Oral Answers to Questions

David Nuttall Excerpts

Monday 24th March 2014 Commons Chamber

[Matthew Hancock]

I pay tribute to MBDA, which I visited to see its work on apprenticeships. The apprentice of the year was a young woman from MBDA. It does great work, but there is much more to be done so that all employers can engage in schools and colleges to show young people what they can do.

[Mr David Nuttall (Bury North) (Con)]

When I visit engineering and manufacturing companies in my Bury North constituency, they often say that not just girls, but boys find the idea of taking up trades off-putting because they are noisy, dirty and sometimes smelly. Does the Minister agree that the teachers in our schools need to do more to encourage people of both sexes to take up such jobs?

[Matthew Hancock]

Absolutely. The very best people to do that are the people who are in those careers themselves and who can show what a modern engineering workplace looks like. They tend to be problem-solving institutions that are exciting and that pay well, which I find is a message that goes down particularly well with apprentices.

Oral Answers to Questions

David Nuttall Excerpts

Thursday 23rd January 2014 Commons Chamber

[Vince Cable]

I am well aware of this issue and its importance to British manufacturing, and, indeed, to Birmingham. I would be happy, as I am sure would the Minister of State, to meet the key people in order to make sure that we get the right decision.

[Mr David Nuttall (Bury North) (Con)]

Given the enthusiasm of both the public and employees for buying shares in Royal Mail, will the Secretary of State look at what other assets in the public sector could be successfully transferred to the private sector?

[Vince Cable]

Asset sales are an important part of Government economic policy. They have been very successful in raising cash and enabling the Government to invest more than would otherwise be the case. We approach this on a practical basis, aiming to get value for money for the taxpayer.

Oral Answers to Questions

David Nuttall Excerpts

Monday 6th January 2014 Commons Chamber

The Secretary of State was asked—

[Mr David Nuttall (Bury North) (Con)]

1. What assessment he has made of the performance of primary schools which have attained academy status.

[The Secretary of State for Education (Michael Gove)]

I associate myself and those on the Front Bench, Mr Speaker, with your generous words towards Paul Goggins and his family. We all wish him a very speedy recovery.

In 2013, the proportion of pupils who achieved the expected standard in reading, writing and mathematics improved significantly more in sponsored academies than in local authority schools.

[Mr Nuttall]

I wish you, Mr Speaker, and the whole House all the best for 2014.

I am most grateful to the Secretary of State for that reply. Having been judged inadequate by Ofsted in each of the past two years, Elton primary school in my constituency is now the subject of a consultation with a view to its becoming an academy. Will my right hon. Friend reassure me and those parents who have concerns that all the evidence suggests that such a move is more likely to be beneficial than detrimental to their children’s education?

[Michael Gove]

My hon. Friend is absolutely right. Parents are naturally nervous whenever there is a change of management or leadership in any school and so they should be—they care about their children. The evidence points to the fact that when primary and secondary schools have been converted to academies, they have made significant improvements. One of the most controversial academy conversions happened in Haringey when Downhills school was taken over by the Harris chain. That met furious opposition from the unions and some Labour MPs, but children in that school are now flourishing at last, as are children in so many other academy schools.

Oral Answers to Questions

David Nuttall Excerpts

Thursday 5th December 2013 Commons Chamber

[Matthew Hancock]

I agree with every word that the hon. Gentleman says. We are supporting crowdfunding on financial terms, not least through the new business bank, but we are also making sure that it can operate in a high-quality framework. The fact that there will be a regulatory framework around crowd-sourced funding has been welcomed by the sector. We have to get it right, and I will meet Martin Wheatley of the FCA to make sure that we get the details right.

[Mr David Nuttall (Bury North) (Con)]

Some of the most burdensome regulations on manufacturing companies in my constituency are the registration, evaluation and authorisation of chemicals regulations imposed by Brussels. Will the Minister undertake to work across Government to do all he can to reduce the burden of these REACH regulations?

[Matthew Hancock]

Yes, the REACH regulations are among the 30 recently highlighted by the EU business taskforce. As my hon. Friend knows, we are working hard to reduce the burden of those regulations.

--- Later in debate ---

[Jo Swinson]

The hon. Gentleman has raised issues relating to agency workers on a number of occasions, and I know that in his constituency there is a particular concentration of them. We are always happy to look at whether workers are treated as they should be. I am happy to look into the specific issue he raises and get back to him.

[Mr David Nuttall (Bury North) (Con)]

One of the biggest and most important decisions that any sole trader has to make is whether and when to take on their first employee. Will the Secretary of State set out what steps his Department is taking to make that process as easy as possible?

[The Minister for Skills and Enterprise (Matthew Hancock)]

My hon. Friend is right to identify that moment in the life of a small business. By reducing the amount of national insurance paid, by introducing the employer allowance of £2,000 from April and by setting out that a company cannot be taken to a tribunal for two years, we are hoping to make it much easier to employ people and for small businesses to expand.

Secondary Schools (Accountability)

David Nuttall Excerpts

Monday 14th October 2013 Commons Chamber

[Mr David Nuttall (Bury North) (Con)]

Following that same point, in warmly welcoming the Minister’s statement, I urge him to accelerate the inclusion of a destination measure as an assessment criterion. What really matters is how a school prepares its pupils to succeed either in further education or in finding a job.

[Mr Laws]

I agree with my hon. Friend that the destination measure is extremely important. I assure him that we will act swiftly to seek to introduce the measure. Getting the data to the standard at which they are accurate and useful, which is crucial because we want an accountability measure that is taken seriously by schools, is important as the first step. However, as soon as we do it, we will move towards publishing the measure.

Oral Answers to Questions

David Nuttall Excerpts

Thursday 18th July 2013 Commons Chamber

[Vince Cable]

The funding for lending scheme primarily benefits mortgage lending, but changes were made in April to make it accessible to asset-based finance, for example. Several of the new challenger banks are now taking advantage of it, and it is beginning to make an impact on SME lending.

[Mr David Nuttall (Bury North) (Con)]

I visited the bank recently and was told that all people who come to it are given a fair hearing and that small business men are getting the loans they need. Is it not the case that what got the banks into this mess was irresponsible and over-optimistic lending and that what we need now is prudent and responsible lending to small businesses?

[Vince Cable]

Of course, we need prudent, responsible lending, but I subscribe to the view, which I hear frequently around the country, that many SMEs find it difficult to access finance from the banks and that we cannot just let the situation remain as it is. That is why we are in the process of establishing the business bank, which is currently marketing £300 million. There is substantial interest in investing in that project.

GCSEs

David Nuttall Excerpts

Tuesday 11th June 2013 Commons Chamber

[Mr David Nuttall (Bury North) (Con)]

Does the Secretary of State agree that as a majority of people believe that GCSEs have become easier in recent years, these substantial reforms are essential to restore the confidence of employers and further education establishments in the GCSE system?

[Michael Gove]

My hon. Friend is absolutely right. I know he is committed to education—we first met in a school in his constituency—and I know he absolutely believes that we need to restore confidence in these examinations. The only people who are let down if there is not public confidence in these examinations are young people, and he is absolutely right to point out that confidence has been eroded over time.

Canterbury City Council Bill

David Nuttall Excerpts

Thursday 31st January 2013 Commons Chamber

[Mr Chope]

Yes, it would be a shame if we could not vote on all of them—perhaps some of them will be accepted. I must not be downhearted at this stage, as they might all be accepted. However, in the event that this one is not accepted, I can understand my hon. Friend’s point that it would be a useful amendment on which to test the opinion of the House. The essence of my amendment (f) is that it is designed to prevent the officers of the local authority from being judges in their own courts. That is a pretty fundamental principle, and I would have thought that all Members would like to sign up to it and apply it in practice.

[Mr David Nuttall (Bury North) (Con)]

I am sorry that I was not in my place to hear the beginning of my hon. Friend’s exposition of his various amendments. On this particular amendment and even allowing for it, it will still be up to the council to determine what is and what is not “adequate”. Does my hon. Friend think that it is right for the council to decide rather than some independent body?

[Mr Chope]

I would have hoped that we could trust councils to provide adequate training. The purpose of my amendment is to try to ensure that that happens. If the training is not adequate, it will be open to somebody to make a complaint to the council or the councillors; ultimately, it could be used as a defence to a fixed penalty notice or something like that—although I would not want to speculate on that. The test is that the officers must be properly trained: that is what the provisions would require—rather than that the council thought the training was adequate. I hope it would not be necessary to set up a new bureaucracy—an appeals panel or something like that—to deal with the situation, as we are already overburdened with bureaucracy and officialdom in this country, and we do not want even more of it.

