Mr Don Foster (Bath, Liberal Democrat)

I beg to move amendment No. 50, in

clause 8, page 4, line 36, after 'issue' insert,

'an exclusive, renewable licence for a period of seven years from the appointed day.'.

Mr Jonathan Sayeed (Mid Bedfordshire, Conservative)

With this it will be convenient to discuss the following amendments: No. 6, in

clause 8, page 4, line 37, leave out 'a licence' and insert

'an exclusive licence for a period of seven years from the appointed day.'.

No. 51, in

clause 8, page 4, line 37, leave out from 'a licence' to 'licence'')'

No. 7, in

clause 8, page 4, line 38, after second 'the', insert 'exclusive'.

No. 10, in

clause 8, page 5, line 8, leave out paragraph (a).

Mr Don Foster (Bath, Liberal Democrat)

From the outset, I acknowledge that the Conservatives' amendments would have a similar, if not identical, effect to ours.

On Second Reading, I argued that the Government's intentions are absolutely clear in many parts of the Bill, but that they had failed to write them into the Bill. We have already had examples of that, which we have discussed. The exclusive licence is an example of the Government's clear intention, but it is

not stated in the Bill. In part, I disagree with that stated intention and want to change it, which my amendments would do.

To illustrate what the Government propose to do, which they have made clear, I refer to speeches made by the Secretary of State and the Minister on Second Reading, to a written statement, and to a departmental press release issued on the same day—27 November last year. Under the heading ''Tote wins seven year licence to operate horserace pool betting'', it says:

''The Racing Trust—a consortium of racing interests—buying the Tote will have an exclusive licence to run pool betting for seven years, the Government announced today.''

As I said, the Minister has made it absolutely clear several times that the Government intend the exclusive licence to be issued for a seven-year period.

The Committee will be aware, however, that the Bill does not refer to that seven-year period. That is to be regretted. Some of my amendments would give us the opportunity to write that seven-year period into the Bill; others go further by stressing my genuine concern that no further exclusive licence will be issued once the Government's proposed unspecified licence period is completed. That is the Government's intention, which they make very clear in the Minister's statements on Second Reading and in the press release, which reports the Minister as saying:

''Selling the Tote to the Racing Trust is the right way to fulfil the Government's commitment to sell the Tote. We firmly believe it's in the public interest to open up the pool betting market to effective competition. But we also believe a reasonable period of preparation is necessary in order to safeguard the revenue racing receives from the Tote and its successor is necessary in order to safeguard the revenue racing receives from the tote and its successor.''

The Minister therefore makes it clear that he believes there needs to be an exclusive licence period. He told us, although it is not in the Bill, that that period should be for seven years, as it is necessary to ensure that the Tote is up and running and successful, and that it can guarantee that it will continue to contribute to racing. However, he goes on to say that after that period, which is likely to be seven years, the Government intend to open up pool betting to competition. He says that it is in the interests of racing to do so. My concern is that all the evidence that I and other Members have studied leads us to a different conclusion.

The Committee will be aware that the Home Affairs Committee discussed the matter at some length in 1991. Its report on the Tote made it very clear that forcing pool betting into the open market in seven years' time could lead to a series of small pools and erratic dividends that would undermine public confidence in pool betting. That was the view of the then Home Affairs Committee. More recently, on Second Reading, we heard from the right hon. Member for Livingston (Mr. Cook), who, I expect all hon. Members would acknowledge, has great knowledge of the horse racing industry and sport. He was clear about his view. He congratulated the

Minister on securing a seven-year period after all the attempts by others, not least the Treasury, to settle on a much shorter one. He continued:

''I find it rather strange that anyone should imagine that opening up pool betting to competition helps the punter, because the whole point of pool betting is that the bigger the pool, the more attractive it is to the punter. The greater the competition and the more pools there are, the less attractive it is to the punter. The logic of that, of course, is that I personally would prefer it if we retained an exclusive licence indefinitely''.

The right hon. Gentleman is clear in his view that opening up the arrangement will not be in the interest of punters or of horse racing. The Home Affairs Committee—admittedly in 1991—came to a similar conclusion. However, perhaps what is most surprising is that the Government have themselves reached that conclusion. The regulatory assessment for the Bill shows at page 22 that the loss of the exclusive licence could lead to the possible loss of pool betting at some race meetings and race courses, and lower Tote contributions to racing. The Government's own analysis suggests that that is possible or perhaps even likely.

There is little or no debate, apparently, about whether the ending of the exclusive licence could be, or is likely to be, damaging to racing, and will make it less attractive to punters, which could lead to a loss of benefit to horse racing. The evidence is clear: the route is a dangerous one for the Minister to take. That is why our amendment makes it clear that the licence should be exclusive for seven years, and specifies that it should be renewable. The Government should have the opportunity to assess, after the seven-year period, whether the benefits to racing have been secured. If not, there would be an opportunity for the Government to continue to grant an exclusive licence.

The right hon. Member for Livingston clearly explained why the issue should be re-examined at the end of seven years. He said:

''We should be under no illusion how tough the competition will be at the end of that period of exclusivity. I do not mean any disrespect to Ladbrokes when I say that it is likely to enter into competition. I can say that with some confidence because it has made no bones about the fact that it will be its intention to bid for pool betting when the licence expires. If it were to be successful in displacing the Tote as a provider of pool betting, paradoxically, we would end up not with more competition, but with more monopoly and less competition in the betting market. It is therefore very much in the public interest, as well as in the interest of the racing trust, that there should be that minimum seven-year breathing space for it to establish itself.''—[Official Report, 8 January 2004; Vol. 416, c. 453-54.]

The right hon. Gentleman makes it clear that at the end of seven years life will be very difficult. Surely we must at least be certain that during that period all has gone well and racing has received the benefits that it should expect, before we decide irrevocably not to allow a continuation of a monopoly of pool betting.

