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Finance Bill

First, may I serve notice that we hope to have the opportunity to put our amendment 15 to the vote? We will also vote for the Scottish National party's amendment, although our reasoning is different; we seek a postponement of any changes to the duty regimes, as I shall outline. As the Committee is aware, the Government are seeking, through this and related clauses, to remove VAT from bingo while increasing bingo duty from 15 to 22 per cent. The purpose of our amendment is to delay the implementation of the rise in duty until the High Court resolves the legal position of VAT on bingo. I ought to make it clear at the outset that if our amendment is carried, we will also seek to delay the removal of VAT. We have no wish to widen the gaping hole in the public finances. Instead, we wish to prevent the Government from pre-empting the legal process through this sudden change to the system—after all, it was the Government themselves who launched the appeal to the High Court. The background to this change is a VAT tribunal last year, as has been mentioned, at which one of the major bingo groups, Rank, which operates the Mecca chain of clubs, successfully challenged the applicability of VAT to new, faster versions of bingo played during intervals in the traditional game. As we know, the industry as a whole has long argued that the so-called "double taxation" of duty and VAT was unfair. The tribunal found that it was also, at least in part, unlawful. As we know, Rank has not paid a penny in VAT on these games since, and Her Majesty's Revenue and Customs had to return more than £59 million in previous payments last November. As I said, it was the Government who appealed the tribunal's decision. I wish to stress that the Opposition are not expressing a view, one way or the other, on the legal merits of Rank's case, but we think that when the High Court has already heard the evidence and is expected to make a decision within weeks it is quite wrong of the Government to rush through changes to the system. It was only in February that the Exchequer Secretary claimed""that altering the tax regime would not be appropriate."—[Official Report, 25 February 2009; Vol. 488, c. 130WH.]" We are asking what the reason is for her volte-face. Ministers have even had the cheek to suggest that bingo operators are standing behind them on this. Speaking in the Budget debate, the Financial Secretary said that""overall, the announcements in the Budget on the taxation of bingo are welcome to the industry."—[ Official Report, 23 April 2009; Vol. 491, c. 434.]" I have to break it to them that they could not be further from the truth. The test case in the High Court has the potential to affect every operator and every form of the game. This is not some arcane spat between Rank and HMRC; other operators confirm that they have been watching the case closely as well, and that it has already altered their payment of VAT. As a result—this has been mentioned—nobody believes the estimates of VAT receipts from bingo that appear in the Red Book. Because operators have not been paying VAT on substantial parts of their business, they each believe that they will pay more if bingo duty increases. One operator, Top Ten, is not paying any VAT at all at the moment, Gala says that it will pay more tax as a result of the changes, and Rank had to issue a profits warning the day after the Budget as a direct result of the changes. The basis for the Government's figures appears even more curious when one examines recent parliamentary answers. Perhaps there is some credible explanation for why the Exchequer Secretary estimates that £65 million was raised from VAT on bingo participation fees in 2008-09 but only £50 million would be lost by its removal in 2009-10. When VAT receipts are projected for 2010-11, with VAT back at 17.5 per cent. throughout, they are estimated at only £55 million. These estimates are all over the place; they have gone from £65 million down to £50 million and back up to £55 million. Bingo clubs have been closing, so unless the Exchequer Secretary anticipates a new wave of bingo clubs opening, how does she explain the fact that the 2011-12 figure goes up to £60 million? To make one's puzzlement complete, the estimated boost to revenue from raising duty is given as a static £35 million in each of those years, so we have severe doubts about the figures being used by the Government. While I hope for answers on those points, the Government should at least say whether those are estimates of what the industry is actually paying or what the Government think it should pay. Those are two very different things, but the Exchequer Secretary appears to have said the latter. The Government's measures could take on a very different complexion, depending on the outcome of the High Court appeal. As I have said, we want the court to determine the merits of the case that it has only just heard. Surely the Government can see that their proposals can be properly evaluated only after the Court's decision? I fear that the Government know that all too well. The changes in the Bill have all the hallmarks of a pre-emptive strike by the Treasury. If the Government were in any doubt about the outcome of the appeal, in revenue terms it is now heads the Government win, tails bingo loses. Given our overall position of awaiting the ruling of the High Court, we will support both amendments 14 and 9 if they are pressed. The effect of amendment 15 would be to allow Ministers the opportunity to think again in the light of the High Court's verdict and take whatever action seems reasonable in that context at the time. Ironically, the Red Book figures suggest that the Exchequer would be better off while it waited. The industry wants to wait and, until we have the Court's ruling, the fairness of the Government's proposals must stand in question.