Betting on Horse Racing

HL Deb 25 January 2000 vol 608 cc1486-502

7.38 p.m.

Viscount Falkland

rose to ask Her Majesty's Government what plans they have to improve and increase the control and regulation of betting on horse racing in order to combat any increase in criminal activity.

The noble Viscount said: My Lords, this is a debate about racing and betting. I readily acknowledge that it is not an easy subject for the Minister who has the difficult task of replying to the debate. I can encourage him only to the extent that the small group of speakers tonight—I am grateful to all of them for contributing to this debate—will give various areas of expertise. No doubt he will have a full brief.

I do not know whether the Minister is a racing man, although part of his title is taken from the excellent town of Brighton which has a racecourse which is well known to me. I have had many enjoyable, if not desperately comfortable, days there. It was infamous at one time—no doubt we shall touch on these matters in a moment—principally just after the war years when the betting arrangements in this country were in some disarray and race gangs were found to be operating in London and elsewhere. Whether because of the sea air or the attractions of that town, their presence in Brighton was immortalised by Graham Greene, Patrick Hamilton and other writers.

My debate this evening was really prompted by the remarks of the chief senior steward of the Jockey Club in his speech at the Gimcrack Dinner—an important annual speech—in which he made a particular point of talking about the changes facing racing and the way in which gambling will be organising itself, not just nationally but globally. He drew attention to the need for proper legislation and control of those activities. I carry that thought into the debate tonight.

However, because of the time limit, perhaps I may briefly run through a not entirely unsuccessful story for Britain as regards the legislation pertaining to racing and the organising of gambling, which has become increasingly the engine of the financing of racing over the years. Those who received a very helpful brief from the British Horseracing Board setting out the background to racing and its importance to our culture and to British life will know that racing in this country and the way that it has been run, together with the operation of gambling, have had a great influence on what has happened in the rest of the world.

Racing as we know it in this country began in the 18th century. It started with friends of owners and owners and their relations racing their horses against one another, often in matches. The prosperity which came in the 18th century led to a wider interest in racing and gambling and, as we shall develop later on, attracted a good deal of sinister activity by way of people striking bets, welchers, other confidence tricksters, and so on. They are always evident where there are large sums of money, especially as concerns gambling. Indeed, the situation is no different today from what it was in the 18th century.

However, in the 19th century it seemed to be a good idea to bring in some legislation to govern the unsatisfactory elements involved. The ironic thing about that is that the experiences before the 1853 Act (which, by setting up a structure for betting, made it extremely difficult for those tricksters, fraudsters and others to operate in the way that they had been) meant that those concerned went across and plied their trade in France. The French took steps to deal with that by creating a Tote monopoly at the end of the 19th century, known as the Pari-mutuel that operates to this day. It is actually a very simple and effective way of operating through a monopoly the money that is bet on race horses.

We did not opt for that course of action. As a result of orderly behaviour by regulated bookmakers—and there was an element of reward for bookmakers for the way that they conducted themselves in a relatively peaceful period—we decided in 1928 for various reasons to introduce for them a competition status with the Tote. I have to say that the Tote was introduced with the major purpose of offering to poorer people the opportunity to bet on horses, and to offer people who were not acquainted with the rather more obscure and complicated ways of betting through bookmakers the opportunity to partake in a pool, which still exists. That pool has run on through the years and was given statutory status. Indeed, in 1928, which was really the key period of legislation, we had the Racehorse Betting Control Board with bookmakers set up in competition with the Tote, and the National Association of Bookmakers was founded.

This went on until the war years, which caused some disruption. However, the whole situation changed in 1963 when we had the legalisation of off-course betting. Before that time, off-course betting was illegal. Various reasons, some spurious and others logical, led to the decision. Such betting resulted in the growth of betting shops and the multiples that we know today; for example, the famous high street names, such as Ladbrokes, Coral and now the bookmaking side of the Tote operation. The levy board was set up to take money from gambling in an organised way for the improvement of the breed and for contributions to veterinary science. It was given the job of arriving at a decision as to what bookmakers would pay, as well as the Tote, for the privilege of betting.

In 1979 Lord Rothchild's commission on gambling took a good look at all gambling. It produced a very interesting report. Various comments were made in that report. I do not propose to quote widely from it. However, I underlined one comment, which came about as a result of the Gaming Board's evidence: There must be constant vigilance to ensure that any legalised gambling activity is not penetrated by criminal interests. who in this connection comprise sophisticated, intelligent, highly organised, well briefed and clever operators with enormous money resources which enable them to hire the best brains in the legal, accountancy, managerial, catering and show business world". I am not quite sure about the last two; nevertheless, that is as true now as it was then.

