Miss McIntosh: Today we are seeking a reiteration from the Minister of his six-month time frame for the current levy board-led process before he proposes a replacement. It would be good to know that that process is in place. I am a little disappointed that my hon. Friend the Member for Rochford and Southend East (James Duddridge) does not agree with what I said about the importance of clause 4, which seeks to remove a distortion in the market. I predict that the Minister might resist clause 4, if not the rest of the Bill, on the grounds that he believes it will constitute a state aid. However, I thought I made a powerful case—if not by

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PowerPoint, which I do not think would be admissible in the Chamber—for why clause 4 goes to the heart of the Hancock/McIntosh version.

James Duddridge: My hon. Friend made a very powerful argument. The case she made persuaded me to move far more towards her position than when I arrived in the Chamber. I will listen with great care to the Minister’s remarks, but I am given great security by the fact that I can listen to her comments and other hon. Members who make a contribution—via intervention or a substantive speech—and not have to come to a final view today. Either the Bill can be passed into Committee, where we can probe it in more detail, or we can amend the Government Bill in Committee, as and when it appears in the third Session. In fact, if it ends up appearing nearer the end of the third Session, we will have had more time to consider the issues.

I am not commenting on the urgency of dealing with this matter. I appreciate that Government time should not necessarily be committed at the front end of the programme, but my hon. Friend the Member for Thirsk and Malton quite understandably sees the need for a certain amount of urgency in this regard. However, that needs to be balanced against doing the right thing. My gut feeling, not having heard the Minister’s formal remarks yet, is that I would like to know a little more before full-heartedly supporting the position she has outlined.

I said that there are two ways to go forward. One is to let this Bill pass; the other is to consider and perhaps amend the Government’s Bill. At this stage I will continue to listen to the debate before making up my mind, but I am minded to prefer to see the Government Bill go through and be amended. However, that should in no way be a distraction from, or criticism of, the case made by those who have very ably brought these matters to our attention.

I have a number of other points to make, but I am conscious that other colleagues want to contribute and they may have fresh matters to raise. Rather than my reiterating and adding more detail to some of my points, I will conclude and listen to them. I thank my hon. Friend the Member for Thirsk and Malton for bringing this matter before the House. She is a passionate individual—passionate about her constituency and about all businesses, specifically the horse racing business today. The House appreciates her efforts, and I am sure that her local community and everyone associated with the broader industry will see the excellent work she is doing.

12.42 pm

Mr David Nuttall (Bury North) (Con): As ever, it is a great honour and privilege to follow my hon. Friend the Member for Rochford and Southend East (James Duddridge). I thank him for a comprehensive speech.

Like my hon. Friend, I have no race course in my constituency—I am not lucky enough to have one. Unlike the hon. Member for Newcastle-under-Lyme (Paul Farrelly), I am not a member of the Culture, Media and Sport Committee. Indeed, it almost feels as though Members have to qualify to take part in this

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debate, either by having stables in their constituencies or by being members of the Select Committee. However, I have a number of bookmakers operating in my constituency, providing valuable jobs for my constituents. Many of my constituents will be customers of those bookmakers and no doubt many will avail themselves of online gambling facilities—or, as we are referring to them today, remote gambling facilities.

I am not a sponsor of the Bill, but I suspect that many hon. Members—certainly many of my hon. Friends on the Government side of the House—will wish that they had put their names to it because, since it was printed on 25 June last year, no fewer than three of its sponsors have found their way on to the Government Front Bench.

Miss McIntosh: I hope that it is appropriate for me to point out that, although it is now too late to bet on Andy Murray going through to the final of the Australian Open, the fact that he will do so will add to the celebrations of Burns night. I hope this will encourage people to place their bets on future matches and, as we are discussing a sporting event, I hope that my hon. Friend will take his lead from that.

Mr Nuttall: I am most grateful to my hon. Friend for her intervention. I am pleased to hear that Andy Murray has got through to the final. I am sure that that will generate more business for bookmakers—online and terrestrial—because I am sure that there will be far more betting activity on the Australian open with him in the final than there would have been without his involvement. Following that intervention, I should like to thank my hon. Friend sincerely for her opening speech and for the comprehensive way in which she took the House through the complicated issues in the Bill. She dealt with interventions courteously, and her speech was most informative. I thank her for that.

As I was saying, no fewer than three of the Bill’s sponsors are now on the Government Front Bench: the Under-Secretary of State for Skills, my hon. Friend the Member for West Suffolk (Matthew Hancock), the Under-Secretary of State for Communities and Local Government, my hon. Friend the Member for Great Yarmouth (Brandon Lewis) and the Under-Secretary of State for Communities and Local Government, my right hon. Friend the Member for Bath (Mr Foster). All are now members of Her Majesty’s Government. That is a pretty high success rate, and I suspect that any future Bill on this subject will attract a rush of Members wanting to put their names to it in the hope that that might spur a move to the Front Bench.

I feel rather like the warm-up act before the main event in a theatre, because I am sure that the whole House is waiting to hear from my hon. Friend the Member for Shipley (Philip Davies), if he is fortunate enough to catch your eye, Mr Deputy Speaker. His knowledge of these matters is far greater than mine. As I said earlier, I have no particular knowledge of the horse racing industry or the bookmaking industry. As ever, I am looking at the Bill purely from the point of view of what is best for my constituents.

The Bill has come into being because the Gambling Act 2005 has failed, in that it was designed to make the United Kingdom an attractive place for operators and a magnet for new operators flooding into the UK market.

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In fact, it has had the opposite effect, with 18 of the 20 largest operators having moved offshore. This Bill is an important measure. It will impact on the lives of tens of thousands of people employed in the betting industry and tens of millions of customers. Depending on whether clause 4 is included in the Bill, it will have an enormous impact on the horse racing industry.

The UK betting industry employs about 40,000 people across the UK and supports the jobs of some 60,000 more, contributing about £1 billion to the Exchequer every year. Just over half—52%—of the gross gambling yield in the United Kingdom is generated by the retail betting sector, as compared with casinos, for example, which account for only 14% of the gross yield.

Betting and gaming have for many years been a popular pastime for many people. For most, it is a pastime carried out and enjoyed safely and responsibly. The British gambling prevalence survey was carried out by the National Centre for Social Research, and in 2010 the Gambling Commission sponsored the third in a series of prevalence surveys. The National Centre for Social Research is an independent social research institute, and the 2010 survey followed on from two previous surveys in 1999 and 2007. The 2010 survey found that 73% of people aged 16 and over—around 35.5 million adults—had participated in some form of gambling in the previous year, while 56% of adults had participated in a form of gambling in the year before that. The difference there, of course, is that some forms of gambling can take place at 16, but others only at 18. It was reported that 4% of adults said that their involvement in gambling had increased in the previous year; for 13% it had decreased; and for the rest it remained the same. In 2011, the bookmakers William Hill reported that its customers had staked almost £80 billion, and that it processed around 1 million bets every single day.

All that gives us some idea of the popularity of the industry and the importance of the measure before us. As the preamble to the Bill states, it is designed 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; to provide that all relevant operators contribute to the Horserace Betting Levy; and for connected purposes.”

It is perhaps worth asking why it is that an Act passed just eight years ago, which did not come into force until 1 September 2007—in force for less than five and a half years—now requires amendment. What is it that has gone wrong? I would submit that, as with many other previous attempts to try to regulate and control the market—whether it be the betting market or any other market—loopholes soon become apparent as human nature takes effect and people try to get round those controls. The Gambling Act 2005 was in part a consolidation measure, but it was also a reforming measure, seeking as it did to reform and update the regulation of online gambling. The Act also created a new single regulator for the betting industry—the Gambling Commission.

I realise that many people would like gambling to be banned outright, but I do not agree with them. I believe that in a free society it should be for the individual to decide whether or not to gamble. Until 1960 betting was

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largely illegal in this country, but the Betting and Gaming Act 1960 liberalised the gambling laws and legalised betting shops. However, despite that Act and the Betting, Gaming and Lotteries Act 1963, commercial gambling became a source of criminal activity, and a new Act, the Gaming Act 1968, was therefore necessary. It was largely successful in removing the criminal element from gambling, and it established the Gaming Board as the new regulator for the gambling industry.

The 2005 Act sets out, in its very first section, the three key principles that we must all keep in mind in considering this Bill. Gambling must not be

“a source of crime or disorder”;

it should be

“conducted in a fair and open way”;

and

“children and other vulnerable persons”

should be protected

“from being harmed or exploited by gambling.”

We should be clear about what the Bill seeks to regulate. As I understand it, the remote gambling market covers all betting and gaming transactions that are effected without the customer’s coming into contact—physical contact, that is, as when a customer goes into a traditional bookmaker’s office—with the operator. It covers, for example, the placing of a bet on the telephone or the use of a computer to bet on the internet. It would also cover new mobile technologies—for instance, bets placed via a tablet computer or a mobile telephone.

Most United Kingdom operators started to offer customers the opportunity to place bets online in the mid to late 1990s, as improvements to internet technology opened up the market to a whole new segment of the population who had previously been denied a chance to participate. These were people who, for whatever reason, had been prevented from visiting a bookmaker’s premises—and presumably, for whatever reason, had not been attracted to telephone betting—perhaps because of infirmity, because of the nature of their work, or simply because they lived in a location where there were no bookmakers. The new development enabled customers to play casino games and poker online whenever they chose to do so. Previously such opportunities had been available only to those with access to a casino, of which there were fewer than 150 in the United Kingdom.

The Gambling Commission itself reports that fewer than one person in 100 has a problem with gambling. In other words, 99% of the population who chose to engage in betting do so safely and responsibly, and enjoyably. Our level of problem gambling compares favourably with that in other countries. For instance, the United Kingdom’s rate is lower than the rates in France, where it is 1.3%, South Africa, where it is 1.4%, and the United States of America, where it is 3.5%.

