Offshore Gambling and the Horseracing Levy

Claire Perry Excerpts

Wednesday 13th July 2011 Commons Chamber

[Matthew Hancock (West Suffolk) (Con)]

It is an honour and a privilege to speak in this House on any day, but on a day like today, when the voice of the House has called so loudly, it is an honour indeed.

I shall speak about an issue that is extremely important to a large part of my constituency: offshore gambling and its relationship with horse racing. When they talk about hacking in Newmarket, they tend to be talking about something rather different to what the House was talking about earlier, because Newmarket is the global centre and headquarters of horse racing. Five thousand people employed in the town get their jobs and livelihoods directly or indirectly from the sport. That means that one third of employment is linked to the sport.

This is not just an issue for Newmarket, however; it is an issue for our whole country. I want to set out the argument that over the past few years, funding for horse racing has been in crisis and that the problem has in part been that those who make a profit from the sport through gambling have gone offshore to escape contributing to the sport on which they rely. I then want to propose action that the Government should take and set this in the wider context of changes that need to be made. We need to put this sport, which gives so much excitement to so many people, back on an even keel so that its funding is fair and secured for years to come.

[Claire Perry (Devizes) (Con)]

I am grateful to my hon. Friend for raising this subject again in the House. As he knows, my constituency has a number of racing stables. I was recently at Richard Hannon’s stables in Herridge. It is not just the excitement that the sport brings; it is the employment that it provides for thousands of people across the country and the support that those people then bring to the rural community—to the shops and the pubs. It is an unbelievably important industry in so many of our constituencies. I commend my hon. Friend again for raising this important matter.

[Matthew Hancock]

My hon. Friend makes a typically passionate intervention. I am talking not just about the beauty and heritage of horse racing, but about jobs—not just those directly involved in the horse racing industry, but those in breeding, training and all the connected livelihoods that support the sport. I will give some examples of the problem. Over the past two or three years, funding of racing through the levy has declined rapidly.

--- Later in debate ---

[Matthew Hancock]

It absolutely is, because bookies who go offshore for tax purposes also go offshore for regulatory purposes, and that means that all the high standards demanded by the British Horseracing Authority are not required of them. There have been instances of poor practice by bookmakers based elsewhere—for instance, in Gibraltar—who fall outside the regulatory practice in the UK. That is not necessarily because the bookie wanted to be outside the regulatory net; rather, they went because of the competitive pressure to reduce their tax and stop paying what had become a voluntary tax and a voluntary levy.

I come to the action that we need in the narrow sphere of offshore gambling. The case for action is strong, but what can we do? I propose a simple solution: we should make the requirement to pay tax and the levy in the UK part of a gambling licence. It is a simple change, but the consequence would be that no serious bookmaker could avoid what has become a voluntary tax, because they would be liable to the law of the land and would be unable to advertise in the UK. Indeed, they would also be unable to come to the UK, because what is currently tax avoidance would become tax evasion. My proposal is for a straightforward change that is being looked at in many other countries. Indeed, it has been enacted in Ireland, and a similar but bigger change has already been put through in France. In any other walk of life, we would not accept an industry choosing not to pay tax by moving headquarters offshore while continuing operations onshore in precisely the same way as before. Why should we allow the gambling industry to avoid tax in that way, when no one in this room could simply choose not to pay their income tax?

[Claire Perry]

I am sure that my hon. Friend is aware, given his wide experience of economic matters, that we have debates in the Chamber and elsewhere all the time on tax evasion in other industries. Indeed, the way in which we tax people whose main sphere of operation is in the UK, and the need to prevent the kind of tax-shifting mechanisms that so many companies use, form a big part of the political discussion. Is he saying that we need another simple mechanism to ensure that an industry that primarily gets its funding and its excitement from the UK market properly pays its taxes in that market?

[Matthew Hancock]

I agree wholeheartedly with my hon. Friend. We need to ensure that the foundations on which the funding of racing is built are strong. We can then go on to deal with the wider task of replacing the broken levy system, which the racing industry, the gambling industry and the Government do not like, with a commercial arrangement that recognises the contribution that racing makes to the product on which gambling bases its bets.

I have spoken before in the Chamber about the need for a racing right, and I was delighted to see that that is one of the three proposals in the consultation put forward by the Minister. I urge him to push in that direction. Before he does so, however, it is critical that we solve the problem of offshore gambling. From the romance of the misty gallops on a Newmarket morning through to the excitement of the finishing post, racing is threaded through the history of our country and through the history and culture of my constituency. Let not its future be built on sand; instead—