With a General Election less than ten months away, we must reluctantly prepare for an unwelcome increase in the unedifying torrent of soundbite politics and frequent attacks on easy targets.
Fewer targets are easier than businesses – the bigger the better for desperate politicians wishing to score comfortable media points by sounding ‘tough’ but actually saying nothing of substance.
We’ve encountered two such examples over the past week, the most prominent being Derby City Council’s proposed ‘Tesco Tax’, a local levy on large supermarket groups which, it maintains, would raise £400 million a year.
Ignoring the fact that any increase in local taxation suffered by larger retailers would, in all likelihood, be passed on to consumers, the council leader, Ranjit Banwait, maintains that overall, organisations such as Tesco and Sainsbury’s have a “detrimental impact on the sustainability of local communities”.
Apart from the hundreds of millions in corporation taxes and local business rates paid by the big supermarkets, it’s worth noting that between them, Tesco, Sainsbury’s, Asda and Morrisons employ almost 750,000 people in the UK. No matter. Mr Banwait’s equivalent of a peashooter attack on a battleship bought him national airtime and miles of column inches.
Yet while supermarkets are considered the retail equivalent of bogeymen for some, there’s surely no sector more frequently demonised and blamed for most of society’s ills than bookmaking. The gambling industry is tarnished with ‘pariah’ status, making it a dream target for politicians. This accounts for the increasingly hostile regulatory environment in which betting companies work and explains why the sector’s profit margins have become painfully thin.
William Hill has fared slightly better than long-standing rivals Ladbrokes. As Hill has gradually increased pre-tax profitability over the last four years, Ladbrokes, which reports interim results on 12 August, has gone backwards. From a pre-tax profit of £174 million in 2009, Ladbrokes’ profits slumped to £67.6 million last year.
Increased regulation and the imposition of heavier taxes has had a direct impact upon the gambling sector.
Richard Glynn, Ladbrokes’ chief executive, said, “The unexpected recent tax increases and ongoing uncertainty surrounding regulation are unwelcome,” adding that, “the significant economic impact of excessive regulation on the business and in terms of jobs, is clear.
Ralph Topping, his counterpart at William Hill, was in agreement when his company’s most recent results were revealed.
“As a direct result of the Government’s unexpected increase in Machine Games Duty to 25%, we have reviewed shop profitability and will be closing 109 shops this year, putting around 420 shop employees at risk of redundancy. This is particularly disappointing as, through the economic downturn, we have worked hard to grow our retail base, but this further planned increase in indirect taxation makes this action necessary.”
Despite these legitimate warnings, noticing that only gambling on horseracing is subject to a gambling levy – around £80 million was raised last year – the shadow sports minister, Clive Efford, published his ‘Sport for All’ document last week. In it, he suggested that a levy on all sports betting would raise money for (amongst other things) grassroots sport, a laudable aim were bookies not being taxed at every turn. From December, for example, a new Point of Consumption tax of 15 percent will be levied on all revenue generated by all online gaming company’s UK-based customers.
Mr Efford’s plans include the creation of new sports facilities, but he’s also keen to tackle what he call’s ‘problem gambling’ and to fund a ‘gambling awareness’ programme. There’s no mention of what proportion of Mr Efford’s tax would be spent administering these schemes.
Naturally, in our political tit-for-tat world, the Conservatives were quick to decry Mr Efford’s plans, calling them and the proposal to tax Premier League football clubs (see below) “a short-term gimmick”.
Yet while government ministers highlighted the disgraceful sale of school playing fields during the time of Blair and Brown, the record since the Coalition came to power is hardly any more encouraging.
Between 1997 and 2009, the Labour government agreed the sale of an average of 28 school playing fields a year; since then, the average has fallen, but only slightly, to 17 per annum. In other words, for the past two decades, our political leaders have sold an average of 22 school playing fields every year; is it any wonder that today’s politicians must explore ways in which they can develop more expensive methods of involving children in sport?
In addition, Mr Efford and shadow culture secretary Harriet Harman turned their attention to another easy target, the Premier League.
“The Premier League [must] be forced to return to its previous obligation to ensure that a 5 percent voluntary levy of its income from domestic TV rights are ploughed back into grassroots sport,” said Mr Efford, who was concerned that although income from domestic football rights had risen by three quarters in recent years, little of it was finding its way into grassroots football. Instead, most is paid out in parachute payments to relegated clubs or in donations to Football League clubs.
Finding a solution to the latest Middle East crisis would be easier than legally turning a voluntary levy into a single sector corporate obligation.
In short, each of our main political parties are to blame in equal measure for the fall in sporting participation, particularly amongst youngsters. Whether hitting bookmakers with another tax or forcing top-flight football clubs to hand over more of their income will rectify matters is extremely doubtful.
Yet the twin-pronged, if predictable, Efford/Harman attack on a couple of easy targets was underpinned by several worrying forecasts.
The pair’s ‘Sport for All’ document highlighted the fact that “rising costs of obesity, diabetes and other Body Mass Index-related illnesses mean it is essential that we fulfil the ambitions of the [Olympic] sporting legacy... By 2050, the annual cost to the economy of elevated BMI is expected to reach £49.9bn. The projected health costs alone show that if we get the legacy right, the legacy of [London’s Olympic] Games will prove to be good value for money.”
This is a valid point. However, instead of cooking up hare-brained schemes to raise new taxes with which to fund grassroots sport, perhaps during the election run-up, our politicians could devote more time to explaining how they could invest the billions in taxes they receive a little more wisely. They might start by providing the electorate with details of how they plan to improve participation in school sport.