HL Deb 28 February 1961 vol 229 cc37-47

4.14 p.m.

House again in Committee.

LORD DENHAM moved, after Clause 3 to insert the following new clause:

Bookmakers' Accounts

".—(1) The Levy Board may require bookmakers to keep such accounts and records as it may direct.

(2) Such records shall be open to inspectors appointed by the Levy Board.

(3) The Levy Board may require that the accounts and records of bookmakers shall be audited by qualified auditors as defined in subsection (5) of section eight of this Act.

(4) The Levy Board and its agents will be under a similar obligation to preserve the secrecy of the accounts of individual bookmakers as are the Commissioners of Inland Revenue regarding the accounts of individual taxpayers."

The noble Lord said: Like the Amendment I moved previously, this is a permissive clause. We hope that when this Bill goes through everything will be arranged in an atmosphere of reason and agreement, reached without recourse to anything such as is visualised by this Amendment. This Amendment would give a useful reserve power of requiring bookmakers to keep proper accounts and records. This was recommended by the Peppiatt Committee Report, paragraphs 41 and 42.

There is no reflection intended by this Amendment on the honesty of bookmakers, nor is it setting them apart from any other kind of business. In fact, the Amendment would safeguard the honest bookmaker because, as I see it, when the Levy Board have fixed the price which bookmakers in general are to pay, if one bookmaker pays less than his share it means that the others will have to pay correspondingly more than their share. This permissive clause would help the Levy Board to assess the distribution of the burden of the levy between the bookmakers and the Totalisator. It would also be a valuable safeguard in a dispute, and it is difficult to see how the Levy Board could reach the right conclusions without having the power to require records to be kept and shown.

At the moment, I think there is a certain anomaly in the Bill; because whereas, under the Bill as it now stands, neither the Bookmakers' Committee nor the Levy Board can demand to see accounts and books of any individual bookmaker while they are assessing the category into which that bookmaker shall come, the appeal tribunal, under Clause 4 (6) (a), can—or rather it goes further and says "shall"—refuse to reduce the category into which that bookmaker has been placed unless proper facilities are given to them, which presumably includes showing books and accounts. In cases where there is any doubt as to what is the right category for any particular bookmaker to be in, I am afraid that this will lead to the bookmaker's being assessed into a higher category; because whereas you cannot check the accounts of the bookmaker before you assess his category, you can put him into a higher one and leave it to him to appeal to come down into What would in fact be the right one. I think that is wasting a great deal of time, and if the accounts of a bookmaker are available to the Bookmakers' Committee or the Levy Board, or whatever it is—the Levy Board in this case—they can assess immediately in which category he should be.

This clause leaves it open to the Levy Board to stipulate the sort of accounts they require, and I think we should leave that to them. The Irish Racing Board have produced a standard system of bookmakers' records in an approved form, which I am told works completely efficiently. If they can do that in Ireland, presumably we can do it here. This Amendment would not mean that large numbers of inspectors would be needed, because if bookmakers' accounts are audited by qualified auditors it is unlikely that the Board would often want an independent check of the figures. Also, I do not think the Amendment would involve any hardship to bookmakers, because they are now legally licensed and have to pay taxes; and presumably in order to pay taxes they have to prepare and submit accounts to the Inland Revenue for assessment. Therefore much the same accounts could be submitted to the Board.

My noble friend and I sympathise strongly with the desire of many bookmakers not to have their accounts and profits known to business competitors. Therefore, we have added subsection (4), which I think gives this safeguard. To sum up, this is a useful reserve power. It will help justice to be done between the different elements in the betting world, and it wild help the Bill to work more smoothly. I beg to move.

Amendment moved— After Clause 3, insert the said new clause.—(Lord Denham.)

4.20 p.m.

