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Mr. John Redwood (Wokingham) (Con): Like Government Members and other Opposition Members, I welcome the Government's decision to specify the term of the exclusive licence. Should my hon. Friend the Member for South-East Cambridgeshire (Mr. Paice) catch your eye before the summing up of this debate, Mr. Deputy Speaker, I would appreciate a little more guidance from him on amendment No. 1. I am grateful to him for explaining that proposed new paragraphs (c) and (d) are alternatives; that makes matters much clearer. I should point out that I am much more attracted to the latter than the former, and I shall briefly sketch why.
My hon. Friend makes a powerful case in saying to the Minister that no one can be sure what the situation will be in seven years' time. The technology might have moved on, the market might have changed greatly, or new circumstances might have arisen that make our deliberations today rather inappropriate, in terms of specifying what should then happen. So I can quite see the wisdom of warning the Minister against reaching a decisive view today that will operate in seven years' time, perhaps under a completely different Government and certainly under a different Minister. Indeed, many other changes might have taken place by then in the world of gambling and gaming, and in the general marketplace.
I accept the idea, advanced by my hon. Friend, that there should be a requirement for some kind of independent inquiry. I understand that they are very popular these days, although people are not always pleased with, or in agreement with, their results. Proposed new subsection 1(d) does not specify what the successor Minister or Secretary of State should do with the inquiry, but I trust that my hon. Friend has in mind an independent inquiry that will guide, rather than mandate.
Kevin Brennan (Cardiff, West) (Lab): If an independent inquiry were agreed to, would the right hon. Gentleman agree to abide by its outcome?
Mr. Redwood: Not necessarily. First, I should want to decide what I thought of its terms of reference and of the
so-called independent members. In my experience, some inquiries are more independent than others, and some terms of reference more sensibly drafted than others. Therein lies the fun of inquiries and what happens afterwards. I am glad that my hon. Friend the Member for South-East Cambridgeshire is signalling that the inquiry is advisory—to me, the best type of inquiry—and I would like a future Minister to be free to take a wise decision based on decent information. On that basis, it is sensible for a future Minister to appoint good and independent people, who really know the industry and understand the relevant circumstances, to offer the advice.I can therefore bring myself to support amendment No. 1, if my hon. Friend decides to press it, but I hope that he will stress paragraph (d) rather than (c), which has the same problem as the Minister's original recommendation—that it somehow pre-empts or pre-judges what might be wise in seven years' time and that it implies rather more foresight than some of us have at this juncture of the state of horse racing and the betting industry then. On that basis, I welcome my hon. Friend's clarification and look forward to supporting paragraph (d) if the amendment is pressed.
5 pm
Mr. Salmond : I thank the Minister for the seven-year guarantee. I also thank Conservative Front Benchers for clarifying amendment No. 1. I only wish I had known that this morning; I would have been saved 45 minutes trying to puzzle out what they had in mind. Nevertheless, the burden of argument is in favour of the Minister allowing at least the possibility of maintaining the exclusive licence for more than seven years.
In explaining my case, I want to look at the issue from a slightly different angle. Right hon. and hon. Members have rightly stressed the importance of the Tote in providing a guaranteed fund for the racing industry. That has been valuable and is something that by and large the Tote has done extremely well over its period of existence. However, there is another role of pool betting that has not been done so well until very recently but which is none the less very important in the current marketplace: pool betting operated as a monopoly increases overall competition in the betting market. It would be useful if people working in the Office of Fair Trading managed to grasp the point that it is possible to provide a more perfect marketplace and more protection for the consumer by allowing an intervention in the marketplace of that sort.
I realise that the subject is exercising the Minister's mind. It may be helpful to view what has been happening in the betting market as a form of contract between the Government and the players in that market. A few years ago, when the Government took betting tax off, they entered into an informal contract with the industry by which it would move into the world of low margins and high turnover and that would be to everyone's benefit: it would be to the benefit of the Government because the high turnover would generate revenues; it would be to the benefit of the consumer—the punter—because they would get better value from their betting; and it would be to the benefit of the companies operating in the marketplace.
Unfortunately, as human nature dictates, some people liked the high turnover aspect of the market, but would also like high margins.There are three bulwarks that operate against the margins in the United Kingdom being increased to the extent that they could be over the Irish sea or in other betting and horseracing markets in the world. The first is the on-course bookmakers who, lo and behold, are now under sustained pressure from other forces in the industry. They operate a market on course, which gives protection to the off-course market and keeps the business honest in the sense of keeping the margins down. I do not think that it is any coincidence that these people are now under the severest pressure.
The second bulwark to keep the off-course market honest is the new emergence of betting exchanges—and, lo and behold, those betting exchanges are now subjected to successive pressure from big bookmakers' chains, challenging various aspects of their operations. To his credit, the Minister has thus far resisted that pressure.
The third bulwark that keeps the market honest is the Tote, and Tote betting and pool betting, as an alternative to fixed-odd betting. It is unsurprising that Ladbroke's, for example, has already made it clear that, at the end of the seven-year licence, it wants to move into the pool betting market. With no disrespect to anyone in the company, which presumably wants to maximise its returns, it will do so not with the interests of the consumer and punter in mind, but in the interests of fragmenting the pool betting market and making it a less competitive instrument, thereby increasing margins in the fixed-price market.
As the Minister rightly said, even for the Tote, the balance between overall operations and pool betting is currently 4:1, and the balance is more like 10:1 for broad operations in the betting market. We need a more powerful pool betting market to act as better protection for the consumer, rather than a less powerful one. In the interest of consumer sovereignty and to prevent cartels and organised behaviour developing in the betting market to the detriment of everyone—in addition to generating income for racing—I hope that the Minister will think it sensible at least to provide for the possibility that the guaranteed licence should continue after the seven-year period has expired.
Mr. Page: I shall begin by thanking the Minister for introducing Government amendment No. 11. In Committee, he coyly—and rather delphically—said:
- "I am minded that complete certainty about its length would be welcomed by the racing industry, the Tote and members of Committee."—[Official Report, Standing Committee D, 20 January 2004; c. 42.]
Government amendment No. 11 is an important datum peg in the valuation process. As the Bill progresses through this House to the other place and back again, I urge the Minister to consider putting other datum pegs in place. When it comes to valuing the Tote, it will useful to know what sort of licence fee the Government will require. He will appreciate that a higher licence fee will mean a lower sum to Government,
and that a lower licence fee could possibly mean a higher sum to Government. The more datum pegs we have, the easier it will be to calculate the valuation. I know that the Tote, among others, would welcome knowing what its possible commitment might be.I also congratulate the Government—the habit of congratulating them sits ill upon my shoulders—on once more resisting the pressures of the OFT and its arguments for open competition for pool betting. The hon. Member for Banff and Buchan (Mr. Salmond) made some valid points about the value of pool betting. I do not want to give hon. Members or, in particular, my constituents the idea that I am a habitual gambler, but one can see pool betting operate at a greyhound race meeting. If a dog—let us say Saucy Sue in track 2—is 6:1 and I rush forward and place a £2 each-way bet, suddenly that dog is odds on favourite and my £2 each-way bet has had a disproportionate effect. Obviously, larger pools offer greater stability, which we all want to see. With larger pools, punters have greater confidence that they are getting a fair market price rather than one that has been distorted by a small amount of money such as my £2 each way.
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