Horserace Betting Levy Regulations 2017

Lord Addington Excerpts

Wednesday 29th March 2017 Lords Chamber

[Baroness McIntosh of Pickering (Con)]

My Lords, I declare my interest in that I took the Bill through in place of Matt Hancock when he started his ministerial career. I also did a six-month stage, or apprenticeship, in DG IV of the European Commission, now known as the Directorate-General for Competition. Like the noble Lord, Lord Lipsey, I have enjoyed hospitality through membership of the all-party horseracing group.

I do not share the noble Lord’s pessimistic approach and entirely endorse my noble friend the Minister’s recommendation that we support the statutory instrument before us. That the Government have set the threshold at a rate that will exclude the majority of small and medium-sized businesses is to be welcomed.

Perhaps I may say why there is such a need for the regulations and for the levy to be applied in this way. The regulations answer a basic question: why should bookmakers who are based offshore and who take bets on British horseracing not pay the levy on bets placed in this country, albeit remotely, and therefore put money back into horseracing? Self-evidently in my view, they should pay.

I had the opportunity to look at the briefing and saw that receipts from the statutory levy fell from £115 million in 2007-08 to £54.5 million in 2015-16. The action that the Government propose to take is much needed. Having practised for a short period in Brussels as a European lawyer, I dispute the legal advice that the noble Lord, Lord Lipsey, has put before the House. Although the levy proposed is a form of state aid, it shares many of the characteristics of the French parafiscal levy. I can therefore see no reason for the European Commission to do other than rule in favour of what the Government propose nor for it to be challenged in the European Court.

I had the privilege to represent for 13 years the Vale of York and then for five years Thirsk and Malton, which were home to some of the most successful trainers, jockeys and stable lads and lasses in the country. The benefits of what is proposed to the rural economy of North Yorkshire and to Britain’s racing grass roots, and to the wider horse sector, deserve our support. I urge the House to support the regulations.

[Lord Addington (LD)]

My Lords, I support the Government’s measures and think the noble Lord, Lord Lipsey, is wrong. That is primarily because I live in the village of Lambourne. Lambourne might claim to be one of the beating hearts of the racing scene, but I will not contest with the noble Baroness who has the biggest claim to that status. I live in a community dominated by racing and by people who work and live in it. These people are not fat-cat owners; they are people who get up, usually when it is still dark, to go and deal with the horses. They risk life and limb in dealing with a half-tonne of animal which has a mind of its own and muscle, which moves up and down. People are hurt regularly, and then there is the task of supporting the horses themselves. The rest of the horse community benefits from that, because when you get one type of horse, you get others going down there and congregating around them in hubs. The levy supports them, but receipts from it have halved. We need something down there. Those communities and people benefit from that money being spent.

Anti-corruption and anti-doping, which racing has taken a real lead on and which the rest of the sporting sector can learn from, has been tackled well in this industry. It is money well spent as a whole and I recommend that we proceed with these regulations. Those people’s livelihoods depend on this money or at least on being able to live with a degree of certainty and support. If we have to take a little bit more off a person who is sitting or standing fatly back and watching as opposed to taking part, I have no objection to that. Those who work in racing should receive that support, thus I hope that the Government will stand firm.

[Lord Donoughue (Lab)]

My Lords, I should declare my interests as in the register, particularly as secretary of the racing and blood stock all-party group and of the Betting and Gaming All-Party Group. I am also chairman of the Starting Price Regulatory Commission. In 2005, I chaired on behalf of the racing industry the independent review of the future funding of racing, with particular reference to the levy and the commercial alternatives to it. That was against a background of the chairman of the then British Horseracing Board having recently called for the abolition of the levy from his racing base. Our three-stage review—I shall not delay your Lordships on it, but they will see the relevance—concluded that we should replace the levy. It had been introduced 40 years earlier to compensate racing for the assumed, although unproven, damage to its revenues caused by the introduction of off-course bookmakers. We identified commercial alternative revenues to racing, with race courses selling race data and television pictures to bookies, but because of then doubts regarding the legal security of such revenues, we reluctantly decided not to recommend abolishing the levy until alternative commercial revenues were legally secure. That is the background I come from. The then Minister accepted our report and the levy was resumed for three years.

However, I think I can say that we assumed that the levy would go; its original purpose was achieved. I note that the Government have helpfully and cleverly defined a new justification, which is well drafted. Since then, the levy debate has rumbled on, as we have seen, through different Governments. It has wobbled between replacing and reforming the levy. Sometimes we have seen different proposals from the Treasury and from DCMS, the department sponsoring it. A year ago, the then Chancellor announced dramatically a new racing right. Now that has quietly disappeared. The levy is restored at 10% for seven years. As I mentioned, a new justification has been produced, replacing the earlier outworn one. Presumably, that was drafted to meet Brussels’ requirements in not discriminating, reconciling racing and betting interests, and with a fixed rate. Elsewhere, the offshore avoidance loopholes have rightly been closed. I am sure all noble Lords support that and will thank the Government for doing it.

Meanwhile, media revenues to racing have continued to rise as our 2005 review predicted, more than doubling since then to around—I read—some £120 million, and double the current levy. Personally, I am always instinctively pleased to see racing receive revenue from any source. I love racing. I can also see the political attractions to the Minister of getting this annual irritation of the levy settlement off his desk for seven years. However, a number of issues clearly remain, including those my noble friend Lord Lipsey so strongly set out. I trust the Minister will address them adequately in his response. I am not sure that it can be a case of just one person trained in law claiming they know a bit more about the law than, for instance, Olswang—a major City firm.

I will summarise my concerns, some of which of course share ground with my noble friend. I see that the new measure may—I hope will—avoid a Brussels challenge over European state aid, thought it clearly seems to be state aid. I assume and hope that Brussels assisted drafting to ensure its safe passage over that hurdle. I accept that French support, wishing to protect French racing, should help there. We will see but my noble friend raised serious doubts. We also have the question of the domestic legal challenge from our bookmakers’ body which may trip it up, as happened—as some of us remember painfully—with William Hill in the past. Again, we will see.

The use of the regulatory order to transfer the levy collection to the Gambling Commission seems unusual. I trust the Minister will be convincing in explaining that. I hope that the Gambling Commission, for which I have great respect, is fully resourced for its new and unexpected task. I note that as recently as 16 March last year, when DCMS published its plans to replace the levy, it specifically stated that the existing Levy Board would collect the funds. Why was that changed? I assume that the Gambling Act 2005, which many of us were deeply and painfully involved in, properly authorises the commission to do this job. Incidentally, at this point we should pay tribute to the fine work done by the Levy Board in its past very tricky job.

However, the biggest remaining problem is the familiar financial one: securing adequate future funding for racing. My view remains, as earlier, that that financial path must be basically a commercial one. This new levy may help in a small way for a while but we should be aware—this is my key point—that it also makes it more difficult for bookmakers to assist racing. This renewed levy impost plus the growing charges for pictures, over which there are current disputes, inevitably make horseracing an expensive betting product. Bookmakers, already under great commercial pressure, will increasingly, inevitably, focus on cheaper betting products such as football in its various betting forms.