HL Deb 06 November 1996 vol 575 cc710-20

8.3 p.m.

Lord Kimball

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

This is a one-clause Bill which has one specific purpose: it removes what the noble Lord, Lord Wyatt, so vividly described in his article in The Times of 1st October, as, an absurd hurdle that ruins the [Tote's] ride [to profitability]". The Bill does one thing and one thing only. It will allow the Tote to take bets on non-sporting events. The Tote's betting offices have been hit by the introduction since March of this year by all the bookmakers in their shops of betting on the Irish lottery numbers. This now amounts to as much as 2.5 per cent. of all their off-course turnover. The fact that the Tote has not been allowed to take these bets has meant that since March of this year it is estimated that the Tote has been deprived of over £1 million and that, in a full year, it would be deprived of in excess of £1.5 million. This is money that has been lost to racing. After all, all the profits of the Tote go to racing.

The Tote has some 200 betting offices out of approximately 9,000 off-course betting shops in this country. The problem is that, if a punter goes into a betting shop and cannot get the bet that he wants—and in this case it is the popular amusement of betting on the numbers that are coming out in the Irish draw—he goes into another betting shop where he can get the bet that he wants. Moreover, he may not bring his patronage back to the Tote shop. So it is a serious disadvantage.

My Bill does no more than put the Tote shops on an equal footing with the bookmakers. Racing needs the Tote's profits and the Tote needs this Bill.

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

8.6 p.m.

Lord Wyatt of Weeford

My Lords, I must, first, declare an interest, as I shall be retiring as chairman of the Tote on April 30th of next year. I shall not gain any pecuniary advantage as regards the success or otherwise of the Bill because my salary is fixed in any case. However, it is only proper that I should remind anyone who does not know that I am at present the chairman of the Tote.

We are very much obliged to the noble Lord, Lord Kimball, for introducing the Bill on behalf of the Tote, which he did in a very concise and correct manner. We are also most grateful to the members of the All Party Racing Committee, who made their supportive views known to the Home Secretary. They have had a great influence and I am very pleased about that fact. We are also grateful to John Greenway, chairman of the All Party Racing Committee, who has agreed to introduce the Bill in another place.

Of course, we are extremely grateful to the Home Secretary and the Government for their support of the Bill. It is a very pleasant surprise. It is a recognition that the Tote is a successful, fully commercial enterprise operating in competition against the biggest bookmaking chains in a cut-throat arena. And if anyone is worried about the supposed political leanings of this chairman over betting on the results of the general election—as this Bill would allow—let me reassure them. It is the weight of the punters' bets which makes the odds, not any chairman for the time being.

I had hoped to dish out nothing but compliments. But, alas, there is still another hurdle to jump. Last February, we asked the Home Office to lay an order enabling us to bet on the Irish lottery numbers. We persistently pressed the point but nothing was done; yet it could have been. This Bill will enable us to bet on the Irish lottery numbers if it gets through its various stages in both Houses of Parliament. But it will take at least four or five months before it can become law, due to the accepted parliamentary procedures.

As the noble Lord, Lord Kimball, said, we have lost punters from our shops in droves because we cannot take their bets on the outcome of the Irish lottery. As the noble Lord, Lord Kimball, said, they go to other shops to place their bets on the Irish lottery but while they are there they also bet on all other kinds of events. A kind of loyalty will develop between that betting shop and a punter and the punter will make a new home there. It will be extremely hard to get him back. Already our betting shop turnover has dropped by some 6 to 7 per cent. since April, whereas our competitors have had much the same turnover as last year on leviable bets. Therefore our turnover has dropped substantially but theirs has remained much the same. They make a fortune out of bets on the Irish lottery, with net profit returns somewhere between 25 to 30 per cent. after betting duty has been levied. Their profits are colossal and they do not have to give half of them to good causes, as do the promoters of the National Lottery, neither do they give anything to racing out of those profits.

If we had been able to take bets on Irish lottery numbers, by this time our profits, instead of declining, would have increased at the rate of £1.5 million a year. That would have happened if it had not been for the Home Office's long and unnecessary delays. We have been pressing this matter ever since February, but the Home Office staff have done absolutely nothing about it. It is particularly sad that the Home Office has procrastinated so long when prize money is being severely cut and we are losing the spectacle of top British horses through the attraction of much higher prize money on the Continent. We could have sponsored 30 races at £50,000, or 50 races at £30,000. That would have been an enormous help to racing, which has been severely hit by the National Lottery. However, due to the delays of the Home Office, we have been unable to do that and that help is lost for ever.

