Question for Short Debate
My Lords, I welcome the opportunity to introduce this timely debate. First, I must declare that I have for some years been a government-appointed director of the Horserace Betting Levy Board, the body that collects the levy from betting operators on their profits from horserace betting and distributes it to the sport and its wider grass roots. It has seen its reputation grow because it has been skilfully chaired and managed by a most effective executive team.
The levy board operates at arm’s length from government. This allows it to respond flexibly to the demands of horseracing while having direct bookmaker representation on the board. Maintaining this independence and responsiveness is crucial. The levy board contributes some £19 million to the sport’s regulation per year, about 80% of the total, and around £2 million a year to equine veterinary research and education. Additionally, the Great British Bonus is 66% funded by the levy board and serves to encourage, with considerable success, the breeding and ownership of British-bred fillies, and in addition to this there is a commitment to give £66 million next year to prize money.
As a Member of Parliament for 18 years, I represented the town of Newmarket, the world’s leading racing and breeding centre. Today’s debate provides an opportunity for us to discuss how we can take this great British success story forward, and how the racing industry and government can support each another in their policy priorities.
I unreservedly applaud the considerable support which the Government provided during the Covid-19 pandemic. The shutdown of racing for 11 weeks and the subsequent continuation of racing behind closed doors for a year put considerable financial strain on the industry, with more than £400 million in lost revenues. Racing and government worked closely on protocols for safe resumption, then the Government supported racing with a critical £21.5 million loan to the levy board through the sports winter survival package and, indeed, £28 million in cash flow and hardship funding. This helped to continue funding critical prize money, the very lifeblood of the racing industry, and other important initiatives, including training and education, integrity and horse welfare.
Horseracing is the second biggest sport in the UK by several measures, second only to football. More than 5 million people attend some 1,400 fixtures annually across our 59 racecourses. Four of the top 10 highest-attended sports events held annually in the UK are major horseracing festivals. It is the most broadcast sport on free-to-air television in the UK through the excellent coverage provided by ITV Racing. Racing provides a substantial contribution to the UK economy. It generates more than £4.1 billion of economic activity, raising more than £300 million in taxation annually for the Exchequer.
The industry provides some 80,000 jobs directly or indirectly and sits at the heart of many rural communities. The Racing Together programme highlights that more than 130 organisations utilise horseracing to support fundraising, well-being and training in local communities, with more than 1,500 hours donated by the racing industry to support charitable causes annually.
British racing also demonstrates international leadership on a range of issues, including integrity monitoring to intercept, disrupt and prosecute corrupt activity, working closely with international counterparts; significant efforts to advance diversity in the industry; and equine welfare initiatives further to raise standards across the lifetime of the racehorse through the independently chaired Horse Welfare Board’s A Life Well Lived strategy. The industry has also proudly supported over £40 million in veterinary research and education funding since 2000.
Yet, I firmly believe that this is an asset which the Government can do so much more to cultivate—a source of continuing frustration. I urge the Government to go further than they have in harnessing horseracing as an asset for their diplomatic and trading objectives. Furthermore, they should capitalise on thoroughbred horseracing and breeding’s role as a rural employer as part of their levelling-up agenda. I know that this is something that the British Horseracing Authority and all in British racing are keen to support them on.
However, if British racing is to really survive it needs to maintain its position at the international pinnacle. I am afraid it is clear that this is coming under remorselessly increasing pressure. Owing to a range of factors, British racing faces gaping challenges in achieving competitive levels of prize money. Quite simply, prize money acts as the lifeblood of the industry. It not only helps to sustain owners’ critical investment in the industry but supports many hundreds of training businesses and the livelihoods of thousands.
