§ Motion made, and Question proposed, That the sitting be now adjourned.—[Mr. Touhig.]9.30 am
§ Mr. Richard Page (South-West Hertfordshire)
I am delighted finally to have managed to obtain this debate through the ballot procedure. Success today has crowned six months of effort. However, the debate may be more apposite today than it would have been six months ago, as there has been a hint that in the next few months—or even weeks—there will be a ministerial statement on the Tote. I hope that the Minister will be able to elaborate on that.
I should welcome such a statement, as the one made by the Home Secretary on 1 May last year was, to put it delicately, opaque when it came to the ownership of the Tote and even murkier on its future. However, I am a helpful sort of person so I can tell the Minister that I quite understand his position. The Government may be leaky, but if they are to make a statement in the next few weeks or months, I accept that it is unlikely that he will give us all the details this morning. Therefore, I should understand if he were to employ a cricket bat 3 ft wide and 4 ft tall and stonewall furiously this morning. We have all been down that path, and we all understand the need for such defence.
I have two points for the Minister to take on board. The first is straightforward, and this debate underlines its importance. We need a Minister with responsibility for horses, a person in Government to argue the case for racing. That Minister could argue the case for the Tote turning into a trust, the proceeds from which could then be devoted exclusively to racing. We need a Minister for the horse, as exists in France and Ireland, although I fully accept that the Home Office should retain responsibility for betting and gaming.
I believe that my views broadly reflect those held by the vast majority of the racing fraternity in the United Kingdom, and that this debate is not just Richard Page firing off ideas without any support. However, it would do no harm for me to make clear the value of racing for this country—an aspect of the argument that is often pushed to one side.
Secondly, the racing industry employs about 60,000 people, with the betting industry employing another 40,000. One does not have to be brilliant at maths to realise that that works out to 100,000 people. All hon. Members know the ripple effect on other industries in a constituency when one activity weakens, so the total number of people supportive of and supported by racing is even greater than that 100,000.
The income generated by racing and breeding exceeds £300 million a year, generating £150 million a year in tax revenue and another £300 million a year in betting duty. As an aside, the Government must get their act together 200WH with regard to internet and overseas betting or those figures will go into a decline. However, that is a debate for another day.
There are more than 3,000 thoroughbred breeders in Britain. Some are very small, but some run quite sizeable operations. That sector achieves exports of more than £1 million a year. Last year, more than 5 million people went to watch racing involving the 13,000 horses that are in training. From that audience, the betting levy generated about £52 million. At the same time, the Tote contributed a record £12.3 million to racing. The previous record was £9.3 million, so it is evident that a substantial amount of money came back into racing.
We must bear it in mind that only 1.1 per cent. of horse racing betting turnover goes back into the sport in this country, compared with 4.4 per cent. in Australia, or the mammoth 15 per cent. in Germany. It is clear that Britain is very much the poor relation in terms of the volumes of money involved.
Our parsimonious approach is evident in the returns to British racehorse owners. Prize money receipts average 22 per cent., and in that respect I should declare an interest. Although I should be only too delighted if my prize money receipts climbed to 22 per cent., I have to say that my receipts are in the bottom half of the scale that keeps the average where it is. The costs of keeping a horse in training in this country compare with the 43 per cent. return in Australia. In the United States the return is 47 per cent., in France, 54 per cent., and in Japan, a stunning 87 per cent.
We are clearly at the bottom end of the Richter scale of support. The Tote's income stream is a vital contributor to racing's finances. It is inextricably entwined with, and an integral part of, racing in this country.
What is the future of the Tote? I am tempted to quote in detail from the debate on 26 July 1998 in the House of Lords. However, I want to emphasise two points that emerged from that debate, as I believe that it would do no harm to repeat them again and again.
The Tote was established by private Act of Parliament in 1928. It is worth underlining that the relevant Act began as a private Member's Bill, not a Government Bill. The Tote was not and has never been financed by Government money. It was financed by loans from racing. The Government do not stand behind or guarantee the Tote in any way; nor do they own any shares in it. The Government are therefore fairly remote from the Tote set-up.
Like any other bookmaker, the Tote has contributed to the Revenue for many years, with the money coming in through off-course starting prices and Tote odds. It returns to racing more than £2 million in sponsorship every year, and it also pays £6 million to race courses for the facilities that it uses. That money is vital, as the standard of some of our courses is disappointing and way below par. Those courses need to improve their image and raise their profile to make racing even more attractive to punters.
Successive Governments have benefited from the operation of the Tote, even though they contributed nothing to its creation and continued existence over the years. It is hard to comprehend how the Exchequer has a right to demand a payment for transferring the Tote into some other existence. Although there will be much 201WH legal toing and froing, I am given to understand that, to fulfil their plans for the Tote, the Government will first have to nationalise it, then privatise it.
This Government have made much of the windfall gains enjoyed by companies that have taken advantage of privatisation. I find it difficult to understand how the Exchequer can allow an operation to be nationalised—meaning that a fair sum of taxpayers' money will have to be paid into it—and then be privatised. If more money is needed, the Government will be guilty of going in for those windfall gains of which they have been so critical in the past. That is an interesting legal concept that will no doubt develop as time goes by.
I make these points to question the legal right of the Treasury to take its cut. I see no moral right for the Government to take a single penny. The Tote should pay the transfer costs; it would be wrong for them to fall on the taxpayer. The cost of changing its status into a trust is a legitimate cost for the Tote.
Elements of the racing world have come together in an unparalleled fashion. They are not used to working together in sweetness, harmony and unity, but they have called for the Tote to be operated at arm's length by an operating board, not directly controlled by the British Horseracing Board or racing's sectional interest as a charitable trust. The relationship between the Tote and its owners should be that of a listed company and its shareholders.
