25 Jan 2013 : Column 573

House of Commons

Friday 25 January 2013

The House met at half-past Nine o’clock

Prayers

[Mr Speaker in the Chair]


Miss Anne McIntosh (Thirsk and Malton) (Con): I beg to move, That the House sit in private.

Question put forthwith (Standing Order No. 163).


The House divided:

Ayes 1, Noes 37.

Division No. 142]

[

9.34 am

AYES

McIntosh, Miss Anne

Tellers for the Ayes:

James Duddridge

and

Mr David Nuttall

NOES

Baker, Norman

Barker, rh Gregory

Bottomley, Sir Peter

Bradley, Karen

Brown, Lyn

Davies, Philip

Dunne, Mr Philip

Durkan, Mark

Efford, Clive

Farrelly, Paul

Featherstone, Lynne

Fitzpatrick, Jim

Foster, rh Mr Don

Freeman, George

Gauke, Mr David

Greatrex, Tom

Green, Kate

Hancock, Matthew

Harris, Mr Tom

Heath, Mr David

Hoban, Mr Mark

Hollobone, Mr Philip

Hurd, Mr Nick

Knight, rh Mr Greg

Lidington, rh Mr David

Lucas, Caroline

Menzies, Mark

Milton, Anne

Robertson, rh Hugh

Sanders, Mr Adrian

Seabeck, Alison

Spellar, rh Mr John

Swinson, Jo

Timms, rh Stephen

Wilson, Phil

Wright, Mr Iain

Wright, Jeremy

Tellers for the Noes:

Greg Hands

and

Joseph Johnson

Question accordingly negatived.

25 Jan 2013 : Column 574

Offshore Gambling Bill

Second Reading

9.47 am

Miss Anne McIntosh (Thirsk and Malton) (Con): I beg to move, That the Bill be now read a Second time.

I am delighted to present the Bill on behalf my hon. Friend the Member for West Suffolk (Matthew Hancock). As one of its early sponsors, I want to take this opportunity to pay tribute to him for initiating it and thank him for his excellent work, which has stood us all in good stead. I am pleased to be taking the Bill forward today with his support and I congratulate him on his preferment and the excellent work he is doing as the Minister responsible for skills and apprenticeships. It is already bearing fruit, bringing extra apprenticeships to my constituency of Thirsk, Malton and Filey.

The Bill aims to amend the Gambling Act 2005 to regulate remote gambling on a point of consumption basis; to require all operators selling into the British market, whether in the United Kingdom or overseas, to hold a Gambling Commission licence to enable them to undertake transactions with British consumers and to advertise in the United Kingdom; and to provide that all relevant operators contribute to the horse race betting levy.

Philip Davies (Shipley) (Con): It would help if my hon. Friend set out the main purpose of the Bill and if we pinned down its main thrust at this stage. Is it better to regulate the online market to raise revenue for the Treasury or to raise more income for the horse racing industry?

Miss McIntosh: I am grateful to my hon. Friend, who takes a close interest in horse racing. He and I share a love of horse racing, and I shall a say little about the contribution that racing makes to the rural economy in my constituency. The Bill’s main purpose is to bring things onshore to the United Kingdom, where the racing takes place, and to emphasise that when a bet is placed online the point of consumption is in this country. The whole thrust of the Bill is to bring money back into racing, and I shall explain how. The Treasury’s proposals, which I understand can be introduced in any Budget—perhaps not this year; possibly next year—will restore the tax situation to those offshore betting companies. That is not the purpose of this Bill. The main difference between it and the draft Gambling (Licensing & Advertising) Bill, which has been drafted by my right hon. Friend the Minister, whom we welcome to the Chamber—we look forward to his response—is that this Bill relates to the levy.

Lyn Brown (West Ham) (Lab): One of the issues that I should like the hon. Lady to address is enforcement. An awful lot of international co-operation will be necessary. What mechanisms will she be able to employ to achieve that?

Miss McIntosh: I pay tribute to my hon. Friend the Member for West Suffolk for the groundwork that he has done in that regard.

One of the unintended consequences of offshore betting has been to remove this activity from the remit of the Gambling Commission. It is my understanding that that was not the intention of the House when the Gambling Act was introduced in 2005. The Gambling

25 Jan 2013 : Column 575

Commission plays a key role in protecting young people and vulnerable people from such activities, and many of my right hon. and hon. Friends will agree on the need to protect the young from parts of the internet; indeed, one of my hon. Friends has just been appointed as adviser to the Prime Minister on that matter. In my view, it was never the intention of the House that this activity should be summarily removed from the remit of the Gambling Commission, which offers an enforcement mechanism.

Regarding the levy, we have to look at the European Commission, which should allow the proposals in clause 4.

Paul Farrelly (Newcastle-under-Lyme) (Lab): The hon. Lady is correct to highlight the flight offshore of online gambling as an unintended consequence that the Government are now addressing. Does she acknowledge that there is a major exception—bet365, which holds a Gambling Commission licence, and is based in north Staffordshire? It is one of the biggest employers in the area that I represent.

Miss McIntosh: I am delighted to do so, and I shall say a little more about bet365. Not only is it a major employer but it demonstrates what can be done to keep that type of operation onshore in this country while contributing to the local and national economy and employing people in the hon. Gentleman’s constituency.

James Duddridge (Rochford and Southend East) (Con): My hon. Friend has referred several times to this country, and I am not sure what she means. The Gambling (Licensing & Advertising) Bill includes explanatory notes, with a section on territorial extent around Scotland, Northern Ireland and Wales. I could not find in the Vote Office explanatory notes for her Bill, which is another excellent measure, and wondered whether it provided similar provisions.

Miss McIntosh: On a closer reading of the Bill, my hon. Friend will see that it

“extends to England and Wales, and Scotland”

and, in part, to Northern Ireland. That is obviously a matter for debate.

Horse racing is important for both business and tourism, with a number of race courses in and around my constituency. Thirsk is the main local race course, but there are also courses at York, Wetherby and Ripon. The industry is vital, and a large number of trainers, jockeys, breeders, bloodstock agents and stable lads and lasses depend on the racing industry for their livelihood. My constituency home is on a former stud farm. The contribution that racing makes locally in Thirsk, Malton and Filey is considerable. There is a direct link to point-to-point racing, as well as a contribution to local pubs, shops and restaurants, which benefit from the visitors, thus making a contribution to leisure tourism. One need only visit Thirsk on race day, or race evening, to see the town come alive.

I thank my constituency chairman, Peter Steveney, who has been extremely helpful in enabling me to prepare for the debate and introducing me to many of

25 Jan 2013 : Column 576

the main players in the racing community both locally and nationally. I thank everyone who briefed me for today’s debate.

Philip Davies: My hon. Friend will be delighted to know that I contribute to the local economy in her constituency by owning and breeding a number of horses stabled there—at great expense, I might add; I cannot advise anyone to get involved in that activity on commercial grounds. Does she agree that it is not just the trainers and the breeders but the stable staff who work in our constituencies who rely on the racing industry, not just for income but for their jobs?

Miss McIntosh: I shall try to speak more slowly, because I referred to the stable lads and lasses. I yield to no one in my admiration for the work they do. Mucking out horses, taking them out of the stables and returning them to the stables at this time of year is a hard job. I have visited a number of stables, but I have not had the good fortune to see any of my hon. Friend’s rides saddled in my own constituency.

I should like to recall the tragedy that occurred in Malton three or four years ago. Two successful jockeys—rising stars—lost their lives in a tragic fire. For that reason, we very much hope to establish an injured jockeys facility in Malton.

Philip Davies: Has my hon. Friend had the pleasure of seeking out the advice of Mr Michael Easterby, the trainer of my horses and a supportive constituent of hers? If she has not, I suggest that she does. I am happy to facilitate such a visit, because she will learn an awful lot from him, not least some colourful language.

Miss McIntosh: Indeed, my ears are still smarting from my last visit, when I witnessed the severe flooding suffered by the Easterby stables. We must not forget Michael Easterby’s brother, Peter, and I congratulate all the trainers based in my constituency on having the good sense to bring horses such as those owned by my hon. Friend to a marvellous constituency where there are many excellent opportunities to train them.

Having said that, I have visited Middleham in the constituency of the Foreign Secretary, my right hon. Friend the Member for Richmond (Yorks) (Mr Hague), where there are some major racehorse trainers, which only emphasises how important racing is to the north Yorkshire economy. Indeed, many rural market towns depend on local race courses as a source of enjoyment and employment, and as a contribution to the local economy. However, those race courses are under increasing pressure, and it is all too easy for smaller, rural race courses to be under threat from other purposes such as housing. The House would wish to record its disappointment at the recent closure of race courses such as Folkestone and Hereford, and I hope that that process will be halted and kept under review. This is a desperate state of affairs, and many fear that local communities are losing out, with jobs being lost and people being made redundant.

In 2011, 93 races were held at Thirsk race course, with 2,253 entries. These fixtures attracted 55,000 people over one year. This proves that racing is entertainment, which draws people to the area to spend money and contribute to the local economy. In 2011, according to

25 Jan 2013 : Column 577

the Sheffield Hallam economic impact study, York race course contributed £58 million to the local economy. The wider racing industry in Yorkshire, with nine race courses, the Northern racing college, Doncaster bloodstock sales, and 120 training yards and stud farms, was calculated to contribute more than £220 million a year to the economy and to support more than 2,300 full-time jobs from the core activity. A further 830 jobs were also supported in the region.

York race course is widely recognised for its good racing. I was honoured to attend during the Royal Ascot at York week. In the past decade York race course has invested over £30 million in capital projects, including the new stands, the track and race-goer facilities. The key part of its income is from the levy board, which helps to fund prize money, and from the wider investment that York race course enjoys through non-interest-bearing loans for capital expenditure for things such as the new stands. Funding from the levy went towards the major developments of the Knavesmire stand in 1996, the excellent Ebor stand in 2003 and the upgrading of the Melrose stand in 2011, as well as the track project in 2009. There is currently a £5 million development at the northern end of the race course to provide a new weighing room, a pre-parade ring and a saddling box. If York race course had not made the improvements to the track, it could not have hosted Royal Ascot at York because the track was not big enough.

The current situation with the levy, which needs to be addressed, means that eventually there will be fewer and fewer entries in races. My hon. Friend the Member for Shipley (Philip Davies) has given us a few markers as to why. Owners and trainers will want to enter their horses in races held overseas to capitalise on the high prize money available there. This would be devastating for north Yorkshire, Yorkshire as a whole and the rest of the country, as the number of active race courses in the UK would decline, a large number of people would lose their income, and livelihoods dependent on racing would decrease.

Philip Davies: I hope my hon. Friend will not over-egg that pudding. Most small owners—and most owners are small owners—own horses because we want to see them run. It is therefore not very likely that we would send them off to be trained in France because the prize money is better there. The races with the most prize money tend to have the fewest entries, and the races with the lowest prize money tend to have the most entries, so I am not entirely sure that the correlation my hon. Friend is presenting stands up to a great deal of scrutiny.

Miss McIntosh: That is a matter for debate. The five-year trend shows that there has been a 15% drop in prize money in flat racing. Perhaps my hon. Friend enters horses only in jump races and is not affected by that.

Philip Davies: My horses run on the flat and over jumps. Any prize money that anybody gets back from owning a horse is a bonus. Most people write off the money and do not expect to get anything back. About 85% of all prize money goes to the top 10 or 15 owners, so increasing the prize money tends to be an exercise in throwing apples into already full orchards.

25 Jan 2013 : Column 578

Miss McIntosh: I disagree on the basis of the conversations that I have had with the industry. Over the past five to 10 years, the percentage change in prize money has been almost minus 8%. Racing takes place on almost every day of the year. On 364 days of the year there is at least one race meeting. It is only on Christmas day that there are no meetings. That means that by any definition the prize money has reduced. Against the backdrop of the cost of owning a horse—perhaps my hon. Friend is so comfortably off that it does not dent his finances, but I am a little alarmed that my brother has taken a share in a syndicate for a racehorse, which might affect the family economy—the trainer who keeps the horse has found that the cost of bedding has gone up, the cost of feed stuffs has gone up, and fuel costs for transporting a horse to the races have gone up. It is a matter of some regret to those in the industry that the prize money and the money coming into racing generally has gone down.

Mr David Nuttall (Bury North) (Con): Although my hon. Friend states that the prize money from the levy has gone down, I have figures that show that although it may have gone down between 2010 and 2011, when there was a significant fall, it has recovered since then and gone up from £34.7 million in 2011 to £38.9 million in 2012, and is forecast to be £50.2 million in 2013.

Miss McIntosh: I shall come to that point in a moment. The levy yield has gone down in the past 10 years by almost 35%, and the five-year trend shows that it has gone down by almost 21%. The current financial problems with racing revolve around betting companies having moved their businesses offshore, meaning that they are exempt from paying both tax and the levy. As soon as one company moved offshore, there was a need for others to follow, enabling more competition between those companies. My understanding is that, as the hon. Member for Newcastle-under-Lyme (Paul Farrelly) said, only one betting company, bet365, remains based in the UK for these betting operations, and it is a significant employer in his constituency.

