Clause 8 - General betting duty: restriction of exemption for on-course bets

Finance Bill – in a Public Bill Committee at 2:45 pm on 15th May 2003.

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Question proposed, That the clause stand part of the Bill.

Photo of John Healey John Healey The Economic Secretary to the Treasury

On-course betting was taken out of the scope of general betting duty in 1987. The intention was to promote a healthy betting market at race courses and greyhound tracks, which is an important factor in generating the starting prices for horse races and greyhound races. The starting prices are used to determine the odds in high street bookmakers up and down the country.

That concession was welcome, well-judged and well-targeted. In recent years, however, the on-course exemption has increasingly been used at other sporting venues where betting is not the main source of attraction and where no comparable starting price mechanism is at work. Members of the Committee will probably be aware that bookmakers are based in stalls within most football grounds, golf tournaments and cricket grounds, and it does not make sense for them to benefit from the same on-course exemption.

We signalled our intention to review the scope of the on-course exemption when we introduced the gross profits tax in 2001 and we have consulted extensively

since then. We have received no responses to the consultation supporting the continuation of current arrangements. By restricting the on-course exemption to bets made on horse racing and greyhound racing, we are restoring and strengthening the rationale behind the original concession. We are satisfied that the measure will have little adverse impact on the ability of bookmakers at other sporting venues to continue to flourish and I stress that it will have no impact on punters, who will continue to be able to enjoy tax-free betting at those venues.

Photo of John Baron John Baron Conservative, Billericay

I, too, welcome you to the Chair, Mr. McWilliam. Although I accept the Economic Secretary's remarks, the choice of sports to benefit from the exemption is unfair. The clause amends the definition of an ''on-course bet''. As I understand it, from 1 September 2003 the on-course exemption to betting duty will apply only to bets made at horse and dog race meetings.

Because of the actions of both Labour and Conservative Governments over the years, Britain has been a world leader in the global betting market and the online betting revolution. I pay tribute to the Government for abolishing the betting tax in October 2001. Going back even further, the Economic Secretary rightly pointed out that in 1987 on-course betting was taken out of the scope of general betting duty. As he said, the intention was to promote a healthy on-course betting market for horse and greyhound racing, which importantly supports the industry's starting price mechanism.

The Committee has heard that the provisions have been increasingly used at other venues, such as football grounds, rugby grounds, golf courses and so forth. At this point, I should declare a partial interest: like many others, one of my great pleasures is watching rugby, particularly England at Twickenham, and having the occasional beer as well. Although I do not partake, I have friends who like to bet on the outcome of the match. It appears that the Government are not prepared to accept that on-course bookmakers at events, such as rugby matches and games of football, should be treated in the same way as those at horse races or greyhound meetings.

I accept that the starting price mechanism is crucial in horse racing, but starting prices also apply to football matches and rugby matches. The nature of betting has moved on because one can bet in a variety of ways on not only the outcome but the spread of points. It seems unjust that those going to rugby matches, for example, should be discriminated against and, at the end of the day, poor tax law results in costs being passed on to consumers.

I would also ask the Economic Secretary one other question. What assessment has he made of the impact that the clause will have on the odds offered by the bookmakers? I should be interested to hear whether any analysis of that has been carried out by the Treasury.

Photo of Michael Jack Michael Jack Conservative, Fylde

I add to what my hon. Friend has just said one further question. Why would the measure apply at a grand prix horse meeting but not at a grand prix motor race? There are examples of on-course

betting arrangements at the latter, and I am struggling to understand why animals should benefit, while human activity is discriminated against.

Photo of Rob Marris Rob Marris Labour, Wolverhampton South West

I welcome you to the Chair this afternoon, Mr. McWilliam. Another jewel in the crown of my constituency is Molineux football ground, home to Wolverhampton Wanderers football club which, as I am sure many hon. Members will know, had a wonderful result last night at Reading and is going into the play-offs for the premier league. If the team should not get promoted, I am concerned what the financial impact of this change might be on Wolverhampton Wanderers football club.

Photo of Mr John McWilliam Mr John McWilliam Labour, Blaydon

Order. If the hon. Gentleman is suggesting that the Finance Bill should contain legislation that would require that result, I have to tell him that I would have to be impartial.