I was prompted to table this Unstarred Question because things have accelerated to such an extent over the past few years that the future of betting looks extremely different. With the arrival of new technologies on the Internet and the introduction of digital communications, we shall see developments in this field that will allow interactive betting through television channels, and so on. All of these will be extremely difficult to control and, at present, they are set against a background where we have a tax rate of 6.75 per cent, which is levied and forms part of the amount that goes to the Treasury each year, along with corporation tax and other things. That gives the Treasury an income of about £½ billion a year.

The recent trend is very worrying and was the subject of a debate in the other place only last week when important points were made. In a way, government and other bodies in the Civil Service will be behind the game because bookmakers are now having to compete rapidly in areas where the tax rate is much less. In fact, the bookmakers have been pushed to the position where they are now having to go abroad in order to profit from all the new technologies that are available to them in a tax-free environment.

The recent Irish experience has been illuminating. The Irish have taken the view that they should cut their rate of duty. As a result of cutting their tax rate from 10 per cent to 5 per cent, they have had an increase of 30 per cent on their turnover in one year. Unless that example is followed here, the situation is likely to lead to bookmakers going abroad and looking into new opportunities there. Indeed, they may move into areas which it would be extremely difficult for the Government to control. That may also lead to possible operations where there is no control, leading to criminal activity. There will be temptations for the weak, and opportunities for criminals. In fact, we shall really be going back to the 18th century when the legislation was produced to allow people to escape from, as it was then put, the injury and demoralisation of improvident persons through irregulated gambling on horses". My 10 minutes or so have now come to an end, but that is the nub of the matter. In my view, it is essential for the Government to catch up with the new technologies and to take decisions quickly. That applies not only to the privatisation—if that is what is to happen to the Tote and the future of the levy board—but also to other matters that are pressing. I note that they plan a gambling review body, but I do not know whether the chairman or members have yet been appointed. Perhaps the Minister will be able to tell us something in that regard. Can he tell us the reaction of his department to the fears which I have expressed this evening, which no doubt other noble Lords will express also?

7.49 p.m.

Lord Donoughue

My Lords, I thank the noble Viscount, Lord Falkland, for raising this important issue. It is a matter of great concern to the racing industry and it gives me a nice opportunity to speak for the first time out of office and from the Back Benches. There could not be an issue closer to my heart. It is even closer to my heart than BSE and the 30-month scheme.

The noble Viscount spoke mainly about betting. This matter concerns strictly the integrity of betting rather than the integrity of racing, but in Britain the two are totally interrelated. They are almost like Siamese twins. Therefore, blemishes on horse betting inevitably damage the integrity of our horse racing. Therefore I support everything that the noble Viscount said. I also support the calls of the BHB and the Jockey Club for maximum government action on this matter and giving the Jockey Club maximum information on which it might act.

Race betting is becoming a most intricate area. As the noble Viscount said, government regulation was successful for 70 years but that applied mainly to a fairly static betting, gambling and racing landscape. Now dynamic change is affecting the industry. I refer to routine changes in the ring and to the technological revolution with interactive betting via TV and the Internet. Ultimately, betting can, and will to a large extent, be conducted in the home, making betting shops—which are an excellent vehicle and environment for regulation—less used. National boundaries will become irrelevant. The whole environment for government to regulate and control will become diluted. As the noble Viscount suggested, the process has profound implications both as regards the policing of illegalities and the potential for raising revenues.

We note that every week credit betting is moving offshore to avoid tax. If all our private bookmakers move offshore, the Treasury may start to argue for an on course Tote monopoly. For those betting reasons and for regulatory and revenue reasons, the Government must remain involved with racing. I wish to discuss broader aspects of the matter in my firm belief that there is a strong public and governmental interest in having healthy racing, which includes a healthy related betting industry.

Government are not always fully aware of the importance of the racing industry. They are not always fully aware of its economic importance and of the fact that it is a great rural employer. Government are being asked to show greater concern for the rural economy. That should focus their attention on the contribution of racing in particular and of the wider horse industry in general. I refer to the contribution of horse breeding to exports. That industry is experiencing difficulties due to a heavy tax burden. At present the whole industry generates huge tax and duty revenue for the Treasury, although, as I have suggested, technology could change that.