I hope that the amendment is clear. I know that it is supported by several members of the Committee and its wording is similar to that tabled by the hon. Member for South-East Cambridgeshire and his colleagues. I hope that the Committee will see its way to agreeing to the amendment and allowing me to write not just a postcard, but a letter to Mrs. Foster.

Mr James Paice (South East Cambridgeshire, Conservative)

As the hon. Member for Bath (Mr. Foster) said, we have tabled amendments to the same effect, although with one important distinction. We tried to separate out the three factors of the licence's period, exclusivity and renewability. I tabled separate amendments because I suspect that the Minister's response to the three different components will be different. I have opted for the course of action that might lead to at least partial success, even if it means only a partial letter to Mrs. Foster.

I shall start with the issue of exclusivity. It is not the critical one, but it probably draws most cross-party agreement. The Government are committed to the exclusivity of the licence for a period, which they say should be seven years. I share the concerns of the hon. Member for Bath about the exclusivity ceasing after seven years, if that ultimately proves to the period. He rightly quoted the right hon. Member for Livingston who, as one would expect, described the situation precisely.

Another analogy is with the national lottery. That is basically a pool betting system, as a bigger pool means that more people bet and more people betting means a bigger pool, more prize money and a bigger jackpot. However, the Government have not suggested that we should have competition between lots of national lotteries, so I do not follow the logic which says that competitive pool betting for horse or greyhound racing would enhance the lot of the punter. As has been said repeatedly, the reverse would almost certainly be true. Pools, and therefore prizes and returns, would be much smaller.

Even more important are the Government's conclusions in their regulatory assessment, to which the hon. Member for Bath referred. Our debates are about the welfare and future of the racing industry, and when we reach part 2, we will debate the levy, the huge financial impact on the racing industry and, in effect, the survivability of many of our race courses. If, as the Government have suggested, pool betting disappears at some meetings or race courses, the viability of those courses and meetings will come into question. That is putting it mildly, as that will almost certainly mean their end. The idea of a lower Tote contribution to racing flies in the face of what we are trying to achieve in the Bill, so I am concerned by the possible end of the exclusivity.

That brings me to renewability. I have a slight difficulty, because our next debate will include my amendments on renewability. If I wax too lyrical about renewability now, there will be little point in boring the Committee again when we discuss those amendments—not that that will necessarily stop me. I shall not pursue the point at great length at this stage, not least because the Minister will undoubtedly refer to renewability when he speaks to this group of amendments. That will allow me to come back to him later with my alternative way of acting.

The seven-year licence period should be defined in the Bill. I know that that is a widespread belief, although I must confess that I am not too enthralled by the idea of seven years. Bearing in mind the huge investment that will be made in buying and developing

the Tote, I am not convinced that a longer period would not have been better. I will not quibble about the seven years, but it should be in the Bill and I do not understand the Minister's reticence in that respect. He endeavoured to respond to my hon. Friend the Member for Ryedale (Mr. Greenway) on Second Reading; indeed, he endorsed his view that seven years was right, but he still resisted putting it in the Bill. I hope the Minister will agree that it would be wise to do so, and cease his resistance now.

The Government have repeatedly said that they intend the period to be seven years, and we need a period of that length to get the commercial benefit of putting the Tote fully and squarely into the private sector and away from Government. That is needed to enable it to recoup the investment it will have to make in its own purchase. It is also critical if it is to develop and become a viable organisation and continue to pour money into racing when the exclusivity ceases, if that is how it turns out. Seven years is the minimum period in which to achieve that aim, although I am not arguing for a longer period now. However, in the debate on the next group of amendments I will argue for the principle of renewability, or, to be precise, that we should not at this stage insist on non-renewability, which is a slightly different approach.

I want the Minister to understand that I wholly support the thrust of the amendment tabled by the hon. Member for Bath; I feel chagrined that he managed to do it in such a way that it became the lead amendment in the group, but that is the way of these things. I think he is unwise to link the three points, although they are all critical.

Mr Richard Page (South West Hertfordshire, Conservative)

I speak especially in support of amendment No. 6, which calls for a licence for a period of seven years from the appointed day. In my 27 years in the House—I do not want anyone to shout, ''Too long''; it is too long and I shall be retiring at the next election—I have never known a Bill that required the Opposition to take so much on trust.

The Minister asks us to trust the Government on valuation, on the appointment of directors, and on the whole question of the racing trust. He even has the temerity to say that politicians should stay out of this because the Government know better. In my experience in the House, I do not think that Governments can run businesses better; whether their political colour is blue or red, Governments have a record of appalling management of industry. I should be out of order if I gave all the examples of industries run by the state with a lunchtime directive and which have been an enormous failure and cost the taxpayer a small fortune. The Minister goes a tad too far in saying that we should trust Government because they know better. That flies in the face of experience.

I ask the Minister to accept amendment No. 6, for no other reason than that in all the uncertainty it will be a rock on which to make other calculations and estimates. It will be a datum point on which people can operate.

My hon. Friend the Member for South-East Cambridgeshire (Mr. Paice) has obviously been looking at my notes because he cited the parallel of the

lottery to compare with the Tote. The lottery headquarters of Camelot are on the edge of my constituency so I have natural interest in what happens there.

The principle of pool betting is to have a pool, not a series of puddles. That is why the Select Committee and the hon. Member for Bath are so right: if we have a series of puddles, we shall have a series of erratic results. Once we have erratic results, the punter will not have the confidence to take part in pool betting. That loss of confidence will lead to other difficulties.

I ask the hon. Member for Bath not to press his amendment to a vote, because the Government should consider and work at this issue before Report.

