NEW CLAUSE.—(Computation of profits of a stud farm.) (Hansard, 15 June 1944)

§ Sir Ralph Glyn (Abingdon)
I beg to move, "That the Clause be read a Second time."
I do so in a very few words. I think the Committee will appreciate that the bloodstock industry in this country is a very important one to the export trade. People do not realise that the export of bloodstock is peculiar to this country. We believe in its value because of its high reputation. During the war, inevitably, there has been a diminution of bloodstock, and the purpose of this Clause—I attach no great importance to the actual wording and it is extremely difficult to word—is to help to restore the position. It should be recognised that a stud farm is no use unless you can test what the progeny which comes off that stud farm can do. The only way you can do that is to match these animals on a racecourse. For the purpose of racing, unhappily, this country offers very meagre prizes: the stakes are lamentably low. Many years ago, I piloted through this House the Betting (Control) Bill, which established the totalisator, the main purpose of which was to increase the stakes offered for those who were breeding bloodstock in this country. I wish that the Tote Board had been able to increase the stakes more than they have done; and I hope they will do so. In the meantime, I hope that the Chancellor will look at this Clause favourably.
I hasten to assure hon. Members that I am not getting up to ask that those who bet, in any walk of life, should have any taxation advantage—far from it. What I am asking is that those who are engaged in this very important business should be recognised as part and parcel of the industry. It is no use hon. Members thinking that anyone can start a stud farm without racing, because he will never get any stallion fees. I would ask the Chancellor, if he cannot accept this Clause, to give the whole matter favourable consideration before the Report stage, in order to give the relief which is so necessary. The Committee probably realise that during this war it has been the practice of the Germans to take from France the best bloodstock that that country has got. They have been racing continuously in Germany, in order to improve the bloodstock, and they are very anxious to capture from us whatever they can of the bloodstock trade. I am sure there is no Member of this Committee who 2236 would not prefer to see the bloodstock of the entire world fertilised from this country, and to see foreign countries come back to us to get the best possible blood-stock.

§ Mr. Benson
I looked very favourably upon this Clause until I heard the hon. Member for Abingdon (Sir R. Glyn) put his case. The way he excludes betting and the bettor simply horrifies me. We know perfectly well that racing could not be carried on in this country if betting were abolished. It really means that every person who goes to the Derby and loses £5, is helping to maintain the whole system of racing, which my hon. Friend says is essential to the breeding of livestock. If the punter is helping to maintain racing, and, therefore, blood-stock, I do not see why he should not be able to put against his Income Tax the expenses which he is incurring in the maintenance of bloodstock any more than the breeders may put their expenses.

§ Colonel Sir Charles MacAndrew (Ayr and Bute, Northern)
I rise to support the proposed Clause. I would point out to the hon. Member for Chesterfield (Mr. Benson) that if people were going to be allowed to charge losses on betting—

§ The Deputy-Chairman (Mr. Charles Williams)
I have recollections of a Tote Bill which was passed by this House. I hope we shall not have a repetition of that Debate to-day.

§ Sir C. MacAndrew
In that case I will not reply to my hon. Friend. The breeders of bloodstock are taxed on the profits of their stud farms. That is quite reasonable. The bloodstock, especially the fillies, have to be run in order to find out which animals it is best to breed from, yet the racing expenses cannot be set off against the profits of the farm; and, therefore, the breeder is getting the worst of both worlds. The bloodstock industry is a valuable asset to this country, and there will be a great opening for us after the war. As my hon. Friend the Member for Abingdon (Sir R. Glyn) said, this Clause is, no doubt, drafted in language which my right hon. Friend will not accept, but we particularly framed the Clause so that if a man does not want to avail himself of it he is entitled to ask the Revenue authorities not to treat racing as part of his business. Obviously, he will have to 2237 say in advance which way he wants to be taxed, but I think it is a very reasonable Clause, and I hope that, in order to help this industry, it will be accepted. I have a letter from a breeder, which says: Racing is a vital part of breeding, especially as regards fillies, and should be treated as forming part of the business. I hope that the Chancellor will be able to agree to that.

§ Mr. Tinker
If the hon. Member for Abingdon (Sir R. Glyn) had wanted to divide the Committee, he could not have brought forward a more suitable question. We, on this side, look upon racing as being a rich man's pleasure. [HON. MEMBERS "No"] I do not know whether that is right or not, but we look upon horse-breeding as being a way of getting rid of surplus cash. I challenge hon. Members opposite to give an instance of anybody who has attempted horse-breeding without having first made money in other directions, using horse-breeding as a method of getting rid of surplus money. When we are engaged in a war, and do not know where to turn for money, it is absurd to suggest that more money should be available for horse-breeding. We hear many cheeky appeals, but I do not know of any which is less likely to appeal to people than this. Surely those people who go in for this kind of thing ought not to come to the State for help. If the Chancellor were to hold out any hope to the supporters of this Clause—and I know he will not do so—what would be the feelings of those of us who have asked for help for the blind?
We have not succeeded in that. What would be the feelings of the country if by any chance this were carried? It would be in their minds that, in times of stringency, the House of Commons had given the rich man some concession, because when you talk about horse racing it means very wealthy people. In the interests of the country, I hope hon. Members on the other side will not make any further speeches on this matter. To my mind, it is wasting the time of the Committee and creating a position in the country that will do no good at all. I should like hon. Members to wait for the Chancellor's reply, which will be, quite definitely, that he will do nothing.