I also stress a matter that is harder to pin down, although in my view it is extremely important; namely, the social and cultural contributions made by the racing industry. Racing provides leisure and pleasure to millions. Historically, our racing industry has been the world's leader. Yet now, I believe, we have problems in terms of international competitiveness. Our prizemoney and our facilities are inferior to those of some others. In the past two months I have attended races in Dubai and in Japan. One cannot avoid noticing the trend for top horses to be sent elsewhere than the United Kingdom to race and to breed. Our racing must improve; we cannot rest on our past reputation.

Most of the improvements must be introduced by the racing industry itself. It needs radical management and a united approach. It is not enough to talk of what government should do for it. However, there is an important role for government. At present the Government are heavily involved in two major issues. I refer to the Tote. I hope that the Government will transfer the Tote to a racing trust and will do so cheaply to enable the Tote to invest and not be crippled by great debt. I refer also to the review of the levy. I support its phasing out—I have beer saying so for a long time—but rot too abruptly. We need more deregulation, moving towards commercial viability. I hope that the handling of media rights will encourage that. I believe that racecourses and race meetings should constitute a big show and that the media should be able to transmit the fixtures they wish to transmit when they like within certain constraints.

However, those two big issues before the Government also imply withdrawal; namely, the Government getting rid of the Tote and perhaps getting rid of the levy. That is worrying as part of a general trend because I believe that spectators, punters and owners are losing out and big finance and the criminals whom the noble Viscount mentioned are starting to dominate the industry. The industry needs continuing government involvement not as regards the day-to-day finance, such as the levy, but to ensure the integrity and the health of racing.

That leads me to my final point on which my views are well known. For some time I have been concerned about who in government is responsible for the health of racing. We know that the Home Office is responsible for the integrity of gambling. I believe that on the whole it has done a pretty good job. However, the matter goes wider than that. It is quite wrong that there is no Minister or department responsible for racing.

When Sheikh Mohammed expressed concern about British racing and said he was contemplating moving some of his horses, it was noticeable that the French immediately sent someone from the department with responsibility for that matter to negotiate with the sheikh and to offer him racing facilities. I held government office at that time but no one in this country's Government had the responsibility of persuading the sheikh not to move his horses out of this country.

I note that the Home Office has made a bid for responsibility in this area. It has set up a designated unit which I welcome. Not for the first time I note that civil servants are animated by territorial concerns. When they perceived a threat to their territory they took action. A department must take responsibility as regards the disposal of the Tote and as regards the levy and for dealing with money laundering and other matters.

I suspect that racing needs to be controlled by a different department. Sport is different from gambling. I do not believe that the Home Office culture is attuned to sport. The DTI could take responsibility for racing but I think that it would always be lowest on its list of priorities. The Department for Culture has "squeaked" about racing, but it has little clout and no historic interest. MAFF has been advocated. I advocated MAFF when I was a Minister in the department. It also has insufficient clout, resources or interest in the industry but, faute de mieux, would be the best department in this regard. Should we get a new Ministry of rural affairs—I hope that we do get such a Ministry—that might prove a suitable location for this responsibility. After all, as I have said, racing is a great rural industry. A new department might give it a fresh push. It is most important that the Prime Minister should take a decision so that we know which department and which Minister are responsible for racing.

8 p.m.

Lord Cavendish of Furness

My Lords. I am grateful for the opportunity to participate in this short debate. I thank the noble Viscount, Lord Falkland, for making it possible and for his extremely authoritative speech. It encapsulated in a very short time all aspects of the problem.

I do not suppose that anyone can remember a time when so few Members of your Lordships' House can speak from experience in support of horse racing. This is especially sad as horse racing is part of a much larger picture in which horses generally occupy an important position in our national life. I warmly support the suggestion of the noble Lord, Lord Donoughue, that the time has come for a "Minister of the British Horse". I hope that that suggestion will be taken forward.

I must declare some personal interests in National Hunt racing. First, for some years I have owned or had a share in one or more horses in training; and, secondly, for a great number of generations Cartmel races in Cumbria have been run on my family's land. For some 20 years I was a director and subsequently I have taken over the running of that racecourse.

In 1974 Cartmel was the venue of a famous betting coup, which attracted huge media attention and was dramatised—not to say glamorised—in a television film. Ironically, the episode only enhanced Cartmel's attendance figures. I suppose it is human nature always to tend to rally to the likeable rogue, especially if he is from Ireland, who takes the bookies to the cleaners.

