Oral Answers to Questions

Damian Collins Excerpts

Tuesday 27th October 2015 Commons Chamber

[Mr Osborne]

Obviously, we will inform families once the changes that we have made become law.

[Damian Collins (Folkestone and Hythe) (Con)]

T7. The channel tunnel and port of Dover are very important pieces of national infrastructure. When there are disruptions to services, as we saw in chaotic scenes this summer, they cause misery for people in Kent. Will my right hon. Friend agree to meet me and other Members from Kent to discuss what funding can be made available to find a long-term solution to managing road freight in Kent and ending the misery of Operation Stack?

[Mr Osborne]

Of course I would be very happy to meet my hon. Friend and other Kent MPs affected by the traffic jams that build up when there is disruption at the channel tunnel. We have made available Manston airport as a temporary measure to help alleviate the congestion caused by Operation Stack. There is a proposal from Kent about a much bigger investment in a longer-term solution and I will be happy to talk to my hon. Friend and his colleagues about that.

Budget Resolutions and Economic Situation

Damian Collins Excerpts

Wednesday 19th March 2014 Commons Chamber

[Gordon Birtwistle]

They are not youth contracts. They are proper training schemes, and young people are absolutely delighted to be on them. I am appalled that the hon. Member for Swansea West should try to decry them. It is absolutely disgraceful, and he should withdraw his comments.

[Damian Collins (Folkestone and Hythe) (Con)]

rose—

[Gordon Birtwistle]

Unfortunately, I cannot give way, as I have done so twice, and I regret giving way the second time.

I welcome the new pension scheme. It is a fantastic scheme, but I would like—and this is something a number of my constituents have asked for—an end to the problems with Equitable Life. It is time that the Government looked at how we can finally wind up the problems with Equitable Life. Many Equitable Life members are now very elderly, and they would like a conclusion to the problems, which should have been sorted out by the previous Government. I believe that we should step in and sort them out. It is not a lot of money, so we should do that.

I welcome the Budget. The Government are working towards delivering a strong economy. They are delivering a fairer economy, they are creating jobs for our young people, and they are creating security for our industries. The previous Government had one major success: they managed to reduce manufacturing from 22% to 9% without trying. That was an absolute scandal of their 13 years in office. Fortunately, we are now bringing manufacturing back, and we are bringing apprentices back. Manufacturing is climbing again, and it is saving this country from the mess it was left in.

[Yasmin Qureshi (Bolton South East) (Lab)]

There was much in the Chancellor’s speech with which I disagreed, but at least I gave him the courtesy of listening, unlike Government Members, who gave no such courtesy to the Leader of the Opposition. In fact, when my right hon. Friend was talking about the crisis of living standards, there was a great deal of laughter among Government Members. The country will have seen exactly what they stand for.

The Chancellor began his speech—and Government Members have repeated this—with the mantra, “Oh, the recession was caused by the Opposition.” Somehow, it was financial mismanagement by the Labour Government that caused the economic crisis. That is not true, because there was a worldwide recession. Perhaps I can help Government Members with some facts and figures. When Labour came to power in 1997, the ratio of gross domestic product to national debt was about 47%, but by 2001, after four years of Labour government, that percentage was in the low 30s. [Interruption.] It came down to 33%, so it was 10% less than it was when the Conservative party was in power. It was not until 2008-09 that the ratio of GDP to national debt went up. Everybody knew why it did—there was a global recession. At the end of the day, the Labour party was not in power in the USA, Japan, Germany or other countries. To claim that the financial crisis was somehow caused by the Labour party’s mismanagement is complete and utter nonsense. Government Members should really stop peddling these myths and lies.

[Damian Collins]

The hon. Lady has missed out the fact that the Labour party was running a deficit before the recession, when the economy was growing. That is why we were in the mess we were in.

[Yasmin Qureshi]

That is absolutely wrong. A few years after we came into office, the amount of the receipts coming in was more than the national debt, the GDP net. After the debate I can certainly give the hon. Gentleman the facts and figures from the Institute for Fiscal Studies, which show how prudently we looked after the economy. Yes, we spent, but guess what? We spent on hospitals and schools. We took millions of children out of poverty. We provided working tax credits for poor families. I do not remember Opposition Members at the time complaining when new schools and hospitals were being built or refurbished in their constituencies. I do not remember any Members complaining about that. That was real investment. The suggestion that the previous Labour Government spent money on throwing parties or something is ridiculous. It was real investment in our country’s infrastructure, which created jobs and made ordinary people’s lives better.

--- Later in debate ---

[Damian Collins (Folkestone and Hythe) (Con)]

Mr Speaker,

“By making a better business environment his top priority, the Chancellor has recognised that successful and confident companies are the key to transforming Britain’s growing economic recovery into one that is felt in homes and on high streets.”

That was the response this afternoon of the director general of the British Chambers of Commerce. It reflects the fact that the Budget takes place in an economy where growth is established—it is set to grow faster than any other developed economy in the world—and where unemployment has been falling consistently and steadily. More than 1 million jobs have been created in the private sector across the country. Today’s unemployment figures provided further good news. In my constituency, unemployment fell again. Unemployment is 20% lower than it was at the time of the last general election and I hope that it will continue to fall. That is making a difference to people’s lives and circumstances.

I am sometimes dismayed to hear Opposition Members decrying the number of jobs that have been created and pretending that they are not worth anything. The best thing that we can do in the economy is get people back into work, and there are a variety of jobs that people want to do. In an intervention earlier, the hon. Member for Swansea West (Geraint Davies) seemed to dismiss a job for a young person as an apprentice in the retail sector as one that was not worth having, particularly in the fashion and textile industry. I find that absolutely staggering, because it is an important industry that people want to go into.

I welcome the extra investment in the apprenticeship programme announced today. The programme has helped a lot of young people get into work, and I have seen it work to great effect in my constituency. At an event that I attended with the Federation of Small Businesses last week, I was pleased when it said that because of growth and falling unemployment, one of the big demands from employers is to have more skilled people to recruit from. Investing money in apprenticeships, further education and skills training is important in meeting that demand.

The Chancellor reminded us today of the cuts in business taxes that the Government have put in place, particularly the headline cut in corporation tax from 28p to 20p in the pound next year, which will make a big difference, including to smaller businesses on the high street. One of the great tests that I apply in Folkestone and Hythe to see how well the local economy is doing is what the high street looks like. Is it busy? Are people out shopping? Are businesses trading? I am pleased to see more new independent businesses opening and taking shape, and more entrepreneurs setting up their businesses in incubator spaces such as the Workshop in Tontine street in Folkestone. Town centre businesses will benefit from the £1,000 cut in business rates that the Chancellor announced in the autumn statement and the £2,000 employment allowance, which will go to smaller businesses.

The cuts in income tax will benefit a huge number of people across the country. More than 3 million people will benefit from the lifting of the personal allowance to £10,500, and 45,000 people in my constituency will be better off as a result of the changes in income tax that the Chancellor has announced.

I also particularly welcome the Chancellor’s focus on what he called “the makers”, who are an important part of our economy. The right hon. Member for Tottenham (Mr Lammy) said that we should do more to support and stimulate the creative economy, but we have done a huge amount. The Chancellor confirmed today that the European Commission has approved the production tax credits that were announced in the previous Budget for the video games industry, high-end TV production and drama and the animation sector. Those policies are now bringing investment into this country and into a rapidly growing industry. The film and television sector in this country is booming and sustains a large number of jobs across the creative sector, not just those employed in it directly. The Chancellor was absolutely right to say that he wanted to extend those production tax credits to theatre, including regional and touring theatre.

I know that many people in the drinks industry, as well as drinkers, will welcome the cut in beer duty and the freeze on whisky duty. Last week, I met some winemakers at Chapel Down in Kent, who work in an important and growing area of the UK drinks industry. I am sure that they will welcome the scrapping of the duty escalator, but what was more important to them in today’s Budget were the incentives to invest in the growth and development of their business. They are much more concerned about growing and expanding their market overseas, so they will hugely welcome the increase in export finance from the Government to £3 billion and the £500,000 annual investment allowance for businesses, as they invest in the future success of their business.

I wish briefly to mention savers. Many people in my constituency will have been delighted to hear what the Chancellor said today. For a long time, it has been a bugbear of many people approaching retirement that annuities have been poor value, and they have resented being forced into taking out a poor product that they did not want. They now have more freedom. I know that many older people who rely on savings income have been concerned that they have not been able to get the returns that they would like, because banks’ interest rates have been low and the range of products has been limited. The creation of new bonds that will be available to pensioners, with returns of up to 4%, will lead to a revolution in the savings market in this country, as will the reforms to ISAs. Somebody said earlier that they should now be known as NISAs—new ISAs—which is a nice touch. They will be simpler, and people will be able to save more, which will be—

[George Freeman]

Nicer.

[Damian Collins]

Exactly.

Like other Members, I greatly welcome the removal of VAT on fuel for air ambulances. Kent, Surrey and Sussex Air Ambulance is a fantastic organisation and has been calling for that change, and it and people across Kent will welcome it.

Football Clubs (Insolvency)

Damian Collins Excerpts

Tuesday 18th March 2014 Westminster Hall

[Damian Collins (Folkestone and Hythe) (Con)]

It is a pleasure to serve under your chairmanship, Mr Streeter. I thank colleagues from all parties for attending this debate, which is incredibly important for all of us who care about the game of football. There are several Members here who I am sure will want to speak about their experiences in constituencies and communities that have been blighted by the consequences of the failure of a football club. This debate will consider two important issues: the general problem of insolvency that affects football and the specific concerns felt by me and numerous other colleagues about the workings of the football creditors rule.

It is an astonishing fact that since 1992, 46% of all clubs that have played in the Premier League or the Football League have been involved in some sort of insolvency proceedings. There have been high-profile cases involving clubs such as Leeds United, Plymouth Argyle, Crystal Palace and Coventry City, which at the moment is going through a particularly torrid time that no football club should have to face again. There have also been insolvencies in the football conference as well as the lower leagues. The problem runs right across the game.

