The Parliamentary Under-Secretary of State for Culture, Media and Sport (Mr. Gerry Sutcliffe): I beg to move,

The Chairman: With this it will be convenient to consider the draft Gambling Act 2005 (Horserace Totalisator Board) Order 2007 and the draft Gambling Act 2005 (Amendment of Schedule 6) Order 2007.

Mr. Sutcliffe: Good afternoon to you, Mr. Jones, and to the Committee. I look forward to your strong stewardship, but hope that it will not be necessary. I welcome the hon. Member for Bournemouth, East to his new position on the Front Bench and congratulate him on his appointment.

The context of the debate is the coming into force of the Gambling Act 2005 on 1 September. Hon. Members will recall that it establishes the Gambling Commission as a regulator for gambling in Great Britain, creating a unified, streamlined licensing regime for gambling operators and premises. The 2005 Act requires those offering facilities for gambling to obtain an operating licence, issued by the Gambling Commission. Premises that provide gambling facilities will be required to obtain a premises licence from the local authority. Generally, a person can be granted a premises licence only if they hold an operating licence authorising the activity.

I will begin by summarising the purpose of the three draft orders. The draft Gambling Act 2005 (Horserace Betting Levy) Order 2007 and the draft Gambling Act 2005 (Horserace Totalisator Board) Order 2007 allow two specific bodies—the Horserace Betting Levy Board and the Tote—to continue operating for the time being. The levy board will continue until a satisfactory alternative commercial mechanism is identified and the Tote will be retained in its present form until its sale is completed. The 2005 Act was drafted on the basis that neither body would exist when it came into force, hence the need for the orders.

The draft Gambling Act 2005 (Amendment of Schedule 6) Order 2007 will ensure the effective continued operation of the levy board by permitting information to flow between it and the Gambling Commission for the purpose of carrying out their respective functions. It also adds the British Boxing Board of Control to the sports bodies listed in the 2005 Act for the purposes of information sharing, thus helping to ensure openness and integrity in betting on boxing matches.

I turn to the detail of the draft Gambling Act 2005 (Horserace Betting Levy) Order 2007. The levy was established under the Betting, Gaming and Lotteries Act 1963 to collect money from bookmakers and the Tote for three statutory purposes: the improvement of horse breeds, the advancement of veterinary science and education and the improvement of horse racing. The Horserace Betting Levy Board was set up as a public body to receive the levy and to administer payments from it, including race prize money and integrity payments.

In March 2000, the Government announced their intention to abolish the levy board and the levy mechanism in response to the racing industry’s view that a more modern and commercially based funding mechanism was available, whereby television coverage of races, data on runners and riders, fixture lists and so on could be sold to bookmakers at commercial rates. Provision was made for the abolition of the board in the Horserace Betting and Olympic Lottery Act 2004. However, the European Court of Justice ruling in November 2004 cast serious doubt over racing’s ability to secure adequate payment for the use of its data and therefore over the viability of the proposed replacement funding model. As a result of that ruling and the recommendations of the future funding of racing review group, my predecessor, my right hon. Friend the Member for Sheffield, Central (Mr. Caborn), made an announcement in December 2006.

Mr. Don Foster (Bath) (LD): The Minister seems to be putting all of the blame on the European Union. Will he confirm that the future funding of racing review group also concluded that, even if the European Union had agreed to that measure going ahead, the sums of money involved—£90 million to £100 million—would not have been forthcoming, and that the Government were wrong in the first place?

Mr. Sutcliffe: I am not sure that I accept that point, but the hon. Gentleman has put it on the record. Clearly he is more experienced in the debates and negotiations on the matter than I. However, I will check his facts and write to him in due course. I cannot believe that the Government got it wrong.

Mr. Foster: The Minister might not believe it, but his right hon. Friend the former Minister for Sport, on 14 December last year, said what I have just said.

Mr. Sutcliffe: I trust the hon. Gentleman and have no doubt that my right hon. Friend said that, but I am sure that my right hon. Friend did not allude to the Government getting it wrong.