On the measure of prize money per race, British racing is well behind other major competitor jurisdictions, including Ireland, France, Australia, the United States, Hong Kong and Japan. These competitor jurisdictions continue to really drive up prize money increases, offering significant incentives for British owners to relocate abroad. Such financial pressures, compounded by additional complexities around thoroughbred movement following Brexit, are starting to have an active impact on owner and high net worth investor decisions to invest in British racing. The decisions of only a few significant owners to relocate to other jurisdictions would permanently damage Britain’s racing leadership position. Although there was record turnover at the key Tattersalls October sales this year, there is increasing evidence that a growing proportion of the top lots are leaving the UK. This exodus of equine talent, driven by international funding disparities, sees British racing starting to fall in this global race.
I am pleased to say that the industry is trying to respond to these challenges. I am delighted that British racing leaders agreed on a new governance structure this week for the sport to deliver unity and focused strategic direction. The racing industry needs the Government to step up as a partner to realise its potential, as has happened in other jurisdictions.
I highlight the forthcoming gambling review White Paper, although it has been repeatedly delayed, as critical. Indeed, it is vital that gambling regulation protects people from experiencing gambling-related harm, yet it is also key that it recognises the unique relationship between racing and betting. Any blanket, disproportionate measures could have profound consequences for British racing. I therefore hope we will see a balanced White Paper in the coming weeks.
I also reference that the Government are required by statute to review the rate of the horserace betting levy, which is currently set at 10% of betting operators’ gross profit on British racing, by no later than 2024. It encapsulates the symbiotic relationship between the two industries. It would not be appropriate for me to comment further on this given my position at the levy board, but I know that this is a point on which the racing industry has made repeated representations, including for a levy based fully or in part on a percentage of turnover rather than profits. However, it is hugely valued that bookmakers contribute some 45% of racing income.
Continuing efforts are being led to reduce complexities around thoroughbred movement post Brexit. I would be interested in hearing from my noble friend the progress of these discussions between the industry and our Government, and whether the future imports system can recognise our high standards of animal health. I therefore conclude by urging the Government, across their various departments, to engage proactively with similar vigour as demonstrated in the Covid-19 pandemic to grasp the many opportunities which exist and set up British racing to thrive through the 21st century.
My Lords, what great timing the noble Lord, Lord Risby, has achieved in securing this debate, because this is the week when, to a fanfare of trumpets, the British Horseracing Authority announced its final agreement to replace the present tripartite and dysfunctional system with a reform designed to stop individual racing interests blocking change. That is a step forward which we can all welcome.
The noble Lord is, of course, a true expert on racing, as a member of the Horserace Betting Levy Board. He will not mind me reminding the Committee that that body exists today only because this House blocked a half-baked scheme cooked up by the Government and racing to hand the whole business of collecting taxes from punters over to a non-accountable body. After this debate, again by a lucky chance, I am off to the 50th birthday party of Alan Delmonte, the chief executive of the levy board—I suspect others here are going too. What a great job he, the noble Lord and their team have done.
I have a few interests to declare. I am member of the Starting Price Regulatory Commission, which oversees the SP, and a past director of the Tote and of the shadow Racing Trust. Much more interestingly, I own or part-own three horses: Lost Connections, who came fourth at Lingfield on Tuesday; Financial Outcome, who won his last two point-to-points; and a baby novice trotter who has not yet run. More significantly, I am also chair of Premier Greyhound Racing, a JV company formed by Arena Racing Company and Entain to supply coverage of the dogs to betting shops and homes. Of course, this afternoon I speak for myself and no one else.
As I say, this is the week of BHA reform and it would be churlish to cavil too much at this welcome change. However, I am afraid I am going to add an ounce of cavil to a pound of welcome. It is quite astonishing how long it has taken for this basic change to happen. I was on the Tote board with Peter Savill when he first started lobbying for change—not exactly this, but change that would have similar effect—20 years ago. Wearing my greyhound hat, I cannot help but compare this pace of change in governance with that in greyhound racing.