I know that my hon. Friend the Member for Hereford and South Herefordshire (Jesse Norman) will wish to talk about the situation at Hereford United, but I too have a particular interest in the fortunes of that club. The first professional football match I ever watched was with my father and brother at Hereford United back in the 1980s. At that time, being a Herefordshire schoolboy, I was happy to watch Hereford United, but I am also a lifelong Manchester United fan. I would go with my school friends to watch Manchester United in the late 1980s, at a time when they were not doing so well in the league—[Hon. Members: “Like now.”] It is amazing how things come around if one waits long enough.

I remember going to Old Trafford in the late 1980s. Not only that club but football has changed with the advent of the Premier League. The great amount of money that has come into football has massively transformed grounds, facilities and players’ salaries. Football is completely different now from what it was 30 years ago. In many ways, that is a good thing, but it is also an issue of great concern. Despite the fact that there has never been more money in football than there is now, there have probably never been more incidents of financial failure and its consequences in the game. I believe that that is partly due to how football finances are structured and administered. It has created a culture of financial irresponsibility, born of the pressure placed on clubs to compete at the highest level to gain the financial prizes available there. That culture of pressure is driving the number of insolvencies in football.

Along with my hon. Friend the Member for Suffolk Coastal (Dr Coffey), whom I see in her place, I was a member of the Select Committee on Culture, Media and Sport when it launched its inquiry into football governance in 2011. Many of the issues highlighted in the report are still current today, three years after the start of the investigation. We considered a number of issues affecting football, but one of our most prominent concerns was what has become known as the football creditors rule, which plays a key part in the insolvency of football clubs.

When a football club goes into administration via a company voluntary arrangement, in which an administrator comes in to restructure the football club’s debts so that it can get back on its feet and playing again, the football creditors rule comes into play, protecting debts owed to other football clubs for things such as transfer payments and debts owed to football players by honouring them in full, whereas other unsecured creditors get just pennies in the pound. For example, when Leeds United went into administration, it was well publicised that former players received owed moneys in full whereas organisations such as St John Ambulance were owed thousands by the club that they did not receive. It has also affected Her Majesty’s Revenue and Customs. In the past, we have seen unpaid tax revenues, money owed by football clubs—

[Mr Jim Cunningham (Coventry South) (Lab)]

On the point about paying players’ wages, I can remember occasions when the Professional Footballers Association—the footballers’ union, if we want to call it that—has had to pay them.

[Damian Collins]

The hon. Gentleman makes an important point. Undoubtedly, in the past, footballers could often be treated poorly by their clubs and had few of the rights that would normally be expected in the workplace. I am certain that no one would want to go back to such a situation, but I will come to how the financial guarantees work to encourage greater risk taking and irresponsibility with the finances of the game, with a direct consequence and knock-on effect for the insolvency of clubs.

[Jesse Norman (Hereford and South Herefordshire) (Con)]

Did my hon. Friend just say that under the football creditors rule, football creditors take precedence over the taxman? If so, can he think of any other industry or sporting activity in this country of which that is also true?

[Damian Collins]

My hon. Friend makes an extremely important point. The taxman lost his preferred creditor status in 2003. An informal arrangement exists between HMRC and football, and I will come to that, but the taxman is not a preferred creditor. The only preferred unsecured creditors are people within the game of football, who must be compensated in full under the rules of the Premier League and Football League. Other creditors get only pence in the pound. For example, when Crystal Palace went into insolvency, football creditors were paid in full, but non-football creditors received 2p in the pound. When Plymouth Argyle went into administration, again, football creditors were paid in full, but non-football creditors received less than 1p in the pound in compensation for the debts that they were owed.

[Alison McGovern (Wirral South) (Lab)]

The hon. Gentleman is making an excellent speech, and he is owed much credit for raising the issue. Given what he just said about the impact of insolvency on non-football creditors in a local community, does he agree that the rule does much greater damage to the reputation of the game of football than perhaps is understood by those in the sport at present?

[Damian Collins]

The hon. Lady makes an extremely good point. It does enormous damage to the credibility and reputation of football. That point was made by Niall Quinn, a former player and club chairman of great distinction, when he gave evidence to the Select Committee. How can it be right that in a community where a club has gone through insolvency, a small business that prints match programmes or paints the stadium receives none of the money that it is owed, while watching a player paid tens of thousands of pounds a week drive out of the gates to the ground in a smart car, having received every penny he was owed? It makes no sense at all. It is seen as a massive injustice and, given the huge amounts of money within the game of football, it cannot be justified in any way for football to reserve preferred status for its own creditors.

The Select Committee called in its 2011 report and its follow-up report in 2013 for the football creditors rule to be scrapped. Numerous debates have been raised in the House about both the generalities of football governance and finance, and specific cases relating to clubs such as Coventry and Leeds. Members have raised their concerns about such clubs in particular. Often in those debates, we have been reassured that the Government’s view is that the rule is one whose time has come, that we should move on and that we should not allow it to continue. I secured this debate to ask the Government where they stand on the football creditors rule.

I am grateful that the Minister with responsibility for consumer affairs, the Under-Secretary of State for Business, Innovation and Skills, the hon. Member for Cardiff Central (Jenny Willott) is here to answer the debate. Often, when we have had such debates, the Minister responding has not been the Minister responsible for insolvency laws in this country. Today we have the insolvency Minister here to answer the debate.

[Jesse Norman]

I absolutely share my hon. Friend’s view. He is making a powerful case, and it is doubly good to hear it from someone educated in Hereford, a city whose football club is in some difficulty due to the imbalance between the money sloshing around at the top of the game and the meagre pickings at the middle and lower end.

The issue I want to raise with my hon. Friend is the Government’s position. When I asked the Under-Secretary of State for Culture, Media and Sport, my hon. Friend the Member for Maidstone and The Weald (Mrs Grant), who is Minister with responsibility for sport, she responded:

“The Financial Fair Play rules now introduced across football which, combined with compliance checks…aim to improve financial management and stability...Legislation remains an option if the football authorities do not demonstrate that they can reform their own governance of the game. The Government’s position on the football creditors rule is clear.”—[Official Report, 27 February 2014; Vol. 576, c. 495W.]

I put it to him that, whatever the Government’s position is, it is not “clear”, and that that answer did not particularly clarify it.

--- Later in debate ---

[Mr Gary Streeter (in the Chair)]

Order. That was a very long intervention.

[Damian Collins]

Mr Streeter, you are of course right, but it was an intervention made with such great force and we enjoyed it so much that we were happy to listen to it. My hon. Friend makes an important point. The Government have consistently criticised the football creditors rule, and indeed HMRC brought a legal action against the Football League to try to prevent the rule from being used, but failed. The Government and the sports Minister have consistently said that the Government are prepared to use legislation to intervene if the football authorities will not demonstrate their own desire for progress and action. I believe that the time has come for an update on that situation and for a consideration of how legislation could be used to prevent the football creditors rule being used in insolvency cases. There may be a debate to be had about the role of Government interfering in the organisation of sports and sporting bodies in this country, but this issue is clearly one of fairness that relates to insolvency law and the specialist rules that football has created for itself to protect its own interests at the cost of the community.

When the Football League gave evidence to the Select Committee, its representative said that the league could find no moral justification for the existence of the football creditors rule. That continues to be the case. It is there by regret, but the time has come for it to be removed. When the High Court considered the case that HMRC brought against the Football League, Judge Richards said that although he was unable to find in favour of HMRC and against the Football League with regard to the football creditors rule, the judgment should not in any way be regarded as an endorsement of the rule.

I will now say a little about how the football creditors rule works in effect, and how I think we can get rid of it through legislation. All football clubs are required by the football authorities to honour their debts to other football clubs in full. When a club goes into administration, the football authorities use their control of the prize money and particularly the broadcasting money that is owed to the club—it is due only if the club completes the season. Effectively, when a club goes into administration, the Football League and the Premier League can use that money, which they control, to settle football debts on behalf of the club, and the club’s administrator does not have the power to gain access to that money. The Football League and the Premier League also reserve the right to remove the club’s golden share, which it requires to participate in football competitions. The removal of that golden share would effectively make the club worthless and the threat of its removal is one that the Football League and the Premier League can use to ensure that football debts are honoured in full.

If the football authorities refuse to give up the football creditors rule voluntarily, legislation has a role—we should amend insolvency legislation. We should put the administrator in sole charge of the assets of the club, including the golden share and prize money that should reasonably be expected to be owed to it during the season. The administrator can use all that money to settle the club’s unsecured debts equally and fairly—both football debts and non-football debts.

[Mr Gregory Campbell (East Londonderry) (DUP)]

I congratulate the hon. Gentleman on securing this timely debate. Does he agree that on some occasions, the problem has been not only the rule to which he refers, but that in some cases, particularly high-profile cases, chairmen and others in charge of football clubs have spent anticipated revenues, including television money and European money, such as champions league money, long before they are in receipt of it, so that there is very little to distribute even before the pot of gold at the end of the rainbow fails to materialise?

[Damian Collins]

The hon. Gentleman makes an important point, which gets to the heart of my great concern about how the football creditors rule works in practice. Although the rule is an administrative tool used to protect football, what it encourages is profligate spending, because football debts are guaranteed by the Football League and the Premier League. A club selling a player to another club will not particularly worry about whether the buying club can afford the transfer fee that they have engaged to pay, and the selling club will not mind if the payment of those fees is spread out in instalments over a number of years, because they know that the money is guaranteed by the football authorities. Similarly, players signing lucrative contracts with a club will not need to inquire too much into the finances of that club because they know that the money is guaranteed. There is no other area of business where that is true, because no other area of business has that sort of protection, which I believe encourages massive profligacy and spending within the game of football—there is no element of shared risk, and there are no consequences or downsides.

I also believe that that is why the level of insolvency in football is so high. There are no other industries in this country in which one would look at the companies trading in it and say that it would be normal for the insolvency rate to be 46%. The practical way in which the football creditors rule is implemented is driving that culture and practice. Getting rid of it would stop that culture and practice.

It may well be that the football creditors rule would have to be phased out over a couple of years, to give clubs a chance to rebalance. If the financial fair play rules were properly enforced across all the top tiers of football, in many ways the football creditors rule may not be needed anyway. If enforced, financial fair play would create a culture of correct spending in which clubs would not be able to live beyond their means. They would be unable, year after year, to gamble tomorrow’s money for success today in the hope of moving further up the football pyramid.

