Payment of Horserace Betting Levy by holders of remote operating licences

Oral Answers to Questions — Prime Minister – in the House of Commons at 3:39 pm on 26th March 2014.

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Photo of Helen Grant Helen Grant The Parliamentary Under-Secretary of State for Culture, Media and Sport 3:39 pm, 26th March 2014

I beg to move, That this House
agrees with Lords amendment 1.

The Lords amendment gives the Secretary of State reserve powers to extend the horserace betting levy to all bookmakers holding a remote operating licence from the Gambling Commission after the remote gambling Bill has been enacted. The amendment is fully in keeping with the context and purpose of the Bill, which is about levelling the playing field for bookmakers engaging with British punters.

Subsections (1) and (2) are broadly drafted to ensure that the Secretary of State can make all the changes necessary to secure extension compatible with the UK’s obligations under European Union law. Members may recall that we resisted previous levy amendments because we believed they failed to offer that necessary scope.

Subsection (3) provides that secondary legislation introduced under this amendment will be subject to affirmative procedure in both Houses of Parliament. Subsection (4) makes it clear that existing provisions to abolish the levy once a suitable replacement has been found are unaffected by the amendment.

We have tabled our own amendment because we are persuaded that a statutory levy should be applied fairly, but we remain firmly of the view that the need for genuine levy reform cannot be satisfied through extension to offshore remote bookmakers alone. That is why this amendment is part of a wider levy reform package, which was announced by the Chancellor a week ago in the Budget. We will now move forward very quickly on two concurrent pieces of work.

On extending the levy, we will seek to complete all of the necessary work in time for the 2015 negotiations on the 55th levy scheme, which will apply from April 2016. The timing will, of course, be subject to the outcome of discussions with the European Commission, which began last Friday. We hope to launch a consultation in May on the mechanics of extension.

Photo of Guy Opperman Guy Opperman Conservative, Hexham

Does my hon. Friend agree that this announcement and today’s developments are very good news for racing, which provides tremendous support for jobs and local tourism, and that it is good that the Government are now beginning to work properly with British racing?

Photo of Helen Grant Helen Grant The Parliamentary Under-Secretary of State for Culture, Media and Sport

I know that my hon. Friend, as a former jockey, has a deep and intimate knowledge of the industry. He makes an excellent point and that is precisely why we are making these reforms.

Photo of Ian Swales Ian Swales Liberal Democrat, Redcar

Following on from the intervention of Guy Opperman, is the Minister aware of the damage that has been done to racing by bookmakers moving offshore and not paying the levy, and will she join me and Redcar race course in welcoming the fact that racing will be more healthy as a result of these measures?

Photo of Helen Grant Helen Grant The Parliamentary Under-Secretary of State for Culture, Media and Sport

My hon. Friend makes a very important point. We have to look after racing. It is an important industry that provides many jobs. This is a sensible move, making a level playing field for all operators.

At the same time, we will develop wider levy reform options and publish a consultation in the summer. The consultation will seek views on a range of options, which are likely to include commercial arrangements, modernising the existing levy and a horse race betting right. The amendment is about collecting the horserace betting levy in a fair and consistent way.

Photo of David Nuttall David Nuttall Conservative, Bury North

Will the Minister confirm that it would not be possible to extend the levy to offshore bookmakers without the approval of the EU and that we are totally dependent on receiving that approval in order to be able to do it legally?

Photo of Helen Grant Helen Grant The Parliamentary Under-Secretary of State for Culture, Media and Sport

My hon. Friend makes a fair point. Certainly, the levy scheme amounts to state aid and, because of the terms, we need to let the EU know if there is any substantial change in state aid and get permission for it.

The amendment is reasonable and I believe it commands widespread support. It signals the Government’s commitment to modernising the levy and it is, of course, part of, but not a substitute for, a wider reform programme.

