Horserace Betting and Olympic Lottery Bill

Public Bill Committee, 20 January 2004.

Standing Committee D

Horserace Betting and Olympic Lottery Bill

Richard Caborn (Labour, Sheffield Central)

I beg to move,

That—

(1) during proceedings on the Horserace Betting and Olympic Lottery Bill the Standing Committee shall meet when the House is sitting on Tuesdays and Thursdays at 9.30 am and 2.30 pm;

(2) 8 sittings shall be allotted to the consideration of the Bill by the Committee:

(3) the proceedings shall be taken in the order shown in the Table below and shall (so far as not previously concluded) be brought to a conclusion at the time specified in the second column of the Table.

TABLE Proceedings Time for conclusion of proceedings Clauses 1 to 10, Schedule 1, Clauses 11 to 13, Schedule 2, Clause 14 11.25 a.m. on Thursday 22nd January Clauses 15 and 16, Schedule 3, Clause 17, Schedule 4, Clauses 18 to 20 5.00 p.m. on Tuesday 27th January Clauses 21 to 29, Schedule 5, Clauses 30 to 38, Schedule 6, Clauses 39 to 42, remaining proceedings on the Bill 5.00 p.m. on Thursday 29th January

James Paice (Conservative, South East Cambridgeshire)

I, too, welcome you to the Chair, Mr. Sayeed. I also welcome Mr. Illsley, in his absence. We do not have any qualms about the programme motion, not least because it was agreed with us all last night. As the Minister rightly said, there is probably plenty of time to deal with things.

The Bill is slightly unusual in that it involves little party politics and few issues of party principle. My colleagues and I come to consider the Bill with the interests of horse racing and the Olympics at heart, and we will address it in that context. Certainly, when it comes to the first two parts of the Bill, which relate to horse racing and which I shall handle on behalf of the Opposition, the purpose of most of our amendments, and of what I hope will be a sensible debate, will be to persuade the Government simply to include measures that they have already agreed verbally and made announcements about. There are one or two other issues of principle, which we shall come to in due course, but I want to stress that overall we welcome the Bill and want it to go forward. There are some areas where improvements could be made and I look forward to constructive consideration in Committee.

Don Foster (Liberal Democrat, Bath)

I, too, welcome you to

the Chair, Mr. Sayeed. The Minister's proposal for the programme for our sittings already has the support of the hon. Member for South-East Cambridgeshire (Mr. Paice), and the Liberal Democrats are also happy to support the motion. It sets out a reasonable timetable for dealing with some quite important and complex issues. Judging from the debate on Second Reading, there appears to be a fair degree of support on both of the House for the various measures. On Second Reading, however, the hon. Gentleman suggested a number of concerns, some of which relate to omissions and issues that should be covered. We have similar concerns, and there are some points of detail that we wish to explore with the Minister.

The programme motion, however, gives us ample time for deliberation. My wife, the current Mrs. Foster, will be disappointed with the show of unanimity. [Interruption.] I see that the Committee has at last woken up and twigged what I have just said. When I have been successful in obtaining major concessions from the Government in other Committees on which I have had the pleasure to serve, it has been my custom to write a letter to my wife explaining how successful I have been. Even small concessions have led to at least a postcard to the current Mrs. Foster. My fear is that, given the fair degree of support on all sides and the lack of controversy, she will not be anticipating much correspondence from me.

Question put and agreed to.

Jonathan Sayeed (Conservative, Mid Bedfordshire)

I remind the Committee that there is a money resolution, copies of which are available in the Room. I also remind Members that adequate notice should be given on the tabling of amendments. As a general rule, my fellow Chairman and I do not intend to call starred amendments, including those that the Committee may reach during an afternoon sitting.Clause 1 Dissolution of the tote

Clause 1 - Dissolution of the tote

Don Foster (Liberal Democrat, Bath)

I beg to move amendment No. 49, in

clause 1, page 1, line 8, at end add—

'(3) The Secretary of State will require an independent valuation of the Horserace Totalisator Board on the appointed day.

(4) The successor company may pay a sum of no more than 50 per cent. of the independent valuation under sub-section (3), providing all future operating profits are used to contribute to racing.

(5) Any further assets acquired by the Horserace Totalisator Board between an independent valuation under sub-section (3) and the transfer of its assets to the successor company must be subject to an independent valuation and added to the sum agreed under sub-clause (4).'.

I said a moment ago that there are several areas in which the Conservative party and my party believe we are well acquainted with the Government's intentions, but that those intentions do not appear in the Bill. That is the basic principle of the amendment.

The Government have made their intentions towards the Tote very clear. They have appeared among the 2001 manifesto commitments, in numerous speeches by the previous and the current Home

Secretary, and most recently on Second Reading when the Minister for Sport and Tourism said:

''Hon. Members asked about the sale of the Tote. We set up the shadow trust to answer those questions, and it has had a dialogue with the Treasury. The Tote will be sold in the normal way for an asset of the Government. An independent review will be held and a price set.''

He continued by explaining why he believes it important to set a fair price. That is also important to our deliberations. He said:

''If we fail to set a fair price for the Tote, we will run into various difficulties. For example, the bookmakers will complain to Europe about state aid and unfair subsidies that could distort the marketplace.''

The Minister explained that the normal procedure for the sale of Government assets will be adopted for the sale of the Tote. He also explained that, once a valuation has been carried out, it is anticipated that the Government will receive 50 per cent. of that value, with the new racing trust paying the other 50 per cent. to the Government. He confirmed that belief on Second Reading:

''On the 50 per cent. figure, the Government believe that there are two legitimate stakeholders in the Tote: the racing industry and the taxpayer. It is as simple as that.''—[Official Report, 8 January 2004; Vol. 416, c. 492–93.]

From what I have read out, the Government's intentions are clear. They intend to sell the Tote to a racing trust—an issue that we shall debate later—but for a racing trust or anyone else, the procedure for sale will consist of an independent valuation at the time of sale, and the Government will expect to receive about 50 per cent. of that with the trust paying 50 per cent. to the Government for the assets. That being the case, we believe that it should be included in the Bill for all to see, to ensure that everyone is clear about the procedure. In doing that, we have to take account of a number of concerns that would exist were it not to be included.

The Government have made it clear that they intend to sell the Tote to a racing trust because they believe that that will be in the best interests of racing. That being the case, the racing trust will not have financial resources of its own and it will have to fund that acquisition by borrowing against the Tote's future cash flow. The Government must therefore ensure that debt funding against the Tote's cash flow is such that it ensures that the trust can pay for the Tote and do so in a way that provides a sustainable interest burden.

The Tote's resulting capital structure must be sustainable and not over-leveraged. Recent examples such as National Air Traffic Services and Railtrack serve as useful precedents of the dangers of overextending viable businesses. We must ensure that whatever action we take avoids embarrassment to the Government and the racing trust. In covering the additional leverage that the Tote may be able to support, it is important to appreciate that the Tote already carries a substantial net debt, estimated to be approximately £40 million for the current year.

At a later stage, we shall no doubt touch on issues relating to some problems the Tote has with its pension fund. We must therefore ensure that we get the price right, so that there is not too great a burden

on the Tote. There must not be any impact on the current distribution to racing. After all, that is why we are going through the exercise. Any reduction in the Tote's contribution to racing, or in any of the money that it distributes, could seriously jeopardise some smaller courses, leading to closure, job losses and related impact on the local economy.

The other reason that I believe we have to be particularly careful is that it is obviously the Government's intention, which we support, for the Tote to grow and develop so that it can make further contributions to racing. The Tote operates in an extremely competitive environment with competitors that are well capitalised and which actively invest their resources to diversify and grow their businesses. The new-style Tote will be launched into a difficult, competitive climate.

Getting the price right is vital, and it is also right that we ensure that we are fair to taxpayers as well. Therefore, we fully support the Government's proposal for the procedure. There is a debate as to whether the figure should be the full 50 per cent. or less than that, primarily reflecting the benefit of the exclusive licence that the Tote will have for seven years under Government plans, although we shall debate that later.

Believing that to be the right procedure, we also believe that it should be included in the Bill, which is what amendment No. 49 would do by adding three subsections to the clause. The first states:

''The Secretary of State will require an independent valuation of the Horserace Totalisator Board on the appointed day.''

That is precisely what the Government have said is their intention. Secondly, the amendment states:

''The successor company may pay a sum of no more than 50 per cent. of the independent valuation under sub-section (3), providing that all future operating profits are used to contribute to racing.''

That, too, is the Government's intention, clearly stated by the Minister. Finally, as the Tote is going through the exercise of purchasing additional assets, we must ensure that such assets are taken into account. That is why we have added the third new subsection.

Although I believe that the procedure adopted by the Government is the correct one, and therefore it should be clearly stated in the Bill, I accept their argument that the racing trust should not be named there. We shall debate the issue later, but I hope that the Minister has noted that we have not specified the racing trust in the amendment, because we acknowledge the importance to the Government of being able to negotiate in a way that does not tie their hands. They will want to conduct negotiations without there being only one potential purchaser.

We believe that the amendment is the right way forward. I hope that, if there is a clause stand part debate, I shall have an opportunity to raise a couple of additional points on the issue with the Minister. As they are not directly relevant to the amendment, with your agreement, Mr. Sayeed, I shall leave them till later in our deliberations.

Richard Page (Conservative, South West Hertfordshire)

The Minister will remember that on Second Reading a number of hon. Members asked for a Committee stage, as it would be a golden opportunity for him to explain how this part of the purchase of the Tote would unravel and give us a clue as to the Government's thinking.

I support the sentiments behind the amendment moved by the hon. Member for Bath (Mr. Foster), but some aspects of its practicalities worry me, such as the method of valuation. We should consider the complexities and difficulties that lie behind the calculation of such a valuation. The hon. Gentleman refers to an ''independent'' valuation: any valuer would want to know the ground rules before moving into a valuation.

In relation to the process of valuation, the history of the Tote should be borne in mind. We know that the Tote has not given the Government any money directly in the form of a licence fee over the past 76 years, but the Government in turn have given the Tote an effective monopoly for 76 years and have enabled a substantial pool betting system to emerge. The Government could have charged a licence over the years if they had changed the law, but, particularly over the past 10 years, the Tote has put a sizeable amount into racing—about £100 million—which could almost be regarded as a licence fee. If the Tote had not put that money into racing, racing would have suffered. The Government's substantial revenues from various aspects relating to racing, particularly betting, would have been diminished, because extra support would have to have gone into racing. The Government should take that into account.

With the acquisition of the Tote, the Government will be taking it over, but, although the Tote is owned by itself, it has a notional value at present. The argument could follow that this value is greater than any value that the racing trust would have to pay the Government, because the racing trust will pay a licence fee to the Government. One could almost work out that the Government should give the racing trust money to take over the Tote, because it will pay a licence fee. I do not advance that too seriously, as I cannot imagine the Chancellor of the Exchequer accepting such a fair and honest evaluation of the situation. My point is that it is very difficult to reach an independent valuation on the Tote.

The hon. Member for Bath touched on the matter. We have the information that a seven-year licence will be granted. I sincerely hope that, when my hon. Friend the Member for South-East Cambridgeshire introduces the appropriate amendments, the Minister will be prepared to accept that the seven-year licence should be included in the Bill. I suggest that we should work backwards when we come to the so-called independent valuation, because one cannot work out the capital value until the size of the licence fee is known, there is an agreement on the amount of money that will go into racing and it is acknowledged that, during the seven years, the entire operation will have to wash its face. One could keep arguing about the various costs that must be taken into account.

This is a golden opportunity for the Minister to take advantage of a compliant and supportive Committee, given all that we are trying to achieve. I hope that when he responds he will explain the basis on which the valuation will be calculated so that we can continue to work and move forward with confidence in him.

James Paice (Conservative, South East Cambridgeshire)

I largely agree with every word that my hon. Friend and the hon. Member for Bath said. I am in a slightly difficult position, because I, too, considered tabling an amendment in similar vein but was dissuaded from doing so by the Tote itself, which felt that it might not be helpful to include such detail in the Bill. Nevertheless, as my hon. Friend said, this is an opportunity to explore the mechanism by which the Tote will be valued and, at least, to get a commitment from the Minister on 50 per cent. The hon. Member for Bath read out some of the Minister's winding-up speech on Second Reading. The Minister did not go quite as far as specifying 50 per cent. He talked about joint ownership and such things but did not make a commitment, although one could read one into his comments. He is smiling, which leads me to assume that I am right in saying that he fought shy of a final commitment, which I believe is necessary.

Don Foster (Liberal Democrat, Bath)

I apologise for interrupting the hon. Gentleman so early in his speech, but I ask him to reflect on what he just said. I do not know whether he would join me in not wanting the Minister to specify a figure of 50 per cent., other than to say that it was the maximum. Surely the Government would want to have negotiations on some of the issues raised by the hon. Gentleman. That is covered by my amendment.

James Paice (Conservative, South East Cambridgeshire)

I fully recognise what the hon. Gentleman is saying. The right term is probably ''a maximum of 50 per cent.'' The figure that has been used throughout the debates during the past 18 months has been 50 per cent., although we have yet to put it into any context or add substance to it, whether it be a maximum of 50 per cent. or 50 per cent.

My hon. Friend said that perhaps the taxpayer should pay the Tote. I believe that that was the way he put it. That might be stretching the point ever so slightly, but the important point is that the taxpayer has never put any money into the Tote itself or even stood by its borrowings. Therefore, there is an intellectual argument that the taxpayer has no right to benefit from the sale of the Tote, other than from the licence fee, which I will come to later, because the taxpayer has never had any financial responsibility for the Tote throughout its existence. Indeed, as I said on Second Reading, the hon. Member for Knowsley, North and Sefton, East (Mr. Howarth) stated clearly in a written answer, when he was the Minister responsible for such matters, that the Tote's assets basically belong to the Tote board, and that the Tote board belongs to no one. That makes it clear that the taxpayer is not viewed as owning it.

In 1999. the British Horseracing Board obtained expert legal advice from Sydney Ketteridge and Margaret Gray, who argued that it was fallacious for the Government to have a share of the money for the Tote. They went on to say that

''the monopoly was vested in a statutory Board in the public interest. The proper control of betting and racing was recognised as a benefit to the nation. The Tote itself derives no benefit from the monopoly rights and cannot sell these rights to a third party for commercial value.''

It is doubtful whether the Government can support their claim to a share in the value of the Tote.

I am sufficiently realistic to understand that the Government will probably insist on a small pound of flesh for the Tote, but there is a strong intellectual argument that they should not receive any money other than the licence fee. What concerns me—this a point that I shall repeat on several occasions during our proceedings—is that none of us can foresee the future. The Minister and the Secretary of State have been completely open and genuine in their expressed intentions about the various aspects of the disposal of the Tote—I do not detract from them at all—and we all know that. Although it is commonplace in Committee to say that the Minister may not be around in few months and that we will have somebody else, that is a reality. We do not know what the future holds.

As I said on Second Reading, it is perfectly conceivable that the situation may have changed by the time the Bill has completed its passage, particularly if, in light of the Office of Fair Trading investigations, decisions are taken to delay some of the actions because the Bill is all-enabling. Therefore, there is an argument for saying that we need a commitment about the mechanism by which the Tote will be valued and a sale price agreed. Of course there are those, the bookmakers in particular, who contend that the value of the Tote is considerably in excess of the sums that have been talked about as a sale price—anything from £50 million to £150 million has been quoted.

Don Foster (Liberal Democrat, Bath)

More than that.

James Paice (Conservative, South East Cambridgeshire)

As the hon. Gentleman says, the bookmakers are quoting figures of double that or more as their estimate of the value of the Tote. I am pleased that in his amendment the hon. Gentleman made it clear that the 50 per cent. figure would apply only if future operating profits were used to contribute to racing. One of my concerns in having that in the Bill was that a future Minister might decide to sell it to somebody else, such as an existing bookmaker, who would then get the 50 per cent. discount. The hon. Gentleman has covered that possibility and I am glad.

I am sure that the Minister will tell us that the amendment is technically faulty. That is the usual response regardless of whether he wants to accept the overall point. The key point is that we need to know how the Minister intends to have the Tote valued, how he intends to deal with its liabilities—including the pension fund—and whether he accepts that the split between the two interest bodies that own the Tote, which he has already put into Hansard, should be 50:50 or some other balance. Those issues are important.

As the hon. Member for Bath has said, the more that the Tote is forced to borrow to pay for itself, the less it will be able to borrow to invest in its growth. As we shall discuss later, its growth during the period of the licence will be critical to its long-term future and

ability to deliver to racing a substantial income flow once the licence ceases to be exclusive—although we shall seek to prevent that—and there is competition in the pool betting industry, as the Government envisage. It is essential that by that stage the Tote has grown to such a size that it can resist not only that competition but can continue to deliver unto racing the sums of money that it is delivering now or indeed, we hope, considerably more. If it is to do that, it must have the resources to expand, and it will not have those resources if it has had to borrow to pay the Government.

