Select Committee on Health Minutes of Evidence

Examination of Witnesses (Questions 819 - 839)




819  May I apologise for keeping you waiting? We have had an extremely useful session this morning and it has gone on rather longer than we thought. We are most grateful for your cooperation with this inquiry. I appreciate from the evidence you have submitted that you have some concerns about being asked to come. I shall comment in a moment or two as to why we should be interested in your thoughts. Would you both briefly like to introduce yourselves to the Committee?

  (Mr Ecclestone) I am Mr Ecclestone.
  (Mr Mosley) I am Max Mosley.

820  I was hoping you might say a little bit about your role in the FIA.

  (Mr Mosley) Mr Ecclestone is Chairman of Formula 1—

821  I appreciate you were not in on the earlier session. I assumed you were familiar with our procedures. I beg your pardon. It is just to help the transcript for the Committee basically.

  (Mr Mosley) Mr Ecclestone is Chairman of Formula 1 Management, which handles the commercial arrangements in Formula 1 between the teams, the organisers, promoters and television arrangements, things of that kind, purely commercial things. I am the President of the FIA, which is, among other things, the world governing body of motor sport, which looks after all the sporting aspects and deals with the rules and regulations of the sport.

822  May I begin by just referring to your evidence? You say in your evidence that it is difficult to anticipate what issues the Committee may wish to explore with FIA. May I basically draw your attention to the fact that the first Committee report produced in this Parliament related to tobacco advertising and the proposed EC directive and this was on 26 November 1997 when our Committee actually re-stated the previous Committee's position. I will mention what that position was: that in the face of the evidence now being accumulated the Government can no longer maintain its position that a further tightening of tobacco advertising controls is unlikely to contribute to a reduction of the prevalence of smoking in the UK. The Committee recommended that the Government adopt as its policy the total elimination of tobacco advertising at point of sale and the Government should support the directive. I am sure you are aware of this. The point which is particularly important in respect of this report is that we said we were particularly concerned at the Government's proposal to seek an EC directive which contained provision for a permanent exemption for Formula 1. We believe that Formula 1 should be placed under the same pressure as other sports to seek alternative sponsorship. What I should welcome at the outset of our questions is to hear what you understand the circumstances to be which led to these proposals for an exemption for Formula 1.

  (Mr Mosley) On the text you have just read out, there is nothing in that with which we would disagree. What is really important is that we never asked for an exemption for Formula 1 only. There are very obvious reasons for that, apart from the fact that it might not be the right thing to do. In an EU situation where only eight of the 15 countries have a Grand Prix and where there are a great many other sports, you are going to have seven countries against you and all the other sports. So it would have been a mad thing for us to ask for and we did not ever ask for it. It was an invention somewhere in the Ministry of Health, but it certainly did not come from us. We would not disagree with a word of that. The circumstances in which there was any discussion of an exemption were that we pointed out that it was necessary to make provision for the Formula 1 teams to be able to continue operating on more or less the same basis as they operate now, or did in those days. Essentially, Formula 1 is by far the most high technology, high money, branch of motor sport and depended then to a very heavy extent on money from tobacco. It is now less the case, but talking about almost four years ago which is when this was. If that money were cut off without notice, quickly, what would happen is that you would not get Formula 1 coming to an end, it would simply run on less money. Because there was less money available, the highest paid engineers, performers and so on, involved in the sport would not be concentrated in Formula 1 and therefore largely, from a technical point of view, in the United Kingdom, but would start to be scattered. In particular, they would tend to go to the United States where there was not, and incidentally still is not, any serious move to ban tobacco advertising in motor sport because the United States Formulae would then be able to afford to pay for these people. That would remove the head from the whole motor sport industry in the UK and a decline, we feared, would then set in. We said that there would be no point in having an EU ban as things were at the present because what would happen, if it succeeded, would be you would get that decline. The alternative would be that the tobacco industry would subsidise events outside the EU, which would then be shown on television in the EU, which again would be pointless. Therefore some form of exemption was necessary. I do not wish to go on too long, but just to set the scene. At that point, you then get a slight divergence of interests between us as the governing body on the one side and the teams on the other. To be fair to him, Mr Ecclestone really does not fall into either category because the teams get the money from the tobacco industry and we, the governing body, try to run the sport. We are not allowed by contract, but also for reasons of competition law, to interfere with the commercial arrangements which the teams make with their sponsors. So it would not be right for us to seek to do that. However, as the leaders of the sport we seek to persuade and we have sat down with the teams, and I have sat down with them on a number of occasions, saying that we must be very careful because at the moment we have more money—again three years ago—from the tobacco industry than we could if we had to get the same sponsorship money on the open market. The tobacco people really have nowhere else to go, not really, whereas in every other area you are competing with every other sponsor. However, my argument ran, that situation will not continue for ever. We risk being down a cul-de-sac with the tobacco industry while the main stream of sports sponsorship continues and eventually overtakes us. Far from having more money we will have less. That was met with two arguments from the teams, which are fairly strong. First of all they said the obvious point: there is nothing illegal about what they are doing and also, as far as they know, there is no evidence that they cause anyone to start smoking. To that we said, okay, we would see whether we could get the evidence to demonstrate that. Their second point, and it is one on which the Committee might be able to help us, is that if the EU is serious about trying to stop the publicity from tobacco, they could do so overnight because the EU currently subsidises the growing of tobacco to the tune of 998 million ecus, the 1997 figure, which is probably in the order of two to three times as much money as the whole sponsorship of Formula 1. By contrast, they pointed out to me, not only are these 998 million ecus going to grow tobacco, the total EU budget for combatting cancer is 14 million ecus and for health initiatives generally 37 million.

