RACE HORSE INDUSTRY (Hansard, 27 October 1975)

§ Mr. Clement Freud (Isle of Ely)
When I put my motion for the Adjournment into the Ballot it was with the intention of drawing the attention of the House to the state of the race horse industry. In the two short weeks since it came up there has been a sale at Newmarket at which 80 per cent. of all horses sold went overseas. Our most prestigious 1256 trainer, Noel Murless, announced his virtual retirement and his split with his jockey. The owner of more race horses than any man in this country has announced that, as a result of VAT, he will leave these shores, buy a training establishment in France, and set up over there.
On Saturday the Observer Gold Cup, which is the most prestigious race for two-year olds—incidentally the Observer is to cease its sponsorship of the race next year—was won by Take Your Place, which is owned by an Italian and ridden by an Italian, from Earth Spirit, which is owned by an American and ridden by a Frenchman, from Gallapiat, which is owned by an American and ridden by an Englishman. Even the horse which came fourth was an American horse. That means that the £26,000 first prize, the £7,000 second prize the £3,800 third 1257 prize, and the £1,000 fourth prize have all left these shores.
I am delighted to see the Under-Secretary of State for the Home Department on the Front Bench, but I should have been much happier to see representatives of the Departments of Employment and of Trade, and of the Treasury, because, what with the decline of the racing industry, 100,000 people who are now employed will be looking for work. The sum of £120 million which is currently being milked from racing will no longer be available to the Government, because racing is on the decline.
Once upon a time in Britain we had rich owners, and they raced for the hell of it. Their wealth was such that it did not really matter. That breed of person has gone, and racing is now virtually dependent upon the small owner, who is in no way a greedy man. He is a man with a flair for breeding, with a love of racing, with one or possibly two horses, and who wants nothing so much as just to make ends meet and possibly dream of winning the Derby one day.
In this country the average prize money per horse is £756, compared with just under £2,000 in France. In this country the training fees for one horse are about £2,500—that is on the low side—which means that an owner has little chance of making ends meet, whereas in France, if all the horses trained in the Paris area were owned by one man, the prize money would be sufficient for him just about to break even. That is the difference. The reason is not only that our prize money is pathetic but that so much racing money goes in tax that the sport is in decline.
I have here a table of figures. It is easy to talk figures, and all figures in racing are fairly inaccurate, but they are the only figures available. In 1974–75, the betting turnover in this country was £1,285,000 million. Of that, the Government took £97 million and gave £9 million back to racing. I say that they gave it back; in fact, they set up a levy board which negotiated with the bookmakers, and they took the bookmakers' profits. They declared a levy of 8.9 per cent. for big bookmakers and received that money from them with some reluctance. So the Government have given nothing to racing; they have simply created the machinery whereby people who made 1258 money from the sport could be fleeced of a little more to put back into the sport.
As I have said, racing employs 100,000 people and collects £120 million. We do not want an injection of Government money; we simply ask the Government to keep their hands out of the till. The eighteenth century doctors used to apply leeches to patients, but even they realised that after a few months of leeching the patient would be so weak that he needed a respite. The Government, however, even now are negotiating for a bigger levy—another ½ per cent. of the turnover of the bookmakers, which would produce another £5 million or £6 million, which is not enough.
The great strength of British racing is that it has the best blood lines in the world, the most talented horse breeders, the most inspired trainers and, without exception, the most brilliant jockeys. It has the best behaved and most patient racegoers, which few people recognise. They put up with racecourses which people in no other country would put up with. In America, racegoers are of the hoodlum element. In France they are deeply disturbed, and usually go racing for a purpose completely different from that of watching horses race. Our racegoers are honourable and long-suffering people. But, in view of the way that racing is going, we shall lose them quite soon, and when we lose them the Government will lose their percentage of betting tax.
What will happen—in fact, it has begun to happen—is that the few good horses we keep will be sent abroad, where the prize money is six or seven times better than it is here. The few rich races which we run in this country increasingly will be won, as was the Observer Gold Cup, by horses sent here from other countries. A few years ago, when Rheingold won the Arc de Triomphe, a French racing newspaper carried a headline the following day which read: La defence du franc est le devoir de tout francais"— meaning, "Defence of the franc is the duty of all Frenchmen". As a result the French racing authorities encouraged the winning of French races by French horses. They cleverly and properly did so by giving substantial prizes to breeders as well as to owners of horses bred and 1259 trained in France. There was a greater incentive to keep the currency of France within the country.