Having said that, I am second to no one in the belief that we must eliminate crime in all its forms on the racecourse and in the racing industry. It is in the interests of the taxpayer, in the interests of the punter and in the interests of the sport. The sport has no future unless it commands the respect of the public and the public believe in its integrity.

As has been said, horse racing is vulnerable to crime through betting. The chief executive of William Hill estimates illegal betting at £1 billion per annum off course. If that is true, it represents a significant degree of corruption. Both the taxpayer and racing generally pay a heavy price for that kind of crime.

I understand that both the Jockey Club and the British Horseracing Board are asking the Government to accept that betting is under-regulated as compared to gaming, whereas betting faces exactly the same challenges as gaming. When such eminent bodies call attention to a problem and actually invite regulation, I think we must conclude that there is a real problem to be faced.

However, I have a reservation. We are talking here about the regulation of betting; I hope that that will never be interpreted as a suggestion that the Government should regulate racing itself. I think they would get into deep water. I should like the Minister to confirm that he will resist any temptation to go down that path. When the Minister replies, I, too, shall be interested to know the stage that the Government's review of betting and gaming has reached.

Turning to a related aspect, every administration of this country that I can remember has had a goodly number of racing enthusiasts among its members. Some administrations carry their statutory responsibilities towards racing more cheerfully than others. All seek, I think, to be benign. But it takes more than an enthusiasm for racing to better the Treasury. In the matter of racing the Treasury's appetite is insatiable.

The hard facts bear repetition. They are these. Through tax revenue and the general betting duty from racing and breeding, the Government recover, as has been said, annually around £450 million. But British racing receives a tiny 1.1 per cent from horse race betting turnover back into the sport. Compare that with the lower levels of sophisticated racing countries elsewhere. In Australia the proportion is 4.4 per cent and, at a higher level, it is 15 per cent in Germany.

British racehorse owners receive from prize money on average only 22 per cent of the cost of keeping a horse in training. Again to make comparisons, in Australia the owner, through prize money, will receive 43 per cent; in the United States, 47 per cent; in France, 54 per cent; and in Japan, 87 per cent. I do not suggest that we go to some of those higher numbers—I do not know whether that would be in the best interests of bloodstock or of British racing—but we should advance on 22 per cent. On the present basis, British horse racing is going nowhere very fast.

There is a common misconception that racecourses are subsidised by the levy board or that only the top 12 racecourses generate levy. That is not so. Each day's racing, each fixture at every racecourse, makes a net contribution to racing's finances.

Over the years repeated requests to the Government to be less rapacious with the revenues we generate have gone unheeded, but now it looks as though the widow's cruse has run dry with the arrival of global, offshore and Internet betting.

The BHB has come up with a solution which, it seems to me, could solve everyone's problems. It suggests a reduction in general betting duty from 6.75 per cent to 5 per cent and a simultaneous cut in punter deductions from the present 9 per cent again down to 5 per cent. As the BHB chairman Peter Savill said, The proposal recognises the legitimate interests of all 4 groups concerned. It would be good for racing and good for punters. It offers a practical means of protecting government revenues and it would protect bookmaker profitability". Some commentators go so far as to say that such a reform would inject such confidence into racing that government revenues would increase.

In the time allowed I do not wish to dwell too much on the Tote, except to say that I hope the Minister can assure us of an early decision about the Tote and that I hope it stays in racing. I read with interest the adjournment debate in another place. I noticed that the Minister has given up the attempt to say that the Government own the Tote. However, I do not think that the taxpayer has much of a stake in the Tote—he never put anything into it in the first place, he has never supported it and he does not back it even today.

The big contributors to racing are the racehorse owners. They pay out the most and get in return the least. They do it simply because they enjoy it. The industry would cease to exist without racing enthusiasts. There are currently too many uncertainties for the sport to look forward with confidence. As a racecourse operator, I believe that it is possible to make profits—but it is a high risk venture and, more to the point, it requires a high level of re-investment.

I should be hesitant to say that National Hunt horse racing could survive a serious downturn in the economic cycle. Some certainty and some revenue reforms along the lines suggested by the BHB would go a long way to restoring confidence.

8.8 p.m.

Lord Sandberg

My Lords, I am sad to say that I have no interest to declare. To my wife's relief, I have no more horses in training. But it is important that we debate the problems facing horseracing, some of which have been mentioned. I think the most serious problem is money laundering. We need to congratulate my noble friend Lord Falkland for raising the matter here.

