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Lord Moynihan: My Lords, I am very grateful to the Minister. We are making good progress on Part 1 of the Bill as much will be left to what we hope will be successful negotiations between now and September. However, there is one aspect of this which I should be grateful if the noble Lord would cover in his correspondence that he intends to put in the Library of the House—I hope as soon as possible so that we can consider it over the recess—and that is the link between what the Minister has just said and European state aid rules.
I should be grateful if the Minister could confirm what discussions have taken place with the European Commission since Committee before Easter about the return to racing, which is at the heart of this
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amendment, in the event of a sale to someone other than a racing trust. Having studied the DTI information on state aid, it clearly says:
"The Commission will take a minimum of two months from receipt of a complete notification to take a decision. Recently the average time taken is four-five months from the date of notification".
This is an important area for discussion. If the Commission says that the Government are unable to return the money to racing, or that they can return, say, 10 per cent only, what power does the House have over such a decision? Can the Minister confirm what would happen if the House refused to accept the European Commission's ruling on the percentage that the Government could legally return to racing? In other words, if the House today were to approve the amendment, or a similar amendment were reintroduced in September, on the basis that 50 per cent of the proceeds would be returned to racing, what would happen if the European Commission ruled against that and ruled that none of the money should be returned to racing, for example? What would happen if the House voted against such an order changing the percentage to zero?
It seems to me that we may be being offered a full sense of control by the Minister when, in fact, the power to vary this particular percentage rests almost entirely with Brussels. All I am seeking from the Minister in a spirit of co-operation is an explanation of how negotiations are progressing with Brussels. The earlier negotiations were time limited. They expired and now we are in a vacuum where further discussions are under way and are clearly critically relevant if at some stage of the Bill's proceedings we were to accept a percentage on the face of the Bill. For that reason I should be grateful if, first, the Minister could let us know how discussions are progressing with the European Commission and, secondly and more importantly, the specific answers to the points that I made with regard to Commission procedure in the event that it overrules any given percentage subsequent to the House considering this amendment if it were returned in this or a similar form in September.
It might also assist the Minister to know that, in the light of all these discussions, like him I will not vote on the relevant amendments nor will I put them before the House.
Lord Lipsey: My Lords, I thank the Minister for having tabled this amendment in the first place because it was designed to deal with certain worries racing had both as regards the price at which the Tote would be sold and the share that racing would get were it not to be sold to a racing trust. For that effort we are grateful. We are grateful even if the amendment is withdrawn today as it provides a statement of where the Government's policy stands, even if we cannot all agree with it.
Within racing there is something of a divide on this amendment. All racing thought that some of it was helpful but some of racing did not think that all of it was helpful. Therefore, it gets us off the hook as well
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as the Government if the amendment is withdrawn this afternoon. We shall be much better able to consider whether an amendment of this type has value in the Bill, whether as a government amendment or otherwise, when we return on 7 September with the knowledge that we shall then have.
Lord McIntosh of Haringey: My Lords, I am grateful for the correction; of course, we are debating Amendment No. 4 and we cannot advance on that formally. I am grateful to the noble Lords, Lord Moynihan and Lord Lipsey, for what they have said.
I can help the noble Lord, Lord Moynihan, some but perhaps not all of the way on the state aid issue. We recognise that there are two legitimate shareholders in the Tote; that is, racing and the taxpayer, although the legal position is that the Tote's assets are owned by the Tote board. It is right that taxpayers should receive market value for racing for their share in the Tote. In effect we are not selling the Tote but the public's share in the Tote. It will be subject to a full independent valuation at the time of sale and the price paid by racing will reflect this. I have already indicated that there is no reason why that independent valuation should not be prepared for state aid purposes before Royal Assent; in other words, we would work very hard to secure that that is done before Third Reading. If that were to mean moving Third Reading slightly, I think by agreement with the usual channels that might be possible. It might be a better outcome than having Third Reading too early.
The European Commission was originally notified of the sale plans in 2001 and we have submitted an updated notification. The Commission has responded with further questions and we shall reply shortly. I do not have in front of me the dates of our submission and the dates of the Commission's response and of our reply but I shall include them in correspondence to noble Lords. The Commission has indicated that it will not be able to give state aid clearance until a valuation is completed nearer the time of sale but we are hopeful that this will not be a problem. Again, I should like to take advice on whether that can be done before Royal Assent. My understanding is that it would be possible. I should like that to be achieved, if possible. Under those circumstances I beg leave to withdraw Amendment No. 4.
Amendment, by leave, withdrawn.
[Amendments Nos. 6 to 9, as amendments to Amendment No. 5, not moved.]
