HC Deb 22 June 1950 vol 476 cc1660-8

Section six of the Finance (No. 2) Act, 1947, so far as relating to bets made by means of a totalisator set up on a dog racecourse which is a track in respect of which a licence granted under Part 1 of the Betting and Lotteries Act, 1934, is for the time being in force shall have effect as if in subsection (1) thereof for the words "ten per cent." there were substituted the words "five per cent."—[Mr. Ian L. Orr-Ewing.]

Brought up, and read the First time.

Mr. Ian L. Orr-Ewing (Weston-super-Mare)

I beg to move, "That the Clause be read a Second time."

On this Clause the question of preference in the Imperial sense does not immediately arise, although in another sense it does, arise, because one of the matters we have to consider is the preference that is given to some other sports and forms of entertainment than are dealt with by this proposed new Clause.

I want to make two things absolutely clear in moving this Clause. First, neither I nor any of my hon. Friends are proposing it with the object of saying that betting should at no stage carry any form of tax. We do not claim that betting should be relieved of all tax, and nothing in this new Clause should be supposed to support such arguments. Nor do we wish to put forward this Clause to amend previous taxation proposals in order to increase betting. Our argument is that at the present time betting, far from being deterred, is being encouraged, and the effect of the existing tax is to divert it from one channel to another.

On the question of preference, we do not base our case or our arguments on jealousy against any other forms of sport or amusement and the tax which they bear, but at the same time one has to take some sort of note of the difference between this tax of 10 per cent. on pool betting and dog-racing and the position as regards horse-racing. Horse-racing is largely, both as regards training, breeding and racing, in the hands of people of quite substantial means; yet dog-racing, from breeding right through training and racing, is largely in the hands of people of very moderate means, and the imposition of a very high rate of tax on dog racing appears to many hundreds of thousands of people to be a discrimination against and a burden laid upon those with lower means of income.

One can carry the examination of the difference between the two sports rather further. The turnover from the dog totalisator between 1947 and 1949 sank from £120 million to £78 million—a 37 per cent. decline in the first year, followed by a 10 per cent. decline. The turnover on horse-racing had increased from 1947 to 1948 by 24 per cent. and declined between 1948 and 1949 by only 1½ per cent. That surely shows that the effect of the tax on the totalisator system in dog-racing imposed in 1946–7 has been a strong deterrent against bets being placed through that system, though not necessarily cutting down the number of bets placed; while horse-racing, free from any totalisator taxes at all, has shown a net increase.

That disproves the argument that there has necessarily been a decline in the public interest in dog-racing, and that the decline in the number and amount of bets placed through the tote in dog-racing is entirely due to a decline of interest. It is as a result of that decline in the turnover of the totalisator that the large drop in the amount which is contributed to the Exchequer has been brought about. That is a serious matter to the Revenue.

I do not consider that the tax has decreased betting in any way. What it has done is to turn those who previously made their bets on the totalisator away from the totalisator on the dog track, and has diverted their activities to the off-the-course bookmaker. Before this tax of 10 per cent. was imposed none of the off-the-course bookmakers took very much interest in dog-racing, but since the tax has been imposed many of the more prominent bookmakers have not only advertised their interest in dog racing, but keep their offices open late specially in order to cater for this betting which now passes through their hands instead of going through the totalisator. When it passes through their hands it attracts no tax at all, and, therefore, the Exchequer loses the entire revenue which it would receive if the betting goes through the totalisator. In fact, the country suffers as a result of this heavy tax.

The argument is sometimes used that this is the wrong moment to deal with this question because the Royal Commission on Lotteries, Betting and Gaming is sitting. I hope that argument will not be used tonight. The Chairman of the Commission has made it clear that he does not consider it to be the duty of the Commission to deal with the question of the extent and nature of the tax which is imposed on any form of betting. I do not want to bother the Committee with quotations, but I think I should give this quotation. In the Budget Speech of 1949 the Chancellor of the Exchequer used these words: Consideration of other improvements in the Betting Tax must now await the Royal Commission's report upon the general matter of betting and gambling."—[OFFICIAL REPORT, 6th April, 1949; Vol. 463, c. 2094.]

Since the Chancellor had used those words the Chairman of the Royal Commission said: While we consider it our duty to consider the principle involved in the taxation on betting and the effect of taxation on the extent of betting, the purely fiscal aspect of taxation, whether a higher or lower rate is practicable or desirable in a particular case, is in the opinion of the Commission a matter for His Majesty's Government and not one on which the Commission is called on to make any recommendation. Thus the argument that we should not deal with this question while the Commission is sitting does not hold water.

