were not even using what we now call category D or even category C machines. Some of the harder gambling machines were being found in some areas. The reason was that those areas were not properly policed, and we take responsibility for that.

People are concerned about this type of framework, as demonstrated by the hon. Member for Bromsgrove, who is raising the issues. If we establish the structure, it must be properly licensed and policed. If it is not, the whole thing will fall into disrepute. To some extent, that is what happened before. It is something that we had to start pulling back on. People were putting all sorts of machines into taxi offices and they were never policed.

Malcolm Moss (Conservative, North East Cambridgeshire)

I take on board the Minister's arguments about policing, but as far as pubs are concerned there has been no argument about any substantial breaking of the existing law on the number of machine permits issued under the old system through the magistracy. So why are we trying to mend something that is not broken?

Richard Caborn (Labour, Sheffield Central)

As with many such things, there were, as the hon. Gentleman knows, no figures on that. We took a realistic approach to the issue. Premises will have grandfather rights, and the status quo will continue: if establishments have five or six machines, they will continue to have those machines. The permit will be granted automatically and the fee will be dealt with automatically. As I said, there is, on average, slightly more than one machine per establishment, and we propose to allow establishments to have two machines. We think that that is right and we have, at least, established a generous baseline. Any establishment that wants to apply for more machines can do so. If they are refused, there are ways in which they can appeal.

That is an argument that will go on. We believe that we made the right judgment. Why did the trade organisation want to set the limit on machines at four and not at three or two? We have, at least, tried to argue our case rationally. The hon. Gentleman may not accept the rationale, but there we are. As Brian Clough always said, I am convinced that we are right.

The hon. Gentleman raised the use of the phrase ''think that'' in the Bill. Counsel has considered those words carefully. We believe that they are simply plain English. They do not allow an authority to evade its normal decision-making responsibilities or process. It must consider all decisions properly. That is why ''think that'' is in the Bill and why paragraph 1 of new schedule 2 says ''may apply'' rather than ''shall apply''. It says:

''A person who applies . . . for . . . or who holds an on-premises alcohol licence''

will be automatically entitled to two machines. They can also apply for more machines by way of the pub gaming machine permit. They do not have to apply for a permit if they do not want more machines. That is why ''may'' is used rather than ''shall''.

Responsibility for compliance with the permit rests with the permit holder. Paragraph 1 of new schedule 2 explains who may apply for a permit.

On removal of exemptions or machines, we are aware that new clause 18 does not replicate the words in clause 268(2), and will table amendments to address that.

I move on to the register of permits. It is important for authorities to keep a record of the premises that have been issued permits under the Bill. That is to ensure the effective regulation of illegally cited machines. In the age of electronic registration, that should not be overly bureaucratic.

The hon. Gentleman asked us to withdraw the amendments. We do not believe that that is necessary. We have developed the amendments and expect to add more, but we are confident that they do the job and do it well.

Malcolm Moss (Conservative, North East Cambridgeshire)

Before we broke for lunch, I put a question to the Minister. He gave a response that I honestly do not understand and I would be grateful if he revisited it. Clause 267(7), which one of our amendments would have deleted, refers to

''a code of practice under section 23''.

In other words, the gambling commission would presumably be involved, at a remove, in much of the process.

At the time, the Minister referred to clause 16. He probably meant new clause 16. I cannot see where in new clause 16 that kind of relationship is referred to. If the Minister is unable to clarify the point now, perhaps he could do so at a later stage or write to the Committee so that we understand exactly where the reference to codes of practice will occur.

Richard Caborn (Labour, Sheffield Central)

It would probably be better if I wrote to the Committee.

Peter Pike (Labour, Burnley)

We are debating new clause 16 in this group.

Richard Caborn (Labour, Sheffield Central)

Yes. I shall clarify the point in writing. If there is a fault, we will rectify it.

Malcolm Moss (Conservative, North East Cambridgeshire)

I drew that to the Committee's attention because I followed what the Minister said last time, but I could not make it stack up. Either there is an oversight, in the sense that the code of practice has not been written into the new clauses, or the Government have taken our amendment and deleted the reference from the Bill, in which case we are very grateful, because we have not had to propose it.

As I understand it, it is up to me to withdraw amendment No. 369. I am disappointed in the Minister's response because he has said on more than one occasion that amendments in this group will be taken up on Report, so we have not yet got it right. To include the new clauses at this stage seems slightly premature, but we shall no doubt revisit the matter on Report. On the basis of our discussion, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Question, That the clause stand part of the Bill, put and negatived.

Clause 267 disagreed to.

Clause 268 disagreed to.

Clauses 269 to 272 ordered to stand part of the Bill.

Schedule 11 - Prize Gaming Permits

Malcolm Moss (Conservative, North East Cambridgeshire)

I beg to move amendment No. 324, in schedule 11, page 190, line 21, at end insert

'for a period in excess of six months'.

Peter Pike (Labour, Burnley)

With this it will be convenient to discuss amendment No. 325, in schedule 11, page 190, line 24, at end insert

'(3) ''Occupy'' for the purpose of this paragraph shall mean to have one's place of business in, whether or not that business actually operates or is open to the public'.

