Horseracing and Bloodstock Industries

Lord Harlech Excerpts

Thursday 14th September 2023 Grand Committee

[Lord Harlech (Con)]

My Lords, I declare my interests as having had the pleasure of attending this year’s Royal Ascot, and my uncle spent a great many years working in the training yards in Newmarket and Ireland. I thank my noble friend Lord Herbert of South Downs for tabling this important and timely debate during National Racehorse Week, and I thank all noble Lords for their heartfelt participation throughout.

His Majesty’s Government acknowledge the significant contribution that racing makes to our economy. The noble Lord, Lord Addington, mentioned the central role it plays in the livelihoods of rural communities. The employment that it supports across racecourses, training yards, breeding operations and related sectors reflects a powerhouse industry respected at home and abroad. The Government absolutely agree that British racing is a substantial asset to the country and remain committed to supporting the industry to prosper.

As has been noted, horseracing is the second biggest sport in the UK in terms of attendance, employment and annual revenue. According to the British Horseracing Authority, racing is worth more than £4 billion annually to the economy in direct, indirect and associated expenditure. The public’s love of racing is shown by the numbers attending flagship race meetings—65,000 to 70,000 at the Grand National and more than 200,000 over the four days of the Cheltenham Festival. British racing and breeding enjoys a reputation as a global leader and is promoted worldwide as part of the GREAT Britain and Northern Ireland campaign. This recognises the significant cultural and economic importance of horseracing to the UK and the role it plays as a soft power asset.

My noble friends Lord Herbert of South Downs, Lady Harding of Winscombe and Lord Effingham have all noted the importance of the levy. The horserace betting levy has evolved in step with the betting industry since it was introduced in the 1960s. In 2017, the Government extended the levy to online bookmakers and fixed the rate at 10% so that it no longer had to be negotiated each year. The 2017 reforms almost doubled the amount of levy collected from £49.8 million to £95 million and it has continued to perform well. Even in 2020-21, with racing suspended for two months and betting shops closed for much longer, it returned £82 million. The forecast for 2022-23 is £99 million.

Noble Lords mentioned prizes. Mechanisms for funding racing in other jurisdictions are not directly comparable with Great Britain. For example, France has a state monopoly and in Ireland there is a general tax and a grant to racing. The Horserace Betting Levy Board has made additional contributions to prize money, supported by a £21.5 million loan via the sport survival package. It should be noted that prize money in Great Britain is spread across a greater number of fixtures and the British Horseracing Authority is trialling changes to the fixture list from 2024 aimed at growing the sport.

I turn to the Government’s review of the levy. The British Horseracing Authority has presented its case that there is a significant gap in funding, meaning that it is unable to compete with jurisdictions such as Ireland and France. It has also submitted suggestions on how to close this gap. We are considering these proposals as we undertake our review, which is due in April 2024. I cannot pre-empt its outcome, but I reassure all noble Lords that the decision will be firmly based on evidence and that the suggestion made by many noble Lords that the scope of the levy should be amended to include racing outside Great Britain is being considered as part of the review.

Noble Lords asked what the Government are doing to increase the amount raised by the levy. These changes would require legislation, so it is sensible to explore a voluntary agreement when there are so many competing demands on parliamentary time. However, we are looking at all options, including—as has been pre-empted—encouraging racing and betting to work together in the best interests of the sport. Reaching a mutual agreement on the way forward for the levy would be beneficial to everyone. To support this aim, the BHA and the BGC were invited to submit evidence over the summer. I know that my right honourable friend the Minister for Sport, Gambling and Civil Society met both industries earlier this week.

The levy is not the only source of funding for racing, as noted by noble Lords. It represented just 6% of racing’s total income in 2022, with far greater proportions earned from owners, breeders, racegoers, media rights deals and sponsorship. However, we have committed to a review of the levy and asked racing and betting to explore jointly how they can maximise other sources of income. I am encouraged by the close engagement that has taken place thus far.

I turn now to the gambling review. Concerns have been raised by the BHA and the Countryside Alliance, as well as by noble Lords in this debate, about the impact of financial risk checks, as set out in the Government’s Gambling Act review White Paper. We specifically assessed the potential impact that gambling would have on the racing sector. Our assessment, set out in the White Paper, was that the impact on racing will be minimal in the context of its overall income but, as we committed, we are currently reviewing the levy to ensure that racing continues to be appropriately funded.

As noble Lords on the other side of the discussion mentioned, it is crucial that we undertake this review of gambling controls. We are challenging the industry to prevent the egregious examples we have seen, where customers are allowed to incur potentially life-changing losses without any checks on their circumstances. Operators have responded to that challenge in a variety of ways—some by taking a very risk-averse approach. We certainly do not want to go down the track of the PEPs situation that we have seen with banking; that is absolutely clear. The key to any outcome will be not just how it is described but how it is run and implemented.

The proposals on financial risk checks will apply only to online gambling accounts and will not affect betting shops or on-course bookmakers. They will support a standard approach and use a range of indicators to look at the behaviour of a bettor. Betting companies could and should already be checking when customers spend huge sums, which is one of those key indicators, but industry has sometimes failed to do enough to stop life-changing sums of money being lost by people potentially in the grip of addiction. That is why the Government and the Gambling Commission are stepping in.

However, we are alive to the need to be proportionate. The White Paper was clear: we want checks only for those most at risk of harm, and we want the checks themselves to be painless for the overwhelming majority of customers. We know that higher rates of problem gambling are associated with online casino games and that problem gamblers use multiple products. Therefore, it would not be responsible to exclude an individual’s use of a particular product from these protective measures.

Some concerns relate to details such as the frequency of assessment and how to consider previous winnings, but that is precisely why the Gambling Commission is consulting on how best to introduce these measures, rather than a diktat being administered straight away. It is a live consultation and an opportunity to shape the outcome. I also reassure noble Lords that checks will be introduced only when there is confidence that they will indeed be frictionless. The Government are keen to ensure that measures such as financial risk checks do not adversely affect racing, interrupt the customer journey or—this is key—push away high net-worth individuals, such as owners and trainers, who invest in the sport.

The noble Baroness, Lady Anderson, raised the important issue of welfare. The British Horseracing Authority is responsible for the safety of racehorses at British racecourses. The BHA works alongside the RSPCA and World Horse Welfare to make horseracing as safe as possible. The Government welcomed the formation of the racing industry’s Horse Welfare Board in March 2019. The board has assured the Government that it is committed to doing all it can to make the sport safer and improve welfare outcomes.

The noble Lord, Lord Addington, and the noble Baroness, Lady Anderson, talked about wider support for the sector. The numerous stakeholders in racing have recently agreed that the British Horseracing Authority is the decision-maker on the sport’s future strategy. The BHA has recently put forward proposals for a future racing product, which includes premierisation of the sport, protected time slots for races and reforms to the fixture list. I know that the potential for hospitality and conference facilities at racecourses is part of the sport’s plans to grow their tier income and to support owners and trainers. All these ways in which the key jewels in the crown can maximise their revenue will support the wider industries and communities involved in horseracing.

I listened carefully to what my noble friend Lord Herbert of South Downs said about the special status of Newmarket to the infrastructure of British racing. I will ensure that colleagues are aware of those concerns. The Government remain committed to supporting British horseracing, which is vital to the rural economy as well as a source of great pleasure to many people. I again thank my noble friend for securing this debate during National Racehorse Week, and look forward to further discussions on these important issues.