I hope that the Minister can offer us considerable assurances on the points made by the hon. Member for Bath in his amendment.

Richard Caborn (Labour, Sheffield Central)

As the hon. Member for Bath said, the Committee gives us a golden opportunity—a golden opportunity to step into reality. First, we have made it clear that we want to sell into a racing trust. Many hon. Members know that discussions have been taking place about getting a fair period of time in which the Tote can consolidate itself and go into the marketplace, and give the punter choice.

Amendment No. 49 tries to evaluate the amount that the successor company will pay, but we should remember that the Government and the Tote say that they do not want that in the Bill. I gave clear assurances on Second Reading and I give them again: an independent valuation will be carried out. There will be, broadly, a 50:50 split of the asset between the taxpayer and the racing industry, because we believe that that is fair.

However, as long as an independent valuation can lead to agreement about the 50:50 split, other aspects must bear greater consideration, such as the length of time over which the payment is made. A series of commercial negotiations is necessary that can determine the survival and development of the Tote. It is far better to leave that to a commercial negotiation, as long as the Government have set out clear parameters, as I am doing now.

It would be naïve to believe that things are not already happening. A dialogue has been taking place for a considerable time between the Tote and the Treasury, so in the real world the Tote is in discussion with the Treasury, the body with which it will negotiate. We have given an absolute commitment that there will be an independent valuation. We have said that, broadly, it will be a 50:50 split, because we think that that is fair to the taxpayer and the punter. But many other aspects are probably more crucial to the Tote and to the way in which it can develop over the seven years—the length of payment, how the debt is raised, how it is paid back and over what period and whether it is back-loaded or front loaded. Many commercial considerations will be necessary. The more politicians keep out of those, the better; and the more they are kept out of the Bill, the better. Therefore, I hope that hon. Members will accept that, by resisting the amendment, we shall be doing the Tote and the Government a favour.

As I said on Second Reading, we must be mindful of the European Union's rules on state aid and understand the point that we have reached on competition. Indeed, we made a manifesto commitment to sell the Tote to a racing trust, and that is what we are doing. We believe that we are living up to our treaty obligations, while retaining the flexibility to get a fair deal for the Tote and put the proceeds into the racing industry. Therefore, I do not believe that the amendment should be included in the Bill, nor that it would be in the Government's best interests to include it.

Don Foster (Liberal Democrat, Bath)

First, I thank the Minister for putting clearly on the record again the Government's intention to sell to a racing trust and for stating again that a 50:50 split is broadly the right way forward because, as he has said many times, he believes that that is fair. I suspect that all members of the Committee are well aware of the discussions that have taken place and no doubt are taking place as we speak. I must say, as gently as I can, that seeking to persuade members of Opposition parties to support him and what he wishes to happen by telling us that we are doing the Government a favour will not endear him to many of us.

Richard Caborn (Labour, Sheffield Central)

I have considered a number of Bills over my 20 years in Parliament, and this is the first time that I have been on a Committee in which the official Opposition and the spokesman for the Liberal Democrats have said that they fully agree with the principle of the Bill and want to ensure that it is enacted—probably in a slightly modified form. I thought that we were all of one purpose. In that sense, I was thinking about the ''we factor'': the fact that we all agree that we have to get the Bill through. It is a new experience.

Don Foster (Liberal Democrat, Bath)

If the Minister is so enjoying the togetherness, I look forward to receiving similar emoluments from him for our contribution to the debate so far. I am grateful to him for clearly making commitments. Again, I gently say to him that he suggested that the things that he has just referred to—a roughly 50:50 split, the probability of a racing trust being involved and so on—should not be included in the Bill because there are a number of other important matters. He rightly referred to them: the length of repayment will clearly be important and I mentioned state aid in my contribution. These things will important in respect of the Tote viability. However, I remind the Minister that these issues are not included in my amendment, which carefully covers only those aspects relating to the sale about which the Government have given clear commitments. The amendment deliberately avoids the important additional issues that the Minister has raised.

Richard Page (Conservative, South West Hertfordshire)

As someone who has put a Bill on privatisation through the House of Commons, I am fully aware of the worries in relation to the arguments about state aid. However, is it not rather peculiar for the Minister to worry about that aspect when the Government have given no money to the industry, and

will be receiving money out of it? I cannot see how any aspect of state aid should be applied in this instance.

Don Foster (Liberal Democrat, Bath)

The Minister may wish to intervene to comment on that. I suspect that he would say that some might consider a new body receiving assets potentially at half price and then going into a marketplace would be worth challenging in the European courts. I understand that the Government have already had preliminary discussions with the European Union, and were they to follow the route that they are clearly planning, but not prepared to include in the Bill, we would probably be all right. We might get clear confirmation from the Minister in the stand- part debate. Nevertheless, it appears that he is not yielding. There is not the likelihood of even a postcard to Mrs. Foster, and she will be bitterly disappointed by that. Certainly, many people in the racing industry will be disappointed that the Government are not willing to include in the Bill what they have said that they are clearly going to do.

Richard Caborn (Labour, Sheffield Central)

I want to ensure that when the hon. Gentleman writes to Mrs. Foster she has all the facts in front of her. I stress the detail in which the racing trust and our financial adviser, PricewaterhouseCoopers, are doing the preparatory work. A methodology for valuing the business prior to the sale has been established, and broadly agreed with the racing trust adviser. The methodology of valuing the business has been broadly agreed, and therefore I think that we are moving in the right direction. That should assure Mrs. Foster that everyone would get a fair deal.

Don Foster (Liberal Democrat, Bath)

I suspect that if Mrs. Foster were to read the transcripts of the debate—it is extremely unlikely that she will: she has better things to do—that would come as no reassurance to her whatever. The Minister makes my point very effectively; he has dug himself into a hole. He has just told the Committee that we are well on the way to having agreement about moving to a racing trust that will be 50:50, but we appear to be in agreement about some of the other extremely complicated, important issues. We could put the whole lot into the Bill since we appear to be in such agreement.

For some bizarre reason, which has not manifested itself in the Minister's contribution, the Government are not prepared to include those points in the Bill. I was going to say that I know when I am flogging a dead horse, but in the context of our deliberations I thought that that would be inappropriate. I know when I am trespassing on the Committee's valuable time and I know also when it is time to give up, so I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

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

Richard Caborn (Labour, Sheffield Central)

The clause gives power to the Secretary of State to abolish the Tote on a given date, which provides the flexibility required to ensure that the Tote is abolished only when everything is in place for a speedy transfer of its assets to the new owner. Consequently, this measure will be implemented as close as possible to that point of sale.

Don Foster (Liberal Democrat, Bath)

There are a couple of points I would like to raise with the Minister. He has said that debates are now ongoing, and he said a minute ago that discussions on the methodology were well advanced. I wonder whether the Minister would tell us the Government's view of the current pension fund deficit in relation to that evaluation. I know that it is subject to formal review, but I understand that there is a pension fund deficit of about £4 million. The question is whether that will be covered 100 per cent. by the Government, or will it be treated as a negative asset in the calculation? I would be grateful to hear what the Government's intentions are in that respect.

Richard Caborn (Labour, Sheffield Central)

That will be part of the valuation, and whatever deficit exists should be covered in the negotiations on the price of the Tote.

Don Foster (Liberal Democrat, Bath)

No, the Minister is not answering the question. It will obviously be taken into account in the valuation—that is pretty obvious. My question was whether it will be subject to the 50:50 rule, or whatever the precise percentage will be. Do the Government believe that the new body responsible for the Tote should have 50 per cent. of responsibility for that debt, or, given that the debt has been accrued under a different form of ownership, should 100 per cent. be paid for by the Government?

Richard Caborn (Labour, Sheffield Central)

If it is part of the evaluation, the answer would be yes, but in the real world it will form part of the negotiation. That is why it would be wrong to tie the matter down as tightly as the amendments specify. It is also why I hope that there can be an agreement on that issue, and others. That is part of the negotiations, and the discussions about the valuation of the Tote.

Question put and agreed to.

Clause 1 ordered to stand part of the Bill.

Clause 2 - Successor company: transfer

Richard Caborn (Labour, Sheffield Central)

The clause allows the transfer of the Tote property and liabilities to a company wholly owned by the Crown. The successor company will be formed and registered under the Companies Act 1985 as a company limited by shares. The transfer will take place on the day appointed by the Secretary of State, and I have already explained that it is intended that the Crown will own the company only for a short period prior to its sale. As I have said repeatedly, our intention is to sell the company to a racing trust.

Question put and agreed to.

Clause 2 ordered to stand part of the Bill.

Clause 3 - Sections 1 and 2: supplemental

James Paice (Conservative, South East Cambridgeshire)

I beg to move amendment No. 1, in

clause 3, page 2, line 39, at end insert—

'(6A) The Secretary of State shall ensure that the directors of the successor company following the vesting of the property, rights and

liabilities of the Board on the appointed day are the same people as were members of the Board before the appointed day, save to the extent that any individual member has not given his consent to being appointed as a director of the successor company.'.

This is a technical amendment, but it is important. The Tote proposed it, and it is about the status of its directors. As the Minister has confirmed, the Government intend to create a successor company and, in almost the same breath, to sell it to the racing trust. However, the legislative basis for a continuity of directors is missing. I am not suggesting that there is any malign intent on behalf of the Government suddenly to get rid of the existing directors and to appoint a new lot for the five minutes of the successor company under Government ownership. However, it is important to clarify that the existing directors should become directors of the successor company unless they individually choose not to be.

Once the Tote is sold to the racing trust, as we hope it will be, that trust should decide whether a change of directors is necessary. As with any company, the owners should decide who are the directors. I am simply trying to clarify the situation for the successor company that exists in the period between the current Tote and it becoming wholly owned by the racing trust.

The amendment is important for the purposes of continuity. We always have to consider the unlikely event, and on Second Reading in response to an intervention from the right hon. Member for Livingston (Mr. Cook), the Minister referred to the possibility that something could go wrong and that the sale to the racing trust might not happen.

We need a belt-and-braces approach. We all hope that there will be no problem, but it is conceivable that, having taken the Tote into state ownership, something may go wrong. In that event, the Government would be stuck with ownership for longer than is currently envisaged. I seek only to ensure that the current directors of the board remain until the Tote is taken over by the racing trust or whomever.

Richard Page (Conservative, South West Hertfordshire)

I wish to intervene only briefly. I support my hon. Friend's argument. I appreciate that it is a technicality and that it represents a belt-and-braces approach, but the Minister said that he hoped that there would be only a short period between Government ownership and the handover to a racing trust.

I do not know what is a short period. For Stephen Hawking it is a few millennia; for the Government it could be three or four months. There could be a period of instability in which various moves are made and actions taken, and it is most important to the stability of, and confidence in, the measure that we ensure that the directors who know how to run the Tote operation are there to take over when the time comes.

We are being super-cautious, but I hope that the Minister appreciates the fact that the amendment has been tabled with the best of intentions for all concerned.

Adrian Sanders (Liberal Democrat, Torbay)

I am not convinced by the amendment. It would bind the

Secretary of State to ensure that the directors of the successor company are the same people as were members of the board before the appointed day when the successor company assumes control. The freedom of the shadow racing trust—the successor body—to determine whom its directors were, or how it would carry out its management, would be removed.

My hon. Friend the Member for Bath said on Second Reading that he did not want the Secretary of State to be forced into selling the Tote to one particular buyer regardless of its offer. Perhaps I have misinterpreted the amendment.

Richard Caborn (Labour, Sheffield Central)

I thank the hon. Member for South-East Cambridgeshire for tabling this probing amendment, and I think that the hon. Member for Torbay (Mr. Sanders) has misinterpreted it.

Amendment No. 1 would ensure that after dissolution the Tote board members would continue to be board members of the successor company. That would be the case. I want to put it on record that the Tote board does an excellent job and will, no doubt, continue to do so until the point of sale. When the successor company has been sold to a new owner—this is where there is a difference of opinion—the new owner will appoint the board. We do not want to tie the hands of the new owner in this matter. That will not affect anyone's rights under employment law and the executive directors, like other employees, will be protected under clause 3(6). I ask the hon. Member for South-East Cambridgeshire to withdraw his amendment.

James Paice (Conservative, South East Cambridgeshire)

I am grateful for the Minister's response. Before perhaps complying with his request, I want to press him a little further. We agree that when the successor company has been sold to the shadow racing trust, none of us wants to tie the trust's hands and it must appoint its own directors as appropriate. However, there will be a period between the Tote ceasing to have its current status, when the successor company takes over its assets and so on, and that successor company being sold on. It might be five minutes, or the time it takes to sign the documents, but it might be considerably longer if matters go adrift.

All I am seeking from the Minister is an assurance that the directors of the successor company, which will, by its nature, be a different company—that is what the clause is all about and the Government are appointing the successor company—will be the same as the existing directors of the Tote until the point of sale to the racing trust.

Richard Caborn (Labour, Sheffield Central)

I repeat what I said: the Tote board members on the appointed day of dissolution will continue to be board members of the successor company. It is our intention to sell it, as quickly as possible, to a racing trust. Beyond that, we must obviously retain some flexibility. We expect the board members to be on the board of the successor company. I am trying to provide the reassurance that the hon. Gentleman asked for. I believe that I have done so and that we are giving the racing trust the flexibility to reflect on the membership of that board. That is the

best way forward in the circumstances, and I hope the amendment will be withdrawn.

James Paice (Conservative, South East Cambridgeshire)

As I suspect we shall find with a number of amendments and in view of the Minister's response, what is wrong with putting the amendment in the Bill? I am trying to achieve what the Minister intends, and I do not see a problem with putting that in the Bill. When the successor company is owned by a racing trust or someone else, who the directors are will be entirely a matter for the new owners. No one is talking about fettering them.

There are perhaps more important issues that should be in the Bill, whatever the Minister says, so I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

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

Richard Caborn (Labour, Sheffield Central)

The clause explains in more detail how the measures in clauses 1 and 2, which cover dissolution of the Tote and its transfer to a company that is wholly owned by the Crown, will take effect. The detailed effect is set out in the 10 subsections to clause 3. Subsections (1) and (2) ensure that anything done or in the process of being done in relation to the Tote is regarded as having been done or continued by the successor company. Subsection (3) provides that, at the appointed day, any reference to the Tote or members or officers of its board in a document or agreement is to be treated as a reference to the successor company and its members or officers.

Subsection (5) provides that any property, rights and liabilities of the Tote are vested in the successor company without the need for any further legal formality. Subsection (6) safeguards the rights of the Tote's employees, including the right to be consulted. It ensures that the Transfer of Undertakings (Protection of Employment) Regulations 1981 apply to the transfer of the Tote to the successor company. This is an important legal protection for the staff, regardless of whom the Tote is sold to.

Subsections (8) and (9) provide that the Secretary of State shall consult the Tote before nominating the successor company. Furthermore, he will consult the Tote and the successor company before deciding on the appointed day for its dissolution and transfer. Subsection (10) allows the Secretary of State to revoke and replace the previously nominated successor company, as outlined in clause 2(2)(a), before the appointed day and provides for an alternative successor company to be identified, should that be necessary for any reason.

The provisions should provide continuity to ensure a smooth transfer for the Tote from the public to the private sector. They are the nuts and bolts that will enable us to fulfil our manifesto commitment to sell the Tote.

James Paice (Conservative, South East Cambridgeshire)

I do not wish to trespass on your prerogative, Mr. Sayeed, but the Committee will have noted that in your wisdom you decided not to select some amendments that I had tabled to the clause. I do not question that, but they were amendments suggested by lawyers acting for the Tote, who

perceived a shortcoming in the drafting of the Bill. Although small, the proposals were intended to amend the beginning of the Bill. I shall not read them out in a manner that might suggest that I have moved them, but, as we learnt only yesterday afternoon that the amendments had not been selected, I am sure that, long before then, the Minister had been advised how to respond to them. They question whether these words form a sufficiently comprehensive statement:

''Anything done by or in relation to the Horserace Totalisator Board''.

If the Minister was advised how to respond to those amendments, I would be grateful if he gave us the benefit of that advice.

Nick Hawkins (Conservative, Surrey Heath)

I want to speak briefly, because when I looked at what my hon. Friend the Member for South-East Cambridgeshire had drafted before the amendments were tabled in our names, it seemed to me, with my background as a corporate lawyer, that the wording the lawyers had advised the Tote to propose was an improvement on the Bill. Therefore, like my hon. Friend, I would be grateful if the Minister explained why his advisers are so certain that the wording in the Bill is an improvement.

Richard Caborn (Labour, Sheffield Central)

The answer is that they believe that what they have drafted is an improvement. For the record, we will not necessarily appoint the Tote board as first directors of the successor company. I may have misread my notes, so I want to correct that for the record.

