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Mr. Caborn: The explanation that I have is that subsection (2) deals with stamp duty and stamp duty land tax. Subsection (1) is about the rest.
Mr. Paice: I shall not argue the point, as I suspect that the Minister and I would quickly strip open Revenue legislation, but I am grateful to him for his response. If the Government's view is that his amendment will suffice to ensure the neutrality of the taxation regime, which we both seek to achieve, I should be prepared to support it. It probably goes down as worth half a postcard. I beg to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Amendment made: No. 42, in
Question proposed, That the clause, as amended, stand part of the Bill.
Mr. Caborn: The clause deals with two sets of taxation. Subsection (1) provides that for all income tax, corporation tax and capital gains tax purposes the
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successor company is to be treated as if it had always been the Tote, and the transfer will not have any tax consequences. I think that that answers the hon. Gentleman's question. Subsection (2) ensures that liability to stamp duty or stamp duty land tax does not arise on the vesting of the Tote's property in the successor company, or on certain preliminary transactions. Together, the measures will provide tax neutrality for the sale of the Tote.
Question put and agreed to.
Clause 4, as amended, ordered to stand part of the Bill
Clause 5
Pre-sale issue of shares, &c. to government
Mr. Paice: I beg to move amendment No. 2, in
The Chairman: With this it will be convenient to discuss amendment No. 3, in
Mr. Paice: As you will probably have realised, Mr. Sayeed, this is one of the most important groups of amendments that we have tabled to part 1, because it would ensure that the future ownership of the Tote was in the best interests of racing. The amendments do not go so far as specifically to require the Tote to be sold to the racing trust or the shadow trust, as currently exists, not because we do not want it to be, but because we have taken at face value the Minister's comments on Second Reading that the new owners must be able to deal with any eventualities that may arise. I am sure that in principle the Minister will be sympathetic to what we seek to achieve. Indeed, from his remarks on Second Reading, I know that he is.
10.45 am
As I said on Second Reading, the Tote is widely seen by the whole racing industry as part of racing. Even the punters view it as such. They go to the race track, where they see its familiar livery. They know it is there and they expect it to be there. I believe that the vast majority of punters, as well as everybody else involved with racing, believe and expect that the profits, dividends—we can call them what we like—should go back into racing. Any idea that the Tote would be sold to some person or organisation that would not plough the proceeds back into racing would be met with absolute horror and objection right across the world of racing.
Amendments Nos. 2 and 3 are not necessarily complementary. They are alternative ways of trying to get into the Bill some mechanism to ensure that the objective that I have just described is met. Amendment No. 2 states that
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''unless the Secretary of State is satisfied that the person nominated will ensure that any dividend from those securities is utilised by the company in the interests of horseracing'',
he would not be able to sell the shares to a new owner. Amendment No. 3 refers to
''any person other than one who receives the securities on behalf of a Trust Fund whose purposes are in the interests of horseracing.''
The amendments provide different ways of addressing the situation.
The Tote is of immense value to the racing industry in cash terms as well as the emotional terms that I have just described. The latest half-year interim report shows profits of £9.2 million and in the past year it has put £10.7 million into racing, excluding the levy of more than £14 million. That is a considerable cash input to the racing industry, and it is fair to say that racing would be in desperate straits without it.
We should be encouraged by the fact that the racing industry is perhaps stronger than ever. In 2003, there were more fixtures, more people attending racing and higher average attendances than ever before. The industry is in a growth phase, but it needs resources ploughed back from the Tote and, as we shall discuss later, from the levy board or its successor systems. That money must go into racing.
The Government have expressed on numerous occasions, and the Minister has already repeated in Committee, a desire to transfer the Tote to a racing trust. I shall not bore the Committee by reading out the raft of ministerial statements reinforcing that; we all understand that it is the case. Following the Government's original announcement that they planned to sell to racing, the shadow racing trust was set up to negotiate with the Government. Bearing in mind who might look in on these proceedings, I hope that it is not negotiating at this very time, because such negotiations would be taking place without the chairman, which might be inconvenient.
As we have heard, the trust continues to negotiate with the Government, and rightly so. In November 2002, Lord Lipsey stood down from the Tote board to become chairman of the shadow racing trust. Everything that has happened points to selling to the racing trust. I strongly welcome that, as do my hon. Friends and the racing industry. We understand that the board basis of the trust means that it will have cross-industry representation. It will have an independent chairman and representatives from the British Horseracing Board, which is the industry committee, the Jockey Club, the Racecourse Association, the Racehorse Owners Association, Tote staff and, of course, from punters. A cross-section of the racing industry was involved, and there may well be others represented on the board.