I shall, if I may, without boring the House, occasionally refer to my experience as chairman of the Hong Kong Jockey Club—in those days it was called the Royal Hong Kong Jockey Club—with its almost obscene turnover because of the controls placed on it and the help given to horse owners. The noble Lord, Lord Cavendish, may be interested to know that owners get back in total—of course, they do not all get it back—100 per cent of what their expenses are likely to be.

As a result, in the old days we might have had a horse whose breeding was announced as, "Out of Black Bess, by unknown". Nowadays in Hong Kong we have group one racing. As I said, the turnover is enormous, and so is the reward for the internal revenue. Indeed, it has a direct effect on income tax which might otherwise be higher. It also has an effect on turnkey operations such as the entire financing of a third university. I do not suggest that we should do so much in this country, but it proves that the more one gives to the punter, the more one is going to get back.

It has been said in previous debates, and it is a truism, that where there is a great deal of cash, criminals will be lurking around. The racecourse has always had to face such problems. I well recall the amount of time that I, as chairman of the stewards, had to spend seeking to keep one step ahead of those who were trying to make a dishonest living out of racing. It would be naïve to pretend that we were always successful, but we did achieve a good deal. Most important, the public were aware that we were trying hard. It is vital that both the public and the punters realise that the authorities are trying to defend them.

However, it is one thing to try to thwart a nobbled jockey or trainer; it is quite another to attempt to overcome a form of organised crime. When one considers the amount of money now sloshing around in the sport, it cannot be doubted that organised crime has found it to be a good hunting ground. Perhaps I may once again cite Hong Kong. A person who had acquired money from a corrupt deal—be he a government servant or a private individual—might attempt to buy a winning lottery ticket or betting slip in order to justify a recent large credit in his bank account. However, I think we have moved on from that kind of crime over here. It is not only Mr X who is trying to conceal his criminally earned income in horse racing. Organised crime is also attempting to do it. The figures involved can be very large indeed. Furthermore, there is the threat of far more vicious retaliation if someone tries to report or obstruct such activities. These people are not gentle.

In previous debates I have said that I am in favour of making changes to the structure of racing. I support changes in the Tote. However, as was mentioned by the noble Lord, Lord Donoughue, I am against any suggestion that the Government should distance themselves from the racing industry, especially as regards the Tote. Those involved in the industry do not want the Government even to attempt to say that this matter is no longer anything to do with them. Horse racing must be a matter for government. We need a representative in government who is directly responsible. Furthermore, the industry should not be seen as a secondary duty of a Minister. It has become too important to be hidden away in the Ministry of Agriculture, for example.

I have suggested that the sums of money involved can be large, attracting people who wield great power and who can be violent. It is necessary that bookies on the racecourse, who can find themselves in a most vulnerable position, should feel that there is someone to whom they can turn. It is not good enough to report an incident to the local security people if their only reward is a physical attack on them or their families.

Horse racing is always a fascinating subject, but I think we must accept that it is a new ball game today. Nowadays people can bet through the Internet and important bookies travel to places like Gibraltar. I do not believe that the public expect to pay no tax: indeed most people are prepared to pay a small tax because, if they wish to bet legitimately, they need to know that they will be protected. Government may need to take a cut in their return, but, as I said, I have found that the less the punters have to pay, the bigger the turnover. In the end, the income evens out.

Finally, I reiterate my hope that the Government will take an active part in this matter. I should like the Minister to confirm that the Government plan to keep a close eye on racing and that they will consider the difficult new problem of money laundering at the racecourse. Plans should be put in place to recognise the difficulties and to combat them.

8.16 p.m.

Viscount Bridgeman

My Lords, I am sure we are all grateful to the noble Viscount, Lord Falkland, for initiating this debate. It is with considerable diffidence that I follow such a distinguished and expert group of speakers.

In his Question, the noble Viscount referred to the threat of criminal activity in racing in this country. Indeed, that has formed the main theme of our debate. Let it be repeated again, as several speakers have made the point, that racing in the United Kingdom is overwhelmingly carried out with an integrity that is the envy of the world. Racing and betting are so closely inter-related that it occurred to me, when the noble Lord, Lord Donoughue, referred to prize money, to recall that that money comes from the betting levy. There we see but one of many connections.