James Paice (Conservative, South East Cambridgeshire)

On a point of order, Mr. Sayeed. I am grateful to the Minister for reading that out, but it negates the whole of the previous debate—it is a completely different response from the one that the Minister gave when replying. The response of Conservative Members to such a remark would have been totally different.

Nick Hawkins (Conservative, Surrey Heath)

Further to that point of order, Mr. Sayeed. I do not know whether it is within the jurisdiction of a member of the Chairmen's Panel such as you to declare a previous debate null and void, but as my hon. Friend the Member for South-East Cambridgeshire withdrew the amendment, which we would otherwise have pressed, only on the basis of ministerial assurances, and the Minister got up a few seconds later and completely contradicted those assurances, can you as Chairman reopen the debate on the previous amendment? Clearly, the amendment was withdrawn on a wholly false and erroneous basis.

Jonathan Sayeed (Conservative, Mid Bedfordshire)

I thank the hon. Gentleman for his advice, but I cannot go backwards on a Bill, nor am I responsible for the Minister's words or the actions of the Opposition.

Richard Caborn (Labour, Sheffield Central)

To be clear, it would be useful to put on the record what I said, and the intention behind it. I said that amendment No. 1 seeks to ensure that Tote board members, on the appointed day, will continue to be board members of the successor company. The Tote has done an excellent job and will no doubt continue to do so until the point of sale. Once the successor

company has been sold to the new owner, it will be for it to appoint the board. We do not want to tie hands, and they will be the new owners. I clearly expressed my intention and said that we expect the directors to continue. However, whether we would have to appoint new directors depends on the length of time before the sale. We intend to have the current directors of the company in the new company until the point of sale. If the time involved lengthens, which I hope it will not, there may be a point at which new directors have to be appointed to the board.

To reassure the Committee, we are trying to make the transfer, which involves selling into the public sector, and then out of the public sector and into a racing trust, as quick and smooth as possible. Therefore, the directors who are on the Tote at the moment will be on the board of the successor company. If the time involved is long, there will have to be reappointments to the board. The Government would have the right to do that, but I hope that the period involved will mean that that does not happen and that we will move smoothly into the sale to the trust.

James Paice (Conservative, South East Cambridgeshire)

Further to that point of order, Mr. Sayeed, the Minister has clarified, and slightly reined back from, the comments that caused the expostulation from Conservative Members. I will try to get this right. As I understand it, he is saying that we have a set of directors of the Tote. On the appointed day, the Government will set up a successor company—Tote 1, we will call it. The same directors will be directors of Tote 1. If Tote 1 is not sold on pretty quickly to the racing trust, it may be necessary at some stage in the future to re-engage the normal appointments and reappointments process that we know that the Tote board goes through.

If that is what the Minister is saying, that is fine. My concern is that, the moment after vesting power in that new company, the directors of Tote 1 might not be the same directors. If the new company is sold to the racing trust pretty quickly—within hours or days of setting it up—as we all hope and expect it will be, the same directors will be directors not only of the Tote but of Tote 1 until the moment that the successor company is sold. We all agree that once it is sold to the racing trust or anybody else, it is that body's job to decide who its directors should be. I am concerned to ensure that, as long as there is not a long extension of time, the same directors remain in place until that point.

Jonathan Sayeed (Conservative, Mid Bedfordshire)

Before the Minister responds, let me make it clear that this is an extension of the debate on clause 3 stand part, as opposed to a series of points of order.

Richard Caborn (Labour, Sheffield Central)

I reassure the Committee that we intend to take the Tote members, put them on to the new board, and, we hope, sell quickly into a racing trust. If the time involved is extended, for whatever reason, there may need to be further reappointments of directors at some stage.

James Paice (Conservative, South East Cambridgeshire)

If the time involved is extended, for whatever reason, there may need to be further reappointments of directors at some stage. I do not

think that the Minister ever got round to replying to my introduction on stand part. I raised the issue of the amendments that had not been selected. In particular, I asked the Minister for his response to the suggested drafting and the claim that the words ''Anything done by'' in line 5 on page 2 were insufficiently comprehensive and should be replaced by:

''Any agreement made, transaction effected or other thing done by''.

Jonathan Sayeed (Conservative, Mid Bedfordshire)

Order. As the amendments were not selected it is not necessary for the Minister to answer those points.

James Paice (Conservative, South East Cambridgeshire)

I am sure that it is not necessary for the Minister to do so, but he is a generous-spirited man and I hope that in the spirit of generosity he will still give me the benefit of his advice.

Richard Caborn (Labour, Sheffield Central)

The suggestion is that the phrase

''Anything done by or in relation to''

the Tote does not cover everything it needs to. We are firmly of the opinion that the current drafting is sufficient. We fail to see what can be done to the Tote that is not also, by definition, being done ''in relation to'' it. I must be careful because I do not want to discuss amendments that were not selected. I hope that the assurance that I have given to the hon. Gentleman is sufficient.

Question put and agreed to.

Clause 3 ordered to stand part of the Bill.

Clause 4 - Tax

James Paice (Conservative, South East Cambridgeshire)

I beg to move amendment No. 30, in

clause 4, page 3, line 4, after second 'tax', insert

', stamp duty land tax'.

Jonathan Sayeed (Conservative, Mid Bedfordshire)

With this it will be convenient to discuss the following:

Amendment No. 31, in

clause 4, page 3, line 12, after 'enactment', insert 'or regulation'.

Government amendment No. 42.

Amendment No. 32, in

clause 4, page 3, line 12, after 'duty', insert

'and Stamp Duty Land Tax'.

James Paice (Conservative, South East Cambridgeshire)

I must confess that I am not in the habit of writing to my wife very often, or even to other parties, but if I were to follow the example of the hon. Member for Bath and do so, I have a small degree of optimism that I might be able to on this group of amendments, not least because the Government have tabled an amendment, which simply serves to point out an omission that I made in not covering all the avenues. The amendments are simple. The clause, which relates to the tax impact of the sale and transfer of the Tote, should include reference to the new stamp duty land tax. The approach underlying the clause and the Bill is intended to ensure that the conversion of the existing board into a plc has no tax consequences. We have a new tax—believe it or not—from this Chancellor: stamp duty land tax, which came into

effect on 1 December 2003. That was probably after this Bill had gone to the printers, and therefore it is not included, but it clearly needs to be if we are to retain the planned neutral impact of the Bill. I understand that the Inland Revenue has acknowledged the need for the clause to be amended. Our proposals are simply intended to correct the omission, and I look forward to the Minister's acceptance.

Richard Caborn (Labour, Sheffield Central)

The aim of clause 4 is to preserve the tax neutrality of the transfer, which is what the hon. Gentleman was getting at. Amendments Nos. 30 and 32 insert express references to stamp duty land tax. The Government accept that stamp duty land tax needs to be mentioned, but it is sufficient for that to be in subsection (2). Therefore, I commend amendment No. 42 to the Committee and ask the hon. Gentleman to seek to withdraw his amendment.

Amendment No. 31 ensures that the transfer to the successor company will not give rise to a liability under an enactment or regulation about stamp duty. The word ''enactment'' is capable of covering secondary legislation, and we do not believe that an arbitrary distinction could be drawn between tax liabilities in primary legislation and those in regulations. For that reason, I hope that the hon. Gentleman will not press the amendment.

James Paice (Conservative, South East Cambridgeshire)

I should be interested if the Minister could explain why he believes that it can all be covered under subsection (2), as in most clauses the opening lines are important. Clause 4 says that

''for the purposes of any enactment about income tax, corporation tax or capital gains tax—

(a) the successor company and the Horserace Totalisator Board shall be treated as the same person''.

The Minister appears to be saying that it is not necessary to put stamp duty land tax into that statement, but it can go in, as he proposes, in line 12, at the end of the clause. I do not know why that is, as all the other taxes are covered in the opening line of the clause. I should be grateful for an explanation.

Richard Caborn (Labour, Sheffield Central)

The explanation that I have is that subsection (2) deals with stamp duty and stamp duty land tax. Subsection (1) is about the rest.

James Paice (Conservative, South East Cambridgeshire)

I shall not argue the point, as I suspect that the Minister and I would quickly strip open Revenue legislation, but I am grateful to him for his response. If the Government's view is that his amendment will suffice to ensure the neutrality of the taxation regime, which we both seek to achieve, I should be prepared to support it. It probably goes down as worth half a postcard. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Amendment made: No. 42, in

clause 4, page 3, line 12, after duty, insert

'or stamp duty land tax'.—[Mr. Caborn.]

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

Richard Caborn (Labour, Sheffield Central)

The clause deals with two sets of taxation. Subsection (1) provides that for all income tax, corporation tax and capital gains tax purposes the

successor company is to be treated as if it had always been the Tote, and the transfer will not have any tax consequences. I think that that answers the hon. Gentleman's question. Subsection (2) ensures that liability to stamp duty or stamp duty land tax does not arise on the vesting of the Tote's property in the successor company, or on certain preliminary transactions. Together, the measures will provide tax neutrality for the sale of the Tote.

Question put and agreed to.

Clause 4, as amended, ordered to stand part of the Bill

Clause 5 - Pre-sale issue of shares, &c. to government Mr. Paice: I beg to move amendment No. 2, in

Jonathan Sayeed (Conservative, Mid Bedfordshire)

With this it will be convenient to discuss amendment No. 3, in

clause 5, page 3, line 19, at end insert—

'(1A) No nomination under subsection (1)(b) shall be made of any person other than one who receives the securities on behalf of a Trust Fund whose purposes are in the interests of horseracing.'.

James Paice (Conservative, South East Cambridgeshire)

As you will probably have realised, Mr. Sayeed, this is one of the most important groups of amendments that we have tabled to part 1, because it would ensure that the future ownership of the Tote was in the best interests of racing. The amendments do not go so far as specifically to require the Tote to be sold to the racing trust or the shadow trust, as currently exists, not because we do not want it to be, but because we have taken at face value the Minister's comments on Second Reading that the new owners must be able to deal with any eventualities that may arise. I am sure that in principle the Minister will be sympathetic to what we seek to achieve. Indeed, from his remarks on Second Reading, I know that he is.

As I said on Second Reading, the Tote is widely seen by the whole racing industry as part of racing. Even the punters view it as such. They go to the race track, where they see its familiar livery. They know it is there and they expect it to be there. I believe that the vast majority of punters, as well as everybody else involved with racing, believe and expect that the profits, dividends—we can call them what we like—should go back into racing. Any idea that the Tote would be sold to some person or organisation that would not plough the proceeds back into racing would be met with absolute horror and objection right across the world of racing.

Amendments Nos. 2 and 3 are not necessarily complementary. They are alternative ways of trying to get into the Bill some mechanism to ensure that the objective that I have just described is met. Amendment No. 2 states that

''unless the Secretary of State is satisfied that the person nominated will ensure that any dividend from those securities is utilised by the company in the interests of horseracing'',

he would not be able to sell the shares to a new owner. Amendment No. 3 refers to

''any person other than one who receives the securities on behalf of a Trust Fund whose purposes are in the interests of horseracing.''

The amendments provide different ways of addressing the situation.

The Tote is of immense value to the racing industry in cash terms as well as the emotional terms that I have just described. The latest half-year interim report shows profits of £9.2 million and in the past year it has put £10.7 million into racing, excluding the levy of more than £14 million. That is a considerable cash input to the racing industry, and it is fair to say that racing would be in desperate straits without it.

We should be encouraged by the fact that the racing industry is perhaps stronger than ever. In 2003, there were more fixtures, more people attending racing and higher average attendances than ever before. The industry is in a growth phase, but it needs resources ploughed back from the Tote and, as we shall discuss later, from the levy board or its successor systems. That money must go into racing.

The Government have expressed on numerous occasions, and the Minister has already repeated in Committee, a desire to transfer the Tote to a racing trust. I shall not bore the Committee by reading out the raft of ministerial statements reinforcing that; we all understand that it is the case. Following the Government's original announcement that they planned to sell to racing, the shadow racing trust was set up to negotiate with the Government. Bearing in mind who might look in on these proceedings, I hope that it is not negotiating at this very time, because such negotiations would be taking place without the chairman, which might be inconvenient.

As we have heard, the trust continues to negotiate with the Government, and rightly so. In November 2002, Lord Lipsey stood down from the Tote board to become chairman of the shadow racing trust. Everything that has happened points to selling to the racing trust. I strongly welcome that, as do my hon. Friends and the racing industry. We understand that the board basis of the trust means that it will have cross-industry representation. It will have an independent chairman and representatives from the British Horseracing Board, which is the industry committee, the Jockey Club, the Racecourse Association, the Racehorse Owners Association, Tote staff and, of course, from punters. A cross-section of the racing industry was involved, and there may well be others represented on the board.

The Tote is part of racing and must remain so. I know that that is known and accepted by the Government, and I am just repeating what is widely understood, but I am concerned that there is nothing in the Bill to turn that into reality. I do not doubt in any way what the Minister has stated in his objectives, or what has been said by the Secretary of State or by the previous Home Secretary, the right hon. Member for Blackburn (Mr. Straw). I am always concerned,

however, that there is many a slip twixt cup and lip, as the old saying has it. Things could go adrift.

Negotiations with the racing trust may break down or, as the hon. Member for Bath suggested, there may be some reason why a negotiation with another body might be necessary. I am trying to ensure that the Bill says that those negotiations should take place only with a body that has racing at its heart, which would ensure that that flow of money comes back into racing. I do not mind whether amendment No. 2 or amendment No. 3 is accepted, or whether the Minister tables a similar amendment that serves the same purpose.

Without trespassing on your generosity, Mr. Sayeed, it is interesting to note that in the next part of the Bill that deals with the levy, the Government have clearly stated that the assets and property of the levy can be used only in the interests of horse racing. I will not read the relevant passage out, but they have included that although they have not put it in the part of the Bill relating to the sale of the Tote. That is a grave omission, and I do not understand it.

I can understand the Minister not wanting his hands to be tied by legislation to sell the Tote to the shadow racing trust, but I do not understand why it is not possible to put constraints in the Bill concerning to whom it should be sold to ensure that it is kept within racing and that the benefits, proceeds, profits and dividends are ploughed back into racing, as we all expect. That is the objective of the amendments. I suspect that the spirit of the amendments will be greeted with support in the Committee and throughout the racing industry, and I hope that the Minister will respond in a way that demonstrates that he understands what we are trying to achieve. We want to ensure, as the Government are doing in part 2, that the proceeds of the action we are taking—the nationalisation and subsequent privatisation of the Tote—remains in the best interests of racing. That is what I am trying to achieve.

Jonathan Sayeed (Conservative, Mid Bedfordshire)

I call the current Mr. Foster.

Don Foster (Liberal Democrat, Bath)

I am grateful to the current Chair of our proceedings, although I note with interest that you will not be our Chairman at all times, Mr. Sayeed. Some changes are pre-ordained; others perhaps are not. I say to you in your temporary post as our Chair that I have much sympathy with the remarks of the hon. Member for South-East Cambridgeshire. You are obviously studying our proceedings with great interest and you will have noted the first amendment we discussed—No. 49, which I tabled—although I withdrew it for reasons that I gave at the time. That amendment referred to the need for the new body to provide that

''all future operating profits are used to contribute to racing.''

That is a similar intention to that of the hon. Gentleman's amendments.

In this Committee, we have had some difficulty with the approach adopted by the Government in relation to several issues. During our debate on Second Reading, a number of colleagues and I referred to the various gaps in the Bill. At the same time, we said

that we did not for a minute dispute the Government's very clear intentions. In response to one issue raised during that debate, the Minister said:

''What I am saying today at the Dispatch Box is, according to the conventions of the House, a clear statement of the Government's intentions. That is why I do not believe that the provision needs to be included on the face of the Bill.''—[Official Report, 8 January 2004; Vol. 416, c. 444.]

In other words, the Minister referred quite rightly to the convention whereby the Government make clear their intention from the Dispatch Box or in Committee, and therefore argue that it is not necessary to include it in the Bill. Taken to its logical extent, that could mean that very little needs to be in the Bill provided that the Minister declares something to be the clear intention of the Government.

The hon. Member for South-East Cambridgeshire rightly points out that those items that the Government have chosen to include and those that they have chosen not to include form a slightly odd collection. The Bill contains a great deal of detail about how taxation will be dealt with for the new body, but the Minister could have told us in Committee what the Government intend.

However, some more crucial issues, such as whether the Tote will go to the racing trust, which we will debate later, and whether things will be done 50:50 are not in the Bill. Here we have an issue that is at the heart of why we are doing what we are doing—ensuring that whatever happens to the Tote is in the interests of racing—but it has not been included in the Bill. The first parts of the legislation are all about that important issue, whereby the sale of the Tote is designed for the benefit of racing, yet it does not appear.

I am not suggesting that the most appropriate way to resolve the problem is to adopt the words used by the hon. Member for South-East Cambridgeshire, but at least those words are a vehicle for that. We must hear something more substantial from the Minister in his rejection of the hon. Gentleman's proposals than merely that they do not need to be in the Bill because the Government intend to do those things anyway. He must explain why less important matters are included when that central issue is not.

