Horseracing

Nick Timothy Excerpts

Thursday 24th October 2024 Westminster Hall

[Nick Timothy (West Suffolk) (Con)]

I beg to move,

That this House has considered Government support for the horseracing industry.

It is a pleasure to serve under your chairmanship, Sir Edward. I thank hon. Members for attending the debate—I know it is a Thursday, but people have shuffled their diaries to attend because of the industry’s importance to all our constituencies and to the country.

Racing is, after football, the second most watched sport in the country. About 6 million people attend the races every year, among them people of all ages, 40% of whom are women. Contrary to myth, racing is a cross-class sport—not that we want to use this debate to define working people. British racing is without doubt an international success story. Four of the top 10 races in the world are held here, which is more than in any other country. We have the best bloodstock; our races attract the best horses; and Britain has some of the finest trainers and horses, including modern legends such as Frankel and Enable.

Racing, like all sports, is a business and it brings huge economic benefits. The industry is estimated to generate £4.1 billion in direct, indirect and associated expenditure every year. About 85,000 people are employed at race- courses, training yards and breeding operations, and in the betting industry. In Newmarket, racing brings in more than 7,000 jobs and generates hundreds of millions of pounds a year for the local economy.

[Stuart Anderson (South Shropshire) (Con)]

I thank my hon. Friend for securing such an important debate. I am delighted to have Ludlow racecourse in my constituency and, if he ever gets the chance, I would welcome him to Eyton races—a great day out. He made an important point about the local economy, so does he agree that the lack of a clear way forward and support from the Government at this stage is creating uncertainty in horseracing?

[Nick Timothy]

I am sure all hon. Members would look forward to a trip to Ludlow to experience the racing. If I am honest—I say this as a Conservative—this issue has dragged on for a while. I will turn to some questions for the Minister shortly, but time is of the essence.

As so often with Britain, part of the draw, especially for international investors, traders and spectators, is our history and tradition. Racing in this country dates back more than three centuries, and thoroughbred racing was first created here. The association with royalty, which continues with His Majesty the King, only adds to the prestige—I am sitting next to my hon. Friend the Member for Windsor (Jack Rankin), the most ardent monarchist in the House of Commons.

That success story, however, is strangely neglected. To those who do not know the industry, it can sometimes appear to be something of a caricature, with horses selling for millions of pounds, breeders paying hundreds of thousands for a particular stallion to cover a mare, and aristocrats and royals being prominent in their patronage. But the reality of racing, unfortunately, is that its future is far more precarious.

Many breeders and trainers operate on tight margins and, as many hon. Members present will affirm, any conversation with them turns quickly to prize money. A horse that wins a top-tier British race increases its future breeding value, but the immediate return is limited compared with in Australia, Ireland and France, where racing benefits from Government support, or in Japan and the United States, where there is simply more money around.

The prize fund for the Dubai Turf, for example, is £4.5 million, and for the All-Star Mile in Australia it is £2.7 million. The Queen Anne Stakes in Ascot, which is a fair equivalent, offers £600,000, and the same is true for the less famous races. At an average of £16,000 to be divided by all placed horses, prize money across the board is much lower here than in competitor markets. Lower down the pyramid, most races pay less than £5,000 to the winner. Owner expenditure far outstrips the total prize money up for grabs in British racing. That is down to how the industry is funded.

In Japan and Hong Kong, where betting is generally banned, there are exceptions for horseracing and some other sports, because they are seen as being run efficiently and by Government Departments. That means proportionately more bets are placed on horseracing than elsewhere, and in both places the industry controls the gambling. In France, prize money is underwritten by the Pari Mutuel Urbain, which enjoys a monopoly on betting. In Australia, where prize money has almost doubled in a decade, it is funded mostly through a betting tax. In Ireland, more than two thirds of prize money comes directly from the Irish Government.

