Previous Section Index Home Page

15 July 2008 : Column 32WH—continued


15 July 2008 : Column 33WH

I have spoken to Neelie Kroes at length on the subject, and I believe that if the Commission could get shot of Tote UK it would do so. By no definition can the Tote distort trade over international boundaries. Let us put that on one side, and say that if we want to deal with Europe we can do so.

Mr. Ian McCartney (Makerfield) (Lab): Like my right hon. Friend, I am a former Minister of Trade. Some of the companies that may want to bid for the Tote already have huge holdings in the European Community. There is an issue about the marketplace. Although my right hon. Friend is not being cavalier in his comments—he is his usual stylish self when it comes to promoting his case—we need to step back and sort out the competition issues. Increasingly, bids for any part of the Tote will attract international attention. The industry is becoming global in all aspects 24/7. That will result in more issues to do with competition. Whatever happens, we should ensure that such competition is fair for the consumer but that it also maintains resources in the constituency of my hon. Friend the Member for Wigan (Mr. Turner) and in mine, as 640 jobs are stake if we get it wrong.

Mr. Caborn: I agree. I have been accused from time to time of being a bit cavalier, but first I want to answer the point raised by the hon. Member for Tewkesbury (Mr. Robertson).

The Tote has 540 shops, and 40 per cent. of its takings come from them. I do not know the exact figure, but those takings are a 10th of its total takings. The sale will not materially affect access to the Tote, because that will be available through other betting shops. We have an agreement that we will take the Tote to the marketplace within seven years. That is what we said. It is a transitional period that we negotiated with the then DTI.

In terms of competition policy, the European Union has on many occasions allowed transitional periods for organisations, and indeed countries, to allow them to become fit for purpose. The mechanism is not unusual in the European Community, as every country that recently came into the Community was given transitional arrangements to allow them to become fit for purpose before fully entering the marketplace. We have argued for that principle and I accept it—it is accepted by the Commission anyway. The organisation will be part of the open competition process within seven years, once it is fit for purpose.

Mr. Meale: On the point about giving various countries’ transitional arrangements, would my right hon. Friend care to speculate on the situation in France, which was one of the founding members of the European Union and whose transitional arrangements, unlike the UK’s Tote arrangements, seem to be going on for ever, ad infinitum?

Mr. Caborn: That is where one can hit the European Union. The European Union has no responsibility at all for gambling. It tried to bring gambling under its influence during recent discussions on the services directive, but had to take it out for all sorts of reasons. I will not describe them now, because they are not particularly germane to the argument, other than to say that gambling is not part of the European Union’s remit and that it does not have the power to bring gambling under its remit. Gambling, however, is brought under that remit in so far as it relates to competition.


15 July 2008 : Column 34WH

France has not tried to alter its Tote, so the reality is that the status quo prevails. If we want to keep the Tote nationalised and to be able to do what we want with it, the European Community will do nothing about that. It is only when we start changing the Tote that the EU will have a say on how it is changed. Otherwise, the status quo can and will prevail, and the Tote will continue to run as it does now. It is a nationalised organisation, fully funded by the state.

The Tote is in a peculiar situation, but for the sake of the discussion I will respond on the issue of state aid, although I think it is a bogus argument. There would be a seven-year transitional period, and that would take the Tote into the marketplace once it was fit for purpose. In addition, the long-term profits of part of the Tote fund sport, which should be able to be funded and not brought under competition rules anyway. As part of the Nice protocol in 2000, the Heads of Government declared that sport should be defined separately from other commercial operations.

What am I proposing this morning? I am saying that the status quo is not an option for the Tote, because it is haemorrhaging and we are losing good staff. Although it is important to get good returns for the taxpayer, it is highly debatable whether the Tote is actually an asset of the taxpayer. No one owned the Tote and it became a taxpayer concern only once we nationalised it. We paid nothing for it, so I do not know how the Treasury can sometimes argue that it belongs to the taxpayer. [Interruption.] The hon. Member for Tewkesbury is laughing. I was the one who brought the Tote into public ownership, but we now need to look at how we can develop it in the interests of racing, the UK and the punter.

As I have said, under my proposals, the Treasury would get its deal, and I have answered the issue on state aid. Racing would get a good income stream, both in the short and medium term, and we could continue to build jobs. I believe that, if we want to, we can resolve the issue of the levy and bring it into the new Tote trust. That would give clear funding streams for sport on the one hand, with good governance by the BHA on the other. I think that the sport would be fit for purpose. Considering that the UK horse racing sport and industry is revered around the world, there would be a major step forward, and I hope that the proposal will be taken seriously and that we can collectively put it together and deliver for sport.

11.34 pm

Mr. Laurence Robertson (Tewkesbury) (Con): May I congratulate the right hon. Member for Sheffield, Central (Mr. Caborn) on securing this most timely and important debate? Racing is certainly at a crossroads, particularly with regard to funding. I agree with his points on Europe and will return to that issue in a few minutes.