Richard Page (Conservative, South West Hertfordshire)

The Minister will recall that on Second Reading several hon. Members made the point about the importance of racing. I am not going to gallop over the ground covered by my hon. Friend the Member for South-East Cambridgeshire.

Don Foster (Liberal Democrat, Bath)

Rein him in.

Richard Page (Conservative, South West Hertfordshire)

Yes, rein me in.

There are times when we forget that racing is not only a great sport, but a very important industry. My hon. Friend the Member for South-East Cambridgeshire made some points about its importance, and we know that about 100,000 people depend on the industry for their employment. If we get the funding wrong, we put them at risk. When one considers the pecking order of responsibility of enterprises, one finds racing in the top 10. We have to treat it with a great deal of care and consideration.

The funding of racing is based on a number of streams, which are not guaranteed. I am thinking particularly of the current media rights. We all remember what happened to football when its TV and media funding streams collapsed. We already have intimations that the attheraces funding for racecourses could be under consideration. That is a very good deal, but there is talk of it being at risk. No one has mentioned it so far, but the industry also has to deal with the delicate administrations of the Office of Fair Trading, and we have no idea what effect that will have on funding streams.

The Tote is a rock in the middle of such uncertainty. It supports and sponsors individual races and, as my hon. Friend the Member for South-East Cambridgeshire said, it contributes to the levy. I have already mentioned the £100 million that it has given to racing, and where would racing be without that substantial sum? There is a real worry that the Tote might not become a racing trust.

I know that we are back to where we have been on the whole Bill—this matter is a case of, ''Trust me, I'm a politician.'' However, we want to see something a little firmer in the Bill to give the racing industry confidence. I hope that the Minister will consider my hon. Friend's amendments, so that, even if they are not technically correct, in some shape or form they can be used by the Government to give that reassurance.

Richard Caborn (Labour, Sheffield Central)

The transfer of the board and the assets is a simple transfer of assets. In the sale of the Tote, we are dealing with the sale of a company to a new owner. They are different, as I am sure the hon. Gentleman will acknowledge.

Amendments Nos. 2 and 3 would ensure that the Secretary of State could not sell the Tote to anyone other than a racing trust or a similar body. Therefore, as the Minister, I cannot accept them, because that would tie the Government's hands.

As the Secretary of State and I have said on behalf of the Government on a number of occasions, we want to sell the Tote to a racing trust, but as I made clear on Second Reading, the Government have kept the other sale options open. We believe that that is right. We do not specify in the Bill the details of the purchaser, or the type of purchaser, because, if we did, in some unforeseen circumstances we would have to come back to the House of Commons for permission to sell the Tote in a different way. No one can give us a complete guarantee that racing will be in a position to buy it. There could be all sorts of reasons why not, none of which may be financial. In view of the assurances that we have given about an independent valuation, about what is already happening between the shadow trust and the Treasury and about the discussions that are taking place, it would be intolerable if the purchaser—a racing trust or similar body—were to restrict the Government's flexibility in the negotiations. The Government would then have Hobson's choice, because they would be limited by the amendments.

A more important point relates to the industry. As the hon. Member for Bath said, it is not just a sport; it is an industry, and many livelihoods depend on it.

Indeed, we have seen what has happened in recent months and years with the OFT and the like. I hope that the industry can come together in a racing trust and show unity of purpose on behalf of the sport and the industry, so that we can sell with confidence to a trust. That is our intention, but, as a Government, it would be irresponsible to tie ourselves down to the wording of the amendment in the Bill, because we would not be acting in the best interests of taxpayers and the country.

For those reasons I reject the amendments. As I said, we are not talking necessarily about financial issues, but about the possible inability of the sport and the industry to come together to develop a unity of purpose to create a trust. We need to be assured that we can put that trust into their hands.

Don Foster (Liberal Democrat, Bath)

I have said to the Minister on a number of occasions that I understand the importance of the Government's hands not being tied in the negotiations. Will he tell the Committee whether he believes that there are any circumstances in which the Government would be prepared to sanction a sale of the Tote to a body that does not intend to put the entirety of the profits received from the Tote into racing? If that is the case, would it not be in the best interests of racing simply to keep the status quo?

Richard Caborn (Labour, Sheffield Central)

To a hypothetical question, I give a hypothetical answer. The answer is yes, we would sell into something. If we cannot sell into a racing trust, and the House of Commons has said that it wants to sell the Tote, we will be in some difficulties. We would have a piece of legislation instructing us to sell the Tote, and we would therefore have to consider options. That is not our intention.

I want to make it clear that we are not prepared to have the hands of Government and our negotiators tied, as they would be in the situation that would arise if we accepted the amendments. We intend to sell to a racing trust, but we are not prepared to put our negotiators into a position where there could be a false price or a false situation.

Don Foster (Liberal Democrat, Bath)

We are suddenly and rather surprisingly on difficult ground. The Minister says that there is clear agreement in the House of Commons that the Government should sell the Tote. That is simply not the case. There is clear agreement in the House that the Tote should be sold—on the assurance that the money raised in future by the Tote, or the profits on the money raised, will be used to benefit racing. That is the clear understanding that all Members of the House had when we gave the Bill a Second Reading.

If the Minister is not prepared to say that he will ensure that, whomsoever the Tote might be sold to, whether it is a racing trust or any other body, the profits from that new body will go to racing, we are into a completely different ball game. Surely everything that the Minister has said so far has led us to believe that the Government want to see both the taxpayer and racing do well out of the proposal. However, if he is not prepared to acknowledge that in some circumstances racing could lose out, and that in those circumstances the status quo would be better than selling, I am extremely concerned, and either I

have misunderstood the Government's intention, or it has been misrepresented.

Richard Caborn (Labour, Sheffield Central)

The hon. Gentleman has not misunderstood the Government's intention. We intend to sell into a racing trust. I have said clearly what we have laid out in terms of the shadow trust. We have not gone into setting up a shadow trust or argued forcefully for a seven-year extension so that we can eventually see the Tote going into the racing industry in a robust way only to withdraw and say that we will not sell into a racing trust. However, it would be wrong to tie the hands of the Government and our negotiators and to say that that is the absolute. If that were done, the negotiators would face Hobson's choice.

There is every intention to sell into a racing trust. We said that in our manifesto commitment, but I cannot say that the sport and the industry will develop a trust. That is not in my power, or the Government's power. I would expect the responsibility of the sport and the industry to be such that they would come together to create a trust that the Government could sell the Tote into. I believe that the framework that is being operated to get the price is transparent and fair to the trust and the racing industry. If people want to debate the matter in the Oxford debating society, that is fine, but this is not the Oxford debating society; it is the real world. I am not prepared to tie the hands of our negotiators so that they are limited in their negotiations.

The Government want to sell into a trust. We believe that the sport and the industry should come together to create a trust. We have already indicated our good intentions by supporting the shadow trust, and being part of setting that up. The structure of the Bill reflects those intentions, but I am not prepared to tie the hands of our negotiators so that whoever is negotiating for the trust gets an unfair advantage over them. That is what the wording of the amendments would mean.

John Grogan (Labour, Selby)

I accept the Minister's good intentions and the thrust of his argument. However, he mentions the manifesto. Manifesto commitments are being carefully examined in a variety of contexts at the moment. He also mentioned that the Government would have to come back to Parliament if they decided to sell to anyone other than the racing trust. Will he put on the record how that would be done? Would the matter be debated on the Floor of the House? There would be those of us who would be very worried about how selling to a bookmaker, for example, would be in line with our manifesto commitment. I would be grateful for details of exactly how Parliament would consider such a situation.

Richard Caborn (Labour, Sheffield Central)

I go back to the point that the intention, as set out in the Bill, is to sell the Tote to a racing trust. We are now debating the position if the racing trust falls apart—the nuclear option. I hope that that will not happen and there is nothing to suggest that that would happen, but if it did happen, we would have given a commitment to sell the Tote

and we would have to consider how the sale was made and how we could bring the receipts of that sale back into racing. The Government would have to consider that, and we would take those responsibilities seriously and honour our commitments. How that would be done would be open to negotiation, but we have not come across that scenario because our intention is to sell into a racing trust. We would have to consider the matter if we were unable to sell into a racing trust. I cannot make the position much clearer.

I am not prepared to accept the amendments and to tie the hands of the negotiators to the degree specified in the amendments and, therefore, to put them at a disadvantage in the negotiation of both the price and the development of the Tote into the racing trust.

Nick Hawkins (Conservative, Surrey Heath)

I am listening carefully to what the Minister is saying and I recognise that he has done his level best to act with the best interests of racing at heart, but I worry that he is being boxed in by the Treasury mandarins when he says so many times that he cannot allow the negotiators' hands to be tied. People like me who support racing are worried that we will end up with people in the Treasury who have no interest in racing trying to set too high a price, and that is when the nuclear option becomes much more worrying for racing. Is that not the difficulty? I recognise the Minister's good intentions, but to what extent is he being told to say what he says by the Treasury?

Richard Caborn (Labour, Sheffield Central)

Not at all. I have indicated that the Treasury and the shadow racing trust are already in negotiation. I have indicated that the form used by the racing trust is the form used by the Treasury. There is a coming together of minds on that and we must get the Bill through so that we can get down to the serious negotiations on the actual price, but a tremendous amount of groundwork has been done. I believe that the way in which the shadow racing trust and the Treasury are approaching the matter will enable them to agree a price, which will be transparent, as will the independent advisers. I believe that if the industry gets its act together it can create a trust that will be robust enough to sell the Tote into. I see nothing that will detract from that.

If the trust implodes, however, the matter would have to return to the House of Commons for a new Bill to sell the trust. Fine. That may be the Opposition's intention, but I make it perfectly clear that that is not the Government's intention. We would have cognisance of whom we were selling it to, and we would ensure that it was sold to the benefit of racing wherever possible.

I give that assurance, but I am not prepared to accept the amendments and to tie the hands of the negotiators when they are negotiating with the shadow board and moving it into the trust.

James Paice (Conservative, South East Cambridgeshire)

I am very disappointed with the Minister's reply, not because he has rejected the amendments for not being technically perfect, but because of his other reasons for doing so. We are rapidly moving into a different ball game, and it worries me. The Minister is now saying that the Government will sell the Tote come what may. I accept

his personal intention to sell it to the racing trust if possible, but he talks about that in the future in terms of whether the racing industry can sort itself out and create a trust that he can sell it to. The trust has existed for 18 months.

Richard Caborn (Labour, Sheffield Central)

Exactly.

James Paice (Conservative, South East Cambridgeshire)

The Minister said ''If it can'', as if it were still to do so. I believe it is there: it is ready and waiting. The negotiation over price is still to be achieved, but the trust is there. The Minister must know whether he is happy with that structure, with only the price mechanism to resolve. However, by resisting the amendments, and indeed the spirit of them, which is much more worrying, he is making it clear that if the sale falls through, he does not want to have to come back to the House of Commons to get permission to sell the Tote to somebody else—one of the existing bookmakers, a new venture capital company or anybody. He is determined to sell the Tote, on the slight chance that the sale to the racing trust goes through.

My aim in tabling the amendments is not to ensure that the Tote is sold to the racing trust or the shadow racing trust.

Richard Caborn (Labour, Sheffield Central)

That is what it says.

James Paice (Conservative, South East Cambridgeshire)

No, that is not what it says. I am sorry, Mr. Sayeed. The Minister says ''That is what it says''. He has not read the amendment. It refers to ''a trust''. The other amendment does not even use the word ''trust''; it simply refers to ploughing any dividend back into racing. I have purposely not tabled an amendment requiring the Minister to sell it to ''the'' racing trust for the very reasons that he rightly described: he should not have his hands tied by the Bill and be forced to sell to a specific organisation. The fact that the Minister intervened from a sedentary position showed that he had not even read the amendments, which makes it even more worrying. He is rejecting amendments that he has not read and fully understood.

I am now extremely concerned that in a year's time we may wish to God that we had not voted for the Bill, as I and my hon. Friends did, because the Government might have gone against the spirit of that support, which was for the Tote to be taken into public ownership and then passed on into the ownership of a shadow racing trust, or at least of an organisation whose sole intent was the benefit of horseracing.

I shall not pursue the amendment to a vote, as that would be pointless, not least because I shall almost certainly want to return to the issue on another occasion. I phrased what I said just now carefully, so that hon. Members could intervene, if they wished, before I completed the necessary formalities.

Don Foster (Liberal Democrat, Bath)

Could the hon. Gentleman share with me his understanding of the situation? I accept, incidentally, the sensible approach of withdrawing the amendment now so that he can discuss it later. What is his understanding of the Government's intention? In the unfortunate event that the Government cannot come to a satisfactory

conclusion in negotiations with a body that is prepared to put the profits that it makes from the Tote into racing, the Minister has said that they would have to come back to the House of Commons. At one point he said that they would come back to develop a new Bill, which might have been a slip of the tongue. Does the hon. Gentleman believe that the Government intend to go ahead and sell, even though it is not in the interests of racing, or does he still accept, as the Minister would perhaps like us to believe, that they will definitely sell in the interests of racing? I, for one, am confused.

James Paice (Conservative, South East Cambridgeshire)

My interpretation is that the Minister personally is determined to sell the Tote to the racing trust, but—my hon. Friend the Member for Surrey Heath (Mr. Hawkins) is probably right—the forces of the Treasury and others in the Government will not let him accept the amendments, or even the spirit of them, because the Government intend to sell the Tote, come what may. The Minister is resisting the amendments because they might fetter those to whom the Tote is sold. That is precisely why I have tried to include them in the Bill—so that there is some fettering of those to whom it is sold, to ensure that they act in the best interests of racing. That was my sole intention. It was specifically not to narrow the sale down to the present shadow racing trust.

If the Government resist the amendments, as they are doing, and the Bill remains unamended in this regard, on the slight chance that the negotiations break down, the Government will sell, come what may. I said in my concluding remarks on Second Reading that the Bill allows the Secretary of State to sell the Tote to whomever she wants for however much money she wants. I am concerned that, after less than two hours' discussion, those slightly emotive words seem to be gaining more substance, because the Government are resisting our amendments that are intended to prevent that happening.

I am disappointed in the Minister's response and his attitude. I had hoped that he would be far more generous, though not necessarily by accepting the words of the amendments, as I accept that I do not have the support that the Government have to draft amendments that are technically correct. I hoped that at least he would be prepared to accept that the Bill should refer to the need to ensure that the future ownership of the Tote was in the hands of an organisation whose first interest was to put the money back into racing and not of another organisation—some sort of milch cow—with the £14 million plus that has gone into racing going elsewhere. That was what I sought to achieve. Clearly I shall not do that this morning, so on this occasion, and because I want to return to the subject at a later date, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

James Paice (Conservative, South East Cambridgeshire)

I beg to move amendment No. 33, in

clause 5, page 4, line 3, leave out from 'without' to end of line 3 and insert—

'(a) the consent of the Treasury and

(b) such disposal having been authorised by the Secretary of State by order by Statutory Instrument, which order shall

not be made unless a draft of the order has been laid before, and approved by a resolution of each House of Parliament.'.

Jonathan Sayeed (Conservative, Mid Bedfordshire)

With this it will be convenient to discuss amendment No. 5, in

clause 5, page 4, line 3, at end add

'; and such disposal shall be authorised by affirmative resolution of each House of Parliament.'.

James Paice (Conservative, South East Cambridgeshire)

These amendments neatly follow the previous group, because they address the situation to which the hon. Member for Bath has just referred and require the sale arrangements that are finally decided to be the subject of an affirmative statutory instrument in the House of Commons The Minister's earlier comments showed clearly that the Government are determined to sell the Tote, and the Bill says nothing about who it should be sold to or the price mechanism for the sale. We shall discuss issues relating to the licence later.

If the situation that the Minister described a few minutes ago were to come to pass and the sale to the racing trust fell through, or for one reason or another he did not believe that the racing trust was a valid purchaser—he stressed that it should not relate simply to the price being paid—he might want to sell the Tote to somebody else, or the Treasury might insist that it was sold to somebody else. I cannot stop that happening if it is not in the Bill. I am trying to ensure that, if that were the case, or in any situation, the Government should come back to the House of Commons with an affirmative statutory instrument, so that at least we would have a say in the matter.

As drafted, the amendments would also require an affirmative statutory instrument for a sale to the racing trust. That is fine. I would envisage a Committee

taking very few minutes to consider such a statutory instrument, but it is a particularly necessary belt-and-braces approach if the Bill is not to contain a number of the issues that it should contain in relation to both the price mechanism and the future owner.

Mr. Foster rose—

Jonathan Sayeed (Conservative, Mid Bedfordshire)

Order. I remind the hon. Gentleman that he is moving an amendment. I must put the Question before he can take an intervention.

James Paice (Conservative, South East Cambridgeshire)

I stand corrected, Mr. Sayeed. Apparently I am not allowed to take an intervention.