We can take action to address that culture by getting rid of the football creditors rule. If the football authorities did not want to get rid of the football creditors rule entirely, they could consider creating a sinking fund to guarantee that unsecured creditors such as local businesses that are owed relatively small amounts of money are always compensated in full, instead of receiving the derisory penny in the pound that they often receive at the moment, which is completely unjust and unfair. For a game that is as wealthy as football, there can be no moral justification for that situation.

Later this week, I will publish my private Member’s Bill on football governance. I am grateful for the support of a number of hon. Members, including my hon. Friend the Member for Portsmouth North (Penny Mordaunt), the hon. Member for Coventry South (Mr Cunningham) and my hon. Friend the Member for North Swindon (Justin Tomlinson), who are all in the Chamber. In that Bill, I set out my view of how insolvency law could be amended to practically eliminate the football creditors rule. I believe that if the football authorities will not demonstrate their desire to do that themselves, it would be a legitimate course of action for us to use Parliament and the law to get rid of the rule.

My Bill also addresses a couple of other important areas related to the insolvency of football clubs and to the culture and practice that I believe drive that insolvency. In addition to getting rid of the football creditors rule, I suggest that there should be a test, which would be particularly relevant to cases such as that of Coventry City, whereby there should be a public declaration of the identity of the owners and investors in a club. I do not think there has ever been a case where the owners of a club have been shrouded in mystery and that club has been a financial success. People rightly question the motivation of people who obscure their identity, often through myriad dummy companies all registered and trading offshore. People question the reasons for that. Football fans should have the right to know the identity of the people who own their club and where their money comes from, which should also be a matter of public investigation.

Alongside that system, we should have a fit and proper person test that is robust and that has teeth, to be administered at the discretion of the football authorities. The situation we have now is ridiculous. In the case of Leeds United in particular, Mr Cellino wants to buy the club. He was formerly convicted of fraud and faces another conviction today, but the Football League might have to wait nine months until the Italian courts hear his appeal case before deciding whether or not to allow him to buy the club. That is totally ludicrous. It should be entirely at the discretion of the football authorities, including the Football Association, as to whether they feel that someone is a fit and proper person.

There is already a helpful precedent for that: the way in which the fit and proper person test is administered by Ofcom with regard to people who may hold a broadcasting licence in the UK. That power was created by the Broadcasting Act 1990 and is administered entirely at the discretion of Ofcom, based on its consideration of whether someone can or is likely to comply with UK broadcasting law, and therefore of whether they are a fit and proper person to hold a broadcasting licence.

[Mr Jim Cunningham]

Returning to the point about ownership, we recently had a case—about a week or 10 days ago—where the owner of Birmingham City was sentenced to a number of years in jail. It comes back to the issues that the hon. Gentleman mentioned: who are these people who own clubs and what is their credibility? The Football League should have been looking at such people and asking, “What is their credibility?”

[Damian Collins]

The hon. Gentleman makes a very good point. The Birmingham City case is particularly relevant. It is believed that there were grounds for concern about the former chairman of the club—there were outstanding previous charges against him relating to dishonesty in the Hong Kong courts. Very recently, he has been convicted of money laundering. Although he has stepped back from control of the club, I believe his son now runs it in his place. There is nothing the football authorities can do about that. It is quite clear that he should never have been allowed to buy the club in the first place, and his family should have no direct involvement in the club any more.

The Football League should not be fearful of taking legal action against people who want to buy a club—that should be at its discretion. In the United States of America, there is a discretionary test for those who want to own a franchise in major league baseball. It is administered by the league, and by other owners of the league. They will look at the business case, the plan and the credentials of the would-be owner and decide whether they want them in their league. We should have the same rules here. It would probably be right for the Football Association, as the guardian not just of the law, but of the ethics of the game, to administer that test and use it at its discretion. I included such a test in my private Member’s Bill because there may need to be some statutory underpinning of that authority if the football authorities fear legal action being taken against them by people who would otherwise seek to invest in the game.

The hon. Member for Coventry South will speak about Coventry City, but I should like to add that the club’s being run into the ground, its finances being in ruins and its being separated from its ground and stadium seem entirely to suit the financial interests of its mysterious, secret owners. That should never be allowed to happen again. The Football League claims that it knows who owns the club. I believe it should publish all that information, which should be a matter of clear and open record. To its credit, the Premier League said that it would require that to be so, should Coventry play in that league.

The situation of Coventry City is desperately sad and it should never, ever be allowed to happen again. In our consideration of issues relating to the insolvency of clubs, hon. Members should consider what next steps need to be taken to ensure that such things do not happen again.

Other hon. Members wish to speak and I have spoken probably for long enough in setting the scene. I should like the Minister to say what positive action the Government are prepared to consider to move to abolish the football creditors rule, and I should like to hear her thoughts on other matters relating to the culture in football that have a negative influence on the finances of the game. I should also like to hear whether the Government are prepared to back up their criticism of the football creditors rule with action. Will they set out now, or in writing after the debate, a timetable—a schedule—by which they would take action if the football authorities are not prepared to do so?

[Mr Jim Cunningham (Coventry South) (Lab)]

I thank the hon. Member for Folkestone and Hythe (Damian Collins) for securing this debate. His private Member’s Bill is timely and I wholeheartedly support it, as he knows. We both share considerable frustration with and concern about the inadequacy of the football governance system. It is now apparent to everyone that reform is long overdue, as he said. I intend to speak for just a few minutes about how this issue affects Coventry.

I have spoken many times about my disgust at what has happened to Coventry City football club. The whole affair has been a disgrace, particularly given that some fans have to do a round trip of about 70 miles, which is expensive in the present economic climate. In the past three or four months, the weather has been pretty appalling, too, to say the least. Fans are always the last to know what is happening at a club or who owns it, but they foot the bill. They are treated quite appallingly, to say the least.

This business with Coventry City has been going on for about two years, and it is about time it was resolved by Government action and regulation. That is one reason why I support the hon. Gentleman’s Bill. I do not need to go into further details, because we have had a number of debates about Coventry, secured by me, my right hon. Friend the Member for Coventry North East (Mr Ainsworth), and my hon. Friend the Member for Coventry North West (Mr Robinson), who are not here today because they have other business on. We have raised questions, debated the matter two or three times and met Ministers to discuss the issue. We should have got legislation last year, which was promised but never came forward.

Coventry is not the only club to have suffered from poor governance and financial mismanagement, but it is a useful example to discuss, because it has displayed many of the problems endemic in the system. It is for this reason that I asked the Select Committee on Culture, Media and Sport to consider a short investigation into what has happened to the club. It would be a useful case study to highlight areas where reform is needed, as the hon. Member for Folkestone and Hythe said. The idea would be to hear from both sides in the dispute and discuss what pitfalls might have been avoided had legislation been in place. I have yet to hear back from the Committee Chairman, and I do not know whether the Committee will accept my suggestions. I should be grateful if the hon. Gentleman considered supporting me in that, as it may help to make a compelling case for legislation.

The hon. Gentleman explained the football creditors rule well, and I do not intend to go back over that. Coventry City FC has had a number of problems and the football creditors rule is just one among many. However, the creditors rule rewards poor management and irresponsible governance. It is one rule for the football industry and another for all other businesses in the economy. Why should a club be responsible if, once it is in administration, it will not be obliged to pay its debts? Footballers’ salaries and other clubs must be paid before anyone else, even secured creditors and Her Majesty’s Revenue and Customs. The taxpayer is not considered until the players’ huge salaries are paid in full and, in Coventry, the rent that is due to be paid to the stadium is not considered.

Coventry’s Ricoh arena is owned by Arena Coventry Ltd, which in turn is half owned by Coventry city council, but the rent owed on the stadium is just ignored, as that company is not a football creditor. No other business failure would be protected in this way. What company would be able to pay its employees astronomical wages it could not afford?

The club is protected from its debt obligations to the taxpayer, in respect of rent arrears; to cleaners; to St John Ambulance; and to kit suppliers—the list goes on, as the hon. Gentleman said. The creditors rule seems to protect clubs from bad management and encourages recklessness. Of equal concern is the fact that most Football League regulations give it flexibility of application to suit individual circumstances, so that organisations dealing with football clubs cannot rely with any certainty on how the rules will be applied. This lack of clarity is a problem; it leaves organisations unclear of their position.

When a club goes into administration, the golden share held by each club, giving it membership of the FL and permission to play in the league, is suspended and reverts to the FL. The FL normally allows the club to play on to see if things can be resolved—a lot of times they are not resolved—but football creditors will still need to be paid. The operation of this rule has been an issue in many football administrations, including that of Coventry City Football Club Ltd.

There was a huge debate about whether the golden share lay in the hands of CCFC Ltd or its parent company, Coventry City Football Club (Holdings) Ltd. Ultimately, it was clarified that the share sat with CCFC Ltd, but that some or all of the players’ contracts are with CCFC (Holdings), which should not be the case under FL rules. That clarification came too late, and by this point the administrator had already sold assets. In any event, CCFC Ltd has been through administration and is being liquidated. All football creditors have been paid in full, while other creditors, notably ACL, the owner of the stadium, will not be paid.

The Select Committee launched its report on domestic football governance in December 2010, publishing the report in July 2011. The report was very clear: the Football Association was in need of urgent reform. Leagues—the Premier League in particular—have too great an influence over the decision-making processes of the FA. The game has seen increasing commercialisation, and there is a distinct lack of financial regulation. This has led to significant financial risk-taking among football clubs. The Select Committee urged the industry to reform itself; otherwise, there should be legislation. Football authorities put forward proposals for reform, but their proposals simply did not address the key issue. I hope that the Minister will deal with some of those issues.

On 30 April last year, the right hon. Member for Faversham and Mid Kent (Hugh Robertson), when he was Minister for Sport, wrote to the Select Committee, agreeing with its recommendations, which he described as “much needed”. He said:

“in the absence of significant progress with these by the beginning of next season, we should seek to introduce legislation as soon as practically possible.”

I agree. We really want to know what the legislation is and what the Government’s timetable is. On at least two occasions, I have asked when the Government will take action, and have been told that they are considering and looking at the issue, but they do not tell us what their proposals are. That is why I agree with the hon. Member for Folkestone and Hythe that we should have a time scale and should know what the proposals are. Everybody should support him in trying to get the Government to come clean on this.

