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Mr. Richard Page (SouthWest Hertfordshire): I am delighted to have secured this Adjournment debate. As the Minister will appreciate, however, I did not choose its timing, so I apologise for the effect that it will have on his gastric juices.
Given the paranoia that the House has shown about the declaration of interests, I must declare my interest. I have had ponies and horses all my life and I have been fascinated by them. The financial arrangement involved has not been to my advantage; it has been a distinctly one-way trip. I have been fortunate enough to acquire a little bay colt yearling that will completely reverse all the losses of the past. Such dreams have kept owners going over the years and I look forward to a year or so of reflected glory starting in a few months' time.
The title of the debate is "Horse Racing", but perhaps I should have added the word "industry". Despite all the pleasure and sport involved, it is a huge industry that is much bigger than most of the industries that regularly attract the Government's collective eye. In common with many industries, horse racing will migrate if we do not get its financing right. The participants will go to where the grass is not just seen to be greener but is, in fact, greener.
I wish, for example, to draw attention to the tax regime for the stallion industry. Compared to southern Ireland, those running a stud in the UK are at a distinct financial disadvantage. Southern Ireland companies have been able to buy stallions and pay more for them. Buying better stallions means that more mares are sent to them, and revenue accrues from the travelling of those mares. If one has more mares, one has more foals; if one has more foals, one has more runners; and if one has more runners; one has more winners. It is a virtuous circle.
I am worried by the distinct decline that there has been in this country's stallion industry. This country is the birthplace of racing and I do not want that decline to continue. I do not expect the Minister to comment on the funding of the stallion regimewe can return to the subject at a later datebut I would be interested to hear his views if he has the relevant notes with him.
On the specifics, we must keep in mind the basis on which the whole industry reststhe owners. The returns forthcoming to owners in the UK show that they are among the worst treated. I will not run through the whole list, but the figures for total prize money compared with the total cost of keeping and training a horse show that, on average, a Japanese owner gets 80 per cent. of his expenses back. The second lowest return is found in Germany, with 36 per cent., but we are at the bottom, with 21 per cent. Those figures are not sustainable and will not provide our racing with a firm foundation on which to develop.
Some race courses in this country are fine. Brand new grandstands have been built and the improvements are to be commended. However, a huge number of race courses are very old and in urgent need of replacement. We also need funding to continue the veterinary research that is so important. I know that this issue is of great concern to the Royal Society for the Prevention of Cruelty to Animals.
It is not all bad news. Over the past few years, we have made tremendous progress and much credit should go to those involved in the industry, to the Government and to Mr. Peter Savill, who has been a driving force in taking steps to producing a sustainable basis for racing's future. The Government are to be congratulated on introducing a gross profit arrangement, rather than a general betting duty, for the bookmaking industry. That has been welcomed by all. It is particularly appreciated by the punters, and I fondly hope and believe that greater income will accrue to the industry and to the bookmaking industry.
The Government are also to be congratulated on the review that has been carried out by Sir Alan Budd. With one hiccupthe proposal to remove slot machines from clubs, which is a retrograde movethe thrust of the review has been positive. The bookmaking and gaming industry in this country has integrity and compares well with those elsewhere in the world. I do not see why it should not be allowed to expand and to produce more revenue for the Government as well as profit for those in the industry.
I hope that the VAT registration scheme that is available for owners will continue. If it does not, the type of migration that has resulted from the stallion regime will take place. If the scheme were to be removed, the effect on horse sales in this country would be catastrophic. I have bought horses in Ireland and the UK, but I would immediately be placed under pressure to buy horses in Ireland rather than at Tattersall's. That would be a crying shame.
The industry produces £500 million in tax revenue each year for the Government; it employs 60,000 people; and it affects every walk of life. If we add the 40,000 people who work in the betting industry, we can grasp the scale of the activities with which we are dealing.
We face some difficulties, however. I welcome the announcement that will determine the future structure and ownership of the Tote. I understand why the Government wish to introduce a new funding mechanism that is based on a direct commercial arrangement between the racing and betting industries and which will replace the commercial levy. I also understand why the Government wish to introduce all that in one Bill. However, the manner of the breakdown in the negotiations on the replacement of the levy is such that I doubt that the problem will be speedily resolved by normal negotiation.
I know that the Minister is aware of the problem, so it will come as no surprise to him when I enter the plea that legislation to determine the future of the Tote should be allowed to proceed without delay. A number of parliamentary mechanisms are available to speed
Like many in racing, I regret, although I am not surprised, that the racing and betting industries did not reach an agreement on the levy replacement. This is not the time or place to drag out a blow-by-blow account of what went wrong. I have seen the proposals, counter-proposals and counter-counter-proposals and know that the problem has swung backwards and forwards. There is no benefit in regurgitating what went on, but the two sides are in a situation that is unacceptable for the long-term benefit of racing. It cannot be allowed to continue. The dispute is not in the best interest of the sport and must be resolved.
The matter is with the Minister for determination. I understand why he desperately wanted to avoid that, and he has my sympathy. However, he has to make the decision. I do not envy him his task. Faced with the instigation of an inquiry into the sport by the Office of Fair Trading, the appeal by William Hill on data rights and the difference between the two parties on the levy, it would be sensible to take some time out. That could be purchased by continuing the existing levy scheme, which has the advantage of being easily understood by all members and so would not require explanation or selling.
The Government have to take a greater and more proactive role. I leave it up to the Minister to decide whether he sets up a small group to hear both sides of the argument and to calculate the processes and procedures. There has to be an investigation, in some shape or form, based on independent research that looks abroad to see how other racing authorities are financed. On the raw data, it appears that Britain is low down the list when it comes to finance. We have to examine the figures to see what odds the bookmaking industry offers the punters on particular races and whether the return abroad is lower than it is in the United Kingdom. We need an equity and an understanding. It might be decided that the bookmakers can maintain the same level of profitability, but must slightly shave the odds so that they help to finance racing and it continues to be successful.
