BETTING LEVY BILL

HL Deb 07 February 1961 vol 228 cc353-96

2.27 p.m.

Order of the Day for the Second Reading read.

THE LORD CHANCELLOR (VISCOUNT KILMUIR)

My Lords, it is not many months since your Lordships were engaged in lengthy and stimulating debates on the subject of betting. But Her Majesty's Government make no apology for inviting your Lordship's House to turn their attention again to this subject, for the Betting Levy Bill, the Second Reading of which I am about to move, can hardly be regarded as a separate piece of legislation. Rather is it a second instalment of the Betting and Gaming Act which passed into law last Session.

When the Betting and Gaming Bill was introduced in another place towards the end of 1959, my right honourable friend the Home Secretary was well aware of the concern of those who have an interest in, and a love for, horse racing, that something should be done to prevent any decline in this great national sport. Indeed, the attention of the Government was drawn to this concern as long ago as June, 1956, in an eloquent speech by the noble Viscount, Lard Astor. In moving a Resolution welcoming the intention of the Government to introduce a comprehensive Bill dealing with betting the noble Viscount referred to the financial difficulties which face the industry and made suggestions for the raising of a levy on bookmakers by means of a scheme something like that contained in this Bill.

My Lords, the concept that some part of the money staked in bets on horse races should be channelled back to horse breeding and racing was to same extent admitted 1)3, Parliament as long ago as 1928 by the passing of the Racecourse Betting Act, which established the Racecourse Betting Control Board to operate totalisators, 'the profits of which are devoted to the well-being of horse breeding and racing. Under the Bill this Board will be re-constituted and absorbed into a larger organisation and the House will, I am sure. wish me to take this opportunity of acknowledging the beneficial work for horse racing which the Board bas achieved since 1928.

The extension of this concept to fixed-odds betting by means of a levy on bookmakers presented considerable difficulties, both of principle and practice. It was for this reason that my right honourable friend the Home Secretary appointed last year, at about the time when the Betting and Gaming Bill was introduced, a Departmental Committee, under Sir Leslie Peppiatt, to look into the whole matter. They were invited to consider whether it was desirable and practicable that persons engaged in betting transactions on horse races, otherwise than by means of the totalisator, should be required to make a contribution for purposes conducive to the improvement of breeds of horses or the sport of horse racing; and, if so, to advise on its amount and the means of securing it.

The Committee moved with commendable speed and to our genuine gratitude presented their Report in April last year. Having regard to the progress which the Betting and Gaming Bill bad by then made, and to the complexity of filling out the outline scheme into a detailed one, the Government then decided that it was impracticable to graft the scheme on to the Betting and Gaming Bill. The matter was therefore loft to be dealt with in a subsequent Bill which I now present. This Bill gives flesh to the recommendations of the Peppiatt Committee.

Before I introduce the Bill in detail, it is, I think, essential to stress its underlying philosophy. As the Peppiatt Report pointed out—I quote …the problem and its solution are domestic to the sport of horse racing. In accordance with this philosophy, the object of the Bill is to lay down a scheme which will enable the industry to help itself. We are not setting up an organisation so that the Government can either directly or indirectly run it: the intention is to establish a framework within which the industry can organise it: own affairs. Clause 1, therefore, sets up a Horserace Betting Levy Board. In the Peppiatt Report, this was called the "Central Board". It will have the responsibility of collecting monetary contributions from bookmakers and from the Totalisator Board, and of applying the proceeds for certain purposes set out in Clause 1 broadly in connection with the advancement of horse racing. These are: first, the improvement of breeds of horses; secondly, the advancement or encouragement of veterinary science and veterinary education; and thirdly, the improvement of horse racing.

Some concern has, I know, been expressed whether the Levy Board can make grants similar to those at present made by the Racecourse Betting Control Board, in particular, in connection with the breeding of horses other than racehorses. The answer to this is that the grant-making powers in the Bill are exactly the same as those available to the Racecourse Betting Control Board at present, and the Levy Board can if it wishes—and I should stress that this will be a matter of policy for the Levy Board—make similar grants.

The Levy Board is to he constituted in the manner laid down in subsection (2) of Clause 1. First, there are to be a Chairman and two members appointed by the Home Secretary, and since these members may have to undertake arbitration functions which I shall describe in a moment, they must have—and I quote: no interests connected with horse racing which might hinder them from discharging their functions as members of the Board in an impartial manner". In effect, they must be free of any sectional interests in racing.

The composition of the Levy Board provided for in the Bill departs in two ways from that proposed by the Peppiatt Committee. First, it provides that there should be these two additional members appointed by the Home Secretary. This is so that the Chairman and the two members can, in the event of disagreements about the amount or manner of collection of the levy from bookmakers or of the contributions from totalisators, arbitrate between the various interests. Since the scheme is to be domestic to the industry, this is not a function which ought properly to be undertaken by a Minister of the Crown. The second departure from the recommendations of the Peppiatt Report lies in the representation of the turf authorities. The Report recommended that there should be one representative of the Jockey Club and one of the National Hunt Committee. The Bill increases the Jockey Club representation to two, in recogni- tion of the fact that the Jockey Club represents the interests of racing generally. The remaining members of the Levy Board are the Chairmen of two other bodies which make up the machinery of the scheme the Book-makers' Committee and the Totalisator Board, which is to carry on the functions of the present Racecourse Betting Control Board in operating totalisators.

Clause 2 confers on the Levy Board powers and duties connected with the advancement of horse racing similar to those which were so recently enacted in relation to the Racecourse Betting Control Board by the Betting and Gaming Act, 1960. Under Clauses 3 and 4, the Bookmakers' Committee, about which I shall say more later, will in each levy period—that is, a period of twelve months beginning on the 1st April—draw up a scheme for levying bookmakers. The limits of the scheme are set out in some detail in subsection (2) of Clause 3. The scheme must secure that the levy be payable only by a bookmaker who carries on, on his own account, a business which includes betting transactions on horse races. It is obviously fair that a levy for the good of horse racing should fall only on those bookmakers who take bets on horse racing.

In accordance with the recommendations of the Peppiatt Report, the scheme must divide bookmakers into categories and determine how much a bookmaker in each category must pay. Your Lordships will recall that the Peppiatt Report recommended that the categories should be based on profits, and I have no doubt that such a categorisation will be adopted, at least in the early years. But Clause 3 leaves it open to the Bookmakers' Committee to adopt a different basis of categorization if they wish. Subsection (4) of Clause 3 makes it clear that the initiative lies with the Bookmakers' Committee to draw up a draft scheme and to put it to the Levy Board. Subsection (5) enables the draft scheme to be approved by the Levy Board or to be referred back to the Bookmakers' Committee for discussion. Only if agreement cannot be reached does subsection (6) come into operation. This enables the Chairman and the two independent members to determine a scheme in the light of, first, the consideration and comparison of the needs of the horse racing industry and the other potential beneficiaries, and secondly, the capacity of bookmakers and the Totalisator Board to make contributions.

The procedure once the scheme has been promulgated is dealt with in Clause 4. Bookmakers will be required to make declarations to the Levy Board as to the category into which they fall, and normally they will be assessed according to their declaration. If, however, the Bookmakers' Committee decides, for one reason or another, that the declaration of a particular bookmaker cannot be accented, the Committee can reassess him. The bookmaker can then accept the reassessment or appeal to an appeal tribunal set up under the Second Schedule to the Bill.

My Lords, I want to underline that the Bill assigns an important role to the Bookmakers' Committee. Since the functions of this 'Committee differ a little from what was recommended by the Peppiatt Report your Lordships may find it helpful if I explain in a little more detail what the Committee will have to do and its relationship with the Levy Board. The recommendation of the Peppiatt Report was that the Bookmakers' Committee should collect "the levy". Under the Bill it will be for the Bookmakers' Committee, as I said, to draw up a draft scheme for the levy or, in other words, to determine the policy for collection. As I said, the Levy Board can either approve that scheme or persuade the Bookmakers' Committee to amend it. If no agreement can be reached, the matter must go to the independent members for arbitration. It will also be for the Bookmakers' Committee to scrutinise declarations by bookmakers.

I think your Lordships will see that the Bill gives to the Bookmakers' Committee a role just as important as that envisaged in the Peppiatt Report. The change made as compared with the Report concerns the responsibility for the control of the staff which will be needed to carry out the office processes of collection. The staff will compile a list of bookmakers and receive the declarations of categories sent in by them, issue notices of assessment and recover levy payments, they will also have tasks to perform in connection with distribution. The Bill makes the Levy Board, rather than the Bookmakers' Committee, responsible for the control of this staff, but the information held by them will, of course, be available both to the Levy Board and to the Bookmakers' Committee. It would be a mistake if the Levy Board and the Bookmakers' Committee came to regard themselves as separate entities with competing interests. It is essential to the groper working of the scheme that they should work closely together, and this fact is brought out by the other fact that they will look to a common staff which will make information available to both of them.