LORD WILLOUGHBY DE BROKE

I must confess that I have far more sympathy with this Amendment, which has been brought forward by my noble friend Lord Denham on behalf of himself and the noble Viscount, Lord Astor, than with the previous one which was moved in their joint names. So far as I can see, the only provision in the Bill as it now stands for compelling bookmakers to produce proper accounts is contained in Clause 4 (6) (a). Is this enough? I rather doubt it. May I quote one case, by way of an amusing and interesting example? I know of a certain bookmaker who has an office in London and another in the country and who bets at most race meetings in quite a big way on the rails. He told a friend of mine that not for one single year since the end of the last war have his accounts ever shown a profit. How on earth are you going, in all fairness, to put a bookmaker of that kind into his proper category—which, in my opinion, knowing him, ought undoubtedly to be the highest category—unless you can get a proper scrutiny of his accounts? I am not accusing anybody of dishonesty, but we all know that there are ways and means for a clever accountant to conceal profits and produce accounts that do not bring the full wrath of Her Majesty's inspector of taxes upon one's head. So I should like to support this Amendment, unless, of course, we can be assured that the Bill as it stands gives the Betting Levy Board adequate powers.

LORD STONHAM

I agree with the noble Lord, Lord Willoughby de Broke, that this Amendment has much more to be said for it than the previous one moved by the noble Lord, Lord Denham. Certainly Lord Denham said everything that could be said for the Amendment—and, if I may say so with respect, said it very well. But I think the Amendment, when you look at it closely, carries within itself the seeds of its own destruction. The noble Lord made the point that subsection (4) of the new clause had been specially inserted so that bookmakers would be able to preserve the secrecy of their accounts. But the Levy Board itself includes a bookmaker, and if a bookmaker's accounts are available to the Levy Board it means that this clause expressly lays it down that there is no secrecy, because the bookmaker will be able to look at the books of his colleagues.

The noble Lord, Lord Willoughby de Broke, cited the man who bet on the rails and was a very big man and never made a profit, and asked what category he should be in. I should class him as a magician, not a bookmaker. Nevertheless, that is an argument against acceptance of this clause, because the Bookmakers' Committee are going to say into which categories they think their colleagues should be put. Obviously, in the case of the man cited by the noble Lord, his friends will know all about him and will see that he goes into the top category. Then, if he objects, he has the right to appear before the tribunal and must then produce his accounts. In effect, what is going to happen is that bookmakers, who know their colleagues pretty well and have a fair idea of their relative standing in the hierarchy, are going to say whether they are A, B, C, D, E, or F. I believe it will be only in a comparatively few cases—and obviously most of them will be genuine cases; I hope they will be genuine cases, though it may be in the case cited by the noble Lord an extremely clever individual who is better at "cooking the books" than most—that they will go before the tribunal and produce accounts.

I should have thought this was another instruction, statutory instruction, to the Levy Board which was really quite unnecessary, unduly restrictive and to some extent hampering. I think this Bill is going forward on the basis of knowledge and good will and co-operation, and it ought to go forward on that basis. Although I understand and fully sympathise with the objects of this Amendment, which were put so well by the noble Lord, I submit that it would not be reasonable to expect bookmakers to publish their accounts in a form not required by any other kind of business. In saying that, I am quoting words used by Mr. Vosper in Committee in another place. In fact, the demands in this Amendment would impose on bookmakers requirements which are not imposed on any other class of trader. That would be unreasonable, and I hope, therefore, the Government will reject the Amendment.

EARL BATHURST

I agree that at first sight my noble friend's Amendment has much to recommend it, but the noble Lord opposite has helped me out a third time this afternoon. The very idea that is behind this Amendment, the idea of inspecting these books and keeping a specific but yet unmentioned type of account, is going to sow the seeds of its own destruction; I think those were the words the noble Lord opposite used. There are 10,000 bookmakers, very approximately, throughout the country, as we have already heard. Some of them are very big men and, indeed, large companies or concerns. Others are small men living on possibly very doubtful margins. Obviously, every single one of these bookmaking concerns has a different type and a different set of accounts because of the difference of each business concern; and where does horse racing, dog racing or football pools begin or end in the course of these business accounts? My noble friend Lord Willoughby de Broke has told us how many different solutions can be arrived at from one set of accounts alone. Multiply this by 10,000.

I cannot but agree with Lord Stonham that the noble Lord's friend upon the rails has really made my case to your Lordships this afternoon. We believe that in any case the effect of my noble friend's Amendment would be a great encumbrance upon bookmakers, and that alone would serve to get ill-will from the bookmakers who are going to be relied upon for the success of the scheme that the Levy Board may bring forward. We believe that it will really divulge little information that is really worth while for the purposes of the scheme, but a great deal of information may be divulged which would be most harmful to the individual interests of a bookmaker or a bookmaker's concern. Therefore, we do not see eye to eye with my noble friend in wishing to compel bookmakers to keep their accounts in the way that he envisages.