Malcolm Moss (Conservative, North East Cambridgeshire)

I will be brief. Paragraph 13(1) states:

''A permit shall lapse if the holder ceases to occupy the premises specified under paragraph 11(1)(c).''

We want to add the words

''for a period in excess of six months''.

A permit will lapse if premises are left unoccupied, but there may be very good reasons, such as seasonality or renovation, why occupation in the strict sense is not possible or is broken for a short period. We have asked for a period of six months to give a little leeway.

Don Foster (Liberal Democrat, Bath)

I was just reflecting on the sensible proposal made by the hon. Gentleman, and I wondered whether he shared my interest in the language used in the schedule. Does it imply that the holder of the licence is the occupier on this occasion? During a previous discussion, a distinction was made between the holder of a licence and an occupier. Had he noticed that?

Malcolm Moss (Conservative, North East Cambridgeshire)

I did not notice it until the hon. Gentleman brought it to my attention. No doubt the Minister heard what he said and will reply if he so chooses.

Amendment No. 325 also refers to paragraph 13. It would add the words:

'''Occupy' for the purpose of this paragraph shall mean to have one's place of business in, whether or not that business actually operates or is open to the public''.

We are attempting to define occupation. It may satisfy the hon. Gentleman, but not the Minister.

Richard Caborn (Labour, Sheffield Central)

I thank the hon. Gentleman for his explanation of the amendments. I understand the concern that prize gaming permits should not be removed from a person who temporarily ceases to use the premises. However, the requirement for a six-month period is a little too rigid. We do not want permits for this sort of gaming to be in force when someone is not taking responsibility for the premises to which they relate. It is good legislative practice to ensure that if a permit holder ceases to occupy the premises, that permit lapses.

Whether someone ceases to occupy a premises will always be a matter of fact and degree. That will be judged by the licensing authority, which should be in a position to have all those facts. I am concerned that a six-month rule, as proposed by the amendment, would allow permits to continue even when it was clear that the premises had been abandoned by the permit holder, perhaps over a few weeks.

Mark Prisk (Conservative, Hertford and Stortford)

I wonder whether the Minister could clarify something. The question of occupation is important. He and the Committee will understand that there is a clear distinction between occupation and continued responsibility under a lease. Will he clarify the Government's view of the scope of the Bill and the implications of the amendment?

Richard Caborn (Labour, Sheffield Central)

I was just about to come to that. I will now read the next paragraph of my brief. If the hon. Gentleman had waited, he would have got the answer. On the amendment that changes the definition of occupation, we want the word ''occupy'' to bear its natural meaning. We want the premises to which a permit relates to be the premises where the prize gaming is offered. I am afraid, therefore, that I cannot see any benefit to the change.

Malcolm Moss (Conservative, North East Cambridgeshire)

I am prepared to negotiate on six months. The Minister said that he was sympathetic to the idea that there should be some kind of time limit. Perhaps three or four months would be better, but there may be circumstances—let us say that there has been an incredible fire on the premises that has gutted the place completely—when it may take up to six months to get people in. The insurance claim could go on and on before it was settled. The person then has to get the builders in to renovate the place. Are there other means in the Bill whereby some comfort could be given to operators that if they face those circumstances, their permit or licence would not be revoked as a result of lack of occupation?

Richard Caborn (Labour, Sheffield Central)

I hear what the hon. Gentleman says. I am trying to work out whether that can be accommodated. Whether a long lease can be viewed as occupation—or a short lease or a freehold—is a question of fact as well as of law. The lease could still exist without occupation. If there was a fire which has gone out, the question is whether the lease continues. In law, the person still occupies the premises even though those premises have burned down. Therefore that person would continue to hold the permit. In law, the person still owns or leases the building despite the fact that it has burned down. That is occupation, so the holder continues to have the right of the licence or the permit. I do not believe that the hon. Gentleman's argument stands up.

Mark Prisk (Conservative, Hertford and Stortford)

It is important to tease out matters so that they are on the record. The Minister is being helpful towards that end. Reference has been made to a long lease. As the hon. Gentleman knows, the Government are keen to reduce that under legislation, possibly through the Department of Trade and Industry, but I shall not stretch the Committee's patience too far in that respect. Will he confirm that the lease, not the physical occupation, defines the responsibility?

Richard Caborn (Labour, Sheffield Central)

I am advised that it could be either. It is worth testing the matter, but the rationale is that, presuming that the holder is law-abiding, clearly we do not want to put that person out of business if circumstances such as the burning of the building arise. We want to make sure that he is put back into business at the earliest opportunity. The drafting of the provision covers such circumstances. I reassure the Committee that the Bill will protect such a person. It will not protect the rogue operator, a provision with which I am sure we all agree. We want to leave the permits in operation for six months in case some difficulties arise. I hope that, on balance, the hon. Member for North-East Cambridgeshire will be reassured by what I have said and withdraw the amendment.

Don Foster (Liberal Democrat, Bath)

I am conscious that the Committee wants to make a decision and that we may have to have a natural break soon. I raised in a slightly light-hearted way the issue of occupation, but clauses 271 and 272, which relate to the new schedule, make it clear that the person who has the permit is the person who is providing the facilities, not necessarily the person who is occupying them. The person providing the facilities could have a tenant who was doing the work.

