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21 Nov 2007 : Column 129WH—continued
My hon. Friend summed up with clarity the challenges facing the industry. I am grateful for the deluge of material that many of the organisations and parties whose representatives are sitting at the back of the room have sent my way in the past few days. Of course, it is not I who is in a position to resolve the issues but the Government, who have not gained a reputation for decisive action. I am reminded of Shakespeare’s famous horse quotation from “Richard III”, of which everyone will be aware. At the battle of Bosworth, Richard III wants to continue the battle and is willing to trade his kingdom for a horse. In contrast, today we have a Minister who wants to avoid the battle
completely and runs away from anything to do with horses. The consequences of that have allowed the British horse racing industry to enter a protracted period of confusion. I am, of course, being entirely disingenuous to the current Minister, who has worked hard to get on top of his brief and been approachable and friendly, but it is his watch now and he needs to make amends for the errors of his predecessors.
The Tote has been with us in one form or another since 1928, when it was the Horserace Totaliser Board, to give it its full name. It operates as a bookmaker and offers pool betting on horses. It has been the Government’s intention to sell the Tote for some time; we first got a inkling that it might happen way back in May 1999. It was an election pledge in June 2001 and in May 2005, and I am sure that it would have been an election pledge in November 2007 had we had an election. I wonder what the odds are against its appearing again in a manifesto in June 2009 or whenever the election is.
There have been more than seven years of briefing versus counter-briefing, bids agreed then scuppered, prices confirmed then rebuffed, and Government announcements and then retractions. As we have heard, the Opposition fully support the sale of the Tote, but in a timely fashion, as reiterated by my hon. Friend the Member for Lancaster and Wyre (Mr. Wallace). I asked the Minister in a parliamentary question only two months ago whether the Tote would be sold in the next three months. His reply was that the Government were in advanced stages of discussions. Two months on, will he update us? What are those advanced stages, what value is the Tote now set at, who is leading the consortium to buy it and how much of the money will go back into racing? I understand that Lord Davies of Oldham said in the other place in July that the cost of trying to sort out the sale of the Tote had already climbed to £2 million. Will the Minister confirm exactly what the cost to the taxpayer is? I am sure that it is in our interests to find out.
The horse racing levy is the agreed annual amount paid by bookmakers to race courses, and it goes towards such things as prize money, the grass roots of the sport, veterinary skills and so forth. It is valued between £85 million and £90 million. As was stated in Lord Donoughue’s study for the Department for Culture, Media and Sport, which has been referred to several times, all sides agree that the levy should eventually be phased out and replaced with a commercial alternative. Unfortunately, by the deadline of 31 October, racing and the bookmakers had failed to reach an agreement on the 2008-09 levy, meaning that determination now falls to the Secretary of State.
The sticking point, as we have heard, is commercial television rights. Traditionally, horse race footage has been beamed into betting shops by SIS, which is predominantly owned by a number of the large bookmakers, including William Hill and Ladbrokes. Turf TV, a new race course broadcaster, has been established and signed up to by about half the race courses. That means that bookmakers must now have two contracts, with SIS and with Turf TV, if they are to show the full complement of racing on offer in the UK.
The two sides of the argument have been well rehearsed: one either supports the levy and says that it should be reduced to compensate for the funds earned
by Turf TV, or says that it should remain and that broadcasting rights are separate from any discussions about the levy itself. Sadly, Lord Donoughue could not find a solution, but it was established that all parties agreed to the long-term aim of abolishing the levy and replacing it with a commercial alternative. I was pleased to hear from the British Horseracing Authority in meetings yesterday that it agreed to a wider modernisation review of the levy.
My hon. Friend the Member for Tewkesbury (Mr. Robertson) reiterated the points about the duplication of costs. Does the Minister agree that, with a long-term commercial solution required, running two broadcasting systems needs to be reviewed if funding to support the racing industry is to be maximised while bookmakers are offered an attractive deal? Alternatively, does he believe that horse racing can receive the critical financial support that it needs with the broadcasting monopoly broken up? I look forward to his response, as I understand that he is already starting talks with an independent organisation to mediate between the groups. What are his views on the short-term requirement to sort out the levy for this year and the long-term challenge of resolving and removing it?
