Clause 15. — (Betting Duty.)

Part of Orders of the Day — Finance Bill. – in the House of Commons on 15th July 1926.

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Photo of Mr Winston Churchill Mr Winston Churchill , Epping

The Betting Duty has now, at last, reached its final stage in the progress of the Finance Bill. I am glad to see that, long as have been the discussions and frequent as have been the repetitions of the arguments, the right hon. Gentleman the Member for Colne Valley (Mr. Snowden) has neither been exhausted by the one process or the other. I admired the spirit of the right hon. Gentleman when, at an hour when the House was stripped to the barest minimum of Members which the Rules of the House prescribe, he endured the pangs of long abstinence from food; I admired the spirit in which he whipped up the old arguments and marshalled again the Opposition against this duty, about which 19 people out of 20 throughout the country have already made up their minds. The right hon. Gentleman produced the whole apparatus of argument which should be appropriate to some season where the fate of the Administration turns upon the vote about to be given. He told us the party was divided, that there was a split in the Cabinet, that 200 members of the Conservative party had abstained from the Division, brushing over the fact that there is a great deal of difference between abstention and absence. He told us that the evangelical elements in the Cabinet—of whom he spoke with all fitting and proper respect—had been engaged in a long struggle with the other elements, among which he classed me, a sort of struggle Gentlemen v. Players, as a result of which, I gathered that it was his conclusion, the evangelical elements had narrowly sustained defeat. He pointed to the fact of a speech which was made by my right hon. Friend the Minister of Agriculture at an evangelical conference, somewhere in the neighbourhood of Newmarket, as clear proof of these grave divisions.

I should be misleading the House if I led them for a moment to suppose that when this subject was first mooted in the Cabinet it was received with an absolutely unanimous and unbroken chorus of approval. I do not suppose there is any place where 20 English, Welsh and Scottish men or women could be gathered together in which such a topic could be raised without giving rise to mingled opinions; and it is the business of a Cabinet, as it is the business of the House of Commons, to thrash out and canvass every proposition that is put before them. Therefore, if there are different points of view there ought to be different points of view—[HON. MEMBERS: "What does that mean?"]—ad when they have all been considered and examined, then it is necessary and proper that united action should be taken. I am quite clear that at the present time there is not the slightest serious difference of any kind among the supporters of the Government on this question, and any differences which really exist upon whether the moral issue should or should not be what one might almost call trotted out on this occasion are really found in their must luxuriant forms on the benches of the official Opposition.

The right hon. Gentleman asked me why it was that we supported a tax which would be an encouragement to betting. He used the expression "encouragement." He must really make up his mind where he stands in this matter. He must, to use an expression which comes rather readily to my lips since I have been engaged in passing this Measure through the House, make up his mind as to which horse he is going to declare to win. He said a tax on betting was an encouragement of betting. The Amendment reduces the tax on betting and therefore reduces the encouragement; and therefore what we invite the Committee to do to-night is to join with us, not in an encouragement of betting, but in a discouragement. The right hon. Gentleman went on to say, "Why, if revenue is your object, do you reduce the rate of the tax? Why have you departed from the 5 per cent. uniform tax on ail bets, no matter wheresoever they may be made?" This is not a case of difficulty of a political or Parliamentary nature. I think it would have been just as easy to carry a uniform 5 per cent. tax as it is to carry the lower and differentiated tax which I have placed on the Order Paper, and which will be formally moved later. It is not because, as we have been told, that we have had to bow and bend to the storm that we have altered our original plan.

There are two reasons for the change from the uniform rate of 5 per cent. to 3½ per cent. for office betting and 2 per cent. for racecourse betting. We have better information now about the volume of betting than it was possible to obtain by any Parliamentary Committees before we actually came forward with a definite proposal. We have had the opportunity of examining the books of some of the largest betting firms in the country, and from the Income Tax which we know is collected from the betting firms of the country we are able to see what proportion this business of these particular firms bears to the whole. All these matters are, as a rule, under-estimated, but still, I believe we have been able to reach much safer, surer and stricter estimates than were ever possible before.

