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15 July 2008 : Column 38WH—continued
A few years ago we managed to get the rest of the Tote to come to Wigan—the senior staff. They are very important to the Wigan local economy, which like many local economies in the country is in transition, from heavy industry—the steel, mining, cotton and textiles on which it used to be based—to a more modern, service industry-based economy. Getting the staff headquarters to come to Wigan was very important. We had last-minute planning difficulties and again the council evicted some staff to move the Tote into their offices. That is more proof of the importance of the Tote to the local economy, and the council’s view of it.
My hon. Friend the Member for Mansfield (Mr. Meale) was profoundly wrong when he implied that the matter could be left over. It is very important to get a resolution now. I have learned from discussions with the Tote that senior management are already being lost, and in a service industry of this kind it is not infrastructure such as buildings that is the most important thing—it is senior management, and the way they run the organisation. When they are lost, not only does the value of the Tote go down, but the value of whatever sale is made will go down too. It is not just that we need to take account of something in the outside market; it is also a question of the nature of the industry. If it loses its senior management it will lose market value as well.
The Minister and his predecessor have been pressing strongly on the future of the Tote. The leader of Wigan council, my noble Friend Lord Smith of Leigh, my right hon. Friend the Member for Makerfield and I want a resolution in the interest of our constituents who work in Wigan. We have a meeting tomorrow at the highest level—with the Prime Minister. Our one aim will be to impress on him the need to ensure that whatever resolution is reached, it is decided on swiftly, with a guarantee for a number of years that the headquarters of the Tote and its successor will be in Wigan. We are confident that if that guarantee is given, for four, five or seven years, or whatever it may be, the successor will find that Wigan is such a good place for its headquarters that it will stay there and take the opportunities in the international betting field that my right hon. Friend the Member for Sheffield, Central outlined, so that they can not only maintain job opportunities but expand them, and make Wigan a centre for the betting industry nationally and internationally. That is what we will be pressing for, and that is why it is so important and timely that we have had the debate, and that we reach a resolution as quickly as possible.
Mr. Jim Hood (in the Chair): Order. Before I call the next speaker I want to point out that I want the summing-up speeches to begin at 12, so the last Back Bencher that I shall call is Mr. Ennis.
11.54 am
Jeff Ennis (Barnsley, East and Mexborough) (Lab):
Thank you, Mr. Hood, for calling me in this important debate. It is always a great pleasure to follow my right hon. Friend the Member for Sheffield, Central (Mr. Caborn), and I think that the hon. Member for Tewkesbury (Mr. Robertson) and my hon. Friend the Member for Wigan (Mr. Turner) were singing from the
same song sheet. I make my remarks not as a new Labour “toshite” but as chairman of the all-party group on racing and bloodstock industries.
I do not want to repeat what has already been said, but a few historical points that have not yet been made fully need to come out. The onward sale of the Tote has been an issue for some time. In fact, it was the Select Committee on Home Affairs, which also brought about the formation of the British Horseracing Board, the forerunner of the British Horseracing Authority, that in 1991 recommended that the Tote should be passed to racing for free. The points that I am making are to underline and support the model put forward by my right hon. Friend the Member for Sheffield, Central.
In 2001 the Labour party manifesto said:
“We are committed to sell the Tote to a racing trust to allow it to compete commercially, with all long-term profits invested in the sport.”
The Tote is making a £20 million-a-year contribution and we would like it to continue in perpetuity, as it were. In 2005, after the European ruling, the Labour party manifesto said:
“Having now passed the necessary legislation”—
to bring the Tote under public ownership, as the hon. Member for Tewkesbury has said—
“we remain committed to completing the sale of the Tote to a racing trust.”
Throughout the process with the changing conditions and environment, racing has been committed to helping the Government achieve their objective. However, it has also been made clear that any potential buyer will need to work closely with racing. The Government should pay tribute to the racing industry for its contribution to taking the issue forward. I know that we do not seem to have had much success so far, but we can only keep trying. As co-chair of the all-party group on racing and bloodstock industries I commend the Minister for asking us to get actively involved in many of the outstanding issues in racing, which include the onward sale of the Tote and the levy. It is important that we ask the Government to continue with the granting of the seven-year exclusive licence for the so-called transition period, to which my right hon. Friend the Member for Sheffield, Central referred. That must be part and parcel of the sale.