The main purpose of the order is to allow the levy board to remain in existence and to continue carrying out all of its functions after 1 September. In due course we intend to repeal part 2 of the 2004 Act, which provided for the abolition of the levy system. That will ensure that Parliament can debate a measure to abolish the levy in the light of the circumstances prevailing at the time.

The order has a secondary purpose. Under the 2005 Act, the Gambling Commission issues operating licences to bookmakers. That replaces the system under the 1963 Act which required bookmakers to hold bookmakers’ permits. Under the old system, the relevant authority could refuse to renew a permit if the levy board provided evidence that a bookmaker had repeatedly failed to pay the levy.

Article 3 of the draft order allows the Levy Board to continue to take a role in the review and revocation of licences by requiring the commission to carry out a review of an operating licence if notified by the board that the holder of the licence has failed to pay the levy for at least three months, and to revoke the licence if appropriate. It also gives bookmakers the opportunity to make representations to the commission before any decision to revoke their operating licence for non-payment of the levy is made.

I turn now to the second draft instrument, the Gambling Act 2005 (Horserace Totalisator Board) Order 2007. The Horserace Totalisator Board—the Tote—is a statutory corporation established by the Government under the Racecourse Betting Act 1928 to provide pool betting services on horse racing. In line with the Government’s commitment to disengage from areas of life where it is no longer appropriate for central Government to have a role, legislative provision was made in the Horserace Betting and Olympic Lottery Act 2004 for the Tote to be removed from the public sector.

Part 1 of the 2004 Act enables the Government to dissolve the Tote and create a successor company to receive its assets and liabilities for onward sale to a commercial operator. The Act also enables the Government to direct the Gambling Commission to issue that third party with an exclusive seven-year licence to offer pool betting on horse races on approved race courses. It is now clear that the dissolution of the Tote and the issuing of the exclusive licence will not have been achieved by 1 September—the date on which the 2005 Act comes into force.

Mr. Douglas Carswell (Harwich) (Con): Although I welcome the decision to sell off the Tote, will the Minister explain why it has taken so long? I believe that it was first mooted in 2001. It is now 2007.

Mr. Sutcliffe: I am aware of the length of time that has been taken. The hon. Gentleman will be aware of complex negotiations and discussions about the make-up of the various bids for the Tote. The latest bid is being considered and I hope that an announcement can be made very shortly on the decision.

Mr. Tobias Ellwood (Bournemouth, East) (Con): You were not the Minister then.

Mr. Sutcliffe: And it was not my fault. I fully understand the concern that a decision be taken. I hope that that can be done very quickly after proper evaluation of the bid.

As the Committee will know, now that the staff and management of the Tote have joined the consortium negotiations are proceeding. The Government hope to be able to announce how they intend to proceed shortly. The order is designed to enable the Tote to continue to operate on its current basis from 1 September until such time as these negotiations are concluded or the Tote is otherwise disposed of. The order therefore allows the lawful continuation of the 1963 Act arrangements for pool betting on horse races.

The order also amends section 33 of the 2005 Act to ensure that the Tote, and others acting under its authority, can exercise its exclusive statutory right to offer pool betting without requiring an operating licence. This mirrors the position under the 1963 Act whereby a bookmaker’s permit is not required to authorise such activity. The order also ensures that a person commits an offence if they infringe the Tote’s exclusive right to provide pool betting.

A consequential amendment to section 163 of the 2005 Act enables the Tote to obtain a betting premises licence without holding a betting operating licence. Finally, sections 336 to 338 of the 2005 Act enable the Gambling Commission in certain circumstances to void bets accepted by the holder of a betting operating licence. The order modifies those provisions to ensure that they also apply where bets are entered into with the Tote or a person acting with the authority of the Tote. It therefore subjects the Tote to the same controls as other betting operators in this regard.

Finally, I turn to the Gambling Act 2005 (Amendment of Schedule 6) Order 2007, which deals with the exchange of information between the Gambling Commission and other authorities. For the Horserace Betting Levy Board to fulfil its statutory functions and to be in a position to object to the issuing of an operating licence or the call for the withdrawal of such a licence, it must have access to an up-to-date list of betting operators and to bookmaker information that is not in the public domain.