A lot of these companies can be intimidating. The hon. Gentleman mentioned the Football League being frightened to take action; a lot of these companies want to go to court, and that can lead to individuals being intimidated. These companies would not get away with some of their practices anywhere else; the mafia probably would look like saints next to them.

The right hon. Member for Faversham and Mid Kent continued:

“I have already been given drafting authority by the Parliamentary Counsel, and my officials have started working up a draft Bill and supporting documentation, should football fail to deliver. This Bill will reflect the conclusions of your report.”

[Damian Collins]

Does the hon. Gentleman agree that it would be helpful if the Government produced the draft Bill and supporting documentation?

[Mr Cunningham]

That would be very helpful. If we saw what was in the draft Bill, we could decide whether we could support it, and I am not just talking about Opposition Members; the hon. Gentleman might disagree with some of the draft Bill, for example. There is a clear promise on the creditors rule, too. The Committee’s report stated that if the courts were to reject the challenge to the creditors rule by Her Majesty’s Revenue and Customs, the Government should introduce legislation to abolish it—the High Court has clearly upheld the challenge.

I conclude by saying to the Minister that football has failed to deliver, and it is now time for the Government to deliver. When will we see the promised Bill before Parliament? What more do the Government need before they decide to legislate?

--- Later in debate ---

[Justin Tomlinson]

I thank the hon. Gentleman for his comments, which I agree with. I see that representative being elected through the supporters trust network. We have had a number of Supporters Direct events in Parliament, and we have all seen at first hand the fantastic work that it does.

[Damian Collins]

My hon. Friend raised an interesting idea. Does he agree that there is a necessity for the public declaration of the ownership to be clear? That was not clear with Leeds United and when the chief executive gave evidence to the Select Committee, he said that he did not know who owned the club. That kind of situation cannot be allowed to continue.

[Justin Tomlinson]

That is the absolute minimum we need. Supporters and suppliers should have a right to know who the custodian of their community football club is. The fans representative could then give a day-to-day commentary where appropriate and link the supporters and the club. That would be a win-win, particularly for the Football League, in ensuring that fans are engaged with the football club. The hon. Gentleman is absolutely right that we need that public declaration.

--- Later in debate ---

[Justin Tomlinson]

I agree wholeheartedly with that. What frustrates me, whether it is the Premier League or the Football League, is that it is in their interest that football clubs remain viable and continue to grow. It is a brand, and by and large it does work. The frustration was highlighted in the example given by my hon. Friend the Member for Portsmouth North. She said that at the eleventh hour—a huge amount of work had been done, the community had raised money and different people had pledged money—the goalposts seemed to be moved.

The Football League and the Premier League should have all the information registered and available, so that those seeking to step in to rescue, protect and save those valuable community assets are armed with the information that they need. In some cases, football clubs will disappear because it is just not meant to be, and some clubs will do better than they should, but that is just the nature of competitive sport. Where a set of owners have been reckless and the community wants to step up, whether that is through a new business owner or a community, fan-owned club, they should be able to have that information. The Football League and the Premier League should have it at their fingertips.

[Damian Collins]

My hon. Friend makes an important point. It is why it is important to have a proper fit and proper person test, administered by the Football Association, that can be done quickly. It can assess whether a new bid is worth pursuing or worth looking at, saying, “Is it from a fit and proper organisation or is it spurious?” If it is spurious, it should be set aside. It should not be down to the administrator to get the most money regardless of where it is coming from.

[Justin Tomlinson]

I agree with my hon. Friend. A whole review of the fit and proper test is needed, because my understanding is that while one of the tests is that a person must have a certain amount of money deposited in a bank account, they do not necessarily have to put that money into the club. I have seen that with Swindon Town. Wealthy people take over a club and have the potential to cover its liabilities, which would cover the suppliers, but that money is not necessarily used.

--- Later in debate ---

[Justin Tomlinson]

I absolutely agree. The issue affects football clubs across the country. In Scotland, there is the worrying experience with Hearts. As with Portsmouth, people are trying to do deals, but even the club cannot identify the owner.

[Damian Collins]

I just make the helpful point that many aspects of football are devolved. I originally wanted the debate to encompass Scotland, too, but I was advised that it could not.

[Justin Tomlinson]

I thank my hon. Friend for that.

In conclusion, there are huge amounts of good will towards sport and football, whether that comes from supporters or suppliers. We need to do whatever we can to ensure that they are equipped with knowledge, so that things can be remedied as quickly and swiftly as possible when they go wrong. That is absolutely vital for our local communities.

--- Later in debate ---

[Mr Wright]

I must disagree with the hon. Gentleman. In my lifetime, Hartlepool United will become a Manchester United or a Liverpool, and I will live to see us lift the champions league trophy, so the hon. Gentleman is wrong in that respect. He is right, however, about the vital contribution that clubs make to local businesses. Hartlepool borough council recently undertook an assessment of Hartlepool United’s economic impact on local businesses and, astonishingly, the club provides something like £5 million to Hartlepool’s economy.

The figures I have quoted show how inherently uncertain is the business model on which much of football is based. The hon. Member for Folkestone and Hythe said that 46% of clubs have been through a formal insolvency procedure since 1992. No other sector of the economy has had that level of insolvency, which highlights—this was one of the hon. Gentleman’s most articulate points—the possibility of reckless spending. Entry into the premier league—the most exciting and followed league on Earth—could mean as much as £50 million to a club. It is the glittering prize to which all supporters and owners aspire, but it leads to reckless gambles in the transfer market, which could undermine the financial viability and long-term security of a club. Some argue that the football creditors rule prevents clubs from spending money on players whom it cannot afford, but we have heard today that that is far from the case. The football creditors rule means that there is no inherent brake on transfer spending or on—as the hon. Gentleman said—the shared risk of a club not being paid for the transfer of a player, because football creditors are paid in full at the expense of other unsecured creditors.

[Damian Collins]

I agree with the hon. Gentleman’s point. Does he agree that, without the creditors rule, clubs would have to be much more open about their financial status, because that would be a prerequisite of clubs wanting to enter into transactions with them?

[Mr Wright]

That is a fair point. The insolvency rule specifically, as well as the hon. Gentleman’s wider point about governance and transparency, would be better for the game. He also suggested replacing the football creditors rule with some form of sinking fund, and I would be interested to hear whether the Minister is working with the Football League, the Football Association and others to examine such a proposal.

The rule can often act as a drag on a club returning to speedy financial health. I am pleased that the hon. Member for Portsmouth North was here earlier, because Portsmouth football club is now owned by the fans, but still has a significant liability of some £7 million owed to ex-players, which the supporters, because of the football creditors rule, must pay in full. That cannot be a good way of getting the club back to financial health. The need to curb the tendency to overspend makes the financial fair play rules, which cap the salaries of league one and league two clubs against a percentage of their turnover, so important, but are the rules the full answer? What will the Minister do to ensure that they are complied with and enforced?

The essence of today’s debate, which has been articulated by many hon. Members, is this: why should we have the football creditors rule if it means that clubs and players are paid in full ahead of all other creditors when a club enters insolvency? This quote from former Sunderland chairman, Niall Quinn, has been mentioned before, but it is worth repeating, because it sums up the problems of the game. He said:

“The fan in the street meets the guy who printed the programmes who didn’t get paid and he sees the player driving out in the big car who was paid, and I think that’s damaging.”

As mentioned by several hon. Gentlemen, there seems to have been a marked shift in tone and emphasis since the Government response to the original Culture, Media and Sport Committee report in 2011, which stated:

“We have sympathy for those who described the consequences of the rule as ‘morally indefensible’.”

“Morally indefensible” is an extremely strong phrase, and the Government sympathise with the position, from which I can infer that the Government wanted to see an end to the rule and wanted to move, through legislation if necessary, as quickly as possible. After the follow-up investigation by the Select Committee, however, the Government response in April 2013 stated that the Government hope that financial fair play rules will

“negate the need for football to rely on the Football Creditors Rule in cases of club insolvencies. However, we will monitor the effect this self-regulation has on the financial discipline and solvency of clubs, and, if necessary, will re-consider whether legislation is needed to address this issue.”

The tone is markedly different. The hon. Member for Hereford and South Herefordshire (Jesse Norman) also referred to a written parliamentary question from last month, in response to which the Under-Secretary of State for Culture, Media and Sport, the hon. Member for Maidstone and The Weald (Mrs Grant),said:

“The Financial Fair Play rules now introduced across football which, combined with compliance checks that the FA and league administrators carry out on participating clubs, aim to improve financial management and stability across the leagues…Legislation remains an option if the football authorities do not demonstrate that they can reform their own governance of the game…The Government’s position on the football creditors rule is clear.”—[Official Report, 27 February 2014; Vol. 576, c. 495W.]

As we have heard time and again in today’s debate, the position is far from clear. The Government seem to be shying away from the necessary heavy tackle. What are the criteria for legislation to be brought forward? What is the time scale on such legislation? How long do clubs have to demonstrate reform of governance and financial management before the Government act?

There is a wider point here about insolvency policy in general. The Opposition are keen to improve the insolvency regime, so that the public and investors have greater confidence that delinquent directors who are unfit to run a company are pursued efficiently and effectively, which is not the case under this Government. In 2012, just a fifth of reports passed to the Insolvency Service by insolvency professionals resulted in a disqualification court order or an undertaking, compared with 45% 10 years ago. Why has there been such a drop? Why are the Government allowing unfit directors to walk away from their responsibilities? What are the Government going to do about it? Last week, we tabled an amendment to the Deregulation Bill to scrap the need for insolvency practitioners to submit certain forms in hard copy and allow them to do so online, as a means of streamlining the process and ensuring that insolvency policy can be brought up to speed. Will the Minister accept that?

I thank all hon. Members for contributing to today’s debate, which has been incredibly important. We have seen a cross-party approach to this important matter, and I hope that the Minister will provide what hon. Members are calling for: greater clarity and a plan to address the wider point about an insolvency policy that is allowing delinquent directors to get off scot-free both in football and elsewhere.

--- Later in debate ---

[Jenny Willott]

If the hon. Gentleman gave me some time, I might be able to answer some of his questions.