There are a number of ways in which the Government could encourage racing. They all involve being less greedy. The best course would be to do something about the Levy Board, which is a Government body. The chairman is appointed by the Home Office. His job is to look after the well-being of racing, to administer the levy, and to look after the various functions of the Levy Board. He administers between £9 million and £10 million for racing, including prize money, courses, stud farms and race horses, and race course commentary funds. He receives £6,360 a year. How the Government can set up a governing body to run racing, which lays such amazingly golden eggs, and expect something to be done for that money defeats me.
In France the tierce, which is a weekly gamble on the first, second and third placed horses, brings £43 millions to the Exchequer every year. We try to emulate that through the Totalisators, which is another Government organisation. The Chairman of the Totalisator Board is paid £8,000 a year.
The totalisator tried to emulate the enormously profitable tierce by means of the roll-up. The Chairman of the Totalisator Board announced, at a private dinner late on a Friday night, that there would be a new roll-up. As a result of the time the announcement was made, the roll-up received no publicity. There were a few lines in the Saturday papers and a few weak comments in the Sunday Press. As the chairman did not realise that this was the only way to sell a new pool, which could have made a fortune for everybody concerned and for racing, he did not communicate with the BBC, the ITV or the newspapers. He selected 33 races over the year. He discovered that the first was to be televised by the BBC. The BBC worked hard, and allotted a programme lasting 15 minutes to it on the Friday before the race. The first roll-up pool came to £80,000. The second roll-up race was screened by ITV, which, with its well-known lack of racing expertise, made a complete mess of it. By the end of the year the roll-up had virtually disappeared and nobody was 1260 remotely interested in it. That was our chance to emulate the immensely profitable tierce.
What can one expect if one pays that sort of money to the chairman of so huge an organisation, which, for the first time this year, has made money. When I say "made money" I mean that the totalisator contributed £200,000 to the Levy Board and no one noticed that it received £300,000 from the bookmakers for being allowed to pay out at tote odds.
To examine the racing of the future, it is best to look back and see what horses have done what. The great horses, such as Nijinsky, Sir Ivor and Roberto, have all gone. Snow Knight, which won the Derby last year, is a typical example. He was owned by Canadians who believed that it was not worth keeping a horse in training in this country because of the poor prize money, so they sent him back to America. Last week he won the immensely valuable Woodbine Stakes. He will run in the Laurel Park International and will probably win. He is yet another horse lost to us.
Admittedly, we still have Grundy and Mill Reef, but we have them due to the philantrophy of the owners and in no way due to the acumen of our racing industry. My great fear is that eventually every horse running in prestigious races in this country will be foreign-owned; its name will be unpronounceable by the punters, the jockey unknown, and the trainer's name unrecognisable. The average punter will not back with any real volume. Phil Bull, who is one of the most knowledgeable men in racing, carried out a substantial study and found that much larger sums of money were backed on prestigious races than on little selling races, handicaps and plates. That is why I believe that there should be a moratorium on the amount of money snatched by the Government. It need not be a major moratorium, but to double the prize money in this country is not enough; it will have to be at least trebled. It will have to keep up with inflation. Owners must be encouraged to keep their horses in this country, and the prize money must reflect the higher training, entrance and travelling fees as well as the higher fees that stable lads and jockeys are paid.
A man from Kashmir owned the horse that won the Gimcrack Stakes last year. 1261 The speech he made was not widely reported, but I should like to read a few short extracts. This man has raced horses in this country for only three years. He has now left, because he will not pay the 8 per cent. VAT. He is absolutely right, because in France VAT is charged on the carcase value of the horse and not, as here, on the sale price. In Ireland no VAT is chargeable. The owner said: There is nothing wrong with British racing today, nothing wrong with management, breeding, training, riding conditions or conduct. The standards here in every branch of the industry are the highest in the world. What is and has been wrong with racing is that it has been at the mercy of hostile Governments who have treated it not as a sport. In the last two years alone the Government has taken in excess of £150 million as revenue through betting tax and levy and given back to it less than 10 per cent. That is not taxation, it is penalisation. Across the English Channel and the Atlantic Ocean the industry is rightly treated as a source of revenue, but in return it is nurtured and encouraged in order that it may prosper and the revenue continue. Here the industry is still a source of revenue only, a classic example of blinkered vision. That man, who had anything but blinkered vision, is lost to this country as an owner because he did not think it worth while carrying on In his last season here he won £70,000 in prize money. He reckons that if he had run his horses in France it would have been £500,000.
I feel that the Government should now recognise that they have been extracting golden eggs from the goose by means of caesarean operation, and that any day now the goose will die.
My reasons for raising this matter on the Adjournment is to bring to the notice of the Government that they are becoming immensely prosperous as a result of the racing industry which they are killing.

