HC Deb 18 September 2003 vol 410 cc1123-38

Motion made, and Question proposed, That this House do now adjourn.—[Vernon Coaker.]

3.26 pm
Mr. Laurence Robertson (Tewkesbury)

I am pleased to have secured this Adjournment debate on the Office of Fair Trading's investigation into the control of horse racing, and I am grateful to the Minister for staying behind to reply to it, and for his co-operation on this issue.

In my other role as a shadow Department of Trade and Industry Minister, part of my responsibility is for competition and consumers, but I am holding this debate as the Member of Parliament whose constituency contains the Cheltenham race course at Prestbury Park, which many people rightly consider to be the greatest race course in the world, although I have not yet seen all of them.

Chris Grayling (Epsom and Ewell)

The second greatest.

Mr. Robertson

My hon. Friend obviously disputes my opinion.

I have also been a follower of the sport of racing, particularly national hunt racing, for more than 20 years, so I have a personal interest in the matter. Having said that, I do not have a vested interest in it, in that I am not involved in any one aspect of the sport. For example, I am not an owner, trainer or breeder, or anything similar. I am just someone who loves the sport and who enjoys the odd flutter when I have time, although not usually too successfully. The point is that I come to the debate as a neutral.

The debate is urgent and extremely important to the sport of horse racing because the OFT has issued a preliminary notice that it believes that there are unacceptable restrictions on competition caused by the central control of the fixture list by the British Horseracing Board, by the central selling of data regarding details of races by that body, and by the setting of rules and orders by the Jockey Club.

It is a sad fact that the many factions in racing—the breeders, owners, jockeys, stable staff, trainers, bookmakers, race courses and so on—represent warring factions. The industry is well known for that. In fact, the former Home Office Minister, the hon. Member for Knowsley, North and Sefton, East (Mr. Howarth), who used to have responsibility for much of racing, once said to me, "Laurence, for all my experience of dealing with Militant in Liverpool, none of it prepared me for the racing world." I think we all know what he meant.

It must be said, however, that the OFT's preliminary ruling has served to unite almost the entire racing fraternity in opposition to its plans. Even the Minister for Sport is concerned about its proposals. In a letter to me dated 29 August, he wrote: I share your view that full implementation of the OFT's rulings, as far as we understand them, may damage the fabric or integrity of the sport". That is a profound statement from the Minister.

So why is the OFT making these recommendations, and why is it looking into what is essentially a sport in the first place? Its concern should surely be for the consumer; yet in the last 10 years, attendance at race courses has increased by 21 per cent. The consumers of this sport do not seem to be unduly worried about the way in which horse racing is run. In the same 10-year period, the amount of prize money has increased by 64 per cent., the number of runners by 20 per cent., the number of horses in training by 19 per cent., the number of owners by 8 per cent., the number or races by 7 per cent. and the number of fixtures by 4 per cent. Those figures do not point to a sport that is in crisis or being badly or fairly managed; quite the reverse.

Even more important than those figures is the fact that British horse racing has integrity. The latest row in horse racing—I have to say that there are more rows in racing than there are rebellions in new Labour—is over whether jockeys should be allowed to use mobile phones. I will not get into that argument, other than to say that the Jockey Club's proposals may be an indication of how seriously this body takes the issue of integrity.

Does anyone really believe that rich people from abroad, such as the Maktoum family, would play such a large part in British racing if it did not have integrity? Would such people engage in a sport that was fragmented, as the OFT seems to suggest that it should be? At present racing takes place on almost every day of the year, and many evenings. There are never fewer than two meetings a day, and rarely more than four. The types of races run are carefully balanced, and prize money is systematically and sympathetically distributed. That is not just control; it is more than that. It is co-ordination—a co-ordination that attracts many people, including people from abroad, to the sport.

Even given that success story, however, the major players in the sport—especially the organisation charged with co-ordinating so much in racing, the British Horseracing Board—recognise that many things must change, and that further significant improvements must be made. That is why the BHB recently conducted a root-and-branch review of racing that recommends many changes. As the chairman of the BHB, Peter Savill, in his recent AGM speech said: The Racing Review Committee has proposed some significant changes to the racing product and the racing experience which will improve the integrity of the sport, establish a true meritocracy, strengthen National Hunt racing, put British breeding on a more level playing field with its Irish and French counterparts and increase consumer interest in the sport.