We had a big problem in greyhound racing. I was chair of the then British Greyhound Racing Board and the governance was in at least as much of a mess as that of horseracing. The Donoughue committee was appointed. It is sad that Bernard, my noble friend Lord Donoughue, is not here this afternoon to give us the benefit of his advice. He came up with a wonderful report proposing root-and-branch change, which went through in a couple of years. I can say with complete confidence that if he had not produced that report and if we had not had that change, I do not think we would have greyhound racing today, or certainly not on the same scale, with 20 tracks this side of the Irish Sea, three meetings every day for afficionados and punters—the noble Lord, Lord Foster, will forgive me for mentioning punters, about whom his views are well known—and still a position as Britain’s sixth-biggest spectator sport. That shows what you can do with the aid of good governance.
We do not need and do not have a compulsory levy. We have a voluntary levy. A few years ago, I was responsible for brokering an increase in that levy by which bookmakers voluntarily put their money into greyhound racing and in return got a say on how it is spent through the British Greyhound Racing Fund.
One of the things that the new BHA model will want to do is negotiate an increase in the levy. I will say two things about that. First, it would be very unwise to progress this—here I pick up a point from the noble Lord, Lord Risby—until we know the Government’s plans for gambling reform. If they introduce some of the changes that have been advocated—I do not say by the noble Lord, Lord Foster—then bookmakers will take a heavy hit, as will the Exchequer, incidentally. In the light of today’s events, that is something that we would not want to see. The less money that is collected from bookmakers, the less money there will be to go into racing too.
Secondly, I am a sort of economist, and I have my doubts about whether large amounts of the levy going into prize money solves this industry’s undoubted problems. Incidentally, I accept the point about overseas competition for buying racehorses, but it is perfectly clear to me, as an economist, that if you raise prize money people will pay more for horses when they go through the sales ring—and what would you have achieved? You would have lined the pockets of breeders. These unexpected side-effects of half-understood economics have to be borne in mind when we consider the right level for the levy.
That leads me to a proposal. Racing indeed needs a plan, but I am not wholly confident that, even with the new model of governance, it has all the knowledge and understanding that it needs for a robust plan. Of course it will consult, but there is a case for a wider input than consultation alone will bring. Therefore, in my view, racing would benefit from formalised outside help and advice. My proposal is a royal commission—the first one for more than 20 years—on horseracing, including representatives of racing but also outsiders with relevant expertise: an independent economist, a leisure industry expert and someone who understands the betting industry properly, all under a proper heavyweight neutral chair.
I am not soft-minded about royal commissions. The one I was on, on care of the elderly, was a complete shambles, and I signed a minority report to it—so the 20-year gap was probably welcome. But they have something to offer in this kind of circumstance. Give such a body a couple of years and there is every chance that it will come up with a plan worthy of that name to act as a starting point for radical reform of racing that the BHA, the Government and the oft-forgotten punter can get behind.
My Lords, I declare my interest as the chairman of Peers for Gambling Reform. I congratulate the noble Lord, Lord Risby, on securing this debate. I have only had the odd flutter on the Grand National and occasional visits to the wonderful racecourse in my former constituency of Bath, so I am conscious that some noble Lords are far better qualified to speak on this issue than me. Nevertheless, I have raised a couple of concerns in your Lordships’ House on a number of occasions relating to the sector and the industry on the issue of drones and gambling, and on wider gambling reform. I will concentrate on just those two, and I apologise for not picking up other issues raised by noble Lords.
One of the ongoing challenges for the racing industry is the use of drones to film races without the permission of the course. This is being undertaken by some in the betting community to beat the slight time lag from official TV feeds. This is very worrying for the integrity of betting markets. I believe that this desperately needs to be addressed, so I would very much welcome comments from the Minister on what the Government propose to do about it. In particular, I hope he would be willing to consider looking at broader sports rights to protect sporting events from the use of drones and to enable the organisers of sports, including horseracing of course, to have much greater control over the events that they are responsible for.
More generally on wider gambling reforms, some in the horseracing sector have argued that the proposals for reform advocated by me and other members of Peers for Gambling Reform will do great harm to the industry. Indeed, articles in the specialist media accuse me of being ignorant, economically daft and, on one occasion, even delusional. So, since I very much hope that the Government will adopt the proposals that we recommend, which stem from the proposals of your Lordships’ Select Committee on gambling, I hope I can reassure the Minister and the Committee that they will not have the impact that some believe they will.
