THE Treasury reacted with fury last night after details of a secret offer by government officials to slash tax on gaming were uncovered by The Times.

US casino industry leaders said they had been promised by the Government that tax on gaming in Britain would be cut by more than half to attract large foreign operators.

The news dragged Gordon Brown, the Chancellor, further into Cabinet divisions over the Gambling Bill as officials at the Treasury made clear he was unaware of the offer.

Yesterday it emerged that Mr Brown is one of at least three senior ministers unhappy about parts of the Bill, which is expected to lead to a dramatic expansion in the size and number of casinos.

The revelation that non-Treasury officials had been discussing a more generous tax regime has caused anger in the Treasury, where officials said no one had the authority to make statements on the Bill’s revenue implications.

Frank Fahrenkopf, the head of the American Gaming Association, said government officials proposed to cut tax on gaming from 40 per cent to between 15 and 20 per cent.

The minister in charge of the Bill has also been accused of interfering in tax plans for gambling. Tessa Jowell, the Culture Secretary, told Labour MPs in a briefing note written by Nick Bent, her special adviser, that the Gambling Bill would be “revenue neutral”, meaning no additional tax would be raised, The Times has learnt.

The row is the first time that Mr Brown has been linked to the controversy over the Bill, which has it second reading in the Commons on November 1.

To date the Chancellor has not spoken publicly on the plans, although one Whitehall source said Ms Jowell had complained privately of obstruction by Mr Brown.

The most vocal Cabinet critic is David Blunkett, the Home Secretary, who has raised objections that deregulation could attract organised crime.

John Prescott, the Deputy Prime Minister, has also questioned siting casinos in poor areas to boost local regeneration, on the grounds that they may create gambling problems.

There was further embarrassment for the Government after it emerged that Lord Levy, Labour’s chief fundraiser, had met the European head of MGM Mirage, the world’s largest casino operator. Lord Levy insisted that it was purely a social meeting, and MGM denied any suggestion of impropriety.

Ms Jowell defended the Bill yesterday, saying there was “a whiff of snobbery” and anti-Americanism in the opposition.

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