Those who are involved in the industry take their responsibilities very seriously, providing training for their staff so that they can recognise customers who are at risk. It is, of course, legitimate to argue—indeed, it was argued earlier in the debate—that the risk posed to people who are engaged in remote gambling may be greater than the risk posed to those who visit traditional bookmakers’ premises. All licensed gambling operators in the UK have to abide by strict licensing conditions designed to protect and help problem gamblers, and the

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gambling industry is unique in financing relevant research, education and treatment activities on a voluntary basis. Licensed operators offer clear guidance and advice to customers on responsible gambling and, for example, are clear that gambling should not be used as a source of income or as a means of paying off debt. This year, the industry will be contributing some £6 million to the Responsible Gambling Trust, an independent national charity that works to ensure that the gambling industry in Britain, including the remote gambling industry, retains its world-leading reputation for promoting responsibility in gambling and to demonstrate that legitimate business growth and job creation is balanced with social protection of the weak and vulnerable in our society. Licensed operators also signpost customers to helpful websites such as those run by GamCare, Gamble Aware and Gamblers Anonymous. Nobody wants to see lives ruined by gambling, and this debate gives us an important opportunity to highlight the enormous amount of help available to those struggling with a gambling habit that is perhaps getting out of hand.

As I hope to demonstrate, one problem with the Bill is that it would have many unintended consequences. For example, it runs the risk of forcing customers into the hands of unlicensed operators—the black market— who may not operate in the same responsible way as the household names on our UK high streets do. We are being told that one of the reasons for trying to regulate offshore gambling is to protect customers, but I have to tell the House that, unfortunately, all the evidence from other countries suggests that that laudable aim will not be achieved.

In essence, the Bill seeks to regulate the internet, and we know from other countries’ attempts to regulate the remote gambling market that it is easier said than done. Different means of enforcement are available—for example, payment process blocking or website blocking. They have all been tried in various guises and all have their shortcomings. We may ask why customers will seek to circumvent attempts at enforcement, but the answer is simple: human nature. It is human nature for customers always to seek out the best value, and operators who are unlicensed in the UK and operating from a jurisdiction where there are fewer controls will be able to spend more on advertising and on marketing. They will be able to keep coming up with new offers to make their offering attractive to customers. It is also possible that they will be able to offer better odds, giving better value to customer, although in reality the UK-based operators will try to match the odds offered by foreign operators and absorb the extra overheads themselves by reducing spending in other areas.

In an attempt to stop customers using companies operating from outside their jurisdiction, other European countries have pioneered the use of restrictive tools to stop customers accessing authorised websites. The three main methods in use are: payment process blocking; website blocking; and the imposition of advertising restrictions. Norway has led the way on payment process blocking as a means of preventing customers from taking advantage of offers from black market operators. It must be said that that has not been entirely successful, because more than half of gamblers said that they play as frequently on foreign websites as they did before the ban came into effect. Norwegian customers soon cottoned

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on to the fact that if they wished to access blacklisted market products, they could get around the payments ban by using third party payment solutions such as e-wallets.

Another unwelcome side effect was that, as a result of over-zealous compliance by operators, legitimate payments could sometimes be blocked. Website blocking has been tried in Italy and has proved to be just as easily circumvented by the use of technology by end-users or service providers. Consumers can easily get around website blocking by using the internet protocol address of a website rather than the website’s domain name. Alternatively, a blacklisted provider can simply change the name of a blocked site in order to evade a blacklist. A common feature of many markets is the imposition of advertising restrictions. Whatever method of enforcement is used, the mere existence of such a method sends out a signal to customers that there is something out there to which they are being denied access. Human nature being what it is, there will be a natural desire to find out what they are missing out on. Consequently, it is clear that no single measure has been proven to be 100% effective. We have heard much debate this morning, but I have not heard anything about how the Bill will be enforced. What magic bullet do we have in this country that other European countries have been unable to find?

The whole issue of enforcement raises the thorny question that increasingly arises in modern life when we try to put together legislation: to what extent is it possible or indeed desirable to try to regulate the internet? To put it another way, how can we stop people accessing the world wide web? How can their access to the web be restricted? Some might think that such questions were of interest only in closed societies such as North Korea, and although I am not suggesting that that is what is being proposed, it is a dangerous path to venture down. Why should the Government attempt to deny citizens who want to access gaming sites run by overseas operators the right to do so?

It has been suggested that such sites do not offer the same protection as those based in the United Kingdom. As my hon. Friend the Member for Rochford and Southend East said, there might well be jurisdictions with more favourable control and regulation. We must not always assume that we have got it absolutely right in this country. Equally, UK customers might well want to seek out the better value that is available from a foreign jurisdiction that has less regulation and is therefore in a position to offer slightly better odds and slightly better value.

Most of the offshore operators used by UK customers are based in Gibraltar or the Isle of Man, jurisdictions whose place on the white list is down to the fact that their regulatory regimes are essentially equivalent to those found in the UK. In any event, is there not a real danger that if these measures become law remote gaming operators not only will be based offshore but will go underground? I am not suggesting for one minute that any of the household names in this country’s market would do that. They will soldier on, and deal with the problems that they face. They will abide by the new restrictions and bureaucracy, and secure a licence, but that will undoubtedly impact on their businesses.

I am worried about new entrants to the market—people we have never even heard of—who could well be located in a distant, unregulated jurisdiction. To that effect, the

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Bill will be another complete and utter failure in the long line of failures to try to regulate the market. I suspect that those seeking to regulate the market will realise that that danger would undermine the effectiveness of the Bill. Customers will quickly become aware of competitive black market offerings, whether via blogs or information websites. Value-conscious consumers will actively seek out those operators once they realise that they are more competitive and offer better value than the regulated operators under the Bill.

The 2005 Act regularised the status of online gambling, which had previously operated in a twilight world that was often referred to as the grey market. The Act provided a new legal framework, allowing online operators to locate within the UK under the jurisdiction of the Gambling Commission, and it allowed all remote gambling, or offshore operators, to advertise to UK customers, provided that they were licensed in a jurisdiction within the EEA or were on what the Gambling Commission called the white list which, as we have heard, includes Antigua, Barbuda and Tasmania. Helpfully for those offshore operators, the list includes low-tax jurisdictions such as the Isle of Man and Alderney, so it is not surprising that operators listed on the UK stock market have an obligation to the shareholders to do what is best for them and their employees, and remain competitive. As soon as one operator decides to go, effectively others have to go as well to remain competitive.

The 15% gross profits tax is the root cause of the problem, and that is what the Bill is all about. It may well be argued that when the 2005 Act was introduced the then Chancellor should have been thinking about what was the best rate at which to set the tax. How could the tax rate be reduced to attract more operators to the UK, rather than driving operators offshore? Household names such as William Hill, Ladbrokes and Betfair have all moved offshore.

The Bill, as we have heard, is almost a mirror image of the Gambling (Licensing & Advertising) Bill that has been published by the Government. The first three clauses of the Government’s Bill are identical in all respects to the Offshore Gambling Bill. The only difference, as we have heard, is the addition of a horse racing levy measure in clause 4 of the Offshore Gambling Bill. I am conscious of the fact that other hon. Members wish to catch your eye, Mr Deputy Speaker, and that we have not heard from the Minister or the Opposition spokesman, so I will not go through the Bill in great detail. Suffice it to say there are real problems with it. It is not clear exactly what sort of equipment will be caught by the Act. I know that operators will make their submission to the Government on these matters, and I hope the Government take seriously what they say.

Clause 4 deals with the levy. As we have heard, the levy is a statutory way of transferring money from bookmakers to the racing industry. It was, in essence, a compromise that was reached in the 1960s between bookmakers and the racing industry, once bookmakers were legalised. The Betting Levy Act 1961 created the statutory body, the Horserace Betting Levy Board, which still exists. We have heard concerns expressed about state aid and whether reforming the levy could fall foul of those state aid rules. I do not want to go down that path again, but there are problems and I look forward to hearing the Minister’s views later. I would

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like to know what advice he has received on the issue of state aid and the legitimacy of potentially bringing the levy within the scope of these reforms.

Much of the debate surrounding the current levy system has focused on the levy in isolation. That is misleading and unhelpful to a sensible debate on the issue. Although the levy may well be in decline for a range of reasons, let us not forget that there are several avenues of funding for horse racing, apart from the levy.

I shall touch on one point that was raised earlier about the amount of racing, as opposed to the other forms of betting that go on. I have from the largest bookmaker in the country, William Hill, figures which show that for its shops, the horse race business accounts for only 25% of revenue. The remaining revenue comes from greyhound racing, football, other sports and gaming. For online gambling, the percentage is even lower. The whole of the sports book accounts for 35% of online revenue, and 65% is made up from other products such as casino games, bingo and poker. So the idea that racing forms a major part of the revenue of bookmakers is not backed up by the facts.

As we heard, there is revenue for the racing industry from on-course bookmakers, overseas picture rights, picture rights for UK betting shops paid through the media rights, and sponsorship. A significant proportion of the sponsorship comes directly from the bookmakers in order to help promote the sport. The amount raised by the levy may be in decline, but the cost of racing to bookmakers is increasing. Racing is now by far and away the most expensive product for bookmakers. Figures collated recently by the Horserace Betting Levy Board show that the combined profits before tax and loan capital repayments of Britain’s race courses—as we heard, there were 60 race courses in 2011—amounted to some £20.9 million, compared with £20.6 million in 2010 and £20.2 million in 2009.

Furthermore, horse racing is not in as bad a state of health as some might think. Rachel Hood, president of the Racehorse Owners Association, said in December that she believed there was more cause for optimism than there had been “for some considerable time”. She added:

“British racing’s funding model has changed so much in recent years and while there remains a lack of total transparency around the issue of media rights, to its credit the Racecourse Association has recently confirmed that by 2013 racecourses will be receiving media rights of at least £84m, nearly £30m more than in 2010.”

I appreciate racing’s need to guarantee prize money and that it needs certainty of funding in order to plan ahead. In the most recent levy agreement, William Hill, Ladbrokes and Coral agreed to guarantee that their combined contribution to the horse racing levy will be not less than £45 million, and Betfair has undertaken to make a contribution to British racing through the levy board, which is assumed to be in the region of £7 million. In response to the latest levy agreement, the chairman of the Horserace Betting Levy Board, Paul Lee, said:

“The Board is extremely pleased to have reached unanimous agreement. This will provide further stability and make possible significant additional expenditure on prize money in 2013. I would like to give recognition to Betting and Racing for the constructive approach that they have taken in seeking early resolution to the terms of the next Levy Scheme.”

