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I beg to move Amendment No. 80, in page 12, line 8, after "than" to insert:
on an approved horse racecourse or a licensed track or".
I understand, Sir Eric, that it is for the convenience of the Committee that with this Amendment we discuss Amendment No. 81, in page 12, line 12, leave out paragraph (c).
Before you took the Chair, Sir Eric, we were "Up the Junction". Now we are to travel down the course, and it is a course in which
a good deal of training will be required by the benches opposite. Mark Twain said that
It were not best that we should all think alike,
It is difference of opinion that makes horse races.
There is no doubt that difference of opinion makes horse races, and I am sorry that the Chancellor of the Exchequer has achieved a unique double today on Gold Cup Day. He not only succeeded in breaking with the tradition of the House of Commons and had controversial business upon Derby Day, but he has also broken with the tradition on Gold Cup Day. Some of us on this side of the Committee would be financially better off elsewhere.
I recognise that the Chancellor may not appreciate the niceties of racing. "Drawback" means only one thing to the average punter. It is a very different type of drawback from that which was discussed yesterday. The drawback which we have to discuss today is the Government's proposals in the Bill, with which I shall deal in the Amendment. Amendment No. 80 deals with on-course, as opposed to off-course, betting, and seeks to exclude on-course betting from the proposals in the Clause. The advantage of the debate is that one is able to come to grips with the proposals which have been put forward generally.
The Chancellor of the Exchequer will find himself in a difficulty if he wishes to continue with his present proposals for a turnover tax. A turnover tax is normally upon commodities, and there one has something which can be seen, checked, and seized by the Revenue officers. Therefore, the normal advantage of a tax on turnover is that it relates to a type of commodity with which one is familiar and can, therefore, tax.
The difficulty of a tax on turnover in betting is exactly the reverse. The bet is usually not seen and it need not even be heard. It can be flashed by tic-tac. It may never be capable of being checked and certainly it can never be seized. Thus there is a very real inherent difficulty about the tax. I have no doubt that the on-course duty in its present form will break down. I shall develop the reasons why in a moment.
The second alternative, as my right hon. Friend the Member for Enfield, West (Mr. Iain Macleod) suggested, is a tax upon returns or upon winnings. Again, this cannot be checked and cannot be seen, but if proper records are kept it is at least more easy of collection, because it is not payable until the horse has won. Administratively, it is about three times as easy as the other class of tax.
As my right hon. Friend the Member for Enfield, West rightly said, there are three alternatives. The third is a tax which has been described as being in some ways on the physical assets. It is a tax upon the premises or upon the pitch. I have no doubt that this third form is the most attractive and effective.
Let us see where we are on common ground. We do not enter the debate in any party political spirit. I certainly do not, and I am sure that my hon. Friends who put their names to this Amendment and to others also take the same view. The people are more deeply affected by this afternoon's debate upon their betting than probably by any other debate which we shall have during the whole of consideration of the Finance Bill.
This debate interests the millions of people who are the small punters and who enjoy a little flutter and whose pleasure it is. If the Amendment, or something similar, is not carried, I am sure that I can establish to the satisfaction of anybody who applies a logical mind to it that this duty will break down and will cause considerable discomfiture not only to the trade, but to the punter, and will not achieve the desired purpose.
I think that the Committee as a whole accepts, first, the need for an effective tax, and by "effective" I mean a reasonable and enforceable tax. Secondly, we accept the Chancellor's statement that it should be effective, fair and reasonable. That is a perfectly valid test. Thirdly, we say that he is quite wrong in saying that the proposed scheme is the best way of getting a reasonable yield.
The Chancellor has so far been wise in one respect. He has kept completely silent about anything relating to betting and gaining so far. There was one paragraph in his Budget speech. Shortly after that, I made a speech dealing with criticisms of the proposals. On the Second Reading of the Finance Bill, the right hon. Gentleman did not deal with that, but he was gently, and pleasantly, chided by my right hon. Friend the Member for Enfield, West, who pointed out that he would be prepared to bet that he would show considerably more expertise. Not even that has so far drawn the Chancellor or his able lieutenants into battle. I think that they are wise. I am sorry, in one sense, that the right hon. Member for Dudley (Mr. Wigg) is enjoying himself at Ascot today. He is one of the few who might have been able to give the Treasury Bench some useful advice. However, we shall have to apply our minds to the problem as best we can.
As between these alternatives, I do not see any other test than this: what will give the best yield and be the most effective and fair tax. Let us see the effect of what the Chancellor said about the first, the turnover tax. He said that the Government wanted to achieve a method which was the least likely to lead to evasion, was the most easy of enforcement, and was the most simple to collect. I think that one must agree that that is right. Those are good tests.
When the Royal Commission considered this in 1949–51 it indicated that the turnover tax yield would be below the estimate, that the administrative costs would be far higher than it had thought, and that it would lead to illegal betting. So it will undoubtedly be. The first thing that will happen if this proposal for taxing on-course betting goes through is that it will lead to amateur bookmakers who will set up in opposition to the present licensed bookmakers.
This will be grossly unfair to the trade and to the punters, because the amateur bookmaker will operate on the basis that neither he nor the punter pays the duty. The duty is 2½ per cent. upon the stakes, which is roughly said to be about one-third of what the punter spends with the bookmaker. The public have not at present realised that anyone having a £1 each-way bet at 4 to I, whether he wins or loses, nevertheless pays 2½ per cent. upon £2-that is, Is. That has to be collected.
I shall give only one example, as my hon. Friend the Member for Richmond, Yorks (Mr. Kitson) will follow me and he has great knowledge of these matters. He will illustrate the ludicrous situation that will arise in relation to collection. I am informed—I believe this to be accurate—that on a bet of £1 the actual wager will be 19s. 6d.—that is to say, winnings will be paid out to 19s. 6d. Sixpence will represent the duty. I ask hon. Members to imagine the complexity and the cost of trying to work out the result of a 19s. 6d. double at odds of 11 to 4 and 13 to 8. I am sure that we shall have the answer to that one from the Official Box by the time the Chancellor of the Exchequer rises to address the Committee. If that is translated into a treble, or into an accumulator, or into a yankee, where there are 11 different bets at different amounts, it becomes an impossibility.
I ask the Committee to visualise for one moment what will happen on the course. The duty is 6d. in the £. A man goes up to a course bookmaker and puts £1 on. He may have the misfortune to have an Irish colleague with him who has, perhaps, a short temper. He puts £1 on an 11 to 4 shot and comes back to find that he is not getting 11 to 4 to £1 but 11 to 4 to 19s. 6d. The reality of the situation must be recognised: bookmakers will give up, punters will give up and the duty just will not be collected. This is the reality of the situation as it will operate upon all courses. If the bookmaker carries the duty, and in some way tries to give some yield to the Inland Revenue, it will be very unfair to the bookmaker and will not be a fair method. It will not meet the test of being enforceable which the Chancellor of the Exchequer laid down as one of his criteria. Therefore, the turnover duty will not work on course. It will not work at all.
I turn now to a very useful precedent we can look to and which has worked effectively. For many years past, working perfectly effectively on greyhound tracks there have been, not only the Totalisator, but bookmakers. Bookmakers in this case are paying upon the physical asset; that is, they are paying a direct tax on the pitch. They are charged so much to be able to go on the pitch. I do not propose to go into the details of this, although the matter is raised in a later Amendment which I have tabled but which has not been selected. That Amendment would involve a change in the amount of money paid and would, therefore, conflict with an earlier Financial Resolution.
I realise that this Amendment may well involve the Chancellor in considering how he is to obtain alternative taxation. If he accepted the Amendment and exempted course bookmakers from the turnover duty, and if he then wished to achieve a fair yield on course betting, he could apply what I describe as a pitch tax. He will find the form which will enable him to do that contained in a later Amendment, save that that Amendment needs amending itself because, if it stood as it is, it would introduce a duty of 5 per cent.
It is not easy to assimilate these complicated details, even if one has had the advantage of meeting the trade and others on this matter. Nowadays, the course is purely the shop window of betting. In the main, bookmakers make little or no profit on the course. They make their profit off the course. They make it from the betting offices. They make it from the S.P. offices. I will not give the names, but two very well-known bookmakers have told me that on the course the profit which they make altogether is a mere 1 per cent. Off the course it is about ten times as much.
On the course there are the experienced racegoers. They are the people who are able to take the money. There are the changes in the odds. Bookmakers are attracting money which comes from the stables. They attract money which comes from the owners, who have knowledge. They have to provide very much bigger staffs. A punter can enter a betting office free. Anyone going on to a racecourse must spend at least 30s. to get on the racecourse and then he has that much less money to spend upon betting on the racecourse. This is yet another reason why it is so much better to have a differential of advantage and tax on the course in a lower way than off the course.
The only effective system for on the course is, as is provided in this Amendment, by exempting on-course from duty and then, if it is desired to get a yield, one looks round for a tax on the pitch.
Would my hon. Friend care to comment on the importance of betting on the course in providing the whole mechanism upon which starting prices are based? In other words, is not the course market basic to the whole betting industry?
My hon. Friend is absolutely right. In a moment I shall deal briefly with some aspects of how the betting mechanism on-course operates to provide the odds. I shall also show why, in certain ways, the proposed tax would be quite impossible of collection.
Just as it is easy to tax on the course betting by a pitch tax, the same principle can be applied to off the course. A betting office licence and a licence upon the physical assets of the telephones would provide a method of collection which would be absolutely simple and which would cost little administratively. It could be £30 a week on every betting office, payable in the same way as the Road Fund licence is paid. Then it could be so much on every telephone installed in an S.P. office.
The whole lot would be collected in advance. The bookmaker would pass the tax on to the punter in the shading of the odds. I know that these matters have received careful consideration in the Treasury. I have never understood why the Treasury has recommended a turnover tax, if this be the case. It may be that a tax on winnings is much to be commended, but a tax on turnover must inevitably break down, as it did in 1926, and end up in evasion and crime.
There is a very real feeling that this is what the Government are seeking. I ask the Chancellor to recognise that there is a feeling in the country that the Government want to see the tax break down so that they can abolish bookmakers altogether and have a State "tote". This feeling is widely held, because people think that the present tax is so chaotic and stupid as proposed that nobody can intend it seriously to do anything other than break down.
I want now to refer in more detail to the matter raised by my hon. Friend the Member for City of Chester (Mr. Temple). I have suggested the method of taxing the pitch and the communications to deal with off-course betting. I believe that that would be a successful method.
On the course there is at the moment the blower. This is a telephone apparatus which operates to send to the course commissions coming from substantial sums of money all over the country. This money is blown through the telephone on to the course and picked up in a series of bets. No arrangements have so far been made to cover the fact that bookmakers themselves engage, as between one and another, not only in hedging, which will be dealt with by a later Amendment, but also in placing very substantial commissions on the course, all of which are done by tic-tac without any records at all. This is the most widespread business upon which, in part, the final S.P. is determined, because the volume of money passing changes the odds.
At the same time, bookmakers lay bets with each other in all parts of the course. Also at the same time, the public, both on the rails and in the ring, are doing the same. It would be an administrative feat, in fact it would be quite impossible, for any person to be able to calculate even to £1, and what the calculations would be like on 2s. 6d., 5s., Ws., £5 and all the rest to arrive at the tax are too ludicrous to imagine.
I ask the Chancellor to bear in mind that on top of that there are also objections to the winners of races, and betting is done on objections as well as on the photographs. This betting is all done in a matter of minutes between the time when the objection takes place and the outcome, and on the photograph, of course, it is done in an even shorter time, a matter of 30 seconds to a minute, perhaps.
I leave to my hon. Friends the other aspects of the mathematics involved here. The point of the case is that no one will have the administrative capacity or the time to determine a turnover tax or even the tax on winnings in on the-course betting. Off the course, the problems are almost as great.
The hon. Gentleman suggested a fixed charge on betting shops, and he said that this could be accounted for by the bookmaker by shading the odds. Would not shading of the odds be more easily accomplished if the charge were a variable one, and is not this the solution to the bookmakers' problems on the course?
Yes, it would be variable. If the hon. Gentleman means that it woud be a higher charge for a pitch in the main rings than it would be in the lesser rings, that is certainly so.
I respectfully agree, Sir Eric, and that is why I took up that matter in a general way only.
As regard the turnover, I hope that I have shown that it is quite impracticable to continue with the proposal as it stands. For on-the-course betting an entirely different method must be found. We have a valuable precedent which has worked well over the years at the dog tracks, and I fail to see why it could not be adopted here. If that system were adopted on the course, it would then be equally easy——
My point, Sir Eric, is that, before the Chancellor can consider any alternative form which may be attractive to him, it is a condition precedent that he must accept these Amendments because it is not until he has exempted on-the-course betting from the tax as now drawn that he can consider an alternative. I have done no more than pave the way for his consideration of alternatives. These two Amendments are totally separate from anything else. I am concerned at present only to ensure that on-the-course betting is taken out altogether.
If he does that, the Chancellor will find that he will have in his hands a method by which he will avoid all the problems of evasion. He will have something simple. He will not have any of the paraphernalia and difficulties which are so unattractive to the public. Quite definitely, the public will find his present proposal most unattractive, and it will lead to considerable trouble and rows.
I conclude with a quotation from Dr. Johnson. This is
A hateful tax levied upon commodities and adjudged by wretches hired by those to whom Excise is paid ".
I hope that we may be able, in the corporate wisdom of the Committee, to make this and other improvements in the betting tax before it goes elsewhere.
I support my hon. Friend the Member for the Isle of Thanet (Mr. Rees-Davies), who so ably moved the Amendment. Many of us on this side genuinely believe that it will be impossible to operate this tax. My hon. Friend has already discussed the position of a man having a £1 bet on the course. But if a man has a £1 bet and pays his 6d. tax at the time be places it, he has to have his odds laid to £1 and something like seven-sixteenths or eleven-sixteenths of Id. This, of course, is quite impossible. If a punter has his bet to 10s. and gives the 10s. to the bookmaker, his bet is to 9s. 9d. If it is 5s., his bet is to 4s. 10–1-d. If he has 2s. 6d. on a horse, the bookmaker must give him odds to 2s. 44d. No bookmaker could go to a racecourse without taking a computer with him to work out these odds.
Let us take the example of a man going to Ascot for the first day this week and having 5s. on the six winners. In other words, if he took his jackpot starting price with a bookmaker, he would win £73,548 14s. 10d. I do not suppose that anyone was successful in doing that, but such a punter would be liable to lid. on his bet. The bookmaker's bogey horse on his book would obviously be the one which won the last race on this occasion, which started at 100 to 9. Supposing that he had other substantial bets on this animal—which happened to be "Track Spare"—he would have to have something in the region of £7,000 on the horse to save himself.
On that £7,000 he would have to pay £175 in tax. So he would be in the happy position, if the horse won, of having covered himself but having to pay £175 in tax. If the horse lost he would win 5s. from his punter, on which lid. would have to be paid, and he would also have to pay £175 himself in tax on the bet which he had laid.
This is a most extraordinary situation, and I cannot imagine that the Department has given very much thought to what it was trying to achieve. My hon. Friend was, I understand, out of order in suggesting another type of tax, but he did remind the Committee of what is done in greyhound racing. It makes sense and it is possible to collect.
The Racecourse Association is extremely worried about the situation. According to paragraph 1(2) of Schedule 2, it seems that it will be the Association's responsibility to see that the tax is collected. How is it to do it? It has not got the money or the staff to do it, although, obviously, the Association would be quite happy to see that any bookmaker infringing the betting laws was kept off the racecourse. I do not see how the racecourses themselves can be made responsible for collecting the tax, and I hope very much that we shall have this matter clarified when the Minister replies.
I am a child in the matter of betting, and I bet very infrequently on racecourses. My knowledge does not compare with that of my hon. Friend. But I do not understand his argument. If I go to a point-to-point meeting and put £1 on a horse with a local bookmaker the Chancellor's proposal, as I understand it, is that that £1 should be taxed at 2½ per cent., and I therefore pay the bookmaker 20s. 6d. My bet is not affected. [HON. MEMBERS: "No."] Is that wrong? If it is, what is the proposition? I do not understand what my hon. Friend is saying.
I think that my hon. Friend would be like the irate Irishman, because, when he went to collect his money, as my hon. Friend the Member for the Isle of Thanet explained, he would find that he had his winnings returned on the basis of 19s. 6d. This is what we are arguing about.
I am sorry to interrupt again. I do not wish to disturb my hon. Friend's speech, but I find this very difficult. My bet of £1 would not be disturbed. The 2½ per cent. to the Chancellor would be reserved; I pay that as an addition to the £1. I pay the bookmaker 20s. 6d. If the odds are 5 to 1, I win £5 [Hon. Members: "Wrong" 1 If that is wrong, what is the alternative?
This is one of the points which we are arguing from this side. If my hon. Friend gives the bookmaker 20s. 6d., the bookmaker must lay the odds to 20s. 6d. This is the point. It means that he is involved in laying the odds to 20s. 6d. and something like eleven-sixteenths of a ld. I think that that is the figure which the bookmakers' association gives.
I am sure that what I am saying is correct. It is certainly how people in the bookmakers' business understand it at the moment. Is my hon. Friend suggesting that everyone going along to make a 10s. bet will have a 3d. piece in his pocket to slip to the bookmaker at the same time? In fact, he will hand over £1 and want 9s. 9d. back.
This is one of the points which my hon. Friend the Member for the Isle of Thanet raised. On racecourses at the moment, the tendency all the time is for the bookmaker to start his betting nearer the time of the race than he did 10 years ago, and this means that he must deal with all his business within the last five or 10 minutes, which complicates the performance even more. He will not have time to give all the change and deal with things like that.
Any bookmaker who honestly started off, whether in a betting shop or on a racecourse, genuinely to try to operate this tax would, before the first race had finished, throw up his arms and say, "Good heavens, I cannot possibly do it". Bookmakers do not see how they can work it, and I am sure that, even with all the will in the world, it would be impossible to try to collect the threepences, three-ha'pences and three-farthings during the time of the race.
I am sorry that the Minister responsible for sport is not here today because he might have helped us. He takes a considerable interest in racing, and the whole racing business is extremely worried about the situation. I hope that the Chancellor of the Exchequer has been to see what happens on a racecourse. The horses go down to the start, they are under starter's order, and then one of them gets kicked. All the punters, supposing that it is the favourite or the second favourite, then try to lay their money off because the horse is going out although it has come under starter's orders, and they run to the bookmakers. In that short space of time, how can all the threepences, three-ha'pences and three-farthings be cleared off? It will not be workable.
The Tote Levy Board has made tremendous efforts in the last few years to try to make things more comfortable for the racing public. A great deal has been achieved. Many of us on this side believe that, if the betting tax is introduced as it now stands, many of the people attending racecourses—after a struggle, attendances are starting to improve again—will be driven away. This, of course, will tend to put things back where we were before, with the illegal bookmaker back in business.
This is a genuine worry which I hope the Chancellor will bear in mind, because if the Levy Board loses money by not getting the levy to which it is entitled, because of the tax and the great difficulties the bookmakers have in collecting it, and if racecourse attendances also fall, the position for the industry will be extremely serious. I hope that the Financial Secretary will try to solve some of these problems when he replies.
On these Amendments, what we are discussing is whether on-course bookmaking should be exempted from the general betting duty. I appreciate that the hon. Member for the Isle of Thanet (Mr. Rees-Davies), who moved the Amendment, also put down others to suggest a way in which in lieu of that could be substituted a different form of taxing on-course betting and I do not want to take any false points and suggest that the hon. Gentleman wants to exempt on-course betting completely. However, for the purposes of discussion it might be helpful if I suggest why we believe that on-course betting should be dealt with in the same way as off-course betting and why we believe that this is possible and why other ways would not be satisfactory.
The hon. Gentleman's argument has been consistently put to us by the bookmakers. We have had various representations from the bookmakers, not all speaking with one voice and some bookmakers not always making the same representations. They have changed their minds, as other people have changed theirs on this subject from time to time. But the one thing which the on-course bookmakers have all alleged throughout is that it would not be practicable for them to recover a general betting duty on on-course betting. We have remained unconvinced by their arguments and something the hon. Member for the Isle of Thanet himself said fortified our reason for not accepting the bookmakers' argument.
The crux of the matter is the way in which the bookmaker himself recovers the duty. Everyone agrees that a duty of this order cannot be paid by the bookmakers out of their existing gross returns and that they therefore have to pass it on in some way to the punters, or some of the punters. There is a great variety of ways in which the duty might be passed on.
Various bookmakers have suggested to us that we should prescribe a particular way, some suggest one way and some suggest another, in which the bookmaker should pass it on. We do not think that that is a right thing for us to do. It would not be in accordance with precedent where other forms of duty, for example, Purchase Tax, are passed on to the ultimate consumer. We do not prescribe the way in which the person liable to Purchase Tax shall pass it on. It is left to him to decide and there are many very good reasons why we do not think that it is right to lay down the way.