The 10 per cent. tax is squeezing—and in many cases has already squeezed—the greyhound totalisator system, and the amount of revenue it produces to the Exchequer, into the field of the law of diminishing returns. I claim that it is the duty of the Government to restore that field from which revenue is derived. The direct effect of this tax on greyhound racing and on the different courses is not always appreciated. It is claimed—and I think there is sufficient evidence to prove the claim—that as a result of the tax five racecourses have resigned from the Greyhound Racing Society.

That might sound as if it were not something really important, but when a course resigns from the society they do so for this reason: that their revenue from and through the totalisator is not sufficient to enable them to maintain the standards insisted upon by the Society. These standards include, not only the standard of racing, and so on, but the standard of security as well.

Nothing could be worse for the public, or any form of entertainment, than that the standard of security should be lowered below the point essential for the racing to be straight. It is absolutely essential that racing should be carried out straight, and that evil-doers should not have access to the dogs or any form of machinery connected with the racing. This point cannot be neglected. In addition, 26 of the smaller courses have closed down the totalisators altogether.

12.45 a.m.

I have already stated that it is sometimes said that the decline in revenue from the totalisators is the result of greyhound racing having become up-popular. That can be disproved by the following figures. The cash receipts from the attendances at greyhound racecourses has been practically constant between 1947 and 1949. In fact, it has increased slightly toy about 5 per cent. The numbers who have attended the meetings, far from remaining stationary, have increased by three million, or 13 per cent., between 1947 and 1949. This is a very considerable increase which entirely disproves the assertion that this drop in revenue through the totalisator is a result of racing having become unpopular.

I hope that point will receive due attention, because it hardly shows that the sport is becoming unpopular. If one considers all sources of revenue of the tracks, the admission money and so on, and the statuory deduction of 6 per cent. from the totalisator, the proportion of the admission money to the amount deducted from the totalisator will reflect the truth or otherwise of the argument that the sport as a whole has become unattractive, and whether any decline has been the result of the increased tax. The proportion of admission money in the total revenue has increased from 28 per cent. in 1947 to 39 per cent. in 1948, which is additional evidence that the argument that it is not the tax which is responsible for the fall of revenue, but rather unpopularity, is completely unjustified.

The tax was not introduced—and the Chancellor of the Exchequer said so at the time—for the purpose of squeezing greyhound racing out of existence. In fact, when he introduced the tax he said: It is a charge which we believe will not unduly handicap them, but if it proves in the event that it does so, then we must try to lighten it by putting another load on somewhere else."—[OFFICIAL REPORT, 25th November, 1947; Vol. 444, col. 1918.]

This is now the time when that burden should be lightened. I am not pleading in the interest of greyhound racing alone but because by the imposition of this tax a fruitful source of revenue has been brought into the field of the law of diminishing returns, and I believe it is necessary to lower this tax if the decrease in revenue is to toe checked.

Mr. Jay

The hon. Gentleman gave us a lot of interesting information, but he did not sound as though he had very high hopes of the Government accepting this Clause. I must tell him straight away that as it would cost between £4,000,000 and £4,500,000 altogether, with the corresponding reduction that would have to be made in the bookmakers' tax, we do not regard it as one of our first priorities this year. Two main grounds could be given for the reduction of this tax, if one wanted to argue it. One would be that a fall has taken place, as the hon. Gentleman said, in the revenue, and it is being endangered as a source of revenue in the future. Secondly, it could be argued that the present system of taxes on betting discriminates unfairly against the dog racecourse in comparison with the horse racecourse.

As to the first, it is true that there has been a fall in revenue from totalisators, and incidentally a corresponding fall in the bookmakers' returns also. I do not believe, so far as one can judge, that it is primarily due to the tax, or indeed to the alleged unpopularity of this form of entertainment. It would appear much more likely to be due to the general decline in spending on entertainments and activities of this kind that has been apparent over the last two or three years, and is most probably due to the fact that there have been more of other things, such as clothes and food on which people could spend their money.

Mr. Ian L. Orr-Ewing

If the hon. Gentleman takes that line, how does he account for the net increase between 1947 and 1949 of some 23 per cent. in the takings through the horse-racing tax?

Mr. Jay

It does not necessarily follow that, while a general decline is going on, there may not be some relative shift between one activity and another. I agree this is a matter of opinion, and that one cannot finally prove what is the cause one way or the other. It is also true, as far as the decline in activity on the dog tracks is concerned, that it has been slacking off in recent months. A number of totalisators were closed down at the time the bookmakers' tax was introduced, but in the 12 months ended 30th April one new totalisator was opened and only four were closed. The evidence, therefore, rather suggests that there is no headlong decline in the revenue from this source at the moment.