Mr Don Foster (Bath, Liberal Democrat)

If it would be helpful to the hon. Gentleman, and indeed to the Minister in his deliberations, were the Minister to indicate a willingness to accept amendment No. 6 on the seven-year issue and at a later stage to consider some of the other issues raised, I would be more than happy to accept the hon. Gentleman's suggestion.

Mr Richard Page (South West Hertfordshire, Conservative)

It is encouraging to see the Liberal Democrats moving through the political spectrum from left to right towards the Conservative party. I view his suggestion with a degree of incredulity, but I also warmly welcome it. The Government should not try to determine this area immediately. The way the Tote operates in the next seven years should be taken into account and then considered for the future after the seven-year period.

We seem to have harmony between my hon. Friend the Member for South-East Cambridgeshire, who is pushing amendment No. 6, and the hon. Member for Bath, who is happy with my suggestion. All the Minister has to do to allow all the letters and postcards to be written to the current wives is to agree.

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

Unity is breaking out all over the Opposition Benches. It is somewhat worrying, but nevertheless we shall have to deal with it politically. Amendment No. 6, if accepted, would serve to stipulate that the length of an exclusive licence referred to in clause 8 would be written in the Bill. It would be specified as seven years. It is well known that it is the Government's intention to issue the successor company, assuming that it is the racing trust, with an exclusive seven-year licence to provide pool betting on British horseracing. That remains the case, and I said as much in Second Reading.

I have not provided for the matter in the Bill because we thought that it would be right for the Secretary of State to have the discretion to act as she thinks best at the time. We have given many times a public commitment in relation to the issue to provide interested parties with sufficient comfort. Sadly, that appears not to be the case.

Amendment No. 10 would provide a consequential change to clause 8 to remove the Secretary of State's powers to specify the length of the licence at the time of its issue. Amendment No. 7 seeks to ensure that an exclusive pool betting right will be attached to an

exclusive pool betting licence. Our belief is that such a right is already implicit, which is why nothing more specific is included in the Bill. However, the amendments raise important issues about the exclusive licence. I am minded that complete certainty about its length would be welcomed by the racing industry, the Tote and members of Committee. I therefore ask hon. Members to withdraw their amendments and we will agree to consider them further at a later stage.

On the other hand, the Government will strongly resist the suggestions in amendments Nos. 50 and 51 that the licence should be renewable. The agreement to a period of seven years is dependent on it being a one-off non-renewable licence. The Government sees competitive benefit in the eventual opening up of the pool betting market. The exclusive licence will be transitional to enable the Tote's successor to establish itself and to allow an early introduction of competition. There is a competition and bidding process for the lottery, for which we are giving an exclusive licence for seven years. That is the competition for that licence as far as pool betting is concerned.

I assure hon. Members that the seven-year period has been included in the Government statement because there have been wide soundings right across the industry to get a balance between what would be fair to the industry in terms of competition, and what would be fair to the Tote—and, therefore, the successor body, the racing trust—and would enable it to go into the marketplace with a degree of certainty. The judgment was made following wide consultation with many of the stakeholders, with insight. We also want to ensure that the balance is right in terms of the competition authorities, both at national and European level. Getting a balance led to the seven-year period. There is a clear commitment that after seven years the body will go into the marketplace.

Mr Don Foster (Bath, Liberal Democrat)

I am grateful to hear some of the concessions that the Minister appears to be making. Perhaps we will return to those. He said that he wanted to open the Tote up to the benefits of competition after seven years. Given that I have quoted at length from the speech made by the right hon. Member for Livingston, the Home Affairs Committee and the Department's own assessment of the situation—all of which show that getting rid of an exclusive licence could seriously harm the Tote, and could be of disbenefit to punters and the racing industry—what evidence does he have to suggest that there are the benefits that he claims for opening up to competition after seven years?

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

We have made a judgment. The hon. Gentleman knows that there have been long discussions with competition authorities, both at national and European level. We have taken advice from inside the industry; we have sought the opinions of many stakeholders. We believe that that exclusivity for seven years will put the racing trust and the Tote into a robust position, and that the discussions with the Treasury will result in a financial arrangement that will allow the body not only to become financially

viable, but to have an investment stream. There will be a structure within the Tote that will be robust and which will enable it to go into the marketplace. The hon. Gentleman may be asking me to protect the Tote as an exclusive body for evermore, but I do not feel that that would be good for the punters in terms of competition.

Mr Don Foster (Bath, Liberal Democrat)

Since we seem to be very good natured, I do not want to stretch the Minister's patience on this point. I understand his argument. If he had said that he was not convinced that the Government could get a period longer than seven years through competition legislation in this country and throughout Europe, I could understand it. However, he specifically said that there would be benefits to the Tote of going into a competitive market after seven years. I understand the benefit of the seven years. That time will give the Tote the strength to cope well in a competitive environment, but he still has not told me what the benefits of that competitive market are, given the overwhelming evidence that it would be of disbenefit.

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

The proof of the pudding will be in the eating. One makes a judgment. The way in which we want to bring the Tote into the competitive marketplace will concentrate the mind. We are putting the Tote into the trust to give it more freedoms; the freedom to borrow and to get out of the public sector borrowing requirement. People will quickly see that those freedoms will lead to a Tote that is much stronger and that will be put into the marketplace in its own right as a competitor. The Tote is unique; pool betting is its strength.

Fixed-odds betting is a totally different area of the marketplace. All the evidence that has come to us—including, but not exclusively, from the competition authorities at national and European level—leads us to believe that we are putting the Tote into not only a viable position, but a robust one. The Tote will add to the marketplace and provide real competition, and will give a real deal to the punter post the seven years.

Mr Richard Page (South West Hertfordshire, Conservative)

I certainly do not want to be critical of what is being offered, which is hugely to the advantage of the Tote, and which I am sure will be to the benefit of racing.