Yet, under the schedule, the person who gets into difficulty is the occupier, not the person providing the facilities. When I referred to the matter earlier, I was being slightly jocular, but I am now being slightly more serious.

Richard Caborn (Labour, Sheffield Central)

I think that it can be either. The occupier can be the person who owns the building and, thus, the operation.

Nick Hawkins (Conservative, Surrey Heath)

I have a helpful suggestion.

Richard Caborn (Labour, Sheffield Central)

It will be the first one.

Nick Hawkins (Conservative, Surrey Heath)

The Minister is not being entirely fair when he says that, given that he accepted one of my amendments, albeit a long time ago. Will the Government go away and think about the issue again? If they did not use the term ''the occupier'' and returned to the other terms of art that already exist, such as ''the personal holder'' and ''the premises licence holder'', there would not be the danger of the confusion that is felt not only by the hon. Member for Bath (Mr. Foster), but by my hon. Friends and the British Beer and Pub Association. If, rather than blurring the issue by referring to occupiers, which may have one meaning or another, the Minister referred to premises licence holders or personal holders, that might solve the problem.

Richard Caborn (Labour, Sheffield Central)

There is no disagreement in Committee. We all agree on the object of the exercise, although the wording may need to be revised. I have put forward a clear case, which members of the Committee do not accept. I shall take away the matter to see if we need to alter the wording—not the intention—to make it clear. I shall consult counsel.

Don Foster (Liberal Democrat, Bath)

The Minister is taking a sensible step. He will examine the definition in paragraph 1 of the schedule, which refers only to ''holder'', not to ''occupier'', which is not defined there or anywhere else in the Bill. I am sure that the Committee will adopt his approach.

Richard Caborn (Labour, Sheffield Central)

I try to inject an element of common sense into our proceedings from time to time. Whether counsel will accept it is a different matter. I shall ask my officials to examine the matter and we will return to the matter if we can. For the record, I do not think that there is any difference between us in what we are trying to achieve. If we can make the provision clearer by rewording it, we will try to do that. I think that I have given a reasonable explanation, and that may be sufficient, but I will revisit the matter.

Malcolm Moss (Conservative, North East Cambridgeshire)

I am grateful for the Minister's assurance that he will look at the matter again. We have put certain words on the record, and people who are involved with gaming permits can read Hansard and decide whether the Opposition's interpretation or that of the Minister is right and appropriate. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Sitting suspended for a Division in the House.

On resuming—

Peter Pike (Labour, Burnley)

Order. Before we move on, I point out that there will be more Divisions in the House. They can happen at any time, but they will certainly take place from half-past 5 when there will be a series of them, so I hope that the Committee will adjourn before that.

Amendments made: No. 179, in schedule 11, page 190, line 25, leave out 'he'.

No. 180, in schedule 11, page 190, line 26, at beginning insert 'he'.

No. 181, in schedule 11, page 190, line 27, at beginning insert 'he'.

No. 182, in schedule 11, page 190, line 29, leave out 'or'.

No. 183, in schedule 11, page 190, line 30, at beginning insert 'he'.

No. 184, in schedule 11, page 190, line 31, at end insert

', or

( ) sequestration of his estate is awarded under section 12(1) of the Bankruptcy (Scotland) Act 1985'.

No. 185, in schedule 11, page 190, line 42, after 'bankrupt),', insert—

'( ) the holder's interim or permanent trustee (in the case of an individual holder whose estate is sequestrated),'.

No. 186, in schedule 11, page 190, line 44, at end insert—

'( ) In relation to premises in Scotland—

(a) sub-paragraph (2)(a) shall have effect as if it referred to a sheriff within whose sheriffdom the premises are wholly or partly situated,

(b) sub-paragraph (2)(b) shall not have effect,

(c) the reference in sub-paragraph (3) to a magistrate's court shall have effect as a reference to the sheriff, and

(d) the reference in sub-paragraph (3)(d) to costs shall have effect as a reference to expenses.'.

—[Mr. Caborn]

Malcolm Moss (Conservative, North East Cambridgeshire)

I beg to move amendment No. 328, in schedule 11, page 193, line 25, leave out sub-sub-paragraph (e).

This amendment is very interesting, because I tabled it some time ago, before the Government tabled their new clauses and amendments to clause 267, which we have just debated. My amendment would delete from paragraph 22(4)(e) of schedule 11:

''The Secretary of State may make regulations . . . excusing licensing authorities, wholly or partly, from compliance with sub-paragraph (1).''

Lo and behold, sub-paragraph (1) states:

''A licensing authority shall . . . maintain a register of permits''.

We have just had some new clauses stating that there must be a register of permits, without the proviso in paragraph 22(4)(e) that a licensing authority can be excused from having such a register. I wondered why there was inconsistency in the Bill yet again.