The hon. Member for Worcestershire, South (Sir G. Nabarro) asked what would be the position when he made a £1 bet. If he makes a £1 bet, there are a variety of ways in which the bookmaker can seek to recover the duty. He will be liable to pay to the Revenue 6d. on that £ bet and the question is how he passes that on to the hon. Member himself or to some other punter, and it may be some other punter because the bookmaker need not collect it from the hon. Gentleman.
One way is by an addition to the stake, the assumption which the hon. Member himself made, namely, that the bookmaker would say that he wanted 20s. 6d., 20s. for the stake and 6d. for the Excise. If the hon. Gentleman agreed, that would be the form of the bet, and the stake would be £1, not a very likely thing for the bookmaker to do, because he would then be highly unpopular with the hon. Member for Worcestershire, South.
This is a very valid point. We have been debating gambling duties for many years. In 1963 I was debating them with the Conservative Chancellor of the Exchequer. This is the method which I personally and many other people favour and which I call the Entertainments Duty method. It was the way in which the duty was added to the cost of a cinema seat when there was Entertainments Duty on a cinema seat. Printed on the ticket was the cost of the seat plus the duty. The bookmaker could operate that system validly and easily.
I forgot that the hon. Gentleman was not a regular punter and I wrongly attributed to him the reaction which most punters would have. They would not favour that method which is why bookmakers would be unlikely to adopt that system, although it is a possible system.
Secondly, there is the system suggested by the hon. Member for the Isle of Thanet and the hon. Member for Richmond, Yorks (Mr. Kitson), namely, deduction from the stake. The bookmaker would say that he had to pay 6d. to the Revenue and that he treated the stake as being only 19s. 6d., so that he would pay out on 19s. 6d. This would impose an additional burden on those human computers who stand beside the bookmakers. I see from the newspapers recently that they beat a number of computers in a test. Very remarkable men they are. But again, this method would not satisfy at any rate the irate Irishman mentioned by the hon. Member for the Isle of Thanet and, again, that is not a very likely method for the bookmakers to adopt, although it is possible.
The third method is by deduction from 'winnings or returns, that is to say, winnings plus the stakes. This is the way which some bookmakers have urged upon us and which they have said we should make obligatory in law. There were Amendments about this proposal which, unfortunately, are out of order, but perhaps I can briefly discuss their merits when we debate the Clause as a whole. Suffice it to say at the moment that we Jo not welcome any proposal that we should impose this or any other system on the bookmaker.
A fourth method would be in effect to reduce the odds, adjusting the odds or, as the hon. Member for Richmond, Yorks called it, shading the odds. This is the way which, if I may make a forecast—which is always a rash thing to do—it is most likely that the book makers will adopt.
A fifth method has recently been discussed in the sporting Press and it applies not so much to on-course betting as to off-course betting. It is that the bookmakers might decide themselves to alter the terms of their place betting. For example, instead of being ready to pay on four places with a given number of runners, they would be prepared to pay on four places with a larger number of runners. Other methods have been discussed elsewhere by which bookmakers would be able to recover sufficient to pay the duty without interfering with their normal odds for win bets.
The hon. and learned Gentleman suggests that the bookmaker might shade the odds, and I accept that that is a possibility. But if we come to the man who has backed five winners on the first day at Ascot, at the sixth race the bookmaker is left with a 5s. bet to pay £175 tax, and if the punter has got himself out to the last race the one thing he does not want at that stage is a shading of the odds. He would much rather see the horse at 20 to 1 instead of at evens. The bookmaker would be in difficulty if he suggested shading the odds, but he would have that tax to pay.
That is a case which we can discuss better when we reach the Amendment dealing with laid-off bets. This is a particular problem which arises from the system of taxing laid-off bets.
We have always suggested to the bookmakers that the likely way in which they would recover this duty would be by reducing the odds. For some reason they have asserted that that is impossible, but we have never understood their argument. The experience of greyhound betting supports us. When the bookmakers first incurred the liability to pay the licence duty, they had to pass it on. Some of them did so in the form of a deduction from winnings. That proved unpopular with the punters, particularly as other bookmakers did it not in that form, but by shading the odds.
In many cases the effect on the punter was exactly the same. The net amount which the punter would receive, whether the bookmaker had shaded the odds or tendered the same odds, but then made a reduction from the return, would be the same. However, some punters are naïve and think that they are doing better when the odds have been adjusted and they do not have their attention drawn to the deduction which has been made in order to pay the tax.
No. I have not discussed that with bookmakers. This is a highly expert calculation which they are well able to make. They have to adjust their odds at the moment in order to produce the figure—most of them make it a 7 per cent. addition—to cover their administrative expenses and to provide their profit margin and, of course, their expenses change from time to time and, presumably, they have to make adjustments to cover those changes. This is something within the experience and great skill of bookmakers.
The next argument why one should not exempt on-course betting was alluded to by the hon. Member for the City of Chester (Mr. Temple) and is the interrelation of on-course betting and off-course S.P. betting. If, as I suggest, what would happen would be that on-course betting would be adjusted to take account of the duty, the odds which will then govern the off-course S.P. betting will be odds which will already ensure for the off-course bookmakers that the return should be sufficient to provide them with money with which to pay the duty. In other words, they will not themselves be in the position of having to adopt one of the other courses which is less favourable to the punter. This would be an advantage from the bookmakers' point of view.
It has sometimes been argued—it has not been said today—that on-course betting should be exempt so as to encourage greater attendance at race meetings. We do not think that that is a consideration which should affect us in framing what is intended to be a general betting duty. The Totalisator Board would not welcome the suggestion for the exemption of on-course betting. The reason is that a great deal of off-course betting is fed into the Totalisator pool. If that off-course betting is to be subject to duty, the Board has to allow for the duty in the odds declared on the tote, and its odds of necessity would be reduced by the off-course duty. If the on-course bookmakers were in a more favourable position and were able to offer odds which ignored the duty, that would give them an unfair advantage over the totalisator on the course. The alternative for the totalisator would be to have two pools, one for off-course and one for on-course betting, something which it would not welcome.
The main argument against this form of duty on on-course betting—and we are discussing only on-course betting—is that it is alleged that there would be no satisfactory practical method of administrative control. Some bookmakers have greatly feared that we would require them to keep documents of a kind which it would clearly be impracticable for them to keep in all the haste of on-course betting. At this stage I do not want to go into detail about the administrative system with which we shall deal when we consider Schedule 2, but briefly the existing field book will be the basis of the system of checks. Nearly all bookmakers have a system of serially numbered betting tickets and those who do not will be required to keep serially numbered betting tickets. The serial number will be clearly recorded in the field book and we consider that that will provide an adequate basis for the system of checks and controls which we shall operate.
All that the bookmaker will be required to do will be to obtain daily sheets from the racecourse authorities and this is all that the racecourse authorities will be involved in from the point of view of collection on-course. They will pay a sum for those betting sheets, which will be, in effect, an advance payment of duty. The exact amount will be adjusted later when the returns have been examined. This return would be a quite simple, one-page document. Bookmakers will not be required to return particulars of each bet but merely totals of the amounts that they have received by way of stakes for the bets.
No, I do not think that they will all be the same price, because, clearly, some bookmakers will be betting on a much larger scale than others and there will be a variation in prices.
If one is setting up that position, then surely it is but a small variation to decide to fix what I call the pitch tax. It is really all part of the same thing.
I never know whether to give way to hon. Gentlemen. It is courteous to do so, but I find that they only raise a point to which I am coming.
The alternative suggested by the hon. Gentleman, the pitch tax, supports my argument, that if it is possible to recover the duty on a pitch tax it is equally possible for it to be recovered on a percentage tax on stakes. The difficulties with regard to the pitch tax are these.
I do not think that we can go into the pitch tax, because I stopped the hon. Gentleman the Member far the Isle of Thanet (Mr. Rees-Davies) from debating the merits of it, and if the Financial Secretary now intends to develop the demerits of it, it is bound to provoke an irregular debate on this Amendment.
On a point of order. I am not asking to bring this into debate. What is said on the basic argument is that we should exempt on-course bookmakers because other ways can then be considered. I would have respectfully said that, provided the hon. Gentleman dealt with it in that way, upon what I would call the general principle, and not n any other way. Then it flows from he general nature of the background to his debate.
The fact is that in moving his Amendment the hon. Member is entitled to argue that this particular tax upon on-course betting has demerits and that the Chancellor could collect revenue in another way, but he is not in order in debating in any detail the merits or demerits of some alternative form of taxation.
All that I need say at this stage is that the greyhound track system is sufficiently uniform for a kind of fiat-rate tax, or a tax with a slight variation for different enclosures. It can work more or less fairly because there is sufficient uniformity. There is such great variation in horse-racing tracks that we do not think that anything like a fair system could be devised. In any event, we think that this tax will work, and will be a fair and accurate tax and achieve what the whole of this tax is intended to do, which is to provide a general betting duty at a low level on all monies staked generally by way of betting.
If there were to be complete exemption for on-course betting the opportunities for evasion would be very great indeed. Many of the on-course bookmakers have close connections with off-course bookmakers and it obviously would not be difficult to evade the duty for off-course bookmaking, by including off-course bets in the on-course returns. This would be an extremely difficult matter for the Commissioners to supervise or control. I may say on this point that the different rates which there were for on-course and off-course betting in the 1926 duty was one of the reasons for the failure of that duty.
I would repudiate any suggestion that it is our intention to produce an unworkable system, or to make life difficult for the bookmakers, or to provide any justification or excuse for altering the law relating to bookmakers. We are with them and join with them in seeking to ensure that the scheme is not one which will drive the bookmaker underground. I quite accept the genuineness of the concern and fears which bookmakers have expressed on this subject.
They have found the great advantages which derive from the legality of bookmaking today compared with the position as it was a few years ago. We know that the great majority of them do not want to return to that, nor do we want to make them do this. We have been in close consultation with the Home Office throughout in devising our proposals and it is satisfied that the system we have devised is the one least likely to produce any return to the old and undesirable methods.
I am very glad to hear the last remark of the Financial Secretary. It is helpful to know that, even though we think that they are going about this the wrong way, at least there is nothing more than folly behind the Government's proposals. At one point the Financial Secretary said that the bookmakers supported this method. That may be so. I would like to make it clear that the method which I advocate is not supported by the bookmakers. I prefer quite a different method and approach. Therefore, my solutions sometimes coincide with those of the bookmakers, but they do differ. My suggestions have emerged from my own studies of the matter.
There are three reasons why I think that these Amendments are important. First, they affect many millions of people. Secondly, we are dealing with a new tax, and, thirdly, the House of Commons went wrong on this matter 40 years ago, and, consequently, it is worth while seeing, if we can, that we do not go wrong again. It is worth noting that, although there are many differences between today and 40 years ago, particularly as a result of the establishment of legalised betting, the Government's method is the one which failed 40 years ago.
I take as my starting point for my brief comments to the Financial Secretary the starting price, which is how my hon. Friend the Member for the City of Chester (Mr. Temple) referred to this matter. It is the course bookmakers who make the price and, therefore, make the market for on-course and off-course transactions. It is proposed that all transactions that lead to the final price should at each stage attract tax. I do not want to go into this, because there is a later Amendment in which we will be able to return to this point.
I just want to note here that a very large number of these transactions are simply the spreading of the weight of liability among different bookmakers on the course, and the spreading of this liability as thinly as possible so that the risk to themselves is something which they feel that they can bear. In the exchanges which my hon. Friend the Member for Worcestershire, South (Sir G. Nabarro) had with the Financial Secretary, I agreed with what the Financial Secretary said. The difficulty is that the answer is that we do not know. I do not think that my hon. Friend is right or wrong. We have not yet been told how this is to be collected and we will not know until the Regulations come before the House. Equally we do not know, although many methods were indicated, which method will finally be adopted. As I understand the Government's present intentions, they are not going to lay down the method by which the bookmakers will be able to recover.
This Amendment is on a fairly narrow point, which is whether we should exempt from tax the transactions which lead up to the declaration of starting prices. As anyone who knows anything about racing will realise, the work on the course from the bookmaker's point of view is concentrated into a fierce scramble in the last five or six minutes before the race. I do not think that it is a very feasible way of approaching the matter to believe that a bookmaker will say to a Yorkshireman who wants to put 5s. on at an evening meeting at Pontefract, "Can I have l½d. for the Chancellor of the Exchequer?" These things can be settled after the race, because there is a period of 20 minutes or so of calm after one scramble before the next scramble starts.
If we were to deal with the matter on the returns, that is an infinitely easy thing to check. If the horse won at 10 to 1, there would be roughly eleven or twelve times as many slips to check and count under the Government system as there would be under the system which we have proposed in the Amendment which, for reasons which I understand, cannot be called.
The Commissioners of Customs and Excise are excellent people and have studied this matter very carefully. But they have had two bees buzzing in their bonnets for many years. One of them relates directly to this Amendment. It is the illusion, which is shared, I am sad to say, by hon. Members on both sides, that it is possible on the course to shade the odds against the punter. I can understand the argument in relation to the betting shop, but we are not discussing that; we are discussing what happens on the course. For two reasons which I will give briefly, it simply is not practicable, if one understands starting price bookmaking, for this to be done.
The first reason is that it is not the bookmakers who make the return of starting prices which is at once flashed through the Press Association all over the country. This is done by two reporters, one from the Sporting Life and the other from the Sporting Chronicle. It is a matter of faith and integrity accepted all over the world that their answer is right at the moment of the "off". It is also accepted that the bookmaker should have nothing to do with it. It is clear from some of the returns that no bookmaker would dream of having such odds because of the headaches that they would bring.
It is common to see odds of 21 to 20 returned. Another odd fraction is 85 to 40. A "bookie" who had it within his power to announce the starting price would never dream of returning 85 to 40 if he had to make a series of calculations involving 2s. 6d. any-to-come bets from all over the country, which, of course, he has to do. Bets would be struck at 85 to 40 in the ring or those would he the odds on offer on the rails at the moment of the "off". This specialised service of the Sporting Life and Sporting Chronicle is not one which the "bookies" can influence at their own convenience.
Secondly, the competition in the last few minutes before the "off" is very fierce indeed, for obvious reasons. It is essential for a "bookie", particularly one who makes his living on the course as opposed to off the course, to get various well backed horses into his book. For example, if a favourite or near favourite is being quoted at 2 to 1 and 2 to 1 is its price in the ring and on the rail, and if a certain "bookie" does not have that horse in his book so that he has a lopsided book, far from shading the odds he has to increase them. He has to go from 2 to 1 to 9 to 4 or even to 5 to 2 to attract money on that horse for his book.
It is for these two reasons, I assure you, Sir Eric—[Laughter.] I claim to have the same relationship to this subject as my hon. Friend the Member for Worcestershire, South has to packaging plywood. The Financial Secretary knows these arguments. He will have had them put to him, or I hope that he has studied them because they are pertinent arguments.
Lord Harding started on the Levy Board with exactly the same fallacy—that it was possible to shade the odds in this way and attract the levy money. I understand that he abandoned that view—I have not discussed the matter with him, so I may be wrong—in the face of the arguments and took up for the levy something much nearer to what I might call the physical asset approach, which is the one I have constantly recommended.
Another fallacy which comes only very mildly into the debate, and, therefore, mention it in passing, is the Irish fallacy, which is that because something works in Ireland it will work here. We should know better than that. In Ireland, there are two taxes off the course and one levy on the course, but on the course the Government tax does not apply to on-course betting. In its place there is a system by which the racing board collects. I heard with some gloom the Financial Secretary's proposal about how this money would be collected from bookmakers on the course, because he is following exactly the Irish system, and this is by no means the right approach.
Would not my right hon. Friend agree that if the bookmakers were shading their odds they would be creating a larger headache for themselves? Is it not a fact that just before a race begins most of the heavy betting, certainly on the rails and in Tattersalls, is between the bookmakers? If there is shading of the odds in the last few minutes before the race, the bookmaker who is trying to get himself out of a difficulty over a "Canadian", "Yankee", "Patent", or "Round Robin" will suffer. This is the sort of situation which would create difficulty for himself.
Yes. A similar argument is that there is no inducement to a bookmaker to falsify the amount of his take because he has to pay Profits Tax and Corporation Tax on it.
This is a very important subject for the reasons which I have given. I want to see the Government get it right. Goodness knows why I should want them to do so. But if they are to do something like this, I prefer that they should do it in a sensible way. Throughout this Clause, they have, as we will show in a series of short but effective debates, picked the wrong course. As the Government are clearly set in their ways, and as those ways will bring unsuspected and unhappy consequences—I mean in a much wider sense than racing—I would advise my hon. Friend the Member for the Isle of Thanet (Mr. Rees-Davies) to divide the Committee.
I am absolutely in opposition to my right hon. Friend the Member for Enfield, West (Mr. Iain Macleod). If my hon. Friend the Member for the Isle of Thanet (Mr. Rees-Davies) forces a Division, I will vote with the Government. I am against my hon. Friend. We are old antagonists in this matter. It was my hon. Friend who intervened in a speech of mine three years ago to say that it was grossly impracticable to apply a turnover tax to betting on the racecourse—[Interruption.] He still thinks that it is.
I will quote his intervention, because it is precisely on the point of the Amendment. I was speaking on the general desirability of a betting tax based on turnover during the Budget debate of 1963. My hon. Friend the Member for the Isle of Thanet intervened in my speech with these words:
"My hon. Friend is very entertaining on this matter, but does he realise that his conception of turnover is entirely erroneous in his whole conception of gambling? Is he seriously suggesting that a person who in the course of an afternoon on a racecourse has perhaps seven or eight bets of a couple of shillings should pay a substantial tax on each bet struck, for that is the turnover to which my hon. Friend refers—not what people win or lose in the outcome but the amount involved in every bet? Does he realise that he will be one of the most unpopular people in England if he supposes that we could bring in such an inequitable tax of that nature?"
I am not concerned with personal popularity. I am concerned with fiscal ethics and fiscal equity. That is much more important to me than popularity on a racecourse. I shall still wager my modest few shillings at the Springhill point-to-point next Easter Monday."—[OFFICIAL REPORT, 9th April, 1963; Vol. 675, c. 1163–4.]
I did, and I lost.
I hope to come back to the point in the debate on the Clause, but later in the same debate there was a controversy between my right hon. Friend the Member for Barnet (Mr. Maudling), then Chancellor of the Exchequer, and myself as to the practicability or otherwise of applying a turnover tax to on-course betting. He said that it was not practicable. I said that it was. Again, without straying on to matters that ought to be dealt with on Clause stand part, the controversy ended there, my hon. Friend the Member for Southend, East (Sir S. McAdden) supporting me in 1963 as we supported each other in 1962, asking for the very form of taxation that the Government are now bringing forward, though not necessarily the same method. However, I shall pass to that in one moment.
I am against my hon. Friend the Member for the Isle of Thanet about on-course betting. If betting is to be taxed, on-course betting must be taxed with it. I am with the Financial Secretary in saying that it should be left to the discretion of the bookmaker as to how he recovers the tax from his clients, the punters. I know that my hon. Friend will not agree with me, but I call in aid a representative body of a vast section of British opinion on gambling. I quote from idle Annual Report of the Churches Council on Gambling for the year ended 31st December, 1965.
Horse-racing men will immediately say that the Church is biased, puritanical and inaccurate, and that no notice should be taken of it. [Interruption.] Perhaps my hon. Friends do not, but I have heard horse racing men say so. I have no special brief for that body, any more than I have for "bookies" or those concerned with bloodstock, but I am interested to see what that Council says about shading the odds, because it refers to that matter in its report.
This is where I come into collision with my hon. Friend. It is perfectly true that, a few minutes before the off, the odds are flashed across the country by these experts— —
I am sorry. Perhaps it would be more accurate to say "a few seconds after the off". I quite concede that. But that represents only a small part of the generality of bookmaking and the placing of bets. We are talking, in the generality of betting, of a sum of £1,000 million a year in terms of turnover—[Interruption.] Did my right hon. Friend say "No"?
No doubt at a later stage we may debate what is the extent of betting turnover, but I have the figures here from an authoritative body. If the Treasury has any more authoritative figures—for example, the figures on which it bases the yield of £50 million from the tax—perhaps we can have them. After all, as it is a turnover tax, the Treasury must have the turnover. The total yield is £50 million from this form of taxation.
The total yield is not £50 million, but £11 million. Secondly, as far as turnover is concerned, if my hon. Friend will read the Report of the Royal Commission, which is a sightly more authoritative body than the Churches Council, he will see that it went into it with great care and found that the turnover is something like £150 million.
My right hon. Friend is talking about horse racing alone. was talking about the generality of Letting, but I do not wish to get out of order by talking about the whole field of betting. Certainly, horse racing may Le £150 million.
Let me return to the question of shading the odds. The Report says:
It is said that a betting tax based on turnover could not be borne within the profit margin to which bookmakers work. But a tax on turnover would not have to be taken from existing profits. Course bookmakers make a book to show a profit whichever horse wins. They lay odds with this in mind, and vary them according to the actual betting. Regular punters may ask for slightly better odds than are being offered, but the bookmaker only accepts such bets at his discretion. He controls the odds. If necessary, to allow for the tax, he could reduce them all slightly and, for instance, instead of 100–8, lay 12–1. This would increase his profit "—
a s well as providing for the tax.
