HL Deb 21 February 1980 vol 405 cc958-90

6.7 p.m.

Lord WIGG rose to ask Her Majesty's Government whether they have any comments to make on the accounts of the Horserace Totalisator Board and the Aglionby Report. The noble Lord said: My Lords, my interest in racing and the betting industry is of long standing, and as the details are well known I am not going to stay long on that point. I must declare an interest. I am Life President of the Betting Office Licensees Association and I became a member of the Horserace Totalisator Board on its formation in 1961, having previously been a member of the Racecourse Betting Control Board.

Tonight, as on every occasion when I have addressed your Lordships on similar matters, the views I express are my own and I speak for nobody but myself. It may help your Lordships if I point out that the history of the Tote and its methods of operation are set out in Chapter 8, pages 62 to 74 of the Royal Commission on Gambling, and in the Second Report of the Select Committee on Nationalised Industries, which reported in House of Commons Paper 344. The Home Office submitted its observations in Cmnd. 7216.

In July last, the Home Secretary appointed Mr. F. J. Aglionby, a Recorder of the Crown Court, to hold an inquiry into the Tote's procedures for the inclusion in its on-course pools of bets made off the course. The Home Secretary said the findings would be published, and on 4th February last the Home Secretary was asked in another place whether he would publish the findings of the inquiry and make a statement. He did neither. He published Mr. Aglionby's conclusion but gave no intimation of the findings of fact and he said nothing, about this own view.

Mr. Aglionby's conclusion was that the Tote's transmission procedures did not involve any breach of any statutory provision or of the common law. I do not stress the question of a breach of the common law, although it should be noted that opinions contrary to those of Mr. Aglionby have been expressed by leading counsel and it is also felt by many that the procedures breached the Theft Act. I shall not pursue these matters, but I am of the opinion that they should be referred to the Law Officers of the Crown for their advice.

However, when it comes to Mr. Aglionby's conclusion that there have been no breaches of any statutory provision, which means breaches of Section 14 of the Betting, Gaming and Lotteries Act 1963, I hold the contrary view very firmly. My judgment is influenced by what happened in 1976, when I reached the conclusion that the Tote Board had not been complying with the provisions of Section 14, and I invited the then Home Secretary's attention to what had happened. He did no more than express his concern.

My interest in the matter led to legal opinions being sought and copies of these opinions were sent to the Home Secretary and to the Tote Board. This led to the Tote amending their rules and to an admission by the Tote that their actions had been ultra vires Section 14(3) of the 1963 Act. Subsequently, the Select Committee of the House of Commons questioned the chairman of the Tote Board on the calculation of pool dividends, and this is referred to in paragraphs 60 to 69 of the report. In answer to a question, the spokesman for the Tote admitted that when the Tote consulted their legal advisers it led to the spokesman saying, We discovered during the course of this that the Tote had never been doing what it ought to have been doing absolutely correctly about pools.

The Home Office, when it published its observations on the Select Committee's report, stated in paragraph 35: It is generally accepted that the way in which the Tote now calculates its dividends is in accordance with statutory requirements ", and in paragraph 36 the Home Office said: The Government is confident that the Tote will, in future, do everything in its power to keep the public fully informed. It is against that background that Mr. Aglionby's findings, that there has been no breach of Section 14, must be judged.

I invite your Lordships' attention to an answer given by the chairman of the Tote Board to the Select Committee, when asked about the way in which the Tote odds are calculated. He said that he was going to ask his deputy chief executive to make a statement because, It is almost in the realm of senior wranglers as to how this is worked out.

The average punter is not a senior wrangler, but he is entitled to know how the dividend is calculated and what deductions the Tote makes. These should be predetermined and the details should be made known to the public. Indeed, the Select Committee asserted in paragraph 64 of their report, that the basic principle must be to observe that the punters have a right to know at all times the basis on which they are wagering their money.

The Tote is, however, under a statutory obligation to distribute the whole of the balance among those who have made winning bets, for Section 14(3)(b) states that the Totalisator Board shall, cause the whole of the remainder of that amount to be distributed among the persons making such of those bets as are winning bets.

This provision was most certainly breached for bets, according to Mr. Aglionby, were included in winning pools which bore no relation to bets made by winning clients and which were inserted into the pool to reduce the dividend artificially. One thing is sure. It is most certainly ultra vires Section 14(3) for an individual, be he the chairman of the Tote Board or an official, to alter dividends on the basis of his personal decision.

Although Mr. Aglionby decided that the Tote's procedures did not breach the provision of Section 14, he described the omitting of losing money from the pool as a malpractice, and the procedure of transmitting to the pool further bets which bore no relation to the bets received from clients, and which were intended to reduce the dividend artificially, as an improper practice. Mr. Aglionby also found that the chairman and members of the Board, the chief executive and other senior officials were ignorant of the abuses that occurred. I do not dissent from this view, but what, then, becomes of the Totalisator Board's responsibility—and I repeat that it is mandatory—for carrying out the provisions of Section 14 of the Betting, Gaming and Lotteries Act?

In my judgment, at this point the Home Secretary becomes responsible, for the Aglionby Report establishes that what happened in 1976 had most certainly been repeated in 1979. It was for this reason that I put to Her Majesty's Government the question of whether they would seek the opinion of the Law Officers of the Crown. I got a dusty answer. That did not surprise me, for the attitude of the Home Secretary and, for that matter, of his predecessor, in, relation to the operation of the Betting, Gaming and Lotteries Act and related legislation is to see nowt, hear nowt and know nowt, in the fond hope and belief that eventually all will be forgiven and forgotten.

The responsibility of the Home Secretary for the affairs of the Tote is limited to appointing the chairman and members of the board, and to receiving through the Levy Board the Totalisator Board's report and accounts, which he lays before each House of Parliament. The Select Committee, in paragraphs 44 and 127 of their report, recommended that this practice should be discontinued and that the Tote's annual report and accounts should be submitted direct to the Home Secretary. The Home Office, in paragraph 30 of its observation, accepted this recommendation and undertook to introduce amending legislation. Nothing has been done.

The Select Committee also recommended, in paragraphs 36 and 127, that the accounts of the Tote's subsidiary companies should be shown separately from the board's accounts, in accordance with current Companies Act procedures. Moreover, in paragraph 90 of their report, the Select Committee also recommended that a careful check should be kept on the board's report and accounts over the next five years. This was in 1976. The Government agreed, in paragraphs 32 and 33 of their observations, and said that a careful check should be kept on the board's report and accounts, but asserted that there would be presentational problems in showing the accounts of the subsidiary companies separately, and pointed out that these accounts are available at Companies House.

It is agreed that the problems associated with the accounts would be comparatelively easy to understand if the accounts for the four subsidiary companies were available at Companies House. But the accounts to 31st March, 1977, were not filed until 4th August, 1978, and the accounts to 31st March, 1978, were not filed until 6th June, 1979. The accounts up to 31st March, 1979, had not up till last week yet been filed.