Richard Caborn (Labour, Sheffield Central)

I agree that the local authority should be responsible for maintaining a local register of permits issued. However, we would not wish to maintain the requirement for ever if it were the case that a nationally run register organised by the commission turned out to be more effective than the local register, or it became evident that local registered permits were not required and served no purpose. That is an example of our building in options to lift the administrative burden if it turns out that the extra red tape serves no purpose.

We have no plans to remove locally organised registers unless the commission takes over the task, or there is general agreement that the register is not needed. Paragraph 21(4)(e) of new schedule 2 contains the same power to excuse licensing authorities from compliance. I hope that with that brilliant explanation of why we need the registers to start with, but are still being flexible—what the hon. Gentleman might call future-proofing—he will withdraw the amendment.

Malcolm Moss (Conservative, North East Cambridgeshire)

I am grateful to the Minister for pointing out where the words appear in new schedule 2. I got there marginally before he did, and as they are there I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Schedule 11, as amended, agreed to.

Clause 273 and 274 ordered to stand part of the Bill.

Clause 275 - Fairs

Mark Prisk (Conservative, Hertford and Stortford)

The purpose of my contribution is to seek clarification, which I am sure the Minister will be able to provide. The clause states:

''A person does not commit an offence under section 30 or 34 by providing facilities for equal chance prize gaming if—''

and then lists three specific conditions. I am concerned about paragraph (c), in which the condition is that

''facilities for gambling (in whatever form) amount together to no more than an ancillary amusement at the fair.''

I know what an amusement at a fair is, but will the Minister clarify the scope of the term ''ancillary amusement''? It is an important point in relation to the nature of the fair's business, and if the Minister will enlighten us about that, the whole Committee will benefit.

Richard Caborn (Labour, Sheffield Central)

A funfair's rides and shooting ranges represent the majority of what it does. The gambling element of what it does would be ancillary.

Mark Prisk (Conservative, Hertford and Stortford)

The Minister is being very helpful. He referred to the majority of what fairs do. Is that in terms of value, by which I mean turnover or profit, or in physical terms—the number of amusements that constitute the fair?

Richard Caborn (Labour, Sheffield Central)

That is a judgment to be made. ''Majority'' could refer to value or volume in judging what is ancillary. I am trying to get my mind round what would happen if the betting was marginally larger in volume. At the moment, there is a test under the Lotteries and Amusement Act 1976, and it may well be that that test could apply in this case. The next question is: what is the current test? I have no doubt that if the hon. Gentleman refers to the 1976 Act, he will find out. I have answered his question before he asked it.

Mark Prisk (Conservative, Hertford and Stortford)

The Minister said that he anticipated that the test will probably be similar to the one in the Act. Does that it mean that it will be the same? He will understand that we are trying to ensure that the record is clear so that, although there may be a deficiency in the Bill, our deliberations will clarify the matter. Is the test in this Bill the same as the one in the earlier Act to which he referred?

Richard Caborn (Labour, Sheffield Central)

Yes, there is the same meaning as in the 1976 Act. I have no doubt that hon. Members will refer to that Act to see what the current test is.

Don Foster (Liberal Democrat, Bath)

Give us a clue.

Richard Caborn (Labour, Sheffield Central)

I will not: I will leave hon. Members to research that themselves.

Question put and agreed to.

Clause 275 ordered to stand part of the Bill.

Clauses 276 to 278 ordered to stand part of the Bill.

Schedule 12 agreed to.

Clause 279 - Exceptions to offences

Malcolm Moss (Conservative, North East Cambridgeshire)

One aspect of the clause is causing concern and consternation in particular quarters. Subsection (3) reads as follows:

''A person does not commit an offence under section 30 or 34 by making or accepting a bet, or by offering to make or accept a bet,''—

then come the crucial words—

''if he acts otherwise than in the course of a business.''

I understand that those words are included in an earlier Act of Parliament, under which acting by way of a business, in so far as those activities are concerned, required a bookmaker's permit. However, I also understand that the words are not defined in the earlier legislation. The absence of any definition is at the heart of the current concerns.

The lack of that definition is particularly important in the context of betting exchange customers, who, although not holders of bookmaker's permits—or, in future, operating licences—can, it is said by some, operate as bookmakers through the medium of a betting exchange by arguing that they are acting privately and in that sense not acting in the course of a business.

I have no definition to offer the Committee myself. I would not say that this is a grey area, but it is an area of contention. The Government have included the words in the Bill and, depending on how they are interpreted, they can affect two major businesses in this country. Historically, bookmakers have taken bets in the traditional way and paid the general betting duty and, in the case of horse racing transactions, the statutory betting levy. However, the ongoing costs of running their business are well known. On the other side of the argument are the betting exchanges, which are a fairly recent development. They are expanding incredibly rapidly and doing excellent business. They may well be the future. People may not bother to get in their car or walk down the high street and nip into their betting shop; they will simply sit at home operating their computer.

Have we got a level playing field and fair competition between those involved in the betting industry? There are the traditional bookmakers, to whom legislation that involves considerable costs of one kind or another has applied for a long time, and there is the new phenomenon of betting exchanges. I am no expert on these matters, but such exchanges would argue that they do not have the bookmakers' margin and do not gain massively from the activity. They probably take a small turn on the transactions—perhaps 2, 3 or 4 per cent.—that will not be as large as the bookmakers'. In making their book, bookmakers always build in a margin, so that they rarely lose out seriously.

