Betting (Hansard, 22 March 1989)

§ Mr. Hurd

I have today sent the following letter to the chairman of the Horserace Betting Levy Board and written similarly to the chairman of the Bookmakers' Committee. A copy of the scheme has been placed in the Library.In your letter of 1 November 1988 you reported to me that the Board and the Bookmakers' Committee has failed to agree the Scheme to have effect for the 28th levy period and that the Scheme accordingly fell to be determined by me. I have now reached my decision and enclose a copy of the Scheme which I have determined. In reaching my decision I have taken into account all the submissions on the issue made to me by the Government-appointed members of the Levy Board and by the Bookmakers' Committee, together with other submissions and representations, including from the Jockey Club and the Horseracing Advisory Council, on which the Board members and the Committee were afforded the opportunity to comment to me. As recommended to me both by the Board members and by the Committee, the Scheme is 'shop based', that is to say, levy on the cash horserace betting turnover of betting offices is to be calculated by the reference to the turnover of each individual office, not the turnover of bookmaking companies. Levy on credit betting turnover necessarily has to be fixed on a different basis and is, therefore, to be calculated by reference to a scale which as nearly as practicable equates with the levy rates on cash betting. The cash yield from the Scheme will depend upon the level of leviable betting turnover. Assuming a turnover of £4,000 million, the total estimated yield will be about £34.5 million. In their final negotiations with the Bookmakers' Committee, the Levy Board sought some £34 million from the scheme, albeit assuming at that time a somewhat lower turnover. Equally, the Committee subsequently indicated that it was prepared for the scheme to produce some £34 million. Like the schemes recommended to me both by the Board members and by the Committee, the Scheme which I have determined is "leveraged", that is to say, should turnover in the 28th levy period increase beyond £4,000 million, for each 1 per cent. such increase the levy yield would be more than 1 per cent. This means that racing as well as bookmaking would benefit from higher turnover. It is, therefore, all the more important to re-emphasise my expectation that the Levy Board as a whole will continue to aim to achieve value for money in its expenditure, continuing and if necessary building upon the arrangements for that which were introduced following the last determination, of the 23rd levy scheme. It is equally important to put on record my confidence that the bookmakers will be able to make their contributions to the levy at the rates in the Scheme without making any increase in their deductions from the punters. The rates of levy in the Scheme, whilst in some respects higher than those recommended by the Bookmakers' 601W Committee, are overall lower than those sought by the Board. It has not been possible for me to accept the contention of some in the racing industry, to which the Board members have referred, that the target levy yield from this scheme should be set by reference to comparisons with the rates of return from betting to racing in other countries. The facts on this point are disputed and remain unclear. I also believe it to be right, under the current levy arrangements, for the needs of racing to be met by the levy to be quantified annually in cash terms, rather than assuming that what is required is a fixed percentage of turnover. Under the levy legislation the rates of levy are to be settled annually. Both the needs of racing and the capacity of bookmakers to make contributions can increase or decrease as a proportion of leviable turnover; they are not necessarily in a precise relationship to one another. My statutory duty is to determine a scheme for one year only, and it would not be right for me to say that the rates for the 28th levy period should or should not remain the same in successive schemes. In that it is shop-based, the Scheme represents a novelty. The Levy Board and the Bookmakers' Committee will no doubt wish to monitor its operation as closely and quickly as possible, and to take the results into account in their negotiations on successive schemes. I understand the arguments for the recommendation from the Government-appointed members of the Board that there should be an inquiry into the long term funding of racing. The possible privatisation of the Horserace Totalisator Board is a relevant factor for me to have in mind in reaching my conclusion on the need for, and scope of, an independent and objective assessment of the issues within that recommendation. I will announce that conclusion when I have received and considered advice of Lloyds Merchant Bank as to the feasibility of that privatisation. That advice is expected soon. My hope is that the negotiations for the 29th levy scheme will be conducted constructively and in a spirit of co-operation.