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Although there are problems facing the horse racing industry—we have heard a lot about them today—it is worth considering that there are problems facing the bookmaking industry, too. Betting shops have been part of our communities for decades. Despite what some would have us believe, there has not been an explosion in the number of betting shops. The number in the UK has, in fact, remained relatively stable over the past decade, at around 8,900 shops. In fact, since the 1960s the betting industry has seen a vast decline in the number of betting shops, because in those days there were close to 16,000 in the UK, and fewer betting shops of course means less money for horse racing. The UK betting industry is already highly regulated and subject to significant levels of taxation. I believe that additional regulation and higher taxation would only make it less likely that the industry will be in a position to consider spending more on supporting horse racing.

1.23 pm

Philip Davies (Shipley) (Con): We have had an excellent debate today, and I commend everybody who contributed to it. It has been very informative. Some strong opinions have been expressed on both sides of the argument, but I think that they have also been well informed.

Before I get into what I want to say, I refer Members to my entry in the Register of Members’ Financial Interests. Unusually, I do not think there is anything in there that is worth declaring, but in case anyone does, I would like them to have a look at it and pore over it themselves to see what they can find. Just to give a complete disclosure, the only thing that I think is of any relevance is a subscription from which I receive no financial benefit whatsoever, from a company called Peninsula Business Services Ltd. It does what it says on the tin: it deals with employment services, and that is how I dealt with it when it approached me about an employment matter. It happens to be owned by Peter Done, the brother of Fred Done, who owns Betfred and now the Tote. You might think it a rather tenuous link, Mr Deputy Speaker, but others might not, so it is all there on the record for anyone to pore over. I reiterate that I receive no personal financial benefit from it. If I was ever to invoke the subscription I receive, it would be to the benefit of the taxpayer, rather than me.

Even though we have had an informative and extensive debate, I think it would be fair to say that it has not been incredibly helpful to the Minister or the Government. My hon. Friend the Member for Thirsk and Malton (Miss McIntosh) made an excellent speech. I did not necessarily agree with all the points she made, but she made them very well. In my first intervention on her, however, I asked her what she thought the main thrust of the Bill was—whether it was to improve regulation of the gambling industry and player protection, whether it was to raise money for the Treasury, or whether it was to provide more money for the racing industry. I stand to be corrected, but my hon. Friend seemed to say that the thrust of what she is trying to achieve was to bring in more money to the racing industry. As she made perfectly clear, she represents a community in which racing has a large presence, and she is, quite properly, trying to do the best for her constituency, constituents and local community. That is why she feels so passionate

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about it, and more power to her elbow in that regard. I take it that that is why clause 4, which relates to the levy, is so important to her and why its omission from the Government’s own Bill, which covers many of the same matters, is unacceptable to her. That is her opinion and we all appreciate the clarity with which she expressed it.

The hon. Member for Newcastle-under-Lyme (Paul Farrelly) also made an excellent speech. I, like him, commend bet365, and not just because it has stayed in the UK to pursue its business interests and has not gone abroad like everybody else. It has been helped by the fact that it is family-owned and does not have any shareholders to account to. I think I am right in saying—I will apologise to the company profusely if I am wrong—that, when its representatives gave evidence to the Culture, Media and Sport Committee as part of our inquiry into the Gambling Act 2005, they themselves acknowledged that had bet365 been a public company on the stock market, they would have found the pressure to move abroad irresistible. Nevertheless, it could still do that as a family-owned business. The fact that it has not shows—this is what I took from the evidence its representatives gave us—a deep-seated commitment to its local community. That should be commended. They are very proud of the fact that they employ so many people in Stoke and of the impact that they have on the local community—the hon. Gentleman mentioned the football club—and that is to their credit.

However, by talking so much about bet365—as he is entitled to do, because it is a big employer of his constituents—the hon. Gentleman seemed really to be focusing on the tax implications of the Bill and the idea that it offered an opportunity not only to level the playing field with regard to the competition that bet365 faces from people who have moved abroad, but for the revenues that such a move would generate for the Treasury. This seems rather inconvenient for the Government and, no doubt, for the Minister.

The Minister’s knowledge of these matters is greater than mine, so I would happily be corrected, but, as I understand it, the thrust of the Government Bill, which so closely mirrors this Bill—the point of consumption bit is virtually the same, if not identical—is not actually about bringing money in to the horseracing industry, which may well fall foul of European law. It would probably be tested in the courts and, as we have seen in the past, it is very difficult to predict the verdict of the European Court of Justice.

To illustrate the point, there was a court case in which the racing industry was trying to argue that it had data that it could sell on to bookmakers on a commercial basis. I think that the industry was very certain that it was going to win its case against William Hill when William Hill challenged it in the courts, and it seemed to be a great surprise to the industry when it lost. Court cases seem to be unpredictable.

Miss McIntosh: I am following my hon. Friend’s remarks carefully; I apologise for missing the start of his speech. Is he aware of the basic concept in European law that the European Commission is the arbiter of competition law, and that it has had an unconscionable length of time in which to bring the British Government to task if it wished to do so? I believe that we are on very strong ground in that regard.

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Philip Davies: I accept what my hon. Friend says. She is far more of an expert on these matters than I will ever be. The House will listen to her opinion with great interest and deference because she is an expert on this subject. I am not a lawyer. People like my hon. Friend the Member for Bury North (Mr Nuttall) are much better qualified to speak on legal matters than I am. I am not an expert, I do not pretend to be an expert, and I will just have to see how events unfold, as will everybody else.

My hon. Friend the Member for Thirsk and Malton may well be right, but whatever the merits of the case, I suspect that were the purpose of the Bill to increase levy payments for the racing industry—notwithstanding the fact that she thinks that is perfectly reasonable—it would face a legal challenge that the Government could probably well do without. Furthermore, it would in many respects entrench the levy system in the industry at a time when the Government have been trying to get away from that system for funding horse racing, so it seems to be moving in the wrong direction in that regard too. I accept my hon. Friend’s legal opinion on the matter, but this measure would certainly add a legal complication that I suspect the Government would rather avoid.

As regards raising revenue for the Treasury. I think I am right in saying that the same issue applies. If it is felt that the reason for the point of consumption legislation is simply to fill the coffers of the Treasury, that in itself could well fall foul of the European Union’s rules, because it certainly would not want to get into a situation where people in one part of the EU are introducing point of consumption taxes on places in other parts of the EU, because the whole thing starts to fall apart at that point. If that was the main motivation behind the legislation, I think that the EU would want to avoid it.

Miss McIntosh: The point of consumption tax has already been established in other member states for the purposes of licensing and advertising activities. That is a separate point from the levy, which is the purpose of clause 4. As I said at some length, the tax issue should rightly be separated from this Bill. I understand that the Treasury has already consulted on the tax situation in 2012. It is for the Treasury to come forward with tax proposals.

I do not wish to mislead my hon. Friend and the House, so I merely say that the purpose of clauses 1, 2 and 3 is purely to establish the point of consumption for the purposes of obtaining a licence, being a licensed operator, having a commercial deal, and advertising the activity, all of which are deemed under the Bill to take place in the United Kingdom. There is common ground between what the Government are proposing and what my hon. Friend the Member for West Suffolk (Matthew Hancock) and I are proposing. Clause 4, on which the debate and the Bill hang, would extend the levy in the way that I set out.

Philip Davies: My hon. Friend is right. Such measures have been established in other parts of the European Union, and there is no problem with having point of consumption in principle. I have no problem with that, and if I remember rightly my hon. Friend quoted the conclusions of the Culture, Media and Sport Committee on which I serve. She was absolutely right; it was a

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unanimous report in every regard. There was no minority report or any divisions on the recommendations, and the Committee agreed the report in full. I certainly stand by the recommendations highlighted by my hon. Friend.

This is not about the principle of point of consumption, but the Government may run into problems when considering the purpose for which such a measure is being introduced. If they can satisfy the European Union that they are introducing it to regulate better the gambling sector, they will be on strong ground, and I suspect that test was satisfied in other parts of the EU where such measures have been introduced. In those cases, however, people may have been starting from scratch and deciding to start their regulation of the gambling industry on that basis. That would not apply in the United Kingdom where we already operate on a different basis that we would need to change, thereby introducing a complication that might not have applied elsewhere.

The Government want this debate to focus on why a point of consumption tax, this Bill and the Government’s version of it are so necessary. This is not about increasing funding to the racing industry by increasing levy payments, because that would introduce a complication, and the Bill’s main purpose is not one of increasing revenues to the Treasury—the Government do not want to go down that route because they will run into different legal problems. The Government want to concentrate on the fact that the Bill is necessary only to regulate the gambling industry better. That it may also increase revenues to the Treasury, or that my hon. Friend the Member for Thirsk and Malton may use it to increase revenues for the racing industry, is merely a useful coincidence, and, as I understand, certainly not what the Government would like us to believe the Bill is about.

As the Minister knows, I have an awful lot of respect for him—he is a great man and we are very lucky that he holds that position. I suspect, however, that he has been passed what might in rugby terms be described as a hospital pass with this Bill, and it will take all his considerable abilities, charm and finesse to extract himself and the Government from this situation. His position was not helped—he will certainly not want to agree with me on this, although he is entitled to feel it—by our right hon. Friend the Chancellor of the Exchequer who signposted the proposed legislation in his Budget speech.

Perhaps I may remind hon. Members of what the Chancellor said:

“One area where I am today making substantial changes is gambling duties…The current duty regime for remote gambling introduced by the last Government was levied on a ‘place of supply’ basis. This allowed overseas operators largely to avoid it, and much of the industry has, as a result, moved offshore. Ninety per cent of online gambling consumed by our citizens is now supplied from outside the UK, and the remaining UK operations are under pressure to leave. This is clearly not fair—and not a sensible way to support jobs in Britain. So we intend to introduce a tax regime based on the place of consumption—where the customer is based, not the company—and, from this April, we will also introduce double taxation relief for remote gambling. These changes will create a more level playing field, and protect jobs here.”—[Official Report, 21 March 2012; Vol. 542, c. 803.]

The genesis of the legislation is therefore clear—the Chancellor’s Budget. It will be no great surprise that my hon. Friend the Under-Secretary of State for Skills,

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whom all hon. Members regard highly, was and remains a close friend and ally of the Chancellor of the Exchequer. I suspect it will not be difficult for people to put two and two together and think, “Well, hold on a minute. The Chancellor said what he said in the Budget, and we have the Offshore Gambling Bill. Hey presto! That is how the Government will introduce the legislation.”

