Lord Herbert of South Downs
To ask His Majesty’s Government what plans they have to support the horseracing and bloodstock industries.
Lord Herbert of South Downs (Con)
My Lords, I am grateful for this opportunity. I declare a minor interest in owning a tiny fraction of an infuriatingly inconsistent horse of moderate ability. However, my real interest is as a lover of the sport of kings, and I know that my passion is shared by millions of others. Racing is the country’s second-largest sport—only football is bigger. It welcomes 5 million racegoers annually to 59 racecourses across England, Scotland and Wales and the industry generates £4.1 billion a year for the UK economy, supporting 80,000 jobs in the rural economy. This is not just a pastime. It is really important to the country. I sometimes wonder whether racing receives the political attention such a major sport and industry deserves.
Despite its size and prestige, there is much to be concerned about for the future of racing in the UK today. It is a global sport and must be competitive to attract owners, runners, racegoers and betters. Yet prize money levels in British racing are far lower than in rival countries. The average per race in Britain is £16,000; in Ireland it is £22,000, in France £24,000, in Japan £53,000 and in Hong Kong £155,000. This already large gap is widening fast. The clear and present danger is that there will be an exodus of equine talent from our country and horses running in other countries where prize money is higher. That is happening already. Stallions are already going abroad rather than staying here. Horses are not being kept in training here. There is a worrying mismatch between the reputation of British racing as the best in the world and its financing, which is among the worst. This gap is simply unsustainable.
The Government say that the levy is not the only source of funding for racing, representing just 6% of racing’s total income last year whereas owners and breeders contribute nearly two-thirds between them. That is true, but owners and breeders rely on the prize money, which is provided by the levy, so the level of the levy is a key concern for the future of racing. It is a vital source of income for the sport, delivering £80 million to £100 million of funding annually. However, that is way short of the £133 million annual target agreed by the Government in 2017. The current level has simply not been enough to keep pace with inflation or growing costs in the industry.
To take a step back, racing receives a return of less than 3% from the more than £13 billion bet every year by punters in the UK. That is a tiny percentage, the lowest of any major racing nation. Ireland’s return is 8.4%; even Australia’s 3.4%, not much above our current yield, would mean a £174 million levy yield going to the UK industry, far higher than it is currently. The centralised funding models in places such as Japan and Hong Kong lead to much higher returns still to racing, such as 16.6% in Japan. We do not have such models. Instead, we have profitable betting companies, which is why the levy is so important.
I welcome the Government’s review of the levy because three key reforms are urgently needed. First, the rate must be increased, as I think all sides now recognise. Secondly, it should be linked to inflation to ensure that it maintains its value and to provide certainty. Thirdly, we must close the loophole so that the levy applies to all bets by British customers, including on international races, which is not how it works at the moment. In fact, Britain is the only major jurisdiction not capturing domestic betters betting on international racing. That has not always been the case, as the levy captured British betting on international racing prior to 2004. This is a very important gap to plug, because a fifth of the money bet by British punters is staked on races abroad, so the industry is simply losing a lot of money that it would have accrued before.
However, there is a further risk to the financing of racing that is not external. I am afraid that it comes from government itself. To deal with problem gamblers, the Government and the Gambling Commission are proposing affordability checks on remote betters. The Government themselves say that this will impact on racing’s finances but that the checks will be minimal. However, the industry calculates a far worse impact than the Government suggest: an 11% reduction in levy income and a consequent loss of value to media rights deals, reducing funding by 15%. The overall effect could see racing lose millions of pounds a year. The industry can ill afford this at the moment.
I am afraid it is no good to say that the checks will be frictionless, because the technology to deliver frictionless checks does not exist at the moment. Checks every six months and no thresholds, which are already far too low, will effectively mean onerous checks for everyone. That is a clumsy, one-size-fits-all approach that will bludgeon punters.
We know how these institutions will apply these rules—with a sledgehammer. Just look at how the banks have applied the politically exposed persons regulations. It is not just the banks. In July, I received an email from Bet365, with which I have an account, which said:
“Dear Sir Herbert … we have identified that you are a politically exposed person”.
It went on to demand that I identify the source of funds through bank statements, proof of annual income and so on and so forth. Those are immensely onerous requirements, yet I can assure noble Lords that the sums I was betting were tiny: a few pounds a year. These checks were completely disproportionate, so we know how the betting companies will apply any rules. We have a good idea of how they would apply affordability checks. We are already seeing a reduction in betting turnover as bookmakers begin their own checks and high-profile betters say that they will quit.