May I rein back the Minister a little on the parallels with the lottery? When the lottery's exclusive licence was offered, the competitors had no assets in the field. Whoever won had to put in the assets; that was the competition. We have an interesting position here. The Tote has millions of pounds worth of assets built up over 76 years. If it is to be given an exclusive licence for seven years—a reasonable period—I can only tell the Minister that I agree and that I hope he will be prepared, as he delicately hinted, to put that in the Bill.

I want to look at the position after the seven years have elapsed. Should the Tote be put up for bids so that someone else could have an exclusive licence for seven years? Should there be an opening up to pool competition, it should be limited to a size that would make it viable and allow it to retain punter confidence.

There appears to be an open-ended position at the end of seven years. I look for some certainty about the way forward. Over the years, I have seen how Governments bring forward plans that seem great for the immediate future but then seem to fall flat on their face a bit later. Far be it from me to mention the dome, but—

Mr Jonathan Sayeed (Mid Bedfordshire, Conservative)

Order. This is rather a long intervention.

Mr Richard Page (South West Hertfordshire, Conservative)

I should be grateful for the Minister's comments.

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

In the Room next door, the Pre-legislative Scrutiny Committee is considering the draft Gambling Bill. I understand that it is talking this morning about the exchanges. The passing of information electronically will transform many industries. We have seen the first major intervention in the betting exchanges. The world of betting will change considerably over seven years. We are trying to protect the Tote. The first step is to put it partially into the marketplace, giving it more freedoms and making sure that it can develop in a much more robust way. Hopefully, seven years from now, it will be able to stand in the marketplace without further protection and with exclusivity.

One can selectively take what one wants from the regulatory impact assessments. [Interruption.] At the end of the day, people have to make a judgment. The Opposition have every right to question the Government, which is what the democratic process and the Committee are about. I do not think that they have made a case. Paragraph 108 of the regulatory impact assessment of the Bill states:

''It is also inevitable that the introduction of more operators would bring some benefits for consumers in the form of product innovation and price competition, although there may also be a risk of further consolidation in a betting market already dominated by a relatively small number of large bookmaking companies''.

It is possible to quote selectively from the various reports. The judgment that we have made and our consultations show that seven is the right number of years. I am now prepared to consider putting that into the Bill. I am not prepared to concede on the question of the exclusive licence beyond that period.

Mr James Paice (South East Cambridgeshire, Conservative)

As I did not move amendment No. 6, I do not get the right of reply. I am pleased to hear that the Minister is prepared to consider putting seven years in the Bill. Obviously that is a step forward. It provides a rock and removes one of the variables from the sale equation. I do not want to sound churlish and I know there is a certain pride in Government not accepting Opposition amendments, but will the Minister tell us what is wrong with our amendments? Why can he not simply accept them?

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

I shall consult my lawyers and give the hon. Gentleman a reply later. The hon. Gentleman is an old hand in this place, and he knows that the lawyers want to ensure that the legislation is correct. On the advice of the lawyers, I am asked to give the

political comfort that the matter will be included in the Bill. Therefore, I ask the hon. Gentleman to withdraw the amendment.

Mr Jonathan Sayeed (Mid Bedfordshire, Conservative)

Order. Before I call on Mr. Foster, may I apologise to the hon. Member for South-West Hertfordshire? I thought he was intervening on the Minister's speech; I did not realise that it was his second speech on a group of amendments.

Mr Richard Page (South West Hertfordshire, Conservative)

That was due to my own inability to show that I was launching into a speech for the second time. You are in no way to blame, Mr. Sayeed, and I say that in case you do not call me at a later point.

Mr Don Foster (Bath, Liberal Democrat)

I have no wish to detain the Committee unnecessarily, but may I say that we have with us a Minister who is prepared to break away from the brief at times? The brief said that he was prepared to consider including the amendment in the Bill, but he went on to say that the political comfort was that it would be included in the Bill, as the record will show. Given that we have the clear assurance that, by one means or another, the seven-year period of exclusivity will be included in the Bill, and given that there will undoubtedly an opportunity to raise the other matters under the next group of amendments and subsequently, I am sure that the Committee would wish me to withdraw the amendment. I am delighted to follow the advice of hon. Members in order that the Minister can ensure that we get what we want, and that postcards can be sent to whomsoever people wish to send them, so I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Mr James Paice (South East Cambridgeshire, Conservative)

I beg to move amendment No. 11, in

clause 8, page 5, line 14, leave out from 'Crown' to end of line 15.

Mr Jonathan Sayeed (Mid Bedfordshire, Conservative)

With this it will be convenient to discuss the following:

Amendment No. 52, in

clause 8, page 5, line 15, leave out paragraph (c).

Amendment No. 53, in

clause 8, page 6, line 1, leave out paragraph (a).

Amendment No. 12, in

clause 8, page 6, line 3, at end add—

'( ) assigned, transferred or otherwise disposed of.'

Mr James Paice (South East Cambridgeshire, Conservative)

As already heralded, we are in some ways continuing the same debate. Amendment No. 11 would delete the non-renewability aspect of the licence. The Liberal Democrats' amendment No. 52 would do precisely the same thing; they have just phrased it in a slightly different way. I shall come to amendment No. 12 in a moment, because it deals with a slightly different issue. Let me address the impact of amendments Nos. 11 or 52—whichever is the best legal way of tabling such an amendment—and return to the argument of renewability.

I understand the Minister's argument that he does not think that it will be necessary to renew the licence. He is perfectly correct when he says that seven years

ago betting exchanges were unknown, and who knows what shall exist in seven years' time? However, a consequence of that is that we do not know in which environment the Tote will be operating in seven years' time. The amendments would not make the Bill require that the licence be renewable, but would remove the statement that it is not renewable; in other words, it would let us wait and see. Indeed, the Minister said earlier that we do not know how it will work out, and we will have to wait and see. Those were not his precise words, but I think that I have summed them up.