I envisage the racing trust comprising a chairman and a number of board members. Nominations for the board—perhaps seven, eight or nine—would come from interested bodies, such as the BHB, the Jockey Club, the Racecourse Owners Association and the Industry Committee (Horseracing) Ltd. A number of organisations go to make up that committee. To show the unity that exists, I should like to read into the record the organisations involved—the Amateur Jockeys Association, the British Equine Veterinary Association, the Federation of Bloodstock Agents, the Horseracing Sponsors Association, the Jockeys Association of Great Britain, the Masters of Foxhounds Association, the National Joint Council for Stable Staff, the National Trainers Federation, the Permit Trainers Association, the Point-to-Point Owners and Riders Association, the Point-to-Point Secretaries Association, the Racegoers Club, the Racehorse Transporters Association, Thoroughbred Auctioneers (UK) and, indeed, the Transport and General Workers Union. I hope that the inclusion of that last organisation will sway the Minister.
I also believe that the punters should be represented. Although I can see how all the bodies that I have mentioned would nominate someone, I cannot yet see a mechanism for nominating a punter representative. The one who loses the most money may not be the most satisfactory basis on which to choose a representative. The Tote's employees should also be represented. That would result in a representative on the board from every area of racing.
We need to set the Tote free to get support for the racing industry. I have already mentioned the problems arising from internet and overseas betting. The Tote needs to do its own thing to help racing in a positive way.
202WH Although I hope that the Minister will give detailed responses to all my points, I quite understand if he cannot. But I should like him to accept that there is a strong feeling that any charge by the Exchequer would be regarded as unfair. If any charge were to be made, and if it was more than a nominal amount, it would cripple the Tote's ability to help racing. Not enough funds go back into racing for us to allow the Tote to suffer in that way.
The racing fraternity—in which I include those Members of Parliament who are interested—does not want this issue to be tied up with any of the consequences that might flow from an election. I should like to leave the Minister with three points. We need a Minister for the horse, we need a racing trust for the Tote, and we need them now.
§ Mrs. Llin Golding (Newcastle-under-Lyme)
I favour a trust as well, but I disagree strongly with the hon. Member for South-West Hertfordshire (Mr. Page) about many of the issues being a debate for another day. I do not think that they are. The future of the racing industry must be considered as a whole, and if we are to have a trust, other matters must be considered.
I find the politics of racing fascinating: it makes the politics of this place look gentle, sweet and kind. It is the most interesting part of racing for me. I speak as a very poor owner of horses in the past, but hopeful ever of being a very profitable owner in the future. However, it may be a vain hope.
The problem is the amount of power that could go to the British Horseracing Board if there were a racing trust. The BHB already has control over the fixture list, which causes many problems, as people interested in racing will know. It has three members on the Horserace Betting Levy Board, and discussions are taking place on whether to abolish the levy board. That would mean another ball game altogether.
I understand that the BHB is sending threatening letters to internet betting companies, demanding copyright fees for pre-race meetings lists. I am aware that it already has an agreement with Victor Chandler in Gibraltar, who pays towards the betting list. As he was going to give money to the levy in any case—that was part of the deal that he was organising—is he now taking money from the levy and giving it instead to the BHB? That question needs to be asked. It has set the hare running on who owns the copyright of the racing list. We have not debated that, but it will affect the future of any racing company, whatever happens to the Tote.
There already seems to be a cosy agreement about who will sit on the racing trust. The hon. Gentleman gave a list; agreement has been reached, I understand, between the BHB and the Tote on who will sit on the trust. It is not in the interests of racing for something to be cut and dried before anything has been decided. It is all very well to have proposals, but to go round saying that something is definite when the proposal has not yet been agreed makes it seem like someone wanting to be king of the racing industry without proper consultation. I am concerned about what is happening, and extremely concerned that, if racing is to appeal to a wider audience, we should think carefully before a small group of people is given such wide power.
203WH We are talking about the future of racing. Many matters are involved—including getting more people to go to racing. There must be proper debate; merely to decide to set up a trust is not good enough. I doubt whether the Minister will tell us that a racing trust will be set up to replace the Tote. I would advise him not to do so. Before such a measure, many more talks must be held—with the whole industry, not just a cosy group who want to carve it up for themselves.
I hope that the Minister will acknowledge my comments, and that he will understand that not only one group is interested in the future of racing; there is a wide audience out there. The problems are great, and he should consider the matter far more carefully than many people want him to.
§ Mr. David Rendel (Newbury)
I am delighted to have the chance to speak in the debate. I congratulate the hon. Member for South-West Hertfordshire (Mr. Page) on having finally achieved the chance to hold the debate, after several months of trying. The matter is important for all parties; it is not party political. Members of all parties who have racing interests—or who have the best interests of racing at heart—will want to take part. I hope and believe that there will be cross-party consensus in favour of racing and of the transfer of the Tote—if it is to be transferred—into a trust controlled by the racing industry.
I think that my constituency has the second greatest interest—after Newmarket—in racing. We not only have a well-known race course, but a huge interest in breeding and training up on the downs. There is also a veterinary interest. I am happy to note that several owners live in my constituency. The industry provides employment, not only in my constituency but in other parts of the country, both for people who are comparatively wealthy—even if many of them spend more time losing money on racing than making it—and for some of the less wealthy members of our community. Perhaps the only chance of employment for those people may be that the racing industry should thrive and be prosperous.
At present, there is a threat to employment in the industry—especially for some of those who are less skilled in other matters—because of the potential ban on hunting. That is a contentious issue, on which I do not want to dwell in detail. I have made my position clear in the past: I am in favour of a ban on hunting. However, those in favour and those opposed will all agree that a ban is likely be introduced in the near future. When it comes in, that can only increase the threat to racing—particularly to national hunt racing. In view of that, it is especially important that we should take care not to damage the industry in any other way—for example, by losing some of the money that currently comes in from the Tote.
Sadly, several yards have already closed—I have lost one or two in my constituency. Several horses have been taken abroad, where, as has been explained, more money goes back into the industry—directly, from prize money, and indirectly, from a levy on the betting industry for that purpose. Some owners have an incentive to take their horses abroad and that is already happening.
204WH There are race courses that greatly depend on the continuing prosperity of the Tote, so that money continues to come into the industry. As the hon. Member for South-West Hertfordshire explained, it is difficult to understand the moral grounds by which the Government would remove the Tote and would, in effect, put the ownership and managership of the industry into private hands. There is a danger that the monopoly of Tote betting could be transferred into a private monopoly. The Labour Government would surely not want to make such a proposal. It could not be seen to be in the best interests of racing as a whole if Tote betting were put into a private monopoly—for example, if it were to be taken over by one of the large betting companies.
