Horse Racing Levy

Claire Perry Excerpts

Thursday 20th January 2011 Commons Chamber

[Matthew Hancock]

My hon. Friend makes an important point, but his phraseology lets slip the error in the argument. The betting industry gives no money to racing; it pays money to racing. I want a system in which that is sustainable. Of course, people who watch a sport should pay towards it. How much of the money made from media rights gets to the front line of racing is an important question, and I hope that those rights will be negotiated very tightly by racing in future. The amount of levy has fallen from more than £100 million to £65 million, but the levy reflects the fact that when people make bets, part of their stake is a contribution to the cost of putting on that race. It is appropriate for racing to charge bookmakers for using its output and product. That is the nub of the argument.

The first hole in the levy is offshore betting. UK consumers are reported to spend about £2.5 billion on internet and phone gambling, but operators licensed by the Gambling Commission represent less than a quarter of that—the rest is spent offshore. Three quarters of online betting, therefore, does not contribute to the levy or other taxes, and consumers are not protected under UK rules. Ireland’s recent budget began to tackle that, and I hope that the Minister will follow suit. I am sure that such a measure would have the support of the gambling industry. I spoke to the big gambling organisations in the run-up to this debate. Each firm told me that it considered going offshore only because all the others are doing so. Let us bring all those firms onshore and subject bets to the levy and the appropriate tax here in Britain.

Betting exchanges are the second hole in the levy. Currently, exchanges pay 10% of the levy on profits that derive from commission from winning bets on each market. However, that produces very little for the levy—less than 0.5%—compared with the return from the same activity with traditional bookmakers. According to Betfair, some users of betting exchanges place around 1,000 bets per hour, but pay no levy or tax because they close their bets before the race is concluded. I am delighted that Betfair paid around £6 million to the levy last year, and by its widespread sponsorship, but the loss to the levy from the fact that exchanges are treated inappropriately is roughly £25 million, and I urge the Government to act.

[Claire Perry (Devizes) (Con)]

I congratulate my hon. Friend on securing a debate that is hugely important in my constituency, where we have a lovely combination of free-draining soil, chalk and turf that does not freeze very easily, hence our important training and racing industry. Exchange transactions are frequently concerned with how many goals will be scored in a football match or whether a player will show up, and other things that do not have a cost associated with them and have almost no benefit to the rural economies we are so proud to represent. Does he agree that part of the reason for securing a change to the levy is so that the industries that employ thousands of people and have a material benefit in our rural communities—they are hugely important—can be adequately supported?

[Matthew Hancock]

My hon. Friend makes her case with the passion to which we have become accustomed.

The third hole in the levy is that outdated threshold rules exempt approximately two thirds of betting shops from paying the full rate. Thresholds were brought in to protect small independent bookmakers, but because the threshold applies to the shop and not to the company, we have a proliferation of corporate betting shops up and down our high street—in Newmarket, we are about to get our 12th. This allows betting shops to profit from fixed odds betting terminals while avoiding some of the levy. Independent members of the levy board say that this threshold error costs racing some £10 million. They think that it should be abolished, and I hope that the Minister will listen.