We have to remember that well over one-third of a million people are deemed to be gambling addicts, including as many as 60,000 11 to 16 year-old children, impacting the lives of well over 2 million people in this country. Most tragically, we have hundreds of gambling-related suicides every single year, so reform of gambling is urgently needed. Since horseracing and gambling are inextricably intertwined, such reforms will clearly have an impact but, I argue, not to the degree that some have suggested. Despite what media reports have claimed, I am not a gambling prohibitionist and I do not want to ban the entire sport. Indeed, the opposite is the case: I hope it will flourish.
I cannot help but note in passing that while the amount of support for the horseracing industry that comes through the statutory horseracing betting levy has gone down, as the noble Lord, Lord Risby, has pointed out, it is still something like three times the amount of money that comes in from the voluntary levy to help research, education and treatment for gambling addiction. That is why I would like to see a statutory levy that brings in more money.
I turn briefly to the other recommendations and their relationship with the industry and, first, our recommendations to limit the links between sport and gambling advertising. I make it absolutely clear, as the Select Committee does, that we believe those proposals should exclude horseracing and greyhound racing. That is not an issue.
Secondly, we are calling for the introduction of affordability checks. Surely it is important that consumers can afford to bet in the way they do, yet some in the industry have argued that such checks will deter the vast majority of punters and even cause a huge surge in the use of black market gambling, with dire consequences for the horseracing industry. Of course, this ignores that fact that some checks involving the sharing of financial data are already required in relation to money laundering and the existing and recent requirements of the Gambling Commission.
The impact of our proposals on horseracing will be limited because, first, they are targeted at online gambling. No checks would take place at a racecourse under the proposals, so traditional gambling at the racetrack would not be affected. Secondly, for online gambling, where horseracing now also resides, we want them to be triggered at a level of £100 a month. Even one of the gambling industry’s own reports, authored for it by PwC, determined that high-spend gamblers are defined as anyone losing more than £75 a month. So a level of £100 as the trigger really will not affect any but the smallest proportion of online customers, those who are likely to be suffering or at risk of suffering a gambling disorder. Thirdly, it is perfectly possible to do the checks in an unintrusive manner. After all, the gambling industry already shares data with credit agencies so should not need to ask for additional evidence from customers in all but a few cases. Affordability checks should not be a threat to the industry.
There is one area where I acknowledge potential issues that need to be addressed. Traditional, on-course betting is very different from what takes place online. At a racetrack there is a long time gap between races and punters have time to reflect on their financial position before making the next bet. Online there are very few of the limits, whether on stakes and prizes or on speed of play, that apply to land-based gambling. I acknowledge that there may well be impacts there, but I think they could be limited.
The noble Lord, Lord Risby, agreed that the horseracing industry wants to protect people from gambling-related harm but without disproportionate measures. I genuinely believe that the proposals we are recommending achieve both the things he wants.
I add my congratulations to my noble friend Lord Risby on securing this debate. I bow in admiration to his knowledge of the industry and join him in recognising the contribution that horseracing plays throughout the UK today. My racing interest is largely as a member of the All-Party Parliamentary Racing and Bloodstock Industries Group. Also, as an MP for 18 years I was fortunate to have Thirsk racecourse in my constituency and York, Wetherby and Ripon nearby.
Horseracing makes a huge contribution to the local economy of rural North Yorkshire. There are many stables and trainers across North Yorkshire and a day at the races brings huge pleasure to many and fills the bars, cafes and restaurants of the county. Point-to-points bring enjoyment and help prepare horses and riders for the jump races. That is something we must not lose sight of. Whether there will be enough jockeys stepping forward is a worry.
I shall highlight the importance of one racecourse—York—locally. Last year was a particularly busy year as the first full year back after the pandemic. Attendance levels of 275,000 over an 18-day season were within 5% of the pre-Covid 2019 figures, in spite of the fact that national train strikes were called on three of the race days, which was not very helpful. There was a record number of horses racing at York—1,491—averaging 12 per race, which is the highest of any flat racecourse. According to a 2019 study by Sheffield Hallam University, the economic impact on the York economy is £60 million per annum through race day and non-race day activity.