In this connection, I invite attention to paragraph 46 of the Select Committee's report, in which they said: We are concerned at the apparent indifference with which the Home Office regards the element of risk inherent in the Tote Board's operation, and particularly in its necessary but very heavy investment programme over the next five years.

I share this view, for it underlines the failure of Her Majesty's Government and, for that matter, their predecessor, to show any sign of understanding the importance of the Select Committee's recommendations, and I invite attention to the Tote's investment programme in connection with its mechanisation plan.

The original investigations started in 1973–74; contracts were placed in 1976, the estimate of the project then being £2 million, and it was planned that the new betting terminals should be operational by midsummer 1977. In 1976–77 the cost of the system was found to be underestimated and a figure of £2,959,000 became the new estimated total. Then it was found that the time-table for field trials had proved to be inaccurate and trials would begin at the end of 1978. In 1978–79 the estimated total of the scheme had increased to £3,504,000 and the annual report for 1978–79 stated that all the hardware necessary had been assembled, but serious difficulties with the software continued to delay the starting date. No indication has been given as to when the scheme will be put on trial and when it will become operational.

It should also be noted that the Tote Board took the decision not to depreciate or write off any of the expenditure until the situation had come to light. It is very important to note that in recent years technology has undergone great changes so that obsolescence and significant cost reductions should surely have been taken into account and a cautionary depreciation charge should have been made. This has not been done. In order to meet the cost of on-course mechanisation, the board negotiated the sale of freehold property, which I presume was the Euston Road offices which had been purchased out of the pennies saved from revenue by the old Racecourse Betting Control Board, of which I had a been member. It produced a sum, after taxation, of £1,301,000.

Turning from mechanisation to the question of Tote profits, a subject of some propaganda and details of which are shown in Table 8.1 of the Report of the Royal Commission, the highest real profit made by the Tote since its establishment in 1961, before levy and tax deductions, was in 1963–64 which, at current prices, was £4.4 million. The highest real profit, after levy and taxation, was in 1961–62 which, at current prices, was £1.97 million. As the accounts for the subsidiary companies are not fully available at Company House, it is not possible to understand the more recent accounts. It can be stated, however, that the net profits before taxation of the off-course operation was, in 1975–76, a profit of 0.3 per cent. In 1976–77, it was a loss of 1.1 per cent., and in 1977–78 the profit was 0.6 per cent. These figures can be compared with the average profits of betting offices right across the board of 2 per cent., and these figures are based on Table 6.7 of the Royal Commission's Report. An examination of the last filed accounts of Tote Course Limited at Companies House show that for the year ended 31st March 1978 the Tote made a loss on-course of £106,447.

The Tote's accounts, and its subsidiaries, at 31st March 1979 showed an income from interest of £164,000. In addition, the acquisition of betting shops cost £1.9 million, which was met by a bank loan of £1.2 million, repayable by instalments over seven years. Bank overdrafts at the end of March 1979 amounted to £700,000. There will therefore be a considerable impact caused by the move from interest receivable to interest payable and this, of course, will be made the harsher by the current high interest rates.

I have already pointed out that the property in Euston Road has been sold to help meet the cost of mechanisation, but in addition to this the Tote's property in New Bridge Street, Bridewell Place and Bride Lane which originally belonged to Tote Investors, which was purchased by the Tote when Sir Alexander Sim was chairman, has been pledged to Lloyds Bank.

So the Tote's accounts, as I understand them—and I stress I am not an accountant —is a picture of a switch in emphasis from sponsored pool operations, operating in accordance with the Betting, Gaming and Lotteries Act, to bookmaking operations carried on through four subsidiary companies, the accounts of which are not submitted to Parliament. A mechanisation programme has been undertaken without an allowance for depreciation. Properties have either been sold or pledged to the Tote's bankers and the Board has moved from a position where it receives income from interest on investments to a point where it is paying heavy interest charges on an overdraft.

I believe the Tote's policy to be basically unsound, and in my opinion the Home Office is unwise not to take notice of the Select Committee's observations in paragraph 46 that the Government would be required to shoulder financial responsibility should the Tote Board's policies not work out in practice.

I do not press the Government to say anything tonight or, indeed, to do anything. The Tote's history and the changes in policy which followed the passing of the 1972 Act are fully dealt with in chapter 8 of the Report of the Royal Commision on Gambling and the Report of the Select Committee. The Home Secretary has chosen to put the Report of the Royal Commission on the shelf, at least for the time being, but I thought your Lordships might be interested to note that, followiing a debate in the House of Commons on 29th October, Lord Rothschild, the distinguished chairman of the Royal Commission on Gambling, wrote in somewhat bitter terms to The Times, on 5th December 1979, when he said: The Royal Commission on Gambling recently had conferred on it a great honour—a debate in the House of Commons lasting no less than six hours—to polish off our two years' work and 304 recommendations, none of which, needless to say, have been implemented though a number were quickly rejected ".

After reading the debate Lord Rothschild wrote, I imagined a conversation between two civil servants in the Home Office, the sponsoring department. 'George,' said one, 'I think it would be useful to have a brief debate about gambling in the House, opened of course by the Home Secretary; after which we can bury the subject almost indefinitely. We can arrange for him to make some nice noises about the Commission and the debate itself will placate those baying for action. We shall, of course, be able to use pressure of legislative time and public expenditure restrictions as reasons for what I might call postponing consideration of the commission's undesirably large number of recommendations ' ".

My Lords, when Lord Rothschild mentioned "George" he was not referring to me, but I agree wholeheartedly with what he said, and it is for that reason that I trouble your Lordships tonight.

6.30 p.m.

Lord TREVETHIN and OAKSEY

My Lords, I find myself both relieved and a little puzzled because I had not expected that the noble Lord had come to praise the Tote; I expected him to attempt its burial in a rather different manner. However, as I am afraid many of your Lordships know all too well, I am myself a deplorably inaccurate forecaster of the future and, happily, the noble Lord, Lord Wigg, can occasionally be almost as inaccurate himself. On at least one occasion in the past he has seemed to know almost as little about the health and potential future of the Tote as I do about the likely winner of the 2.30 at Kempton Park tomorrow.

Less than two years ago the noble Lord told your Lordships as, in different words, he has told you tonight, that the Tote would shortly be bankrupt. Under their present direction"— he said— the only place they can possibly can up is Carey Street". What had aroused his ire on that occasion was the Tote's purchase of a group of betting shops called Benfield, and the noble Lord asked: What chance can the Tote have if they cannot make a profit out of pool betting, where you cannot lose? What chance can they have competing with bookmakers when they buy a chain of betting shops for a price which none of the big four are prepared to pay? Of course there must have been an element of truth in that, because when two people want something it is not all that unusual for one to outbid the other. The question is whether or not the successful bidder has paid too much; and that, with respect, was where the noble Lord's predictions, like so many of my own, came unstuck.