The problem is that the Chancellor made no reference in his Budget to the need to introduce the measure to improve player protection or better regulate the gambling industry. He made no reference to that being a problem that needed solving. We are beginning to understand what motivated the Government to introduce the Bill. I do not criticise the Chancellor: what he said was perfectly reasonable and fair, and many hon. Members on both sides of he House agree with his analysis, but I suspect that it has been unhelpful. He may not have been aware of the legal minefield he was in at the time, but people have become aware of it, and the Government have backtracked to change the nature of the debate. The debate must now be based, therefore, on player protection and the regulation of gambling rather than on—we can probably guess this is the real motive for the measure—getting money into the Treasury, which is no bad thing, and levelling the playing field for companies such as bet365 so that they do not go abroad, which no hon. Member wants.

I believe the Chancellor was also hinting that, if we get the measure right, we may even be able to reverse the trend. It would be fantastic if we were not just trying to stop bet365 leaving the country, but putting a regime in place that encouraged companies that have left the UK to come back. Not only would we retrieve lost revenue; we would also get jobs back. Lots of people in the UK would love the jobs that have been exported to places such as Gibraltar because of the current situation to come back to this country. With the best will in the world, neither the Offshore Gambling Bill nor the Government’s alternative Bill will make any difference in that respect.

There is no prospect whatever of any of those organisations relocating to the UK, whatever rate of tax the Government introduce. I think that would be a missed opportunity. My hon. Friend the Member for Rochford and Southend East (James Duddridge) mentioned a rate of 5%. If we had that rate and the Government asked the gambling industry whether it would agree to come back in return for that rate, there might well be scope for negotiation, but VAT will scupper such a plan, because gambling industries in the UK cannot reclaim their VAT. The money they spend on advertising is not reclaimable, but it is reclaimable overseas.

The House would support a regime that levelled the playing field, and that means companies paying more in taxation than they currently pay—no one would argue with that. The House would support a regime that gave companies an incentive to bring their operations back to the UK and the jobs that would come back with them. Surely that is a great prize to aim for, and I urge the Minister to lobby the Chancellor. All that is required is for the Chancellor to help with taxation—not just point of consumption taxation for the online industry, but VAT relief. Those two things combined could get those jobs and companies back. That is what we should be aiming to do. It is a strange state of affairs when we

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are spending lots of time trying to stop one company leaving—it is a negative thing to try to achieve—when much bigger prizes are at stake.

In many respects, the main thrust of what my hon. Friend the Member for Thirsk and Malton said concerned the levy. I should thank my hon. Friend, because from what she and my hon. Friend the Member for Mid Norfolk (George Freeman) were saying, it seems that, in essence, the Bill is designed to help me. As we discussed earlier, I am a very modest owner of racehorses. I am an owner of very modest race horses, too, to be perfectly honest. Contributing to the odd shares and legs and other parts of the anatomy—I am sure that it does not make a great impact on the considerable wealth of Mr Michael Easterby, in the constituency of my hon. Friend the Member for Thirsk and Malton—provides me with a great deal of pleasure. I seem to be the kind of owner that my hon. Friend says she wants to help. I regret to inform the House that I am also a very small-scale breeder of racehorses, too. The saying goes in racing circles that the only thing worse than having one broodmare is having two. There is no better way of leaking money as quickly as possible than breeding horses. The only thing that can compete is owning horses. Whichever one chooses, the only possible outcome is that one will be considerably poorer at the end of it than at the start. I think that somebody once said that the best way to gain a small fortune out of owning and breeding racehorses is to start with a large fortune—there is a considerable amount of truth in that. I should therefore be grateful to my hon. Friend for having me in mind to try to boost the modest returns I get from my horses. It is a rare pleasure when any of them trouble the scorers.

In passing, my hon. Friend the Member for Mid Norfolk encouraged us all—I think I am right in saying this; we can all check Hansard later—to back a horse called Wind for Power in the 1 pm at Lingfield today. I am sure that that was partly directed at the hon. Member for Brighton, Pavilion (Caroline Lucas), who was waiting to debate her Bill. I am sure she would have been encouraged to back a horse with that particular name, and I am delighted to announce that the horse won. If anybody took my hon. Friend’s advice, they are now considerably richer than they were when this debate started.

Mr Deputy Speaker (Mr Lindsay Hoyle): Order. I loved the hon. Gentleman’s description of his horses, whether he has a leg and which horse is going to win. I am sure that it is very relevant to offshore gambling, but we seem to have lost that for a little while—I think we got lost in the leg somewhere. I am sure he is going to bring it back into line for me.

Philip Davies: I am very grateful, Mr Deputy Speaker. You are, as ever, absolutely right. I was getting carried away with my hon. Friend’s tipping prowess and I promise not to return to it. I will take your chastisement as an indication that you are keen to acquire a leg or two of your own, and I will certainly be happy to negotiate a deal for you.

Even though the horse racing levy is supposed to benefit people like me, I am not entirely convinced by the argument given by my hon. Friend the Member for Thirsk and Malton. Clause 4 is well meaning and I do not want to decry that, but I do not think that it will

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have the impact she thinks it would. I spoke about this briefly in an intervention. The levy is determined, hopefully, by agreement—it has been recently, which is to be welcomed—between the betting industry and racing industry through the auspices of the levy board, and we should all thank it for its work. When they come to an agreement about how much money should be handed over from the betting industry to the horse racing industry, rather than concentrating on the mechanism of how that money is raised, people are really thinking about how much it will raise. People think, “Well, what we need is a certain amount of money from the betting industry to make the racing industry viable which is reasonable to ask the gambling industry to provide based on the money it makes from the horse racing product.” A figure is therefore arrived at that seems reasonable.

I cannot remember, but I have a feeling—the Minister will be able to help out on this—that the last time the Secretary of State determined what the Government thought was a reasonable price for the betting industry to pay the racing industry, the figure arrived at was somewhere around £75 million. The Government then introduced a mechanism in the levy, making slight amendments to try to deliver £75 million—or whatever figure they thought was a fair amount for the gambling industry to pay—and that was that. The mechanism was arrived at to deliver the figure.

My hon. Friend the Member for Thirsk and Malton seems to presume that everyone will continue with the same mechanism, which will simply deliver more money to the racing industry, but I suspect it would not really work like that. I suspect that the levy board would still go through the same deliberations and work out what was reasonable to expect the gambling industry to provide, and that a mechanism would be worked out to deliver around £75 million. Therefore, the 10.75% of gross horse racing profits that go to the levy would probably be reduced to hit that target. As a consequence, the Bill —clause 4 in particular—would generate no more money for the racing industry. Rather, it would simply mean that the money came from a different mechanism.

Miss McIntosh: Obviously we hope to hear the Minister give the reassurances that we have requested, but the whole point is that—I hope he will confirm this—we have set in place a six-month time frame for the current levy board-led process to come up with a replacement. That is why the Bill, particularly clause 4, is so pertinent and so appropriate at this time, and why we need it on the statute book.

Philip Davies: I understand my hon. Friend’s point, but in some respects she argues against herself. As she says, the Government are looking at this issue—indeed, everybody has been looking. I think even she said in her speech, in passing, that the levy system was broken to a certain extent—everybody starts these debates like this—or that it was not ideal and was not delivering the right outcome. However, it seems rather strange to say, “The levy system’s broken; let’s introduce a measure that entrenches it even more.” I do not quite follow how that is the solution to the problem that she rightly highlights.

I am not a big fan of the levy system either. My hon. Friend the Member for Rochford and Southend East would describe himself as a layman, but he made some

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pertinent points about other sports and industries being subsidised, and all the rest of it. I certainly do not think there is any justification for that. Really, the levy is something historical, because that is how it started. If we were starting again now, would we have the levy system? Possibly not—I do not know; probably we would come to a commercial agreement—so I am not sure that entrenching the levy system is the solution to the problem that my hon. Friend the Member for Thirsk and Malton identifies, nor would it deliver any extra funding for racing. Therefore, I am not sure that this proposal is worth persevering with, given that it would also add legal complications—again, I accept her point about the legal position as she sees it—that the Government could well do without. I see lots of downsides for the Government in pursuing this proposal; I do not really see any great upside, for the reasons I have given. Therefore, it is probably not worth while persevering with. Again, however, I am sure that the Minister will have a view on that.

Let me return to the point about the levy. There is a slight misnomer—I am certainly not alleging that anybody is trying to mislead anybody when they trot it out—that can give a false picture, which is the idea that the levy is essential for the small trainers, the small owners and the small breeders, whom we have got to support, and that without the prize money the levy generates, they would go under. I do not think that that is the case. If we look at the figures more closely, we can see that it is not quite as simple as that. There is an element of that involved: the levy board supports fixtures at the bottom end that might not otherwise be viable, and I am not going to decry that, but that is not the only destination for the levy board’s money. It might not even be where most of it goes; I am not entirely sure. It would be interesting to have a breakdown of where the board’s funding goes, so that we can see whether it represents a sensible way of diverting resources.

As I said, a very high percentage of prize money in this country goes to a very small number of people, including the top owners and the top trainers. In effect, we are asking for money to be transferred from poor people in betting shops—they are the ones who pay the levy, after all; it is the punters, not the companies, who are paying in one form or another—to wealthy racehorse owners. That set-up represents a strange redistribution of wealth, and it is not one that I recognise. There are not many calls in the House for the very poorest to pay more to the very wealthiest people in the world, but the levy, in essence, brings about just such a transfer of wealth. I do not think that that arrangement stands up to scrutiny.

The levy is certainly used to prop up the prize money of some of the top races in the country. I am sorry if I am returning to a subject that you would rather I did not mention, Mr Deputy Speaker, but with the best will in the world, a small owner like me is not going to win the top classic races on the flat. That is simply not going to happen, so I will not benefit from an increase in the levy. The people who win that kind of race are Sheikh Mohammed, the Coolmore stud in Ireland and the new people from Qatar, who are a welcome addition to the racing industry. It would be stretching the imagination to suggest that any of them were struggling to get by, based on what they have at the moment. We cannot pursue that particular avenue too far. We should be

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careful about what we say the levy is used for; it is not used just for the purposes that my hon. Friend the Member for Thirsk and Malton claims it is.