My Lords, I mentioned appeals and the appeal tribunal. An important task is also given to the appeal tribunal—or, I should rather say, tribunals, since there will be one or more for England and Wales and one or more for Scotland. The decisions of these tribunals 'may, in the long run, affect the livelihood of bookmakers, and it is important that the tribunals should be under supervision. I have decided, therefore, in agreement with my right honourable friend the Secretary of State for Scotland, to make an Order under Section 10 of the Tribunals and Inquiries Act, 1958, bringing the appeal tribunals under the Council of Tribunals. The Second Schedule has been drafted with this in mind.

Paragraph 2 provides that the appeal tribunals shall consist of three members: the chairman of the English tribunals will be appointed by myself, and the chairman of the Scottish tribunal by the Lord President of the Court of Session. It will be for the Home Secretary or the Secretary of State for Scotland to appoint the other two members. Under paragraph 3, the rules of procedure of the tribunals are to be prescribed by the Lord President of the Court of Session and myself.

Now I turn to the contribution from totalisators. Clauses 6 and 7 deal with the contribution to be made from the operation of totalisators The broad effect is to reconstitute the Racecourse Betting Control Board under the new name of the Horserace Totalisator Board. But since this Board will no longer be concerned with the distribution of available moneys, Clause 7 provided that, instead of a widely representative Board, the new Board shall be composed of a chairman and three other members, all of whom will be appointed by the Home Secretary. The new Board will be a purely business organisation whose functions will be restricted to the operation of totalisators and functions associated with this. It is contemplated that its members will be appointed primarily for their business ability, although this should be combined with an interest in, and enthusiasm for, racing. The procedure for determining the amount of the contribution by the Totalisator Board is similar to that for the bookmakers' levy. The amount will be determined by the Totalisator Board in consultation with the Levy Board; but in the event of disagreement, the matter will again be decided by the independent members.

Clause 8 makes provision for the audit of accounts of the Levy Board and the Totalisator Board. A report on the proceedings of both Boards, including their accounts, is to be made to the Home Secretary by the Levy Board and laid before each House of Parliament. This will provide an opportunity for your Lordships to examine the Report and, if you think fit, to initiate a debate on the activities of the Board. This, as your Lordships know, is a similar procedure to that in relation to other undertakings whose Reports are made available to your Lordships' House. Clause 9 makes transitional provisions for dividing the assets and liabilities of the Totalisator Board between that Board and the Levy Board.

Finally, I should like to say a word about a matter which has caused some concern in another place: that is, the question of Ministerial or Parliamentary control over the various schemes under the Bill. As I have already explained, the Government consider that the whole matter is one which is domestic to the industry, and have therefore not thought it right to provide for detailed Parliamentary control. What the Government are trying to do in the Bill is, as I have said, to establish the framework within which the Boards set up under the Bill can work. The requirement which I have just mentioned, that they should make a report annually to Parliament on their activities, apart from providing an opportunity to criticise any appointment made by Ministers— by any of my right honourable friends or myself—will provide a means whereby, if necessary, Parliament can make clear its views on the working of the plan.

My Lords, I want to say only this in conclusion. Although the provisions of this Bill will give assistance to many interests in racing— racehorse owners, breeders and many others— it would be to misunderstand the Bill to see these sectional racing interests as the beneficiaries under the Bill. That is not so. The real beneficiaries will be the public at large, who will, as a result, be able to enjoy better racing in better conditions. My Lords, I beg to move the Second Reading of this Bill.

Moved, That the Bill be now read 2^a.—(The Lord Chancellor.)

2.52 p.m.

LORD STONHAM

My Lords, those of you who have studied the list will have noticed that I am to be the only speaker on this Bill from the official Opposition, but I hope that no one will think that that betokens that none of my noble friends is interested in racing or that only in myself reside the signs of a mis-spent youth. I think the reason is that my noble friends are concentrating on the much more weighty matters which we shall be discussing within the next ten days or so. In fact, my noble friends and I welcome the Bill, which, wisely applied, will do a great deal for the sport of horse racing, which the noble and learned Viscount described as "our great national sport". It is a sport which, at one time or another and in varying degrees and ways, is enjoyed by the overwhelming majority of our people.

I congratulate the Government, also, on having, in my view, improved on the excellent work of the Peppiatt Committee. I do not suppose I shall often have the opportunity of saying it. but it seems to me that in the several instances where the Government have differed from the Peppiatt Committee they have been absolutely right. For example, it must be better, as the noble and learned Viscount explained, for the Levy Board and not the bookmakers to be responsible for the collection of the levy. Equally, it is much better to have the whole financial and administrative control under one organisation directly responsible to the Secretary of State. If the bookmakers had been charged with the duty of collecting the levy, they would have had to set up an extra and expensive organisation which they are far too inexperienced to control.

On the other hand, they are peculiarly well fitted to discharge the functions which the Bill remits to the proposed Bookmakers' Committee, which the noble and learned Viscount rightly described as playing a most important rôle. I am particularly pleased that the Government have insisted on a Levy Board small in number in which the ultimate power will rest with the three independent members. Not that I think that the Board will become a warring hive of vested interests. On the contrary, I am certain that it will settle down into an administrative body working smoothly and amicably in the interests of racing as a whole. But it is right to put the ultimate power in the hands of the independent members, because they represent the important people who make racing possible—the vast army of ordinary racegoers and punters. They, arid not the bookmakers, will provide the money for this levy. In fact, racing is made possible only by the contributions of the people who, generally speaking, make no profit out of it—the owners and backers of horses.

It is right, therefore, that the levy should be drawn from the profits of those who benefit from our sporting sacrifices —the bookmakers. Obviously they agree, because the Peppiatt Committee have made it clear that the whole racing industry is unanimous for a levy, and that the money it will bring is not to bolster a declining industry but to improve it. It is equally certain, although not sufficiently acknowledged, that the money spent in improving conditions for owners and backers will, through increased business, bring dividends to bookmakers far greater than the levy that they pay.

Let me say why I think that. We are considering an industry for which, for reasons which we all appreciate, there are no reliable statistics—none at all. The Royal Commission estimated the bookmaking turnover as £200 million a year; and the I3ookmakers' Protection Association said there were 10,000 bookmakers. I think that by next April, when we get information about the number of licences applied for, these will be exposed as considerable underestimates. Similarly, the Peppiatt Committee's estimate that 47 per cent. of those 10,000 bookmakers earn less than £1,000 a year will be exposed as nonsense. I do not blame the Committee for that, because obviously they were obliged to base their recommendations on the only estimates available and in the conditions then prevailing—namely, that most of that 47 per cent. of small bookmakers (and, indeed, many in the upper brackets) were operating illegal businesses, and, in consequence, their expenses were inordinately high. Whether they were operating in the street or in illegal betting shops, they incurred heavy expenses in lines and bribes, for lookout men and for the various forced charitable and other levies to which their invidious position made them so prone.

Perhaps understandably, in these circumstances, they have seen to it that their tax returns did not bear any relationship to their net profits. Theirs is mainly a cash business, and it is not difficult for them to prove that they never make a profit. Indeed, it is almost impossible for the Revenue authorities to prove that they do. That is why the Government are so right in rejecting the Peppiatt Committee's recommendation for a levy based on profits.

Now the whole position has been transformed by the Betting Bill, which gives the bookmaker a legal status and a new standing. Indeed, the noble and learned Viscount the Lord Chancellor has indicated that this Bill is, as it were, the adjunct to, or the second half of, an Betting Bill. The bookmaker's expenses will not now be all the things that I have detailed—the kind of shady things about which we knew but very seldom spoke. His expenses will now be an office and £100 a year for his licence, compared with the £50 which many a so-called "small" bookmaker has paid in fines and bribes in a single week. The new regime will thus bring a considerable increase in net profits and in the number of applications for bookmakers' licences.

All these things are well known to bookmakers' organisations, and it is thus very sound to leave it to their Committee to define the categories of bookmaker and suggest the levy attaching to each. Those organisations will also have a shrewd idea of whether the category which each bookmaker declares to the Levy Board is the right one. I am sure that the right honourable gentleman, the Home Secretary, will consult all the score or so of national and regional bookmakers' organisations before that Committee is set up. In my view, he should not only aim at a Committee composed entirely of bookmakers but should try to make sure that it includes representatives from all regions and all the categories. We want the "little men" to feel that this is just as much their show as that of the "big boys", and I believe that this could best be achieved by encouraging the formation of district bookmakers' committees, with representatives on Area Boards, so that we get a kind of pyramid structure culminating in the one bookmakers' representative on the Levy Board.

Such an arrangement, would facilitate, without any very great expense, the full use of the bookmakers' local knowledge when questions arise regarding the proper category for individuals—not that I anticipate much difficulty. Nor do I anticipate much work for the appeals tribunals: I very much doubt whether there will be much work for them. It is true that bookmakers are no more anxious than anyone else to pay more taxes or a bigger levy than they have to pay, but since they do a lot of business with each other they have to be careful of their professional status; and it would scarcely inspire confidence for bookmakers to declare that their profits were less than £20 a week, or that they could not afford to pay a levy of £50, which is the one suggested by the Peppiatt Committee for the lowest category —47 per cent. of the total, they say. If there are any who cannot afford to pay a levy of £50, it would surely be in the interests of the betting, public if they tried some other occupation.