This reform is doubtless well intentioned but it will not work in practice because it will simply drive punters to the unregulated black market. I am afraid that the Gambling Commission is in complete denial about that. However, I also think that these checks are wrong in principle. People should be allowed to spend their money in ways that they judge is right for them. Would we seriously propose affordability checks for alcohol or tobacco? We might take measures to deal with problem drinking and problem smoking; we might tax these products and so on, but would we actually say to people that if they cannot afford them we will not allow them to purchase them? It is an extraordinary suggestion.
For the state to decide whether someone may place a bet based on their job title or postcode is discriminatory. Actually, I would argue that it would be an outrageous abuse of state power. If there is an issue with problem gambling, affordability checks are an unwise and blunt instrument that will not deal with the issue. I suggest the Government drop these checks and focus instead on measures that are targeted on those most at risk: the problem gamblers.
There is a very important point here: there is no point in increasing the levy, if the Government finally decide to do that, which would be very welcome, only for any gain or even part of it to be cancelled by another government measure. That would be to give with one hand and take with the other, and racing would be the loser.
Finally, I will raise the issue of the proposed solar farm at Newmarket—2,500 acres of solar panels, the largest in the country. The visual impact from the Limekilns training grounds in Newmarket would be appalling. I should say that I live five miles from the centre of Newmarket but in completely the opposite direction. I would not be personally impacted by this solar farm. I have no vested or private interest in opposing it, but Newmarket does.
Newmarket is the centre of flat-racing in not just the UK but the world—it is known as its headquarters. Historically, the rail tunnel was put under the gallops. The gallops were not dug up in the war for food; special planning protection was given to Newmarket. That has protected it as the international centre of flat-racing, and we cannot be casual about losing these protections or that special status.
The 77 acres of batteries are just a device to obtain planning permission. I believe that solar panels should be on the roofs of public buildings, not on high-grade agricultural land. This proposal is opposed by all local councils, as well as the racing community. I appreciate that there is a public inquiry on it and that Ministers are taking a quasi-judicial decision, but I urge them to reject the proposal if they possibly can.
In conclusion, responding to a similar debate initiated last year by my noble friend Lord Risby, the then Minister said:
“The Government remain committed to supporting British horseracing and related businesses, which are vital to the lifeblood of the rural economy”.—[Official Report, 17/11/22; col. GC 232.]
The Government must mean what they say. If they are committed to supporting racing, they cannot bring in damaging and pointless affordability checks, knowing that the sport’s finances will be shredded. If they are committed to supporting racing, they cannot allow the erosion of our global competitiveness when a key solution—increasing and reforming the levy—lies in their hands. If they are committed to supporting racing, they cannot just ignore the concerns of the global centre of the sport and allow a development which would go against centuries of protection. I am grateful to the Government for acknowledging the importance of racing; their actions must now match their words.
Baroness Harding of Winscombe (Con)
My Lords, I thank my noble friend Lord Herbert for securing this debate and introducing it so comprehensively, such that I suspect I will not say anything that he has not already said—with one exception, as I declare my interests, which I am afraid are slightly longer than his. I am a steward, which really means a director, of the Jockey Club; I totted up that I have been a racehorse owner for more than 30 years, which makes me feel very old; and I am a 20-years’retired amateur steeplechase jockey. As we will discuss the levy, I should also declare that my grandfather was the first chair of the Levy Board, in 1961.
Racing is definitely in my heart, soul and blood. It has given me some of the best days of my life—I was encouraged to add the words “some of” into that sentence by my husband last night. When I have a bad day at work, I tend to close my eyes and remember how it felt to land over Becher’s Brook and how it felt to lead in the winner of the Cheltenham Gold Cup, and I suddenly feel better.
Although I have been phenomenally lucky in racing, I am not alone. As my noble friend said, racing is the second-largest sport in the UK, with over 5 million racegoers each year. It is internationally renowned, hosting some of the most prestigious races in the world, and underpinned by world-class talent, human and equine—not me, unfortunately. It has strong, respected and genuinely trusted governance, and it contributes more than £4 billion and 80,000 jobs to the economy. My noble friend listed all those facts. We also host some of the most memorable spectacles of the year in British racing. It is where Heads of State, captains of industry and everyday punters are all fans together.
My first question for my noble friend the Minister is this: does he agree that British racing is a substantial asset to this country and that he and the Government genuinely want to see British racing prosper? If so, as my noble friend Lord Herbert just asked, what have they done, or are they doing, to ensure that that is the case? That is the fundamental question that we are debating today.