My amendment (g) to Lords amendment C27 proposes the deletion of subsection (2), which makes training provided by the council mandatory. It states:

“The council shall make the training referred to in subsection (1) available also to constables and community support officers empowered by section 5(1) to give a fixed penalty notice.”

That is redundant, because constables and community support officers receive training that enables them to perform this function outside the ambit of any particular local Act relating to pedlars, and it is therefore unnecessary to require the council to become involved in training them. Obviously, if the chief constable asks the local council whether it will provide training for constables and community support officers, the council will probably be happy to oblige and to explain the procedure.

--- Later in debate ---

[Mr Chope]

As my hon. Friend the Member for Pudsey (Stuart Andrew) suggested, we have now come to the meat of the Bills—namely, the provisions on pedlars and street trading. Their lordships looked at the issues and decided that clause 4 should be left out. Amendment C8 covers that. Under amendment C9, clause 5 would be left out and the new clause to which my hon. Friend briefly referred would be inserted.

Confusion has been caused. Since the Lords looked at these issues in November 2011, the Government have come forward with a consultation that effectively says that, because of the impact of the services directive, it is important that the Pedlars Act be repealed nationally. Although I agree that this process has been going on for a while—many years, perhaps—this is the first time we have got what might be described as a European dimension. If the European services directive is going to apply as the Government interpret it, we in this subordinate legislature will not be able to act outside its terms. The Government will not have any option but to proceed along the lines set out in the consultation document.

The Minister is looking at me in a way that suggests he wishes to intervene and put me right. If that is correct, I will be happy to give way to him.

[Mr Nuttall]

Will my hon. Friend give way to me instead?

[Mr Chope]

Yes, of course.

[Mr Nuttall]

The Department for Business, Innovation and Skills impact assessment states:

“In any case, our assessment is that the Government has no choice but to abolish the Pedlars Act to comply with the European Services Directive.”

[Mr Chope]

I am grateful to my hon. Friend for reinforcing my point, and if the Minister wishes to intervene, I would be happy to give way.

--- Later in debate ---

One would have expected the Government to table amendments to the Lords amendments to set out, beyond peradventure, what, if anything, should be in the Bill instead of clause 5, which is being left out. I find the situation rather perplexing. It is important that it is clarified.

[Mr Nuttall]

My hon. Friend mentioned that it was suggested in the consultation document that a rather larger trolley be allowed. Is he as surprised as I am that neither the promoters nor the Government have brought forward amendments to bring the new clause in Lords amendment C9 in line with the consultation document?

[Mr Chope]

I am surprised about that. I am also a bit disappointed in myself, because I should have tabled such an amendment so that the House could have discussed it. I failed to do that, so the House does not have the opportunity to compare the alternative proposals for the best size of trolley.

--- Later in debate ---

Obstruction of the highway is a wide and vague term, and means that any trolley, including one that complies with the sizes in the Bill, could be regarded as capable of creating an obstruction in the highway. The wording of the Lords amendment would enable a council to develop its bad faith towards pedlars. There is a lot of evidence that councils have such bad faith and that they wish to support the interests of their own street traders, who are licensed and pay substantial fees. Councils want to protect that income against competition from pedlars. We know that such ill will exists. The current wording would facilitate its development to the detriment of pedlars.

[Mr Nuttall]

Does my hon. Friend share my concern that, if the words of the Lords amendment remained and were taken literally, virtually any article in the highway could be construed as an obstruction of it? It would therefore be possible for the authority to name virtually any street as being at risk of falling foul of the provision.

[Mr Chope]

Exactly—my hon. Friend is right to make that point.

--- Later in debate ---

[Mr Chope]

Yes, obviously they would—I am sorry that it seems to have taken my hon. Friend quite a long time to drill out the answer he was looking for from this particular stone—because the council will be the one determining the matter. I do not know whether my hon. Friend is going to make reference in his own contribution to the circularity of the argument, but I understand the point he is getting at. I think the way to put it is to say “I surrender”.

Looking at the amendments in the context of the revisions to the legislation envisaged by the Government, my own view is that it would be wrong for the House to accept amendment C9 as drafted. Amendment C9 is a lot better than the provisions that were in place before it. If it were simply an amendment to leave out clause 5, that would be fine, but to

“insert the following new Clause”

as set out in C9 risks the danger that the provisions, when enacted, will be totally at odds with legislation brought forward by the Government, whether it be legislation relating to the size of the trolleys or to the circumstances in which those trolleys can be used by pedlars, particularly because C9 seeks to amend the pedlars legislation at a time when the Government are saying that those Acts have to be repealed.

[Mr Nuttall]

On that very point, is my hon. Friend aware of any reason why such very specific measurements are included in their lordships’ amendment C9? I refer to where a width of 0.75 metres, a depth of 0.5 metres and a height of 1.25 metres are specified. It would have been far better to go with the Government’s originally suggested amendments and measurements of 1 metre and 2 metres.

[Mr Chope]

The answer to my hon. Friend’s question is that when their lordships drew up these amendments in November 2011, the Government had not declared their hand. They did not do that until November 2012—and nobody can be blamed for not anticipating what the Government would say.

Offshore Gambling Bill

David Nuttall Excerpts

Friday 25th January 2013 Commons Chamber

[Miss McIntosh]

I disagree on the basis of the conversations that I have had with the industry. Over the past five to 10 years, the percentage change in prize money has been almost minus 8%. Racing takes place on almost every day of the year. On 364 days of the year there is at least one race meeting. It is only on Christmas day that there are no meetings. That means that by any definition the prize money has reduced. Against the backdrop of the cost of owning a horse—perhaps my hon. Friend is so comfortably off that it does not dent his finances, but I am a little alarmed that my brother has taken a share in a syndicate for a racehorse, which might affect the family economy—the trainer who keeps the horse has found that the cost of bedding has gone up, the cost of feed stuffs has gone up, and fuel costs for transporting a horse to the races have gone up. It is a matter of some regret to those in the industry that the prize money and the money coming into racing generally has gone down.

[Mr David Nuttall (Bury North) (Con)]

Although my hon. Friend states that the prize money from the levy has gone down, I have figures that show that although it may have gone down between 2010 and 2011, when there was a significant fall, it has recovered since then and gone up from £34.7 million in 2011 to £38.9 million in 2012, and is forecast to be £50.2 million in 2013.

[Miss McIntosh]

I shall come to that point in a moment. The levy yield has gone down in the past 10 years by almost 35%, and the five-year trend shows that it has gone down by almost 21%. The current financial problems with racing revolve around betting companies having moved their businesses offshore, meaning that they are exempt from paying both tax and the levy. As soon as one company moved offshore, there was a need for others to follow, enabling more competition between those companies. My understanding is that, as the hon. Member for Newcastle-under-Lyme (Paul Farrelly) said, only one betting company, bet365, remains based in the UK for these betting operations, and it is a significant employer in his constituency.

As a result of this mass exodus offshore, the Government are losing approximately £300 million in tax each year, and the amount being paid into the levy has been reduced by between £5 million and £10 million. I repeat that the tax situation is properly a matter for the Treasury to address in the Budget. The point that I want to make for the purposes of the Bill is that the drop in levy and the drop in tax has meant that less prize money is available, making other countries such as Ireland and France more attractive for owners to buy horses there and enter them in races there.

To address the point made by my hon. Friend the Member for Bury North (Mr Nuttall), the figures that I have show that the average prize money per race over the past 10 years on flat race courses has seen a reduction of more than 16%, and for jump racing a reduction of almost 10%. Overall the reduction has been almost 14%. The five-year trend for flat racing shows a reduction of more than 3% in average prize money per race and in jump racing a reduction of almost 20%. Overall, average prize money per race has dropped by more than 9%. By comparison, the prize money available in France is approximately seven times higher than that on offer in the UK.

To give an idea of the difference between the UK and France, in 2011-12, £67.7 million on betting activity on British racing was returned to racing through the levy, but in France the PMU, the state-owned tote monopoly—I will talk more about this later—returned approximately £735 million to racing. In Australia approximately £280 million was returned to racing. British owners receive the lowest return from their investment in training fees for racehorses of any major racing nation. I think that the international statistics are powerful and show how weak British racing is in comparison because of the falling yield.