[Mr. Roger Gale in the Chair]
One implication that has not been mentioned so far, and another current problem affecting revenue streams into racing, is the number of offshore operators in the betting market. I am not just referring to the Tote but to other betting forms, exchanges and operators. I would like the Minister to try to give some assurance that any eventual purchaser of the Tote could not relocate its remote operations—call centre and internet operations—offshore. I should certainly like clarification of that, because it is a significant weakness of the sport’s current funding arrangements that several companies are licensed overseas. There are operators in the Isle of Man, Gibraltar, Ireland, Malta and so on, who pay no levy and no tax to racing. We do not want to lose another whole income stream for racing and the Government.
I intervened on my right hon. Friend the Member for Sheffield, Central about the onward 50 per cent. that will come to racing, hopefully, as quickly as possible, if
the sale proceeds. There is some doubt; the difference between the gross and the net, of course, is in issues such as accounting for pensions deficits, the Government’s professional fees, and all such money that might be sliced off instead of giving the 50 per cent. gross amount of the sale to racing. I would like the Minister to comment on that.
What we might call the Dick Caborn or Cook model for the future onward sale of the Tote is a seductive and attractive option. I am attracted to it because I do not think that the Government should be committed to selling the Tote to racing. Decoupling the property estate of 540 shops—setting up a racing trust just for pool betting and selling off the betting shops—sounds attractive in theory, but I have my doubts about the value in practice of selling on the Tote pool or setting up a racing trust.
It would be difficult to get all the race courses to agree to continue having the Tote. The on-course Tote pool is attractive at Cheltenham or Doncaster St. Leger, my local track, but it is not so attractive on a wet Monday afternoon at Great Leighs or Southwell. We can all come up with examples. I have some doubts. If racing cannot come up with a price for the whole estate, why can we not consider splitting the 540 shops? Perhaps 270 could be contained within the racing trust and the Tote, and the other 270 could be sold to the highest bidder. I have some doubts, although in theory I would like to support that proposal.
The other issue was combination, another attractive proposal to link the levy to the new Tote and bring in an arbitration mechanism similar to that used by the Copyright Tribunal. That is an attractive option as well, and I would certainly like to hear the Minister’s comments on that model. My right hon. Friend the Member for Sheffield, Central said that, hopefully, it could become operational by 1 January 2009.
On the current credit crunch, the all-party group on racing and bloodstock industries held its annual dinner last night. The chairman of the British Horseracing Authority, Paul Roy, is an expert in the City; he makes his money doing deals on the stock exchange and so on. He said—I will use his exact expression, because I made a note of it—that the current valuation of the Tote was “shot to pieces”. Earlier this year, it was £400 million or £500 million. It started from a baseline of £50 million, as the hon. Member for Tewkesbury said earlier. That is a difficult issue to get around, and I do not know the answer to it.
Mr. Caborn:
May I help my hon. Friend? The answer is to take the shops and put them into a package. Mike Smith—another experienced City person—or a group would then judge when it should be put into the marketplace. Then we could let the Tote get on with restructuring itself and attacking the international marketplace. There are two separate issues. The principal decision to be taken is whether to decouple the shops from the Tote. When I say the Tote, I mean the pool, the credit and the internet. The Tote could then be split off, and we could say, “Mr. Smith, you will deal with that and get the possible price when you believe that to be right.” We should get on with the Tote. The status quo is not an option, because we are haemorrhaging at the Tote. It must be given a new lease on life. That is what
separates the two. When to flog them on the marketplace is a judgment for Mr. Smith when he believes that the market is right.
Mr. Roger Gale (in the Chair): Order. That is not an intervention; it is a speech. Moreover, if hon. Members wish to hear the Minister respond, I must remind them that this is a time-limited debate.
Jeff Ennis: I am trying to draw my remarks to a close, Mr. Gale. I thank my right hon. Friend for his intervention and his clarification of the model that he suggested. I hope that the Minister will respond specifically to it in summing up.