If this Bill is not passed, we shall also be savaged in the new year when the big bookmakers start a separate company to run daily number draws, just like the lottery. As it is, we cannot expand our chain of 200 shops. New acquisitions bought by us would be instantly devalued by our having to stop betting on the Irish lottery numbers. I ask the Government, as humbly as I can, to lay an order instantly to let us accept bets on the Irish lottery numbers. I believe it would take some 40 days for an order that is laid here to get through, instead of the four or five months that this Bill could take. Every moment is absolutely vital to us. We are bleeding copiously at a rate nearing £40,000 a week. That money could have gone to racing, as all our profits do. The principle is included in this Bill, but it has come about much too late. All I am asking is that this part of the provisions should be expedited; tomorrow would be just about right.

8.14 p.m.

Viscount Astor

My Lords, the introduction of the National Lottery changed the face of gambling in this country. The National Lottery is a great success. It raises huge sums for good causes. The Government must be proud of that achievement. However, it has affected other gambling and other expenditure. In 1993–94 total spending on gambling was just over £20 billion. In 1995–96 it was £24 billion, but the lottery accounted for more than £5 billion of that figure. Betting, whether it be through bookmakers or the Tote, has lost its share of the market and has suffered a net cash reduction.

Bookmakers have been able to make up some of this by being allowed to bet on the National Lottery, but the Tote has not been able to do so. During the passage of the lottery Act the Government gave a commitment to monitor the effect of the lottery on racing and on other gambling, and indeed they have done so. The Government have made significant concessions to help the pools companies. I believe that they should make a similar concession by supporting this Bill in order to help the Tote.

Experience in Ireland shows that gambling on the outcome of the Irish lottery has not affected the lottery—if there is any worry about affecting the lottery either here or in Ireland—but rather it has encouraged people to take notice of the lottery. That has been beneficial. The Tote has been put at a disadvantage. Bookmakers estimate that their current turnover of bets on the Irish lottery is about 2 per cent. of their turnover and stands at about £300 million a year. If the Tote were able to have its share of that market that would be a significant amount of money, as the noble Lord, Lord Wyatt, said. I believe that the Government should look closely at whether bookmakers and the Tote should be allowed to bet on the results of the English lottery. I do not think that would harm the lottery. However, that is not the issue before us. This Bill would put the Tote on an equal footing with the bookmakers in that the Tote would be able to take bets on the Irish lottery. I hope that my noble friend the Minister will be able to support the Bill of my noble friend Lord Kimball. I hope that the Government will find a slot in another place for the Bill because I am sure that it will go through this House extremely speedily. I give it all my support.

8.17 p.m.

Lord Burnham

My Lords, I hope I may correct my noble friend Lord Astor. I am pretty certain it was a slip of the tongue when he said that bookmakers were permitted to bet on the lottery. It is, of course, the Irish lottery.

Viscount Astor

My Lords, I am grateful to my noble friend for pointing that out. I meant to refer to the Irish lottery but I believe I said they were not allowed to bet on the English National Lottery. However, if I made a slip of the tongue, I am glad that my noble friend has corrected me.

Lord Burnham

My Lords, the noble Viscount did, of course, say that later. Almost every section of the racing industry is represented in your Lordships' House although I am not certain whether there is any longer a bookmaker in these Chambers. I am on my feet at this late hour to demonstrate that this Bill represents a point of great interest and great importance to racing. It would not be desirable to lead the mandarins of the Home Office to suspect—as has happened with other racing Bills in the past—that noble Lords with an involvement in racing do not care what happens to their sport.

As my noble friends have said, racing and betting have changed and are now very different since the current Act came into force in 1972. The lottery is, of course, the biggest factor involved in that, but there is also index betting on football, golf, tiddly-winks and, as the noble Lord, Lord Wyatt, mentioned, on the results of the general election. That gambling comprises a large section of the betting cake. It is estimated that 30 per cent. of betting turnover is concerned with events in which the Tote is not allowed to participate.

Yesterday a number of your Lordships heard representatives of the Betting Office Licensees Association lamenting their losses and the lack of turnover which they have suffered as a result of the lottery. They gave many figures, some of which I would view with a certain amount of suspicion. They are looking for reductions in tax incurred in off-course betting shops to give them what is vulgarly called a level playing field with the lottery. The Tote's playing field is on a steep and slippery slope compared with that of the bookmakers, a slope which this Bill will do something to level. It will enable the Tote to recover some of the serious disadvantage in which it is placed. As matters now stand the situation may become worse with the suggestion, as the noble Lord, Lord Wyatt, said, that the bookmakers invent a series of numbers and invite people to bet on them.