We do not know how successful the Tote will be. We can all express confidence in it, but because we do not know what the price is going to be, we do not know how much will be invested in the Tote to develop it during those seven years. We do not know how the betting market will develop, how betting exchanges will develop or whether there will be any more regulation of them in seven years' time. There are huge competitors in the betting market at the moment.

My hon. Friend the Member for South-West Hertfordshire referred this morning to the current Office of Fair Trading investigation and the European Court of Justice decisions. Those are two huge variables. We do not know what the financial state of racing will be in one year's time, let alone seven. The amendment suggests that we wait and see and that we do not jump to a conclusion now. There are so many unknowns about how the Tote will develop, about the financial background of racing and about how many racecourses there will be.

If, God forbid, the OFT rule 14 statement stands, it is quite possible that in seven years' time there will have been a considerable reduction in the number of racecourses. If that is the OFT's decision, the comment in the regulatory impact assessment could have come to pass, with the Tote having had nothing to do with it, despite its exclusive licence.

I hope that the Minister will not read out a previously prepared, trite response. I am trying to wrestle with the fact that no one has the foresight to know what the situation with the Tote, the wider betting industry, the financial state of the industry or the number of racecourses will be in seven years' time. All are in a state of flux for the reasons that I have described. I would like to see a commitment from the Government to instigate a review in five years' time of how things have developed and to consider the renewability of the licence.

Once the provision that the licence cannot be renewed is in the Bill, we are stuck with it. I am sufficiently long in the tooth to know that once its there, the Government will not remove it. That is why it should be removed at this stage. The amendment does not force the Government to renew the licence; it simply allows them to renew it if circumstances dictate that its renewal would be in the best interest, because we do not know what the situation will be.

It is perfectly true that the exclusive licence for the lottery is decided by competition, but we are not discussing that; we are discussing competition for providing pool betting. In seven years' time there

could be half a dozen different racing pools. There may be fewer but there will be competition between pool betting systems, not competition for the licence.

If the Minister, by referring to the lottery, is suggesting that in seven years' time we should have competition to run an exclusive licence to run a Tote for racing, that is a different ball game, with which I would have a lot of sympathy. I do not believe that the present Tote is entitled to a licence renewable ad infinitum; that is not in anybody's interest.

I would be attracted to the proposition of a competition for the right to own and run an exclusive licence for a pool betting system, as long as the money went back into racing. Another organisation might be set up for that. It is very different, however, from what the Minister said about competition in the pool betting market, with several pools, or puddles, as my hon. Friend the Member for South-West Hertfordshire has rightly described them. They would not be in the long-term interests of punters or, quite clearly, of racing.

The amendment is non-partisan and it is tabled with a genuine desire not to rush matters, so that we would be able to see in a few years' time how matters have settled down. The amendment would remove from the Bill the Gaming Board's inability to renew the licence. It would allow us to think again; it would not force any action at this time.

The Tote recommended amendment No. 12, which would add to the last line of the clause the—[Interruption.] I beg your pardon, Mr. Sayeed, it is not from the Tote, it is the Paice version. Everybody would agree that, having got an exclusive licence, the Tote should keep it for seven years. I do not envisage its not wanting to do so, but I seek to add to the end of clause 8 the statement that it would not have the right to assign, transfer or otherwise dispose of the licence. The Minister might say that it would not have that right anyway, but I want to be sure. None of us envisages the situation arising, but, as we have repeatedly said during these deliberations, we are trying to jump one step ahead of what might arise, even in circumstances that we cannot foresee.

The principal point of the group of amendments is to make it possible for the licence to be renewed after seven years; not to make it obligatory, but to enable it to happen should the situation in racing, the Tote or the betting industry, or all three, be such that the judgment at that stage is that it would be in everybody's interests for it to be renewed.

Mr Don Foster (Bath, Liberal Democrat)

In respect of renewability, I refer the Committee to the speech that I made a few moments ago. I agree with the hon. Member for South-East Cambridgeshire; I hope that the Minister will consider the matter again and allow us a further opportunity for deliberation. However, we could find ourselves in disagreement about amendment No.12. I hope that after the Minister has spoken, we shall hear again from the hon. Gentleman.

In his earlier contribution about renewability, the hon. Member for South-East Cambridgeshire rightly pointed to the complete uncertainty about what will

happen in the next seven years. We know that the Government believe that seven years is long enough to ensure the stability of the Tote and of its proceeds continuing to go to racing. However, we do not know that for certain. One of the reasons why we should leave the renewability option on the table is in case the Tote does not get its act together during that period. Things could go badly wrong. I am sure that they will not, and I hope that nothing will go amiss for the Tote. However, surely, given the uncertainty, it is necessary to consider allowing the transfer of the exclusive licence to some other operator. The mechanism could be a competition of the type organised for the lottery's exclusive licence. I do not understand why the hon. Gentleman is concerned about uncertainty in some respects but has such certainty in others.

Mr James Paice (South East Cambridgeshire, Conservative)

I shall try to clear up the hon. Gentleman's confusion. I understand where he is coming from. I am proposing that the Tote, under the ownership of the racing trust, should not be allowed to dispose of its licence. That is not the same as the matter that we shall discuss under the next group of amendments; allowing the Gaming Board the opportunity to revoke the licence because things have gone wrong and handing it to somebody else. The hon. Gentleman is right. The uncertainty is there, and the opportunity to revoke the licence and to give it to somebody else is still there.

Mr Don Foster (Bath, Liberal Democrat)

I am grateful for that clarification.