The Deputy Speaker (Baroness Thomas of Walliswood: My Lords, I should inform the House that Amendment No. 10 is misplaced in the Marshalled List. It is, in fact, an amendment to page 5, line 45. I shall therefore call it after Amendment No. 12.
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Lord Moynihan moved Amendment No. 11:
The noble Lord said: My Lords, from our discussions in Committee there appeared to be a considerable degree of support for the principle behind this amendment; namely, that we should not rule out the possibility of extending the exclusive licence for pool betting. Noble Lords will be aware that there has been an exclusive licence for pool betting in place since the Tote came into existence in 1928. The arguments should be studied carefully—very carefully—before we agree to legislation that will remove this exclusive licence in seven years with no possibility of its renewal.
It is ironic that throughout our earlier discussions the Government argued that the Bill should allow them flexibility about how best to proceed and yet when we on these Benches suggest an amendment to provide such flexibility for future governments Ministers now seem reluctant to accept our suggestion. If I may, it is worth briefly recapping on our discussions with the Minister in Committee. First, the Minister appeared to suggest that the Competition Commission and the Office of Fair Trading had insisted on a one-off seven year licence. When pressed the Minister then went on to say that the European Commission's rules on the single market did not allow the extension of the Tote's exclusive licence.
This latter point was quickly picked up by the noble Viscount, Lord Falkland, who highlighted the exclusive pool betting licences in France, through the Pari Mutuel, as well as in Germany and Italy. Eventually the Minister changed tack and decided that it was safest to say that the Government had chosen the seven-year licence of their own free will although it appeared that they were aware of the possibility of challenge. The Minister said:
"I am not saying that the deal we have has been dictated by anyone, by the European Commission, the Office of Fair Trading or anyone else. The Government believe in competition because we believe in the single market and because we know that rules exist which, if they are breached, create at the very least a risk of challenge".—[Official Report, 5/4/04; col. GC 504.]
I fear that Ministers are seeing the spectre of legal challenges where none exists. There are clear precedents within Europe for exclusive pool-betting licences on horseracing. I am sure that many noble Lords will share my view that the European Commission would think long and hard before ruling against pool betting, particularly given the importance of the Pari Mutuel to the French, for example.
On the domestic front there is a clear precedent in support of the amendment, which I trust will reassure the Minister. As I mentioned in Grand Committee, the National Lottery, which is covered in Part 3 of the Bill, has an exclusive seven-year licence. My amendment is designed to follow the precedent of the National Lottery, although in this instance there is no requirement for the licence to be renewed.
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It is worth restating that the amendment merely gives future Secretaries of State the option to renew the licence, or not to renew it, at the end of seven years. Noble Lords may recall my brief foray into economic theory to justify the retention of the exclusive licence. There is indeed a strong economic argument for such retention, although the precedent of the National Lottery is perhaps more compelling, particularly as both the Tote and the National Lottery return money to good causes.
The gambling market in the UK offers a number of alternative yet easily substitutable forms of betting on a horse race. Punters can use bookmakers, with either fixed price or starting price odds; there is the new option of the betting exchanges; and there is still the Tote. All these options are easily interchangeable, which limits the downside of a monopoly in any one betting market. This tripartite system for betting helps to ensure that all three markets run efficiently and smoothly.
The same logic applies to the Tote as to the National Lottery. It is clear that the bigger the pool, the more efficient it will be. We have only one National Lottery because this guarantees big prizes, increased efficiency and more money returned to good causes.
I briefly touched on the emergence of betting exchanges, which raises another important point. Development of new technologies within the gaming market is progressing quickly. Who could have imagined the importance of betting exchanges just a few years ago? This rapid advance in technology is yet another reason for the Government to retain sufficient flexibility within the provisions of the Bill, so that they can continue with the exclusive licence if this is found to be in the best interests of both racing and the public.
The amendment would remove the present subsection (11), which prohibits the renewal of the licence, and replace it with a new subsection (11), giving the Secretary of State the option to direct the Gaming Board to renew, not to renew or to revoke the exclusive licence at the end of seven years. Any decision made by future Secretaries of State would need parliamentary approval. This is a sensible check, and would provide future governments with specific authority in the public interest in the event of any challenge.
Paragraph (b) gives the Secretary of State the ability to award the licence either to the incumbent or to another company. This is designed to keep the licence holder on its toes by making sure that it does not abuse its market position. Again, the precedent for this arrangement is drawn from the National Lottery.
Finally, paragraph (c) would allow the exclusive licence to be renewed ad infinitum.
In conclusion, the amendment is sensible and seeks to give future governments sufficient flexibility to make the decision nearer to the time of the renewal or otherwise of the seven-year licence. The amendment makes no commitment to renew that licence. I trust
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that the Minister will recognise the strength of feeling behind the amendment and respond accordingly. I beg to move.
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