Horse Racing Levy

Ian Swales Excerpts

Thursday 20th January 2011 Commons Chamber

[Ian Swales (Redcar) (LD)]

Each of our 60 racecourses plays a vital role in the local economy, providing employment and a social hub. My local course at Redcar attracts people from far and wide and is particularly attractive to trainers who like our flat, straight mile. The course is right in the middle of the town, so any threat to it would not just cause an economic problem but might become an environmental issue.

Racing and betting are inextricably linked. The sport’s fixture list, scheduling, volume and even rules are largely dictated by bookmakers. Last year, I tabled an early-day motion with wording very similar to that in the motion. It was given the number 999, strangely enough, which was very appropriate because this is an urgent problem. I shall not repeat statistics others have given, but I shall mention one that has not been given: some 5.8 million people a year attend race meetings, so it is a huge spectator sport. It is imperative that the mechanism to transfer value between betting and racing is brought up to date and gives sufficient protection to local racecourses. As we have heard, the levy contribution to prize money is falling dramatically this year, down to £65 million. Redcar’s prize money is being cut by 50%, which is a massive problem for the management at the racecourse. As we have heard, smaller racecourses face cuts of up to two thirds and are therefore clearly under threat.

Another important area that has not been mentioned but could be seriously affected is the number and pattern of fixtures, particularly at smaller courses. There has been a reduction from £6.9 million in 2009 to £2.1 million in 2011 in the fixture incentive scheme, which is paid to racecourses to incentivise them to hold fixtures on days when gate receipts are low. They do that so that bookmakers and the levy have a continuous horse race betting product. Some racecourses might abandon those important bookmaker and levy-friendly fixtures and move fixtures to Saturday afternoons, for example, when gate receipts would be higher. However, that would starve other parts of the week and bookmakers might have a problem with that.

If things do not change, there will certainly be a reduction in the annual fixture list of perhaps 400 fixtures next year, as they would not be financially viable for racecourses. That would further reduce the levy to the Horserace Betting Levy Board, clearly risking a vicious circle. The loopholes we have heard about cost racing millions of pounds a year. It is especially important that the threshold from which more than 60% of betting shops benefit should be reviewed rather than scrapped—I agree with that point. The vast majority of those shops are, indeed, owned by major operations. It is equally important to address the offshore betting issue.

The Tote should continue to operate as a pooled betting system. We see such systems in pretty much every other racing country in the world, and it is worth remembering that in some countries that have successful racing industries, a Tote-style system is sometimes the only legitimate form of betting. The chief executive of my local racecourse has pointed out that before we sell the Tote we should ask ourselves who owns it. The Secretary of State for Culture, Olympics, Media and Sport has previously stated his desire to

“ensure that funding for racing is fair, and collected from as broad a base as possible.”—[Official Report, 8 November 2010; Vol. 518, c. 41W.]

Unless the levy is reformed, we cannot claim that either of those criteria is being met.

It is worth considering what might happen if we do not address the dramatic decline in the levy. In many ways a chain would be set up, many aspects of which would be irreversible. There might be racecourse closures with owners walking away. Some owners, including leading international owners on the flat, might transfer their horses to other countries, especially France, and other owners, especially at the lower end, would leave the industry. Some breeders might choose to go out of business or produce fewer foals, all of which would lead to a smaller industry with direct job losses to jockeys, trainers and stable staff, as well as indirect job losses in dependent businesses, including bookmakers. Local racecourses are often at the centre of their communities.

While methods of betting have advanced and become more modern, the levy has remained stagnant and become outdated. It needs to be urgently revised if we are to maintain this country’s fine racing reputation and heritage. I understand the Secretary of State’s stated wish to remove his Department from this issue, but the Government’s historical involvement in the Tote and levy system means that they cannot just walk away. It is imperative that they leave an effective and sustainable system that will protect the diversity of racing in this country for the long term.