That demonstrates that no one in the sport wants to stand still; but the OFT recommendations threaten to throw the baby out with the bathwater. The chaos that would result from the absence of central co-ordination of the fixture list and an inability to set the rules and orders for the sport centrally could not possibly bring benefits to the consumer. It would be quite the reverse: in the absence of any ability to bring together the different strands of racing—all the disparate groups I mentioned earlier—and to set rules and impose discipline, the integrity of the sport would suffer. How can that act as a protection for the consumer?

The basis of the OFT's preliminary ruling is chapter I of the Competition Act 1998, which—here I quote from a letter I received from the OFT, dated 7 August— prohibits agreements that appreciably restrict competition in the UK, unless they deliver countervailing economic benefits". I could respond to that in a number of ways. First, we are talking about a sport. No one has to engage in it, watch it or bet on it; that is all done voluntarily. It is not like buying bread, milk, potatoes or other essentials. This is a national sport, which should surely be governed by national rules. If I watch my home team, Bolton Wanderers, play football, they will be using the same rules that would be used were I unfortunate enough to have to watch Arsenal or Leeds.

Secondly, does anyone really believe that consumers would like to see not one national sport called horse racing, but a number of different race courses all with different rules and standards of discipline, with no co-ordination of the types of races run or horses attracted, all—as minnows—having to sell their own picture rights and data rights to the big bad powerful bookmakers? Are individual race courses, or consumers, likely to benefit from such a free-for-all? The chief executive of the Racecourse Association, Stephen Atkins—whom I met earlier this week—does not think so. Might not the OFT break down the supposed power of the BHB, as many people in the sport fear, only for that democratic body to be replaced, in effect, by an undemocratic cartel formed within the bookmaking industry?

Responsible bookmakers, many of whom are good friends of mine, do not want the OFT investigation to result in chaos. Indeed, a senior executive at Ladbrokes told me that recently, and it was Peter Jones, the chairman of the Tote, who helped me to put together this speech. I pay tribute the likes of Ladbrokes and the Tote for sponsoring so many races, most famously the Tote Cheltenham gold cup, which takes place in my constituency each year.

Thirdly, such central co-ordination of fixtures and rules, and of the collective selling of data rights, therefore delivers the countervailing economic benefits that the OFT requires. Fourthly, such central co-ordination protects the sport's integrity, which, where betting is involved, is crucial to its survival and ability to prosper. A free-for-all in the control of fixtures and rules could not possibly enhance the sport's integrity, so how could that benefit the consumer, whom the OFT is supposed to exist to protect?

As I have said, there is total recognition and acceptance throughout the sport that things must change, and many proposals are on the table. But changes brought about by heavy-handed demands from the OFT will seriously weaken, rather than strengthen, the sport as a consumer product. Virtually everyone throughout the industry fears, for example, for the future of national hunt racing if the OFT's proposals bring about the free-for-all in which they would surely result. Smaller tracks in particular would suffer. Such tracks, while being valuable sources of great entertainment in themselves, are also feeder courses—training courses, perhaps—for larger ones such as Cheltenham and Aintree. So could the wrong kind of OFT-inspired changes to the sport signal the end of the Cheltenham gold cup and the grand national, and could such changes bring about a shift away from racing on turf and towards racing on sand? Somehow, a dirt track would not fit too comfortably with the dresses and hats at Royal Ascot; it would seem rather incongruous. Such things are unthinkable but quite possible, as is significant damage to the rural economy.

So what can be done? I suggest that the OFT treat this investigation very sensitively. It should recognise that it is dealing with a sport, not a large and dominant business. It should recognise that British horse racing is respected and followed throughout the world, and it should attempt to understand racing's characteristics, which play such a vital role in holding the sport together. I therefore ask the OFT not to make heavy-handed proposals, but to recognise the changes already being proposed within the sport itself, and to work with its representatives, rather than against them. Only by doing that can consumers be both protected and well-served.

I hope that the OFT will be sensible, but if its final proposals are, in the Government's view, potentially damaging to the sport, I ask the Minister to use his powers under the 1998 Act to intervene. Clause 3(3) of the 1998 Act states: The Secretary of State may at any time by order amend Schedule 3, with respect to the Chapter 1 prohibition, by … providing for one or more additional exclusions". I suggest that sport should be such an exclusion.

I have to make this request of the Minister because it is impossible to question or talk to the OFT in this Chamber. It appears to be empowered to make decisions that could have profound effects on a national sport, and thereby on many people's livelihoods, without any reference to Parliament. It is therefore only reasonable for me to ask the Minister to intervene, if it is likely that the OFT will not take a reasonable and sensible approach.