I believe that we need a belt-and-braces approach because, if the Minister had been prepared to accept separate amendments to constrain to whom and for how much the Tote should be sold and the length of the lease, it would be much less necessary to ask that the matter should be brought back to the House of Commons for an affirmative statutory instrument. However, the Minister has made it clear that he is not prepared to concede on these important matters, so it is even more important that the sale arrangements should be the subject of an affirmative statutory instrument.

Richard Caborn (Labour, Sheffield Central)

I think that there was a little clever boxing around the clock. The hon. Member for Bath did not want to continue an intervention that he was not allowed to make because the amendment had not been moved.

Amendment No. 33—

It being twenty-five minutes past Eleven o'clock, The Chairman adjourned the Committee without Question put, pursuant to the Standing Order.

Adjourned till this day at half-past Two o'clock.

Standing Committee D

Clause 5 - Pre-sale issue of shares, &c. to government Amendment proposed [this day]: No. 33, in clause 5, page 4, line 3, leave out from 'without' to end of line 3 and insert

Jonathan Sayeed (Conservative, Mid Bedfordshire)

I remind the Committee that with this we are discussing amendment No. 5, in page 4, line 3, at end add:

'; and such disposal shall be authorised by affirmative resolution of each House of Parliament.'.

Richard Caborn (Labour, Sheffield Central)

I have had an interesting lunchtime. I have just met representatives of the racing industry, to discuss not the Tote or the lottery but another issue that is exercising their minds: the Office of Fair Trading. Representatives of the British Horseracing Board were there, as were race course owners, the Racecourse Association, the Jockey Club and members of the Trade and Industry Committee. I took the opportunity to reflect on this morning's proceedings, and was reassured that there would be a racing trust and that there would be no falling out within the industry. I hope that that reassures the Committee.

Amendment No. 33 seeks to give Parliament a role in the further approval of the sale of the Tote, and amendment No. 5 offers an alternative drafting to the same end. The legislation is drafted to give the Secretary of State discretion over when and to whom the Tote is sold. We are asking Parliament to accept the Bill on that basis. In the unlikely event that we are unable to sell the Tote to a racing trust, we would need to consider how to give the racing industry the benefit of the stake that we acknowledge it has in the Tote. How we do that will depend on the circumstances: the Government will discuss with the industry how best to achieve that. I therefore ask for the amendment to be withdrawn.

James Paice (Conservative, South East Cambridgeshire)

I cannot say that I am surprised. It has been the lot of Ministers over millennia—not just Ministers in

this Government—to resist measures to put statutory instruments into Bills. Even though they usually stuff Bills full of statutory instruments for secondary legislation themselves, they always resist any attempt to put one in to constrain a Minister's freedom of action.

I shall leave it to you to judge, Mr. Sayeed, but I think that it is in order for the Minister to comment on the assurance that he has received from the racing industry in the last few minutes that there will be a racing trust. That is tantamount to saying that these amendments are unnecessary, because he is going to get the sale that we all want. I have never been in any doubt about there being a racing trust. I do not know how other members of the Committee feel, but the Minister's earlier comments led me to think that it was he who doubted whether there would be a suitable racing trust to which he felt he could sell the Tote. I have never doubted that there would be a trust and I am glad that he received reaffirmation of that at lunchtime.

However, my concern is not with the Minister in particular. If, as I have said repeatedly—I fear that I shall do so again during our proceedings—for some reason we find ourselves in the hands of a different Minister or Secretary of State before the Committee concludes its business, we may find that this Minister's undertakings, which I readily take at face value, may prove to be less substantial than we should like. However, even I can do arithmetic and I see no point in pursuing the matter to a vote.

I am sorry that the Minister will not give us the fall-back position of a statutory instrument. I take at face value his assurance that, if the Government are unable to proceed to a sale to racing, he will consider carefully what to do and will consult the racing industry. I hope that he will also consult hon. Members in all parts of the House who take an interest in these matters: I include particularly my hon. Friend the Member for South-West Hertfordshire (Mr. Page), who is one of the joint chairmen of the all-party group on racing and bloodstock. In the unfortunate event of there not being a sale, I hope that everyone will be content and will agree on the right way forward. On the understanding that the Minister will do that, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

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

Richard Caborn (Labour, Sheffield Central)

The clause allows shares in the successor company to be issued to the Secretary of State in anticipation of the company's onward sale to the racing trust. It provides the mechanism by which the Tote will be transferred into private ownership. The clause is therefore fundamental to the policy aims of the Bill. Without it, the Secretary of State would have no means by which to sell the Tote. The basic premise of the clause is clear, but it may help if I outline the way in which it will be used.

The expectation is that the Secretary of State will request the successor company to issue securities to her on the appointed day. That will enable her to sell the successor company on to the proposed purchaser—the racing trust—in the way that we intend. The company will be valued, and the racing trust will pay the Government a price reflecting the stake that racing currently has in the whole Tote business.

There is no plan for the Secretary of State to retain shares in the successor company longer than is necessary to facilitate the sale. However, I reiterate that further details on the mechanics of the sale and, in particular, the identity of the purchaser cannot be provided in the Bill. Parliament is asked to support the Bill on that basis, and the clause must be considered against that background.

Richard Page (Conservative, South West Hertfordshire)

I seek clarification of some of the comments that were made at the Committee's first sitting. We got a bit excited about the difference between ''the'' racing trust and ''a'' racing trust. I gained huge confidence from the Minister's comments about his lunchtime meeting with the dignitaries and power brokers of the racing industry. I sincerely hope that everything that he talks about comes to a conclusion, but it was said that if that did not happen, everything would have to return to the House in order for the process to be restarted. If ''the'' racing trust somehow fails, could ''a'' racing trust come forward and take over the process without the need for a return to the House for all the legislative change to which the Minister referred and to which Opposition Members would object?

Richard Caborn (Labour, Sheffield Central)

It is our intention to sell the company to a racing trust. I hope that we can sell it to ''the'' racing trust. That should reassure the hon. Gentleman.

Question put and agreed to.

Clause 5 ordered to stand part of the Bill.

Clause 6 - Accounts

Richard Caborn (Labour, Sheffield Central)

The clause provides that the accounts of the Tote at the time of dissolution are to be treated as the accounts of the successor company. The purpose is to provide for continuity of the accounting process in the transfer of ownership. That is in line with the Government's intention to treat the successor company as if it were the Tote in all respects, including for tax purposes. That has crucial consequences. In particular, subsection (5) allows the successor company to treat the Tote's accumulated realised profits as its own. That will enable the successor company to issue dividends if it has accumulated realised profits to distribute.

The clause therefore makes the necessary provision for the accounting procedures that will enable the Tote to develop commercially as Government policy intends.

Question put and agreed to.

Clause 6 ordered to stand part of the Bill.

Clause 7 - Shadow directors

Richard Caborn (Labour, Sheffield Central)

The clause provides that neither the Secretary of State nor the Treasury shall be treated as shadow directors of the Tote's successor. The effect is to exempt the Secretary of State and the Treasury from the controls and obligations that are incumbent on the shadow directors, such as those relating to wrongful trading. The role of Government is only to facilitate the sale in line with policy; it is not to become involved in the operation of the Tote's business. It is therefore appropriate that the Secretary of State and the Treasury should not be treated as shadow directors simply by virtue of their role in facilitating the sale. The clause ensures that.

Question put and agreed to.

Clause 7 ordered to stand part of the Bill.

Clause 8 - Exclusive licence

Don Foster (Liberal Democrat, Bath)

I beg to move amendment No. 50, in

clause 8, page 4, line 36, after 'issue' insert,

'an exclusive, renewable licence for a period of seven years from the appointed day.'.

Jonathan Sayeed (Conservative, Mid Bedfordshire)

With this it will be convenient to discuss the following amendments: No. 6, in

clause 8, page 4, line 37, leave out 'a licence' and insert

'an exclusive licence for a period of seven years from the appointed day.'.

No. 51, in

clause 8, page 4, line 37, leave out from 'a licence' to 'licence'')'

No. 7, in

clause 8, page 4, line 38, after second 'the', insert 'exclusive'.

No. 10, in

clause 8, page 5, line 8, leave out paragraph (a).

Don Foster (Liberal Democrat, Bath)

From the outset, I acknowledge that the Conservatives' amendments would have a similar, if not identical, effect to ours.

On Second Reading, I argued that the Government's intentions are absolutely clear in many parts of the Bill, but that they had failed to write them into the Bill. We have already had examples of that, which we have discussed. The exclusive licence is an example of the Government's clear intention, but it is

not stated in the Bill. In part, I disagree with that stated intention and want to change it, which my amendments would do.

To illustrate what the Government propose to do, which they have made clear, I refer to speeches made by the Secretary of State and the Minister on Second Reading, to a written statement, and to a departmental press release issued on the same day—27 November last year. Under the heading ''Tote wins seven year licence to operate horserace pool betting'', it says:

''The Racing Trust—a consortium of racing interests—buying the Tote will have an exclusive licence to run pool betting for seven years, the Government announced today.''

As I said, the Minister has made it absolutely clear several times that the Government intend the exclusive licence to be issued for a seven-year period.

The Committee will be aware, however, that the Bill does not refer to that seven-year period. That is to be regretted. Some of my amendments would give us the opportunity to write that seven-year period into the Bill; others go further by stressing my genuine concern that no further exclusive licence will be issued once the Government's proposed unspecified licence period is completed. That is the Government's intention, which they make very clear in the Minister's statements on Second Reading and in the press release, which reports the Minister as saying:

''Selling the Tote to the Racing Trust is the right way to fulfil the Government's commitment to sell the Tote. We firmly believe it's in the public interest to open up the pool betting market to effective competition. But we also believe a reasonable period of preparation is necessary in order to safeguard the revenue racing receives from the Tote and its successor is necessary in order to safeguard the revenue racing receives from the tote and its successor.''

The Minister therefore makes it clear that he believes there needs to be an exclusive licence period. He told us, although it is not in the Bill, that that period should be for seven years, as it is necessary to ensure that the Tote is up and running and successful, and that it can guarantee that it will continue to contribute to racing. However, he goes on to say that after that period, which is likely to be seven years, the Government intend to open up pool betting to competition. He says that it is in the interests of racing to do so. My concern is that all the evidence that I and other Members have studied leads us to a different conclusion.

The Committee will be aware that the Home Affairs Committee discussed the matter at some length in 1991. Its report on the Tote made it very clear that forcing pool betting into the open market in seven years' time could lead to a series of small pools and erratic dividends that would undermine public confidence in pool betting. That was the view of the then Home Affairs Committee. More recently, on Second Reading, we heard from the right hon. Member for Livingston (Mr. Cook), who, I expect all hon. Members would acknowledge, has great knowledge of the horse racing industry and sport. He was clear about his view. He congratulated the

Minister on securing a seven-year period after all the attempts by others, not least the Treasury, to settle on a much shorter one. He continued:

''I find it rather strange that anyone should imagine that opening up pool betting to competition helps the punter, because the whole point of pool betting is that the bigger the pool, the more attractive it is to the punter. The greater the competition and the more pools there are, the less attractive it is to the punter. The logic of that, of course, is that I personally would prefer it if we retained an exclusive licence indefinitely''.

The right hon. Gentleman is clear in his view that opening up the arrangement will not be in the interest of punters or of horse racing. The Home Affairs Committee—admittedly in 1991—came to a similar conclusion. However, perhaps what is most surprising is that the Government have themselves reached that conclusion. The regulatory assessment for the Bill shows at page 22 that the loss of the exclusive licence could lead to the possible loss of pool betting at some race meetings and race courses, and lower Tote contributions to racing. The Government's own analysis suggests that that is possible or perhaps even likely.

There is little or no debate, apparently, about whether the ending of the exclusive licence could be, or is likely to be, damaging to racing, and will make it less attractive to punters, which could lead to a loss of benefit to horse racing. The evidence is clear: the route is a dangerous one for the Minister to take. That is why our amendment makes it clear that the licence should be exclusive for seven years, and specifies that it should be renewable. The Government should have the opportunity to assess, after the seven-year period, whether the benefits to racing have been secured. If not, there would be an opportunity for the Government to continue to grant an exclusive licence.

The right hon. Member for Livingston clearly explained why the issue should be re-examined at the end of seven years. He said:

''We should be under no illusion how tough the competition will be at the end of that period of exclusivity. I do not mean any disrespect to Ladbrokes when I say that it is likely to enter into competition. I can say that with some confidence because it has made no bones about the fact that it will be its intention to bid for pool betting when the licence expires. If it were to be successful in displacing the Tote as a provider of pool betting, paradoxically, we would end up not with more competition, but with more monopoly and less competition in the betting market. It is therefore very much in the public interest, as well as in the interest of the racing trust, that there should be that minimum seven-year breathing space for it to establish itself.''—[Official Report, 8 January 2004; Vol. 416, c. 453-54.]

The right hon. Gentleman makes it clear that at the end of seven years life will be very difficult. Surely we must at least be certain that during that period all has gone well and racing has received the benefits that it should expect, before we decide irrevocably not to allow a continuation of a monopoly of pool betting.

I hope that the amendment is clear. I know that it is supported by several members of the Committee and its wording is similar to that tabled by the hon. Member for South-East Cambridgeshire and his colleagues. I hope that the Committee will see its way to agreeing to the amendment and allowing me to write not just a postcard, but a letter to Mrs. Foster.

James Paice (Conservative, South East Cambridgeshire)

As the hon. Member for Bath (Mr. Foster) said, we have tabled amendments to the same effect, although with one important distinction. We tried to separate out the three factors of the licence's period, exclusivity and renewability. I tabled separate amendments because I suspect that the Minister's response to the three different components will be different. I have opted for the course of action that might lead to at least partial success, even if it means only a partial letter to Mrs. Foster.

I shall start with the issue of exclusivity. It is not the critical one, but it probably draws most cross-party agreement. The Government are committed to the exclusivity of the licence for a period, which they say should be seven years. I share the concerns of the hon. Member for Bath about the exclusivity ceasing after seven years, if that ultimately proves to the period. He rightly quoted the right hon. Member for Livingston who, as one would expect, described the situation precisely.

Another analogy is with the national lottery. That is basically a pool betting system, as a bigger pool means that more people bet and more people betting means a bigger pool, more prize money and a bigger jackpot. However, the Government have not suggested that we should have competition between lots of national lotteries, so I do not follow the logic which says that competitive pool betting for horse or greyhound racing would enhance the lot of the punter. As has been said repeatedly, the reverse would almost certainly be true. Pools, and therefore prizes and returns, would be much smaller.

Even more important are the Government's conclusions in their regulatory assessment, to which the hon. Member for Bath referred. Our debates are about the welfare and future of the racing industry, and when we reach part 2, we will debate the levy, the huge financial impact on the racing industry and, in effect, the survivability of many of our race courses. If, as the Government have suggested, pool betting disappears at some meetings or race courses, the viability of those courses and meetings will come into question. That is putting it mildly, as that will almost certainly mean their end. The idea of a lower Tote contribution to racing flies in the face of what we are trying to achieve in the Bill, so I am concerned by the possible end of the exclusivity.

That brings me to renewability. I have a slight difficulty, because our next debate will include my amendments on renewability. If I wax too lyrical about renewability now, there will be little point in boring the Committee again when we discuss those amendments—not that that will necessarily stop me. I shall not pursue the point at great length at this stage, not least because the Minister will undoubtedly refer to renewability when he speaks to this group of amendments. That will allow me to come back to him later with my alternative way of acting.

The seven-year licence period should be defined in the Bill. I know that that is a widespread belief, although I must confess that I am not too enthralled by the idea of seven years. Bearing in mind the huge investment that will be made in buying and developing

the Tote, I am not convinced that a longer period would not have been better. I will not quibble about the seven years, but it should be in the Bill and I do not understand the Minister's reticence in that respect. He endeavoured to respond to my hon. Friend the Member for Ryedale (Mr. Greenway) on Second Reading; indeed, he endorsed his view that seven years was right, but he still resisted putting it in the Bill. I hope the Minister will agree that it would be wise to do so, and cease his resistance now.

The Government have repeatedly said that they intend the period to be seven years, and we need a period of that length to get the commercial benefit of putting the Tote fully and squarely into the private sector and away from Government. That is needed to enable it to recoup the investment it will have to make in its own purchase. It is also critical if it is to develop and become a viable organisation and continue to pour money into racing when the exclusivity ceases, if that is how it turns out. Seven years is the minimum period in which to achieve that aim, although I am not arguing for a longer period now. However, in the debate on the next group of amendments I will argue for the principle of renewability, or, to be precise, that we should not at this stage insist on non-renewability, which is a slightly different approach.

I want the Minister to understand that I wholly support the thrust of the amendment tabled by the hon. Member for Bath; I feel chagrined that he managed to do it in such a way that it became the lead amendment in the group, but that is the way of these things. I think he is unwise to link the three points, although they are all critical.