As my noble friend set out—I will not repeat all the statistics—British racing’s international competitiveness is under serious threat. Our prize money is lower and good horses are increasingly leaving the UK. The number of higher-rated horses leaving doubled from 2021 to 2022. It is not sustainable for our equine talent to depart these shores. The percentage of top-rated, grade 1 races that the UK holds is dropping. In 2017, the UK held 24% of grade 1 races; four years later, in 2021, it was 17%. That is a 30% drop. The reality is that the rest of the world is copying and learning from us, but they are much more financially resilient, which is a real problem. Owners can win more money abroad, increasingly win better races abroad and sell their horses for more by sending them abroad. This is a really vicious, slippery slope of decline for something that I hope we would all agree is a great British asset.
There is much that UK racing can do itself. I am not making the case that this is only the Government’s problem. I would argue that UK racing needs to genuinely work together. I try to explain to my friends who are not keen racing fans but love other sports like this: imagine if, in tennis, the tennis ball, racket, court, net, player and team support were all separately represented in discussions about the funding of the sport—that is racing. For the horses, trainers, breeders, jockeys and fans, racing does not find it inherently easy to work together. The sport needs to get better at doing that itself, and I say that as a member of the sport.
The sport also needs to get better at appealing to younger, more diverse audiences. The sport needs to continue investing in equine welfare and in supporting responsible gambling and responsible drinking, and the sport must create events and entertainment that are fitting for the modern world and genuinely inclusive entertainment for all. I am not for a moment suggesting that racing cannot do some of that itself—it needs to—but there is also a really important role for government, and arguably there has always been.
For millennia, people have enjoyed racing horses and betting on which horse will win. For a very long time the British Government have been firmly on the pitch—or on the turf—playing a role as a regulator: in 1961, with the creation of the Levy Board as an arm’s-length body of what is now DCMS, and through the Gaming Act 1968, which brought the Government on to the pitch for gambling regulation. I know that it is hugely tempting, and I worry that we might hear it today, that the Government always would like racing and bookmakers to come to an agreement together, on their own, without the Government. I think every Secretary of State has always said that, but the reality is that we have needed the Levy Board and gambling regulation precisely because of the many conflicting interests in this sport, including the need to protect the vulnerable and to make sure that it is a fair and equitable, regulated sector. That is a role for government, and we need government to step up and act.
My noble friend the Minister has set out the two main areas, and I will simply reiterate them. The first is the levy. Despite prize money being the lowest of the major racing nations, the amount of money placed on horseracing betting makes it actually the second-largest market in the world—second only to Hong Kong. As my noble friend has said, only 2.8% of money bet on racing comes back into racing, compared to 16.6% in Japan, which is the high mark. Even just across the channel, in Ireland, it is 8.4%. We are at a structural disadvantage. What are the Government going to do to increase the rate bookmakers pay into British racing? That is their job description. That is what the levy does—it is an arm’s-length body of DCMS. What are the Government going to do to ensure that the levy is reformed to deliver a better, fairer return into racing?
There are a number of options on the table. My noble friend has described the obvious one, which is expanding the levy to British people betting on overseas racing. We created a depressingly British disadvantage, where, if I am Irish and I want to bet on a British race, Irish racing benefits—the Irish capture some of that betting revenue—whereas if I am British and I want to bet on Irish racing, nothing comes into the British coffers. It is not right. There is international precedent; we are the only racing jurisdiction that does not do this—and we used to. I really want to understand why we cannot do that. I know the Government will want to say that racing and the bookmakers should be able to sort this out, but they have not, for millennia. We need the Government on the pitch as the referee to drive this forward.
I will not dwell further on the levy, as I would like to take my remaining minute or so to talk about affordability checks. Problem gambling is a really serious problem. I have spent the last five years of my life, heart and soul, working in the NHS. We need to make sure that we are genuinely protecting the most vulnerable, but I really do not understand why checking whether everyone who wants to spend £125 a month on betting is the way to protect the problem gamblers.
I do not understand why the Gambling Commission refuses to acknowledge that there is and will be an ever larger black market. Also, by my calculations, £125 is the same as buying a family night out at McDonald’s once a week. Would we really challenge people to prove that they could afford to take their family to McDonald’s once a week? That is what we are proposing with the affordability rules, and it is not right.
Many big racehorse owners are being asked, like my noble friend, to prove that they can pay to bet. Several have publicly announced that they will leave the sport. We are shooting ourselves in the foot. This is a national asset that ought to drive economic growth in the country, bring people into the UK and give us joy.