The final act in the Government’s three-ring circus of equine confusion, if I may call it that, is the issue of bookmakers’ course pitches at race meetings. For many years, bookmakers had assumed that their pitches on race courses were theirs to use or sell on. Their value hinged on the so-called list system, reflecting the greater choice of pitches for people higher up the list. Location is critical, as it is linked directly to the amount of revenue that a bookmaker might receive. Charges to bookmakers were limited to five times the entry fee of the course, which changed in 2003 following a position paper from the Department. The change modernised the charges but there was no agreement on changes to list positions, which had been traded for some value for many years. Along came the Gambling Act 2005, which removed the responsibility for track betting licences from the Horserace Betting Levy Board and gave it to local authorities, with no longer any mention of list positions. That was the fundamental flaw in the 2005 Act.
The Racecourse Association was quick to announce that, by 2012, bookmakers’ list positions would no longer be recognised. There seems to be no official documentation showing that pitch ownership was ever to be in perpetuity, but conversely I understand that there is also no official documentation showing that it was not. That is a complete legislative nightmare. How on earth did we get there? It certainly seems that the sport of kings is being managed by a Ministry of court jesters.
What action is the Minister taking, and what time scale is he adopting? What parties and intermediaries are being involved? Does he believe, for example, that race courses should take a small percentage of bookmakers’ profits provided that there is a fairer charge, linked to earnings, so relinquishing the need to interfere with the list? Will he be using section 151(2) of the 2005 Act, which allows the Secretary of State directly to influence the form and contents of premises licences?
We have heard a number of eloquent speeches, and everyone has joined in supporting the industry. We can
rightly be proud of horse racing in the UK, and certainly of its role in the economy. It is a multi-billion pound industry with more than 9,000 races a year, including eight of the top, world-class races. However, that position is not guaranteed. We need better co-operation within the industry and stronger leadership from the Government. I hope that the Minister will not duck his responsibility to help to resolve the concerns that we have debated, which affect the horse racing industry.
10.48 am
The Parliamentary Under-Secretary of State for Culture, Media and Sport (Mr. Gerry Sutcliffe): It is a pleasure to serve under your chairmanship, Mr. Atkinson. We were formerly two Whips together and worked closely in the dark arts of the Whips Office.
I welcome this important debate, secured by the hon. Member for East Devon (Mr. Swire). I add my support to his views on Sir Tristram Ricketts. Today is a sad day, as racing has lost somebody who had such a sharp mind. I met him on only a couple of occasions, but he had a great love for racing and wanted to ensure that it succeeded. He will be sadly missed and I pass on my condolences to his family.
The debate and the spirit in which hon. Members have contributed to it have been important. I was particularly pleased by the contributions by my hon. Friends the Members for Livingston (Mr. Devine) and for Hove (Ms Barlow), and by the hon. Members for Tewkesbury (Mr. Robertson) and for Lancaster and Wyre (Mr. Wallace). We need to consider how we can move forward together. We heard some thoughtful comments about the impact on racing and its future.
Like the hon. Member for Bath (Mr. Foster), we should start by celebrating horse racing and its impact on the economy. Horse racing is healthy and buoyant, and is second only to football in British sport in terms of attendance at fixtures and revenue earned. Total race course attendance in 2006 was just under 6 million, the total having been on a significant upward trend since 2000, when 5.1 million people went racing. The current figures are the highest since the 1960s. The appeal of racing is universal: it appeals to people of all ages, backgrounds and socio-economic groups.
Not only do more people attend racing; many more people watch it on TV. The average TV audience for racing is 1.3 million for BBC 1 and 774,000 for BBC 2. Some 9.5 million people watched the grand national, and the 2007 Derby attracted 3 million viewers. In 2006, 197 meetings were broadcast terrestrially—151 on Channel 4 and 46 on the BBC. Channel 4 has the successful “The Morning Line” programme that attracts an average audience of 658,000 to racing, and has an hour-long programme dedicated to racing. At The Races is available in more than 9 million homes, and Racing UK, which is owned by 31 leading British race courses, has around 50,000 subscribers.
The economic facts speak for themselves. The racing and racehorse breeding industries are together directly responsibly for 18,800 full-time equivalent jobs. As the hon. Gentleman said, a report by Deloitte in 2006 found that racing employs more people than any other sport in Britain. Taking into account the secondary
employment in the betting industry that he mentioned—it is impossible to imagine racing thriving without on-course bookmaking—the figure rises to 88,000.