Our system is different. Here the funds come from media rights, executive contributions from racecourses, owners’ entry fees, and the betting levy—a 10% tax on bookmakers’ profits from bets placed on races staged in Britain. Around a third of prize money comes from the levy, but income is falling. Over the past two years, the industry estimates that betting turnover on British racing has fallen by over £1.5 billion and could be as low as £7 billion this year. The Horserace Betting Levy Board says

“falling turnover is unlikely to prove a positive for the sport’s long-term health”,

and I agree.

Nobody expects us to adopt a Japanese or French model, but I ask the Minister how things might be changed so that we can put racing on a sustainable footing and make sure that we retain our position as the best place in the world to breed, train and race horses. First, does the Minister agree with all hon. Members present—this is probably the easiest of my questions— that the British horseracing industry is an undoubted international success story, a source of British soft power around the world, and home to many vital community assets in regional towns here, and that we must therefore do everything in our power to make sure it continues to prosper?

Secondly, will the Minister confirm today that the Government will not go back to square one and will instead pick up where their predecessors left off? In May, the British Horseracing Authority agreed with the Department for Culture, Media and Sport that the levy should be increased to 11.5% to create a growth fund to market and promote British racing at home and abroad, and to hold an independent review of the racing funding model.

[Dan Carden (Liverpool Walton) (Lab)]

I am grateful to the hon. Member for securing this debate—he and I are co-chairs of the all-party parliamentary group on racing and bloodstock. It is important to get more money into the racing industry because there are so many people employed throughout the sport for whom racing is their livelihood, but their commitment and the lifestyle that they have to lead to do their work means that we must make sure they are in decent well-paid jobs as well. We cannot have racing squeezed, as it could be in years ahead.

[Nick Timothy]

I completely agree with the hon. Gentleman. The racing industry is connected to many associated industries and many different kinds of jobs. As I said, when people see the large sums that are invested in bloodstock and so on, they do not always see that the industry rests on thousands of people, many of whom are on low incomes.

[George Freeman (Mid Norfolk) (Con)]

I congratulate my hon. Friend on securing this debate, which is well attended for a Thursday. He knows my family’s interest— I am about the only one who is not involved in racing; my father was a national hunt jockey. Does he agree that from the 2,000 Guineas and the Derby down to the small trainers, small tracks, point-to-points—Fakenham is just outside my constituency—the rural economy and pony clubs, there is an equine economy right across this country, but it relies on money trickling down from the top? Does he further agree that racing’s finances are not just unhealthy, but in crisis? The problem goes across a lot of Labour constituencies as well, so I support him in asking the Government—we will hear from the Minister—for a strong steer to prevent the further decline of racing’s finances.

[Nick Timothy]

I agree emphatically with my hon. Friend. I do not think this is a party political matter at all. We are all in this room regardless of our party badges because we know the importance of horseracing to our constituents and to our local economies and the country. A lot of the beneficiaries of the British horseracing industry reside in rural and semi-rural areas and regional towns. We spend a lot of time talking in this House about how we are going to improve the regional economy and racing is a really important part of that economy. To return to my point, we do not have time to go backwards.

As part of the work that I referred to, my third question is: will the Minister commit in this debate to the principle of a higher levy? In 2022-23, the levy raised £105 million, but the British Horseracing Authority estimates that an indexed yield of at least £133.5 million is needed for a sustainable future for racing.

Fourthly, will the Government reform the way in which the levy works? It is anomalous and nonsensical that the levy should apply to bets placed here on the races in this country, but not on bets placed here on races held overseas. That does not happen in Ireland or France, which derive significant income from the best British meetings, and we are penalising our own industry. I note that the Gambling Minister, Baroness Twycross, has committed to

“making sure that the levy is administered efficiently to best support racing.”—[Official Report, House of Lords, 29 July 2024; Vol. 839, c. 801.]

Indeed, I think the way in which the levy works is a vital part of that commitment.

Fifthly, following the Secretary of State’s encouragement that

“we cannot believe everything we read in the papers”—[Official Report, 17 October 2024; Vol. 754, c. 969.]

as somebody who sometimes writes in The Daily Telegraph, I demur—can the Minister rule out today the reported Treasury plan to increase taxes on bookmakers? If the idea is to crack down on problem gambling, such a blanket policy would be like using a sledgehammer to crack a nut, and would obviously damage the racing industry.