Mr Richard Page (South West Hertfordshire, Conservative)

I join my hon. Friends in their plea not to burn any boats at this stage. I have the pleasure of serving on the gambling review committee, now known as the Greenway committee. I can only congratulate the Government on having introduced the pre-legislative scrutiny measures. That is undoubtedly the way to proceed in respect of uncontroversial Bills. In the Room next door, substantial progress has been made in bringing about an environment of gaming that is trustworthy, solid and reliable, and that can give confidence throughout the world.

However, the Bill puts tremendous power into the hands of the Gaming Board, and I wonder whether the Government want to tie its hands for the future. Some things might be better left to the Gaming Board to decide, as it has experience and knowledge of how the issues develop and mature. The Government should consider stepping back from making any definitive decisions. I agree with the Minister that it would be wrong to give the Tote a further exclusive licence for seven years, unless there is some form of competition or arrangement that has a full and open examination. At this stage, we should not close off options; we should leave them for the future. I put my trust in the Minister and the Government.

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

I will not speak from my notes at this point. I will deal with this matter politically. It is interesting that the Liberals and the Conservatives are now coming together on an anti-competition policy. I never thought that I would stand in the House of

Commons, at the Dispatch Box in the Chamber or in Committee, and have to defend competition against a new anti-competitive alliance of the Conservatives and Liberals. It is astounding that that has happened with regard to the racing industry and the Tote. It is amazing that protectionism is booming on the Opposition Benches in a way that would have been inconceivable in previous eras of Conservatism.

A Labour Government are being asked to protect the Tote by licensing and all the other necessary aspects of protectionism. What are we asking for? We are giving the Tote seven years to find its feet with a 50-50 split on the finances, and we are asking it to throw the shackles of the public sector borrowing requirement off its back and use the innovation that we have already seen, including in the shadow racing trusts, so that it can go into the marketplace and defend itself as a Tote—as a pool-better. That is all that we are asking for. All the competition authorities, both nationally and internationally, agree with us. Against us are the backwoodsmen of protectionism. Liberalism and Conservatism are coming together to form a coalition force, so the script can be thrown away.

On the point about a five-year review, the Government continue to keep everything under review. If it is in the public interest for a review to be conducted after five or six years, and if the competition authorities agree to that, the matter will go to the Gaming Board—and then, hopefully, to the Gambling Commission—and a view will be taken as to whether things are operating in the public interest. The drive to put the Tote into the modern marketplace in a robust form is intended to help the punter by giving choice. That is in the public interest. If matters were to move against the public interest, as is currently perceived to be the case, any sensible Government would want to review them. There will be the necessary mechanisms in the Gaming Board, and there will, I hope, be a Gambling Commission. What was happening would have to be in the public interest and have the support of the competition authorities.

Amendments Nos. 11, 52, 53 and 12 would allow the Secretary of State to require the exclusive licence to be issued more than once. The Government resist that approach. The licence is to be non-renewable for the reasons stated. The agreement to an exclusive period of seven years is dependent on it being a one-off, non-renewable licence. Anyone who says that it will be renewed will take out of the culture of the new Tote—the new racing trust—the ability to be dynamic and say, ''We are going into the marketplace in seven years.''

If there were a safety valve, in that we could have another licence, the culture would be totally different. It is necessary for the Tote to have a cutting edge if it is to go to the marketplace with a product that has been called the bedrock of the gambling industry. There is no doubt that the Tote provides security to the punter out there. It is a respected and honest organisation, and by its very nature, it is not there to rip the punter off, as some would say. It therefore has a marketing ability, and if we give it the tools to go ahead and give

it a fair wind for seven years, it will be able stand on its own in the marketplace and will not need such protection.

If the licence is revoked before the seven years are up, we do not believe that it should be reissued to that company. There are no powers in the Bill to issue the exclusive licence to anyone else and no powers for the Secretary of State to transfer it. We therefore believe that amendment No. 12 is unnecessary. For those reasons, I ask the hon. Member for South-East Cambridgeshire not to press the amendment.

Mr James Paice (South East Cambridgeshire, Conservative)

I think that the Minister should stick to his script in future.

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

The hon. Gentleman does not like the political consequences of what I have done.

Mr James Paice (South East Cambridgeshire, Conservative)

I am more than happy to deal with the political consequences, not least because I have never heard so much rubbish in my life. The Minister knows full well that he has given a complete distortion of what I was trying to put across. I was saying, in the words of my hon. Friend the Member for South-West Hertfordshire, that we should not burn our boats. We should not be dogmatic about renewability at this stage, but simply leave the opportunity open.

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

That is protectionism.

Mr James Paice (South East Cambridgeshire, Conservative)

It is nothing to do with protectionism, as the Minister knows full well and as I made clear in my opening remarks. If he were to suggest that in seven years there could be competition among other organisations for a new exclusive licence, I would be more than happy as long as the proceeds went to racing. Indeed, I might even be tempted to table an amendment to that effect on Report and see whether he is prepared to contemplate it at that stage. I can hardly pretend that I am surprised at his response.

Mr Don Foster (Bath, Liberal Democrat)

The hon. Gentleman says that he is hardly surprised, but perhaps he should be after the Minister's tirade, which the hon. Gentleman rightly suggested was a travesty of what has been said. He will probably be as interested as I am to read the Hansard record of our deliberations. Did he notice that the Minister told us that, if some problems emerged in seven years, it would be perfectly possible for the gambling board or commission as it might then be to come back with further proposals? Is the Minister not entirely agreeing by the back door with what we are proposing? He is merely doing so in a different way, so that he can have his little rant about competition.

Mr James Paice (South East Cambridgeshire, Conservative)

The hon. Gentleman is perfectly right. I said that I was not surprised that the Minister resisted the amendment, because all his comments in discussion on the earlier group, including those on the hon. Gentleman's amendment, led us to conclude what his response would be.