As a result of this mass exodus offshore, the Government are losing approximately £300 million in tax each year, and the amount being paid into the levy has been reduced by between £5 million and £10 million. I repeat that the tax situation is properly a matter for the Treasury to address in the Budget. The point that I want to make for the purposes of the Bill is that the drop in levy and the drop in tax has meant that less prize money is available, making other countries such as Ireland and France more attractive for owners to buy horses there and enter them in races there.

To address the point made by my hon. Friend the Member for Bury North (Mr Nuttall), the figures that I have show that the average prize money per race over the past 10 years on flat race courses has seen a reduction of more than 16%, and for jump racing a reduction of almost 10%. Overall the reduction has been almost 14%. The five-year trend for flat racing shows a reduction of more than 3% in average prize money per race and in jump racing a reduction of almost 20%. Overall, average prize money per race has dropped by more than 9%. By comparison, the prize money available in France is approximately seven times higher than that on offer in the UK.

25 Jan 2013 : Column 579

To give an idea of the difference between the UK and France, in 2011-12, £67.7 million on betting activity on British racing was returned to racing through the levy, but in France the PMU, the state-owned tote monopoly—I will talk more about this later—returned approximately £735 million to racing. In Australia approximately £280 million was returned to racing. British owners receive the lowest return from their investment in training fees for racehorses of any major racing nation. I think that the international statistics are powerful and show how weak British racing is in comparison because of the falling yield.

My hon. Friend the Member for Shipley serves with great distinction on the Culture, Media and Sport Committee. The Committee addressed this question in 2012 in its report, “The Gambling Act 2005: A bet worth taking?”, for which it took some compelling evidence. I will share with Members one of its conclusions:

“The failure of the Department for Culture, Media and Sport to work with the Treasury to set remote gambling taxation at a level at which online operators could remain within the UK and regulated by the Gambling Commission has led to almost every online gambling operator moving offshore whilst most are still able to advertise and operate into the UK. We therefore welcome the announcement, made in the 2012 Budget Statement, that the online industry will be taxed on a point-of-consumption rather than a point-of-supply basis. We also welcome the detailed consultation with the industry since the Budget over the design of the policy framework and look forward to the Government's response. To give certainty to online operators, and their investment plans, we urge the Government to adhere to its timetable for implementation by December, 2014 and to make plans to deal with any challenges to the proposed new system. However, the Treasury still needs to work with industry stakeholders to establish the correct level for online gambling taxation, taking into account the need to encourage companies to accept UK regulation and taxation and to discourage the formation of a grey market.”

There we have it. My hon. Friend the Member for Shipley, a distinguished member of the Committee, did not, to my certain knowledge, dissent from or disagree with that conclusion, seek to distance himself from it, express an opposing minority view or table a minority report, so I am delighted that we will no doubt enjoy his full support today. In his own Committee’s report, he has drawn two conclusions: it is for the Treasury to close that gap to ensure fairness in taxation, but it is for the House today to ask the Minister either to accept the Bill or to give an assurance on the precise date and timetable for when the Government will bring forward their proposals for the remote gambling Bill. Should the worst happen today and the Bill falls, will my right hon. Friend the Minister accept an amendment on the levy when he brings forward the remote gambling Bill? I will move on to that momentarily.

Paul Farrelly: Heaven forbid that the hon. Lady should suspect the hon. Member for Shipley (Philip Davies) of ever opposing a private Member’s Bill. Clearly, the timing of the legislation is not entirely in the sport Minister’s hands, because it is dependent on the Treasury. I emphasise the importance of the December 2014 deadline, because of the investment plans of operators such as bet365 and the need for certainty. I must say that the plans of companies such as bet365, which is a European operator, might have been somewhat jolted by the Government’s announcement on holding an in/out referendum by 2018.

25 Jan 2013 : Column 580

Miss McIntosh: I think that the hon. Gentleman might find some reassurance in the remarks I am about to make. I will answer the point the hon. Member for West Ham (Lyn Brown) made earlier about enforcement. I hope that the Bill will satisfy her in that regard. The Select Committee’s excellent report sets out why we need the Offshore Gambling Bill, as opposed to a remote gambling Bill. I will now go through the relevant clauses.

Philip Davies: The hon. Member for Newcastle-under-Lyme (Paul Farrelly) is a far more distinguished member of the Committee than I am. Has my hon. Friend given any thought to the legality of her proposal to add the levy requirement on to this issue, because it seems to me that it might contradict European law? She is much more of an expert in that field than I am, so I wonder whether she could tell us about it. If it did fall foul of the European Union, perhaps that would encourage her to join me in voting no when the referendum comes.

Miss McIntosh rose—

Mr Speaker: Order. It was, I think, predictable that the intervention of the hon. Member for Newcastle-under-Lyme (Paul Farrelly) would provoke the hon. Member for Shipley (Philip Davies). I simply say to the hon. Member for Thirsk and Malton (Miss McIntosh) that there is a substantial canvas available to her in offering the House a speech on her Bill, but it does not extend to covering the merits or demerits of an in/out referendum on the European Union.

Miss McIntosh: I hope that I might please you, Mr Speaker, even if I disappoint other hon. Members, when I say that I have no intention of going down that path today. I do not wish to enter into a competition about who is the most assiduous or distinguished member of the Select Committee. Suffice it to say that I yield to no one in my admiration for the members of the Committee here today.

James Duddridge: All members of the Committee are distinguished and their advice should be considered carefully. Both the Department and the Treasury should work closely together, which is why I am encouraged to look at the Government’s alternative Bill, rather than my hon. Friend’s Bill. Perhaps she could reassure me and explain some of the discussions she has had with the Treasury and the Department.

Miss McIntosh: I believe that the debate we are about to have on clause 4 goes to the heart of that matter, but I would like to remain in order and to go through clauses 1, 2 and 3 first before addressing the issue of the levy, which is set out in clause 4 of the Bill, which I am promoting on behalf of my hon. Friend the Member for West Suffolk.

Clauses 1, 2 and 3, as the Select Committee has made clear, set out the problem. The Bill proposes to put the operation at the point of consumption, which means where the customer is in the United Kingdom. I do not think that any customer placing a bet, either through a betting exchange or online—I saw yesterday for the first time a betting exchange work on someone’s mobile phone, but I am afraid that I resisted the temptation to place a bet—assumes that the company through which

25 Jan 2013 : Column 581

they are placing it is based anywhere other than the United Kingdom. I think that it would come as a surprise to them to learn that the company is based in Gibraltar, the Isle of Man or some other such place.

The background information provides a reason for bringing offshore operators into the United Kingdom for the purposes of advertising, licensing and the levy. Betting companies that provide gambling facilities for British customers will be required under the Bill to be licensed by the Gambling Commission, which will ensure that the correct tax and levy are paid, and the tax situation will be resolved in future by the Treasury. If a bet is placed in the UK, under the point of consumption licensing, that bet and the company behind it should be covered by UK law and domestic regulation to protect consumers. That should be welcomed by the betting companies because it gives them, to use the idea expressed by the hon. Member for Newcastle-under-Lyme, clarity and legal certainty and sets the relationship on a sound commercial basis on which they can operate. It will be completely transparent and open to scrutiny by the regulator.

Philip Davies: If the Gambling Commission had to license each individual betting operator wherever they operated around the world, as opposed to simply accepting a white list and the regulation that takes place in a particular jurisdiction, has my hon. Friend given any thought to what the resource implications would be for the commission and how many extra staff it would need to take on to deal with that extra licensing?

Miss McIntosh: I hope that my hon. Friend will not mind me answering in plain Yorkshire by saying that that is plain daft. The Gambling Commission had the right number of people in place from the outset; they are just not being put to good use. The so-called white list is being completely avoided, contrary to the terms set out by my hon. Friend’s own Committee, which wants to discourage the formation of a grey market. The white list is not working—a grey market is coming in and undermining companies such as bet365.

It is absolutely clear that an unintended consequence of the Gambling Act 2005 was the movement offshore of the major betting operators. All it took was for one operator to move offshore and the others followed, as it became less competitive for them to remain in the UK. This was neither the wish nor the stated intention of the House when the Gambling Bill was going through its stages, and now the problem must be rectified once and for all. The Offshore Gambling Bill would restrict what betting operators can do on the internet without a licence, and it would make it harder for operators to find customers in the UK, because they would be banned from advertising and marketing if they did not obtain a licence.

Philip Davies: My hon. Friend claims that that what I said was daft, but could she give some examples of betting companies that operate on the grey market and that do not offer proper protection to punters? As far as I am aware, there is very little evidence of betting by UK punters on any grey market whatsoever. The danger is that the Bill would create a grey market, not that there is a grey market at the moment. We would all be

25 Jan 2013 : Column 582

interested to hear whether my hon. Friend has evidence of any companies with UK customers that are operating on what she would describe as a grey market.

Miss McIntosh: I do not think that the purpose of this debate is to draw up a grey list or a black list; the purpose of the debate is to set out the problem, as identified by my hon. Friend’s Committee, and to address it.

Obviously, it is impossible to restrict all internet use because of its sheer size, but we want to make the situation much fairer and clearer for anybody placing a bet and put everything on to an even keel. I think that one point that my hon. Friend and I would agree on is that we want to bring more money back into the UK so that it can then be spent on racing.

Because of the increased use of the internet for gambling purposes, it is crucial that the integrity of the sport is maintained. Therefore, information-sharing between betting operators—for example, the information on account holders—must occur when suspicious gambling takes place.

As I said earlier, the Gambling Commission would play a crucial role in the public policy aspect of clauses 1, 2 and 3 in protecting the young and vulnerable. It surely must be in the interest of bookmakers to have a healthy racing industry. The purpose of the Bill is not to pit bookmakers against other sectors of the racing industry; its purpose, and that of the positive conversations that I have had with those in the racing industry, is to promote partnerships. That is something that successive Government have done. The Labour party chose to call them, rather vulgarly, stakeholders, but we prefer a more cuddly partnership approach. That is precisely what we want to achieve—a partnership with bookmakers, whom I think have become one step removed from other partners in the racing industry. We also want to create fair competition between onshore and offshore bookmakers.

Hon. Members may raise the fear later in the debate that the operation of online betting will be moved further offshore to China. I would like to know from those hon. Members how that can happen when it is completely illegal to place a bet in China, either online or offline. China is a bad example to use.

Mr Nuttall: I am not sure why my hon. Friend has mentioned China. It has not been mentioned before or in any of the conversations that I have had in the run-up to this debate. What we do know is that, in other countries and jurisdictions that have tried to go down the road of regulating remote gambling, there has been a leakage and the development of grey markets.

Miss McIntosh: I think that my hon. Friend’s argument helps mine and disagrees with that of my hon. Friend the Member for Shipley, who might, therefore, like to explore it.

The purpose of clauses 1, 2 and 3 is to bring offshore activities back onshore to allow the Gambling Commission to intervene in order to be able to discharge its public policy role and promote consumer protection. The sports integrity of racing, football and cricket is also important. The gambling scam in cricket captured everybody’s attention, but we now know that that could so easily happen in racing and football, too. This is, potentially, a big and growing issue. If a relevant website was licensed

25 Jan 2013 : Column 583

by the Gambling Commission, that would give it the opportunity to report all suspicions activities. They could be monitored and the commission could discharge its public-policy and consumer-protection role.

James Duddridge: The hon. Lady mentions suspicious transactions in cricket and football, but would she also include politics and politicians placing bets on that list? Our Liberal Democrat friends, who are no longer in their place—if they ever were during this Friday sitting—are well known at by-elections for placing bets of relatively small amounts on their candidates, in order to move the odds and then place a leaflet in “Focus”, or whatever their little yellow paper is called. If this is moved offshore, would it not be even harder to catch them in the act?

Miss McIntosh: My hon. Friend throws new light on the debate with an issue of which I was unaware. I do not know whether my hon. Friend the Member for West Suffolk knew of it when he was drafting the Bill, but I am sure that it has caused great consternation to the House.

Racing is still the main sport that attracts those who place bets online or offline into a betting shop or on to a computer to place a bet, and that is why this Bill is so important.

Philip Davies: Will my hon. Friend give way?

Mr Speaker: Order. May I just say, with reference to what has been said, that periodic reference to and use of the word “offshore” because it is part of the title of a Bill does not render orderly an intervention that is otherwise disorderly?

Philip Davies: Thank you, Mr Speaker. I am grateful to my hon. Friend for giving way, but would she accept that most of the corruption she mentions with regard to sport and gambling has had nothing to do with any UK-based company or even one based in Gibraltar? It has been fuelled by illegal activity in the far east—perhaps that is why she got mixed up on China earlier. Any changes to regulation here would make no difference at all to that illegal betting activity in the far east.