My hon. Friend the Member for Shipley serves with great distinction on the Culture, Media and Sport Committee. The Committee addressed this question in 2012 in its report, “The Gambling Act 2005: A bet worth taking?”, for which it took some compelling evidence. I will share with Members one of its conclusions:

“The failure of the Department for Culture, Media and Sport to work with the Treasury to set remote gambling taxation at a level at which online operators could remain within the UK and regulated by the Gambling Commission has led to almost every online gambling operator moving offshore whilst most are still able to advertise and operate into the UK. We therefore welcome the announcement, made in the 2012 Budget Statement, that the online industry will be taxed on a point-of-consumption rather than a point-of-supply basis. We also welcome the detailed consultation with the industry since the Budget over the design of the policy framework and look forward to the Government's response. To give certainty to online operators, and their investment plans, we urge the Government to adhere to its timetable for implementation by December, 2014 and to make plans to deal with any challenges to the proposed new system. However, the Treasury still needs to work with industry stakeholders to establish the correct level for online gambling taxation, taking into account the need to encourage companies to accept UK regulation and taxation and to discourage the formation of a grey market.”

There we have it. My hon. Friend the Member for Shipley, a distinguished member of the Committee, did not, to my certain knowledge, dissent from or disagree with that conclusion, seek to distance himself from it, express an opposing minority view or table a minority report, so I am delighted that we will no doubt enjoy his full support today. In his own Committee’s report, he has drawn two conclusions: it is for the Treasury to close that gap to ensure fairness in taxation, but it is for the House today to ask the Minister either to accept the Bill or to give an assurance on the precise date and timetable for when the Government will bring forward their proposals for the remote gambling Bill. Should the worst happen today and the Bill falls, will my right hon. Friend the Minister accept an amendment on the levy when he brings forward the remote gambling Bill? I will move on to that momentarily.

--- Later in debate ---

[Miss McIntosh]

I do not think that the purpose of this debate is to draw up a grey list or a black list; the purpose of the debate is to set out the problem, as identified by my hon. Friend’s Committee, and to address it.

Obviously, it is impossible to restrict all internet use because of its sheer size, but we want to make the situation much fairer and clearer for anybody placing a bet and put everything on to an even keel. I think that one point that my hon. Friend and I would agree on is that we want to bring more money back into the UK so that it can then be spent on racing.

Because of the increased use of the internet for gambling purposes, it is crucial that the integrity of the sport is maintained. Therefore, information-sharing between betting operators—for example, the information on account holders—must occur when suspicious gambling takes place.

As I said earlier, the Gambling Commission would play a crucial role in the public policy aspect of clauses 1, 2 and 3 in protecting the young and vulnerable. It surely must be in the interest of bookmakers to have a healthy racing industry. The purpose of the Bill is not to pit bookmakers against other sectors of the racing industry; its purpose, and that of the positive conversations that I have had with those in the racing industry, is to promote partnerships. That is something that successive Government have done. The Labour party chose to call them, rather vulgarly, stakeholders, but we prefer a more cuddly partnership approach. That is precisely what we want to achieve—a partnership with bookmakers, whom I think have become one step removed from other partners in the racing industry. We also want to create fair competition between onshore and offshore bookmakers.

Hon. Members may raise the fear later in the debate that the operation of online betting will be moved further offshore to China. I would like to know from those hon. Members how that can happen when it is completely illegal to place a bet in China, either online or offline. China is a bad example to use.

[Mr Nuttall]

I am not sure why my hon. Friend has mentioned China. It has not been mentioned before or in any of the conversations that I have had in the run-up to this debate. What we do know is that, in other countries and jurisdictions that have tried to go down the road of regulating remote gambling, there has been a leakage and the development of grey markets.

[Miss McIntosh]

I think that my hon. Friend’s argument helps mine and disagrees with that of my hon. Friend the Member for Shipley, who might, therefore, like to explore it.

The purpose of clauses 1, 2 and 3 is to bring offshore activities back onshore to allow the Gambling Commission to intervene in order to be able to discharge its public policy role and promote consumer protection. The sports integrity of racing, football and cricket is also important. The gambling scam in cricket captured everybody’s attention, but we now know that that could so easily happen in racing and football, too. This is, potentially, a big and growing issue. If a relevant website was licensed by the Gambling Commission, that would give it the opportunity to report all suspicions activities. They could be monitored and the commission could discharge its public-policy and consumer-protection role.

--- Later in debate ---

[Miss McIntosh]

Picture rights are only part of the story, however, and are up for renegotiation at frequent intervals. That is a very recent development. When the budgets of race courses are squeezed, competition reduces and, it is argued, lower-quality races are run.

Let me share with the House the figures for the average field size. Over a 10-year trend there has been a reduction of more than 11% for flat turf racing, and a reduction of more than 9% for hurdles. Between 2006 and 2010 there has been an 8% change overall in the average field size, which means that less money is going in. The average number of runners overall has gone down by 8% over the past 10 years. That is obviously setting alarm bells ringing through the racing community. If the number of runners go down, the contribution to racing and the level of prize money will also go down unless the race courses make up the shortfall.

[Mr Nuttall]

My hon. Friend makes an interesting point about the reduction in the number of runners. She mentioned that she spent time visiting stables, including in her constituency. Does she know of reasons other than the level of prize money that contribute to the reduction in the number of runners?

[Miss McIntosh]

As I have said, other reasons include the cost of keeping a horse in training, to which I am sure my hon. Friend the Member for Shipley will testify. Feeding costs have gone up hugely for all livestock, including horses. Bedding costs have gone up hugely. Alternatives to straw are being considered. Corn is being produced so that more corn goes to cereal and there is less straw, which has a huge impact on the stabling costs. Many of the stables I have visited had considered alternatives such as cut-up newspaper. However, I understand that stabling horses with newspaper—this also applies to using newspaper for chickens—leads to a cough and is a health hazard that can prevent horses from running.

There are therefore reasons other than economic ones—though costs are increasing—for smaller field sizes and fewer runners. In turn, that reduces the footfall at the race course, and so yields less income from admission prices. Figures for the past five and 10 years show that average attendances are down by a considerable 7%. Trainers are training fewer horses, and therefore require fewer stable staff and fewer farriers, which will have huge knock-on effects in rural areas such as my own of Thirsk, Malton and Filey. The trainers require fewer saddlers and horse boxes. The knock-on effect on the whole rural economy is potentially huge.

The results are the same if there is less prize money, because owners enter their horses in races from which they will see a greater return, and at this point in time that means overseas. My hon. Friend the Member for Shipley seems to be bucking the trend, because it appears that the number of owners is down. The number of sole owners has dropped in the past 10 years by 13%, which is less than the drop in partnership or company owners whose numbers are down by more than 31% in the past 10 years, and by almost 20% in the past five years. I do not think the House can argue that the racing industry is not facing a crisis. That is why the Bill is so urgent. My hon. Friend the Member for Rochford and Southend East (James Duddridge)—I am delighted to have had the honour to represent that area in the European Parliament between 1989 and 1994—must now be satisfied about why the racing industry is in penury and why racing needs the money.

It is true that the wealthy end of the sport—I am looking at no one in particular—is unaffected by the reduction in prize money. However, at the budget end of the sport, the smaller syndicates and individual owners are struggling.

--- Later in debate ---

[Mr Nuttall]

In what ways does my hon. Friend think the operators who have moved offshore are enjoying any less regulation by being based in, for example, Gibraltar rather than in the UK?

[George Freeman]

Those operators are not required to comply with the regulation that applies to operators based in the UK. The Bill will simply create a level playing field by making offshore bookmakers subject to exactly the same regulation, which I do not think anyone would consider unduly onerous. Such a level playing field would also encourage new entrants into the betting market, a development of which Conservative Members in particular would approve.

I support the Bill principally because I think the amendments that it proposes to the 2005 Act will create that level playing field. It will

“regulate remote gambling on a point of consumption basis; to require all operators selling into the British market, whether in the United Kingdom or overseas, to hold a Gambling Commission licence to enable them to undertake transactions with British consumers and to advertise in the United Kingdom; to provide that all relevant operators contribute to the Horserace Betting Levy”.

