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The Parliamentary Under-Secretary of State, Department for Culture, Media and Sport (Lord McIntosh of Haringey): My Lords, with this amendment we return to the issue that has dominated the consideration of Part 1 of the Bill throughout its proceedings. As the noble Lord, Lord Moynihan, and others have confirmed, everybody who takes part in this debate is committed to the interests of horseracing. I commend them on that commitment, and I know that the amendment before us now reflects
 
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their concern. I pay tribute to the consistency and the objectivity with which these matters are being discussed.

We have considered a number of amendments of this kind before. They are designed to strengthen the position of the Racing Trust before negotiations commence between the Government and the Trust. I cannot blame anyone for doing so, but at the same time it has to be recognised that I, as a Minister of the Crown, have the interests of the taxpayer to take into account as well. We have to achieve a fair balance in our work. At each stage of the Bill's consideration, both here and in the House of Commons, the Government have argued that these amendments are unnecessary, and we still hold to that view—not because we disagree with the sentiments behind the Bill, as we too are committed to horseracing and to the Racing Trust.

The noble Lord, Lord Moynihan, has quoted our 2001 manifesto commitment, which states:

"We are committed to sell the Tote to a racing trust to allow it to compete commercially, with all long-term profits invested in the sport".

We have repeated that over and over again, and yet here I am standing before the House to say that our intention is perfectly clear. That is what the noble Lord, Lord Lipsey, has asked me to say, and I have no hesitation in doing so. We have taken practical, positive steps to achieve that aim since the matter was last debated in this House towards the end of July.

Before the Bill's proceedings commenced, the Government encouraged the development of the Racing Trust. Since then, we have had regular and constructive discussions with the noble Lord, Lord Lipsey, and with the other members of the shadow Racing Trust. I hope that there is no disagreement between them on these matters. Certainly the Racing Trust has come across to us as a body with a consistency of purpose and no evidence of disagreement.

Throughout the consideration of the Bill, the Government have taken practical steps to make the sale of the Tote to the Racing Trust a reality. At each stage, we have started preparations as soon as has been possible. I made it clear on Report that the Government would continue to make the maximum possible progress in their preparatory work for the sale of the Tote, but I also made it clear that there were important rules of government accounting that prevented the conclusion of a final deal before the Royal Assent to this Bill. That is why it is not possible to give the noble Lord, Lord Moynihan, the guarantee he is seeking that these matters can be brought to a successful conclusion.

The government accounting rules are designed for the benefit of Parliament, not the Government. They ensure that the Government cannot commit themselves to expenditure in advance of the will of Parliament being expressed, which can only be achieved by Royal Assent. It would not only be cowardly of me to seek to depart from those
 
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Government accounting rules; it would be entirely contrary to the interests of the legislature in its relationships with Government. I hope, and I still believe, that all sides of the House will agree that that is the correct relationship and that the Government should not be able to commit to expenditure other than that which has achieved the will of Parliament.

We have made good and solid progress since I last spoke to the House in July. We have held extensive discussions between the advisers to the Government and the Racing Trust, who have now been outed as PricewaterhouseCoopers and Rothschilds respectively. These discussions have been about all aspects of the deal, not simply about the valuation.

I assure the House that the Treasury has been involved at all stages. There is no possibility of its saying, "We were not aware of any deal or valuation". The process has been entirely open. Yesterday, it was possible for PricewaterhouseCoopers, acting for the Government, to make available the key outcomes of the independent valuation that will set the context for negotiations. In return, we have received the Racing Trust's assessment of the Tote's value. That is exactly what I said in July I hoped would happen, and it is on that basis that I said we could approach a Third Reading on 14 September with positive progress having been made. Clearly, I cannot discuss the figures, because they are "commercial, in confidence".

The noble Viscount, Lord Falkland, asked me to say how far apart the figures were. If I did, I would be bringing all the negotiations into the public sphere. I cannot do that and would not wish to. Of course discussions about the valuation will continue in advance of Royal Assent; in particular, about the assumptions behind the valuations. If we can get agreement on the different financial advisers' assumptions, the probability is that any existing gap will be reduced, as valuations made on the same assumptions are less likely to have differences than those made on different assumptions. These are not negotiations, but discussions about the basis on which the valuation is made. They started pretty much immediately yesterday and are continuing.

