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Lord Lipsey: My Lords, I am grateful to the noble Viscount for giving way. I should not like him inadvertently to create a wrong impression, as I am sure he does not mean to. As the figures that are before the board each month show, if you put a pound on every horse on the Tote, you win a good deal more than if you put a pound on every winning horse with bookmakers.

Viscount Falkland: My Lords, be that as it may, the Tote is very patchy. Obviously, those of us who go to Ascot next week will see enormous returns on the Tote pool. The success of a pool depends on the size of the pool. If you have a big pool, you will get big dividends. You have only to go to Hong Kong to see that operate. Here, you do not often get big pools except at the big meetings. I am not criticising the Tote for its operation of the pool. It has done marvellously. The new Scoop 6 pools are very successful. I give credit for that to the late Lord Wyatt of Weeford, with whom I had various tangles across the Floor of the House. Mr Peter Jones has done a terrific job.

People who read Hansard or find out about this issue from perhaps a radio programme should realise that when we talk of the Tote we are talking about two things which run alongside each other. At the moment, the Tote pool is the poor relation in the operation. My contention is that in the future, because of new technologies, because of global communications and because of interest in pools, the pool need not be the poor relation. All kinds of things may happen over the next few months, rather than years, which could make the Tote operation very interesting. People in other countries may wish to use our pool and our racing. We may get an enormous pool which will be a new engine for funding racing without having to go into this painstaking, boring and painful confrontation every year with the bookmakers via the levy board to get funding for racing.

It was said in the papers this morning that 50 per cent of the top trainers in the country said that, because of the difficulties of staff, borrowing money, bad debts and so one, they would not recommend anyone to go into their business. Money is the main issue. The Tote can reverse the situation. I see the noble Lord, Lord Lipsey, nodding. Mr Jones and the noble Lord, Lord Lipsey, are taking steps to see that these new developments take place. I hope the Minister will acknowledge that we could now make possibly the biggest jump in terms of creating some affluence in racing so that even the prize money could be increased.

I shall not mention prize money. I remember very well the last time prize money was mentioned in the House. We had Lord Hartington upstairs representing the Jockey Club and we had his father, the Duke of

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Devonshire, down below. After everyone had been whinging on about the level of prize money, the Duke of Devonshire, in the fashion of a fine and distinguished Whig Peer, said, "I don't agree with prize money going up". He said, "If I had a yacht, I would not want my sails or my rudder to be subsidised". To an extent I can follow his reasoning. It was an extreme view. But the prize money in racing has already increased quite markedly at the higher levels in the group racing. That is where the group and pattern race structure in this country has helped to channel better funding into the better races. The prize money will take care of itself if we get the basic funding right. All I am saying to the Government is that they must take care to ensure that no stone is unturned in seeing to it that the new technologies are accommodated and new opportunities are not lost.

I have written in my notes, to which I have not referred very much, "shootings in the foot". Those need to be mentioned. I shall mention briefly the things which make me hot under the collar. There is the cost of getting into racecourses and so on, which is exorbitant. It is a rip- off. There are also the racecourses which deal with people who have their backs to the racing and instead are enjoying champagne with their hosts in the corporate entertainment boxes. Newmarket has reached the extreme of ludicrous behaviour in that area and that will now be reversed.

There have been two blips with regard to racing. The first was the appalling handling of the arrest of jockeys and other people connected with racing. It was extremely clumsily done. We have got over that and so I shall not go into it. The second is the integrity of the starting price. That worries the Tote because it deals with this aspect. The starting price is the price at which ordinary punters have their bets settled. Over the years it has been carefully watched and regulated in a way which has been perceived to be fair. What do we have now? We have a most extraordinary situation. We have the new SP Executive. Who is on the SP Executive? The chairman of the SP Executive is Mr Terry Ellis, a man with whom I do not have the honour of being acquainted. I have no reason to believe that he is not a man of the utmost integrity and extremely useful in racing, but he has been employed by bookmakers in the past. He is also director of operations for Satellite Information Services, which beams out pictures to bookmakers. That operation is 40 per cent owned by bookmakers.

How is it possible that racing could have allowed this change? Even if it is run perfectly, even if all these people have become saints overnight and are whiter than white and everything is done at arm's length, the perception is that it is a rap. Those who have been to racecourses and betting shops know how quickly racegoers get the idea that they are being gypped or that someone has pulled a horse. That is the situation here. How could the bookmakers have allowed this to happen? It is so damaging.

