Andy Burnham, the new Secretary of State for the Department of Culture, Media and Sport (DCMS), has been forced to hand over responsibility for the sale of state-owned betting operator The Tote because it is based in his constituency.
Sports minister Gerry Sutcliffe, who had been working with Burnham already, will now oversee the sale.
A DCMS spokesperson says Burnham has withdrawn as “a precautionary measure to avoid any perceived conflict of interest”.
The Tote’s operational headquarters are in Wigan, not far from Burnham’s Leigh constituency, and it was decided that it could be difficult for him to preside over a decision that might result in job losses in the area. The Tote has 650 Wigan-based employees.
Burnham replaced James Purnell, who was moved to head the Department for Work and Pensions (DWP), following a cabinet reshuffle last month.
The move was triggered by the departure of Peter Hain, who quit after a row over donations to his Labour deputy leadership campaign.
In a further twist, in his previous post as chief secretary to the Treasury, Burnham was in charge of setting the sale price for The Tote. The Treasury had been accused of holding up the sale through indecision.
The Government made a manifesto pledge seven years ago to return The Tote to the ownership of a racing trust.
Last year, the Treasury turned down a joint bid of £330m from the Racecourse and the Racehorse Owners associations. It was then thought that The Tote would be put up for sale on the open market.
Gala Coral chief executive Neil Goulden has already declared a “strong interest” in buying The Tote’s chain of 550 betting shops (MW 10 January).
The DCMS could not say when a decision will be made.