The Earl of Effingham (Con)
My Lords, I thank my noble friend Lord Herbert of South Downs for raising this important debate. In around 200 AD, it was Roman soldiers in Britain who organised the first horseracing competitions. The sport continued to increase in popularity and, by the 10th century, famous racehorses were widely given as gifts for royalty. In the 1500s, breeding laws were set by Henry VIII, possibly when he was sitting in Cloister Court, just a few minutes away from where we are right now, and rules became standardised. James I visited Newmarket in 1605, acknowledged as the home of racing. In 1711, Queen Anne was out riding and discovered the beautiful terrain of Ascot. Her magical find is celebrated to this day with the Queen Anne Stakes, the opening race of Royal Ascot Week. The St Leger Stakes was first run in 1776, the Epsom Oaks in 1779. In more recent times, racing was one of Her late Majesty’s greatest passions, with her winning more than 1,800 races and overseeing the royal stud on the Sandringham estate.
British racing leads the sport on an international level, and events such as Royal Ascot attract competitors and spectators from all around the world. British horseracing is a treasured institution. It is part of our national identity and has been enjoyed by many for over a thousand years. But this is so much more important than just supporting a tradition. While racing is referred to as the sport of kings, that is entirely misleading because racing is enjoyed by adults and children alike from every different walk of life. If asked, many people would cite football as the most attended sport in the UK; they would be right, with around 15 million people enjoying Premier League matches alone in 2022. However, it might come as a surprise to some that racing is in second place, with over 5 million spectators every year enjoying a day out at the many courses we have across Scotland, Wales and England.
Racing is entertainment for the entire family. One can enjoy a picnic at the racecourse, watch the beautifully turned-out horses in the parade ring and immerse oneself in the thrill of the race with the huge excitement of your fellow spectators cheering on their favourite. You are out in the fresh air, walking around the course taking exercise. This is all-inclusive fun and human interaction away from mobile phone screens. Aside from the enjoyment for the nation, the benefits to the wider economy are significant. Racing contributes around £4 billion to gross domestic product. Our rural economies need all the help they can receive, and racing both directly and indirectly supports around 80,000 jobs. Training yards and studs needs many different skill sets in the individuals it employs, and these businesses are key to providing jobs for our future generations and giving them a great base from which to learn and grow.
We have an industry which has existed for centuries, provides an amazing day out for all, contributes £4 billion to the economy and supports around 80,000 people, but it is not without its challenges. For owners and trainers in the UK, it currently makes sense to race overseas. Horses are coming out of training in the UK and going straight to the Middle East. The industry is facing a talent drain, which we must try to stem. It is an alarming statistic that in 2022, the number of higher-rated horses being exported from the UK doubled versus the previous year.
The reason for this, as we have already heard, is prize money. Our trainers rely heavily on that money as a key source of income, which in turn supports rural economies. Our owners know that if their horses race overseas, it can materially help with running costs. Prize money in Japan is around five times more than that in the UK; in the United States, it is around four times more.
It is not only prize money. Trainers and breeders are also bearing the brunt of the cost of living crisis and supply-chain issues. Feed is more expensive; electricity and fuel for transportation are more expensive—the list goes on. I am reluctant to automatically go down the route of saying that more funding is the solution, without looking hard at alternative measures, but in this case I believe it is the right path. To support the racing industry, we need to increase the money available to it.
Levy income stood at around £98 million in 2022, but we know that the right number to support the industry is around £140 million. That number can be achieved without any material restructuring; we simply need to follow the existing precedents of our European neighbours, Ireland and France, which both have a global levy. If a UK-based racing enthusiast places a bet on the Kentucky Derby, surely British racing should benefit. Where was that love of racing nurtured and cultivated? Who made the investment to create that bond and enjoyment? It was clearly predominantly British racing, so why should British racing not benefit in that scenario?
A global levy would generate around £25 million of additional revenue. If we then increased the levy by just 1.5 percentage points, from 10% to 11.5%, that would generate another £15 million, which would result in an annual income of £140 million; that is where we need to be. For good order, increasing the levy not only increases prize money. Equally importantly, it provides invaluable funding for the welfare of our horses, with improvement in equine medical science and the sport at a grass-roots level. What plans do the Government have for the levy? What are the options on the table and what do the Government see as a realistic timeframe for improvement and change to support our horseracing industry?