Part 2 of schedule 6 to the 2005 Act lists enforcement and regulatory officials and bodies to which the Gambling Commission is empowered to supply information, and which may themselves supply information to the commission. The order amends part 2 to include an entry for the levy board, thus allowing it to have access to information on bookmakers held by the commission and to provide information to the commission.

The order also includes measures designed to extend the Gambling Commission’s information sharing powers to boxing. This is one of the sports, other than horse racing, on which British betting operators increasingly take bets. The British Boxing Board of Control, the governing body for professional boxing, has asked to be added to the list of bodies in part 3 of schedule 6 to the 2005 Act, which lists sports governing bodies to which the Gambling Commission is empowered to supply information. The Gambling Commission supports the inclusion of boxing, and the order amends part 3 to include an entry for the British Boxing Board of Control.

Information sharing is part of a suite of measures introduced by the 2005 Act that are intended to help to uphold high levels of sports betting integrity. Other measures include the voiding of bets and a new offence of cheating. Information sharing is vital for the effective investigation of alleged breaches of a sport’s ruling body’s rules or of the placing of illegal bets.

All the draft orders before us today are practical measures. Two of them are designed to ensure that the modernised, improved betting environment that is created by the Gambling Act 2005 and its precursor, the 2004 Act, comes into force in respect of the Horse Race Betting Levy Board and the Tote only when the time is right. I hope that, with those explanations, the Committee will support the draft orders.

Mr. Ellwood: It is a pleasure to be working under your stewardship today, Mr. Jones. I welcome you to the Chair and thank the Minister for the kind words in his introduction. We are both starting from the beginning, and I look forward to sparring with him. I am sure that there will be areas on which we agree and that when we do not agree, we will spend a lot of time scrutinising what the Government do.

The Minister certainly has a reputation for being thoughtful, approachable and engaging, and the same can be said for the hon. Member for Bath, who has, I understand, spent more time in betting shops than Pat Butcher. We have a good team here, which will be able to scrutinise legislation in a number of areas. In fact, when I was asked what my first statutory instrument would be about, I hoped that it would be casinos, and that we would get some answers on those.

Lord Commissioner of Her Majesty's Treasury (Claire Ward): That was last week.

Mr. Ellwood: Well, we are still waiting to know where the first super-casino will be.

I am already wandering away from my brief, so let me return to the three orders before us today. All of them are connected with horse racing. As we heard, the draft Gambling Act 2005 (Horserace Betting Levy) Order 2007 allows the Horserace Betting Levy Board to continue to apply the bookmakers’ levy and the draft Gambling Act 2005 (Horserace Totalisator Board) Order 2007 saves provisions of the Betting, Gaming and Lotteries Act 1963 relating to Tote pool betting. Finally in this three-course feast of betting legislation, we have the draft Gambling Act 2005 (Amendment of Schedule 6) Order 2007, which is concerned with scrutiny by the Gambling Commission of the British Boxing Board of Control and the Horserace Betting Levy Board.

The measures are all fairly straightforward. They are not controversial, and you will not find us challenging them, Mr. Jones. We will not vote against them, and I am now being encouraged to sit down and let the Committee get on with it—[Hon. Members: “Hear, hear!”] I am pleased to be cheered, but we do not agree with some of the detail. First I have to ask why on earth we are considering these statutory instruments at all. They all alter very new legislation—most of it is so fresh that it has not even come into force—so we have to ask what has happened to the timetable on the Tote that has put us in the position of having to rush through three statutory instruments before the Gambling Act comes into force on 1 September.

The first instrument is the draft Gambling Act 2005 (Horserace Betting Levy) Order 2007. The levy board applies the bookmakers’ levy for three statutory purposes: an improvement of the breeds of horses; the advancement and encouragement of veterinary support; and the improvement of horse racing as a whole. The Government announced their intention to abolish the levy board and the levy mechanism in March 2000 on the basis that a commercially based alternative funding mechanism was viable. Indeed, they went further: the Horserace Betting and Olympic Lottery Act 2004 and the Gambling Act 2005 made provision for the abolition of the levy and the levy board. However, a European Court of Justice ruling in November 2004 cast serious doubt on the sport’s ability to enforce substantial payments for the use of its data and, as a result, on the viability of the proposed replacement funding model as well. In December 2006, some two years after the ECJ ruling, the Government announced that they had decided to retain the levy board

Can the Minister update us on where we stand on developing that secure funding and tell us why we face this statutory instrument today?

