§ As from 2nd August 1971
- (1) the rate of duty on any on-course bet made on or after that date shall (in lieu of the rate of 5 per cent. specified in section 1 (1)(a) of the Finance Act 1970) be 2½ per cent.;
- (2) any bet made on or after that date by means of a totalisator situated on premises forming part of the track shall be deemed to be an 'on-course' bet.—[Mr. Temple.]
§ Brought up, and read the First time.
§ Mr. Deputy Speaker (Miss Harvie Anderson)
It would be for the convenience of the House to discuss at the same time new Clause 8–Alteration to 1046 general betting duty in respect of on-course bets—In relation to any on-course bet made on or after 2nd August 1971 section 1 of the Finance Act 1970 (which relates to general betting duty) shall be read and have effect as if, in place of the words '5 per cent.' there were substituted the words '2½ per cent.'.and new Clause 37–On-course betting—As from 1st November 1971 the provision contained in section 1(1)(a) of the Finance Act 1970 shall be abolished, and the provision contained in section 1(3) of the said Act (defining an 'on-course bet') shall be amended by the addition of these words at the end of the subsection 'or the bet is made by a person on behalf of the Horserace Totalisator Board on premises not forming part of the track but in such event the bet made is transmitted to the premises forming part of the track and forms part of the pool on the course for the event in respect of which the bet is made.
§ Mr. Temple
I am delighted that you have selected new Clauses 8 and 37 to be debated at the same time, Mr. Deputy 1047 Speaker. I cannot claim to be a novice at the question of betting legislation, and I can claim the honour of being relatively consistent in these matters in that I have proposed several new Clauses and Amendments directed to the same end.
The object and principles underlying new Clause 10 are. basically, to reduce by half—that is, to 2½ per cent.—the duty on all betting on racecourses and at the same time to provide that all bets struck on the totalisator shall be deemed to be on-course bets
I am not wholly convinced that new Clause 10 is properly drafted, but I am more confident about the drafting of new Clause 8, having been more associated personally over a period of years with the approach enshrined in the latter. A new Clause on similar lines was proposed by the Conservative Opposition in both 1968 and 1969.
New Clause 37 is in the name of my hon. Friend the Member for the Isle of Thanet (Mr. Rees-Davies), who has been so dedicated to the cause of racing. I well remember how in 1966 he returned at a gallop on Gold Cup Day from Ascot in order to propose a new Clause designed to the same end. I am happy to say that I have not had to drag myself from Chester races on this occasion. These new Clauses are being debated at what I call a reasonably quiet time in the racing calendar, between Ascot and Goodwood, and we have time for a good review of the situation. In my view, the present situation is not healthy for racing generally or for the bloodstock industry.
New Clause 10 has, as I say, two objectives, the second being to help the totalisator. I cannot claim to be an expert on the totalisator or its workings, but I know that it is in considerable difficulty at present. It has not been able to meet the contributions which it should have been making to the levy board in the last two years, and on present form there is little prospect that it will pay the levy in the foreseeable future.
My hon. Friend the Member for Mid-Bedfordshire (Mr. Hastings) has had a good deal to do with the totalisator—
§ Mr. Temple
—and, if he can catch your eye, Mr. Deputy Speaker, he will, I am sure, deploy the case for the totalisator much better than I could. For my part, as I say, I have always endeavoured to be consistent in politics, and in no sphere, I believe, can I claim to have been more consistent than in the sphere of betting legislation.
It is a great tragedy that the House lost a most respected Member by the death of Iain Macleod. I well remember the occasion when he moved an Amendment on this subject to the Finance Bill in Committee in May, 1968. I hesitate to mention this now in the presence of the Minister of State, but that Amendment was supported not only by the present Financial Secretary and the present Minister of State at the Treasury but by five Members who are now Ministers in the present Government and by two who are Government Whips. I was myself associated with the Amendment, so I cannot think it was other than highly respectable.
It is, perhaps, good fortune that the present Chief Secretary to the Treasury is to answer this debate. He was not personally involved on that occasion, and I suspect that he has been picked because he is the one Treasury Minister not to have been involved in previous debates and who did not vote for the Amendment on the lines of new Clause 8 to which I have referred. I hope that he has at any rate read the OFFICIAL REPORT of the debates. I cannot do better than quote the late Iain Macleod, who said in the debate in 1969:… I think that there ought to be a clear differential between the tax on on-course betting and the tax on off-course betting ".Then he said something which is very significant:I hope in a not-too-distant Budget that will come about."—[OFFICIAL REPORT, 16th July, 1969; Vol. 787, c. 679.]Perhaps there is a hope on this occasion.
I do not think that the Treasury would be losers if it took the action which I advocate. In 1970 hedging betting on-course was exempted from tax. That shows how persistency can have effect, for that was a matter I had pursued for a number of years. Moreover, the principle which I and a number of my right hon. and hon. Friends had enunciated, of 1049 a differential between on-course and off-course betting, was accepted for the first time, so there is no difficulty for my hon. Friend the Chief Secretary today. He will not have to say that he would be breaching a Treasury principle, for it has already been breached by the previous Government. I am trying to induce him to jump a little further through the hole already made in the Treasury defences to bring about the happier state of affairs in which on-course betting would be treated much more lightly than it is now from a tax point of view.
Today there is a 6 per cent. duty on all bets struck off-course and a 5 per cent. duty on all bets struck on-course. I do not think that that difference of 1 per cent. is the difference to which Iain Macleod was referring. He was referring to a substantial difference, such as halving of the on-course duty.
I should like to explain something of the figures, for the House is entitled to know whether I am seeking a remission of tens or hundreds of millions of £s of revenue or a mere £1 million or so. In 1970–71 the on-course turnover in both horse racing and dog racing was about £100 million, bringing in duty of £5 million. The off-course figure was gigantic. The turnover was £1,000 million, and the duty it brought in was about £61 million.
I would encourage my hon. Friend by admitting that the hedging concessions granted last year has stimulated the on-course market to an extent. That is all to the good. But it is encouraging also from the Treasury point of view to realise that that concession did not diminish the revenue. That will substantiate the point I shall make later that the tax could well be reduced without reducing the revenue.