I do not expect the Minister to give a detailed answer on this point. I have sprung it on him after he was kind enough to have a word with me before the start of the

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debate. But this development has caused monstrous damage to the perception of our racing. It is so short term. I imagine that the bookmakers are now seeing, with the changes, that their returns are likely to be diminished and punters are having a good time. Even if they do not fall foul of these temptations, there is a perception that they will and that the SP will be manipulated.

To me, that goes well beyond the blips that we have had. This is the most dangerous development in racing in recent times. It has to be changed. I hope that punters around the country will clamour for it to be changed, and I hope that I have the support of the Tote in its entirety.

I shall stop now. This is a fascinating debate. I have always loved talking about racing, whether in betting shops, in your Lordships' House or wherever else. I thank the noble Viscount for the opportunity.

8.50 p.m.

Lord Cope of Berkeley: My Lords, we can all agree with the last remark of the noble Viscount. He clearly enjoys talking about the matter, and so do some of the rest of us.

My credentials here are not nearly so impressive as those of my noble friends and other noble Lords who have spoken. But I have had some exposure to the issues. I was until recently--I do not think it counts as an interest any more--chairman for some years of the Horse and Pony Taxation Committee, a joint committee of the British Horseracing Board, the British Horse Society and other bodies. I also had responsibility for a while in government for betting tax when we were able to carry through some assistance with VAT.

I mention that exposure to the issues to give at least some authority to my opinion that my noble friend Lord Astor, supported as he is by Peers of the two largest parties, and to a certain extent by the noble Viscount, Lord Falkland, has brought forward a useful Bill which could speed up substantially the reorganisation of the Tote in the interests of racing.

It is often frustrating in political life to have sensible reform bogged down by legal and bureaucratic delays over the mechanics. This Private Member's Bill shows the way to unlock those delays in this case and allow the reform to proceed. It clarifies, without prejudging the remaining decisions to be taken. If it helps, I would even be prepared to describe it as modernisation, because the Government seem to like modernisation and to think that if something is modernisation it must appeal, without any other justification for change.

With respect to the noble Viscount, Lord Falkland, I think that it is more than a probing Bill. It is a practical approach to the situation. I shall not follow the noble Viscount in what he said about the starting price, except to say that I have always understood that it was developed by a well-known firm of bookmakers called "Cope" a century or so ago. It was the trust in that firm--no relation of mine, so far as I am aware--

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that enabled the SP to develop as it did and become the respected institution, if that is the correct word, that it is.

I was very interested in the attack by the noble Lord, Lord Lipsey, on the public sector character of the Tote, if that is not to misrepresent him. I would have preferred the phrase "statutory character".

The question of who owns the Tote is very important and potentially a very expensive legal question. I am no lawyer, but I have been told--and I think it has the ring of truth--that the Tote's assets are held in trust for the punters. That means that ultimately it is held in trust for those who bet with it, between the time they place the bet and the time the race is run. In many cases that is only a few minutes, and it is very rarely more than a day. Therefore, that is not a very satisfactory basis on which to proceed.

The Home Secretary does not own the assets; he is the trustee for the punters. Given that, it seems to me that the European Union could not in any sense complain about state aid, even if the Government were to give the Tote to the racing trust, or, for that matter, anybody else.

Punters, including punters with the Tote, are not coterminous with taxpayers. They pay tax--they pay betting tax--but they are not the same. Therefore, the view that the Government should pocket the profit on the sale of the Tote is not obvious.

At the same time, like my noble friends, I shall not argue with the situation that we are in. It is a practical situation in which one cannot ask those who bet on the Tote to vote if they happen to have a bet open at the time. I certainly do not press that view tonight.

The Bill makes a useful contribution to unblocking some of the difficulties. It might make a major contribution to avoiding great delay on the subject. I am delighted, therefore, to support it, and I hope that the Government will do so too.

8.55 p.m.

The Parliamentary Under-Secretary of State, Home Office (Lord Bassam of Brighton): My Lords, I begin by acknowledging that the Bill is undoubtedly introduced with the very best of intentions. I for one particularly welcome the opportunity it has provided for Members of your Lordships' House to air some of the issues associated with the sale of the Tote.

I have found the debate hugely entertaining. As ever, for someone like me who is something of a novice--no pun intended--it has been a genuine learning experience. I have enjoyed the contribution of every Member of your Lordships' House who has spoken.

The debate conjured up images for me. I now see the noble Viscount, Lord Astor, in a trilby at the local Brighton races; the noble Lord, Lord Burnham, in the owners' enclosure; the noble Lord, Lord Cope, taking the taxes at the end of the run; the noble Lord, Lord Lipsey, counting the pennies for the Tote; and the noble Viscount, Lord Astor, carefully considering the future of the racing industry as we all meet at the

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winning post. As I said, the debate has been extremely interesting and I have some very powerful images from it.