There is a precedent for such action. For example, the Secretary of State provided for an exemption for public transport ticketing schemes, which came into force on 1 March 2001. Furthermore, the Government are looking sympathetically at the position on the exclusive pool betting licence as operated by the Tote. Quite rightly, they are likely to allow the Tote to retain it when the organisation is privatised, as the Government have pledged. I applaud the Government for their sensitivity in that respect because it is in the interests of racing and the consumer that the Tote retains its exclusive pool betting licence—and even other bookmakers agree. I am asking the OFT to show the same sensitivity and flexibility in dealing with racing as a whole. In the absence of such a compromise, I ask the Minister to exercise his powers as allowed under the 1998 Act.

British horse racing is a national sport admired by millions of people in this country and abroad. It is part of our heritage. Last weekend I had the pleasure of attending the 227th running of the St. Leger at Doncaster. The traditions of the sport are an integral part of it. Disraeli once described himself as a progressive Conservative, and I suggest that evolution, not revolution, is the way to improve the running, integrity and therefore the performance of horse racing to the benefit of all who take part in it.

The OFT has the responsibility of safeguarding the interests of consumers, and I am asking the OFT to do precisely that. I am also asking the Minister to ensure that it is done in such a way that it benefits consumers rather than risk destroying the sport that so many of us love. Horse racing is the sport of kings, but it is also the sport of many ordinary people who are depending on us to get this right.

3.41 pm
Mr. Richard Page (South-West Hertfordshire)

I congratulate my hon. Friend the Member for Tewkesbury (Mr. Robertson) on securing the debate. It takes some ability and skill—and a little luck—to get an Adjournment debate. The particular case that he has engineered reminds me of Napoleon when he was promoting various officers. He turned to those recommending various promotions and said that he did not want to know how good an officer was, only whether he was lucky. On that basis, my hon. Friend, in securing a debate in which we have up to two and half hours instead of the usual half an hour, would be a general in Napoleon's army.

I do not wish to gallop too heavily—if I can be forgiven the pun—over ground that my hon. Friend has already correctly and eloquently gone. I speak as joint chairman of the all-party racing and bloodstock group and we know that many people are deeply concerned about what could happen as a result of the OFT investigation into racing.

My hon. Friend referred to various factions within racing. The Minister, who is coming fairly fresh to the matter, will have gathered that those factions do not go warmly hand in hand on every issue on every occasion. Sometimes the hands are warmly round the throats of the others, but they all realise now that if they do not work together, the game is over.

There is no need for me to tell you, Mr. Deputy Speaker, that a race course without any horses does not really have a point; and it is no good having a horse without a race course for it to compete on. Without trainers it will all get a bit difficult; jockeys might be needed as well. The idea that race courses can somehow run their own fixture lists and do their own data rights is a joke because there has to be some centralised arrangement whereby the information gets out to the public. Why? Because racing depends for a large percentage of its income on betting. Whatever we do, we must ensure that we do not upset the current arrangements. I am afraid that the OFT is approaching the issue as a bunch of innocents who have gone charging in. What upsets me is how the OFT seems to have started from a preconceived position; it now faces the embarrassment of trying to get out of it.

I shall quote briefly from a letter from the OFT, dated 8 May, to the chief executive of the Racecourse Association. It states: The OFT will be examining the scope for further competition within racing as part of its remit to ensure that markets are working well… considering… how often they race… the type of racing… the prizes they can offer. It continues: At this stage, the OFT anticipates that increased competition would potentially benefit racegoers, punters and race horse owners. And courses should benefit from greater freedom. The OFT assumes that change will happen and that the automatic consequence of its report will be a benefit to racing, but I suggest that the opposite is true.

It would be heresy to suggest that anything was greater than British racing, but in this day and age of world gambling—when information can travel round the world at the flick of a finger—the potential income is enormous. It pains me to say it but I congratulate the Government on the suggestion of a gambling Bill. If we could get a review of gambling right, the revenue for this country—which, after all, has lost its shipbuilding and other industries—from worldwide gambling could be enormous.

Why would people gamble on racing in Britain? After all, people can gamble by watching a television screen showing live races anywhere in the world. What makes British racing attractive? As my hon. Friend suggested, it is the integrity and honesty of British racing. Unless one is remarkably lucky or incredibly foolish, one does not expect to win money at racing. One expects to have some fun and occasionally come out ahead, and that is good. Before you took up your position of responsibility, Mr. Deputy Speaker, I suggest that even you had the odd shilling on a horse at Newmarket, although I do not expect you to confess to that from the Chair. We put our money on a race in Britain knowing that there is a better chance of it being a straight race—an honest contest—than anywhere else in the world. That is why huge amounts of money have already come to this country from the far east, where people are inveterate gamblers, and I want that to happen more and more.