Photo of Clive Efford Clive Efford Shadow Minister (Culture, Media and Sport) 3:45 pm, 26th March 2014

We welcome the Government amendment and their change of heart on the alteration that we proposed both in Committee and on Report.

We pay tribute to the Members of the House of Lords who took up several of the issues that we raised during the Bill’s passage through this House. They have been very successful in gaining Government support for our amendments, notably in relation to sport spread betting, pre-watershed gambling advertising and its impact on children, a one-stop shop for problem gamblers and financial blocking. On all those areas, the Government said that change was not necessary or desirable, but it is very welcome that they have now changed their mind.

We welcome the Lords amendment on the horserace betting levy. There are two key issues: the application of the existing levy to online gamblers, and a consultation on the levy’s replacement in the long term. It is worth putting in context why the levy is necessary to support the horse racing industry.

British horse racing is a major sport. It is the country’s second most popular sport, with 5.68 million attendees, according to the British Horseracing Authority. It is also the second largest sporting employer. British racing supports a predominantly rural industry that makes a significant contribution to the British economy. It generates £3.45 billion in annual expenditure, provides direct and associated employment for 85,000 people and assists in leveraging billions of pounds of inward investment.

Horse racing is inextricably linked with gambling like no other sport, with the exception of greyhound racing. As online gambling has grown, betting operators have moved offshore, which has contributed to a fall in revenue from the levy from an average of about £106 million between 2003-04 and 2008-09 to £66.7 million now. The industry says that that has led the number of horses in training to go down by 14.2% between 2008 and 2013, and foal production to go down by 25.3% during the same period. The Lords amendment is therefore very important. We welcome the Government’s about-turn and their support for our position on the levy.

The Minister has accepted our position, but a review may take a very long time. What does she think is the time scale for the review? When will the end date be for a major review of the betting levy?

In Committee, I warned the Minister that she might face more tenacious support for the horse racing industry than comes from most Members of the House of Commons. After I had told her that she might face more fanatical opposition in the House of Lords, she said:

“I am not sure that I understand quite what the hon. Member means by the horse racing fanatics in the other place, but I look forward to finding out.”––[Official Report, Gambling (Licensing and Advertising) Public Bill Committee, 19 November 2013; c. 141.]

She well and truly found out when the Bill arrived in the Lords.

When I moved the amendment on Report, the Minister said:

“First, I do not believe that we should assume that genuine levy reform lies in merely extending the existing levy scheme… Secondly, as I have said previously, any extension of the levy to offshore bookmakers as a result of the new clauses”— the ones I had tabled—

“would require EU Commission approval because the levy is a state aid scheme. I will not implement the proposals, for which we do not have EU approval in respect of state aid.”—[Hansard, 26 November 2013; Vol. 571, c. 195.]

When the Bill reached the Lords—following some to-ing and fro-ing between the Opposition, Cross Benchers and the Government—Lord Gardiner of Kimble moved an amendment, and said:

“We agree with the view that while we still have a statutory levy, it should be fairly applied. Furthermore, we are persuaded that including a clause about extending the levy to offshore remote operators is fully in keeping with the context and purpose of the Bill.”—[Hansard, House of Lords, 4 March 2014; Vol. 752, c. 1301.]

Will the Minister explain to the House—I will allow her to intervene—exactly what changed between our discussions in the House of Commons and those in the House of Lords? There has been a complete about-turn in the Government’s position on this issue.

It is important that there are no delays. The Minister said that she hoped that the consultation would start in May. Will she clarify whether it will conclude before the annual review of the levy terms, which will take place in October?

I know that there is concern about the horserace betting levy. My noble Friend Lord Lipsey spoke of his opposition to it in the other place. I share some of his concerns. If we go ahead with extending the levy and it generates an additional £20 million for the horse racing industry, what exactly will the Minister do to ensure that it benefits the wider horse racing industry and not just the haves at the expense of the have-nots? That investment should benefit the low-paid workers in the industry, generate economic activity in rural areas, and perhaps even support struggling race courses to become viable and keep people in their jobs.

