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Mr. Deputy Speaker (Mr. Michael J. Martin): Order. We must now move on to the next debate.

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National Hunt Racing

1.30 pm

Mr. Laurence Robertson (Tewkesbury): I am privileged to be introducing an Adjournment debate on the national hunt racing industry. Basically, I want to do three things. First, I wish to draw attention to the importance of the racing industry to the country and to my constituency. Secondly, I wish to highlight some of the problems that, in particular, national hunt racing faces. Thirdly, I wish to suggest one or two ways forward in which the Government might help.

First, I declare an interest. The Cheltenham race course is in my constituency and I am a member of that course, although I am sure that membership of it costs more money than it brings in. I declare also a passion for racing, especially national hunt racing. Most people in this country and many others throughout the world are stirred by the excitement of the grand national and the Cheltenham gold cup, and by many other races that we stage in Britain.

Two million people attended race meetings last year to enjoy the spectacle of racing. It is the third most popular sport in the country. Racing is a large industry, with a turnover of £600 million a year; the turnover is more than £5 billion a year if betting is included in the calculations. The industry's assets total more than £2 billion and it is responsible for £90 million-worth of exports a year. It also contributes £600 million a year to the Exchequer, which is a subject to which I shall return shortly.

The industry generates jobs for more than 100,000 people. It is responsible for providing jobs for one in every eight agricultural workers. There are 500 racing training yards in Britain and 50 race courses, of which 44 stage national hunt racing. At present, more than 12,000 horses are in training.

In my constituency alone, Cheltenham race course has a turnover of £10 million a year. That does not include the massive revenue that is generated in hotels, guest houses, pubs and restaurants by the 173,000 people who attend the three-day national hunt festival in March each year.

It might be asked, if the industry is doing so well, why introduce an Adjournment debate on it? Sadly, racing--especially the national hunt side--has its problems. No one is suggesting that these problems point to a terminal decline, but I want to bring the problems to the Government's attention because, largely, they are caused by the way in which successive Governments have regulated the industry.

The House will be aware that only yesterday Lord Wakeham resigned as chairman of the British Horseracing Board, and that that body has been discussing this morning a financial plan which has been compiled to address the problems of the racing industry generally.

What are the problems facing the industry? They are, of course, financial. The prize money won by guiding a horse to victory in the grand national or the Cheltenham gold cup is well worth having. However, the prize money received by winning a race at Fontwell or Newton Abbot, for example, can be as low as £1,300, out of which the winning owner would have to pay a percentage to the trainer and the jockey as well as his own travelling expenses for that day.

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When we consider that, on average, it costs £10,000 a year to have a national hunt horse in training, it does not require a degree in mathematics to work out that involvement in racing costs most owners dearly. On average, owners in Britain recover only 24 per cent. of their costs each season. That compares with47 per cent. in the United States, 49 per cent. in France, 61 per cent. in South Africa and 90 per cent. in Japan. Of the nine major racing nations, British owners come eighth in the league, with only owners in Ireland being worse off. It is no coincidence that Ireland is the only other country to have a major national hunt programme.

The poor return to owners has a knock-on effect. It means that fewer horses are in training than would otherwise be the case. Given the low prize money, 32 per cent. of races attract fewer than eight runners. That, in turn, means that fewer bets are placed on those races, because each-way betting is not an option. As a result, less money is collected in taxation by the Government. More important, less money is collected by the Horserace Betting Levy Board to return to racing. If less money is returned to racing, prize money will remain low. At that point, the circle begins again.

It is crucial to the industry that smaller courses thrive. The analogy that I would draw is that the Football League would not survive if it contained only the big clubs, such as Manchester United and Liverpool. Those clubs depend on the smaller clubs, such as Doncaster Rovers or Brentford, to supply players. Many players start from such clubs. The same goes for racing: most horses, trainers and owners start from what might be called the feeder tracks before progressing, if they ever do, to Cheltenham and Aintree.

It is vital that attention is given to the problems that are faced by the smaller race courses to enable them to increase the prize money on offer, thereby protecting the fundamental base of the industry.

Why is the prize money so low? The answer is that not enough money comes into racing from the most obvious source of revenue, the betting industry. The punters cannot be blamed for that because they, cheerfully or otherwise, contribute about £1 billion a year to the bookies in lost bets. The bookies survive on a profit margin of less than 3 per cent. The problem is the low percentage of betting turnover that finds its way back into racing.