If we start to break up the central data rights, how will the information be transmitted round the world? Will the individual race courses have to obtain the data rights to transmit races? I do not think so. Instead, the UK would start to suffer, because it was not providing world coverage from a unified and central source. Racing is like a many-legged chair: if one kicks away one of the legs, the chair falls over. It is crucial that we get it right.

My hon. Friend touched on the fact that racing is growing. More people are going racing than ever before, and more horses are being raced than ever before. Much of that is because the people who lead the racing industry at the moment have decided to move it forward into the modern market and the modern age. They are to be congratulated on that. They have not sat there, ossified and unchanging. They have been working at the problem.

The OFT has never run a business. I am puzzled about why it should consider that it knows more about running the racing industry than those who are actively involved. The assumption appears to have been that increased competition would have a variety of effects. I spoke to the OFT, offering the all-party committee's help and evidence, because I recognised that there was a difficulty.

The racing industry does not have independent participants. People are involved in race courses, horses, the British Horseracing Board or the Jockey Club, and therefore have their own factions. Answers from the industry therefore reflect a particular slant or colour. The all-party committee meets people from all sides of the industry, and we like to think that we view their presentations with a degree of independence.

In response to the offer made by me and my cochairman, the OFT sent a letter to the effect that it would accept a written submission. We supplied that submission, which concluded with our strong opinion that the OFT's proposals could cause race courses to close. We also predicted a move towards what I call the barn principle evident in the US. There, trainers ensure that horses race on only one course during their racing lives. Watching American racing is, with a few exceptions, the equivalent of watching paint dry. Most races are run on dirt, and are held in only one direction around the track. There is little of the colour, excitement or variation that is attractive to the world gambling scene.

We told the OFT that we foresaw the closure of a number of courses, and that the inevitable centralisation of racing activity around a few centres would reduce consumers' ability to attend meetings. I suggest that many hon. Members share that view, as does almost all the racing fraternity.

The racing industry should not be put at risk. I therefore endorse the call for the Government to examine their existing powers to see whether changes could be made, and action taken, to rein in what is being considered and proposed. When I expressed extreme surprise that the OFT report should have appeared in the middle of the review being undertaken by the racing industry, I was told that the BHB had asked for it.

When I contacted the BHB, I was told that it had wanted a reply a year ago. The board could not wait a year or more before starting its review, which is now under way, and it has already given presentations to the racing fraternity. I have a copy of its first presentation; it takes a comprehensive look at how racing can be made more exciting for all the participants, especially the public.

Unless we want to close racecourses, reduce the number of horses in training and put our opportunities on the backburner, the Minister must take on board what is being said to him today.

3.55 pm
Chris Grayling (Epsom and Ewell)

I am grateful for the opportunity to contribute to the debate, as well as for the good fortune of my hon. Friend the Member for Tewkesbury (Mr. Robertson) in securing it.

The House will be aware that I represent what is, in my humble submission, the finest race course in the world, on Epsom downs; it is the home of the Derby Britain's greatest day out. Epsom is much more than a race course, however; it is a centre for training for people with various levels of success in the industry. It is thus an essential part of the whole racing world in this country.

I want to touch on a few of the points that my hon. Friend the Member for South-West Hertfordshire (Mr. Page) raised about the threat posed by the OFT report to the development end of the training industry—not the big yards and the division one players, but people who play an important part in developing new horses for racing. I was worried when I read the OFT report on the future of horseracing. I thought back to a subject that the OFT touched on only a few months ago: community pharmacies. As in racing, the OFT saw a market where none exists and tried to create a sense of diverse market forces in a conventional industry. It tried to impose on the pharmacy world—as it is trying to impose on the racing world—the structures of the supermarket sector. Racing is not like that; it is a sport.

Mr. Laurence Robertson

My hon. Friend referred to supermarkets, something that I did not mention as I thought there would not be enough time. Is there an analogy with the situation faced by farmers? These days, because farmers sell their milk, as individuals, to extremely powerful organisations they are impoverished. They claim that savings are not passed on to the consumers but are held up in the chain. Is there an analogy with what could happen in racing?

Chris Grayling

My hon. Friend touches on an important point. If the proposals go through, it is difficult to imagine that they will not play into the hands of a small number of commercial interests, almost certainly in the betting fraternity. That is where the change will come.