The amendment will provide a great deal of support to the industry and could mean £20 million of investment. The industry must use it wisely. If it is used not to provide those wider benefits, but to inflate prizes at the expense of lower-paid workers in the industry, the support for the levy in the House might dissipate and the industry might lose important income. We all have a duty to pay close attention to what the money is used for when it finally reaches the industry.

I pay tribute to the Members of the House of Lords who supported the amendments that we tabled, not least the amendment before us. I pay particular tribute to Lord Stevenson of Balmacara, Baroness Jones of Whitchurch and Lord Collins of Highbury. I would not go so far as to suggest that someone should name a racehorse or even a stakes race after each of them. However, I received an e-mail of gratitude from the British Horseracing Authority, expressing its appreciation for my support, which said:

“I hope that we can get you along to a race meeting in the near future, potentially for the inaugural running of the ‘Clive Efford Cup’”.

I am sure that that was said in jest, but I will not stand in anyone’s way if that is what they want to do.

This is a welcome about-turn from the Government. We certainly support the amendment. I hope that the Minister will give an assurance about the time scales, because we do not want there to be any delay that could be avoided in implementing the levy on online gambling because, in the meantime, the industry will be missing out on significant income that could be put to good use, as I have set out today. I hope that the House will support the amendment.

Photo of David Nuttall David Nuttall Conservative, Bury North

I want to raise two matters. Both have been touched on, but I want to expand on them.

First, as Clive Efford rightly said, a new clause very similar to the Lords amendment was tabled on Report. I, along with other Government Members, voted against it. Of course, it was not the same clause, but it was very similar to the amendment we are being asked to support today, and if I am anything, I like to be constant and consistent in my position.

Photo of Clive Efford Clive Efford Shadow Minister (Culture, Media and Sport)

May I point out to the hon. Gentleman that the outcome is the same? We will apply the existing levy—assuming we get European Commission approval—to online gamblers, and the Government will consult on a future levy for the longer term. The outcome is the same whether the amendment has been mildly adjusted or not.

Photo of David Nuttall David Nuttall Conservative, Bury North

I appreciate that the aim might be the same, but as I understand it, the Lords amendment creates a reserved power straight away—

Photo of David Nuttall David Nuttall Conservative, Bury North

I thought it was to do it straight away, which is slightly different.

Photo of Clive Efford Clive Efford Shadow Minister (Culture, Media and Sport)

In Committee we tabled two amendments, one of which would have done what the hon. Gentleman has set out. We also offered the Government the opportunity to consider taking the reserved power in the longer term. That was the amendment we brought to the House on Report, and he voted against the reserved power, which is again set out in this amendment.

Photo of David Nuttall David Nuttall Conservative, Bury North

This is a very time-limited debate and I do not want to spend all my time on a preliminary point. The substantive point is that whether or not the amendment is identical or slightly different to the previous one, this new clause certainly does provide for a reserved power. That is somewhat confusing given what the Chancellor said in his Budget statement last Wednesday:

“We will also extend the horserace betting levy to bookmakers who are based offshore, and we will look at wider levy reform and at introducing a ‘racing right’ to support the sport.”—[Hansard, 19 March 2014; Vol. 577, c. 791.]

That makes it apparent, or gives the impression, that it is going to happen, and that the reserved power will not be kept for a rainy day but is something that the Government definitely want to proceed with. We must assume that that is the case; otherwise, why introduce it in the first place?

That leads neatly to my second point. I will not quote word for word what the hon. Member for Eltham said on Report, because he mentioned some of it in his speech. On 26 November last year, when new clauses 10 and 11 were being considered, the Minister stated:

“Nor am I convinced that we should seek EU approval for an extension of the current levy when we do not know that it will satisfy the need for proper reform. I am not prepared to act in a way that could jeopardise the stability provided by the recent voluntary arrangement.

