Clause 15 - General betting duty: pool betting

Finance Bill – in a Public Bill Committee at 3:15 pm on 6th May 2004.

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

Photo of Richard Bacon Richard Bacon Conservative, South Norfolk

I welcome you to the Chair, Sir John. I said on Second Reading that I was an undergraduate student of Finance Bills and I think that that has been demonstrated amply. My hon. Friend the shadow Paymaster General is, of course, delirious about the subject of betting duty in general, and pool betting in particular, but unfortunately he has been unable to join us this afternoon, so he asked me to comment on the clause. It provides for all pool betting, on both dog racing and horse racing, to be brought under the general betting provisions.

As online betting exchanges have developed in recent years, there has been growing concern that they provide not only an innovative and convenient way for clients to place a bet, but a way for some people to establish themselves as, in effect, unlicensed bookmakers, and therefore escape the 15 per cent. tax on profits incurred by traditional bookmakers. It certainly appears that there has been a broad welcome for the clause from the industry, at least from the traditional industry, because it has become increasingly clear that there has not been equal tax treatment of traditional bookmakers and those who act as bookmakers on betting exchanges.

I have just one question for the Minister. At present, the liability of certain types of pool betting to general betting duty depends on where and by whom the betting is being provided or promoted. Although the Government's proposed changes will mean that any pool betting, at least on dog racing and horse racing, will fall within the scope of general betting duty, so long as the promoter or the totalisator is in the UK, an obvious question arises. As proposed new section 12(4A) of the 1981 Act, in subsection (8), says:

''A bet is an on-course bet for the purposes of this Part of this Act'' if it is made

''with a bookmaker present at the meeting''

''by means of a totalisator situated in the United Kingdom''.

That raises concerns about what assessments the Government may have made of the potential size of the shift towards offshore online betting as a result of such changes. If an individual who currently practises as an unlicensed bookmaker through a betting exchange were to move his activities offshore, there could be considerable scope for abuse of the rules on UK residency. I can imagine that it would be quite easy for someone to seek to avoid the effects of the proposed changes by locating outside the UK, or at least purporting to do so, while actually continuing to spend significant periods of time here.

In conclusion, the clause is broadly welcome, but there are concerns about whether it may result in some unintended consequences. I look forward to hearing what the Minister has to say about that.

Photo of Harry Cohen Harry Cohen Labour, Leyton and Wanstead

I suppose that I should declare an interest—although it has to do more with money being paid out than money coming in—in that I half own a greyhound with my hon. Friend the Member for Walthamstow (Mr. Gerrard). In total, she has won about 10 races out of 64, including the one before last. I can give a tip to my hon. Friends: I think that she will win again in the next two or three races that she runs. The all-party greyhound group have a dog called Go Running Whip, which starts its campaign in the greyhound derby this Saturday. My hon. Friend the Member for Walthamstow tells me that he is on it at 500:1, so he will be very rich if it wins.

The clause is about gambling and the greyhound industry. I welcome the fact that there will be no betting tax for dog racing, which will be a boost to the industry. I understand that there has been an agreement between the British Greyhound Racing Board and the bookmakers for an increased levy on the bookmakers, the proceeds from which will go to the industry. Some of that money will also go to the welfare of the greyhounds, particularly retired ones. That is important; not enough has been done on that in the past. The industry has made improvements to look after retired greyhounds. I welcome that, although more needs to be done. I am also sympathetic to an important campaign on the issue by the League Against Cruel Sports.

The problem with the levy is that it is voluntary. In the past, a number of the bookmakers have not paid up. They are a minority, but I believe that even now a number of bookmakers are saying that they will not pay up to the levy. They are freeloading on the sport and on the industry. My right hon. Friend the Minister for Sport and Tourism has made some strong statements on the issue and expressed his concern about non-paying bookies. I would like the Economic Secretary to say whether he will keep an eye on the situation. All the bookies should pay. If the voluntary scheme does not operate properly, it should be made compulsory, so that the money can be available for the industry. Will my hon. Friend also look at how the money from the levy is spent and ensure that it goes towards the rehoming of retired greyhounds?

