The Levy – A win for Racing
It was rather sad that the DCMS Minister of State Jeremy Hunt MP missed the opportunity to invoke some economy into the Levy Board in his Levy determination at a time when the rest of the world has to cut its cloth during the Great Recession.
From a political perspective the Minister has been clever. He has hit the least economically powerful group in bookmaking, the independent firms, which should save him the bother of a judicial review. At the same time he has been able to placate racing with an increase in the rate and shore up the Levy Board’ finances.
The question whether the decision was right in the sense of jobs, tax and consumer choice remains to be seen. Somehow GBGC doubts it.
“I don’t think anyone has done a proper impact assessment, which is very sad. These are shops often in estates, street corners, where there won’t be another betting shop. The shop will close, nothing else will open up in its place, jobs will be lost and I’m not even sure why it’s happened.”
First of all the Minister has decided that the quantum is key rather than the rate.
In the submission by the government appointed members to the Levy Board they advised the Minister that to keep the show on the road a certain amount of money was required.
The Minister took the option to satisfy the impending need rather than take the opportunity to move the industry onto a more commercial footing but perhaps that is to come with the current DCMS review.
The DCMS has decided on a rate increase from 10% on horseracing margin to 10.75% and the threshold from which Levy is payable has been reduced to £50,000. A quick calculation shows that this will create an increase of 19% for the Big 3 and an average of 45% for the remaining shops with some seeing an increase in Levy of 75%.
For the first time the Minister has not taken account of the bookmakers’ capacity to pay.
What the determination does do is provide some clarity on current government thinking. The DCMS favours sport over gambling. Take a look at the DCMS website if you need further illustration.
On the 20th October 2008 while in opposition David Cameron pledged to help small business warning many would go to the wall without help.
None of this seems to apply to independent bookmakers!
The irony is that on the 20th October the government decided to freeze the licence fee for the BBC for six years.
The secretary of State Jeremy Hunt MP said “In the end the deal we got was tough but fair. Tough because the BBC, like everyone, is going to have to make demanding efficiency savings.”
According to Peter Sissons who was the BBC front man for 20 years the BBC has an institutional trendy left wing bias. Perhaps that is the reason why George Osborne found it so easy to freeze the licence fee for six years.
The same search for economy has escaped the government when it comes to horse racing. After all the richest 0.5% of the nation are the racehorse owners and the government’ stalwart supporters. The result is a blinder for the racing industry.