That does not strike me as a radical package of anti-business measures. It does not strike me as a dramatic attack on the freedom of the market, or a contravention of any simple, basic business principles. It is simply common sense. We need a structure that supports our industry, is fair, and provides a level playing field for all operators.

I believe that the Bill will unlock three important benefits. It will provide better protection for consumers. If all operators are subject to Gambling Commission requirements, everyone who places a bet will know that wherever they are placing it, it will be subject to the same regulation. Operators will be mandated under the Gambling Commission’s licence condition 15.1 rather than being able to operate on a voluntary basis. The Bill will, as I have said, return a level playing field to the market, and in so doing will make it easier for small to medium-sized operators to enter the sector.

At the heart of the debate is an issue similar to the one that we face across the board. Industries are increasingly dominated by big players, while smaller placers are locked out at the bottom. The pyramid of racing, which at the top relies on the glamour and prestige of the Derby, the grand national and other big, celebrated events, has deep roots at the bottom. Unless we look after those roots and introduce a system that maintains their viability and sustainability, we will see them wither. I believe that the Bill does what the 2005 Act failed to do. It resolves a very simple and fundamental funding crisis at the heart of racing, and gives hope to the 60 race courses in the country—including Fakenham, which is on the edge of my constituency—by reassuring them that they have a sound basis on which to continue to thrive, and to support both racing and the local rural economy.

I understand that the Government intend to give effect to these measures with legislation of their own, and that they have published a draft Bill. I hope that the Minister will assure me that in pursuing their own legislation, the Government will seek to give effect to undertakings given previously. On 20 January 2011, at the end of the debate on the funding of British horse racing, my hon. Friend the Member for Weston-super-Mare (John Penrose)—who was then the Minister responsible for tourism and heritage—said:

“It has also been pretty much universally agreed in today's debate that the current levy system is old-fashioned and, if not broken, in the process of breaking.”

He also said:

“It is absolutely right for the House to urge the Government to come up with concrete proposals before the end of the year, and I am happy to accept that challenge, in line with the mood of the House.”—[Official Report, 20 January 2011; Vol. 521, c. 1067.]

Since May 2011, racing has been involved in a pre-consultation process and subsequent bilateral discussions with the betting industry, represented by the industry’s recognised trade body, the Association of British Bookmakers, and under the auspices of the Department for Culture, Media and Sport, to achieve a sustainable long-term replacement for the levy. Despite its best efforts, and notwithstanding the aims of the Bill, racing is continually told that the levy is incapable of the reform that would enable it to capture modern forms of betting. It is therefore vital for the work to establish a mechanism that is fair, enforceable, commercial and sustainable to be completed. Solutions, including a racing right and a Gambling Commission licence condition requiring bookmakers to have commercial terms agreed with racing, are available and the consultation is due to begin this year.

I understand the Government’s preference for legislation of their own. Having looked at the draft Bill and heard the views of the British Horseracing Authority, I should like to raise a number of issues which I hope the Minister will address in his closing remarks.

--- Later in debate ---

[James Duddridge]

I apologise to my hon. Friend, but I will have to defer to others on that point, because I have placed a bet only twice. The first time was around the ’92 election, when there was a runner called Party Politics, which I thought was a sign. The election result was not as pleasing as I had hoped, but I did win on that bet. The other time was to bet on my becoming the next Prime Minister. I will indulge the House a little more on that unlikely subject, because I think it illustrates some points in relation to supervision.

[Mr Nuttall]

Will my hon. Friend give way?

[James Duddridge]

Without hesitation, on the condition that I have a first supporter.

[Mr Nuttall]

Will my hon. Friend enlighten the House on the odds he was able to obtain on his becoming the next Prime Minister?

[James Duddridge]

I will illustrate the point I was trying to make by placing the bet. Initially, staff pretty much told me that they had never heard of me, but I pressed the issue, particularly when I saw some of the people who were listed. They gave me odds of 250:1. I was not trying to earn money, because I thought that the chances of my ever becoming Prime Minister, let alone the next one, were zero. Instead, I was looking at how the odds could be changed and at suspicious betting patterns, particularly given my comments about Liberal Democrat betting. Within the day they had suspended taking bets on me because I was so popular, based only on one or two bets that I had other people across the country make for only another few pence. That demonstrated how easy it is to manipulate the betting statistics and, in relation to the Bill, how important it is that betting is regulated, supervised and licensed locally, rather than simply offshore.

--- Later in debate ---

[James Duddridge]

I think that my hon. Friend is putting words into my mouth in relation to the Gambling Commission. I would say, though, that we have more control over the Gambling Commission in comparison with a foreign commission or an area that is completely offshore and completely unregulated. There is no great history of regulation in this area, but we do sometimes focus on some of the more problematic cases.

To return to the idea of working across jurisdictions, one can often go on to a website and not be sure which jurisdiction one is trading in. I mentioned my dabbling in the national lottery. A friend who used to live in Southend and moved away to southern Spain—Southend being as sunny as it is, it comes as a surprise that anyone would want to do that—bought a lottery ticket there. Although they had a modest win—£10, I think—they were outside the jurisdiction and blocked from receiving that money. We need clarity because there is confusion even with something as simple as a lottery ticket in the EU, and we should look at the issue in detail.

The Gambling Commission reported that it receives inquiries about social responsibility and unfairness in relation to offshore gambling—I am sure it also receives such inquiries in relation to onshore gambling—but that it is not able to do much about what is going on. It has been unable to investigate complaints or inquiries, so it is difficult for me, or indeed anyone, to understand the size of the problem. It would be advantageous to solicit information and hard numbers, and I urge other Members of Parliament to consider the issue.

[Mr Nuttall]

My hon. Friend makes the valid and interesting point that some people may complain that they have accessed sites and did not realise which jurisdiction they were in. Equally, however, will not many customers be satisfied that they are getting better value by accessing sites in other jurisdictions? Perhaps they even go out of their way to seek those other sites.

[James Duddridge]

That is a reasonable point. There could be better protection in other jurisdictions, or simply better odds, and people may be very aware of the risks they are taking in response to those odds. During the problems with the Icelandic banks, people felt that they knew the risks they were taking for an extra couple of per cent. If I were to place a bet on bet365—I was tempted to place one on the next leader of the Labour party—I might be tempted to use a site I had never heard of if I got better odds. It is worrying, however, because people must know the details and be confident that when that eventuality—the change of leader—takes place around 2015, the site will pay up. Will the site pay up against a person standing in as temporary leader or must it be a long-term leader? Will it pay up for someone who is just keeping the position warm before another Member of Parliament takes on the role? I am not sure, but offshore gamblers need clarity about when the site will pay up, and it is clear from this discussion that such clarity does not currently exist.

Having set out my broad position, I will now look at the specifics of the Bill and in particular the point of consumption, which goes to the heart of the Bill. The Government are already introducing measures on remote gambling, which in many ways will provide greater protection for British-based users of remote gambling services. The case for change is clear, but there is limited consensus on standards of software testing and what it means to be a British consumer—where the hardware is, whether it is a software issue. Those matters are quite complex as information is pinged around the world within seconds.

There is concern about a lack of fairness towards British-licensed operators that operate overseas or have overseas consumers. We must look at that issue and at what happens when British citizens travel overseas. If I travel to America and use a site to place a bet on Stoke City, what would the regulations be compared with those covering a bet made in the country where the event takes place?

Both Bills seek to amend the Gambling Act 2005 so that remote gambling by consumers living in Britain is regulated on a point of consumption basis, rather than on the point of supply, and there is broad agreement that that is the right way forward. Such a measure is sensible and a fundamental change to the basis on which the system of remote gambling is regulated in the UK. By moving from the current place of supply basis to a place of consumption basis, the British consumer becomes the focal point around which the system is based, rather than the location of the gambling operator. In terms of consumer protection, that is the right way forward.

All operators selling into the British market will be required to hold a Gambling Commission licence, and will therefore be subject to all the provisions of the previous Government’s Gambling Act 2005 and its regulations, to the Gambling Commission’s social responsibility and technical standards requirements, and to the provisions I have referred to. That will bring the original intent of the Act up to date. My hon. Friend the Member for Shipley was entirely right to say that I should tar not the whole Act with the brush of success— I am thinking of super-casinos—but only its broad understanding.