The Tote was created by racing people for racing people. In the past, it never belonged to the taxpayer. It should not be handed over to the taxpayer. The Tote should be left in the hands of the racing industry. The obvious way to do that is to create a trust, as has been explained, and to leave the Tote in the hands of the racing industry. That would ensure that money from the Tote goes back into the industry; in that way, both the industry and the Tote can thrive in the future.
§ Mr. Richard Spring (West Suffolk)
I am most grateful to have the opportunity to speak in the debate. I congratulate my hon. Friend the Member for South-West Hertfordshire (Mr. Page), who made a compelling case, both in describing the financial background to the situation in racing and, most important, in setting out a structure for the future of the Tote, which was most persuasive.
My hon. Friend mentioned the importance to employment of racing and breeding. It is commonly thought that 100,000 people are employed in the industry. Indeed, racing and breeding employ about 60,000. That needs to be put in context—one in eight of all agricultural workers are so employed. The hon. Member for Newbury (Mr. Rendel) referred to the possible threat to hunting, but, because of the terrible problems in the agricultural sector and the difficulties facing farmers throughout the country, employment in agriculture will be under considerable difficulty and pressure in the months to come. In considering employment in breeding and racing, we should bear that broad agricultural background in mind.
The health of racing is rather like the curate's egg. It is true that prize money remains low by international standards. The contribution of bookmakers via the levy, is about £52 million, so the amount of money currently contributed to racing by the Tote—£12.3 million—is substantial. That is an important contribution—apart from help to race courses and other forms of assistance from the Tote. The future of the Tote and the financing of racing through it will become even more important in the years ahead.
I am happy that the number of people going to race meetings has reached a record going back to 1965. Over the past two years, in my constituency, auctioneering activity at Tattersalls has been excellent. That shows that there is high demand for top-quality bloodstock.
My hon. Friend pointed out that the racing and betting interests are often divided over the outlook for horse racing and the industry in this country. They have 205WH radically different attitudes as to the financing of the industry. However, all can agree that a contribution of about £12.3 million, which has risen and has the potential to grow, is vital for the future viability of the industry.
The hon. Member for Newbury referred briefly to the internet. I shall deal with that matter at some length because it involves forces that are difficult to control and it will have a significant impact on the whole future financing of the racing industry and, of course, on Government finances. No Government know how to tackle that problem. The internet is driving prices down, as is evident in the retail sector. Offshore betting by telephone has been growing. Ladbroke's, Coral and William Hill have developed or are developing offshore companies. A voluntary ban introduced by Ladbroke's and Hill's was abandoned because Victor Chandler set up in Gibraltar.
At present, the 9 per cent. deduction from all bets in the United Kingdom consumes more than 40 per cent. of the money spent in betting offices and by telephone customers. In the United Kingdom, we have myriad confusing and antiquated betting arrangements. I welcome the Government's inquiry into gambling; we need to understand how gambling will react to meet the challenge of simplification and the challenges that the internet, e-commerce and offshore betting imply. Will the Minister tell us when that process is likely to be concluded?
Not surprisingly, the Treasury is seeking ways to protect its income. Three hundred million pounds is raised from general betting duty on horse racing alone. Can the position be sustainable if the pressures that I have described continue?
In November, the Government announced that it would ban advertising on Teletext by offshore bookmakers, and there is talk of tax penalties. How can Governments control the situation if Victor Chandler offers free telephone calls and a 3 per cent. deduction, versus the current 9.5 per cent. in the United Kingdom? Success beckons, with mobile telephones and the internet—ultimately to racing's disadvantage, because the money from bookmaking helps to finance the industry.
The Betting Office Licensees Association commissioned a report by Europe Economics. It studied the experience of Ireland, where duty was reduced from 10 to 5 per cent. Admittedly, the Irish economy has been doing extremely well, but betting turnover has increased by about 30 per cent. Ultimately, Governments cannot buck the market.
The British Horseracing Board agrees. It has called for a cut in off-course punter deductions to 5 per cent. from the current 9 per cent., and for a cut in general betting duty from 6.75 to 5 per cent. Of course those are Treasury matters, but the Tote's outlook must be viewed in that context. Others would like betting duty to drop to 3 per cent.
It is generally recognised that the current situation is unsatisfactory, and that there are grave questions to be asked about the future financing of racing. Therefore, the role of the Tote, and its ability to generate funding 206WH for racing, become even more important. I am delighted to say that racing takes a broadly united view of those issues.
In 1991, the Select Committee on Home Affairs recommended the sale of the Tote to a democratically accountable body. Arguably, we have that body today. The details of how it would operate betting offices and race course facilities must be addressed, so there is much to do, but there is widespread agreement among racing's constituent groups.
§ Mr. James Gray (North Wiltshire)
My hon. Friend may have inadvertently been wrong. I believe that, in 1991, the Home Affairs Committee recommended that the Tote should be given, not sold, to such a body.
§ Mr. Spring
If I used the word sold, I was wrong. The crux of the matter at the time was that the Committee called for a democratically accountable body.
The time has come for action. We have spoken about the need to appoint a single Minister in charge of the horse, and I believe and hope that one will be appointed. We must give the Tote a status, so that it is viable and enriches racing for the long term. Purchase price, structure and composition will need to be worked out, but I believe that there is an opportunity for the Tote to contribute ultimately and successfully to the viability of racing, that most important industry for this country.
§ 10.5 am
§ Mr. Neil Turner (Wigan)
My interest in the debate is not confined to horse racing; it is focused on the Tote, whose headquarters are in my constituency. One of the first things that I did when I was elected was to visit them, because the Tote employs about 1,000 people in Wigan. The Tote is investing heavily to bring itself up to date and into the 21st century with new computer technology. It is among the most advanced operations in the betting industry.