I have also been urged to take a power to extend the levy at a future point, but that assumes that all that we might wish to do is extend the existing system, and that would not be genuine levy reform. Even if we took such a power, we could find that it was too narrowly scoped to enable us to achieve what we wanted—for example, to meet the EC—”

I presume that means the European Union—

“requirements for any reform scheme to be state aid compliant.”—[Hansard, 26 November 2013; Vol. 571, c. 195.]

There are therefore two matters of confusion. First, what is the Government’s position on the proposal? Is it simply to have a reserve power, or is it to seek to introduce a measure at the earliest opportunity? Secondly, for what will the Government seek approval from the EU? Will they simply seek approval to extend the levy, or will they seek a wider reform, which was the reason given on 26 November for the delay?

Essentially, those are the two points that I would be grateful to the Minister for addressing when she replies to this brief debate.

Photo of Jim Shannon Jim Shannon Shadow DUP Spokesperson (Health), Shadow DUP Spokesperson (Transport), Shadow DUP Spokesperson (Human Rights) 4:00 pm, 26th March 2014

I want to make a few quick comments on holding a remote operating licence from the Gambling Commission. I will also comment on those based overseas who will be required to obtain a remote operating licence from the commission as a result of measures in the Bill.

I bring that to the Minister’s attention because of the changes that will be introduced off the back of the Bill. Currently, remote gambling operators in only 31 jurisdictions can advertise in the UK. As a consequence of the Bill, the scope for advertising will widen sixfold to 196 jurisdictions, as long as providers get the operating licence. Providers from, for example, China and Brazil cannot advertise in the UK, but under the Bill, they will be able to do so for the first time if they get a Gambling Commission licence under Lords amendment 1. I make that point because, between 2006 and 2012, advertising on TV increased by 600%. With the licence comes the advertising. Perhaps the Government will give the House an indication of how they intend, through the licensing grant, to ensure that advertising does not spiral out of control.

I thank the Minister and the Lords for making the changes. Two welcome and important commitments were made in the other place. I divided the House on the introduction of a one-stop shop self-exclusion mechanism and got support from Labour colleagues to make that happen. I am pleased that those changes are included in the Bill because they will strengthen player protection. Put simply, a customer need ask only once in their local betting shop and their exclusion will apply to all shops in that chain and to all chains in the UK. That, too, is good news. The concept of a one-stop shop is to help to deliver an important tool to assist problem gamblers to take back control over their lives, as it is often described. That is good news.

I am pleased to see the financial transaction blocking amendments, which are good news. I am also pleased to confirm that the Gambling Commission has reached agreement with major payment systems organisations, namely MasterCard, PayPal and Visa Europe, to work together to block financial transactions with unlicensed operators that seek to use payment systems for illegal purposes. That is good news for the Bill and for the good work put into the process by Members of the House, and those in the other place especially, who made that happen.

I want to ask the Minister two questions. On the voluntary approach to the fixed odds betting terminals, there is an indication that there will be regulations. Will she indicate whether it is the Government’s intention to put the situation right in the Consumer Rights Bill? If so, we are probably at the stage where those measures need to be included in it. Consumer protection is also important. Is it the Government’s intention to provide for the FOBT voluntary approach regulations in the Consumer Rights Bill?

Lastly, I want to ask the Minister about a technical point. I would welcome any clarification she can give on how, prior to legislation, the voluntary approach to financial transaction blocking will apply to Northern Ireland. I ask because, as I understand it, the Gambling Commission, which does not have jurisdiction in Northern Ireland, will play the key mediating role. Will she indicate how that will work? Will it be done through the Northern Ireland Assembly and an amendment there, or will it be done through further UK Government changes?

I am very pleased that, at long last, the amended Bill seems to be going in the direction we want it go in. That is down to the hard work of Members in this Chamber and in the other place. In particular, I thank Clive Efford for his hard work. I thank the Minister, too.