If the Bill is given a Second Reading, we may ask in Committee that both Tote and bookmakers be allowed to bet on individual numbers in the lottery as bookmakers now can on the Irish lottery. The Department of National Heritage opposes this, possibly on the grounds that it will expose what an appallingly bad bet the lottery is—9 to 1 against getting three numbers correct against 5 to 1 offered by those generous fellows the layers for getting one right in the Irish lottery. On whatever grounds, the prohibition seems illogical; but that is for a later stage of the Bill.

Within the past week a senior representative of the bookmakers' organisation has expressed his total lack of interest in the financial problems of horseracing. The Tote, on the contrary, cares and does something about it. The Home Office is about to select by democratic means, it is said, and I am sure your Lordships will believe that, a successor to the noble Lord, Lord Wyatt. I trust that he will have this additional weapon in his armoury to attack the old enemy.

Lord Graham of Edmonton

My Lords, the list indicates that my noble friend Lord McIntosh of Haringey—

The Viscount of Falkland

My Lords, I am perfectly prepared to let the noble Lord precede me if he wishes. I had just asked him whether we were to have the benefit of his contribution since his name is not on the list.

Lord Graham of Edmonton

My Lords, it is worth waiting for.

8.23 p.m.

The Viscount of Falkland

My Lords, absolutely.

The Bill arrived on my desk with a brief note asking, "Does anyone know anything about this?" It so happens that on our Benches, anything to do with racing, gambling or matters of that kind usually falls to me to deal with. It makes me conscious that I am probably the only Peer on our Benches who has had a misspent youth. In my school days I ran a pool and was also the school bookmaker for a while, at enormous risk to myself. The bookmaking was profitable. In fact, the two ran well together. I am glad that there is no right reverend Prelate in your Lordships' House tonight; our pool was run on the length of sermons at Sunday evening chapel. I made no profit out of the pool. Indeed, pools are not intended to make profits but we shall come to that later. However, it was good to engender the mood to draw people to chapel each morning. I made a profit out of backing horses, although in those days it was extremely difficult to lay the money off. They were probably the most dangerous days of my life.

I have tangled previously with the noble Lord, Lord Wyatt of Weeford, on the subject of betting shops and their opening hours. I may have overstated my reservations on that occasion. I hope that anything I say tonight which may savour of a reservation will not be picked up by, I think, the only tabloid newspaper which is not in your Lordships' House, the Daily Sport. On the last occasion, it so objected to my intervention that the following day the inside plus the cover of the newspaper was devoted to speculation on my sanity. The headline of that newspaper—I cannot understand why it is not in your Lordships' House; it seems ideal recreational reading for us—was, "Falk off', in large, bold letters. I hope that that will not be repeated tonight.

Lord Graham of Edmonton

I wonder what it meant.

The Viscount of Falkland

I do not know what it meant.

The Bill is extremely interesting. I have every sympathy with everything said in the debate, in particular by the noble Lords, Lord Kimball, and Lord Wyatt of Weeford. The Tote has always had an uphill struggle against bookmakers. That is the anomaly in our country. It is not the case in most countries. For example, in Australia all off-course betting is a Tote monopoly and bookmakers are allowed only on the race course. However, we can do nothing about that. Bookmaking has a long history and tradition. Bookmakers are here to stay.

It should have been foreseen that the Tote would probably be the major sufferer from the advent of the lottery, not only because of betting on the lottery numbers but also because people who may spend £5 a week on the racecourse at a Tote or betting shop are likely now to spend less on that and to buy scratchcards or a lottery ticket. In addition, as has been explained this evening, betting on the Irish lottery numbers has made considerable inroads into the profitability of the Tote.

I have absolutely no idea of the Government's reaction to the Bill and what fair wind it will have in another place. I refer to the activities of a bookmaker, and of a pool organisation, which is what the Tote is effectively. The noble Lord, Lord Kimball, talked about the profitability of the Tote. There is profitability but it is not real profitability because there is no loss expectation in the Tote. The Tote takes from the pool, pays for the privilege of operating the pool by giving money back to racing, which is commendable, and pays its expenses. A bookmaker has a potential liability if his business does not run at a profit. At school the bookmaking was carefully controlled and I was able to lay off excess bets. On a small scale, if one has any arithmetical ability, one can balance one's book and make a small percentage profit. That is exactly what bookmakers tell us they do when pressed for more money by the levy board. They say that it is an unprofitable business, forgetting that we may ask questions about the style of living of bookmakers, and so on.