However, we need to sort out the Tote's future. There is far too much indecision and far too little certainty. Those who work for it in Wigan are deeply worried. I hope that the Minister will tell us that things will be settled very soon. Many of its workers are part-time, and their shift patterns are convenient, especially for those—mostly women—who have children to care for.
§ Mr. John Greenway (Ryedale)
The point that the hon. Gentleman is making about the importance of part-time work to Tote staff applies not only to Wigan but to all 59 United Kingdom race courses.
§ Mr. Turner
That is absolutely correct. I am simply saying that, because the headquarters are in Wigan, the issue is greater importance to my constituency.
When I visited the Tote's headquarters, I was surprised to discover that much of the betting that takes place within the Tote involves football, boxing, rugby league and so on. If we are to hand over the Tote to a trust, it should not be restricted to horse racing. People who bet on other sports would be miffed if they thought that the money that they were putting into the Tote was going solely to horse racing and not being used to benefit the sport that they were interested in.
207WH A windfall tax may be imposed if the Tote is privatised, or nationalised and then privatised. The Government were right to take back some of the excess profits of privatised industries because those industries had been undersold. However, in the case of the Tote the surplus will go to the general public. There is a clear difference between windfalls going into the private hands of shareholders and windfalls going to the general public for the public good.
§ Mr. Gray
The hon. Gentleman seems to be moving towards proposing that the Tote should be privatised. Does he recall the remark made by his right hon. Friend the Member for Livingston (Mr. Cook), now Foreign Secretary, before the general election:There will be no proposal by Labour to sell the Tote"?That was perfectly plain. Does that commitment have the same status as the commitment with regard to National Air Traffic Services, which was that Britain's airspace was not for sale?
§ Mr. Turner
I was not debating whether the Tote should be privatised or outlining what its future should be. I was merely making the point that, if the Government decide to privatise it, there is a clear difference between the profits from privatisation going to the private sector and private people and the profits going into the public purse. If the Government privatise the Tote, it is right that the surpluses should go to the public sector for use in whatever way the Government wish. However, that is a matter for the future.
I emphasise to my hon. Friend the Minister that the issue needs to be settled. The Tote must have a clear direction. We cannot have the matter hanging round in the way that it has for so long. The interests of racing need to be taken into account, but so do the interests of the other sports in which the Tote has betting interests. The interests of the work force, particularly those who work in my constituency, clearly need to be taken into account, as do the interests of management who have a clear view of the Tote's future. I hope that, in the not too distant future, the Minister will be able to provide clear direction on where the Tote is going.
§ 10. 11 am
§ Mr. Laurence Robertson (Tewkesbury)
As I am required to do, I declare an interest. I have a registered interest with the Tote, and Cheltenham race course is in my constituency. It is the source of a great deal of information and, occasionally, expense.
I congratulate my hon. Friend the Member for South-West Hertfordshire (Mr. Page) on his persistence in trying to secure a debate on the Tote. I am glad that that has paid off. The fact that he has been persistent shows how much he regards the racing industry and that he, like us all, recognises its importance to this country. He ably and eloquently demonstrated why the industry is important not only to the people who enjoy it, but to the people who work in it and to the Exchequer. He also provided statistics that show its importance.
There are some good statistics on racing. The figures for the number of racehorses in training and the number of people going racing are very impressive. Some 208WH statistics are more impressive than ever. However, as my hon. Friend pointed out, there are some bad statistics. For example, a small amount of betting turnover finds its way back into racing, and owners in this country recover a lower percentage of their expenses compared with those recovered elsewhere.
It is important that we do not view racehorse owners as a group of extremely rich people. Some horses are owned by a number of people. In these days when world travel is so easy, it is important to recognise that it is much more beneficial to send one's horses abroad. We must be careful about that. There are good and bad statistics for racing and, in some ways, the position is rather static or even worse than that.
My hon. Friend used statistics to show how important the Tote is to racing. It is important not only financially, but in other ways. Under the expert guidance and chairmanship of Peter Jones, much interest has been taken in racing. That has been generated partly by the Tote's performance, especially in recent weeks. Who could have ignored the fact that, for two consecutive Saturdays, ordinary punters, such as me, have had the opportunity to win £1 million on the scoop-six bet? I was not far off winning that sum, but, as they say, a miss is as good as a mile.
The Tote has several options for the future. Of course, there is the opportunity for a straight commercial sale and there would be some advantages to that. It would offer the Tote freedom and it might lead to the injection of capital and new people becoming involved. However, in those circumstances, how would we ensure that racing received the same amount of money as it does now from the Tote? A regulatory system, such as those for the water, gas and electricity industries, could be created. We could create an "Oftot" or something like that to ensure that money went back into racing. However, if we were to promise the private company that was created that we would take its profits away, I suggest that we would not have a successful sale of the Tote. That is not a viable option, especially given the way that it was set up and the reasons for its creation that were described by my hon. Friend.
A racing trust would secure the profits of the Tote for racing and would have racing people running it. The hon. Member for Wigan (Mr. Turner) was right when he said that the Tote takes bets on other sports, but historically, it was set up for racing purposes. I am a football fan and I would not want football fans to be estranged from the Tote. However, the fact that it was set up for the racing industry is all important. People in the racing industry say that betting and horse racing are two separate industries. They are correct in technical terms, but I think that one depends on the other. It is important that the Tote remains within racing and within a racing trust.
I pay tribute to the chairman of the Tote and all those with whom he has been involved in setting up an agreement with the British Horseracing Board and others. As my hon. Friend the Member for South-West Hertfordshire pointed out, such agreements are even harder to construct in racing than they are in Parliament. The agreement shows the willingness of the 209WH British Horseracing Board and the Tote to sort out differences and problems and to come together for the benefit of racing. That point, above all others, shows why a racing trust should be set up.
It is important to set up such a trust very soon. When Ladbroke bought Coral and passed some shops to the Tote, uncertainty was created in the industry and among the people who work in it because of the delay in finalising the deal that was caused by the referral to the Office of Fair Trading. I therefore urge the Minister to make a swift decision and the Government to enact the necessary legislation quicker than they appear to intend.