The Peppiatt Committee, on their estimates of bookmakers' earnings, believe that approximately 5 per cent. of net profits will produce £1¼ million. I should make it quite clear that the Committee do not say that in so many words, but I have worked out a little table and taken the mean of each category: and. except in one instance, the figure works out at about 5 per cent. It is estimated that 5 per cent. of the bookmakers' net profits will produce £1¼ million, though my own view is that that percentage will produce very much more. If this is so it will be a very good thing, because it seems to me very likely that the Jockey Club's estimate of requirements of some £3 million per annum will prove to be much nearer reality.

The proportions suggested by the Peppiatt Committee for disbursement of funds as between encouragement of breeding, increased prize money and improved facilities and amenities for the racing public, seem to me about right. although I hope that the sum available for breeding will be considerably more than the £100,000 suggested in the Report. That, of course, will depend on the overall total of income. Everyone will approve if, by grants in suitable cases, it is made possible for outstanding horses to be kept here. I think we all suffer a blow to our national pride when a great Derby winner has to be sold to the United States, the Argentine, or some other country; and if we can keep our best horses here, and perhaps export our second best, as we used to do, that must, in the long run, advantage our export trade.

Similarly, if owners get better prices, the benefits should go right down the line: to the trainers and the boys who ride the work-horses, and to the stable lads, who, Heaven knows! are badly paid at the present time. I believe that it is of vital importance that the money should go down in that way because it will make for cleaner racing. I understand that at present it costs as much as £1,000 a year to keep a thoroughbred in training and racing, and few trainers can make a living without betting. This means that horses are "readied" so that they will win when wanted, and when the price is right. It also means that the ordinary backer does not always get what he is entitled to—a fair run for his money. Although I know that it happens, I believe that the principle of trainers betting on their own horses is analogous to the manager of a cricket club or football team betting on his own team. So the sooner we get to the point where trainers can earn a living training horses, the better. There is nothing against running a horse for experience. or perhaps when he is three-parts fit, to "sharpen him up" for a later race; but there is everything to be said against deliberate rigging "of races. I hope and believe that this Bill is going to be a very strong aid towards bringing about an improvement in that respect.

On the question of the badly needed improvements to racecourse amenities, I am greatly alarmed at the suggestion made in some quarters that the Levy Board should concentrate their grants on the provision of a few super-courses on the French pattern, while doing little or nothing for the so-called smaller, uneconomic courses. I do not know what is meant by an "uneconomic" racecourse It is true that many of the smaller courses operate on a very limited budget, and obviously they cannot furnish the same standard of amenities as the more well-to-do courses. I do not know whether they are regarded as uneconomic for that reason, but some of them certainly survive for many years. I object to this suggestion for other and, as I think, very sound reasons.

Racing may he the sport of Kings but it is also the sport of commoners. and nowhere is it better, more sportingly or more socially enjoyed than at some of the courses where, particularly at holiday times, a race meeting is a festival for the whole countryside. I shall never forget my first race meeting. It was at Towcester on a bank holiday, when I was a boy. In those days. farm hands, if they were cowmen, never had one day's holiday in the whole 365. But on this particular bank holiday (it was a fine day, though I cannot remember whether it was the Whitsun or the August holiday), after the milking had been done, the milk separated and the calves and other stock fed, the cowman and I went off to Towcester races—all of 30 miles away. We had our afternoon and our 30-mile journey back, and I still remember that the cowman had to finish the milking when he got back because the cows had refused to cooperate with his deputy. That was a day of which he would talk for years afterwards, naming the horses and jockeys. When I think of the real England and the real English, I always think of the races at Towcester and places like it. Many of the courses are like that—Wincanton, Taunton, Newton Abbot, Market Rasen, and many more. If those which I have mentioned are courses where they hold National Hunt racing, and if I appear to enjoy that more, it is because I think one of the most wonderful things in racing is to see a good horse reaching out for a fence. But to me it is unthinkable that funds provided for the benefit of racing in general should not afford these smaller courses their fair share.

On the question of amenities, and paying due heed to the urgent need for improved amenities for racegoers, I hope that the Levy Board will not overlook the needs of the staffs who serve race-goers. Their working conditions are usually appalling. Even on some of the more famous courses, where, perhaps, the conditions and amenities for race-goers are reasonably good, the totalisator staffs still have Elsan closets, no running water, and no catering facilities, or virtually none. Of course, they are part-time staff, and they have no trade union behind them. I am sorry to say that those who are bold enough to complain probably do not get any work for a couple of months or so. There are quite a few examples of this kind which no doubt any Board will uncover and put right. Equally, it is certain that they will take full account of the financial support needed for equine research by the Royal Veterinary College. I believe that in this field the Board can do a very great deal, and that a comparatively—and I emphasise the word "comparatively"—small amount of money will bring wide benefits.

My Lords, there is no need for me to detail (because many of your Lordships know them far better than I) the many other good racing causes on which the Board could spend its money. They will not lack expert advice, and I think they can be safely left to sort out the priorities and produce their schemes, In my view, it is sufficient for me to commend the Bill. As the Peppiatt Committee recommended, it provides the framework for the solution, by the industry itself, of the problems of horse racing. Despite the doubts which have been referred to by the noble and learned Viscount, the Bill, in my view, gives just sufficient Parliamentary control, through the submission of the annual accounts and the Home Secretary's very wide powers to modify schemes. And whilst requiring that a sufficient, but I believe not onerous, financial contribution be made, it rightly acknowledges the bookmakers' new status and gives them a statutory say in the conduct of the industry, which is going to prove increasingly important to them. Taking it all in all, and by and large, my Lords, it looks as if a much better time will be had by us all.

3.14 p.m.

LORD MESTON

My Lords, this is a most interesting Bill, but it requires a good deal more elucidation. I am not suggesting for a moment that the noble and learned Viscount The Lord Chancellor has not explained the Bill very carefully; on the contrary, I think he has explained this Bill, as every other Bill, with remarkable clarity. But in my view, the fact remains that the Bill, in itself, still lacks precision. I may say at the outset that, never having been on a racecourse in my life, I am at a great disadvantage compared with the other Members of your Lordships' House, who are experts in this matter. I think the most remarkable feature of this Bill is its vagueness. It rather reminds me of a Bill for the purpose of levying income tax of an unspecified amount, at a rate to be determined by the taxpayers; and on failure of agreement as to amount by the taxpayers, the amount is to be decided by the Inland Revenue. I find this Bill really rather vague in its present form.

Let me say a few words about the levy on the bookmakers. Why is there all this secrecy about the amount? I understand that the Peppiatt Committee suggested £1¼million a year; the Jockey Club, on the other hand, would like as much as £3 million a year. I am wondering what is the position. There are, as your Lordships know, about 8,000 bookmakers in this country; that is to say, there are 8,000 people who have taken out, or will take out, a bookmaker's permit. If the levy is £3 million, then the average amount payable by each bookmaker will be in the region of £400 a year. I presume that some of the big bookmakers will pay as much as £1,000 a year, and that some of the smaller men will pay as little as £50 a year. In the interests of the bookmakers, I only hope that these charges, whether raised by way of permit or levy, will be chargeable to their expenses and allowable for income tax purposes.

My Lords, in regard to the different categories of bookmakers, pause just for one moment and think how you are going to place each individual bookmaker out of 8,000 bookmakers into a specific category. How are you going to do it? Are you going to do it by way of profits? I do not wish to say anything should not, but the profits of bookmakers are sometimes of a rather fluid and non-ascertainable nature. Are you going to do it by alphabetical order? That would be just as sensible as any other order. How can you tell whether a bookmaker is doing well or doing badly? They certainly will not tell you themselves. I suppose at one end of the scale you will have Douglas Stuart, of the firm "Duggie Never Owes", who will pay a very large sum by way of levy; at the other end of the scale, you will have the small bookmaker who has practically no office and who bellows like a bison at open-air suburban meetings. I have no idea how you will categorise these people. My old friend Angus Mackay, from Aberdeen and Newmarket, keeps on asking me into what category he will fall, and I keep on telling him that I will ask another Aberdonian, the noble and learned Viscount The Lord Chancellor, to place him in the best category of all, where he gets his betting free.

The next question is this. The levy having been obtained, how will it be spent? Clause 1 (1), paragraphs (a), (b) and (c), make provision for that matter. I should like to know whether the money is going to be paid to private owners in the same way as a grant is made to maintain an ancient monument. Will this amount be paid annually, or once and for all; or are any conditions attached to it? I do not want anybody to think for a moment that I am envious or jealous of the money paid to private owners: I have no doubt that they are indeed the people to whom this money should be paid. Then, dealing with the improvement of horse racing, I want to know whether that refers to the horses, the owners, the trainers, the jockeys or to the general public who go to race meetings. That is a matter which requires a great deal more elucidation.