The Government have announced their intention to repeal part 2 of the Horserace Betting and Olympic Lottery Act 2004 in due course to allow full parliamentary debate. Again I urge the Minister to provide a little more clarity in that area. Today, we are providing a stay of execution before the Gambling Act comes into force in September, which would have killed the levy board off.

The draft order also provides for the new Gambling Commission to carry out a review of a bookmakers’ operating licence if notified by the levy board that the holder of the operating licence has failed to pay the levy for at least three months. That is a useful piece of housekeeping, but why was it not considered before? Is there a possibility that the Government will heed calls from parts of the industry, as has been insinuated, once again to remove the board? Will we see another statutory instrument in the near future? Does not the necessity of the SI bring into question and expose the fact that the Government’s timetable has gone completely out of synch and led to the Tote going down a bumpy road—on a roller-coaster—with no end in sight?

The second SI that we are talking about today deals with the Horserace Totalisator Board. The Tote’s powers were originally gained from the Betting, Gaming and Lotteries Act 1963, much of which was repealed by the Gambling Act 2005, which comes into force in September. The Horserace Betting and Olympic Lottery Act 2004 allows the Secretary of State to sell the Tote and to direct the Gambling Commission to give the successor company an exclusive seven-year licence to operate pool betting. As the Gambling Act comes into force in September and the Tote has not been sold, the order is required to allow the Tote’s lawful continuation.

How did we get ourselves into this pickle? It began back in 2001 with Labour’s general election manifesto promise to sell of the Tote. What is the reason for the delay? We could put it down to the fact that we are dealing with a socialist Government who do not have much experience with privatising national assets—they are usually more comfortable with going the other way and nationalising such assets—but, in fact, as has been touched on before, the delay is to with the sale price itself.

There was an interesting statement by the previous Minister, the right hon. Member for Sheffield, Central. To a question about the sale of the Tote, he replied:

There was then a huge interruption, but the right hon. Gentleman went on:

Can the Minister explain the difference between a fair price and a market price? Surely those two prices should be the same. Essentially, the European Union blocked the sale for £300 million, as it did not believe that that reflected the true market value. Otherwise, it would have fallen foul of European Union rules on state aid. The value that is now being talked about is £400 million.

Will the Minister clarify what exactly is today’s value? Can he also bring us up to date with the discussions that he had with a number of consortiums, to which he alluded in his opening remarks? When we will finally see the manifesto commitment honoured? Rumour has it that the Prime Minister, in the build-up to taking over from the previous Prime Minister, was concerned about a potential asset-stripping deal ahead of his premiership and the fact that a national asset might fall into the hands of private equity. Can the Minister explain whether, now that the right hon. Gentleman has secured his position within No. 10, we are going to see an expedition of the sale of the Tote? Once the Tote is sold, will the earlier promise of half the proceeds of that sale being pushed back into the horse racing industry still be honoured? I urge the Minister for some clarity about the Government’s intentions and for him to suggest what the odds might be for a sale during the summer.

The final statutory instrument is the draft Gambling Act 2005 (Amendment of Schedule 6) Order 2007. The order adds the Horserace Betting Levy Board, which has been facing abolition, as we have heard, and the British Boxing Board of Control to the list of bodies to which the Gambling Commission can supply information. The Gambling Commission is now able to scrutinise those two bodies, which is a very useful piece of housekeeping. However, why is a statutory instrument necessary? Why were those issues not foreseen and dealt with in earlier legislation?

