DCMS Annnual Responsibilities and Accounts 2008-09 and Responsibilities of the Secretary of State - Culture, Media and Sport Committee Contents


Examination of Witnesses (Question Numbers 100-119)

RT HON BEN BRADSHAW MP AND MR JONATHAN STEPHENS

20 OCTOBER 2009

  Q100  Philip Davies: Can I just move on to the Tote briefly? Many people were taken aback by the Prime Minister's recent announcements about the disposal of the Tote. When were you made aware of what the Prime Minister was about to say?

  Mr Bradshaw: We have been discussing this for a considerable time. I do not think anybody should have been taken by surprise. I think this was a manifesto commitment going back to 1997, certainly to 2001, and I would have hoped that most people would recognise that in the fiscal climate going forward it makes absolute sense for government to have a look at some of its assets and whether disposal of those assets can help generate income that means constructive investment elsewhere or the avoidance of de-structured cuts elsewhere can be made or avoided. That is exactly what we are doing.

  Q101  Philip Davies: So when the Prime Minister made his announcement recently—his re-announcement as you seem to describe it—about the sale of the Tote, you and your Department were aware that he was about to say what he said were you?

  Mr Bradshaw: Yes, and indeed we had been having discussions about this and I think Gerry Sutcliffe said in the last period when this was discussed that it would not happen in the short term but the timeframe we are outlining now is quite consistent with what Gerry said. I do not think people should be surprised about that.

  Q102  Philip Davies: I think you will find that lots of people were surprised actually and the government sort of indicated to the Tote that they would have at least a three year grace where nothing would happen to allow them some stability. I do not know whether you have any contact with the employees of the Tote who, every so often, have been put in a position of uncertainty. They thought they had got some certainty from the government that nothing was likely to happen for at least three years and then that was all unravelled within the space of minutes by the Prime Minister's surprise announcement to the whole world apart from you it seems.

  Mr Bradshaw: No, I do not think it should be a surprise announcement. There have been a lot of discussions, some of it in public but these discussions do not always happen in public. When you are talking about the sale of assets there are commercial considerations to take into account and the timetable that we have provisionally laid out for a possible sale of the Tote is entirely consistent with what Gerry Sutcliffe said in terms of that three year period whenever it was he said it in 2008. I am sorry that you were surprised but I cannot think of anything else that has been touted so often for public sale as the Tote and the fact that it should be included in the list of public assets which the government may consider disposing I would think is entirely predictable.

  Q103  Philip Davies: Is there a deadline for the sale or a reserve price on the sale?

  Mr Bradshaw: No, there is no deadline for the sale. Clearly the government will want to try to get as much money for the taxpayer from the sale and that may influence the timing in some respect, but there is no deadline and there is no reserve price.

  Q104  Philip Davies: I am not entirely sure what great triumph this is for the public finances. A sale may raise, for argument's sake, £200 million. The government are still committed, I believe, to giving half of that to the racing industry which leaves £100 million. You can tell me perhaps how much the government is borrowing each day but I suspect that that figure of £100 million into the kitty—if it can raise that amount of money—is probably eight hours' worth of borrowing for the government. Was it really worth unsettling all of those employees at the Tote again to try to make a headline to raise about eight hours' worth of government borrowing?

  Mr Bradshaw: I think it would be a mistake to see the proposal on the Tote in isolation. It has always slightly puzzled me—and I suspect this is the reason why the sale has been discussed so many times before—that government owns a betting organisation. I would have thought when everybody agrees that there were going to be some tough decisions ahead over spending and investment and all of those things that it makes absolute sense to have another hard look at whether the government is carrying assets that it does not need to carry, that it can realise value for the taxpayer from. That is exactly what we are doing, but to see the Tote in isolation from some of the other proposed assets I think would be a mistake. I think it is perfectly sensible for the government to have a look at this.

  Q105  Philip Davies: Finally, can I ask you about taxes? We have recently seen William Hill and Ladbrokes move their on-line betting offshore to Gibraltar which means that the government no longer gets the 15% tax on its gross profits; it means that the Horse Race Levy Board does not get the 10% as well. What discussions is your Department having with the Treasury to try to bring in a tax regime which would encourage these firms back onshore again with the jobs that come with them?