My Lords, I think the only constructive criticism that I can make at the present time is that the Bill does not allow for sufficient Parliamentary control. The members of the Horserace Betting Levy Board will be experts who no doubt will see that the spending of the money collected by the levy is conducted on sound lines. I also see that the Bill provides that an Annual Report on this matter will be made by the Secretary of State before each House of Parliament But does the matter end there? What power, if any, will Parliament have to enforce, or even recommend, any suggestions relating to expenditure or other administrative matters? This matter has been raised before, and in the course of his speech the learned and noble Viscount the Lord Chancellor pointed out that this was a domestic matter and that, in effect, it should not be determined by Parliament. I am not going to contradict that statement on general lines; I will simply leave it to your Lordships to express your views on that matter.

3.20 p.m.

LORD WILLOUGHBY DE BROKE

My Lords, may I first of all offer my humble congratulations to my noble and learned friend who sits upon the Woolsack for the admirable exposition which he gave to your Lordships a the Betting Levy Bill and its ramifications? I should also like to offer my equally sincere and humble congratulations to my noble friend Lord Stonham, who spoke for those noble Lords who sit upon the opposite side of your Lordships' House. I was delighted to hear from him that he and his supporters are in general agreement with the broad principles of this Bill. I can assure him that no member of the racing industry could possibly have put the case better or more forcibly before your Lordships. I would venture to correct him in one minor respect, however. Maybe I am wrong over this, but I thought he said that bookmakers would be charged a fee of £100 a year for registration. I think that I am right in saying that in the first instance they pay £100 for a licence, and that after that it is only a matter of a renewal fee of some £10 a year. With regard to the comments made by my noble friend Lord Meston, I think that I can safely leave it to my noble and learned friend the Lord Chancellor to deal with them in his reply.

When I found myself senior steward of the Jockey Club in 1956, it was my duty to head a deputation, consisting of my two co-stewards and of the secretary to the Jockey Club, to see the Home Secretary of the day, now my noble friend Lord Tenby. Our deputation was most sympathetically received, and it was at that meeting that the stewards of the Jockey Club, who were also speaking for the stewards of the National Hunt Committee, made their big plea for financial aid to racing from off-course betting with the bookmakers. I will not detain your Lordships with the story of the subsequent events, because they are all well known. Her Majesty's Government brought in and passed the Betting and Gaming Act in 1960, and, true to their promise to the two governing bodies of racing, they are now bringing forward the Betting Levy Bill.

As one who had the privilege of heading the first deputation to one of Her Majesty's Ministers on the subject, I most cordially welcome this measure which is before your Lordships to-day. I do so in other capacities as well, having served two terms of office as a steward both of the Jockey Club and of the National Hunt Committee. I also happen to be chairman of three racecourse companies, and I have bred and owned racehorses in a small way for 35 years. I may also describe myself as a punter in a modest way, as one who enjoys having a bet on as many races as I can find an excuse for in a day. However, I must frankly admit that over the years practically all my betting has been done with bookmakers rather than with the totalisator, both on and off the racecourse.

Perhaps your Lordships will bear with me for a moment if I recall that a bookmaker once said to me, many years ago, "Punters are divided into two classes—the needy and the greedy. Now, my Lord, which one do you belong to?" Being a subaltern in a cavalry regiment, and living more or less on my pay, I did not hesitate to assure him that I belonged to both classes! I feel that possibly I can speak about this Bill as representing quite a number of different racing interests.

In my humble opinion, this Bill is the most vital and important measure that has been brought forward to help the racing industry since the Racecourse Betting Act, 1928, which permitted the establishment of the totalisator and I enabled a charge for betting to be made on bookmakers operating on racecourses. The provision for off-course betting with bookmakers to make its contribution to racing is felt by the racing industry to be long overdue, and I should like most warmly to commend and 'thank Her Majesty's Government in general. and my right honourable friend the Home Secretary in particular, for having brought this Bill forward so promptly on the heels of the Betting and Gaming Act.

The Bill itself is clear and concise. It leaves in the hands of the Horserace Betting Levy Board the determination of the amount of the levy, the method of collecting it and its subsequent distribution. As my noble and learned friend who sits on the Woolsack has already said, the composition of this Board will ensure that it will be admirably qualified to carry out these tasks. Another excellent feature of the Bill is that it allows the Board a considerable amount of latitude and enables it to vary the amount of the levy as circumstances require. This was a point to which my noble friend Lord Meston referred. Surely, it is in the best interests of all concerned that the payments, receipts and allocations of the fund thus levied should be kept under annual review.

I can assure your Lordships that this Bill has the unanimous support of almost every section of the racing industry, including the bookmaking profession, The great majority of whom recognise the fairness and equity of the measure so far as they are concerned. I very much hope that all your Lordships will find it possible to give this Bill your support on Second Reading, and that it will not be thought necessary to introduce any Amendments to it at a later stage.

3.28 p.m.

LORD JESSEL

My Lords, the noble and learned Viscount the Lord Chancellor has dealt fully with the background of the Peppiatt Committee and their Report, and it may be that some of your Lordships have the impression that, by and large, this Bill to which we are asked to give a Second Reading this afternoon follows closely the recommendations of the excellent Peppiatt Committee. I do not think that that is so, however. Certainly with regard to the bookmakers I think that it is a fair criticism to say that it is only the framework of the Report which has 'been retained, and many of the safeguards for the bookmakers have been omitted from the Bill. Being an incurable gambler, like my noble friend Lord Willoughby de Broke, I have contributed over the last 30 years to the profits of the bookmakers. I feel that it shows considerable nobility of character on my part that I am here to-day speaking on their behalf, criticising this Bill because, in my opinion, it does not sufficiently look after their interests.

I know that some people think that bookmakers should not be allowed at all and that all betting should be channelled through the Tote. I do not share that view. Personally, I feel that bookmakers contribute immensely to the fun of racing. I like to hear them shouting the odds; I like to hear them mispronouncing the names of the horses; and I like to get 7 to 2 on a horse that starts at 3 to 1, even if it loses. But it is fair to say that the off-the-course bookmaker has contributed little to racing, and some of them have taken a great deal out of it. This does not apply so much to the bookmakers who actually go racing. If your Lordships look at paragraph 26 of the Peppiatt Report you will see they estimated that during the period of the year ending July. 1959, racecourses received more than £450.000 from the bookmakers"— and this, of course, all came from bookmakers who actually went to the races.

The bookmakers have for a long time been aware of the validity of the criticism of the position of bookmakers who operate entirely off the course. So it was that in 1956 they co-operated with the Jockey Club to discuss the financial structure of racing. In 1958 the bookmakers started what was called a racecourse amenities fund to help racecourses to provide amenities for the public. This fund will have distributed £115.000 by the time this Betting Levy Bill comes into force. But I agree that this was only a gesture of goodwill, and that is why this Bill is necessary and is welcomed by all responsible bookmakers.

Then, later, the bookmakers cooperated closely with the Home Office over the Betting and Gaming Act. When the Peppiatt Committee was formed, one of its members was a working bookmaker, and, of course, a great deal of evidence was heard from representatives of the bookmakers. When the Peppiatt Committee reported—and as the noble and learned Viscount on the Woolsack has said, they did their work with great speed—I think it can be fairly said that two important points came out of the Report which vitally affected the bookmakers. First, the Report stated that the sums of money which had been talked about as a possible contribution to racing from the bookmakers were quite unrealistic and secondly, the Committee recommended that, in the main, bookmakers should be allowed to organise and control their own destiny in assessing and collecting the levy.

What in fact does this Bill say in regard to the levy? The noble and learned Viscount has explained it. It seems to me that the bookmakers will he permitted to draw up a scheme, and if the Levy Board do not like the scheme, then the chairman and the two independent members of the Board can put forward any scheme they wish, whether the bookmakers like it or not, and the bookmakers will have to work it. Incidentally, the constitution of the Central Levy Board has been changed from that recommended by the Peppiatt Report, in that the representation of the bookmakers is now one in eight and not, as was recommended, one in five.

I suggest that any scheme which is going to take money from the bookmakers should have the approval of the Home Secretary and the Peppiatt Committee took a similar view. I also feel that any such scheme should have annual Parliamentary scrutiny, and I am glad to know that the noble Lord, Lord Meston, who put that point also, agrees with me. I know that the annual report of the Levy Board will be laid before both Houses of Parliament and may be debated, but I think this is no real safeguard: it is bound to be presented several months after the year has come to an end, and by then the harm may have been done and it will be too late to take any action.

The Bill, as it stands, delegates responsibility for taxation to an outside body, and there is no upper limit in the Bill on the amount which can be levied. This seems to me to be wrong in principle. Therefore I hope the Government will have second thoughts and make this Bill more in line with the Peppiatt Committee's recommendations. I know that there are two essential points which the bookmakers would like to see included in this Bill. First, they want to have inserted a maximum figure as the upper limit which can be levied on bookmakers. The Peppiatt Report recommended a levy of £1 million to £1¼ million for the first full year of operation. Perhaps £2 million would be a reasonable upper limit; I do not know. I know that the value of money changes, and if in years to come this figure becomes ridiculous and out of touch with the times, pit can always be altered: but in the meantime the bookmakers will know how they stand. Secondly, the bookmakers want to be sure that, whatever figure is finally decided upon by the Levy Board as the maximum to be taken from them it must have the approval of the Home Secretary. Here again all I am asking the Government is to implement a recommendation of the Peppiatt Committee. Finally, as I said earlier, I think it is essential that each year Parliament should have an opportunity of discussing and confirming the sum of money which is going to 'be taken from the bookmakers by the levy.