The Tote is part of racing and must remain so. I know that that is known and accepted by the Government, and I am just repeating what is widely understood, but I am concerned that there is nothing in the Bill to turn that into reality. I do not doubt in any way what the Minister has stated in his objectives, or what has been said by the Secretary of State or by the previous Home Secretary, the right hon. Member for Blackburn (Mr. Straw). I am always concerned,
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however, that there is many a slip twixt cup and lip, as the old saying has it. Things could go adrift.
Negotiations with the racing trust may break down or, as the hon. Member for Bath suggested, there may be some reason why a negotiation with another body might be necessary. I am trying to ensure that the Bill says that those negotiations should take place only with a body that has racing at its heart, which would ensure that that flow of money comes back into racing. I do not mind whether amendment No. 2 or amendment No. 3 is accepted, or whether the Minister tables a similar amendment that serves the same purpose.
Without trespassing on your generosity, Mr. Sayeed, it is interesting to note that in the next part of the Bill that deals with the levy, the Government have clearly stated that the assets and property of the levy can be used only in the interests of horse racing. I will not read the relevant passage out, but they have included that although they have not put it in the part of the Bill relating to the sale of the Tote. That is a grave omission, and I do not understand it.
I can understand the Minister not wanting his hands to be tied by legislation to sell the Tote to the shadow racing trust, but I do not understand why it is not possible to put constraints in the Bill concerning to whom it should be sold to ensure that it is kept within racing and that the benefits, proceeds, profits and dividends are ploughed back into racing, as we all expect. That is the objective of the amendments. I suspect that the spirit of the amendments will be greeted with support in the Committee and throughout the racing industry, and I hope that the Minister will respond in a way that demonstrates that he understands what we are trying to achieve. We want to ensure, as the Government are doing in part 2, that the proceeds of the action we are taking—the nationalisation and subsequent privatisation of the Tote—remains in the best interests of racing. That is what I am trying to achieve.
The Chairman: I call the current Mr. Foster.
Mr. Foster: I am grateful to the current Chair of our proceedings, although I note with interest that you will not be our Chairman at all times, Mr. Sayeed. Some changes are pre-ordained; others perhaps are not. I say to you in your temporary post as our Chair that I have much sympathy with the remarks of the hon. Member for South-East Cambridgeshire. You are obviously studying our proceedings with great interest and you will have noted the first amendment we discussed—No. 49, which I tabled—although I withdrew it for reasons that I gave at the time. That amendment referred to the need for the new body to provide that
''all future operating profits are used to contribute to racing.''
That is a similar intention to that of the hon. Gentleman's amendments.
In this Committee, we have had some difficulty with the approach adopted by the Government in relation to several issues. During our debate on Second Reading, a number of colleagues and I referred to the various gaps in the Bill. At the same time, we said
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that we did not for a minute dispute the Government's very clear intentions. In response to one issue raised during that debate, the Minister said:
''What I am saying today at the Dispatch Box is, according to the conventions of the House, a clear statement of the Government's intentions. That is why I do not believe that the provision needs to be included on the face of the Bill.''—[Official Report, 8 January 2004; Vol. 416, c. 444.]
In other words, the Minister referred quite rightly to the convention whereby the Government make clear their intention from the Dispatch Box or in Committee, and therefore argue that it is not necessary to include it in the Bill. Taken to its logical extent, that could mean that very little needs to be in the Bill provided that the Minister declares something to be the clear intention of the Government.
The hon. Member for South-East Cambridgeshire rightly points out that those items that the Government have chosen to include and those that they have chosen not to include form a slightly odd collection. The Bill contains a great deal of detail about how taxation will be dealt with for the new body, but the Minister could have told us in Committee what the Government intend.
However, some more crucial issues, such as whether the Tote will go to the racing trust, which we will debate later, and whether things will be done 50:50 are not in the Bill. Here we have an issue that is at the heart of why we are doing what we are doing—ensuring that whatever happens to the Tote is in the interests of racing—but it has not been included in the Bill. The first parts of the legislation are all about that important issue, whereby the sale of the Tote is designed for the benefit of racing, yet it does not appear.
I am not suggesting that the most appropriate way to resolve the problem is to adopt the words used by the hon. Member for South-East Cambridgeshire, but at least those words are a vehicle for that. We must hear something more substantial from the Minister in his rejection of the hon. Gentleman's proposals than merely that they do not need to be in the Bill because the Government intend to do those things anyway. He must explain why less important matters are included when that central issue is not.
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