I hope that the noble Earl will be able to answer these questions. Half of me hopes that the Bill will pass through its stages successfully. I should like to see the Tote board profit and able to compete with bookmakers. The other half of me asks: how will the Horserace Totalisator Board organise the business of being a bookmaker and the operator of a pool? How will it deal with the contingent liability of being a bookmaker? Will it have its activities as a bookmaker confined to horses and betting on the lottery numbers? Alternatively, will the board go into what is now generally accepted to be the thinking man's type of betting—that is, spread betting on sporting events and others of that kind? That looks like a growth area of betting in this country. If the Tote is given the green light to do so, I hope that it will go into that area very quickly.

The Home Office is responsible under statute for the Tote board. What are the Government doing, metaphorically picking up the check suit and satchel of the bookmaker, when they are divesting themselves of involvement in owning property and other matters, probably quite properly? We have debated those subjects in this House. Some of us object to them more than others.

I have every sympathy with the Bill. But are there not difficulties in keeping the two operations apart, and limiting the activities of the bookmaker? Presumably most of the major bookmakers are opposed to the Bill. They do not want another competitor in the market place. The bookmaking lobby is very powerful, as we all know.

From these Benches I have absolute sympathy with everything that has been said now that the uphill task which the Tote has always had in competing with bookmakers has been made more severe as a result of the lottery. It has every right to ask that its ability to operate should extend into the area of competing with bookmakers. If the Government are supporting the legislation—they may not be, and I wait anxiously to hear—will the noble Earl tell the House (he will tell us anyway, since if he objects to it presumably these points represent some of the objections) how the liabilities will be underpinned should the bookmaking business be unprofitable for whatever reason? Bookmaking businesses do get into trouble from time to time—

Lord Wyatt of Weeford

My Lords, perhaps the noble Viscount will allow me to intervene. His remarks are very interesting; however, I assure him that we have quite a lot of reserves, some £30 million, so we have no worry about not being able to pay our debts. We are also the biggest sponsor of any betting organisation in this country, running now at £1 million a year. We have a very cautious approach to our finances. Our debt ratio in the credit betting business is 0.1.

The Viscount of Falkland

My Lords, I thank the noble Lord for that comment. It is extremely reassuring. All noble Lords must be reassured to know that the good housekeeping of his organisation has resulted in reserves of this kind being available. However, will he be allowed to use those reserves to underpin liabilities of this kind? That is my question to the noble Earl. And how will the mechanics of that work? However, should these concerns be met, I shall be extremely glad to hear that the totalisator board, even without the noble Lord at its helm, is moving into new and more fruitful areas.

8.31 p.m.

Lord Graham of Edmonton

My Lords, I am glad that I waited. I apologise to the noble Viscount, Lord Falkland. I wanted to say that the list shows that my noble friend Lord McIntosh of Haringey would normally be in his place, whereas tonight I am in his place. My noble friend apologises for his absence. The House would expect it to be due to an important event, as proves to be the case. My noble friend had to leave to be present at the induction into the Royal Television Society's hall of fame of his wife, Professor Naomi Sargant. She has a most impressive record of achievement in the world of television and in higher education, not least with Channel 4 and the Open University. I know that the whole House will wish to join me in offering her our congratulations.

Noble Lords

Hear, hear!

Lord Graham of Edmonton

My Lords, my noble friend left confident in the knowledge that I should be here to deputise for him, and that I would prove a worthy deputy. He and my noble friend Lord Donoughue, who has a watching brief in these matters as our heritage spokesman as well as other experience not unrelated to this matter, both asked me to tell the House that they wish the Bill full speed and raise no objection to its passage.

As I listened to the points made, it was quite clear that an anomaly has arisen which can be put right. It is not huge and if this adjustment did not take place it would not be catastrophic. However, if it assists the totalisator board, I am certainly very happy to support the Bill. The snags in the betting industry are recognised. If it is not too onerous to deal with one disadvantage as against another, I have no objection. In the spirit in which the noble Viscount, Lord Falkland, asks legitimate questions, we on this side of the House consider the Bill to be fair in that it puts a matter right. We very much hope that the Minister will do the most that he can ever do in relation to a private measure; namely, not oppose it at Second Reading and give it a fair wind in the other House. We certainly do that from these Benches.

8.34 p.m.

The Earl of Courtown

My Lords, first I congratulate the noble Lord, Lord Kimball, on his initiative in bringing forward and explaining the Bill. We know that this subject is very dear to the heart of the noble Lord, Lord Wyatt of Weeford, and we do not underestimate the importance of the measure to the Tote. I thank all noble Lords for their contributions. They have been both informative and interesting.

