Privatising the tote.

Desert Orchid

Desert Orchid

Senior Jockey
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Haven't seen it with my own eyes or heard it with my own ears but I was told at lunchtime that the budget mentioned privatising the toet.

How the f&ck can that do anything to help us out of the economic situation???

Privatisation does nothing more than put money into individuals' pockets.
 
Problem is, once you've sold your assets, they're gone for good. The balance sheet only gets a boost for as long as the sale money lasts, then you're back to square one and scratching round for another quick dose of cash.
 
Privatising the Tote has been on the agenda for some years, it's not something which has just popped up today. It's just that the last government left the issue lying around and it was known by the Horseman's Group that this government would decide on whether to proceed with its sale or not. As for whether the acquisition of the Tote by racing is good or bad, Alan Morcombe, the Horseman's Group's first Chief Executive (who helped set up TurfTV) has said that it would, but only the pool betting side of the business. He feels that racing should not get involved in the Tote betting shops, as that's best left to bookmakers. He's also said that racing would need to secure a very long exclusive licence to pool betting, otherwise it might find competitors coming into the marketplace and stealing their lunch.
 
Desert Orchid said:
Privatisation does nothing more than put money into individuals' pockets.
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completely DISAGREE

what privatisation does is make the company more efficient and leave the tax payer to pay inept indivious that rules companys thanks to friendship of politician.
 
Sorry, maybe I'm thick but neither of the two previous posts make one iota of sense to me. Please explain in plain English, preferably in words of no more than two syllables.
 
sunybay said:
what privatisation does is make the company more efficient and leave the tax payer to pay inept indivious that rules companys thanks to friendship of politician.
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Maybe that's how things work in Spain, sunybay, but history here shows that nearly every privatised company has hit difficulties due to inefficiencies and lack of investment while shareholders cream off huge profits.

Take BT, for example. When it was nationalised we had cheap calls, free enquiries, prompt service, local operators. Now it's expensive, poor quality, dreadful customer service, awful servicing and response, and you get regular unwelcome calls from somebody in Calcutta trying to get you to sign up for services you're not interested in.
 
Thatcher's non-legacy -- sold off BT, British Gas, Electricity, Water so that the exchequer had some temporary funds but her faction had permanent share ownership ...
It's like selling the lead on the church roof: who benefits? The seller for a short while, but for a long term supply of unearned, the new owners, of course.

Toryism at its worst.
 
I'm afraid there is the usual healthy dose of socialist propaganda on thias thread.

Privatisation doesn't just give the exchequer a short term cash boost, but as the company is turned profitable it pays increased corporation tax, plus a dividend on any retained ownership in to the exchequer year on year.

Companies like BT went from contributing a few hundred million a year into the exchequer every year to contributing several billion. Many others that now contribute were previously net-takers through massive taxpayer subsidies.

The quality of service issue is a different question and I acknowledge Desert Orchids concerns. Almost certainly there will be a cut in the provision of non-profitable or subsidised services and the people who depend on them will be disadvantaged. We should be careful about broad brush generalisations about poor service though as there is some evidence that it has actually improved on core services that are subject to competition.

Of what there is almost no doubt about though is the financial benefit of privatisation to the government and therefore the taxpayer.
 
If this thread is going to turn into a general privatisation vs nationalisation debate, I'll move it into the general forum. Otherwise, it might be better to stick to discussing the specifics of the Tote privatisation here in the racing forum.
 
Hmmm.

Well, it depends on how you want to look at this.
The extra revenues were generated from the very tax payer you say is benefitting from the privatisation -- well, thanks for nothing! says the tax payer. You've just increased the prices & the work needed to collect tax, too! Brilliant! Just for the benefit of shareholders.

Because it's patently obvious that while there were businesses benefitting from the service supplied by these industries, the tax payer also was paying less for them before privatisation and a lot more after.

The newcomer was the shareholder -- getting nice unearned income & contributing no added value.
The shareholder wasn't required for these industries to deliver - that's just an excuse for creaming off unearned income.

You might argue that shareholders drove efficiency higher -- that might be so. However, they're not needed for that to be achieved; other agents could do the same and without helping themselves at the same time.

Shareholding per se is not a benefit to enterprise: just like landlords, mere ownership is entirely passive in the productive process, that's obvious. Obviously, having a party that contributes nil but takes from revenue is ... less than clever.

Nothing to do with socialism, not propaganda; just unbiased perception of what's going on.

betsmate said:
I'm afraid there is the usual healthy dose of socialist propaganda on thias thread.