However, we have to face the fact that betting malpractice is as old as racing itself. The urgent problem facing us today is the huge sums involved, the increasing sophistication on the part of criminals, advances in technology—the Internet and so forth—and, behind it all, the insidious onset of the drugs trade. Money laundering hasbeen referred to as a considerable danger. The noble Lord, Lord Sandberg, gave us a chilling reminder of what this can involve in another environment.

Turning to the racing element for a moment, the Jockey Club, as the regulator of racing, has a demanding job. One of the problems in the—it is hoped—rare criminal activities in racing is that it may well involve jockeys, trainers, bookmakers, the racecourse and the underworld, each of whom could be in different police jurisdictions. Use is now made of the National Criminal Intelligence Service, but what is really required here is a specialised racing unit formed along the lines of the drugs unit.

A further problem is that many of racing's malpractices are not in fact criminal offences. Among those are doping and attempting to influence the result of a race, or corrupting a racecourse official. I understand that there is an important submission by the British Horse Racing Board and the Jockey Club that the criminal law should be amended to correct this handicap, under which the regulator suffers. There is also the more contentious issue of seeking exemption for the racing industry from the Rehabilitation of Offenders Act. It will be interesting to see whether the Minister has anything to say on that.

Another point that the Government should address is the under-regulation of the racehorse betting industry. This is in marked contrast to the gaming industry, to which my noble friend Lord Cavendish referred. With the current menace of organised crime, the Government would do well to be aware of the very prompt steps that were necessary some 25 years ago to prevent the London casinos being taken over by organised crime.

There is a recent welcome initiative by the recently formed National Joint Pitch Council, which reports to the levy board. Its important functions include checking that large bets are hedged with licensed, not illegal, operators. Also, to expose recent moves, of which there is more than anecdotal evidence, for organised crime to buy bookmakers to operate pitches on their behalf—a tidy either way option where the backers get the money, win or lose.

I also welcome the role of the NJPC in monitoring unusual betting activity, which over the years has alerted racing to many potential betting coups. I was hesitant about referring to Cartmel Racecourse, and was very relieved that mynoble friend, Lord Cavendish, enlightened us on that.

I now turn to the question of the general betting duty and the move to betting offshore to avoid it. In this respect Gibraltar has become a substantial centre. However, only this morning William Hill announced that it was offering a facility in Ireland. These developments are, of course, serious for the Treasury. They are also of concern to the racing industry levy board in that it can, and almost certainly does, attract considerable illegal betting by this route.

I very much support the British Horseracing Board in its submission to the Government that general betting duty should be reduced from 6.5 per cent to 5 per cent. That has been mentioned. I should very much welcome the views of the Minister on that. If that had the effect of bringing offshore betting back to this country there could be a number of winners: racing through the levy board, the bookmakers, the punters, and even the Treasury would not be as big a loser as it might appear.

The Irish experience has been referred to. If my arithmetic is correct, the increase in betting volume would need to be 100 per cent to mitigate the loss of revenue to the Irish Treasury. It is in fact 30 per cent. That is not the whole story. The reductions should be seen in the light of the regularisation of hitherto illegal betting and other indirect benefits to racing.

Perhaps I may refer briefly to the review of gambling legislation which was announced by the Home Secretary on 8th December 1999. I would welcome from the Minister any information he can give us as to the composition of the committee, its terms of reference and when it will commence its hearings. I remind the Minister that the practice of bookmakers offering hospitality to jockeys and trainers is widely accepted. The comparison with croupiers may not be an exact one. However, for the record, croupiers are forbidden to have any social contact with clients. I also suggest to the Minister that bookmakers' hospitality, were it put in a commercial context, might well be seen as insider trading. I hope that that will be addressed by the Committee.

Finally, perhaps I may revert to a point made by the noble Lord, Lord Donoughue, on the question of a government department which would have overall responsibility for supervision of matters relating to horses. That matter was very well covered in an excellent brief from the British Horseracing Board. Whether that was MAFF or whether a proposed department of rural affairs, it is important that thatsubject is addressed by one body. I very much look forward to the Minister's reply.

8.23 p.m.

The Earl of Carnarvon

My Lords, I must declare an interest as an owner and manager of racehorses and a member of the Jockey Club. I speak in the gap to underline two points. As a member of the Joint Bloodstock and Racing Committee of both Houses, I can say that both these points are unanimously supported. They have been referred to today. One is a request from the Jockey Club, which is responsible for the rules of racing, for access to criminal records by exemption from certain provisions of the Rehabilitation of Offenders Act referred to by the noble Viscount, Lord Bridgeman. Of course, a government department or Minister responsible for the horse is necessary. I think that mention has been made not only of a Minister for the horse, but also of a Minister for racing. However, it is very much a ministry for the horse right across the equine world that is wanted, and not one isolated for racing alone.