Miss McIntosh: What we are trying to do is help racing in the UK by bringing activities that are deemed to be in the UK back here so that they fall within the remit of the Gambling Commission. That would lead to, I hope—mindful of those placing bets—a duty to behave responsibly and would provide legitimacy for licences based in the UK. I will come in a moment to why it would introduce a level playing field.

Paul Farrelly: Perhaps I can help with some facts. Will the hon. Lady acknowledge that it is important to compare like with like? There are examples of well-thought-out point of consumption regimes in Denmark and Spain that capture the vast majority of online gambling and bring revenue back to the Exchequer. In changing the regime here, the Government are showing every sign, I am pleased to say, of taking that very careful, considered and measured approach so that it will be effective at the end of the day.

25 Jan 2013 : Column 584

Miss McIntosh: The hon. Gentleman makes a powerful and pertinent point that I hope will satisfy my hon. Friend the Member for West Suffolk.

The purpose of clauses 1, 2 and 3 is to bring unlicensed offshore companies back under UK law and back under the regulator, making sure that they advertise here, have a licence here, and are under UK public policy provisions and the UK consumer protection remit of the Gambling Commission. Offshore betting online—remote gambling —would be back under UK regulation so that all those betting activities could be regulated equally by the commission.

Clause 4 relates to the horse racing levy. This provision is the main difference between the Bill before us and the remote gambling Bill that we hope Ministers will introduce in the next parliamentary Session. When betting shops were legalised in 1961, that was the first time that a bet could be placed other than on course. Now, even more gambling is taking place with internet gambling, and there is a wider choice of how to place a bet. That raises the question of how to bring the money placed on an offshore bet into the levy so that it can return to racing.

It has been pointed out to me in the course of preparing for this debate that an unintendend consequence of the Bill is that the UK could become a centre from which illegal markets operate. Foreign companies that are not subject to tax and the levy could find it more competitive to attract British consumers in this way. There is a fear that operations could move from the EU to third world countries, as the ordinary consumer—the person placing the bet—would not be able to tell where the website was licensed. In addition, the EU Commission needs to be persuaded that clause 4 is acceptable, and for that purpose there has to be proof that consumers are not benefiting from the current system. However, Bills similar to this have already been passed in other EU countries.

The Government have voiced concerns over a potential state aid issue whereby a tax is applied to companies based in other EU countries to fund racing in those countries. I hope that the Minister will respond to this point. Some companies based offshore thereby avoid paying tax and the levy despite the fact that they operate almost solely in the UK. It has been suggested that there could be problems in compelling the whole market to pay at the point of consumption, as betting operators are not keen to pay the tax and levy unless they can see that everyone else is doing so. This would increase the currently uncompetitive nature of being based in the UK and mean that less money is put back into racing.

Betting operators who are based offshore are reaping all the benefit of accessing the British market but are not contributing financially to the future of horse racing. The UK has the most liberal gambling market imaginable, with open competition, betting shops, the internet and the legalisation of gaming machines in shops. If betting operators are brought into the taxable area, their biggest concern will be the rate at which the tax is set. I accept that that is a matter for Her Majesty’s Treasury. However, it has been put to me that if the tax were set at 15% of gross profits, a number of betting operators would become unprofitable. The purpose of the Bill is not to increase tax, which is properly a matter for the Treasury, but to level the playing field for those contributing or

25 Jan 2013 : Column 585

not contributing to the levy. I hope that that addresses any potential misunderstanding of the purpose of clause 4 and the Bill, as opposed to the remote gambling Bill.

James Duddridge: If hon. Members are concerned about the levy—I have a few concerns—would it be possible to propose the removal of clause 4 in Committee to make the Bill more like the Government Bill? That would give the House the opportunity to consider today whether to take forward this Bill or the Government Bill.

Miss McIntosh: Perhaps I am not being very clear, but I think that the wish of the House is to include clause 4 to address the levy situation. Together with any potential Treasury action in the Budget, we need to ensure not only that a sensible rate of tax is set by the Treasury but that the levy and tax contributions together cannot be left as voluntary. We have recently seen too much of corporations such as Amazon and Starbucks avoiding tax in this country.

Philip Davies: I understand the thrust of my hon. Friend’s point. However, when the Secretary of State comes to a determination on the levy, or an agreement is reached on it, the mechanism used is designed to reach a particular figure of, say, £75 million. If the Bill succeeded and money were added on, the target figure of £75 million would still apply. All that would happen is that the mechanism used to calculate it would change in order still to hit £75 million. We would not get any more money through the levy; we would just have a different mechanism for getting to that figure.

Miss McIntosh: That is a matter for debate. I would hope that there can be some flexibility in this regard. Tax is a matter for the Treasury, while the levy is a matter for the Department for Culture, Media and Sport.

As the levy already exists, there should not be a problem in extending it to overseas operators to equalise the conditions of competition so as not to generate a new state aid issue. If it is thought that the levy raises such an issue, the Gambling Commission has waited an incredibly long time to say so. The levy is not paid directly to economic operators in the field of horse racing but directly to the Horserace Betting Levy Board, which then distributes it for the improvement of horse racing as an industry, including veterinary science and education. Without the levy, it is hard to see what contribution bookmakers would make. The levy fell to a very low level, but it started to rise and now seems to have stabilised again.

James Duddridge: Have the Government not asked the levy board to look at a consultation on the voluntary arrangement that is not concluding until autumn 2013? Could it be argued that this is the wrong time to legislate and that we should let the Government encourage that consultation? Without intending to use too many puns, is not my hon. Friend putting the cart before the horse in pushing this Bill through now?

Miss McIntosh: Perhaps we are in danger of the horse having bolted. I would say, as we canter around the course, that the voluntary idea simply does not work. A lot can be said for the one company, which I shall try not to name, that has proceeded on a voluntary

25 Jan 2013 : Column 586

basis. It has entered into a commercial deal that has safeguards in place to ensure that the contribution is made at the point of consumption. The time has passed for a voluntary option, and we have to move on to some sort of compulsion. It would be helpful if there were a further level playing field in that those who had entered into a voluntary deal were allowed to sponsor prizes and races. It is unfair that the one company that has so far entered into the voluntary arrangement is not allowed so to do.

James Duddridge: My hon. Friend is defeating her own argument by mentioning the one company that has come forward and done the right thing on a voluntary basis. Does that not show that some people are starting to come forward and that the process is working, and may I urge her to name the company? It sounds like a company that, although it might not be perfect, is doing better than the rest of the marketplace. We should encourage it.

Miss McIntosh: Let me make the case, and then perhaps I will satisfy my hon. Friend’s request. Importantly, the levy was created and enforced prior to our entry in 1973 into the Common Market, as the European Union was then called. Let me state clearly and graphically that the levy enjoys grandfather rights—that is the big difference between the Bill under consideration and the remote gambling Bill—and cannot therefore be said in any shape or form to constitute a state aid.

What authority do I have to make this case? I hesitate to say this, but as a mere youth in 1978 I spent six months on a stagiaire placement as a trainee with the Commission in the Directorate General for Competition, then known as DG 4. The House will be familiar with the competition rules—originally articles 85 and 86 of the treaty of Rome, and now known as articles 105 and 106 of the snappily entitled treaty on the functioning of the European Union—that set out the common rules on competition, taxation and approximation of laws. As the levy existed prior to 1973, and because it has grandfather rights, it cannot be deemed to constitute a state aid, and the fact that we have not been pursued by the European Commission emphasises that. I hope the Minister will listen closely to and support those arguments, and that he will either give the whole Offshore Gambling Bill a fair passage today, or say that when the remote gambling Bill is brought forward, clause 4—or its equivalent relating to the levy—will be included.

Clive Efford (Eltham) (Lab): I suspect that the hon. Lady is coming to a conclusion, but I was expecting her to refer to discussions she has had with the Government about her Bill. I cannot help noticing that the clauses in her Bill are—with one exception—almost identical to those in the Government’s Bill, which suggests some form of dialogue between the hon. Lady and the Government. It would be desirable for that part of the Bill to make progress. Has she discussed with the Government when they intend their Bill to complete its progress? Perhaps we could succeed in that and deal with the levy separately. Has she considered that?

Miss McIntosh: I am not concluding quite yet, but I have always considered myself to be particularly close to the Government having served for nine years as a shadow Minister. I have had loose discussions on that

25 Jan 2013 : Column 587

issue; I am sure the Minister will elaborate in summing up and—hopefully—accepting this Bill, and we will then have a space in the legislative programme from May for another Bill such as the water Bill. I am sure the whole House joins me in looking forward to that.

We are seeking reassurances about when the Government will bring forward their remote gambling Bill. It is not sufficient for the Minister simply to say that it will be in the next Session, which will start in May 2013 and end in May 2014. I think that would be unacceptable, and I hope that the Minister will comment not only on when the Bill will be presented but, as the hon. Member for Eltham (Clive Efford) said, on what the timetable will be and when the legislative stages will conclude. I hope he will also respond to the point about the levy, which, as I have said several times, is the main point of contention when comparing the Offshore Gambling Bill and the Government’s remote gambling Bill.

James Duddridge: My hon. Friend is perhaps being unfair on the Minister. Although he has indicated that the Bill will make progress in the third Session of this Parliament, would it not be unprecedented, given all the enormous problems in the country, for such a Bill to be given preference following the Queen’s Speech? He has already gone some way to making assurances, but to hold back praise purely on the issue of timing in the next Session seems rather unfair and churlish.

Miss McIntosh: I do not want to appear ungracious and I congratulate the Minister on the work he has done in preparing the remote gambling Bill. However, there is a sense of urgency. Every time I visit a stable yard—whether or not it is the one housing the horses of my hon. Friend the Member for Shipley—I have the acute impression that a crisis is hanging over the racing industry that we need to address. Competition is currently distorted and some companies are reaping the benefits of the industry—consumers wanting to place bets—but do not contribute financially to the long-term upkeep and maintenance of horse racing.

Although the levy is provided from state resources, its extension to overseas operators would only equalise, not distort, competition. The overall impact of betting operators having moved offshore has been the decline in prize money I referred to earlier. Race courses have therefore had to fund part of the prize money themselves, as well as fund the levy, which is its biggest overhead. Therefore, if the levy decreases, race courses have to contribute more to maintain the same level of prize money. That is difficult to do, because if more money goes into prize money, less is available to spend on the integrity of the sport and things such as the photo finish and dope testing.

Philip Davies: That is not necessarily the complete picture, as I am sure my hon. Friend knows. Racing and race courses get income not just from bookmakers through the levy; increasingly it comes from picture and media rights, which those have gone up massively in recent years to the extent that, if the levy and media rights are taken together, we see that bookmakers are now paying far more for the racing product than ever before.

25 Jan 2013 : Column 588

Miss McIntosh: Picture rights are only part of the story, however, and are up for renegotiation at frequent intervals. That is a very recent development. When the budgets of race courses are squeezed, competition reduces and, it is argued, lower-quality races are run.

Let me share with the House the figures for the average field size. Over a 10-year trend there has been a reduction of more than 11% for flat turf racing, and a reduction of more than 9% for hurdles. Between 2006 and 2010 there has been an 8% change overall in the average field size, which means that less money is going in. The average number of runners overall has gone down by 8% over the past 10 years. That is obviously setting alarm bells ringing through the racing community. If the number of runners go down, the contribution to racing and the level of prize money will also go down unless the race courses make up the shortfall.



Mr Nuttall: My hon. Friend makes an interesting point about the reduction in the number of runners. She mentioned that she spent time visiting stables, including in her constituency. Does she know of reasons other than the level of prize money that contribute to the reduction in the number of runners?

Miss McIntosh: As I have said, other reasons include the cost of keeping a horse in training, to which I am sure my hon. Friend the Member for Shipley will testify. Feeding costs have gone up hugely for all livestock, including horses. Bedding costs have gone up hugely. Alternatives to straw are being considered. Corn is being produced so that more corn goes to cereal and there is less straw, which has a huge impact on the stabling costs. Many of the stables I have visited had considered alternatives such as cut-up newspaper. However, I understand that stabling horses with newspaper—this also applies to using newspaper for chickens—leads to a cough and is a health hazard that can prevent horses from running.

There are therefore reasons other than economic ones—though costs are increasing—for smaller field sizes and fewer runners. In turn, that reduces the footfall at the race course, and so yields less income from admission prices. Figures for the past five and 10 years show that average attendances are down by a considerable 7%. Trainers are training fewer horses, and therefore require fewer stable staff and fewer farriers, which will have huge knock-on effects in rural areas such as my own of Thirsk, Malton and Filey. The trainers require fewer saddlers and horse boxes. The knock-on effect on the whole rural economy is potentially huge.