I say that if shading the odds is a practicable means of recovering the tax from the punter, I do not mind. I can go to one "bookie" at a point-to-point and get 7 to 4, and I can go to the "bookie" next door and get 6 to 4, or to the "bookie" next door to him and get 2 to 1. They are all different. They are all, in measure, shading the odds.
If there is that difference between contiguous "bookies", it follows that the small amount of 2íper cent. on-course is perfectly capable of being recovered by shading the odds. That is why I am diametrically opposed to what my right hon. Friend said. I think that this is a mistaken Amendment. If we are to have a betting duty, it must cover the whole field, and it must cover on-course betting as well as every other kind of betting.
|Division No. 21.1||AYES||[5.39 p.m.|
|Alison, Michael (Barkston Ash)||Giles, Rear-Adm. Morgan||Macleod, Rt. Hn. Iain|
|Astor, John||Gilmour, Sir John (Fife, E.)||McMaster, Stanley|
|Awdry, Daniel||Glover, Sir Douglas||Maddan, Martin|
|Barber, Rt. Hn. Anthony||Goodhart, Philip||Marples, Rt. Hn. Ernest|
|Batsford, Brian||Goodhew, Victor||Maxwell-Hyslop, R. J.|
|Beamish, Col. Sir Tufton||Grant, Anthony||Maydon, Lt.-Cmdr. S. L. C.|
|Bennett, Sir Frederic (Torquay)||Grieve, Percy||Munro, Hector|
|Bennett, Dr. Reginald (Cos. & Fhm)||Griffiths, Eldon (Bury St. Edmunds)||More, Jasper|
|Biffen, John||Gurden, Harold||Morrison, Charles (Devizes)|
|Blaker, Peter||Hall, John (Wycombe)||Munro-Lucas-Tooth, Sir Hugh|
|Boyd-Carpenter, Rt. Hn. John||Hall-Davis, A. G. F.||Murton, Oscar|
|Braine Bernard||Harvey, Sir Arthur Vere||Neave, Airey|
|Brinton, Sir Tatton||Harvie Anderson, Miss||Noble, Rt. Hn. Michael|
|Bromley-Davenport, Lt. Col. Sir Walter||Hastings, Stephen||Nott, John|
|Bruce-Gardyne, J.||Hawkins, Paul||Osborn, John (Hallam)|
|Bullus, Sir Eric||Heald, Rt. Hn. Sir Lionel||Page, John (Harrow, W.)|
|Campbell, Gordon||Heath, Rt. Hn. Edward||Peyton, John|
|Carlisle, Mark||Heseltine, Michael||Pike, Miss Mervyn|
|Cary, Sir Robert||Higgins, Terence L.||Pink, R. Bonner|
|Channon, H. P. G.||Hiley, Joseph||Price, David (Eastleigh)|
|Chichester-Clark, R.||Hirst Geoffrey||Pym, Francis|
|Clark, Henry||Hogg, Fit. Hn. Quintin||Ramsden, Rt. Hn. James|
|Clegg, Walter||Holland, Philip||Pees-Davies, W. R.|
|Cooke, Robert||Hordern, Peter||Roots, William|
|Costain, A. P.||Howell, David (Guildford)||Rossi, Hugh (Hornsey)|
|Craddock, Sir Beresford (Spelthorne)||Hunt, John||Russell, Sir Ronald|
|Crosthwaite-Eyre, Sir Oliver||Iremonger, T. L.||St. John-Stevas, Norman|
|Crouch, David||Irvine, Bryant Godman (Rye)||Scott, Nicholas|
|Cunningham, Sir Knox||Jenkin, Patrick (Woodford)||Sharpies, Richard|
|Dalkeith, Earl of||Jennings, J. C. (Burton)||Shaw, Michael (Sc'b'gh & Whitby)|
|Dean, Paul (Somerset, N.)||Jopling, Michael||Sinclair, Sir George|
|Digby, Simon Wingfield||Joseph, Rt. Hn. Sir Keith||Smith, John|
|Eden, Sir John||King, Evelyn (Dorset, S.)||Stodart, Anthony|
|Elliot, Capt. Walter (Carshalton)||Legge-Bourke, Sir Harry||Stoddart-Scott, Col. Sir M. (Ripon)|
|Errington, Sir Eric||Lloyd, Ian (P'tsm'th, Langstone)||Tapsell, Peter|
|Fisher, Nigel||McAdden, Sir Stephen||Taylor, Frank (Moss Side)|
|Foster, Sir John||MacArthur, Ian||Temple, John M.|
|Galbraith, Hn. T. G.||Maclean, Sir Fitzroy||Thatcher, Mrs. Margaret|
|Tilney, John||Ward, Dame Irene||Younger, Hn. George|
|Turton, Rt. Hn. R. H.||Wells, John (Maidstone)|
|Vaughan-Morgan, Rt. Hn. Sir John||Wills, Sir Gerald (Bridgwater)||TELLERS FOR THE AYES:|
|Vickers, Dame Joan||Wilson, Geoffrey (Truro)||Mr. R. W. Elliott and Mr. Eyre|
|Walker, Peter (Worcester)||Worsley, Marcus|
|Abse, Leo||Griffiths, Will (Exchange)||Oakes, Gordon|
|Anderson, Donald||Grimond, Rt. Hn. J.||Ogden, Eric|
|Archer, Peter||Hale, Leslie (Oldham, W.)||O'Malley, Brian|
|Armstrong, Ernest||Hamilton, James (Bothwell)||Orbach, Maurice|
|Ashley, Jack||Hamilton, William (Fife, W.)||Oswald, Thomas|
|Atkins, Ronald (Preston, N.)||Hannan, William||Owen, Dr. David (Plymouth, S'tn)|
|Atkinson, Norman (Tottenham)||Harper, Joseph||Padley, Walter|
|Bagier, Gordon A. T.||Hart, Mrs. Judith||Paget, R. T.|
|Barnett, Joel||Hattersley, Roy||Pannell, Rt. Hn. Charles|
|Beaney, Alan||Henig, Stanley||Park, Trevor|
|Berm, Rt. Hn. Anthony Wedgwood||Herbison, Rt. Hn. Margaret||Pearson, Arthur (Pontypridd)|
|Bennett, James (C'gow, Bridgeton)||Hilton, W.S.||Peart, Rt. Hn. Fred|
|Bessell Peter||Hooley, Frank||Pentland, Norman|
|Blnns, John||Houghton, Rt. Hn. Douglas||Perry, Ernest G. (Battersea, S.)|
|Bishop, E. S.||Howarth, Harry (Wellingborough)||Perry, George H. (Nottingham, S.)|
|Blackburn, F.||Howie, W.||Price, Thomas (Westhoughton)|
|Boardman, H.||Hoy, James||Price, William (Rugby)|
|Booth, Albert||Hughes, Rt. Hn. Cledwyn (Anglesey)||Probert, Arthur|
|Bowden, Rt. Hn. Herbert||Hughes, Emrys (Ayrshire, S.)||Rankin, John|
|Boyden, James||Hughes, Hector (Aberdeen, N.)||Roberts, Albert (Normanton)|
|Braddock, Mrs. E. M.||Hughes, Roy (Newport)||Roberts, Gwilym (Bedfordshire, S.)|
|Bray, Dr. Jeremy||Jackson, Peter M. (High Peak)||Robinson,Rt.Hn.Kenneth(St.P'c'as)|
|Brooks, Edwin||Janner, Sir Barnett||Robinson, W. O. J. (Walth'stow, E.)|
|Broughton, Dr. A. D. D.||Jenkins, Hugh (Putney)||Rose, Paul|
|Brown, Hugh D. (G'gow, Provan)||Johnson, Carol (Lewisham, S.)||Ross, Rt. Hn. William|
|Brown,Bob(N'c'tle-upon-Tyne,V1.)||Johnston, Russell (Inverness)||Rowland, Christopher (Meriden)|
|Buchan, Norman||Jones, Rt.H.Sir Elwyn(W.Ham,S.)||Rowlands, E. (Cardiff, N.)|
|Buchanan, Richard (G'gow, Sp'burn)||Judd, Frank||Ryan, John|
|Butler, Herbert (Hackney, C.)||Kelley, Richard||Sheldon, Robert|
|Callaghan, Rt. Hn. James||Kenyon, Clifford||Shinwell, Rt. Hn. E.|
|Cant, R. B.||Kerr, Russell (Feltham)||Shore, Peter (Stepney)|
|Carmichael, Neil||Lawson, George||Silkin, John (Deptford)|
|Chapman, Donald||Lee, Rt. Hn. Frederick (Newton)||Silverman, Sydney (Nelson)|
|Coe, Denis||Lee, John (Reading)||Slater, Joseph|
|Coleman, Donald||Luard, Evan||Small, William|
|Concannon, J. D.||Lubbock, Eric||Snow, Julian|
|Conlan, Bernard||Lyon, Alexander W. (York)||Spriggs, Leslie|
|Cousins, Rt. Hn. Frank||Lyons, Edward (Bradford, E.)||Steel, David (Roxburgh)|
|Cronin, John||Mabon, Dr. J. Dickson||Steele, Thomas (Dunbartonshire, W.)|
|Cullen, Mrs. Alice||McCann, John||Stonehouse, John|
|Davidson, Arthur (Accrington)||MacColl, James||Strauss, Rt. Hn. G. R.|
|Davidson,James(Aberdeenshire,W.)||MacDermot, Niall||Swingler, Stephen|
|Davies, Dr. Ernest (Stretford)||Macdonald, A. H.||Symonds, J. B.|
|Davies, Harold (Leek)||McGuire, Michael||Taverns, Dick|
|Davies, Robert (Cambridge)||Mackenzie, Alasdair(Ross&Crom'ty)||Thomas, Iorwerth (Rhondda, W.)|
|Dempsey, James||Mackenzie, Gregor (Rutherglen)||Thorpe, Jeremy|
|Dewar, Donald||Mackie, John||Tinn, James|
|Diamond, Rt. Hn. John||Mackintosh, John P.||Tuck, Raphael|
|Dickens, James||Maclennan, Robert||Urwin, T. W.|
|Doig, Peter||McMillan, Tom (Glasgow, C.)||Varley, Eric G.|
|Dunn, James A.||McNamara, J. Kevin||Wainwright, Edwin (Dearne Valley)|
|Dunnett, Jack||Macpherson, Malcolm||Walden, Brian (All Saints)|
|Dunwoody, Mrs. Gwyneth (Exeter)||Mahon, Peter (Preston, S.)||Walker, Harold (Doncaster)|
|Dunwoody, Dr. John (F'th & C'b'e)||Mahon, Simon (Bootle)||Watkins, David (Consett)|
|Ellis, John||Mallalieu, E. L. (Brigg)||Weitzman, David|
|Ensor, David||Manuel, Archie||Wellbeloved, James|
|Evans, Albert (Islington, S.W.)||Mapp, Charles||Whitaker, Ben|
|Finch, Harold||Marquand, David||White, Mrs. Eirene|
|Fletcher, Raymond (Ilkeston)||Marsh, Rt. Hn. Richard||Willey, Rt. Hn. Frederick|
|Fletcher, Ted (Darlington)||Mellish, Robert||Williams, Alan (Swansea, W.)|
|Forrester, John||Mendelson, J. J.||Williams, Alan Lee (Hornchurch)|
|Fowler, Gerry||Millan, Bruce||Williams, Clifford (Abertillery)|
|Galpern, Sir Myer||Mitler, Dr. M. S.||Willis, George (Edinburgh, E.)|
|Gardner, A. J.||Mitchell, R. C. (S'th'pton, Test)||Winnick, David|
|Garrett, W. E.||Morgan, Elystan (Cardinganshire)||Winstanley, Dr. M. P.|
|Gordon Walker, Rt. Hn. P. C.||Morris, Charles R. (Openshaw)||Woodburn, Rt. Hn. A.|
|Gourlay, Harry||Moyle, Roland||Woof, Robert|
|Gregory, Arnold||Murray, Albert|
|Griffiths, David (Rother Valley)||Nabarro, Sir Gerald||TELLERS FOR THE NOES:|
|Griffiths, Rt. Hn. James (Lianelly)||Noel-Baker,Rt.Hn.Philip(Derhy,S.)||Mr. McBride and Mr. Whitlock|
I beg to move Amendment No. 75, in page 12, line 36, at the end to insert:
(3) Notwithstanding the foregoing provisions of this section the general betting duty shall not be chargeable on any bet in respect of which the amount staked is returnable to the
bettor by reason of the bet having become void.
This Amendment should not cause the Committee any great difficulty, because it is comparatively simple. It deals with the question of when is a bet a bet, and when is it not a bet. It seems to me quite clear that on all occasions a bet is a bet when it is struck, but the one person who wins in all instances, whether the contest takes place or not, is the Chancellor of the Exchequer.
I am dealing with the problem of void bets. A void bet is a bet that is struck on a contest or a race and the contest does not take place because of circumstances quite outside the control of the bettor or the layer concerned. Imagine, for example, that Ascot today had been deluged with a thunderstorm, which was quite a possibility, since there was at thunderstorm in London.
Yes, or Lords. If there had been a thunderstorm and deluge at Ascot, all the races might have been washed out.
Again, take the case of this year's Derby. The Minister of Agriculture might have had to determine a cancellation of the Derby because some French horses which had arrived had been in contact with horses in British stables and, therefore, it was unwise for the race to be run. In the circumstances, all the bets which had been made on the Derby would have been declared void and nobody would have been able to win neither the bookie nor the punter.
As the Bill is drawn, however, it certainly appears to us on this side that those bets would have been deemed to have been bets which had been properly made and, therefore, the 2½ per cent. tax would have been payable on them. I am sure that the Chancellor of the Exchequer did not intend this chain of circumstances to come about whereby the only people who could possibly win in those events would be the Exchequer.
A respectable precedent for our Amendment exists in connection with the duty on football fixed-odds betting. When a game of football is cancelled and there has been betting on the match and the match is declared void, the bets are void also and no tax is collected by the Revenue.
I hope very much that the Government will look at this matter extremely sympathetically. It is a matter which should be dealt with and I hope very much that I shall have a helpful response.
I can give the hon. Member for the City of Chester (Mr. Temple) the assurance which he requires, but I do so by saying that it is our view that the Amendment is unnecessary. The hon. Member asked the pertinent question; when is a bet not a bet? I agree with his answer. It is not a bet when it is a void bet. I am advised that this position is adequately covered under the Bill as drafted, because since, when a bet is declared void, it ceases to be a bet and is deemed never to have been a bet, it would not, therefore, be a bet upon which the Customs would be entitled to levy duty or, if it had already been paid, to retain that duty.
It might, of course, happen in the case particularly of ante-post betting that the duty would already have been paid on a bet which was subsequently declared void. In those circumstances, the bookmaker would be entitled to be refunded the amount of the duty either in the form of a repayment or as a credit against other liability to duty.
I am quite satisfied with the Financial Secretary's answer-I was about to say, as long as it is right. The hon. and learned Gentleman will know what I mean.
Subsection (1) of the Clause states:
Subject to the provisions of this section, on any bet made … with a bookmaker".
Certainly, all commentators on the Clause have taken this to mean that duty is liable as soon as the bet is made. That is to say, if I am betting, as, for example, I do almost always, on credit with my bookmaker, when I put down the telephone and he has said "Right", the bet is then made.
As I understand—and we must be careful about having ex cathedra statements about this, because, naturally, it will be for the courts in due course to decide any disputes which arise—the wording in the first line of the Clause does not wholly substantiate the point that the Financial Secretary has made. I simply ask him to check with the legal eagles on this point before Report and see whether the point which I have made has substance.
I assure the right hon. Gentleman that I have done that already, because I had exactly the same reaction as he did when I was originally given this advice. I read the Clause in exactly the same way as the right hon. Gentleman has done, but I am satisfied, and I have taken legal advice on this from those who are expert in this branch of the law, that what I have said is correct.
I cannot, of course, lay down the law from this Box—as the right hon. Gentleman has said, it would ultimately be for the courts to decide—but I think that it is clear from what I have said that the matter never would, or could, arise before the courts. Since the view which the Customs and Excise take of the matter is as I have explained it, it would never seek to retain the duty in the circumstances with which we are concerned.
When it comes to betting, I am much more in the category of my hon. Friend the Member for Worcestershire, South (Sir G. Nabarro) than that of my right hon. Friend the Member for Enfield, West (Mr. Iain Macleod). I read in the papers a fortnight ago, however, of a race in Newmarket in which there was a false start. The horses covered the whole course and the stewards ordered that the race be re-run in half an hour.
Six horses were withdrawn and, presumably, the "bookies" formed a new book. During that half hour, however, would they have been expected to repay the 2½per cent. for the earlier backers on the horses? How would they ever be expected to deal with it in that way? Is not this an argument for the tax to be on winning rather than on the stake? In the case to which I have referred, I do not see how the bookmakers could physically have dealt with the problem.
I am sure that the whole Committee is lost in admiration by the expositions on betting which we have had this afternoon from the right hon. Member for Enfield, West (Mr. Iain Macleod). As the right hon. Gentleman, who can fairly be described as an expert, is clearly of the view that there could be confusion in this matter, I should like to ask the Financial Secretary whether there is any reason why the Amendment should not be accepted.
The hon. and learned Gentleman states that the Bill as drafted meets the requirements of the Amendment. That may be so, and I would be the last person to attempt to pit my knowledge against him on a matter of this sort. But, for the sake of clarity, and to put at rest the mind of the right hon. Member for Enfield. West, would it not be sensible to accept the Amendment, since doing so could do no harm and would reinforce the position as described by the Financial Secretary?
Let us be certain that we have got the position right. Like my right hon. Friend the Member for Enfield, West (Mr. Iain Macleod), I was quite satisfied with the Financial Secretary's exposition until, at the end of his remarks, he referred to ante-post betting. In such a case, when a horse is subsequently scratched, the bet has already been struck and tax must be paid on it. That must be so, otherwise we would have the ludicrous position of the Customs not seeking to take the tax from the bookmaker who had already taken it from the punter.
My reference to ante-post betting was to illustrate how the duty might have been paid on a bet which was subsequently declared void. We will come to the details of this later. I will merely say at this point that, under the scheme which will operate, bookmakers will have an option by which they may pay weekly if they wish. If the ante-post bet was a cash bet, the duty in respect of that bet might have been paid before the race was declared void. In that case he would be entitled to a refund.
To answer the question posed by the hon. Member for Bodmin (Mr. Bessell), the House of Commons considers it preferable to try to reduce the amount of verbiage in Statutes. It has always been considered advisable not to include words which are unnecessary.
I am extremely obliged for the Financial Secretary's reply. It came as a slight surprise to me and I hope that it will enable me to bring off a double today, because I will be moving t le next Amendment. I have a happy recollection of making a good start on last year's Finance Bill, although I was not successful on that occasion in bringing off the second leg of my double.
I was obliged to my hon. Friend the Member for Southend, East (Sir S. McAdden) for mentioning ante-post betting. I am in agreement with the way in which he interprets this matter, as I am in agreement with what the Financial Secretary said on the subject.
I had no hesitation in bringing this matter to the attention of the Committee, because many people outside, and a number of hon. Members, were in doubt on this issue before it was cleared up today. However, I hope that the Financial Secretary will have another look at the matter between now and Report just in case there is any loophole or possibility of the lawyers getting to work on it. We should do our best to put the matter absolutely beyond doubt. I accept the hon. and learned Gentleman's assurance and I beg to ask leave to withdraw the Amendment.
I beg to move Amendment No. 79, in page 13, line 2, at the end to insert:
(4) A bookmaker shall be entitled to a rebate of the general betting duty in cases where the whole or any part of the liability in respect of a bet accepted by him is shown to the satisfaction of the Commissioners to have been transferred by him to another book-maker by means of a fresh bet made by him with that other bookmaker.
I come to the second leg of what I hope will be a successful double, although this is a more difficult and complicated matter than the last. Briefly, this subject concerns hedging bets, which are mostly trade bets—bets between bookmakers—which take place on a very large scale and which, in effect, are the basis of the betting market in this country.
The object of the Amendment is, first, to see that the same bet is not taxed two, three or more times over. It may seem a little strange to hon. Members that this can happen, but I will explain later how it can happen under the Bill as drafted. The Amendment would leave the betting and taxation position between the punter and the bookie exactly as it stands in the Bill; in other words, if accepted it would affect only trade transactions as between one "bookie" and another.
Some years ago I was a member of a Stock Exchange and, to refresh my memory about the exact method of transactions on the Stock Exchange, I telephoned a friend of mine over the weekend and put some questions to him. It is customary on the Stock Exchange, during the course of an account, for securities to change hands many times during that account, attracting the ad valorem stamp duty. In other words, there is no successive taxation or duty on stocks and shares from the trade point of view when changing hands within the market. I submit that this is a close analogy between what happens in the betting markets, particularly the market which takes place on the course every day of the year.