Photo of Guy Opperman Guy Opperman Conservative, Hexham

I started out aged 14 as an apprentice stable lad. I worked my way up through a racing stable and then became a jockey at various stages of my life. I am lucky enough and privileged enough to have ridden upsides Tony McCoy, who famously asked me what my real job was. I am also very fortunate to be the Member of Parliament for Hexham, which is one of the finest racecourses in the country. It will strongly welcome the Bill as demonstrating support for smaller racecourses, as more money goes back into the racing community.

Any interpretation of the Bill will show that it is right that bookmakers now support the industry from which they benefit so much. I have met many bookmakers over the years as this matter has gone through the House. This is not an anti-bookmaker measure; it will produce a level playing field where bookmakers make a proper contribution to the racing community.

I welcome the announcements in the Budget. It is worth reminding the House that it is right that the LIBOR fines, paid for by those who demonstrated the worst of values, should now be supporting those who demonstrate the best of values. I support LIBOR fines going to St John Ambulance—I have certainly used its services in point-to-points and the like—and the VAT relief on fuel for air ambulances. We cannot have racecourses without those facilities. The Chancellor’s decision, ably set out by my hon. Friend Mr Nuttall, to extend the horseracing betting levy to offshore bookmakers and to consider wider levy reforms—something that has been a nirvana for so many people involved in racing—is fantastically good news. I will come on to the racing right to support the sport, which we need to address and expand on, in a moment.

In addressing the comments by Clive Efford, it is important to understand that the Gambling Act 2005, introduced by the previous Government, effectively introduced the system that we have had to amend, control and change. The Act was far from helpful. As someone who was working in racing throughout the period of the previous Government, I can assure the House that they were deeply unsupportive of horseracing.

I welcome the introduction of the racing right, which is fantastic. After all, racing is key to tourism, local jobs and the rural package that several small towns offer. I have been lucky enough to ride at all the big tracks, such as Cheltenham and Kempton Park. I am not denigrating, in any way, those tracks—their fences are a bit bigger and stiffer, and when one falls one certainly falls quite hard—but it is the smaller tracks, the Towcesters, the Ludlows and, of course, the Hexhams that are the true lifeblood of racing. They are vital to its future. The Bill will introduce the support that we want.

It is important to understand and make the wider point that some have touched on, which is that without support for racing there will be no bloodstock sales, no breeding, no studs and no veterinary support. I, for one, broke several bones. Without racing, I would have put various orthopaedic surgeons in the NHS in fewer situations. All those people will benefit from an enhancement of racing.

We need more from the Minister on what constitutes the racing right. We accept and acknowledge that this is a good Bill and that we are heading in the right direction, and we accept and acknowledge that wider levy reform is for the benefit of one and all in racing, but we need to understand what exactly the racing right entails. That needs to be expanded on to a greater degree, because British racing is a wonderful institution and it needs all our support.

Photo of John Leech John Leech Liberal Democrat, Manchester, Withington

I do not intend to detain the House for long, but I want to put on record the Liberal Democrats’ support for the Lords amendment. This change has been campaigned for by Members in all parts of the House, but particularly by my right hon. Friend Mr Foster. I found it rather frustrating that we could not deal with it in the House of Commons rather than expecting the Lords to improve a Bill that is generally considered acceptable. However, the amendment will help to level the playing field between onshore bookies and offshore gambling providers, which I think is in line with the overall aims of the Bill, and I am happy to support it.

Photo of Helen Grant Helen Grant The Parliamentary Under-Secretary of State for Culture, Media and Sport

With the leave of the House, Mr Deputy Speaker.

I thank all Members for what they have said today about this important issue, and for their contributions during the Bill’s earlier stages. I shall be fairly brief, but I want to deal with some of the points that they have raised.