The results are the same if there is less prize money, because owners enter their horses in races from which they will see a greater return, and at this point in time that means overseas. My hon. Friend the Member for Shipley seems to be bucking the trend, because it appears that the number of owners is down. The number of sole owners has dropped in the past 10 years by 13%, which is less than the drop in partnership or company owners whose numbers are down by more than 31% in the past 10 years, and by almost 20% in the past five years. I do not think the House can argue that the racing industry is not facing a crisis. That is why the Bill is so urgent. My hon. Friend the Member for Rochford and Southend East (James Duddridge)—I am delighted to have had the honour to represent that area in the European

25 Jan 2013 : Column 589

Parliament between 1989 and 1994—must now be satisfied about why the racing industry is in penury and why racing needs the money.

It is true that the wealthy end of the sport—I am looking at no one in particular—is unaffected by the reduction in prize money. However, at the budget end of the sport, the smaller syndicates and individual owners are struggling.

Philip Davies: Lest anyone be confused by my hon. Friend’s musings, I assure her that I am certainly not at the wealthy end of any spectrum, and that I own my horses through small syndicates, which she said were not decreasing in number as much as sole owners. I am at that end of the market rather than the Sheikh Mohammed end.

Miss McIntosh: I have a link with Sheikh Mohammed—his horses were at stud where I live in the constituency—but I take my hon. Friend’s point.

The fact is that the problem affects the race courses that are in far more remote areas of the country, located further away from racing centres. I am not thinking particularly of my area in that regard, but of further- flung courses in Scotland and the UK, which are feeling the effects of the reduction in the levy because they have less to offer to owners and trainers. A further consideration is the price of fuel and the location of the race course in relation to the trainer’s yard. The trainers to whom I have spoken have made that point most vigorously. They take not just one horse to one course on a given day, but multiple horses to multiple race courses. That makes certain race courses far less appealing than others.

I have argued that state aid rules should not be a significant issue, but if they are, a way around them has been suggested: all betting operators could require a UK licence. However, in order to obtain that licence, they must enter into a commercial deal with the British Horseracing Authority that ensures that a percentage of their gross profit goes back into racing. That approach has already been taken up by one betting operator, to which I have referred. Pressure must be placed on others to follow. There could be a further incentive: betting operators must have a commercial deal if they want to sponsor the big races and meets.

On the so-called problem of competition law—[Interruption.] I ask for the Minister’s attention at this point, because this is the crux of my argument and the main difference between the Gambling (Licensing & Advertising) Bill, which deals with remote gambling, and the Offshore Gambling Bill. I struggle to see why the Minister, the Department or the Government should so categorically state that extending the levy to overseas operators would breach the rules on state aid. I mentioned my own background information in that regard, but I have also taken advice from a legal counsellor.

To state the obvious, the levy already exists, so its extension to overseas operators would purely be to equalise the competition conditions and ought not to generate any new state aid problem. Those arguments arose at the time of the sale of the Tote—I argued vigorously with successive Governments that there were no state aid issues. We are often fearful in this country of debating with the European Commission, and yet, in my experience, Commission officials are even more open than officials from UK Government Departments.

25 Jan 2013 : Column 590

The existing levy of the 1960s pre-dates our entry into the Common Market in 1973 and has grandfather rights, as I have said. If it is thought to raise a state aid issue—as I have explained, there are good reasons why it should not—why has the Commission waited so long to raise this point? I put it to the Minister and the House that the Commission has chosen not to do so because there is no state aid issue. I want to help the Government and my right hon. Friend the Minister in this regard. The Government might be nervous that the Commission is currently examining the state aid aspects of the parafiscal levy on online horse race betting in France. France has been notified that such a measure is, in the Commission’s view, a state aid.

The Commission has opened proceedings under article 108(2) of the treaty on the functioning of the European Union. The case that the Commission brought against France commenced in 2010 and has still not been completed some three years on. It relates to a levy to finance the public service mission of

“improvement of the equine species and the promotion of horse breeding”—

this is from official journal, which is the reason for the legalese—and

“training in the horse racing and breeding sector and rural development.”

The invitation to submit comments under the treaty on the functioning of the EU was published in January 2011.

The case against France is that the French authorities notified the Commission of a proposal for a parafiscal levy on online horse race betting in order to fund a public service mission entrusted to horse racing companies. The notified measure comes in the context of the opening up of certain online games of betting and chance under the French law of 12 May 2010. That law ends the monopoly on online horse race betting held by Pari Mutuel Urbain, commonly known as PMU, an economic interest grouping of 51 horse race companies that, however, retains the monopoly of online horse race betting through its physical network of sales outlets. The French authorities argued their case that the purpose of the levy was to fund the public service mission improvement. They subsequently submitted this to the Commission and it considers that the aid measure contains all the features constituting the concept of state aid, and published its decision inviting comments and consultation.

My question to the Minister today is: have we, as a party, joined that case? Did the Government respond to that invitation to clarify the legal situation? That would have been immensely helpful to the Minister, both in responding to the Offshore Gambling Bill today and in preparing his own remote gambling Bill. I want to strengthen the Minister’s and the Government’s arm. We have nothing to fear on this point from the European Union. We have a very strong case to put, and it appears to me that there are distinctions between it and the French case. I hope the Minister has joy and that the Government did respond to that consultation and can use it as an opportunity to clarify the difference between the French proposed parafiscal levy and our levy which has existed since the early 1960s and enjoys grandfather rights, which by no stretch of the imagination can be said of the French proposed parafiscal levy. If the Minister did not respond to that consultation, he owes

25 Jan 2013 : Column 591

the House an explanation of why the Government chose not to respond, as it would have been a unique opportunity to clarify the law in this regard.

There are distinctions between the French case and the Horserace Betting Levy Board. Most importantly, the levy in this country is not paid to economic operators in the field of horse race betting, but paid direct to the Horserace Betting Levy Board, which then distributes the proceeds of the levy for the improvement of racehorses: and breeds of horses, and for the advancement of veterinary science and education. There is no direct participation by bookmakers in the proceeds of the levy, and if any advantage is conferred on them it is only on the maintenance of the stock of good quality horses, the provision of grants to cover the costs of regulating races and to provide loans for the improvements to racehorses. It is very hard to reconstruct what contribution bookmakers might have made without the levy, but it cannot be sensibly said that the levy relieves bookmakers of the burden that they would otherwise have had to assume. Indeed, the paradox before us today is that the existing levy confers an advantage on overseas operators, since they derive, albeit indirectly, the benefit from a healthy horse stock and well-provisioned race courses without having to make the contribution that their domestic competitors have to make. That must surely distort competition.

We are not proposing state aid. In no way would the Government, were it to agree to clause 4, be proposing state aid. Clause 4 seeks to equalise unfairness and to remove the distortion to competition between bet365 and others who place their bets in the UK, and those offshore operators who place their bets in Gibraltar and in other offshore territories. It may be that I have to concede that the levy is provided from state resources, because it is a statutory levy. However, there seem to be powerful arguments that its extension to overseas operators would tend to equalise the conclusions of competition, not distort it.

I therefore put it to the Minister that today is his opportunity to explain his views, his Department’s views and the Government’s views on state aid once and for all. We have never had the opportunity in the House to discuss this—this is a unique opportunity to do so. It is incumbent on the Minister to explain why, if he did not, he did not respond to the consultation’s points in the official journal called by the European Commission to the French-proposed parafiscal levy. I ask the Minister to explain his views on state aid, and explain why they are at such variance from mine and those of the Under-Secretary of State for Skills, my hon. Friend the Member for West Suffolk who is sat next to him on the Front Bench. We believe that this does not constitute state aid but merely seeks to close the gap and remove the existing distortion from competition.

Paul Farrelly: The hon. Lady will probably be aware that there have been challenges to point of consumption legislation in Europe from operators affected. On that point, does she think that it may be better to deal with the levy separately from the rest of the legislation backing point of consumption, so that there is less opportunity for challenges to the change of the framework, which may just delay the Exchequer getting more money

25 Jan 2013 : Column 592

and the levelling of competition across the board in general, not with specific reference to horse racing?

Miss McIntosh: I see where the hon. Gentleman is coming from, but I think that would be unacceptable to the racing industry. The message that I want to go out from the House today is that the House cares about the racing industry, recognises the contribution the industry makes to the micro-economy in rural north Yorkshire—Thirsk, Malton and Filey—and to the greater economy of the United Kingdom. Racing has been cheated for months and years ever since these offshore operators have been operating out of Gibraltar, the Isle of Man and other such unacceptable points of establishment.

This is a unique opportunity to take the challenges facing racing in the round. I fully accept that we cannot deal with questions of taxation today—that has to be the remit of the Treasury. I am sure that my right hon. Friend the Chancellor of the Exchequer will address that point, giving those affected sufficient time to prepare for this tax. Some of the betting companies are alarmed about this, but I think unnecessarily so. That is a separate argument, however. Clause 4 and the matter of the horse racing levy is an integral part of the whole problem of racing being cheated out of the money. The consequences of licensing and advertising offshore and not paying towards the levy onshore need to be addressed together. We seek to improve competition and equalise the market. I notice that my right hon. Friend the Minister is shaking his head. He must be bold. He has nothing to fear. He has the whole of the House and the industry behind his not inconsiderable stature. I therefore hope that the Minister will march forth today and take on those companies, which want to do the right thing—one of them is already doing so. They should join in line and make the Minister’s life easier and the racing industry’s future much more certain.

The Bill aims to remedy the current flaws in the system to ensure that all betting companies pay the correct amount of tax and contribute to the future of racing by paying the levy. I accept that the levy in its current form is no longer fit for purpose and must change. The industry has some time to do so—it has been invited to do so by the Government, which I welcome. The purpose of today’s Bill is to equalise the competitive situation, as in France, to ensure that everybody pays the tax and the levy and that everybody knows and can see that they are doing so. The Bill is not anti-competitive; quite the reverse. It seeks to encourage competition by removing the current distortion in the market. Without this Bill, racing will continue to lose out on much-needed funding.

I recognise that costs are increasing—the costs of trainers, feed, bedding, fuel and travel—and prize money has gone down. I fully accept that racing has long been considered the sport of kings. In north Yorkshire it is also recognised as bringing tremendous enjoyment to local participants and tremendous returns—on a good day or a in a good year—to the trainers, stable boys and lasses, jockeys and owners, and also the local economy. It gives me great pleasure—it is also an honour—to take over the Bill today from my hon. Friend the Member for West Suffolk. I hope that the House will give it a fair hearing. We wait with great anticipation to hear the Minister’s response, to ensure that racing can proceed on a much firmer footing than in the recent past.

25 Jan 2013 : Column 593

11.11 am

Paul Farrelly (Newcastle-under-Lyme) (Lab): I, too, start with a double congratulation to the hon. Member for West Suffolk (Matthew Hancock)—or perhaps the honourable Member for Newmarket, as he might more appropriately be known today—first, on securing this private Member’s Bill in the ballot and, secondly, on his promotion to Under-Secretary of State for Skills at both the Department for Education and the Department for Business, Innovation and Skills. He has certainly got a lot on his plate, so it is kind of the hon. Member for racing at Thirsk, if not Malton (Miss McIntosh) to take the Bill on so ably for him.

At this point I was going to say that I will make a short contribution, because I realised that the Bill’s promoters were not seeking to take it forward in its current form, but the hon. Lady’s lengthy speech has left me in some confusion about that. If she wants to intervene on me, I would be grateful for some clarity.

Miss McIntosh: What we are seeking is a number of assurances from the Minister, as I set out in my speech.

Paul Farrelly: It seems clear from that intervention that the Bill will not go forward in its current form, because the Government have just published their draft Gambling (Licensing & Advertising) Bill and, with the exception of the racing parts, today’s Bill covers the same ground. In fact, we will be scrutinising that draft Bill in the Select Committee on Culture, Media and Sport on Tuesday, so perhaps the promoters and sponsors of today’s Bill will want to make a detailed written submission to the Committee—or, indeed, send the Hansard report of this debate—as we perform that scrutiny. That draft Bill is the DCMS/regulatory end of what the Government propose as a major reform of the taxation regime—the move to point of consumption as the basis for taxation of remote online gambling. The business end of that change—the Treasury part—is at the detailed policy design stage, which has been the subject of extensive consultation by the Government.

We are still awaiting a response to that consultation, but the Government have just published their response to our report from last July, “The Gambling Act 2005: A bet worth taking?”, in which, as we heard from the hon. Lady, we unanimously welcomed the change of emphasis towards taxing remote gambling on a point-of-consumption basis, for three very good reasons. It may well encourage online operators to rebase themselves here, following a flight overseas—in particular, to Gibraltar. Changing the emphasis would level the playing field for operators such as bet365 that have chosen to remain here and pay tax in this country, and it would raise tax for the hard-pressed Treasury.

For certainty’s sake, we also recommended that the Government adhere to their timetable of December 2014 for implementing the new regime, bearing in mind the possibility of a challenge in Europe if the tax level in particular is not right or acceptable to the operators, which might wish to challenge it, as they have challenged other moves in the EU. Such a challenge might be a vexatious challenge at the last moment, simply to delay things as far as possible. That would have major repercussions for operators such as bet365 or others

25 Jan 2013 : Column 594

that might wish to return to the UK, as well as for some expensive investment plans, particularly in IT and servers, and in sales.