The figures that my hon. Friend gave earlier rightly showed how the levy had reduced over the years. My hon. Friend the Member for Bury North was right to point out that it had stabilised and started to move back up again, and I am sure that everyone is happy about that. It is not right, however, to say that the only contribution that bookmakers make to the racing industry is through the levy. In recent years, for example, they have been asked to pay a vastly increased contribution to race courses for picture rights. That money is going to the race courses and the media companies.

I accept where my hon. Friend the Member for Thirsk and Malton is coming from and what she wants to achieve, and I would like to think that there is no greater supporter of horse racing in the House than me. It is my great passion in life—to be perfectly honest, it is a greater passion than politics—and I want to see the horse racing industry thrive. My point is, however, that the money that bookmakers pay for the racing product is not being efficiently passed down the racing food chain. A lot of it gets stuck with the broadcasters who are supplying the pictures, for example. Perhaps we could explore the possibility of finding a better mechanism for getting the money from the broadcasters down into the racing industry, as my hon. Friend the Member for Thirsk and Malton wants to do. It is also possible that the race courses are piling up the money from the picture rights and not passing it on in prize money.

James Duddridge: I apologise to my hon. Friend for not being here right at the beginning of his speech. Having sat through three or four hours of the debate, however, I have started to get a feel for the issues involved and I understand the points that he is making about the levy. It has been pointed out that we should not look at the levy in isolation, and that we should look at other sources of revenue. Does he have any idea of the amounts that are being acquired, or could be acquired, through picture rights or other avenues? The Bill tries to make the case that the levy does not raise enough money, but without being able to see the bigger picture, it is difficult to say whether there is enough money in the industry at the moment.

Philip Davies: I am grateful to my hon. Friend and I will try to assist him by looking at the data from 2009-10 and then from 2010-11. In 2010, the levy was £75 million and the picture rights were £140 million—the betting industry was paying for them—and other costs came to £26 million. That total of £241 million was, in effect, what racing cost the betting industry. The total dropped to £228 million in 2010-11, which was largely the result of a drop in the levy by £16 million, and the overall amount that betting gave to racing dropped by £13 million. Since then, however, it has steadily risen. In 2011-12, the picture rights went up by £11 million and the levy went up by £60 million, so the total went up from £228 million to £256 million. For this year, 2012-13, the betting industry is forking out £267 million for racing products compared with £256 million last year.

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In the current climate, that is a considerable rise. Next year, with the agreements that have been made, it is going to go up from £267 million to £275 million.

If we take all that together, it is difficult to sustain the argument that bookmakers are not paying a fair amount for their racing products. It might not be through the levy—the levy is at a level similar to what it was five or six years ago, now that it has stabilised and gone back up—but it is not the levy that is costing the bookmakers more: it is the other things. Given that we have heard from a number of Members today how horse racing makes up a smaller and smaller part of the income bookmakers receive, it is not, in my view, sustainable in the long run for, on the one hand, horse racing to take less and less of the bookmakers’ share of the bets they are taking, while on the other expecting bookmakers to pay more and more every single year for the horse racing product. At some point, it is going to snap; it will reach a point where it is no longer sustainable.

I point out gently to my hon. Friend the Member for Thirsk and Malton that it is always easy in this place to say “Let’s get those awful bookmakers to pay more money.” They have paid more money and they are paying more money, but that will not be possible in the long run: we need to find alternative ways to get the money into racing. We need a commercial agreement based on picture rights, as we must find a mechanism for getting money into racing.

Before the intervention of my hon. Friend the Member for Rochford and Southend East, I mentioned race courses, which are one of the main beneficiaries of the increase in picture right costs. As my hon. Friend the Member for Thirsk and Malton said, two race courses have closed, which is a matter of great regret. I am very sad about that, as one of the great virtues of British racing is the diversity of race courses all around the country and the ability of people living nearby to get to them. I am sure that this is also a great regret to the Minister, given that one of the courses that closed down was in his area of Kent.

People might get the idea that the race courses must be struggling, too, if they have to close down, but I do not think that is the case. I think there has never been a better time for race courses; they have never had more money coming in from picture rights and other sources. The reason for the closure of the two race courses, as I see it, is that they were owned by this big company—it was Northern Racing, but is now in a bigger group, ARC, Arena Racing Company, owned by the Reuben brothers—which took advantage of the fact that fixtures could be transferred from one race course in a group to another race course in the group. It thus closed down the least profitable race courses to move the fixtures to the most profitable race courses—not because the two race courses were not viable, but simply because profits could be enhanced by moving fixtures to other race courses in the group. That is a very sad and serious state of affairs, and I hope the racing industry will wake up to that, and change the allocation of fixtures to stop that happening. I do not believe, however, that any of those issues need to be dealt with by clause 4. As I say, it would not help the situation; it could make it worse because of the legal problems that it will bring about.

James Duddridge: My hon. Friend is explaining very well how money flows from the bookmakers via the picture rights. We have been concentrating on the levy,

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but is not one of the problems the fact that the race courses are not filtering the money further down to the jockeys and some of the industries mentioned by my hon. Friend the Member for Mid Norfolk (George Freeman)? If that hold-up were dealt with and the money flowed down properly through the industry, we might not need to do all this work on the levy.

Philip Davies: That is essentially the point that I am making. In the past, there has been a “racing versus bookmaker” attitude that has got neither side anywhere. There have been faults on both sides of that polarisation. Bookmakers need to accept that horse racing must thrive if they are to do well in their business, and, equally, the racing industry needs to understand that without betting, it has not much of a product to sell. Each side needs the other; a “them and us” approach gets us absolutely nowhere.

Rather than rehearsing those decades-old arguments, let us look at the facts in the cold light of day. Let us see where the money is, and how it can be filtered down. I think that there is an awful lot more money in the race courses now than there was before, but what we want is for the prize money to filter down. The amount of prize money could be increased if funds were passed down efficiently, and the smaller trainers, owners and breeders could benefit in the way that my hon. Friend the Member for Thirsk and Malton wants if that increased prize money were passed on by the race courses.

Another problem is the fact that the Horsemen’s Group, which represents racehorse owners, trainers and so forth, placed a minimum tariff on different race classifications. The prize money for a class 5 race, for instance, will be at a certain minimum level, while for a class 4 race the level will be slightly higher. Although that was done for a good reason—to end what I am sure my hon. Friend would consider to be the worst excesses of paltry prize money and establish some minimums —it has encouraged race courses to put on lower-grade racing so that they can get away with providing the minimum maximum, as it were. A well-meant initiative has had an unintended consequence. Race courses have been given a perverse incentive to “dumb down” the quality of the racing that they offer so that the prize money can be as little as they can get away with, although it will still hit the minimum prescribed by the Horsemen’s Group. That, too, is not of much benefit to anyone.

There is money in the system. Money has been flowing from the betting industry. What we need to do is find mechanisms that will enable it to be conveyed to the people whom my hon. Friend has rightly identified.

Mr Nuttall: Does my hon. Friend agree with the comments of Rachel Hood, the president of the Racehorse Owners Association, to whom I referred earlier? She said that there was more cause for optimism than there had been “for some considerable time”.

Philip Davies: I do. Rachel Hood is the wife of John Gosden, one of the top trainers in the country. She is also, I believe, a lawyer by profession. She is an extremely talented person, and the Racehorse Owners Association is lucky to have her representing it. She is a formidable character, and we do not always see eye to eye, but my hon. Friend was right to quote her. She also said:

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“British racing’s funding model has changed so much in recent years and while there remains a lack of total transparency around the issue of media rights, to its credit the Racecourse Association has recently confirmed that by 2013 racecourses will be receiving media rights of at least £84m, nearly £30m more than in 2010.”

She herself has identified the fact that the race courses are receiving a windfall from the media rights that the bookmakers are paying. She may also have cottoned on to the fact that there may well be more mileage for the owners in trying to pass some of it on in prize money.

I am well aware, Mr Deputy Speaker, that time is passing, and it is a shame when there is so much to say about such a big subject and so little time in which to say it—unfortunately, I seem to encounter that problem regularly, and on Fridays in particular. However, I want to talk about regulation because, as I said at the start of my remarks, this will help the Government to a certain extent; they want us to get on to discuss regulation because as far as they are concerned that is what they are all about. That is probably about as helpful as I am going to get for the Government, but I thought I would help in that respect.

The Minister is on the horns of a dilemma, because he has to say that this issue is about regulation. The problem is that I do not see, and neither did our Select Committee when we took evidence, a great deal of evidence of a massive problem with the regulation of the betting industry in this country. If anybody has any evidence of the failures of regulation, the Select Committee would love to see it because we genuinely did not see any. If we are to take the Government’s word on what this is all about, the Bill seems to be the perfect example of a solution looking for a problem. I am not aware of what the problem is, but it will be for the Government, either today or at a later date, to spell out what the particular issue is. I do not know whether the Minister sees the Bill as an irritant—perhaps he will be able to tell us. Some aspects of the Bill are superfluous, because the Treasury and the Department for Culture, Media and Sport have already indicated that they are going to carry out much of what is in it, and some of it may be illegal.

Let me discuss some of the particular regulation issues. At the moment, we have a white list, which is based on the view that the regulation in the other regimes involved is just as rigorous and onerous as it is in this country, and we are satisfied as a country that those regimes are just as good. So the principle goes: given that we are happy with the regulatory regime in those jurisdictions, we are happy to accept the licences that they issue. If we are simply looking at this in terms of regulation, the model of regulation seems to be sensible. So if we are happy with the overall standard of regulation, why do we need to get bogged down in issuing each individual operator a licence, given that they have already been given a licence in a regime that we think is good enough? That is the basis on which we have operated our regulation in this country and it has worked particularly well.

This country has a very small number of people who bet with illegal operators, although, again, I am happy to listen to evidence to the contrary on that and I will certainly accept it if it exists. In other countries, particularly those in the European Union, illegal betting is a massive problem. These countries give licences to a very small number of people on different bases. In Belgium, someone

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has to have shops—they have to have a physical presence in the country—in order to be given an online licence. There are all sorts of rules like that. The inevitable consequence is that a massive amount of illegal gambling goes on, in the sense that people bet with operators abroad who have no licence in their home jurisdiction.