A most serious matter has been the drop in race-course attendances. A very large number of people are now watching horse races on television. From about 27 racing programmes on television in a year, the figure has grown in the past few years to about 235. But on the racecourse the number of persons watching the racing has dropped by a third since 1953, from 6 million—a small enough figure—to only 4 million a year. The daily attendances on the track have fallen from an average of 8,500 to 5,000. We should expect to see more people at an average Third Division football match than at the average race meeting. These 1050 figures include the great meetings of Ascot, Goodwood, Aintree and everywhere else. One can deduce from them the fact that attendances at some of the small meetings are amazingly thin.
Linked to the question of the small attendances is the viability of the racecourses themselves. A few years ago, in the period 1963–66, there was an average return on capital invested in racecourses of about 6 per cent. That was a modest reutrn in itself. Between 1967 and 1969 the return on capital dropped to 0.3 per cent.; in other words, one-third of one per cent. is the return on capital invested in racecourse. That is a most dangerous situation. If we want the bloodstock industry to prosper, we must have racecourses that can attract the public and give prize money. There is real danger of these courses being taken out of racing altogether for development for other purposes because the capital employed is not making a reasonable return.
I have no wish to labour this point. The arguments are well known. They have been well put in previous debates. Recently Lord Wigg said that the racecourse market is the pyramid upon which the whole of the racing industry depends—on which off-course betting depends. At Chester races a few years ago, just before I spoke on this matter, I met those two mythical men, the representatives of the Sporting Life and the Sporting Chronicle who determine what is called the "starting price return". Many people imagine that bookmakers make the starting price return; the starting price is made not by them but by these two authoritative racing correspondents, who have the difficult job of assessing what the market is at the off. That market price at the off is the starting price which determines all the off-course betting throughout the country.
The one thing I and my hon. Friends have always been concerned about is that we should have a strong market on-course. Mr. Sidney Bates, a respected racehorse owner, told me that the market was so weak at a meeting recently that no starting price could be made. That is one end of the scale. If a weak market develops at a very small meeting it is not difficult to influence the starting price odds by placing a few bets strategically in the market. This is why a strong market on-course is desirable.
1051 I hope that the Government will look favourably at the new Clause. The principle was supported in Opposition by the Conservatives, and indeed, received all-party support at that time. I do not believe that much revenue would be lost. If the betting duty on-course was halved, as things stand the loss to the Revenue would be about £2½ million, but I believe that there would be a big upsurge in betting on the course and that the Revenue would, therefore, soon gain back a great deal of what the Treasury thinks it might lose by this proposal, and, over and above that, would gain tremendously by the added encouragement this would give both to racecourses themselves and to the whole of the bloodstock industry. For these reasons, I hope that the Government will look favourably at the new Clause.
§ Mr. W. R. Rees-Davies (Isle of Thanet)
The subject which we are discussing tonight is probably almost as popular among the public as the subject of the Common Market is in certain quarters. I make no apology for following my hon. Friend the Member for the City of Chester (Mr. Temple) in developing some of the arguments on a matter which affects millions of people who are fascinated by the sport of kings.
There are four factors which arise, the first of them new. The new factor is that the Horse Race Totalisator Board is heading straight for bankruptcy. It behoves the House and the Treasury to take action either to save it, or to decide that it shall not continue.
The second factor, of overriding importance, is to do something to encouraging people to go racing on course and not to sit watching the television. The third, which is vital, is to try to restore to racing the quality of racing which is a way of life, a hobby, an interest of so many of us. The fourth is to enable us to maintain this country as the leader of bloodstock and to enable the facilities of the racecourses to provide what they do not now provide—the highest amenities for racing for a country which should continue to give a lead in this rescect. Only one thing can achieve all four factors at the same time: it is to make people who want to watch pay for those 1052 who want to attend and to participate in racing.
The essence of this begins in 1966 with Iain Macleod. It began when he forcefully pointed out to the House that there was all the world of difference between off-course betting and on-course betting, between being a goer and being merely a watcher. He pointed out that there should be a differential between being a participator and being merely an idle watcher, and we voted on it.
In 1968, he followed that by opposing an increase in tax and again he singled out the necessity for a distinction between the off-course and the on-course market, having explained the essentials of the market in 1966. Finally, in the quotation which has been given, he said in terms that it was the policy of the Conservative Party, which would be pursued in a not-too-distant future Budget, to introduce a substantial differential between on- and off-course betting.
Why is this so? First, one must look at the general betting duty picture. There are 64 racecourses racing on approximately 800 days with 5,000 races. In the financial year 1970–71, the immediate up-to-date figures show that the Government are receiving a total £71.149 million. They estimated to receive only £66.5 million, so they received £4.5 million more than they estimated this year. The off-course bookmakers provided £61.45 million; the on-course horse race tote only £1.52 million; the on-course bookmakers £2.77 million; the greyhounds provided on-course for the totalisator £2.95 million and the off-course bookmakers with the dogs £2.44 million. That is the complete picture for 1971. Therefore, the whole tax on course in respect of horseracing is just over £4 million, or less than the difference between the estimated and actual figures received this year by the Revenue, and it represents a tiny fraction of the money received.
When the tax was introduced by mc Treasury in 1966, it thought that it would receive between £11 and £12 million. It received about £13 million. A couple of years later, it estimated that it would receive £30 million. It received £50 million. More recently, it estimated that it would receive £66½ million. It received over £71 million. The off-course punter 1053 has supported betting not racing. But there is no money in racing today, and this is the sad picture. It is entirely the off-course punter, who contributes nothing to the sport except the tax, who has provided the revenue which far exceeded the wildest dreams of any Chancellor of the Exchequer. The turnover producing a mere £10 million on a 2½ per cent. figure in 1966 went up to £55 million in March, 1968. This is the background of the figures against which we must work.
Why is it said that we should either have no tax on course or a negligible tax—say, 1 per cent.? One of the major new reasons is that the tote is heading for, if it has not already reached it, complete insolvency. The facts are these. The debt to the Levy Board as at yesterday's date is £465,606. The loss by the tote last year was £250,000. The tote has no reserves, no capital and virtually no assets. The 1½ per cent. levy fixed by the Home Secretary was to be paid only in the event of its being able to make a profit. It had no chance of doing that. There was a nil return, and next year there will be a nil return. Therefore, one of the purposes for which it was set up, which was to provide a benefit for racing, cannot be achieved.