Some months ago, the Home Secretary announced—I think at the Tote's annual general meeting—that there would be a change in its status. Several years could pass before the Government bring that about. The passage of so much time is not good for the industry, so I urge the Minister to make a decision, announce it quickly and persuade the Government to introduce the necessary legislation. It should not be that complicated or difficult.
I wish to consider the money that the Government appear to want to take out of the Tote. The steering group report says:the government has not financed the Tote and does not stand behind it, eg as a financial guarantor".That fact is crucial as is the fact that the Government do not own the Tote. They may have given it a pool betting monopoly, but that is why it was set up and it does not provide a reason to take money out of it.
In the old nationalised industries, such as British Steel, which might have lost £1 million a day at the height of its success, the taxpayer was due a return. Taxpayers have not financed the Tote, so I do not see why they—and I am normally on their side—are due any return. It would retard the prospects of progress and, to some extent, weaken the Tote's position if a substantial amount of money were taken out. That would set things off to a bad start and—to use a racing expression—handicap it against other bookmakers. Is that fair when we want to create a successful enterprise when we change the status of the Tote?
Unlike a case in which a company acquires more shops or more business and has extra profits to pay off a loan, if the Tote's status is changed, it will not gain any extra business immediately from which to pay back the Government. Money would be taken from its present operating costs and income. That would be a smash-and-grab raid on behalf of the Treasury. I urge the Minister to stand up to the Treasury for the good of racing.
In conclusion, I repeat that racing is important to the country. There are worrying statistics, and we need to put more money into racing and to create a trust to control the Tote. That would enable the Tote to expand and carry out many more exciting ventures, which would be good for the industry. The Tote is therefore extremely important to racing. I urge the Government to make a speedy decision and to implement the necessary changes. I further urge the Minister to persuade the Treasury not to handicap the Tote and racing by taking money from it.
§ Mr. Owen Paterson (North Shropshire)
I have rather a sad interest to declare in this debate as I have been backing slow horses since I was about 15.
§ Mr. Paterson
I shall pass on the question of fast women.
I congratulate my hon. Friend the Member for South-West Hertfordshire (Mr. Page) on securing this debate. I know that he tried extremely hard to do so, and his determination has paid off. This is a unique opportunity to do something extremely good for racing because, as far as I know, everyone in racing agrees on this matter.
I have to take issue with the hon. Member for Newcastle-under-Lyme (Mrs. Golding). I do not know anybody who opposes this measure. This is a unique moment in the byzantine politics of racing in that all parties appear to agree.
§ Mrs. Golding
I made it quite clear that I was in favour of a trust, and I should not like the hon. Gentleman to think otherwise.
§ Mr. Paterson
I am delighted by that intervention. I understood that the hon. Lady was advocating a delay. If I misunderstood her, I apologise and withdraw my remark.
The unique feature of this proposal is the agreement that has brought all racing interests together. I heartily endorse the comments made by my hon. Friend the Member for Tewkesbury (Mr. Robertson). He was right to say that time is short. We hear much from the Government about globalisation, and no industry can be more affected by globalisation than racing. Trying to stop people betting on the internet would be as effective as King Canute setting up his throne on the beach at low tide. Betting duties would flow straight to the new betting points abroad.
It is pointless and childish to pretend that the Government can ban adverts for internet betting. As my hon. Friend the Member for West Suffolk (Mr. Spring) said, the only way to increase betting is to do as the Irish have done and reduce duties to make the industry competitive. In Ireland, the take has rocketed to 30 per cent. It is childish to try to stop people betting abroad.
It is equally childish to pretend that in today's racing industry horses will stay here and that owners owe us a favour. When the big owners go to Keeneland, they can send their horses all over the world, to Australia, Hong Kong, France or elsewhere. They do not have to come here—we have to offer them the very best. There have been spectacular cases in the past few weeks where horses have been arbitrarily moved abroad. Many jobs and businesses are at stake.
Racing and breeding support 60,000 jobs, which, as my hon. Friend said, means that they employ one in eight agricultural workers. With the pig industry losing millions of pounds every week and milk prices at rock bottom, we have to encourage jobs in the countryside. Here we have a chance to help.
Thoroughbred exports alone are worth £100 million a year. There are 7,300 thoroughbred breeders in Britain, of whom about 350 are full-time. All that could be in 211WH jeopardy if we do not grab this opportunity. The moment is right because more people are going racing. Last year, 5.1 million went racing, which is the highest figure since 1965. The state is the winner.
In 1998–99, the Tote's contribution to racing was £12.3 million compared with £9.3 million the year before. That is thanks to the new dynamic management in the Tote. Who really won? The state took £3 million in corporation tax and £21.3 million in betting duty. Racing did not gain, as we can see from the fact that only 1.1 per cent. of betting turnover in racing goes back into the sport. That compares with 4.4 per cent. in Australia and 15 per cent. in Germany.
We must not forget that earnings can be sent to those countries with no problems at all. We cannot blame owners for sending their yearlings abroad because the average take by owners in this country, after the cost of keeping a race horse in training, is only 22 per cent. compared with 87 per cent. in Japan, 47 per cent. in the United States and 54 per cent. in France.
As my hon. Friend the Member for Tewkesbury said, if the Government act quickly, they have a chance to do something good for racing. The Government did not set up the Tote—it was set up by a private Act of Parliament in 1928—they do not own it or any shares in it and they have never subsidised it. I raised this matter in Home Office questions this week and the Minister's answer was most unsatisfactory. I noticed that the Minister nodded when my hon. Friend mentioned the monopoly of pool betting, but that is only one sector of betting. The Tote is up against fierce competition from this country and abroad, from the lottery and other forms of betting. It is not a normal monopoly.
On that basis, it is time for the state to get out of racing. The trust has the full support of the industry. How much will the state take for the transfer of an organisation that does not belong to it, and when will it transfer it?
§ Dr. Lewis Moonie (Kirkcaldy)
I congratulate the hon. Member for South-West Hertfordshire (Mr. Page) on securing this debate. I apologise for my tardiness in getting here and for missing his opening speech, and I can assure him that it was entirely involuntary.
