Call for cut in betting tax

Greg Wood reports on the British Horseracing Board's appeal to the government to aid an industry threatened by the Lottery
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The British Horseracing Board will today publish details of its submission to the Treasury, asking for help in November's Budget to ease the sport's Lottery-induced financial crisis. In what is, in effect, a 19-page begging letter, the BHB asks for a reduction in betting duty of 1.75 per cent, and makes it clear that the livelihoods of thousands of people may depend on whether Kenneth Clarke is persuaded by their arguments.

The most significant aspect of the BHB's submission is its contention that a duty cut should be split between a direct cash injection for the racing industry and a further reduction in the betting "tax" paid by punters, in order to stimulate betting turnover. The BHB would like 0.75 per cent to pass to racing via the Levy, with the remaining one per cent returned to punters via a cut in their deductions to eight per cent. The bookmakers, in a separate submission to the Treasury, asked for a 1.5 per cent cut in duty, all of which would be passed on to their customers.

The Chancellor's Budget speech in November will thus mark the first major test of the political connections of Lord Wakeham, which were thought to be a significant factor in his appointment to suceed Lord Hartington as chairman of the BHB.

"Racing's submission is compelling, well documented and closely argued," Lord Wakeham said yesterday. "Years of overtaxation of betting and the consequent depressed contribution from betting turnover are now really taking their toll. Racing urgently needs a significant injection of funds to enable it to flourish."

The BHB's submission also offers an interesting summary of the state of British racing, and what a state it appears to be in. It points out how poorly we compare to other major racing countries in terms of the percentage of betting turnover returned to the industry, and notes that there is "a disturbing decline in investment in two-year-olds" and "an exodus of high-quality bloodstock abroad for breeding purposes." Owners, meanwhile, face one of the poorest risk-to-reward ratios anywhere in the world.

Clearly, it is in the BHB's interests to accentuate the negative, but it is hard to disagree with the conclusion that "unless significant investment is made immediately, racing will face a dramatic decline."

What such a decline might mean in human terms is set out in a study by KPMG Management Consulting which accompanies the BHB document. "The Economic Value of the British Horseracing and Breeding Industry" concludes that in 1995, racing and betting provided employment, both directly and indirectly, for more than 100,000 people. In rural areas, where alternative employment is often scarce, the industry employed the equivalent of one in eight agricultural workers. In major training centres such as Newmarket and Lambourn, meanwhile, at least a third and up to a half of all jobs in the area depend on racing.

Many of these local economies, as well as hundreds of betting shops, will be at risk of collapse if the alarming decline in betting turnover caused by the National Lottery is not reversed. The future of top-class racing in the country where the thoroughbred was created could now depend first on whether the Chancellor appreciates the scale of the problem, and then on whether he is prepared to assist in its solution. With income tax cuts an obvious priority, this must be doubtful.

As the BHB's submission points out, "racing's appeal is clearly very deep-rooted, despite the uneconomic terms on which it has been conducted, which would have led to its virtual extinction elsewhere." Even the deepest roots, though, are little protection in the face of the force 10 gale which the Lottery represents. Let us hope that Lord Wakeham, a former Government chief whip, has not lost his touch in the black arts of political persuasion.