Racing on Britain’s 59 racecourses—with a 60th soon to open in Essex—generates some £300 million in tax revenues for the Government each year, and has an overall economic impact of £2.86 billion. Total prize money reached a record of £104.1 million in 2006, compared with £71.7 million in 2000. There are about 9,500 active racehorse owners, and 50,000 people are involved in racehorse ownership through various types of co-ownership. About 14,500 horses are in training, and 1,415 fixtures have been programmed in the current year, with over 9,000 races.
As for betting, £10 billion is bet off-course on horse racing every year, most of it in the 8,500 licensed betting offices in Britain, with a further £120 million bet on-course through the Tote. Bookmakers’ profits on British racing alone are more than £1 billion a year, and the levy board received some £98 million from off-course bookmakers and the Tote in 2006-07. Those figures show not only that racing is a deeply engrained pastime and part of our national sporting life, but that it makes a strong and growing contribution to the economy of the country, including in some of the more deprived areas that we have heard about.
I know that the welfare of racehorses has been of concern to many people over the years. The Animal Welfare Act 2006 came into force earlier this year, and we believe that it is a significant step forward, as there is now a positive duty on owners and keepers of animals to promote welfare. I was sad to see that two horses were killed at Cheltenham at the weekend, and I send my condolences to all those involved.
We have the 2006 Act in place, and we have a particular position on racing. It is not the case, as the hon. Member for Bournemouth, East (Mr. Ellwood) said, that the Government want to abdicate their responsibilities. I do not think that I have avoided any battles; in fact, I got involved in a few battles very quickly in my role as the Sports Minister.
On the specific issues, the chairman of the Horserace Betting Levy Board has, to our regret, again asked my right hon. Friend the Secretary of State to determine the level of the annual horse race betting levy.
Sandra Osborne: I thank my hon. Friend for giving way and for meeting me during the summer recess, when he expressed a hope, and perhaps even an expectation, that the industry would be able to manage its own affairs. Sadly, that has not proved to be the case. He knows that although the Ayr racecourse has thrived in recent years, the investment would definitely be put at risk if the levy were reduced in any way. Does he agree with the levy board chairman, Mr. Hughes, who said:
“I don’t think you can mix statutory payments with commercial elements, particularly where they may be seen to involve inducements”?
Does he agree that any matters relating to Turf TV are separate from the negotiations on the levy?
Mr. Sutcliffe: I understand and share many of my hon. Friend’s concerns. Let me set out the Government’s position. We do not want to pre-judge what the determination will be, but we hope to announce it early in the new year to meet the requests of hon. Members. The levy has only just gone to determination, and we have not yet appointed consultants to assist the Secretary of State in his deliberations. However, my predecessor and my officials have followed the levy board’s discussions closely and we are fully aware of the importance of having fair and timely outcomes for the racing industry.
I confirm that, in line with the recommendations of the future funding of racing review group, which my noble Friend Lord Donoughue chaired in 2005, we still plan to review the workings of the levy scheme to see whether there is any way in which the machinery can be streamlined and simplified. I hope that the levy board will share the burden of that work with my Department. Obviously, that review can happen only when the 47th levy is determined. As my predecessor, my right hon. Friend the Member for Sheffield, Central (Mr. Caborn), told the House late last year, we have no plans to abolish the levy until a viable commercial alternative emerges.
Mr. Anthony Wright (Great Yarmouth) (Lab): I share the opinions of many hon. Members in the Chamber today about the importance of the levy to race courses such as mine in Great Yarmouth. The betting industry provides up to £130 million of investment through the levy and other things, and there is sponsorship on top of that. Has there been any indication from the industry that it wants to reduce that amount, or is it prepared to keep the money as it is?
Mr. Sutcliffe: Again, that will be determined during the discussions on the determination. I do not want to get drawn into those arguments today. We will make the determination, we will consider everything that has been put to us, and we will try to work in the best interests of racing.
The determination will take place and we will look at the future of the levy system, as we have outlined. I agree with the hon. Member for Tewkesbury that it is important that racing looks to its future as well. Clearly, there are many sides that contribute to racing, and we have to ensure that they look to the future, too. I want the Government to remove themselves from the detail, although we will carry out our responsibilities.