Most clubs that have entered insolvency have gone into administration. The primary objective of an administrator is to rescue the company wherever possible. If the business can keep going, that is the best outcome for employees and other stakeholders. Administration is therefore a rescue procedure and, judged on that criterion alone, football administrators have been successful. In spite of the number of clubs facing difficulty, as highlighted by a number of hon. Members today, no Football League club has gone out of business mid-season since the demise of Aldershot in 1992.

Administrators are governed by statute. Their primary focus is on rescuing the company, but the survival of the company or business will always be balanced against the interests of the creditors. Put simply, an administrator cannot save the company if that is not in the interests of the creditors. As was highlighted by the hon. Members for North Swindon (Justin Tomlinson) and for Portsmouth North (Penny Mordaunt), generally, rescuing a football club is in the broad interests of the creditors and the fans. That is because the alternative to a rescue out of administration is liquidation, in which a club’s assets are turned into cash, its affairs are wound up and any remaining funds are distributed to creditors.

On liquidation, football players’ contracts are void and they receive what is known as a free transfer, which means that no transfer fee need be paid to the liquidated club. That is clearly not in the interests of creditors, as the players’ contracts are an important asset of the club, being worth significant amounts of money. As hon. Members have said, including the hon. Member for Coventry South (Mr Cunningham), the Football League is in essence a members’ club, with all the clubs having a share in it, sometimes known as the golden share. To continue membership of this club and to retain the share, members must abide by the rules. Among the rules is the Football League’s insolvency policy.

One aspect of that insolvency policy, as we have discussed today, is the football creditors rule, under which all football creditors must be paid in full if a club is to remain a member of the Football League. The list of football creditors is long, so it would be slightly tedious to read out, but it includes players, the staff of the club, the leagues, the Football Association and other clubs, as was mentioned by a number of hon. Members. Other than in exceptional circumstances, if the football creditors rule is not followed, the club will lose its share in the Football League. Without the share, the club cannot take part in league matches and will in effect cease to trade. If a football club is in administration, the loss of the share will almost inevitably result in liquidation, which, as I said, voids all player contracts. If that happens, the football club is in effect dead, which is disastrous for all classes of creditor, because there is no value in a club that has been kicked out of the league and has no players.

[Damian Collins]

What the Minister says is correct, but that is down to the rules of the Football League. We could amend insolvency law to give the administrator the power to compensate all unsecured creditors equally and fairly, and it would then be a matter for the Football League to decide what it did with the club after the administration.

[Jenny Willott]

The administrators are regulated professionals and are obliged by law to perform their functions in the interests of the company’s creditors as a whole. They are complying with insolvency law. The administrators are not bound by the Football League’s rules on football creditors; they are required by law to treat all unsecured creditors equally. Those are the rules under which administrators operate, but it is clearly in the interests of a potential purchaser to abide by the Football League’s rules and to ensure that football creditors are paid in full, to be able to keep the club operating. It is usually in the best interests of administrators to sell to someone who will do that to keep the business operating and keep the club playing as part of the league. If the purchaser does not do that, there is a significant risk that the Football League will not allow the club to compete, and the purchaser would then own a worthless club.

[Damian Collins]

I question that, on behalf of non-football creditors. Under insolvency, they might get less than 1p for every pound that they are owed. What interest of theirs does the process serve? They are in effect watching football creditors being compensated fully, but are themselves walking away with what in any other administration would be considered practically nothing.

[Jenny Willott]

It is important to remember that the money being used to pay the football creditors is not drawn from the assets being used to fund the other unsecured creditors. It is not the same pot of money.

[Damian Collins]

The Minister makes an important point, but this is where legislation might be necessary, because the football authorities will withhold money that is due to the club at the end of the season to carry out, in effect, their own administration process by settling football debts that the club cannot manage. We should make it a requirement that administrators have access to those funds that are due to the club at the end of the season, so that they can be factored into the administration of the club.

[Jenny Willott]

This was looked at fairly recently by the High Court, which decided that those funds did not count as assets of the club. The assets of the club have to be divided up in accordance with insolvency law, under which the administrator has to look at all the unsecured creditors. I completely understand what the hon. Gentleman is saying, but following the High Court ruling, I believe that those funds do not count as assets of the club.

[Damian Collins]

Under the Football League rules, those funds are not necessarily due until the club completes the season. If the administrator were free to carry on the administration until the end of the season, I do not see why the administrator could not reasonably draw on those funds as well.

[Jenny Willott]

The hon. Gentleman makes an interesting point, but I have to confess that I do not know the answer. If it is okay with him, I will write to him after the debate to clarify that point.

When a football club is sold, which takes it out of insolvency, the purchaser generally funds the payment of the football creditors, or other funds that do not belong to the club are used. A different pot of money is therefore paying for the football creditors. That is one of the reasons why the football creditors rule does not breach existing insolvency law. Were the funds to come from the same pot, it would breach the law, because it would be treating different unsecured creditors differently. Nevertheless, today and on a number of occasions in the past, it has been suggested that the football creditors rule should be abolished through legislation. The hon. Member for Folkestone and Hythe has made that point today.

The number of Football League club insolvencies has declined significantly in recent seasons. In the 2003-04 season alone, six clubs became insolvent. Five years ago, there were around three or four failures per season. Happily, however, there have been no football insolvencies at all so far this season and only two in the season before that, and in one of those there were no football creditors, so the situation seems to be improving slightly. Insolvency is not the cause of a football business’s problems; it is a symptom arising from an underlying lack of financial stability.

The hon. Member for Hartlepool (Mr Wright) and other hon. Members mentioned financial fair play; the football authorities have made significant moves in recent years to put clubs on a stronger financial footing. They have introduced an early warning system for tax debts, salary caps and an agreement on financial fair play rules, which will ensure that clubs do not spend more than they earn. Those measures are possibly already having a beneficial impact in increasing financial stability, which will lead to a decrease in the number of insolvencies.

--- Later in debate ---

[Jenny Willott]

The issues that the hon. Gentleman is raising are more connected to the administration of the game of football as a whole than to insolvency. I have not discussed those issues with counterparts in other Administrations, but Ministers in the Department for Culture, Media and Sport may have done. I am happy to write to him to clarify that point; I do not know the answer to his question off the top of my head.

It is important that we encourage the football authorities to continue with the financial fair play rules, to ensure that football has a solid financial base on which to operate. If there are no insolvencies, the football creditors rule does not come into play, so we get around the problem.

[Damian Collins]

I do not think that it is fair to say that if there are no insolvencies, we should not look at getting rid of the football creditors rule. In her opening remarks the Minister said that the rules of corporate life cannot be selectively applied, but that is what is happening. It should not; it should stop.

[Jenny Willott]

Insolvency law is applied equally to football clubs and any other businesses facing insolvency.

[Damian Collins]

The Minister says that, but there is no other sector of industry in this country that has a rule whereby it treats one group of unsecured creditors—its friends—differently from another group. I know that this has been tested in the High Court and is legal, so clubs can do it. The purpose of the debate is to question whether it should be legal, or whether we should stop it.

[Jenny Willott]

I appreciate what the hon. Gentleman is highlighting. I have sympathy for the views he is expressing.

National Insurance Contributions Bill

Damian Collins Excerpts

Monday 4th November 2013 Commons Chamber

[Damian Collins (Folkestone and Hythe) (Con)]

I will say a few words in support of the Bill. Like all Government Members, I believe that this is an excellent measure that recognises that it is businesses of all sizes that create jobs in this country. People are now finding jobs in growing numbers. By reducing taxes on employment, we will make it more likely that businesses will employ more people. The strength of the recovery in the private sector underlines the growth in the economy as a whole. The Labour party predicted that growth would not come and that jobs would not be created. By reducing the cost of national insurance to employers, the Government are in this Bill taking another excellent step in the right direction.

I agree with the Exchequer Secretary that we should look at the Bill as one of a range of important measures that the Government are introducing to support the business community, and all those measures support each other. My hon. Friend the Member for Skipton and Ripon (Julian Smith) spoke of meeting young people under the age of 30 who had received StartUp loans from the Government to invest in starting their own businesses, which have had a great deal of success. The Bill will help businesses like those to get to the next stage on the path to growth and to go from being a start-up to employing a small number of people. There is an enormous appetite among people in this country to have a go at starting their own business. That is one of the most positive things to come out of the recession. We need policies that work with the grain of people’s entrepreneurial instincts and back them as they back themselves.

[Bob Stewart]

I have listened carefully to this debate. I have never run a small business; I have run a medium-sized business, but it was not my own. Would it not be a tremendous fillip to small businesses if HMRC was slightly more proactive when it saw a business making a clear mistake, and wrote to it saying, “It would be better if you did it this way”?

[Damian Collins]

My hon. Friend makes an important point. The quality of the advice to businesses from all quarters is important. That echoes a point made by my hon. Friend the Member for Skipton and Ripon, who said that we all need to advocate the Government’s policies to ensure that businesses benefit from them.

[Julian Smith]

I pay tribute to the work that my hon. Friend has done within our party for a number of years to encourage entrepreneurs. It has been a most successful scheme. May I ask him for his reflections on that scheme? We have talked about the StartUp loans scheme and the new enterprise allowance, but he probably has the most experience of any Conservative Member of the competitive encouragement of small businesses.

[Damian Collins]

It is very kind of my hon. Friend to make those remarks. The start-up hub competition at the Conservative party conference has given small businesses an opportunity. That has been a good way to ensure that those businesses are plugged into the decision makers and people with influence in their local communities, and to ensure that they are benefiting from the breadth of schemes that the Government have to offer. We have run the competition for three years.

At this year’s party conference, I was pleased to meet Neill Ricketts of Versarien, which employs groundbreaking technology to improve the cooling systems that are used in the mainframes of computers and data storage systems. That business, which started within the lifetime of this Parliament, is going from strength to strength. It was floated on the alternative investment market this year, employs a large number of people and is growing fast.

There is a business in my constituency that was started by a group of young men. The managing director is only just 30 years old. The business specialises in search engine optimisation and social marketing campaigns. It employs more than 20 people and is growing rapidly. It has developed a way of specialising its techniques for small local businesses so that it can design social media and search engine optimisation campaigns to help businesses on the high street to grow.