§ Mr. Astor (Fulham, East)
I am afraid that neither the hon. Member for Ches- 2238 terfield (Mr. Benson), nor the hon. Member for Leigh (Mr. Tinker) has given very much thought to the economics of horse-breeding. The hon. Member for Chesterfield probably does not realise that most big breeders do not go in for betting, anyway. Certainly, my family never had a bet, and betting has nothing to do with breeding. It has been said that we have to increase our exports after the war. We cannot pay for our social services or anything else unless we can get back our export trade. The export trade in thoroughbred racehorses has been a very steady and solid national asset for generations. Breeders from all over the world have come to England to buy mares or stallions, and, while no one pretends that it is a vast industry, it is yet a perfectly solid gain to the country. No breeder would think of buying a horse unless it has been tested on the racecourse. We have all seen horses with impeccable pedigrees, and which made magnificent oil paintings, but which proved to be utterly useless on a racecourse. No buyer of thoroughbreds would buy a horse unless it has been through the mill of racing, and that is why racing has been kept on during the war. If you cut off racing for two or three years, it would be quite impossible to keep up breeding and to find the right kind of horses from which to breed. It is not only an economic asset in the balance of trade of this country, but it is a great prestige asset all over the world, like people going to France to buy ladies' dresses or wine, and it brings visitors to this country and in that way acts as an invisible export. People come here and spend money on racehorses, and all over the world it is a factor in keeping up English prestige. I need hardly say that it is a sport which is shared by all classes, and especially in the North of England. It is not only the very rich man who breeds horses, but people of quite moderate means keep a horse or two.

§ Mr. George Griffiths (Hemsworth)
It takes them all their time to keep a dog.

§ Mr. Astor
If we recognise that it is a desirable industry and a national asset, and that it has been recognised by the Inland Revenue as such, it is only fair that racing and breeding should be regarded as one business, because there is a great danger, which a great breeder was pointing out to me to-day, that if 2239 you are too hard on the stud farms you will do more harm than is desirable in the long run, because some breeders might decide to sell particular horses which really ought to be kept as foundation animals for the future generations whose products we shall want to sell abroad. I hope hon. Members will understand that it is not a question of relief for the rich, but of keeping up a national asset which will be very useful to the export trade after the war.

§ Mr. Evelyn Walkden (Doncaster)
May I mention to the Committee, speaking as a representative of an area which publicly owns a racecourse, that I believe the Committee would expect me to support the hon. Member for Abingdon (Sir R. Glyn) and the hon. Member for East Fulham (Mr. Astor), but I can hardly believe that the ratepayers of my division, who may derive a little profit out of the racecourse, will feel enthusiastic about this new Clause.

§ Mr. Astor
How would they feel in the hon. Members division if racing finished and they never had another St. Leger run at Doncaster?

§ Mr. Walkden
Quite truthfully, I would prefer to stand or fall by the decision of the electors of Doncaster, or of this country, if you like, on whether horse racing should continue or not. I do not think it would matter very much. I have been in countries where they are not interested in gambling. Holland has quite healthy racing, but no betting. Whatever they may do in Holland, they are good citizens and they are on our side in this war. The Dutch are undoubtedly glad to be with us because they recognise the same fundamental principles as we do, and their conduct is somewhat similar to our own. The position we are being asked to face is that the wealthy man shall be given some kind of benefit at the expense of the taxpayer because he runs a stud farm. I cannot agree with this. If you are to carry it to its logical conclusion, what about the men in my division, or in the divisions of the hon. Members for Hemsworth (Mr. G. Griffiths) and Leigh (Mr. Tinker), who produce whippets ? The whippet is his racehorse, and, although he has a flutter on the Derby or the St. Leger or the Grand National, he certainly takes a 2240 keen interest in his whippet. It is the only hobby that he can afford, and, undoubtedly, that man would feel that, if Lord Derby or Lord Astor—

§ The Deputy-Chairman
I am sorry to interrupt the hon. Member, but I think we must keep off whippets.

§ Mr. Walkden
I submit, with respect, Mr. Williams, that stud farms are not only associated with what Lord Astor or Lord Derby conduct. We, too, are interested in stud farms.