Would the hon. Gentleman tell us the large percentage of the whole which is the subject of hedging? Does he know the size, the percentage, of this sort of betting in terms of the amount of overall betting?
No. I do not know the exact percentage, but during my speech, I will indicate the size of the market on the course and, equally, I will try to indicate the amount of inter-office business that takes place.
I should explain the meaning of the word "hedging". It means that a bookmaker takes a bet of fairly large dimensions and immediately seeks to spread it over his confreres in the betting business because he does not want to stand the enormous risk himself. As I have connections with Lloyds, I might say that it is somewhat similar to the reinsurance business which takes place in the great insurance market in Lloyds. When a broker goes to an underwriter with a very large risk, that underwriter says. "I will accept that risk" knowing perfectly well that he has some underwriting arrangements which will enable him to spread the risk all over the market.
It is not quite as simple as that, because in Lloyds one has a simple transfer of a very large undertaking. In this case the complication of hedging is that the bet transferred at the second, third or later stages may not be of the same form as the original bet. This is the difficulty, particularly when one thinks in terms of an accumulator bet which is liable to cost the original bookmaker a large amount of money in view of the large investment which goes on the last horse in the accumulator. This complexity makes it impossible to draw a parallel with Lloyds.
I am obliged to the hon. Gentleman for that intervention, and I think that we are at one, as I will show. What is in fact being hedged is the risk, and the risk at Lloyds is put down in the policy. The risk in the case of betting is the risk that a particular animal will win. In other words, it is the risk which is hedged. I brought in the Stock Exchange and Lloyds merely to provide an analogy to show how risks change hands.
The best way to explain these provisions is to give some examples. My first example is of an accumulator bet of some consequence which took place comparatively recently. Unfortunately I was not a winner in that enterprise, which was a five horse accumulator, something which makes one's mouth water on a day when the Ascot races are being run. This was a particularly successful accumulator and provides an excellent illustration.
The most simple example of a hedging bet is where a small bookmaker, possibly in a small town such as Malton in Yorkshire, where there is possibly one trainer, finds that when that trainer has a fancied horse running there is immediately a big run of bets on that horse. He will probably take £100, £200 or more in bets on that horse with practically no field money whatever on any of the other horses. The first thing he must do is to lay off a proportion of the wager. So he telephones either one or more other bookmakers whom he knows and hedges that bet, or places another bet with another bookmaker.
This is where the provisions of the Bill come in, because every time that bet moves around between bookmakers it attracts the 2½ per cent. duty. That is why I said that the original wager by the punter could be taxed two, three or more times—indeed, as many times as it travels around the betting markets.
How can the hon. Gentleman refer to the same bet travelling around when clearly a bet which is laid off or hedged is often hedged at different odds? Such a bet changes odds from time to time so that, in effect, a number of different bets at different odds are being placed rather than the same bet travelling around.
I have no doubt that the Financial Secretary will be making a case such as that. However, I submit that whatever the odds during the transactions the bet is the same money that was originally invested with that small bookmaker in Malton. I am simply making the point that these hedging transactions are trade transactions between bookmakers and that they are part of the whole mechanism of the betting market.
I will give another instance—because these concrete instances are of importance—that of a stable commission. It is the usual thing for a bookmaker to receive a stable commission of £1,000 to place on a horse. The bettor concerned does not want the trouble of ringing up innumerable bookmakers, nor does he want the information to go too wide that the stable is backing a particular horse, so he invests that money with one bookmaker. I should think that on many occasions the bookmaker, knowing the stable concerned, lays the whole lot off. When that bet is placed it attracts the 2½ per cent. duty, so I should have thought that at that moment of time the Chancellor of the Exchequer would have been satisfied if he had had full duty paid on that bet as such.
Perhaps I might now trace that bet from that original stable commission through all the various hands, through the blower, of which we have heard in previous debates today, back to the course. Having arrived at the course through a whole series of transactions which would not occasion any betting slips whatsoever, just nods, winks and little wags of the finger, that £1,000 will again be spread over the whole of the betting market.
I submit that it is unfair that every time these trade bets are moved around in the course of market transactions they should attract fresh duty, because in the specific case of a £500 bet which was a stable commission-and I have here the information on the way this bet travelled around—it would have attracted £250 in d Ity before it finally laid itself to rest in the books of the ultimate layers concerned.
I turn now to another example. The hon. Member for Bedfordshire, South (Mr. Gwilym Roberts) spoke about accumulators. I shall give a practical example of a five-horse accumulator. All these horses won. The last horse in the five-horse accumulator was Wild Sunset, which won at 7 to 4 in May of this year. The original layer had a 30s. investment, the tax on which would have been 9d. The first horse won at 6 to 1, and the bookmaker concerned took out a £10 accumulator on the last four horses in the accumulator.
As the bet was subsequently hedged, it involved a total hedging of £2,400, which would have attracted a tax of £60. I think it is of interest to the Committee to realise that an original 30s. accumulator could, in the course of hedging bets, attract a tax of about £60. In addition, the last trade bookmaker who had Wild Sunset laid in his book laid off £1,000, on which the tax was another £25, so that the total tax involved in the transaction was more than £85. The winner—and I am glad to say that there was a winner of this five-horse accumulator—won £5,500. If the bet had been dealt with on the basis of returns, the Chancellor would have collected £137, as opposed to the £85 which he would collect if my Amendment were not accepted.
The Amendment is very well precedented indeed. I was one of the hon. Members who sat through the whole of the discussions on the Betting and Gaming Bill in Committee upstairs. As I was not satisfied with the introduction of betting shops in this country before I had some experience of them, I went over to the Fish Republic to see how they were working there. I came back not convinced that they were a good thing but that they were a better thing than the system which was operating, largely illegally, in this country. I therefore felt able to vote for betting shops in this country, and I naturally concluded that ultimately there would be a tax on betting. I forecast that at the time.
Despite the remarks of my right hon. Friend, I think that we can go to the Irish Republic for a number of respectable precedents. When a bookmaker in Southern Ireland lays off bets he is required to furnish the Revenue authorities with the name and address of the bookmaker with whom he has hedged, and that is the principle embodied in the Amendment.
I have been racing in Ireland, I have betted on course, and I have been to betting shops. I never placed a bet in one, but I have been into them to see how they work. I have also had correspondence with the Irish Racing Board during the last few days. I know that their system works smoothly from an administrative point of view, and their costs of collection are very small indeed relative to the amount of money they collect. They use this system of special rebate with regard to hedging bets.
Significantly, there is an English precedent in this matter as well, because in the 1926 Finance Act provision was made whereby hedging bets could be exempted from double taxation. The appropriate regulation was made and those bets were exempted from double taxation.
I would not wish in any way to mislead the Committee in moving the Amendment, but I should like to make a short quotation from what Sir William Croft, then the Chairman of the Board of Customs and Excise, said to the 1949–51 Royal Commission on Betting. He said:
Laid off bets did not come under the betting duty. They were excluded, and as far as I know that worked quite easily in practice, but I do not think sufficient allowance was made for it in the estimate.
Thus we see that Sir William Croft in his evidence said that there was no practical difficulty whatsoever in accepting an Amendment of this nature, nor in working this system.
One thing which I should like to emphasise—and perhaps the Financial Secretary has not overlooked it—is that if the Amendment is not accepted the situation may be extremely prejudicial to the small bookmaker. I described the small bookmaker a few moments ago as someone in a small town like Malton who takes a fairly sizeable commission. He is not linked in business in any way with other bookmakers, and therefore under this legislation he has to negotiate a fresh bet.
The position of a large integrated chain of bookmakers is different. Here we have a large company with offices all over the country which are part of one organisation and no subsidiary companies are involved. I submit that in art organisation like this, when money is moved or hedged between the various offices of the company, no fresh bet is struck because it is not a fresh transaction as between one bookmaker and another, or between a punter and a layer. It is purely a matter of moving money between one office and another.
It is the custom in the betting industry—I do not know why this is so, but it is—for large bookmaking organisations to have, say, Joe Bloggs, Northern, Joe Bloggs, Birmingham, Joe Bloggs, London, and Joe Bloggs, Trade. It is normal for all these various Joe Bloggs subsidiary companies to lay off with Joe Bloggs, Trade. If this system which is proposed by the Government is brought into being, I submit that the probable likelihood is that these subsidiary companies will be put into liquidation and Joe Bloggs will become one company throughout the country. The result will be that money will be able to move around the Joe Bloggs organisation without attracting any tax whatsoever. That will not happen with the smaller bookmaker, because he will have to lay off with other outside interests and thereby make a separate bet on any occasion when he pays on the hedging operation.
I apologise for going into this matter at some length, but it is complicated and is of great importance to my next point, which concerns the betting market. I intervened in the speech of my hon. Friend the Member for the Isle of Thanet (Mr. Rees-Davies) to say that the main betting market, that is, the trade transactions, is the course. Inter-office transactions take place. I should not like to hazard an estimate as to whether interoffice transactions are larger than the transactions which go back to the course, but I should think that they probably are.
The fact remains that it is on the course that the market in starting prices is made. The Sporting Chronicle and Sporting Life representatives take the average price when they walk down the rails immediately after the "off" and that becomes the starting price, but that is only a reflection of the prices on offer by the rails bookmakers at the moment of the "off".
I come now to my final point, which is possibly the most important one with regard to the Amendment. That is, the detrimental effect which this may have on the whole betting market. I unfortunately share the view expressed once from these benches that this provision may be an indirect attack on the whole bookmaking industry. It is widely known that in many quarters a Tote monopoly has been sought. I was successful in this House on one occasion in fighting fairly hard against the introduction of a Tote monopoly, but if the main market upon which the starting price depends is upset and its mechanism destroyed, the next step will lead straight to a Tote monoply.
I regard this matter as of the highest importance not only to the bookmaking fraternity but to those many people who enjoy having a bet at starting price, enjoy going to a race meeting, enjoy watching the race on television and who are able at one and the same time to hear the odds being reported as they vary in the market on any day.
The point which I should like to leave with the Government is that their proposals are very unreasonable. It is quite unfair to propose what in effect will be double, treble or quadruple taxation.
I want to be brief in underlining two points. We have just heard a very lucid and expert appreciation of the situation by my hon. Friend the Member for the City of Chester (Mr. Temple), which requires no underlining apart from these two further points.
The first is that I share the deep anxiety for the small bookmaker unless we solve this problem. Hedging is not really betting at all. It is part of the ordinary mechanism of the operation of the industry. Most of the small men in the trade do not carry the substance of the bet. They pass it on to Hill's or Ladbroke's and get a commission of perhaps Is. in the E. They are doing nothing more nor less than merely accepting a bet from the punter from which they take a small corn-mission before passing it on. They hold part of the business, but what they cannot afford must be passed on. This operation is, therefore, only part of the ordinary mechanism of their business.
My second point is to contrast the operation of the two methods of business, of the Tote versus what is, in fact, the effective use of the trade mechanism which the bookmaker uses, operating through telephonic communication by means of "the blower". The Tote has a bottomless purse. The Tote is us, the nation. It takes a direct sum of money in the case of the jackpot out of each race—17½per cent. of the jackpot on the card. As it goes on over the season and as it has the State behind it, in effect, the Totalisator is not concerned with the movement of any market or any price except the price after the "off". One cannot go to the Tote and say, "Thank you very much. I want it at 6 to 1 now."
The whole colour of racing, the thing which makes British racing the greatest in the world and so much better than American, French or any other racing to people who understand the sport of kings and enjoy it, is not just the colour and noise of the bookmaker, it is the fact that one can beat the book. If one is shrewd in a three-horse race—it is the greatest pleasure—one can win before the "off". One can back all three horses with bookmakers before the "off".
The essence of the point concerning the operation and mechanism of betting is to understand that what the bookmaker is doing is not laying other bets at all but trying to ensure that he has a balanced book which will operate to his benefit.
Therefore, what happens is simply this. Into Hill's in London or Ladbroke's comes a large sum of money from all parts of the country on the favourite for, say, the Hunt Cup. What will they do? If they keep the whole of that sum of money, of course the price of that favourite on the course will be greatly higher, so the man picks up a telephone and blows through to the representative on the course, who is the representative of the agency which owns the blower Exchange Telegraph—which has nothing to do with the bookmakers and which charges all the bookmakers a sum of money for that service, and says, "We have £10,000 or £20,000 on this horse. Will you please lay off £10,000 for us?"
Of course, Hill's will come through for £10,000 or £20,000 a go. One bookmaker does not want the lot, so it is laid off over the whole range of the trade in the ring. One says, for example, that George will have £500 at certain odds. Therefore, the mechanism which creates the price in the ring is determined by thousands of transactions. It is inconceivable that that should be taxed. The two processes are exactly the same. This is part of the ordinary operation of the whole mechanism of the game. This is part of ordinary races. It is not a bet struck at all. It is part of the ordinary inter-office mechanism of balancing the book.
Therefore, I come back to the point that the Government would not need to trouble with this Amendment if they would accept that all on-course betting should be treated in a different way by a fixed tax. Once again that is the answer. So I come back to the earlier point.
On hedging, if there were an arrangement by which the Government said to the race course, "We want £20,000 a day from Ascot for the Inland Revenue office; that is our price. You fix the bets and charge the amounts", there would be no need to bother about all this extra betting and "the blower" and so on. The Government would get their money simply and easily.
I beg the hon. and learned Gentleman to recognise that he would break down the whole mechanism of betting and play straight into the hands of the Tote monopoly boys if he does not make some provision to accept the Amendment or arrive at this result in some similar way.
I do not pretend to be anything like so expert as the right hon. Member for Enfield, West (Mr. Iain Macleod) or the hon. Member for the Isle of Thanet (Mr. Rees-Davies). We must be very careful in any legislation to be fair and to be seen to be fair. We must be very careful not to allow any prejudice that we might have to temper the justice of the case.
I want to look not at the general hedging case made out by the hon. Member for the City of Chester (Mr. Temple) but rather at the case of the small betting shop, the proprietor of which, I understand, is primarily a commission agent and not a bookmaker. I understand that the commission is generally about 5 per cent. To do a turnover of, say, £100,000, he would need a betting shop in which the overheads commensurate to that sort of turnover might well be around £2,000 or £3,000, and possibly more. On this basis, the present betting duty would be £2,500 on a £100,000 turnover, if the duty is to be on the turnover, whereas his real turnover is his commission of £5,000.
This is a different sort of hedging, but it amounts to the same thing. I imagine that the matter will also be complicated by the fact that even the small betting shop will do a little carrying of its own bets Therefore, it is not perhaps quite so simple to exempt anybody who is a commission agent, in the sense that nobody will be a 100 per cent. commission agent, although I imagine that a large number of small shops will be very largely commission agents and not bookmakers.
By this Measure, we could well be closing down or effecting take-overs of one-man shops. If this is what we want to do, I think that we should be more honest and do it in a different way than by a tax of this nature.
I am sure that we shall be told that there is a great opportunity for evasion if we allow any form of exemption for hedging. In order to try to find the possible extent of any evasion, I intervened to ask the hon. Member for the City of Chester if he had any figures for the percentage of the whole. I have not been able to find any, and apparently neither has he. What concerns me is that we already have what I believe to be a very low yield from the tax, at £11 million. If the figure for the exemption of hedging is very substantial and the yield becomes almost non-existent, all it will mean is that, taking the large hedgings mentioned by the hon. Member for the Isle of Thanet, instead of fixing the level at 2½ per cent. we shall fix it at 10 per cent. That sort of thing may well be all right, but we should be clear what we are doing.
If the yield would be reduced only slightly by granting the exemption, or if it could be granted to the small man who would be literally closed down by the duty, the Treasury should in fairness concede it.
If it amounts to a substantial sum on the large amount of hedging referred to by the hon. Member for the City of Chester, that is tantamount to saying that we are having a higher level of tax. I do not object to that, but I think that it would be unfair if we were in a roundabout way doing away with the small man.
I can add very little to the extremely detailed and able exposition of the case for the Amendment which was made by my hon. Friend the Member for City of Chester (Mr. Temple). We all learned a great deal from that exposition. I am not a very keen racing man myself, but I have found this debate and the previous one something of a liberal education.
I wish to emphasise that it is a basic principle of taxation that, within the limits of the disagreeable situation created by taxation—and all taxation is an unfortunate interference with individual rights—the incidence of the taxation should be fair and reasonable. I was very impressed by the point made to this effect by the hon. Member for Heywood and Royton (Mr. Barnett). I am only sorry that he seemed to abandon the position of principle in favour of the more utilitarian considerations of the yield of the tax in the latter part of his oration. I do not think that bookmakers or betting should be encouraged. Quite the contrary, but whatever view one may take of their occupation, bookmakers are human beings.
It is hardly a matter of controversy that they are human beings and that they have their rights. The effect of the Clause, if unamended, in cases where a bet is laid off or in the situations outlined by my hon. Friend the Member for the City of Chester would be that what is in essence one transaction would attract taxation more than once. This is surely quite contrary not only to the principles of our taxation but to the ordinary rules of natural justice.
Another undesirable side effect of Leaving the Clause unamended would be that it would reduce the very small amount of revenue which is at present available to the Levy Board. At present it gets the rather paltry sum of about £3 million a year. I fear that British racing is not in the happy state described by my hon. Friend the Member for Isle of Thanet (Mr. Rees-Davies) in a lyrical passage. It is in a very poor state as compared with racing, say, in France from the point of view of the stud situation or the amenities provided on the racecourse. If unamended, the Clause would worsen the situation of British racing by reducing even that small sum still further.
I do not wish to dissent from what my right hon. Friend the Member for Enfield, West (Mr. Iain Macleod) or my hon. Friend the Member for the City of Chester said, but I tentatively question whether the universal Tote system is such a closed question as they seemed to presume. I think that there is a lot to be said for the Tote system. For example, in France, which has this system and where there is a levy of about 22 per cent., the amount of money raised to invest in racing as such is— —
Thank you, Mr. Grant-Ferris. I have finished my point in any case, and I was merely placing the Amendment in a wider setting. The question of the Tote had been raised in earlier speeches and so I was trespassing no further than other speakers in this debate have done. I hope that the Financial Secretary, who is a most just and reasonable man, will accept the Amendment, because the case for it in equity is overwhelming.
Originally I had no intention of intervening in the debate on this Clause, but I have been tempted to do so by some of the naïve statements made by hon. Members opposite. If there were any question of there being double taxation of the punter, I would be the first to oppose it, because the poor punter is already badly enough done by.
A very naive picture has been presented. The hon. Member for Isle of Thanet (Mr. Rees Davies) even went so far as to speak of a three-horse race in which the punter could back each animal, presumably with varying stakes, and thereby make a profit irrespective of which animal won. These things have happened, but only once in heaven knows how many races. This could possibly be done on the course if the punter were a world 100-metres champion who was also possessed of the mind of Euclid to enable him to calculate the appropriate stake to place on each animal. It is absurd to believe that this is a common happening, as many of us know to our cost.
A sad picture has been presented of the small bookmaker. I do not wish to start the Tote monopoly argument. I am all in favour of the small bookmaker as against the Tote monopoly. But having said that, we should not imagine for a moment that the small bookmaker is a philanthropic animal. He is not. He often accepts a bet at 11 to 10 and lays it off at 5 to 4. He makes a commission of ls. in the £ by transferring the bet without taking any risk whatsoever. This is a duty of only 6d. in the £ which will be taken from his commission for merely acting as the middleman.
I repeat that if there were any case of there being double taxation of the punter I should be the first to oppose it. The only thing this duty might achieve is perhaps a small marginal reduction in the profits of some small bookmakers.
Unfortunately, I raised one hare. I suggested that bets were not always transferred in the same form as that in which they were originally received. This is true. Immediately the hon. Member for the City of Chester talked about five-horse accumulators. Anybody in the betting world knows that these are very rare bets indeed. To give a simple example, the racing pundits employed by the national newspapers sometimes—about once or twice a season in the case of the best of them, and not at all for the others—give six winners at a meeting. Usually, when they succeed in doing this the overall accumulator might produce something approaching 100 to 1 because the animals predicted to win are generally the favourites or near-favourites Even assuming that these pundits did this once every flat-racing season, this would be once out of 250 or more meetings. To talk of huge five- or six-horse accumulators coming up is not a realistic way of discussing betting. When I suggested that bets were transferred differently, I meant that they were transferred sometimes into doubles and possibly into combinations. As one hon. Member pointed out, the odds are often changed as well.
The hon. Gentleman is making an extremely interesting point. It does not necessarily matter whether the five-horse accumulator comes up. By the time that the first two have won the hedging bets will have already started and will go on through the third, the fourth and the fifth, even though the original stake may be only 10s. and even though it eventually be lost.
This is partly correct. It will not go on for the third, the fourth and the fifth if the third falls. It will go only as far as the second stage. There was talk by one hon. Member opposite of £60 as being the sort of taxation. This would be only after the fourth had won and when they were looking towards the fifth on a very high-priced accumulator.