Bringing the original intent of the Act up to date will give consumers greater confidence that the operators they choose will be subject to the same standards. For example, an offshore operator that makes remote gambling facilities available to consumers around the world on the internet will need to obtain an operating licence from the Gambling Commission if people in parts of Great Britain are capable of using them, regardless of whether they are used in Great Britain. If operators want to avoid having such a licence, they would need to block internet access from consumers in Great Britain at their own cost, so that people are incapable of using remote gambling facilities illegally in the UK. The measure will also mean that there is a requirement for operators to contribute British problem gambling issues and regulatory costs. Effectively, they would have to make a contribution where they are part of the problem, which is an extremely welcome development, and will go some way to levelling the playing field for UK-based companies.

I have concerns about the whole arena of gambling. Recently, the Southend Standard, a weekly publication in my patch of Rochford and Southend East, set out the number of betting offices on the local high street. I was surprised to find that there were five, including two run by the same company. I cannot help but think that we need to look again at the broader issue of gambling, and particularly at how online gambling based offshore encourages people to bet money they may not be able to afford.

Switching to a point of consumption basis will mean that the location of the gambler and not the operator will be the deciding factor on what tax to pay. For example, money collected by an online casino that is attributed to a UK player will be subject to British taxation, which seems entirely fair. Although there is no mention of the rate, the current rate of 15% on gross profits clearly puts domestic operators at a disadvantage. The hon. Member for Newcastle-under-Lyme rightly said that the level of taxation is the crux of the matter. I believe William Hill accepts the principle of changing to the point of consumption from the place of supply if the rate of taxation is right. I understand it has pitched for 5%, but it would suggest a low figure, wouldn’t it? I have never been a fan of high taxation—I prefer lower and flatter rates—so I encourage the Government to consider whether 15% is right and competitive, and whether it will encourage growth in the UK and people in other jurisdictions to bet in the UK.

The new licensing arrangements will also mean that, for the first time, overseas-based operators will be required to inform the British Gambling Association of suspicious activities, which will help the fight against illegal activity and corruption in sports betting, which discredits not only the betting community but the sporting community—people cannot enjoy sport if they believe the result is fixed. I welcome the inclusion of that measure, which, as I have said, removes the potential risk of match-fixing and suspicious betting practices in sporting events on overseas-licensed sites.

The second half of the Bill relates to the horse racing levy. My experience of horse racing is not much better than my experience of betting in a shop or online, but I have been to Aintree, and to Lingfield a couple of times—they were enjoyable events. As a Member of Parliament whose constituency is partly rural, I am particularly concerned about rural communities. Quite often we make decisions here that have an impact on them. A number of Members have mentioned the great benefits of the horse racing industry, with 60 race courses across the UK.

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[Mr David Nuttall (Bury North) (Con)]

As ever, it is a great honour and privilege to follow my hon. Friend the Member for Rochford and Southend East (James Duddridge). I thank him for a comprehensive speech.

Like my hon. Friend, I have no race course in my constituency—I am not lucky enough to have one. Unlike the hon. Member for Newcastle-under-Lyme (Paul Farrelly), I am not a member of the Culture, Media and Sport Committee. Indeed, it almost feels as though Members have to qualify to take part in this debate, either by having stables in their constituencies or by being members of the Select Committee. However, I have a number of bookmakers operating in my constituency, providing valuable jobs for my constituents. Many of my constituents will be customers of those bookmakers and no doubt many will avail themselves of online gambling facilities—or, as we are referring to them today, remote gambling facilities.

I am not a sponsor of the Bill, but I suspect that many hon. Members—certainly many of my hon. Friends on the Government side of the House—will wish that they had put their names to it because, since it was printed on 25 June last year, no fewer than three of its sponsors have found their way on to the Government Front Bench.

[Miss McIntosh]

I hope that it is appropriate for me to point out that, although it is now too late to bet on Andy Murray going through to the final of the Australian Open, the fact that he will do so will add to the celebrations of Burns night. I hope this will encourage people to place their bets on future matches and, as we are discussing a sporting event, I hope that my hon. Friend will take his lead from that.

[Mr Nuttall]

I am most grateful to my hon. Friend for her intervention. I am pleased to hear that Andy Murray has got through to the final. I am sure that that will generate more business for bookmakers—online and terrestrial—because I am sure that there will be far more betting activity on the Australian open with him in the final than there would have been without his involvement. Following that intervention, I should like to thank my hon. Friend sincerely for her opening speech and for the comprehensive way in which she took the House through the complicated issues in the Bill. She dealt with interventions courteously, and her speech was most informative. I thank her for that.

As I was saying, no fewer than three of the Bill’s sponsors are now on the Government Front Bench: the Under-Secretary of State for Skills, my hon. Friend the Member for West Suffolk (Matthew Hancock), the Under-Secretary of State for Communities and Local Government, my hon. Friend the Member for Great Yarmouth (Brandon Lewis) and the Under-Secretary of State for Communities and Local Government, my right hon. Friend the Member for Bath (Mr Foster). All are now members of Her Majesty’s Government. That is a pretty high success rate, and I suspect that any future Bill on this subject will attract a rush of Members wanting to put their names to it in the hope that that might spur a move to the Front Bench.

I feel rather like the warm-up act before the main event in a theatre, because I am sure that the whole House is waiting to hear from my hon. Friend the Member for Shipley (Philip Davies), if he is fortunate enough to catch your eye, Mr Deputy Speaker. His knowledge of these matters is far greater than mine. As I said earlier, I have no particular knowledge of the horse racing industry or the bookmaking industry. As ever, I am looking at the Bill purely from the point of view of what is best for my constituents.

The Bill has come into being because the Gambling Act 2005 has failed, in that it was designed to make the United Kingdom an attractive place for operators and a magnet for new operators flooding into the UK market. In fact, it has had the opposite effect, with 18 of the 20 largest operators having moved offshore. This Bill is an important measure. It will impact on the lives of tens of thousands of people employed in the betting industry and tens of millions of customers. Depending on whether clause 4 is included in the Bill, it will have an enormous impact on the horse racing industry.

The UK betting industry employs about 40,000 people across the UK and supports the jobs of some 60,000 more, contributing about £1 billion to the Exchequer every year. Just over half—52%—of the gross gambling yield in the United Kingdom is generated by the retail betting sector, as compared with casinos, for example, which account for only 14% of the gross yield.

Betting and gaming have for many years been a popular pastime for many people. For most, it is a pastime carried out and enjoyed safely and responsibly. The British gambling prevalence survey was carried out by the National Centre for Social Research, and in 2010 the Gambling Commission sponsored the third in a series of prevalence surveys. The National Centre for Social Research is an independent social research institute, and the 2010 survey followed on from two previous surveys in 1999 and 2007. The 2010 survey found that 73% of people aged 16 and over—around 35.5 million adults—had participated in some form of gambling in the previous year, while 56% of adults had participated in a form of gambling in the year before that. The difference there, of course, is that some forms of gambling can take place at 16, but others only at 18. It was reported that 4% of adults said that their involvement in gambling had increased in the previous year; for 13% it had decreased; and for the rest it remained the same. In 2011, the bookmakers William Hill reported that its customers had staked almost £80 billion, and that it processed around 1 million bets every single day.

All that gives us some idea of the popularity of the industry and the importance of the measure before us. As the preamble to the Bill states, it is designed to

“Amend the Gambling Act 2005 to regulate remote gambling on a point of consumption basis; to require all operators selling into the British market, whether in the United Kingdom or overseas, to hold a Gambling Commission licence to enable them to undertake transactions with British consumers and to advertise in the United Kingdom; to provide that all relevant operators contribute to the Horserace Betting Levy; and for connected purposes.”

It is perhaps worth asking why it is that an Act passed just eight years ago, which did not come into force until 1 September 2007—in force for less than five and a half years—now requires amendment. What is it that has gone wrong? I would submit that, as with many other previous attempts to try to regulate and control the market—whether it be the betting market or any other market—loopholes soon become apparent as human nature takes effect and people try to get round those controls. The Gambling Act 2005 was in part a consolidation measure, but it was also a reforming measure, seeking as it did to reform and update the regulation of online gambling. The Act also created a new single regulator for the betting industry—the Gambling Commission.

