Skip to content

Lipsey speech

I’m afraid I have had no time to write of late, despite there being many things worth talking about.

I thought that I would instead post this extremely interesting contribution to the House of Lords Third Reading debate for the Gambling (Licensing and Advertising) Bill, which passed an amendment to include offshore business in the horseracing levy. The speech if by Lord Lipsey.

My Lords, I am aware that the House is keen to get on to the important debate that we will hold on the Ukraine this afternoon, so I will not detain it longer than I have to.

I start from a position that may not be widely shared in this House-I do not know-which is that I am against the levy, and I have been for years. When I started off being against it I was in a minority of one, but now a large number of people have come round to the view that it is not desirable. The two Members of the House of Commons who have most knowledge of these matters-Mr Philip Davies and Mr Laurence Robertson, who chairs the Racing and Bloodstock Industries All-Party Group-are both anti-levy. On their good days the Government are anti-levy, since they have explained that they want a replacement of the levy. I hope that it will be a commercial replacement that comes along.

I am against the levy for two reasons. First, for my sins I am by training an economist and, like all economists, I believe that subsidies, ceteris paribus, are a bad thing. They distort markets and interfere with the generally beneficial results in industry of free competition. The statutory levy on horseracing betting is an exemplar of this; it means that racing spends much of its time lobbying for more levy instead of putting its house in order and modernising the sport. It leads to bigger prizes, which in turn lead to inflated prices for the best bloodstock and then demands for even bigger prizes, so that that investment in inflated-priced bloodstock pays a dividend. Supernormal profits are made by some participants in the sport, including successful trainers, but I observe that little of that money trickles down to stablehands.

Secondly, I am against the levy because, as a socialist- I am sorry if that word shocks some noble Lords-I believe in greater equality. What we have in the levy is a statutory mechanism that redistributes wealth from the less well-off to the rich. The poor punter in the betting shop subsidises the agreeable hobby of the rich racehorse owner. You never meet a poor racehorse owner, unless you meet one who has shown an excessive belief that his pride and joy is going to win the next race and has invested accordingly with the bookmakers.

So I should like to live in a levy-free world. If in such a world the betting industry and horseracing industry decide that it is in both their interests to have a commercial arrangement whereby betting provides money for horseracing, that is all well and good. I have no desire to interfere in a free contract. Indeed, quite a lot of that has been happening, because media rights for covering horseracing have been rising quite rapidly. You do not read that when you hear racing’s pleas for more and more levy. Even more significantly, we have been edging towards a commercial agreement on support from one industry to another, and the last levy settlement reflected that. As Parliament clamps down, as I am sure that it will, on FOBTs in betting shops, so the betting industry will need horseracing more and will have to pay to get the product that it requires. There is nothing wrong with any of that.

As an anti-levy person who is glad to see the signs that it may be fading away, where does that leave me on the amendment? I can see the Minister’s argument that, if you are going to have a levy, it is better to have a fair one than to have an unfair one-so I am not necessarily opposed to doing what the amendment would do to make the levy payable on bets with overseas operators. It is the level playing field argument, and who can be against a level playing field? However, a fairer levy is not at all the same thing as a larger levy. It is a quite different question to how much should be raised in a levy. So I would ask the Minister when he replies for the reassurance that behind this amendment does not lie any intention to signal that the Government believe that the yield of the levy should be in future higher than it is now. That is a position on which the Government should be strictly and studiously neutral.

Will the amendment bring a levy-free world closer or less close? I note that William Hill, the bookmakers, made a comment in the Racing Post, to the effect that altering the levy in this way might mean that the whole scheme was declared illegal as a state aid by the European Union. In reaching this conclusion, it analysed the recent decision of the Commission in the French case, allowing a scheme in some ways analogous to that which the Government propose here. It pointed out, first, that that decision is being appealed by the Remote Gambling Association and its members and, secondly, that an aid that might not be regarded as distorting competition in a market such as that of France, which is essentially non-competitive, might not be allowed in Britain, where the market is highly competitive. So it is a glimmer of hope. The Government might go down that path but, with any luck, the Commission might use it as an opportunity to get rid of the levy anyway.

18 Mar 2014 : Column 87

William Hill also points out-and I think that this is an even better point to rest on-that, although the Commission may allow the levy not to be state aid, that may depend on how it is spent. If it is spent in deprived areas, supporting racecourses that would otherwise close down, that is one thing, but if it is used just to stack up larger and larger prizes for owners, that is another. Therefore, we may get not only a fairer but a better levy as a result of the unplanned consequences of this amendment and any regulations under it. The Commission took precisely that view of the proceeds from the sale of the Tote. As noble Lords know, some money was retained from those proceeds for racing, but it had to be spent in certain ways, and not necessarily in the ways racing would have preferred.

However, none of these desirable consequences can be relied on, so I want to press the Minister on one absolutely central point. When he announced the bringing forward of this amendment, he argued that the Government were taking these powers without prejudice to their long-lasting, though slow-moving, efforts to find the holy grail-a levy replacement which did not involve government in fixing the flow of funds from one industry to another. I ask the Minister to give those assurances again today in the strongest possible terms and then to go off with his colleagues and betting and horseracing representatives to find a system which does not involve a state-enforced transfer from poor punters to fat-cat owners.


Posted in Betting industry, Gambling, Sport.

Tagged with , , , , , .

0 Responses

Stay in touch with the conversation, subscribe to the RSS feed for comments on this post.

You must be logged in to post a comment.