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BUSINESS OF THE HOUSE
- That, at the sitting on Friday 28th July, the Speaker shall not adjourn the House until--
(a) any Messages from the Lords shall have been received; and
(b) she shall have notified the Royal Assent to Acts agreed upon by both Houses.--[Mr. Mike Hall.]
Horseracing (Starting Prices)
Motion made, and Question proposed, That this House do now adjourn.--[Mr. Mike Hall.]
11.1 pm
Mr. Alex Salmond (Banff and Buchan): I am delighted to move the Adjournment of the House on a debate that is of substantial interest to many people in the country. Indeed, if my memory serves me correctly, Mr. Deputy Speaker, it might have been of interest to your late father.
Before I move on to the substance of the debate, may I say that as I will shortly have more time on my hands, I am intensely grateful to hon. Members in all parts of the House for speculating on what I might be doing with that time? As a long shot, I might move in as a compromise candidate for Speaker of the House. Despite the overwhelming demand in all parts of the House, that might well be a long shot.
A favourite's chance would be the proposition put to me by the hon. Member for West Ham (Mr. Banks), who suggested that I might front up the Scottish bid for the Euro 2008 championships--an attractive prospect, particularly if the hon. Gentleman gives me the benefit of all his experience after the glittering success of the English world cup bid. That could be the favourite's chance--but we must move on to the substance of the debate on starting prices.
The intricacy of the matter is important. Since January last year, the racetrack odds and margins have swung in favour of the punters--a remarkable occurrence--as a result of the opening up of the pitch positions at the racetracks, which has made the betting market at racetracks rather more competitive. That in turn led to better starting prices, which are available to punters in betting shops around the country.
Not surprisingly, the big bookmakers were not at all happy with the resultant fall in their profit margins. At last year's Levy Board annual general meeting, Rob Hughes, the chairman of the Levy Board, announced publicly that the big bookmakers, including John Brown of William Hill and Chris Bell of Ladbrokes, had telephoned him, complaining about the fall in their profit margins. More generally, they complained of "economic ruin" and "financial suicide".
I am reminded of Adam Smith's comment that whenever two or three men of business are gathered together, what takes place is a conspiracy against the public interest. What has taken place as a result of the moaning and groaning of the big bookmakers is most certainly a conspiracy against the public interest.
It came to pass on 22 May this year that the starting price executive, which has responsibility for administering the returns system, issued new rules. There had been no demand whatever for any change, except from the big bookmakers. There was no consultation before the new rules were instituted. As many have pointed out, the old system was not broke so there was no need to fix it, but the new rules were none the less imposed unilaterally by the starting price executive.
Under the new system, two starting price returners operate at race meetings and are each required to draw up a list of at least five bookmakers--a total of 10 per meeting. The list must be determined before the start of
racing. The final starting price is determined from a majority of the bookmakers' quoted odds. Under the old, more flexible system, the returners had assessed prices through the racecourse betting ring, for the betting ring as a whole. It was a more flexible system that was related to the new competition in the ring. It depended, of course, on the integrity of the starting price returners. It was a well-tried system that had worked extremely well. Above all, it was perceived by all concerned to be fair and above board.What has been the outcome of the changes? The evidence to date clearly indicates that starting price returns have moved in favour of the bookmakers to the detriment of the punters, improving the profit margins of the large bookmakers. Evidence collected by the Racing Post shows that the overround--that is, the theoretical profit margin of bookmakers--has improved substantially under the new system. For example, at the bank holiday meetings, when there were 10 race meetings on 9 May, the evidence showed improved margins for bookmakers compared with the corresponding fixtures for 1999.
Who made the decision on the starting price executive? Two of its members are from the Press Association, two from Trinity Mirror and two from Satellite Information Services. The chairman of the executive is Mr. Terry Ellis of SIS, who was once employed by Ladbrokes. The big bookmakers have a substantial interest in SIS. As The Observer pointed out, the perception of the betting shop punter must be that
- the arrangement must seem as clean as coal.
Keith Elliott, an independent member of the Levy Board appointed by the Home Secretary, describes the new system as
- a scandal and a disgrace.
- It is not appropriate for SIS to have such a prominent role in the determination of starting prices. We cannot let the fox look after the chickens. It will certainly damage customer confidence.
- I would like us to go back to the previous system . . . That system worked well. It did what it was designed to do--return the prices that were available to punters on the racecourse.
- this development has caused monstrous damage to the perception of . . . racing . . . This is the most dangerous development in racing in recent times. It has to be changed. I hope that punters around the country will clamour for it to be changed.--[Official Report, House of Lords, 14 June 2000; Vol. 613, c. 1737.]
- It's being wholly done in the interests of Ladbrokes, Coral and Hill and absolutely against the interests of their betting-shop customers.
Mr. Ellis has indicated that he will stand down as chairman of the starting price executive. I have a fellow feeling for people who take that decision. That being so, I shall not say as much about Mr. Ellis as perhaps I would have done before he made that particular decision. However, people in public life should be prepared to debate matters of public interest and should not censure debate by calling in lawyers.
The fact that Mr. Ellis was a senior executive for Ladbrokes is a substantial matter of concern when he becomes chairman of the starting price executive, which introduces unilaterally a system which is to the benefit of Ladbrokes, Hill and the other big bookmakers. These are matters of public concern and they should be debated without fear or favour, which is, I hope, what I am doing and what the Minister will do when he replies.
The Minister is well known as a friend of the betting shop punter. He is concerned about fairness and competition, and ensuring that people get a decent deal. I hope that his reply will indicate substantial concern on the part of the Government about what is going on.
I believe that what is required is a return to the old system--it worked. It was perceived to be fair and provided a reasonable deal for punters. We also need a reform of the starting price executive itself. It should have an independent chairman, two representatives from the Press Association, two from Trinity Mirror and two from the National Joint Pitch Council. Crucially, there should be no place for SIS, except perhaps as observers. The starting price executive needs to be perceived as clean and above board and definitely not as representing the interests of the bookmakers.
I suggest that those reforms should be instituted now. With great respect to the Minister, I do not think it is good enough to wait for Sir Alan Budd's committee on gambling which is not due to report until next summer. There are rumours, after all, that Hill and Coral are due to float on the stock market and that Labrokes' betting operation could be floated off, too. It is reasonable to believe that one of the reasons for the changes is to see profit margins increase so that there can be big pay-offs when the companies are floated. If that is so, it should not be at the expense of the betting shop punter.
I shall summarise my argument. The new starting price system introduced on 22 May this year has undoubtedly proved to be to the bookie's benefit and to the detriment of punters in the shop. The new system has improved profit margins for the big bookmakers and led to worsening starting price odds for the betting shop punters. The starting price executive has let punters down by introducing the new system; and the fact that Terry Ellis, the chairman of the starting price executive, is a former Labrokes employees and that his company, SIS, is substantially owned by the big bookmakers gives reasonable grounds for concern. As Keith Elliott, the independent member of the Levy Board, said:
- We cannot let the fox look after the chickens.
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