Horse Racing Levy

Laurence Robertson Excerpts

Thursday 20th January 2011 Commons Chamber

[Mr Laurence Robertson (Tewkesbury) (Con)]

I congratulate my hon. Friend the Member for West Suffolk (Matthew Hancock) on securing this debate and on how he introduced it. He made some extremely good points. I would like to declare two non-declarable interests as it were: first, I am joint chairman of the all-party group on racing and bloodstock industries, which is one of the most active and influential—we like to think—groups in Parliament. Secondly, I have the honour of representing Cheltenham race course, and so I take slight issue with his assertion that Newmarket is the centre of world racing. I readily acknowledge that it is a fantastic establishment and the home of flat racing, but I would suggest that Cheltenham is the home of national hunt racing.

My hon. Friend is right to draw attention to the dangerous situation with regard to prize money. It is not a matter of rich owners becoming richer; it is a matter of enabling all owners to continue to own race horses and to race them at the right standard and at the right level. He also pointed out that the important part of the debate is the knock-on effects on stable staff, jockeys and trainers—all the people who are not well paid but who should be able to continue to carry out their essential work. Take them out and the whole sport collapses. That is why prize money is so important, and my hon. Friend is absolutely correct to point out that in many races owners would lose out even if they won. If a horse is at the lower levels of racing—the lower levels are extremely important—they would have to win possibly eight or nine races a season just to break even, and that would be in a good year. However, no horse is going to do that, so he is absolutely right to point out the problem.

The current situation is paradoxical, because as my hon. Friend also pointed out, we have the most tremendous racing in this country—indeed, probably the best in the world. In just a few weeks’ time, we will have the great Cheltenham festival, which is surely the greatest racing festival in the world. We can also boast the grand national shortly after, and then Royal Ascot, and the York week in August—absolutely tremendous racing that is not bettered anywhere in the world—and yet we also have this financial problem. If seems that the two situations should not go together, but they do. Racing has continued to exist because of the generosity—or, as my hon. Friend the Member for Shipley (Philip Davies) said earlier from a sedentary position, the stupidity—of some owners, who have continued to lose money. It would be rather complacent of racing to accept that this situation will continue indefinitely, because I do not think that it will.

[Mr Gyimah]

Does my hon. Friend agree that one of the problems with not having a stable funding base for racing is the underbelly of racing? A lot of people are attracted to racing out of their passion for it, but there is so little funding available that many live on low incomes, with a lot of suicides among people who want to become jockeys but do not make it. Racing is not just for the wealthy: there is an underbelly of racing, and to resolve that we need a stable funding base for racing as a whole.

[Mr Robertson]

My hon. Friend is absolutely right. It is not just winning the Cheltenham gold cup that is important. Horses do not start off running in the gold cup; they start off running in point-to-point races, before building up to races where the prize money is perhaps less than £2,000. My hon. Friend is also absolutely right about all the people involved in that. We cannot lose those feeder tracks or what I would describe as feeder racing.

We therefore have a problem, and I have reluctantly come to the view that the levy is an outdated system that has to be replaced. We have the problems of falling prize money, and owners running horses and not getting back a third of what they put in even when they are placed. All those problems exist under the present system, so the present system cannot be right. I have long felt that the existence of the levy does at least two things. First, it divides the people of racing. When I say “the people of racing”, I include the bookmakers, because many bookmakers, whether they are chief executives or work for Ladbrokes or Hill’s, are also racing people. However, each and every year, the levy negotiations serve to divide those people. We end up with this gratuitous violence, from one side to the other, which does racing no good. We saw what can be achieved when the whole of racing got together—for once—to promote Tony McCoy, who became BBC sports personality of the year, a much-deserved award. That is racing getting together—it is racing at its best—but the levy has served to divide it, each and every year.

The second thing that the existence of the levy has done is to allow racing not to address the need to find alternative funding as urgently as it might have done. There are alternative funding mechanisms and routes for money to come in; for instance, media rights is one way, while sponsorship is another. Racecourses take money from the public, and from sponsorship and hospitality. My hon. Friend the Member for Shipley was absolutely right to say that there might be a better income stream for racing from those sources in future. In 2004, when this House passed legislation to abolish the levy, it was not enacted—I understand that it is still on the statute book and can be enacted by a statutory instrument. At that time, there were negotiations and discussions on the then British Horseracing Board’s ability to sell its data rights to bookmakers in order to get money for racing.

That option was seen as a possible way forward. However, at that time, the European Union, being the wonderful organisation that it is, decided that this could not happen. It is now time to revisit that opinion, as expressed by the European Union—and, for the benefit of those reading this in Hansard, I was being sarcastic when I described it as a “wonderful organisation”. That decision has to be revisited, because I see a need to replace the levy. I have thought long and hard about this, and I think that the Minister probably ought to announce that the statutory levy will end in, let us say, three years’ time. That would give racing the opportunity to forge new relationships and develop new income streams, in the knowledge that the levy will no longer be there after a certain point. Setting a date will concentrate people’s minds, so that they have to come up with other funding mechanisms.