  Mr Bradshaw: If you are suggesting that we match the Gibraltar tax regime I am not sure that it is even worth trying to begin conversations with the Treasury about that. We are concerned about this. We regret the move. It was a commercial decision for both organisations. We have initiated a review of the whole issue of overseas operators with a view to trying to protect both British consumers and also to get a fairer deal for UK companies, but ultimately this is also a matter that will have to be tackled at European level and we are very keen that that should happen too.

  Q106  Philip Davies: Just for argument's sake I think it is 1.5% they are now paying being offshore, would you not agree that 1.5% of something is better than 15% of nothing?

  Mr Bradshaw: I think you have to look at your taxation regime in the round and I am sure the Treasury will be doing that. Unless you have a level playing field for those companies that have kept all of their operations onshore and a consistent regime across the European Union, in a global economy this is a problem that is not likely to go away very quickly.

  Q107  Philip Davies: Are you aware and are you doing anything to try to help the Bingo industry who feel that the tax regime that they face is very unfair in comparison with other areas of gambling?

  Mr Bradshaw: Yes we are and that is why we made changes to gaming machine entitlements which benefited bingo halls and increased the stake and prize levels for category C and D gaming machines which I think were again of significant assistance to bingo halls.

  Q108  Philip Davies: So as far as you are concerned that is it from the government? You do not feel the need for any further help for the bingo industry; as far as you are concerned what you have done is quite sufficient.

  Mr Bradshaw: We are always open to representations that any of our sectors might like to make to us and we will always fight on their behalf with the Treasury.

  Q109  Mr Watson: I have one question on the offshore arrangements of Ladbrokes and William Hill. I distinctly remember a case put by Ladbrokes to members of the Gambling Bill Committee that they were proud that they kept their affairs onshore, however they were being buffeted by overseas competition in an unregulated offshore market and they would implicitly stay on the UK shores if there was support for them putting fixed-price gambling machines in their retail outlets. Given that they have reneged on that commitment, do you think it might be appropriate to look at fixed-price betting machines because a lot of people are worried that for compulsive gambling that is a particular threat to the individual who is possibly vulnerable to the compulsive gambling habit?

  Mr Bradshaw: Again I am afraid this is an issue that predates my tenure but I am happy to have a look at it and write to you or to the Committee with a response.

  Q110  Chairman: Can I just come back briefly to the Tote? It is almost exactly one year since Gerry Sutcliffe made a statement in which he said, "I have concluded that it is not appropriate to pursue a sale in these market conditions". He went on, "It is right that the Tote is now given time to grow the business so that any future sale will achieve maximum value". Do you believe that these are now the right market conditions?

  Mr Bradshaw: What I would say to that is that a year ago we were in a very different economic place from the one we are in now. We were at the beginning of a recognition of the severity of the global downturn and I think in the intervening period since then all bets have been off. I think it makes absolute sense for any government to have another look at the potential of realising assets and one would hope that thanks to the policies of this government helping to secure a recovery we will be in a better place in terms of value for all of these assets, including the Tote, by the time the proposed date of sale comes along. That is certainly what we are working towards, but to say that we should keep any of these assets off the table in the current climate I think would be a mistake. Life has changed in the last year.

  Q111  Chairman: The minister specifically said that the sale should achieve maximum value which I am sure is something you would also want to see. Previously the government rejected offers for the Tote of above £300 million; it is now speculated that the offers or the worth of the Tote may be significantly less than £200 million. How can this possibly be maximum value for the taxpayer?

  Mr Bradshaw: If one was to wait to realise an asset until it had maximum value one would never sell it. Clearly we all want to try to get maximum value out of it and it may well be that a year or so down the line if there is concern about what would be raised from the sale that it would be looked at again then. I think to signal a refusal to even contemplate selling it would be a mistake and it is not sustainable in the current fiscal climate. That is a position I fully support.

  Q112  Chairman: If the offer that was made was significantly less than the one that was previously rejected by the government as not being sufficient, would you not proceed with the sale?

