Orders of the Day — Horserace Betting Levy Bill

– in the House of Commons at 12:00 am on 8 May 1981.

Alert me about debates like this

As amended (in the Standing Committee), considered.

Motion made, and Question proposed, That the Bill be now read the Third time.

Photo of Dr Shirley Summerskill Dr Shirley Summerskill , Halifax 9:35, 8 May 1981

There are two points that I should like to have clarified or explained by the promoter before the Bill moves to another place. As it is now drafted, a bookmaker will be able to appeal against a notice of determination only within 28 days of the service of the notice. During the 28 days he can apply in writing to the levy board to be excused from making payments on account. If he does that the decision on his application rests with the levy board and is final, for by making an application a bookmaker automatically forgoes his right of appeal. But after 28 days the position changes, for he then has no right of appeal, but can still make an application if his circumstances change.

It is only during the first 28 days that a bookmaker may appeal to an independent tribunal to resolve a dispute between himself and the levy board about what sum it is reasonable for him to pay in advance of assessment, in the light of the changed circumstances of his business. Such change of circumstances will have arisen between his last assessment and the issue of the notice, and may also arise at any time throughout the year. Therefore, this will not be a matter for consideration simply during the first 28 days.

Will the promoter explain why the Bill specifies 28 days and not a longer period, which would obviously be more practicable, and why the right of appeal should be limited to that period? If it is right that a bookmaker should be able to appeal during that time, it must be equally right for him to appeal for a reasonable period afterwards. I am not suggesting that the 28 days should be extended to 28 months, but at least two-thirds of a bookmaker's business is usually undertaken during the summer months of the flat racing season, and it therefore seems reasonable that the right of appeal to an independent tribunal under clause 2(2) should be granted for a slightly longer period, say, six months, from the issue of the notice of determination.

Will the promoter explain why he chose 28 days, and why it cannot be a longer period? Perhaps he will consider the matter before the Bill goes to the other place.

My other point arises from the first one. In Committee the promoter introduced a new clause, which I welcomed. It is now clause 3, as amended. But it gives the bookmaker very few new rights. Indeed, it restricts his right of appeal under clause 2(1). If a bookmaker's circumstances make it unjust that he should make payments to the levy board he can write in and have the injustice corrected without that affecting his right of appeal. However, clause 3 makes no concession, and would appear to prevent a bookmaker from appealing if his application is dealt with in a way that he feels is unsatisfactory. He will have to choose whether to appeal or to make an application and thus lose his right of appeal. He cannot make an application and still have the right of appeal.

It seems unjust that the bookmaker should lose his right of appeal simply because he has asked to have the demand for payment corrected by the body that issued it in the first place, without consultation. As drafted, the Bill means that the bookmaker's only sensible course during the first 28 days is to appeal under clause 2 and to see what action that brings from the levy board. He would not lose his right of appeal, and would still have his case heard. I am sure that that is not what the promoter intended.

As drafted, the Bill virtually forces a bookmaker to appeal instead of making a reasoned application. I hope that an explanation of those two points will be given at the end of the debate.

Photo of Mr Charles Morrison Mr Charles Morrison , Devizes 9:41, 8 May 1981

The hon. Member for Halifax (Dr. Summerskill) has referred to a point that she endeavoured to raise in an amendment that has not been selected. I shall do my utmost to satisfy her concern about the time involved in an appeal. We may take it for granted that the hon. Lady supports the Bill in principle, as she did on Second Reading and in Committee. However, if her amendment had been selected and accepted it could have largely destroyed the Bill's main purpose. It is important that we should keep the Bill's objectives at the back of our minds. The Bill seeks to improve the levy board and assure an adequate cash flow for it during the course of a levy period and to remove the uncertainty and unfairness experienced by bookmakers who contribute via the voluntary system of advance payments, which has existed for the past few years.

The hon. Lady's request for further change could drive a coach and horses through the Bill because of the provisions, not of clause 2, but of clause 4(1). The hon. Lady suggested that the time limit of 28 days for an appeal should be extended to six months. Unfortunately, the amount of time has a significant effect on the finances of the levy board. Under clause 4(1) advance payments do not become due from bookmakers until the time allowed for an appeal against the notice of determination has expired. Therefore, if the hon. Lady's request were met, payments would not become due until six months after the notice of appeal had been served. During that time the levy board would have no income from bookmakers who had appealed to the tribunal.