I do not think that the tote should be blamed for this situation. It is not to blame. Over the past six years the tote contributed no less than £6 million. Now it is unable to do so. Unlike other commercial concerns, it had no capital and no power to obtain a commercial loan. Any profits which it made year by year had to be handed over for the benefit of the concerns it sought to serve. It is in no way to blame in this respect. It may be that there are steps which it can take to improve its profit position. But the situation calls for a keen, hard look because otherwise the Government will be faced with the same position in respect of the tote this coming year as they were faced with in respect of Upper Clyde shipbuilders and other concerns. I do not want that to happen.
The best thing which can be done for the tote is, first, to give it the advantage of not having to pay the tax of £1½ million which it paid last year for on-course betting and, further, to enable it to have off course the advantage of treating as on-course bets placed at tote odds. 1054 For example, if there was a meeting at Chester and a person at Kempton Park wanted to bet at tote prices he could bet at Kempton and the money would go into the pool at Chester.
It is perfectly true that this gives it an advantage to the tote as against the bookmaker. Let me say this with all the authority that I can command—and I have spoken to so many of the bookmakers in the country—that while it is true that they may not like giving an advantage to a competitor in this way, the advantage obtained by accepting the Amendment is one which they will universally accept. They will accept it because of the great advantage which would accrue to racing, and not having to pay the tax on-course would more than offset the advantage which would be carried to the tote, whom naturally they do not regard as the very greatest of competitors, nowadays with their tiny turnover as compared with bookmakers.
A year ago they subscribed to that view virtually unanimously. They have only expressed a different view very recently and it is a view that I have no hesitation in saying would be acceptable provided that we could really secure the benefit for racing which the Amendment would contribute.
There are many ways in which the tote can be assisted. It seems that the first thing to do is to get its tax position right and to ensure that it then is in a position to provide the facilities. The tote has to attend 792 meetings throughout the country and is obliged to provide facilities at all of these whether or not they are profitable. We should take a keen hard look and see whether it ought to continue to do so. There may be opportunities to provide different facilities, such as the tierce for the future which may provide a profit. We need action now or very soon indeed if we are to assist in the maintenance of a system which is of very great value to many small punters and to those who wish to go racing.
Secondly, we must encourage people to go racing. Attendances have been falling year by year. In 1965, five and a quarter million people went racing. By 1969 the figure was 4,110,000. The lack of differential in betting, the cost of going racing, the advent of colour television and the increasing traffic problems are 1055 all factors which have militated against persons going to the course. The necessity for a strong betting market was always in the forefront of the mind of the late Iain Macleod. As a man with a phenomenal knowledge and appreciation of odds and mathematics he recognised a factor which I am sorry to say we will have to train our Front Bench to recognise.
What he understood and what it does not understand at the moment—although many coming up in Customs and Excise are now becoming very well trained in gambling matters—is that we must have a strong betting market because one of the only reasons for sustaining the on-course market today is that the return is made from the course by the journalists whose integrity is undoubted and who return the market price. If there is no effective market on the course there cannot be an effective return and if it is very weak, one bookmaker, by throwing a weight of money in at the last moment, can change the whole range of the odds to his advantage. It is therefore essential that we ensure that people go racing, that they enjoy racing and that they make this a sport which is a living thing.
If that be the third factory, the fourth and most important in many ways is that we maintain the quality of British racing, that we try to retain the best of British bloodstock. Recently, Nijinsky came for sale. This country was unable to find the money. It can find the money, I am happy to say, for a good picture but not for an outstanding racehorse. It was lost to the United States because the National Stud could not find the £2 million for the outstanding horse. It is said, "Oh, but there are many people who are owners today, who have horses." They have horses, poor horses in the main. The quality has fallen badly. If we consider those who owned the best racing stock in our country it was people like Paul Mellon and the late Charles Engelhard. It is the foreign money today.
These are the people who sustain the bloodstock market today. These are the people who are non-United Kingdom taxpayers who are providing the money and who are draining away the bloodstock. Year by year it is being drained away.
Although the Extel Company pays £700,000 a year to the racecourses of 1056 Britain to provide for the blower services, nevertheless this is a pretty poor way of treating our racecourses. They would be very much better supported if we could ensure that people go racing and pay at the gate and go in and provide the funds—which provide the prizes.
Now I come to the shocking figures of prizes. In 1966 the amount was £3 million. In 1970 in flat racing it had risen to only £3.5 million. Although in that period the value in money and returns had gone up by nearly 50 per cent. in actual value they had fallen in this country. In France at the same date they had risen by 30 per cent. and in 1971 alone were up 10 per cent. In Australia, starting from a higher base, the figures were up over 50 per cent. In Greece, where they started racing only two or three years ago, the lowest prize money is £1,000 a race. We are not even as well off as Greece. The net training deficit for owners for last year was £6 million—£1,000 per horse per year. In New South Wales and Victoria, two States in Australia, with a population of 8 million, the prize money exceeds the whole of the prize in the United Kingdom with a population of 55 million.
§ Mr. Rees-Davies
I am delighted that my hon. Friend, with his great knowledge of finance, is understanding these figures so well.
It is perfectly true that a very high price is got for first class yearlings, but the owners who get it—where do they go? Abroad. The money goes to non-United Kingdom taxpayers. So the quality of racing goes down and down.
I would refer to something said in Sporting Life about the tote. There was an article by Michel Rolfe on 1st July and I entirely agreed with a great part of it. He said:'If the Government cannot solve the tote problem let Lord Wigg run it".With all respect to his Lordship, I cannot agree with that, but if the Government cannot solve the tote problem through the Home Office let the Home Office transfer it to the Treasury, because this is really a Treasury problem now. It is certainly one which has not been solved by either of the late Home Secretaries, nor is it one which the present Home Secretary has yet done anything to solve. 1057 I think the proper place for it is Customs and Excise. There are the people who are most likely to understand the problems.
