Horserace Betting and Olympic Lottery Bill

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Mr. Nick Hawkins (Surrey Heath) (Con): I want to speak briefly, because when I looked at what my hon. Friend the Member for South-East Cambridgeshire had drafted before the amendments were tabled in our names, it seemed to me, with my background as a corporate lawyer, that the wording the lawyers had advised the Tote to propose was an improvement on the Bill. Therefore, like my hon. Friend, I would be grateful if the Minister explained why his advisers are so certain that the wording in the Bill is an improvement.

Mr. Caborn: The answer is that they believe that what they have drafted is an improvement. For the record, we will not necessarily appoint the Tote board as first directors of the successor company. I may have misread my notes, so I want to correct that for the record.

Mr. Paice: On a point of order, Mr. Sayeed. I am grateful to the Minister for reading that out, but it negates the whole of the previous debate—it is a completely different response from the one that the Minister gave when replying. The response of Conservative Members to such a remark would have been totally different.

Mr. Hawkins: Further to that point of order, Mr. Sayeed. I do not know whether it is within the jurisdiction of a member of the Chairmen's Panel such as you to declare a previous debate null and void, but as my hon. Friend the Member for South-East Cambridgeshire withdrew the amendment, which we would otherwise have pressed, only on the basis of ministerial assurances, and the Minister got up a few seconds later and completely contradicted those assurances, can you as Chairman reopen the debate on the previous amendment? Clearly, the amendment was withdrawn on a wholly false and erroneous basis.

The Chairman: I thank the hon. Gentleman for his advice, but I cannot go backwards on a Bill, nor am I responsible for the Minister's words or the actions of the Opposition.

10.30 am

Mr. Caborn: To be clear, it would be useful to put on the record what I said, and the intention behind it. I said that amendment No. 1 seeks to ensure that Tote board members, on the appointed day, will continue to be board members of the successor company. The Tote has done an excellent job and will no doubt continue to do so until the point of sale. Once the successor

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company has been sold to the new owner, it will be for it to appoint the board. We do not want to tie hands, and they will be the new owners. I clearly expressed my intention and said that we expect the directors to continue. However, whether we would have to appoint new directors depends on the length of time before the sale. We intend to have the current directors of the company in the new company until the point of sale. If the time involved lengthens, which I hope it will not, there may be a point at which new directors have to be appointed to the board.

To reassure the Committee, we are trying to make the transfer, which involves selling into the public sector, and then out of the public sector and into a racing trust, as quick and smooth as possible. Therefore, the directors who are on the Tote at the moment will be on the board of the successor company. If the time involved is long, there will have to be reappointments to the board. The Government would have the right to do that, but I hope that the period involved will mean that that does not happen and that we will move smoothly into the sale to the trust.

Mr. Paice: Further to that point of order, Mr. Sayeed, the Minister has clarified, and slightly reined back from, the comments that caused the expostulation from Conservative Members. I will try to get this right. As I understand it, he is saying that we have a set of directors of the Tote. On the appointed day, the Government will set up a successor company—Tote 1, we will call it. The same directors will be directors of Tote 1. If Tote 1 is not sold on pretty quickly to the racing trust, it may be necessary at some stage in the future to re-engage the normal appointments and reappointments process that we know that the Tote board goes through.

If that is what the Minister is saying, that is fine. My concern is that, the moment after vesting power in that new company, the directors of Tote 1 might not be the same directors. If the new company is sold to the racing trust pretty quickly—within hours or days of setting it up—as we all hope and expect it will be, the same directors will be directors not only of the Tote but of Tote 1 until the moment that the successor company is sold. We all agree that once it is sold to the racing trust or anybody else, it is that body's job to decide who its directors should be. I am concerned to ensure that, as long as there is not a long extension of time, the same directors remain in place until that point.

The Chairman: Before the Minister responds, let me make it clear that this is an extension of the debate on clause 3 stand part, as opposed to a series of points of order.

Mr. Caborn: I reassure the Committee that we intend to take the Tote members, put them on to the new board, and, we hope, sell quickly into a racing trust. If the time involved is extended, for whatever reason, there may need to be further reappointments of directors at some stage.