In their response to our report, the Government have said that they are still analysing the responses to the detailed policy design to make the system effective. I recognise that the Minister today is from the Department for Culture, Media and Sport, not the Treasury, but it might be useful in his summing up if he could give some guidance on when that response will be published, because we are all interested to see it. Indeed, the representations that the Government have received may well cover the same ground as the representations that our Committee has received for our scrutiny, because they will be from all the members of the Remote Gambling Association.

The RGA has much to commend it, not least the way it goes about promoting the industry in other jurisdictions—in particular, the other 26 members of the European Union—and making the case for sensible market reforms that are workable. The RGA is led well, works well and is respected as a body for the case it makes. However, the reality is that, in the UK, the RGA is a lobbying organisation with a strong vested interest, because the vast majority of its members are already based offshore and will therefore by definition oppose a point of consumption basis for taxation.

Miss McIntosh: As the hon. Gentleman has mentioned bet365 in his constituency and the RGA’s lobbying power, does he not accept that—with Malton as the main centre of training in my constituency, but with a few trainers in Thirsk as well—the trainers and, indeed, the whole racing industry are perhaps not as cohesive, but instead fragmented, which means that their views are not heard as clearly as those of a focused lobbying organisation such as the RGA?

Paul Farrelly: I take the hon. Lady’s point, but I think she is rather doing herself down, because the case made in this Bill and the fact that the horse racing levy exists at all show the power of the industry and the representations made on behalf of racing.

On the thrust towards a point of consumption basis, the vast majority of the RGA’s members are based offshore, where they pay very little tax. Therefore, although I respect the RGA in many respects, we have to take its arguments against the thrust of the change to the regime with a pinch of salt. The big exception among its members is bet365, which in 10 years has become the biggest employer in north Staffordshire. It is largely UK-based—all its sports betting has always been UK-based—because the founding Coates family believe in creating employment locally and paying their fair share of tax. Their commitment to our local area and sport in general is shown in their ownership of Stoke City football club, as the hon. Member for Shipley (Philip Davies) will very well know. Indeed, unless someone is a very wealthy racehorse owner—I am looking to Manchester—owning a premier league football club is going to make a big dent in their pocket. The commitment of the Coates family is demonstrated and well regarded.

We do not see it in the RGA’s representations, although it appears in its previous submissions to the Select Committee, but bet365 wholly welcomes the Government’s change to a point of consumption basis for taxation. By

25 Jan 2013 : Column 595

virtue of that, it is important to recognise that the RGA does not speak for all its members on that matter or, because of the success of bet365, for a big slice of the UK online market.

James Duddridge: It is interesting to hear what bet365 has done, for good reasons, within its community. Has the hon. Gentleman learned from his discussions with the company whether it has managed to persuade any other organisations to start thinking in a similar way and to come back onshore on a voluntary basis, or are those organisations so far removed from bet365 that it will remain an isolated case?

Paul Farrelly: I do not want to get involved in the internal politics of the RGA. All its members are reputable, and the vast majority—the likes of William Hill, Coral and bwin.party—will of course accept a licence if we move to the new regime. They will not want to be unlicensed operators. That is not how they do business and they would not make money in a big market such as the UK as comfortably as they do at the moment.

Cutting through the bluster, we can see that tax is the fundamental factor. It is important to recognise that, for those operators, this is about getting the tax right. The other arguments are incidental, and those operators will be able to live with the changes. Some will have different experiences because of their distance from the UK market, but they will all be able to live with the changes as long as they are comfortable with the tax arrangements. That very point was highlighted in William Hill’s submission to the Select Committee for our scrutiny of the Government’s draft Bill. Having made all its arguments, the RGA has effectively suggested that it could live with all the changes if the gross profits tax were reduced from, say, 15% to 5%. That is the crux of the argument. We will test all those objections in our scrutiny Committee on Tuesday. As the hon. Member for Thirsk and Malton said, our report called on the Treasury to establish what should be the current level of tax for online gambling, taking into account the need to bring everyone on board and not to encourage an unlicensed grey market.

The continued presence and success of bet365 in sports activities is rather inconvenient for the rest of the industry, because it shows that the doomsday arguments do not have any substance. Bet365’s success proves that it is fully able to compete here, and there is no reason why the other big names should not do so as well.

Let me set out some of the facts for the House. In the year ending March 2012, bet365 took £12 billion in wagers, which was 45% up on the previous year. It made pre-tax profits of £116 million, which was up 22%. That is a record that most UK businesses can only envy in the current economic environment. Its total contribution to the UK Exchequer, including betting duty, VAT and £20 million corporation tax, was £130 million; and, importantly for our area in these difficult times, it recruited another 500 staff.

Bet365’s record is exemplary, and if it can be so successful there is no reason why the likes of William Hill, Coral or Ladbrokes—all the names, old and new, that we know so well—cannot be successful here too and contribute to the UK Exchequer. This is all about

25 Jan 2013 : Column 596

tax, and for the Government it is all about revenue. It would be helpful for us, and for the industry, if the Minister shed some light on any conversations that he has had with the Treasury on how its modelling of the tax take has progressed and on the discussions it has had with the industry on tax levels.

If tax is the nub of the argument for the industry, the core issue in the Bill is, as the hon. Lady has made clear, a special plea for the horse racing industry. I do not have the opportunity to indulge myself in racing as much as the hon. Member for Shipley does, but I enjoy the odd visit to the races and the odd flutter. We have Uttoxeter nearby in Staffordshire, and Chester races are just across the border.

I am not intrinsically against a special deal for the racing industry, because it is a reality that the racing levy is part of the landscape—the hon. Lady talked about grandfather rights—and it is a national lottery for the horse racing industry. However, I do not believe that she made the point as strongly as she might have done for Ministers to back the case for the racing industry and not to cave in to special pleading for, say, a football levy to help struggling clubs. An example of such a club is Port Vale, which is at the opposite end of the city from Stoke City FC—owned by bet365—and recently went into administration. If the hon. Lady would like to intervene on me, I would be interested to hear why she thinks the Minister should not listen to special pleading from other sports.

Miss McIntosh: It is for the simple reason that the levy was set up to help the racing industry but is now being circumvented in a very obvious way. Also, as I have said, at least 50% of the bets placed online—it is probably more in betting shops, but for the purposes of the debate we are concentrating on online betting—are attracted because of racing.

Paul Farrelly: I thank the hon. Lady for that response. As the day goes on, she will probably have to listen to the argument from the gambling industry that racing owes its success in large part to the ease of having a flutter at the races. The industry will argue that it already does enough. Similar arguments will be made about how racing has become less important because of the development of online gambling and of in-game betting alongside result betting. Those are arguments that she and the sponsors of the Bill will have to take on. I am sure that they will be presented again and again as the Government’s Bill proceeds and as the hon. Lady and others table amendments to it.

I conclude by returning to a point that I made in an intervention on the hon. Lady, and on which I hope the Minister will be able to comment. There is great merit in keeping this Bill simple and in dealing with racing separately. The Bill is the regulatory end of the changes to the taxation regime that will benefit everyone in the country through increased contributions to the Treasury coffers, and that will benefit operators who have remained here and face competition from organisations overseas that do not pay tax. The real danger is that a vexatious complaint could be made, causing delays because of the European Union angle. The Government’s approach has much to commend it, if they proceed with careful thought and simplicity, and if the racing element is dealt with separately.

25 Jan 2013 : Column 597

11.29 am

George Freeman (Mid Norfolk) (Con): I pay tribute to my hon. Friend the Member for Thirsk and Malton (Miss McIntosh) for leading the debate this morning, and to my one-time office mate, the Under-Secretary of State for Skills, my hon. Friend the Member for West Suffolk (Matthew Hancock), whose constituency includes Newmarket.

As a sponsor of the original Bill, it is a pleasure for me to be here on this Friday morning to support this Bill. I support it because I believe the racing industry needs it, and I shall say something about why this great industry requires our support. Contrary perhaps to the wishes of the Whips, I do not intend to talk the House through my family’s long connection with racing, other than to acknowledge it, as I think that will reveal something about the extent of this great industry’s footprint out in the rural economy.

As one or two Members know, my father was a one-time national hunt jockey who rode for Her Majesty the Queen Mother and won the grand national in 1958. My brother is a racehorse trainer in California, where the funding for racing is rather more sustainable. It a place to which many of the British diaspora in racing have headed because of its more sustainable model of funding. Other members of my family have for many years been involved in breeding. My uncle Christo Philipson was a one-time chairman of the British Bloodstock Agency, and I grew up Newmarket, so I know very well that it, along with a number of towns such as Newbury, Malton and others in the UK, is totally dependent on this industry.

I also have a constituency interest. I am not lucky enough to have Fakenham race course in my constituency, but it sits on its northern boundary. It sits at the heart of a deep local, rural and equestrian economy of which Norfolk is proud and on which it relies—a network of point-to-point races, local equestrian activity and pony clubs, which are all part of the grassroots footprint, particularly of national hunt racing, and a cluster of trainers and breeders around the Attleborough area on the fringes of the Shadwell Stud in the corridor between Fakenham and Newmarket. This is the invisible side of racing that one does not see when tuning in to watch the Derby, the 2,000 Guineas or even the grand national. It is for the benefit of those communities and the rural economic impact that I stand here today.

We are debating this important issue because the health of racing is vital to our overall economy, yet it is under severe threat. The crisis in prize money and the crisis in respect of the leaching away from the industry of revenues on which every other racing industry around the world is able to rely is undermining the health of this great industry, It is, as I say, an issue of vital national importance.

Let me take the opportunity of reminding the House of the industry’s size. More than £10 billion a year is placed in bets; more than 6.5 million people attend our race courses, with a total turnover of over £3 billion. About 7,000 staff are employed directly, but more than 80,000 full-time equivalent staff are employed in supporting and associated activities. There are more than 4,000 breeders. We hear a lot about the top 10 or 15 breeding operations, but there are many small breeders and small-time trainers at the bottom of the pyramid who rely on prize money to keep them in business.

25 Jan 2013 : Column 598

I would also argue that the horse racing industry has a disproportionate impact in the rural economy—an area that the Government have rightly put at the heart of their economic mission to drive a rebalanced economy and to help this country claw its way out of the debt crisis that confronts us. Its wider footprint—the feed suppliers, the hauliers, the farriers, the saddlers and the tourism associated with local race tracks—is very significant.

The truth is that our racing industry faces a crisis in respect of prize money, and it is a crisis that is particularly affecting those in the bottom half of its pyramid. At the top of the racing industry, particularly in the flat sector, the cost of racing is easily met by the rewards associated with breeding. For those at the bottom of the pyramid, however, prize money is the central method for covering costs and maintaining racing as a sustainable and viable activity. I shall say a little more about that in a few moments.

Philip Davies: As my hon. Friend knows, I share his passion for horse racing, but does he not accept that the levy model largely works by taking its income from low-quality racing, which some people might describe as betting office fodder? The money raised from that tends to be used by the levy board to increase the prize money at the top end rather than increase it at the bottom end, which might help the small-time owners, trainers and breeders to whom he refers.

George Freeman: My hon. Friend makes an interesting point. I dare say there is an extent to which the industry needs to think about how it allocates its prize money, but the fundamental point is that unless it has a sustainable link to a reliable source of revenue from its principal input, which is betting, all this discussion is academic. The central point we are confronting today is how this great industry, which successive Governments have acknowledged needs a statutory basis, continues to ensure that the betting activity that feeds off it puts back a sustainable and responsible contribution to promote it.

The truth is that the levy has not been able to react quickly enough to the transformation in the gambling industry, which has seen so many of our gambling businesses move offshore. Eighteen of the 20 biggest bookmakers are now offshore. We have heard of one this morning—it is an “n of 1”—proudly maintaining a presence here in the UK, but the trend is indisputable and has been very significant in reducing the industry’s income.

Prize money has been significantly affected. It is important to acknowledge that prize money is vital for ensuring that we attract the best horses for breeding here, the best horses in training and the best people in the industry. Our elite racing sector at the very top is, of course, world beating, but prize money is also crucial to sustaining the less glamorous part of the industry out in our more diverse parts of the rural economy.

The levy contribution has nearly halved over the last five or six years. I want to highlight that by having a look at today’s Racing Post, which will illustrate some Members’ points. I do not intend to read it all, but let us look at today’s card at Lingfield. The first race at 1 o’clock is the Bet at bluesquare.com claiming stakes. The prize money is £2,045. If we divide that up between the first, second and third and between the owner, the trainer and jockey, and we take off the costs—of fuel, of staff, of getting a lorry to get a horse to the races—

25 Jan 2013 : Column 599

we see that that simply does not add up. Across the country, we are seeing small trainers and breeders packing up.