Lord Addington (LD)
My Lords, when it comes to declarations of interest, mine is the most second-hand that I can think of. I live in the village of Lambourn, Lambourn valley being the valley of the racehorse. I married into equestrianism—I should be able to say that word properly on a day like today—and I have a wife and daughter who both ride and love horses. Indeed, I remember through my courting days being woken up in the mornings by my wife going out to ride three lots over the downs. That will mean nothing to anybody who does not know anything about racing; it means getting on a half-tonne animal, with its fight and flight responses geared up, to charge up a hill at about 30 miles per hour with, in this case, a woman perched on top of it.
If you look at the industry from the point of view of the people who take part, I do not disagree with much of what has been said today. That is what I would like us to look at now. Racing supports an entire industry of people who work with their hands and are engaged in something quite dangerous.
If you want to see a good selection of braces, limps and crutches, go down the streets of Lambourn. You will find people who get thrown by horses and kicked by them but who want to get back on. If you want to discuss the intricacies of how a collarbone is repaired, go to any of the pubs in Lambourn. There will be a small person who will tell you about how they sailed across the horse’s shoulder to land splatting on the ground—and, indeed, you can go down to the rehabilitation centres in Lambourn and Moulton.
The noble Baroness, Lady Harding, gave us the best insight into this: all sports like to talk about themselves to themselves in darkened rooms and tell everybody else that they do not understand. To an extent, they do not—but all sports do this. They do not understand, because that sport does not get out there and say “Enough!” to the rest of the world in language that it may understand.
What I would also say about racing is that it supports the other equine sports. In the Lambourn Valley, you have world-class event riding and show jumping. It is a centre of veterinary medicine and of farriering—that is, shoeing horses, for anyone who is reading this who does not understand and, believe you me, there are plenty of people who do. All these things come together and interact. The people at the bottom of it are generally people who love it, who get back in and have bought into a culture. When arguments come up about the levy, racing has led the field and has supported people who actually take part at the bottom. If nothing else, it deserves support for that. Of course, it could have done it better and sooner, but it was first. I cannot see anybody else who has done it that well.
If you are supporting racing, provided that you make sure that that support goes down and helps throughout, that is doing a social good. And just as it supports the other equine activities, it is also supporting things like pony clubs. A pony club is an amateur sports club, which means that you have involvement—people coming together, voluntary activity and fundraising. We are so lucky in this country: we have a tradition of supporting our own sports. All these things are taking place. The Government should look very hard at what we can do to facilitate this connection, in this sport as in many others. That is an important thing.
The levy has been spoken about and I cannot really add very much. Yes, if you are betting anywhere in the world, why should we not get a cut here? We provide a base and a structure, and in fact the rest of world racing probably wants us to, because we have the structure here and the tradition to help them to improve their games. When something becomes an international sport, there will be interaction and changes. Look at football—look outside your bubble—and at how that has changed and that structure has shifted. You cannot change the world; you can merely operate better in it.
Are the Government going to look at this ongoing process to make sure that this entire industry and amateur support system works properly? The noble Baroness, Lady Harding, has given the best example of where state intervention should come from under a Conservative Government in the long term. But there has there has to be some action here. People complain that it is difficult to place a bet, but the difference with racing is that it is the only sport that I can think of that is so incredibly tightly linked to gambling, and always has been. Ancient texts about bets on horse races go back to everywhere. There was a different type of activity—there was chariot racing—but you name it, it was all there. But there is going to be that interaction.
If we are worried about problem gambling because it is at the end of a phone, there will have to be some checks and changes. Whether it is done properly and well is a good question, and one that probably only government has the resources to check properly. But it has to happen; otherwise, the damage done outweighs the social benefit. Other countries have faced this—Kenya, for example, with betting on football. The gambling is the problem, not the football. How do you interact with that? If we can hear something from the Government today about their thinking, I would be very glad to take that back, as would many of my colleagues who look at this. What is that connection, what is that thought, and how does it come backwards and forwards here?
There is also the fact that you can overdo these complaints—when someone says, “It took my daughter several minutes to open dozens of accounts so she could check what was the best price, at the age of 18”. Grow up. If it takes a couple of days to get them online, that is fine—and it does not have to be at the age of 18. There are limits and realistic chances that you have to take here: certain people will be vulnerable, and you will have to intervene. If we are overdoing it at the moment, and it is clumsy, fair enough; let us look again. I do not blame the racing industry. We do not blame brewers because a few people become alcoholics, or most of us do not anyway.
How are we going to work this out? Are we taking into account the fact it supports an entire industry of people who are fairly low paid and in low-status jobs? It is an industry that has looked after them reasonably well; it could always do better, but it has. It set a precedent. It looks after the welfare of people who are injured doing these jobs. So it has good things about it, but its relationship with gambling has always been problematic and always will be. Keeping the benefits of it will require government action and for everybody to become grown-ups. Saying, “Oh dear, it’s difficult”, will not work for anybody.