I have not underlined the significance of the Tote to the local economy in Wigan. I speak as a former leader of Barnsley, which is in the same group of authorities and is similar in size to Wigan, another white working-class area. Barnsley is on the wrong side of the Pennines, but apart from that, it has many characteristics in common with Wigan. As a former leader of Barnsley, I would hate to lose a big company like that with an international reputation. I hope that that aspect will be uppermost in the Minister’s deliberations if and when he comes to a decision.
I will finish on a couple of points that were raised earlier. The Minister mentioned the outstanding Turf TV case. I understand that the jury will deliberate on 31 July. I am sure that appeals will be made, which will drag out the case. It is probably a commercially sensitive situation, what with Goldman Sachs’ involvement. Can he outline how many bids have been received and how many of those he feels are positive bids that ought to be considered rather than dismissed? How many are serious bids? One point on which I disagreed with the hon. Member for Tewkesbury involved referring the matter back to Europe. It took two years to bottom it the last time it was referred to Europe, and I can see it dragging out for a further two years. That is the last thing that the people of Wigan want. I will leave it there. The issue is important to the House, but it is particularly important to the people who work in Wigan.
12.6 pm
Tom Brake (Carshalton and Wallington) (LD): I shall keep my remarks brief in order to allow the Minister to respond, hopefully in some detail. It has been clear from today’s very welcome debate that some hon. Members here are much more familiar with the history of the Tote than I am. The right hon. Member for Sheffield, Central (Mr. Caborn) has played a central role in the painful, extended labour that is the debate about where the Tote will ultimately end up. I have never bought a copy of the Racing Post, although I confess to being an occasional purchaser of The Guardian; obviously, I need to change my purchasing habits, or I will not have access to insider tips about which horse to bet on at which race course.
The Tote is a large employer, as a number of Members have made clear. The hon. Member for Wigan (Mr. Turner) made a naked pitch for jobs—as good constituency Members, we all understand that he should—and the hon. Member for Barnsley, East and Mexborough (Jeff Ennis) made a strong point, which had not been debated until he raised it, about offshore betting and how it affects the industry as a whole.
The Tote is a large employer, with 4,000 employees. Members have referred to its 450 shops, or 540—I am not quite sure what the number is—and its large presence throughout the country. It has significant employment implications. The Tote, along with the levy, makes a substantial contribution to the industry, so we need to resolve the issue. The policy has had a long gestation period; Members will have seen the time line helpfully provided by the British Horseracing Authority, which did not go back in any detail to 1928, when the original Act of Parliament was passed, but concentrated on more recent years, including the announcement in March 2000 of the intention to sell the Tote to a racing trust and two separate manifesto commitments that it would be appropriate for the Government to uphold.
My final comments relate to the points made by the right hon. Member for Sheffield, Central, who introduced the debate. He described clearly where we need to go from here: delivering on the manifesto commitment, which is a responsibility for the Minister to pick up; delivering for the Treasury, which is clearly seeking something out of the sale; delivering for racing, most importantly, and ensuring that the industry continues to receive the support that it needs; ensuring as far as possible that jobs are secure; and allowing the Tote to grow and take advantage of the many technological developments emerging with the internet and so on, to allow it to extend to other markets and ensure its long-term survivability.
The right hon. Member made an interesting proposal about decoupling the Tote shops from the Tote. Other Members have rightly questioned the timing of that, in relation to where the market is nationally and internationally, and questioned whether now is the best time to secure the best possible value. I shall listen carefully to the Minister’s response to see how he intends to address that issue.
I think that the right hon. Member for Sheffield, Central said that the racehorses have been going around the course for the past seven years. I hope that the Minister can reassure us that they will not be going around it for another seven years.
12.10 pm
Mr. Tobias Ellwood (Bournemouth, East) (Con): It is a pleasure to participate in this important debate, and I congratulate the right hon. Member for Sheffield, Central (Mr. Caborn) on bringing it to Westminster Hall, although I was a little surprised when I saw that it was he who was presenting the debate, given his past ministerial involvement. However, I was pleased with the manner in which he presented his ideas.