We must assume that, on the whole, bookmakers want to act responsibly. However, it is possible to envisage a mass appeal under clause 2 that would have an adverse effect on the levy board's finances. That is why the hon. Lady's request would drive a coach and horses through the Bill. In addition, clause 2(1) refers to appeals by bookmakers simply as follows: on the grounds that the determination was not in accordance with the scheme". The hon. Lady referred to new clause 3 in the course of making her second point. It covers a different situation, in which a bookmaker can request a review of, and relief from, payment on the basis that his circumstances have changed. Clause 2 and new clause 3—I say "new clause 3" as it was added to the Bill in Committee—provide an adequate opportunity for the bookmakers' interests to be looked after by the law and by those responsible for its operation.

As drafted, the Bill is nothing other than a simple balance between the interests of the board and those of the bookmakers. I should like to emphasise a point that I made in Committee, namely, that we are all concerned with the better interests of the industry and of racing. Above all, we are concerned with the interests of those who enjoy racing. As long ago as 1963 it was decided that a levy board should be established. The levy board's money comes directly from bookmakers. They are the geese who lay the golden eggs for the levy board. However, before they can do that, they must be fed with the money that comes from the punters' pockets. Therefore, a wide range of people contribute—via the bookmakers—towards improving the sport that they enjoy. The Bill takes account of all those interests and provides adequate safeguards for the bookmakers.

It would be wrong if there were anything in the Bill which would have the effect of disrupting or undermining the position of bookmakers. If that happened, the geese that laid the golden eggs could be destroyed. That would be to the disadvantage not only of the bookmakers but of the sport, the racing industry and those who enjoy it.

Photo of Dr Shirley Summerskill Dr Shirley Summerskill , Halifax

Despite what the hon. Member for Devizes (Mr. Morrison) has said, I hope that before the Bill goes to another place he will consider the subject of appeal. He said that he was afraid of mass appeals by bookmakers if the time to appeal were extended from 28 days because that would deprive the levy board of money. Will he also consider the point I made, that clause 3 forces bookmakers to appeal rather than to make reasoned applications? He is afraid of appeals but when he reads the Official Report he will see that he is encouraging bookmakers to make appeals.

Photo of Mr Charles Morrison Mr Charles Morrison , Devizes

I am not encouraging bookmakers to make appeals. The hon. Lady misunderstood what I said earlier. I am not saying that there would be a mass of appeals, but that there could be.

I still hold to my view that the balance in the Bill is correct. Nevertheless, in the spirit in which we have conducted all our proceedings, I am prepared to give further detailed consideration to the hon. Lady's point to see whether I remain convinced that the Bill is correct.

I thank the hon. Lady for her interest in the Bill and my hon. Friend the Minister of State for his helpful and constructive remarks in the earlier stages. His comments have been of great benefit to all of us. It does not fall to many hon. Members to be fortunate to draw a high place in the ballot. It falls to even fewer to discover that the number of Bills ahead of us has been reduced with the result that, having drawn place No. 5, one finishes at place No. 2. Fortune has smiled kindly upon me and on those other right hon. and hon. Members who were kind enough to join me in sponsoring the Bill. I am grateful to them for their assistance.

If the Bill passes through the other place as successfully it will be of considerable advantage to the racing industry and to those who enjoy the sport. It is a step forward, to which the racing industry has looked forward for a long time. I hope that before long our aims will be achieved.

Photo of Mr Clement Freud Mr Clement Freud , Isle of Ely 9:51, 8 May 1981

The hon. Member for Devizes (Mr. Morrison) said that all those interested in racing will welcome the Bill. I totally identify myself with those remarks. The hon. Member said that fortune had smiled kindly on him. I would hate to feel that I am scowling with malignance, but I raise two small matters.

First, I understand that the levy board has formally requested a scheme for the twenty-first levy. In considering the legislation, that seems to be contrary to section 13 of the Interpretation Act 1978, which does not sanction formal requests for new schemes prior to legislation. The Minister, or his advisers, who are replete with knowledge on that subject, might look into that.

