My right honourable friend the Minister for Sport (Richard Caborn) has made the following Written Ministerial Statement.

The Government have decided, after much consultation and deliberation, to retain the Horserace Betting Levy Board (the levy board) and the associated horserace betting levy scheme. We are doing so on the basis that the scheme continues to reflect and balance the legitimate needs of racing against the ability of bookmakers to pay in accordance with the prevailing economic position.

The Government announced their intention to abolish the levy board and the levy mechanism in March 2000. This policy was approved on the basis that the horseracing industry was confident that a commercially based alternative funding mechanism was available and requested that the Government abolish the levy board in order that it could fully exploit these new commercial opportunities.

The sport proposed to substitute the statutory levy income with a commercial arrangement based on the sale of pre-race data (runners, riders and so on), primarily to bookmakers both here and abroad. The Government, preferring commercial arrangements between industries, brought forward legislation in the form of the Horserace Betting and Olympic Lottery Act 2004 to achieve this.

A judgment by the European Court of Justice in November 2004 cast serious doubt over the sport’s ability to enforce substantial payments for the use of its data and, as a result, the viability of the proposed replacement funding model. The Government have since engaged in lengthy discussions with the racing and betting industries on future funding arrangements, resulting in the establishment of an independent Future Funding of Racing Review Group (FFRRG), chaired by Lord Donoughue.

The FFRRG reported earlier this year, concluding that a secure alternative funding mechanism to the levy—which, at £90 million to £100 million per annum, represents a significant proportion of the sport’s income, was not presently available. The loss of the levy, without a commercial replacement of comparable value, would have serious and immediate adverse consequences for the racing industry, as well as knock-on effects to other related businesses, notably the betting industry and those within the rural economy.

Given the importance of the present statutory system, the Government have decided to retain the levy until such time as a secure and adequate alternative commercial funding arrangement can be identified. We also intend to repeal the sections of the existing legislation providing for the levy board’s abolition, to ensure that Parliament may be permitted to debate such a measure in light of the prevailing circumstances at the time.

In the mean time, the Government propose to modernise the existing levy mechanism with a view to removing as many of the unnecessary administrative burdens as possible and will consult stakeholders on the form and content of those changes in the new year. The Government also welcome the horseracing industry’s commitment to modernise and establish a new governing and regulatory body from 1 January 2007.