Horse Racing Levy

Martin Horwood Excerpts

Thursday 20th January 2011 Commons Chamber

[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We therefore have a problem, and I have reluctantly come to the view that the levy is an outdated system that has to be replaced.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.