I declare an interest as a paid parliamentary consultant to William Hill. I therefore have a specific interest in gambling, although I have to say to the hon. Member for North Shropshire (Mr. Paterson) that, in a long life of trying to defeat the odds, that is the only way that I have ever managed to make any money out of a bookmaker. I finally found a way to do so, and I have not placed a bet since.
This is a welcome opportunity to debate a serious issue facing racing and the gambling industry. This is a crucial nexus. It has become clear from developments over the past six months that the industry cannot be left alone, with the Government simply assuming that it will limp along and we can patch over any cracks that appear. The offshore cracks in particular cannot be patched over, and the loss to Treasury coffers will be substantial over the next few years. I do not think that anything can be done about that.
The present telephone-based system will quickly develop into internet betting. One of the great—or, from the Government's point of view, depressing—features 212WH of internet betting is that it is impossible for Governments to control it. The quicker they realise that and the sooner they start to live with it, the better for them and for those concerned in gambling and racing, including the general punter.
The Tote, as a pool betting system, is a natural monopoly. I do not see how such a monopoly could be fully transferred to the private sector. That would be wrong and challengeable in law. It could not be defended under European Union competition law unless a trust were set up to organise it. I do not think that the Government have a prayer of getting rid of it. They should recognise that such a natural monopoly would be best dealt with by a trust that is set up to serve racing. We should bear it in mind that to serve racing was the raison d'être of the Tote when it was set up, and that primary purpose should continue.
Other hon. Members have mentioned the need for quick decisions. We cannot afford to dilly-dally over the matter for much longer. I welcome the fact that the Government are setting up a general commission to consider every aspect of gambling. That is long overdue, but the Tote cannot afford to wait until that weighty organisation comes to its conclusions, which could easily take a year or more. Therefore, I would warmly welcome a quick decision by Ministers.
If we allow matters to continue to develop as they have done, there will be a loss to the Treasury and to racing. Gambling will become prey to criminal influences: the moment it is taken offshore, it will become more difficult to control and unsavoury elements may well find a niche. It is far better to recognise the need for change and to accept a reduction in revenue to encourage gambling to remain onshore. In that way, we shall help to ensure a healthy future for racing and the gambling industry.
§ Mr. John Greenway (Ryedale)
I congratulate my hon. Friend the Member for South-West Hertfordshire (Mr. Page) on having secured the debate. For some months, with my encouragement, he has been trying in the ballot to win a place for such a debate. However, I agree that the delay has been worth while, because the time is now right for a decision to be made on the Tote's future. In the period since such a debate was first mooted, clear progress has been made within the racing industry toward drawing up recommendations that can be put to the Government.
Although I speak now on behalf of the official Opposition, I, like many hon. Members, have a close constituency interest in racing, in that the Malton and Norton area of my constituency contains stableyards with a long history, stretching back almost three centuries. I am glad to report that they have of late enjoyed better times, with more big race winners, but much remains to be done. At this juncture, I should express my agreement with all that has been said about the importance to the rural economy of racehorse training, and the need to improve the lot of many of the yards and their staff.
I place on record my admiration and affection for the Tote. I suspect that many participants in today's debate have, from time to time, enjoyed the Tote's hospitality. My association with the Tote began when, with the hon. 213WH Member for Mansfield (Mr. Meale), I was a member of the Select Committee on Home Affairs. We grasped the nettle and inquired into the Tote, the Horserace Betting Levy Board and the equivalent body for greyhound racing.
That fascinating experience began by our being told that we would find an incompetent rabble at the Tote. In fact, we found that, under its then chairman, Lord Wyatt, it was an extremely well run organisation. I endorse the remarks of the hon. Member for Wigan (Mr. Turner) about the staff at the Wigan headquarters. Members of the Home Affairs Committee visited Wigan during our inquiry: we were greatly impressed and found that many of the allegations made against the Tote, especially by some sections of the media, were wholly unjustified. I pay tribute to the Tote's current chairman, Peter Jones, and its team of directors and executives. They have successfully developed the Tote in recent years.
As my hon. Friend the Member for West Suffolk (Mr. Spring) said, the key recommendation of the Home Affairs Committee report was that the Tote should be given to racing when a suitable body, capable of running racing, had been established. That recommendation was the spur to the creation of the British Horseracing Board. We made our recommendation for two reasons: first, to get the Government out of an organisation in which they had no real long-term role; and, secondly, to enable the Tote to develop its commercial interests to a greater extent than it could as part of the public sector, thus generating increased profits that could be fed into racing, especially in support of prize money and race course development.
That objective is within racing's grasp, but one or two fences remain to be taken. Even though hurdles are lower than fences, using the word hurdles to describe any obstacles would imply that jumping them will be difficult; in fact, it should not be difficult to do so. The chief fence that has to be cleared is the Government's decision on how to proceed.
The Tote is a strategic asset for racing. My hon. Friend the Member for South-West Hertfordshire described it as a vital part of the income stream of racing. The £12.3 million it generated in 1998–99 is significantly more than the hon. Member for Mansfield and I remember it producing nine years ago, when our Committee produced its report. That sum is almost one quarter of the revenue racing gets through the levy. The best way to illustrate the importance and effective use of money from the Tote is to draw attention to the Tote's sponsorship of key races at this country's two main racing festivals: the Cheltenham gold cup, which is coming up shortly, and the Tote Ebor handicap at York in August. They are the two great festivals of jump racing and flat racing respectively; without the Tote, they would be all the poorer.
The Tote has never received Government funding or taxpayers' support. The Government do not own the Tote and, regardless of racing's interests, that is one of the key reasons why it should not be sold off to the highest bidder. However, it is important to recognise that the Tote has enjoyed a monopoly on pool betting. In discussions with racing's leadership, I have learned that the industry wants to continue to enjoy that 214WH monopoly and recognises that it might justify a relatively modest payment being made to the Government to set the Tote free and enable it to become a directly held asset of racing.
The structure of such a transfer to racing of that asset would have to command the support of all strands of racing. My hon. Friend the Member for South-West Hertfordshire listed the many organisations that have expressed support for the creation of a new racing trust, but the three key bodies that have had to come together to try to settle a common position are the British Horseracing Board, the Racecourse Association and the Tote. Despite a shaky start, I have been encouraged by what I have seen of their deliberations. For many of the bodies involved, the experience has been a unifying one. The racing industry has, at long last, shown some maturity and responsibility in its attempts to reach agreement.
