Horse Racing Levy

Jacob Rees-Mogg Excerpts

Thursday 20th January 2011 Commons Chamber

[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.

[Jacob Rees-Mogg (North East Somerset) (Con)]

There is just one question that I would raise, and that is about the speed of change. We have seen some scandals in betting, notably in cricket, but in horse racing there have been remarkably few. It has been very honest, which may be because of the close relationship between the betting industry and the horse racing fraternity, brought together by the levy. It would be worrying if that was broken and if something was not put in its place that would keep the system honest.

[Mr Robertson]

I understand my hon. Friend’s point, but I think that the levy drives people apart. I do not think that it brings them together. However, the British Horseracing Authority has done a good job of keeping the sport clean, which I accept is essential.

I want to move on quickly, because I have only a minute left. The Minister should give some consideration to announcing the end of the statutory levy, perhaps in three years. I emphasise the word “statutory”, because racing can always come to an arrangement with bookmakers whereby they still get paid for bets or picture rights, or whatever else.

I want just to touch on the importance of the Tote. The future of the Tote has to be secured. I very much hope that the Minister will allow the Tote’s own bid to continue to run the organisation, at least through to the next round. Last year the Tote contributed £19 million to racing, one way or another. If that were lost, racing would suffer a very severe blow indeed. I am not sure that a straight commercial sale of the Tote would provide security for racing, nor would it benefit racing in the way that the Government have promised it would. Let us not forget that the taxpayer has never put a single penny into the Tote, and therefore, in my view, does not deserve any money out of any transfer of its assets. I am always on the side of the taxpayer, but in this case the interests of racing should come first.

--- Later in debate ---

[Mr Foster]

I entirely agree, and it is borne out by evidence from the wonderful racecourse in my own constituency of Bath, as it doubtless is by Wincanton, which I was asked to mention by my hon. Friend the Deputy Leader of the House, and indeed by the wonderful course in the constituency of my hon. Friend the Member for Cheltenham (Martin Horwood). That is true because, as we have already heard, since 2003, when the levy brought £110 million into racing, it has fallen to about £65 million. Such a reduction has inevitably had an impact.

[Jacob Rees-Mogg]

I just want to claim a share of Bath racecourse, which I believe is in North East Somerset.

[Mr Foster]

Given the boundary changes, I have to concede that to my hon. Friend. I share the same passion he does for the course’s continued success.

I was explaining that the mutual interdependence has existed for 50 years, but it has become increasingly difficult. It is now critical to find a sustainable future for the link between the racing community and the gambling community. In so doing, we have to remove the involvement of politicians. I entirely agree with the Secretary of State when he said at the end of last year:

“Frankly, the government should never be the last resort in an essentially commercial negotiation”.

A sustainable way forward should not involve politicians, but politicians will have to help find that way forward, which must be based on a number of fundamental principles.

The first principle is to be absolutely clear about what the levy is about. Many hon. Members will have come across a leaflet put out by William Hill, which says under the heading “Real People, Real Jobs”:

“For every additional £1 million that the bookmakers are forced to pay in horseracing levy, 100 industry jobs may be lost for people like this”.

It goes on to provide examples of such people. That is a bit rich from an organisation that has recently moved its internet betting operation—and is soon to move its telephone operation—offshore, losing many hundreds of jobs and about £12 million of tax revenue for the Exchequer. My key point, however, can be seen on the other side of the leaflet, which says:

“Whilst racing can depend on a 1960s state subsidy it will never have the incentive to modernise.”

My clear understanding of the levy is that it is not a state subsidy; it is a relationship between two organisations. It cannot—as some have sought to portray it—be defined as state aid. We must be clear that this is a relationship between two organisations that get mutual benefit from each other. That is crucial to understanding what we are talking about.