I do not know whether the two activities are that different. As a layman, I think that, if someone sits at home laying off bets that other people take to an exchange, they may lose their house, but they may win a lot of money. The skill is in knowing what prices to offer and what to bet off. If someone is making a small fortune from their activity on the exchange, when and how—at what point—would that cross a threshold and trigger the definition

''in the course of a business''?

The Government have not yet addressed that. During discussions, they have more or less said, ''We do not know the answer. We will allow the gambling commission to sort it out later.'' That is as helpful as nothing to those involved. We shall return to the issue on Report, and it is a key question for debate in the other place. We need some flesh on the bones of the definition of the phrase

''in the course of a business''.

I am not arguing for one side of the industry against another. I have listened to both sides of the argument, but I am not an expert. However, I am here to scrutinise legislation and to ask questions about the meaning of words in the Bill. People who run such businesses say to me and other Opposition Committee members—no doubt to Government Committee members as well—that they have real problems with that definition because it could set up an uneven playing field, be discriminatory and attack the capital worth of their businesses and their revenue income. It may promote the new businesses, so that they have an advantage.

I do not know the answer to such questions, but I believe that the Government should have such answers and should not leave the matter for the gambling commission to decide at a remove. The uncertainty is such that the period implied—I suspect that it will be two years before it all kicks in—is unacceptable for businesses on both sides of the argument. It is important that the Government make some effort to define what the phrase really means and how it will impact on businesses on both sides of the argument. We shall come back to this point.

Richard Page (Conservative, South West Hertfordshire)

I want to follow my hon. Friend in saying that I am not coming out on one side or another. We are all seekers after definitions and truth, rather than people advancing particular arguments. The definition of a business occupied the scrutiny Committee for a considerable and inordinate time. It was obvious fairly quickly—even to somebody of my advanced years—that the Committee operated from a basis of extreme ignorance.

I discovered that nobody on the Committee had a betting exchange account, although a number had a bookmaker's account. In the spirit of true public service, I opened an exchange account to gain first-hand experience of how it worked. I applied to the Committee for a refund of the expenses involved in the gambling on and operating of the account, but that was refused. That was most unacceptable. One of the troubles of speaking like this is that Hansard will record these events and my saying that it was absolutely dreadful not to be given any expenses to operate an exchange account, whereas, obviously, hon. Members all realise that I am joking—don't they? Well, I think they realise, Mr. Pike.

It has become fairly obvious that we are operating two different systems. To become a bookmaker, you have to be licensed and to go through a series of probity tests. You take the customer's money, hold it in trust and are required to pay out at the end of the day—not that I am suggesting that you are a bookmaker, Mr. Pike, but you can appreciate the argument that I am advancing.

A bookmaker operates depending on what odds he quotes. Because he makes a book, at the end of the day, he may make 5 per cent. or 10 per cent. of the money he takes in. If he takes in £100 on the race, with any luck, whatever he pays out, he will put £5 or £10 in his pocket. If one goes to Brighton for a two-horse race, one will never find a bookmaker quoting evens on both horses. There is always a shade of the odds to leave the bookmaker with a small amount in their pocket.

Betting exchanges work on a different basis. When one puts one's money on a betting exchange—it is the equivalent of acting as a bookmaker—the overall book is designed in such a way that, if one were to lay that book, one would not win but lose. One's monies would gradually depreciate round after round and one would end up bankrupt. There is a choice: either lose to the betting exchanges round after round, or lose to the bookmakers round after round. The result is the same.

The bookmaking industry has become concerned about whether people are using betting exchanges to gain an unfair advantage. If a bookmaker uses the betting exchanges, he should declare it. He should say, ''This is part of my business. This is part of the trading that I do back and forth against my book.'' A bookmaker could gain considerable advantage by using betting exchanges but, in fairness, whatever profits they make, they have to pay part towards the levy and part towards the tax, which all other businesses must do throughout their operations.

A betting exchange simply takes a turn and acts as the conduit between the money coming in and out. The exchange will take a small amount—perhaps 2, 3, 4 or 5 per cent., depending on the exchange—on which a levy and a tax will be paid. The exchange will have a much greater turnover but, in ratios, make a much smaller amount of money. It will make a turn and, in theory, unless it behaves in a completely crazy fashion, and there are one or two relatively new betting exchanges that have behaved irresponsibly, it will not go bust.

Conventional bookmaking is quite legitimately asking the question that my hon. Friend the Member for North-East Cambridgeshire has asked: what is the definition of a business? There may be some bookmaking businesses that are not declaring what they are doing, and some may be using exchanges and knowledge in an underhand and covert fashion. The exchanges are, however, evolving a code of practice that they can put on record and use in conjunction with Customs and Excise and, in the fullness of time, the gambling commission, in order to ensure that everything is run cleanly and above board.