Let us look briefly at the figures in the next comparable financial period after the Tote bought the Benfield Group, for, I believe, £1.8 million. Whether that was very much more than the big bookmakers were prepared to pay or a little more, I do not know; but the question is, of course, whether the highest bidder paid too much. Since under the Tote the turnover rose by 25.68 per cent. and the profit by 132 per cent., giving a return on investment of 24 per cent., I do not think there can be any doubt that the Tote on that occasion made a wise investment. Indeed, there may be many on both sides of the House who would wish that some other nationalised industries would get on the same path to bankruptcy.

Of course, I cannot follow the noble Lord through the pathways he has trodden so ably. I certainly do not know the immediate future of the Tote's mechanisation plans. I know that they ran into snags and I know, as he has said, that they are going to be extremely expensive. But what I do know is that with one exception, which I will come to presently, the Tote has prospered since its present chairman took over the management. I think your Lordships will hear the full figures later, but with that one sad exception it has prospered.

I said that I wished other nationalised industries would follow its example. Someone might well have said, "Yes, but other nationalised industries do not cheat; they do not fix the books ". Well, no one can deny that the recent past has been a traumatic and tragic period for the Tote. No one can deny, and no one should attempt to minimise, the seriousness of the malpractices which Mr. Aglionby revealed; and no one, incidentally, should deny credit to the Sporting Life and its tireless bloodhound, John McCririck. His cry may be somewhat shrill for some tastes and I believe that quite often he overruns the line, but there is no doubt that he has done a service to racing and particularly to the punter; and although I do not suppose he would figure too high on the list of beneficiaries in Woodrow Wyatt's will at the moment, I believe that in the long run he has also done a service to the Tote. But, as I said, he and the Tote's other assailants do tend to overrun the line, and I believe that their reaction to the Aglionby Report is a good example of that.

I do not minimise the seriousness of what Mr. Aglionby discovered, but they were only a small proportion of malpractices in the transmission of bets which controlled—and in these 14 cases depressed—the dividend. I say "a small proportion". I know there are those who say that this is only the tip of the iceberg. With respect, that argument is nonsense and does no credit to Mr. Aglionby, who not only had all the evidence he wanted—and no doubt a lot that he did not want—but his ears were open throughout and the criteria under which he decided which pools should be examined in detail by his accountants were sensible, clear and, in my opinion at any rate, perfectly adequate. So I do not believe that the "tip of the iceberg" argument has any strength.

He found that there had been no offence against the statutory law or against the common law. One might well find that surprising, but so far as I can remember from my days of long ago, of doing Part I of the Bar exams, I do not believe that your Lordships would wish or be able to overturn his finding at the moment, and I certainly accept it.

I also accept as being more important his finding that neither the chairman nor the board nor the chief executive knew what was going on. Your Lordships might well ask: "Does that prove incompetence?" I do not believe it does —nothing like it. There was no reason why they should know what was going on. Certainly they did know, and should perhaps have been aware, of the danger; they did know the system of transmission which gave Tote Credit, the bookmaking branch of the Tote, the opportunity which some of its employees took through, as Mr. Aglionby found, misplaced enthusiasm. They did not gain; they merely wished to prove that they were doing a good professional job in those cases.

The reason why the Tote Board could not possibly have recognised those 14 cases was that they did not produce exceptional dividends. The depression was not exceptionally low; certainly the starting prices in the forecasts had been high, but the dividends were still higher than the bookmakers' computer straight forecast dividends—which are incidentally computed by a method which I could not explain to your Lordships even if I knew it—after the results. The fixed dividends of the Tote were always higher than those bookmakers dividends. So that seems to me to be a strong reason why the executive could not possibly have recognised what was going on.

In the chairman's case, he certainly would not have understood or appreciated the motive of those who were depressing the dividends, because from the first, since he took over the Tote, he, like any other pool operator, has longed for what I everybody, from Littlewoods to an old lady running a bazaar for the Women's Institute wishes, which is for someone to win a great deal for a little. That is the point of Totes and pools, and Woodrow Wyatt had from the start wanted the big bonanza dividend. He would not have understood the motives of those who depressed the dividends to make it seem that they were doing a better job as bookmakers. He would not have understood and if he had known he would have required their guts for garters. Well, now he does know, and the transmission system under which those malpractices took place has been corrected. It is in that sense that I believe the whole dismal episode will have done good for the Tote.

The chairman has been accused of other things, one of them a happy one, getting 50 to 1 about Troy seven months before he won the Derby. I am sure there are some of your Lordships who, like me, have been "mug" punters and "mug" ante-post punters, and you will know that in the seven months before a Derby or indeed in the seven days before a Derby, or sometimes in the seven minutes before a Derby, there is many a slip, at least 50 slips, betwixt your bet and the winning post. The chairman of the Tote thought it right that he should bet, and the Tote and its board are certainly allowed to bet; I think it is open to argument whether it is advisable for them to do so, but the chairman believes that he serves a useful purpose by his small bets because they help him to know his job and to learn the requirements of his customers. They give him ideas, including a very good one called the "placepot". Unable, as he found, to get the jackpot, in which you need to name all six winners, he thought of the idea of trying to name six horses for a place, and that in itself is quite difficult enough. But it was a good idae and betting gave it to him. So although the propriety of the board betting is, in my opinion, questionable, they have decided that they should bet and can bet, and if you can bet there is absolutely nothing against you asking on behalf of a friend what price the tote is laying against Troy and taking it.

The other accusation against the chairman, as he admits, is that he fixed several dividends at Royal Ascot in 1976; well, in fact, he did raise one dividend because, horrified by the deplorable results which the Tote was producing compared with starting price, he felt that, with Royal Ascot being the most important shop window of the racing year, it was vital that it should be better. I would not pronounce on whether he made a good business decision that day, but it was only a business decision. It is within the powers of the Tote to increase or reduce the deduction they take from the pool at any time. He reduced it, and thereby increased the dividend.

I am not sure of the effect of that action on bookmakers who had been taking bets off course. Yes, I am sure; it lost them money. But there is a legal loophole in the authority they sign which relieves the Tote of responsibility for that. Nevertheless, I feel that it was a mistake. believe that the chairman probably feels now that it was a mistake. Happily, having revised the system of deductions from the pool and made it now a flat-rate deduction, which the punters do know—the noble Lord seemed to me to suggest that the punters do not know the rate of deductions from the pools; they are known, and they are now a flat-rate which is not varied up and down by senior wranglers—there will never be the need to make adjustments to the pool again, and it will certainly never be adjusted wilfully by employees of the Tote.

Therefore, I hope that your Lordships will be able not only to forgive but also to forget the unhappy episode through which the Tote has passed, because in every other respect I believe—and here I suppose I differ from the noble Lord—that it is healthier, stronger and more helpful to racing than ever before. On course it is supplying a priceless service, because there are many people who hate the hurly-burly of the silver ring and far prefer to bet with the Tote. I hope the noble Lord is wrong in his pessimistic predictions of the cost and effect of the mechanisation programme. I hope it will go through quickly, and I certainly hope that those who have used the recent distressing episode as an excuse to bay for blood, in particular the blood of the Tote's present chairman, will stop baying and will congratulate him on the fine job he has done in reviving and inspiring what had begun to look like a moribund nannygoat.