I realise that many people would like gambling to be banned outright, but I do not agree with them. I believe that in a free society it should be for the individual to decide whether or not to gamble. Until 1960 betting was largely illegal in this country, but the Betting and Gaming Act 1960 liberalised the gambling laws and legalised betting shops. However, despite that Act and the Betting, Gaming and Lotteries Act 1963, commercial gambling became a source of criminal activity, and a new Act, the Gaming Act 1968, was therefore necessary. It was largely successful in removing the criminal element from gambling, and it established the Gaming Board as the new regulator for the gambling industry.

The 2005 Act sets out, in its very first section, the three key principles that we must all keep in mind in considering this Bill. Gambling must not be

“a source of crime or disorder”;

it should be

“conducted in a fair and open way”;

and

“children and other vulnerable persons”

should be protected

“from being harmed or exploited by gambling.”

We should be clear about what the Bill seeks to regulate. As I understand it, the remote gambling market covers all betting and gaming transactions that are effected without the customer’s coming into contact—physical contact, that is, as when a customer goes into a traditional bookmaker’s office—with the operator. It covers, for example, the placing of a bet on the telephone or the use of a computer to bet on the internet. It would also cover new mobile technologies—for instance, bets placed via a tablet computer or a mobile telephone.

Most United Kingdom operators started to offer customers the opportunity to place bets online in the mid to late 1990s, as improvements to internet technology opened up the market to a whole new segment of the population who had previously been denied a chance to participate. These were people who, for whatever reason, had been prevented from visiting a bookmaker’s premises—and presumably, for whatever reason, had not been attracted to telephone betting—perhaps because of infirmity, because of the nature of their work, or simply because they lived in a location where there were no bookmakers. The new development enabled customers to play casino games and poker online whenever they chose to do so. Previously such opportunities had been available only to those with access to a casino, of which there were fewer than 150 in the United Kingdom.

The Gambling Commission itself reports that fewer than one person in 100 has a problem with gambling. In other words, 99% of the population who chose to engage in betting do so safely and responsibly, and enjoyably. Our level of problem gambling compares favourably with that in other countries. For instance, the United Kingdom’s rate is lower than the rates in France, where it is 1.3%, South Africa, where it is 1.4%, and the United States of America, where it is 3.5%.

Those who are involved in the industry take their responsibilities very seriously, providing training for their staff so that they can recognise customers who are at risk. It is, of course, legitimate to argue—indeed, it was argued earlier in the debate—that the risk posed to people who are engaged in remote gambling may be greater than the risk posed to those who visit traditional bookmakers’ premises. All licensed gambling operators in the UK have to abide by strict licensing conditions designed to protect and help problem gamblers, and the gambling industry is unique in financing relevant research, education and treatment activities on a voluntary basis. Licensed operators offer clear guidance and advice to customers on responsible gambling and, for example, are clear that gambling should not be used as a source of income or as a means of paying off debt. This year, the industry will be contributing some £6 million to the Responsible Gambling Trust, an independent national charity that works to ensure that the gambling industry in Britain, including the remote gambling industry, retains its world-leading reputation for promoting responsibility in gambling and to demonstrate that legitimate business growth and job creation is balanced with social protection of the weak and vulnerable in our society. Licensed operators also signpost customers to helpful websites such as those run by GamCare, Gamble Aware and Gamblers Anonymous. Nobody wants to see lives ruined by gambling, and this debate gives us an important opportunity to highlight the enormous amount of help available to those struggling with a gambling habit that is perhaps getting out of hand.

As I hope to demonstrate, one problem with the Bill is that it would have many unintended consequences. For example, it runs the risk of forcing customers into the hands of unlicensed operators—the black market— who may not operate in the same responsible way as the household names on our UK high streets do. We are being told that one of the reasons for trying to regulate offshore gambling is to protect customers, but I have to tell the House that, unfortunately, all the evidence from other countries suggests that that laudable aim will not be achieved.

In essence, the Bill seeks to regulate the internet, and we know from other countries’ attempts to regulate the remote gambling market that it is easier said than done. Different means of enforcement are available—for example, payment process blocking or website blocking. They have all been tried in various guises and all have their shortcomings. We may ask why customers will seek to circumvent attempts at enforcement, but the answer is simple: human nature. It is human nature for customers always to seek out the best value, and operators who are unlicensed in the UK and operating from a jurisdiction where there are fewer controls will be able to spend more on advertising and on marketing. They will be able to keep coming up with new offers to make their offering attractive to customers. It is also possible that they will be able to offer better odds, giving better value to customer, although in reality the UK-based operators will try to match the odds offered by foreign operators and absorb the extra overheads themselves by reducing spending in other areas.

In an attempt to stop customers using companies operating from outside their jurisdiction, other European countries have pioneered the use of restrictive tools to stop customers accessing authorised websites. The three main methods in use are: payment process blocking; website blocking; and the imposition of advertising restrictions. Norway has led the way on payment process blocking as a means of preventing customers from taking advantage of offers from black market operators. It must be said that that has not been entirely successful, because more than half of gamblers said that they play as frequently on foreign websites as they did before the ban came into effect. Norwegian customers soon cottoned on to the fact that if they wished to access blacklisted market products, they could get around the payments ban by using third party payment solutions such as e-wallets.

Another unwelcome side effect was that, as a result of over-zealous compliance by operators, legitimate payments could sometimes be blocked. Website blocking has been tried in Italy and has proved to be just as easily circumvented by the use of technology by end-users or service providers. Consumers can easily get around website blocking by using the internet protocol address of a website rather than the website’s domain name. Alternatively, a blacklisted provider can simply change the name of a blocked site in order to evade a blacklist. A common feature of many markets is the imposition of advertising restrictions. Whatever method of enforcement is used, the mere existence of such a method sends out a signal to customers that there is something out there to which they are being denied access. Human nature being what it is, there will be a natural desire to find out what they are missing out on. Consequently, it is clear that no single measure has been proven to be 100% effective. We have heard much debate this morning, but I have not heard anything about how the Bill will be enforced. What magic bullet do we have in this country that other European countries have been unable to find?

The whole issue of enforcement raises the thorny question that increasingly arises in modern life when we try to put together legislation: to what extent is it possible or indeed desirable to try to regulate the internet? To put it another way, how can we stop people accessing the world wide web? How can their access to the web be restricted? Some might think that such questions were of interest only in closed societies such as North Korea, and although I am not suggesting that that is what is being proposed, it is a dangerous path to venture down. Why should the Government attempt to deny citizens who want to access gaming sites run by overseas operators the right to do so?

It has been suggested that such sites do not offer the same protection as those based in the United Kingdom. As my hon. Friend the Member for Rochford and Southend East said, there might well be jurisdictions with more favourable control and regulation. We must not always assume that we have got it absolutely right in this country. Equally, UK customers might well want to seek out the better value that is available from a foreign jurisdiction that has less regulation and is therefore in a position to offer slightly better odds and slightly better value.

Most of the offshore operators used by UK customers are based in Gibraltar or the Isle of Man, jurisdictions whose place on the white list is down to the fact that their regulatory regimes are essentially equivalent to those found in the UK. In any event, is there not a real danger that if these measures become law remote gaming operators not only will be based offshore but will go underground? I am not suggesting for one minute that any of the household names in this country’s market would do that. They will soldier on, and deal with the problems that they face. They will abide by the new restrictions and bureaucracy, and secure a licence, but that will undoubtedly impact on their businesses.

I am worried about new entrants to the market—people we have never even heard of—who could well be located in a distant, unregulated jurisdiction. To that effect, the Bill will be another complete and utter failure in the long line of failures to try to regulate the market. I suspect that those seeking to regulate the market will realise that that danger would undermine the effectiveness of the Bill. Customers will quickly become aware of competitive black market offerings, whether via blogs or information websites. Value-conscious consumers will actively seek out those operators once they realise that they are more competitive and offer better value than the regulated operators under the Bill.

The 2005 Act regularised the status of online gambling, which had previously operated in a twilight world that was often referred to as the grey market. The Act provided a new legal framework, allowing online operators to locate within the UK under the jurisdiction of the Gambling Commission, and it allowed all remote gambling, or offshore operators, to advertise to UK customers, provided that they were licensed in a jurisdiction within the EEA or were on what the Gambling Commission called the white list which, as we have heard, includes Antigua, Barbuda and Tasmania. Helpfully for those offshore operators, the list includes low-tax jurisdictions such as the Isle of Man and Alderney, so it is not surprising that operators listed on the UK stock market have an obligation to the shareholders to do what is best for them and their employees, and remain competitive. As soon as one operator decides to go, effectively others have to go as well to remain competitive.