The other interesting thing to notice about the 1 o’clock at Lingfield is that there are only four runners in it. What is happening across the sector is that in that lower half of the market, fewer and fewer people are able to survive. That feeds in on itself. The smaller the fields, the less attractive for TV coverage and the less attractive for betting. In case anyone is concerned that there is a bumper race with huge prize money somewhere in the middle of the afternoon, the 1.30 prize money is £2,000, the 2 o’clock is £2,700 and the 2.30 is £2,040. These are disproportionately small sums compared with prize money in France or in Ireland. That is why we are seeing increasing numbers of trainers leaving this country and going to those territories. We are allowing this structure to undermine one of our great industries at a time when the Government are rightly doing everything they can to remove obstacles to growth and to drive economic recovery.

Miss McIntosh: I am following my hon. Friend’s arguments very closely. Does he share my concern that the average prize money in British racing is £10,135, while in France it is approximately £21,500 and £15,700 in Ireland? I think that helps to make the case that the hon. Member for Newcastle-under-Lyme (Paul Farrelly) was making.

George Freeman: As ever, my hon. Friend makes an excellent point. That was exactly the point I was about to make. The differences in prize money are significant and make a very significant difference. We are not talking here about marginal competitiveness, but fundamental differences in the rate of prize money that no sensible or rational operator in the industry could ignore. Indeed, they are not ignoring them. In the last few years there has been an 8.4% drop in the number of horses in training, and that continues year on year. There has been a 32% drop in foal production, which is an even more significant figure in the context of forthcoming years. Britain now ranks bottom of the global league in terms of the percentage of trainers’ costs that they are able to recoup through prize money—the figure is 21%—which means that trainers are increasingly dependent on their fees. That raises the costs of having a horse in training, with the result that fewer and fewer people—such as my hon. Friend the Member for Shipley (Philip Davies)—can afford to do it. We want to make racing an activity that more and more people can access, enjoy, participate in and contribute to, but by allowing the present structure we are doing exactly the opposite. We are feeding an increasing diaspora of British racing talent overseas.

The last Government’s attempt to deal with this problem, as with so many others, failed. The Gambling Act 2005 did not sort the problem out. It allows betting operators to base their remote operations offshore, often simply by placing the servers offshore while many of the offices are in the United Kingdom. It creates loopholes by allowing offshore bookmakers to avoid Gambling Commission regulation, and by exempting them from payment of their fair share of the levy.

25 Jan 2013 : Column 600

Mr Nuttall: In what ways does my hon. Friend think the operators who have moved offshore are enjoying any less regulation by being based in, for example, Gibraltar rather than in the UK?

George Freeman: Those operators are not required to comply with the regulation that applies to operators based in the UK. The Bill will simply create a level playing field by making offshore bookmakers subject to exactly the same regulation, which I do not think anyone would consider unduly onerous. Such a level playing field would also encourage new entrants into the betting market, a development of which Conservative Members in particular would approve.

I support the Bill principally because I think the amendments that it proposes to the 2005 Act will create that level playing field. It will

“regulate remote gambling on a point of consumption basis; to require all operators selling into the British market, whether in the United Kingdom or overseas, to hold a Gambling Commission licence to enable them to undertake transactions with British consumers and to advertise in the United Kingdom; to provide that all relevant operators contribute to the Horserace Betting Levy”.

That does not strike me as a radical package of anti-business measures. It does not strike me as a dramatic attack on the freedom of the market, or a contravention of any simple, basic business principles. It is simply common sense. We need a structure that supports our industry, is fair, and provides a level playing field for all operators.

I believe that the Bill will unlock three important benefits. It will provide better protection for consumers. If all operators are subject to Gambling Commission requirements, everyone who places a bet will know that wherever they are placing it, it will be subject to the same regulation. Operators will be mandated under the Gambling Commission’s licence condition 15.1 rather than being able to operate on a voluntary basis. The Bill will, as I have said, return a level playing field to the market, and in so doing will make it easier for small to medium-sized operators to enter the sector.

At the heart of the debate is an issue similar to the one that we face across the board. Industries are increasingly dominated by big players, while smaller placers are locked out at the bottom. The pyramid of racing, which at the top relies on the glamour and prestige of the Derby, the grand national and other big, celebrated events, has deep roots at the bottom. Unless we look after those roots and introduce a system that maintains their viability and sustainability, we will see them wither. I believe that the Bill does what the 2005 Act failed to do. It resolves a very simple and fundamental funding crisis at the heart of racing, and gives hope to the 60 race courses in the country—including Fakenham, which is on the edge of my constituency—by reassuring them that they have a sound basis on which to continue to thrive, and to support both racing and the local rural economy.

I understand that the Government intend to give effect to these measures with legislation of their own, and that they have published a draft Bill. I hope that the Minister will assure me that in pursuing their own legislation, the Government will seek to give effect to undertakings given previously. On 20 January 2011, at the end of the debate on the funding of British horse

25 Jan 2013 : Column 601

racing, my hon. Friend the Member for Weston-super-Mare (John Penrose)—who was then the Minister responsible for tourism and heritage—said:

“It has also been pretty much universally agreed in today's debate that the current levy system is old-fashioned and, if not broken, in the process of breaking.”

He also said:

“It is absolutely right for the House to urge the Government to come up with concrete proposals before the end of the year, and I am happy to accept that challenge, in line with the mood of the House.”—[Official Report, 20 January 2011; Vol. 521, c. 1067.]

Since May 2011, racing has been involved in a pre-consultation process and subsequent bilateral discussions with the betting industry, represented by the industry’s recognised trade body, the Association of British Bookmakers, and under the auspices of the Department for Culture, Media and Sport, to achieve a sustainable long-term replacement for the levy. Despite its best efforts, and notwithstanding the aims of the Bill, racing is continually told that the levy is incapable of the reform that would enable it to capture modern forms of betting. It is therefore vital for the work to establish a mechanism that is fair, enforceable, commercial and sustainable to be completed. Solutions, including a racing right and a Gambling Commission licence condition requiring bookmakers to have commercial terms agreed with racing, are available and the consultation is due to begin this year.

I understand the Government’s preference for legislation of their own. Having looked at the draft Bill and heard the views of the British Horseracing Authority, I should like to raise a number of issues which I hope the Minister will address in his closing remarks.

James Duddridge: My hon. Friend has referred repeatedly to the contribution of horse racing specifically, but the industry does not benefit the country equally. It is targeted on helping those in rural communities, some of which have suffered particularly badly over the last decade or so.

George Freeman: My hon. Friend has made an excellent point. While of course the industry has a general economic impact on the UK economy, certain pockets of the country are being hit particularly hard, including some of the areas that most need the economic growth that the Government are doing their best to unlock.

I move on to the areas that I wanted to ask the Minister to address. As I understand it, the clause in what might be called the “McIntosh/Hancock” Bill providing that once all operators selling into the British market have a Gambling Commission licence the legislation must provide that all operators contribute to the levy has been omitted from the Government Bill. Will the Minister provide reassurance that the Government Bill or some other measure will provide that all operators will contribute fairly to the levy?

Does the Minister agree that we need to tackle the basis on which we fund racing, and that voluntary arrangements for the funding of an industry and a sport as important as racing are unsatisfactory in the long term, unless they are enshrined in some sort of contract, with legal underpinning, on the basis of which the industry can plan and invest? Does he agree that we would do well to look at some of the overseas examples, as different countries have tackled this problem in different

25 Jan 2013 : Column 602

ways? Australia, in particular, has very effective legislation that ensures a commercial basis between the sport and the bookmakers, providing a sustainable basis for funding the industry.

On regulation, I note that the Government Bill says that the enforcement of licensing at the point of consumption will be light touch. We are all in favour of light-touch regulation, but will the Minister guarantee that the Government’s interpretation of “light touch” will still mean appropriate provision for enforcement is made to prevent many operators from escaping its provisions? Such a situation occurred as an unintended consequence—I am sure it was that—of the Gambling Act 2005.

I hope that the Minister will reassure the House that the ambitions of this Bill, the ambitions set out by the House in discussing its original presentation and the undertakings given by the former Minister will be dealt with in due course by the Government. I understand, as I am sure all hon. Members do, the pressures and complexities that the Minister faces in legislating in this field, but we have a duty to get this right. We have an historic opportunity to do so in this Bill, in the interests of our economy, at a time when we need to do everything we can to ensure growth in key industries in this country, and, in particular, in the interests of our rural economy and British leadership around the world in a great and growing business.

We are having this debate on the day the Prime Minister returns from Davos having given major undertakings about this generation of Conservatives’ commitment to fair tax and to ensuring that we believe in and will support responsible capitalism and moral markets. As Conservatives developing an agenda for growth, enterprise and entrepreneurship, we need a fair tax regime that ensures that those who benefit from the sector pay their fair share in supporting it. I very much look forward to hearing the Minister’s remarks.

11.51 am

James Duddridge (Rochford and Southend East) (Con): It is a pleasure to follow the excellent speech by my hon. Friend the Member for Mid Norfolk (George Freeman). When looking around the Chamber, I was surprised to find that he was handing out a copy of his speech to other Conservative Members, who were taking great interest in it. I then realised that it was not his speech but the Racing Post. Mr Speaker, who was in the Chair at the time, noticed that and allowed it, thus establishing a precedent that although it is, rightly, not permissible for hon. Members to read newspapers in the Chamber, unless, like the Vice-Chamberlain of Her Majesty’s Household, the right hon. Member for East Yorkshire (Mr Knight), who was previously the Chair of the Procedure Committee, they read them on their iPad, they are allowed to look at the Racing Post.

Philip Davies: Will my hon. Friend give way?

James Duddridge: I have quite a few points to make, but I will give way.

Philip Davies: I just want my hon. Friend to clarify something. Is he advancing the case that hon. Members are able to read the Racing Post in the Chamber at any time or merely when it relates to a Bill under discussion?

25 Jan 2013 : Column 603

Mr Deputy Speaker (Mr Nigel Evans): Order. Before the hon. Member for Rochford and Southend East (James Duddridge) responds to that, may I just say that no precedent has been created whatever. If the hon. Member for Mid Norfolk (George Freeman) would like to place the Racing Post back on the Bench, we will be able to continue with the debate.

George Freeman indicated assent.

Mr Deputy Speaker: I think that that means no precedent has been created.

James Duddridge: Obviously I abide by that very wise ruling, Mr Deputy Speaker.

The hon. Member for Newcastle-under-Lyme (Paul Farrelly) referred to bet365. I had seen some promotional material for that company, but I was able to look on my iPad to find out a little more. The company should be very proud of the taxation it is paying rather than going offshore, and although I am not a heavy better, I will try to bet with bet365 and, thus, keep that money in the UK rather than send it offshore. I hope that that sends a message to other gambling firms that not only is doing the right thing moral, but individual consumers will change their behaviour and firms will benefit from that approach—Starbucks is starting to learn that lesson here in the United Kingdom.

I welcome the opportunity to discuss the detail of the Bill and I add my congratulations to those given to my hon. Friend the Member for West Suffolk (Matthew Hancock). He is now the Under-Secretary of State for Skills, but he first introduced this Bill last summer. I also congratulate my hon. Friend the Member for Thirsk and Malton (Miss McIntosh). My hon. Friend the Member for Mid Norfolk refers to this as the McIntosh/Kinnock—sorry, not that.

The Parliamentary Under-Secretary of State for Skills (Matthew Hancock): What did I do to deserve that?

James Duddridge: My hon. Friend has done many things to deserve that, as he well knows. However, I think it best that I move on swiftly.

My hon. Friends have been a great double act in preparing and explaining the Bill and, whatever happens today, legislation should be introduced. Regardless of whether that happens through this Bill or another, there will be a great improvement.

George Freeman: Although attendance in the House and Public Gallery is relatively sparse today, as it is a Friday, does my hon. Friend acknowledge that the debate is being closely followed by the many thousands of people involved in the industry? The attendance today is not a sign of paucity of interest; a substantial degree of interest in the Government’s getting this right has been shown in the newspapers and online.

James Duddridge: I could not agree more. That is very important and I am sure that if there is a vote, if we reach that point in our proceedings, hon. Members who are working studiously in their offices and Committees will rush to the Chamber to express a view.

Although some might say that there is limited value in having the two Bills progressing through Parliament at the same time, it provides an excellent opportunity for Members of Parliament to undertake additional

25 Jan 2013 : Column 604

scrutiny that goes above and beyond the excellent work done by the Select Committee on Culture, Media and Sport.

Hon. Members will have two options, if they choose to legislate. The first is to pass the Bill today, to allow it to go to Committee and to make progress in that way. The other will be to receive reassurances from the Minister on clause 4 and allow amendment of the Government’s Bill. It is good to have that dual-track approach. I have listened to the debate carefully and would be minded to allow matters to be taken forward in the Government Bill.

In an intervention, I asked about the territorial extent of the Bill and I received some reassurances. I shall come to that later, although I managed to tease out from my hon. Friend the Member for Thirsk and Malton that there are no explanatory notes. They would have been useful and would have helped its case.