I am confident that when the Bill receives Royal Assent and passes into law, giving us the power under government accounting rules to begin negotiations, we shall be able to start them with confidence and optimism that the legitimate interests of both racing and the taxpayer can be recognised and that a fair deal can be struck. My noble friend Lord Lipsey, who knows the figures, has said that he is optimistic—and certainly more optimistic than he was last week. However, I think that he used the word in its absolute rather than its relative sense. I share that optimism. It is our firm intention to begin negotiations with the Racing Trust as soon as possible after the Bill receives Royal Assent.

We have instructed our financial and legal advisers to pursue a successful sale to racing at a price that reflects the fair value of the Tote. Indeed, since July we have written to the shadow Racing Trust committing to a period of exclusive negotiation with it.
 
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I was asked by the noble Lord, Lord Moynihan, about the European Commission. We have also made progress in our discussions with the Commission. The government team is meeting with its representatives later this month to discuss what we hope will be their final questions about state aid in relation to this transaction. I should remind noble Lords that when this matter arose before, we did not have insuperable difficulties with the Commission. We have to do it all over again because the authority we had to proceed is time-expired. But we have no reason to suppose that there will be any particular difference on issues of principle.

In all of these ways, the Government have acted on their stated policy of selling the Tote to the Racing Trust under terms that meet the objectives of all interested parties. In other words, all the things that I said in July would be done before Third Reading have in fact been done.

I heard what the noble Lord, Lord Moynihan, said about the report in the Observer on 1 August. He himself called them rumours. I beg the House to listen to assurances from Ministers and to the facts as they have been set out rather than to rumours. I say that because, as I have made clear, we have been working hand in hand with the Treasury throughout, which supports our approach. If those rumours had been true, that could not have been the case. Equally, if the rumours had been true, that would have implied that we have been working without the full collaboration of the Treasury. At no point during the passage of this Bill have the Government done anything other than make practical preparations for the sale of the Tote to racing. We are delivering on all the pledges I made during our proceedings on the Bill—and I was only repeating the pledges made by the Minister for Sport, Richard Caborn, in another place.

The amendment tabled in the names of the noble Lords, Lord Moynihan and Lord Luke, and my noble friend Lord Lipsey requires the Government to return to Parliament for its approval to sell the Tote to someone other than the Racing Trust. The noble Lord, Lord Moynihan, has confirmed that this amendment arises from the concern that the agreement we hope to achieve with the Racing Trust will prove impossible because the Government will demand a price well beyond the trust's ability to raise finance. We have again heard reference to a Treasury plot to undermine publicly stated government policy. I can confirm that my noble friend Lord Lipsey is right in all he says about the implications of us abandoning publicly stated government policy in order to guzzle up the proceeds of a sale on the open market.

I have to say that I am taken aback by such suggestions at this stage. I can understand that they might have been made at the end of last year when the sales strategy existed only on paper, and I understand that it could have been thought at that point that we were pursuing other approaches at the same time rather than pursuing the negotiated sale to racing, which is the only course we are pursuing. We are well into the preparatory process. We have appointed the independent valuer, who has been instructed to
 
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establish a fair value of the Tote to racing, not a maximum value that might be made on a sale to the highest bidder. And, as I have said, we are working closely with the Treasury.

Of course, the Government have the fallback position, which we need. The Racing Trust does not exist and we cannot put into legislation binding negotiations with a body that does not exist. It would be utterly irresponsible for us not to take, in legislation, the precaution of ensuring that we are not constrained in protecting the interests of the racing industry and of the public. However, we remain convinced that a sale to racing is the best way to meet both of those interests.

Before I close, let me refer to two matters raised in debate. First, the noble Lord, Lord Molyneaux, raised the issue of Northern Ireland. As he knows, horseracing is a devolved matter. The Tote and the Horserace Betting Levy Board do not operate in Northern Ireland and it will be for that administration to make any changes to legislation regarding horseracing and betting there.

Secondly, the noble Viscount, Lord Falkland, asked about a staff share incentive scheme. The Tote board has indicated that it wishes to introduce a new incentive scheme involving some equity share as part of the sale. That is one of the matters which may need to be taken forward in the negotiations when they start, but in the first place it is for the Racing Trust to reach a considered view on the proposal once it has been more fully worked up, and it would not be appropriate for me to make any further comment at this time.

So, at the risk of repetition, we have not changed our position. We have fulfilled every promise that we have made—cautious promises perhaps, but we have met every undertaking made to this House. On that basis, I urge the noble Lord, Lord Moynihan, not to press his amendment.

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