Richard Page (Conservative, South West Hertfordshire)

I speak especially in support of amendment No. 6, which calls for a licence for a period of seven years from the appointed day. In my 27 years in the House—I do not want anyone to shout, ''Too long''; it is too long and I shall be retiring at the next election—I have never known a Bill that required the Opposition to take so much on trust.

The Minister asks us to trust the Government on valuation, on the appointment of directors, and on the whole question of the racing trust. He even has the temerity to say that politicians should stay out of this because the Government know better. In my experience in the House, I do not think that Governments can run businesses better; whether their political colour is blue or red, Governments have a record of appalling management of industry. I should be out of order if I gave all the examples of industries run by the state with a lunchtime directive and which have been an enormous failure and cost the taxpayer a small fortune. The Minister goes a tad too far in saying that we should trust Government because they know better. That flies in the face of experience.

I ask the Minister to accept amendment No. 6, for no other reason than that in all the uncertainty it will be a rock on which to make other calculations and estimates. It will be a datum point on which people can operate.

My hon. Friend the Member for South-East Cambridgeshire (Mr. Paice) has obviously been looking at my notes because he cited the parallel of the

lottery to compare with the Tote. The lottery headquarters of Camelot are on the edge of my constituency so I have natural interest in what happens there.

The principle of pool betting is to have a pool, not a series of puddles. That is why the Select Committee and the hon. Member for Bath are so right: if we have a series of puddles, we shall have a series of erratic results. Once we have erratic results, the punter will not have the confidence to take part in pool betting. That loss of confidence will lead to other difficulties.

I ask the hon. Member for Bath not to press his amendment to a vote, because the Government should consider and work at this issue before Report.

Don Foster (Liberal Democrat, Bath)

If it would be helpful to the hon. Gentleman, and indeed to the Minister in his deliberations, were the Minister to indicate a willingness to accept amendment No. 6 on the seven-year issue and at a later stage to consider some of the other issues raised, I would be more than happy to accept the hon. Gentleman's suggestion.

Richard Page (Conservative, South West Hertfordshire)

It is encouraging to see the Liberal Democrats moving through the political spectrum from left to right towards the Conservative party. I view his suggestion with a degree of incredulity, but I also warmly welcome it. The Government should not try to determine this area immediately. The way the Tote operates in the next seven years should be taken into account and then considered for the future after the seven-year period.

We seem to have harmony between my hon. Friend the Member for South-East Cambridgeshire, who is pushing amendment No. 6, and the hon. Member for Bath, who is happy with my suggestion. All the Minister has to do to allow all the letters and postcards to be written to the current wives is to agree.

Richard Caborn (Labour, Sheffield Central)

Unity is breaking out all over the Opposition Benches. It is somewhat worrying, but nevertheless we shall have to deal with it politically. Amendment No. 6, if accepted, would serve to stipulate that the length of an exclusive licence referred to in clause 8 would be written in the Bill. It would be specified as seven years. It is well known that it is the Government's intention to issue the successor company, assuming that it is the racing trust, with an exclusive seven-year licence to provide pool betting on British horseracing. That remains the case, and I said as much in Second Reading.

I have not provided for the matter in the Bill because we thought that it would be right for the Secretary of State to have the discretion to act as she thinks best at the time. We have given many times a public commitment in relation to the issue to provide interested parties with sufficient comfort. Sadly, that appears not to be the case.

Amendment No. 10 would provide a consequential change to clause 8 to remove the Secretary of State's powers to specify the length of the licence at the time of its issue. Amendment No. 7 seeks to ensure that an exclusive pool betting right will be attached to an

exclusive pool betting licence. Our belief is that such a right is already implicit, which is why nothing more specific is included in the Bill. However, the amendments raise important issues about the exclusive licence. I am minded that complete certainty about its length would be welcomed by the racing industry, the Tote and members of Committee. I therefore ask hon. Members to withdraw their amendments and we will agree to consider them further at a later stage.

On the other hand, the Government will strongly resist the suggestions in amendments Nos. 50 and 51 that the licence should be renewable. The agreement to a period of seven years is dependent on it being a one-off non-renewable licence. The Government sees competitive benefit in the eventual opening up of the pool betting market. The exclusive licence will be transitional to enable the Tote's successor to establish itself and to allow an early introduction of competition. There is a competition and bidding process for the lottery, for which we are giving an exclusive licence for seven years. That is the competition for that licence as far as pool betting is concerned.

I assure hon. Members that the seven-year period has been included in the Government statement because there have been wide soundings right across the industry to get a balance between what would be fair to the industry in terms of competition, and what would be fair to the Tote—and, therefore, the successor body, the racing trust—and would enable it to go into the marketplace with a degree of certainty. The judgment was made following wide consultation with many of the stakeholders, with insight. We also want to ensure that the balance is right in terms of the competition authorities, both at national and European level. Getting a balance led to the seven-year period. There is a clear commitment that after seven years the body will go into the marketplace.

Don Foster (Liberal Democrat, Bath)

I am grateful to hear some of the concessions that the Minister appears to be making. Perhaps we will return to those. He said that he wanted to open the Tote up to the benefits of competition after seven years. Given that I have quoted at length from the speech made by the right hon. Member for Livingston, the Home Affairs Committee and the Department's own assessment of the situation—all of which show that getting rid of an exclusive licence could seriously harm the Tote, and could be of disbenefit to punters and the racing industry—what evidence does he have to suggest that there are the benefits that he claims for opening up to competition after seven years?

Richard Caborn (Labour, Sheffield Central)

We have made a judgment. The hon. Gentleman knows that there have been long discussions with competition authorities, both at national and European level. We have taken advice from inside the industry; we have sought the opinions of many stakeholders. We believe that that exclusivity for seven years will put the racing trust and the Tote into a robust position, and that the discussions with the Treasury will result in a financial arrangement that will allow the body not only to become financially

viable, but to have an investment stream. There will be a structure within the Tote that will be robust and which will enable it to go into the marketplace. The hon. Gentleman may be asking me to protect the Tote as an exclusive body for evermore, but I do not feel that that would be good for the punters in terms of competition.

Don Foster (Liberal Democrat, Bath)

Since we seem to be very good natured, I do not want to stretch the Minister's patience on this point. I understand his argument. If he had said that he was not convinced that the Government could get a period longer than seven years through competition legislation in this country and throughout Europe, I could understand it. However, he specifically said that there would be benefits to the Tote of going into a competitive market after seven years. I understand the benefit of the seven years. That time will give the Tote the strength to cope well in a competitive environment, but he still has not told me what the benefits of that competitive market are, given the overwhelming evidence that it would be of disbenefit.

Richard Caborn (Labour, Sheffield Central)

The proof of the pudding will be in the eating. One makes a judgment. The way in which we want to bring the Tote into the competitive marketplace will concentrate the mind. We are putting the Tote into the trust to give it more freedoms; the freedom to borrow and to get out of the public sector borrowing requirement. People will quickly see that those freedoms will lead to a Tote that is much stronger and that will be put into the marketplace in its own right as a competitor. The Tote is unique; pool betting is its strength.

Fixed-odds betting is a totally different area of the marketplace. All the evidence that has come to us—including, but not exclusively, from the competition authorities at national and European level—leads us to believe that we are putting the Tote into not only a viable position, but a robust one. The Tote will add to the marketplace and provide real competition, and will give a real deal to the punter post the seven years.

Richard Page (Conservative, South West Hertfordshire)

I certainly do not want to be critical of what is being offered, which is hugely to the advantage of the Tote, and which I am sure will be to the benefit of racing.

May I rein back the Minister a little on the parallels with the lottery? When the lottery's exclusive licence was offered, the competitors had no assets in the field. Whoever won had to put in the assets; that was the competition. We have an interesting position here. The Tote has millions of pounds worth of assets built up over 76 years. If it is to be given an exclusive licence for seven years—a reasonable period—I can only tell the Minister that I agree and that I hope he will be prepared, as he delicately hinted, to put that in the Bill.

I want to look at the position after the seven years have elapsed. Should the Tote be put up for bids so that someone else could have an exclusive licence for seven years? Should there be an opening up to pool competition, it should be limited to a size that would make it viable and allow it to retain punter confidence.

There appears to be an open-ended position at the end of seven years. I look for some certainty about the way forward. Over the years, I have seen how Governments bring forward plans that seem great for the immediate future but then seem to fall flat on their face a bit later. Far be it from me to mention the dome, but—

Jonathan Sayeed (Conservative, Mid Bedfordshire)

Order. This is rather a long intervention.

Richard Page (Conservative, South West Hertfordshire)

I should be grateful for the Minister's comments.

Richard Caborn (Labour, Sheffield Central)

In the Room next door, the Pre-legislative Scrutiny Committee is considering the draft Gambling Bill. I understand that it is talking this morning about the exchanges. The passing of information electronically will transform many industries. We have seen the first major intervention in the betting exchanges. The world of betting will change considerably over seven years. We are trying to protect the Tote. The first step is to put it partially into the marketplace, giving it more freedoms and making sure that it can develop in a much more robust way. Hopefully, seven years from now, it will be able to stand in the marketplace without further protection and with exclusivity.

One can selectively take what one wants from the regulatory impact assessments. [Interruption.] At the end of the day, people have to make a judgment. The Opposition have every right to question the Government, which is what the democratic process and the Committee are about. I do not think that they have made a case. Paragraph 108 of the regulatory impact assessment of the Bill states:

''It is also inevitable that the introduction of more operators would bring some benefits for consumers in the form of product innovation and price competition, although there may also be a risk of further consolidation in a betting market already dominated by a relatively small number of large bookmaking companies''.

It is possible to quote selectively from the various reports. The judgment that we have made and our consultations show that seven is the right number of years. I am now prepared to consider putting that into the Bill. I am not prepared to concede on the question of the exclusive licence beyond that period.

James Paice (Conservative, South East Cambridgeshire)

As I did not move amendment No. 6, I do not get the right of reply. I am pleased to hear that the Minister is prepared to consider putting seven years in the Bill. Obviously that is a step forward. It provides a rock and removes one of the variables from the sale equation. I do not want to sound churlish and I know there is a certain pride in Government not accepting Opposition amendments, but will the Minister tell us what is wrong with our amendments? Why can he not simply accept them?

Richard Caborn (Labour, Sheffield Central)

I shall consult my lawyers and give the hon. Gentleman a reply later. The hon. Gentleman is an old hand in this place, and he knows that the lawyers want to ensure that the legislation is correct. On the advice of the lawyers, I am asked to give the

political comfort that the matter will be included in the Bill. Therefore, I ask the hon. Gentleman to withdraw the amendment.

Jonathan Sayeed (Conservative, Mid Bedfordshire)

Order. Before I call on Mr. Foster, may I apologise to the hon. Member for South-West Hertfordshire? I thought he was intervening on the Minister's speech; I did not realise that it was his second speech on a group of amendments.

Richard Page (Conservative, South West Hertfordshire)

That was due to my own inability to show that I was launching into a speech for the second time. You are in no way to blame, Mr. Sayeed, and I say that in case you do not call me at a later point.

Don Foster (Liberal Democrat, Bath)

I have no wish to detain the Committee unnecessarily, but may I say that we have with us a Minister who is prepared to break away from the brief at times? The brief said that he was prepared to consider including the amendment in the Bill, but he went on to say that the political comfort was that it would be included in the Bill, as the record will show. Given that we have the clear assurance that, by one means or another, the seven-year period of exclusivity will be included in the Bill, and given that there will undoubtedly an opportunity to raise the other matters under the next group of amendments and subsequently, I am sure that the Committee would wish me to withdraw the amendment. I am delighted to follow the advice of hon. Members in order that the Minister can ensure that we get what we want, and that postcards can be sent to whomsoever people wish to send them, so I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

James Paice (Conservative, South East Cambridgeshire)

I beg to move amendment No. 11, in

clause 8, page 5, line 14, leave out from 'Crown' to end of line 15.

Jonathan Sayeed (Conservative, Mid Bedfordshire)

With this it will be convenient to discuss the following:

Amendment No. 52, in

clause 8, page 5, line 15, leave out paragraph (c).

Amendment No. 53, in

clause 8, page 6, line 1, leave out paragraph (a).

Amendment No. 12, in

clause 8, page 6, line 3, at end add—

'( ) assigned, transferred or otherwise disposed of.'

James Paice (Conservative, South East Cambridgeshire)

As already heralded, we are in some ways continuing the same debate. Amendment No. 11 would delete the non-renewability aspect of the licence. The Liberal Democrats' amendment No. 52 would do precisely the same thing; they have just phrased it in a slightly different way. I shall come to amendment No. 12 in a moment, because it deals with a slightly different issue. Let me address the impact of amendments Nos. 11 or 52—whichever is the best legal way of tabling such an amendment—and return to the argument of renewability.

I understand the Minister's argument that he does not think that it will be necessary to renew the licence. He is perfectly correct when he says that seven years

ago betting exchanges were unknown, and who knows what shall exist in seven years' time? However, a consequence of that is that we do not know in which environment the Tote will be operating in seven years' time. The amendments would not make the Bill require that the licence be renewable, but would remove the statement that it is not renewable; in other words, it would let us wait and see. Indeed, the Minister said earlier that we do not know how it will work out, and we will have to wait and see. Those were not his precise words, but I think that I have summed them up.

We do not know how successful the Tote will be. We can all express confidence in it, but because we do not know what the price is going to be, we do not know how much will be invested in the Tote to develop it during those seven years. We do not know how the betting market will develop, how betting exchanges will develop or whether there will be any more regulation of them in seven years' time. There are huge competitors in the betting market at the moment.

My hon. Friend the Member for South-West Hertfordshire referred this morning to the current Office of Fair Trading investigation and the European Court of Justice decisions. Those are two huge variables. We do not know what the financial state of racing will be in one year's time, let alone seven. The amendment suggests that we wait and see and that we do not jump to a conclusion now. There are so many unknowns about how the Tote will develop, about the financial background of racing and about how many racecourses there will be.

If, God forbid, the OFT rule 14 statement stands, it is quite possible that in seven years' time there will have been a considerable reduction in the number of racecourses. If that is the OFT's decision, the comment in the regulatory impact assessment could have come to pass, with the Tote having had nothing to do with it, despite its exclusive licence.

I hope that the Minister will not read out a previously prepared, trite response. I am trying to wrestle with the fact that no one has the foresight to know what the situation with the Tote, the wider betting industry, the financial state of the industry or the number of racecourses will be in seven years' time. All are in a state of flux for the reasons that I have described. I would like to see a commitment from the Government to instigate a review in five years' time of how things have developed and to consider the renewability of the licence.

Once the provision that the licence cannot be renewed is in the Bill, we are stuck with it. I am sufficiently long in the tooth to know that once its there, the Government will not remove it. That is why it should be removed at this stage. The amendment does not force the Government to renew the licence; it simply allows them to renew it if circumstances dictate that its renewal would be in the best interest, because we do not know what the situation will be.

It is perfectly true that the exclusive licence for the lottery is decided by competition, but we are not discussing that; we are discussing competition for providing pool betting. In seven years' time there

could be half a dozen different racing pools. There may be fewer but there will be competition between pool betting systems, not competition for the licence.

If the Minister, by referring to the lottery, is suggesting that in seven years' time we should have competition to run an exclusive licence to run a Tote for racing, that is a different ball game, with which I would have a lot of sympathy. I do not believe that the present Tote is entitled to a licence renewable ad infinitum; that is not in anybody's interest.

I would be attracted to the proposition of a competition for the right to own and run an exclusive licence for a pool betting system, as long as the money went back into racing. Another organisation might be set up for that. It is very different, however, from what the Minister said about competition in the pool betting market, with several pools, or puddles, as my hon. Friend the Member for South-West Hertfordshire has rightly described them. They would not be in the long-term interests of punters or, quite clearly, of racing.

The amendment is non-partisan and it is tabled with a genuine desire not to rush matters, so that we would be able to see in a few years' time how matters have settled down. The amendment would remove from the Bill the Gaming Board's inability to renew the licence. It would allow us to think again; it would not force any action at this time.

The Tote recommended amendment No. 12, which would add to the last line of the clause the—[Interruption.] I beg your pardon, Mr. Sayeed, it is not from the Tote, it is the Paice version. Everybody would agree that, having got an exclusive licence, the Tote should keep it for seven years. I do not envisage its not wanting to do so, but I seek to add to the end of clause 8 the statement that it would not have the right to assign, transfer or otherwise dispose of the licence. The Minister might say that it would not have that right anyway, but I want to be sure. None of us envisages the situation arising, but, as we have repeatedly said during these deliberations, we are trying to jump one step ahead of what might arise, even in circumstances that we cannot foresee.

The principal point of the group of amendments is to make it possible for the licence to be renewed after seven years; not to make it obligatory, but to enable it to happen should the situation in racing, the Tote or the betting industry, or all three, be such that the judgment at that stage is that it would be in everybody's interests for it to be renewed.