3.38 p.m.

VISCOUNT ASTOR

My Lords, if I am not very audible to-day I hope your Lordships will excuse me, because I have had a cold. But I felt that it would have been churlish if, having missed the Second Reading of the Betting Bill, I had not tried to be 'present for the Betting Levy Bill, as I had initiated two debates asking the Government to take these measures. It gives me particular pleasure that the noble and learned Viscount the Lord Chancellor should now be introducing this Bill, as 'he it was who so eloquently "knocked me for six" on the previous occasions; and I am glad that, like those of a famous Old Testament character, his views have also been altered by quadrupeds. I am equally glad that the Labour Party support this Bill, remembering the way the Daily Herald "knocked me for six" the morning after I spoke.

I think one can say that the whole racing community is immensely glad to have this Bill, because racing is not only a useful export but also a great factor in the prestige of this country in the world; and we need to preserve all the factors and assets that we have. Racing helps our tourist industry and it is a great unifying factor in the nation to-day. How often when I was in the other place did a very dear friend from the Labour Benches denounce the profit motive and the people who wanted to make profits, and afterwards say to me: "What about that wee filly of your father's in the 3.30 to-day?" If this sport is to maintain its position nationally and internationally, it must be both healthy and clean; it must be economically viable and financially honest. That has become more and mare difficult, 'because casts have steadily risen and prize money has remained very nearly static.

The net annual loss on racing by people who put the money into it has been of the order of £3 million a year, plus or minus. The result has been that owners and trainers have had to rely more on betting. That has meant that the owner and the breeder have tried to produce the animal which is the easier vehicle for bets—that is, the early maturing two-year-old and the sprinter. But that is not the foundation on which British bloodstock industry is based; and if this process is continued too long our bloodstock industry will deteriorate. The steady number of French victories in our Classics since the war has been alarming, compared to the fact that only one English horse has won an important race in France since the end of the war.

We have also poor facilities for the public. The lads are poorly paid, with greater temptation, therefore, for the acceptance of bribes. A very nice fellow worked in my stable. For one moment he fell to temptation and he has gone to prison. That would never have happened if the trainers had been able to afford to pay a decent wage and provide decent conditions for their lads. Anybody who thinks that this Bill is merely a levy on the poor little unfortunate punter in order to look after the rich owner should remember that in the first place the average number of horses owned by owners in this country is three. That means that there are a great many people who awn only one horse, so far as we have been able to obtain statistics.

Secondly, in countries like France and Ireland, where there has been a levy, it is the public who benefit. When you think that on Grand Prix day you can get the best seat in Longchamps for the equivalent of 18s. compared with the £4 or £5 for the best seat on an English course, it shows how for the ordinary person things can improve. For instance, in Ireland, where there has been a levy, car parking is entirely free at all racecourses, and Ireland is a very poor country indeed. Horses are transported free to the course, and there has been a steady improvement in the stands in that country.

LORD STONHAM

My Lords, may I interrupt the noble Viscount? Is it not the case that the levy on bookmakers in Ireland is perhaps ten times as much proportionately as that which is now proposed here?

VISCOUNT ASTOR

My Lords, I am afraid I could not answer that question without notice. Some people feel that if the off-course bookmaker is going to contribute it may somehow hurt the punter. In fact it cannot, because the off-course bookmaker is bound in the long run to give as good odds as the Tote, because if he consistently gives worse odds than the Tote everybody is going to bet on the Tote. Therefore, there is no danger that the small punter in the country is going to be worse off.

We have heard two very interesting speeches from the noble Lords, Lord Meston and Lord Jessel, but I think the answer to them is that until we know how much money is actually spent on gambling and racing, what the profits are, and how many bookmakers are going to take licences, it is impossible to know what the figures will be. I propose to submit an Amendment to your Lordships on Committee stage to embody the following principle: that monies wagered with the bookmaker should pay an equal proportion pro rata as monies put on the Tote: that if a man puts £1 on the Tote and pays out of that £1 sixpence to the Racing Board, a man who puts on £1 with the bookmaker will equally put sixpence; neither more nor less so far as possible. Therefore, the punter will not be discriminated against in other ways, whether he bets with the bookmaker or the totalisator. There will be no preference for one or the other; it will be absolutely level so far as it can be done.

Bookmakers should be under the same obligation as the Tote to keep such accounts and records as the Levy Board may direct, and have them inspected. Then there can be no argument as to whether the amount fixed is fair or unfair as opposed to A or B. This has been done perfectly effectively in Ireland, as it should be done by any legal business for income tax. Such accounts, properly audited, will prevent any argument as to whether these things have been done fairly or not. I hope both noble. Lords will accept that as the practical answer for the fact that it is difficult at the moment to reach a real figure.

Finally, I hope that the public will be patient for the results of this Bill. After all, if an owner decides to change his breeding policy now he will be thinking of future years' meetings and of the horses which will run in the Derby in, say, 1966. The plan is for a long-term changing of breeding policy and for getting our courses into a better state. Therefore, those of us in the racing industry must 'ask the public to face the fact that it is a long-term policy but, we are all absolutely convinced, a sound one, and we thank the Government very much for having had the courage to introduce this Bill.

3.47 p.m.

VISCOUNT MASSEREENE AND FERRARD

My Lords. I also should like to thank Her Majesty's Government for introducing this excellent Bill. It is an extremely straightforward Bill. It is what. I should call a neat Bill. It is attempting to do something which is really very difficult, but it has been drafted in an extremely easy manner for the layman like myself to understand. I should declare an interest here, as from my teens, the age of nineteen, I have always had an odd horse; I have also ridden in one or two professional races over the sticks and in quite a few hunt chases and point-to-points. Of course, I bet, too. I rather blame the bookmakers for that, because at the first race meeting I ever went to, at the age of fourteen, I had 2s. on a horse which won at 20 to 1. Unfortunately, I lost the bookmaker's ticket. I was extremely upset about this, and a kind bookmaker took pity on me and paid me out. Ever since then I have been completely lost.

We have had some criticism from various organs of the Press as to whether a subsidy for racing is necessary. The Peppiatt Committee states extremely plainly that a subsidy is necessary. I do not think it is necessary to quote it, but they go on to say that it is not their view that without a subsidy horse racing will rapidly decline or die. The important word here is "rapidly". Without the infusion of new money into racing it will decline, without a doubt, and it will also decline in honesty. The public are inclined to regard racing as a sport of kings and millionaires, but the days when racing was really a match between the landowners have long gone by Everybody to-day is a racehorse owner—publicans, hairdressers, stockbrokers, "Old Uncle Tom Cobley and all". A great many of these people have helped racing immensely by bringing in new money.

Many owners to-day are inclined to regard their horses as gambling machines. They have these early maturing two-year-olds, as the noble Viscount, Lord Astor, has pointed out. Of course, trainers themselves are extremely sorely pressed to make ends meet. In fact, if a trainer has not independent means he cannot really make ends meet out of his training fees. It is all right, perhaps, if he trains for the noble Viscount, who wins a great number of races, but for the average small owner the trainer is sorely tempted, as we have heard, to bet.

The average owner cannot pay higher fees because the expenses are so out of proportion. I think that, on the average, the owners last year provided 35 per cent. of the prize money for which they were running. In other countries, France, America and such countries as those, the percentage is about 5 or 3. For instance, last year 1,016 different owners had at least one winner; but out of that number 1,000 won an average of only £1,179. We have heard that it costs round about £1,000 to have a horse in training. I have one or two horses in training and I can assure your Lordships that that figure is correct. The great majority of those owners have more than one horse. The average owner has, I understand, two or three horses. Therefore it can be seen how much on the debit side the average owner is. All this is very bad for racing.

I should like now to turn to the Bill for a moment. In Clause 2 the general powers and duties of the Levy Board are subject to the approval of and conditions imposed by the Secretary of State. I hope that when the figure suggested by the Peppiatt Committee of £1¼million comes to be distributed, the Secretary of State, through the chairman and two members of the Board appointed by him, will see—and I think this is extremely important—that an adequate sum is set aside for security, because the first thing that the public ought to have is fair racing. We have read a lot lately about doping. No expense ought to be spared to stamp out this foul practice. It harms the horse. In every way it is despicable. You also have the custom, rather too prevalent, that horses are given an easy race to get their weight down for some future handicap. If every racecourse were equipped with a cine camera it should make it extremely difficult for people to practise this. The tine camera is very expensive; it costs about £150 a day. hope that the Levy Board will make a grant to have this camera on every racecourse.