People are using their knowledge and expertise to develop innovative businesses and to demonstrate that there is a market for them that has not been realised. People are developing cutting-edge technologies and products that will be exportable and that will help businesses to develop and grow.

One business that succeeded through the start-up hub competition was started by Julian Hakes, who redesigned the high-heeled shoe. He is an architect and he applied the principles of architecture to a fashion item. This year, his product was given the accessory of the year award by Vogue. It went viral on the internet and he has export orders from around the world. That was all based on a good idea that he was able to take to market. Credit is also due to two good trade bodies, the British Fashion Council and the UK Fashion and Textile Association, which supported him in the development of his business.

There are some brilliant people who are doing great things. We need to get behind them and support them. We have good schemes that can do that. My hon. Friend the Member for Skipton and Ripon made a good point about our advocating those schemes and ensuring that people are aware of them. At Tech City in east London, one hears people talking enthusiastically about the enterprise investment schemes that are available. When we meet politicians from Germany, as my hon. Friend has done, we find that they are interested in the way that we use enterprise investment schemes to encourage private investors to invest in start-up businesses. However, I wonder whether our own chambers of commerce and people around the country know enough about the schemes that are available and that they could benefit from. We all have an important role to play in advocating the Government schemes that are there to help people get their businesses to the next stage.

That support sits alongside a strong regional growth policy that is being delivered through the regional growth fund. In east Kent in my constituency, the regional growth fund has granted a third of the money that has been awarded. Tens of millions of pounds are being spent and invested by businesses. People are being employed on the back of that investment.

H. V. Wooding in Hythe, which was visited by the Minister of State, Department for Business, Innovation and Skills, my right hon. Friend the Member for Sevenoaks (Michael Fallon), is investing in a new plant and machinery to expand its production capabilities. It is a precision engineering company that makes parts for the Hadron Collider at CERN, and it makes busbars that are used across a wide range of industry and machine parts for Formula 1 engines. It is bidding for contracts that have gone overseas in the past decade, to bring them back to this country because it can compete in that sector. It is benefiting from regional growth fund money, which is helping it take its business to the next level, and it is employing people now.

One reason why unemployment is falling much faster than predicted is that the schemes to benefit smaller businesses are helping them grow and employ more people, and we are seeing the knock-on effect. It is not only bigger businesses that are doing well and competing, but smaller ones too. The challenge we should set ourselves is: “Do we have a strong and robust investment culture? Is this a country that people around the world want to invest in?” Increasingly, we are seeing that it is. People are investing in this country because of low levels of corporation tax compared with our competitors in Europe and America. That is why people are bringing investment from all over the world to this country.

Not only are smaller businesses investing in themselves, but the investment community is investing in them through crowdsource funding and companies like Funding Circle. People can match fund some of the Government schemes to help businesses get the finance they need, and that is an important part of the growth of our economy. In the ’80s, thanks to privatisation we were seen as a nation of shareholders. In the next decade, could we be a nation of shareholder and start-up businesses where people take advantage of available schemes to invest in start-up and smaller businesses in their areas? We should set ourselves that challenge.

Finally, we should not lose sight of the big projects that the Government must back, including those that will not benefit us directly in this Parliament but are important for the next 10 to 20 years—major infrastructure projects like high-speed rail or investment in electricity power generation. Such projects are vital for our future competitiveness. We have sometimes looked at other countries and seen how their infrastructure has helped them to compete. We have the tax and investment policies, ideas and people to compete, but we must ensure that we invest now in the big infrastructure projects we need to help those people grow in future. I commend those projects that I have touched on in my remarks, as well as the Bill which, as my hon. Friend the Exchequer Secretary said, is an important part of the range of measures that the Government have put in place to support entrepreneurship in this country.

Corporate Structures and Financial Crime

Damian Collins Excerpts

Thursday 4th July 2013 Commons Chamber

[Chris Heaton-Harris (Daventry) (Con)]

Thank you for your guidance, Madam Deputy Speaker.

It is a pleasure to follow the right hon. Member for Oldham West and Royton (Mr Meacher). I am glad to be doing so on a day when he has been very positive. I would hate to follow him on a day when he was being negative—it would be like having a dementor circling the room. It is always a pleasure to see him in this House, though, especially when he has so many to choose from.

I wanted to take part in the debate to do two things. First, I wanted to set out that the vast majority of businesses established in our country do the right thing by tax and the right thing by corporate structure. They really do work hard to stay within the rules, and they, like everyone else, are shocked when they see other corporate structures not doing the same.

Secondly, I wanted to congratulate and support the hon. Member for Bassetlaw (John Mann). It comes as a bit of a shock to me to say that, but I know that he has worked hard on this subject. I do not agree with him on everything, but he does raise a number of valid points; he states them and debates them well and they need to have a good airing. I look forward to continuing the dialogue with him.

Before I got involved in this political charabanc, I was a small business man. I much preferred running a small business and being able to do something positive to sometimes sitting through debates and ultimately achieving nothing. We remain a nation of small businesses and we should encourage them, so I believe it is important that we allow small businesses to set up and establish themselves quickly and cheaply. I therefore disagreed with the hon. Gentleman when he talked about making it more expensive and complicated to set up a company.

Only a year or so ago, I set up a company, and it was a delight to be able to do so online and quickly. There are a few hoops to jump through—one has to prove one’s identity, for example—but I thought the right checks and balances were in place. If we want to create wealth in this country, as we all do because that is where our taxation comes from, enabling businesses to be set up quickly is a good thing. I hope that the hon. Gentleman forgives me for disagreeing with him on that point.

Like my hon. Friend the Member for Aberconwy (Guto Bebb), I am a member of the Public Accounts Committee. We have been going through report after report on a series of corporate structures that were set up in a slightly interesting way to avoid paying tax, but to do so legitimately. We have been able to show where tax has not been paid or where people think tax should be paid, but it is only a thought, only a process. The companies that have come before us have all been able to say to us, “We do exactly the right thing both by the law in this country and by international law.” If we are serious about tackling this problem, we need to engage on an international stage. That is why I welcome very much the Prime Minister’s words and deeds at the G8 summit and what I expect will happen in future.

The right hon. Member for Wolverhampton South East (Mr McFadden) mentioned the complexity of modern-day banking. In fact, now that banks are so interlinked, there is an odd sort of transparency about banking transactions. Banks can make themselves as complicated as they like, but with modern technology and the internet—something the hon. Member for Bishop Auckland (Helen Goodman) was moaning about—comes a degree of transparency that, should we wish it, could clear up a number of issues behind the scenes. Again, however, that would have to be negotiated on an international basis.

[Damian Collins (Folkestone and Hythe) (Con)]

Does my hon. Friend agree that transparency about ownership, particularly the ultimate beneficial owner, of a company should be welcomed? For many years, the identity of the real owners of some football clubs, such as Coventry City and, previously, Leeds United, was hidden in dummy companies registered offshore.

[Chris Heaton-Harris]

I agree. Coventry City is a perfect example. It announced today that it is moving in with Northampton Town, a club that is local to me. I am sure fans would love to know what went on behind the corporate structure there.

I have one wish, which is to ensure that we get some sort of transparency behind these corporate structures. Members will know that I am a big campaigner against onshore wind farms. Many of the developers have an unbelievably complex corporate structure that sucks money—subsidy, actually—out of this country and away to far-flung lands through a number of countries and a number of companies.

There is a job to be done. I welcome this debate, I congratulate the hon. Member for Bassetlaw on securing it, and I look forward to working with him and others in the House to get the right job done.

Budget Resolutions and Economic Situation

Damian Collins Excerpts

Thursday 21st March 2013 Commons Chamber

[Ed Balls]

I think it is a little unfair to tease this Chancellor about what goes on late at night in massage parlours. Perhaps he will correct me and tell me that it was not a massage parlour. I will take an intervention if he would like to clarify it; I cannot remember that chapter in the biography.

According to House of Commons Library figures, a one-earner family—[Interruption.] The Chancellor should listen to the reality of his plans and their impact on hard-working families in our country. According to the Library, a one-earner family on £20,000 a year with two children will be £381 a year worse off in 2013 compared with 2010, even with the personal allowance, because that is outweighed by the hit to tax credits for a working family. This is without taking into account the rise in VAT. By 2015, that family on £20,000 will be £600 a year worse off.

It is not just a case of being worse off under the Tories, but worse off under the Liberal Democrats too. In 16 days’ time, as the Chancellor, with the support of the Business Secretary, rams through the granny tax, the strivers tax and the bedroom tax, he is pressing ahead with a £3 billion tax cut for the very richest people in our country. In two weeks’ time, 13,000 millionaires will get an average tax cut of £100,000 each. Millions are paying more while millionaires get a tax cut.

[Damian Collins (Folkestone and Hythe) (Con)]

The shadow Chancellor is on record as saying that his solution is that we should be borrowing more now. How much more would he borrow on top of what the Chancellor is already borrowing?

[Ed Balls]

I will quote the Business Secretary. Asked on the “Today” programme, “Won’t that mean more borrowing?”, he replied, “But we are borrowing more.” The Government are borrowing more—it is all here in the OBR document. If they had listened to our plan two years ago, the borrowing would be coming down, and it is not.

--- Later in debate ---

[Damian Collins (Folkestone and Hythe) (Con)]

Following the speech by the hon. Member for Denton and Reddish (Andrew Gwynne) I feel I should point out that the Government do welcome Lord Heseltine’s report, which is why they have adopted the vast majority of his recommendations. I was also pleased to hear the hon. Gentleman mention the success of town teams and the Portas pilots, although he failed to mention that those initiatives were introduced by this Government.

I am sure, Mr Deputy Speaker, as a bit of context for this debate, that you will be familiar with the novel by Chris Mullin, a former Member of this House, called “A Very British Coup”—many Members will have read it; I think it was almost a manifesto for certain Opposition Members at one point. It tells the story of a left-wing Labour Government who run out of money and go cap in hand to the International Monetary Fund, but they cannot accept the terms that the IMF offers, so instead they go cap in hand to the Russians.