  Mr Bradshaw: I cannot give you a commitment on that now. I think we would have to examine all of the circumstances at the time in discussions with the Treasury and reach a view.

  Mr Stephens: The governing principle here is that the sale should secure value for money for the taxpayer. That would be a judgment that needs to be taken in the light of market conditions at the time, the structure of the sale and likely proceeds to the taxpayer but also can properly take account of the opportunity cost of the investment foregone if one were to retain the Tote in public hands. The judgment is a value for money judgment and of course past offers are all off the table now and we must have regard to whatever can be generated for the taxpayer in current circumstances and market conditions.

  Q113  Chairman: The considerations that you have rightly just identified were presumably precisely those which were applied previously and which led the government to conclude that it was not the right time to proceed with the sale.

  Mr Stephens: That judgment was reached at a particularly fraught time in market conditions when proceeding with the sale in those conditions was quite unlikely to realise any sale and there were extremely turbulent market conditions.

  Mr Bradshaw: It was the worst possible time, if you think about it.

  Mr Stephens: The commitment that has been made is to proceed towards and consider a sale by the end of 2010/11. As I have just said, obviously final decisions will have to be taken in the light of market conditions at the time and a judgment on the value for money potentially secured to the taxpayer.

  Q114  Chairman: You will appreciate that having given the Tote and its employees some assurance of stability a year ago you have now plunged them back into uncertainty and they are saying that you are not going to be able to make up your mind for at least another two years.

  Mr Bradshaw: I regret any uncertainty that has been engendered by this but I have to say that it was made clear when Gerry made his announcement back in 2008 that this was three years and that is the timescale we are talking about. Given the current economic conditions and given the uncertainty that has been felt by a lot of people I do not think that that is an unreasonable or not a sensible course of action to take.

  Q115  Mr Ainsworth: Economic uncertainty has been felt by a lot of people. What is your assessment of how the arts are faring during this particular time?

  Mr Bradshaw: The arts are faring incredibly well. They are a remarkable success story. As I indicated at the beginning of the session, funding is still going up. Attendance at our galleries, museums, music festivals, arts festivals is increasing massively. Even this year I think the Edinburgh Festival had a 25% increase in attendance and that is a picture that is being replicated all over the country. It not only seems as if they are benefiting from staycations but almost against the backdrop of economic uncertainty people are looking even more for the nourishment and the inspiration—and in many cases the free nourishment and inspiration—that our galleries and theatre and everything else have to offer.

  Q116  Mr Ainsworth: So the arts are thriving in the recession.

  Mr Bradshaw: The arts are thriving in recession. They have been growing very, very well and very strongly over the last 10 years and they have continued to grow during the economic downturn against the trend in many parts of the economy.

  Q117  Mr Ainsworth: In that context what is the point of the Sustain Programme?

  Mr Bradshaw: The Sustain Programme has been to help particularly those organisations that may be suffering from a downturn in private giving and although there has been, I think, a doubling in private giving since 2001, the last year, most people would accept, has inevitably led to a reduction in private giving. We do not want to see arts organisations go to the wall because of a short term problem in private giving. This is an intervention that, through the Arts Council, we are making to support those organisations who are maybe being particularly badly affected by a downturn in private giving. I think it is a sensible role for government to take. It is a good example of active government doing the right thing in a downturn, rather than do nothing and government allowing organisations to go to the wall. We need these organisations in the future, we want them to get through this period and we want them to continue to make the contribution that they have made as our economy rebounds.

  Q118  Mr Ainsworth: It is just rather hard to square the rosy image that you have painted of the state of the arts in this country with arts organisations threatened with going to the wall. Am I right in thinking that Sustain money has essentially now been spent?

  Mr Bradshaw: It would not suggest so from my brief because it says that the Arts Council are investing a further £40 million through the Sustain Programme. I will have to write with confirmation as to whether that money has already been spent.

  Q119  Mr Ainsworth: They closed the applications about 10 days ago.

  Mr Bradshaw: I will have to get back to you on that.



 
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