Horse Racing Levy

Lord Austin of Dudley Excerpts

Thursday 20th January 2011 Commons Chamber

[Ian Austin (Dudley North) (Lab)]

This has been an absolutely fascinating debate. Today we have seen the House doing exactly what it should do: examining a complex and detailed issue from all sides of the argument. Members from both sides have demonstrated real, detailed expertise. Let us look at the previous two speeches: one from someone who has run a bookmakers; and the other from someone who participated in the sport as a jockey. How many other debates enable hon. Members from both sides to bring personal and detailed knowledge of a complex issue to the House? It has been absolutely brilliant.

We have heard people speak up on behalf of residents and businesses in their constituencies, whether racing fans or trainers, operators of betting shops or racecourses, owners or others who make such a huge contribution to the economy. So, let me congratulate the hon. Member for West Suffolk (Matthew Hancock) on securing this debate. It is fair to say that we have heard him stand up for the interests of his constituency, and for the jobs and prosperity that racing brings to Newmarket.

We have heard fascinating contributions from all parts of the House, and it is no surprise that so many Members have taken part, when we consider the hugely important role that horse racing plays in Britain’s sporting and cultural life. With about 60 racecourses throughout the country and annual attendances of well over 5 million, it contributes about £3.5 billion directly to the economy, providing 100,000 direct and indirect jobs and generating £325 million in taxes.

Horse racing plays a major role in the tourism industry, attracting visitors from around the world to major events such as the grand national, the Derby, Royal Ascot and the Cheltenham festival, as well as of course to Hexham, Worcester and so on, as we have heard. What is more, it is a truly global sport, but one in which Britain plays a leading role, with world-class courses, training, breeding, bloodstocks and sales.

The intrinsic link between racing and betting means that, in every country where the two take place, there is a mechanism to allow funding to go from the betting industry to support the racing industry. Here in the UK, the levy was established in 196l, and today it funds prize money for participants, the governance of the sport, the maintenance of its standards, veterinary science, training programmes, racecourses and other matters concerned with horse breeds and standards of care.

The levy is based on the betting industry contributing 10% of its gross profits to British horse racing. It is set by the Horserace Betting Levy Board, which has not so far been able to arrive at an agreement for next year, meaning that the Government are due to take the decision imminently, although the Secretary of State has said, like others before him to be fair, that this is the last time he wants the Government to make the decision.

In 2003-04, the levy contributed £110 million to racing, but that declined over the next three years to £99 million, and to £65 million this year as betting preferences have changed to new forms of gambling, and some betting has moved offshore. Racing argues that these developments have hit the sport hard, and that has led to the identification of several areas that would address the problems and increase the income received from the betting industry. The betting industry, on the other hand, argues that the amount that it contributes by having the right to broadcast races through media or picture rights and sponsorship has increased over the same period, and says that the total amount from the levy, TV picture rights and sponsorship payments from betting to racing has remained stable in recent years. The average total of these payments was £164 million between 2006 and 2010, and in 2010 it remained at £160 million, as the hon. Member for Shipley (Philip Davies) pointed out.

As we have heard, this is a hugely detailed and complex issue. The horse racing industry, bookmakers and other interested parties have widely differing views about how betting should fund racing and by what amount. As the Government consider how to put the relationship between betting and racing on the stable footing for the long term that we all want to see, and to decide what contribution bookmakers and others should make to the sport, there are a number of questions and areas on which we would like further detail or clarification. For example, can the Minister tell us what assessment the Government have made of the impact on the growth of offshore betting on the racing industry? When will the Government announce their response to and the outcome of the document, “Consultation on Regulatory Future of Remote Gambling in Great Britain”, which my hon. Friend the Member for Bradford South (Mr Sutcliffe) launched last year and which concluded in June?

Betting is taking place in a different context as a result of new technology and the resulting globalisation of the industry, and that has had a major impact on the sport as a whole, its structure and its finances. What discussion has the Minister had with the Treasury about the sport and the betting industry over the past few months? Is he considering no longer permitting betting operators to advertise to and transact with British consumers in a way that allows them to avoid the levy?

[Matthew Hancock]

Do Labour Front Benchers support a racing right?

[Ian Austin]

I shall come to our views shortly. Our role at this point, four and a half years away from an election, is to listen to all sides of the argument, as in this debate, and to interested parties outside, and that is what I want to do. Then, at some point, we will arrive at a view. The Government are going to make this decision in the next few months. [Hon. Members: “What do you think?”] I think it is my job to listen to all sides of the argument, to ask the Government questions about their intentions, and at some point—not now, with four and a half years to go until an election—to arrive at a view on this and on all sorts of other issues.

What consideration has the Minister given to ensuring that betting exchanges and the professional bookmakers who use them, but do not pay full tax and levy, make an adequate contribution to British racing, or the same contribution to British racing as the rest of the onshore betting industry?

Several right hon. and hon. Members have queried the threshold rules introduced by the previous Government. Does the Minister believe that those should be altered? Racing argues that payments for customers in Britain who place bets on racing overseas should be reinstated. The betting industry argues that thresholds were previously reduced substantially in exchange for removing the levy on foreign racing, and that it would be odd to charge a levy payable to British racing on events that are nothing to do with British racing. What thought has the Minister given to this issue?

Labour Members recognise the enormous contribution that horse racing makes to Britain and to so many of its communities in so many ways, particularly in rural areas, and we want to see the sport strengthened and placed on a secure and stable financial footing for the long term. Our manifesto promised that as betting on sport increases, we would bring forward measures for consultation on generating a fair return to sport based on a contribution from the profits of the betting industry. We will work with the levy board to ensure that all operators taking bets on British races pay to support British horse racing.

As I have said, the Government have to establish next year’s levy, but we want a wide-ranging discussion that develops proposals to put racing on to a secure financial footing for the long term. We believe that ordinary racing fans want to see racing thrive in Britain, funded by the industry’s profits. We want plans to be developed to reform and modernise the funding arrangements for racing.

The Labour Government made the commitment that half the proceeds from the sale of the Tote would go back into racing. We also want the Tote, under future arrangements, to make a permanent contribution to racing. We want its ownership to be transferred into safe hands to ensure racing’s financial future.

I will conclude my remarks on that point to give the Minister his full 10 minutes. I congratulate again the hon. Member for West Suffolk on securing this debate, and all hon. Members who have taken part in what I have found to be a fascinating and informative discussion.