823  We have looked at this in some detail in this inquiry, as you might imagine.

  (Mr Mosley) Good. I just wanted to make that point—

824  It is a very important point; we understand that.

  (Mr Mosley)—that I had difficulty in convincing the teams that their position is morally difficult when confronted with this action by our Government.

825  Let us be clear about this. The suggestion that the FIA asked for an exemption was, in your words, an invention; it was not the case basically.

  (Mr Mosley) Absolutely.

826  May I come to Mr Ecclestone on this because clearly a lot of press coverage was given to this issue and a lot of suggestions as to why this change took place not long after the new Government had been elected. We have a concern that as far back as 1954 in this place the Health Minister stood up and said there was a clear link between lung cancer and smoking. Since that time six million people in this country have died through smoking related disease; 120,000 die every year. What concerns me particularly is that we have only recently started to address the health risks. If one looks at the political processes which have delayed this place tackling smoking seriously, looks at the register of interests in recent years and sees the number of people with tobacco related interests who are Members of Parliament and senior Members of Parliament, there are reasons why we have been slow to address these issues. If the political processes have been manipulated on behalf of the tobacco industry until recently, some of us actually anticipated that in 1997 there would be a fundamental change, some accept there has been. The concern I have and the reason why the Committee looked at this area was that it seemed to be backing away from what the Labour Party, my own party, had said in Opposition in respect of what it would do over smoking in particular, over advertising and in particular over sponsorship. The word was of course that because of your donations to the Labour Party, Mr Ecclestone, somehow the Government backed off. We are told that it was an invention by Mr Mosley. Do you see it as an invention? Is it a nonsense to suggest that your donations influenced the direction of Government policy on this very, very important issue, this life and death issue?

  (Mr Ecclestone) I sincerely hope that you are not suggesting for one moment that that is what it was for.

827  I am suggesting nothing. I know what the press were suggesting. I know what journalists were suggesting to me at the time.

  (Mr Ecclestone) If you did not suggest that you would be absolutely correct.

828  You have nothing more to say on that point.

  (Mr Ecclestone) I have just answered that question.

829  The suggestions in the media that your donations to the Labour Party influenced this whole area, this very important area, are nonsense from your point of view.