The hon. Gentleman is making great play with the fact that I mentioned a five-horse accumulator. In fact, the hon. Gentleman invited me to give an example of an accumulator. My first example was a normal hedging transaction by a small bookmaker.
I accept that. I said that I had introduced the hare of the accumulator bet. Some hon. Members opposite have presented a rather unrealistic viewpoint of bookmaking. The bread and butter transactions in this game are not five-horse accumulators. The bread and butter transactions are singles, doubles, perhaps trebles, but they do not often go much beyond that. When the small bookmaker transfers, he usually transfers to be on the safe side of the transaction. This proposal will not bring about double taxation of the punter. It may result in a very thin shaving of the small bookmaker's profits. This will be the only effect of the Clause.
Once again, we have had a very interesting debate on a subject which I know has attracted a great deal of interest outside Parliament as well as inside. It is important to establish the justice and rightness of what we seek to do in respect of laid-off bets. Some people have taken the view—it was expressed by the hon. Member for the City of Chester (Mr. Temple) in moving the Amendment—that this is a form of double taxation and is unjust. I say at once that in my view this is a misconception.
The double taxation argument is based on the assumption that the laid-off bet is the same bet. It is not the same bet. It is an independent and separate bet. It is a fresh bet. I would only ask the hon. Gentleman to study his own Amendment which says that he wants a rebate to be paid where, in effect, the bookmaker lays off
by means of a fresh bet made by him with that other bookmaker.
It is a fresh bet, as the hon. Member for the Isle of Thanet (Mr. Rees-Davies) said, which takes place and which plays its part in the whole operation of our betting system. As the hon. Member for the Isle of Thanet said, laid-off bets play a very important part within our bookmaking system and, through the system of passing on the bets, many of which ultimately end up on the course, they ultimately affect the starting price of the horses.
The acceptance of laid-off bets represents a very large part of the business of some of the largest bookmakers. My hon. Friend the Member for Heywood and Royton (Mr. Barnett) asked how large a part and what the figures were. I do not know, and I do not think that anyone knows. Some people may be able to make estimates, but I am not in a position even to do that. However, there is no doubt that it represents a very large part.
If we were to accept this Amendment, therefore, we would seriously affect the yield, and the result would be that we Mould have to look again at the rate. This rate of 2½ per cent., which has been criticised in some quarters as being too low, is a rate we arrived at after taking into account that we were including laid-off bets among the bets subject to the duty. Hon. Members have quoted the example of Ireland where laid-off bets are not included, but the rate of duty in Ireland, of course, is higher than the rate we propose to introduce. I think I am right in saying that there is a variety of duties in Ireland. I do not know the full details of the system there, but betting is affected by a general turnover tax of the order of 2½ per cent. I read in the newspaper yesterday that this is to be increased, and I do not know whether that will affect betting. In addition, there is a separate betting duty which is now, I think, about 10 per cent. on the stake. Clearly, one may assume that the Irish, in fixing their rate, took into account that they were excluding laid-off bets.
If one believes, as I do, that, whatever way one imposes these duties, ultimately the way in which the bookmakers will recover the duty is by adjustment of the odds in the same way as they recover an amount sufficient to cover their overheads and profits, then, in a sense, it does not matter whether one has the Irish rate of duty and excludes laid-off bets or has the lower rate of duty and includes laid-off bets. The bookmakers, with heir great experience and skill, will find a way to adjust the odds so as to pass the total burden of the duty, whatever it may be, on to punters as a whole.
Let us take the Amendment and assume, in spite of what I have argued, that the preferable and better way would be to exclude laid-off bets. Even if the Amendment itself were workable—for reasons I shall give in a moment, I think that it is not—it would lead to rebate, as my hon. Friend the Member for Bedfordshire, South (Mr. Gwilym Roberts) pointed out, in only one type of laying off, namely, the laying off where one is able to identify the laid-off bet as passing on the risk of an identifiable bet. This is clear from the terms of the Amendment.
But not all laying off takes that form. As the hon. Member for the Isle of Thanet said—I think it was he who made the point—what the bookmaker does is to lay off his total liability on his book at a given moment. He may not necessarily do this by laying off the liability with a bet on the same race or a particular horse. He may do a hedging bet on a different contingency than the one on which the liability exists which he is seeking—I accept the hon. Gentleman's analogy—to reinsure.
The bookmaker may also in his laying off introduce an element of betting of his own. He may to some extent be betting on his own account, mixing the two things, as it were, a hedging element and a speculative or betting element of his own, in the same bet. This kind of bet would not qualify for rebate under the Amendment.
Again, it would not be possible under the Amendment to grant rebate in the case of the multiple bet to which the hon. Member for the City of Chester referred because the difficulty with the multiple bet is that the laying-off transaction or series of laying-off transactions resulting from a multiple bet may not be undertaken until some of the earlier legs of the multiple transaction have been successful. How, then, is one to relate with sufficient certainty for these fiscal purposes the laid-off bet to the original stakes or to any of the subsequent legs of the transaction?
I shall come to that. I heard what the hon. Gentleman said, but I do not agree with the view there expressed. The hon. Gentleman quoted the example of Ireland, and it seems that people are satisfied with the system there, but, as I pointed out, it has a different effect on the rate.
In our view, this Amendment would not be workable. To try to exercise control over it would require a large addition to the staff and a great increase in the work of verification and checking which would be likely to lead to bad feeling and irritation. Envisaging a case in which bookmaker A laid off with bookmaker B, one has to check that the bet was included in B's own betting duty return and that it was a genuine laid-off bet by A. A very great deal of checking would be necessary for this purpose. Obviously, there would be considerable scope for evasion by bookmakers claiming that bets were laid-off bets though they were not in fact such. I am advised by the commissioners that, in their view—this is our view also—the exemption of laid-off bets was one of the reasons for the failure of the 1926 betting duty.
Both the hon. Member for the Isle of Thanet and the hon. Member for the City of Chester discussed the position of the small bookmaker, saying that he would be particularly hard hit. My first observation on this is that many small bookmakers, as the hon. Member for the Isle of Thanet said, pass on bets to large bookmakers in circumstances in which they are not themselves carrying a risk but are operating on a commission. In those cases, provided that there was a prior agreement with the large bookmaker pursuant to which they pass on the bets in that way, there would be no liability to double duty. They would for this purpose be merely the agents on a bet as between the punter and the large bookmaker, and there would be only one liability.
I can readily follow how this would work in a 100 per cent. agency, but how would it apply in the 50, 70 or 80 per cent. case? How would it be worked out in practice?
I would not like to try to give a specific answer without knowing the details of the particular transaction. Off the cuff, I imagine that, if the true legal position were that, in effect, the bookmaker split a bet which he had taken himself, carrying the risk of one part and separating off another part and passing it on to the main bookmaker, he merely being the agent and taking a commission on this latter part, the duty would be treated separately for the two parts. I imagine that that would be so, but it must depend on the terms of the agreement.
I am trying to follow this, but, as I see it, the position of the small bookmaker is exactly the reverse of what the Financial Secretary has described. The small bookmaker accumulates multiples of very small bets, then passing them on to the big bookmaker. He does not collect a big bet and divide it up, passing on parts to the large bookmaker.
I have created the difficulty which I referred to earlier. If one gives way too much, one is then asked a question on a point to which one is about to come.
I have dealt with the position of the small man who is acting merely as agent. It is then said that our proposals will hit the small bookmaker who receives bets on his own account and then passes them on. But he is not the one liable to the duty on the laid-off bets. It is the large bookmaker who pays the duty on them. This may affect the odds, but it is part of my case that it will do so. The duty on the laid-off bets can, should and will affect the odds, and, when experience builds up, the odds will reflect the liability to duty, including the liability to duty on the laid-off bet.
The hon. and learned Gentleman has introduced the point about agency, which is most important. Is he saying that, if a small bookmaker has an agency agreement all over the country, he can do his hedging without attracting any tax whatever or only tax relative to the proportion of the agency agreement which he has with those other bookmakers?
No, I did not introduce anything. All I did was to answer a point raised by the hon. Member for the Isle of Thanet—I hope that I have answered it satisfactorily—namely, the case of the small bookmaker who does not in fact bet on his own account but who accepts bets as agent for a larger bookmaker with whom he places the bets. He does not stand to lose. I am speaking here of pure agency. He does not stand to lose anything. He just gets a commission on the transaction. It is a matter of pure agency and in such a case there is one bet and one bet only. The Revenue is entitled to only one lot of duty, which it would collect from the large bookmaker with whom the bet is truly placed.
I come next to the case of the large chain of betting shops all under one ownership. They may at the moment, as was said, be split into subsidiaries, but there may well be an incentive now for them to join together again as one company. In such a case, if what they do is, so to call it, laying off within the business, they will not have to pay a second lot of duty on the laid-off bets for the simple reason that they will not be laid-off bets. It is, in fact, a big concern, and it will enjoy one of the advantages of large-scale operation which one hears about in many other fields of economics today. Their position is comparable to the example which the hon. Member for the City of Chester gave of the stockbroking firm transferring a share several times among clients within the same firm. Though not closely analogous, it is a comparable situation. One must look at the reality of the situation, which is that in that case there is not a separate and laid-off bet.
Once again the bogy of the Tote monopoly was raised. I shall not answer that again. It may be referred to many times in our debates. I hope that I have answered it completely and in unequivocal terms. I stand by what I have said and nothing will be gained by repeating it.
The hon. Member for Chelmsford (Mr. St. John-Stevas), who has now left us, raised a further point, saying that the effect would be to reduce the sums available to the Levy Board. This would be so only if it reduced bookmakers' profits, and this will depend upon the skill with which bookmakers pass on the duty. If the conclusion I have suggested is right, that, if we were to accept the Amendment, we would have to change the rate in order to make good the yield, this could have no effect as regards the Levy Board. As the Levy Board has been mentioned, all I say is that we believe—I think that some members of the Levy Board themselves believe this, too—that the general effect of the introduction of this duty, with the supervision and control of bookmaking transactions which will result from it, will be likely to have a beneficial effect on the total amount of the levy.
I accept that this is a substantial matter, but I cannot agree with the hon. and learned Gentleman when he raises a whole lot of technical difficulties as to why the mechanism which I have proposed for hedging bets cannot be operated. I said that Sir William Croft, long after the 1926 legislation had been finished, in his evidence to the Royal Commission said that the introduction of a method of exempting hedging bets presented no difficulty. Equally, it works easily and cheaply and the administration is not difficult in the Irish Republic. If the hon. and learned Gentleman had the will he could certainly find the way to meet us on this issue.
The two most significant points in the debate came from the Labour benches, when both hon. Members speaking from that side said that they wanted to make sure that the small bookmaker was not prejudiced. I am afraid that prejudicing the small bookmaker is just what the result of non-acceptance of the Amendment will be. The Financial Secretary made it perfectly clear that the large chains throughout the country will be able to hedge their bets without attracting any duty. The Financial Secretary made that perfectly clear.
I did not. The large bookmakers do not need to hedge because they are large enough to carry the risk themselves. What the hon. Gentleman is inviting us to do is to interfere in the economics of the bookmaking business by giving compensation to the small bookmaker for the fact that he is small. It is no concern of ours.
The hon. and learned Gentleman is playing with words. I said when I opened the debate that I would not specifically define hedging, but it means spreading the bets which one receives over the rest of the market and for the large chain the whole market is owned within the chain.
I forecast that if the Government go on with this proposal the end may well be that there will be a few small bookmakers in this country acting purely as agents for the large bookmakers, with the result that the large bookmakers will get much larger. They will do away with their subsidiary companies and will form unitary companies throughout the country and will move about all their equalising transactions through the medium of their own organisations. We would regard that as a very unsatisfactory situation.
We regard this provision as unfair generally and particularly unfair for the
|Division No. 22.1||AYES||(7.7 p.m.|
|Alison, Michael (Barkston Ash)||Harvey, Sir Arthur Vere||Nott, John|
|Astor, John||Harvie Anderson, Miss||Osborn, John (Hallam)|
|Barber, Rt. Hn. Anthony||Hawkins, Paul||Peyton, John|
|Batsford, Brian||Heseltine, Michael||Pike, Miss Mervyn|
|Blaker, Peter||Higgins, Terence L.||Pink, R. Bonner|
|Brains, Bernard||Hiley, Joseph||Price, David (Eastleigh)|
|Buck, Antony (Colchester)||Hogg, Rt. Hn. Quintin||Pym, Francis|
|Bullus, Sir Eric||Hordern, Peter||Rees-Davies, W. R.|
|Carlisle, Mark||Howell, David (Guildford)||Roots, William|
|Cary, Sir Robert||Hunt, John||Rossi, Hugh (Hornsey)|
|Chichester-Clark, R.||Iremonger, T. L.||Russell, Sir Ronald|
|Clark, Henry||Jenkin, Patrick (Woodford)||Sharpies, Richard|
|Clegg, Walter||Jennings, J. C. (Burton)||Shaw, Michael (Sc'b'gh & Whitby)|
|Cooke, Robert||Joining, Michael||Sinclair, Sir George|
|Craddock, Sir Beresford (Speithorne)||King, Evelyn (Dorset, S.)||Stodart, Anthony|
|Crouch, David||Legge-Bourke, Sir Harry||Stoddart-Scott, Col. Sir M. (Ripon)|
|Cunningham, Sir Knox||Lloyd, Ian (P'tsm'th, Langstone)||Summers, Sir Spencer|
|Dean, Paul (Somerset, N.)||McAdden, Sir Stephen||Tapsell, Peter|
|Deedes, Rt. Hn. W. F. (Ashford)||MacArthur, Ian||Taylor, Frank (Moss Side)|
|Digby, Simon Wingfield||Maclean, Sir Fitzroy||Temple, John M.|
|Elliott, R. W.(N'c'tle-upon-Tyne,N.)||Macleod, Rt. Hn. lain||Thatcher, Mrs. Margaret|
|Galbraith, Hn. T. G.||Maddan, Martin||Turton, Rt. Hn. R. H.|
|Gibson-Watt, David||Maxwell-Hyslop, R. J.||Vaughan-Morgan, Rt. Hn. Sir John|
|Gilmour, Sir John (Fife, E.)||Maydon, Lt.-Cmdr. S. L. C.||Vickers, Dame Joan|
|Glover, Sir Douglas||Mills, Stratton (Belfast, N.)||Walker, Peter (Worcester)|
|Goodhart, Philip||Miscampbell, Norman||Ward, Dame Irene|
|Grant, Anthony||Monro, Hector||Wills, Sir Gerald (Bridgwater)|
|Griffiths, Eldon (Bury St. Edmunds)||More, Jasper||Wilson, Geoffrey (Truro)|
|Gurden, Harold||Morrison, Charles (Devizes)||Woirige-Gordon, Patrick|
|Hall, John (Wycombe)||Murton, Oscar||Worsley, Marcus|
|Hall-Davis, A. G. F.||Nabarro, Sir Gerald|
|Harris, Frederic (Croydon, N.W.)||Reeve, Airey||TELLERS FOR THE AYES:|
|Mr. Younger and Mr. Eyre.|
|Abse, Leo||Cooke, Robert||Hamilton, James (Bothwell)|
|Anderson, Donald||Cousins, Rt. Hn. Frank||Hamilton, William (Fife, W.)|
|Archer, Peter||Cronin, John||Hannan, William|
|Ashley, Jack||Dalyell, Tam||Hart, Mrs. Judith|
|Atkins, Ronald (Preston, N.)||Davidson, Arthur (Accrington)||Henig, Stanley|
|Atkinson, Norman (Tottenham)||Davidson,James(Aberdeenshire,W.)||Herbison, Rt. Hn. Margaret|
|Barnett, Joel||Davies, Dr. Ernest (Stretford)||Hilton, W. S.|
|Beaney, Alan||Davies, Harold (Leek)||Hooley, Frank|
|Benn, Rt. Hn. Anthony Wedgwood||Davies, Robert (Cambridge)||Horner, John|
|Bennett, James (G'gow, Bridgeton)||Dewar, Donald||Houghton, Rt. Hn. Douglas|
|Bessell Peter||Diamond, Rt. Hn. John||Howarth, Harry (Wellingborough)|
|Bishop, E. S.||Dickens, James||Howie, W.|
|Blackburn, F.||Dolg, Peter||Hughes, Rt. Hn. Cledwyn (Anglesey)|
|Boardman, H.||Dunnett, Jack||Hughes, Emrys (Ayrshire, S.)|
|Booth, Albert||Dunwoody, Mrs. Gwyneth (Exeter)||Hughes, Hector (Aberdeen, N.)|
|Bowden, Rt. Hn. Herbert||Dunwoody, Dr. John (F'th & C'b'e)||Hughes, Roy (Newport)|
|Bray, Dr. Jeremy||Edwards, William (Merioneth)||Janner, Sir Barnett|
|Brooks, Edwin||Ellis, John||Jenkins, Hugh (Putney)|
|Brown, Hugh D. (G'gow, Provan)||Evans, Albert (Islington, S.W.)||Jenkins, Rt. Hn. Roy (Stechford)|
|Brown,Bob(N'c'tle-upon-Tyne, W.)||Faulds, Andrew||Johnson, Carol (Lewisham, S.)|
|Buchanan, Richard (G'gow, Sp'burn)||Finch, Harold||Johnston, Russell (Inverness)|
|Butler, Herbert (Hackney, C.)||Fletcher, Raymond (Ilkeston)||Jones,Rt.Hn.Sir Elwyn(W.Ham,S.)|
|Callaghan, Rt. Hn. James||Fletcher, Ted (Darlington)||Judd, Frank|
|Cant, R. B.||Floud, Bernard||Kelley, Richard|
|Carmichael, Neil||Foley, Maurice||Kenyon, Clifford|
|Carter-Jones, Lewis||Forrester, John||Lee, John (Reading)|
|Castle, Rt. Hn. Barbara||Fowler, Gerry||Lestor, Miss Joan|
|Chapman, Donald||Gardner, A. J.||Lever, L. M. (Ardwick)|
|Coe, Denis||Gregory, Arnold||Lomas, Kenneth|
|Coleman, Donald||Griffiths, Rt. Hn. James (Llanelly)||Luard, Evan|
|Concannon, J. D.||Griffiths, Will (Exchange)||Lubbock, Eric|
|Conlan, Bernard||Grimond, Rt. Hn. J.||Lyon, Alexander W. (York)|
|Hale, Leslie (Oldham, W.)||Lyons, Edward (Bradford, E.)|
|Mabon, Dr. J. Dickson||Owen, Dr. David (Plymouth, S'tn)||Steele, Thomas (Dunbartonshire, W.)|
|McBride, Neil||Paget, R. T.||Stonehouse, John|
|MacColl, James||Pannell, Rt. Hn. Charles||Swingler, Stephen|
|MacDermot, Niall||Pardoe, J.||Symonds, J. B.|
|Macdonald, A. H.||Pearson, Arthur (Pontypridd)||Thomas, Iorwerth (Rhondda, W.)|
|McGuire, Michael||Peart, Rt. Fin. Fred||Tuck, Raphael|
|Mackenzie,Alasdair(Ross&Crom'ty)||Pentland, Norman||Varley, Eric G.|
|Mackenzie, Gregor (Rutherglen)||Perry, Ernest G. (Battersea, S.)||Wainwright, Edwin (Deanne Valley)|
|Mackie, John||Perry, George H. (Nottingham, S.)||Wainwright, Richard (Colne Valley)|
|Maclennan, Robert||Price, Thomas (Westhoughton)||Walden, Brian (All Saints)|
|McNamara, J. Kevin||Price, William (Rugby)||Walker, Harold (Doncaster)|
|MacPherson, Malcolm||Probert, Arthur||Wallace, George|
|Mahon, Peter (Preston, S.)||Rankin, John||Watkins, David (Consett)|
|Mahon, Simon (Bootle)||Richard, Ivor||Wellbeloved, James|
|Mapp, Charles||Roberts, Gwilym (Bedfordshire, S.)||Whitaker, Ben|
|Marquand, David||Robinson, W. O. J. (Walth'stow, E.)||White, Mrs. Eirene|
|Mellish, Robert||Rose, Paul||Whitlock, William|
|Mendelson, J. J.||Ross, Rt. Hn. William||Willey, Rt. Hn. Frederick|
|Millan, Bruce||Rowland, Christopher (Meriden)||Williams, Alan (Swansea, W.)|
|Miller, Dr. M. S.||Rowlands, E. (Cardiff, N.)||Williams, Alan Lee (Hornchurch)|
|Mitchell, R. C. (S'th'pton, Test)||Ryan, John||Williams, Clifford (Abertillery)|
|Morgan, Elysian (Cardiganshire)||Sheldon, Robert||Willis, George (Edinburgh, E.)|
|Murray, Albert||Shore, Peter (Stepney)||Winnick, David|
|Noel-Baker,Rt.Hn.Philip(Derby,S.)||Silverman, Sydney (Nelson)||Winstanley, Dr. M. P.|
|Oakes, Gordon||Slater, Joseph|
|Ogden, Eric||Small, William||TELLERS FOR THE NOES:|
|O'Malley, Brian||Spriggs, Leslie||Mr. Lawson and Mr. Harper.|
|Oswald, Thomas||Steel, David (Roxburgh)|
I beg to move Amendment No. 129, in page 13, line 3, to leave out subsection (4).