The shadow Minister, Clive Efford, accused us of performing a U-turn. I certainly do not accept that accusation, and I am a little surprised that he made it. I have said time and again—and the hon. Gentleman has heard me say it—that the extension on its own does not equate to genuine levy reform. The amendment is part of a wider levy reform programme, which is essential and which will involve our looking at all the various options.

The shadow Minister rightly asked for further details about time scales and delay. Delay is the last thing that I want: we need to move ahead. I can tell the hon. Gentleman that we will seek to complete all the necessary extension work in time for the 2015 negotiations on the 55th levy scheme, and that we will begin consultation on wider levy reform this summer. We hope to complete that consultation by the autumn. We want to get on with this, but it must be done properly, and there are a number of practical considerations that prevent us from doing it any earlier. As the hon. Gentleman will know, any significant change beyond extension would require primary legislation.

Photo of Helen Grant Helen Grant The Parliamentary Under-Secretary of State for Culture, Media and Sport

I want to make a few more points, but I will give way before I end my speech.

Photo of Clive Efford Clive Efford Shadow Minister (Culture, Media and Sport)

A review of the levy terms will take place in October. We are pretty clear about what we want to consult on in relation to the extension of the existing levy. Why can we not complete the consultation in time for the review, so that we can aim for earlier implementation? The longer we delay, the more the horseracing industry will miss out on potential income.

Photo of Helen Grant Helen Grant The Parliamentary Under-Secretary of State for Culture, Media and Sport

I hear what the hon. Gentleman says. Of course no one wants delay, which is why we want to take this power. However, as I am sure the hon. Gentleman appreciates, things must be done properly and carefully, and that is indeed how they will be done.

The hon. Gentleman also asked about the benefits of the levy. The levy contribution is likely to constitute a considerable sum, which, as he knows, will fund integrity, veterinary and breeding activities. As was pointed out earlier, the prize money from what we hope will be an increased levy will support the maintenance of quality racing at all the different kinds of courses throughout the country.

My hon. Friend Guy Opperman, who I know has considerable knowledge of the industry, referred to the “racing right”. It is not a foregone conclusion that there will be a racing right, but we will certainly consider it during the consultation.

My hon. Friend Mr Nuttall raised the point of the nature of the amendment and the question of whether the power is the same. I can tell him the key difference in the amendment we have put forward is that the power is more broadly scoped to ensure that we extend in a way that is state-compliant. He also queried why we are consulting and liaising with the European Union. We are doing so because the levy is existing state aid and the rules require that any change that is substantive—and this is substantive—must be notified to the Commission. Discussions have already begun and we are already trying to establish whether any precedent has been set in relation to the ruling on the French levy last year.

I want to cover a few more matters, including those raised by Jim Shannon. Turning to broader issues, I know we should not stray too far from the horse race betting levy, but for the benefit of the House I will clarify that during the time that this Bill has been going through the Houses, considerable work has been ongoing and good progress has been made particularly in relation to a number of the issues raised by the hon. Gentleman, including setting up the reviews on advertising, agreements being reached with payment providers to block unlicensed sites, ongoing dialogue with the casino sector, progress with the Financial Conduct Authority to issue new guidance on spread betting, and—I know this is close to the hon. Gentleman’s heart—the setting of a goal on a national self-exclusion model. None of these requires primary legislation.

I thank all those from across the House who have participated in this debate and in the passage of the Bill, and in particular my hon. Friends the Members for West Suffolk (Matthew Hancock) and for Thirsk and Malton (Miss McIntosh) for their continued support of the horse racing industry. I would also like to take this opportunity to recognise the important work done on this Bill by my hon. Friend John Penrose while he was in ministerial office. Last but not least, I sincerely thank my excellent officials for their hard work, dedication and commitment. It has been greatly appreciated.

This Bill marks a small but significant step in increasing protection to consumers based in Great Britain and I am glad we have reached agreement on the horse race betting levy here today.

Lords amendment 1 agreed to.