Lord WIGG

My Lords, I understand the noble Lord referred to me in relation to Benfield. May I just put him right. The purchase price was not £1.8 million; it was £l.9 million. I would have been only too happy to go into the details of Benfield, but I did not want to trouble the House with particular cases. But on that, like so many other things he said, he is quite wrong.

6.47 p.m.

Lord AIREDALE

My Lords, I am very pleased that the noble Lord, Lord Trevethin and Oaksey, has so eloquently emphasised the credit side of this matter we are discussing, because of course when there is a pretty serious debit side it is only right that the other half of the picture should be eloquently presented, and the noble Lord has done that so well.

Before embarking on the not too long speech that I had prepared I should like to come in on almost the last words that the noble Lord, Lord Trevethin and Oaksey, spoke, and say that, in the light of yesterday's Committee stage of the Competition Bill, which was all about unfair compeition, it seems to me quite extraordinary that the chairman of a Totalisator Board could contemplate studying bookmakers starting prices and decide to declare a Tote dividend which did not represent the dividend as it would otherwise have been worked out but was to be a dividend which would compete with the announced starting price of the bookmakers. What the chairman ought surely to have borne in mind on an occasion like this was that it is not open to the bookmakers to withhold their starting price until they can discover what the Tote dividend is going to be and then adjust their starting price so as to compete with the Tote. If ever there was an example of unfair competition, there, my Lords, you have one.

I had not intended to refer to that matter at all. I had proposed to start by saying to your Lordships that a bet with the Tote has one of the features of an insurance contract. It is a contract of utmost faith. What I mean by that is that if you go into the hurly-burly, as the noble Lord calls it, of the ring, and you strike a bet with a bookmaker, you know at that moment what you stand to win. But, if you are perhaps an occasional race-goer, or indeed if you are a woman, you may not enjoy the hurly-burly of the ring, and you may much prefer the calmer atmosphere of the windows at the Tote. When you place your bet with the Tote you are reposing your utmost faith in the integrity of the Tote. They calculate your winnings behind closed doors. They announce what your winnings are, they pay you that sum and that is that.

There are two quite obvious temptations to anybody running any kind of a pool. The first is to withhold losing bets from the pool. The second is to make bogus winning bets and put them into the pool. It really is very distressing indeed to find that Mr. Aglionby has found that this public monopoly, under the supervision of the Home Office, has been permitting—in the sense of not preventing—its employees, not once, but on a number of occasions, to yield to both of these temptations; both withholding losing money from the pool and putting bogus winning bets into the pool.

We have been directed by the noble Lord, Lord Wigg, particularly to the accounts. There is one item of the accounts which I would like to mention, because it highlights an aspect of this matter which I do not think, so far, has been generally understood. The Tote, in exchange for fees from bookmakers, give bookmakers authority to bet with any of their clients who wish the facility, to bet with their bookmakers at Tote prices. I understand that the annual revenue that the Tote is receiving in fees for granting this facility to bookmakers is in the region of £387,000 a year. That must indicate a very strong and widespread desire among the clients of bookmakers to bet with the bookmakers at Tote prices. I have no doubt that the bookmakers contrive to pass on the £387,000 a year to their clients.

It must surely be an implied condition in this bargain with the Tote that the Tote will ensure that the pools are run straightly and honestly and that the dividends declared are proper dividends; because otherwise when these malpractices arise, on which Mr. Aglionby has been reporting, not only has the Tote been unjustly enriching itself at the expense of its own clients, but bookmakers all over the country have been unjustly enriched at the expense of their clients. So, these dishonest practices by Tote employees have had ramifications far beyond the Tote itself and its own organisation.

There has been a most lamentable and distressing lack of vigilance on the part of the Totalisator Board. There is no escape from that fact. One has to ask oneself: What happens in cases like this in the harsh world of private enterprise? Supposing a food canning company allowed a tin of baked beans containing a bath-plug to get into the hands of a housewife? Does it avail the board of directors to say, "We did not know that this practice could happen"? The offence is lack of vigilance—failure to see that it does not happen. If you fail in that regard you are prosecuted, quite properly under the Food and Drugs Acts.

The DUKE of DEVONSHIRE

My Lords, I should like to interrupt the noble Lord. He has made a very strong statement talking about dishonest practices. I am a member of the Tote Board and I challenge him to repeat what he has said in the unprivileged parts outside this House.

Lord AIREDALE

My Lords, I do not think that the noble Duke really understood what I was saying. I was talking about lack of vigilance. There is no question at all of the Tote Board itself having any knowledge of dishonest practices, just as there is no question of the food canners' board of directors having any dishonest knowledge at all. I am talking about lack of vigilance. I am saying that, if the food canner in the private enterprise sector, is to be prosecuted for lack of vigilance in a case like that, what is to be done with the Totalisator Board?

It is then said on behalf of the Tote Board, and quite properly said, "We have strenuously sought to recompense all those who were cheated by these dishonest practices of our employees and no harm has been done." The food canner can say, "We replaced that tin of baked beans with a more hygenic specimen and no harm has been done ". However, that will not enable them to escape a prosecution under the Food and Drugs Acts.

This country leads the world in rather fewer fields than perhaps it once did. But when it comes to horseracing, I do not know that I can quite say that we lead the world, but in Royal Ascot we have something which cannot be matched anywhere else in the world. If something irregular occurred with the Tote at Royal Ascot that would seem to me to be a very sad affair. This is really a rather serious matter, I should have thought, for the Home Office. The Home Secretary appoints a board which fails to exercise proper vigilance. What is the Home Secretary going to do about it?

As to the lack of vigilance, a sidelight upon that matter is thrown up by paragraph 7 of Mr. Aglionby's findings where one reads: The abuses arose out of misplaced enthusiasm by some employees of Tote Credit Limited who took improper advantage of opportunities presented to them believing that it was in the Tote's interest to depress dividends. High Forecast Pool dividends are in the Tote's interest but this was not appreciated by those employees who were all experienced in starting price betting practices and applied them to pool betting."—[Official Report, Commons, WA, 4/2/80; col. 2.] For heaven's sake! how long did you have to work for the Tote in the money transmission department before the board got around to having it explained to you what practices were in the Tote's best interests?

As regards the Home Secretary's attitude to this matter, I refer your Lordships to his Written Answer on 4th February 1980. Having set out Mr. Aglionby's findings, the Home Secretary says: The Chairman of the board has also assured me that all necessary steps have been taken to ensure that the staff adhere to the new procedures." —[Col. 3.] Is that all that the right honourable gentleman is going to do? Having been badly let down by your appointees on one occasion, is that all that you are going to do? Is there no other security department at the disposal of the Home Office to go in, not once, but from time to time, and make absolutely certain, from an independent point of view, that the Tote's new procedures are being properly observed?