Don Foster (Liberal Democrat, Bath)

In respect of renewability, I refer the Committee to the speech that I made a few moments ago. I agree with the hon. Member for South-East Cambridgeshire; I hope that the Minister will consider the matter again and allow us a further opportunity for deliberation. However, we could find ourselves in disagreement about amendment No.12. I hope that after the Minister has spoken, we shall hear again from the hon. Gentleman.

In his earlier contribution about renewability, the hon. Member for South-East Cambridgeshire rightly pointed to the complete uncertainty about what will

happen in the next seven years. We know that the Government believe that seven years is long enough to ensure the stability of the Tote and of its proceeds continuing to go to racing. However, we do not know that for certain. One of the reasons why we should leave the renewability option on the table is in case the Tote does not get its act together during that period. Things could go badly wrong. I am sure that they will not, and I hope that nothing will go amiss for the Tote. However, surely, given the uncertainty, it is necessary to consider allowing the transfer of the exclusive licence to some other operator. The mechanism could be a competition of the type organised for the lottery's exclusive licence. I do not understand why the hon. Gentleman is concerned about uncertainty in some respects but has such certainty in others.

James Paice (Conservative, South East Cambridgeshire)

I shall try to clear up the hon. Gentleman's confusion. I understand where he is coming from. I am proposing that the Tote, under the ownership of the racing trust, should not be allowed to dispose of its licence. That is not the same as the matter that we shall discuss under the next group of amendments; allowing the Gaming Board the opportunity to revoke the licence because things have gone wrong and handing it to somebody else. The hon. Gentleman is right. The uncertainty is there, and the opportunity to revoke the licence and to give it to somebody else is still there.

Don Foster (Liberal Democrat, Bath)

I am grateful for that clarification.

Richard Page (Conservative, South West Hertfordshire)

I join my hon. Friends in their plea not to burn any boats at this stage. I have the pleasure of serving on the gambling review committee, now known as the Greenway committee. I can only congratulate the Government on having introduced the pre-legislative scrutiny measures. That is undoubtedly the way to proceed in respect of uncontroversial Bills. In the Room next door, substantial progress has been made in bringing about an environment of gaming that is trustworthy, solid and reliable, and that can give confidence throughout the world.

However, the Bill puts tremendous power into the hands of the Gaming Board, and I wonder whether the Government want to tie its hands for the future. Some things might be better left to the Gaming Board to decide, as it has experience and knowledge of how the issues develop and mature. The Government should consider stepping back from making any definitive decisions. I agree with the Minister that it would be wrong to give the Tote a further exclusive licence for seven years, unless there is some form of competition or arrangement that has a full and open examination. At this stage, we should not close off options; we should leave them for the future. I put my trust in the Minister and the Government.

Richard Caborn (Labour, Sheffield Central)

I will not speak from my notes at this point. I will deal with this matter politically. It is interesting that the Liberals and the Conservatives are now coming together on an anti-competition policy. I never thought that I would stand in the House of

Commons, at the Dispatch Box in the Chamber or in Committee, and have to defend competition against a new anti-competitive alliance of the Conservatives and Liberals. It is astounding that that has happened with regard to the racing industry and the Tote. It is amazing that protectionism is booming on the Opposition Benches in a way that would have been inconceivable in previous eras of Conservatism.

A Labour Government are being asked to protect the Tote by licensing and all the other necessary aspects of protectionism. What are we asking for? We are giving the Tote seven years to find its feet with a 50-50 split on the finances, and we are asking it to throw the shackles of the public sector borrowing requirement off its back and use the innovation that we have already seen, including in the shadow racing trusts, so that it can go into the marketplace and defend itself as a Tote—as a pool-better. That is all that we are asking for. All the competition authorities, both nationally and internationally, agree with us. Against us are the backwoodsmen of protectionism. Liberalism and Conservatism are coming together to form a coalition force, so the script can be thrown away.

On the point about a five-year review, the Government continue to keep everything under review. If it is in the public interest for a review to be conducted after five or six years, and if the competition authorities agree to that, the matter will go to the Gaming Board—and then, hopefully, to the Gambling Commission—and a view will be taken as to whether things are operating in the public interest. The drive to put the Tote into the modern marketplace in a robust form is intended to help the punter by giving choice. That is in the public interest. If matters were to move against the public interest, as is currently perceived to be the case, any sensible Government would want to review them. There will be the necessary mechanisms in the Gaming Board, and there will, I hope, be a Gambling Commission. What was happening would have to be in the public interest and have the support of the competition authorities.

Amendments Nos. 11, 52, 53 and 12 would allow the Secretary of State to require the exclusive licence to be issued more than once. The Government resist that approach. The licence is to be non-renewable for the reasons stated. The agreement to an exclusive period of seven years is dependent on it being a one-off, non-renewable licence. Anyone who says that it will be renewed will take out of the culture of the new Tote—the new racing trust—the ability to be dynamic and say, ''We are going into the marketplace in seven years.''

If there were a safety valve, in that we could have another licence, the culture would be totally different. It is necessary for the Tote to have a cutting edge if it is to go to the marketplace with a product that has been called the bedrock of the gambling industry. There is no doubt that the Tote provides security to the punter out there. It is a respected and honest organisation, and by its very nature, it is not there to rip the punter off, as some would say. It therefore has a marketing ability, and if we give it the tools to go ahead and give

it a fair wind for seven years, it will be able stand on its own in the marketplace and will not need such protection.

If the licence is revoked before the seven years are up, we do not believe that it should be reissued to that company. There are no powers in the Bill to issue the exclusive licence to anyone else and no powers for the Secretary of State to transfer it. We therefore believe that amendment No. 12 is unnecessary. For those reasons, I ask the hon. Member for South-East Cambridgeshire not to press the amendment.

James Paice (Conservative, South East Cambridgeshire)

I think that the Minister should stick to his script in future.

Richard Caborn (Labour, Sheffield Central)

The hon. Gentleman does not like the political consequences of what I have done.

James Paice (Conservative, South East Cambridgeshire)

I am more than happy to deal with the political consequences, not least because I have never heard so much rubbish in my life. The Minister knows full well that he has given a complete distortion of what I was trying to put across. I was saying, in the words of my hon. Friend the Member for South-West Hertfordshire, that we should not burn our boats. We should not be dogmatic about renewability at this stage, but simply leave the opportunity open.

Richard Caborn (Labour, Sheffield Central)

That is protectionism.

James Paice (Conservative, South East Cambridgeshire)

It is nothing to do with protectionism, as the Minister knows full well and as I made clear in my opening remarks. If he were to suggest that in seven years there could be competition among other organisations for a new exclusive licence, I would be more than happy as long as the proceeds went to racing. Indeed, I might even be tempted to table an amendment to that effect on Report and see whether he is prepared to contemplate it at that stage. I can hardly pretend that I am surprised at his response.

Don Foster (Liberal Democrat, Bath)

The hon. Gentleman says that he is hardly surprised, but perhaps he should be after the Minister's tirade, which the hon. Gentleman rightly suggested was a travesty of what has been said. He will probably be as interested as I am to read the Hansard record of our deliberations. Did he notice that the Minister told us that, if some problems emerged in seven years, it would be perfectly possible for the gambling board or commission as it might then be to come back with further proposals? Is the Minister not entirely agreeing by the back door with what we are proposing? He is merely doing so in a different way, so that he can have his little rant about competition.

James Paice (Conservative, South East Cambridgeshire)

The hon. Gentleman is perfectly right. I said that I was not surprised that the Minister resisted the amendment, because all his comments in discussion on the earlier group, including those on the hon. Gentleman's amendment, led us to conclude what his response would be.

However, I, too, was interested in the Minister's remarks about what might happen if things did not work out, and about the fact that the Government always keep things under review. I am not sure how much force the Hansard Committee record of the

Minister's words has, but they were quite telling. He clearly seemed to accept the possibility that the situation will need to be looked at again in five, six or seven years. That is exactly the point that I am making, and I am trying to make it easier for that to happen by removing the compulsory non-renewability issue from the Bill.

The Minister might be surprised to read in tomorrow's Hansard that in his off-the-cuff tirade he managed to get on record a fact that we failed to get on the record this morning, which is that of the 50-50 split. At no stage this morning when discussing the price mechanism did he confirm that there would be 50 per cent. pricing, but he has done so now, so I suppose I should welcome his off-script tirade.

Richard Caborn (Labour, Sheffield Central)

I refer to amendment No. 49. I want to make it clear that that is exactly what I said about the 50-50 split. If the hon. Gentleman reads Hansard tomorrow, he will learn that before I said it in response to this group of amendments, I said it when we discussed amendment No. 14.

James Paice (Conservative, South East Cambridgeshire)

On the off-chance that the Minister did stick to his script at one point, I stand corrected. I do not want to force Labour Whips to pull in Members for what might be a close-run vote—[Interruption.] Do not tempt me.

Despite my extreme disappointment at the Minister's response, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

James Paice (Conservative, South East Cambridgeshire)

I beg to move amendment No. 34, in

clause 8, page 5, line 33, at end insert—

'(6A) An order revoking the exclusive licence shall not be made by the Gaming Board under subsection 6(a) unless—

(a) the Gaming Board has first given notice to the successor company that it believes that it is entitled to make an order under subsection (6)(a) and that it intends to make such an order together with the reasons therefore,

(b) the successor company has had a period of at least 28 days to make representations with respect to the proposed revocation, and

(c) any order made by the Gaming Board confirms that prior to making any such order it has taken into account any representations made by the successor company with respect to the revocation.'.

Jonathan Sayeed (Conservative, Mid Bedfordshire)

With this it will be convenient to discuss the following amendments:

No. 35, in

clause 8, page 5, line 40, at end insert

'provided that time is not less than 28 days after the date of the order'.

No. 36, in

clause 8, page 5, line 43, leave out paragraph (b)'.

James Paice (Conservative, South East Cambridgeshire)

We turn to the issue of revocation. The Bill seems to provide for a much stricter situation than is provided for by Tote licensing legislation. The Gaming Board will have powers to revoke the pool betting licence if it thinks that a breach of the conditions has occurred. That would seem perfectly

reasonable—except that there are no ifs, buts or caveats. The Bill does not tell us how serious the breach has to be, and there is no opportunity for the Tote to remedy the breach. The amendment seeks to ensure that the breach must be material—in other words, significant—and that the board must act reasonably in coming to the view that the licence has been breached materially in a way that affected the integrity of the Tote or racing, or the interests of the betting public.

Amendment No. 35 proposes that there should be a 28-day period for all revocations. My earlier comments related to revocations by the Gaming Board only, as opposed to the Secretary of State's powers to require a revocation. This amendment refers to all revocations, whether under the instruction of the Secretary of State or at the initiation of the Gaming Board. A 28-day period is reasonable to allow for the necessary changes and to wind up activities.

Amendment No. 36 is slightly different. It is a probing amendment. I am slightly puzzled as to why the Secretary of State should have the power to require the revocation of the licence for a period of 14 days after she ceases to own the Tote. The Minister may have a perfectly good argument, which I would be ready to hear, but I cannot envisage the circumstances that could arise in the two weeks after the Secretary of State has transferred the Tote to the Racing Trust that would make her decide to revoke the licence. Amendment No. 36 would remove her power to do that. I cannot see why she should need to revoke the licence, but the Minister might be able to persuade me otherwise.

Amendment No. 34 was suggested by the Tote itself and would introduce the issues of reasonableness and a material breach, and allow for an opportunity to remedy a breach before the licence is automatically revoked. I hope the Minister agrees that that is a reasonable suggestion.

Nick Hawkins (Conservative, Surrey Heath)

I rise briefly to support what my hon. Friend the Member for South-East Cambridgeshire said and ask the Minister to tell us whether he anticipates that anything that may be included in a future gambling Bill may affect this part of the Bill.

As all Committee members know, the Committee carrying out the pre-legislative scrutiny on the proposed gaming Bill, under the chairmanship of my hon. Friend the Member for Ryedale (Mr. Greenway), is currently meeting and taking evidence. As one of the shadow Ministers who is interested in this issue, I look week by week at the transcripts of the evidence given by people such as Mr. Peter Dean. He is currently the chairman of the Gaming Board, which is to be transmogrified into a new Gambling Commission. We are only at the pre-legislative scrutiny stage of that Bill, so we do not know what form it will take. The Government have said that they will take on board what happens in the Committee chaired by my hon. Friend. However, given that we are discussing what

may happen to the Tote in future under the Gambling Commission, perhaps the Minister could give us some guidance on the Government's thinking.

Richard Caborn (Labour, Sheffield Central)

I will deal with that point straight away. We believe that the powers we are giving the Gaming Board are sufficient for it to take through our proposals in the Bill—and we hope that those powers will be transferred to the Gambling Commission. Therefore, there is no conflict.

Amendments Nos. 34 and 35 cover the notice period that the Gaming Board must give before revoking an exclusive licence and include the provision that it must take into account any representation made by the successor company before proceeding with the revocation. The Government believe that the Gaming Board will have to act reasonably, like any public body, in any case in which it is minded to revoke the licence. The clause, as drafted, does not preclude the Gaming Board giving notice to the successor company to remedy a breach of a licence condition. On the other hand, it is likely that the licence would be revoked only when it was clear that a serious and unjustifiable breach had occurred or was occurring. In such cases, there might need to be an immediate revocation of the licence for the protection of the pool-betting public.

Any such decision would have to satisfy all the usual requirements of public law and would be subject to judicial review. We believe that that should give the exclusive licence holder sufficient reassurance that the Gaming Board would not act arbitrarily in this matter. The Gaming Board is not subject to a 28-day delay in respect of its other regulatory functions, and there is no reason to introduce such a provision on this one.

Don Foster (Liberal Democrat, Bath)

Will the Minister explain the procedures? We have already debated the fact that it will not be possible to issue a second licence. If the Gaming Board revoked the licence and there were a judicial review, there could be much turmoil and uncertainty for those involved. What happens if the judicial review is successful? Would the licence continue, or would another one have to be issued? At the moment, it could not be reissued.

Richard Caborn (Labour, Sheffield Central)

That is for the courts to decide during the judicial review.

Amendment No. 36 would remove the Secretary of State's power to revoke the exclusive licence within 14 days of its being issued. That power was included in the Bill as a precautionary measure in the event that, in the immediate aftermath of the sale and the issue of the licence, evidence came to light, which, had it been discovered earlier, might have resulted in the licence not being issued. Given that the Gaming Board will have the power to revoke the licence, I do not regard that as an essential measure. I agree to consider this amendment, but ask that it be withdrawn by the hon. Member for South-East Cambridgeshire on the understanding that the Government will introduce their own amendment on Report. I hope that that addresses his concerns.

James Paice (Conservative, South East Cambridgeshire)

I am touched that members of the Committee paid so much attention to my words that they did not notice that I was discussing earlier an amendment that had not been selected. My references to acting reasonably were, of course, in an amendment that you decided not to select, Mr. Sayeed. I had failed to notice that—as did you and the rest of the Committee. I apologise to Committee members, who I am sure will apologise to me for not picking me up on that.

I was slightly disconcerted by the Minister's earlier response, but he came round in his latter remarks. I accept that 28 days overall is not appropriate, and I accept his assurances about 14 days. However, I am not clear about the issue of notice or the opportunities for representations to be made. I shall not pursue that point at this stage because the Minister has kindly said that he will examine the issue, but I stress that those points have been raised by the Tote, which is concerned. I hope that the Minister agrees that it is important that the Tote has some kind of appeal mechanism by which it is able to make representations. That must happen before the Gaming Board makes the necessary order of revocation. However, in the light of the Minister's comments, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

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

Richard Caborn (Labour, Sheffield Central)

It is worth explaining the composition of the Tote and its income. About 22 per cent. of the Tote's turnover comes from pool betting. I am referring now to pool betting and the necessary protection, but I appreciate that we are discussing the role of pool betting in the wider gambling market. Although pool betting is an important part of the Tote's operation, we need to keep that in mind. Recently, activity on the fixed-odds betting side of the business has been building, so the Tote has become about much more than just pool betting.

In response to the suggestion that everything will be dragged away from the Tote, I reassure Members that if the licence went, the racing trust would still have the profitable part of the Tote, which consists of the betting shops, the phones, the internet and all the hardware and, I suppose, the relevant intellectual property rights. We are not therefore talking about an absolute when it comes to the Tote and pool betting. As I said, about 22 per cent. of the Tote turnover comes from pool betting.

Clause 8 sets out provisions for an exclusive pool betting licence post-transfer. Subsections (1) and (2) allow the Secretary of State to require the Gaming Board to issue to the successor company an exclusive licence to carry on the pool betting business in any form in connection with horse racing in Great Britain. In the light of Opposition Members' concerns, the Government will examine how we can make it clear in the Bill that the licence will be for seven years. After discussions within government, it has been decided that if the Tote is sold to the racing trust, an exclusive licence will be granted for seven years on terms

specified by the Secretary of State. The proposed licence link strikes the right balance between providing a sensible level of certainty for racing and introducing competition into the pool betting market after seven years. That will allow the Tote's successor to establish itself and ensure continued provision of pool betting at race courses.