In that article it was also said:A realisation that the Totaliser Board is unlikely ever again to receive money from racing has been apparent to the Levy Board and bookmakers for some time and it is beginning to dawn on everyone else connected with racing. Roy Jenkins, James Callaghan and Reggie Maudling have in turn been the guilty men. Each of them has allowed the Tote position to slip from bad to worse.I have confidence that this Government, and the Treasury, will now, in the next year, take the action which is necessary to consider the position of the tote, but when they consider the position of the tote, which is there to serve racing, they must also consider the position of the people who participate in racing. There was much criticism of the proposal for a betting tax that bookmakers would be obliged to carry it out effectively. We were told they would evade it They cannot evade it, for the simple reason that if one has a permit and a licence to be a bookmaker, it is too dangerous to evade it.
The bookmakers will ride honestly and properly. Admittedly, it is difficult to remove, perhaps entirely, the tax on course. A nominal one must probably be kept for security reasons, but that is merely to ensure that the Customs and Excise officers who have to administer this, and who have administered it extremely effectively in recent years, must be able to look at the books of the bookmakers on course to see that they are not being fiddled. They must also be able, therefore, to see the whole picture of racing.
I am convinced, therefore, that the only way that we shall succeed in future is to reduce the differential on course to an absolute minimum, just sufficient to provide some type of pitch tax by the bookmakers, to bring in people to enjoy racing so that they can then increase, and increase substantially, the prize money to the levels which one finds in Japan, Germany, France and, possibly, one day, in the United States. This should be done not only for a few selected races, but for racing generally. In this way, the quality of racing could be restored to that of a sport which not 1058 only hon. Members sitting here tonight enjoy, but which the public regard as part of their heritage and want to see restored to the great position that British racing ought to hold if only we in this House will give it our support.
§ Mr. John Golding (Newcastle-under-Lyme)
I cannot follow the detailed knowledge of the hon. Member for the Isle of Thanet (Mr. Rees-Davies), but it is important that tonight, when many of us are concerned with the cuts that are to be made in Government grants to small sports, we on this side should emphasise that we are not concerned with granting large subsidies to rich men who want to pursue their hobby.
I speak as someone who has for a long time taken an interest in sport in Chester. One of my earlier sporting recollections is of noting the increased truancy that occurred in Chester schools during the month of May. Many of us were very interested in the racing on the Roodee. It was in Chester, too, that I learned some of the problems and intricacies of the tote, when I worked on the tote during the evenings helping the citizens of Chester to lose a considerable amount of their hard-earned money.
Let us ask ourselves why many of us want the tote. It is because, for many people, it is easier to put a bet on the tote than to put a bet on with a bookmaker. One of the social characteristics of the tote is that, until recently at least, it has enabled working-class people to have a bet without spending too much.
Many hon. Members will know that one of the disadvantages of going racing is that there are six races and it takes a very strong-willed individual not to bet on each race. It takes a man of iron will and great judgment, faced with six races, to decide that he will have a bet on only one, two, three or four of them and leave the others alone. In my youth, the man who could leave a race alone was regarded as a man apart, a cut above the rest of those of us who, being at the races, had to have a bet on each of the six races. Unfortunately, if one has six bets and if one's judgment is like mine, six times 10s. is £3. [HON MEMBERS: "Hear, hear."] In my days on the tote, I discovered that men who were nearly illiterate could tell what the tote odds would be minutes before the machine had 1059 calculated them. So I can tell the House that a person having six 10s. bets will spend £3, and £3 is often too much for a working man to spend at the races. In the old days, when a bet was 2s., one could at a pinch justify spending 12s. Then the ticket went up to 4s. Now we have to pay 30p for a 20p ticket, but still our betting can be restricted to £1.80. It is important that there should be facilities for the placing of small bets on all courses.
I am advised that bookmakers are loth to accept small bets. Bookmakers have lower limits, and people find it hard to make bets of smaller amounts, so we want the tote. We want the tote, too, because some of us, having just escaped from our nonconformist background, cannot quite take the final step of putting the money into the bookmaker's satchel. We have been reared to believe that gambling and bookmakers are both evil. Some of us have escaped from the first proposition and gamble, but still believe bookmakers to be evil. We have been taught that they stand on street corners, or get other people to stand on street corners, to take away our hard-earned money. For some strange sociological reason, we are prepared to give the money to the tote because it does not go into the pocket of the bookmaker. We are loth to make the bookmaking fraternity richer than they are, so we want the tote for this social reason.
The principle of the tote is that ideally it can never lose. It is the same as the principle of the pools. Money is taken in, a certain percentage is deducted and the rest is divided amongst the people who have backed the winners. This principle founders in years when there is bad weather. Kempton Park is not the only course to have suffered from the recent bad winters. The tote obviously has suffered, and this principle breaks down if for extended periods there is no racing so that overheads have to be met when no receipts are coming in. So we must do our best to keep the tote.
I do not want to see the betting tax reduced for either the tote or the bookies. I certainly do not want to see it reduced because it will put more money into the sport because it will save the sport, and because it is for the benefit of livestock and owners. The responsibility rests very 1060 firmly on racing and on racecourse proprietors themselves to make the sport more popular.
What racing is suffering from at present is that in England it has been the sport of kings. It has been an aristocratic sport. The reason for television, and colour television in particular, being at present such a threat to racing is not that it is more comfortable to sit at home and watch the races—although there is something to be said for that on a cold, damp November afternoon—but that for many of us it takes us for the first time off the course, out of the silver ring, into the paddock.
I cannot emphasise that too much when addressing hon. Members opposite. I do not want to introduce the subject of the Common Market tonight, but I confess that the only French I was ever taught was "Gagner ou placé si vous plait"—"Win or place, please". What I learned on visiting France for the first time was the different nature of racing there as a spectator sport, and the different attitude adopted towards the racing public. The cost was much cheaper, and that was to be welcomed. But, most important of all, it struck me that there were not on the racecourse these social divisions. What must strike any social observer of the English racecourse is the social divisions that exist there.