I intend to speak primarily about the parts of the Bill that are shared with the Government’s draft Gambling (Licensing & Advertising) Bill, although I wish to make some additional points on the levy.

George Freeman: My hon. Friend makes an interesting point about the lack of explanatory notes. Does he agree that the Bill is admirably short? It does not even cover the two sides of the page and has no more than five very short clauses? It is also incredibly simple, making provision for the three things that we have all described. Does he agree that it does not need substantial explanatory notes and that it is a wonderful example of proposed legislation? Perhaps we could take that up more generally in the House and encourage the Government to produce simple and short Bills for our consideration.

James Duddridge: I would certainly encourage the Government to produce simple and short legislation, and less of it. My hon. Friend mentioned that the Bill has only five clauses, and clause 5—entitled “Short title, commencement and extent”—is needed for every Bill, so it actually has only four clauses. We have already questioned whether another clause can be taken out or amended in Committee, further shortening the Bill. The hon. Member for Eltham (Clive Efford) talked about the Government’s draft Bill and said that there are many similarities. I am not sure who has copied whose Bill, but they both seem to be operating with equal brevity, which should be encouraged.

I want now to give some of the background to the Bill. My hon. Friend the Member for Mid Norfolk mentioned the Gambling Act 2005, and despite his criticisms I think that there is general consensus outside the House and among most Members of Parliament that that Act was a step in the right direction. It brought together other pieces of gambling legislation, particularly the Gaming Act 1968, and had an awful lot of good stuff in it that I would not want to see go. It might not have been not bold enough, and perhaps it did not have sufficient foresight about how the offshore industry might work and how internet gambling might fit alongside all other forms of gambling.

Philip Davies: My hon. Friend might be being far too kind to the 2005 Act. As far as I can see, it was intended to introduce a range of casinos into the country that did not materialise and to make the UK a hub for gambling

25 Jan 2013 : Column 605

businesses. Since the introduction of that Act, not only has there been no expansion in casinos but betting companies are all clearing offshore rather than moving to the UK.

James Duddridge: My hon. Friend is right to chastise me in relation to super-casinos. I was referring to the broad objectives, which were to prevent gambling from being associated with crime and disorder; to prevent it from being used to support a crime; to ensure that it was conducted in a fair and open way; and to protect children and other vulnerable persons from being harmed or exploited. I thought that those aims were laudable, as opposed to the excessive regulation of super-casinos, to which I shall return anon.

Miss McIntosh: I am following my hon. Friend’s remarks with great interest. Did the 2005 Act not liberalise and deregulate some casinos?

James Duddridge: The 2005 Act was a bit of a pig’s ear in relation to a number of issues. In Southend, for example, we had three casino licences, and were pushed to bid for a super-casino, to which my hon. Friend the Member for Shipley (Philip Davies) referred, not because we particularly wanted it, but because a super-casino on the Thames corridor would put the three casinos out of business. I shall return to the casinos in Southend, because they are relevant to the responsibilities envisaged by the Bill. The further the regulation from the person making the bet, the easier it is not to take responsibility.

I particularly welcomed the provisions in the 2005 Act on the protection of children, because as a child I placed a bet. I am clearly not very good at betting— I did not win—but I placed a £1 bet. Someone kindly explained to me that I had a better chance of winning if I placed an each-way bet. I did so, only to find that it cost me £2. They said, “Would you like to pay tax?” I thought that that was rather strange, because as a 16 or 17-year-old I was not used to paying tax, so I said, “No.” Then I realised that I had to pay tax if I won. Children need to be protected. [Interruption.] My hon. Friend the Member for Shipley (Philip Davies) should have better sense than to barrack me from a sedentary position. I have known him for a number of years, and have discussed betting on a number of occasions, and every time I come away with him trying to sell me a horse’s leg or urging me to place a bet. Invariably, not knowing how to place a bet, I end up giving him a fiver and asking him to place an extra bet for me. He has never given me anything in return, so when he says that horse ownership is not a commercial business, I can well believe it.

The Gambling Commission—the new regulator set up by the 2005 Act—has duties including the operation of licences for organisations and individuals who provide gambling, as well as personal licences for certain individuals working in the gambling industry. Remote gambling is the key issue addressed by this Bill and the Government’s Bill, and indeed the desire to impose order and regulation on the online sector was one of the motivations behind the 2005 Act, alongside the interests of the Treasury following a visit by Americans who thought that it would be a great boost to the UK economy to introduce super-casinos—which was certainly not the case.

25 Jan 2013 : Column 606

The intention of the Act was to protect British customers from unscrupulous operators and to make Britain a base for the growing online gambling industry. It has clearly failed, and many Members have evidenced that today. I do not think that I need to go into the details, as that would prolong the debate for the sake of it, which I do not want to do, as I have a number of issues of substance that I want to cover.

Under the Act, remote gambling operators are required to hold a Gambling Commission licence only if they have remote gambling equipment located outside Britain. Operators based outside Britain but licensed in the European economic area and Gibraltar are permitted to advertise gambling services in the UK with reliance on the licence issued in their home jurisdiction. I believe that other operators are allowed to operate in Antigua, Barbuda, the Isle of Man, the States of Alderney, and Tasmania. Quite why those countries are allowed to operate on the same basis, I do not know, because they are a bizarre collection of countries and geographies that are not usually put together. Perhaps later in the debate someone will explain why they stand out. This has created a number of key problems and challenges around consumer protection and the regulation as competitiveness issues of British licensed gambling operators. I would like to spend some time developing these points further.

Participation in remote gambling is steadily increasing. According to the British gambling prevalence survey in 2010, 73%—that is, 35 million—of the adult population participated in some form of gambling in the year prior to the survey, with 14% using the internet to gamble. I thought that was an awfully large proportion. As a novice gambler I thought that I was not a participant in this great project, but then I realised that state gambling included the national lottery, which I do online, and well as the pools, which some people do online. Some of those silly games—Monopoly or similar—that I have been persuaded to play while topping up my national lottery game are included as well, so it is quite a broad area.

Like most people, I had no idea where the tax on those games on websites was going. There is a complete lack of clarity. It is a growing industry and a growing problem. A report by the Gambling Commission on industry statistics estimates that the total global revenue from gaming, the gross gambling yield, which for some reason excludes telephone betting, was more than £20 billion in 2001, representing 10% growth on the previous year.

The UK consumer gambling yield which, as opposed to the broader statistics, includes telephone betting, is estimated to have grown by 5% between 2010 and 2011 to reach £2 billion, so this is big business. It has an impact on many people, which makes the need for reform so much more important and relevant. The Government rightly recognise that the current system is flawed and can no longer adequately ensure the protection of British consumers that had originally been envisaged.

I said that I would return to the subject of Southend and gambling. There are three casino licences in Southend. I go into those casinos, as one would expect of a Member of Parliament, and talk a lot to operators about the responsibility for problem gamblers. People with British licences onshore are responsible for that regulation. Having listened to the debate, I think that

25 Jan 2013 : Column 607

the position offshore is less certain. In some cases operators could have no responsibility.

If a problem gambler in Southend goes into the casino and is in remission, for want of a better word, and going to Gamblers Anonymous, they can say to casino staff, in effect, “Look, I’ve got a gambling problem. Please don’t serve me when I come in.” A register is maintained. I believe this goes across the board. If that person, for whatever reason—stress, perhaps—is worrying about whether they should gamble or not and subsequently says, “I’ve changed my mind. I want to gamble again,” they are not allowed to do so. They are opted out, but that same person can nip on to a computer and bet.

It is wrong that that differential exists between online and offline, onshore and offshore. It is not a level playing field. It is not to the benefit of the gambler. Most gambling is perfectly legitimate and does not cause a problem, but for some people it does cause problems. Bringing the legislation, the supervision and the taxation closer to the individual would be a great help.

Philip Davies: My hon. Friend is right about the importance of people being able to self-exclude from gambling. We all want to see as little problem gambling as possible, but I am sure it is just as possible for somebody to self-exclude online as it is to self-exclude in a shop or in a casino. I am sure the facility to self-exclude applies online as well.

James Duddridge: What my hon. Friend says is logical, but I challenge him. I have not seen examples of that. I notice that he has his iPad, so perhaps he can zip through a few websites to see whether there are any that are self-excluding. I know that the casinos and the operators were very proud of that facility.

George Freeman: My hon. Friend was developing an interesting argument about onshore and offshore taxation. Does he agree that there are strong parallels with the message that the Prime Minister has been giving at the Davos summit in preparation for the British leadership of the G8, that one of our central themes and ambitions will be to ensure an appropriate regime for tax accountability generally for companies offshore and to close the loopholes that have seen major corporations in other areas moving offshore and denying the Exchequer appropriate tax revenues? This is part of the much bigger debate about responsible capitalism.

James Duddridge: I entirely agree. The Prime Minister’s other speech this week will receive much more coverage in the coming weeks and months, but I think that his Davos speech was equally important because it sent a message to companies about how they should conduct their tax arrangements, whether they are banks, Starbucks or online casinos. They need to do the right thing and pay tax on their online business, as John Lewis does, or pay tax on the betting framework, as bet365 does.

Miss McIntosh: On the point about self-exclusion, is it not the case, as I found when I visited some high street betting shops in Thirsk and other towns in my constituency, that self-exclusion is more difficult online? The staff in

25 Jan 2013 : Column 608

betting shops are trained to identify at-risk and vulnerable people and will step in to discourage them from placing a bet, but I am not sure how that control can work on a home computer.

James Duddridge: I apologise to my hon. Friend, but I will have to defer to others on that point, because I have placed a bet only twice. The first time was around the ’92 election, when there was a runner called Party Politics, which I thought was a sign. The election result was not as pleasing as I had hoped, but I did win on that bet. The other time was to bet on my becoming the next Prime Minister. I will indulge the House a little more on that unlikely subject, because I think it illustrates some points in relation to supervision.

Mr Nuttall: Will my hon. Friend give way?

James Duddridge: Without hesitation, on the condition that I have a first supporter.

Mr Nuttall: Will my hon. Friend enlighten the House on the odds he was able to obtain on his becoming the next Prime Minister?

James Duddridge: I will illustrate the point I was trying to make by placing the bet. Initially, staff pretty much told me that they had never heard of me, but I pressed the issue, particularly when I saw some of the people who were listed. They gave me odds of 250:1. I was not trying to earn money, because I thought that the chances of my ever becoming Prime Minister, let alone the next one, were zero. Instead, I was looking at how the odds could be changed and at suspicious betting patterns, particularly given my comments about Liberal Democrat betting. Within the day they had suspended taking bets on me because I was so popular, based only on one or two bets that I had other people across the country make for only another few pence. That demonstrated how easy it is to manipulate the betting statistics and, in relation to the Bill, how important it is that betting is regulated, supervised and licensed locally, rather than simply offshore.

George Freeman: I apologise for interrupting my hon. Friend’s argument. He mentioned that the 1992 grand national included a horse called Party Politics, which he thought was a sign. I have just noticed that the Blue Square website claims that the favourite for the race to which I referred in my speech, the 1 o’clock at Lingfield, is a horse called Wind for Power. I wonder whether he thinks, particularly in the light of the business of the House, that that, too, is a sign.

James Duddridge: I am not sure whether I might not still be on my feet at 1 o’clock, but perhaps if I rush through my comments I will find time to place a bet on behalf of myself and my hon. Friend.

Although the majority of operators currently targeting British consumers are subject to established and effective regulatory regimes, not all of them are, so we are suffering from those problems now. For example, some online operators have begun to target British consumers and very little is known about the level of their regulation or, indeed, consumer protection. There is concern about that issue and others when it comes to European operators and, in particular, operators beyond Europe without

25 Jan 2013 : Column 609

sufficient regulatory oversight. There has been some debate about light-touch regulation and what is sufficient, but there needs to be a level playing field. I will not go into details of my particular view on the level of regulation—that would be wrong and I do not think that it applies to this Bill.

Even where operators are subject to appropriate levels of overseas regulation, there are different regulatory standards and approaches. This lack of parity inevitably leads to British consumers receiving different levels of protection depending on which operator they use. I recall discussing case work with another Member of Parliament in the Tea Room. A constituent of his had lost £25,000, by which I mean that their online betting account, which had been very successful and had a balance of more than £25,000, was hacked into, a losing bet was made and that money was lost. They maintain that it was not they who made the bet and I am not sure—I was not privileged to sit in on the relevant debate—whether that online gambler was subject to online regulations.

We wander around and make decisions in the United Kingdom under the security of British law. Although there are exceptions when there are problems, largely we are very well protected as UK citizens when making purchases. It is clear that that is not always the case in the gambling arena and that the 2005 Act has not allowed for it. I welcome the exploration of how we can solve some of those problems, whether through the Offshore Gambling Bill or the draft Gambling (Licensing & Advertising) Bill.