The wider racing industry in Yorkshire, with nine racecourses, more than 100 training yards, the National Horseracing College at Doncaster and Doncaster bloodstock sales, contributes £200 million per annum to the county’s economy. Some £10 million was invested in prize money to attract the best horses and jockeys to York and to support the wider industry at a challenging time as it emerged from the pandemic.
A particular highlight for me was the June 2005 week-long Royal Ascot meet at York, which was sadly a one-off occasion. It opened up the splendours of the royal race meeting to many people who had never been able to experience it.
The welfare of horses and jockeys lies at the heart of racing’s future. Much work on improving animal welfare has taken place in recent years. I pay personal tribute to the work of the late Rose Paterson. As chairman of Aintree racecourse, Rose made great strides at making the famous jumps safer, albeit still challenging. I realise that that work continues.
I also pay tribute to the excellent work of Jack Berry House in Malton in supporting the recovery of injured jockeys. This facility is a tremendous asset to injured jockeys across Yorkshire and the north of England. Separately, the charity Racing Welfare has to date in 2022 provided more than 2,000 instances of support to 472 individuals working in or retired from the racing industry in Yorkshire alone, as well as providing more than £24,000 in grants. The charity organises very successful and popular open days in Middleham and Malton each year, enabling members of the public to go behind the scenes at some of the most prestigious training yards in the country.
However, as my noble friend and others have pointed out, challenges lie ahead. There is concern about falling average attendances, albeit that they are recovering from Covid, the impact of lower prize money levels on our ability to compete with other countries and the financial loss to the racing industry of the Covid-19 pandemic, with lost revenues to racecourses, trainers, breeders and jockeys of more than £100 million. There is concern about the future impact of reduced prize money and a general contraction of the industry and, as my noble friend pointed out, in the sale of horses at Tattersalls and elsewhere.
On the impact of the gambling reforms that were promised in December 2020, the proposals have yet to be published. I urge the Minister to recognise the significance of horseracing in all its aspects, particularly to the rural economy, in this White Paper and to work to enhance its impact on the rural economy, particularly through the levelling-up agenda.
I am concerned, and have been since Brexit was first raised, about its consequences for the movement and export of horses. That is something I will remain vigilant about.
I make a plea to the Minister that the gambling White Paper will be proportionate, evidence-led and responsible. British racing prize money is falling behind France, Ireland and other leading jurisdictions, as my noble friend Lord Risby pointed out. We are losing equine talent with horses being sold overseas, which is threatening our position as a leading global racing nation. Will the Minister ensure that bets made by British-based punters on overseas racing are covered in the Government’s review of the levy? That would recover the current losses of £20 million to £30 million a year.
Finally, will the Government recognise the contribution of horseracing to the local rural economy and as a significant soft power asset on a global scale? This is not just the sport of kings but the sport of every individual racegoer and should be recognised as such by the Government.
My Lords, I declare my interest as a veterinary surgeon as laid out in the register. I am very grateful, as others are, to the noble Lord, Lord Risby, for securing this debate. He and others have emphasised the considerable value of the equine industry to the UK economy. As noble Lords may expect from my interests, the points I wish to make are in respect of measures of support for equine health, disease prevention and veterinary education.
I hope it is self-evident that the whole horseracing industry is critically underpinned by maintaining the health of horses, which are imperilled by infectious disease and traumatic injury. The Horserace Betting Levy Board has historically provided, as determined by statute, substantial financial support for equine health and welfare in three main ways. The first is its important financial support for research into the epidemiology of infectious disease and into non-infectious trauma injuries, which has led, for example, to improvements in the preparation of racing surfaces and the design of fences to reduce injury from falls and lameness.
