| Horserace Betting and Olympic Lottery Bill
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Mr. Richard Page (South-West Hertfordshire) (Con): The Minister will remember that on Second Reading a number of hon. Members asked for a Committee stage, as it would be a golden opportunity for him to explain how this part of the purchase of the Tote would unravel and give us a clue as to the Government's thinking. I support the sentiments behind the amendment moved by the hon. Member for Bath (Mr. Foster), but some aspects of its practicalities worry me, such as the method of valuation. We should consider the complexities and difficulties that lie behind the calculation of such a valuation. The hon. Gentleman refers to an ''independent'' valuation: any valuer would want to know the ground rules before moving into a valuation. In relation to the process of valuation, the history of the Tote should be borne in mind. We know that the Tote has not given the Government any money directly in the form of a licence fee over the past 76 years, but the Government in turn have given the Tote an effective monopoly for 76 years and have enabled a substantial pool betting system to emerge. The Government could have charged a licence over the years if they had changed the law, but, particularly over the past 10 years, the Tote has put a sizeable amount into racing—about £100 million—which could almost be regarded as a licence fee. If the Tote had not put that money into racing, racing would have suffered. The Government's substantial revenues from various aspects relating to racing, particularly betting, would have been diminished, because extra support would have to have gone into racing. The Government should take that into account. With the acquisition of the Tote, the Government will be taking it over, but, although the Tote is owned by itself, it has a notional value at present. The argument could follow that this value is greater than any value that the racing trust would have to pay the Government, because the racing trust will pay a licence fee to the Government. One could almost work out that the Government should give the racing trust money to take over the Tote, because it will pay a licence fee. I do not advance that too seriously, as I cannot imagine the Chancellor of the Exchequer accepting such a fair and honest evaluation of the situation. My point is that it is very difficult to reach an independent valuation on the Tote. The hon. Member for Bath touched on the matter. We have the information that a seven-year licence will be granted. I sincerely hope that, when my hon. Friend the Member for South-East Cambridgeshire introduces the appropriate amendments, the Minister will be prepared to accept that the seven-year licence should be included in the Bill. I suggest that we should work backwards when we come to the so-called independent valuation, because one cannot work out the capital value until the size of the licence fee is known, there is an agreement on the amount of money that will go into racing and it is acknowledged that, during the seven years, the entire operation will have to wash its face. One could keep arguing about the various costs that must be taken into account. Column Number: 008 This is a golden opportunity for the Minister to take advantage of a compliant and supportive Committee, given all that we are trying to achieve. I hope that when he responds he will explain the basis on which the valuation will be calculated so that we can continue to work and move forward with confidence in him. Mr. Paice: I largely agree with every word that my hon. Friend and the hon. Member for Bath said. I am in a slightly difficult position, because I, too, considered tabling an amendment in similar vein but was dissuaded from doing so by the Tote itself, which felt that it might not be helpful to include such detail in the Bill. Nevertheless, as my hon. Friend said, this is an opportunity to explore the mechanism by which the Tote will be valued and, at least, to get a commitment from the Minister on 50 per cent. The hon. Member for Bath read out some of the Minister's winding-up speech on Second Reading. The Minister did not go quite as far as specifying 50 per cent. He talked about joint ownership and such things but did not make a commitment, although one could read one into his comments. He is smiling, which leads me to assume that I am right in saying that he fought shy of a final commitment, which I believe is necessary. Mr. Foster: I apologise for interrupting the hon. Gentleman so early in his speech, but I ask him to reflect on what he just said. I do not know whether he would join me in not wanting the Minister to specify a figure of 50 per cent., other than to say that it was the maximum. Surely the Government would want to have negotiations on some of the issues raised by the hon. Gentleman. That is covered by my amendment. Mr. Paice: I fully recognise what the hon. Gentleman is saying. The right term is probably ''a maximum of 50 per cent.'' The figure that has been used throughout the debates during the past 18 months has been 