As a child, and I speak very seriously, I was surprised to learn that it was possible to go into a stand, because in my youth most working-class people assumed that they would go on the course and see nothing except the jockeys' caps. That to a very large extent, is true today. If one watches at the Roodee at Chester as one of the "plebs", one sees a colourful scene but relies upon rumour to find out what won—and the Roodee is one of the finest racecourses in the country for viewing [Laughter.] Hon. Gentlemen laugh, but it is true. Unless people who have the welfare of racing at heart recognise these facts, there can be no financial salvation. One can go to the races in this country and see little of the racing. Caps and horses' necks, yes, but races, no.
It goes further than that. Even those who are prepared to spend a little more are divided between those who go into the silver ring and see the races and those who go into a far more expensive 1061 enclosure still and gain admittance to the paddock. Those who go into the silver ring see nothing of the horses before the races; they are cut off. It is only those who can afford what for working class people is a very large amount indeed who can see what television brings. The point I want to rub home is that all are equal watching racing on television. Most, if not all, are equally informed. All can participate. This is not so on the course. Only a small minority are being catered for on courses at present.
The matter goes beyond this fundamental point of being able to watch a sporting event. Our racecourses are often ill-equipped. For example, if one goes to Uttoxeter on a fine summer afternoon to watch the jumping, it can be very difficult to get a cup of tea. It is simpler to get oneself a cup of tea between races whilst watching the I.T.V. seven than at Uttoxeter. Racecourses are difficult of access and often the refreshment facilities, at least for the general public, are extremely poor. I do not suggest that these poor facilities exist for the better off, for those who own, train and even ride the horses. But they must be aware, because their income depends on it, that they will not get large crowds at racecourses unless things are very much improved.
The argument has been that there ought to be some differential between on-course and off-course bookmaking because the industry needs to attract money into itself. The argument is that the off-course punter is putting nothing into the sport. Whether it be little or great, I do not think that the off-course punter should be asked to put anything into the sport. However, there is an argument for the off-course and the on-course punter putting something into the Exchequer.
Whether one gambles with the tote or with the bookies, I think that gambling ought to be taxed. I do not of necessity think that a sport, an entertainment, should be subsidised by the people who bet in this way. I no more think that there should be subsidies from the off-course punter to the racecourses than that there should be subsidies from the pools punter to Tottenham Hotspur, Stoke City or Arsenal. That is not the way in which the sport should be financed. It ought to be made sufficiently attractive 1062 that people would go to the course and pay admission money. Money could then be obtained from the selling of programmes and the profits derived from the sale of refreshments. We should not be running what is predominantly a rich man's sport by taxing people's off-course bets.
On a previous occasion I have crossed swords with my hon. Friend the Member for Birmingham, Small Heath (Mr. Denis Howell) and I have had to remind him that it is better for the country's economy that people be kept off the courses midweek. It would be a bad thing for us to discourage the punter to make his bets off the course and encourage him to go racing in the middle of the week.
§ Mr. Golding
I realise that I have to uphold the nonconformist conscience in this debate, surrounded as I am, on both sides of the House, by men who obviously are here to give support to an industry which Lord Wigg has said that he would prefer to see run on its own two legs.
§ Mr. Golding
As far as I am concerned, it is generally two legs.
It is important that the industry should not rely on contributions from betting. There should not be a greater tax burden placed on the man who bets in the betting shop than is placed on the man who bets on the course, because often the difference between them is financial. The man who uses the betting shop often has less money than the man who goes to the course. If one has only 5s. or 10s. in one's pocket one can place a bet in a bookie's shop; but one cannot go to the races with that amount of money. By taxing the man who bets in the betting shop more heavily than the man who goes to the course, we are saying to the man with less money that he has to pay more than his richer brother.
§ Mr. Howell
May I put two points to my hon. Friend? They have nothing much to do with the nonconformist conscience in his constituency. When I visited his constituency to speak on behalf of my hon. Friend in that well known 1063 by-election, I did not find that conscience to be very pronounced. But I take it from my hon. Friend that it may be.
My first point is that if people wish to bet on horse racing, as most of my hon. Friend's constituents do day by day, and most of my constituents, there can be no sport or interest for them unless the health of the sport as a whole is maintained. That must mean that those who want to enjoy their flutter, as many of us do, have an obligation to make a small contribution towards the health of the sport as a whole.
Secondly, it is of tremendous importance to remember that one can have no sport at all unless one safeguards the atmosphere of the sporting occasion. In racing, unfortunately, one of the things that happen at far too many meetings is that there is a dearth of people on the course and one cannot establish a fair market for the betting and, therefore, a fair market for the punters in my hon. Friend's constituency as well as mine. We cannot do that unless we attract a reasonable number of people on to the course to safeguard the meeting as a sporting occasion in its own right.
For those reasons alone, it has always seemed to me that the case for a differential in betting duty between off-course and on-course betting has been well and truly made.
§ Mr. Golding
I shall not reply to the second point my hon. Friend has raised. I spoke for 15 minutes in my hon. Friend's absence about the need to attract people to attend races.
§ Mr. Golding
It is outrageous for an hon. Member to come into the Chamber at the end of another hon. Member's speech and make a point such as the one my hon. Friend made.
§ Mr. Howell
I am sure that my hon. Friend in his felicitations towards me would not wish to do me an injustice. The fact that I was not sitting on the Front Bench does not mean that I did not hear my hon. Friend's speech. I heard him from the other end of the Chamber. That is why I came on to the Front Bench.
§ Mr. Golding
Then I withdraw what I said.
The first point my hon. Friend made was a serious one and was that the off-course punter depends on a healthy racing industry. We are living in different worlds. From time to time a horse like Arkle catches the imagination, and the fact that he is in a race will increase the amount of betting. For the most part the off-course bookmaker does not concern himself with whether a given horse can run the distance in one, two, three or four minutes. It is of no concern to the off-course punter whether the horses are of high quality. All that he is concerned with is whether he will pick the best of the bad bunch. He is concerned only with picking winners and not with the health of the industry. When he goes to collect any winnings from the betting shop he is concerned only with the return from his investment and not with the way in which the deductions have been spent.
§ Major-General Jack d'Avigdor-Goldsmid (Lichfield and Tamworth)
It is well known that in Britain there are many people who are extremely interested in racing and derive much pleasure from it. The racing industry employs over 150,000 people. The bloodstock we breed for those who are interested in it is probably the best in the world. We produce jockeys of worldwide prestige. People like Lester Piggott are acclaimed worldwide, which, although this is only in a sporting context, is no bad thing for Britain.