That scenario has, thankfully, been avoided here, but it is the meat and drink of a member of the eurozone and a European country, albeit a small country: Cyprus. It has lost control of its debts and spending and is in the awful position—as countries are when they get to this point—where the cuts it is being asked to make at this late stage are much worse than those it might have made earlier, at the right time. Countries find that they cannot go on borrowing for ever because one day the people lending the money will not lend it any more, or only at a rate so punitive that it cannot be accepted. That warning is live. It is affecting a member of the eurozone and may soon affect other countries. The Labour party ignore that peril, but the Chancellor of the Exchequer is steering this country away from it.

Throughout this debate Opposition Members, just as the shadow Chancellor and Leader of the Opposition did yesterday, have pointed out how much the country is borrowing and said that we are borrowing more than was forecast—a perfectly legitimate point. They are, however, much more reluctant to be drawn on whether they would borrow even more. The shadow Chancellor seems to be very happy when he is touring the news studios and sitting on the sofas to be a bit more frank and open about this, but he was asked about it twice in the debate and refused to answer both times. Last week, he was asked by Gavin Esler on “Newsnight” whether his plans would mean that the Labour party would borrow more, and his answer was, “Of course it would.” He is right. His plans do not come out of thin air. He must borrow the money to put in place the stimulus he wants. The reason he is not forthcoming is that he knows that that is not what the country wants. He knows that people are genuinely concerned about the high level of debt we have and about the costs we will put on future generations if we do not get on top of it now. He knows that people are looking at countries such as Cyprus and thinking, “That could happen here if we do not get a grip of our debts.”

[Barbara Keeley]

The hon. Gentleman does not hear what I hear from the shadow Chancellor. I heard him say, first, that we want a cut to VAT to stimulate the economy—the economy has been badly affected by the VAT increase—and, secondly, that we would use the proceeds from the 4G spectrum auction to build 100,000 houses, which would also stimulate the economy and the construction sector. My right hon. Friend the shadow Chancellor does answer those questions; the hon. Gentleman should listen to him.

[Damian Collins]

I hear the shadow Chancellor tell us how he will spend the same money a number of times. A VAT holiday could not be paid for, and would be only a temporary measure—the rate would go back up again. It would be an artificial stimulus, and the country cannot afford any more of those. Why will Labour Members not have the courage of their convictions and say, “Yes, of course borrowing would go up. That is the truth of the matter.” That is what the shadow Chancellor said on “Newsnight”. When they challenge the Chancellor, it is like a sumo wrestler giving unsolicited advice on dieting. Their prescription is worse. They want to borrow more than we have borrowed. People need to understand that. I do not understand why Labour Members will not be up front about it.

What can we do to get our economy going? Labour Members do not like to talk about the growth in jobs, because the recovery of the private sector economy and its response to the measures put in place by the Chancellor of the Exchequer in his series of Budgets is an inconvenient fact.

I was recently at the London launch of the campaign to market the east Kent regional growth fund. Doug Richard, the entrepreneur and former dragon on “Dragons’ Den”, was there to support the event. He is a great supporter of start-up businesses, particularly in the tech and digital sectors. He said that now is a great time not only to start a business—that is why we have a record number of private sector businesses in this country—but to go to the market to look for finance to set up a business. He highlighted, as have many entrepreneurs—particularly in the tech, creative and digital sectors, which are so important to the future growth of our economy—that initiatives such as the seed enterprise investment scheme, which the Chancellor mentioned in his Budget, provide great incentives to bring private sector money into start-up business, and to encourage individual investors to support the growth in those businesses.

[Mr Andrew Love (Edmonton) (Lab/Co-op)]

I accept what the hon. Gentleman says about those schemes, but the main funnel for credit provision to small businesses is the funding for lending scheme. That scheme is not working as effectively as we would want. Is he disappointed that there were no initiatives in the Budget to improve funding for lending to address the small business problem?

[Damian Collins]

We should look at the series of schemes and initiatives that have been put in place and accept that it sometimes takes time from the moment of their creation for the money to come through. Funding is now coming through for the regional growth fund for east Kent. A high-end engineering business in my constituency, HV Wooding, which supplies parts for the CERN hadron collider and grand prix engines, has received a grant of more than £1 million from the regional growth fund, which could create up to 50 sustainable, high-skilled engineering jobs at its factory in Hythe. Those are exactly the type of businesses we want to support. Money is also coming through the seed enterprise investment scheme to support creative businesses, and digital businesses in particular.

People can see the benefits that those schemes are creating in the economy. That is one reason why we see job creation in the economy and new business start-ups performing strongly. The measures put in place in the past four Budgets are starting to bear fruit, which we should appreciate and accept.

The help to buy scheme, launched by the Chancellor yesterday, is a bold and imaginative measure that could help to stimulate the housing market and construction sector. I have been in many debates in the past year in which people have said that the problem with the construction industry and the housing market is that builders are reluctant to commit to starting projects because they do not think that they will be able to sell the properties. The scheme put in place by the Chancellor will give them the confidence to start building, and will give people the confidence to start buying. That can have a dramatic impact on our housing sector.

As in the measure to support small and start-up businesses, the Chancellor is working with the grain of the aspirations of the British people to give them the opportunity to start a business or buy their own home, with the backing of the Government to do so. The hon. Member for Worsley and Eccles South (Barbara Keeley) said that the cap on the cost of residential care—the implementation of the Dilnot measures—was still quite high, but at least it is there now, and we are saying for the first time that people who work and save all their lives, who set up a business or buy their own home, will not have all that taken away late in life. There will be a cap on their contributions so that they do not pay through the nose for something that other people get for free. That is part of supporting the aspirations of the British people, and I welcome the Budget.

--- Later in debate ---

[Mark Durkan]

I fully accept my hon. Friend’s point. The multipliers would get into gear far faster under that sort of measure than under some of the other measures that have been proposed, welcome though they are in their own context.

Certain aspects of the Budget served notice of more pain to come. The Chancellor spoke yesterday about changes that he will be making through annually managed expenditure. That sounds like a dry, technical change, but it will have a significant impact in relation to the controls that are being placed on welfare spending. We have already had the Welfare Reform Act 2012, which changed many of the rules, structures and qualifying criteria for benefits. It was designed in such a way as to allow for wide regulatory powers to place further changes and squeezes on benefits without the need for further primary legislation.

It is clear that, by moving to change the rules relating to annually managed expenditure, the Chancellor is trying to put in place more fixed envelopes for welfare spending. That will have particular implications for the way in which social security spend is managed in Northern Ireland, because the money comes to Northern Ireland not as part of the departmental expenditure limit—the DEL—but as annually managed expenditure. If that is now to be subject to some fixed-envelope procedure and capped in advance, it will put serious stress on the Northern Ireland Assembly. The Assembly is in the bizarre position of having to pass karaoke legislation that has to be exactly the same as that passed here, but it is notionally responsible for the administrative discretion on delivery. That will be a fundamental challenge for us in Northern Ireland, and we all need to wake up to that fact.

We need to be as alert to that challenge as the Executive have been on the case for corporation tax. I can see where the Chancellor is going with that, but his rate of travel in regard to corporation tax UK-wide means that, by the time any concession is delivered to Northern Ireland, the marginal benefits it will give us will be a lot less.

[Damian Collins]

The hon. Gentleman is talking about business. Will he welcome the introduction of the employment allowance, and the benefit that it will bring to small businesses in Northern Ireland?

[Mark Durkan]

Yes, I welcome that. Labour has advocated it as well; it is a good, sensible measure that I know many firms will take up.

Similarly, I welcome the increase in the personal allowance, although it will perhaps not benefit as many people in my constituency as in the constituencies of some Government Members who have mentioned the measure. That is because my constituency has very high unemployment and high rates of economic inactivity. The problem in my constituency is the lack of work, not the lack of a work ethic. I will support any measures in the Budget or anywhere else that will ensure that more people can find work, embrace and express their aspirations and ambitions and make a contribution to their community and society.

The Chancellor is introducing fiscal apps and things in regional and city economies here in Britain that I would like to see our Executive and Assembly emulate at home in Northern Ireland. I would like to see the devolution discretion used a lot more to give us more creative capacity. When I see some of the measures in the Budget, I recognise that there is some constructive engagement to get the economy going again, but we need to get our share of it.

Multiannual Financial Framework

Damian Collins Excerpts

Wednesday 31st October 2012 Commons Chamber

[Mr Newmark]

If it was the hon. Gentleman and I negotiating, I am sure we could find some realistic efficiencies. The fact is, however, that for the time being—I say this for the benefit of my hon. Friend the Member for Stone (Mr Cash)—we are in something called the European Union. We therefore have to negotiate with more than 25 other countries.

[Damian Collins (Folkestone and Hythe) (Con)]

Will my hon. Friend give way?

[Mr Newmark]

No, I think I will proceed.

On the Labour party’s chutzpah and hypocrisy, the hon. Members for Rhondda (Chris Bryant) and for Nottingham East (Chris Leslie) argued for more financial restraint and for looking after taxpayers’ interests, but there was a 47% real-terms increase in the EU budget while Labour was in government. What has suddenly changed their minds? We need not take any lectures from them. Their policies are incoherent, opportunistic and completely lacking in credibility.

That brings me to the nub of the argument: which way will we go? Will we ask the Prime Minister for something that he can achieve, which is a real-terms freeze? That does not mean that he will not do better than that, because I believe he will fight our corner for real-terms cuts. I am sure he is listening to everybody who is fighting for real-terms cuts, or at least to Government Members, but what is his bottom line? What is the red line beyond which we should pull out the veto, which the hon. Member for Nottingham East has not admitted he is willing to use? That red line has to be at least a real-terms freeze. That is what today’s debate is really about.

I ask my right hon. and hon. Friends to consider what message we want to give the Prime Minister. It should be that he should negotiate in the best interests of UK plc. That means fighting for a real-terms cut—I want that, and so do all my right hon. and hon. Friends—but the bottom line should be a real-terms freeze, which I believe is achievable in the negotiations.

Infrastructure (Financial Assistance) Bill

Damian Collins Excerpts

Monday 17th September 2012 Commons Chamber

[Danny Alexander]

One of the things that the Bill will do, which I hope the hon. Gentleman will welcome, is help to generate private investment in this nation’s important infrastructure, which has suffered from under-investment for so many years. Perhaps that is the answer that he was seeking.