I should point out that I have the honour of representing the Cheltenham race course, although I also value the contributions made by smaller race courses. My involvement in racing is at the lowest level, at the point-to-point and hunter chase level, but I want to point out that the Tote is extremely important to the Cheltenham race course and the surrounding area in my constituency. The festival each March brings millions of pounds into the area, much of it from Ireland. An important point is that the
15 July 2008 : Column 35WH
Tote Cheltenham gold cup—now called the Totesport Cheltenham gold cup—has been running for many years and is one of the world’s leading steeplechases, if not the greatest.

The Tote also provides a great deal of prize money and sponsorship for many other races, not only at Cheltenham, but throughout the country. The Tote’s contribution to racing, excluding its levy payments, was £11.3 million last year. If we include the levy payments, its contribution was £20 million last year. The most up-to-date figures are being laid before Parliament today. I do not know what they are, but my guess is that they will show a considerable improvement on what is already a good record for the Tote’s contribution to racing.

The Tote is the largest commercial sponsor of racing by a considerable margin: it sponsored 442 races last year and delivered 42 per cent. of the total prize money on offer through the sport. While we often hear that racing is the sport of kings, it is important to point out that the reality is different. Although royalty are involved in racing and make a welcome contribution, on many occasions the money for a race is as little as £2,000. Given the cost of looking after horses, particularly with the current cost of feeding and transportation, prize money is important. The Tote also provides many other services. There are many betting shops, services on race courses and special low-cost bets that are attractive. The Tote is a national institution, so if it were lost, not only would racing lose out financially, but the racegoers would suffer.

As has been said, the Tote was set up 80 years ago to benefit racing. As has also been pointed out, no Government have ever put any money into racing, so the taxpayer is not due any money from a sale or transfer of the Tote. When the then Home Secretary, the present Secretary of State for Justice and Lord Chancellor, originally announced his intention to transfer or sell the Tote, a figure of £50 million was mentioned. Some people, myself included, said that that was too much and that the taxpayer was due no return at all for the Tote because no taxpayer ever put any money into it.

The original decision to transfer or sell the Tote was welcomed, but no one could have envisaged that it would take so long to get from there to where we are now, wherever that might be. During a debate on 21 November 2007, after Europe stepped into the debate—I shall return to that point later—I called for the Government to allow an extra two or three months at least for the Tote to come to terms with the European judgment and look at its future options. Those two or three months were granted by the Government, but that is a short delay for coming to terms with the situation. It is a rather different situation from the 10-year delay that we have experienced.

David Taylor: The Conservative Government in the 1980s were quick to justify their privatisation mania on the basis that they were sometimes getting rid of inefficient, loss-making state enterprises. The hon. Gentleman portrays the Tote as never having been such an enterprise over an 80-year period. He was one of the more enthusiastic privatisers, although not in this place at the time, so does he believe that the sale of the Tote makes any sense whatever for the taxpayer, the racegoer or anyone else involved in the imbroglio?


15 July 2008 : Column 36WH

Mr. Robertson: I was outside this place at the time, but I certainly supported turning British Steel’s £1.5 million a day loss into profit. I continue to support that kind of thing, but the Tote is a different situation altogether. It was set up for racing. The right hon. Member for Sheffield, Central, made the case that it is not so much a business as part of a sport, and I shall advance that argument in a moment.

As I was saying, we have had a 10-year delay. In a previous debate initiated by Mr. Richard Page, then the Member for South-West Hertfordshire, I urged that the process be completed. The then Minister, who is now the Minister for Pensions Reform, rebuked me by saying:

Those words were spoken on 19 January 2000, eight and a half years ago. We were being rebuked for trying to press the matter on. As we have heard, the result of the delay is that the staff at Wigan, whose jobs I believe should be protected, are unsettled, senior members of the Tote have been lost and it is very difficult for the Tote to recruit people. That has had a destabilising effect on it and can hardly be helping its finances. Importantly, it cannot be helping to enhance its value if it is to be sold commercially.

At the risk of embarrassing the right hon. Member for Sheffield, Central, who has admitted his culpability in the process to a degree, I add that when the Horserace Betting and Olympic Lottery Bill was introduced in 2004, it was extraordinary that its very purpose, the sale or transfer of the Tote, was not mentioned in it. The only thing that was included in the Bill was the nationalisation of the Tote, as a number of us pointed out at the time. It was stated outside the House that the purpose was to transfer the Tote to the new trust, which was set up under the chairmanship of Lord Lipsey, but that was not stated in the Bill.

The late Robin Cook, who took an active role in racing, said in the debate on the 2004 Act:

the right hon. Member for Sheffield, Central, who was then the Minister—

The right hon. Gentleman replied:

Rather ominously, he continued,

That concerned me deeply, and I said that

Later in the debate, I asked:


15 July 2008 : Column 37WH

I claim no particular insider foresight because I got it spot on, but the Tote is now to be sold to the highest bidder, which concerns me for a number of reasons.