The 15% gross profits tax is the root cause of the problem, and that is what the Bill is all about. It may well be argued that when the 2005 Act was introduced the then Chancellor should have been thinking about what was the best rate at which to set the tax. How could the tax rate be reduced to attract more operators to the UK, rather than driving operators offshore? Household names such as William Hill, Ladbrokes and Betfair have all moved offshore.

The Bill, as we have heard, is almost a mirror image of the Gambling (Licensing & Advertising) Bill that has been published by the Government. The first three clauses of the Government’s Bill are identical in all respects to the Offshore Gambling Bill. The only difference, as we have heard, is the addition of a horse racing levy measure in clause 4 of the Offshore Gambling Bill. I am conscious of the fact that other hon. Members wish to catch your eye, Mr Deputy Speaker, and that we have not heard from the Minister or the Opposition spokesman, so I will not go through the Bill in great detail. Suffice it to say there are real problems with it. It is not clear exactly what sort of equipment will be caught by the Act. I know that operators will make their submission to the Government on these matters, and I hope the Government take seriously what they say.

Clause 4 deals with the levy. As we have heard, the levy is a statutory way of transferring money from bookmakers to the racing industry. It was, in essence, a compromise that was reached in the 1960s between bookmakers and the racing industry, once bookmakers were legalised. The Betting Levy Act 1961 created the statutory body, the Horserace Betting Levy Board, which still exists. We have heard concerns expressed about state aid and whether reforming the levy could fall foul of those state aid rules. I do not want to go down that path again, but there are problems and I look forward to hearing the Minister’s views later. I would like to know what advice he has received on the issue of state aid and the legitimacy of potentially bringing the levy within the scope of these reforms.

Much of the debate surrounding the current levy system has focused on the levy in isolation. That is misleading and unhelpful to a sensible debate on the issue. Although the levy may well be in decline for a range of reasons, let us not forget that there are several avenues of funding for horse racing, apart from the levy.

I shall touch on one point that was raised earlier about the amount of racing, as opposed to the other forms of betting that go on. I have from the largest bookmaker in the country, William Hill, figures which show that for its shops, the horse race business accounts for only 25% of revenue. The remaining revenue comes from greyhound racing, football, other sports and gaming. For online gambling, the percentage is even lower. The whole of the sports book accounts for 35% of online revenue, and 65% is made up from other products such as casino games, bingo and poker. So the idea that racing forms a major part of the revenue of bookmakers is not backed up by the facts.

As we heard, there is revenue for the racing industry from on-course bookmakers, overseas picture rights, picture rights for UK betting shops paid through the media rights, and sponsorship. A significant proportion of the sponsorship comes directly from the bookmakers in order to help promote the sport. The amount raised by the levy may be in decline, but the cost of racing to bookmakers is increasing. Racing is now by far and away the most expensive product for bookmakers. Figures collated recently by the Horserace Betting Levy Board show that the combined profits before tax and loan capital repayments of Britain’s race courses—as we heard, there were 60 race courses in 2011—amounted to some £20.9 million, compared with £20.6 million in 2010 and £20.2 million in 2009.

Furthermore, horse racing is not in as bad a state of health as some might think. Rachel Hood, president of the Racehorse Owners Association, said in December that she believed there was more cause for optimism than there had been “for some considerable time”. She added:

“British racing’s funding model has changed so much in recent years and while there remains a lack of total transparency around the issue of media rights, to its credit the Racecourse Association has recently confirmed that by 2013 racecourses will be receiving media rights of at least £84m, nearly £30m more than in 2010.”

I appreciate racing’s need to guarantee prize money and that it needs certainty of funding in order to plan ahead. In the most recent levy agreement, William Hill, Ladbrokes and Coral agreed to guarantee that their combined contribution to the horse racing levy will be not less than £45 million, and Betfair has undertaken to make a contribution to British racing through the levy board, which is assumed to be in the region of £7 million. In response to the latest levy agreement, the chairman of the Horserace Betting Levy Board, Paul Lee, said:

“The Board is extremely pleased to have reached unanimous agreement. This will provide further stability and make possible significant additional expenditure on prize money in 2013. I would like to give recognition to Betting and Racing for the constructive approach that they have taken in seeking early resolution to the terms of the next Levy Scheme.”

Although there are problems facing the horse racing industry—we have heard a lot about them today—it is worth considering that there are problems facing the bookmaking industry, too. Betting shops have been part of our communities for decades. Despite what some would have us believe, there has not been an explosion in the number of betting shops. The number in the UK has, in fact, remained relatively stable over the past decade, at around 8,900 shops. In fact, since the 1960s the betting industry has seen a vast decline in the number of betting shops, because in those days there were close to 16,000 in the UK, and fewer betting shops of course means less money for horse racing. The UK betting industry is already highly regulated and subject to significant levels of taxation. I believe that additional regulation and higher taxation would only make it less likely that the industry will be in a position to consider spending more on supporting horse racing.

--- Later in debate ---

[Philip Davies]

That is essentially the point that I am making. In the past, there has been a “racing versus bookmaker” attitude that has got neither side anywhere. There have been faults on both sides of that polarisation. Bookmakers need to accept that horse racing must thrive if they are to do well in their business, and, equally, the racing industry needs to understand that without betting, it has not much of a product to sell. Each side needs the other; a “them and us” approach gets us absolutely nowhere.

Rather than rehearsing those decades-old arguments, let us look at the facts in the cold light of day. Let us see where the money is, and how it can be filtered down. I think that there is an awful lot more money in the race courses now than there was before, but what we want is for the prize money to filter down. The amount of prize money could be increased if funds were passed down efficiently, and the smaller trainers, owners and breeders could benefit in the way that my hon. Friend the Member for Thirsk and Malton wants if that increased prize money were passed on by the race courses.

Another problem is the fact that the Horsemen’s Group, which represents racehorse owners, trainers and so forth, placed a minimum tariff on different race classifications. The prize money for a class 5 race, for instance, will be at a certain minimum level, while for a class 4 race the level will be slightly higher. Although that was done for a good reason—to end what I am sure my hon. Friend would consider to be the worst excesses of paltry prize money and establish some minimums —it has encouraged race courses to put on lower-grade racing so that they can get away with providing the minimum maximum, as it were. A well-meant initiative has had an unintended consequence. Race courses have been given a perverse incentive to “dumb down” the quality of the racing that they offer so that the prize money can be as little as they can get away with, although it will still hit the minimum prescribed by the Horsemen’s Group. That, too, is not of much benefit to anyone.

There is money in the system. Money has been flowing from the betting industry. What we need to do is find mechanisms that will enable it to be conveyed to the people whom my hon. Friend has rightly identified.

[Mr Nuttall]

Does my hon. Friend agree with the comments of Rachel Hood, the president of the Racehorse Owners Association, to whom I referred earlier? She said that there was more cause for optimism than there had been “for some considerable time”.

[Philip Davies]

I do. Rachel Hood is the wife of John Gosden, one of the top trainers in the country. She is also, I believe, a lawyer by profession. She is an extremely talented person, and the Racehorse Owners Association is lucky to have her representing it. She is a formidable character, and we do not always see eye to eye, but my hon. Friend was right to quote her. She also said:

“British racing’s funding model has changed so much in recent years and while there remains a lack of total transparency around the issue of media rights, to its credit the Racecourse Association has recently confirmed that by 2013 racecourses will be receiving media rights of at least £84m, nearly £30m more than in 2010.”

She herself has identified the fact that the race courses are receiving a windfall from the media rights that the bookmakers are paying. She may also have cottoned on to the fact that there may well be more mileage for the owners in trying to pass some of it on in prize money.

I am well aware, Mr Deputy Speaker, that time is passing, and it is a shame when there is so much to say about such a big subject and so little time in which to say it—unfortunately, I seem to encounter that problem regularly, and on Fridays in particular. However, I want to talk about regulation because, as I said at the start of my remarks, this will help the Government to a certain extent; they want us to get on to discuss regulation because as far as they are concerned that is what they are all about. That is probably about as helpful as I am going to get for the Government, but I thought I would help in that respect.