The second is the levy board’s support of disease surveillance, which is hugely important to help monitor and prevent the incursion of devastating infections, such as equine flu, which could paralyse not only the horseracing industry but the wider horse sport industry as a whole. The important issue of equine disease surveillance was formerly located at the Animal Health Trust, but, following its unfortunate closure, surveillance activities have fortunately managed to continue with help from the levy board. They have relocated to the University of Cambridge and a major veterinary practice in Newmarket. The third main support that the levy board has given is to veterinary education and for specialist postgraduate training in equine health and welfare to ensure that we have an unrivalled cohort of appropriate professional expertise.
Moreover, I should emphasise that assurance about the welfare of horses, including, of course, freedom from disease and injury, underpins the social contract between the industry and the British public, who accept and support the racing of horses. I need hardly stress that this cannot be taken for granted in a public who increasingly question and value animal welfare.
Therefore, funding for the issues I have mentioned is absolutely vital and the role of the HBLB is critical. Although a small proportion of its overall income is devoted to horse health and welfare, that is hugely important and has amounted to more than £40 million over the past 22 years. It currently amounts to about £1.5 million to £2 million per annum. I stress that this support is particularly important because alternative sources for funding equine health, welfare and research are relatively limited. The research councils and the Wellcome Trust, which are very important supporters of biomedical research in general, do not include funding for equine research. There are a few other charities and organisations which help—I should mention the Thoroughbred Breeders’ Association, the Racing Foundation and the Horse Welfare Board, among others—but the support flowing from the levy board is quantitively the most important in this respect.
It is thus of some concern that there has been continuing uncertainty about the future of the HBLB. Whether or why it might be replaced is not something for me to comment on, but I want to emphasise that any current or alternative mechanism helping to support the racing industry in general must surely take account of the fact that the whole industry, directly or indirectly, is totally reliant on maintaining the health and welfare of the horses on which it depends. Finally, will His Majesty’s Government ensure that any future changes to the statutory mechanisms which provide funding for the racing industry include adequate support for equine health and welfare?
My Lords, I, too, thank the noble Lord, Lord Risby, for bringing this debate forward and I thank all noble Lords for their interesting contributions, particularly my noble friend Lord Lipsey, who clearly has an enormous amount of knowledge about the industry—far more than I have. As has been said, this is a timely debate for a number of reasons, one of which is that the British racing industry has recently announced that it will undertake a new industry strategy aimed at building a sustainable model for racing and identifying areas for growth. We have discussed many areas today where this could be implemented. It has also agreed a new governance structure that better clarifies the role of the British Horseracing Authority as the governing body.
I should declare a former interest in this matter, as I was a member of the whip consultation steering group that recently brought forward recommendations on improving the use of the whip. From this, I have a particular interest in welfare, which was mentioned by the noble Baroness, Lady McIntosh of Pickering, and, of course, the noble Lord, Lord Trees, who rightly said that the industry needs to be underpinned by equine health and welfare. Being on that steering group drew my attention to the work that the Horse Welfare Board is carrying out to enhance equine welfare right across racing and to the importance of taking a global leadership role in this area. Its strategy, A Life Well Lived, which has been mentioned, was where the recommendation to review the use of the whip came from.
However, it also mentioned a number of other areas in which to improve animal welfare, for example, the use of equine fracture support kits for the treatment of injury and the roll-out of white-painted obstacles, moving them away from the traditional orange colour because there has been lots of interesting research about equine vision and how horses see things. It is a very interesting report. It also encouraged the formation of a working party to present recommendations on the jump-racing predictive risk model. There is lots of interesting work going on around welfare, which I strongly support.
However, we also need to make further progress on welfare issues. The noble Lord, Lord Trees, talked about this. When I was on the steering committee, for example, I was one of a minority who believed that the whip should not be used for encouragement but kept only for safety.
I come back to some of the issues discussed in the debate. There was quite a lot about the review of the Gambling Act, and Ministers obviously recognise that it needs updating. As discussed, particularly by the noble Lord, Lord Foster of Bath, we have a lot of online gambling. I know that the British Horseracing Authority also believes that this review needs to take place, and that the Act needs updating. If we do not update it, there are concerns that we threaten the integrity of sport. Importantly, we need to protect people from gambling-related harm. My understanding is that the review does not specifically target horseracing but, as we have heard, given the amount of money that it receives through the horserace betting levy, clearly it will be impacted. When we include media rights and sponsorship, we are talking about huge sums of money, so it is bound to have an impact on the wider equestrian world.