I am sure that the many supporters of racing will agree with the Tote when it says that it must be allowed to compete with the bookmakers on an equal basis. We have heard that the Tote cannot take fixed odds bets on non-sporting events. That may seem a little curious. It dates back to the 1972 Act. It was the intention at that time to put the Tote as far as possible in the same position as a bookmaker. It was considered that the Tote should not be inhibited by restrictions on its statutory powers from competing on equal terms. The Act therefore gave the Tote unfettered powers to take fixed odds on sporting events.

But, as we have heard, the Tote's powers to offer such bets on non-sporting events were restricted. It may strike many now as rather quaint, but it was thought at the time that it was undesirable for a statutory body to take bets on such matters as a general election or on Royal matters. The Home Secretary's approval was therefore required in the case of non-sporting events. I think that today most people would expect the Tote itself to decide as a matter of taste and good judgment what bets it should offer.

In those days the restriction was not seen as irksome. The demand for bets on events other than sporting events was minimal; indeed, the Home Secretary has never found it necessary to exercise his power to allow bets on specific events. In fact, I think I am right in saying that the Tote has never really pressed hard to be allowed to take bets on non-sporting events until this year.

The reason that matters have changed is the new area of business which the bookmakers have ingeniously created; that is, betting on the Irish lottery numbers or "Lucky Choice" as it is called. The bookmakers saw that in Ireland betting on the Irish lottery numbers was very popular. The bookmakers here are, of course, prevented by law from betting on the UK lottery. "Lucky Choice" has turned out to be very popular and most bookmakers are finding it a lucrative slice of their business. In fact they can make more from this type of bet than the traditional horserace bet because they do not have to pay levy on it.

So that leaves the Tote once more trailing behind. I can well understand why the Tote is up in arms. If its customers like to play "Lucky Choice" and they cannot do so in a Tote betting shop they will go elsewhere. And if the Tote loses income, so does racing.

I am very pleased to inform the House that the Government are happy to lend their support to the Bill. We will do our best to ensure that it receives a speedy passage through both Houses. This is a modest change which simply brings the Tote into line with other bookmakers.

I should make it clear that it is not the Government's intention to allow the Tote to take bets on the National Lottery. I know that it is not the Tote's intention. We will look at the drafting of the Bill to ensure that the Tote is placed in the same position as the other bookmakers in relation to the National Lottery. Under the law, bookmakers are prohibited from taking such bets.

The noble Lord, Lord Wyatt of Weeford, mentioned Home Office delay. I understand the point that the noble Lord made about the time the proposal to allow Irish lottery bets has been before the Home Office. It has raised some difficult issues for government. I appreciate that the delay has been frustrating. However, I hope that the wait will have been worth while since we are now able to give our support to this Bill.

The noble Lord, Lord Wyatt, also asked the Government in the meantime to bring forward an order by secondary legislation to allow the Tote to bet on the Irish lottery. I can confirm that the Home Secretary has the power to bring forward an order, by negative resolution, to allow fixed odds betting by the Tote on a specified non-sporting event. It should be possible to allow the Tote to take bets on the Irish lottery by this means.

The Government will wish to see the views expressed in the debate today and to consider in the light of that what the prospects are for this Bill. The Government will then seriously consider whether an order should be introduced meanwhile.

The noble Viscount, Lord Falkland, was concerned about liability for the Tote. No public funds are involved, as I am sure the noble Viscount is aware. The Government would not bail out the Tote if it got into difficulties. The Tote is responsible for its own liabilities. However, as pointed out by the noble Lord, Lord Wyatt of Weeford, the Tote has been commercially successful for many years and there is no reason for concern.

The noble Viscount also mentioned the anxiety of the bookmaking industry. We have no reason to believe that the Bill will be opposed by the bookmakers; it should not be. This will not give the Tote any competitive advantage.

I understand that all noble Lords are largely in support of the Bill proposed by my noble friend Lord Kimball and I reiterate that we support the legislation.

Lord Kimball

My Lords, I am most grateful to all your Lordships for the support from all quarters of the House. I am particularly grateful to my noble friend who wound up the debate for such a positive expression of support for the Bill. I now ask your Lordships to give it a Second Reading.

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

Baroness Trumpington

My Lords, speaking as a former steward of Folkestone Racecourse, I beg to move that the House do now adjourn.

Moved, That the House do now adjourn.—(Baroness Trumpington.)

On Question, Motion agreed to.

House adjourned at twenty minutes before nine o'clock.