  (Mr Ecclestone) Absolutely.
  (Mr Mosley) May I help there? Mr Ecclestone wrote on 13 November 1997 to The Times, which is a matter of public record. The letter was published. It might help if I just read the one paragraph which dealt with that issue. "I made a donation to the Labour Party because I believed Mr Blair to be a person of exceptional ability who, if free to act, would to an outstanding job for our country. This I thought depended on independence from old-fashioned vested interests in the Labour movement. My gift was intended to contribute to this. There were no strings attached. I have just paid an annual personal tax bill of £27 million for the simple privilege of living in England rather than a tax haven. With so large an investment it is reasonable to pay a million or two extra as a contribution to a free and independent Government for my country. When Mr Mosley and I visited Mr Blair to discuss tobacco advertising, we had already secured the support of several EU governments. Our case was overwhelming. A ban in the EU would have undesirable side effects but achieve no reduction in Formula 1 publicity for tobacco, while on the other hand the FIA could offer a significant compulsory worldwide reduction in return for an EU exemption. My donation did not come into it. The case made itself, just as it had elsewhere in the EU. I am all in favour of reform in political funding. Governments should be free from the influence of special interests, be they trade unions, businesses or single issue pressure groups. But until these reforms are in place I should enjoy the same rights as everyone else. These include the right to make donations to any political party I choose. Anything less implies that I have done something wrong and is a gross, insulting and irrational restriction of my freedom".

Dr Brand

830  How much money actually does Formula 1 get from tobacco sponsorship? Do we know?

  (Mr Mosley) Nobody knows exactly, but it is probably in the order of £200 to £300 million. I am sorry to say this again but it is certainly well within the EU subsidy for growing tobacco.

831  You are at liberty to keep quoting that, but it is not very relevant.

  (Mr Mosley) It is if it is diverted.

832  If you diverted that it would have to go into social payments to those peasants growing the crop.

  (Mr Mosley) It would depend on the EU governments; that would be their decision.

833  That is a different argument. If we take the upper figure of £300 million, what percentage is that of the total cost of running a Formula 1 circuit?

  (Mr Mosley) It really is very difficult to say because obviously the teams are very secretive about their money. Probably tobacco provides something in the order of 20 to 30 per cent of the income of the teams. That is a guess; it is definitely not a figure. If you wanted to know, you could ask the teams and they would probably tell you. We do not know closer than that.

834  Have you been monitoring whether in the last few years the proportion of income from tobacco has changed?

  (Mr Mosley) Not in the sense of monitoring accurately, because we do not have the means to do that. Anecdotally it is perfectly clear that this is happening. The trend at the moment in Formula 1, the whole structure, has changed dramatically since all these matters came up in 1996. Then it was more heavily dependent on tobacco than it is now. Now the motor industry, the world motor industry, is becoming much more heavily involved. Companies like Jaguar are coming in, Toyota are about to come in who have never been in Formula 1 before, BMW becoming much more heavily involved. I think I am right in saying that next year there will be six tobacco sponsored teams out of 11; last year it was seven. The trend now is decline.

835  Surely you have a role in monitoring that? If you were negotiating with governments on behalf of Formula 1 sport generally, then I am surprised that you do not have more direct control over what happens within the teams.

  (Mr Mosley) I wish we did. It is always suggested to us, particularly in Brussels, that we should regulate the sport and the business should be allowed to conduct itself.

836  Are you confident that the postponement time you have got is being used productively by the industry to stop its dependence?

  (Mr Mosley) Do you mean the motor racing industry?

837  Yes.

  (Mr Mosley) I would not put it quite like that. The thing is these people are running a business. Each team runs an independent business, independent from all the others. They will obviously do what is commercially best for them, within a framework which we regulate. When we had a meeting and I said to them, "If I could demonstrate to you that children take up smoking because of what you are doing, would you voluntarily give it up?", the reply was yes. Most people have small children themselves and anyone will support that position. There is no dispute from our side that tobacco is unhealthy and bad for your health. The problem I then had was getting the evidence. I wrote to every single—

838  I am sorry, I am not really at this stage interested in morality, I am interested in the business side of things. The reason for my questioning is that you made a very cogent argument, very persuasive argument for not introducing the ban in 1999 or 2001 because the industry needed time to restructure. I find it totally amazing that you have new teams coming in 100 per cent dependent on tobacco sponsorship.

  (Mr Mosley) Which one did you have in mind.

839  I am thinking about British American Racing.

  (Mr Mosley) First of all, they were not a new team coming in. What happened there was that a tobacco company bought an existing team. Secondly, the only new team which is coming in is Toyota and I suspect they have the resources to run a team without tobacco.

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