My hon. Friend the Member for Thirsk and Malton referred initially to the remote gambling Bill. Perhaps that was the working title of the Government Bill. My hon. Friend nods in assent, for which I am grateful. I was somewhat confused when preparing for this debate, because I thought there was a third Bill in play, so I am grateful to find that that is not the case. It is difficult enough to deal with two Bills at one time.

Without specific requirements imposed by overseas jurisdictions, operators may not be compelled to report certain information, such as suspicious betting activity, to the Gambling Commission or relevant sports bodies, even when such an activity may involve a British sportsperson and/or British consumers. As such, there is a potential risk of match fixing. The hon. Member for Newcastle-under-Lyme used the term “in-match betting”, I think, which I was not familiar with, but I suspect it covers things such as how many times a bowler will stray away from the wicket during the course of one over. I understand from press reports that that is an increasingly popular sign of betting.

Paul Farrelly: The hon. Gentleman is right, but the not very technical term is “in-game betting”, as I understand it.

James Duddridge: I am grateful for that correction. One of the things emerging from this debate is that I need to spend some more time betting in order to be able to contribute more fully to debates such as this.

There is a potential risk of match fixing and suspicious betting practices taking place on overseas-licensed sites, including those that may have an impact on sports in Britain. The British authorities may not be notified, thereby placing individuals at much greater risk.

25 Jan 2013 : Column 610

Some offshore operators do share information with the Gambling Commission, in addition to their home regulator, and they do so on a voluntary basis. I would be interested to hear more examples and details from the Minister. It is all very well to say that they share some information, but is it sufficient? I suspect there may be some smoke and mirrors regarding what is and what is not shared.

The detail is often insufficient for it to be used in an investigation. In fact, I cannot find many examples of investigations taking place. That limits the Gambling Commission’s ability to conduct thorough investigations when it does not have powers of jurisdiction. There have been instances when the commission has not received the relevant information and has been unable to obtain information from its overseas licensed operators or regulators. That is clearly not in anybody’s interest or in that of the market to work effectively. Let us face it: if the market is not robust, people simply will not place a bet. Why would they place a bet with an organisation—be it online or offline, onshore or offshore—if they thought that it would wriggle out of the contract? It is important to look at the benefits of bringing all this back to the UK for the sustainability of the industry.

In some cases, the Gambling Commission is told that the refusal to provide information is down to overseas data protection requirements. I would be interested to hear whether the Minister thinks that that is a legitimate concern or just a veil that these organisations are using. There is currently no way of ensuring that the protections of the gambling regulations framework, particularly those afforded to licence condition 15—for those who do not know, that is about the reporting requirements on restrictions of betting activity—are applied on a consistent basis to operators who transact with British consumers or are allowed to bet on British events.

With technological advancement, it is becoming increasingly difficult to identify the level of regulatory oversight of gambling service provision and where the key equipment is, which is important in relation to the legislation.

Miss McIntosh: I understand that countries such as Denmark have made the point of consumption the basis of advertising licensing, as well as tax. The technological changes are obviously happening, so does my hon. Friend think that there may be a reluctance on the part of some operators to engage with the technology?

James Duddridge: I am not sure that there is a reluctance to engage with the technology per se, but there is a reluctance to do so where it might be disadvantageous rather than advantageous. I recall going to a business in Southend that specialised in online marketing. I did not question it on the taxation arrangements of the companies they were helping or those of the company itself, because that was not the focus of my visit. I think I will go back and ask a little more about the online gambling firms it is working with and the implications of how technology can be used to assist not only in compliance with regulations but in best practice, which is in the interests of the whole industry.

Many operators have different products licensed in different jurisdictions, and it might be thought that this provision could be a regulatory burden. I know that my hon. Friend the Member for Shipley will pull me up

25 Jan 2013 : Column 611

very quickly on that issue. However, several companies deal across different jurisdictions, and I do not think that it should trouble them too much.

Philip Davies: I am struck by how much faith my hon. Friend has in the Gambling Commission over and above any other regulator in any part of the world that has been assessed as having as good a regulatory standard as ours. On what basis does he have such complete and utter faith in the Gambling Commission and know for a fact that it is so much better than any other regulator in any other jurisdiction?

James Duddridge: I think that my hon. Friend is putting words into my mouth in relation to the Gambling Commission. I would say, though, that we have more control over the Gambling Commission in comparison with a foreign commission or an area that is completely offshore and completely unregulated. There is no great history of regulation in this area, but we do sometimes focus on some of the more problematic cases.

To return to the idea of working across jurisdictions, one can often go on to a website and not be sure which jurisdiction one is trading in. I mentioned my dabbling in the national lottery. A friend who used to live in Southend and moved away to southern Spain—Southend being as sunny as it is, it comes as a surprise that anyone would want to do that—bought a lottery ticket there. Although they had a modest win—£10, I think—they were outside the jurisdiction and blocked from receiving that money. We need clarity because there is confusion even with something as simple as a lottery ticket in the EU, and we should look at the issue in detail.

The Gambling Commission reported that it receives inquiries about social responsibility and unfairness in relation to offshore gambling—I am sure it also receives such inquiries in relation to onshore gambling—but that it is not able to do much about what is going on. It has been unable to investigate complaints or inquiries, so it is difficult for me, or indeed anyone, to understand the size of the problem. It would be advantageous to solicit information and hard numbers, and I urge other Members of Parliament to consider the issue.

Mr Nuttall: My hon. Friend makes the valid and interesting point that some people may complain that they have accessed sites and did not realise which jurisdiction they were in. Equally, however, will not many customers be satisfied that they are getting better value by accessing sites in other jurisdictions? Perhaps they even go out of their way to seek those other sites.

James Duddridge: That is a reasonable point. There could be better protection in other jurisdictions, or simply better odds, and people may be very aware of the risks they are taking in response to those odds. During the problems with the Icelandic banks, people felt that they knew the risks they were taking for an extra couple of per cent. If I were to place a bet on bet365—I was tempted to place one on the next leader of the Labour party—I might be tempted to use a site I had never heard of if I got better odds. It is worrying, however, because people must know the details and be confident that when that eventuality—the change of leader—takes

25 Jan 2013 : Column 612

place around 2015, the site will pay up. Will the site pay up against a person standing in as temporary leader or must it be a long-term leader? Will it pay up for someone who is just keeping the position warm before another Member of Parliament takes on the role? I am not sure, but offshore gamblers need clarity about when the site will pay up, and it is clear from this discussion that such clarity does not currently exist.

Having set out my broad position, I will now look at the specifics of the Bill and in particular the point of consumption, which goes to the heart of the Bill. The Government are already introducing measures on remote gambling, which in many ways will provide greater protection for British-based users of remote gambling services. The case for change is clear, but there is limited consensus on standards of software testing and what it means to be a British consumer—where the hardware is, whether it is a software issue. Those matters are quite complex as information is pinged around the world within seconds.

There is concern about a lack of fairness towards British-licensed operators that operate overseas or have overseas consumers. We must look at that issue and at what happens when British citizens travel overseas. If I travel to America and use a site to place a bet on Stoke City, what would the regulations be compared with those covering a bet made in the country where the event takes place?

Both Bills seek to amend the Gambling Act 2005 so that remote gambling by consumers living in Britain is regulated on a point of consumption basis, rather than on the point of supply, and there is broad agreement that that is the right way forward. Such a measure is sensible and a fundamental change to the basis on which the system of remote gambling is regulated in the UK. By moving from the current place of supply basis to a place of consumption basis, the British consumer becomes the focal point around which the system is based, rather than the location of the gambling operator. In terms of consumer protection, that is the right way forward.

All operators selling into the British market will be required to hold a Gambling Commission licence, and will therefore be subject to all the provisions of the previous Government’s Gambling Act 2005 and its regulations, to the Gambling Commission’s social responsibility and technical standards requirements, and to the provisions I have referred to. That will bring the original intent of the Act up to date. My hon. Friend the Member for Shipley was entirely right to say that I should tar not the whole Act with the brush of success— I am thinking of super-casinos—but only its broad understanding.

Bringing the original intent of the Act up to date will give consumers greater confidence that the operators they choose will be subject to the same standards. For example, an offshore operator that makes remote gambling facilities available to consumers around the world on the internet will need to obtain an operating licence from the Gambling Commission if people in parts of Great Britain are capable of using them, regardless of whether they are used in Great Britain. If operators want to avoid having such a licence, they would need to block internet access from consumers in Great Britain at their own cost, so that people are incapable of using remote gambling facilities illegally in the UK. The

25 Jan 2013 : Column 613

measure will also mean that there is a requirement for operators to contribute British problem gambling issues and regulatory costs. Effectively, they would have to make a contribution where they are part of the problem, which is an extremely welcome development, and will go some way to levelling the playing field for UK-based companies.

I have concerns about the whole arena of gambling. Recently, the Southend Standard, a weekly publication in my patch of Rochford and Southend East, set out the number of betting offices on the local high street. I was surprised to find that there were five, including two run by the same company. I cannot help but think that we need to look again at the broader issue of gambling, and particularly at how online gambling based offshore encourages people to bet money they may not be able to afford.

Switching to a point of consumption basis will mean that the location of the gambler and not the operator will be the deciding factor on what tax to pay. For example, money collected by an online casino that is attributed to a UK player will be subject to British taxation, which seems entirely fair. Although there is no mention of the rate, the current rate of 15% on gross profits clearly puts domestic operators at a disadvantage. The hon. Member for Newcastle-under-Lyme rightly said that the level of taxation is the crux of the matter. I believe William Hill accepts the principle of changing to the point of consumption from the place of supply if the rate of taxation is right. I understand it has pitched for 5%, but it would suggest a low figure, wouldn’t it? I have never been a fan of high taxation—I prefer lower and flatter rates—so I encourage the Government to consider whether 15% is right and competitive, and whether it will encourage growth in the UK and people in other jurisdictions to bet in the UK.

The new licensing arrangements will also mean that, for the first time, overseas-based operators will be required to inform the British Gambling Association of suspicious activities, which will help the fight against illegal activity and corruption in sports betting, which discredits not only the betting community but the sporting community—people cannot enjoy sport if they believe the result is fixed. I welcome the inclusion of that measure, which, as I have said, removes the potential risk of match-fixing and suspicious betting practices in sporting events on overseas-licensed sites.

The second half of the Bill relates to the horse racing levy. My experience of horse racing is not much better than my experience of betting in a shop or online, but I have been to Aintree, and to Lingfield a couple of times—they were enjoyable events. As a Member of Parliament whose constituency is partly rural, I am particularly concerned about rural communities. Quite often we make decisions here that have an impact on them. A number of Members have mentioned the great benefits of the horse racing industry, with 60 race courses across the UK.

Miss McIntosh: As I think I said, two race courses have closed, so we are have only 58 race courses at the moment.

James Duddridge: I thank my hon. Friend for that correction. I had not picked up on the fact that that figure was the old figure, rather than the new figure after those closures.

25 Jan 2013 : Column 614

The numbers are immense. I shall not repeat them, partly because I might get one of them wrong again, but also because I think similar numbers were read into the record by my hon. Friend the Member for Mid Norfolk. However, the contribution is massive.

I had not realised how peculiar the levy was. Nobody is suggesting that we have a similar levy for similar industries. I am sure that even the Labour party in search of funds would not argue that the political levy should be more or less likely to be enacted just because bet365 has political betting. Many marketplaces survive without receiving a subsidy from the people who bet on them. For example, the revenues for cricket and football come from different sources. My hon. Friend the Member for Shipley made an interesting point about the case for looking more holistically at the levy. While there has largely been a decline over five years—there has been a little up-kick in the past couple of years—it would be much more interesting to see the figures going to horse racing based on TV revenues plus the levy.

As a Conservative, I do not start every debate with a blank piece of paper and decide what there should be. I am very cognisant of what there already is. The levy has provided a backbone to the horse racing industry, and it would be unwise to have a revolution in this sector. My hon. Friend pointed out that it is not perfect in its distribution of funds. While I am trying to build up a resistance to his betting advice, I will take his political advice on that.

On the broader landscape in relation to the horseracing levy, I welcome the fact that my hon. Friend the Member for Mid Norfolk raised the issue of the Davos speech. It will not turn out to be as important as the Europe speech, but it was significant in turning things on their head and saying that companies need to take a greater degree of responsibility themselves. That applies to the offshore gambling issue, but also to the levy.

I am not minded to support clause 4 in its current state. If the Bill goes to Committee, I would love to serve on it and table a probing amendment that might force a vote—I am not sure what one calls such an amendment; an aggressive probing amendment, perhaps—and remove clause 4. That is not to say it is not the right way forward in the longer term. If the Minister’s consultation and encouragement to the levy board and the voluntary system does not work, I would come back to the provisions in clause 4. It may be that, rather than removing the clause, we could make the measures provisional on what happens under the voluntary arrangement. Let us give the industry the chance to fix it and, if it does not, let us impose another solution on it.