When I opened the Budget I estimated that the turnover of legal betting, leaving out illegal betting which we do not touch, was £170,000,000, and I was advised that it would be safer to allow for a shrinkage in betting owing to the discouragement caused by the tax to the amount of £50,000,000. That would leave £120,000,000 and 5 per cent. on that would yield £6,000,000 which was the revenue I estimated. That is the amount which I hope to achieve and which I am deter- mined to achieve if it is humanly possible. Now, as the result, not of mere estimates but of close and accurate examination of large specific accounts, we have put the turnover of betting at £275,000,000, and we have thought it right to make a large deduction' in order to he on the safe side. Although the hon. Member for Great Yarmouth (Sir F. Meyer) told as that the turnover would probably be £400,000,000, I am only placing it at £275,000,000, and I take only £200,000,000 as the sure and certain basis as far as anything can be sure and certain on which we expect to reap the tax.

A tax on that basis of 5 per cent, would produce £10,000,000. It may be asked why don't you take the £10,000,000 and rejoice, but it was never part of our policy to impose a tax on betting which would break the betting business. I have never pretended that it was right for me to do that, and it would be hypocritical and wrong of me so to pretend. The tax may diminish betting, and I am budgeting that it will, but I should be sorry if as a result of the tax we found that the whole business of racing and horse breeding had been struck a serious and possibly a deadly blow. Therefore, I am glad that it is in my power to realise the revenue which I honestly believe is possible, and which I set out to realise, at a lower rate of tax. Of course, if we find that the business can bear a higher rate of tax than the £6,000,000 which is common ground between all parties to this business, without breaking the industry, there is nothing to prevent Parliament and the Government from raising the rate of the tax. In the first instance, it is necessarily a speculative matter, and, as we have every reason to believe that we shall get the revenue we set out to obtain, it seems to me very right and prudent, in view of the later information we have obtained, to reduce our rate, and not to aim at taking more than £6,000,000 from the racing and betting community.

That is the first reason why we have reduced the rate of the tax. A more difficult point is when it comes to the differentiation in favour of racecourse betting and against office or starting price betting. There, again, I have been powerfully impressed by the fact that the racegoer is the man, or woman, upon whom the whole sport of racing is sustained. The entrance fees which they pay at the course, and the general expenses which they contribute by their presence on the racecourse, are the means by which the racecourses are kept up, and the horses—those beautiful animals to which the right hon. Gentleman the Member for West Swansea (Mr. Runciman) referred so feelingly—are induced to compete. It seems to me that there is a great difference between the man who goes to the races, who pays his railway fare or other travelling expenses, who pays his entrance fee and his Entertainments Duty, and who, as I am opportunely reminded, buys both his solid and his liquid refreshment on a scale which is certainly not unduly cheap—it seems to me that there is a great difference between such a one and another man who merely takes down his telephone receiver and transmits his bet, cold-bloodedly, from one office to another, and who may, perhaps, bet for years, and indulge in this frigid excitement, without ever going to see a horse run or doing anything to support what. is, after all, a great and characteristic British national sport.

Merely for the sake of equity, for the sake of equality of treatment as between these two classes, it is right that a certain casement should be given to the man who has the expense of attending the racecourse, as against the credit bettor, who uses nothing but the telephone or the telegraph. Also, it seems that this will, in fact, give some assistance to the racing community and the horse-breeding interest, which will, perhaps, go a long way to compensate them for the additional burden which has been cast upon them through the imposition of this tax. At any rate, if it should so be that they are left in the same position, neither better nor worse, advantaged by the differentiation as much as disadvantaged by the tax—if it should so be that that is the result, I, personally, shall be quite content. That is the reason why we have decided to propose a rate 3½ per cent. for the credit bookmaker and a discriminative preferential rate of 2 per cent. for bets made by persons who go to the racecourse with persons who have also gone there.