Racing is in a bad way because, as has been said, attendances are falling. This is largely because of the 5 per cent. tax which is levied on on-course betting. The tax was instituted in 1968. The bookmaker deducts 5p in the pound from a winning bet—not only on winnings but on the original stake as well. If the punter loses the bookmaker pays the tax on his losings, but he can adjust that by adjusting the prices. He gives worse odds, especially in place betting, which was formerly at a quarter of the odds and is now at one-fifth.
It is interesting to note that as a result of this the number of bookmakers attending racecourses is steadily falling. In the year ending 31st March, 1968, the average number of bookmakers attending racing per day was 90; then the on-course betting tax went up to 5 per cent., and by the end of this financial year the number had fallen to 74. If the betting tax could be reduced or abolished the ramifications would be very wide. First, we would have increased attendances at race meetings; people would rather go racing and have a bet there than go to a betting shop, where they have to pay a 6 per cent. tax.
Secondly, the increase in the number of people attending race meetings would produce a stronger betting market. Previous speakers have emphasised that it would mean a wider variation in prices. The starting price emanates from the racecourse, and a wider range of prices might even attract further off-course punters, thereby increasing the revenue to the Chancellor.
Thirdly, as was mentioned by my hon. Friend the Member for the Isle of Thanet 1066 (Mr. Rees-Davies), the prize money could be increased. At the moment racecourses rely for their income on owners' entry fees, attendance fees, the sale of race cards and car parking. If there was an increase in attendances the amount of prize money could be increased and that, in turn, would have an effect. Not all the money goes to the winning owner; 10 per cent. goes automatically to the trainer, 7½ per cent. goes automatically to the jockey and 2½ per cent. goes to the stable. That 2½ per cent. is very important, because on the whole the workers in stables are not well paid and depend largely on the generosity of owners.
Fourthly, we should be able to improve the amenities at racecourses. The hon. Member for Newcastle-under-Lyme (Mr. Golding) might be able to get a better cup of tea at Uttoxeter.
We have already heard that the tote is in great trouble. Any help that we can give it in terms of on-course tax would be welcome. I therefore support the new Clause and I ask my right hon. Friend to listen to the arguments put forward and consider either the abolition of the tax or its reduction to 2½ per cent. I hope that he will bear in mind the six points that I have raised—increased attendance; a stronger market; increased prize money; more contented stables; help for the tote; and better amenities.
§ Mr. Taverne
It is clear that the tote is in deep trouble. We want to know what the Government's attitude is to that predicament. Will they apply their "lame duck" philosophy, or, if the kind of solution advocated in one or other of the new Clauses does not commend itself to the Government, what other plans have they to deal with the problem?
Second, on the face of it, as my hon. Friend the Member for Birmingham, Small Heath (Mr. Denis Howell) said when he intervened during the speech of my hon. Friend the Member for Newcastle-under-Lyme (Mr. Golding), the case for a differential rate between on-course and off-course has always seemed attractive. There is, however, one danger which its advocates have not always recognised, I think; that is, the danger of evasion. I understand that this danger was considerable, but it could, perhaps, be met if a differential rate were introduced gradually.
1067 Last year a slight differential was introduced. Perhaps the Government could tell us how this has worked, and whether, on the basis of the experience gained of working a marginal differential, a somewhat larger differential might now be possible to achieve the results which many hon. Members on both sides would favour.
§ Mr. Hastings
Most of the points which should be deployed have already been made, and we have heard a number of interesting speeches. My hon. Friend the Member for the Isle of Thanet (Mr. Rees-Davies) gave a most eloquent exposition of the case for the new Clause, and I was delighted that my hon. Friend the Member for the City of Chester (Mr. Temple) was able to move it, for the third time, I believe, since he came to the House. I am sure that the Government will take note of what has been said.
My only misfortune now is that I have lost my notes, and I shall have to do my best without them. I recall that my hon. Friend the Member for the City of Chester said that I had had a great deal to do with the tote. Like most of us, I have been in and out of the place from time to time, but I do not think that that necessarily qualifies me to speak in this debate. My interest in the matter arose from a lifelong interest in horse racing, and from an occasion when my well-known enthusiasm for the Industrial Relations Bill became a little less than strong one morning and I escaped to the Gold Cup at Cheltenham, a place which has always had a nostalgic apeal for me since the last race I rode in this country was at Cheltenham. I wish I could say that I succeeded; but I got round, anyway.
In the course of interesting conversations at Cheltenham with members of the Totalisator Board, I became impressed by the extreme difficulties under which they are required to operate. Their difficulties stem from the failure of anyone—Government, Home Office or anyone responsible—to decide whether they are required to operate as a commercial concern or as a public facility operating under strict requirements imposed upon them by Statute. If that could be cleared up one way or the other, their lot would, I believe, be much easier.
1068 The tote is not allowed, for instance, to deal in ante-post betting. It is not allowed to deal in bets on anything but horse racing, which puts it in a category very different from the bookmakers, and, as one hon. Member said, it has no capital as such with which to engage in competition with bookmakers. I think it fair to say that the totalisator saw the opportunity of betting shops as quickly as any of its competitors, but it was unable to seize and profit from it because it has no capital, either equity or Government, and, in fact, it operates on an overdraft or on bonds.
Such a situation is most unfortunate. If the totalisator were unable to operate it would be a grave loss to racing as a whole. It has now reached a stage after three years of running at a loss when the Government must do something to help it. The differentiation between on-course and off-course betting which is involved in the second part of the Clause in particular has already been admitted by the Government. All we are now asking is that the principle should be extended to avert what might well be a disaster for a sport which many people in every walk of life enjoy. That would be a tragedy for the country.
I hope very much that the points made in the debate will commend themselves to my hon. Friend. I think that there has been only one speech against the proposal, and that was the speech of the hon. Member for Newcastle-under-Lyme (Mr. Golding), the original Marxist analysis of horse-racing—"Horses of the world unite. You have nothing to lose but your capitalist jockeys". I found it difficult to decide whether the hon. Gentleman was for or against, but in the end came to the conclusion that he was against. He was answered effectively by his hon. Friend the ex-Minister for Sport. I am sure that we can discount his arguments, such as they were.
