Gambling (Licensing and Advertising) Bill

Debate between Viscount Falkland and Lord Lipsey

Tuesday 14th January 2014 Grand Committee

[Viscount Falkland (CB)]

My Lords, in the absence of the noble Viscount, Lord Astor, I speak to this amendment, which is not brief but is logical. I hope I can persuade others it is logical that when we extend the area of tax we expect to online betting, the levy should benefit accordingly from the benefits that the bookmakers get from their increase in betting online. Noble Lords will realise that the levy fall has had a grave effect on the finances of racing. Among the causes of the fall has been the move to online betting by people who back horses and the fact that no levy comes from that source. There are all kinds of other reasons why the levy contribution has fallen. As regards the popularity of betting on horses, since the 1960s when the law effectively changed to introduce betting shops and so on, the fall has been gradual but the amount of betting has not in any way declined. It has just been spread over a wider area of gambling opportunities and is not likely to change favourably for racing in the foreseeable future.

I urge the Government to consider the logic of what I am saying. If the bookmakers find this unappetising and unacceptable, I suggest they realise that racing is threatened. The sport has existed in the form we know basically from the early 18th century. It has a worldwide reputation and its brand is unequalled. We really cannot afford that to change because bookmakers do not feel that they should contribute towards the sport from which they profit. I do not want to get any more e-mails from bookmakers, which I expect noble Lords also have been getting, saying how lovely betting shops are with their daffodils and how they are places where you can take children. Of course they are not like that.

As we all know, in those shops there are four gaming machines. They are called fixed-odds betting terminals, which is a euphemism and nobody understands what it means. They are casino machines. You can play poker, blackjack and so on. In most betting shops, they are a main contributor, if not the major contributor, to the bottom line of the bookmakers’ accounts.

I do not want to be rude about bookmakers. I did that once in the House. It was covered by what I can only call a pornographic newspaper, the Daily Sport. I had the privilege of removing the ladies in compromising positions on the front of the Daily Sport to find that my face was very large on the front of the paper under a heavy headline saying, “Falk Off!”. I have to tell you that that newspaper is displayed in a prominent place in my house. However, if noble Lords will allow me, I will say to the bookmakers through this Committee that if they do not play ball on this we will take away the machines—simple as that. The previous Government did not seem keen even on looking at the machines although, in opposition, most of the complaints about betting machines come from the Labour Party—I hope that the noble Lord, Lord Stevenson of Balmacara, will take note of this—and I agree with them. It is no good the bookmakers saying that there is no danger to people who go into betting shops in terms of social damage from increasing their gambling habit. It is a fact that it does that, but the bookmakers deny it.

I think it will be quite some time before we get those machines removed. I see no evidence of movement on that; other noble Lords may be able to disabuse me of that. If the bookmakers do not play ball now, such is the threat to racing that we have to find ways of putting pressure on. Maybe they have suddenly had a change of heart. If they agree that they should pay a levy online, we will have to find other ways, but if they do not agree we should consider asking the Government to tell them that the machines will be removed—simple as that. Others may not agree, and bookmakers certainly will not, but that is it.

That is what this amendment is about. I hope that the Government can make an encouraging response, because the other day we all had the benefit of listening to the new head of the horseracing authority. I was impressed by his general approach. His is a fresh look at racing, because he comes from outside it. He made this important point about this wonderful sport that we have exported to the rest of the world: what other activity is there, half of which is extremely profitable, in this case the breeding industry and the bloodstock agency in particular, and the other half of which—the racecourses and the people who work in the racing industry—is having a very bad time? It is about time that the Government took steps—many of us are keen to work with them and talk to them, together with the horseracing authority—on how they can get a balanced view of that and get racing back into the position where it deserves to be and is properly funded.

[Lord Lipsey (Lab)]

My Lords, nobody is going to tell the noble Viscount, Lord Falkland, to “Falk off” this afternoon because he is doing a noble thing. He sees the levy lying nearly unconscious on the sidewalk and rushes up to offer it mouth-to-mouth resuscitation. In that way, he offers the Committee a chance to discuss the levy and its future; I, among others, am grateful for that. However, I cannot support his amendment, and I am afraid that I am going to detain the Committee for a few minutes in explaining why.