However, I, too, was interested in the Minister's remarks about what might happen if things did not work out, and about the fact that the Government always keep things under review. I am not sure how much force the Hansard Committee record of the

Minister's words has, but they were quite telling. He clearly seemed to accept the possibility that the situation will need to be looked at again in five, six or seven years. That is exactly the point that I am making, and I am trying to make it easier for that to happen by removing the compulsory non-renewability issue from the Bill.

The Minister might be surprised to read in tomorrow's Hansard that in his off-the-cuff tirade he managed to get on record a fact that we failed to get on the record this morning, which is that of the 50-50 split. At no stage this morning when discussing the price mechanism did he confirm that there would be 50 per cent. pricing, but he has done so now, so I suppose I should welcome his off-script tirade.

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

I refer to amendment No. 49. I want to make it clear that that is exactly what I said about the 50-50 split. If the hon. Gentleman reads Hansard tomorrow, he will learn that before I said it in response to this group of amendments, I said it when we discussed amendment No. 14.

Mr James Paice (South East Cambridgeshire, Conservative)

On the off-chance that the Minister did stick to his script at one point, I stand corrected. I do not want to force Labour Whips to pull in Members for what might be a close-run vote—[Interruption.] Do not tempt me.

Despite my extreme disappointment at the Minister's response, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Mr James Paice (South East Cambridgeshire, Conservative)

I beg to move amendment No. 34, in

clause 8, page 5, line 33, at end insert—

'(6A) An order revoking the exclusive licence shall not be made by the Gaming Board under subsection 6(a) unless—

(a) the Gaming Board has first given notice to the successor company that it believes that it is entitled to make an order under subsection (6)(a) and that it intends to make such an order together with the reasons therefore,

(b) the successor company has had a period of at least 28 days to make representations with respect to the proposed revocation, and

(c) any order made by the Gaming Board confirms that prior to making any such order it has taken into account any representations made by the successor company with respect to the revocation.'.

Mr Jonathan Sayeed (Mid Bedfordshire, Conservative)

With this it will be convenient to discuss the following amendments:

No. 35, in

clause 8, page 5, line 40, at end insert

'provided that time is not less than 28 days after the date of the order'.

No. 36, in

clause 8, page 5, line 43, leave out paragraph (b)'.

Mr James Paice (South East Cambridgeshire, Conservative)

We turn to the issue of revocation. The Bill seems to provide for a much stricter situation than is provided for by Tote licensing legislation. The Gaming Board will have powers to revoke the pool betting licence if it thinks that a breach of the conditions has occurred. That would seem perfectly

reasonable—except that there are no ifs, buts or caveats. The Bill does not tell us how serious the breach has to be, and there is no opportunity for the Tote to remedy the breach. The amendment seeks to ensure that the breach must be material—in other words, significant—and that the board must act reasonably in coming to the view that the licence has been breached materially in a way that affected the integrity of the Tote or racing, or the interests of the betting public.

Amendment No. 35 proposes that there should be a 28-day period for all revocations. My earlier comments related to revocations by the Gaming Board only, as opposed to the Secretary of State's powers to require a revocation. This amendment refers to all revocations, whether under the instruction of the Secretary of State or at the initiation of the Gaming Board. A 28-day period is reasonable to allow for the necessary changes and to wind up activities.

Amendment No. 36 is slightly different. It is a probing amendment. I am slightly puzzled as to why the Secretary of State should have the power to require the revocation of the licence for a period of 14 days after she ceases to own the Tote. The Minister may have a perfectly good argument, which I would be ready to hear, but I cannot envisage the circumstances that could arise in the two weeks after the Secretary of State has transferred the Tote to the Racing Trust that would make her decide to revoke the licence. Amendment No. 36 would remove her power to do that. I cannot see why she should need to revoke the licence, but the Minister might be able to persuade me otherwise.

Amendment No. 34 was suggested by the Tote itself and would introduce the issues of reasonableness and a material breach, and allow for an opportunity to remedy a breach before the licence is automatically revoked. I hope the Minister agrees that that is a reasonable suggestion.

Mr Nick Hawkins (Surrey Heath, Conservative)

I rise briefly to support what my hon. Friend the Member for South-East Cambridgeshire said and ask the Minister to tell us whether he anticipates that anything that may be included in a future gambling Bill may affect this part of the Bill.

As all Committee members know, the Committee carrying out the pre-legislative scrutiny on the proposed gaming Bill, under the chairmanship of my hon. Friend the Member for Ryedale (Mr. Greenway), is currently meeting and taking evidence. As one of the shadow Ministers who is interested in this issue, I look week by week at the transcripts of the evidence given by people such as Mr. Peter Dean. He is currently the chairman of the Gaming Board, which is to be transmogrified into a new Gambling Commission. We are only at the pre-legislative scrutiny stage of that Bill, so we do not know what form it will take. The Government have said that they will take on board what happens in the Committee chaired by my hon. Friend. However, given that we are discussing what

may happen to the Tote in future under the Gambling Commission, perhaps the Minister could give us some guidance on the Government's thinking.

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

I will deal with that point straight away. We believe that the powers we are giving the Gaming Board are sufficient for it to take through our proposals in the Bill—and we hope that those powers will be transferred to the Gambling Commission. Therefore, there is no conflict.

Amendments Nos. 34 and 35 cover the notice period that the Gaming Board must give before revoking an exclusive licence and include the provision that it must take into account any representation made by the successor company before proceeding with the revocation. The Government believe that the Gaming Board will have to act reasonably, like any public body, in any case in which it is minded to revoke the licence. The clause, as drafted, does not preclude the Gaming Board giving notice to the successor company to remedy a breach of a licence condition. On the other hand, it is likely that the licence would be revoked only when it was clear that a serious and unjustifiable breach had occurred or was occurring. In such cases, there might need to be an immediate revocation of the licence for the protection of the pool-betting public.