I should like to pay a tribute to the Jockey Club and stewards in general, who have an extremely hard task to-day. There are such vast sums of money involved in racing. I hope one result of having this Levy Board will be that the Jockey Club will be able to buy the services of the best professionally and technically trained people possible to help them in their work. You have probably heard of an Irish horse called Zonda. In the Daily Mail on January 27—I can hardly believe this—one of the owner's witnesses, Dr. Brendan, lecturer in veterinary medicine at University College. Dublin, is quoted as saying: I was an expert witness but I was not allowed to present all my evidence, the stewards ruling that they could not allow a discussion on the scientific evidence because they were not competent to evaluate such evidence. I am sure that the National Hunt stewards would have a good answer to that. But if because of a shortage of money every racecourse cannot have enough technical advisers, it certainly seems an extremely bad state of affairs. I understand, however, that perhaps the papers have this reported incorrectly.

I should now like to turn to Clause 2 of the Bill which refers to the levy. I did not quite understand the noble and learned Viscount the Lord Chancellor in regard to these levies. Are they to be divided on the basis given in the Peppiatt Report? If so, in the Peppiatt Report some of the categories appear to be far too wide. For instance, those in the top category of £40,000—I am quoting from memory now, but I think it concerns any bookmaker having a profit of from £12,500 up to £40,000—all have to pay the same. That category appears to be extremely widely drawn, and I should have thought it was rather unfair to the smaller man. There are some extremely big bookmakers who earn far more than £40,000 and I should have thought they ought to pay more.

When it comes to the bookmaker's accounts, under subsection (3) of Clause 4 the Bookmakers' Committee is allowed to scrutinise the accounts if the Levy Board should raise any query. Are the Levy Board going to have their own auditors? If so, they will need a great number of them, because I understand that there are anything up to 10,000 bookmakers in the country. A further point about which I am not too happy if that the bookmakers have only one representative on the Levy Board, and in the event of any dispute between the bookmakers and the Levy Board the bookmakers do not appear to have much chance—they appear to be heavily outnumbered. I should have liked to have on the Levy Board representatives of the Racecourse Owners' Association and the Thoroughbred Breeders' Association and Racehorse Owners' Association. If we had those three extra representatives, then I should have liked to have an independent third body to adjudicate between the Bookmakers' Committee and the Levy Board. Perhaps that is wishful thinking.

Another point about which I am not quite clear is this. Are these allocations from the Levy Board to be tax free? Presumably, when the bookmakers pay this levy they will be paying it out of taxable profits and it will be reducing their tax. I can hardly see the Exchequer under the present tax law allowing the recipients to have these disbursements free of tax. But if these disbursements are to achieve their object, is there any purpose in the Exchequer taking back a great deal of the financial help disbursed? I hope that at some future date it will be possible to alter the tax law in order that the racecourse owners and other recipients can have these allocations free of tax.

To conclude, I welcome this Bill. I think it is an excellent Bill. I am sure it will save the horse racing and the livestock breeding industries. I think, too, that with the infusion of this new money into racing the majority of the ills from which racing has suffered will fade away and disappear. Therefore, I thoroughly support the Bill.

4.9 p.m.

LORD SWANSEA

My Lords, I am not going to take up too much of your time to-day. I shall concern myself with only one aspect of this Bill. But first I have to declare an interest, since I speak as a member of the Council of the Welsh Pony and Cob Society, one of the bodies at present receiving a grant from the Racecourse Betting Control Board. Like other breeding societies, this society has as its aim the preservation of the character and individuality of one of our native breeds of pony. As your Lordships are doubtless aware, we have in these islands several native breeds. Besides Welsh, there are Dartmoor, Exmoor and New Forest ponies, to mention only a few. 'These breeds have long traditions and associations in their respective parts of the country, and each breed has its own devoted band of adherents. 'It would be invidious, I think, to extol the merits of any one of these breeds at the expense of others, and I do not propose to do so. What I have to say applies equally to any of the breed societies which at present receive grants from the Racecourse Betting Control Board.

As it is with the Welsh breeds that I am immediately concerned, I intend to deal principally with them by way of example. The grants to which I have referred are paid by the Racecourse Betting Control Board either directly to my society or indirectly through the National Pony Society, and are applied for the maintenance of premium stallions. These premium stallions are selected in the spring, on a competitive basis, and are allocated to different areas, one or more to each; and they are turned out on the hills. This system is to the great benefit of many farmers and others who breed ponies in a small way but who cannot afford to pay large stud fees to send their mares to the top-class stallions. By paying a comparatively small fee per head they can turn their mares out on the hill to run with the stallion, while the owner of the stallion, whether an individual or a local improvement society, benefits from the grant. It would not be an exaggeration to say that the premium stallion system is the backbone of a breed society. There are in Wales 25 pony improvement societies run on a co-operative basis and set up to foster the improvement of pony-breeding in the hills. They have rendered great service towards the improvement of the native breed, as well as providing stock for crossing and thereby the improvement of other breeds of horses.

Your Lordships may not be generally aware that Welsh ponies, among which I include Welsh mountain ponies and Welsh cobs, have for several years past enjoyed great popularity overseas, particularly in the United States and Canada; indeed, they have become quite an important dollar export in the livestock line. In the five years from 1956 to 1960, 1,897 Welsh ponies and cobs to a total value of close on £500,000 were exported from this country. This value may seem to your Lordships to be small compared with that of some of our other exports, but I would point out that in 1958, when 674 Welsh potties were exported, mostly to dollar countries, their value was higher than that of any other livestock export in that year.

In subsection (2) (d) of Clause 2 of the Bill now before your Lordships, the Levy Board is empowered to apply money, among other purposes, for the purposes mentioned in subsection (1) of Clause 1 of the Bill. This subsection sets out these purposes:

1. "(a) the improvement of breeds of horses;
2. (b) the advancement…of veterinary science or…education and
3. (c) the improvement of horse racing."

The wording of the subsection is a matter of some concern to my Society, because mention is made only of improvement of breeds of horses: there is no mention of ponies. Your Lordships may recall that in the debate last week on the Report stage of the Weights and Measures Bill, the point was raised as to the application of the Bill to Irish whiskey; and the noble Earl who spoke for Her Majesty's Government said that the greater could be deemed to include the less. It may be that that is so in this case, and that horses can be deemed to include ponies.

The noble and learned Viscount on the Woolsack, in opening the debate, said in relation to this subsection that the powers of the Levy Board, so far as the application of their money was concerned, would be exactly the same as those of the Racecourse Betting Control Board at present; in other words, grants will be purely discretionary. I am grateful to the noble and learned Viscount for his exposition of this subsection of the Bill, but I feel that this is rather a negative promise. My Society feel that there is a danger that if the terms of the Bill are not sufficiently explicit our native breeds of pony may at some future date be deprived of a source of grant aid, and the quality of the breed will suffer in consequence. It would greatly relieve the minds of breed societies if the noble and learned Viscount on the Woolsack could give us some assurance that the Government will give this point some consideration and at any rate that the present system will be continued.

4.15 p.m.

LORD WOLVERTON

My Lords, I, like other noble Lords, should like to welcome this Bill and to congratulate Her Majesty's Government on bringing it forward. Like other noble Lords, I have felt for some time that the racing industry needs more money, and it has always seemed to me rather unfair that people who enjoy racing but do not often go to a racecourse, putting their money on with bookmakers off the course, and the bookmakers off the course, should contribute very little to the betterment of racing except perhaps through their organisation. As was said this afternoon by my noble friend Lord Jessel, bookmakers who go on the course pay for their entrance five or six times the amount paid by the ordinary person and also contribute for the privilege of setting up their pitch something like £450,000 a year for the betterment of racing, while the Totalisator Board contribute something like £600,000.

I believe Her Majesty's Government are wise to leave this clause flexible in relation to the method of assessing the levy. The people who are important under this Bill are the Bookmakers' Advisory Committee, because they are to suggest the method of levy. I think it is right that that should be left very flexible. The way in which they are to decide the best method of making the levy is left very flexible and I think rightly so, because, as has been said this afternoon, it is sometimes extremely difficult to find out what are bookmakers' profits. Your Lordships may remember that Sir Winston Churchill, when he was Chancellor of the Exchequer before the war, tried to tax the bookmakers on profits, but he could not find out what their profits were.

Although I welcome very much the Report of the Peppiatt Committee, on which sat the noble Lord, Lord Crathorne, a member of your Lordships' House, and Mr. Archie Scott, a leading bookmaker who did noble work in bringing bookmakers together to agree that they would pay the levy, I think it is right to try to tax them on their profits; but it may not prove possible. I believe the minimum amount recommended to be paid by the smallest bookmaker would be £50 per year, and the largest something in the neighbourhood of £2,000. Many people thought that was not enough. Some thought the amount should total about£3million. The Peppiatt Committee thought that it should be about £1¼million; but under the Bill that is left flexible. Once the Bill becomes an Act of Parliament it is difficult to get it altered without an amending Act.