My final point is this. Unless the Home Secretary is seen to be taking this matter very seriously indeed, people will start asking: If the Home Office cannot even appoint members to a board to exercise proper vigilance, how clever are the Home Office at supervising some of their other responsibilities over other bodies over which they have jurisdiction?—such as ensuring that laboratory animals are properly protected from cruel experiments. There may be absolutely no suggestion that anything like that could be the case, but unless the Home Secretary is seen to be acting with the utmost firmness in a scandal of this kind, people will ask those questions.

7.1 p.m.

Lord HARRIS of GREENWICH

My Lords, it would be right for me to begin by declaring an interest. It is all the more proper to do so on a day when the noble Duke, the Duke of Devonshire, managed to do so on no fewer than three occasions in a period of five minutes. Therefore, I do so. The chairman of the Tote, Mr. Wyatt, has been a friend of mine for 20 years. It is right to say this because Mr. Wyatt, and his record as chairman, is central to the debate today and also to a great deal of the campaign which has taken place outside this House.

The noble Lord, Lord Wigg, who introduced this brief debate today, has always demonstrated a very keen interest in the racing industry. His knowledge is certainly a great deal more profound than mine, as I recognised during a debate we had in the course of the Committee stage of the Welsh devolution Bill, when I had the less than attractive task, sitting where the noble Lord. Lord Belstead, now sits, of defending the then Government's proposals for betting in Wales against the criticisms of the noble Lord, Lord Wigg. It is only fair for me to say that, to put the matter as generously as possible to me, I do not think that I got exactly the better of that argument.

Again today the noble Lord, Lord Wigg, has demonstrated his detailed knowledge of the industry, and he has very properly declared his interest in and his personal involvement with bookmaking. It is very proper for him to have done so, for the position of the bookmakers is highly relevant. There are, of course, the competitors of the Tote. As the noble Lord indicated, today he spoke entirely for himself. In the past the bookmakers have rather been able to patronise the Tote; it was not even remotely in their league. With the arrival of Mr. Wyatt as chairman in 1976, it is right to recognise—and this again lies at the back of some of the argument which we have heard in the last few months—that the situation changed quite substantially.

In 1977, his first year as chairman, the profits of the Tote amounted to a mere £207,000; in 1978 they rose to over £1 million; and in 1979 to £1,335,000. When he became chairman the Tote's total contribution to racing was £500,801. The next year it was £625,000; in 1978–79 it was £988,000 and in 1979–80 it is estimated to be in the region of £1.3 million. During the same period the number of people employed at the Tote's Head Office and on the racecourse declined from 486 to 239, over a 50 per cent. reduction. I very much wish—and this echoes a point made by the noble Lord, Lord Trevethin and Oaksey—that other areas of our public affairs had been conducted with anything approaching the same degree of high ability.

It is fair to say—and I think one had a slight hint of this from the speech of the noble Lord, Lord Wigg—that he has not altogether been a total and unqualified admirer of the Tote during this particular period. Indeed, I remember the exchange that we had in 1978, which I am sure is very fresh in the mind of the noble Lord, Lord Wigg, because the noble Lord Lord Trevethin and Oaksey, referred to it. Perhaps I could refresh the noble Lord, Lord Wigg's memory. It shows that even he can sometimes get it wrong. In an exchange that we had during the debate on gambling the noble Lord, Lord Wigg, said at columns 584 and 585 of the Official Report of 13th December, 1978: I forecast that sooner or later, as a result of the policies they are adopting, the Tote cannot fail to end up in Carey Street,"—

Lord WIGG

My Lords, if I may interrupt the noble Lord?

Lord HARRIS of GREENWICH

My Lords, I should not like the noble Lord, Lord Wigg, to interrupt his own speech, because it is only right that the whole House should have the opportunity of being reminded of what he said on that occasion. I will begin the sentence again: … the Tote cannot fail to end up in Carey Street, because, if they cannot run pool betting, in which they take no risks but simply take a cut out of the pool—in other words, they cannot lose —and make a profit under the present dispensation, what are their chances of running the business of bookmakers when they are paying betting shop prices that none of the Big Four would pay?

Lord WIGG

My Lords, I did not want to interrupt the noble Lord so that the House would not hear my remarks; I wanted to help him. What I said then, I say now. What I said is absolutely correct and my analysis shows it. What the noble Lord has done is to make a comparison on a basis which is utterly and completely false. He relates profit without taking other things into account, including money invested, the investment and, in fact, the interest charges that have been paid on it.

Lord HARRIS of GREENWICH

My Lords, I am glad that the noble Lord maintains his position—rather, I would not say that I am glad that he maintains it, because I regret to say that he maintains it against all the evidence. Nevertheless, I note that he maintains the position which he adopted in 1978. It is quite interesting to study what happened in relation to these betting shop acquisitions. Again, the noble Lord, Lord Trevethin and Oaksey, alluded to this and I should like to do so also. When the present chairman began acquiring betting shops there were, I think, 125. Now there are 243, but as the noble Lord indicated, the return on capital is 25 per cent. gross.

Lord WIGG

My Lords, no.

Lord HARRIS of GREENWICH

My Lords, I wish that the noble Lord, Lord Wigg, who was heard without interruption, could sometimes manage to control himself rather more successfully and not interrupt others from a seated position. I should like to continue. In the year that Mr. Wyatt became chairman of the Tote, those betting shops, to which I referred a few moments ago, were making a loss of some £250,000 before Head Office expenses. The comparable figure now is a profit in the region of £1 million.

The headline following this in the Sporting Life, referring, of course, to the speech made by the noble Lord, Lord Wigg, was: Tote will end in Carey Street, says Wigg". As the noble Lord, Lord Trevethin and Oaksey, again reminded us and as I indicated a few moments ago, it is indeed unfortunate that other elements of our public life have not ended up in Carey Street in the same rather satisfactory fashion as has the Tote. As I think I have indicated, at the beginning of his speech the noble Lord, Lord Wigg, said something to the effect that the figures of profits and so on were part of propaganda put out by the Tote. Certainly there is a fair degree of counter-propaganda, if I may say so, which has been put out outside this House by the representatives of the bookmaking interest, who are very powerful and, if I may say, who have apparently some quite close friends working on the staff of the Sporting Life. I think it is right to remind the House of those facts before we come to the question of the Aglionby Report.

The noble Lord, Lord Oaksey, referred in his speech to malpractices. Certainly that report indicated that there had indeed been malpractices. He found that some employees of Tote Credit Limited took action designed to reduce artificially the dividend. This "improper practice", as it was described, occurred in 15 out of 697 Forecast Pools. In addition, bets laid off by outside bookmakers for inclusion in the pool were placed with Tote Credit Limited for onward transmission to the course after the results of the race. This opportunity, Mr. Aglionby concluded, was misused because not all losing bets were put into the pool. This in fact was done in six out of 995 win pools examined.