I strongly believe in the old adage, "If it ain't broke, don't fix it". Racing is not broke; it may need to evolve and develop, as my hon. Friends pointed out, but it is not an unsuccessful industry. Terrible injustices are not happening. Racing is working pretty well and is an asset to the nation. The trouble is that when organisations such as the OFT start tinkering there are unintended consequences.

In the early 1990s, for example, a report by the Monopolies and Mergers Commission on the pub and brewing industry, which was designed to improve consumer choice and competition, led directly to the disappearance of thousands of country pubs. Small local pubs kept going only because of the tie—that slightly anti-competitive arrangement—and when it disappeared, so did they. We are concerned that the same effect will be seen in racing.

Racing does not involve only a small number of centres. Of course, I do not need to worry about Epsom. The race course pays for itself many times over on just one day a year. No doubt Cheltenham pays for itself in one week of the year. So the big racing centres—the international names—will survive and flourish, and it is arguable that they would probably do better if they had more meetings each year.

Of course, racing is now a truly national sport. Small race courses are to be found in far flung parts of the country, where racing takes place on a wild winter's day. Those race courses are an integral part of the industry, but they are the ones that will disappear. Those meetings will not happen, and racing will be concentrated instead in a number of larger commercial centres and lost in many parts of the country. But this is not just about race courses; it is also about the training industry.

My hon. Friend the Member for South-West Hertfordshire made an extremely important point about the smaller courses serving effectively as a feeder network for the bigger meetings. When people buy their first horse, the smaller courses are where they go to race. They do not turn up at Royal Ascot for their first outing; they turn up on a Tuesday in February at Wetherby. That is where those people who dabble in racing for the first time—those who perhaps buy an eighth share in a race horse—go to see their horse run. The smaller, newer and developing trainers bring those horses into the industry and start to nurture them, and they hope ultimately to enjoy great success with them.

One reason why I feel so strongly about the issue is that Epsom's training industry is in a particularly challenging situation at the moment. It has declined over a number of years, partly because of the value of the real estate that it sits on. Not surprisingly, it is very tempting for those sitting on land and owning big houses inside the M25 to sell them at a large profit, taking them out of the industry. A training industry that once, perhaps 30 years ago, trained 500 horses trains only about 200 today. I have been working with many people in the local racing industry to try to find a way to reverse that trend by bringing new life back into the training industry in Epsom.

One of the things that I want to see is Epsom emerging as a training and development centre for trainers. We are talking about the possibility of setting up starter yards, where new trainers could lease blocks of 10 boxes, get into training for the first time with a few horses, begin to build a reputation and then move on—remaining in the area, we hope, but if not, going to another centre. But, of course, if the smaller parts of the racing calendar begin to be removed and the smaller courses start to be lost, the opportunity for the training industry in my area to build that starter and development role will be much diminished. The report concerns me greatly, as it seems to undermine what I hope will be an important part of the future of the training industry in Epsom.

Mr. Page

Hon. Members are looking at someone who used to ride out, first lot, for an Epsom trainer a long time ago when the horses were bigger and stronger and I was lighter, and I can only endorse what my hon. Friend says. Does he share with me the worry that, if the OFT recommendations go through and the number of trainers reduces, there will be no starter races around the country and no room for the trainers whom he wants to bring into the business to bring in new horses? There will be fewer horses and we shall end up with a power play between those people with a lot of money to buy very expensive, very good horses, and the thrill of the sport, which runs right through to the bottom end, will disappear.

Chris Grayling

I entirely endorse my hon. Friend's comments. To use an analogy, we are talking about the danger of creating a super league at the expense of the rest. There is no doubt that, if the top players in any sport are allowed to accumulate all the commercial benefits in that sport, the smaller players lose out.

Other sports have governing bodies, set guidelines and negotiate common commercial relationships in television or in other ways, and they then redistribute that money across the whole sport. We have seen the impact on some of the lower division football clubs when those central arrangements break up. The reality is that if it were not for the work done by governing bodies of cricket, soccer and rugby to push money further down the line all around the country, local clubs arid local matches would disappear.

So why should horse racing be any different? Why should we suddenly say, "Actually, it's just a big business, it's operating in an anti-competitive way, so we must tear up all the existing arrangements and create a free-for-all." It makes no sense. Would the Office of Fair Trading go round and say, for example, "We insist for reasons of competition that Rangers and Celtic should be allowed to join the Premiership"? Surely that is a decision for the footballing authorities. Are we going to say that racing should somehow have a different relationship to competition authorities, and that they should have power over what happens in racing as a sport, even though it is inconceivable that they could have similar powers in other sports? It makes no sense.