As to the argument of discrimination, it is true, and has always been admitted, that the present system of taxes on betting is somewhat lop-sided. The reason is that the only practical way of raising revenue in the circumstances in which the duties were introduced was the arrangement which is in force. The hon. Gentleman said he hoped we would not use the argument about the Royal Commission on Lotteries, Betting and Gaming, but when the case is put on the ground of the present discrimination—if it is called that—I should have thought that the existence of the Royal Commission is plainly relevant, because if any major changes are to be made in the system of betting taxes we feel that it is necessary to await the report of this Commission, and to see the general survey of the facts which the Commission is likely to give us.

It is true that it is not within the terms of reference of the Commission to suggest what rates of taxation should be imposed by the Government, but it is the task of the Commission to survey the field generally, and to provide the Government and the country with background information, in the light of which it should be possible to judge this question of taxation. Because the decline in revenue does not appear to be precipitate, and for those other reasons, we do not think that a case has been made out to regard this as a first-rate priority this year.

Mr. J. Enoch Powell (Wolverhampton, South-West)

I am surprised that the Financial Secretary should have opposed this Clause on the ground that it would place a burden on the Treasury and would mean a loss of revenue, because this is one of the few new Clauses whose object is to increase the revenue accruing to the Treasury. I shall direct my remarks in support of my hon. Friend the Member for Weston-super-Mare (Mr. Ian L. Orr-Ewing) to that narrow point, for in supporting this Clause I express no opinion about this form of sport, nor about the desirability of betting in general, nor of the State deriving revenue from a tax upon betting. I do assert, however, that if we are taxing betting it is irrational to tax it at such a level that the revenue obtained is less than if it were taxed at a lower level.

If one can make out a reasonable case to show that the level at which greyhound totalisators are taxed is reducing the revenue derived from that source, then the Treasury Bench have no logical alternative to accepting this Clause. In our view, there is nothing sacrosanct in the 5 per cent. which is written into this Clause, and if the Chancellor of the Exchequer expresses his willingness to reduce the totalisator tax from 10 per cent. to some other figure lower than 10 per cent., which his advisers consider would result in increased revenue, then I am sure my hon. Friend would be prepared to withdraw this Clause in anticipation of a Government Clause to that effect.

The object of the Clause is to bring down the level of greyhound totalisator taxation in such a way as to increase the revenue derived from that source. I will not repeat the figures which have already been given by my hon. Friend, but I want to remind the Committee of the salient facts. They are that attendances at these tracks have steadily and substantially increased in the last three years, while on the other hand, the totalisator turnover has abruptly fallen between 1948 and 1949, and again in 1950. I think the Financial Secretary was, in fact, mistaken in saying that the early months of 1950 showed a reversal of this downward trend. I am advised that the revenue in the first eight weeks of 1950 was £25,000 less than in the corresponding first eight weeks of 1949.

We are, therefore, facing an upward trend in attendances and an abrupt downward trend in the receipts from the totalisator, which might be due, as the Financial Secretary said, to a variety of reasons He suggested that it was because people were spending more on food and clothing, and because his right hon. and learned Friend's disinflationary policy was bearing fruit. If that is the case, how is it possible to account for the increase in the totalisator receipts on horse-racing courses over the same period? I suggest that, looking at these facts, the increase in the attendance and the great fall in the totalisator receipts while during the same period horse-racing totalisator receipts—

Mr. Keenan (Liverpool, Kirkdale)

Is it not true that last year it was announced that there was a reduction in the amount that went over the horse-racing totalisator?

1.0 a.m.

Mr. Powell

That is so. In 1949 as against 1948 there was a fall in horse-racing totalisator receipts of 2 per cent., but there was a fall in greyhound racing totalisator receipts of 10 per cent. during the same period. If we go back to the previous year, there was an increase of 25 per cent. in horse-racing totalisator receipts to offset a 27 per cent. decrease in the case of greyhound racing.

Substantially, we have this picture: an increase in horse racing and a decrease in greyhound racing totalisator receipts. The real explanation has nothing to do with disinflation and people spending more on food and clothes, but is simply the effect of the 10 per cent. tax imposed at the beginning of 1948. It seems to follow from that that if a less severe tax were imposed, we should find greyhound racing totalisator receipts increasing and the share going to the Revenue would either be the same or would actually rise. I therefore, ask the Financial Secretary to look again at these facts, which to my mind are convincing, to see whether they do not make out a case for reducing the rate of taxation, not necessarily to 5 per cent. but to an actuarially ascertained figure to preserve and increase the revenue without penalising what is the sport of many millions of people.

Question put, and negatived.