Are the Government looking at this in the round, as a sports and leisure interactive sector? The fact is that football stadiums might host the odd concert, and I know for a fact that Newbury Racecourse hosts dozens. They act as part of that social link. How does that fit into this sector? It is more than just racing: it is a social structure and an industry that comes together. Can we please hear what the Government are doing about that? Gambling started with racing as a constructive activity—it was actually outdone by cricket at one point; that is odd, isn’t it? That was the way spot betting went in the 18th century. What are we doing to ensure that gambling’s symbiotic relationship with the racing industry functions correctly so that we get the best while at least mitigating the worst?
I hope the Minister will give us a coherent answer. If he cannot, he should go back to his department and say, “Please, we need to know what is happening here”. That is what the question is.
Baroness Anderson of Stoke-on-Trent (Lab)
My Lords, I draw your Lordships’ attention to my declared interests. I wish they were as exciting as everyone else’s, but it is just hospitality with the Betting and Gaming Council. It serves me right for going to the cricket.
This has been a truly interesting debate. I thank the noble Lord, Lord Herbert of South Downs, for convening the debate and for his opening remarks, which have made clear the importance of the horseracing and bloodstock industries to our national economy, as well as to our international standing. It is only 10 months since we last debated the importance of this sector in your Lordships’ House. That fact alone is a testament to both the value of and fondness with which we consider the industry.
I stand here as the great-niece of a bookie, whose funeral was on the front page of the Racing Post, and the granddaughter of an amazing man who liked more than an occasional bet on the horses. One of my earliest memories was him taking me to the sweetshop to get sweets so that I would not grass him to my grandmother while he went in to place a bet. I am also a very proud resident of Staffordshire, where Uttoxeter Racecourse plays an important part in our county’s local economy; and, of course, Bet365 is the largest private sector employer in my great city. I am very sorry for the noble Lord’s experiences; when he started talking about Bet365 I got very worried about where that conversation was going. It should not surprise your Lordships that I have an affinity with horseracing, and I appreciate the importance of the bloodstock industry, which is so vital to the success of our sector.
This has been an incredibly informative debate and it has been a joy to listen to some of your Lordships’ contributions. It was a privilege to listen to the noble Baroness, Lady Harding, talk about her experiences. Much has moved on since your Lordships last debated the horseracing industry, not least the long-anticipated gambling White Paper, which we have touched on. I may be a fan of the sector, and even place the odd bet on my Bet365 app, but that does not mean that I am unaware of the darker side of the gambling industry. Addiction can ruin lives, and it is something we need to acknowledge. Problem gambling has not only a personal impact but economic and social impacts.
We know that some in the horseracing industry have been unsettled by constant speculation about what the review process might mean, and still are. We sympathise with those concerns, even though we believe the Government were right to undertake their review of existing regulation. It is regrettable that the progress has been so incredibly slow and that even now, nobody has absolute certainty about what the future holds.
Proper regulation, enforcement and support for gamblers can go a long way to ensuring that the overwhelming majority can enjoy the occasional flutter while the most vulnerable are protected. Many people visit a betting shop or use an online platform only once or twice a year, to back a horse in one of racing’s crown jewels: the Epsom Derby or the Grand National. While we must act quickly to better protect those who are at risk, that occasional punter should also not face excessive burdens.
As has been highlighted, we must also ensure that our domestic equine businesses operate on a level playing field and that any change is proportionate and enacted in consultation with the sector. This is especially the case when we consider the anticipated reduction to the online element of the horserace betting levy by up to 11%. As the industry seeks to recover from the impact of Covid, which we have not touched on, and which may feel like a dim and distant memory for some, it is still impacting too many businesses. We need to be careful that we do not move too quickly with any of these proposals, which may risk undermining local businesses as they strive to re-establish financial stability.
That brings me to the rural nature of the businesses concerned. We have spent many, many hours over the last year scrutinising the levelling-up Bill, and we will continue to do so next week. But what is levelling up if it does not also seek to improve the economic outlook of every community, including our rural communities, where over 20,000 people are directly employed in the sector, with many more in associated industries, as has been highlighted? We must strive to facilitate growth in every part of our economy, and this is no less true of horseracing, bloodstock and the associated industries. We ignore the sector at our peril, and I hope that the Minister has some reassurance for us regarding the support for our rural communities.