Privatisation doesn't just give the exchequer a short term cash boost, but as the company is turned profitable it pays increased corporation tax, plus a dividend on any retained ownership in to the exchequer year on year.

Companies like BT went from contributing a few hundred million a year into the exchequer every year to contributing several billion. Many others that now contribute were previously net-takers through massive taxpayer subsidies.

The quality of service issue is a different question and I acknowledge Desert Orchids concerns. Almost certainly there will be a cut in the provision of non-profitable or subsidised services and the people who depend on them will be disadvantaged. We should be careful about broad brush generalisations about poor service though as there is some evidence that it has actually improved on core services that are subject to competition.

Of what there is almost no doubt about though is the financial benefit of privatisation to the government and therefore the taxpayer.
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I'd say Betsmate's reply was very balanced and considered and am happy to take many of his arguments on board.

Cards on the table, though, I am pro-nationalisation.
 
Surely the only companies likely to want to buy the Tote would be one of the major bookmakers, and could they raise the funds in the current climate?
 
I think Mrussell makes a valid a point about taxpayers paying more for privatised services.

However, I think he is is overly dismissive about shareholders driving efficiencies (which may lower price as well as increase revenue especially in the face of competition) and would question which other agents have ever proved to be so successful at this.

Finally, I think we are pushing Mr Flynn to his limits...
 
Here's a bit more from Peter Jones, former Tote chairman, in the current edition of TB Owner & Breeder magazine, to give Walsy a bit more background:

Having recovered from the drama of the general election, it's time to think about what the new government might mean for racing. The Lib-Cons takeover at a time when racing is facing its worst financial crisis for 20 years, so the sport expects a lot of the new boys. First, we must hope the Tote is kept safe for our sport. Labour got itself into a terrible tangle, making umpteen mistakes during its 13-year tenure.

Having missed the chance to pass the Tote to racing, Labour failed to sell the business on the open market, then continued to destabilise the Tote by pressing for the sale in recent months when all hope of a good financial deal had long passed.

What will the new coalition make of the Tote? It's early days but it is believed there is no appetite to sell. Market conditions remain poor and the Tote's value has slumped to a maximum of £200 million, of which half has been pledged to racing. After coping with legislative costs, Tote debt and pension deficits, the government would be left with a paltry sum at a time when the Tote's contribution to racing is higher, relatively, than at any stage in the past 15 years.

Jeremy Hunt, MP for SW Surrey, basically Farnham, Godalming and parts of Guildford, has been appointed senior minister at DCMS. Hugh Robertson has the sports portfolio within the department. His constituency is Faversham in Kent, and he's a playing member of the MCC. Neither have a racecourse in their constituency, nor have they a special interest in racing. In opposition, both pledged support for racing, but words are cheap before the reality of power and huge deficits concentrate the mind. The best hope is that thoughts of Tote privatisation are put on the back burner and that racing can continue to rely on the company's profits remaining in the sport for the next few years at least.

(Jones then goes on at some length about the annual wrangle between bookies and racing over the contribution made by bookies, before concluding that new ministers may prefer to concentrate on their own deficit rather than get entangled in racing's problems.)
 
A question for those who are dead against privatisation - what about the mobile phone industry?
 
Highly competitive, lower costs, better service would be my educated guess at Simon's point DO.

Certainly a fine example of how a competitive market should be run - similar to the betting market at the moment with bookies falling over themselves to give you extra (BOG, extra places, enhanced win only prices etc).

Personally think rather than privatise the Tote a rival to the Tote operating on a Tote basis would be more beneficial to racing than simply privatising it. If the Tote see better payouts and lower takeouts at a rival firm then they'll be forced to cut their margins in order to be competitive.
 
but history here shows that nearly every privatised company has hit difficulties due to inefficiencies and lack of investment while shareholders cream off huge profits
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Absolute rubbish. It was a wait of 12 weeks for a phone under the nationlised BT. What is it now? 12 hours given how competitive it is i would say

Nationlised Steel was a massive inefficeint drain on the tax payer. Totally uncompetitive and did little more than provide non-jobs in certain constituencies

Water hasnt been a success or rail (mostly) but the idea that a grossly overstaffed, heavily subsidised (which drains resources from the rest of the economy) loss making shambles is "efficient" is bizarre. Simple fact is that private companies have to deliver. Nationalised ones dont

Right...shall we analyse British leyland now
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Yes and the great nationlised eastern european nationlised conglomerates had such a wonderful enviromental record dont they?
 
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