My hon. Friend the Member for Shipley (Mr. Hirst) said on Second Reading that he found this subsection entirely incomprehensible, and I dare say that that is why he has added his name to mine to the Amendment to delete it. This is a probing Amendment. I think that the subsection concerns itself with what we can call "any to come" bets.
The proposition which it puts forward is that if one makes a bet, a single or Double or triple bet, or an accumulator, in which the succession of events is automatic, only one lot of duty is levied, leaving out the hedging point with which we have dealt. When the winnings are hazarded on other contingencies, that is say, if someone bets £1 on horse A, any to come, £2 on horse B, if he wins on the first, in effect he is subsequently Petting with the bookmaker's money and understand that it is proposed to levy tax on those additional any to come bets at each series of a man's instructions to s bookie.
I do not propose to invite the Committee to divide on the Amendment, but what concerns me is that this is the small man's favourite type of bet. He likes it very much and sometimes the stakes are amazingly small—6d. on something, any to come on something else. The "bookies" do not like it. Working out 6d. any to come on a 13 to 8 dead-heat is not a very easy calculation.
Might it not be—I put it no higher than that—that if the Financial Secretary insists on the new duty at every stage of these bets, which are basically the small man's bets, introducing this complexity at every leg of the transaction, the bookmakers who already find these bets fairly tiresome will prohibit them in the "bookies'" rules? If that happened may it not be that the Financial Secretary gets less money than he had bargained for and an entirely harmless activity of the small bettor would be curtailed? I simply raise this as a probing Amendment to say that I see some danger in subsection (4) in that a method of betting which seems to be entirely harmless may be prohibited by bookmakers' rules.
I remember the strictures of the hon. Gentleman the Member for Shipley (Mr. Hirst) about the wording of this subsection. I did not agree with him because I thought that this was a singularly clear subsection. I am sure that its purport has now been clearly explained to him by the right hon. Gentleman the Member for Enfield, West (Mr. Iain Macleod), as he has explained it to the Committee.
There is a clear distinction between multiple bets which are true accumulators, such as the double and treble variety, and those which are of the any-to-come variety. This distinction should be reflected in their liability to the duty. Under the true accumulator the whole of the winnings on the first leg of the bet must be restaked and the result is that there can only be a pay-out on one win—the final win in the double, treble or whatever the series may be, although the earlier wins are a precondition for payment.
On these other multiple bets the punter is liable to win something at each stage, irrespective of what happens subsequently. He can have winnings paid out on each leg of the bet, and he is only restaking, usually, part of his winnings on the earlier legs. It is, therefore, right to regard it as what it is, a separate bet for subsequent stages of such a transaction.
I would not agree that a punter is betting with the bookmaker's money. He is betting with his own money, held to his account by the bookmaker, and this is a reason why we have made this discrimination. It is also necessary for a Bill of this kind to lay down a quite clear definition of what is meant by a bet. We could define it so that this kind of bet was regarded as one bet but we did not. The whole Committee will agree, I think, that a clear definition is needed, otherwise there will be endless cases, no doubt in time wending their way to the House of Lords to decide whether or not an "up and down," a "double stakes about," "rounders" and the rest of them were one bet or many bets.
If we had not done this it would reduce the yield, but it would also provide a large loophole for evasion by credit bookmakers. Obviously, they would have an opportunity to present a considerable amount of their business as comprising mainly any-to-come bets when they were not of that kind. This would considerably weaken the control.
The right hon. Gentleman asked me whether we thought that the effect of this would be to make bookmakers more reluctant to agree to take this kind of bet. I should have thought that this is unlikely. I have taken the trouble to work out what the liability to the duty would be on many of these accumulator type of bets. The liability of the bookmaker was not very great. It would depend in each case of course what happens during the earlier legs. If there is only the first leg, the bookmaker only pays out on the first stage. Even if one follows it through, I do not think that the liability for duty on the punter's stakes would be such as to be likely to lead to the abolition of this kind of betting.
I will not weary the Committee with long details. I see that the hon. Member for Worcester (Mr. Peter Walker) looks surprised. Perhaps he wants me to repeat some of my performances of last year. I can assure the right hon. Gentleman that I will gladly go into the figures with him afterwards, if he so wishes.
I think that we should have a short debate on the Clause before we part from it, largely for the reasons that I gave earlier—because this is a new tax and because the House of Commons once made a most serious mistake, which we are anxious not to repeat.
I would like to make one point clear about the money to be raised. I am not suggesting that the Chancellor should raise less money than the El 1 million proposed. As the Financial Secretary knows, there are two other methods which I prefer to the ones which he has adopted.
My attitude now is the attitude of the Permanent Secretary who said to his Minister, "Minister, if you must do this darned silly thing, at least do not do it in this darned silly way." It is to this end that we have been bending our efforts during the afternoon. I hope that the Chancellor will look at this again. I would far rather he took a slightly higher percentage: three, for various reasons, would be extremely awkward to calculate, but 3⅓ would not. I would rather that he took 3⅓ and conceded some of the points on hedging bets and any to come bets, and so on, which we have been putting in front of the Committee, with some occasional sympathy at least from his side of the Committee.
I am not arguing about the amount of money that could be raised. One thing which we have learned in recent years is that in what I call loosely the field of personal and social behaviour we have often ended up, as a result of legislation, with a result utterly different from that which, in all goodwill, we intended. Both sides of the House are guilty in this. I remember that Mr. Winston Churchill, as he then was, said when he introduced this tax in 1926, that he was not looking for trouble, he was looking for revenue. I understand that to be the attitude of the present Chancellor, and that is fair enough.
I also remember the phrase that Mr. Churchill used when the tax failed. He said that it had failed because of the volatile and elusive nature of the betting population. Even with betting shops and the results of legalised betting, I do not think that the elusive and volatile nature of the betting population has changed all that much in these 40 years.
We have had an extremely good discussion and this is an expression of my own personal philosophy in this subject. I like as few rules as possible in the sphere of personal and social behaviour. In general, I am an abolitionist of censorship and almost everything else, but I am very conscious that when we have dealt with things like gaming, and sometimes when we have dealt with things like Sunday observance and the Street Offences Act, we have legislated with great solemnity in the House and ended up, because of human nature in all its various forms, with quite a different end product.
I want to spend a couple of minutes saying why I think the Chancellor is wrong. I do not think that he is wrong to tax gaming; I think that gaming should be taxed very heavily indeed, and more severely than the Chancellor proposes. Thus, money does not come into the argument. I am much less convinced about a tax on betting. Attendances at the racecourses have been decreasing and there is little doubt that a tax on that form of betting, unless it is devised in such a way that it is acceptable by the people at large, as the 1926–1929 taxation was not, may, as always happens to a tax held in ill-regard by people, open up once more, in a very different way, the door to illegal and what I might call amateur practices.
It is worth glancing back 40 years. Mr. Churchill estimated that the yield from the tax would be £6 million. In fact, it operated only in two complete years. In 1927–28, he got £21 million and in 1928–29 he got £21 million. This was little more than one-third of what he was budgeting for. The costs of collection were admittedly very high. Just how high they were has not been revealed, as far as I know, which makes me suspect that they were very high indeed. The Commissioners of Customs and Excise were extremely "cagey" about this matter in their evidence to the Royal Commission in 1950. They said that, apart from a large staff of their own, they had 19 ex-police officers carrying out their duties on the course and 200 operating off the course.
One of the consequences of the Government's proposal is that the Customs and Excise will—I make no complaint about this; it will be part of its duty, but not a particularly attractive part—act as agent provocateur. It happens this way in Ireland. If the Financial Secretary will consult last month's issue of a publication called "The Licensed Bookmaker" he will find an account of how it is done there.
I think that the difference between the right hon. Gentleman and I is purely one of terminology. "Agent provocateur" has a specific meaning, which is that the agent is seeking to provoke someone to break the law. That is an entirely different thing from a test bet.
I apologise. It was not the right phrase to use. I meant that test bets will be put in one way or another through the bookmaker's account, either on their own behalf or they will get somebody to do it. "Agent provocateur" was a loose form of words. I did not mean the phrase in that sense. I have a great admiration for the Customs and Excise officials. I will simply regard it as their duty in carrying out the provisions of the Clause.
There was a failure of intent by Parliament 40 years ago. I have given the yield, which was dramatically different from the estimates made. Since then, every Chancellor of the Exchequer has looked longingly almost every year at betting to see whether he could draw something from it. Perhaps the new incidence of casino gaming and, in particular, the introduction of the betting shop were the things which made the present Chancellor of the Exchequer decide that it was opportune to do something about the matter. I do not deny that it may be opportune, but I have consistently argued—and perhaps I may be forgiven for making this point again—an entirely different case from the one which the Bookmakers' Protection Association wished to argue.
I have consistently argued that the method selected by the Government is the worst possible method. I believe that it will encourage illegal betting. The argument that the position has changed because of betting shops and licensed betting offices ignores the fact that the real danger of evasion of duty lies not with the licensed bookmaker, for whom it would rightly mean the loss of his permit, but with the amateur bookmaker, operating without a permit, who operates to the detriment of racing. There is already difficulty in collecting the appropriate amounts for the levy, and I cannot but think that this tax will make it worse.
As is well known, my first method would mean rewriting the whole of this part of the Bill and, therefore, it is not a right method to adopt. We have left our other proposal on the Notice Paper to indicate that we would prefer a simpler method, which is the method on returns. This is outside the terms of the Budget Resolution and, therefore, cannot be discussed except in passing.
I am grateful to the Financial Secretary for the extremely clear answers he has given on this Clause and the way in which he has dealt with the points we have raised. I remain convinced that the Government have not done the wrong thing in taxing betting, but selected the worst possible method which will do damage to racing. We shall make 40 years afterwards the mistake which was made in 1926. Therefore, I advise my right hon. and hon. Friends to oppose the Clause.
My hon. Friend the Member for Worcestershire, South (Sir G. Nabarro) rightly said that he and I joined forces together on several occasions in the past in favour of a general betting duty. Where I part company from him is that I never joined him in his advocacy of a turnover tax on betting. That was his own suggestion. I did not join him in it. But I supported the idea of a general betting duty.
My support for the idea of a general betting duty does not mean that I have necessarily got to give support to any particular form of betting duty. It is this particular form of betting duty with which I disagree. I am fortified in my disagreement by the fact that, together with my hon. Friend the Member for the City of Chester (Mr. Temple), I served on the Committee on the Betting and Gaming Bill and listened to assurances given by Conservative Ministers, although, of course, on the advice of those whose duty it was to advise them, that under the terms of that Bill it would be impossible for commercial gaming and casinos to operate. But in fact they have done so.
This leads me to cast doubt on whether the assurances on which the Financial Secretary, I am sure honestly, relies will be borne out in the light of experience and to wonder whether my right hon. Friend the Member for Enfield, West (Mr. Iain Macleod) is nearer the truth when he says that, in spite of all these protestations and assurances, we will bring in a considerable evil by reintroducing illegal betting in order to escape what is being proposed in the Clause which is against the best interests of the community.
I repeat that I am entirely in favour of a general betting duty which is sensibly and properly applied on the lines advocated by my right hon. Friend the Member for Enfield, West. I am sure that he is right. This is not a matter of party political faith. All of us have views about how betting should be taxed. But, irrespective of on which side of the Committee we sit, if we feel that this method is wrong—and I sincerely believe that it is—we should argue and vote against it. I hope that when the time comes my hon. Friends and hon. Members opposite, if they share the views which we hold, will take the line that we must have a general betting duty but that this is the wrong form of betting duty.
When we were considering the Betting and Gaming Bill some years ago, many hon. Members said that they knew nothing about betting and gaming but proceeded to advise the Committee on how it should conduct its affairs. The results of that experience should deter us a little. If we have in this Committee people who know a little bit about the matter, should not we be guided by their practical experience? I do not doubt that the Customs and Excise have had long and protracted negotiations with, and made inquiries of, bodies interested in betting and gaming. Nevertheless, it sometimes happens that those of us who are not involved in the technical side of it know a little about the practical side of it.
The hon. Gentleman is rather trailing his coat, because I happened to be a member of the Betting and Gaming Committee in 1957 myself, with the hon. Gentleman. It is quite true that many of us who had serious doubts on moral grounds about the issues involved made strong protestations and voted against many of the proposals of the Government of the day. It is not right to suggest that because some of us who were not exactly naive but never claimed any professional knowledge of gaming made those criticisms the expert knowledge on which the Bill was based was entirely wrong. The evils of casinos and similar establishments were the result of bad technical advice tendered to the Government of the day and the action of the Conservative Government in accepting it.
The hon. Gentleman has misunderstood me. I am not attacking him at all. I remember distinctly how on many occasions he voted against proposals in that Bill, as I did myself.
This is not a matter of party faith. If one is convinced, as I am, that it is the wrong way to do it, we ought to examine it more carfully before enshrining it in an Act which may involve us in a repetition of some of the evils which have occurred in earlier gaming and betting legislation. I hope that my hon. Friends will vote against the Clause, not against a general betting duty, but against the way that it is proposed to be levied under the Clause.
Some hon. Members may recall that I moved an Amendment to the Finance Bill last year on behalf of myself and my right hon. and hon. Friends which sought to include a betting tax in the section on the Capital Gains Tax. Perhaps rightly, that method of taxing gambling was rejected by the Government. On reflection I feel the system which we suggested might have been cumbersome, and I am satisfied that the method proposed in Clause 11 is the best compromise we are likely to get. Therefore, on behalf of those of us who sit on this bench, I welcome the Clause.
I should have liked very much to have had the opportunity of taking up some of the points raised last year by the hon. Member for Manchester, Cheetham (Mr. Harold Lever), who, unfortunately, is not in his place. As I have not given him notice, I cannot very well challenge him on them. He, like a number of hon. Members on the Government benches and a great many hon. Members on this side of the Committee on the Conservative benches, rejected the principle of a gambling tax with considerable force.
I recall that I and my right hon. and hon. Friends on this bench were held to ridicule for suggesting that it was a proper kind of tax to be imposed by the Government. When the learned Solicitor-General replied to me, he pointed out that a tax on gambling would be very difficult because no provision would be made for losses. He said:
Apparently, this caused the hon. Member for Bodmin no difficulty. He said that no allowance would be made for losses. That, I submit, would be a rather novel principle to introduce into our tax law. We cannot take account of gains, but take no account of losses."—[OFFICIAL REPORT, 27th May, 1965: Vol. 713, c. 901.]
In the present proposals of the Government, I have been unable to discover that there is any provision for relief in the case of losses. I wish that the learned Solicitor-General were here, because I would like to remind him of some words of his father, the late Isaac Foot, who once represented the Bodmin constituency in the House. They were:
The Labour Party: leave them alone, and they'll come home, bringing their tails behind them.
I am glad to see that they have once more learned wisdom from the Liberals.
It would be right and fair to add that the Committee, the House of Commons and the country owe a very special debt to the hon. Member for Worcestershire, South (Sir G. Nabarro). I was hoping that he might have been called before I was, because I hoped that he would not quote in full the speech which he made here in April, 1963. I should have liked to have the opportunity of quoting some of the parts of it which he may omit. He has pioneered the question of a gambling tax, and I am sure that he has not only had the support of many people in the House of Commons, but that of a very wide and representative body of public opinion throughout the nation.
It has always seemed to me incredible that, while of necessity we must tax many vital goods and services in order that the Exchequer shall obtain the revenue to provide the nation with the Government services which are essential to its smooth conduct, gambling should almost entirely escape any form of taxation. I know that the last Conservative Government made a stab at it, but it was not a sufficiently effective one.
The measure proposed under Clause 11 is a real step forward and one which will be welcomed, even though it will be unpopular in some quarters. Where it is unpopular, the people concerned are not particularly relevant. In the last analysis, we are concerned as a nation that there shall be equity in taxation, and we are concerned as a Committee of the House of Commons that the Finance Bill shall provide as much equity as possible. I cannot believe that we can continue to ignore the amount of money which is spent on gambling each year and not seek to find some way whereby the Treasury and the nation as a whole may benefit. Anyone who suggest otherwise is irresponsible and, more than that, it is something which would be condemned by any fair-minded or sensible person.
The right hon. Member for Enfield, West (Mr. Iain Macleod), who has shown an expertise on the subject which has left most of us gasping with admiration, seemed to cast some doubt on the figures which are provided by the Churches Council on Gambling. I am at a loss to understand why he should do that. After all, the Council concerned is not an ad hoc body. It is regarded by most authorities as a responsible body. It has gone to an enormous amount of trouble to provide accurate figures, and it has always sought to understate its case. There is no instance of any of its annual reports giving a figure which it believes to be the full amount. It always cuts it down as far as it is able to, and it usually adds a footnote, as it did in its Report for 1965, to the effect that the turnover may be considerably in excess of the figure which it quotes.
The figure which it quotes for 1965 is £915 million, and, unless the right hon. Gentleman can produce conclusive evidence that that figure is erroneous or deceptive, then we can do no better as a Committee than accept it and work on that basis.
Assuming for a moment that the right hon. Gentleman is right and that the figure is substantially less, what is the figure? Let us suppose it is as low as £100 million. We know that it is substantially more, but it would still be quite wrong that even that figure, spent on gambling, should be ignored by the Exchequer for purposes of taxation. Therefore, I am certain that the Government have taken a correct step on this occasion and have introduced a Clause to the Finance Bill which can be only equitable and fair.
I have some slight reservations on the Clause itself. I had not sought to intervene on the Amendments—there has not been an appropriate one for the purpose—but I ask the Financial Secretary to look carefully at the Clause and to see whether he agrees with me that there could be a danger of the small bookmaker suffering to the benefit of the large combines and the larger bookmaking institutions and companies. This is important, not because I have any vested interest in the profession of bookmaking—I hasten to add that, otherwise my Nonconformist vote in Bodmin will have gone for ever—but because I believe that in fairness we should consider the position of the small man in relation to the large company.
It has been suggested to me that the Clause may provide favourably for the larger bookmaker and cause difficulties to the smaller bookmaker. I will not elaborate on that or waste time by further explanation, but I should like an assurance from the Financial Secretary that he will consider the Clause in regard to that consideration. Perhaps we may hear from him further about that and, if necessary, possibly the hon. and learned Gentleman will undertake to introduce an Amendment before Report.
We on this bench give a cordial welcome to the Clause. We do not give it on the grounds which it was suggested last year were behind our Amendment on the Capital Gains Tax Clauses in the 1965 Finance Bill, namely, that the Liberal Party views all matters of this sort from the somewhat narrow confines of its Nonconformist conscience.
As for my right hon. and hon. Friends on this bench, I think I am right in saying that my hon. Friend the Member for Colne Valley (Mr. Richard Wainwright) is the only hon. Member apart from myself who would claim a close link with our Nonconformist Churches. Therefore, the Liberal Party in the House of Commons today is more representative than perhaps it once was of all sides of opinion.
We welcome the Clause, not on any moral grounds, not on any particularly narrow, grounds of religious belief, but because we feel that it is wholly wrong that in a country which is heavily taxed, as indeed it must be, where people are having to expend a great deal of their earnings in taxation of one form or another, the punter, however innocent or otherwise his sport might be, should not be equally subject to some form of taxation which will be of benefit to the nation as a whole. We from this bench give a cordial welcome to the Clause.
Since I felt constrained a few moments ago to make a short comment while the hon. Member for Southend, East (Sir S. McAdden) was speaking, perhaps I might be allowed for a few moments to expand my feelings about this matter without unduly wasting the time of the Committee.
I took an active part in our betting and gaming debates nine years or so ago and I was all the time in opposition to this kind of thing, not only on grounds of practicability, but on moral and ethical principles, also, on which I hold particularly strong views.
I do not hold those views in the belief that Parliament, by fiscal or legislative measures, can prevent the passion for gambling which is so prevalent in our society—I am not as foolish or naive as to suppose that we can do that—but I think seriously that in bringing forward this proposal, with whatever defects might be revealed in critical discussion, the Government are beginning to take an interest in this subject in a practical way which may have fiscal benefit for the nation.
I can never understand the line of argument which puts forward the thesis that because gambling is a particularly difficult and intricate business, a sort of mysterious world inhabited by bookmakers and professional backers and punters, the State should throw up its hands in despair and refuse to tax it at all.
I was grateful to the right hon. Member for Enfield, West (Mr. Iain Macleod), who spoke critically about the Clause, for at least acknowledging from the Opposition Front Bench that in the present economic state of the country we in the House of Commons are entitled to require the tremendous revenue which is produced in betting and gaming to make a contribution to the revenues of the State. In that, I strongly support my right hon. Friends who have brought forward this proposal.
My astonishment is not in the principle itself, but in the very modesty of the proposal. When one considers the tremendous revenues which are already raised from the orthodox sources of revenue—spirits. wines, tobacco and all the other things which are to a large extent wholly occupied by the needs of the Revenue—and compares this proposal of 2½ per cent. on a business which, on some estimates, which have been challenged by the right hon. Member for Enfield, West, produces £900 million a year, I am astonished that my right hon. Friends at the Treasury have made this very modest proposal of 2½ per cent.
