Draft Horserace Betting Levy Regulations 2017

Philip Davies Excerpts

Monday 27th March 2017 General Committees

[Mr Stephen Hepburn (Jarrow) (Lab)]

I feel your frustration, Sir Alan; your knowledge and insight into the horse-racing game is sadly missed by the Opposition today. I welcome you to the Chair. I was not disappointed when our spokesperson did not turn up on time today. The hon. Member for Hexham (Guy Opperman) and I hatched a plot: I would have made my name in her position today if she had not arrived. It was not to be.

I congratulate the Minister. Some 20 years ago, when I was a new MP and she was a novice researcher, we used to have a pint in Bellamy’s club, which is sadly not there anymore. We never discussed horse-racing, so I am surprised and pleased that she has achieved something that so many people before her have tried to do and not succeeded. I congratulate her on that.

I have just a few brief questions. First, the Minister mentioned that she was confident about state aid rules not being contravened. On what basis does she have that confidence? Secondly, she says that everybody is on board, so far as the bookmakers are concerned. Is everybody on board, or has she any concerns that there is a particular area that still holds concerns and may, at the end of the day, challenge her?

Thirdly, may I ask her about the distribution, so far as geography and the allocation of the money are concerned? I do not know whether she has any say in that. On geography, will all areas of the country get a share—a fair share—of the money? On allocation, let us hope it is not like the Premier League and that the money does go down to the bottom—to the smaller people at the real grassroots of horse racing, who miss out so often and who struggle to keep our great sport alive.

[Philip Davies (Shipley) (Con)]

rose—

[Mr Laurence Robertson (Tewkesbury) (Con)]

rose—

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[Philip Davies (Shipley) (Con)]

I am grateful to you, Sir Alan, for allowing me to speak in this debate. It is a pleasure to serve under your chairmanship. Unlike the hon. Member for Jarrow, my pleasure is only tempered by the fact that we do not have the benefit of your expertise as a successful owner and breeder on the Committee today.

Like my hon. Friend the Member for Tewkesbury, I refer people to my entry in the Register of Members’ Financial Interests. Like him, I am an occasional visitor to racecourses for the benefit of bookmakers and people in the racing industry. I am grateful to both for their occasional invitations to race meetings. For many years, I have been the modest owner of racehorses, or I should probably say the owner of modest racehorses. That would be a better way to describe it.

There are two issues I want to explore. The first is whether the Government are in order in making this change in the way that they are. When I first inquired of the Clerks about the mechanism for changing the rules, the Clerk of Bills in the Public Bill Office said:

“I can say with reasonable confidence that changes to the levy itself and its scope would need primary legislation, probably contained within the next Finance Bill after the Budget in March.”

As we can see, however, this is not primary legislation. Why do we not have primary legislation when that was the advice of the Clerk, in particular given that the Minister described this in her opening remarks as a “material change” to the levy? I would like her to consider that point.

I am grateful to Lord Lipsey, who is an expert on such matters in another place, for some advice he got from Olswang’s lawyers. Their point was that it is of course in order to impose the levy on foreign betting operators who do not pay it—because

“the 2014 act specifically says so”—

but

“this order goes ‘well beyond’ that. It mandates a fixed levy of 10% for all bookmakers, in place of the present process of annual levy fixed by the levy board. It mandates the extension of the levy to the Tote’s on-course operation”,

which was not the case before, and all on-course bookmakers will have to pay the levy, subject to the exemption set out by the Minister. Those lawyers, too, feel that there is some doubt as to whether that is how the situation should be handled.

My final evidence is from 2013, when we had a private Member’s Bill to extend the levy to foreign operators. Responding to a point someone had made in the debate, the Minister at the time, Hugh Robertson, said about the levy:

“The best thing I can do is read to her the legal advice that I have been given by the Government Law Officers, which says that although a levy is permitted in its current form, since it originates from before 1972 and therefore pre-dates state aid rules, the European Commission is likely to consider that the collection of contributions from overseas operators would substantially alter the levy, such that it was no longer compliant with state aid. I am afraid that, regardless of how many high-priced opinions are obtained elsewhere, once the Government Law Officers have opined that the Bill is therefore defective in that respect, the Government cannot accept it.”—[Official Report, 25 January 2013; Vol. 557, c. 638.]

[Interruption.] There is a Division—should we break here?

[The Chair]

How much longer will you need?

[Philip Davies]

I will probably need another five minutes or so.

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[Philip Davies]

I was presenting as evidence the remarks of a previous Minister; if the Minister would explain why the Department’s legal advice has changed so radically, that would be welcome. Perhaps, when she does, she will explain what will happen if the original legal advice, rather than the latest, proves accurate, and the European Court of Justice comes down on a different side of the fence from the one anticipated.