There has been a weight of argument in favour of the Clause. I cannot believe that my hon. Friend is insensible to it.
§ Mr. Paget
For a good many years I was a member of the Tote Board. In those years we did a good deal for racing. We made quite a lot of money, and we were not really impeded by the Act. It enabled us to do the job for which we had been appointed, and it worked very 1069 effectively. What killed the tote was the turnover tax. Anybody who applied that percentage to the performance of the tote before the tax was put on knew that it must be crushed by the tax. The tote simply could not carry it, and it cannot now.
The hon. and gallant Member for Lichfield and Tamworth (Major-General Jack d'Avigdor-Goldsmid) said that British racing and British horses were the best in the world. I can remember when they were, but they certainly are not now. I doubt whether we are in the first five, whether we assess this by the quality of the courses, the quality of the facilities, the cost to the public or the quality of the horses. I suppose that American racing comes first, then French, then Irish, and then probably Australian, and, trailing last, ourselves. The quality of our horses has fallen, as has the quality of our facilities. The reason why all the other racing prospers whereas we become more decadent, and, frankly more dishonest, is simply that betting is allowed to finance racing in those countries and it is not allowed to finance it here.
I have always favoured a tote monopoly, which is the French system. I do not find that the bookmaking profession is a very productive element in the country or, indeed, in the sport. Certainly, it is the source of corruption in racing. Without it corruption does not really occur in French racing. I do not remember when there was last a scandal there. The French system works astonishingly well. Our racing will become a very small, sordid and rather unworkable thing unless something is done to help the racecourses.
I can describe myself as an ex-racing man turned television viewer. I find today that, unless I have an interest in a particular horse which I go to watch, racing is much more pleasant on the television, and I pay nothing for it.
Surely this is a very sensible proposal. I believe that racing should have the advantage of being able to tax betting. But if we cannot have that and have a tote monopoly, let us excuse the on-course betting, and let those who enjoy their racing from newspapers and television at least contribute by carrying the betting tax.
§ 10.45 p.m.
§ Mr. Maurice Macmillan
This debate has, with few exceptions, been characterised by the personal knowledge, expertise and interest of those who have taken part in it from both sides. It must also be admitted by all those who have heard it that the main object of the new Clauses is not to gain a particular sectarian advantage for one group of persons over another but to find a method of solving a problem which has been clearly identified and stated in its various aspects by various speakers. That is, broadly speaking, the hope of the entire industry, and of the bloodstock industry which is associated with it.
It was suggested by my hon. Friend the Member for City of Chester (Mr. Temple) that I was answering as the only Treasury Minister who was in no way associated with having moved a similar Clause when in Opposition, but in these circumstances perhaps I should declare what I might call a mild interest of a reverse kind. As a part-owner of what my hon. Friend the Member for the Isle of Thanet (Mr. Rees-Davies) would call "a poor racehorse", I think that, if anything, I should benefit indirectly from the sort of measures which have been suggested.
If I may say so, I think that there has been a slight confusion between two things. It seems to me that the Clauses seek to kill two birds with one stone, and, if I may switch metaphors, there is a danger that those who have tabled the Clauses have fallen between two stools. The linking of the tote and its difficulties with the effect on the attendance at racecourses of the on-course betting duty is largely an attempt to deploy the issue which was put by the hon. and learned Member for Northampton (Mr. Paget). It is the problem of getting money from betting into racing which underlies the Clauses, and I must admit that I am by no means certain that this linking is necessarily the right way of dealing with this group of problems.
Perhaps I may now try to examine the effect of the duty and charges on attendance and other matters. When the duty went up in March, 1968, from 2½ per cent. to 5 per cent., in the financial year 1968–69 the general betting turnover dropped by some 8 per cent., the on-course betting on horses dropped by 18 1071 per cent., and the off-course betting on horses dropped by 6 per cent. However, by the financial year 1969–70, general betting total turnover was back to the previous year's level, but the on-course betting on horses had not recovered, although the off-course betting on horses had.
Then came the 1970 Budget when not only was the bookmakers' premises licence duty revised but the off-course betting duty was put up by 6 per cent. and hedging bets on course were exempt. Comparing the financial year 1970–71 with 1969–70–and this meets the point made by the hon. and learned Member for Northampton—the total turnover of general betting then dutiable went up by 3 per cent., on-course betting on horses went up by 11 per cent., and off-course betting on horses by 3 per cent.
This is an indication that the argument put forward by my hon. and gallant Friend the Member for Lichfield and Tamworth (Major-General Jack d'Avigdor-Goldsmid) was more direct than some of the others adduced in the debate, for he made it clear that he thought that the difficulty was the tax on on-course betting rather than the differential between on-course and off-course betting. Certainly no one in the betting industry, or in the racing industry as a whole, would wish for any increase in off-course taxation in order to widen the differential. What is being suggested is that the attendance at race meetings may be encouraged by halving or abolishing the tax, that that may be a material factor in the recovery of attendance and the recovery of gate money and the benefits which would flow from that.
The total abolition of on-course duty and the treatment of all tote betting as if it were on-course would cost about £9 million to £10 million in revenue. Even halving the on-course betting duty would decrease the revenue from total betting sources by at least £5 million.
The differential was introduced last year and it is a little early to say whether it is having any great effect. The changes in the betting tax, so far as it has a history, have a history of changing things in the first years with the situation tending to be restored in the second year. This would be the first time for three 1072 years that there had been no alteration in betting duty, and it would be a good thing to try to reach a certain degree of stabilisation in the matter.
§ Mr. Temple
My hon. Friend has given a figure of £9 million as the revenue from all on-course betting duties. The figure of £5 million has been frequently used during the debate and it has come from authoritative sources. As my hon. Friend's figure does not exactly agree 100 per cent. with mine, could he give a breakdown of the £9 million?
§ Mr. Macmillan
It is a slightly complex calculation, but it is based on the fact that there would be a loss in off-course betting to on-course which would tend to reduce the yield from the off-course tax.
