Horse Racing Levy

Debate between Duncan Hames and Baroness Ritchie of Downpatrick

Thursday 20th January 2011 Commons Chamber

[Ms Margaret Ritchie (South Down) (SDLP)]

I congratulate the hon. Member for West Suffolk (Matthew Hancock) on securing the debate. I also join other Members in registering a non-declarable interest: Downpatrick racecourse is in my constituency. The course, which recently celebrated its 275th anniversary, has contributed much to the horse racing industry on the island of Ireland, and the area has exported not only thoroughbreds but many jockeys and trainers to the industry here in Britain.

Speaking as the representative of a constituency with a substantial horse racing industry, which contributes to the local economy and to tourism, I want to see more regulation of the betting industry. That would protect both that industry and the horse racing industry. I am aware that horse racing in Northern Ireland is a devolved matter, but the local betting industry is being undermined by offshore betting, and my constituents and I would deeply appreciate any discussions that could take place with the Irish horse racing board and the Irish Government.

The funding of racing in both the United Kingdom and the Republic of Ireland depends on returns from the betting industry. In both jurisdictions, research has demonstrated that it has decreased significantly owing to the amount of business that is directed offshore. As the hon. Member for West Suffolk pointed out, the offshore betting industry, which includes both betting exchanges and some of the larger bookmaking chains, is taking advantage of loopholes in the system to avoid making a fair contribution. For example, online businesses allow firms to locate a server offshore in places such as the Isle of Man, Malta and Gibraltar, and route the bets by means of “phone to server”. A bet then becomes that country’s bet for tax purposes, as a result of the William Hill judgment in the European Court of Justice.

Those problems need to be addressed, because they are having an impact on our local industry. They have implications for jobs, and for all involved in the horse-racing industry. Many of us hold that industry very dear, because we represent rural constituencies of which horse racing is a central part.

[Duncan Hames (Chippenham) (LD)]

I agree with the hon. Lady’s critique of levy avoidance, but does she agree with me—and with my right hon. Friend the Member for Bath (Mr Foster) and the hon. Member for North Swindon (Justin Tomlinson)—that any measures to tackle it should not fall disproportionately on small betting shops or, indeed, small groups of bookmakers?

[Ms Ritchie]

I entirely agree with the hon. Gentleman. I am about to deal with that very point.

The larger bookmaking chains argue that they have moved offshore in a bid to compete with the betting exchanges. Betting exchanges allow unlicensed individuals to lay bets and to incur no gross profits tax or associated costs on their winnings. Like the hon. Member for Chippenham (Duncan Hames), I fear that the smaller bookmakers and gambling establishments in rural towns throughout the United Kingdom and Ireland are deeply affected by that, because the current legislation and, perhaps, the regulations governing it are out of date and do not take on board offshore and online betting. I understand that in the UK, Betfair, one of the online systems, pays duty on the commission that it charges, and that the commission ranges from 2% to 5% of winnings depending on individual turnover. Last week I met representatives of the bookmaking industry on the island of Ireland. They expressed those very concerns, and they were very pleased that we would be debating the issue in the House, because they wanted an opportunity to ensure that their views were articulated here.

I hope that we on the island of Ireland will be able to undertake further exports such as that of A. P. McCoy, whom I congratulate as a person from County Antrim who has done exceedingly well as a jockey, has made an enormous contribution, and has been an excellent ambassador for the horse racing industry. However, I agree with other Members that the industry needs a sustainable future.

I ask the Minister to consider all the points I have made. I also ask him to make appropriate representations to, and hold appropriate discussions with, his opposite number in the Irish Cabinet as soon as possible to ensure that the industry on both islands has that sustainable future, because it makes a marked contribution to the local economy and also to tourism.