The new chairman of the British Horseracing Authority has said that the review needs to reflect the unique relationship between racing and betting. He was concerned that pre-emptive measures were already starting to impact on the sport, citing the delay of the White Paper, which has also been discussed in this debate. I would be very interested to hear whether the Minister can shed any light on when we are likely to see it. The Secretary of State, Michelle Donelan, has said that the White Paper is a priority but we do not yet have a publication date, so it would be helpful if the Minister could give a steer on this.
The noble Lord, Lord Foster of Bath, made an important contribution about the importance of reforming gambling, but also said that when any review takes place, we must always be aware of the harm that it can do. We heard quite a lot about the horserace betting levy. We on the Opposition Benches previously supported reforming the levy, when we secured an amendment to gambling legislation. My noble friend Lord Lipsey and others made some suggestions on this.
The British Horseracing Authority specifically asked whether the Government would consider—I would be interested in the Minister’s response—a few things, one of which the noble Baroness, Lady McIntosh of Pickering, mentioned: extending the levy to apply to all horseracing globally that is bet on by British customers. That is based on historic, international precedence, so we should be able to do it. Another is adjusting the levy rate so that it would be based on a percentage of turnover rather than profit, resulting in less volatile yields and reflecting overall activity levels.
If we are to move forward in the areas debated today, the Government really need to work with the industry to find solutions to support a high-health, high-wealth future for the industry, particularly on the movement of racehorses. The noble Baroness, Lady McIntosh, talked about the post-Brexit complications of this. Now that we have left the EU, there is quite an adjustment for the thoroughbred industry, which faces significant challenges in how this is managed. A rare benefit of Brexit is that it means we can go further and faster in raising animal health and welfare standards, through risk-based controls for equine movement. Again, I would be really interested to hear from the Minister about how he sees tackling the challenges while welcoming the positives that come from this. I see that I am about to run out of time, so I end there and look forward to the Minister’s response.
I thank my noble friend Lord Risby for initiating this debate, and all noble Lords who have taken part in it. His support for the racing industry goes back a long way, including of course to another place, where he ably represented the people and businesses of West Suffolk, including Newmarket Racecourse and the many horseracing interests in that constituency. As he mentioned, he has been a member of the Horserace Betting Levy Board since 2016, and I am glad to have the opportunity shortly to say a bit more about his and their excellent work on behalf of racing. I also echo my noble friend Lady McIntosh’s tribute to the work of the late Rose Paterson, who is much missed in Parliament and the horseracing sector.
The Government acknowledge the significant contribution that racing makes to our economy: it supports jobs and livelihoods from Perth to Newton Abbot, and it is particularly important to rural economies, in the way that my noble friends set out. Over 20,000 people are directly employed across 59 licensed racecourses, hundreds of training yards and thousands of breeding operations. Tens of thousands more jobs are supported in the rural economy supply chain, including in the farriery and veterinary sectors, highlighted by the noble Lord, Lord Trees, as well as many jobs in the betting industry. Indeed, horseracing is the second-biggest sport in the United Kingdom in terms of attendance, employment and annual revenue. According to its governing body, the British Horseracing Authority, racing is worth over £4 billion to the economy in direct, indirect and associated expenditure every year.
How much it is valued by the public is shown by the numbers returning to our flagship meetings as Covid restrictions were lifted, with a record aggregate attendance at the Cheltenham Festival this year. I was on a very busy train to Gloucester on Friday, on my way to visit some of the new recipients of Arts Council funding, so I can attest to the liveliness of the November meeting there as well.
