Tote

Baroness Garden of Frognal Excerpts

Wednesday 8th December 2010 Lords Chamber

[Baroness Garden of Frognal]

My Lords, I join in the thanks to my noble friend Lord James of Blackheath for securing this debate. He will be aware that the Government announced in the Budget on 22 June that they would resolve the future of the Tote over the next 12 months in a way that secures value for the taxpayer and recognises the support that the Tote currently provides to the racing industry—which is a point that has been picked up by a number of noble Lords in their speeches. The noble Lord, Lord James, set out his concerns about this very clearly in his opening speech. I hope that in the course of my remarks some—if not all—of those concerns will be addressed.

As we have heard, the Tote is the key provider of funds to the racing industry, providing approximately £11 million per annum in the form of commissions, sponsorships and grants over and above the statutory levy that all bookmakers pay. As noble Lords will know, the previous Government were also fully committed to removing the Tote from Government ownership and put in a very considerable effort over a 12-year period to achieve that aim. This length of time has been referred to in noble Lords’ comments. However, a combination of factors, notably market conditions and European competition rules, worked against them. We recognise the challenges that selling the Tote presents but we believe that the conditions are right to remove the Government from involvement in the Tote. The Government reaffirmed their resolve to do so in a Statement to the House of Commons on 15 September.

I am happy to confirm that the Government remain firmly on course to achieve the objectives set out in the Budget by resolving the future of the Tote by June 2011—about which my noble friend Lord Patten asked for specific clarification In line with that objective, the Government launched an open market process last month, inviting proposals from interested parties. As we know, the closing date for submitting proposals to Lazard, the Government’s financial advisers in this process, is Friday, 10 December. The process is open to all organisations that have an interest in the Tote. We recognise the uncertainty that this long, drawn-out process has generated among those who work for the Tote.

The statutory framework governing the Government’s right to sell the Tote is found in Part 1 of the Horserace Betting and Olympic Lottery Act 2004. In broad terms, the Act provides that on a day appointed by the Secretary of State the Tote will cease to exist and all its property, rights and liabilities will transfer to a new company known as the successor company, being a company limited by shares and wholly owned by the Crown. The 2004 Act also provides that the Gambling Commission may, if the Secretary of State so requires, issue to the successor company an exclusive seven-year licence. The exclusive licence will grant the successor company the right to carry on pool betting business in connection with horseraces on approved horserace courses. I hope that gives some reassurance to my noble friend Lord Falkland, given his enthusiasm for the pool betting side of the business. It is expected that, as a condition of the licence, the successor company must ensure that adequate facilities for pool betting are made available in all areas of each approved horserace course on days when horseracing takes place on that racecourse. The exclusive licence can be granted only once. After the seven-year period has expired, the pool betting business will be open to competition.

I am sure noble Lords will appreciate that in advance of the closing date by which proposals have to be submitted, and for reasons of commercial confidentiality, I am not in a position at present to comment further on the process by which we intend to resolve the future of the Tote. Nevertheless, I stress that the Government are very keen to secure a successful outcome to this process in a timely fashion and are working closely with all the main parties involved. Naturally, the Government are continuing to liaise closely with the board of the Tote and with racing interests as the process unfolds. We want to remove government from direct involvement in an industry that it regulates in a way that secures value for the taxpayer and recognises the support which the Tote provides to the racing industry. Its financial importance has been stressed by my noble friend Lord James, the noble Lord, Lord Lipsey, and others. In removing that direct involvement, we want to give certainty to the Tote to enable it to grow as a business. We also want as far as possible to respect the interests of the employees who work for the Tote and those of the local economy in Wigan where the Tote is based. The Government expect to be in a position to update Parliament early in the new year once we are clearer about the outcome of the current market process.

My noble friend Lord James expressed his concerns on a number of fronts. The Government do not anticipate the dire consequences of removing themselves from the Tote that he suggests. I am afraid that the Government cannot simply hand over the Tote to racing; the Tote being a statutory corporation. To do so would undoubtedly constitute a state aid. I can also confirm that any new owner of the Tote will still be obliged to pay levy at the going rate. The pool betting, too, is a profitable business which we expect will continue to flourish and grow in any new ownership. However, I stress that final decisions have yet to be taken. The process that is under way has received a wide range of proposals and the Government will carefully analyse all of these before reaching their decision on the way forward.

The noble Lord, Lord Lipsey, talked about the Greyhound Racing Trust and the greyhounds, which did not feature so prominently in other speeches. We all recognise the popularity of greyhound racing in communities, how important it is to many people and the enthusiasm that it generates. In 2010, the Tote made a donation of more than £400,000 to the Greyhound Racing Trust. We hope that the Tote’s successor company will continue to make these charitable donations. However, I am sure your Lordships will understand that we cannot, of course, make this a condition of the open market process.

I am happy to clarify for the noble Viscount, Lord Falkland, what will happen to the Tote’s statutory monopoly on horserace pool betting. As I mentioned, any new owner will be granted an exclusive seven-year licence to run pool betting, and will be required to do so on all racecourses. After seven years, the pool betting will be open to competition, but on terms that will need to satisfy the Gambling Commission. However, the owner of the first and only exclusive licence will be in a good position in that respect at that distant point in the debate.

I think that I have responded to the point made by the noble Lord, Lord Patten, about the date. I am delighted that he mentioned that he was glad to be in the coalition, at least in this Parliament. I am sorry that he has differences with his local government coalition partners, but we hope to continue to carry forward the coalition in friendship, at least in these Houses of Parliament.

I think that I have answered most of the questions asked by the noble Lord, Lord Evans. As regards his specific question about the EU, the Government have not yet reached a decision on how to proceed, so it is premature to speculate about what might happen to the proceeds of any sale. However, any sharing of proceeds will need to comply with EU state aid and competition rules. We shall have to await further notice on those.

If there are questions that I have not answered, I shall pick them up in Hansard and undertake to write to noble Lords. I renew my thanks to my noble friend Lord James, for initiating this debate. It has, indeed, been enlightening for me as well as for the noble Lord, Lord Evans. I thank all noble Lords who have taken part in it. We shall see what happens after the offers for the Tote come in.