Mr. Caborn: The hon. Gentleman is absolutely right, but may I guide him by saying that the use of the term “fair price” in the 2004 Act, instead of “market price”, was where the whole thing fell down with Europe? We tried to defend the word “fair” as against “market”, but Europe believed that that meant that we were giving a subsidy. Rightly or wrongly, that was the argument.

We had a long debate with the EU about whether the price should be a fair price or a market price, and it demanded that it be a market price because of the distortion of trade. Whether we accept it or not, that was its argument. That was what Neelie Kroes, the Commissioner, insisted on, which was why we got into the long discussion about what the market price was. We paid millions to have assessments made by accountants’ firms, and we found ourselves in difficulty. The process fundamentally broke down at the European Union at that time, and others hid behind that later on.

Mr. Robertson: I agree with the right hon. Gentleman, and I shall return to Europe in a moment, but I am aware that time is pressing on.

I am concerned about the open-market sale, first because that was not what we agreed to when we passed the 2004 Act. Secondly, as I asked the right hon. Gentleman in an intervention, if there is a open-market sale, how can we ensure that racing continues to get the same amount of money from the Tote after the process is finished?

We have heard a great deal about the 50-50 split, with 50 per cent. going back into racing, but that poses questions. First, what is racing? Secondly, would it get through Europe? The right hon. Gentleman says that it should—not that it would—but the previous proposal should have, too. Important though the money from the sale would be, it would be much less than if the sale had taken place last year, because of the market conditions. Also, it would be a one-off payment. The important thing is the Tote’s year-on-year contribution to racing. If I highlight any point that I am making, it is that.

We find ourselves in a difficult situation. We all know that Europe intervened, as we have discussed, and it is my submission that the European judgment was wrong. That is the view of the all-party group on the racing and bloodstock industries, which is very active. For example, the EU referred to the Tote as a “public company”, but it is a public company only because the Government nationalised it. It stated that a transfer below market value would constitute aid, but who exactly would it aid? The company is already up and running, and has been for 80 years. The proposal was not to transfer the Tote to another company, which probably would have constituted state aid, but a simple administrative change whereby the Tote could, for example, have appointed its own chairman. That is not state aid.

The EU went on to state that such a transfer or sale would “distort the betting market”. I am not sure how many bureaucrats in Europe actually go into betting shops or place bets, but that is simply nonsense. The organisation has been taking bets for 80 years. If the Tote, instead of the Minister, appointed its chairman,
15 July 2008 : Column 38WH
how would that distort the betting market? It is palpable nonsense, so the Government should challenge that ruling.

I am romantic in that I want the Tote to be transferred to the racing trust and believe that that can be achieved. I do not agree entirely with the right hon. Gentleman’s analysis of how it should be done, but I agree in principle that that should be achieved. We are at a crossroads in the financing of racing, and it would be a huge boost to racing if it could run a successful business that continued to put money back into racing. However, I fear that the Minister, whom I greatly admire and consider a friend, is not quite powerful enough to overcome the Treasury’s demands. I do not know whether racing or the Treasury will benefit from those demands.

A couple of Fridays ago, we had about 145 people at a charity dinner in the House for the Injured Jockeys Fund. In one night, we raised more than £50,000. It was a fantastic night and brought together the warring factions of racing for once. There is an appetite for moving forward together, and I hope that the Treasury does not prevent us from doing that.

Several hon. Members rose

Mr. Jim Hood (in the Chair): Order. May I point out to hon. Members that I have a few speakers to call? If they can be brief, I am sure we will manage to get everybody in. If there are interventions, perhaps they can be shorter than they have been hitherto.

11.48 am

Mr. Neil Turner (Wigan) (Lab): I congratulate my right hon. Friend the Member for Sheffield, Central (Mr. Caborn) on securing this important and timely debate. I thank him and his successor, the current Minister, for keeping myself and my right hon. Friend the Member for Makerfield (Mr. McCartney) up to date with all the twists and turns in the saga. They have done that well both formally and informally, which has helped both of us greatly.

My interest in the Tote is unashamedly one-dimensional. I have only a passing interest in racing, which is not a sport that particularly attracts me. My interest is the fact that the Tote’s headquarters are in my constituency. Its financial headquarters are in my right hon. Friend’s constituency. The Tote came to Wigan some 20 years ago. It was not an easy shift. It is never easy prising southerners out of Harrods and sorting them out with woad and whippets, but we managed to get them up there and they work well with the local authority. The local authority felt that it was so important to the local economy to get the Tote to come to Wigan that it evicted members of its staff from their offices to put Tote staff in there, and make it a success. The fact that the Tote is still in Wigan, and is a success, proves that that was right.

We have some 600 employees in Wigan. Working relationships are extremely good, with the management, trade unions and work force working well together. That is not only because the Tote a good employer, but the nature of the work is flexible as to the times when people work; mothers can work around school times, and so on. That makes the Tote a valuable employer in the Wigan economy.


Next Section Index Home Page