My second point has been made before. The hon. Member for Devizes referred to the bookmakers as the geese that laid the golden eggs. I want to make a small plea for an extra goose to have representation on the levy board. I have argued before that the number of bookmakers is small compared with the total sum of money that they raise for the levy. If the Betting Office Licensees Association could be represented I know that the bookmaking profession would support the Bill more strongly than they do now.

I wish the Bill a smooth passage through the Lords, possibly with an amendment that would make the bookmakers feel more contented than at present.

Photo of Mr Timothy Raison Mr Timothy Raison , Aylesbury 9:53, 8 May 1981

I am confident that hon. Members on both sides of the House will join me in congratulating my hon. Friend the Member for Devizes (Mr. Morrison) on his success in piloting this thoroughly useful measure through the House. He said that this horse had moved from No. 5 to No. 2 in the field. I knew that it was always a good each-way bet, and results are proving that.

Photo of Mr Clement Freud Mr Clement Freud , Isle of Ely

I should explain to the Minister, if only to help his knowledge of racing, that each-way bets are not paid out when there are as few runners as there appear to be. One can bet to win only when there are five runners.

Photo of Mr Timothy Raison Mr Timothy Raison , Aylesbury

I was not aware that bets were paid out on the basis of how many people attended a race meeting. There are still a number of runners in the field of Private Members' Bills.

Photo of Mr Charles Morrison Mr Charles Morrison , Devizes

Several have fallen.

Photo of Mr Timothy Raison Mr Timothy Raison , Aylesbury

My hon. Friend is quite correct; several have fallen. However, I confess that I am not a great racing man and if I were to proceed in a metaphorical vein for too long I might find myself in serious trouble, which would discredit my hon. Friend's Bill.

My hon. Friend has made good use of the opportunities that are afforded by winning a high place in the ballot. As we know, Private Members' Bills play an important part in getting done things that Governments do not always have the time to provide for. As my hon. Friend said, not only is horse racing an industry that is the sport of kings; it gives employment to many thousands and entertainment to millions. Its well-being is of real importance, and it is right that Parliament should give some time to a measure needed to ensure that well-being.

Betting is an integral part of horse racing. It is also, however, an activity which, because of its susceptibility to abuse, has always been regarded as one calling for specially strict legislative control. One aspect of those controls is provision designed to prevent excessive stimulation of gambling. It is in the implementation of such provision that the extent to which race courses and those who run them may have a direct interest in the betting that takes place on the racing staged there is strictly controlled.

The 1928 legislation, which established the predecessor of the Horse race Totalisator Board, introduced totalisator betting on races on a non-profit-making basis, the proceeds going to the benefit of racing. The legalisation of off-course betting shops in 1960, however, created a new situation, because it seemed likely to attract a proportion of the betting public away from the courses, to weaken the on-course market, and to have considerable potential for prejudicing racing.

The then Home Secretary, Lord Butler, in recognition of the need to guard against these possible developments, set up a committee under the chairmanship of Sir Leslie Peppiatt to consider the possibility of a levy on bookmakers. I believe that it showed far-sightedness on the part of the bookmakers involved at that time that they recognised that the betting-shop legislation from which they were benefiting represented a threat to the very activity on which their business depended, and that there was a mutual interest in introducing machinery to help the financial well-being of horse racing. From the start, therefore, the principle of a levy on horse race betting turnover has been an agreed one and the machinery for determining the amount of the annual levies has depended on agreement.

It could not have been otherwise. Without such agreement, statutory machinery to raise money from a particular business would be indistinguishable from a tax and the basic revenue principle of opposing hypothecation would have precluded the proceeds being allocated to the particular purpose of racing and its related activities.

The fact that the levy is based on agreement, however, should not be misunderstood. The original agreement that there should be a levy at all was in due course translated into statute. That statute creates the machinery whereby the contributors to, and the distributors of, the levy reach agreement on the annual sum to be raised from individual bookmakers, and this, in turn, is translated into an enforceable obligation to pay the contributions agreed on, and determined by, the annual levy schemes.

Despite this general agreement on basic principles, however, there are many different and sometimes conflicting interests involved. It is not therefore surprising that from time to time there have been differences about details. The collection of a levy of this size, moreover, from many thousand individual contributors with widely different levels of business is a complex and technical matter, and one for which there was no good precedent.