All sorts of mechanisms are put in place to try to prevent such betting from happening, such as the site blocking that some countries put in place to try to stop people betting on illegal sites. That has not worked and we know why: modern technology means that as soon as one site is closed down, another one opens up within five minutes and by the time people get round to closing that one down, another one opens up within five minutes flat; you are for ever chasing your tail and you never deal with the problem.

Some jurisdictions therefore have a block on payments, whereby the Government come to an agreement with the banks and the credit card companies that they will not allow any transactions to take place with the unlicensed operators abroad. Of course, that can have more success than site blocking. I am a luddite, as you know, Mr Deputy Speaker, so I am probably not the best person to go through all the ways that people get around such restrictions. As I understand it—hon. Members who know more about it than I do will be able to correct me—operations such as PayPal enable people to get around those restrictions, so they are not totally successful.

The problem is that in every jurisdiction that has tried to restrict the licences it issues and whom it allows people to bet with, that approach has never worked. I do not see why we think we will solve a problem that no other country appears to have solved. It seems to me that the only possible consequence is that the levels of betting with illegal operators or operators without a licence will go up. Given that we have virtually none of that at the moment, which must be good for regulation and player protection, how can it improve regulation to set up a regime when the only possible consequence is that people will go into the grey market and will not get a licence but will still operate? How will we stop people betting with those operators? They will be able to offer better prices as they will have lower costs and lower tax liabilities, so in many respects we will be in danger of setting up a regime that actively encourages people to go to unlicensed operators abroad who do not contribute anything in this country.

We treat the online industry as if it contributes nothing to racing or to the Exchequer. Some of the big online companies are Ladbrokes and William Hill. They have thousands of shops in the UK and are massive employers. They do not contribute nothing to the British economy; they contribute an awful lot. The danger is that in the online world, fewer people will bet with the companies such as Ladbrokes and William Hill that make a contribution, if not on an online basis but though their shops, and instead will go to operators that contribute nothing to the UK economy.

We will set up a system that inadvertently pushes people to such operators and I do not see how that is a triumph for regulation or for player protection. We should be grateful that we do not have the problems that other counties do, but we would be in danger of

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creating them. If this is about regulation, as the Minister would like us to believe, he must explain where the big problem is and why regulation is necessary to solve it.

The white listing system means that the Gambling Commission can accept regulation from other jurisdictions and can trust it in the knowledge that those jurisdictions have as tough a regulatory system as we do—one in which we can have faith. That means the commission can accept such operators in the same way as it would one from the UK. The problem with the Bill and the Government’s draft Bill is that the Gambling Commission will have to issue individual licences to Lord knows how many gambling companies. On what basis will it do that? On what basis will it assess the abilities of betting companies in foreign lands? How will it decide whether they are legitimate, whether they can pay out to punters and whether they are ring-fencing the punters’ stake rather than putting it all in a pot? How will it do that when companies are in far-flung jurisdictions? Will all the Gambling Commission staff be off on permanent jollies, going around and looking at all those industries? Who will issue all the licences? How many more people will the commission need?

I bet the commission thinks that this is the best thing since sliced bread. Quangos love empire building; we have seen it time and time again. The commission must think all its Christmases have come at once. Instead of having to accept the licences issued by jurisdictions whose regulatory regimes we are perfectly happy with, it will have to consider every company individually. That seems to me to be what my hon. Friend the Member for Thirsk and Malton and the Minister are proposing: great stuff if you work for the Gambling Commission, but probably not so great for anyone else. Will those companies, including UK companies, that employ many people in the UK have to get an individual licence in every jurisdiction in which they operate? That is unnecessary, as we could just recognise regulatory regimes elsewhere. It is bureaucracy gone mad, and I hope that the Government can make a good case for why that should happen.

I am sure that we are all anxious to hear what the Front-Bench spokesmen have to say about the matter, but I am sorry that we have been short of time for this debate, because there is a lot more stuff that I wanted to mention. The revenue raised by the measure is not all a net benefit to the Exchequer, as there is a negative side too. There are gambling companies such as tombola—Members might have seen it advertise its product before “Emmerdale” on television—and it is a fairly new company that has enjoyed massive growth. I apologise if this is not true, but I believe that it is based offshore, so it does not contribute the taxation that people would like, and that is the problem the Bill is designed to tackle. Tombola employs an awful lot of people in the UK to work on things such as its marketing and advertising strategies. If we imposed extra taxation on such companies, which is difficult to justify given their margins, they will reduce their marketing spend—we do not have to be great geniuses to work that out—because they will not be able to afford to spend as much on it. Ultimately, therefore, they will employ fewer people in the UK to work on marketing.

We should think through the consequences of what we are doing. The Government seem to have pound signs in their eyes, thinking that this is an easy way to

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make money: there is no downside, it is all upside. Life is never quite as simple as that. There are no painless panaceas, and there may well be some unintended consequences, including the fact that fewer people will be employed in these industries in the UK. I am sure that none of us, whatever our view of the Bill—again, I have no problem with it in principle—wants to see unintended consequences that result in people losing their jobs in this country and in the economy losing money. We want a regime that increases revenue for the Government and increases the number of jobs. The Government can do that, but they need to be rather more careful than they have been, and rather more careful than has been the case with this Bill. However, I commend my hon. Friends the Members for Thirsk and Malton and for West Suffolk (Matthew Hancock) for introducing the Bill, because it has allowed us to have a very good debate and informed discussion. We should all be grateful for that.

2.22 pm

Clive Efford (Eltham) (Lab): I feel like I have been under starter’s orders for four and a half hours and I have finally got out of the traps. I congratulate the hon. Members for West Suffolk (Matthew Hancock) and for Thirsk and Malton (Miss McIntosh) on securing this debate. It has been an interesting debate, although it has been heavy going at times. I feel like I have been waiting for a taxi: you wait for a Bill, then you get two at once.

I will leave the Dispatch Box after asking the Minister if he can clarify where we are. We have two identical Bills: the only thing that is different about the Offshore Gambling Bill is clause 4—where have we been before on clause IV?—which deals with the levy. The levy is important, as it provides essential funds for an important industry, particularly in rural areas, but will the Minister explain how he intends to proceed with the Bills? Will we see legislation in this Session? It is shame that his draft Bill was not submitted to the Select Committee on Culture, Media and Sport any earlier, given that there has been a paucity of Government business to fill the time. We could have completed scrutiny of this piece of legislation had it been introduced earlier. In the time remaining today, the Minister will want to contribute to the debate as much as possible, so I shall leave it to him to answer those points.

2.24 pm

The Minister of State, Department for Culture, Media and Sport (Hugh Robertson): I start by thanking my hon. Friend the Member for Thirsk and Malton (Miss McIntosh) for securing a debate on such an important topic, and I thank the Under-Secretary of State for Skills, my hon. Friend the Member for West Suffolk (Matthew Hancock), for his support in the earlier stages. Despite much of what has been said today, I am delighted to see that there is a considerable amount of cross-party support, in almost every corner, for the regulation of remote gambling on a point of consumption basis and for the requirement that all remote gambling operators engaging with British consumers hold a Gambling Commission licence.

In the limited time available to me, I shall go through some of the questions that were asked and try to cover as many of the points as possible. My hon. Friend the Member for Thirsk and Malton and the Opposition

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spokesman, the hon. Member for Eltham (Clive Efford), asked about the timetable for the Government Bill. As both are aware, the draft Bill is before the Culture, Media and Sport Committee. Providing it passes that stage, it will go forward as a third Session Bill. Clearly, it is then up to the business managers in the House to decide whether and when to take it forward, but it is our intention to do so, if legislative space can be found, as a third Session Bill.

My hon. Friend the Member for Thirsk and Malton asked about the levy, which is the subject of clause 4. The best thing I can do is read to her the legal advice that I have been given by the Government Law Officers, which says that although a levy is permitted in its current form, since it originates from before 1972 and therefore pre-dates state aid rules, the European Commission is likely to consider that the collection of contributions from overseas operators would substantially alter the levy, such that it was no longer compliant with state aid. I am afraid that, regardless of how many high-priced opinions are obtained elsewhere, once the Government Law Officers have opined that the Bill is therefore defective in that respect, the Government cannot accept it.

Let me turn to the reform of the levy board, which was the second part of my hon. Friend’s question. Given the success of the levy board in concluding the most recent negotiations, and the fact that the advice that I was given, both by the industry and by the lawyers, was that the proposed solution around secondary legislation was unlikely to withstand legal challenge, should it appear, and since the advice that I received from the chairman of the levy board was that there was much more good will in the industry—I pay tribute to the work that he and his organisation have done—it seemed sensible to allow him six months to see whether he could put together a voluntary agreement.

I think that is the right thing to do. No Government want to legislate unless it is absolutely necessary, and they need to exhaust all avenues before they do so. The chairman of the levy board is aware that the bar in that is quite high, because such an agreement would have to be sustainable, it would have to carry the confidence of both sides, and it would, I hope, bring security and stability to the industry in the medium term.

Philip Davies: At present the levy situation has to be resolved on an annual basis. Will the Government be able to facilitate longer-term agreements, rather than having to go through an annual procedure, which is sometimes a bun fight?

Hugh Robertson: The best way of answering that is that I have not in any way restricted the chairman of the levy board over that, but I have made medium-term stability a key criterion by which we will judge any deal. If he is able—I wish him the very best of luck—to conclude a three-year or five-year deal that brings stability to the racing industry and commands the confidence of both sides, which I realise is a high hurdle to jump over, I would look at such a deal very carefully.

My hon. Friend the Member for Thirsk and Malton talked a little about integrity and sports. I seemed to spend a considerable amount of my time last year locked in rooms in Switzerland talking about integrity and sports betting before the Olympics, and it is worth

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saying here that the system that was set up for London 2012 worked so well that it is now being imported into other games as the model of how these things should happen. Rather to our surprise, there was very little of that sort of activity around London 2012. We might find, as we discover more about it, that it is quite sport-specific, and more specific to football and cricket than to some Olympic sports, but the system worked well.

The key point, of course, is that many of the threats come not from established betting markets here and in Europe, but from illegal betting markets in the far east. When I was in Delhi for the Commonwealth games, a journalist got access to one of the illegal dens, and one could hear the buzz about it. I do not know how these things are calculated, but it is rumoured that for a one-day cricket match between India and Pakistan $1 billion was traded—

2.30 pm

The debate stood adjourned (Standing Order No. 11(2)).