Sixthly, and finally—you might be grateful to hear that, Sir Edward—the Secretary of State rightly wants to “strike the right balance” to prevent problem gambling while also protecting the racing industry and responsible gambling, which she says

“brings joy to many people.”—[Official Report, 17 October 2024; Vol. 754, c. 968.]

Will the Government commit today to ensuring proportionality in their efforts to stop problem gambling?

Even though Parliament has not legislated for affordability checks, as the gambling review has dragged on, bookmakers are operating pilot checks at the behest of the Gambling Commission. The idea was that those checks would be frictionless, and we were told that eight in 10 people placing bets would never undergo checks, but we know that punters are being asked to provide bank statements and payslips to prove they can afford their bets. Nobody wants to see problem gambling go untackled, but the rate of problem gambling on horseracing is comparable with that of many national lottery products, and affordability checks are already driving people away from legal betting on horseracing and on to the ever-growing offshore black market through online accounts, where of course there are no safeguards at all.

While the numbers for viewing and attendance at races is at least the same as it was before affordability checks, we know that betting turnover, and therefore racing income, is down by 20% in two years. Independent analysis for the Racecourse Association has forecast a £250-million hit to racing over the next five years, and the BHA says that one in seven jobs in the sport could be lost because of that issue alone. We need to appreciate the difference between gambling on racing or other sports, and the fixed-margin gambling online and in casinos that drives so much addiction and suffering. If we do not, it will be to the detriment of the racing industry and the enjoyment, employment and prosperity that it brings to so many. I look forward to hearing from the Minister.

[Several hon. Members rose—]

--- Later in debate ---

[Nick Timothy]

Unfortunately for you, Sir Edward, I would like that very much.

I thank everybody who participated in this really constructive debate. We have learned a lot—and not just about the dubious music tastes of my hon. Friend the Member for Spelthorne (Lincoln Jopp). I took the hint from the hon. Member for Liverpool Walton (Dan Carden), and I will extend an invitation to all hon. Members who participated in the debate to come and see the delights that Newmarket has to offer.

There was strong agreement from Members from all parties on the six issues I raised. I will not repeat them, but I want to say something in response to the Minister’s answer, for which I am grateful. I note and appreciate the warmth of her words and those of the Secretary of State in the main Chamber last Thursday. I appreciate that it is early days for the Government, and that Ministers often need time to familiarise themselves with the challenges, but I gently say that Labour Members are in government now; they are not shadow Ministers. Being in government means that they have power, and it may not be enough to convene conversations between interested parties and hope that we might reach voluntary agreements. In the end, Ministers often need to decide.

On each of the points made by the Minister, I encourage her and the Secretary of State to go a little further. It is easy for us all to agree on the ends, but when we agree on the ends, we have to determine the means. Sometimes that will involve making decisions that some of the interested parties might not like to hear. Sometimes people assume that the racing and gambling industries’ interests are coterminous, but they are not. Therefore, I invite Ministers to intervene on such issues.

Specifically on including overseas races in the levy, as on other issues, there was a high degree of consensus among all those who contributed to the debate. Obviously, an opportunity is coming up—I do not know whether the Budget has been put to bed, but a Finance Bill will follow, and that is the easiest change in the world to make. From a Government perspective, it is cost-free, and it would make sense for British racing. The Minister noted the difference in structures and financing of racing in countries such as Ireland and France, but the debate has exposed the extent to which the industries in those countries stand in an advantageous position compared with ours. I press the Minister once more on that.

I thank everyone for participating in the debate and you, Sir Edward, for your excellent skills in the Chair.

[Sir Edward Leigh (in the Chair)]

It has been a pleasure to chair this debate. I am only sorry that no one mentioned the best racecourse in the country—Market Rasen.

Question put and agreed to.

Resolved,

That this House has considered Government support for the horseracing industry.