If the whole matter could be regulated by statute, no doubt many of the difficulties could be more easily overcome, but this would be incompatible with the principle that the levy should be effected by schemes drawn up by agreement between the parties. Such machinery gives a valuable measure of flexibility. However, it is also dependent on the appropriate powers being available. Over the years, experience has shown that various changes have been necessary in the basis of the annual levy schemes. Some of these changes have been within existing powers. Others have not, and amending legislation has been needed. This has been needed to make the collection of the levy more effective. It has also been needed to ensure that it fell fairly as between all contributors. The various amendments have therefore been in the interests of bookmakers themselves.

It is against that background that we have to consider the provisions of the Bill.

Experience has shown that the most satisfactory basis for the levy is annual turnover. This cannot, however, be known until the individual bookmaker's accounts have been made up at the end of the year of trading and a return made to the levy board. But because levy schemes have to be devised in relation to a particular year, there is a problem in relating trading in this current year to earlier determinable turnover. I will not trouble the House with the details, which have already been given in earlier debates, but the situation was one in which evasion became a possibility. It was to avoid this that the basis of the levy was changed to current turnover. However, this meant delay until final assessments were made, which could, effectively, have lost the board a whole year's payment of levy.

Various devices were resorted to to overcome this, but they depended on the voluntary co-operation of bookmakers, which in many cases was not forthcoming. The devices were unsatisfactory in themselves and fell unfairly. It was accordingly concluded that the only satisfactory solution would be to provide a power that the existing statutory provisions do not provide, namely, a power for schemes to include provision for payments on account, which could be made enforceable. That is what the Bill does. It provides that a scheme may include such provision and, if it does, that the scheme shall specify the basis on which such amounts are to be determined and the times at which payments are to be made.

There will of course be marginal cases where a bookmaker starts or ceases trading. On the whole, however, this approach reflects the reality that, taking one year with another, the level of a bookmaker's business is a reasonably predictable matter. This affords a satisfactory basis for the calculation of appropriate payments on account, which will leave only a small sum outstanding when a final settlement can be calculated at the end of the year. If that had been the whole of the story I believe that the Bill as originally introduced by my hon. Friend would have met all the requirements.

When the complicated processes involved in calculating and collecting levy payments came to be examined, however, it became apparent that estimates of the possible timetable had been over-optimistic. The basic assumption—that previous trading figures afford a satisfactory basis for calculating payments on account—held good, but it became evident that the previous trading figures would be much earlier than originally envisaged. Given, regrettably, a prospect of some continuing inflation for the foreseeable future, such earlier figures would be likely to be lower than the figures that would form the basis for the final settlement and so, in the normal course, would not be likely, if used as the basis for payments on account, to prejudice the contributing bookmaker.

The longer the gap between the trading figures used as the basis for calculation and the dates of the actual payment, however, the greater the possibility of some unusual event having intervened to render the basis invalid. This was a factor that the Bill, as originally introduced, failed to take into account.

During the Second Reading debate several hon. Members spoke about the need for the Bill to incorporate a provision for a notice of determination to be moved in the course of the levy year, to reflect a significant change in a bookmaker's circumstances. I am pleased that my hon. Friend the Member for Devizes was able to meet the point so effectively by means of the new clause that he introduced in Committee. I refer, of course, to what is now clause 3.

This clause provides a mechanism whereby a genuine change in the circumstances of a bookmaker may be reflected in the size of the advance payments that he is required to make to the levy board in accordance with the levy scheme agreed between the board and the Bookmakers Committee or, in the unusual event of a failure of the two sides to agree, a scheme determined by the Home Secretary.

Under clause 3, a bookmaker on whom a notice of determination has been served may apply in writing to the levy board to excused from making payments on account in accordance with his notice of determination, on the ground that his circumstances make it unjust that he should do so.

The clause provides that such applications shall be amended by the Government-appointed members of the levy board, who may, for the purposes of disposing of such applications, consult the Bookmakers Committee and such other persons as the Government-appointed members think proper. Some hon. Members argued in Committee that the Government-appointed members should be required to consult the Bookmakers Committee in each one of these applications for a variation, but that would be entirely out of keeping with the provisions governing the other procedures of the board.