For every bet placed, the punter pays tax at 9 per cent. Of the total bet--the bet plus the tax--the money is distributed as follows: 78 per cent. is returned to the punter as winnings, which is average by international standards, and overheads of 14 per cent. are retained by the betting industry, whereas the international level is about half that amount. The percentage is high in Britain because of the regulated nature of such betting. The 14 per cent. for overheads includes profits for bookmakers of only 2.35 per cent. compared with an international spread of between 4 and 8 per cent.

The betting duty taken by the Government is 6.75 per cent., which leaves only 1.19 per cent. of the total bet to go back into racing. That is the crux of the problem. That percentage compares with 8 per cent. in France,9 per cent. in the United States and 15 per cent. in Germany. It is no wonder that prize money is so low in Britain.

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The ratio of how much the Government take to how much racing receives is 6:1 in Britain. In France it is 1.8:1 and in Germany it is 0.05:1. These ratios clearly demonstrate that the Government are taking too high a percentage of the tax paid by the punter when compared to the amount that racing receives from the tax.

The Minister will be aware that the tax percentage taken by the Government of 6.75 per cent. is not particularly high by international standards and is at about the middle of the range. Nevertheless, government is racing's problem in this country in a number of ways. Although some foreign Governments might charge a comparable rate of tax, the overheads of the racing industry abroad are lower than in this country. The reason is the over-regulation of much of the industry.

For example, race courses in this country are restricted in the activities that they can pursue. Betting on horse races can take place only in licensed betting shops. All this regulation adds to the cost of running the betting industry, which is why overheads are so high.

I have dealt with the problems, but what are the solutions? Much in common with what the British Horseracing Board is suggesting today, I have some proposals which, if taken up, would serve to protect the racing industry and enable it to remain a major employer, a popular sport and a big money spinner well into the next century.

The real way forward for racing is to deregulate much of the industry. At present, racing gets much of its money--about £54 million a year--from the levy board, and that arrangement is regulated by the Government. Because of the present arrangement negotiated at Government level, racing stands to lose £5 million a year from this source for the next two years. In time, the racing industry needs to be able to negotiate the levy arrangements directly with the bookmakers, so that a famine-to-worse-famine situation can be avoided.

The betting industry also needs deregulating to a large extent. Why cannot bets on horse races be made in the same places at which lottery tickets are bought, in common with what happens in other countries? That would cut the industry's overheads, thereby leaving more room for negotiation between the racing industry and the bookmakers. Race courses, too, should be deregulated, to allow them to realise the true worth of their assets.

Without being controversial, I believe that the Government should not cause further problems for the national hunt industry by accommodating legislation that would cause hunting to be banned, as such a move would be very damaging to the industry--a point widely acknowledged in racing circles.

These solutions are for the future. The industry needs an immediate increase in income of £105 million a year to increase prize money significantly, improve its marketing and thereby safeguard the future of the industry and the livelihoods of those who work in it.

The British Horseracing Board has identified ways in which the industry could raise an additional £25 million a year, but that leaves £80 million a year, which must come from the betting industry. Given that bookmakers make less than 3 per cent. in profits, it is incumbent on the Government to change the present betting duty-betting levy ratio, about which I spoke earlier. The ratio is currently 6:1; if it were changed to one similar to that of France, say, to 1.7:1, the racing industry would have the

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money that it needed, enabling it to double the prize money, which would give the industry a tremendous boost, and the money would find its way into the pockets of trainers and stablehands, as well as owners.

Such a transformation in the fortunes of the racing industry can be attained simply by the Government cutting betting duty from 6.75 to 5 per cent., with the difference going to the levy board for distribution to racing. It is estimated that that would cost the Government only about £125 million a year initially, but that money would be regained in the short to medium term through extra tax receipts, which would be taken from a regenerated racing industry. In the longer term, the Government's tax take from the industry would probably increase, just as the previous Government increased their tax take by cutting the rates of tax.

Without wanting to be party political, I should point out that the previous Government helped the industry by cutting betting tax, by abolishing on-course betting tax altogether and by allowing owners to claim back VAT on training fees and bloodstock purchases. It is time for the Government to recognise the problems that the industry faces and to realise that government is the largest part of the problem.

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