Any such decision would have to satisfy all the usual requirements of public law and would be subject to judicial review. We believe that that should give the exclusive licence holder sufficient reassurance that the Gaming Board would not act arbitrarily in this matter. The Gaming Board is not subject to a 28-day delay in respect of its other regulatory functions, and there is no reason to introduce such a provision on this one.

Mr Don Foster (Bath, Liberal Democrat)

Will the Minister explain the procedures? We have already debated the fact that it will not be possible to issue a second licence. If the Gaming Board revoked the licence and there were a judicial review, there could be much turmoil and uncertainty for those involved. What happens if the judicial review is successful? Would the licence continue, or would another one have to be issued? At the moment, it could not be reissued.

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

That is for the courts to decide during the judicial review.

Amendment No. 36 would remove the Secretary of State's power to revoke the exclusive licence within 14 days of its being issued. That power was included in the Bill as a precautionary measure in the event that, in the immediate aftermath of the sale and the issue of the licence, evidence came to light, which, had it been discovered earlier, might have resulted in the licence not being issued. Given that the Gaming Board will have the power to revoke the licence, I do not regard that as an essential measure. I agree to consider this amendment, but ask that it be withdrawn by the hon. Member for South-East Cambridgeshire on the understanding that the Government will introduce their own amendment on Report. I hope that that addresses his concerns.

Mr James Paice (South East Cambridgeshire, Conservative)

I am touched that members of the Committee paid so much attention to my words that they did not notice that I was discussing earlier an amendment that had not been selected. My references to acting reasonably were, of course, in an amendment that you decided not to select, Mr. Sayeed. I had failed to notice that—as did you and the rest of the Committee. I apologise to Committee members, who I am sure will apologise to me for not picking me up on that.

I was slightly disconcerted by the Minister's earlier response, but he came round in his latter remarks. I accept that 28 days overall is not appropriate, and I accept his assurances about 14 days. However, I am not clear about the issue of notice or the opportunities for representations to be made. I shall not pursue that point at this stage because the Minister has kindly said that he will examine the issue, but I stress that those points have been raised by the Tote, which is concerned. I hope that the Minister agrees that it is important that the Tote has some kind of appeal mechanism by which it is able to make representations. That must happen before the Gaming Board makes the necessary order of revocation. However, in the light of the Minister's comments, 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)

It is worth explaining the composition of the Tote and its income. About 22 per cent. of the Tote's turnover comes from pool betting. I am referring now to pool betting and the necessary protection, but I appreciate that we are discussing the role of pool betting in the wider gambling market. Although pool betting is an important part of the Tote's operation, we need to keep that in mind. Recently, activity on the fixed-odds betting side of the business has been building, so the Tote has become about much more than just pool betting.

In response to the suggestion that everything will be dragged away from the Tote, I reassure Members that if the licence went, the racing trust would still have the profitable part of the Tote, which consists of the betting shops, the phones, the internet and all the hardware and, I suppose, the relevant intellectual property rights. We are not therefore talking about an absolute when it comes to the Tote and pool betting. As I said, about 22 per cent. of the Tote turnover comes from pool betting.

Clause 8 sets out provisions for an exclusive pool betting licence post-transfer. Subsections (1) and (2) allow the Secretary of State to require the Gaming Board to issue to the successor company an exclusive licence to carry on the pool betting business in any form in connection with horse racing in Great Britain. In the light of Opposition Members' concerns, the Government will examine how we can make it clear in the Bill that the licence will be for seven years. After discussions within government, it has been decided that if the Tote is sold to the racing trust, an exclusive licence will be granted for seven years on terms

specified by the Secretary of State. The proposed licence link strikes the right balance between providing a sensible level of certainty for racing and introducing competition into the pool betting market after seven years. That will allow the Tote's successor to establish itself and ensure continued provision of pool betting at race courses.

The Secretary of State's powers to require the issuing of a licence, which may be before, on or after the appointed day, are provided in subsection (3). Only one exclusive pool betting licence will be issued and if, for example, an exclusive licence has been issued and is subsequently revoked, the Secretary of State will not have the power to request the Gaming Board to issue another exclusive licence.

Subsections (4) and (5) provide that the successor company may authorise other persons to conduct pool betting, along lines similar to the Tote's current practice. For example, those who wish to organise a totalisator at point-to-points will have to be authorised by the successor company. The successor company may state the terms and conditions under which another body may conduct pool betting on British horse racing.

While the Tote was in public ownership, its pool betting operation was self-regulating. That will not be suitable for a private sector body. Therefore, the Gaming Board has been given the task of issuing the licence and regulating its use. When the new Gambling Commission is established, it will regulate all forms of betting as part of our plans to reform the country's gambling laws. We are satisfied that, until then, the Gaming Board is well equipped to do the job.

Under subsection (6), the Gaming Board will have the power to revoke the licence if required by the Secretary of State, or if it thinks that a term or condition of the licence has been breached. My hope and belief is that the Gaming Board and the Tote's new owners will develop a constructive working relationship. It is right to have a power to revoke the licence, but it would be a matter of regret if it ever needed to be used.

If the licence is revoked following a direction from the Secretary of State, the reasons and the time that the revocation will take effect must be given. Subsection (9) provides that the Secretary of State may require the revocation of the exclusive licence only while the successor company is wholly owned by the Crown or during the 14 days after it ceases to be wholly owned by the Crown. The 14-day transitional period was provided for in case any serious problems with the transaction should emerge after the sale—for example, meeting the sale price. However, as I indicated to the Committee, we shall review whether the provision is necessary. Finally, subsection (10) provides that the exclusive licence may not be renewed.

Question put and agreed to.

Clause 8 ordered to stand part of the Bill.

Clause 9Section 8: supplemental