Clause 1(5), for example, specifies that in determining, in accordance with the levy scheme, the amounts to be paid on account of the levy by bookmakers within the scheme and the times at which the payments on account are to be made, the Government-appointed members may consult the Bookmakers Committee. Similarly, in the new clause, it is surely more appropriate to provide the Government-appointed members with the power to consult others than to constrain them to do so on any single application, even the most frivolous.

Having considered the application for a variation, it is for the Government-appointed members to decide how to deal with it. If they are of the opinion that a reduction should be made on the payments on account due to be made by a bookmaker, they are required to give either of the following directions with respect to payment becoming due as from a date specified in the direction: first, they may direct that these payments shall cease to be payable—that is, that the bookmaker need make no further payment on account to the levy board; secondly, they may direct that these payments shall be reduced to such amount or amounts as they, the Government-appointed members, still specify.

If, however, they decide that neither of these courses is appropriate they must dismiss the application. What they are not empowered to do is to increase the size and frequency of the advance payments due to the board. In other words, they may decrease the advance payments due, but they cannot increase them.

Where the Government-appointed members give a direction that the bookmaker need not make any more advance payments they must issue a notice cancelling the notice of determination with respect to which the application for a variation was made so far as that notice related to payments on account becoming due on or after the specified date.

Where they decide to give a direction that the advance payments due by a bookmaker who has applied for a variation shall be reduced, they must issue a revised notice of determination. This shall have effect as from the specified date in place of the notice of determination with respect to which the application for variation was made, so far as that notice relates to payments on account becoming due on or after the specified date.

Every bookmaker who is liable to make payments on account in accordance with an agreed levy scheme may use this procedure to apply for his notice of determination to be varied, and he may make more than one such application in any levy period provided that there has been a change in his circumstances since his last application. The only provision which limits his freedom to apply for his notice of determination to be varied relates to the arrangements under clause 2 for a notice of determination to be the subject of an appeal to an appeal tribunal.

The function of the appeal tribunal is limited to considering whether the determination or assessment is in accordance with the agreed levy scheme. The levy scheme will have established the amount due from any bookmaker in accordance with agreed criteria—for example, current turnover. If a bookmaker, having received his notice of determination, discovers that his advance payment liability has been incorrectly calculated, either because he was placed in the wrong category or because there has been a simple error in the calculation of his liability or the preparation of his notice of determination, he may appeal to the tribunal to have the notice of determination put right. While his appeal is outstanding, he may not apply for a variation of his notice of determination under clause 3.

During the course of the progress of the Bill through the House various other points have been made, not all of which would perhaps have fallen within the rules of order for me to deal with. My right hon. Friend and I recognise that there are other matters that may give rise to concern in connection with the collection of the levy and its distribution, but those are matters that may not command universal agreement at this stage in terms of the way in which they should be resolved. We shall be continuing to give them attention, with a view to seeing what progress may be made. The fact that such issues may not yet be capable of being resolved ought not to stand in the way of the progress of this measure, which I believe commands universal support, not only as to its principles but as to its details.

The hon. Member for Isle of Ely (Mr. Freud) raised two points. The first was essentially a question of interpretation. It is not for me to comment on the activities of the levy board. It is a statutory body, and its activities are determined by law.

Photo of Mr Clement Freud Mr Clement Freud , Isle of Ely

Would a formal request by the levy board for suggestions for the twenty-first levy be in accordance with section 13 of the 1978 Act?

Photo of Mr Timothy Raison Mr Timothy Raison , Aylesbury

I shall have to write to the hon. Gentleman about that.

The question of the membership of the levy board falls outside the scope of the Bill.

We should congratulate my hon. Friend on the skill that he has shown not only in introducing such a measure but in succeeding in meeting the genuine anxieties that were expressed about the original version. We should recognise, too, the constructive co-operation shown by the bookmakers.

The Bill will now go from here to another place, and I know I speak for all hon. Members in expressing my congratulations to the chairman of the levy board on his recent grant of a life peerage, as a result of which he will be able to watch over the Bill's further progress even more closely than he would otherwise have been able to.

If we give the Bill its Third Reading, as I feel that we shall, we shall be permitting progress to be made on a thoroughly worthwhile measure. I commend the Bill to the House.

Question put and agreed to.

Bill accordingly read the Third time and passed.