Clause 3 - Sections 1 and 2: supplemental
Horserace Betting and Olympic Lottery Bill
10:15 am

Mr James Paice (South East Cambridgeshire, Conservative)

I beg to move amendment No. 1, in

clause 3, page 2, line 39, at end insert—

'(6A) The Secretary of State shall ensure that the directors of the successor company following the vesting of the property, rights and

liabilities of the Board on the appointed day are the same people as were members of the Board before the appointed day, save to the extent that any individual member has not given his consent to being appointed as a director of the successor company.'.

This is a technical amendment, but it is important. The Tote proposed it, and it is about the status of its directors. As the Minister has confirmed, the Government intend to create a successor company and, in almost the same breath, to sell it to the racing trust. However, the legislative basis for a continuity of directors is missing. I am not suggesting that there is any malign intent on behalf of the Government suddenly to get rid of the existing directors and to appoint a new lot for the five minutes of the successor company under Government ownership. However, it is important to clarify that the existing directors should become directors of the successor company unless they individually choose not to be.

Once the Tote is sold to the racing trust, as we hope it will be, that trust should decide whether a change of directors is necessary. As with any company, the owners should decide who are the directors. I am simply trying to clarify the situation for the successor company that exists in the period between the current Tote and it becoming wholly owned by the racing trust.

The amendment is important for the purposes of continuity. We always have to consider the unlikely event, and on Second Reading in response to an intervention from the right hon. Member for Livingston (Mr. Cook), the Minister referred to the possibility that something could go wrong and that the sale to the racing trust might not happen.

We need a belt-and-braces approach. We all hope that there will be no problem, but it is conceivable that, having taken the Tote into state ownership, something may go wrong. In that event, the Government would be stuck with ownership for longer than is currently envisaged. I seek only to ensure that the current directors of the board remain until the Tote is taken over by the racing trust or whomever.

Mr Richard Page (South West Hertfordshire, Conservative)

I wish to intervene only briefly. I support my hon. Friend's argument. I appreciate that it is a technicality and that it represents a belt-and-braces approach, but the Minister said that he hoped that there would be only a short period between Government ownership and the handover to a racing trust.

I do not know what is a short period. For Stephen Hawking it is a few millennia; for the Government it could be three or four months. There could be a period of instability in which various moves are made and actions taken, and it is most important to the stability of, and confidence in, the measure that we ensure that the directors who know how to run the Tote operation are there to take over when the time comes.

We are being super-cautious, but I hope that the Minister appreciates the fact that the amendment has been tabled with the best of intentions for all concerned.

Mr Adrian Sanders (Torbay, Liberal Democrat)

I am not convinced by the amendment. It would bind the

Secretary of State to ensure that the directors of the successor company are the same people as were members of the board before the appointed day when the successor company assumes control. The freedom of the shadow racing trust—the successor body—to determine whom its directors were, or how it would carry out its management, would be removed.

My hon. Friend the Member for Bath said on Second Reading that he did not want the Secretary of State to be forced into selling the Tote to one particular buyer regardless of its offer. Perhaps I have misinterpreted the amendment.

Mr Richard Caborn (Minister of State (Sport and Tourism), Department for Culture, Media & Sport; Sheffield Central, Labour)

I thank the hon. Member for South-East Cambridgeshire for tabling this probing amendment, and I think that the hon. Member for Torbay (Mr. Sanders) has misinterpreted it.

Amendment No. 1 would ensure that after dissolution the Tote board members would continue to be board members of the successor company. That would be the case. I want to put it on record that the Tote board does an excellent job and will, no doubt, continue to do so until the point of sale. When the successor company has been sold to a new owner—this is where there is a difference of opinion—the new owner will appoint the board. We do not want to tie the hands of the new owner in this matter. That will not affect anyone's rights under employment law and the executive directors, like other employees, will be protected under clause 3(6). I ask the hon. Member for South-East Cambridgeshire to withdraw his amendment.

Mr James Paice (South East Cambridgeshire, Conservative)

I am grateful for the Minister's response. Before perhaps complying with his request, I want to press him a little further. We agree that when the successor company has been sold to the shadow racing trust, none of us wants to tie the trust's hands and it must appoint its own directors as appropriate. However, there will be a period between the Tote ceasing to have its current status, when the successor company takes over its assets and so on, and that successor company being sold on. It might be five minutes, or the time it takes to sign the documents, but it might be considerably longer if matters go adrift.

All I am seeking from the Minister is an assurance that the directors of the successor company, which will, by its nature, be a different company—that is what the clause is all about and the Government are appointing the successor company—will be the same as the existing directors of the Tote until the point of sale to the racing trust.