Mr. Paice: If the time involved is extended, for whatever reason, there may need to be further reappointments of directors at some stage. I do not

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think that the Minister ever got round to replying to my introduction on stand part. I raised the issue of the amendments that had not been selected. In particular, I asked the Minister for his response to the suggested drafting and the claim that the words ''Anything done by'' in line 5 on page 2 were insufficiently comprehensive and should be replaced by:

''Any agreement made, transaction effected or other thing done by''.

The Chairman: Order. As the amendments were not selected it is not necessary for the Minister to answer those points.

Mr. Paice: I am sure that it is not necessary for the Minister to do so, but he is a generous-spirited man and I hope that in the spirit of generosity he will still give me the benefit of his advice.

Mr. Caborn: The suggestion is that the phrase

''Anything done by or in relation to''

the Tote does not cover everything it needs to. We are firmly of the opinion that the current drafting is sufficient. We fail to see what can be done to the Tote that is not also, by definition, being done ''in relation to'' it. I must be careful because I do not want to discuss amendments that were not selected. I hope that the assurance that I have given to the hon. Gentleman is sufficient.

Question put and agreed to.

Clause 3 ordered to stand part of the Bill.

Clause 4

Tax

Mr. Paice: I beg to move amendment No. 30, in

clause 4, page 3, line 4, after second 'tax', insert

', stamp duty land tax'.

The Chairman: With this it will be convenient to discuss the following:

Amendment No. 31, in

clause 4, page 3, line 12, after 'enactment', insert 'or regulation'.

Government amendment No. 42.

Amendment No. 32, in

clause 4, page 3, line 12, after 'duty', insert

'and Stamp Duty Land Tax'.

Mr. Paice: I must confess that I am not in the habit of writing to my wife very often, or even to other parties, but if I were to follow the example of the hon. Member for Bath and do so, I have a small degree of optimism that I might be able to on this group of amendments, not least because the Government have tabled an amendment, which simply serves to point out an omission that I made in not covering all the avenues. The amendments are simple. The clause, which relates to the tax impact of the sale and transfer of the Tote, should include reference to the new stamp duty land tax. The approach underlying the clause and the Bill is intended to ensure that the conversion of the existing board into a plc has no tax consequences. We have a new tax—believe it or not—from this Chancellor: stamp duty land tax, which came into

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effect on 1 December 2003. That was probably after this Bill had gone to the printers, and therefore it is not included, but it clearly needs to be if we are to retain the planned neutral impact of the Bill. I understand that the Inland Revenue has acknowledged the need for the clause to be amended. Our proposals are simply intended to correct the omission, and I look forward to the Minister's acceptance.

Mr. Caborn: The aim of clause 4 is to preserve the tax neutrality of the transfer, which is what the hon. Gentleman was getting at. Amendments Nos. 30 and 32 insert express references to stamp duty land tax. The Government accept that stamp duty land tax needs to be mentioned, but it is sufficient for that to be in subsection (2). Therefore, I commend amendment No. 42 to the Committee and ask the hon. Gentleman to seek to withdraw his amendment.

Amendment No. 31 ensures that the transfer to the successor company will not give rise to a liability under an enactment or regulation about stamp duty. The word ''enactment'' is capable of covering secondary legislation, and we do not believe that an arbitrary distinction could be drawn between tax liabilities in primary legislation and those in regulations. For that reason, I hope that the hon. Gentleman will not press the amendment.

Mr. Paice: I should be interested if the Minister could explain why he believes that it can all be covered under subsection (2), as in most clauses the opening lines are important. Clause 4 says that

''for the purposes of any enactment about income tax, corporation tax or capital gains tax—

(a) the successor company and the Horserace Totalisator Board shall be treated as the same person''.

The Minister appears to be saying that it is not necessary to put stamp duty land tax into that statement, but it can go in, as he proposes, in line 12, at the end of the clause. I do not know why that is, as all the other taxes are covered in the opening line of the clause. I should be grateful for an explanation.

 

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Prepared 20 January 2004