The Minister will know, I am sure, that I have been in touch with his colleague the noble and learned Lord the Attorney-General on the subject of criminal records, and no doubt he will have had access to the letters that have been written to the Home Office from the Jockey Club.

8.25 p.m.

The Parliamentary Under-Secretary of State, Home Office (Lord Bassam of Brighton)

My Lords, I feel very humble and a novice in entering this debate this evening. I thought that when I ceased being the leader of Brighton and Hove Council towards the end of last summer, I had probably ceased my direct hands-on experience of horse racing. The noble Viscount, Lord Falkland, made reference to Brighton racecourse. For 13 long years I was very involved with it through our racecourse ownership, the famous "racecourse lessees". I think that we made a good contribution to improving a municipal racecourse. Ultimately, we went into private partnership to secure long-term benefits, and those have been profound indeed. So I speak from some experience, but not with the breadth of experience expressed in your Lordships' House this evening.

Important issues have been raised in the debate, which has come at a useful moment. It is important for us to pause, reflect and take stock of matters. I say this not to make a bid to be the Minister for the horse, interesting though that might be; but perhaps given my past interests it is something in which I ought to take a greater interest. The question raised in today's debate iswhether the Government's general approach with regard to the regulation of betting on horse racing is right and what more we might need to do to combat any increase in criminal activity.

There are currently a range of mechanisms in place, as your Lordships well understand, to control and regulate betting on horse racing. Off-course betting is regulated through the issue of bookmakers' permits, by licensing justices under the provisions of the Betting, Gaming and Lotteries Act 1963. On-course bookmakers also require such permits. In addition, the activities of bookmakers operating in on-course betting rings are subject to regulations and controls operated by the National Joint Pitch Council. The Jockey Club in its role as the industry's own regulator has a very key part to play. Any criminal activity relating to betting on horse racing is a matter for the police and the criminal law. That much is clear. That much is obvious.

The Government have, as has been recognised in the debate this evening, recently announced an independent review of gambling. I shall say a little more about that later. The terms of reference will be published shortly, and the review body will have a wide-ranging remit.

The noble Viscount, Lord Falkland, made a very interesting and valuable contribution to the debate. I was particularly taken by his points about the changes in technology and the way in which that will increase the difficulties of controlling criminal activity in the racing field. He was absolutely right to point to the problems of technology, offshore betting and the way in which interactive media, the Internet and so on, will force us to take stock of those matters and look for a way forward.

The noble Viscount also raised a number of other questions. With regard to offshore betting and the level of UK betting duty, what has happened thus far is that the Treasury has consulted very widely with the major bookmaking trade associations. The Treasury is alert to the very profound impact on UK bookmakers of offshore betting and is considering what other measures might be used to safeguard bookmakers here and the important revenue streams to both the racing industry and the Exchequer. The Chancellor has already announced that he will be tightening the legislation on advertising offshore betting services. I am sure that that will be widely welcomed.

The noble Viscount also asked about the review of gambling. Its members have not yet been announced; that much is clear. We hope to announce shortly the name of the chair of the gambling review and the terms of reference. The names of other members will follow. We want the review to start in the spring and we would expect the review to take about a year. We see no sense in hanging around. The review will need to be thorough and it will need to be conscious of the need to modernise our system of regulation for gambling. That much will be welcomed.

The noble Lord, Lord Donoughue, the noble Viscount, Lord Bridgeman, the noble Earl, Lord Carnarvon, and others referred to the Jockey Club's request to have access to criminal information. Access to criminal records is a sensitive area. We think that the application has some merit and it will be considered by the Home Office this year. But the matter will certainly have to be resolved before the new criminal records bureau becomes operational in 2001. We are keeping the matter under serious review.

The noble Lord, Lord Donoughue, and the noble Viscount, Lord Bridgeman, raised the issue of a Minister for racing. We do not have any plans currently to appoint a Minister for the horse industry. I have noted the powerful arguments made in that context. Although the Home Office has an important co-ordinating role, there are issues which need to be taken up more widely across Whitehall. Given the contribution racing makes and betting contributes to the Exchequer, these are important concerns.