Mr. Aglionby also pointed out—and this has been referred to—that there was no question of personal corruption being involved. He said that none of the various malpractices arose from a desire for personal financial gain, and no individual in the Tote benefited as a result. He added—and again this has been pointed out—that the chairman and the members of the board and the chief executive were unaware of these improprieties, and part of the reason for that was again explained by the noble Lord, Lord Oaksey, in his speech.

However, I do not think it is possible, or desirable, in any way to minimise the seriousness of this matter. I think that there has indeed been damage done to the Tote as a result of these acts of folly, disinterested though they may have been, by its employees. Its reputation has undoubtedly been damaged, and this inevitably has not caused too much grief among some of the great bookmaking firms, particularly at a time when the activities of some of their employees in their casino divisions have received spectacular publicity in the Press as a result of court proceedings. Not, I may say, spectacular publicity in the columns of the Sporting Life—a matter in which at some stage, I suspect, the senior management of the International Publishing Corporation would perhaps like to take a rather careful interest, given, I am sure, their desire to maintain the highest standards in one of their own publications.

I think that to most reasonable people the Aglionby Report should have been an end of the matter. May I say with great respect to the noble Lord, Lord Airedale, that if this had been in the form of private business, given the fact that there was no breech of the law—a matter touched on by Mr. Aglionby—there would have been no such report or inquiry in the first instance. A Crown Court Recorder appointed by the right honourable gentleman the Home Secretary has examined the evidence, and his conclusions have been published. Why then, I wonder, does this debate continue?

Many of the critics—although indeed it is only fair to say not the noble Lord, Lord Wigg, today—have said, "That is all very well, but why shouldn't the whole of this report now be published?" There have indeed been demands for this to be done. But of course we all know precisely why it has not all been published. Let the Sporting Life, which has campaigned so assiduously and, in my view, perfectly properly for such an inquiry, provide the answer. Just a week after the right honourable gentleman the Home Secretary had announced that there would be an inquiry it published a report headlined: Tote Inquiry: Fear of Repercussions ". I quote from the report in the Sporting Life: A number of Tote employees, wishing to appear, are holding off for fear of having their names revealed. It is quite clear in that situation what would have been said by the Sporting Life, and possibly perfectly reasonably by others, if in fact there had not been a guarantee of confidentiality. The critics would have said, "Well, the whole inquiry is absolutely worthless;" that, of course, members of the Tote staff, who possessed detailed and possibly damaging information, had not come forward because they feared that if they had done so their careers at the Tote would have been jeopardised. That being so, it seems to me wholly sensible that the guarantee of confidentiality should have been given.

As a result of it a number of people came forward and gave evidence which it is possible some of them would not have been prepared to do if that guarantee had not been given. Now it is suggested, again by some of the critics though, I repeat, not by Lord Wigg, that this guarantee should be breached. Why? Why should a commitment given by an eminent barrister be disregarded? I believe that it would be totally dishonourable to do any such thing. But it would not only be dishonourable, it would also be entirely self-defeating, because if such a guarantee was torn up after an inquiry of this character as a worthless piece of paper, would anyone ever again believe any similar guarantees given by those conducting future inquiries into other areas of our public life?

What did the noble Lord, Lord Wigg, say in his speech this afternoon in addition to the point I have referred to? He had, of course, some rather disobliging things to say about the record of the chairman of the Tote, Mr. Wyatt, although he did not mention him by name—and of course there was no obligation on him to do so. He did not think much of his record—which is a little surprising, as virtually everybody else seems to have a high regard of his record as chairman; but it is fair to say (and this is again part of the reason for some at least of the commotion that continues) that Mr. Wyatt does indeed possess a substantial number of critics, and not only in relation to his racing activities. He is a man of strong opinions. A few of those coincide, just to take an obvious example, with those of the noble Lord, Lord Wigg. He is a vigorous, outspoken, argumentative and sometimes rather tiresome person—particularly, if I may say so, when he disagrees with me. He is cordially disliked by the Left; and that is hardly surprising in view of his vigorous campaign to root out communist corruption in the Electrical Trades Union.

As I indicated at the beginning of my speech, I have known him for 20 years. Therefore, I think I can speak with some authority about him. He is not a good hater. He is a man of decency and honour. That is why I find some of the more scurrilous attacks made upon him, particularly in the columns of the Sporting Life, particularly objectionable and offensive. I think that this debate would have achieved some purpose if it brings this increasingly pointless argument to an end. Mr. Aglionby has conducted his inquiry, and we should now accept his findings and pass on to other matters.

In one of the very few conversations I had the good fortune to have with the late Lord Attlee, I recall him saying that one of the features of public life in Britain which distinguished it from that of many other countries was not only a deep sense of fairness but also a willingness to accept that the decision of the umpire was final. Things have, I fear, deteriorated rather sharply in this country since the passing of Lord Attlee, but on one element of his judgment his words still hold good; when an inquiry has been held, after prolonged and often entirely justified pressure, there is nothing more silly than to attempt to reopen the argument all over again. If a man of independence of judgment and professional skill has examined the evidence, we should, I believe, accept his conclusions unless there is overwhelming evidence that he was mistaken. No such evidence exists in this case. Mr. Aglionby was appointed by the Home Secretary as the umpire; we should now accept his decision as final.

Lord AIREDALE

My Lords, as the noble Lord, Lord Harris of Greenwich, briefly referred to me, perhaps he would answer a question. He asks why the commotion continues. Has he studied the 1974 decision of the House of Lords in Scott v. the Metropolitan Police Commissioner? I think therein lies the answer to the question why the commotion continues.

Lord HARRIS of GREENWICH

Without having read that judgment, my Lords, I foreshadowed why some of the commotion continues; I think there are other explanations for at least some of it.

The DUKE of DEVONSHIRE

My Lords, I had not intended to intervene other than to refute a charge of my colleagues and I being criminally negligent; when we look at Hansard I think we shall find that that is the charge made against us by the noble Lord. I intervene—and I do so without the permission of my chairman, whose beady eye I sec upon me—to refer to one particular aspect of the speech of the noble Lord, Lord Wigg, a sensitive one with the Tote Board at the moment, and that is the delay and rising cost of mechanisation. It is a sad story and I will not weary the House with it. In recent months we have spent many hours of anxious discussion, and I am giving away no secrets when I say that this is a very difficult and troublesome problem which has caused the chairman, all our colleagues and senior executives very great anxiety. We hope, come the spring, to begin an embryo scheme and we hope that in future it will develop, but there have been problems and we are very conscious of them.

Since the Eastbourne Harbour Bill was given its Second Reading earlier—it may possibly involve me in a large sum of money—I might remind the noble Lord that costs escalate. The original cost of the Brighton marina was £7 million: the last figure I heard was £120 million; so the escalation in the costs of mechanisation, though regrettable, is not unique. I assure the noble Lord that the board is very conscious of this and is giving it top priority to getting it sorted out and getting it going as soon as possible.