We all know that the future of the Tote is of major importance to the racing industry, and of course to those currently working in the Tote. If this evening we do no more than to clarify the situation for them, it will have been time well spent.

In that context, I should like to comment on the Bill and some of the points made in the debate. I wish first to reiterate that the Government fully recognise racing's legitimate stake in the Tote and wish to work with the industry to ensure that its interests are safeguarded. Indeed, we are already doing exactly that. We have announced that a sale to racing is our preferred option for the Tote. I am pleased that there appears to be consensus among those who have spoken that that is the right way forward, but the detailed terms and conditions of such a sale remain to be determined, not because of any dragging of feet or because of bureaucracy or red tape, but because we feel that there are very important issues to be resolved first. Put simply, no matter how much some people may want it, there is no realistic quick-fix option available. To suggest otherwise would represent serious under-estimation of what is really involved.

Perhaps the best way to illustrate the situation is to look at the Bill. Where in it are there any references to the Betting, Gaming and Lotteries Act 1963 or to the many provisions therein relating to the operation of the Tote, such as the regulation of horserace pool betting; the terms of the Tote's exclusive licence to operate pool betting; the Tote's powers to authorise others to operate pool betting; the requirement for it to negotiate a separate levy settlement; and finally the fact that its chairman has a guaranteed seat on the Levy Board? All of those issues will need to be addressed in legislation at some later point.

I could go on. But I hope that I have made my point that there is more to selling the Tote than just taking its assets into public ownership and selling them on to racing. Quite simply, that would be unrealistic and leave the job no more than half done. The Government's requirements, as may be expected, are for a piece of legislation that stands up well to scrutiny and properly addresses all the issues. We are not talking here about the price to be paid for the acquisition of the Tote. It is now well understood that that is to be determined by commercial negotiation in the light of circumstances at the time; that has to be the best way forward. This is not a matter of price; it is a matter of principle. To that end the Home Office is continuing to work closely with racing and the Tote itself to make sure that those issues are satisfactorily resolved. There will be no avoidable delay.

But resolving some issues may take longer than some of us would like. I am afraid that cannot be helped. Complex matters like the Tote's exclusive licence on the horserace pool betting and its future regulation demand proper consideration. In addition, because the sale of the Tote involves the transfer of a

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public body to a private one, it raises the question of whether state aid is involved, as has been mentioned by Members of your Lordships' House.

Our belief is that we can satisfy the European Commission on that aspect of the sale. But there will need to be formal notification. We shall be referring the sale proposal to the Commission shortly, asking it to give the matter the highest priority. It would be premature to legislate in advance of that clearance. In the meantime, the Tote will continue to operate in an efficient and effective way. "Business as usual" will be maintained, and the Tote's profits will, as its popular slogan suggests, remain in racing.

The Tote is in good hands. Frankly, I am at a loss to see what dire consequences people fear if the sale takes rather longer to finalise than some may have hoped would be possible. We believe it is much better to get it right than to rush it.

Fears have been expressed that linking the Tote to the abolition of the Levy Board may in itself delay the sale. But the Government's view--shared by the British Horseracing Board--is that there is no persuasive reason why the two should not proceed in parallel and to the same broad timetable. The Government favour a single Bill. The noble Viscount, Lord Astor, said that the Government favour a tidy solution; we feel that that would be in the best interests of the industry and I make no apology for that. Taken together, the sale of the Tote and the abolition of the Levy Board represent a coherent strategy for the Government's withdrawal from direct involvement in the administration and funding of horseracing.

Although both organisations have evolved over the years, they share the primary purpose of channelling funds from betting into racing. To differing degrees they have had a hand on racing's purse strings. We take the view that racing no longer needs so many helping hands and, as such, it makes eminent good sense to deal with the two issues together. I suggest also that it is in the interests of the racing industry to be able to draw a line under direct government involvement in its funding. If it is to be in command of its own destiny with the ability to plan properly for the future, then we will do it no favours by withdrawing in a piecemeal fashion.

Having urged racing to adopt a strategic approach, it will make no sense for the Government to do precisely the opposite by treating the Tote as a stand-alone issue. Naturally, if there were to be some significant or unforeseen delay to either one or the other, then we would have to review that approach. But at the moment we do not anticipate having to do so.

The comprehensive gambling review is now being undertaken for the Government--as I am sure everyone is aware--by Sir Alan Budd and his colleagues. That is running to a longer timetable. But it has never been our intention to postpone the reforms

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of the Tote and the Levy Board to await its findings. We do not see those things as being inextricably bound up.

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