The Government introduced the horserace betting levy in the 1960s, when there were fears that no one would go to racecourses once betting shops were permitted to open. We have continued to ensure that the levy keeps pace as the betting industry evolves with the times. In 2017, we extended the levy to online bookmakers and fixed the rate at 10% of bookmakers’ gross profits on British racing so that it no longer has to be negotiated each year.
The 2017 reforms almost doubled the amount of levy collected, to £95 million in 2018, exceeding expectations, and it has continued to perform well. The levy returned £97 million to racing in 2019-20, against a forecast of £90 million. Even in 2020-21, when racing was suspended for two months and betting shops were closed for much longer, it returned £82 million. Last financial year, it returned £97 million. But we are not complacent. The British Horseracing Authority has presented its case that there is a significant gap in its funding, which means that it is unable to compete with jurisdictions such as the Republic of Ireland and France, as my noble friend outlined. We have considered that case very carefully as we prepare to conduct the next review of the levy, which is due in 2024. In particular, racing has asked for international races to be brought within the scope of the levy—noble Lords highlighted this in their remarks. Although funding systems vary between jurisdictions, it is fair to say that racing in those countries benefits from bets on overseas races in a way that racing in Britain does not, which is something that merits careful consideration.
The noble Lord, Lord Trees, asked about and highlighted the importance of funding equine health. The money that is raised is applied to the advancement of veterinary science and education, as set out in the legislation. Indeed, it is one of the three key areas funded.
A number of noble Lords touched on the Government’s review of the Gambling Act 2005. In addition to its case for additional funding, which I mentioned earlier, racing representatives have discussed with officials at DCMS their concerns about the impacts of proposals being explored through our review, including the potential for so-called affordability checks, the opposite case to which was made by the noble Lord, Lord Foster of Bath. We have heard his representations and their concerns, and I assure my noble friend Lady McIntosh that we have been gathering evidence to make sure that the review is evidence-based, and we will continue to engage with the sector when the White Paper is published in the coming weeks.
The noble Lord, Lord Foster of Bath, raised the use of drones to beat the broadcasting lag. We are aware of the industry’s concerns about this use of drones and will keep the issue under close scrutiny, working with it.
Any consideration of amendments to the rate of the levy needs to be in the context of all the proposals in the White Paper which affect bookmakers. However, the levy is not the only source of funding for racing. Indeed, it represented just 6% of racing’s total income in 2022, compared with 17% from racegoers, 11% from media rights deals and 4% from sponsorship. Owners and breeders contributed 40% and 22% respectively. So while we review whether the levy provides an adequate level of funding for the industry, it is only right that we expect racing and betting to explore jointly how they can maximise other sources of income. Both sectors have a clear interest in making racing as attractive as possible to customers, and I encourage racing to engage and work closely with betting partners in its thinking on the levy.
I pay tribute to my noble friend Lord Risby and his fellow members of the Horserace Betting Levy Board for their stewardship of levy funds. As the levy is a percentage of profits, it varies from year to year, depending, for example, on how bookmakers fare at key race meetings. The levy board has reserves to help mitigate this variation and it used these to great effect to support the industry during the Covid-19 pandemic, to mitigate the absence of, first, racing and, subsequently, spectators.
The levy board and the Racing Foundation put together a £28 million cash-flow and hardship support package. Some £20 million of levy funds were aimed at supporting racecourses, with £8 million from the foundation going to supporting individuals in the sector. Since then, the levy board has made additional contributions to prize money to mitigate lower amounts made available by racecourses because of Covid.
The Government too provided support, with racing benefiting from our economy-wide support for jobs and rates relief. Racecourses have also been able to access support through the sport survival package, through which a £21.5 million loan has been made to the levy board to enable it to provide extra support. The levy board distributed £15 million of this via prize money in 2021 and £6.5 million in 2022.
The Government remain committed to supporting British horseracing and related businesses, which are vital to the lifeblood of the rural economy, as well as a source of great pleasure to many people. I thank my noble friend for initiating this debate and giving us this opportunity, and for the work he does on behalf of all those who have the interests of racing at heart. I look forward to debating these issues further in future.
Committee adjourned at 4.51 pm.