I must admit that this departs from the recommendation of the Peppiatt Committee to which my noble friend has referred. But we believe that it would be a cumbersome and onerous scheme to the bookmakers. The Bill obliges the bookmaker to declare to the Levy Board the category into which he himself thinks that he comes, depending upon his previous year's profits. The Levy Board which, as the noble Lord, Lord Stonham, has told us, has a bookmaker sitting thereon, will send those declarations to the Bookmakers' Committee for scrutiny, and the regional committees up and down the country will have a good idea, as again the noble Lord, Lord Stonham, has told us, of what categories the bookmakers in their own localities should come under. Our problem is to devise a procedure to assess the bookmakers' profits and yet, at the same time, provide a fair and just system for the bookmaker to appeal against an assessment without that appeal system being too cumbersome or costly or onerous upon him.

As the noble Lord opposite has also told us, this Bill does not envisage that it is fair for the Bookmakers' Committee to have access to an individual bookmaker's accounts, and we stand by that assertion. If the bookmaker is dissatisfied with his reassessment—it may be a reassessment from the Bookmakers' Committee, or it may be the opinion even of the Levy Board—he has the right of appeal to the appeal tribunal. This appeal tribunal can, if they require it, call for an independent audit of that bookmaker's accounts. They may require all sorts of other information as well, in order to justify seeking the sort of information about which the friend of the noble Lord, Lord Willoughby de Broke has told him. If that bookmaker does not co-operate, then the appeal tribunal may call for his accounts. If he does not produce those accounts, then the tribunal has no right to make the reduction in the assessment which the bookmaker himself may be seeking. We believe that that is the strength of the appeal system written into the Bill.

Under Clause 4 (6) which the noble Lord, Lord Denham mentioned, we believe that all safeguards appear for the bookmaker who shows his accounts, who shows that he is, may I say, "on the level." He can then, if the appeal tribunal decide that there is a right and just case, have his assessment reduced. The authority that is responsible for reviewing the bookmaker's permit must consider (this is written into the Bill, in Clause 5 (2)) whether or not the bookmaker has in fact paid his assessment to the Levy Board. Therefore, it is greatly in the interest of the bookmaker to make quite certain that he has, in fact, paid his assessment.

Another safeguard upon which I hope to assure my noble friend Lord Willoughby de Broke is this. If the bookmaker takes an unfair advantage, or endeavours to take an advantage, in regard to his assessment position he will have a good chance of not being granted his licence to carry on his business as a bookmaker. I think that the ordinary average bookmaker will pay close attention to that. It is only the bad man with whom we shall be concerned. He should he looked after. His case will be looked after by the application of Clause 4 (6), where he is obliged to show his accounts if he wishes for a lower assessment. That man should also remember that he is liable to a higher assessment should his accounts show that that would be a suitable decision.

The Bill makes it possible for the bookmakers to raise a sum. We are not concerned with how that sum is raised, or who pays that sum; we are concerned with the fairness of raising the sum. We believe—this is another facet laid down by the Peppiatt Committee—that the working of this levy scheme should be domestic to the industry, and we therefore believe that the bookmakers themselves, through their Bookmakers' Committee and the branches of their association, should raise the money that is necessary. Only if there is a dispute would these accounts be necessary. We cannot see that we should lay the burden on all bookmakers to produce their accounts, when in fact, so far as the scheme is concerned, it will be quite unnecessary. I hope that I have made clear to my noble friend my right honourable friend's reasons why his Amendment cannot be accepted.

LORD DENHAM

Before the noble Earl sits down, would he just comment on this point. In a case where the Board has to assess the category into which any bookmaker comes, which may happen either because the bookmaker concerned has not submitted a declaration, or because he has submitted a declaration and that declaration is not quite believed, does the noble Earl think it is satisfactory for the books only then to be made available for scrutiny by the appeal tribunal? The Board or the Bookmakers' Committee may well put him in a higher category. Whereas the category can be reduced after reference to the books, the books cannot be referred to before the bookmaker is placed in a particular category. Do I make myself clear?