I fully appreciate the force of that argument. Would not the hon. Member agree, however, that there is a grave danger from the viewpoint which he is arguing that this tax gives the Treasury a vested interest in the continuance of gambling and that if one considers the experience with the tobacco tax the Treasury could not get on without it, whatever may be proved about the effect of tobacco on health? Is this not a serious danger which should be considered when supporting this new tax?
Yes; I appreciate the point. It is a valid argument. It applies with even greater force to the proposals of the French Parliament when, some years ago, it levied a tax on the maison tolerée. One might say that something which is frowned upon or disapproved by certain members of our society on moral, religious or ethical grounds, might involve the State in a shareholding in that particular form of vice as it appears to certain people.
I am not quite as simple as that. Many people hold particularly strong views about the evils of drink, for example—and the evils of strong drink are patent to everybody who likes to look at the state of the country today, particularly the excessive use of strong drink. But if, since many people hold those views, revenue were to be lost because we abolished the tax on strong drink, all the virtuous people who hold the extreme view that the State should gain no benefit from these evils would have to pay possibly double the amount of Income Tax which they are paying today. This, therefore, is a difficult line of country, but I accept the point made by the hon. Member.
I do not want to develop this matter unduly except, perhaps, to refer legitimately to the point raised by the right hon. Member for Enfield, West. The right hon. Member said that if this tax was ineffective, if its machinery was inadequate to deal with the collection which is envisaged by the Clause, a good deal of betting which is now legitimately permitted under the law through betting offices and licensed bookmakers might go underground. That is a valid argument and I accept it.
I was in the House of Commons when we had the long debates on the Street Offences Bill, when the point was raised from various parts of the House that prostitution would be driven underground. That has happened. This is known to every social observer of any competence since the Bill was passed. That is what may be happening with betting. In many of the clubs which we, in our unwisdom, have by legislation licensed, we have provided not only an anti-social instrument in the hands of people who operate it for commercial gain, but also a refuge for the people who previously operated prostitution on the streets when it has now gone underground.
I mention this, I hope, with due regard to the needs of the Treasury to raise new revenue. Nevertheless, the first thing that ought to be apparent to the Committee in settling this matter as a basis for future taxation of a much heavier rate than anything envisaged in the Bill is that if we are to proceed with this, we do so on the assumption that if the Treasury, in its wisdom and on competent professional advice and after adequate debate in Parliament, has decided to adopt a certain line of legislation and to levy a tax of 2½ per cent. on bookmakers, it is not the business of the House of Commons to advise the bookmakers how to meet that requirement.
If the Chancellor decides to increase my Income Tax—I hypothecate myself as a suitable instance—by 1 s. in the £, or some other figure, the Treasury does not advise me how I readjust my personal affairs to meet the new liability which I have to meet. It is quite superfluous for the House of Commons, and for the Financial Secretary, in particular, who has addressed the Committee with great charm for the last couple of hours about these intricate matters, to spend our time here discussing all kinds of alternative means by which the bookmakers may be entitled or empowered to meet their liabilities. That is a matter for them.
I approach this question quite rationally and not unreasonably. I want there to be reasonable equity in it. It is, however, surely no business of this Committee to tell the bookmakers how they will provide 2½ per cent. on turnover or some other notional figure. They will adjust their busines all right. They have done so in the past. Taxes are already levelled on certain forms of gambling.
Every time this matter comes before us, we are all, regardless of our party affiliations, completely engulfed by masses of propaganda poured out by public relations officers and all kinds of inspired sources who tell us, and try to "frighten the daylight" out of us, how difficult and immoral it will be if we do this. That is what happens with a little, modest proposal for 2½ per cent. What would happen if the proposal were for 10 per cent., which, in relation to the tax on whisky, would still be very modest?
I am shocked and disturbed by the spectacle of my right hon. Friends, who have the advantage of professional advice in the Treasury and elsewhere in Government Departments, coming here and arguing for hours about how the bookmakers are to find this miserable 2½ per cent. Let Parliament decide to levy this tax and they will soon provide the machinery by which it can be done.
I share the hon. Member's view that the amount of the proposed tax is too little. Would not the hon. Gentleman agree that the proposal made in 1963 by the hon. Member for Worcestershire, South (Sir G. Nabarro) was a very sensible one, namely, 2d. in the Is.?
That might be a simpler way of doing it—I do not know. However, the hon. Member for Worcestershire, South (Sir G. Nabarro) is quite capable of looking after himself, without any special pleading from me.
The hon. Member must not presume too much upon my good nature. He must not stand up automatically and think that I shall sit down immediately. In any event, I have nearly finished.
I support this tax although I consider it inadequate. If any of my constituents complain to me about my having supported it I think that I know how I will deal with the matter. I will certainly not run away from their complaints or apologise for the support I have given this tax. I wish that it were larger. I hope that it will not drive this form of activity underground. If the hon. Member for Worcestershire, South now wishes to intervene I will allow him to do so.
I feel inclined to resume my seat right away, particularly when I see the attractive carnation being worn by my hon. Friend the Member for Worcestershire, South (Sir G. Nabarro) who, I have no doubt, will he fortunate enough to catch your eye later, Sir Eric.
I shall be brief. My main object is to persuade the Government to look at this whole matter again. It really boils down to another saying of Mark Twain, to whom I referred earlier this afternoon. I recall that he gave the advice to statesmen that they should concern themselves with administration and get that right and not concern themselves with the moral principles of the matter.
The Committee has accepted that there shall be a betting tax. The hon. Member for Westhoughton (Mr. J. T. Price) rightly said that for a long time the whole House has been agreed that there should be such a tax. My hon. Friend, who was then the hon. Member for Kidderminster, put forward a turnover tax and it is now three years since I advocated to my right hon. Friend the Member for Barnet (Mr. Maudling) at the Treasury, in all its glory at the time, that there should be a betting office licence tax, a tax related to telephones and a pitch tax.
All those methods having been suggested but nobody has yet satisfactorily said why we cannot have a betting office licence—which the Sporting Life has made plain would be acceptable to the bookmakers—at say, £30 a week, a tax which would not cost a penny to collect. I have not yet heard how much that would provide to the Revenue. If every betting office licence paid £1,500 a year basic, what would that be worth to the Government? That is not to say that the bigger betting offices would not pay more if, say, their rateable values were higher, or if some other arrangement applied.
It is plain that every S.P. office depends on its telephones. The number of telephones will tell one the nature of the business of the premises. Therefore, if one introduced a tax on those telephones the resultant money could be collected without the difficulties and dangers to which I shall refer.
It is no good saying that the Government's proposals are just as good in practice. It is true that horse racing is different from dog racing and that Folkestone racecourse is different from Ascot racecourse. But if the Revenue goes as an ordinary individual to a racecourse manager and says, "We expect to receive from Ascot so many thousands of pounds a day from the pitches and so many hundreds of pounds a day from Folkestone. You can then decide the value of the pitches in each ring", the money would then come to the Treasury without a penny being spent. The reason I am so definite in stating this is that all the dangers of doing otherwise would thus be avoided.
As I pointed out last May:
A tax of 2½ per cent. upon the stake money of every punter in this country will have a first effect of leading to substantial evasion, a great deal of crime and growing illegal betting. The purpose for which the tax is introduced on betting will be set aside. Furthermore, the tax system is impracticable because the bookmakers who are not honest—and some of them are not—will not only evade the tax but will put the punter's money to their own benefit. The great majority of bookmakers who are perfectly honest, will pay the tax. Thus, those who are dishonest will reap the benefit of their dishonesty."—[OFFICIAL REPORT, 3rd May, 1966; Vol. 727, c. 1480.]
I believe that, in the end, the Commissioners of Inland Revenue will go to the major bookmakers and make a provisional assessment of what they expect to get from them. That will have to be guesswork, because nobody will collect the small amounts on the course. I was right when I gave the example that the average bet of £1 will mean the punter being paid out his winnings on 19s. 6d. This shows that the Government's system will not work. It will not pay, because it will be impossible to collect. There will be a provisional assessment on anticipated turnover.
It will be seen that this is grossly unfair because the Bill states that a 2½ per cent. tax shall be collected on the stakes. We will, therefore, be setting into motion an Act of Parliament which will not be truthfully and faithfully interpreted, and that is bad from the point of view of the law, and it is undesirable to build up a practice of that sort.
In saying that, the hon. Gentleman is really going back to the situation which existed before the Betting and Gaming Act was passed, when there was a great deal of undercover betting. Was it not a fact that the practice of the Treasury was to make an arbitrary assessment of bookmakers' takings and saying, "If you do not accept this assessment of £10,000 a year or, whatever the sum might be, you must produce your books to show that it is wrong." Was that a bad principle or would the hon. Gentleman consider that it should apply to the present situation?
It is correct to say that illegal street bookmakers paid Income Tax. They were assessed on the anticipated turnover of their illegal moneys. I always thought that that system was grossly unsatisfactory. When one provides in an Act that the Exchequer will collect a punters' tax—because that is what it is—it is wrong that it should end up in the way the hon. Gentleman described, and that is what will happen in the end.
To begin with, there will have to be substantial staff increases in the Customs. Has an estimate been made of the additional staff which will be required? Have the Government realised that on the course and within betting offices throughout the country these provisions will have to be supervised? And what about the duties of the police? Will this be carried out entirely by the Customs, or will the Home Office enter into the picture? That Department will have to come into it because the real, final deterrent is the loss of the betting office licence. When it reaches that stage the Customs will have to go to the police.
Frankly, I do not believe that the House of Commons wants the police to be involved in the enforcement of betting duties once more, remembering the trouble we went to to cure the situation on the last occasion. In this connection, what about the strike off? Will we be faced with proceedings to strike off bookmakers in our efforts to ensure that they pay the duty?
One can have a turnover tax, a tax on winnings or whatever else might be suggested. But, whatever system one uses, one must end up with exactly what the Royal Commission said in its 1951 Report: that the estimate on the yield proved to be false, that the cost to the Administration proved to be much higher than was thought to be the case and that the system brought about illegal betting and set up amateur bookmakers. That happened before. Do not let us allow it to happen again.
There are some hon. Members who have not inconsiderable experience in this sphere. It is from that experience that we are giving advice to the Government which we hope will guide them. I hope that between now and Report they will consider the immediate introduction of a straightforward tax from the pitch point of view, for the cash betting office. We have not tabled Amendments to this effect because such amendments are not easy to draft. The Treasury should realise that, whether or not this year the same amount of revenue would be raised, such a system would work and the Revenue would be bound to get its money immediately.
It would be much easier to call on the racecourse authorities and betting fraternity to pay a flat-rate tax, which would not cause all the difficulties I have described, than to institute a tax similar to the 1926 one in the hope that, by the powers of enforcement, the Government will he able to get away with it. They may, but it is unlikely that they will. Far better for them to use a simpler method, an easier method, one which is easier to enforce, easy to collect and which my hon. Friends and I would infinitely prefer.
I will follow the lead of my right hon. Friend the Member for Enfield, West (Mr. Iain Macleod) and be brief because I realise that we must make progress with the Bill. I have always supported the idea of a betting tax. It may seem amazing from my point of view—and I say that with a certain amount of vested interest because like so many people, I like to have a bet from time to time—that I fully recognise that the Government should receive a tax from betting. I have never disputed that.
The proposal as put forward is completely unworkable and I go a long way in supporting my hon. Friend the Member for the Isle of Thanet (Mr. Rees-Davies). Had a tax of some form been devised based on winnings—or, better still, on operating sites—that would have been acceptable and, as my hon. Friend the Member for the Isle of Thanet pointed out, easy to administer. Hardly any cost and very little staff would have been involved. However the Government's suggestion is extremely bad.
The proposed system adds to a problem which I have raised from time to time, namely, the additional complexities which are constantly being introduced into our muddled taxation system. The Government's latest proposals will be no easy tax to administer. It is bound to add to the development of illegal betting and we should not accept that. It will undoubtedly hit the small bookmaker. The Financial Secretary admitted that in his remarks.
The hon. and learned Gentleman may not think he did but when he reads his remarks in the OFFICIAL REPORT he will find that that is what he suggested. There is little doubt that it will hit the small bookmaker and if we accept, as we do, that bookmakers should be allowed to live and exist, we should treat all on the same fair basis.
The Government have virtually taken the line that they must have 2½ per cent. from all betting turnover, as we understand it today, and that it is up to the bookmakers to find a method of meeting that requirement. Irrespective of what the Government have said on this issue, that is an unsatisfactory way of trying to achieve their aims. It seems wrong to propose a scheme which will, in effect, mean that the genuine payment of this tax will not be achieved—the factual results of this imposition will not be as the Government expect—because there will be so much guesswork involved all along the line.
It is extraordinary that in this discussion the Financial Secretary should time and again have made the point that the odds will be adjusted to meet the tax. His remarks show a lack of knowledge of how prices and odds are created at every race meeting. How he imagines that odds will be adjusted to meet the tax, I do not understand. His views indicate that he would be a gift, so to speak, to the bookmakers because he just does not have any knowledge of what goes on behind the scenes.
I support a betting tax in general, and I have never failed to do that, but I am against this system, which I think is unworkable and unsatisfactory.
I am glad to have the opportunity to take part in the debate on this most important Clause which introduces this new tax, which before today has virtually been undebated in the House. The discussion on the Budget earlier rightly centred on the absurdities, the inequalities, and the anomalies of the Selective Employment Tax.
The case for a betting tax is, I think, widely accepted in the House, and I would accept it, despite my own caveat which I entered earlier about the possible danger of establishing a vested interest by the State in this new source of revenue. This tax must be seriously considered, despite the gimmicky way in which it was first announced to the House. It was said at the time that it would in some way balance the charge for the scheme for mortgages, of which we have seen virtually nothing in the way of legislation.
The betting duty imposed by this Clause has to be assessed in the wider social setting of gambling and betting in Britain at the present time. Grave social implications are involved by this tax although it is, in the first place, a financial measure. I agree with those who have said that the Betting and Gaming Act of 1960 was in many respects an extremely unfortunate Act and that it brought about results quite the opposite to those which it was intended to bring about.
It has achieved an immense increase in betting and gambling of every kind. It was thought at the time that if we made betting and gambling respectable they would lose their glamour and attraction. But, alas, this is not the case, and directly following from that Act we have seen a spread of betting not only on the racing of animals, about which we have been talking this afternoon, but of betting on the results of General Elections, contests for the leadership of the party opposite, and other similar events. We may eventually have betting on the contest for the leadership of the third party in the House.
I regard all this as deplorable.
That gives me no reason to change my views. The only thing that we have been spared by the bookies is betting on the likelihood of devaluation, although gambling in that respect is carried on more subtly elsewhere.
The Nonconformist conscience has been mentioned earlier today and I am not qualified to speak for it, but the widespread anxiety about the extent of betting and gambling is not confined to the Free Churches which have always regarded gambling with a particular abhorrence. Those like myself who do not regard gambling as intrinsically evil but as something to be judged by the social circumstances of the time, and the personal circumstances of the person making the bet or taking the gamble, are also seriously concerned.
The introduction of this betting tax gave the Government a most important opportunity to introduce a tax which would, first, raise a substantial revenue, and, secondly, would reduce the incidence of gambling in the country. The criticism of the Clause is that it does nothing to achieve either of those objectives, and, far from making them easier of attainment, by the very fact of its existence, will make it more difficult to get the sort of tax which is needed.
It will raise very little revenue, and precisely because of that it will have only the most negligible effect on the amount of betting that is carried out. It is far too low a tax for that. The betting turnover is very large. It is estimated—and it may well be an optimistic estimate—that this tax will raise £11 million. This is a small sum in itself, but if it is put in the setting of consumer spending, which is £23,000 million a year, one sees what a fleabite it is.
In a recent article the Economist made an estimate of the amount of money involved in gambling. Stake money was estimated to be about £900 million—very similar to the estimate made by the Churches Council on Gambling. Actual spending is in the region of £200 million, if one takes as one's figure the stake money minus winnings. If one adds the total estimated to be provided by this Clause, £11 million, to the £6 million revenue which it is estimated the other two Clauses will raise, one gets a total of only £17 million, which is a very small sum indeed.
But there are other objections to this tax. It is vitally important when introducing taxes that the tax itself should be reasonably easily gatherable, and there are two reasons why this one will not be. First, there is the obvious reason that it will be very difficult to assess.
I think that there is also a moral point which is relevant and which should be made, namely, that a tax should not be an invitation to evasion. The Treasury should not seek to create conditions under which, by the very nature of the tax, potential taxpayers are tempted to avoid it. This tax is an invitation to those people concerned to take every opportunity to dodge it. What the tax does by taxing turnover is creating endless opportunities for evasion. What the Chancellor and his team are doing—I hold them all responsible—is creating an occasion of sin for bookmakers. This turnover tax then is open to grave objections.
Of course, any tax on betting can be objected to, but a tax on winnings would be open to much smaller objections. It would not be perfect, but it would be an improvement. There would be fewer transactions and bookmakers would have some incentive to keep accurate records. Already they need to keep records of winnings in order to return them to the Inland Revenue, for obvious purposes. Accordingly, conscience would be buttressed by a certain amount of self-interest——
That might well be so, but if it is it does not dispose of my point. It rather strengthens it, because such a man might be so practised at evading Income Tax that when he came to this, which offers a much easier opportu- nity of tax evasion, he would do it much more skilfully, being able to rely on his previous experience.
There are, I conclude, very serious objections to the Clause. The tax is too low, it is not enforceable, and it does nothing to reduce the incidence of gambling, which, in the opinion of many people who are not censorious by nature, is one of the gravest moral problems facing Britain at the present time.
The only point in the speech of my hon. Friend the Member for Chelmsford (Mr. St. John-Stevas) with which I am completely in agreement is that the amount of the tax enshrined in this Clause is far too small. It ought to be 16⅔ per cent., or 2d. in the shilling. It should be 2d. in the shilling for ease of calculation and 16⅔ per cent., because that would bear a proper relation to the scale of sumptuary taxation in other spheres.
For example, of approximately £1,400 million spent annually on tobacco, £1,000 million is taken in taxation. I do not regard the use of tobacco as any greater evil than gambling. I indulge in both in strict moderation. There was a good deal of hilarity earlier about my betting on the leadership of the Tory Party. It was a very good thing to bet on. I thought that I knew better than most people who would win, and I was right. As I was not at the time a Member of the House, I did so with a clear conscience.
I bet occasionally, perhaps three or four times a year—a few shilling on a point-to-point and perhaps on the result of a by-election or something of that kind. I have no objection to people betting in moderation or to their drinking or smoking in moderation. I condemn none of these things as an evil or a vice, but I do say that gambling makes no contribution whatever to our national economy and our prosperity. It contributes not a jot or tittle to Britain's export trade and it ought to be the subject of high taxation. I have never shifted from this point of view.
My remarks fell on stony ground with successive Conservative Chancellors of the Exchequer, however. They would not listen to me. They advanced all sorts of arguments about the difficulties of doing it. I believed none of them. One Chancellor, who shall remain unnamed, said that he could not devise a means of taxing the bets in a betting shop. I told him, straight to his face, not to be a fool and that I would show him how to do it. I sat in his office and showed him how to do it and he said, "Oh yes, I suppose that that might be possible." That was the end of it.
Of course it is possible. I said in 1963, and I want to read out to the Committee today what I said because it is exactly consistent and will demonstrate to my right hon. Friend the Member for Enfield, West (Mr. Iain Macleod) why I cannot vote with him tonight against this Clause. I said this:
I believe that the Chancellor this year should have taxed all gambling turnover—and I repeat, turnover If a man stakes a sum of money ten times over he should be taxed on it severally ten times over at 16⅔ per cent., or 2d. in the shilling. My right hon Friend is muttering. He does not like me saying this sort of thing. I do not like omissions in his Budget.
I am trying to follow the mathematics of it. I should have thought that a tax of 10 per cent. imposed 16 times would make a tax of 160 per cent."
Certainly in the aggregation, but I do not mind if it is a tax on turnover,…"—[OFFICIAL REPORT, 9th April, 1963; Vol. 675, c. 1162.]
which is what I consider it ought to be.
If a man buys ten tots of whisky and drinks them in succession he pays the whisky duty per tot ten times over. If the whisky duty, is at, say, 150 per cent., then if the Maudling argument is correct he is paying 1,500 per cent. But that is not correct. He is paying 150 per cent. severally ten times, and that is what I seek for betting. That is also what I am confident it will be within five years on betting.
This 2½ per cent. duty is only a beginning on what should be called a turnover tax on betting. It is economically and morally corect that we should do it. Whether it is precisely in its proper form in the present inaugural stage is arguable. I am certain that the tax on betting turnover is the proper way to do this, as opposed to the complicated system advanced by my hon. Friend the Member for the Isle of Thanet (Mr. Rees-Davies), which was a tax on pitches, telephones and other fixed assets.