To conclude, we have three statutory instruments today, which, embarrassingly, are being rushed through before the summer recess and before the might of the Gambling Act 2005 rolls into play. Although we support the Minister today, there is a certain irony about what we are debating. We realise how awkward it is for him to come to terms with a new brief—I sympathise—and with the fact that first, a socialist Government are making a promise to sell off a nationalised asset; secondly, they are getting the price wrong; thirdly, they are delaying the sale for fear that the Tote might end up in the hands of those horrible capitalists in private equity, and fourthly, there is no indication of when this tale might end and the future of the Tote will finally be settled. I feel for the Minister and I congratulate him on his appointment. I look forward to hearing his answers.

Mr. Foster: I begin by saying a huge welcome to the hon. Member for Bournemouth, East. I thoroughly enjoyed his contribution. I agreed with him in a number of respects, not least his concern about the delay in the laying of the orders. Indeed, as the Minister knows only too well from our exchanges last week, I share those concerns more widely about a large number of statutory instruments that are still to come before the House and that relate to the commencement of the 2005 Act on 1 September. I am still looking forward to receiving the list of those outstanding statutory instruments, which the Minister promised to provide me with. However, let me not digress, Mr. Jones; I know that you would be upset if I did.

There are a number of points that relate to each order that I want to raise quickly with the Minister. I begin, however, by saying that I entirely support every single word of the statutory instruments that are before us. Unlike the Conservative spokesman, I think that all are entirely welcome, although I share his concerns about the delay. For example, as I mentioned in my intervention, the Minister’s predecessor, the right hon. Member for Sheffield, Central, said in a written ministerial statement on 14 December last year:

Given that that statement was made in December, it is slightly odd that we have had to wait to the fag end of this Session of Parliament before we have the statutory instruments to implement the decision, but they are welcome none the less. However, I made the clear point in my intervention that the Government set up the independent future funding of racing review group, which concluded that there was no possibility of similar sums of money—£90 million to £100 million—coming in the near future from the funding forms that were originally proposed by the Government and, to be fair to the Government, by the industry itself, which was initially also of the view that the money could have been raised. Clearly, both the industry and the Government were wrong in that respect. Nevertheless, I welcome what is being proposed.

I think that the hon. Member for Bournemouth, East is right to ask the Minister, in the light of the statutory instrument, to give us a rather more detailed update on where we are on the sale of the Tote. The Conservative spokesman suggested that he would not be at all unhappy if we had a scheme whereby the Tote fell into the hands of private equity companies. Well, I for one would be unhappy, because I served on the Committee that scrutinised the Bill that became the 2005 Act, and we were clearly told that the reason for considering the sale was for ensuring that it remained in the hands of the racing industry. I welcome the fact that we have a consortium that includes the management and the staff of the Tote, but which also involves the Racehorse Owners Association and the Racecourse Association.

The Minister will be well aware that, following the decision of the European Union in respect of the sums of money involved, the objection to the sale came not from his Department but from the Treasury, in relation particularly to the nature of funding from Lloyds TSB Development Capital. I would like to know, therefore, who is going to make the decision, given that it has cleared the European Union hurdle? Will it be a Department for Culture, Media and Sport decision or a Treasury one? Will the Minister also give a clear indication whether he is satisfied that the new financial arrangements, whereby there will be, not payments in kind, but straightforward loans are acceptable to the Department? That would be helpful and would clear the way for the future.

Secondly, I welcome the introduction of the British Boxing Board of Control to the list. The Minister said that increasingly many bets are placed on boxing matches, and that the BBBC has responsibility for the integrity of the sport. Given that, does he believe, as his predecessor did, that the time has come to look at how the gambling industry could contribute to boxing and other sports to help to fund the cost of ensuring their integrity?

Finally, I ask the Minister whether what he has just said and the statement made by the then Minister for Sport on 14 December last year imply that the betting levy will be retained only until such time as an alternative form of funding can be found? Presumably the implication is that that funding would be up to a similar level of £90 million to £100 million. Can the Minister tell the Committee whether discussions are ongoing with regard to finding an alternative source of funding, or whether there will be no further discussion in the light of the independent review group’s consideration, and that we are likely to see the levy continue? People need some indication of the likely level of security of this form of funding for the industry.