The hon. Member for Newcastle-under-Lyme (Mrs. Golding) has been treasurer of our all-party racing group for many years. It is because of the likelihood that I would have to speak on such matters on behalf of the Conservative party that I stepped down as chairman of that all-party group. The hon. Lady said that it appeared that there was a cosy club in racing, but I do not believe that that is so. Racing has been challenged to find a solution and it is not surprising that, in responding to that challenge, it has attempted to resolve all the problems that might arise by creating a new structure. However, I gather that the BHB would have only one of the eight seats on the Tote board.
I do not want to get bogged down in detail, because we have not yet seen the document that gives full details of the proposals—we have seen only the broad outline. However, it appears that, of the available options and in the light of the Government's announcement that they are minded to put the Tote into the private sector, the racing trust proposal is the most attractive. A total sell-off of the Tote is unacceptable, not least because of the likely diminution in profits returning to racing. Also, it would be unacceptable to create a privately owned Tote monopoly of pool betting, a point which the hon. Member for Kirkcaldy (Dr. Moonie) rightly made. We listened with interest to his perspective on the basis of the main high-street bookmakers.
A private pool would lead to pressure for the pool to be broken up, or it could lead to the end of the monopoly of pool betting. That would be disastrous for horse racing and it would be equally bad for punters. It is essential that the pool monopoly be retained. The same argument underpins the concept of the national lottery. I am sorry that my hon. Friend the Member for Tewkesbury (Mr. Robertson) did not win scoop 6, and I have no doubt that he is too. He spoke of the value of a massive single pool in terms of attractive bets and the opportunity through horse racing to create millionaires, in addition to the national lottery. That is an extremely important factor.
There are genuine questions about other matters—for example, the protection of the punter, efficacy and the need for the running of the pool and of the Tote itself to be properly monitored. None of these issues is beyond early resolution. There are also the interests of other betting organisations. As the hon. Member for Wigan said, there are other sports interests, which must be 215WH considered. I do not believe that these matters undermine in any way the concept of the proposed racing trust.
The Government need to take some early decisions on the deregulation of gambling. More importantly—we appreciate that this is not a matter for the Minister—there is the vexed issue of betting duty and the need to deal with the difficulties created by betting on the internet and the offshore activities of some bookmakers.
Those issues are for another day. Our opportunity this morning is to indicate our view on the future of the Tote. I hope that I have made it clear that the Conservative preference would be to give real and urgent consideration to the racing trust proposal. I agree wholeheartedly with the hon. Member for Wigan that the matter needs to be settled, not least for the members of the staff who work for the Tote throughout the country, to whom we pay tribute. The employment that the Tote generates is important to local communities.
We think that the proposed racing trust deserves every consideration. We are unconvinced by the other options. The trust is the best chance that racing has had to show what it can do for a generation or more. My hon. Friend the Member for North Shropshire (Mr. Paterson) was right when he said that this is a unique moment for racing, and racing will not forgive us if we fluff this chance.
§ The Parliamentary Under-Secretary of State for the Home Department (Mr. Mike O'Brien)
I join in congratulating the hon. Member for South-West Hertfordshire (Mr. Page) on raising the debate. It is an enormously important issue. The racing industry is clearly important to Britain. The debate provides a useful opportunity to air many important questions that are associated with the future of the Tote and of horse racing.
There have been some extremely good speeches, including those of my hon. Friends the Members for Newcastle-under-Lyme (Mrs. Golding) and for Kirkcaldy (Dr. Moonie). The hon. Member for Tewkesbury (Mr. Robertson) made an important contribution, given his extensive knowledge of the racing industry. The hon. Member for North Shropshire (Mr. Paterson) and others also spoke very well.
I need to make it clear that the Government are not willing to announce today their conclusions about the sale of the Tote. However, I shall give you some indication, Mr. Chairman, of when we might make that announcement.
§ Mr. Deputy Speaker (Mr. Frank Cook)
Order. I remind hon. Members that this is not a Committee but a convention of the whole House.
§ Mr. O'Brien
I am grateful, Mr. Deputy Speaker.
The hon. Member for South-West Hertfordshire said that the industry needs someone to argue for racing. I am not sure whether I want to be designated the Minister for the horse, but I am happy to say that I would want to be an advocate for the success of the industry, which is enormously important to Britain. It 216WH employs many people and millions of people have an interest in it, even if it is merely to put a bet on horses from time to time.
The industry benefits us all in many ways. For example, betting duty is paid to the Exchequer, which benefits every taxpayer. I agree with the hon. Member for Tewkesbury that racing is not only a rich man's sport. My father was very far from being a rich man, but he supported the industry for many years. Many people care deeply about racing, and not only because it benefits them economically or is of interest to them. In many ways, it is part of our country's culture. It needs to be respected for that reason.
The Tote is also extremely important to us. A few statistics might illustrate that importance. In 1998–99, the Tote had a turnover of £497 million. That was an increase of 25 per cent. on the previous year. There was a profit of £23.9 million, which was an increase of 34 per cent. From that profit, it gave £12.3 million to horse racing, which was an increase of 32 per cent. It has more than 300 betting offices and the credit betting operation has more than 50,000 customers. It operates pool betting at all 59 race courses and employs 2,800 full and part-time staff.
I agree with the hon. Member for Ryedale (Mr. Greenway) that it is time to send a clear message that the Government need to get out of an organisation in which it should not have a long-term, direct role. We must ensure that the Tote's long-term future is secured, and that is what we propose to do.
We have given the most careful consideration to how the Government get out of having a role in the Tote and to the way in which we secure its long-term future. We want to be sure that we reach the right conclusion, which pays proper regard both to the interests of horse racing and to those of the taxpayer. We would do neither a service by trying to rush our fences. As we all know, the Government decided to sell the Tote only on the advice of a steering group which was chaired by its chairman, Peter Jones. On the basis of the group's recommendations, we are satisfied that a sale would represent the best means of securing the Tote's future in the increasingly competitive and diverse business environment in which it operates.