The hon. Member for Gorbals (Mr. Buchanan) raised a still more complicated point on the subject of this preferential duty. I shall not follow him into the moral issue on which he touched because, as far as I could gather from his speech, the moral issue was very important but it stopped short of whippets. If he will excuse me, I must suit my movements to this moral issue and stop short at whippets too. I am quite prepared to go with him as far as to say that a pony is a horse, but nothing shall induce me to say that a whippet is a horse. We must draw the line somewhere. I draw the line even at a donkey. If you are to let in the donkey, how can you exclude the pigeon? And; if you are going to say that anyone who goes to a course over which pigeons are flying is to get the preferential 2 per cent., I do not know any part of England where we should not be confronted with demands. There is the case of the greyhound chasing the hare. For all you know, before you had finished you would find you would have to have a special differential rate for the famous race between the hare and the tortoise which so greatly excited the interest of the ancient world and would, I have no doubt, give rise to an equal volume of betting and gambling were it to be instituted here. No, we must stop at the equine species—I do not wish to be led into any error of natural history—defined as comprising the horse and the pony. I give the hon. Member the pony. He cannot say he has gone empty-handed away. He has the pony. After that I cannot do anything further to assist him.

I have explained the reasons, I think with the assent of the House, why there should be a differentiation in this tax. It is certainly equitable, it is fair, and it is in the. public interest. The question still remains, is it practicable to differentiate. Can you manage to work the tax and collect it when to you have a differential rate Here there are a number of serious objections which I shall endeavour to deal with. We have considered it very carefully, and I am advised that we shall have no difficulty in working the proposals which are being put forward in this Amendment, including the differential rate, and I am advised that we need not apprehend any serious loss from evasion. But let me deal with some of the points specifically. The first is this. Will the course book- makers pass on the 3½ per cent. in the starting price to the backers instead of the 2 per cent. If that were true, we should have failed in our object of differentiating the tax so as to attract the backers to the course, and that would not have been obtained because the bookmaker on the course would have pocketed the difference between 2 and 3½ per cent. I should like the House to realise that this criticism assumes, what we have always contended, that the duty would be passed on to the clients of the bookmakers by a differentiation in the odds, or what the hon. Member who knows too much about the subject called cramping the odds, an expression which I have never heard before, but which is accurate, suggestive, and compendious.

It has always been our view that the duty will be passed on by the bookmaker to the public by what the hon. Member so well described as "cramping the odds." If that is so, we see no reason why the 2 per cent. should not be passed on in the odds. That simply means that the normal book of £100, out of which at the present time £97 is paid back to the public and £3 retained by the bookmaker, will be succeeded by a system under which £5 will be retained by the bookmaker, of which £2 will go in tax, and £95 will be given back to the public. Of course, that is not true of any particular bookmaker, and it is not true of any particular bet, but it is, broadly speaking, true, if you. take week by week and race meeting after race meeting .throughout the year., according to the calculations on which we have proceeded.

There is no doubt whatever that the racecourse bookmakers will endeavour to give less than the difference which the tax means to them, in the odds, but it does not rest with them to decide, because the competition is very fierce and very keen, and backers will make their bets dependent on the fact that the odds are given on what they think is a fair basis. We believe that the competition of the ring and the effort of backers to Obtain the best odds will press down the course bookmakers to the existing gross profit of 3 per cent. plus 2 per cent. tax.

My right hon. Friend the Member for Colne Valley asked ire what is going to be done about the 2 per cent. duty, and how we can pass that on in any odds. He quoted some extremely awkward fractions. For instance, he said that 2 per cent. on £1 was 4 4/5d. and that 2 per cent. on 5s. was 1 1/5d., and that 2 per cent, on 2s. 6d. was 2 2/5 farthings. He asked how on earth the bookmakers were going to be able to make those calculations and pass them on to the public. Once you accept the point of view that this is going to be passed on, not on each particular bet or even on each particular series of bets, but passed on generally over the course of the year, through the cramping of the odds and the alteration of the odds, these inconvenient fractions make not the slightest difference.