HL Deb 07 June 1999 vol 601 cc1135-7

Viscount Falkland asked Her Majesty's Government:

How the interests of the British horseracing industry will be affected by the recent decision of a leading credit bookmaker to move operations to Gibraltar in order to offer clients tax-free betting.

The Minister of State, Home Office (Lord Williams of Mostyn)

My Lords, it is far too early to tell. Bookmakers pay a levy on horserace betting and this is then distributed by the Horserace Betting Levy Board for the benefit of racing. If a significant portion of the betting market were to transfer to offshore bookmakers, then clearly the amount available to racing would diminish. However, we are a long way from that and are monitoring the position closely.

Viscount Falkland

My Lords, I thank the Minister for that Answer. However, has he perhaps understated the long-term dangers of betting being taken offshore in this way? Those who believe that the economic engine of racing is not gambling are probably deluding themselves. including the Treasury, which takes £0.5 billion a year. Any reduction of the pool of money from bookmakers will damage racing. If this is a gesture by one bookmaker to show the problems that arise from the tax being lowered in Ireland to 5 per cent and to push the Treasury into recognising that we are in a difficult position, action needs to be taken fairly quickly.

Lord Williams of Mostyn

My Lords, undoubtedly the betting industry funds horseracing to a significant extent. I agree with the noble Viscount that it would be foolish to overlook that. I declare an interest in this matter in that I formerly acted for Mr. Chandler, the bookmaker in question, in happier times from my point of view. If the newspapers are correct, he is proposing to offer telephone betting. Most people in this country do not bet by telephone. Over 90 per cent of the revenue that goes into betting is not in fact from credit telephone betting at all.

Baroness Trumpington

My Lords, does the Minister agree that the United Kingdom is the only country in Europe to have bookmakers? Would not the racing industry be far better off if there were no bookmakers?

Lord Williams of Mostyn

My Lords, I can certainly drop a postcard to that effect to Mr. Chandler. I am not sure that the noble Baroness is right. My recollection is that bookmaking goes on in the Irish Republic quite vigorously and quite successfully. It also goes on in the Isle of Man and in Orkney.

Lord Ewing of Kirkford

My Lords, my noble friend says he used to act for bookmakers. Is he aware that he was in the unique position, both in this country and probably in any other country of the world, of being the only person ever to make money from a bookmaker?

Lord Williams of Mostyn

My Lords, I am happy to think that that is probably correct.

Lord Peyton of Yeovil

My Lords, will the noble Lord ask himself why it is so much more comfortable to go racing in France and many other countries than it is here? Also—perhaps I am being a little simple here—will he encourage this particularly observant, opportunist bookmaker to encourage racing by giving directly to racing the extra money he will earn by not paying tax?

Lord Williams of Mostyn

My Lords, according to the newspapers, Mr. Chandler intends to return some of the money to horseracing. It is true that many people who attend horseracing in France find it much more agreeable than here, but many other people take a contrary view. I am told by my noble friend Lord Donoughue that Cheltenham Week is always well supported, and people are entitled to a free choice.

Lord Burnham

My Lords, the noble Lord says that 10 per cent of the betting turnover is from telephone credit betting. Does the Minister realise that Mr. Chandler's exercise also involves Switch and deposit betting? That means that 20 per cent of the levy, if it goes through, will be lost to racing.

Lord Williams of Mostyn

My Lords, I am not entirely clear on an authoritative basis what plans Mr. Chandler has in mind. I stress that I have simply been given newspaper reports. However, the point made by the noble Lord, Lord Burnham, is well taken. We need to monitor the situation carefully because, as the noble Viscount said originally, the revenues are critically important to the industry.

Lord Pearson of Rannoch

My Lords, bearing in mind the pressures which are being brought to bear upon Gibraltar from other directions, does the Minister feel that his client is well advised to have set up in Gibraltar as a tax-free exercise in the longer term?

Lord Williams of Mostyn

My Lords, I should like to make two points. First, he is not my client; and, secondly, if he were, I should certainly not be giving him free advice.

Lord Cope of Berkeley

My Lords, no doubt the Minister's former client will return some money to racing, but I think it most unlikely that he will return any of this money to the Exchequer. Therefore, can the Minister tell the House of other taxes where the revenue is similarly likely to vanish as a result of the spreading of electronic commerce, of which this is but one small indication of what will happen?

Lord Williams of Mostyn

My Lords, the taxation component of the charge levied on the punter is the general betting duty, which, at present, stands at 6.75 per cent. Of course, the levy, which is what the noble Viscount had in mind, stands at 1.25 per cent. In answer to the noble Lord's more general question, I could not possibly speculate about what devious minds—possibly devious accountancy minds—might think of in terms of avoiding duty. Obviously, the Revenue keeps a very close eye on such matters, but one needs to get this into perspective: this is one bookmaker who is talking about offering a single, limited service.

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