One option, which I know is favoured by many, is the sale of the Tote to a racing trust. In considering the sale options, the Home Office received a proposal, jointly sponsored by the British Horseracing Board and the Tote itself, for the acquisition of the Tote by racing.
My hon. Friend the Member for Newcastle-under-Lyme (Mrs. Golding) referred to the politics of racing, suggesting that it made politics in this place look kind. We wondered for a while whether the various political groups in racing would be able to come together and form a coalition government given the proposal that a racing trust should run the Tote. I am pleased that there is a proposal. We will give it careful and detailed consideration. My hon. Friend the Member for Newcastle-under-Lyme called it a cosy deal, rather than a cosy club, but it is not such a done deal. She asked me 217WH to consider the views of all racing. In that regard, hers are wise words. We need to consult widely and ensure that the industry broadly supports the proposals.
§ Mr. O'Brien
I hear what the hon. Gentleman says, and what others have said during the debate. I shall weigh the words of all of them with great care. We shall examine the issues with care and we intend to consult widely. The hon. Gentleman would want us to do so, to ensure an element of consensus in the industry.
The hon. Member for Ryedale is right to say that some element of agreement has been reached, and we should congratulate the industry on achieving that agreement. I agree with the comments of the hon. Member for Newbury (Mr. Rendel) on the matter. We need to ensure that the future of racing is secured for the long term.
We have looked at the issues in detail, alongside the other options, the principle of establishing a trust and the possibility of a sale on the open market or a flotation. My officials have had discussions with the relevant racing interests so that we can be confident that we fully understand the detail of the proposals.
We are aware that the Tote is considered by many to be an integral part of horse racing, not least because of its presence at each of the United Kingdom's 59 race courses and through its financial contribution to the sport over many years.
The Government recognise that racing has a stake in the Tote, and it has been one of our key objectives in this exercise to ensure that the interests of racing are safeguarded. There are other stakeholders, notably the present managers and staff, whose collective efforts have been a major factor in the Tote's success. However, it must be recognised that the taxpayer also has a legitimate interest in the business. That was an important conclusion of the Tote review steering group.
Although the Tote was originally constituted under a private Bill, the statutory framework within which it now operates is largely based on the Betting, Gaming and Lotteries Act 1963. Today's Tote is a very different and far more diverse business than that originally envisaged by Parliament under that private Act in 1928, and decisions about its future must self-evidently be taken in today's context, and not in the context of 1928.
§ Mr. O'Brien
I will give way one last time, because my hon. Friend has not contributed to the debate so far. I am happy for him to make a contribution.
§ Mr. Meale
I thank my hon. Friend. He speaks of protecting the public interest. May I point out to him 218WH that a recent ruling by the Monopolies and Mergers Commission on the proposed Ladbroke-Coral merger clearly showed the danger of off-course betting becoming a monopoly? Choosing the route of the trust would prevent that for ever in the industry.
§ Mr. O'Brien
That is one of the issues to which we must give full consideration. I assure my hon. Friend that, when we make known our views, we will take account of that and many other points.
We must not overlook the extent to which the Tote's status as a public body has been a factor in its commercial success, not least through the perception of its probity and respectability, on which those who work for the Tote are to be congratulated. As the hon. Member for Tewkesbury observed, the Tote has enjoyed a commercial advantage over competitors by virtue of the grant by the Government of an exclusive licence to operate pool betting on horse racing. Indeed, that remains the foundation on which the Tote's broader success has been built.
The hon. Member for Tewkesbury argued—ingeniously, I thought—that the taxpayer—the public—would smash and grab the racing industry. I disagree with that view. The unarguable fact is that the Tote is at present a public body, and it is therefore reasonable that the taxpayer should obtain some benefit from its sale. The Government will defend the taxpayer against those who would seek to give away potential benefits.
The taxpayer has a legitimate interest and it is important that when the future of the industry is determined, we balance the interests of the industry, the long-term future of the Tote and the taxpayer, which are all legitimate interests. The fact that neither the Government nor anyone else currently own the Tote does not alter that conclusion.
§ Mr. O'Brien
Primary legislation will be required before the Tote can be sold, and we will introduce that at the appropriate time and when parliamentary time allows.
Hon. Members will understand why I cannot say today when we will be able to introduce such a Bill, but I have noted the arguments for it to be introduced sooner rather than later. I will bear in mind the views expressed by the Opposition. The hon. Member for Ryedale said that he wanted some early movement on the matter and we shall take that on board. No doubt the matter will be discussed through the usual channels.
I am aware of the need to reduce uncertainty about the Tote's future in the interests of the business, the Tote's staff and the industry as a whole. I remain hopeful that we shall be able to announce our conclusions about the future of the Tote within the next few weeks. [Interruption.] My hon. Friend the Member for Wigan asks how long, so I say not long. The future of the Tote does not stand alone as an issue facing the industry, although it is one of the more important issues.
Alongside our assessment of the sale options, the Home Office has been reviewing the Horserace Betting Levy Board and the current levy system. It is our present 219WH intention to make a single announcement covering both the Tote and the levy board. Examination of the issues has taken some time, but it is right that we should be able to set out our conclusions clearly for those who have a direct interest in the future of the racing industry.
Although the hon. Member for Tewkesbury thinks that the process has taken a long time, it has not taken longer than we planned. We must balance the various considerations that a successful sale strategy would have to cover, and ensure that the financial implications have been properly evaluated. We must also ensure that the racing industry comes together on the proposal for a trust.
If we had gone too fast at those fences, we could have ended up with a situation in which some of the riders had come off at the back and the racing industry had not got its act together at the front. It has now done so, and we can give full and proper consideration to the proposals. We can also begin to examine the other issues that will directly affect the future of racing.
We expect to make an announcement soon. It will set out clearly our perception of the Government's future relationship with horse racing, especially with the industry's funding arrangements. Today's debate has shown that British horse racing is an industry and a sport of major national and international importance, and the Government wish it to prosper and thrive in the years ahead. I welcome the opportunity that the debate has provided to make that important point.