Mr Richard Caborn (Minister of State (Sport and Tourism), Department for Culture, Media & Sport; Sheffield Central, Labour)

I repeat what I said: the Tote board members on the appointed day of dissolution will continue to be board members of the successor company. It is our intention to sell it, as quickly as possible, to a racing trust. Beyond that, we must obviously retain some flexibility. We expect the board members to be on the board of the successor company. I am trying to provide the reassurance that the hon. Gentleman asked for. I believe that I have done so and that we are giving the racing trust the flexibility to reflect on the membership of that board. That is the

best way forward in the circumstances, and I hope the amendment will be withdrawn.

Mr James Paice (South East Cambridgeshire, Conservative)

As I suspect we shall find with a number of amendments and in view of the Minister's response, what is wrong with putting the amendment in the Bill? I am trying to achieve what the Minister intends, and I do not see a problem with putting that in the Bill. When the successor company is owned by a racing trust or someone else, who the directors are will be entirely a matter for the new owners. No one is talking about fettering them.

There are perhaps more important issues that should be in the Bill, whatever the Minister says, so I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Question proposed, That the clause stand part of the Bill.

Mr Richard Caborn (Minister of State (Sport and Tourism), Department for Culture, Media & Sport; Sheffield Central, Labour)

The clause explains in more detail how the measures in clauses 1 and 2, which cover dissolution of the Tote and its transfer to a company that is wholly owned by the Crown, will take effect. The detailed effect is set out in the 10 subsections to clause 3. Subsections (1) and (2) ensure that anything done or in the process of being done in relation to the Tote is regarded as having been done or continued by the successor company. Subsection (3) provides that, at the appointed day, any reference to the Tote or members or officers of its board in a document or agreement is to be treated as a reference to the successor company and its members or officers.

Subsection (5) provides that any property, rights and liabilities of the Tote are vested in the successor company without the need for any further legal formality. Subsection (6) safeguards the rights of the Tote's employees, including the right to be consulted. It ensures that the Transfer of Undertakings (Protection of Employment) Regulations 1981 apply to the transfer of the Tote to the successor company. This is an important legal protection for the staff, regardless of whom the Tote is sold to.

Subsections (8) and (9) provide that the Secretary of State shall consult the Tote before nominating the successor company. Furthermore, he will consult the Tote and the successor company before deciding on the appointed day for its dissolution and transfer. Subsection (10) allows the Secretary of State to revoke and replace the previously nominated successor company, as outlined in clause 2(2)(a), before the appointed day and provides for an alternative successor company to be identified, should that be necessary for any reason.

The provisions should provide continuity to ensure a smooth transfer for the Tote from the public to the private sector. They are the nuts and bolts that will enable us to fulfil our manifesto commitment to sell the Tote.

Mr James Paice (South East Cambridgeshire, Conservative)

I do not wish to trespass on your prerogative, Mr. Sayeed, but the Committee will have noted that in your wisdom you decided not to select some amendments that I had tabled to the clause. I do not question that, but they were amendments suggested by lawyers acting for the Tote, who

perceived a shortcoming in the drafting of the Bill. Although small, the proposals were intended to amend the beginning of the Bill. I shall not read them out in a manner that might suggest that I have moved them, but, as we learnt only yesterday afternoon that the amendments had not been selected, I am sure that, long before then, the Minister had been advised how to respond to them. They question whether these words form a sufficiently comprehensive statement:

''Anything done by or in relation to the Horserace Totalisator Board''.

If the Minister was advised how to respond to those amendments, I would be grateful if he gave us the benefit of that advice.

Mr Nick Hawkins (Surrey Heath, Conservative)

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 Richard Caborn (Minister of State (Sport and Tourism), Department for Culture, Media & Sport; Sheffield Central, Labour)

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 James Paice (South East Cambridgeshire, Conservative)

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 Nick Hawkins (Surrey Heath, Conservative)

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.

Mr Jonathan Sayeed (Mid Bedfordshire, Conservative)

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.

Mr Richard Caborn (Minister of State (Sport and Tourism), Department for Culture, Media & Sport; Sheffield Central, Labour)

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

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 James Paice (South East Cambridgeshire, Conservative)

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.

Mr Jonathan Sayeed (Mid Bedfordshire, Conservative)

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 Richard Caborn (Minister of State (Sport and Tourism), Department for Culture, Media & Sport; Sheffield Central, Labour)

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 James Paice (South East Cambridgeshire, Conservative)

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

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''.

Mr Jonathan Sayeed (Mid Bedfordshire, Conservative)

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

Mr James Paice (South East Cambridgeshire, Conservative)

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 Richard Caborn (Minister of State (Sport and Tourism), Department for Culture, Media & Sport; Sheffield Central, Labour)

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.