Lord WIGG

My Lords, I am much obliged to the noble Duke for those comments. I have all the sympathy in the world with the project and, after all, in my day we went through that process on a smaller scale. The point I am making—and perhaps the noble Duke will take it back to his board—is that there should have been a cautionary depreciation. Perhaps I am being tendentious, but the reason it was not done was that the Tote has changed its priorities. It is no longer a public service as the first priority; what it is now engaged in is profit, profit, profit, as part of a public relations exercise.

7.23 p.m.

The PARLIAMENTARY UNDERSECRETARY of STATE, HOME OFFICE (Lord Belstead)

My Lords, I am glad to have the opportunity to add a word on behalf of the Government to the speeches which have been made by noble Lords this evening on this Unstarred Question. I shall not ask again to be forgiven if I say things of which your Lordships are well aware, so for the first and last time I apologise if this is very familiar to noble Lords, but let me remind the House of the Home Secretary's responsibilities for the Tote. They are of a limited nature. My right honourable friend appoints the chairman and members of the board, but he is not responsible for their staff. The board's annual report and accounts are submitted to the Secretary of State through the Horserace Betting Levy Board and my right honourable friend is required to lay them before each House of Parliament. The Home Secretary is empowered to determine the levy scheme in the case of a dispute between the Tote and the levy boards over the terms of the scheme. Finally, the approval of the Home Secretary would be required if the Tote Board wish to exercise certain powers under the Horserace Totalisator Betting Levy Boards Act 1972 to extend the types of events on which the Tote may take bets.

Thus, the Tote Board is free to regulate its affairs within the requirements of the law, and of course Section 14 of the 1963 Act regulates the functions of the Tote with respect to betting on horseracing. The terms of Section 14(3) of that Act are very wide and really go to the heart of that section, and I must make it clear—I have done so before in correspondence but I do so again now—that the Home Office does not accept the view of the noble Lord, Lord Wigg, that the Tote have on any occasion been in breach of Section 14. Mr. Aglionby found no breach, and we agree with him.

I will not say anything, despite the fact that it forms the first half of the noble Lord's Motion, about the accounts of the Tote because the noble Lords, Lord Harris of Greenwich and Lord Trevethin and Oaksey, have done so far better than I possibly could. I thought it was most valuable that my noble friend the Duke of Devonshire said a word at the end about the mechanisation plans of the Tote and put into context therefore what are some of the hopes of the Tote Board. The only point I would add is that when, last year, the Tote made a contribution to racing of nearly £990,000 and paid £510,000 in tax, it was able to achieve those results after some difficult times in recent years, as the noble Lord, Lord Harris of Greenwich, reminded us, by not only operating its traditional pool betting operations but also through its fixed odds betting activities under the 1972 Act.

It is worth saying, as we have this opportunity. that the fixed odds betting operations of the Tote were something which the Select Committee on Nationalised Industries, which considered the Tote in the 1976–77 Session, was clear that the Tote should be enabled to do, and that was a view with which the previous and present Home Secretary and the Royal Commission on gambling all agreed. The noble Lord, Lord Wigg, said, as I understood him, that the matters with regard to Mr. Aglionby's Report should be put into the hands of the Law Officers.

Lord WIGG

I did not say that, my Lords, and I did not ask that question. I said that the question whether there has been a breach of Section 14 should be referred to the Law Officers for their opinion. I said that if they agreed with the Home Office, then that would be me finished. If only on the basis of what the noble Lord, Lord Trevethin and Oaksey, said tonight, that the chairman arbitrarily, for commercial reasons, took a personal decision to alter it, then that in itself is a breach. Thus, if the noble Lord, Lord Belstead, would say to me that having listened to this debate he will put that squarely to the Law Officers, then if they say No, I am finished. On the other hand, if they say Yes, then all it does is to establish as a question of fact that there has been a breach now, as there was for precisely the same reasons in 1976. On that occasion the Home Office did nothing and on that occasion the Tote did nothing until they were forced to do something.

Lord BELSTEAD

My Lords, communications between my right honourable friend the Home Secretary and the Attorney-General are always open and no doubt they would discuss a serious matter of this sort.

Lord WIGG

My Lords. I thank the Minister: that is all I am asking.

Lord BELSTEAD

My Lords, the noble Lord will not thank me quite so readily when I tell him that if he is suggesting to the Government that they should therefore question fundamentally the findings of the Aglionby Report, then I must say to him that I disagree fundamentally with what he is saying, and I will now explain why.

Lord WIGG

My Lords, I did not say it then and I do not say it now. I am asking—I have asked the question before and I put it again now to the Minister—just that he should put the facts to the Law Officers of the Crown and ask them if there has been a breach of Section 14(3), and in particular Section 14(3)(b). I repeat, if the answer is No, then l fade out of the act. If the answer is Yes, then all it has done is to establish as a question of fact that the Tote is in breach, as they were in 1976.

Lord BELSTEAD

I must say, my Lords, that I find these interruptions of the noble Lord quite extraordinary. Let us for a moment consider what happened. In July last year there were a number of allegations in the Press relating to the transmisison of off-course bets for the on-course pools. What happened? The chairman of the Tote Board discussed these allegations with the Home Secretary, which I think was perfectly proper. The chairman of the Tote Board took the initiative of asking that an independent inquiry should be arranged, to be conducted into the Tote's procedures for the inclusion in their on-course pools of bets made off the course. As a result, my right honourable friend the Home Secretary announced on 26th July last year that he had appointed for this purpose Mr. Aglionby, a recorder of the Crown Court.

The noble Lord is—despite his protestations—asking the Government simply to overturn the findings of a man who has been a recorder of the Crown Court for four years, who has been called to the Bar for 20 years, and who had, during the course of his inquiry, the benefit of a special audit of the Tote's pools carried out by Messrs. Deloitte, Haskins and Sells. Mr. Aglionby took oral evidence from a number of witnesses, and this evidence was given on the understanding that it would be treated in confidence. The noble Lord may feel that that was a mistake, but in terms which I certainly understood, and which I very much appreciated, the noble Lord, Lord Harris of Greenwich, explained why he felt that this was a very sensible and a very wise course to follow. I have to say to the House tonight, and to make it crystal clear, that it was because the inquiry was conducted in that way—which I believe, on behalf of the Secretary of State, to be quite right—that the Home Secretary has decided not to publish the report.

I do not want to weary your Lordships, but because from all sides of the House it has been agreed that this is a very serious matter, and because in some parts of the House there is perhaps misunderstanding of exactly what Mr. Aglionby found, may I, in your Lordships' House, go through his findings, though very briefly. Mr. Aglionby found, first, that the various transmission procedures operated by the Tote did not involve any breach of any statutory provision or of the common law. Secondly, he found that the transmission of debts before September 1977 was conducted properly. Thirdly, he found that the procedures subsequently adopted for transmitting to the relevant pool bets laid off by Tote Credit Limited put Tote Credit into a uniquely and unfairly privileged position.