The Government will use their hard-earned fiscal credibility to pass on lower costs of borrowing to support the long-term delivery of new affordable and private rental homes. We plan to issue debt guarantees for a private rental housing scheme and the affordable housing scheme to give institutional investors the assurance that they need to invest in housing. Under those schemes, the Government would enable providers who commit themselves to investing in additional new-build rented homes to raise debt with a Government guarantee. Housing proposals will be scrutinised and approved on the basis of presenting low-risk, high value-for-money investments.

As with UK guarantees, there will be a minimal impact on public sector net borrowing, as the developments we expect to back will be structured to minimise the potential losses to the Exchequer. For the private rented sector guarantee, we intend to levy a commercial charge to reflect the benefits that companies receive and to cover the risk taken by the taxpayer.

The actions made possible by the Bill would provide enormous benefits across the UK. We expect the boost to housing construction, combined with our recently announced planning reforms, to generate about 140,000 jobs in the construction sector, and the infrastructure unlocked through UK guarantees could provide hundreds of thousands more. However, this is not just about a near-term boost. The projects that go ahead as a result of the action that we are taking will provide major long-term benefits for individuals, firms, households, and the whole UK economy. They could help businesses to take better advantage of 21st-century technology by improving broadband and mobile speed and connectivity. They could help businesses to connect with consumers, employees and each other, and allow workers to gain access to new job markets by improving our major ports, airports and corporate centres, and the transport links between them.

[Damian Collins (Folkestone and Hythe) (Con)]

I am grateful to my right hon. Friend for giving way. He is being very generous with his time.

The planning system has an important part to play. Two years ago, the local authority gave Lydd airport, which is in my constituency, permission to expand. A private investor is willing to pour in millions of pounds so that the work can start immediately, but the decision is still locked up in the planning system awaiting the Secretary of State’s approval. Is there any advice that my right hon. Friend can give his colleagues in the Government that might make it easier for people to invest in the kind of infrastructure that he is describing?

[Danny Alexander]

The Secretary of State will have to make a decision in the normal way. I am sure that he will have heard my hon. Friend’s comments, and I shall ensure that they are passed on.

Professional Standards in the Banking Industry

Damian Collins Excerpts

Thursday 5th July 2012 Commons Chamber

[Ed Balls]

I will take the right hon. and learned Gentleman’s intervention, but I will make the point on powers first. I will do this in a proper way, Mr Deputy Speaker.

All the recent experience is that only a judge-led inquiry can have the necessary power to compel witnesses to attend and to ensure the production of documents, with powers of enforcement that make it a criminal offence to fail to comply—under section 35 of the relevant legislation, the penalty is 51 weeks or a £1,000 fine—or High Court powers of enforcement for contempt of court, under section 36. The problem is that Select Committees, in the modern legal world, just do not have the same powers in law to force witnesses to attend or to give evidence on oath, and nor do they have the necessary sanctions. The last time Parliament—

[Damian Collins (Folkestone and Hythe) (Con)]

Will the right hon. Gentleman give way?

[Ed Balls]

No. I will take the intervention from the Attorney-General next, thank you.

The last time Parliament imposed a fine for contempt of court was before the great fire of London in 1666. The last time a member of the public was imprisoned for contempt was before the Boer war. Select Committees do not have these powers.

--- Later in debate ---

[Ed Balls]

The hon. Gentleman has proposed that a QC could advise the Committee; perhaps he will make that proposal later. Those important points take us down the road towards the judicial inquiry. The problem is—and this is my third objection—that experience shows that only a judge-led inquiry can ensure the necessary forensic cross-examination of witnesses, prevent witnesses from avoiding answering key questions that are important for establishing the truth and, in particular, avoid blanket refusals to answer questions on grounds of legal advice. I would be happy to take an intervention from the Attorney-General on this point, because we have seen it happen in parliamentary hearings.

The argument is that a witness before a parliamentary inquiry can say on legal advice that they will not answer a question, but in a judge-led inquiry the judge has the ability to explain to the witness why answering the question in the particular form set by him according to his legal judgment will not cross the line. Unless a judge is properly testing the boundary between self-incrimination and the answers that must be given for a proper inquiry, we cannot make progress. That would be doubly the case with the prospect of criminal investigations, which might take some years down the track. On the question of witnesses not incriminating themselves, it seems to me that the evidence shows—perhaps the Attorney-General will correct me—that it is impossible for a parliamentary inquiry to call any witness who might be implicated in the LIBOR scandal without the witness saying, “On legal advice, I will say nothing.” The inquiry cannot work like that. Only a judge can sort this out.

[Damian Collins]

Does the shadow Chancellor accept that a Select Committee can ask a witness to release information covered by client-attorney privilege, as the Select Committee on Culture, Media and Sport did in the phone hacking inquiry? That information cannot be requested by a public inquiry because it is covered by the same remit as a civil court. A parliamentary inquiry can request and receive information that a public inquiry cannot and, in the case of the phone hacking inquiry, that led to the production of the most significant information of the entire inquiry.

[Ed Balls]

All my experience—and there are many Members on both sides of the House who have more detailed experience than I have—is that Select Committees find it much harder than a judge-led inquiry to secure the release of necessary and essential documents and, more importantly, to find out which documents they should ask for in the first place.

Finally, and above all in our view—and I note that the Attorney-General did not correct me on the calling of witnesses, but perhaps he will advise the Chancellor for his speech—only a judge-led inquiry can truly persuade the public that the inquiry is properly independent and objective and, given the Chancellor’s behaviour, non-partisan.

--- Later in debate ---

[Mr Bernard Jenkin (Harwich and North Essex) (Con)]

The hon. Member for Birmingham, Hall Green (Mr Godsiff) has underlined the importance of having a banking system that commands public confidence. I do not know how serious the LIBOR scandal is in relation to the ability of the banks to support jobs and growth, which we so desperately need at the moment, but it is clearly a mortal blow to the reputation of the City so we need to deal with it effectively and quickly.

I say to Front Benchers on both sides in this debate that this has not been the finest hour of the House of Commons. We have not seen the finest, highest and most principled leadership from Front Benchers of either side. Many among the public will look at the debate and scoff at our self-importance and arrogance. The City itself will be in utter despair that Front Benchers should have chosen to use this opportunity to tear chunks out of each other instead of co-operating to find a solution on which they can agree.

No solution will work unless there is consensus. I say that with a very heavy heart, having great respect for the prodigious abilities of both my right hon. Friend the Chancellor and the shadow Chancellor, as well as for their public service in the House. But I really think that we have to do better. Anybody could have seen over the past few days that the debate would be a complete car crash, and so it has been. We must seek to extract something positive from it at the end of the day.

My hon. Friend the Member for Chichester (Mr Tyrie) raised the tone of the debate in a laudable manner. He referred to the Marconi scandal of 1912; this is its 100th anniversary, and I will say a few words about it soon if I have time. The parallels are chilling.

First, I shall say a brief word about the powers of Select Committees. The shadow Chancellor is completely wrong—we have the powers. There is some doubt about the manner of their exercise and how we might deal with contempt, but there is no doubt that we have the powers. As Chairman of a Select Committee, I have exercised them. People are in fear of them. It does the House no service for the shadow Chancellor to go around saying that we do not have powers. That undermines the authority of the House and it is not in the interests of the House.

[Damian Collins]

I am closely following my hon. Friend’s argument. Is not the Standards and Privileges Committee currently looking at the sanction for contempt of Parliament?

[Mr Jenkin]

Actually, it is the Liaison Committee on which I serve as a Select Committee Chairman. I am personally looking into the matter and will report to the Liaison Committee next week; that will be part of our report on the powers and effectiveness of Select Committees, which we hope to produce before the end of this term. It greatly ill serves the House to denigrate the powers of Select Committees.

I am going to support the Government motion. I am not in favour of a judicial inquiry; I think it would be completely dotty to plunge us into such a lengthy procedure. However, I want to sound some warnings about the dangers that might befall a parliamentary Select Committee inquiry as proposed in the Government motion. We must be mindful, not least, that if Ministers or ex-Ministers were to be called to give evidence to try to sort out the absurd row that we have seen this afternoon, the Committee could not possibly function. Indeed, it could not possibly function if Opposition Front Benchers were determined to undermine its authority and operation.

It was highly irresponsible of the shadow Chancellor to fail to answer my question or that of my right hon. Friend the Chancellor about whether the Opposition will go on non-speaks if the motion is carried. I commend the hon. Member for Dundee East (Stewart Hosie), who said that even if the Opposition lose the vote, Scottish National party Members will co-operate with the inquiry. How is the House meant to make a judgment about whether to vote for the motion unless we have a clear view from the shadow Chancellor?

My hon. Friend the Member for Chichester mentioned the Marconi scandal. That occurred when Ministers—Liberal Democrat Ministers, I hasten to add, just for fun—were accused of buying and selling shares for profit—

Oral Answers to Questions

Damian Collins Excerpts

Tuesday 26th June 2012 Commons Chamber

[Mr Hoban]

What we need are measures to tackle some of the structural problems in the economy that we inherited from the previous Government and to tackle issues to do with education, transport infrastructure and the complexity of the tax system. Those are the reforms we need to ensure that the economy grows.

[Damian Collins (Folkestone and Hythe) (Con)]

9. What recent steps he has taken to encourage economic growth.

[The Chancellor of the Exchequer (Mr George Osborne)]

To help the economy, we are cutting taxes for businesses and families. We are, as we have just heard, freezing fuel duty, helping 10,000 businesses with the national loan guarantee scheme, reforming the planning system, creating enterprise zones, setting up the regional growth fund and creating the biggest number of apprenticeships this country has ever seen.

[Damian Collins]

The recent Growth Factory report on industrial strategy highlighted the importance of rebalancing our economy. Does the Chancellor agree that the record increase in employment in the manufacturing sector in the first quarter of this year is a welcome sign of the growing confidence at the heart of our economy?

[Mr Osborne]

My hon. Friend is right and I commend him and his group for the interesting ideas, many of which I agree with, that they are promoting. He is absolutely right to point out the increase in employment, including in manufacturing employment. An interesting recent statistic from an independent international body on the British economy showed that the share of manufacturing in the UK economy is increasing for the first time in a very long time, having almost halved under the previous Labour Government.