I shall start at the technical end. It is not clear that the amendment would not constitute state aid in European terms, and state aid that would not be allowed. The recent French judgment on state aid has been much misunderstood. The Commission did not rule that the activities of the pari-mutuel in France were not state aid. It did rule, however, that it was legitimate state aid. What we have yet to determine is whether a similar ruling would apply were we to extend the levy in Britain, in the way that this suggests, to overseas betting. That judgment needs to be studied carefully and the views of the Commission need to be sought. It would be premature—indeed, I would say provocative—to seek to advance at this stage. On those minimal technical terms alone, I would not support the amendment.

A broader question is going to constitute the majority of my remarks. The Government have for some time been looking, and still are, at the future of the levy. There are all sorts of notions about the levy, from the kind of notion put forward by the noble Viscount, Lord Falkland, that we should extend its scope to the whole question of a sporting levy in general for sporting betting rights, to, at the other extent—and I am about to expand on this—the abolition of the levy. All these options are rightly open at the moment and still being reviewed. The Government have lurched to and fro for rather a long time on this, and changes in Ministers have meant changes of attitude. This is certainly not something that we should rush into. The levy has been about for 50 years, and for most of that time it has served its purpose. We ought not to go into a decision about its long-term future without careful reflection and analysis of the alternatives.

Having said that, I make it clear that I am in favour of the abolition of the levy. I have been for 25 years. I first wrote a leader on this subject in the Times in 1991 or 1992, and I have consistently never changed my mind about it. The only thing is that in those days, and indeed when I came into this House, I was in a minority of one. There really was not anyone else, in this House or another place, who favoured the abolition of the levy. That is not so today. Some of the most knowledgeable people about racing in the House of Commons take the view that the levy should go. I think of Mr Robertson, the chairman of the horseracing, betting and levy group, and Philip Davies. These are all opponents of the levy. They may or may not be right—indeed, I may or may not be right—but they have a view that ought to be carefully weighed.

I am an opponent of the levy for two sets of reasons, and they consist of being an economist and a socialist. The two do go together—in some people’s minds, anyway. First of all, I shall expand on the economic case. Throughout the world, including in a lot of countries that were once communist, there is now a strong understanding of how very bad subsidies are for industries. When I look at racing, I do not see an industry that has been brought low because it has not had enough subsidy; I see an industry many of whose flaws stem from the subsidy that has meant that every time, instead of sorting out the fundamental problems of the industry, people have asked someone else to pay for them through the levy. For years we have had a situation where the bookmakers and racing were at loggerheads, because racing was seeking more money out of the bookmakers and the bookmakers were seeking not to give it to them, when they should have been working together to grow the size of the cake by looking to their mutual interests and advancing those.

The multiyear settlement this year was a tremendous step forward, and the great improvement in the climate of relations between bookmaking and racing is also an extraordinarily encouraging development. I hope, however, that it could go still further: I hope that within a year or two the levy will simply seem to be an unnecessary mechanism. I am certain that no one would cheer louder in that case than Her Majesty’s Government. An absurd situation has arisen in recent years where at midnight one night negotiations break down and a Minister of the Crown is asked to decide how much money one industry should give to another in subsidy. That beggars the imagination. If anything other than racing were involved, it would be recognised that it beggars the imagination.

--- Later in debate ---

[Lord Lipsey]

I am sorry to interrupt the noble Viscount, especially as his point about the yacht-owning, horse-owning aristocrat made my point so much more eloquently than I did myself. Perhaps he has not entirely followed the full detail of my argument. I spoke as a socialist, not as a non-socialist—I am so sorry to disappoint him. I would have bought my share in Robber Baron had there been no prize money, just as willingly as I did when there was prize money. Anyway, we did not get anywhere near that prize money very often. I suggest not for one second that there should not be prize money, but that it should come about as a result of the commercial business of racing, supported by the bookmakers for commercial purposes, not by a compulsory tax on poor betting-shop customers.

[Viscount Falkland]

We shall discuss that outside the confines of this Room, I am sure.

The only other point I have to make is in answer to the noble Lord, Lord Clement-Jones. I have thought of a definition of “parafiscal levy”: I think it is a soft tax. Having said that, I thank everybody for their participation in this debate, which has been an interesting one, and I hope that over the coming months we can have further discussion on it. I beg leave to withdraw the amendment.