My honourable friend the Parliamentary Under-Secretary of State for Culture, Media and Sport (Gerry Sutcliffe) has made the following Written Ministerial Statement.
The Government took powers in the Horserace Betting and Olympic Lottery Act 2004 to enable it to sell the Horserace Totalisator Board (The Tote) as part of their wider policy aim of removing themselves from detailed involvement in the affairs of the racing industry. Since then they have been in exclusive negotiation to sell the Tote to racing, in line with their manifesto commitments of 2001 and 2005. The Government’s initial intention was to sell the Tote to a racing trust in 2005 at a fair price until it became clear that a sale on that basis risked being denied approval under European state aid and competition rules, because it would have been below open market value.
The Government subsequently appointed independent advisers to assess market value and sought unsuccessfully to achieve a sale on that basis to racing in 2006. Finally the Government, responding to representations from racing and the Tote itself, sought during the course of 2007 to achieve a sale to racing interests and the staff and management of the Tote. The Government received an offer for the Tote in January 2007 but the final offer subsequently received in September 2007 did not meet the independent assessment of the Tote’s market value undertaken for the Government and which was necessary for a sale to proceed lawfully under EU state aid rules. The Government have therefore today, with great regret, declined the offer and, having exhausted all the practicable sale options, have decided to draw to a close the period of exclusive negotiation with racing.
The Government now intend to prepare for an open market sale, and will appoint advisers shortly to advise them on strategic options. The overriding criterion for the Tote’s privatisation will be to maximise value for the taxpayer. Advisers will work closely with the Board of the Tote. Meanwhile the Government stand fully behind their commitment during the passage of the Horserace Betting and Olympic Lottery Act 2004 to make available to racing half the net proceeds of any open market sale in the event that a sale to racing itself did not prove possible. We will now be considering urgently how best to give effect to that undertaking in ways which meet the needs of racing, do not add unnecessary bureaucracy and are consistent with European state aid and competition regulations.
The Government are also taking steps to appoint a chairman to oversee the process of preparing the Tote for sale, to work closely with the Government and their appointed advisers in assessing strategic options and in executing the sale process, and to manage the implications of the sale particularly as they affect the Tote’s staff. The Government would like to place on record their gratitude to Ian Good, as the senior non-executive on the Tote’s board, for agreeing to act as interim chairman of the Tote until that appointment is made.
Pending the appointment of sale advisers the Government are happy to receive any initial expressions of interest to acquire the Tote’s businesses. Any such expressions of interest will then be evaluated by the Government’s advisers as part of their wider strategic view of sale options.