I recently made a donation. Under the gift aid scheme, if an individual gives £100, another £28 can go to the charity. Would it be possible to extend the scheme to businesses such as greyhound tracks and bookmakers, perhaps by allowing an offset against their tax bill, so that additional money could be raised for the retirement of greyhounds? I hope that the Economic Secretary will consider that suggestion.

Photo of John Butterfill John Butterfill Conservative, Bournemouth West

Order. I appreciate the hon. Gentleman's concern, which I share, for retired greyhounds. However, I hope that the Economic Secretary will not be tempted too far into a response, as the matter does not closely relate to the clause under discussion.

Photo of Mr Howard Flight Mr Howard Flight Shadow Chief Secretary to the Treasury

May I briefly add my welcome to you, Sir John? I almost feel that we should consider setting a precedent by allowing you to speak when we get to clauses 139 to 270 and all the schedules on pensions.

These measures are part of a wider opening up of gambling everywhere. There is a coincidence of interest between the Government and the industry, in that the Government get more tax and the industry gets more business. It may sound old-fashioned, but I have moral concerns about a business that is based on exploitation of the weaknesses of the less privileged. I can think of a certain past Prime Minister who may have had some objections in principle. I wonder whether the Government have any wider policy on the subject, given that we may end up with forms of gambling on every high street.

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

A number of interesting and wide-ranging points have been made. I shall touch on them but not dwell on any for too long.

Clause 15 is not part of the opening up, as the hon. Member for Arundel and South Downs (Mr. Flight) put it, of the gaming industry. However, he raises proper concerns. Having given evidence to the cross-party pre-legislative scrutiny Committee that was set up by both Houses to consider the draft legislation on the future of the gaming industry, I am aware that such concerns were put to it and that it has examined them. At present, the Government are considering the observations of that Committee, which reported just before Easter. In due course and before long we will set out the Government's conclusions and proposals for the way ahead, taking into account the serious work undertaken by that Committee, which was chaired by the hon. Member for Ryedale (Mr. Greenway).

I must admit to my hon. Friend the Member for Leyton and Wanstead (Harry Cohen) that, to be perfectly honest, I never know where I am with a Running Whip. Even odds of 500:1 do not make it any more likely that I would go with it, but I was interested to hear about his involvement with the industry. I recognise his interest in the welfare of retired greyhounds, but I point out that the operation of the levy is principally a matter not for me but for my right

hon. Friend the Minister for Sport and Tourism. I shall certainly draw his attention to my hon. Friend's concerns.

I understand the broader points that the hon. Member for South Norfolk (Mr. Bacon) made about betting exchanges and offshoring in the bookmaking industry. Both concerns are wide of the tightly drawn provisions in clause 15, but let me say that I am keeping a close eye on betting exchanges and have done so for the past year or more. As the Budget confirmed, officials are taking another close look at whether we have an appropriate taxation regime for betting exchanges, and in particular considering the concerns that some have raised about the use of betting exchanges by people who are effectively running businesses through them, rather than acting as individual punters.

The clause, however, is being introduced to maintain the existing equitable treatment and level playing field in the current tax treatment of pool betting. It is being introduced as a consequence of changes to social law that are making their way through the other place at present, which will affect the current administration of pool betting for horse and greyhound racing.

Those changes are being introduced by the Horserace Betting and Olympic Lottery Bill and will result in the dissolution of the Tote, which has the current responsibility for the administration of pool betting for British horse racing. The changes introduced by that Bill will allow the Tote's successor company, which is expected to be a racing trust, to retain exclusive rights to administer British horse race pool betting for a maximum of seven years. After that, the market will be open to competitors to enter.

In order to maintain the current equitable treatment, clause 15 will amend the Betting and Gaming Duties Act 1981. It will amend or remove some soon to be outdated references, such as references to ''bookmakers'', ''totalisator odds'' and the Tote itself. The amendment will also maintain the current equitable treatment for the administration of pool betting on horse and greyhound racing by mandating those activities liable to general betting duty. That will protect their current on-course duty exemption and will avoid burdening the Tote's successor with liabilities to both general betting duty and pool betting duty. On that basis, I commend the clause to the Committee.

Question put and agreed to.

Clause 15 ordered to stand part of the Bill.