Horse Racing Levy

Peter Aldous Excerpts

Thursday 20th January 2011 Commons Chamber

[Peter Aldous (Waveney) (Con)]

I congratulate my fellow Suffolk MP, my hon. Friend the Member for West Suffolk (Matthew Hancock), on securing this debate. It provides me with an opportunity to participate in a debate on the future of a sport in which I have had a lifelong interest. At the outset I should mention some non-declarable interests.

Although I am not a horse breeder, I am a member of the Thoroughbred Breeders Association so that I can receive its useful publications, and for many years I have been an annual member at Newmarket.

I have gone racing in other countries and although days at Santa Anita, Saratoga and Longchamp are never to be forgotten, nothing quite matches what is on offer in Britain, whether it is at Aintree or Epsom, the homes of our two most famous races, under the trees of the pre-paddock at Newmarket or at the very special atmosphere at the Cheltenham Festival, which commentators such as Hugh McIlvanney have observed has no equal in the sporting world.

What has always intrigued me is that British racing has continued to lead the world despite the very low levels of prize money on offer. In national hunt racing, I think that that is because the love and passion for both the spectacle and the horse is ingrained in so many people, while in flat racing the prestige associated with winning the major races means that there is a clear incentive for the major international players to continue to race here. At this stage, I should mention the Maktoum family and Khalid Abdullah, as well as other owners who have made such an enormous contribution to and investment in British racing over the past 30 years. Without them, racing would have faced its day of reckoning much earlier.

Some might say that that day of reckoning has not arrived and that racing has cried wolf before and has always survived and carried on. It is wrong to say that now. Prize money has fallen to such a low level that urgent action is required. Without decent prize money at all levels, owners will leave the sport, trainers will give up and grooms who work in the yards will be laid off or will have to work harder for a wage that certainly cannot be described as “living”. It is prize money that oils racing’s wheels and keeps the whole show on the road.

Although I was born in 1961 and do not have a full knowledge of the negotiations that took place then, in my view the levy was flawed from the outset. I accept, however, that I say that with the benefit of hindsight. In most other racing countries, there is a monopoly whereby all revenue derived from pool betting goes back into racing. As a result, in those countries, the majority of racing’s revenue comes from betting.

The yield from the levy has fallen dramatically from £115 million in 2007-08 to £65 million in 2010-11. The British Horseracing Authority says that action is needed in four key areas to ensure that racing gets a fair return on its product. I shall consider each in turn. First, the betting exchanges that have grown up in recent years should pay a proper commercial return to British racing. To me, that argument is compelling. Secondly, bookmakers who have moved their operations offshore should be included in the levy. Again, that sounds logical to me: if they are using a British racing product they should pay for it. However, I note from today’s Racing Post that such a move might be open to legal challenge. Thirdly, horse racing wants to abolish the threshold rule that currently exempts 60% of betting shops from paying the full rate of the levy. If the major bookmakers are exploiting that loophole to avoid paying their full dues, it is right that the anomaly should be addressed. However, one should have regard to the plight of the smaller independent shops, which, like so many high street traders, are struggling. They should receive some assistance to help them compete against their larger rivals. Finally, British racing wants to reinstate payments for customers in Britain placing bets on overseas racing. I want to receive more information on that argument as my immediate reaction is that overseas racing is not the industry’s product to sell.

Although racing has a strong case to receive a higher price for its product, it needs to look at the package that it provides, not only to meet the requirements of its buyer, the betting industry, but to look after the interests of its various component parts, whether that is racecourses, owners, breeders, trainers, jockeys or—not to be forgotten —the stable staff who keep the whole show on the road in often trying circumstances and very poor weather.

To be fair, racing has not done a bad job in recent years. As reported in today’s Racing Post, just under 5.8 million people went racing in 2010, a rise of 0.9% on 2009 despite the bad weather that wiped out most racing in December. The various racing festivals that take place throughout the year remain extremely popular and are well marketed. There are also those courses that show imagination and flair and put on other attractions, such as music, that help them to attract large crowds to their meetings. Newmarket “nights” are a must on the East Anglian social calendar.

More needs to be done to enhance racing’s attraction and to look after the interests of those working in the industry. The following areas could be considered. First, the fixture list needs to be reviewed. Too much racing is being put on to please the bookmakers at present, which has led to an increase in racing’s cost without a commensurate increase in income. The cost of policing has risen from £16.2 million in 2002-03, to £25 million in 2009-10. In the same period, owners paid an additional £6.5 million in increased transport costs. Having wall-to-wall racing in the afternoon, at dusk and at night, seven days a week, places unreasonable pressure on those who work in the industry. Racing needs to have regard to sustainability. We need a fixture list with a good spread of meetings across the country each day. On opening the paper in the morning, one often finds meetings at Lingfield, Ascot, Warwick and Wolverhampton. Racing needs to go across the country on a daily basis and an all-weather course in the north should be considered, as should a day off once a month, perhaps on a Monday.

One of the main attractions of British racing is the large number of diverse courses—60 in total, all of which are unique in their own way—but racing must look at ways of rewarding those courses that show ingenuity and imagination in putting on attractive meetings. It should also look at ways of rewarding courses that look after themselves through promotion and sponsorship, invest in their facilities and do not just rely on the levy. The days of the levy junkie should come to an end.

There is also a need to look at ways of making racing more appealing to the public. Perhaps bullet races over two to three furlongs could be considered as racing’s version of 20/20.

That brings me to the way forward, the future and my conclusions. There is no one simple solution to the host of problems that need to be addressed. First, the levy should be abolished and replaced with a fair funding mechanism that collects from as broad a base as possible. Secondly, the Government should work with racing and the betting industries to establish which methods of payment are permissible from a legal viewpoint, and they should negotiate with the EU as necessary. In the forthcoming sale of the Tote, the Government must do all they can to look after the best interests of racing. I would like to see the Tote run by racing for racing.