When such subjects arise, there is a tendency simply to pluck out an old speech, change the words around a little and reiterate the same points. It would be easy to do that today, so I am pleased that some ideas have been put forward which, hopefully, will push the wheels along. There has so far been a lack of change. It has been educational to learn a new phrase, “new Labour tosh”, which I had not come across before. I am sure it will join the Government’s lexicon.
Mr. Ian McCartney: What about “Tory toff”?
Mr. Ellwood: I do not want to cause even more division among Labour Members.
I pay tribute to the horse racing fraternity. The one thing that unites us on both sides of the House is the importance of horse racing to British industry. We can be rightly proud of horse racing in the UK. We now have 60 race courses employing more than 88,000 people, and about 9,000 races a year. I understand that about £10 billion is bet through off-course bookmakers, and a study by Deloitte last year suggested that it contributes well over £3 billion to the economy—a significant sum of money.
In a previous debate in this Chamber, my hon. Friend the Member for East Devon (Mr. Swire) suggested that it sometimes seems that there are as many bodies representing different parts of racing as there are races. I am sure that the Minister will agree that a little consolidation would be a small step in helping us to move forward. Sadly, however, on the matter before us there have been too many headlines on the front pages of our newspapers, not least in the Racing Post, rather than on the back pages. It is grabbing the news for the wrong reasons, which is the background to today’s debate.
Three outstanding issues hover over the industry. The first, which has been mentioned, is the resolution of the levy—the annual lump sum agreed by the levy board and paid by the bookmakers to horse racing. The second issue is the on-course bookmakers dispute, their legal status and the charge that they pay to a race course, which has been thrown into disarray by drafting errors in the Gambling Act 2005. The third issue is the subject of today’s debate—the future of the Tote itself, which was first mooted back in 1999, but still rumbles on.
I pay tribute to hon. Members who have commented today. All spoke with passion, not least my hon. Friend the Member for Tewkesbury (Mr. Robertson), who illustrated the Tote’s importance to Cheltenham and the value that it brings not only to that race course, but to others around the country. I pay tribute to the all-party group on racing and bloodstock industries, which provides a wealth of experience. However, I find it bizarre that the Government, who are tasked to solve such problems, have handed over responsibility to a parliamentary group that does not have the clerical support or the finances to answer the questions. I wonder whether the Culture, Media and Sport Committee might have been a better source of scrutiny.
The battle scars of this saga are well documented, and they have been mentioned again today. The matter was first raised by Labour in 1999 and again in an election pledge in June 2001 to sell off the Tote. In 2004 there was the debacle with the European Union about a possible conflict with state aid rules. Another election pledge followed in May 2005, and although we did not actually have an election in 2007—of course we thought that we might—I am sure that if we look in the archives one day, we will see that it would have been in that election manifesto, too. We could place bets on whether it will be in the June 2010 election manifesto. Who knows? Perhaps the Glasgow, East by-election will have an influence on whether that date changes.
Sadly, the question about the future of the Tote has rumbled on, as has repeatedly been mentioned today. Bids have been agreed, then scuppered, prices confirmed,
then rebuffed, Government announcements made and retractions issued. The industry is calling for stability, but all we get from the Government is uncertainty by the barrel load.
The Minister and I first crossed paths about one year ago when we were both appointed to our current posts, and it was in relation to a statutory instrument—the draft Gambling Act 2005 (Horserace Totalisator Board) Order 2007, which is quite a mouthful. It amended the Horserace Betting and Olympic Lottery Act 2004. The Tote should have been sold off, for which the Act made provision, but because that was not going to happen when the Act came into fruition, an SI had to be introduced to allow the state to continue ownership. That was when we first raised the issue before us.
At that time the Minister and I were pretty kind to each other because we were still trying to understand our briefs. We are now a little wiser and are more familiar with the issues. We are not as grey as the former Minister for Sport, although it is clear from the manner in which he gives his speeches that he has not lost any of his energy—clearly, he is still eating three Shredded Wheat in the morning. Long may his energy continue. I pay tribute to the fact that he still wants to participate in the debate, long after he hung up his ministerial boots.
The SI was a chance for the Minister to understand the issues and to spell out what he was going to do, now that he had responsibility for the situation. When asked how much time it would take, he replied:
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