There are other concerns. Both my hon. Friends have talked about the potential risks to national hunt racing. That would be a tragic loss, particularly in rural areas that will depend even more on local national hunt race courses when, as I fear that the Government want, the infrastructure of hunting disappears. That will cut a slice off the substance of those local economies. Were national hunt racing to go as well, which might be a consequence of the OFT's report, it would be even more damaging to those communities.

This makes no sense. The OFT is trying to do something in an area where it does not belong. It is trying to create the sense that a market exists or should exist in an area which I do not believe is all about markets. It will take away a sport and pastime from many parts of this country and will concentrate money and resource in a small number of locations in the hands of big players, and the small people will lose out—the small emerging trainers, the local race courses, and perhaps even the small on-course bookies who will have fewer opportunities to do their business.

What possible benefit could there be from the OFT looking after the interests of the big guys at the exclusion of the small guys in an area where it should not be in the first place? That is why this issue is so important, why it is right that my hon. Friend the Member for Tewkesbury secured this debate, and why it is appropriate and, I hope, essential—as I hope that the Minister realises—that he watches over the shoulders of the OFT and that he does not let this happen.

4.7 pm

Mr. George Osborne (Tatton)

Like my other hon. Friends, I congratulate my hon. Friend the Member for Tewkesbury (Mr. Robertson) on securing this debate, and on the good fortune of securing it on the day when the Arms Control and Disarmament (Inspections) Bill passed its Second Reading at remarkable speed.

I must confess, as I do not write to my hon. Friend the Member for Tewkesbury when I do so, that I am an annual visitor to his constituency, and almost an annual visitor to the constituency of my hon. Friend the Member for Epsom and Ewell (Chris Grayling). Indeed, I am also a visitor to the constituencies of my hon. Friend the Member for Windsor (Mr. Trend) and the hon. Member for Knowsley, North and Sefton, East (Mr. Howarth), who has an excellent race course and arguably one that competes with Epsom, certainly in my book.

I do not have a race course in my constituency, although I do have quite a few owners among my constituents, including Alex Ferguson, who is perhaps the most famous race horse owner at the moment—

Chris Grayling

Notorious.

Mr. Osborne

Or notorious, perhaps, as my hon. Friend suggests. I do not mind saying that, as he appeared all over my Labour opponent's leaflets during the last general election, and I am not here necessarily to defend his interests.

I confess that I have a personal interest in racing. That is why, when I saw the opportunity to speak today, I took it. I come from a family that has been involved in racing. My grandmother had a full-page obituary in the Racing Post when she died, my family business sponsors a race at Goodwood every year, and my uncle runs a bookmaker. Although I have no pecuniary interest in racing or gambling, many members of my family do.

I was alerted to the threat that the OFT report poses to British racing not by any of those family members—indeed, as half of them are in the betting industry, it would not have been in their interests—but by a lady called Mrs. Paton-Smith whom I sat next to at the Cheshire agriculture show in June this year. She is an owner, and she lives in the constituency of my neighbour and hon. Friend the Member for Eddisbury (Mr. O'Brien). Over lunch, she talked to me about the OFT report. I asked her to send me details, and she subsequently wrote to me enclosing details of what she feared the OFT report would do to the sport in which she participates.

She wrote: Without doubt this is the biggest threat to the conduct of racing that we can recall and we would be most grateful"— she was speaking for her husband as well— if you agree, if you could lobby the Government to prevent such a scenario emerging. This debate represents a good opportunity to lobby the Government.

As one who is uninitiated in the intricacies of how racing is organised, I must confess that I was initially sceptical of Mrs. Paton-Smith's complaint. As a Conservative, I believe in freer markets and competition in principle and am instinctively against monopoly and restrictive practices. If one examines the proposals in the Office of Fair Trading report, they are superficially attractive. They would allow race courses to set their own fixtures and permit data such as television images to be bought directly from race courses. They would provide that the collective selling of the rights of racing was not acceptable and say that race courses should be able to set their own race programmes and prize money.

If one starts to consider the implications for the horse racing industry and looks under the surface of the OFT report to examine the unintended consequences that the changes might bring about, the full threat to racing becomes clear. My colleagues said that the OFT report would effectively dismantle one monopoly and replace it with an arguably more dangerous monopoly that would be run by the bookmaking industry, which is also my judgment. Rather than the British Horseracing Board setting fixture lists to ensure a balance of interests throughout the industry, the betting industry would effectively control which race courses were granted which fixtures, which races would be run and when they would be run. That is because, as Peter Savill, the chairman of the BHB said earlier this year, one can count on 2 hands the number of fixtures that can take place profitably each year without bookmaker funding.