My hon. Friend is perfectly right—the total on-course betting tax on bookmakers last year was £5.215 million; the tote was £3.746 million; giving a total of nearly £9 million of on-course betting duty in all. That extra is to take account of any switching, the effect which, if he is correct in his arguments in moving this new Clause, my hon. Friend the Member for the City of Chester would wish to see.
§ Mr. Temple
My hon. Friend has now admitted that £9 million is a hypothetical figure and that it included what I might call the postulated switch from off-course to on-course betting. I think it misleading to use £9 million, and it would have been better if he had stuck to the actual figure of £5 million.
§ Mr. Macmillan
No, I hope I did not mislead. I had no intention of doing so. I hope I made clear that what would cost £9 milion to £9½ million was the total elimination of on-course tax plus the relief of the tote from taxation by treating all tote transactions as if they had been on-course. The on-course element from the bookmaker is £5,250,000 and the tote element is £3,750,000.
§ Mr. Rees-Davies
The figure is exactly this: £2.95 million which is totalisator, dogs; £1.52 million which is totalisator, horses; £2.77 million which is on-course horses with bookmakers; and about £2.4 million which is dogs and horses on-course, making up the total, the presumption being that if one makes the deduction, one must make it for horses and 1073 dogs, which I think one must. But that is not the argument relating to the removal of tax on course betting for horses only.
On top is the hypothetical assertion of the Treasury that when one looks at this one has to say that if people do not bet off-course but go on-course, one will therefore lose the money one made off-course, which does not necessarily follow.
§ Mr. Macmillan
Presumably one would hope, in moving this new Clause, to see this kind of increase in on-course betting. I do not think it would be reasonable, in view of what those using the argument have said about new facilities, to assume that it will all be new racegoers going to meetings rather than staying at home, instead of the hon. and learned Member for Northampton (Mr. Paget) leaving his television and going back to the course, because it is more comfortable There is bound to be a certain switching element, I must apologise for unintentionally misleading my hon. Friend by giving a total which included all the figures of on-course betting on horses and dogs. The other total of £5 million is far the more limited new Clause—the "horses only" proposition.
It is true that off-course betting, however one looks at it, is much the larger yield, and it is equally true that the tote is getting a decreasing proportion of the business.
If I could turn to the argument of my hon. Friend the Member for the Isle of Thanet and others about prize money and perhaps also mention the argument of the hon. Member for Newcastle-under-Lyme (Mr. Golding), the difficulty about the large sums of prize money which other countries are able to produce is that other countries do not, on the whole, seek to maintain the relatively large number of separate racecourses and they have a tote monopoly which provides a great deal of money, coming back from betting to racing in amenities on courses and prize money to the owners. We are not discussing large subsidies to a lot of rich men who wish to engage in racing. It is wrong to say that the home punter does not equally depend on the health of the sport. If it does not continue, he will not have anything to punt on.
1074 11.0 p.m.
The suggestion of the hon. Member for Newcastle-under-Lyme that improvements could be made from the profits of the owners of racecourses was met by hon. Members who pointed out that the return on capital invested in racecourses is very low. But if racecourses were to be run in order to optimise profit throughout the industry, there would be far fewer facilities and racecourses, to the detriment of those who wish to attend them and the local nature of many meetings.
There is no doubt that the tote needs help and support. My right hon. Friend the Home Secretary has made it clear in a Written Answer that he accepts the purposes and objects for which the tote was established and attaches importance to its continuing rôle in providing an alternative form of betting on horse races. I am sure that its rôle is important. There are a number of ways in which the Tote Board should perhaps adjust itself to change. The question of the rate of overheads, the method of operating, whether place betting is reasonable and profitable, the question of doing more forecasting and even the vexed and controversial quetsion of moving over to the tiercé are matters which should be considered before any question arises of putting the tote in a special privileged position as regards on-course and off-course betting.
Part of the reason for wishing to have a differential between on-course and off-course betting was to reconcile the preferential treatment to the tote by ensuring that on-course the bookmakers received the same preferential treatment in the light of the fact that the tote is always on-course to all intents and purposes. I am not happy with this linking as I do not think that the case has been established that the differential in the duty is enough in itself to have a significant effect on attendances. We should examine that very carefully, just as we should examine the difficulties in which the tote undoubtedly finds itself.
I must admit to a certain personal regret in being unable to accept any of the new Clauses, but I ask the House not to press them. I assure the House that there is at least one member of the Treasury Bench who is only too aware of the difficulties which face the tote and, from bitter personal experience, of the discomforts that face many racegoers on 1075 some racecourses, particularly in winter, and of the inadequacy of any return from even part ownership of a partly successful animal.
§ Mr. Temple
I thank my hon. Friend for that careful reply, while expressing extreme disappointment. We all seek to improve the health of the bloodstock industry, and my hon. Friends and I thought that this was the way to go about the matter. I was interested to note that my hon. Friend admitted two things. First, there are the difficulties which surrounded the tote. The Clause sought to give help for that reason. My hon. Friend has given valuable information about the Treasury's thinking over the future of the tote. I have always thought that the tote had a rôle to play in a healthy racing industry.
My hon. Friend said that the tote might be placed in a privileged position. He was thinking in terms of betting taxation. The approach we have put forward was reasonable and would have assisted the tote but would not have lost the Treasury the amounts of money my hon. Friend suggested. I was sorry to have a slight altercation with my hon. Friend but I think that he was wrong in fearing losses of between £5m. and £9m. as a result of the new Clause. The Clause would have lost half that amount because it sought only to halve the betting duties on on-course betting.
I could not agree about the amount of money the Treasury felt it would lose because I made it clear that it was expected that the on-course turnover, which is such an important factor in any market situation, would have improved. I shall have regard to my hon. Friend's request not to press the Clause. I have in mind that we must approach this problem in what I call in racing terms "softly, softly" might catch a "monkey" and if it does so on another occasion I will be happy. We have won these long battles over a period of years and this is a step in the right direction. My hon. Friends can take heart from the Treasury reply. If we sustain this battle for another year or two we shall probably succeed. In the hope that that will be the case I beg to ask leave to withdraw the Clause.
§ Motion and Clause, by leave, withdrawn.