HC Deb 29 January 2002 vol 379 cc210-2W
Jeff Emu's

To ask the Secretary of State for Culture, Media and Sport if she will make a statement about the determination of the 41st horserace betting levy scheme. [31818]

Mr. Paterson

To ask the Secretary of State for Culture, Media and Sport (1) whether it is her policy that the new funding scheme for the horse racing levy will be based on the sale of pictures and data to bookmakers; [30863]

(2) when a decision is expected on a new levy scheme for the horse racing industry. [30864]

Tessa Jowell

As the Horserace Betting Levy Board was unable to accept the Bookmakers' Committee's recommendations for the 41st levy scheme the matter, under statute, was referred to me to determine.

In considering the next scheme I have taken into account submission from the Chairman and independent members of the Levy Board, the Bookmakers' Committee, and the British Horseracing Board. In the interests of fairness and openness, these bodies were also given the opportunity to comment on each others' submissions.

I have also taken account of independent advice from Organisation Consulting Partnership on those submissions. A copy of their report is being placed in the Library and is being sent to those who provided submissions.

The criteria which customarily apply to the setting of levy schemes include the needs of horseracing and the capacity of bookmakers to pay. I can confirm that I have sought to reflect these considerations in reaching a view about how much bookmakers should be required to contribute in order to enable the Levy Board to give effect to the improvement of horseracing and its other statutory purposes.

The exercise of my responsibility to determine the 41st scheme has been made difficult by uncertainties currently facing the betting and racing industries. These include the effect of the introduction of a gross profits tax on betting, and the potential income for racing from its proposed sale of picture and data rights to bookmakers.

As to the former, it is difficult to judge the extent to which changes in bookmakers' turnover on horseracing betting will be reflected in their gross profits on that business. Although all recent levy schemes have been based on turnover it appears to me that, in current circumstances, it is not necessarily the fairest or most reliable indication of bookmakers' ability to pay the levy.

In all the circumstances, I am therefore minded to determine the 41st scheme on the basis of off-course bookmakers paying an average of 9 per cent, of their gross profits on horseracing betting. (As on-course bookmakers will not be directly affected by the tax changes I am minded to continue the flat fee arrangements of the 40th levy scheme). My officials will be working with the Levy Board so that the details of the scheme can be confirmed and promulgated in time for it to take effect from 1 April.

As to the sale of picture and data rights, it must be a cause of considerable disappointment that a full measure of agreement on the commercial terms which should apply has not yet been reached. Against this background of uncertainty and outstanding legal disputes I do not feel able to accept the Bookmakers' Committee argument that the 41st scheme should require only a nominal contribution from bookmakers from 1 May 2002. I have, however, taken account of the commitment from the British Horseracing Board that any payments in respect of licences to use pictures or data which are purchased by that date will be offset against levy payments which the bookmakers concerned are liable to make thereafter.

As a result of these uncertainties it is hard to forecast how much the 41st scheme, determined in this way, will yield; but, on the basis of forecasts previously provided by the betting industry, it would be in a range from £90 million to £105 million in 2002–03. A lower yield would reflect a lower level of profits. The scheme should enable both the betting and racing industries as well as punters themselves to share in the benefits flowing from the new tax regime; and enable the Levy Board to meet its own liabilities.

We would like to encourage the betting and racing industries to develop a modern relationship as business partners and move away from an adversarial approach. The levy scheme which I am minded to determine will give them a shared interest in developing their businesses to their mutual benefit. It is, however, clear that the levy system as a whole is flawed, and should not be needed if satisfactory commercial agreements between the parties can be made to work. We remain committed to its abolition, when parliamentary time permits.

East and Mexborough (Jeff Ennis).

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