One could probably count the Cheltenham gold cup and the Derby on those two hands but beyond that, as my hon. Friends said, hundreds of races would not be able to survive without the support of the bookmaking industry. The bookmaking industry is dominated by three bookmakers, and it would be able to pick and choose. New all-weather tracks are coming on line and there will be about 3,000 potential fixtures by 2005, but bookmaker demand for no more than about 1,500. The bookmaking industry would be in a strong position to pick the race courses at which its margins were greatest rather than those at which spectator enjoyment was greatest or that were most popular with sponsors or jumping enthusiasts. Let us be honest—I am not the MP for Lingfield—there might be a situation in which all-weather tracks ran races day and night at times that were convenient for punters in betting shops throughout the country. British racing would lose much of its character as a result. We would lose many of the listed races and much national hunt racing, which is such an important part of the rural economy and so important to rural parts of my constituency. As Peter Savill said in a speech that he made earlier this year: The OFT thinks it is helping racecourses to operate as healthy commercial enterprises when in fact its strategy, if allowed to be implemented, will result in a deterioration in the financial position of every single racecourse and racecourse group—without exception. That represents a serious threat to the industry.

There are alternative ways of dealing with some of the genuine conflicts of interest and problems that the OFT report identified. Indeed, the British Horseracing Board has made several proposals on changing its function, removing itself from commercial activity or creating a separate entity that would commercially promote racing and negotiate with bookmakers. Indeed, the board's racing review committee has come up with several imaginative proposals to improve the integrity of support, to establish a better meritocracy, to strengthen jumping and, importantly, to put British breeding on a level playing field with our Irish and French counterparts.

In the past year, British racing has had record attendances, record prize money and a significant expansion of listed racings, for example. It has exciting plans for the future. Those of us who care about racing and enjoy going to race meets—even if we do not have a financial interest in racing or are involved in the industry—do not want the OFT report to wreck it.

4.15 pm
The Parliamentary Under-Secretary of State for Trade and Industry (Mr. Gerry Sutcliffe)

I congratulate the hon. Member for Tewkesbury (Mr. Robertson) on securing the debate, which is a continuation of Department of Trade and Industry questions this morning. I also congratulate the hon. Members for South-West Hertfordshire (Mr. Page), for Epsom and Ewell (Chris Grayling) and for Tatton (Mr. Osborne) on making informed contributions, reflecting their constituency backgrounds and their interests in the well-being of the horse racing industry. The debate provides a welcome opportunity to address an issue that is undoubtedly of interest not just to people directly involved or employed in the sport, but to many of the industry's customers, especially the large number of people who attend meetings, who choose to back horses or who simply enjoy watching the sport at home.

I would be the first to recognise that horse racing is much more than just a sport. It gives enjoyment and employment to many thousands of people in the UK and, as the hon. Member for Tewkesbury emphasised, it is a significant contributor both directly and indirectly to the UK economy. Substantial further income and economic activity is generated by the betting industry, as well as related activities such as stables and stud farms, some of which attract significant overseas income, as has been mentioned.

The sport today very much reflects the outcome of a continuing evolution, founded on its long and rich history. I hope that all parts of the sport continue to address and respond to changes in the surrounding world, as they have done in the past, because that is the best way to ensure the sport's future. I am not going to get involved in arguing about the best race course in the country, although if I did, I would add York to the list; nor am I going to get involved in discussing the merits of particular owners, especially as Sir Alex Ferguson is the manager of a team that I support.

I have noted the concerns raised by the hon. Gentleman and by others in correspondence and a variety of other ways. I am sure that the Office of Fair Trading will take account of those in its continuing investigation into the agreements. I fully understand the desire expressed in the Chamber and elsewhere to retain the essential character of the sport, but that must be balanced against the need for all sections of the business world to comply with the fair trading principles that underlie the competition legislation endorsed by the House. I must make it clear that under our framework of competition law, the decision on the matter is entirely for the Office of Fair Trading. It would be inappropriate for me as the Minister with responsibility for competition to intervene in its deliberations. Perhaps we should reflect on why we have reached this stage.

For several years, the issue has received much media coverage, some of it alarmist—the "end of racing as we know it" scenario. I do not include Mr. Savill in that. I read his speech and heartfelt thoughts about what might happen to the industry. Some of the coverage has been confusing, so perhaps it is worth clearing the air by setting out the background and explaining briefly the Office of Fair Trading's role before explaining the role that falls to the DTI.