My right hon. Friend the Member for Enfield, West has cast doubt on the figures given for the total turnover on gambling. He says that the Churches' Council on Gambling is not a reliable estimate. I quoted the Churches' Council report, which I regard as tolerably reliable. My hon. Friend the Member for Chelmsford came to my aid in this matter, and I am delighted with him for doing so. He quoted the Economist, which put the aggregation of gambling turnover at £900 million approximately. The Churches' Council on Gambling gave it £915 million in 1965. They are both estimates, and neither can be exact.
But the Treasury must know, because it has deduced the yield what this low level of betting duty at 2½ per cent. will produce in the first year.
As it is a turnover duty or tax, it follows that the Treasury must have made a computation. I shall demonstrate to my right hon. Friend the Member for Enfield, West in no uncertain terms that I am not a speculative creature. I have done my homework with the greatest thoroughness in this matter. I quote from the Minutes of Evidence taken before the Royal Commission on Betting, Lotteries and gaming on Thursday, 21st July, 1949. A principal witness was Sir William Croft, K.C.B., K.B.E., C.I.E., C.V.O., head of the Board of Customs and Excise. This is the evidence which he gave about horse racing only. He said:
In 1927–28 "—
that being the last year of the Winston Churchill betting duty—
the actual taxed turnover was £86 million, of which the on-the-course figure was £37 million and the off-the-course figure was £49 million. In 1928–29 the total was £88 million, on-the-course was £48 million, and off-the-course £40 million.
Later Sir William continued in response to a question:
Laid-off bets did not come under the betting duty.
But they do this time. That is the difference.
The duty was £88 million of horse-racing turnover only, in 1927–28. I shall now adjust the figure for the fall in the value of money. The £ in 1928 is today worth 5s., and four times £88 million is £352 million. Now I shall adjust for the increase in horse racing, which is said to be of the order of 50 per cent, in the last 30 years. I have no figure for 1928. Fifty per cent. added on to £352 million would give a turnover figure of £528 million for horse racing, excluding laid-off bets.
I now appeal to my right hon. Friend the Member for Enfield, West not to rise and tell me that the total turnover on all betting in this country last year was only £150 million. I demonstrate that on horse racing alone it was certainly more than £500 million. The Economist came to the same conclusion.
May I make it plain to my hon. Friend that my intervention was nothing to do with my hon. Friend's criticism of my right hon. Friend the Member for Enfield, West (Mr. Iain Macleod) and that any aid that I afforded my hon. Friend in his campaign was quite unintentional and purely coincidental? At Me same time I am both pleased and apprehensive to be rehabilitated in the favours of my hon. Friend after yesterday's division between us.
I congratulate my hon. Friend on his humorous intervention. I was not intending to associate his statement in connection with the Economist with what my right hon. Friend said to me earlier in the day. What I was trying o do, I think not entirely unsuccessfully, was to demonstrate that the Economist and the Report of the Churches Council on Gambling are approximately in line at fixing the turnover at more than £900 pillion in respect of all betting in the aggregation, last year, whereas my right non. Friend derided it by saying that it was only £150 million.
Of course I know that the £915 million ncludes football pools—but I did not say otherwise. Of course it includes grey—found racing—but I did not say otherwise. Of course it includes Premium Bond interest—but I did not say otherwise. They are all forms of gambling. One of my reasons for supporting the betting duty tonight is this simple proposition. For years and years we have supported in successive Budgets the taxing of football pools at 30 per cent. and the taxing of greyhound racing at 10 per cent. I have always questioned why football pools and greyhound racing should be singled out in a highly discriminatory fashion whilst the whole of horse racing, the whole of bingo, and the whole of every other form of highly speculative activity which comes within the ambit of gambling and gaming is left untaxed. I have always wanted them all to be on the same uniform and nondiscriminatory basis of 2d. in the shilling of turnover, or 16⅔ per cent.—thereby reducing the football duty from 30 per cent. to that figure and increasing the greyhound duty to that figure.
On Finance Bill after Finance Bill I have generally taken the majority of Members with me. That is why this year I welcome this first attempt to impose a betting duty based on turnover of betting which, in my judgment, is the correct basis for taxing it. Were I Chancellor of the Exchequer, this is what I would do. I would do it at a much higher rate. I do not believe that the nation would cavil or take unkindly to 2d. in the 1 s. of every bet in the form of taxation, when we are taxing motor cars at 25 per cent. and whisky, beer and cigarettes on the huge scale we all know about.
This is a moral issue to me. It is also an issue of conscience to me. I am allowed to parade my conscience once a year. Tonight I shall vote for the Government on this Clause because they are right, and—I say this with the greatest sorrow—against my own party.
I propose to follow the example of the right hon. Member for Enfield, West (Mr. Iain Macleod) and speak briefly in this interesting debate on the Question, That the Clause stand part of the Bill. It is, perhaps, right that we on the Front Benches should do so because the Committee has had to listen to rather a lot from the Front Benches in all the debates on the specific Amendments. The Amendments have already raised most of the really interesting points on the Clause and inevitably, therefore, this debate has been of a more general character.
The right hon. Gentleman has again stuck his flag firmly in the ground to demonstrate his belief that we are setting about this tax, which in itself he welcomes, in the wrong way. As he said on Second Reading, he believes that the object could be achieved more fairly—I think he would say that—and certainly more cheaply and effectively by taxing the premises, the telephone and the licence rather than by having a 2½ per cent. tax on stakes.
It would not be in order for me to go in detail into the reasons why we have rejected the right hon. Gentleman's solution and chosen our own. Suffice it to say that we are satisfied that, to secure the same yield—the right hon. Gentleman made clear that he thought we ought to aim at the same yield—the kind of tax which he suggests would operate quite oppressively and unfairly on the small bookmaker.
We have heard a lot about the small bookmaker in these debates. It has been suggested that we have ignored his interests. I assure the Committee that quite the opposite is true. As is well known, we received many representations from bookmakers saying that we ought to make it a condition of this tax that it should be passed on by the bookmaker to the punter in the form of a deduction from winnings. This might well suit the larger bookmakers, but we have received a deputation from small bookmakers urging the Chancellor not to do that because, they feel, it would operate harshly and unfairly upon them. We have given great attention to the interests of the small bookmaker, and a number of the proposals put to us by the associations representing largely the interests of the larger bookmakers we have rejected simply because of the effect they would have on the small bookmaker.
It may well be that a tax on the premises, telephone and licence would be simpler in some ways. It would certainly be welcomed by the larger bookmakers. But we have to look at the intention of the tax and, of course, first and foremost, we must be guided by what we think is workable. I entirely agree with the hon. Member for the Isle of Thanet (Mr. Rees-Davies) that we should be concerned here with administration and not with morality. This is our concern. The social aspects of it are not. We are concerned to produce an effective tax which will be spread fairly, and this is what we aim to do. I think that everyone will agree that, in principle, provided that it is administratively workable and effective, the tax on stakes is the fairest way to proceed and will give the fairest spread because it will tax what we want to tax, that is, the money coming in to betting, and it will tax it at an equal level.
It has been said by hon. Members again and again that the tax is quite unworkable, but we have had precious few reasons and precious few arguments to support that suggestion. Some were adduced in the debates on the Amendments, and I sought to answer them to the best of my ability. On the general allegations, all I can do is to retort with a general answer. We feel confident now that this is a workable tax and that it can be operated without imposing any administrative burden on bookmakers in particular which would make their job impracticable. On Clause 14 we shall have an opportunity to discuss further the actual procedures. All I say now is that we are satisfied that it is a workable scheme.
Of all fields this, perhaps, is the one in which it would be most rash to make prophecies. I entirely respect the view of the right hon. Member for Enfield, West, which, as has been quite evident in these debates, is based on very extensive knowledge. I would not expect him to attach any weight to my personal judgment in the matter, though he may attach a little more to that of the Paymaster-General. All I can do is invite him to challenge the Paymaster-General to a bet. I am glad to say that we in the Treasury have had my right hon. Friend's advice in this matter, and I think that, at least in a modest sum, he would be prepared to stake his opinion against that of the right hon. Gentleman. It will be one of the interesting features, in working out this tax, to see whose judgment is the better.
As my hon. and learned Friend brings the Paymaster-General into this, may I take this opportunity to dissociate myself from my right hon. Friend's views? I had to combat them all through our proceedings on the Betting and Gaming Bill some years ago, and I reject almost entirely everything he thought about it. I am sorry to learn that Her Majesty's Government have been seriously influenced by what he thinks in this case.
I assure my hon. Friend, if it comforts him at all, that our decisions in these matters were not based on what the Paymaster-General told us, though we have had the advantage of his scrutiny of the proposals as well as those of others.
The question of the total turnover is, of course, notoriously a matter on which opinions differ greatly. It needs no great mathematical ability to see that the £11 million yield which we estimate must be based on a turnover of £440 million. This is, of course, a more modest estimate than that of the Churches Council. The Churches Council may be right. I would not quarrel with its view. Ours is deliberately a conservative estimate. If some of the figures which have been suggested during the debate are right, the yield from the tax will be greater than that which we have allowed for. I think that the 1965 figure of the Churches Council estimated a turnover of untaxed betting of £610 million.
My hon. Friend the Member for Worcestershire, South (Sir G. Nabarro) was most anxious to establish the Treasury estimate of the turnover. The hon. and learned Gentleman will remember that the Chancellor of the Exchequer specifically rejected the figure of £900 million and said that it was very much lower than that.
The figure of £900 million includes, as the hon. Member for Worcestershire, South (Sir G. Nabarro) pointed out, elements besides those which we are now proposing to tax. Substantial revenue already comes into the Exchequer from the existing pool betting duty and other duties on betting.
We have now been discussing this Clause in total for about four and a half hours. Personally, I have found them extremely interesting debates, but I hope that we have now reached the stage when the Committee will feel that a decision on it should be reached.
I do not want to go into the turnover argument. In a sense, both sides are right. It may be summed up by saying that if one goes to a race meeting and puts 2s. 6d. on each of the eight races, in one sense one may be said to have spent £1; but if one has normal good luck and ill-luck, one will receive back about 18s., so that one's personal expenditure is 2s. Basically, that is the difference between the two. My right hon. Friend the then Chancellor of the Exchequer, in his Budget speech in 1963, said that the net expenditure on betting was probably not much more than £100 million a year. Much of this argument, therefore, is about nomenclature.
I have had a brief discussion of this matter, in passing, with the Paymaster-General and I am confirmed in my view that we should divide the Committee on this Clause. I am sure that the hon. Member for Westhoughton (Mr. J. T. Price) will join us in the Division Lobby to cancel out my hon. Friend the Member for Worcestershire, South (Sir G. Nabarro) on the other side.
I want to make these things crystal clear from this Dispatch Box, speaking for this side of the Committee. It is quite clear that we are not voting against a general betting duty. That is point No. 1. Point No. 2 is that we are not suggesting that the Chancellor should collect less than this amount of money. That is absolutely clear. We have argued for some hours that he is going about it the wrong way. Having had, as I agree, an extremely good argument, for which I am grateful, I suggest that the Committee should now divide.
|Division No. 23.]||AYES||[8.55 p.m.|
|Abse, Leo||Bessell, Peter||Carmichael, Neil|
|Anderson, Donald||Blackburn, F.||Carter-Jones, Lewis|
|Archer, Peter||Boardman, H.||Castle, Rt. Hn. Barbara|
|Armstrong, Ernest||Booth, Albert||Chapman, Donald|
|Ashley, Jack||Bowden, Rt. Hn. Herbert||Coe, Denis|
|Atkins, Ronald (Preston, N.)||Bray, Dr. Jeremy||Coleman, Donald|
|Atkinson, Norman (Tottenham)||Brooks, Edwin||Concannon, J. D.|
|Bagier, Gordon A. T.||Brown, Hugh D. (G'gow, Proven)||Conlan, Bernard|
|Barnett, Joel||Brown,Bob(N'c'tle-upon-Tyne,W.)||Cousins, Rt. Hn. Frank|
|Beaney, Alan||Buchan, Norman||Cronin, John|
|Bence, Cyril||Buchanan, Richard (G'gow, Sp'burn)||Crosland, Rt. Hn. Anthony|
|Benn, Rt. Hn. Anthony Wedgwood||Callaghan, Rt. Hn. James||Dalyell, Tam|
|Bennett, James (G'gow, Bridgeton)||Cant, R. B.||Davidson, Arthur (Accrington)|
|Davidson,James(Aberdeenshire,W.)||Jenkins, Hugh (Putney)||Perry, George H. (Nottingham, S.)|
|Davies, Dr. Ernest (Stretford)||Jenkins, Rt. Hn. Roy (Stechford)||Price, Christopher (Perry Barr)|
|Davies, Harold (Leek)||Johnston, Russell (Inverness)||Price, Thomas (Westhoughton)|
|Davies, Robert (Cambridge)||Jones,Rt.Hn.Sir Elwyn(W.Ham,S.)||Price, William (Rugby)|
|Dewar, Donald||Judd, Frank||Probert, Arthur|
|Diamond, Rt. Hn. John||Kenyon, Clifford||Rankin, John|
|Dickens, James||Lee, John (Reading)||Roberts, Albert (Normanton)|
|Doig, Peter||Lestor, Miss Joan||Roberts, Goronwy (Caernarvon)|
|Donnelly, Desmond||Lever, L. M. (Ardwick)||Roberts, Gwilym (Bedfordshire, S.)|
|Dunnett, Jack||Lomas, Kenneth||Robinson,Rt.Hn.Kenneth(St.P'c'as)|
|Dunwoody, Mrs. Gwyneth (Exeter)||Luard, Evan||Robinson, W. O. J. (Walth'stow, E.)|
|Dunwoody, Dr. John (F'th & C'b'e)||Lubbock, Eric||Rodgers, William (Stockton)|
|Edwards, William (Merioneth)||Lyon, Alexander W. (York)||Rose, Paul|
|Ellis, John||Lyons, Edward (Bradford, E.)||Ross, Rt. Hn. William|
|Ensor, David||Mabon, Dr. J. Dickson||Rowland, Christopher (Meriden)|
|Faulds, Andrew||McBride, Neil||Rowlands, E. (Cardiff, N.)|
|Finch, Harold||McCann, John||Ryan, John|
|Fitch, Alan (Wigan)||MacColl, James||Sheldon, Robert|
|Fletcher, Raymond (Ilkeston)||MacDermot, Niall||Shore, Peter (Stepney)|
|Fletcher, Ted (Darlington)||Macdonald, A. H.||Silkin, John (Deptford)|
|Floud, Bernard||McGuire, Michael||Slater, Joseph|
|Foley, Maurice||Mackenzie, Alasdair(Ross&Crom'ty)||Spriggs, Leslie|
|Forrester, John||Mackenzie, Gregor (Rutherglen)||Steel, David (Roxburgh)|
|Fowler, Gerry||Mackie, John||Steele, Thomas (Dunbartonshire, W.)|
|Gardner, A. J.||Maclennan, Robert||Stonehouse, John|
|Garrett, W. E.||McNamara, J. Kevin||Thomas, Iorwerth (Rhondda, W.)|
|Gourlay, Harry||MacPherson, Malcolm||Tinn, James|
|Gregory, Arnold||Mahon, Peter (Preston, S.)||Tuck, Raphael|
|Griffiths, David (Rother Valley)||Mahon, Simon (Bootle)||Urwin, T. W.|
|Griffiths, Rt. Hn, James (Llanelly)||Mapp, Charles||Wainwright, Edwin (Dearne Valley)|
|Griffiths, Will (Exchange)||Marquand, David||Wainwright, Richard (Coins Valley)|
|Grimond, Rt. Hn. J.||Millan, Bruce||Walden, Brian (All Saints)|
|Hale, Leslie (Oldham, W.)||Mitchell, R. C. (S'th'pton, Test)||Walker, Harold (Doncaster)|
|Hamilton, James (Bothwell)||Morgan, Elystan (Cardiganshire)||Wallace, George|
|Hamilton, William (Fife, W.)||Morris, Charles R. (Openshaw)||Watkins, David (Consett)|
|Hannan, William||Murray, Albert||Wellbeloved, James|
|Harper, Joseph||Nabarro, Sir Gerald||Wells, William (Walsall, N.)|
|Hart, Mrs. Judith||Noel-Baker,Rt. Hn.Philip(Derby,S.)||Whitaker, Ben|
|Henig, Stanley||Oakes, Gordon||White, Mrs. Eirene|
|Herbison, Rt. Hn. Margaret||Ogden, Eric||Whitlock, William|
|Hilton, W. S.||O'Malley, Brian||Willey, Rt. Hn. Frederick|
|Hooley, Frank||Oswald, Thomas||Williams, Alan (Swansea, W.)|
|Homer, John||Owen, Dr. David (Plymouth, S'tn)||Williams, Alan Lee (Homchurch)|
|Houghton, Rt. Hn. Douglas||Padley, Walter||Williams, Clifford (Abertillery)|
|Howarth, Harry (Wellingborough)||Paget, R. T.||Willis, George (Edinburgh, E.)|
|Howie, W.||Pannell, Rt. Hn. Charles||Winnick, David|
|Hughes, Emrys (Ayrshire, S.)||Pardoe, J.||Winstanley, Dr. M. P.|
|Hughes, Hector (Aberdeen, N.)||Pearson, Arthur (Pontypridd)|
|Hughes, Roy (Newport)||Peart, Rt. Hn. Fred||TELLERS FOR THE AYES:|
|Jackson, Colin (B'h'se & Spenb'gh)||Pentland, Norman||Mr. Lawson and Mr. Bishop.|
|Janner, Sir Barnett||Perry, Ernest G. (Battersea, S.)|
|Alison, Michael (Barkston Ash)||Grant, Anthony||Miscampbell, Norman|
|Astor, John||Griffiths, Eldon (Bury St. Edmunds)||Monro, Hector|
|Barber, Rt. Hn. Anthony||Gurden, Harold||More, Jasper|
|Batsford, Brian||Hall, John (Wycombe)||Morrison, Charles (Devizes)|
|Bitten, John||Hall-Davis, A. G. F.||Murton, Oscar|
|Braine, Bernard||Harris, Frederic (Croydon, N.W.)||Neave, Airey|
|Brinton, Sir Tatton||Harvey, Sir Arthur Vere||Nott, John|
|Buck, Antony (Colchester)||Hawkins, Paul||Pike, Miss Mervyn|
|Bullus, Sir Eric||Heald, Rt. Hn. Sir Lionel||Pink, R. Bonner|
|Carlisle, Mark||Heath, Rt. Hn. Edward||Price, David (Eastleigh)|
|Cary, Sir Robert||Heseltine, Michael||Rees-Davies, W. R.|
|Chichester-Clark, R.||Higgins, Terence L.||Roots, William|
|Clark, Henry||Hiley, Joseph||Rossi, Hugh (Hornsey)|
|Clegg, Walter||Holland, Philip||Sharpies, Richard|
|Corfield, F. V.||Hordern, Peter||Shaw, Michael (Seb'gh & Whitby)|
|Craddock, Sir Beresford (Speithorne)||Howell, David (Guildford)||Sinclair, Sir George|
|Crosthwaite-Eyre, Sir Oliver||Hunt, John||Smith, John|
|Crouch, David||Jenkin, Patrick (Woodford)||Stodart, Anthony|
|Cunningham, Sir Knox||Jennings, J. C. (Burton)||Stoddart-Scott, Col. Sir M. (Ripon)|
|Dean, Paul (Somerset, N.)||Jopling, Michael||Summers, Sir Spencer|
|Deedes, Rt. Hn. W. F. (Ashford)||King, Evelyn (Dorset, S.)||Taylor,Edward M.(G'gow,Cathcart)|
|Digby, Simon Wingfield||Lloyd, Ian (P'tsm'th, Langstone)||Taylor, Frank (Moss Side)|
|Elliott, R.W.(N'c'tle-upon-Tyne,N.)||McAdden, Sir Stephen||Temple, John M.|
|Eyre, Reginald||MacArthur, Ian||Thatcher, Mrs. Margaret|
|Galbraith, Hn. T. G.||Maclean, Sir Fitzroy||Turton, Rt. Hn. R. H.|
|Gibson-Watt, David||Macleod, Rt. Hn. lain||Vaughan-Morgan, Rt. Hn. Sir John|
|Giles, Rear-Adm. Morgan||Maddan, Martin||Vickers, Dame Joan|
|Gilmour, Sir John (Fife, E.)||Maxwell-Hyslop, R. J.||Ward, Dame Irene|
|Glover, Sir Douglas||Maydon, Lt.-Cmdr. S. L. C.||Weatherill, Bernard|
|Goodhart, Philip||Mills, Stratton (Belfast, N.)||Wells, John (Maidstone)|
|Whitelaw, William||Wolrige Gordon, Patrick||TELLERS FOR THE NOES:|
|Wills, Sir Gerald (Bridgwater)||Worsley, Marcus||Mr. Pym and Mr. Blaker.|
|Wilson, Geoffrey (Truro)||Younger, Hn. George|