I am not going to develop my thoughts on that further. The facts and figures need to be in front of us and understood by both sides of the industry so that we know where we stand. The problem must be resolved. There has to be a replacement for the levy, because racing cannot develop and expand until its financial base is secure. The Minister might have a replacement scheme for the levy which he is ready to roll. If so, this is the ideal time and place to make that announcement, and I shall be delighted to hear it. If not, in my usual calm, collected and courteous fashion, and on bended knee, I ask him to consider my comments and I look forward to hearing his response.
The Minister for Sport (Mr. Richard Caborn): I congratulate the hon. Member for SouthWest Hertfordshire (Mr. Page) on initiating the debate. It is time to take stock of the industry. The hon. Gentleman is well informed because he is joint chairman of the all-
On Budd, it is important to see the bigger picture. It is Government policy to modernise the gambling industry, which is a multi-billion pound concern. In the light of the development of information technology and the way in which gambling is changing, we thought it right to take stock because the Act that governs the vast majority of gambling was put on the statute book in the 1960s. Electronic gambling is coming into effect and we have to decide what role the British gambling industry will play in the international field. As Budd explained, that would need primary legislation.
We instituted the Budd inquiry and it produced a good report that sets the agenda for modernisation. We put it out to a consultation that closed towards the end of October, after three months. We are reflecting on that and I hope that we will give the Government's considered reply early in the new year. I am mindful that uncertainty is not good for business. The gambling industry is an expensive commodity and we want it to know how we will manage our decisions. Of course, we need to get time on the Floor of the House, but at least the industry will have some certainty.
I will deal with gaming machines in clubs. Of 2,000 responses, about 1,500 were on gaming machines in Conservative clubs, Labour clubs, Liberal clubs and working men's clubs. The consultation created quite a hoo-hah. Nevertheless, we will cover that and other important issues. I did not realise until I took responsibility for gambling that the integrity of the industry is internationally renowned and respected. We want to keep that important ingredient if we deregulate or modernise gambling. I hope to ensure also that we have a sustainable industry.
On the specific issues, yesterday I had the privilege of cutting the first sod at the residential block of the Northern Racing college in Doncaster. It is one of only two such colleges, Newmarket being the other. When it is built, the residential block will accommodate 40 to 50 young people who attend the college to learn about the arts of riding. Hopefully, it will produce our future jockeys. I could not agree more that we have to look carefully at how we invest in the human capital of the racing industry to ensure that it is of a high professional standard and is sustainable.
Yesterday I suggested that we have a meeting with the industry, probably in late spring or early summer next year. Perhaps the hon. Gentleman's all-party group can consider that, and I shall be pleased to talk to him about it. The industry should come together to consider how best to invest in its future through the young people whom I spoke to at the college. The social inclusion agenda has had a considerable impact. Young offenders who went on a 10-week course have been placed with owners around the country. Hopefully they will realise that it is better to earn a living through racing than through crime, and that is welcome.
The taxation system as it relates to the stallion regime and the industry is a matter for my right hon. Friend the Chancellor. No doubt he will consider that. He took a favourable approach to the gambling tax, which the industry welcomed.
I cannot say much about the levy because, as the hon. Gentleman pointed out, the matter has been referred to the Secretary of State and me for determination. Like the hon. Gentleman, I am sorry that the industry was unable to come together to find a solution to the problem. In the wider gambling industry of which horse racing is a part, genuine opportunities will arise as a result of the removal of the levy, and we are trying to open up a dialogue about that and about privatising the Tote. The Chancellor's action on the gambling tax demonstrated our belief that the industry was ready for growth and modernisation, so it was disappointing that, in such an atmosphere, the industry was unable to respond by setting the levy. However, that is life. We will have to come to conclusions on those matters, and I hope that we will do so sooner than later.
The industry's lack of confidence was disappointing. Battle lines had been drawn which reinforced a "them and us" approach. I hope that the industry can work together to agree on the highest, rather than the lowest, common denominatorthe latter sometimes bedevils its progress. I think that it has a tremendous future and that this can be a win-win situation.
There are commercial negotiations for the sale of racing's media rights, which have been assumed to be a replacement for the levy, but that implies technical links that do not exist. The negotiations are separate. The levy was established some years ago to protect the industry and off-course betting, and we believe that it has now outlived its usefulness and it is right to remove it. We will then return to the marketplace. The sale of the media rights will also take place, but that is a commercial proposition that must be negotiated properly, as it would in any marketplace.
There have been major debates about what will replace the levy when it is eventually abolished. I respect what the hon. Gentleman has said, and I will take on board his remarks about what should replace the levy, but that is a matter for future discussions.
We would like to privatise the Tote sooner rather than later, and we would like to introduce that measure in a Bill that will also abolish the levy, but the timing of that is up to those who manage Parliament's business, and like Ministers in every Department, we are at their mercy. However, the Government's intention has been established, and the introduction of the legislation is only a matter of time. I do not agree with the hon. Gentleman's comments about a private Member's Bill. I think he knows that measures with financial implications are not usually introduced in such Bills.
I thank the hon. Gentleman for initiating this debate on horse racing, which is an important part of the wider gambling industry. It provides many jobs, it has integrity and it is loved by many throughout the country. That situation may be unique. In France, the number of those attending race meetings is considerably smaller than it is in the UK, and England in particular. Horse racing is a part of our heritage which I hope we can continue to develop and modernise. I am sure that if the industry is prepared to form a stronger partnership, this can be a win-win situation for everybody.