The noble and learned Viscount on the Woolsack, in explaining the Bill very fully, dealt with its financial implications. I believe they were dealt with by the Home Secretary and that I am right in saying (the noble and learned Viscount will correct me if I am wrong) that the bookmakers, in making the calculation of the levy they have to pay, can deduct the genuine expenses of their business. The Totalisator Board have up to now paid taxation at source, although they took a case right up to your Lordships' House for a decision because they felt they should not pay taxation at source. They will now not have to. I think he also said that it did not naturally follow that the recipients will not have to pay tax; that depends on the tax laws and how they use the money. In certain cases they will have to pay tax and in others they will not. Perhaps the noble and learned Viscount the Lord Chancellor could explain that.

At any rate, I feel that the Bill should help enormously. It should obtain another £1 million for the betterment of racing, to add to the £1 million the Totalisator Board will he able to distribute, instead of £600,000, and the minimum total should be £2½million. I am sure that that will be of very much help both to the breeding side and to the prize side and also to amenities. The noble Viscount, Lord Astor, I believe, said that many of our best horses, Derby winners and so on, are now exported. He wanted to see them, if possible, kept in this country for breeding, and the second best exported. It has not been possible to keep the best in this country because breeders have had to get money back into their stud farms and racing establishments and they have had to let these very valuable animals go. I appreciate very much the Government's bringing this Bill forward. I think it will do a lot of good on the important question of better amenities for the comfort of racegoers. One of the important things is to increase the prize money. because then we keep the owners, and consequently the whole industry, going. With those few words, I support the Bill

4.23 p.m.

THE LORD CHANCELLOR

My Lords, I am extremely grateful to your Lordships for the very kind reception of this Bill. If I may particularise, I should like to thank the noble Lord, Lord Stonham, for a kind and generous speech from the Front Opposition Bench; and it was a great pleasure to me that my noble friend Lord Willoughby de Brake should give us the approval of those who, like himself, do so much for racing in this country. I shall try to deal with all the points that have been raised, if your Lordships will bear with me, because they have been raised so seriously and with such an obvious desire for information. But if I fail to deal with any point I hope that the noble Lord in question will not hesitate to get in touch with me per- sonally, and I shell be very pleased to deal with it, either by word of mouth or by letter.

The noble Lord, Lord Stonham, raised two points. First, the said he was glad that we have not made profits the basis of the scheme. We have not gone quite so far as to exclude profits. We leave that to the Levy Board; and, of course, the Levy Board in turn will hear what the Bookmakers' Committee have to say, as I described, and it is open to them to choose that basis. But it is open to them to choose other methods, and I think that this is what the noble Lord had in mind. With regard to the composition of the Bookmakers' Committee, which was the second point on which the noble Lord wanted information, the noble Lord will see that authority is taken in paragraph 2 of the First Schedule to pay bookmakers serving on the Bookmakers' Committee suitable remuneration or expenses. The reason for that is that we know that their duties will consume a considerable amount of time and some bookmakers may not be able to serve unless some remuneration is provided.

On the major point, however, in order to give flexibility to the Committee, paragraph 1 provides that The Bookmakers' Committee shall be constituted in such manner as the Secretary of State may, after consultation with any body appearing to him to be representative of the interests of bookmakers generally…prescribe". That will, I think, give my right honourable friend complete freedom, and I am sure that he will bear in mind the suggestion of the noble Lord as to consulting a wide variety of national and local organisations. I think that my right honourable friend (if my memory is not wrong) has given as an undertaking that the Bookmakers' Committee would accord with its name—the primary Committee of Bookmakers. But, again, I shall bring it to his attention and discuss what the noble Lord said on that point.

The noble Lord, Lord Meston, had a number of criticisms, and his first was that the Bill lacked precision. I think that here one has to make the choice as to whether the Bill will have an antecedent precision, as Lord Meston suggested, or whether it will have flexibility. I must say that flexibility appeals to me infinitely more strongly, despite the noble Lord's arguments. He, I suppose, would suggest that there should be a fixed figure. The method which we have suggested, and which I explained to your Lordships in opening the debate on this Bill, is that the levy should be agreed between the Levy Board and the Bookmakers' Committee or, in the event of disagreement, should be settled by the independent members.

It is obvious that the amount of the levy depends on three factors: first, the needs of horse racing and breeding, and of veterinary science and education, and the other potential objects of the benefaction; secondly, the capacity of bookmakers to pay; and, thirdly, the need to balance in an equitable manner the amounts taken from the bookmakers and the Totalisator Board. I would put it to the noble Lord, Lord Meston—and I would ask him to consider this as he has done the various legal problems to which he has addressed his mind—in an open and receptive way. These are not matters which can be determined in advance. This applies to any of the three factors I have mentioned: the needs, the capacity or the respective balance of the amounts between bookmakers and the Totalisator Board. They depend not only on the needs of racing but also on such matters as the number of bookmakers, which cannot be known until bookmakers are registered under the Betting and Gaming Act next year, and their individual capacities to pay, which cannot be known until the first declarations under the Bill are made. To set out an irrevocable limit in the Bill would be to make the whole scheme inflexible.

Now, my Lords, I come to one of the points raised by my noble friend Lord Jessel, because it is akin to that point. That is, that there should in any case be a ceiling; that, even if there is not a fixed amount, there should be a fixed ceiling. The difficulty about that idea is that not only are there the uncertainties that I have mentioned, but there is a danger that, if we put in a ceiling, it will be regarded as a target rather than a maximum, and the effect may be not to protect bookmakers but to preserve the levy payments at an artificially high figure. My noble friend Lord Jessel asked, "Well, then, what are the safeguards?" My Lords, the real safeguard of bookmakers against the levy payments being taken to excessive figures is, first, that subsections (4) and (5) of Clause 3 provide for the levy scheme to be drafted by the Bookmakers' Committee and agreed between that Committee and the Levy Board. The Bookmakers' Committee is therefore in a strong position. In the event of disagreement, the members of the Board (who, broadly, represent the racing interests which will receive assistance) cannot override the views of the bookmakers—and here the second protection comes in. In the event of disagreement, the scheme falls to be determined by the chairman and the independent members of the Board, who, to use the words which the Government have used, will discharge their functions in an impartial manner.

My Lords, this question of Parliamentary control was raised first by the noble Lord, Lord Meston, and then by my noble friend Lord Jessel. I have explained the reasons which convinced the Government that it is not really for a Minister to carry out that arbitration between the Bookmakers' Committee and the Levy Board; and it is better, I am sure, to have the three independent members, the chairman and the other two independent members, to do that. But, I want to emphasise the scope of Parliamentary control: I dealt with this rather shortly in opening. Whenever a Minister makes an appointment it is open to Parliament to criticise that appointment, and to criticise, not necessarily the individual appointed, but the principle on which the appointment has been made—and that is a very important part of the working of Parliament.

Then there is the point in the subsection to which my noble friend Lord Massereene and Ferrard referred, with regard to the application; and if the noble Lord, Lord Meston, and my noble friend Lord Jessel would be good enough to look to Clause 2 (2) (d), they will see that subsection (2) says: The Levy Board shall apply any moneys from time to time available in their hands…

1. (d) subject to the foregoing paragraphs of this subsection, in making payments, in accordance with schemes from time to time prepared by the Levy Board and approved with or without modifications by the Secretary of State, far such purposes as are mentioned in subsection (1) of section one of this Act."—

that is to say, for the improvement of breeding, the advance of veterinary science, and the improvement of horse racing. There again, if the Secretary of State improves or modifies the scheme, then, of course, the matter can be raised in Parliament and his decision debated. Thirdly, there is the point which I ventured to make in my first speech, that there will be a Report. My Lords, to my mind these provisions give full opportunities for Parliament to see that the matter is not allowed to go out of its sight. To go further, as my noble friend Lord Jessel suggests, and to make Parliament submit this scheme, would, in my view, be unworkable.

I ask your Lordships to consider this further thought. Apart from my general point, that the concept of the Report was that the scheme was domestic to the racing industry and that it seems unsuitable and undesirable that Ministers and Parliament should be concerned in the matter, the scheme for levying bookmakers would have to be drawn up on the basis of detailed knowledge of racing and of the manner in which bookmakers work. That information will be available to the chairman and the independent members, if they are required to adjudicate, but my right honourable friend the Home Secretary, of course, would not have this advantage. He would have no independent sources of information on which to call. I therefore suggest that it would be inappropriate that he should have this task.

I would next take up the other point, and I ask my noble friend Lord Jessel to consider this, as I am sure he will. The submission to Parliament of a yearly scheme for approval would in itself create very considerable difficulties. The levy scheme would first have to be drawn up by the Bookmakers' Committee and would then have to be approved by the Levy Board, on the basis of their intimate knowledge of the industry. It might well be less complicated, and certainly more attuned to the circumstances, than a scheme scheduled in a Statutory Instrument and submitted to Parliament. Perhaps my noble friend would be good enough to look at the discussion following the reply which was made on this point by my honourable and learned friend the Under-Secretary to the Home Office; and I think he will find it dealt with in some detail in the Hansard of another place for December 14, 1960 (Vol. 632 (No. 320, from column 489 onwards.