Time is against us, so I want to concentrate on some of the major issues. On the sale of the Tote, I accept that there have been difficulties, including those in relation to the 500 jobs in Wigan. We must ensure that we do this properly. We have been chided about the role of Europe, but Europe played a big part in preventing the sale from taking place. We want to sell to racing, but we are considering the offer that has been made, and we need to make a quick decision. We must ensure that we go through the due process and look at the detail of all the bids. I can give the assurance that the hon. Member for Bath was looking for regarding what will happen if we do not sell the Tote to racing and it goes on the open market. The agreement was that 50 per cent. would go to the horse racing industry, and I am happy to put that on the record.
Mr. John Grogan (Selby) (Lab): If it is not possible to sell the Tote to racing—it is almost certain that any sale will be challenged in the European Court—does not the hon. Member for Lancaster and Wyre (Mr. Wallace) have a point when he says if it ain’t broke, don’t fix it? Will the Government consider leaving it exactly as it is or having a licensing system like the lottery? There was no manifesto commitment to sell the Tote on the open market.
Mr. Sutcliffe: That is an important point. First, let us make the determination. We need to do that quickly for the reasons that have been outlined. Again, I agree with the hon. Member for Tewkesbury: we ought to look at the options that are available to us if that is not successful. I am happy to give the commitment that we will do that.
The Select Committee is looking into pitch tenure. I want to resolve the matter. We have set up a working group with an independent chair. We want to ensure that all sides of the argument, including the race courses and bookmakers, benefit from such a group. It is important to do that rather than going to law. People in racing tend to go to law very quickly, whether it be Turf TV or because of pitch tenure, which incurs huge cost. However, that money could go into racing, and we want to ensure that it is spent wisely for the future of racing.
Hon. Members raised a number of points that I cannot respond to in the time left. However, I will put in writing to those who have attended the debate the details on the questions that were asked. I urge that there are more debates on horse racing, that we look with interest at the work of the all-party group on horse racing and that we try to meet the challenges together. I accept that politics sometimes comes into play, but I hope that that will not prevent us from working together for racing’s benefit.
Welsh Ports (Customs/Security)
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Mr. Stephen Crabb (Preseli Pembrokeshire) (Con): I am grateful for the opportunity to open this debate on customs and security at Welsh ports. I am not sure whether the Minister will regard it as a respite or yet another irritation amid the maelstrom of bad news that has descended on her Department in the past 24 hours, but I hope that it will be a useful opportunity to engage with her on an important and pressing matter. I am grateful that she is here and that she has agreed to wind up the debate by about 25 minutes past 11 to enable me to get to the Chamber, where I have the first question on today’s Order Paper.
I shall try to save some time to allow the hon. Member for Ynys Môn (Albert Owen) to say a few words about the situation in north Wales. Like me, he is a strong friend of his local ports and enjoys good working relationships with the port management. He, too, would like to raise some concerns this morning.
This is a timely debate, given the wider discussion on national security and the integrity of our borders in the context of the challenges posed by terrorism, organised crime and illegal immigration. There is a specifically Welsh dimension to the problem as the ports of Wales together form an important entry point into the UK. Perhaps they do not have the same significance as the ports of south-east England in terms of overall passenger numbers and freight volumes, but if ports such as Dover, Folkestone, Felixstowe and Harwich and the airports at Heathrow, Gatwick and Stansted are the front door to the UK, the ports of Wales are the back door. They need securing and protecting as well, and that is what this debate is about.
My county of Pembrokeshire in west Wales is home to two major ferry routes to Ireland from Fishguard and Pembroke Dock, both of which carry thousands of passenger and commercial vehicles each week. The port of Milford Haven in my constituency is also one of the UK’s major energy ports. It has two large oil refineries and one of Europe’s largest fuel storage depots, and next year two large liquefied natural gas import terminals will come on stream. Further afield in Wales, the ports of Holyhead in north Wales and Swansea in the south, with their major links to Ireland, are also very important. The ferry ports of Wales together account for around 15 per cent. of the entire volume of ferry traffic arriving in the UK every year.
If terrorism, trafficking in narcotics and persons, and illegal immigration form the strategic context for this debate, the deep and severe cuts in customs cover that have taken place at Welsh ports in recent years form the operational context, and the move to an intelligence-led, risk-based system of deployment is the policy backdrop. Overarching all that is a question of resources that simply cannot be ignored.
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