Ordered, That the debate be resumed on Friday 1 March.

Business without Debate

Micro Businesses and Energy Contract Roll-over Bill

Motion made, That the Bill be now read a Second time.

Hon. Members: Object.

Bill to be read a Second time on Friday 1 March.

Local Services (Planning) Bill

Motion made, That the Bill be now read a Second time.

Hon. Members: Object.

Bill to be read a Second time on Friday 1 March.

Land Value Tax Bill

Motion made, That the Bill be now read a Second time.

Hon. Members: Object.

Bill to be read a Second time on Friday 1 March.

House of Lords (Cessation of Membership) Bill [Lords]

Motion made, That the Bill be now read a Second time.

Hon. Members: Object.

Bill to be read a Second time on Friday 1 February.

25 Jan 2013 : Column 640

High Speed 2 (Birmingham)

Motion made, and Question proposed, That this House do now adjourn.—(Greg Hands.)

2.31 pm

Mr Liam Byrne (Birmingham, Hodge Hill) (Lab): I am grateful for the chance to bring this subject to the Floor of the House for debate this afternoon. May I say to the Minister, who has now taken his place, that I am very grateful to the Secretary of State, and indeed to his predecessor and to his right hon. Friend the Secretary of State for Business, Innovation and Skills, for meeting me to discuss this important subject? I rise, therefore, to reinforce a point.

The nub of the matter is extremely simple. Today High Speed 2 is consulting on safeguarding orders that, if put into effect, would lock up, sterilise and write off one of the most important development sites not just in the city of Birmingham but in the entire country. High Speed 2 proposes to do that in an area that has some of the worst unemployment in the country, and at a cost of some 7,500 jobs, which could not and would not be created in years to come if the proposal were implemented.

My argument this afternoon is very simple: to proceed with locking up the land on the LDV-Alstom site in Birmingham is tantamount to a monstrous economic crime against the city. It is a senseless act and an avoidable one. The city of Birmingham is looking to the Minister and to the Secretary of State to bring an end to this lunacy.

I want to preface my remarks by saying that I am a passionate and strong advocate of High Speed 2. I think it would transform the economic geography of our country and do an incredible amount for the economy of the west midlands and for the city of Birmingham. Some estimates have suggested that something in the order of 60,000 jobs could be created in and around the city. Heaven knows we need those jobs, not least in the light of the growth figures we saw this morning. I and other Members of Parliament in and around Birmingham want to join forces with the Government to ensure that the High Speed 2 legislation that is needed hits the statute book as quickly as possible. We want the project to go ahead and we want it to succeed, because we know what kind of prizes it can bring.

However, putting a marshalling yard in the middle of the inner city, in the middle of the worst unemployment blackspot in the country, is simply a recipe for hobbling the economic growth of the city, specifically east Birmingham, for literally the next 50 years. We in this House should not stand by and watch that happen. Around half the city’s unemployment is concentrated in three constituencies, Hodge Hill, Ladywood and Erdington, all of which are at the junction of the site in question, where High Speed 2 proposes to build its marshalling yard. There are 22,000 people on jobseeker’s allowance in those three constituencies. That is 42% of the number of people on the dole in the city of Birmingham. Simply, the problem confronting local MPs is that there are just not enough jobs to go around.

This morning I was pleased to meet some of the managers from my local jobcentre, who do an incredible job under the most difficult of circumstances. It is clear

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from what they tell me that there are simply not enough jobs to go around. Indeed, the unemployment statistics published earlier this week confirmed that in my constituency 24 people are chasing every job.

What is holding up unemployment in my part of the city of Birmingham is that we do not have the local jobs to go around. That is why a couple of years ago I suggested to officials at Birmingham city council and, indeed, to the owners of the site that a once-in-a-century moment was about to come to pass. After the liquidation of LDV and of the regional development agency in 2010, for the first time in 100 years three great pieces of the jigsaw puzzle on the LDV-Alstom site were about to come together. In so doing, it created the second biggest development site in the city of Birmingham, after Longbridge in the south of the city.

When I asked city planners to undertake some rough and ready master planning of what could be done on a site so big and so neatly adjacent to the city centre and to our brilliant transport links in east Birmingham, they said, after a bit of work, that something in the order of 7,500 jobs could be created on the site. There, on the table, is a specific proposal to create 7,500 jobs in the middle of the worst unemployment blackspot in the country. That, at a stroke, would take one in six of those in the city’s dole queue off the dole and into work, paying tax and national insurance, not sitting on the dole and taking benefits. That is why this is too good a prize simply to throw away. Of course, what is worse is that if the proposal for a marshalling yard goes ahead, we will lose 850 jobs within the next couple of years. There are two big businesses on the site and they are both ambitious to expand, but they will be forced to move quickly if the proposal is given the green light.

This is not a theoretical problem. In the past year or so, two major businesses, both seeking something in the order of 1 million square feet, wanted to invest in the site, but ultimately they turned away to go elsewhere because of the uncertainty that HS2 has cast over the site. At a time of rising unemployment in east Birmingham, that is a tragedy.

My second big point is that I am not making this case simply on behalf of the citizens of Hodge Hill, Ladywood and Erdington. The problem confronts not just the citizens of east Birmingham but all residents in Birmingham. If a site this big, which constitutes half of the best urban land available in the city, is taken out, the city will, of course, be forced to take land out of the green belt—and, my goodness, what a lot of land it would have to take. In fact, it would have to take almost double the amount of green-belt land to compensate for the loss of land in Washwood Heath and Hodge Hill. That is the equivalent of 105 football pitches— 7 million square feet of green-belt land that would have to be taken from other parts of the green belt around the city. I suspect, although I am not an economic geographer, that a great deal of that land would come out of Sutton Coldfield. There are therefore big concerns not just for the residents of Hodge Hill but for citizens across the city.

My third major concern is that, if this proposal goes ahead, it will not last 10 minutes in court. I won and lost enough judicial reviews in my time as a Minister to recognise a process that is not judicial review-proof, and the selection of this site is in no way judicial review-proof. The objective criteria used to select the site have not

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been published. High Speed 2 has ignored much of its own guidance. Indeed, I have been told by one of the site owners that two of the three sites HS2 identified in its assessment are in green-belt land south of the city, but there has been no clear acknowledgement in its reporting of the economic devastation that the selection of the site at Washwood Heath would wreak. There has clearly not been a transparent and open process, and I should think that that would fall foul of a judicial review hearing in any court.

Frank Dobson (Holborn and St Pancras) (Lab): I am grateful to my right hon. Friend for allowing me to make a brief intervention in his debate. As someone who has been trying to protect the interests of the people who live in my constituency, I sympathise with his efforts to protect the interests of his constituents.

May I advise my right hon. Friend not to give too much weight to any assurances that he may receive in this debate? On 20 December 2010, when originally announcing that HS2 was to go ahead, the then Transport Secretary, the right hon. Member for Runnymede and Weybridge (Mr Hammond), said that people adversely affected would be “compensated fairly”, and stated in response to the shadow Transport Secretary, my hon. Friend the Member for Garston and Halewood (Maria Eagle), that

“it is right and proper that individuals who suffer serious financial loss in the national interest should be compensated.”—[Official Report, 20 December 2010; Vol. 520, c. 1207.]

Despite that, last night at a meeting in my constituency, officials from HS2 and the Department for Transport said that many people living near Euston station, including some who had exercised their right to buy from the council, would not be fully compensated, and others would not be compensated at all. Ministers are saying one thing in the House of Commons and officials are saying the opposite outside.

Mr Byrne: I am very grateful to my right hon. Friend for making those important points. What he says about the standard and quality of the way in which the High Speed 2 team have gone about public consultation rings very true.

I say gently to the Minister that this is one of the most important projects in the country. It will, I hope, be a railway for well over a century to come. It will transform the economic geography and economic prospects of my region. It is controversial, it is difficult, and it will have its ups and downs. It needs a powerful coalition across all parties to support it. That cross-party support is jeopardised when we have slipshod, mediocre management of a consultation process which, in the case of the landowners that have talked to me, has involved their producing very detailed and expensive submissions and getting but a letter of acknowledgement, without even the offer of a meeting or an invitation to come to consultation forums. AXA Insurance, one of the site owners, presented some very detailed proposals that were not even acknowledged by High Speed 2, provoking the former Secretary of State herself to have to apologise for the omission. When we have a project that is so significant to the country’s future, we need the world’s best team, not any old team, managing the consultation. I hope that the Minister will take that on board.

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My final point is that some landowners, such as the Homes and Communities Agency, have a legal obligation, in transferring their assets, to seek the best possible outcome for local communities. I cannot see how such an obligation could be satisfied under the current proposals on the table.

I hope that the Minister has listened hard to the debate, and I look forward to a full response. I look forward even more to him and the Secretary of State taking the decision to put the marshalling yard somewhere else. Much better sites are available. There are sites much closer to the Y junction at Birmingham international airport, where there are significant land holdings in the hands of Birmingham city council. It is true that they are on green-belt land, but they are also land-locked by the M42 and therefore dead; they have no future economic purpose. They are in the middle of a very busy motorway junction that is perfectly suitable and appropriate for designs of this type.

I hope that the Secretary of State and the Minister can take a degree of inspiration from our history. One hundred years ago, the city of Birmingham doubled in size following Acts passed in this House in 1911 and 1912. A century ago, in 1913, the city of Birmingham published in full its ambitious plans to create a bigger, better city in east Birmingham, building on the foundations set by some of our great civic entrepreneurs—Joseph Wright and his sons who built the great Metro Cammell engine works; Herbert Austin who built the great site that was the forerunner of Austin cars and LDV; and, of course, Lord Norton, the last lord of the manor at Saltley, who laid out the streets in the design that can still be seen today. Those great civic and industrial engineers helped to create the mighty city of Birmingham and set a standard against which we should judge ourselves. I hope the Minister and the Secretary of State will not fall short.

2.45 pm

The Parliamentary Under-Secretary of State for Transport (Norman Baker): I congratulate the right hon. Member for Birmingham, Hodge Hill (Mr Byrne) on securing this debate on the location of HS2’s rolling stock maintenance depot. He has talked passionately about how important the area is for jobs and regeneration—quite rightly—and I hope he will agree that we all have those interests at heart.