I put this point to him: that often you will want amendments to the scheme if it is going to work between the two bodies; and, as I say, there will be the adjustments which will come from a complete knowledge of the subject. But, when you have got that, to submit it and have it go through a legislative process in Parliament seems to me again to destroy that flexibility and dependence on knowledge which are the things that will make this scheme work.

4.40 p.m.

LORD JESSEL

My Lords, might I be permitted to interrupt for a moment? Surely, this is happening all the time. For several years I served on Special Orders Committees of this House, and we were constantly approving Orders, either for lump sums or for so much an acre, or something we were asked to approve which had been arrived at by negotiation and with special knowledge, and all that kind of thing. We merely approved the figure. All I am asking in this case is that the total levy which is to be raised in one year shall be subject to Parliamentary approval, either by the Affirmative or the Negative Resolution procedure. I cannot see that it is so difficult.

THE LORD CHANCELLOR

My Lords, I do not grant that the matter could be as easy as the noble Lord suggests; and either Parliament is going to apply its mind to the matter or it is not If it is going to apply its mind to the matter, then it means that the 1,500 Members of Parliament, or, at any rate, those of them who are going to take an interest in the matter, should acquire some knowledge of the reasons which have been put forward, first of all by the Bookmakers' Committee and then by the Levy Board, and they will have to consider the matter through, as I say, research and knowledge. Now, if that is going to be the position, the matter is going to be rediscussed on the floor of Parliament. I put it to the noble Lord: how many of the 1.500 Members of Parliament does he think would be able, under pressure of modern life, to equip themselves with enough knowledge to consider this feint? I do not think it really is a practical proposition. I have considered this sort of thing in many fields, and one of the reasons why I supported and put before your Lordships a change in the law with regard to dealing with restrictive practices was that I did not think it possible, in a modern State, that Members of Parliament could find time to gain the knowledge to consider the pros and cons of that subject.

LORD JESSEL

My Lords, might I ask why we are asked to approve a change in the amount per acre given to farmers for ploughing out every year? Have we all got specialised knowledge of that subject?

THE LORD CHANCELLOR

My Lords, on the ploughing grant, I can only say that I will undertake to find in your Lordships' House 50, 60 or 70 Members who have as great a knowledge of all the aspects of farming, and the effect of that grant, as could be found in any other place in the country. I should not have the slightest difficulty in doing that. But, apart from a few, I think it would be very difficult to find people with a full knowledge of this subject. They would just have to work it out. I think it would be to rigidify something which, at the moment, will be flexibly determined, and which will have the protection, as I said, of the independent members.

I think the other point raised by the noble Lord, Lord Meston, and, I believe, the noble Lord, Lord Jessel, who followed, was the general question whether this was (to use the jargon) an hypothecated tax; that is, that it is really a tax hypothecated for a special subject. do not want to detain your Lordships unduly, but I would remind both noble Lords that my right honourable friend the Home Secretary, who, after all, was Chancellor of the Exchequer for a considerable time, dealt with this subject on December 5 of last year. His report is in columns 883 and 884 of Hansard. Will your Lordships allow me just to quote one sentence of what the Secretary of State said? He said {OFFICIAL REPORT (Commons), Vol. 631 (No. 25), col. 883]: There is, of course, a distinction between tax raised by the State, which should not be hypothecated for a particular purpose, and a statutory levy raised by some body other than the State. We are reminded in another place that the Peppiatt Committee went into this subject in detail, as appears in paragraph 22 of their Report, and they gave as precedents for the levy the levy on cinema takings, the sugar surcharge mechanism, the levy on the cotton industry, and the levy payments under agricultural marketing schemes. They went on to say: None of these provides an exact analogy to what would be necessary for the horse racing industry; but they serve to establish precedents for a statutory levy within a particular industry. My Lords, I think that is the distinction between a levy and an hypothecated tax.

VISCOUNT MASSEREENE AND FERRARD

My Lords, might I interrupt for a moment? From the practical point of view, as the bookmakers are going to be able to set off the levy against taxable profits, I should have thought that the Exchequer are, from the moral point of view, really paying some of it. I do not agree with my noble friend Lord Jessel that Parliament ought to control this payment too much. I think the arrangements which have been made are adequate. I hope the noble and learned Viscount the Lord Chancellor does not mind, but I wanted to point that out. It does appear, from the moral point of view, that the levy is coming from the Exchequer in a roundabout way.

THE LORD CHANCELLOR

My Lords, it is late in the afternoon for my arithmetic to be really flourishing. I hope my noble friend will correct me if I am wrong, but if you deduct the levy in arriving at your taxable income, is not the Treasury only subscribing what would be paid in the tax on that portion of your income, and are you not subscribing the rest yourself? I should not for one moment put my arithmetic against my noble friend's, but that seems to be right. If I am wrong, I hope he will correct me and I will make a simple apology. However, am glad he is with me on the main point, which is really irrespective of that.

My Lords, I have thanked my noble friend Lord Willoughby de Broke for his words. I do not think he has raised any point with which he wanted me to deal at the moment. I believe I have dealt with most of the points which have been raised by the noble Lord, Lord Jessel—if not to his immediate satisfaction, at any rate, I have put them on record and I am sure he will consider them. I assure him that I have considered his point. I have put the difficulty in regard to the ceiling and enlarged upon what I said before on Parliamentary control, and I hope that he will consider these points. I am grateful to my noble friend Lord Astor. Up to the time he made his delightful speech I was quite unconscious that I, or anyone else, had "knocked him for six", but I shall put it among the Parliamentary achievements in which I take a modest pride.

My noble friend Lord Massereene and Ferrard asked about the categories and pointed out that the top category in paragraph 40 of the Peppiatt Report is wide. Of course, it is for the Levy Board, on the suggestion of the Bookmakers' Committee and on consideration, to decide the matter. There is nothing to prevent their making a subdivision in that category, if they should think it right My noble friend then asked about audits. There has to be an independent audit of the Levy Board, but it is not for the Levy Board to constitute an independent audit if the Bookmakers' Committee refuse to accept a declaration by a bookmaker and reassess him. The bookmaker can appeal to the appeal tribunal, which then can make suitable inquiries, if necessary including an audit. So there will not be a general fear of audit, to which I think my noble friend was referring, but an audit will apply in the case of appeal, which, of course, is a perfectly normal process. I was glad to hear the noble Lord, Lord Stonham, say that he thought there would not be many appeals, so that trouble in that field is one within limits.

The question of taxation was mentioned by my noble friend Lord Wolverton, and what he said was right. My right honourable friend the Home Secretary said that the amount of levy would be a permitted deduction. My noble friend Lord Massereene and Ferrard mentioned a second point. The answer is that the tax position of beneficiaries of grants depends on the circumstances of the use to which the money is put. If the money goes to carry on the trade of a racecourse owner, a grant for revenue expenditure would be brought in as a trade receipt. A grant earmarked for capital expenditure would not. A grant to a person not carrying on a trade—for example, a private horse owner—would normally not be liable to tax. This is the normal application of general tax law and no change is made in the Bill. I hope that my noble friend Lord Massereene and Ferrard will not hold it against me if I have given only a general account. Obviously, there are qualifications, as anyone who has had anything to do with tax law knows, but I hope that this answers the general point. It depends upon in what capacity the money is received. In that regard, it is the same as other grants.

My answer to my noble friend's point, that there is one bookmakers' representative against two for the Jockey Club and one for the National Hunt Committee, would be that the Chairman of the Board and the two independent members are there to see that both sides are dealt with equitably. That is the protection that is provided. I hope that I have dealt with all the points my noble friend raised, but I repeat my willingness to discuss any that have not.

My noble friend Lord Swansea raised a point in which, as a former Minister for Welsh Affairs, I have an interest—namely, the position of those in the Council of which he is a member. I do not know that at the moment I can take it much further than I did in my earlier speech. Your Lordships will remember that I said that concern was expressed as to whether the making of grants similar to those made by the Racecourse Betting Control Board applied to any breed of horses other than racehorses. I should like to make it clear that the grant-making powers of this Bill are exactly the same as those available to the Racecourse Betting Control Board at present. I gather from my noble friend that they are getting grants at present, so clearly it will be open to the Levy Board to make exactly the same grants. There is nothing to prevent their doing it.

I also said, and must repeat, that it will be a matter of policy for the Levy Board: it will be within their discretion as to whether grants are made. It would be quite wrong, and contrary to the whole basis on which I have presented this Bill, which was that the Government want it treated as something domestic to the industry, for me to lay down, in answer to a debate in your Lordships' House, what I thought was the right policy. But I can assure my noble friend that it is open to him to try, and if he succeeded it would be open to the Board to give a grant in future. Putting it in another way, I do not think that my noble friend, or the Council of the Society of which he is a member, need worry about the word "horse" in the Bill including pony.

My Lords, I apologise for taking so much of your Lordships' time in answering the debate but I feel that the points raised were all of substance, on which your Lordships wanted answers, and I have done my best to answer them. I hope that your Lordships will now give the Bill a Second Reading.

On Question, Bill read 2^a, and committed to a Committee of the Whole House.