Standing Committee D
Thursday 22 January 2004
(Morning)
[Mr. Eric Illsley in the Chair]
9.30 am
Mr. Andy Reed (Loughborough) (Lab/Co-op): On a point of order, Mr. Illsley. I see that on the list of Committee members for today I am listed as Mr. James Reed. I am sure that my four-and-a-half-year-old son James would be in some difficulties in this Committee, however, as he started school only last week. I am not sure which he is more frightened of—being told off by the head teacher or being told off by the Whip for not being present. I should be grateful if you would make sure that the name is corrected to Mr. Andy Reed.
The Chairman: The hon. Gentleman's problem is a printing error. Suffice it to say that I know who he is, so I shall be able to call him to speak. He is listed as Mr. Andy Reed on the Division list. I shall see that the printing error corrected. Clause 15
Abolition of levy
Mr. Don Foster (Bath) (LD): I beg to move amendment No. 48, in
I welcome you to the Chair, Mr. Illsley. We have made great progress under your co-Chairman, Mr. Sayeed, which I hope we shall continue.
The second part of the Bill deals with the Horserace Betting Levy Board. The Committee will be aware of the relevant history. Until the 1960s, money was transferred from the bookmakers to the racing industry through a voluntary arrangement, but in the early 1960s more formal arrangements establishing the Horserace Betting Levy Board and the levy that goes with it were put in place. However, many people in the industry and the Government have been seeking for some time a different arrangement that removes Government interference and regulation. As the Bill is a deregulatory measure, we are pleased to support the Government's proposals, as I am sure the equally deregulatory Conservative party is.
You will be aware, Mr. Illsley, from reading the record of our deliberations that at the end of Tuesday's sitting the Minister seemed to think that the Liberal Democrats were not keen on deregulation, but I can assure him that we are. That is why we are happy to support the Government's intention, which is broadly supported in the racing industry, to abolish the board and the levy and to find an alternative arrangement.
As the Committee is only too well aware, the problem is that there is now some doubt about the
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alternative developed by the board, the industry and the bookmakers because of the involvement of the Office of Fair Trading in the industry and sport of horse racing. As a result, there is considerable doubt about whether the proposed mechanism, which primarily involves the sale of data to the bookmakers, will be possible. I was delighted to hear the Minister say on Second Reading that he was aware of that problem. He would be, as he has been closely involved, and he went on to say that, as a result of the concerns that had been expressed, the Government had decided to extend the life of the levy board to September 2006. As the industry agrees, that is a sensible move. However, the Bill contains nothing to ensure that we can be confident that a satisfactory and agreed alternative will be put in place before the Horserace Betting Levy Board and the levy are abolished.
We know that the industry, the Government and the bookmakers intend to find an alternative that ensures that money continues to go into racing for a number of important purposes, including improvements in the breeding of horses and the advancement and encouragement of veterinary science and education for the improvement of horse racing generally. There is a clear desire for a mechanism to be found to achieve that result. Racing brings about £70 million or £80 million into the industry for those activities, so an alternative is necessary. The problem is that we do not know what that alternative will be. We know that there are question marks about the existing arrangements. The Government have acknowledged the difficulty and have sought to assist in bringing various parts of the industry together to find a way forward in respect of OFT rule 14 issues and, if necessary, to look for an alternative way forward in the light of any OFT ruling, although we do not know when that will happen or even what it will be.
The amendment is an attempt to find a different way of ensuring that nothing moves forward until we are sure that what happens will not be rejected again by the OFT. It seeks to introduce a new mechanism that is agreed by all the relevant parties and will have the agreement of the OFT. That will ensure that instead of having a fixed date, as the Minister is suggesting, we can leave things open until those issues are settled. We are also conscious of an impending European Court case on the British Horseracing Board's ability to hold pre-race data centrally. Clearly, that issue must also be borne in mind and resolved before any new solution can be found.
When I was in discussion yesterday with the British Horseracing Board, I was delighted to hear that there is a new impetus in the industry to find a new way forward. We, the board and the industry want to ensure that, whatever the solution is, it will be sustainable and ensure that funds continue to go into the industry. The amendment provides a simple mechanism to ensure that we do not move forward unless we are sure that we have got the solution right and that it is not likely to fall foul of the OFT.