To determine whether or not certain agreements complied with chapter I of the Competition Act 1998, a little over three years ago, on 28 June 2000, the British Horseracing Board and the Jockey Club notified a number of agreements to the OFT. For those less familiar with the detail of the 1998 Act, it might be helpful to summarise that chapter I expressly prohibits agreements that prevent, restrict or distort competition. The British Horseracing Board and the Jockey Club considered that those agreements, including the orders and rules of racing and general instructions, did not infringe chapter I and they sought a decision from the OFT granting negative clearance—in essence, seeking a clean bill of health for the agreements. In the event that clearance was not granted by the OFT, the parties sought exemption from the chapter I prohibition. It is worth stressing that the parties specified that the application was for a decision, not for guidance. When the OFT receives such a notification, it is its job to apply the Competition Act, no more, no less.

The applicants are required to state which provisions or effects of agreements might raise questions of compatibility with the chapter 1 prohibition. The parties duly provided a list that included a provision that the OFT has provisionally—I stress "provisionally"—concluded is an infringement of the Competition Act and cannot be granted an exemption. The OFT has also found a number of other provisions within the orders, rules and general instructions that it has provisionally concluded infringe the Competition Act, and cannot be granted an exemption. The OFT has advised the applicants of its provisional conclusions and the theoretical next steps to give them a chance to make oral or written representations, for instance to correct any factual errors or misunderstandings in the provisional conclusions before it makes a decision on whether to proceed with a final infringement decision.

I understand that the British Horseracing Board and the Jockey Club duly submitted a response to the OFT on 5 September. It is now for the OFT to consider those responses and determine whether or not to proceed with a final infringement decision. It is, however, worth noting that in such cases even after the OFT has issued a final infringement decision a full right of appeal would exist. It would therefore be open to the various industry respondents to challenge the decision. In such circumstances they would have a full right of appeal to the Competition Appeal Tribunal, which would be able to consider the appeal and hear the case again on its merits.

As for the role of the Department of Trade and Industry, I am sure that the hon. Member for Tewkesbury will understand that the matters being considered by the Office of Fair Trading fall within its ambit, so it would be inappropriate for me as a Minister with responsibility for competition to seek to intervene in its deliberations. However, the hon. Gentleman raised the Competition Act and the exemptions available to the Secretary of State. He cited the block on public transport ticketing schemes. I shall discuss this with him later, but my information is that that block exemption was made under section 9, not section 3, to which he referred.

Mr. Laurence Robertson

I would be delighted to meet the Minister to discuss that in more detail, but for the record, there are two ways in which exemptions can be granted under section 4—there are exemptions that the director of the OFT can recommend, but the Minister has the right to provide additional exclusions. My remarks may have led to confusion, but there are two ways in which items can be excluded from chapter I.

Mr. Sutcliffe

I am grateful to the hon. Gentleman. In the spirit of co-operation in which we have tried to proceed, we will look at that again, and I shall discuss it with him further.

As a competition Minister, it is not my role to be involved in the OFT investigations. However, I shall look at the role of the Department for Culture, Media and Sport, which has been mentioned by the hon. Gentleman and others, particularly the role of the Minister for Sport and Tourism, whose views are outlined in a letter to the hon. Gentleman. We must also ensure that the director general of fair trading is aware of the issues that have been raised in our debate, and we shall make sure that he is contacted.

The hon. Member for Epsom and Ewell talked about other sports and the way in which they operate. The sponsoring Department for the industry is DCMS—the Minister for Sport and Tourism has taken a particular interest in this issue, and it is right and proper that he does so within the framework of his Department. I am in contact with him, and shall write to him about today's debate and make sure that he is fully aware of Members' concerns. The issue is of major significance to the industry, as horse racing is enjoyed, as has been said, by vast numbers of people, whatever their background, in every part of the country.

The OFT must conclude its deliberations, and the industry will have the opportunity to put its case. I am sure that hon. Members will continue to make their views known to me and to my right hon. Friend the Minister for Sport and Tourism. It is important that the right decision is reached in the framework of the competition regimes that we have introduced, and that we secure the industry's future.

The hon. Member for South-West Hertfordshire spoke about the warring factions in the horse racing industry. I am aware of that from other sources. The various factions should realise that it is important that they come together. I believe the review will achieve that. We want a vibrant industry and fair competition. I hope the hon. Gentleman will accept my comments. We will wait to see what transpires and make sure that all the relevant bodies have the information and the serious thoughts that hon. Members have presented. I thank the hon. Member for Tewkesbury for raising the matter.

Question put and agreed to.

Adjourned accordingly at twenty-six minutes past Four o'clock.