My second point is about the merits of the levy in the first place. I am astonished at the Labour party and Scottish National party support for it, because we all know that it is taking money from poor punters and giving it to rich owners; it is redistribution of wealth in reverse, so I am intrigued by their support. On the Conservative Benches we are, you will notice, Sir Alan, against subsidies for any industry unless it is farming or horse-racing. People may draw their own conclusions as to why Conservatives are all in favour of subsidies for those two industries but not for others.

The levy figures are clear. Something like 75% of the prize money in the UK goes to about the top 10 owners in the country, so it is a great benefit to Sheikh Mohammed, the Qatari royal family and Coolmore Stud—I am sure they are not really on their uppers. The question is whether we should be subsidising their sport and interests.

I have two more points to make. First, it seems to me that the Government have made changes to the scheme to satisfy the European Commission by extending the levy to the Tote and on-course bookmakers, which were not in the original proposals put out to consultation. Why do not the Government, given that they are now pursuing a policy that they do not support—it was not their original proposal—wait until after we have left the European Union, when they can introduce whatever policy they want without having to refer any of it to the European Commission and risk its going through the European Court of Justice?

Finally, we talk about the amount of money that goes from bookmakers to racing. When the levy started, it was a mechanism to do that. The Government have always been against the levy; they have tried to abolish it, because they think it is a bad system. However, it was a useful mechanism for transferring money from bookmakers to racing when there was no other mechanism for doing so.

I asked the Minister some questions not too long ago about how much money bookmakers give to the racing industry. Racing always wanted about £100 million out of the levy; that was the figure it wanted to achieve—a perfectly reasonable figure. However, let us take 2012 as an example. The levy has gone down since then but media payments have gone up, so the figure is probably still about right.

In 2012, the bookmakers handed over, in levy payments, £74 million. As my right hon. Friend the Member for Newbury said, that has gone down since—I accept that. In the same year, they also gave £153 million in media rights to show the racing in their shops and online, £88 million of which went to racecourses. That figure has gone up considerably since 2012. They also gave £12 million in sponsorship. The total going directly to racecourses from the betting industry was £174 million. However, it cost bookmakers even more than that, given the money taken out with respect to picture rights.

In that year, total prize money in racing, in the UK, was £97 million. If people were asked what proportion of prize money bookmakers in the UK should contribute to UK horseracing, I suspect that some might say half. Some zealots might say all of it. I suspect very few people would think that bookmakers should give virtually double the total UK prize money levels to the racing industry, yet that is what they do every single year. That, to me, seems excessive. The Government seem to be doing nothing to find a way to make sure that the horse-racing industry passes the money down from racecourses to owners and trainers.

If the Government proceed with this, I hope that they do not just try to extract more and more money out of bookmakers, which are actually taking less and less on horse-racing; it is becoming a smaller and smaller proportion of their business. I hope that the Government accept that bookmakers pay a huge amount into racing—I think it excessive, in many respects—and that they find a way to ensure that racecourses pass that money on in prize money, not just to the richest racehorse owners but to those at the bottom. I look forward to hearing how the Minister will say to the racing industry that, yes, the Government will make sure that it gets the money, but that it should make sure that that money goes from the racecourses to the people it is intended to support.

[Sir Edward Garnier (Harborough) (Con)]

rose—

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[Sir Edward Garnier (Harborough) (Con)]

Sir Alan, I apologise, not only to you but to the Committee as a whole, for my slightly late arrival at the Committee. I will certainly not go on until 6.23 pm or anything like it.

I do not want to have a row with my hon. Friend the Member for Shipley because it simply would not be worth it. However, I do not want him to think that I accept that Leicester Racecourse, in my constituency of Harborough, is at the bottom end of the racing hierarchy. It may not have the cachet of Newbury, which my right hon. Friend the Member for Newbury proudly represents, and it may not be quite like Cheltenham, but it is not a bad racecourse. If this new arrangement enables more racing to be held there, and for there to be better prize money to attract higher-quality racing at the racecourse, so much the better.

I appreciate that my hon. Friend the Member for Shipley speaks with great knowledge of the bookies’ industry. I was also delighted to hear from him that one of his many horses once ran at Leicester, steered by the great Dettori. I look forward to seeing my hon. Friend riding one of his own horses.

[Philip Davies]

No chance!

[Sir Edward Garnier]

“No chance”, he says. There we are—there is a God.

While we are getting excited about what my hon. Friend may think is the unfair nature of this new arrangement on the bookmaking industry, I think it is important that we also discuss the unsung heroes of the racing world who work at and run, shall we say, the less famous racecourses throughout the country.

The last time I went to Leicester Racecourse—last summer, for one of the summer meetings—the number of people working backstage was probably just as great, proportionally, as it would have been at Cheltenham, Newbury or Aintree. However, the cash flow and the money going through that particular racecourse is not nearly as great as at some of the great festival racecourses.