EARL BATHURST

I see what the noble Lord means. He is worried lest the Bookmakers' Committee should assess a bookmaker, one of their members, too highly and therefore compel him to produce his accounts in order to get a reassessment. We do not believe that there is a danger of this happening. If the bookmakers fairly carry out their obligations under this Bill—in other words, if they submit what they themselves fairly believe is the classification in regard to which they should be considered—then this sum of money will be raised, and there will be no need for the Bookmakers' Committee to instigate any further proceedings. On the other hand, if the bookmaker deliberately puts himself in too low a category, it is true that it will be up to the Bookmakers' Committee to ask for a reclassification, and then the bookmaker's books will be inspected by a tribunal. But I do not think that there will be any great unfairness upon that particular bookmaker. After all, his accounts will not be published in any way to his rivals, and provided he is in the right he should have no great difficulty in persuading the appeal tribunal that in fact his category is the correct one—the one that he says that he should be in. If, however, he is wrong, then the tribunal may well put him to a great deal of trouble; so I do not think the noble Lord need be unduly worried over that position. However, I will look at the point and consider what the noble Lord has said.

LORD DENHAM

I thank the noble Earl for his reply, but I am afraid that I am not convinced by it, because the keeping and showing of accounts will be required only if there is any dispute; and to say that there will seldom be any dispute about this matter is no real argument against our. Amendment, because the Amendment is a safeguard, and is intended only to be used as such. On the point which I have just put to the noble Earl, I am not thinking entirely of the bookmaker. If the bookmaker has been unfairly put in a higher category he has redress; but I am thinking of the fact that, when there is some doubt, it would seem to be necessary for there to be that much more work for the people concerned, as the Board will probably put the bookmaker into a higher category and leave it to him to appeal. As my noble friend has said that he will look at the matter again, I will ask your Lordships' permission to withdraw this Amendment at this stage, but I reserve the right to reintroduce it at a later stage.

Amendment, by leave, withdrawn.

Clause 4 agreed to.

Clauses 5 and 6 agreed to.

Clause 7 [Reconstitution of Totalisator Board]:

EARL BATHURST moved, in subsection (6) to omit the proposed new paragraph (d) and to insert instead: () to make such loans or investments as they judge desirable for the proper conduct of their affairs, being loans or investments either—

  1. (i) such as, under the enactments for the time being in force, a trustee would be authorised to make out of trust funds; or
  2. (ii) approved, or of a description approved, by the Secretary of State."

The noble Earl said: This is a technical Amendment. It is necessary because the Tote has power to lend money to set up totalisators for pool betting on horse racing only. They have no power to invest money for the purposes of their business—that is, pool betting—in any other way. The Betting and Gaming Act, 1960, which comes into force on May 1 next, by Section 11 (3) (d), empowers the Totalisator Board to make loans or investments as they judge desirable for the proper conduct of their affairs. That envisages that the Tote may (I do not say will) wish in the future, when there is the new Totalisator Board, to invest or make loans to other people to set up betting offices or businesses to run a betting office or possibly to make loans, or to invest in a firm who will carry on this particular business of pool betting on race horses on behalf of the Tote, using their copyrighted odds.

The Tote which is, as it were, a semi-nationalised body, is to be restricted to trustee investments. I do not know whether pool betting would be a suitable trustee investment under the new trustee laws. On the other hand, from what I have already said, it may be a much more profitable investment than certain other trustee investments. Nevertheless, this clause was amended in another place, making it possible for the Tote to make investments in other than trustee investments; in other words, possibly for betting offices and businesses of that type. The words of the Amendment which was passed in another place were: wholly or mainly engaged in operations which they themselves"— that is, the Tote. are engaged in". This wording has caused some doubts to the Totalisator Board and they have asked my right honourable friend to consider new wording. This Amendment is the result of that consideration. The effect of the new words to which I ask your Lordships to agree is that the Tote may make trustee investments. If their loans or investments are not of that category, then they need the approval of my right honourable friend to ensure that the proposed investments are proper investments under the Betting and Gaming Act. I beg to move.

Amendment moved— Page 9, leave out lines 7 to 16 and insert the said new paragraph.—(Earl Bathurst.)

LORD STONHAM

Although the noble Earl described this as a technical Amendment, we regard it as a very important and necessary one, which we fully support. I can only say that if Her Majesty's Government had not moved this Amendment, we should have moved it, or a similar one.

On Question, Amendment agreed to.

Clause 7, as amended, agreed to.

Remaining clause and Schedules agreed to.

House resumed.