The Secretary of State's powers to require the issuing of a licence, which may be before, on or after the appointed day, are provided in subsection (3). Only one exclusive pool betting licence will be issued and if, for example, an exclusive licence has been issued and is subsequently revoked, the Secretary of State will not have the power to request the Gaming Board to issue another exclusive licence.

Subsections (4) and (5) provide that the successor company may authorise other persons to conduct pool betting, along lines similar to the Tote's current practice. For example, those who wish to organise a totalisator at point-to-points will have to be authorised by the successor company. The successor company may state the terms and conditions under which another body may conduct pool betting on British horse racing.

While the Tote was in public ownership, its pool betting operation was self-regulating. That will not be suitable for a private sector body. Therefore, the Gaming Board has been given the task of issuing the licence and regulating its use. When the new Gambling Commission is established, it will regulate all forms of betting as part of our plans to reform the country's gambling laws. We are satisfied that, until then, the Gaming Board is well equipped to do the job.

Under subsection (6), the Gaming Board will have the power to revoke the licence if required by the Secretary of State, or if it thinks that a term or condition of the licence has been breached. My hope and belief is that the Gaming Board and the Tote's new owners will develop a constructive working relationship. It is right to have a power to revoke the licence, but it would be a matter of regret if it ever needed to be used.

If the licence is revoked following a direction from the Secretary of State, the reasons and the time that the revocation will take effect must be given. Subsection (9) provides that the Secretary of State may require the revocation of the exclusive licence only while the successor company is wholly owned by the Crown or during the 14 days after it ceases to be wholly owned by the Crown. The 14-day transitional period was provided for in case any serious problems with the transaction should emerge after the sale—for example, meeting the sale price. However, as I indicated to the Committee, we shall review whether the provision is necessary. Finally, subsection (10) provides that the exclusive licence may not be renewed.

Question put and agreed to.

Clause 8 ordered to stand part of the Bill.

Clause 9Section 8: supplemental

Section 8: supplemental

James Paice (Conservative, South East Cambridgeshire)

I beg to move amendment No. 37, in

clause 9, page 7, line 7, leave out from 'for' to end of line and insert

'all such relief, by way of damages, injunction or otherwise, as the court thinks appropriate and the court may grant an injunction restraining an infringement or apprehended infringement of the right aforesaid whether or not any other relief is claimed.'.

This is a slightly more technical amendment. Clause 9(6) allows the successor company to proceed against somebody who commits or threatens a breach of the licence

''in the High Court or county court for damages or such other relief as the court thinks appropriate.''

Section 14(2) of the Betting, Gaming and Lotteries Act 1963 allows the Tote to seek an injunction at the same time that another relief such as damages is claimed. The wording in the 1963 Act acknowledges that damages or an injunction alone may not be sufficient relief, whereas the wording in clause 9(6) allows the successor company to seek only

''damages or such other relief as the court thinks appropriate.''

The fact that the statute has been amended could be interpreted such that damages or such other relief—that is, an injunction—were now considered a sufficient remedy for the Tote. That would make it harder for the Tote to seek an injunction at the same time as damages.

The Tote has effectively used the provisions under section 14(2) of the 1963 Act on many occasions. Therefore, any new wording may lead to unnecessary confusion as to the remedies available to the Tote. It is clear that its position is stronger in such a situation if statute clearly states that an injunction and damages together are a possible remedy.

That is why I propose the amendment. Basically, it is trying to put into the Bill the same terminology as in the 1963 Act with regard to the Tote seeking an injunction against anyone who commits or threatens to commit a breach of licensing agreements. It is perfectly reasonable to request that the legislation stays the same, and I shall be interested in the Minister's response.

Richard Caborn (Labour, Sheffield Central)

The amendment proposes that the court could issue an injunction against anyone breaching the successor company's pool betting exclusivity.

The Government resist the amendment. The subsection expressly mentions that action may be taken for a threatened breach, in relation to which an injunction is the most obvious relief. We consider that a court would have no difficulty in interpreting the phrase ''or such other relief'' as including injunctive relief.

James Paice (Conservative, South East Cambridgeshire)

With respect, I think that the Minister has missed the point. An injunction may be covered by the phrase ''or such other relief'', but the problem is the word ''or''. The Tote, through the amendment that it has asked me to table, seeks to be able, as at present, to seek damages and an injunction.

Richard Caborn (Labour, Sheffield Central)

My understanding is that that matter is covered in the Bill as currently drafted. If that is not the case, I will return to it at a later stage in the Bill, after further consultation. However, my understanding, and that of my officials—based on the legal advice that we have received—is that the phrase ''or such other relief'' would cover both compensation and injunctive relief.

James Paice (Conservative, South East Cambridgeshire)

I am grateful to the Minister for his response to my intervention. I am also grateful that he will consider the matter further. I urge him to discuss it with the Tote and its lawyers; I am sure that he will do that. However, in the light of his response, I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

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

Richard Caborn (Labour, Sheffield Central)

The clause is supplemental to the previous clause concerning the exclusive pool betting licence post-transfer.

Subsection (1) sets out the matters that the Secretary of State must consider in making a request for the issue or revocation of an exclusive pool betting licence. It is right that that should be transparent. It embodies the Government's key aims for the legislation relating to the exclusive licence and certificates of approval; protecting the interests of those who bet on horse racing, and of the sport itself.

The clause is also designed to prevent crime and disorder. It will ensure that betting is fair and open while protecting children and the vulnerable. Those are core principles of the Government's wider gambling policy.

Subsection (2) provides that the successor body, and persons authorised by it, will not be subject to the regime in the Betting, Gaming and Lotteries Act 1963 for controlling pool betting, which this Bill will amend, while the exclusive licence is in place. That provides the same legislative position as the Tote currently enjoys. As I said to the hon. Member for South-East Cambridgeshire, if that is not the case, I will return to the matter at a later stage.

Subsections (3) and (4) provide that, for the duration of the exclusive licence, the successor company, and any persons it authorises, will be able also to apply for a betting office licence to enable them to carry on off-course pool betting in betting shops.The successor company and persons authorised by it are not, by virtue of the exclusive licence alone, to be treated as bookmakers. They will need to fulfil the same ''fit and proper'' requirements as other applicants for a bookmaker's permit if they wish to offer fixed odds betting.

Subsection (5) provides the teeth for the exclusive licence. Anyone who breaches it will be treated as if they had carried on unlawful betting under the 1963 Act. Subsections (6) and (7) provide the successor company with civil rights to protect its exclusive rights. As I explained, that would include the right to apply

for an injunction to restrain a threatened breach as well as a right to claim damages. That right is similar to that provided in section 14(2) of the 1963 Act.

The draftsmen of the Bill have used a shorter wording, which we think will work in the same way. We think that we have covered both damages and injunctions. However, I reiterate my assurance that if that is not the case, we will return to it at a later stage. That is our intention and that is what my advisers inform me.

Question put and agreed to.

Clause 9 ordered to stand part of the Bill.

Clause 10 - Control when no exclusive licence

Richard Caborn (Labour, Sheffield Central)

The clause provides for the control of pool betting when there is no exclusive licence in operation. It consists of proposed new sections 4, 4A and 4B, and proposed new schedule 1A to the 1963 Act. The three new sections provide for the restriction of pool betting on track, restrictions to pool betting off track and the detailed regulation of horse race pool betting.

Under proposed new section 4, a person commits an offence if he carries on a pool betting business on a racecourse unless it is in connection with horse racing that is carried on by the holder of a bookmaker's permit, on an approved race course on a day that racing takes place and in accordance with the regulatory regime in part 2 of proposed new schedule 1A. An offence is also avoided if the relevant activity is in connection with a horse race that is carried on in accordance with a point-to-point exemption notice issued by the Gaming Board. Such notices will be issued where racing take place no more than four days a year and allows the Gaming Board to attach further conditions, such as the operation of the pool and the publication of betting rules, should it feel that they are required.

That limit is a reduction from the present seven-day exemption, but the Government feel that that is justified. Leaving the present seven-day limit raises the possibility of some race courses that only have a few fixtures being able to offer pool betting without needing to be an approved race course, thereby avoiding the stricter requirements. For example, Aintree has only seven fixtures for 2004. It and others have had fewer than that before, so we have reduced the scope of the exemption to four. The third permitted way of carrying on a pool betting business is on a licensed dog track by means of a totalisator.

Under proposed new section 4A, a person will commit an offence if he carries on a pool betting business other than on a track, unless it is in connection with horseracing and is carried on by the holder of a bookmaker's permit in accordance with the regulatory regime provided for in part 2 of proposed new schedule 1A. In practice, that covers pool betting

in licensed betting shops. Alternatively, the person may be a registered pool promoter, or the pool betting business may be carried on in accordance with a licensed inter-track betting scheme.

Proposed new section 4B introduces a new schedule 1A, which provides a detailed regime for the regulation of pool betting business in connection with horse racing. The requirements include the proper working of the totalisator and compliance with a number of conditions set out in part 2, which are designed to ensure fairness and transparency in the operation of horse race pool betting. Furthermore, the provisions provide for the Gaming Board to supervise the operation of the pool in accordance with part 3. That includes the appointment of an accountant and a technical adviser to ensure compliance with the requirements. Those are important safeguards for the customer and help to ensure the integrity of the product.

Question put and agreed to.

Clause 10 ordered to stand part of the Bill.

Schedule 1 - New Schedule 1A to the Betting, Gaming and Lotteries Act 1963

Richard Caborn (Labour, Sheffield Central)

I beg to move amendment No. 47, in

schedule 1, page 24, line 36, leave out 'qualified accountant' and insert

'person who is eligible for appointment as a company auditor (in accordance with section 25 of the Companies Act 1989 (c.40))'.

The amendment makes it clear that the Gaming Board may appoint an individual or a firm of accountants to fulfil the role of the supervisor's accountant.

Amendment agreed to.

James Paice (Conservative, South East Cambridgeshire)

I beg to move amendment No. 39, in

schedule 1, page 26, line 2, leave out 'seven' and insert 'twenty-eight.'.

Jonathan Sayeed (Conservative, Mid Bedfordshire)

With this it will be convenient to discuss the following:

Amendment No. 40, in

schedule 1, page 26, line 15, leave out 'seven' and insert 'twenty-eight'.

James Paice (Conservative, South East Cambridgeshire)

The short amendments in this group have the same import and relate to the same portion of the schedule as amendment No. 47 did. The amendment concerns the time scale in which the person who operates a pool betting business will send the supervising accountant a statement of the accounts of that business for any particular month. The Bill gives only a seven-day notice for both submission and resubmission of the accounts, if that proves necessary. I am certainly not a person who likes delays, but I think that seven days is a very short time and have tabled amendments to make it 28 days. The Minister may have an alternative viewpoint but in all reasonableness seven days is a very short time in which

to table those accounts. From reading the clause, it strikes me—I may have misunderstood—that if at any time the supervisory accountant requested accounts, they must be provided in seven days. My amendment suggests that seven days be replaced by 28 days, which is a more reasonable period.

Richard Page (Conservative, South West Hertfordshire)

Mine will be a very short intervention. I wish to support my hon. Friend the Member for South-East Cambridgeshire with a logical argument. The Tote is not a small business. It is not a corner shop but a relatively large organisation. The idea that one could cobble together accurate figures, if required, in seven days is an impossible imposition. The clause does not even say seven working days, so if the request was received on a Friday and there was a bank holiday, there would be only three days in which to produce the figures.

It is a simple matter of logic. Anyone with any business experience would require more than seven days to comply with the regulations to make sure that the figures are presented correctly. I am sure that the Minister will see the eminent logic of the amendments and be only too happy to accept them.

Richard Caborn (Labour, Sheffield Central)

Based on that powerful contribution, amendments Nos. 39 and 40 increase the time allowed by pool operators to submit their pool accounts for inspection by supervising accountants. The period of seven days specified in the Bill is based on the regime that operates, as already indicated, for greyhound pools and we see no reason to diverge from that. However, I recognise that horse racing and dog pools differ. We keep hearing about little pools, but are talking about dog pools not little pools.

Richard Page (Conservative, South West Hertfordshire)

Puddles.

Richard Caborn (Labour, Sheffield Central)

Pools. If information comes to light that shows that horse race pools accounts take longer to prepare than greyhound pools accounts, we will look again at the time scale. In the meantime, I ask the hon. Member for South-East Cambridgeshire to withdraw the amendment. We will agree to consider it on the basis of any further information that we are given.

James Paice (Conservative, South East Cambridgeshire)

I am grateful for the Minister's response. Surprise comes in many forms and I am delighted at his emollient words. I therefore beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Schedule 1, as amended, agreed to.

Clause 11 - Preparatory work by the Tote

Richard Caborn (Labour, Sheffield Central)

The clause provides the statutory authority for the necessary planning and preparatory work to take place for the Tote's sale. It extends the powers of the Tote's board so that it may do anything

that it or the Secretary of State thinks necessary or expedient in connection with the sale. That will include the ability to provide information, support and assistance to the racing trust. Similarly, it gives the Secretary of State power to direct the Tote to undertake such work or to provide information or assistance in connection with it. That will ensure that all the required preparatory work done in connection with the sale can be undertaken. It is, therefore, key to the smooth passage of the sale as soon as possible.

Question put and agreed to.

Clause 11 ordered to stand part of the Bill.

Clause 12 - Interpretation

Richard Caborn (Labour, Sheffield Central)

The clause deals with the interpretation of terms and expression used in this part of the Bill. It clarifies what is meant by Crown ownership of shares and provides a definition of securities modeled on the Companies Act. It also provides for terms that are defined in the Gaming Act 1968, Companies Act 1985 and the Betting, Gaming and Lotteries Act 1963 to have the same meaning in the Bill.

Question put and agreed to.

Clause 12 ordered to stand part of the Bill.

Clause 13 - Consequential amendments

Richard Caborn (Labour, Sheffield Central)

Schedule 2 makes a number of consequential amendments to other Acts. The clause merely allows the amendments made in that schedule to have effect.

Clause 13 ordered to stand part of the Bill.

Schedule 2 - Sale of the Tote: consequential amendments

James Paice (Conservative, South East Cambridgeshire)

I beg to move amendment No. 41, in

schedule 2, page 29, line 31, at end insert—

17A The Betting and Gaming Duties Act 1981 shall be amended as follows.

17B In section 4 (Other betting)—

(a) While the exclusive licence has effect substitute the following subsections (1) and (2) for the existing subsections (1) and (2)—

''(1) General betting duty shall be charged on a bet made by way of pool betting by means of facilities provided by people who are authorised under section 8(4)(a) of the Horserace Betting and Olympic Lottery Act 2004.

(2) General betting duty shall be charged on a bet made by way of pool betting by means of facilities provided by the successor company (as defined in section 2(2) of the Horserace Betting and Olympic Lottery Act 2004).''

(b) Once the exclusive licence no longer has effect subsections (i) and (ii) shall cease to have effect.'.

The amendment was put forward by the Tote's lawyers, who advise me that although section 4 of the Betting and Gaming Duties Act 1981 refers to the horse race totalisator board and to the question of general betting duty, they seem to have been omitted from the consequential amendments in schedule 2. The amendment acknowledges the fact that while the exclusive licence is in effect, general betting duty will continue to be charged in the current manner. When the exclusive licence ceases to have effect, the provisions of section 4 of the 1981 Act will cease to have effect also. As I said, the amendment was recommended by the lawyers acting on behalf of the Tote; I cannot add to that.

Richard Caborn (Labour, Sheffield Central)

It seems that the hon. Member for South-East Cambridgeshire and I are both reading from brief this afternoon. The amendment would allow the Tote's successor to pay a general betting duty on its full betting operation rather than pool betting duty. As the hon. Gentleman knows, taxation is a matter for my colleagues in the Treasury, who will of course consider the issue as part of the Budget and Finance Bill process. Naturally, if proposals to that effect are brought forward in a future Finance Bill, the House will have the chance to debate them then. On that basis, I hope that the hon. Gentleman will withdraw the amendment.

James Paice (Conservative, South East Cambridgeshire)

I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Schedule 2 agreed to.

Clause 14 - Extent

Richard Caborn (Labour, Sheffield Central)

The clause deals with the extent of part 1 of the Bill, and it excludes Northern Ireland from the scope of the provision allowing for the sale of the Tote. Northern Ireland racecourses operate their own pools under a separate system of regulation, and the Tote does not run betting offices there.

Clause 14 ordered to stand part of the Bill.

Further consideration adjourned.—[Mr. Kemp.]

Adjourned accordingly at eighteen minutes past Four o'clock till Thursday 22 January at half-past Nine o'clock.