I do not know the extent to which an overseas bookmaker can tap into the system and use the exchanges and money from abroad to offset their book and to obtain an advantage. What I do know is that the number of people using betting exchanges is growing and the money coming in from overseas is growing. I understand that it is now around 20 per cent. One of the arguments for the Bill is that we need it to deal with new technology and all the changes that have taken place in this modern world.

That was the question put early on to the scrutiny Committee. It was asked what it saw as the definition of a business. It started off by making a number of recommendations but, as more and more knowledge emerged, it decided to throw the matter back to the Government. That is exactly what I am doing and what my hon. Friend is doing.

Don Foster (Liberal Democrat, Bath)

I have listened to the hon. Gentleman with considerable interest. He clearly has a much better understanding of how exchanges operate than I do. I will tell him privately my experience of trying to understand them.

In a nutshell, after the hon. Gentleman's lengthy contribution, is he merely asking the Minister to say whether an individual or organisation who lays bets on an exchange is or is not a business? If that is the gist of his question, we could ask the Minister for an answer and then move on.

Peter Pike (Labour, Burnley)

Order. Before I call the hon. Member for South-West Hertfordshire (Mr. Page), I must tell him that he is pushing me to the extreme. I am listening to him carefully. The clause covers exceptions to offences and, so far, he is in order, but he is pushing me to the limit, so perhaps he will keep himself in order.

Richard Page (Conservative, South West Hertfordshire)

I would never want to push you to the limit, Mr. Pike.

I must apologise for not making the point more clearly. Because of the open audit trail of betting exchanges, it is easier to trace and to identify offences, but there is concern that all is not fair and above board and that all is not cricket, which is why I have been going through the scenario for the Committee. The hon. Member for Bath—I was going to say my hon. Friend.

Richard Caborn (Labour, Sheffield Central)

It is getting a bit like that.

Richard Page (Conservative, South West Hertfordshire)

One never knows. After the next election—[Interruption.] Is the Minister going to intervene or is he getting a drink?

Richard Caborn (Labour, Sheffield Central)

I am getting a drink.

Richard Page (Conservative, South West Hertfordshire)

After the next election, we may need the support of my hon. Friend the Member for Bath to drive this great nation forward to even better and other things, or we may not.

To return to where we were. The Government need to go beyond what is in the clause. We want to understand the thinking behind the Government's way of going forward. It is not just a definition of a business that is needed. What will be the definition of customers who use betting exchanges? Will there have to have a certain volume of activity and transactions for registration? What will happen if there is a large overseas bet? Will that require any record keeping? Will passports and utility bills have to be provided to discover whether money laundering is involved? This is a can of worms and the Government must provide clear guidance for the industry on where we go from here.

You are right, Mr. Pike. The question, ''What is a business?'' is just the tip of the iceberg. The Government have avoided tackling the problem in the clause. They have ducked it, but I am now looking the Minister fair and square in the eye—it is no good him grinning and smiling at me—and asking him how he will deal with the severe problems that will arise.

Richard Caborn (Labour, Sheffield Central)

If that were the tip of the iceberg and we kept going, the iceberg would melt. I was going to quote another metaphor about cricket and taking a catch, but, as a good Yorkshireman, I will not.

The clause allows people to take part in and provide facilities for private betting and gaming, as defined in schedule 12, without committing an offence under the Bill. It is important to ensure that the Bill does not outlaw perfectly acceptable gaming and betting that takes place in private. The limits under the existing law are being preserved.

Subsection (3) contains protection for those who bet but are not doing so in the course of a business. It allows people to place bets using the services of a betting operator or a betting intermediary on a non-commercial basis without the need for a licence. It also allows private bets between friends and others to take place without any need for authorisation and without committing an offence.

I shall try to answer some of the specific questions that have been raised. The issue is not an easy one. As the hon. Member for Bath said, it has been bouncing around.

First, on the money limits to which hon. Members referred, precise boundaries would not be helpful as there will always be people who bet recreationally but in large amounts—people will know who they are. They would be caught, whereas people who want to evade a limit could always find a way to come under the threshold. Therefore, we do not believe that money limits would be helpful.

Betting exchanges are licensed as bookmakers under the same test. The Bill provides a specific licence with a specific test that protects the consumer. As the hon. Member for North-East Cambridgeshire acknowledged, bookmakers already live with a business test in section 55 of the Betting, Gaming and Lotteries Act 1963. The test is defined in that Act.

Otherwise,

''in the course of a business''

is a question of fact. It will be about the amount of activity carried on and whether the person holds themselves out for business. Given the possible variations, we think that it would be best to leave the matter for the commission. It is difficult to come up with a foolproof definition of all circumstances, as the hon. Member for North-East Cambridgeshire said. Therefore, we need a combination of common sense and flexibility, which is why we believe that the new commission, which is the regulator, ought to and will have powers to make a decision on

''in the course of a business''.

Mark Prisk (Conservative, Hertford and Stortford)

Presumably, therefore, someone must demonstrate that they are making or are seeking to make a profit from the activities.

Richard Caborn (Labour, Sheffield Central)

Not necessarily. In the course of business, the person running the business is one consideration. The people who are laying the business also need protection, so I would not think that the definition would rely solely on whether they make a profit on a particular transaction.