Photo of Rob Marris Rob Marris Labour, Wolverhampton South West

I would welcome any amendment to that effect, Mr. McWilliam. If Wolverhampton Wanderers was not to be promoted, it would stay in the English league division one, in which there are significant financial difficulties due to the ITV Digital fiasco. I wonder if the Minister would tell me what effect the clause would have on the finances of football clubs that may be leasing out betting space to a private company for at-stadium betting, whether on the result of the match taking place at that stadium, other football matches or other sporting events. Has the Treasury made an assessment of the financial impact?

Photo of Stephen O'Brien Stephen O'Brien Shadow Paymaster General

I have listened carefully to the Minister and the contributions of my hon. Friends, as well as to the hon. Member for Wolverhampton, South-West (Rob Marris), and it seems to me that while I accept the Minister's logic, questions have to be raised—of course, it would be very helpful to have the answers too. I am very interested to hear the answer to the question put by my right hon. Friend the Member for Fylde (Mr. Jack) about motor racing. Oulton Park circuit is in my constituency and it is having to go through some major restructuring, so obviously the financial implications are important.

Most of us will have some form of constituency interest which might experience a potential differential or even competitive effect in relation to the future financial backing that can be found to underpin various sporting venues. It did strike me that one of the most difficult ones to square—it may seem somewhat humorous—was a donkey derby because that really is entirely animal-based. Is a donkey a horse for the purposes of the clause? I do not know whether the Economic Secretary has paragraphs of advice helpfully provided by his officials, but I dare say that the world has always wished to know the answer to that. Is he able to provide it this afternoon? That would be a world first. I say that in the presence of my right hon. Friend, who represents Fylde, which is close to one of the most famous donkey derbies on the Blackpool beach. We need to know the answer, but on the basis that we will get satisfactory answers, we will be happy to support the Government on the clause.

Photo of John Healey John Healey The Economic Secretary to the Treasury

I shall respond to the points raised by the right hon. Member and other hon. Members. The rationale for returning the concession to its original purpose is twofold. First, at venues such as rugby grounds and motor racing circuits, betting is not a major part of the attraction in the way that it is in horse racing or greyhound racing. More importantly, as I explained in my opening remarks, at greyhound tracks and horse racing circuits, on-course betting is a crucial component in establishing, altering and determining the starting prices for those races. That simply is not comparable with the sort of prices that someone would get on the result at a football or rugby match, or any other sort of sporting fixture where the prices are determined by off-course bookmakers.

A couple of hon. Members were concerned about the impact of the change. As a result of the consultation and the accompanying discussions and evidence, we are satisfied that there will be little adverse impact on the ability of bookmakers to conduct their business activities at sporting venues that will no longer be covered by the concession. There was absolutely no indication from the bookmakers during the consultation period that they would withdraw from those venues as a result. We, therefore, confidently believe that there will be very little or nil adverse impact on the venues at which the bookmakers choose to continue to operate. As far as we can estimate, the impact of the reform on the odds that may be offered will also be negligible.

Photo of Tony Cunningham Tony Cunningham Labour, Workington

From what I can gather, the Economic Secretary is talking about horse racing and greyhound racing. I just wondered whether hound trailing, which is popular in my constituency and other parts of Cumbria and which has on-course betting that determines the price, is also covered by the amendment.

Photo of John Healey John Healey The Economic Secretary to the Treasury

I have to concede that I am not familiar with that sport. We do not have it in Rotherham. If I may, I will check the point and get back to my hon. Friend.

Photo of Stephen O'Brien Stephen O'Brien Shadow Paymaster General

Will the Economic Secretary ensure that the letter is sent to all members of the Committee? As a Cumbrian by background, I am familiar with the sport. It was a good example and I am grateful to the hon. Member for Workington (Tony Cunningham) for raising it.

Photo of John Healey John Healey The Economic Secretary to the Treasury

I should be delighted to do that. I am not promising or making any commitment, but if I can shed any light on the philosophical question posed by the hon. Gentleman about when a horse is a horse and not a donkey, I will do so as well.

Photo of Mr John McWilliam Mr John McWilliam Labour, Blaydon

Order. That is more a zoological question than a philosophical one.

Question put and agreed to.

Clause 8 ordered to stand part of the Bill.