Mr. James Paice (South-East Cambridgeshire) (Con): May I add my welcome to you, Mr. Illsley,
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and express the hope that our progress under your chairmanship will be as fast as it was under that of Mr. Sayeed? Having heard your sotto voce comment earlier, we must wait and see.
The OFT issue is critical to part 1 and the hon. Member for Bath (Mr. Foster) is right to refer to it. I must admit that I am not entirely convinced that his amendment is the right way of dealing with that issue because it relates to the abolition of the levy rather than to the successor arrangements. I have tabled amendments to later provisions in this part of the Bill to require the transfer plan, which I think is the central point, to be subject to the affirmative resolution procedure.
I am concerned that the hon. Gentleman is simply suggesting that the OFT should approve the abolition of the levy, which is not really the point. I cannot see that there is a problem with the abolition of the levy, and whether something is put in its place is not a matter for the OFT. I know that that is not his intention, which I think is exactly the same as mine: that we should not proceed with the totality of part 2, which covers abolition of the levy and the transfer scheme that goes with it, and abolition of the board, until we are certain that there is a robust mechanism for alternative funding of the racing industry, as well as the sale of data and media rights, although that issue has largely been resolved. We briefly discussed the sale of data on Tuesday and I shall not detain the Committee by going through it again.
However, it is abundantly clear that the number of race courses would decline if OFT rule 14 were to stand. That would mean a break-up of the competitive nature of the balance between the racing provider and the consumer in the main bookmakers in bidding for data rights. As the right hon. Member for Livingston (Mr. Cook) said on Second Reading, it seems absurd that the OFT should propose that race course owners should not be allowed to group together to sell data rights when bookmakers can group together to buy them. That seems a slightly odd position for the OFT to adopt.
I welcomed the Minister's inferences—they were no more than that—in that Second Reading debate. He made it clear that the Government were sympathetic to the problems that would arise and referred to a letter that the Secretary of State had sent to the OFT, but which cannot be published. I take it—perhaps I am rash to do so—that the letter expresses concerns about the potential impact of the rule 14 notice on the racing industry. I hope that the OFT will amend its stance and that the industry will come to an agreement in its discussions, as that is critical. As I intimated, I shall speak to amendments later that would enable us to put off rule 14 until we are convinced that there are alternative orders.
None the less, I entirely support what the Government are trying to do. The levy is an anachronism, particularly with regard to the role of the Secretary of State in settling it. The concept of shifting to a much more commercial arrangement is right. I simply want to ensure that we do not jump
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before we know what we are jumping into and that there are viable alternative arrangements for the racing industry.
I believe that that is what the hon. Member for Bath is suggesting in his amendment. In principle, I support what he is trying to achieve. Let us see what the Minister says. My gut feeling is that the amendment does not achieve its intention, but the hon. Member for Bath is right to say that the current deliberations of the OFT are central to the future of the levy board and what comes after it. I hope that the Minister will take that on board. We support the end of the levy, but we want to ensure that we do not get rid of it before we know exactly what will replace it.
Mr. Richard Page (South-West Hertfordshire) (Con): May I, too, welcome you to the Chair, Mr. Illsley? If you have a chance to read the record of the previous two sittings, you will discover that they have been conducted with good humour on all sides. My hon. Friend the Member for South-East Cambridgeshire (Mr. Paice), my new-found friend the hon. Member for Bath—we will leave his wife and her postcards out of this—and I have made various requests of the Minister, who has put his hand somewhere near his heart, or perhaps his wallet, and said, ''Trust me. I shall ensure that all your concerns are recognised in the fullness of time.'' We poor trusting souls have agreed to that, and we are looking forward with great anticipation to the Report stage.
Like my hon. Friend the Member for South-East Cambridgeshire, I appreciate and understand the thrust of the amendment but have doubts about whether it would achieve its basic intention. Equally, I understand why the Government want to get rid of the levy board. It is unacceptable that a Secretary of State should be drawn into what is essentially a business transaction, and I can appreciate their wanting to say goodbye to the board as soon as possible.
However, in discussing the amendment, we must also be careful that we clearly understand the value of the levy board. Many a time I have been to various race courses, particularly in the winter. I stand on corrugated iron—
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