
My open letter to Rachel Reeves to avoid the disasters killing racing
We need to talk about growth, through the prism of the horse racing industry. We need to talk about mistakes that you have inherited that are not being addressed and we need to talk about the consequences of the tax raid that the Treasury is currently 'consulting' about.
The horse racing industry provides more than £4 billion to the economy every year. It employs more than 80,000 people, supports 6,000 small businesses and is the lifeblood of more than 40 Labour constituencies.
It also supports a 'soft' trade network, which is the envy of many of our competing nations, with many foreign investors attracted to the UK because of racing. That network could be relocated very easily if the standard and regard in which our racing is held should diminish.
But so dire are the consequences of the situation, the prediction is that foal production will fall by 40 per cent in this country under this government. Subsequently, there will be a similar contraction of the second-biggest sport in this country, and all the employment and tax receipts that go with it.
If it is ideology rather than growth that is your master, these may be losses that do not concern you. But I will spell out the three main causes anyway.
Firstly, let's consider your consultation on harmonisation of online gambling taxes. Sounds innocuous enough to the uninformed, but the reality is such a harmonisation fails to take into account the social impact of different types of gambling.
Online casino and slots games provide little employment in this country, are designed to be addictive and cause a huge amount of social harm. So, I would suggest you double the tax on them to 42 per cent.
Betting tax on racing, which is no more addictive than buying a Lottery ticket, is 15 per cent. The smart thing to do would be to reduce this using the gains from casino games to offset the shortfall, if you really want to create growth.
Increasing the tax on racing, on the other hand, would be an act of moral and fiscal vandalism that would reduce your tax take before the end of this parliament.
The bookmakers realise that their best defence of casino-games taxation is to tie it as closely as possible to racing. Do not fall for that argument. They can, and should, be treated differently.
Secondly, there is the matter of the Levy review which has been swept under the carpet and ignored since the election. Bookmakers pay a levy back to UK racing on bets struck on races run on home soil. But they do not pay that levy on betting on foreign racing.
In Donald Trump's world, that is akin to having a tariff on a home-grown product but making the same imported product tariff free. How can that be growth friendly?
When the Levy was originally constructed, bets taken on foreign racing would have been negligible. But in part due to support they have had from successive governments, the strength of breeding and racing horses in Ireland has superseded the UK.
When Gordon Brown was Prime Minister, he asked me how this could be corrected. Apparently, even he knew the results at the Cheltenham Festival. But such is the strength of the bookmakers' lobbying, nothing was done to correct this Levy anomaly, which now costs the industry in the UK circa £25 million per annum.
The third disaster killing racing is the ill-conceived affordability checks that have been nurtured by a Gambling Commission that is driving punters into the welcoming arms of the illegal bookmakers.
The Gambling Commission is meant to be protecting punters from losses they cannot afford and bookmakers who do not follow guidelines of acceptable practice. But the reality is, if the regulated market becomes too onerous, punters will desert it for the black market, costing the Treasury hundreds of millions of pounds.
The fact that the black market has grown exponentially in the past few years is indicative that the Gambling Commission is a misguided, failing quango. If you want to save money, I suggest you get rid of it.
I suspect there may be some mitigating circumstances as to why you are possibly unaware of these issues and their consequences. Racing should have built closer relationships with the Cabinet Office and been more proactive highlighting the threat of the betting black market.
It suited the Gambling Commission's agenda to downplay this leakage and racing should have been less nervous about confronting them and bringing it to your attention.
I hope this gives you food for thought.
Yours,
Charlie Brooks
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