Fourthly, a malpractice occurred which usually took the form of failing to transmit losing money which normally would have been transmitted before the race. Fifthly, some employees of Tote Credit Limited transmitted to the pools bets which bore no relation to the bets received from clients—

Lord WIGG

It is a breach of the Act.

Lord BELSTEAD

—and which were intended to reduce the dividend artificially. Fifteen out of 697 audited forecast pools were affected in this way. Sixthly, the procedure whereby bets lodged with Tote Credit Limited for inclusion in the pool were transmitted after the result of the race was abused in six cases out of 995 win pools examined, because not all losing bets were put into the pool.

Seventhly, these various malpractices did not arise, Mr. Aglionby found, out of a desire for personal financial gain, and no individual in the Tote, or in its subsidiary companies, benefited thereby. Eighthly, there was no evidence to suggest that the pools, other than the forecast and win pool, were improperly conducted. Ninthly, there were some errors in transmission which could fairly be attributed to innocent human error. Tenthly, since 17th July 1979 all bets must be transmitted before the start of a race. This procedure is entirely fair.

Eleventh, in practice, therefore, the overwhelming number of transmissions had been made fairly, but certain procedures were open to abuse and were abused. That situation no longer exists. Finally, and twelfth, those involved in these various abuses were all employees of Tote Credit Limited. The chairman of the Board of the Tote, the members of the Board, the chief executive and other senior officials were ignorant of these abuses.

The noble Lord, Lord Wigg, said in his speech that my right honourable friend the Home Secretary has not expressed any view about the Aglionby Report, and this debate gives me the opportunity to say I think that those findings raised four main considerations; the position of the board and their staff; the position of the punters; the adequacy of the law; and the transmission arrangements which apply now and for the future.

So far as the first matter is concerned—the position of the board and their staff—I repeat that Mr. Aglionby found that the board chairman and members were unaware of the abuses that had occurred. I must say I was grateful to the noble Lord, Lord Trevethin and Oaksey, for explaining why, in his view, this was a totally logical finding for Mr. Aglionby to reach. In Mr. Aglionby's view the fault lay with certain members of' the staff of Tote Credit Limited, whose actions were governed not by a desire for personal gain, but by a misguided loyalty in that they sought to increase the profitability of Tote Credit Limited by reducing the dividend, not perhaps realising that high dividends also attract punters to the Tote. Following the publication of Mr. Aglionby's findings, the board have taken appropriate action as regards all the staff concerned.

It has been suggested in the debate, as I understood it, by the noble Lords, Lord Wigg and Lord Airedale, that the response bility for this situation should lie possibly with the chairman and members of the board and that this matter was of a criminal nature. I think I must make it clear to noble Lords that it is not for the Home Secretary to suggest that criminal proceedings should be considered. Mr. Aglionby's brief was to examine the Tote's transmission procedure, and it would be quite improper to invite the prosecuting authorities to look at the evidence given to Mr. Aglionby, since that evidence was given in confidence. However, may I add that when the Home Secretary's decision to hold an inquiry was announced, it was also reported that the chairman of the Tote was calling in the police to investigate whether criminal offences had been committed. I am sure that your Lordships would want me to say that the Metropolitan Police subsequently discussed the matter with officers of the Tote and reached the conclusion that on information available to them there were not sufficient grounds for a police investigation.

So far as the punters affected are concerned, here again let us be quite clear about the position. The 21 cases where the dividend was improperly reduced by a significant amount were referred to in the published findings. The Tote have recompensed those persons in respect of the race at Carlisle on 4th July 1979, which gave rise to the inquiry. The Tote Board have now published full particulars of the other 20 cases and have invited the punters who can show that they had a winning bet on one of those pools to submit claims for recompense.

Lord WIGG

My Lords, would the noble Lord not agree that as the Tote have been very fair and have offered to pay up to those punters who received less than they should have received, the Tote Board are now under a similar obligation to pay out to those bookmakers who paid out more than they should have paid out because of the arbitrary action of the chairman of the Tote Board in order to get Ascot dividend?

Lord BELSTEAD

My Lords, I was at great pains at the beginning of my speech to try to explain to the noble Lord that that is precisely the kind of question about which my right honourable friend does not take a view because he is not statutorily empowered to do so. Therefore if the noble Lord wishes to indulge in this sort of dialogue, it should not be with me on behalf of my right honourable friend, but with other people.

The question of the adequacy of the law, however, does fall to my right honourable friend. I should like to say to your Lordships that the Home Secretary is not convinced that the need to amend the law has been demonstrated, and he thinks that the detailed regulation of betting procedures is best left to non-statutory arrangements. In case that sounds a little bland, may I add that I understand that bookmakers, as well as the Tote, have their own rules on betting procedures. I really do not think that we should attempt to deal with those matters by statutory provisions.

What I think is essential—if I may turn to the final point which I think arises—is that the Tote's procedures now and in the future should not permit of the malpractices which Mr. Aglionby's inquiry revealed. On 17th July last the Tote altered its procedures so that transmission of bets after the start of a race ceased for all pools except the jackpot and the placepot. The new procedures are based upon time-stamping and photographing of original documents, tape recording telephone conversations between the course and the Tote's London racing room, and continuous audit of all transmissions by an outside security firm. Mr. Aglionby has examined the present procedures, and is satisfied that they are entirely fair; and the chairman of the board has assured my right honourable friend the Home Secretary that all necessary steps have been taken to ensure that the staff adhere to the new procedures.

Before I finish may I refer to an entirely different matter. The noble Lord, Lord Wigg, in his speech, suggested that the Home Office is doing nothing about the report of the Royal Commission on Gambling. I am sure he will not think that I am being discourteous if I say that that assertion chimed in with other remarks which the noble Lord made during his speech, indicating that in some way or another my right honourable friend was being negligent with regard to gambling. The suggestion by the noble Lord, Lord Wigg, that the Home Office is doing nothing about the report of the Royal Commission on Gambling is totally untrue. My right honourable friend the Home Secretary said at the conclusion of his speech last October in another place that there was a clear need for substantial legislation. It has been made clear by (if I may say so) myself in your Lordships' House this Session, on the Betting, Gaming and Lotteries (Amendment) Bill, that the Home Secretary understands this, and intends to introduce such legislation.

If we have disagreed this evening—and I am afraid I have ventured to disagree with some of your Lordships—I think that where we can all reach common ground is in agreeing that the reduction of dividends is a very serious matter. But these malpractices occurred within the Tote's activities on a very small scale and over a limited period of time. The inquiry of Mr. Aglionby has ascertained the facts and has concluded that the chairman and members of the board were ignorant of the malpractices which occurred. I should also like to add that, in view of the very thorough examination by the accountants under these circumstances, my right honourable friend does not consider that any further auditing of these pools would be justified. The Tote is prospering today, and this is good, is it not, for British racing? In view of the fact appropriate steps have been taken as regards the staff and punters concerned, and the transmission procedures, I hope your Lordships will agree that this matter should now be considered closed.