The Minister is on the horns of a dilemma, because he has to say that this issue is about regulation. The problem is that I do not see, and neither did our Select Committee when we took evidence, a great deal of evidence of a massive problem with the regulation of the betting industry in this country. If anybody has any evidence of the failures of regulation, the Select Committee would love to see it because we genuinely did not see any. If we are to take the Government’s word on what this is all about, the Bill seems to be the perfect example of a solution looking for a problem. I am not aware of what the problem is, but it will be for the Government, either today or at a later date, to spell out what the particular issue is. I do not know whether the Minister sees the Bill as an irritant—perhaps he will be able to tell us. Some aspects of the Bill are superfluous, because the Treasury and the Department for Culture, Media and Sport have already indicated that they are going to carry out much of what is in it, and some of it may be illegal.

Let me discuss some of the particular regulation issues. At the moment, we have a white list, which is based on the view that the regulation in the other regimes involved is just as rigorous and onerous as it is in this country, and we are satisfied as a country that those regimes are just as good. So the principle goes: given that we are happy with the regulatory regime in those jurisdictions, we are happy to accept the licences that they issue. If we are simply looking at this in terms of regulation, the model of regulation seems to be sensible. So if we are happy with the overall standard of regulation, why do we need to get bogged down in issuing each individual operator a licence, given that they have already been given a licence in a regime that we think is good enough? That is the basis on which we have operated our regulation in this country and it has worked particularly well.

This country has a very small number of people who bet with illegal operators, although, again, I am happy to listen to evidence to the contrary on that and I will certainly accept it if it exists. In other countries, particularly those in the European Union, illegal betting is a massive problem. These countries give licences to a very small number of people on different bases. In Belgium, someone has to have shops—they have to have a physical presence in the country—in order to be given an online licence. There are all sorts of rules like that. The inevitable consequence is that a massive amount of illegal gambling goes on, in the sense that people bet with operators abroad who have no licence in their home jurisdiction.

All sorts of mechanisms are put in place to try to prevent such betting from happening, such as the site blocking that some countries put in place to try to stop people betting on illegal sites. That has not worked and we know why: modern technology means that as soon as one site is closed down, another one opens up within five minutes and by the time people get round to closing that one down, another one opens up within five minutes flat; you are for ever chasing your tail and you never deal with the problem.

Some jurisdictions therefore have a block on payments, whereby the Government come to an agreement with the banks and the credit card companies that they will not allow any transactions to take place with the unlicensed operators abroad. Of course, that can have more success than site blocking. I am a luddite, as you know, Mr Deputy Speaker, so I am probably not the best person to go through all the ways that people get around such restrictions. As I understand it—hon. Members who know more about it than I do will be able to correct me—operations such as PayPal enable people to get around those restrictions, so they are not totally successful.

The problem is that in every jurisdiction that has tried to restrict the licences it issues and whom it allows people to bet with, that approach has never worked. I do not see why we think we will solve a problem that no other country appears to have solved. It seems to me that the only possible consequence is that the levels of betting with illegal operators or operators without a licence will go up. Given that we have virtually none of that at the moment, which must be good for regulation and player protection, how can it improve regulation to set up a regime when the only possible consequence is that people will go into the grey market and will not get a licence but will still operate? How will we stop people betting with those operators? They will be able to offer better prices as they will have lower costs and lower tax liabilities, so in many respects we will be in danger of setting up a regime that actively encourages people to go to unlicensed operators abroad who do not contribute anything in this country.

We treat the online industry as if it contributes nothing to racing or to the Exchequer. Some of the big online companies are Ladbrokes and William Hill. They have thousands of shops in the UK and are massive employers. They do not contribute nothing to the British economy; they contribute an awful lot. The danger is that in the online world, fewer people will bet with the companies such as Ladbrokes and William Hill that make a contribution, if not on an online basis but though their shops, and instead will go to operators that contribute nothing to the UK economy.

We will set up a system that inadvertently pushes people to such operators and I do not see how that is a triumph for regulation or for player protection. We should be grateful that we do not have the problems that other counties do, but we would be in danger of creating them. If this is about regulation, as the Minister would like us to believe, he must explain where the big problem is and why regulation is necessary to solve it.

The white listing system means that the Gambling Commission can accept regulation from other jurisdictions and can trust it in the knowledge that those jurisdictions have as tough a regulatory system as we do—one in which we can have faith. That means the commission can accept such operators in the same way as it would one from the UK. The problem with the Bill and the Government’s draft Bill is that the Gambling Commission will have to issue individual licences to Lord knows how many gambling companies. On what basis will it do that? On what basis will it assess the abilities of betting companies in foreign lands? How will it decide whether they are legitimate, whether they can pay out to punters and whether they are ring-fencing the punters’ stake rather than putting it all in a pot? How will it do that when companies are in far-flung jurisdictions? Will all the Gambling Commission staff be off on permanent jollies, going around and looking at all those industries? Who will issue all the licences? How many more people will the commission need?

I bet the commission thinks that this is the best thing since sliced bread. Quangos love empire building; we have seen it time and time again. The commission must think all its Christmases have come at once. Instead of having to accept the licences issued by jurisdictions whose regulatory regimes we are perfectly happy with, it will have to consider every company individually. That seems to me to be what my hon. Friend the Member for Thirsk and Malton and the Minister are proposing: great stuff if you work for the Gambling Commission, but probably not so great for anyone else. Will those companies, including UK companies, that employ many people in the UK have to get an individual licence in every jurisdiction in which they operate? That is unnecessary, as we could just recognise regulatory regimes elsewhere. It is bureaucracy gone mad, and I hope that the Government can make a good case for why that should happen.

I am sure that we are all anxious to hear what the Front-Bench spokesmen have to say about the matter, but I am sorry that we have been short of time for this debate, because there is a lot more stuff that I wanted to mention. The revenue raised by the measure is not all a net benefit to the Exchequer, as there is a negative side too. There are gambling companies such as tombola—Members might have seen it advertise its product before “Emmerdale” on television—and it is a fairly new company that has enjoyed massive growth. I apologise if this is not true, but I believe that it is based offshore, so it does not contribute the taxation that people would like, and that is the problem the Bill is designed to tackle. Tombola employs an awful lot of people in the UK to work on things such as its marketing and advertising strategies. If we imposed extra taxation on such companies, which is difficult to justify given their margins, they will reduce their marketing spend—we do not have to be great geniuses to work that out—because they will not be able to afford to spend as much on it. Ultimately, therefore, they will employ fewer people in the UK to work on marketing.

We should think through the consequences of what we are doing. The Government seem to have pound signs in their eyes, thinking that this is an easy way to make money: there is no downside, it is all upside. Life is never quite as simple as that. There are no painless panaceas, and there may well be some unintended consequences, including the fact that fewer people will be employed in these industries in the UK. I am sure that none of us, whatever our view of the Bill—again, I have no problem with it in principle—wants to see unintended consequences that result in people losing their jobs in this country and in the economy losing money. We want a regime that increases revenue for the Government and increases the number of jobs. The Government can do that, but they need to be rather more careful than they have been, and rather more careful than has been the case with this Bill. However, I commend my hon. Friends the Members for Thirsk and Malton and for West Suffolk (Matthew Hancock) for introducing the Bill, because it has allowed us to have a very good debate and informed discussion. We should all be grateful for that.

Exam Reform

David Nuttall Excerpts

Monday 17th September 2012 Commons Chamber

[Michael Gove]

Yes, I would be happy to share with the hon. Lady the work that has been done by the university of Durham, the Royal Society of Chemistry, Ofqual, Ofsted and King’s College London, all of which have pointed out the way in which the current model of GCSE examination needs to change. I would also be happy to share with her best practice in every successful education jurisdiction, which stresses a broad curriculum of the kind that the English baccalaureate aspires to provide.

[Mr David Nuttall (Bury North) (Con)]

I thank the Secretary of State for his statement. Does my right hon. Friend agree that, to reassure everyone of the rigour of the new exam, no pupil should be regarded as having passed it unless they achieve a mark of at least 50%?

[Michael Gove]

I take my hon. Friend’s point. When I was re-reading Mike Tomlinson’s report into what went wrong with A-levels under the last Labour Government, I noted that he made the point that it is very difficult for the public to understand how exam boards convert raw marks into particular scores and then particular grades. It is an opaque process that impedes understanding. I think that my hon. Friend the Member for New Forest East (Dr Lewis) made the point that greater granular detail about attainment can help us all understand how marks are awarded. The simplicity that my hon. Friend the Member for Bury North (Mr Nuttall) wants is not always available to us, but we should aspire to it.