§ The Deputy-Chairman
That may well be, but it is not in this Clause, which mentions horses, and we must keep entirely to horses.

§ Mr. G. Griffiths
On a point of Order. It is only an illustration, Mr. Williams, and what about racing pigeons?

§ The Deputy-Chairman
No; I think that, if we once begin an argument on whippets, it will go much too wide. The illustration has gone quite far enough.

§ Mr. Walkden
Would you agree, Mr. Williams, to a comparison with the maintenance of homing pigeons? After all, the workers have maintained stocks of homing pigeons which have done very well in this war.

§ Mr. G. Griffiths
And helped the Government.

§ Mr. Walkden
Yes, and helped the R.A.F. I know the arguments of the hon. Member for Abingdon and other hon. Members. They are that there was no greater or more valuable commodity to compare with a racehorse when the cash-and-carry arrangement was made and President Roosevelt told us "You can have the goods, but you must pay cash." Whisky was not more valuable than racehorses, and there was not much radium, so we chose racehorses, and it will be well known to the Members of the Committee that there were one or two racehorses exported which were equal to two bombers. One horse meant two bombers to us. I appreciate the argument, but I do not know of anybody who is exporting radium or platinum or any other commodity who would come along and say, "You ought to exempt me from tax because I am running a business."

§ Sir C. MacAndrew
He is not asking to be exempt because he is running a 2241 business but to be allowed to offset part of his business run at a loss.

§ Mr. Walkden
I use the term "running a hobby," the hobby being that of producing horses for export. We have always maintained in this Committee, that whatever a man wishes to do with his money is his business, but if he enters into something which is really regarded by the State as necessary for the well being of the State can he come to Parliament and ask for recognition?

§ Mr. Astor
They are not run as hobbies. Most stud farms are run as limited companies and have been recognised as businesses for years by my right hon. Friend the Chancellor of the Exchequer.

§ Mr. Walkden
It may be that the hon. Gentleman regards it as a kind of business.

§ Mr. Astor
It is not me, but the Treasury.

§ Mr. Walkden
No one on these benches owns racehorses so far as we know.

§ Earl Winterton (Horsham and Worthing)
What has that to do with it?

§ Mr. Walkden
It has everything to do with it. Many of us are shareholders in co-operative societies, building societies and in various forms of property, which are undoubtedly serving the people in a manner that this Committee and the country expects, but we do not ask for relief unless the rest of the community benefit in the same manner. We therefore regard this suggestion as being wholly unreasonable, and we feel that the Clause ought not to have been put upon the Paper. Hon. Members will be doing a good service to the community if they withdraw it altogether, before the Chancellor replies.

§ Mr. Assheton
This Clause raises the issue of the Income Tax treatment of the owner of a stud farm for the breeding of thoroughbred horses who races horses which he breeds. He is chargeable to Income Tax on the profits of the stud farm, including stallion fees, but unless he can show that his stud farm activities and his racing is part of a single commercial enterprise—and of course very few owners of famous studs can show that—the results of his racing activities are outside the 2242 scope of the Income Tax. So he is taxed on his stud profits without set-off for any excess of the cost of training and racing horses over receipts in the form of prize monies, although he may be able to show that the breeding and rearing on the one hand and the training and racing on the other are intimately connected, in the sense that it is on the racecourse that the merits of the progeny of his stallions and mares are tested and displayed, and that training and racing are therefore essential to the successful operation of the stud farm.
It is true, as my hon. Friend the Member for Abingdon (Sir R. Glyn) said, and as was confirmed by other hon. Members, that it is important that the export trade in thoroughbred horses should be maintained and, after the war, increased. It is important that we should get as much foreign exchange as we can, and dollars are very important. I do not think that the Committee would wish to be prejudiced against these proposals by the fact that well-to-do men engage in this particular activity. Hon. Members must recollect that breeding horses, and breeding most animals, is a very chancy business, and it is not surprising that people with money are more often engaged in it than people who have not much money.
But I think that the Committee feel, as do the Government, that this is not the moment to make a change of this sort. It has been useful for my hon. Friend to have raised this matter, and I do not think that it is a matter which we as a Committee ought to view with any prejudices. We ought to look at it in a common sense and business-like way and do the right thing irrespective of any prejudices. I hope that my hon. Friend, in view of what I have said, will be good enough to withdraw the Clause, and that possibly one day, after the war, he may have a more favourable opportunity of moving such a Clause.

§ Sir R. Glyn
I regret rather that my right hon. Friend has assumed that the whole views of the Committee are along the lines he now suggests, but I feel, after all, that he alone can judge. I trust that the Chancellor will not put the idea of doing something to help the export of bloodstock from his mind and will take a suitable opportunity to introduce the matter again. I beg to ask leave to withdraw the Motion.