§ Mr. Deputy Speaker (Mr. George Thomas)
Order. Has the hon Gentleman reached agreement with the Minister and the hon. Member for the Isle of Ely (Mr. Freud)?

§ Sir T. Kitson
Yes, Mr. Deputy Speaker, I just want to point out briefly that most hon Members on this side of the House agree with the comments made by the hon. Member for the Isle of Ely (Mr. Freud).
1262 As all the racing correspondents in nearly all our national newspapers are now pointing out, the situation in the racing industry is extremely bleak. Most of us would like to see fair competition for our trainers and those employed in the industry so that they can compete with their overseas competitors on equal terms.
As the hon. Member for the Isle of Ely competently pointed out, the problem of VAT is a discouragement for good horses to remain and be trained in this country.
We are also bottom of the league in prize money. However much we look at, think about and try to work out a system for putting more money into racing, it appears that the only way is by increasing prize money. We show up badly compared with other countries in the amount of money that is extracted by and returned to the Government. We are practically at the bottom of the league in every table.
The Government cannot allow this situation to continue for long. If they do, they will drive out the large men at the top. Small trainers and racing centres will find that the competition for them, by horses going down to Newmarket and Lambourn, will take away their living as well. An enormous number of people in this country are employed in the racing industry. It is up to the Government to see what can be done for them in this difficult situation.

§ The Under-Secretary of State for the Home Department (Dr. Shirley Summerskill)
I am grateful to the hon. Member for the Isle of Ely (Mr. Freud) for raising a subject which is not often raised in either House. I congratulate him on obtaining what is a packed House for an Adjournment debate, especially at 3.18 a.m. That is an illustration of the interest which this House feels on this subject, if that is the reason why hon. Members are still here. This subject is also of great interest to the public and to the people who work in the industry.
The hon. Gentleman said that he would have liked Employment, Trade and the Treasury to be represented.
Perhaps I should first explain the responsibilities of my right hon. Friend the Secretary of State in this area. He has a general responsibility as regards the social control of gambling and specific 1263 responsibilities in relation to the Horserace Betting Levy Board and the Horserace Totalisator Board. The Horserace Betting Levy Board has the duties of assessing and collecting contributions from bookmakers and from the Totalisator Board and of applying those contributions for purposes conducive to the improvement of breeds of horses; the advancement or encouragement of veterinary science or veterinary education; and the improvement of horse-racing.
The Levy Board is actively engaged in applying the levy for the improvement of horse racing and the Board has recently taken an initiative to increase prize money next year by a further £1 million provided certain conditions relating to machinery for negotiating the minimum wage of stable staff are met. Discussions on this are currently taking place and the Levy Board is hopeful as to their outcome. The Levy Board has already increased its prize money allocation for 1975 from £2.57 million to £3.35 million. I should explain here that prize money is derived from other sources as well as from the contributions made by the Levy Board. Altogether, as the hon. Member indicated, prize money currently totals about £8 million. The Board would like to increase the prize money still further.

§ Mr. Freud
It sounds very impressive that the prize money is £8 million, but is the hon. Lady aware that the prize money in France is £83 million?

§ Dr. Summerskill
I am aware that it is very much more in France. Perhaps I may develop my argument a little more in the time available.
The Board would like to increase the prize money further. That is one reason why it did not accept the recommendation of the bookmakers that the Fifteenth Levy Scheme for the year from 1st April 1976 should be a repeat of the Fourteenth Levy Scheme, under which no bookmaker pays more than 0.89 per cent. of his turnover to the levy. The yield of the Fourteenth Levy Scheme is expected to be about £8 million.
This dispute between the Levy Board and the Bookmaker's Committee has been formally referred to my right hon. Friend the Home Secretary, who will, in accord- 1264 ance with the Horseracing Betting Levy Act 1969, determine the scheme for the Fifteenth Levy period. My right hon. Friend is, therefore, acting in a quasi-judicial capacity in this case and it would be wrong for me to make any comment on the dispute at the present time.
Nevertheless, I have thought it right to refer to this dispute tonight because it highlights the financial restraints within which the Levy Board has to work; and, further, in relation to the Levy Board, it puts in perspective the sums of money to which the hon. Member for Isle of Ely has referred tonight. The whole of the levy in the current period is expected to amount to £8 million and the Levy Board's prize money allocation in the current year is £3.35 million.
The hon. Gentleman has not asked for a Government subsidy. He spoke of a reduction in VAT and the general betting duty, but this has to be seen in the context not only of the needs of the horse racing industry but of the general economic climate. I ask the House to view in this setting the state of the industry and, in particular, such matters as VAT on bloodstock and the level of general betting duty.
It can be argued that the level of VAT on bloodstock and the general betting duties should be lowered. I know that my right hon. Friend the Chancellor of the Exchequer received strong representations on these taxes before the last Budget. However, he was then unable to propose any relief from VAT, but the VAT rate applying to racing was not raised, nor was the general betting duty rate.
I shall certainly convey to the Chancellor the comments that have been made in the debate on that issue. I assure both hon. Gentlemen who have spoken that the general issues they have raised will be borne carefully in mind by the Home Office in connection with its particular responsibilities.
The issues we have been discussing will shortly be under consideration by the Royal Commission on Gambling, under the chairmanship of Lord Rothschild. The terms of reference of the Royal Commission include consideration of the contribution made from the proceeds from gambling towards the support of other social activities including sport, the means by which this might be enhanced and the conditions to be imposed.
1265 I hope that what I have said will show that the Government are very much aware of the concern of the House for the state of the race horse industry but, on the other hand, I hope that the House will appreciate that the Government's ap- 1266 proach to this, as to so many other matters, must be governed by our overall economic and financial state.