Mark Prisk (Conservative, Hertford and Stortford)

So someone who is self-employed, who clearly is not an enterprise in the corporate sense, would be included in the definition.

Richard Caborn (Labour, Sheffield Central)

Yes.

Bookmakers based abroad should be licensed in that country. If they are based here and are acting in the course of business, they need an operating licence. Again, if someone has an operating licence here, they can advertise and do all sorts of things. If they are licensed abroad and trying to ply their business here, they will not get the same advantages as a business licensed in this country.

How are users who act in business identified? The commission and betting exchanges will work together to identify parties who may be using exchanges to run a business, and a commission code of practice could also be developed.

Richard Page (Conservative, South West Hertfordshire)

I am sorry to ask this just as the Minister is drawing to an end. We have a real problem, in that one cannot lay a book on a betting exchange. A bookmaker can make a book because they can actively control the odds, whereas on the betting exchange the odds are on the screen, and one has no control over them. That is a fundamental difference.

The worry is whether there are people who are able to manipulate those figures from outside and using outside influences that may not always be honest—hence, my question about overseas bookmakers. Bookmakers in this country who are using betting exchanges and not declaring that are doing something unlawful, and they would be in severe trouble if they got caught; they could lose their bookmaker's licence. However, with regard to the other systems I am talking about, I wonder whether we should try to get some definition a little ahead of the gambling commission coming forward because, as my hon. Friend the Member for North-East Cambridgeshire says, that could take two or more years.

Richard Caborn (Labour, Sheffield Central)

I think that I follow the logic of that. The hon. Gentleman is saying that people would want to lay bets from abroad on to the exchanges, and he is asking whether that would be in breach of the law. One would have thought so. The hon. Gentleman's premise for his scenario is that odds cannot be given on the betting exchanges. That is not true; odds can be offered on the betting exchanges.

Richard Page (Conservative, South West Hertfordshire)

No, I did not say that.

Richard Caborn (Labour, Sheffield Central)

I thought that the hon. Gentleman did say that.

Richard Page (Conservative, South West Hertfordshire)

I thank the Minister for giving way. If someone goes to lay a bet on the betting exchanges, there are odds. If someone were to go through the piece of all the odds being offered, whatever happens—and we assume that they get the winner or loser as the case may be—if they had invested £100 they would come away at the end of the day with £92. They would not come away with £110. That is because in these circumstances a book cannot be laid in the same way as a bookmaker can make a book. At the end of a race, a bookmaker should be able to put some money in his pocket because he has got active control of the odds. However, if one goes on to the betting exchanges, one cannot control the odds; they are there for an individual to accept or reject. That is the difference.

Richard Caborn (Labour, Sheffield Central)

That might be the difference, but I do not know what point the hon. Gentleman is making. Someone might want to have a fixed-odds bet and the bookmaker might want to make his 5 per cent. or 10 per cent., but as far as I understand it on the betting exchanges it is those who are matching the bets up who get the commission in any case. Are we talking about the definition of what a business is, rather than trying to define what the betting regimes are—whether they are fixed-odds or on the exchanges? I do not follow the argument; I do not even know the question that the hon. Gentleman wants me to answer.

Richard Page (Conservative, South West Hertfordshire)

I fully accept that my inarticulate stuttering has not got through to the Minister, and I apologise for that. What I am endeavouring to say is that if one uses the betting exchanges to lay bets, it is impossible to run a business that will not eventually go bust, and, as I understand it, the objective of most businesses is to make a profit. That is why my hon. Friend the Member for North-East Cambridgeshire has perfectly legitimately asked whether the Minister would care to develop the definition of what is a business so that we can see where this is all leading, because the scrutiny Committee initially got itself into quite a muddle on the matter and, listening to the Minister, I can understand why.

Richard Caborn (Labour, Sheffield Central)

I can understand why it got into a muddle, because I have been got into a muddle as well.

I will try to deal with this. It is not possible to have a book on a betting exchange. I do not know where the hon. Gentleman is coming from and what he is asking me to define. I have defined what a business is, according to the legislation. I have also tried to explain how that applies to the exchanges and the bookies. There are some grey areas, and I have said that, within the context of this legislation, the regulator, with a dose of common sense on one hand and realism on the other, should be able to make a judgment; that is what the regulator is there for.

I have tried to give a definition of business and of exchange—and of exchange with regard to the bookies as well. I believe that my explanations will hold up well when the legislation is enacted.

Malcolm Moss (Conservative, North East Cambridgeshire)

We have had a reasonably good debate. I am not a betting man but I suspect that if people were listening to the debate and offering odds on whether the industry is any wiser at the end of it than it was when we started, generous odds would be given.

There is no definition in the 1963 Act. The same words are used, but no definition is given. That is the point that I made. We are no further forward than we were then. There may be an accepted definition or appreciation of what the words mean. It would be helpful to hear that from the Minister—whether the definition has been tested in court, there is case law on it, or whatever we need. It is my understanding that no clear definition is given in the 1963 Act or in the Bill.