That brings me to the extra economic activities that are driving extra revenue into our racecourses, which we have not touched on. Lots of tracks, including my own Uttoxeter, are diversifying to increase their revenue and broaden their appeal, seeking to maximise the track as a venue. Can the Minister say whether His Majesty’s Government are working with the sector to expand that activity? Are there financial incentives available, and are they content that licensing rules are sufficiently flexible to allow additional activity while ensuring that the impact on local residents is minimised?
As we discuss the businesses which are at the heart of the sector, it would be remiss of me not to touch on matters of equine health and welfare, consideration of which must be at the core of every business in the field. Whether or not you agree with the tactics of the various campaign groups involved—I do not—protests at a number of high-profile race meets over the past year have brought these issues back into the public consciousness. We recognise the steps taken by breeders, trainers, jockeys and others across the racing and bloodstock industries to improve welfare standards, and to be more open about why certain practices exist or choices have been made. That is not to say that things are perfect, or that there are not individual cases which will cause public concern when they come to light, but enormous strides have been made.
That is why we are pleased that the Thoroughbred Breeders’ Association held its first ever conference in June this year, which explored many of the issues which have been touched on by others today, including sharing best practice regarding welfare standards. I believe that it is admirable that the TBA also used its conference to begin a conversation about social licence in the context of the breeding industry, especially with regards to changing attitudes towards animals in sport. If the sport is to survive, we need to start having those conversations—and there will be many more in the years ahead.
I have now finished my substantive comments but before I sit down, tomorrow is Jewish New Year, and new year is always about horseracing—although maybe not for Jewish New Year. However, I wish all your Lordships shanah tovah—happy new year—and I look forward to hearing the comments from the Minister.
Lord Harlech (Con)
My Lords, I declare my interests as having had the pleasure of attending this year’s Royal Ascot, and my uncle spent a great many years working in the training yards in Newmarket and Ireland. I thank my noble friend Lord Herbert of South Downs for tabling this important and timely debate during National Racehorse Week, and I thank all noble Lords for their heartfelt participation throughout.
His Majesty’s Government acknowledge the significant contribution that racing makes to our economy. The noble Lord, Lord Addington, mentioned the central role it plays in the livelihoods of rural communities. The employment that it supports across racecourses, training yards, breeding operations and related sectors reflects a powerhouse industry respected at home and abroad. The Government absolutely agree that British racing is a substantial asset to the country and remain committed to supporting the industry to prosper.
As has been noted, horseracing is the second biggest sport in the UK in terms of attendance, employment and annual revenue. According to the British Horseracing Authority, racing is worth more than £4 billion annually to the economy in direct, indirect and associated expenditure. The public’s love of racing is shown by the numbers attending flagship race meetings—65,000 to 70,000 at the Grand National and more than 200,000 over the four days of the Cheltenham Festival. British racing and breeding enjoys a reputation as a global leader and is promoted worldwide as part of the GREAT Britain and Northern Ireland campaign. This recognises the significant cultural and economic importance of horseracing to the UK and the role it plays as a soft power asset.
My noble friends Lord Herbert of South Downs, Lady Harding of Winscombe and Lord Effingham have all noted the importance of the levy. The horserace betting levy has evolved in step with the betting industry since it was introduced in the 1960s. In 2017, the Government extended the levy to online bookmakers and fixed the rate at 10% so that it no longer had to be negotiated each year. The 2017 reforms almost doubled the amount of levy collected from £49.8 million to £95 million and it has continued to perform well. Even in 2020-21, with racing suspended for two months and betting shops closed for much longer, it returned £82 million. The forecast for 2022-23 is £99 million.
Noble Lords mentioned prizes. Mechanisms for funding racing in other jurisdictions are not directly comparable with Great Britain. For example, France has a state monopoly and in Ireland there is a general tax and a grant to racing. The Horserace Betting Levy Board has made additional contributions to prize money, supported by a £21.5 million loan via the sport survival package. It should be noted that prize money in Great Britain is spread across a greater number of fixtures and the British Horseracing Authority is trialling changes to the fixture list from 2024 aimed at growing the sport.
I turn to the Government’s review of the levy. The British Horseracing Authority has presented its case that there is a significant gap in funding, meaning that it is unable to compete with jurisdictions such as Ireland and France. It has also submitted suggestions on how to close this gap. We are considering these proposals as we undertake our review, which is due in April 2024. I cannot pre-empt its outcome, but I reassure all noble Lords that the decision will be firmly based on evidence and that the suggestion made by many noble Lords that the scope of the levy should be amended to include racing outside Great Britain is being considered as part of the review.