Mr. Sutcliffe: I thank the hon. Members for Bath and for Bournemouth, East for their comments, particularly the former, with his knowledge of the relevant issues. I am pleased that the Opposition parties support the orders, and I am grateful to the hon. Member for Bournemouth, East for his support. I hate to think what he will be like when he argues against us.

The two main issues relate to the Tote and the levy. I start by answering the hon. Gentleman in a more distinguished manner than perhaps I did with my flippant contribution about the history of the Tote and the issues facing it. He said that its sale is an embarrassment to the Government; it is not. We want to ensure that the Tote is sold, and that it is sold to suitable people. He asked about the distinction between a fair price and a market price. He is quite right that the discussion of the Tote’s fair market price in relation to the Commission and issues around state aid was delaying its sale.

Mr. Mike Hall (Weaver Vale) (Lab): I wonder whether I misheard the hon. Member for Bath when he said that a ruling in the European Union was the problem, rather than one in the European Court of Justice? To clarify, it was an ECJ ruling that caused the problem.

Mr. Sutcliffe: I am grateful for that clarification. On the issue of fair price or market price, the Government regarded a fair price as one that recognised racing’s historical interest.

Mr. Geoffrey Robinson (Coventry, North-West) (Lab): Is not a fair price really what somebody will pay for something?

Mr. Sutcliffe: I do not want to get drawn into too detailed a description of fair or market price. I am trying to explain why the Department had the difficulties with the Commission. The Commission took that view that an element of state aid was included. We were trying to consider the historical impact of racing. That was the cause of the long delay. We now have an offer for the Tote, as hon. Members have said. There is a broader consortium of racing interests, including the staff and management of the Tote. We are in detailed discussions across Government, because this does not involve only one Department or another. We hope to announce shortly what the situation is.

Mr. Ellwood: I am grateful to the Minister for that clarification. The fact that we are looking to approve these statutory instruments suggests that we will not see any movement on the sale until at least 1 September. Will the Minister outline the time frame within which he thinks the discussions with the consortium will be concluded and the sale will near fruition?

Mr. Sutcliffe: I am not prepared to do that this afternoon. In the 10 days I have been in my new post, I have been brought up to speed on the negotiations. It is right that we consider the issues across Government. We want to make a decision at the earliest possible opportunity.

Mr. Foster: I should like to help the Minister’s hon. Friend, the Member for Weaver Vale. I apologise if I confused the Minister and the Committee. I was hoping to make the point that the issue of the fair or unfair price level concerned the European Union. In November 2004, the European Court of Justice made the ruling not about price, but about the ability to raise substantial funds through the sale of data, which was the replacement funding, so both aspects were involved.

Mr. Sutcliffe: I am grateful to the hon. Gentleman for giving us the benefit of his knowledge of the issues. I shall move on to the issue of levies, which he raised. I intended to write to him, but in the light of that clarification, perhaps I do not need to. He was right about the conclusions of the future funding of racing review group. My right hon. Friend the Member for Sheffield, Central announced the retention of the levy in December 2006. The Government were content then that there was no viable alternative to the levy, which is our position now. We still have not identified a stable commercial alternative.

The hon. Gentleman will be aware that the 47th levy is approaching fast. The industry has to get its act together to resolve the many issues that it faces concerning the levy. I am sure that we will have discussions in future about progress on that matter. The Government support voluntary commercial payments from betting to sport, which relates to the point that was raised about the involvement of my right hon. Friend the Member for Sheffield, Central. We consider that funds raised should go towards sports betting integrity and grass-roots sport. I am happy to continue down that route.

Mr. Foster: The Minister says that he supports the continuation of voluntary contributions. His right hon. Friend the Member for Sheffield, Central was at the point of moving towards mandatory contributions. Has further thought been given to that?

Mr. Sutcliffe: I am not at that point yet. I will consider it in the light of my discussions with representatives of the industry. Having heard my explanations, I hope that the Committee will support the orders.

Question put and agreed to.

Resolved,

Resolved,

Resolved,

Committee rose at five minutes past Five o’clock.