50 per cent., although we have yet to put it into any context or add substance to it, whether it be a maximum of 50 per cent. or 50 per cent. My hon. Friend said that perhaps the taxpayer should pay the Tote. I believe that that was the way he put it. That might be stretching the point ever so slightly, but the important point is that the taxpayer has never put any money into the Tote itself or even stood by its borrowings. Therefore, there is an intellectual argument that the taxpayer has no right to benefit from the sale of the Tote, other than from the licence fee, which I will come to later, because the taxpayer has never had any financial responsibility for the Tote throughout its existence. Indeed, as I said on Second Reading, the hon. Member for Knowsley, North and Sefton, East (Mr. Howarth) stated clearly in a written answer, when he was the Minister responsible for such matters, that the Tote's assets basically belong to the Tote board, and that the Tote board belongs to no one. That makes it clear that the taxpayer is not viewed as owning it. In 1999. the British Horseracing Board obtained expert legal advice from Sydney Ketteridge and Margaret Gray, who argued that it was fallacious for the Government to have a share of the money for the Tote. They went on to say that Column Number: 009
It is doubtful whether the Government can support their claim to a share in the value of the Tote. I am sufficiently realistic to understand that the Government will probably insist on a small pound of flesh for the Tote, but there is a strong intellectual argument that they should not receive any money other than the licence fee. What concerns me—this a point that I shall repeat on several occasions during our proceedings—is that none of us can foresee the future. The Minister and the Secretary of State have been completely open and genuine in their expressed intentions about the various aspects of the disposal of the Tote—I do not detract from them at all—and we all know that. Although it is commonplace in Committee to say that the Minister may not be around in few months and that we will have somebody else, that is a reality. We do not know what the future holds. As I said on Second Reading, it is perfectly conceivable that the situation may have changed by the time the Bill has completed its passage, particularly if, in light of the Office of Fair Trading investigations, decisions are taken to delay some of the actions because the Bill is all-enabling. Therefore, there is an argument for saying that we need a commitment about the mechanism by which the Tote will be valued and a sale price agreed. Of course there are those, the bookmakers in particular, who contend that the value of the Tote is considerably in excess of the sums that have been talked about as a sale price—anything from £50 million to £150 million has been quoted. Mr. Foster: More than that. Mr. Paice: As the hon. Gentleman says, the bookmakers are quoting figures of double that or more as their estimate of the value of the Tote. I am pleased that in his amendment the hon. Gentleman made it clear that the 50 per cent. figure would apply only if future operating profits were used to contribute to racing. One of my concerns in having that in the Bill was that a future Minister might decide to sell it to somebody else, such as an existing bookmaker, who would then get the 50 per cent. discount. The hon. Gentleman has covered that possibility and I am glad. I am sure that the Minister will tell us that the amendment is technically faulty. That is the usual response regardless of whether he wants to accept the overall point. The key point is that we need to know how the Minister intends to have the Tote valued, how he intends to deal with its liabilities—including the pension fund—and whether he accepts that the split between the two interest bodies that own the Tote, which he has already put into Hansard, should be 50:50 or some other balance. Those issues are important. As the hon. Member for Bath has said, the more that the Tote is forced to borrow to pay for itself, the less it will be able to borrow to invest in its growth. As we shall discuss later, its growth during the period of the licence will be critical to its long-term future and Column Number: 010 ability to deliver to racing a substantial income flow once the licence ceases to be exclusive—although we shall seek to prevent that—and there is competition in the pool betting industry, as the Government envisage. It is essential that by that stage the Tote has grown to such a size that it can resist not only that competition but can continue to deliver unto racing the sums of money that it is delivering now or indeed, we hope, considerably more. If it is to do that, it must have the resources to expand, and it will not have those resources if it has had to borrow to pay the Government.I hope that the Minister can offer us considerable assurances on the points made by the hon. Member for Bath in his amendment.
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| ©Parliamentary copyright 2004 | Prepared 20 January 2004 |
