Horseracing Industry

Lord Parkinson of Whitley Bay Excerpts

Thursday 17th November 2022 Grand Committee

[The Parliamentary Under-Secretary of State, Department for Digital, Culture, Media and Sport (Lord Parkinson of Whitley Bay) (Con)]

I thank my noble friend Lord Risby for initiating this debate, and all noble Lords who have taken part in it. His support for the racing industry goes back a long way, including of course to another place, where he ably represented the people and businesses of West Suffolk, including Newmarket Racecourse and the many horseracing interests in that constituency. As he mentioned, he has been a member of the Horserace Betting Levy Board since 2016, and I am glad to have the opportunity shortly to say a bit more about his and their excellent work on behalf of racing. I also echo my noble friend Lady McIntosh’s tribute to the work of the late Rose Paterson, who is much missed in Parliament and the horseracing sector.

The Government acknowledge the significant contribution that racing makes to our economy: it supports jobs and livelihoods from Perth to Newton Abbot, and it is particularly important to rural economies, in the way that my noble friends set out. Over 20,000 people are directly employed across 59 licensed racecourses, hundreds of training yards and thousands of breeding operations. Tens of thousands more jobs are supported in the rural economy supply chain, including in the farriery and veterinary sectors, highlighted by the noble Lord, Lord Trees, as well as many jobs in the betting industry. Indeed, horseracing is the second-biggest sport in the United Kingdom in terms of attendance, employment and annual revenue. According to its governing body, the British Horseracing Authority, racing is worth over £4 billion to the economy in direct, indirect and associated expenditure every year.

How much it is valued by the public is shown by the numbers returning to our flagship meetings as Covid restrictions were lifted, with a record aggregate attendance at the Cheltenham Festival this year. I was on a very busy train to Gloucester on Friday, on my way to visit some of the new recipients of Arts Council funding, so I can attest to the liveliness of the November meeting there as well.

The Government introduced the horserace betting levy in the 1960s, when there were fears that no one would go to racecourses once betting shops were permitted to open. We have continued to ensure that the levy keeps pace as the betting industry evolves with the times. In 2017, we extended the levy to online bookmakers and fixed the rate at 10% of bookmakers’ gross profits on British racing so that it no longer has to be negotiated each year.

The 2017 reforms almost doubled the amount of levy collected, to £95 million in 2018, exceeding expectations, and it has continued to perform well. The levy returned £97 million to racing in 2019-20, against a forecast of £90 million. Even in 2020-21, when racing was suspended for two months and betting shops were closed for much longer, it returned £82 million. Last financial year, it returned £97 million. But we are not complacent. The British Horseracing Authority has presented its case that there is a significant gap in its funding, which means that it is unable to compete with jurisdictions such as the Republic of Ireland and France, as my noble friend outlined. We have considered that case very carefully as we prepare to conduct the next review of the levy, which is due in 2024. In particular, racing has asked for international races to be brought within the scope of the levy—noble Lords highlighted this in their remarks. Although funding systems vary between jurisdictions, it is fair to say that racing in those countries benefits from bets on overseas races in a way that racing in Britain does not, which is something that merits careful consideration.

The noble Lord, Lord Trees, asked about and highlighted the importance of funding equine health. The money that is raised is applied to the advancement of veterinary science and education, as set out in the legislation. Indeed, it is one of the three key areas funded.

A number of noble Lords touched on the Government’s review of the Gambling Act 2005. In addition to its case for additional funding, which I mentioned earlier, racing representatives have discussed with officials at DCMS their concerns about the impacts of proposals being explored through our review, including the potential for so-called affordability checks, the opposite case to which was made by the noble Lord, Lord Foster of Bath. We have heard his representations and their concerns, and I assure my noble friend Lady McIntosh that we have been gathering evidence to make sure that the review is evidence-based, and we will continue to engage with the sector when the White Paper is published in the coming weeks.

The noble Lord, Lord Foster of Bath, raised the use of drones to beat the broadcasting lag. We are aware of the industry’s concerns about this use of drones and will keep the issue under close scrutiny, working with it.

Any consideration of amendments to the rate of the levy needs to be in the context of all the proposals in the White Paper which affect bookmakers. However, the levy is not the only source of funding for racing. Indeed, it represented just 6% of racing’s total income in 2022, compared with 17% from racegoers, 11% from media rights deals and 4% from sponsorship. Owners and breeders contributed 40% and 22% respectively. So while we review whether the levy provides an adequate level of funding for the industry, it is only right that we expect racing and betting to explore jointly how they can maximise other sources of income. Both sectors have a clear interest in making racing as attractive as possible to customers, and I encourage racing to engage and work closely with betting partners in its thinking on the levy.

I pay tribute to my noble friend Lord Risby and his fellow members of the Horserace Betting Levy Board for their stewardship of levy funds. As the levy is a percentage of profits, it varies from year to year, depending, for example, on how bookmakers fare at key race meetings. The levy board has reserves to help mitigate this variation and it used these to great effect to support the industry during the Covid-19 pandemic, to mitigate the absence of, first, racing and, subsequently, spectators.

The levy board and the Racing Foundation put together a £28 million cash-flow and hardship support package. Some £20 million of levy funds were aimed at supporting racecourses, with £8 million from the foundation going to supporting individuals in the sector. Since then, the levy board has made additional contributions to prize money to mitigate lower amounts made available by racecourses because of Covid.

The Government too provided support, with racing benefiting from our economy-wide support for jobs and rates relief. Racecourses have also been able to access support through the sport survival package, through which a £21.5 million loan has been made to the levy board to enable it to provide extra support. The levy board distributed £15 million of this via prize money in 2021 and £6.5 million in 2022.

The Government remain committed to supporting British horseracing and related businesses, which are vital to the lifeblood of the rural economy, as well as a source of great pleasure to many people. I thank my noble friend for initiating this debate and giving us this opportunity, and for the work he does on behalf of all those who have the interests of racing at heart. I look forward to debating these issues further in future.

Committee adjourned at 4.51 pm.