Noble Lords asked what the Government are doing to increase the amount raised by the levy. These changes would require legislation, so it is sensible to explore a voluntary agreement when there are so many competing demands on parliamentary time. However, we are looking at all options, including—as has been pre-empted—encouraging racing and betting to work together in the best interests of the sport. Reaching a mutual agreement on the way forward for the levy would be beneficial to everyone. To support this aim, the BHA and the BGC were invited to submit evidence over the summer. I know that my right honourable friend the Minister for Sport, Gambling and Civil Society met both industries earlier this week.
The levy is not the only source of funding for racing, as noted by noble Lords. It represented just 6% of racing’s total income in 2022, with far greater proportions earned from owners, breeders, racegoers, media rights deals and sponsorship. However, we have committed to a review of the levy and asked racing and betting to explore jointly how they can maximise other sources of income. I am encouraged by the close engagement that has taken place thus far.
I turn now to the gambling review. Concerns have been raised by the BHA and the Countryside Alliance, as well as by noble Lords in this debate, about the impact of financial risk checks, as set out in the Government’s Gambling Act review White Paper. We specifically assessed the potential impact that gambling would have on the racing sector. Our assessment, set out in the White Paper, was that the impact on racing will be minimal in the context of its overall income but, as we committed, we are currently reviewing the levy to ensure that racing continues to be appropriately funded.
As noble Lords on the other side of the discussion mentioned, it is crucial that we undertake this review of gambling controls. We are challenging the industry to prevent the egregious examples we have seen, where customers are allowed to incur potentially life-changing losses without any checks on their circumstances. Operators have responded to that challenge in a variety of ways—some by taking a very risk-averse approach. We certainly do not want to go down the track of the PEPs situation that we have seen with banking; that is absolutely clear. The key to any outcome will be not just how it is described but how it is run and implemented.
The proposals on financial risk checks will apply only to online gambling accounts and will not affect betting shops or on-course bookmakers. They will support a standard approach and use a range of indicators to look at the behaviour of a bettor. Betting companies could and should already be checking when customers spend huge sums, which is one of those key indicators, but industry has sometimes failed to do enough to stop life-changing sums of money being lost by people potentially in the grip of addiction. That is why the Government and the Gambling Commission are stepping in.
However, we are alive to the need to be proportionate. The White Paper was clear: we want checks only for those most at risk of harm, and we want the checks themselves to be painless for the overwhelming majority of customers. We know that higher rates of problem gambling are associated with online casino games and that problem gamblers use multiple products. Therefore, it would not be responsible to exclude an individual’s use of a particular product from these protective measures.
Some concerns relate to details such as the frequency of assessment and how to consider previous winnings, but that is precisely why the Gambling Commission is consulting on how best to introduce these measures, rather than a diktat being administered straight away. It is a live consultation and an opportunity to shape the outcome. I also reassure noble Lords that checks will be introduced only when there is confidence that they will indeed be frictionless. The Government are keen to ensure that measures such as financial risk checks do not adversely affect racing, interrupt the customer journey or—this is key—push away high net-worth individuals, such as owners and trainers, who invest in the sport.
The noble Baroness, Lady Anderson, raised the important issue of welfare. The British Horseracing Authority is responsible for the safety of racehorses at British racecourses. The BHA works alongside the RSPCA and World Horse Welfare to make horseracing as safe as possible. The Government welcomed the formation of the racing industry’s Horse Welfare Board in March 2019. The board has assured the Government that it is committed to doing all it can to make the sport safer and improve welfare outcomes.
The noble Lord, Lord Addington, and the noble Baroness, Lady Anderson, talked about wider support for the sector. The numerous stakeholders in racing have recently agreed that the British Horseracing Authority is the decision-maker on the sport’s future strategy. The BHA has recently put forward proposals for a future racing product, which includes premierisation of the sport, protected time slots for races and reforms to the fixture list. I know that the potential for hospitality and conference facilities at racecourses is part of the sport’s plans to grow their tier income and to support owners and trainers. All these ways in which the key jewels in the crown can maximise their revenue will support the wider industries and communities involved in horseracing.
I listened carefully to what my noble friend Lord Herbert of South Downs said about the special status of Newmarket to the infrastructure of British racing. I will ensure that colleagues are aware of those concerns. The Government remain committed to supporting British horseracing, which is vital to the rural economy as well as a source of great pleasure to many people. I again thank my noble friend for securing this debate during National Racehorse Week, and look forward to further discussions on these important issues.