The Minister agreed that the issue was contentious and difficult, that there were grey areas and that there was a division of opinion in the industry. However, he was determined to leave the issue to the gambling commission. I think that doing that is a cop-out. The attitude is, ''There are problems, so we'll leave them to one side. Let's not get too fazed about it.'' These provision will affect some of the biggest businesses in the country and allow an unelected group—of which nobody knows who the members will be—to decide the fate of such businesses on the basis of the definition of the words in front of us.

The Minister also suggested that somebody operating on a betting exchange might be trading—if that is the word—by offering bets on a regular basis. That person might be turning over huge amounts. Is the Minister saying that that does not matter because it is a private transaction between individuals at either end of a terminal? It would be helpful to know whether that is the definition.

Is running a business to do with advertising? Is it to do with running accounts? Should people be registering as a limited company or as a trading partnership? Those who do not wish to be caught up in a net of taxation or a levy, or to pay for the privilege of having a licence, will obviously not be communicating those factors to anybody. The betting exchange might give them the opportunity to trade on a massive scale. They take their losses as well as their gains. If the Minister is happy for somebody to make huge amounts of money doing that, let us hear him say so. If advertising is a component of running a business, then people are also off the hook if they do not advertise. That area must be addressed at some point. It is not best left to the gambling commission a few years hence.

Richard Caborn (Labour, Sheffield Central)

To a large extent, the hon. Gentleman answers his own question. On one hand, he wants everything to be laid down in the Bill, including the definition of business. On the other hand, he asks how we will deal with circumstances that may arise. What we have said is that, to future-proof the Bill and make sure that we can respond to the new electronic age, where information is passed electronically at a speed that would have been unimaginable 20 or 30 years ago, we must provide flexibility and powers so that a body that can respond to those circumstances as they arise.

The example that the hon. Gentleman gave was that, if the commission believed that someone was working outside the confines of the law and what is laid down in the Bill, it would have the power to intervene. I do not see anything wrong with that. The ultimate responsibility is with Parliament. As I have said, again and again, we are taking what was in the 1968 Act and enshrining it in a much more flexible way—taking the principles but making them more flexible and moving them into a modern setting. In doing that, we must invest some sovereignty in the regulator—the gambling commission—to allow it to deal with the fast-moving world in which we live. I see nothing wrong with that as long as the accountability lies with Parliament, which it does. We have therefore got the right to intervene.

This is a classic example of where, if we were to try to tie the matter down in the Bill, we would be outmanoeuvred in the space of a few weeks by those people who are incredibly bright, incredibly flexible and who will take Parliament all over the place. That is why we want experts in a regulatory position with powers to act fairly quickly if the need arises. That is why we are doing what we are doing.

Question put and agreed to.

Clause 279 ordered to stand part of the Bill.

Clauses 280 to 283 ordered to stand part of the Bill.

Clause 284 - Misusing profits of non-commercial prize gaming

Clause 285 - Enforcement officers

Nick Hawkins (Conservative, Surrey Heath)

I want to make a brief contribution, because I am always a bit worried whenever a Government—and, perhaps, particularly this Government—introduce new kinds of enforcement officers. This Government probably already hold the record, after seven and a bit years in office, for imposing more and more inspectors, officers and different kinds of people to operate their nanny state.

I have been quite involved in some of the discussions that we have had in Parliament on the security industry. I was the shadow spokesman on the Bill that became the Private Security Industry Act 2001. The right hon. Member for Walsall, South (Mr. George), has the distinction of being the Chairman of the Select Committee on Defence and has a long-standing interest in the security industry, as have I. We were asked to form a new all-party group on that industry, and many hon. Members from all parties became members of it.

We need to press the Minister on whether there are safeguards to subsection (1)(b). Under subsection (1)(a), the new gambling commission will

''designate employees of the Commission as enforcement officers for the purposes of this Act''.

I can see the logic of that, but I am much more worried about the wider implications of subsection (1)(b), which states that the commission

''may appoint persons other than employees of the Commission as enforcement officers''.

There does not seem to be any limitation on that. The commission can apparently designate anybody as an enforcement officer. That seems an astonishingly wide power and it would be helpful if the Minister would put on the record today exactly the kind of people whom the Government envisage might become enforcement officers, other than employees of the commission.

I do not have any problem with the payment to enforcement officers, but we ought to get a little more on the record about what the Government have in mind about a whole new class of people called enforcement officers under this legislation.

Richard Caborn (Labour, Sheffield Central)

For clarification, let me say that the people referred to are the gambling commission inspectors, who will replace the current Gaming Board inspectors. I hope that that helps the hon. Gentleman. The inspectors will move from being the Gaming Board inspectors to becoming the gambling commission inspectors. We envisage that the people mentioned in subsection (1)(b) are likely to be seconded from other regulatory agencies, such as Customs and Excise. We are moving from having Gaming Board inspectors to having the gambling commission inspectors and the other persons who have been referred to will be seconded from other regulatory agencies from time to time.

Nick Hawkins (Conservative, Surrey Heath)

The Minister is clearly suggesting that the only class of people who will have to be appointed under subsection 1(b) are those who already carry out policing-type functions for other bodies. If that is so, I am somewhat reassured.

The rest of the debate is in Hansard.