Before I go into the specific issues of the proposed use of the site for HS2 and what is being done to help business currently located there, I would first like to say just how important the Government believes HS2 is for the country. We believe it is a crucial part of our plans to develop the right infrastructure for future economic growth, and I personally welcome the cross-party support that exists in this House for high-speed rail, and I welcome the right hon. Gentleman’s comments in support of it. Shortly, my right hon. Friend the Secretary of State for Transport will announce details of the route for phase 2 of HS2—the legs to Leeds and Manchester. Our plans put Birmingham and the west midlands at the very heart of Britain’s new high-speed rail network, and in my view they will change the geography of the

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country in Birmingham’s favour. The right hon. Gentleman will agree that this is a fantastic opportunity for everyone in the area.

The new terminus station at Curzon street, the interchange station near Birmingham airport and the west coast main line will put Birmingham and Solihull at the centre of the country’s transport infrastructure, creating huge opportunities for growth in the area. The Curzon street station will be a catalyst for the development of the Eastside area of the city, and offer real regeneration potential for the Digbeth area. The interchange station will act as the nexus for the economic development plans of local authorities and the area’s local enterprise partnership. More widely, HS2 will bring construction jobs, operational jobs when the line is open, and support wider jobs and wealth creation, improving the prospects for businesses and people right across the west midlands.

HS2 could help to support growth in employment with more than 8,000 jobs in the regeneration and development areas around Birmingham stations. Centro estimates that figure to be closer to 10,000 jobs with as many as 22,000 created in the wider region once phase 2 is completed, with economic output increasing by £1.5 billion.

As the right hon. Gentleman knows, HS2 Ltd has identified Washwood Heath as a key site for the development of the high-speed rail network. It is situated approximately two miles from Birmingham Curzon Street. The intention is that once phase 1 of HS2 is completed, Washwood Heath will accommodate the rolling stock maintenance depot to serve the London to west midlands route. That role will be expanded when phase 2 opens to provide the maintenance services for the extended network. To that extent we will need to consider the land required at Washwood Heath for both phase 1 and 2 requirements to ensure that the construction of the railway and depot can be facilitated.

The Washwood Heath rolling stock maintenance depot will create 400 jobs during construction and support a further 300 operational jobs when phase 1 opens, with a potential 400 additional skilled jobs when phase 2 is completed. There is also the potential to locate the HS2 control centre at Washwood Heath, generating a further 100 jobs.

I think I should say something about how Washwood Heath was chosen and why we are where we are now. I know there has been a desire from some for the selection of the Washwood Heath site to be looked at again, so let me dwell on that for a second. HS2 Ltd undertook an assessment to identify a credible location for a rolling stock maintenance depot that could be progressed as part of an overall HS2 London to west midlands phase 1 proposition. The fleet using the depot, and ultimately the depot’s functional requirements, informed much of the site selection process. Additionally, the key factors influencing the site selection process included location, size, access to the HS2 network and sustainability.

The initial assessment concluded that a west midlands location was more appropriate than a site in the London area. From that assessment, a longlist of six potential sites in the west midlands area was identified and evaluated. That resulted in the identification of a shortlist of the Washwood Heath, Middleton and Coleshill sites. Those locations underwent further evaluation to enable a preferred option—Washwood Heath—to be identified as the most suitable rolling stock depot location. The key reasons

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for Washwood Heath’s selection as a preferred option include the fact that it is close to the Curzon Street terminus station, that it is situated off the main HS2 line of route, and that the site is centrally placed within the future national high speed network. That process is documented in HS2 Ltd’s “Rolling Stock Maintenance Depot Selection”, which was prepared in September 2010. In developing a longlist of options, HS2 Ltd worked closely with Birmingham city council officers, who agreed with the site selection process.

Mr Byrne: The Minister is characteristically generous in giving way, but it is simply inconceivable that he could say that Birmingham city council officers agree with the site selection. I have worked with so many of them for so long, and they are very clear about the economic catastrophe that the chosen site would represent. I hope that, when we conclude the debate over the next month or two, there is a note of consensus, but I must tell the Minister that, if the legislation is not on the books by 2015 and Labour forms the next Government, we will look at the decision again.

Norman Baker: On Birmingham city council officers, the right hon. Gentleman will know from his time in ministerial office that Ministers discuss matters in some detail with officials so that they are properly prepared for Adjournment debates. I raised that specific point and was given an assurance that Birmingham city council officers had indeed responded in that way. That is why I included it in my comments. He questions the robustness of the process, but I am satisfied that there has been a thorough examination.

Would Birmingham benefit more from other use of the land? The right hon. Gentleman made the case that it would, and HS2 Ltd recognises his concerns and those of the landowners at Washwood Heath which have emerged since the selection process I have described. HS2 Ltd is currently looking in detail at their concerns and the alternative sites they have proposed for the rolling stock maintenance depot, and will report to the Department for Transport in February, when Ministers will consider them. I hope that gives him comfort that the matter is being considered at the highest level by Ministers.

Given where we are in the process and the need to progress the scheme, I expect the Secretary of State to wait to receive the outcomes of HS2 Ltd’s examination to understand the most appropriate mechanism formally to address the concerns of the landowners and Birmingham city council. However, I should like to make two further points. First, the site in question has remained largely as it is for many years, including through the last economic boom, and it is not immediately clear—or at least the Government are not persuaded—how realistic the development proposals are. Secondly, the proposals for the rolling stock maintenance depot would bring employment directly associated with building and operating the railway, create opportunities for supporting employment uses, and make valuable use of the site, which, I might add, has an historic association with the railway.

The right hon. Gentleman spoke of the impacts on businesses based on the Washwood Heath site. UKMail has a particularly large presence there, and I assure him of the Government’s commitment to work with the company to ensure that the business can either continue

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to operate there or move to another location. HS2 Ltd has had regular and constructive conversations with it and I expect them to continue.

Some people have said that HS2 Ltd is proposing to safeguard too much land. HS2 Ltd needs to safeguard a larger area of land initially to ensure that the land is kept available for the depot and that HS2 Ltd can be notified of any future proposals that might compromise our ability to build and operate the facility. That does not mean that all the land will be taken by HS2, but we need to ensure that conflicts do not arise.

Draft safeguarding consultation began in October 2012 and is due to close on 31 January. As the engineering design for the depot and railway develops, HS2 Ltd will continue to meet Birmingham city council officers to share emerging designs and to discuss the potential of developing a planning framework for the area, enabling additional employment uses to exist alongside the depot, and providing certainty for landowners and developers on the extent of future land availability and use.

I am aware that Birmingham city council recently consulted on options for the future growth of the city, and in particular identified the need to expand into the green belt, to which the right hon. Gentleman referred, to accommodate future employment growth. There was a recognised need to do that, even without the rolling stock maintenance depot located at Washwood Heath, so he has made his point about how far he thinks that ingression needs to go.

In addition to supporting the preparation of a planning framework, HS2 Ltd will continue to work with the city council to ensure that the proposed rolling stock maintenance depot maximises the opportunities created by locating the hub of the national high-speed network at Washwood Heath, both in terms of employment opportunities created by the construction and operation of the railway, and in attracting investment and new jobs to this area of Birmingham.

The Government and HS2 Ltd are working hard to implement a scheme that will not only bring the widest possible benefits to the country, but help all those who would be impacted. HS2 Ltd is already engaged with UKMail and other interested parties concerning the future of the Washwood Heath site. It is HS2 Ltd’s intention to work with Birmingham city council and key landowners to share emerging design solutions, and to prepare a planning framework for the site, enabling the rolling stock maintenance depot to co-exist with additional employment uses. We should not forget the direct job creation this opportunity will bring: approximately 300 operational jobs with phase 1 and approximately 700 with phase 2. The site offers opportunities for more jobs, local training opportunities and the attraction of wider rail industries, as the site becomes a hub of high-speed rail activities in the region, and therefore one of national importance. The Government and HS2 Ltd will continue to support these aspirations for HS2 and continue to do what we can to support the economy of Birmingham and the west midlands.

The right hon. Member for Holborn and St Pancras (Frank Dobson) raised an issue about consultation—a meeting from last night of which I obviously have no knowledge. All I would say is that it is the Government’s intention to ensure that there is proper compensation, and that has not changed since the statement made

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by the previous Secretary of State for Transport, the right hon. Member for Runnymede and Weybridge (Mr Hammond).

Frank Dobson: Will the Minister try to ensure that officials from HS2 Ltd and the Department for Transport are made aware of ministerial desires and intentions, because they were denying them outright last night?

Norman Baker: As I say, I was not at the meeting and I would be surprised if that was indeed the case. I have restated the position to the House that we believe in proper compensation for people affected by HS2.

Mr Byrne: The Minister is generous in giving way a second time. The argument that has been rehearsed this afternoon is an argument that has been rehearsed by HS2 in the past year and a half, and it has been systematically taken apart. There will be no comfort in the notion of 300 or 400 jobs being created some time in the 2020s when 7,500 jobs could be created in the next few years. The idea that history is any guide to what could be done now is, I am afraid, almost completely irrelevant. A site of this size and scale has not been put together for more than a century. This is a completely new opportunity. Borne of the worry about grip on detail, I hope the Minister can give a commitment that

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either he or the Secretary of State will come to Birmingham and discuss with the leader of the city council, me and Birmingham city council officers the whys and wherefores and the logic of the case we are making this afternoon, before they come to a final conclusion in February?

Norman Baker: I will certainly pass on the right hon. Gentleman’s request to the Secretary of State and make him aware of the exchange we have had this afternoon.

In conclusion, the Secretary of State wants to reach the best conclusion for the country and the transport system, and for those who will benefit from HS2 in terms of jobs and employment, particularly in Birmingham and the west midlands, and in Manchester and Leeds. He will make a statement in due course about further plans for HS2, and the right hon. Gentleman will have the opportunity to raise the matter directly with him at that point.

This has been a useful exchange. I am grateful to the right hon. Gentleman for the way he has put his case, with the usual aplomb and forcefulness that I expect from him. His points have been noted, and I am also grateful to the right hon. Member for Holborn and St Pancras for his contribution.

Question put and agreed to.

2.58 pm

House adjourned.