Reforms result in 'spirit of optimism' says Levy Board
The reforms of the levy system brought in this year mean the sport can look forward with optimism, according to the Levy Board's latest annual report that was laid before parliament on Tuesday.
In his statement in the report, Levy Board chairman Paul Lee said "a significant increase in levy yield" could be expected in the years to come thanks to the reforms, which have extended the system to operators based offshore for the first time.
As a result expenditure, including on prize-money, is set to rise.
Lee said: "As we look forward to 2017 and beyond, it is in a spirit of optimism for British racing. Major issues appear resolved."
The government's reforms, which came into force in April, have so far worked smoothly, according to Levy Board chief executive Alan Delmonte.
He said on Tuesday: "We're very comfortable with where we are. Money is flowing in the way we would have hoped and expected it would.
"It does help that we've had good relationships with all the major firms so are able to have conversations with them about what we're doing, what they need to do, and to assist them in dealing with questions they have about the new documentation they've been asked to fill in.
"But the principle of were people going to pay, which was the big question that was exercising the board in April and May, is yes, people are paying."
The Levy Board has maintained its spending on areas such as prize-money despite falling levy yield in the expectation the government's reforms would come into force. Now those reforms have proved effective, the expectation is that expenditure will increase next year.
Delmonte said: "It remains the board's position to increase prize-money when that's possible.
'Core money flowing in'
"There should be some reassurance that, even in this time of transition and uncertainty, the core money is flowing in and should be capable of being invested next year."
The window for a legal challenge in Europe has yet to open, which Delmonte said was the one "hump" left.
"The board might have to come to some decisions in principle about 2018 expenditure before that window is closed and it will have to take a view about what feels reasonable and balanced in the circumstances," Delmonte added.
According to the report, statutory levy yield for 2016-17 fell 8.6 per cent to £49.8 million while total income was down seven per cent at £65.1m.
The authorised betting partner scheme brought in £14m in income, better even than the £12m mentioned in the BHA's annual report earlier this year.
The Levy Board said its final income figure was £3.6m better than budgeted, but it still ran a deficit of £7.5m, taking reserves – which were around £45m in 2014 – down to £25.4m.
As part of the government's reform of the levy system, the board is due to be abolished next spring, with its collection duties taken on by the Gambling Commission and expenditure decisions made by a new Racing Authority.
Uncertainty remains though, as the process for bringing those changes about has yet to be started in parliament.
However, Delmonte said: "We'll be ready for whatever time frame emerges but are working on a date of April 2018, with us stopping collection on March 31, until and unless we're told differently by government."
Staff retention under those circumstances is proving another issue. Finance director Rob Skeggs left the organisation in April for Tattersalls, while head of operations Tasha Rose is also set to depart for the Hong Kong Jockey Club.
Delmonte said: "We'll do what's necessary to make sure we provide the service. We've been able to implement the new regulations and work under them successfully so far and will ensure we're doing our work on distribution also.
"Clearly, as time goes on it must become marginally harder rather than easier, but we will fulfil what we are asked to do."
Levy Board annual report key figures
- 55th Levy scheme (2016-17) income from bookmakers down 8.6%, to £49.8m from £54.5m
- Total revenue for 2015-16, including non-statutory contributions, down 7%, to £65.065m from £69.994m
- Total expenditure down 7.1%, to £72.555m from £78.133m
- Prize-money allocation in 2017 (budgeted) up 1.9%, to £49.3m from (actual) £48.4m in 2016
- Total reserves down 22.8%, to £25.383m from £32.873m