The noble Lord, Lord Donoughue, referred to the phasing out of the levy and to more emphasis being needed on media rights and other forms of funding. Again, the noble Lord put forward a compelling set of arguments. They are certainly not ones with which we would take great issue. We note the noble Lord's reference to changes to the levy system. We intend to announce soon the outcome of the Home Office review of the levy board together with our proposals for the sale of the Tote. We recognise the importance of both to the financial health of racing. These issues need to be taken together. They need to be considered strategically. They are very important to the future of the industry.

The noble Lord, Lord Cavendish, asked about the regulation of racing. The Government have no plans to take over the regulation of horse racing. I trust that the noble Lord is reassured on that issue. The noble Lord raised the question of the timing of the sale of the Tote and the taxpayers' interest. We expect to make an announcement soon. We recognise racing's legitimate stake in the Tote. But it has also to be said that the Tote is a public body and it is therefore not unreasonable that taxpayers should obtain some benefit from its sale.

The noble Viscount, Lord Bridgeman, raised the issue of the impact of current criminal law on the ability of the Jockey Club to do its regulatory job. We recognise that. We would be happy to receive proposals from the Jockey Club or any other contributor to this debate. Those will be important matters in what is a difficult area.

As I said earlier, this has been an interesting and stimulating debate. It has provided ample evidence of the breadth of knowledge in this House on horse racing matters and a most welcome opportunity to air many of the important issues that are of current concern to the racing industry.

As my honourable friend the Parliamentary Under-Secretary of State for the Home Department, Mike O'Brien, said in an other place only last week, British horse racing is an industry, and a sport, of major national and international importance. We want it to retain that international importance. After all, the industry employs, directly and indirectly, some 60,000 people and makes a £600 million contribution to the Treasury. In our rural areas, one in eight agricultural workers are employed in horse racing. In 1999, some 5.1 million people attended race meetings, the largest attendance at race meetings since 1965. Horse racing clearly has an important financial impact on our country and it is an important part of our culture.

The variety and diversity of our 59 racecourses are without equal anywhere in the world, and British racing continues to set the standards by which others measure the quality of their racing product, not only in terms of the ability of our horses, but also our jockeys, our trainers and the many other dedicated and very professional people who work within or support the industry.

Equally important to the success of British racing have been its integrity and its credibility, not only in the eyes of those who see it as a uniquely exciting sporting spectacle, but also to those millions of people, both in this country and overseas, who look upon it as an honest and safe sport on which to bet.

Racing and betting are inextricably linked, a point made by several noble Lords, and we must remain alert to the very real and continuing threat that this represents to the honesty and integrity of the sport. Your Lordships have, quite rightly, drawn attention to the concerns that have been expressed by the Jockey Club and others within the industry about the vulnerability of racing to criminal activity and corruption. I am totally aware of that. Brighton Rock is very much a legend in racing circles. We accept that the statutory framework within which horse race betting takes place has remained largely unaltered for several decades. In many respects, it has stood the test of time, and our racing and bookmaking industries continue to enjoy an enviable reputation, both at home and overseas, for their honesty and integrity.

But we cannot afford to be complacent. Race fixing, in any form, strikes at the very fabric of the sport. Illegal betting is an ever-present threat, as the sums mentioned in the debate indicate, to the viability of the industry. It has the potential to undermine our gambling policy objectives. It also reduces the financial returns to the taxpayer, racing and the legitimate bookmaking industry.

As I have indicated, the Government have decided that the time has come for a thorough and wide-ranging review of all forms of gambling in this country. This independent review will provide us with an opportunity to consider whether the current regulatory framework for horse race betting is the right one in today's world. It will enable interested industries and groups to put forward their own views and proposals for change. We welcome those. The prevention of criminal activity is fundamental to government policy on the regulation of gambling. If there are arguments for strengthening controls in a particular area, now is the time to consider them.

Individual cases of criminal activity must continue to be dealt by the police who, I know, have a close and important working relationship with racing's regulators. Thankfully, such cases are few and far between, but if investigations throw up evidence of wider and more systematic problems, they must be addressed. Alarmist speculation about the level of criminal infiltration into the racing and bookmaking industries is unhelpful and counterproductive. It does both industries an enormous disservice.

The Government are committed to maintaining a close and constructive dialogue with both racing and bookmaking representatives on these and other matters. Only by working together can we be confident that British racing will continue to enjoy its well deserved and much envied reputation for sporting excellence and integrity. That must be our objective; it must be one that we share; and it must surely be one that all Members of your Lordships' House will endorse.