[Martin Horwood (Cheltenham) (LD)]

I warmly welcome the hon. Gentleman’s support for the motion, which is very welcome indeed. I welcome even more warmly his comments about Cheltenham race course, which is the world centre of jump racing—if it is not the favourite jump racing course of the hon. Member for West Suffolk (Matthew Hancock), I am sure that, between us, we can secure him an invitation to the gold cup that will persuade him. However, does the hon. Member for Tewkesbury (Mr Robertson) think that structural changes in the betting industry, the media and even the technology involved in betting have contributed to the levy’s becoming outdated, and that both whatever replaces it and the governance structures that will come afterwards need to be sufficiently flexible to cope with future changes, so that we do not get locked into something that again becomes outdated as both industries move on?

[Mr Robertson]

The hon. Gentleman is absolutely right. I think that I am right in saying that when betting shops were licensed in 1963, about 100% of their income came from bets on horse racing or greyhounds. Now, if we put fixed odds betting terminals into the equation, the figure is as low as 35% in many cases. We have also had the internet and betting exchanges coming forward. None of that was seen or even thought of in 1963, so he is right. The world has moved on. Racing cannot go back to 1963 and say that it wants the same funding mechanism. I also entirely agree that when we decide on a replacement for the levy, we have to be flexible. That is why I would prefer more commercial arrangements, because they are, by necessity and by their very nature, flexible.

[Jacob Rees-Mogg (North East Somerset) (Con)]

There is just one question that I would raise, and that is about the speed of change. We have seen some scandals in betting, notably in cricket, but in horse racing there have been remarkably few. It has been very honest, which may be because of the close relationship between the betting industry and the horse racing fraternity, brought together by the levy. It would be worrying if that was broken and if something was not put in its place that would keep the system honest.

[Mr Robertson]

I understand my hon. Friend’s point, but I think that the levy drives people apart. I do not think that it brings them together. However, the British Horseracing Authority has done a good job of keeping the sport clean, which I accept is essential.

I want to move on quickly, because I have only a minute left. The Minister should give some consideration to announcing the end of the statutory levy, perhaps in three years. I emphasise the word “statutory”, because racing can always come to an arrangement with bookmakers whereby they still get paid for bets or picture rights, or whatever else.

I want just to touch on the importance of the Tote. The future of the Tote has to be secured. I very much hope that the Minister will allow the Tote’s own bid to continue to run the organisation, at least through to the next round. Last year the Tote contributed £19 million to racing, one way or another. If that were lost, racing would suffer a very severe blow indeed. I am not sure that a straight commercial sale of the Tote would provide security for racing, nor would it benefit racing in the way that the Government have promised it would. Let us not forget that the taxpayer has never put a single penny into the Tote, and therefore, in my view, does not deserve any money out of any transfer of its assets. I am always on the side of the taxpayer, but in this case the interests of racing should come first.

--- Later in debate ---

[Catherine McKinnell]

I would leave to the Minister’s discretion the question of whether this should involve a gradual process or a more immediate emergency response, but I want to make a plea today for an immediate response on the percentage of the horse racing levy that is going to be contributed this year.

[Mr Laurence Robertson]

Just to clarify the matter, I was not suggesting that a decision should be delayed for three years. I just think that there should be an end date to the statutory levy in order to speed up the examination of other opportunities for funding to horse racing.

[Catherine McKinnell]

I thank the hon. Gentleman for that clarification; that was my understanding of the point he was making in his speech.

I find the words of the general manager of Newcastle racecourse deeply worrying, not only because of the economic implications at a time when Newcastle and the north-east face difficult times as a result of the Government’s cuts but because of the potential knock-on effect on commercial activity and the tourism industry in the region. I would hope, given this Government’s apparent commitment to supporting regions such as the north-east to grow their private sector in order to replace the thousands of lost public sector jobs, that the Secretary of State and the Minister will be equally troubled by what Mr Lane had to say. It is disappointing that we have reached a stage at which the Secretary of State has had to intervene on this issue, but I would urge him to reach a fair and equitable decision on the levy for 2011-12 as a matter of urgency.

For all the reasons that I outlined earlier, it is also vital that British racing is placed on a secure financial footing for the long term, thereby allowing racecourses such as Newcastle that want to continue to thrive, further invest in their business and staff, and provide entertainment and pleasure to people such as my dad, to do so for many years to come. I look forward to hearing the Minister explain how he intends to secure that outcome.