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 recentlyhis re-announcement
as you seem to describe itabout 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 kittyif
it can raise that amount of moneyis 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 meand I suspect this is the
reason why the sale has been discussed so many times beforethat
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 inspirationand in many cases the free nourishment
and inspirationthat 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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