Finance (No. 2) Bill

Jim Cunningham Excerpts

Tuesday 1st April 2014 Commons Chamber

[Bridget Phillipson (Houghton and Sunderland South) (Lab)]

I am grateful for the opportunity to speak in this debate. I want to begin by focusing my remarks on the north-east economy: the challenges that we face and why my constituents will struggle to recognise the picture presented earlier by the Chief Secretary to the Treasury as he set out the measures in the Finance Bill.

The need to secure a stronger, more balanced economic recovery is pressing. My continued concern is that, unless the Government are willing to act to address the imbalance, the north-east will continue to be left behind. The north-east economy has many strengths and is an asset for the United Kingdom. We are one of the leading export regions in the UK, and in 2011, 2012 and 2013 we were the only English region to achieve a positive balance of trade.

A large contributor to that surplus is Nissan. Its plant on Wearside is one of the world’s most productive, producing a car every 60 seconds. Nissan’s continued success and the skill and determination of the work force are sources of immense pride to us all. We have long been a region with an identity rooted in manufacturing and engineering, and with Nissan, Hitachi and many others we will show just what we can achieve. For that reason, I welcome the measures on investment allowances in the Bill. However, it is a U-turn from previous cuts to allowances and, for all his refusal to acknowledge it, the Chief Secretary must accept that it was a mistake to have made those cuts in the first place. None the less, the measures are to be welcomed.

The automotive industry continues to show great strength, providing high-skilled jobs and investment. However, it is important to acknowledge that, particularly over the past decade, growth has come about through active Government involvement, by working with Nissan and the work force there. Over the past decade Nissan has rightly enjoyed many accolades. At times, sadly, jobs were lost at the plant, but we now enjoy the largest work force there on record, which is of course to be welcomed.

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

My hon. Friend mentions the automobile industry. I am sure she would appreciate that the previous Labour Government did a lot to encourage Tata to invest in Jaguar Land Rover, which is one reason why we are starting to get great success in the manufacturing industries, including in her region.

[Bridget Phillipson]

I agree entirely with my hon. Friend’s point. I was about to come on to look at the Labour Government’s record on the automotive industry and on industrial strategy. It is simply not right to begin looking at the sector only from 2010. A lot of work went in, over a long period of time, with the work force and the trade unions as well as through Government, to make sure there were the right skills and the investment needed for the industry to compete in the future. The Labour Government took that seriously; I hope this Government will take that forward.

--- Later in debate ---

[Bridget Phillipson]

That is absolutely the case. One of the ways in which Sunderland has diversified its economy has been to move towards software. The number of new small software firm start-ups is among the highest in the UK. Many of them are looking to expand into and open offices in Europe and I have no doubt that they do not find helpful the constant discussion we are having about Britain’s role in Europe. They want to expand what they export and their role in Europe by opening offices there. They do not want to have a pointless debate about Britain’s role; they just want to get on, create jobs, invest in our region and continue to diversify our economy. I have no doubt that my hon. Friend, like me, will recognise the fact that there was a big shift in the north-east economy in the 1980s and ’90s. We have transformed our industries, although that has not been entirely of our own choosing—we had to transform them. In fact, given the transition that had to take place, we have been remarkably successful. The fact that the software sector in Sunderland continues to grow, including in Rainton Bridge in my constituency, shows what we are capable of in the north-east, but we need the Government to work with us to achieve it.

[Mr Jim Cunningham]

On the point about companies investing in this country, I am sure my hon. Friend will agree that a lot of companies, such as Nissan and Jaguar Land Rover, initially invested in this country because we are in Europe. If the Government continue to undermine that confidence, they will create some major problems in the west midlands and, as she has indicated, in the north-east.

[Bridget Phillipson]

We should not underestimate the scale of the challenge that companies such as Nissan face. It is incredibly productive and has a wonderful work force, and the Qashqai, which is produced on Wearside, was recently voted car of the year. There is so much good news in terms of Nissan and other big companies in the north-east. However, companies such as Nissan require long-term stability and the ability to make decisions about where investment will come from in the years ahead. The prospect of an in/out referendum hanging over our heads until 2017 and the constant discussion about it are simply not helpful when it comes to jobs and investment in the north-east.

The most recent unemployment figures reveal that the north-east still has the highest unemployment rate in the country, standing at 9.5%. It is clear that the recovery has yet to deliver fully for my area. The picture of youth unemployment is even more troubling. Across the three parliamentary constituencies covering Sunderland, nearly 2,500 young people aged 18 to 24 have been out of work for more than 12 months. In my constituency, that represents an increase of 1,650% in four years.

Our region has seen in the past the economic and social damage caused by long-term unemployment, destroying communities and draining hope from countless good people and their families. Ministers, however, appear to be complacent about the scale of the problem. They should act now and implement Labour’s plan for a jobs guarantee for all young people who have been out of work for more than a year, because it is clear that the Youth Contract and the Work programme are failing. This Bill is another missed opportunity to tackle the scourge of youth unemployment and long-term unemployment in constituencies such as mine.

I speak to many people in my constituency who are desperate to work and who are applying for job after job and getting nowhere. They do not even hear anything or get an interview—they make no progress. It is hard to underestimate the despair that that causes among young people who are without hope for the future and not sure where things will take them. One man who came to my constituency surgery last week told me that he faces the prospect of getting up and looking for work every day, but he has been doing it for too many years now. He is desperate to work and has a lot to offer, but it is a highly competitive jobs market in which lots of highly skilled people who have lost their jobs in the public sector are able to compete and are chasing too few jobs. The Government must address the matter urgently.

Zero-hours Contracts

Jim Cunningham Excerpts

Wednesday 19th March 2014 Westminster Hall

[Alison McGovern]

My right hon. Friend has hit the nail right on the head. There is no better word for that than “scandal”. I will come on to say a few things about the care sector. He and I are as one in thinking that we need to develop the skills of our care work force.

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

I congratulate my hon. Friend on securing the debate. It strikes me that we are going back to a 19th century approach with zero-hours contracts. Going back to the ’30s, or even before the first world war, dockers or miners would turn up at the gates of a factory or the docks, a tallyman would throw something in the middle of them, and whoever was lucky enough to pick it up got a job. Whoever did not get it did not get a job. Zero-hours contracts are a 19th century approach. I was disappointed that nothing was said in today’s Budget to address zero-hours contracts and the cost of living. People on zero-hours contracts are badly affected by the cost of living.

Football Clubs (Insolvency)

Jim Cunningham 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.

--- Later in debate ---

[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 know that my hon. Friend has worked tirelessly to support the long-suffering fans of Coventry City. Long gone are the days of the 1987 FA cup final, when Coventry had a 3-2 win over Tottenham. Watching that on the television is one of my earlier memories. My brother went to Coventry university, and it was the only time he was interested in football. He was pleased by the result on the day.

We keep coming back to the point on transparency. My hon. Friend the Member for Portsmouth North made the point that there would be alternatives if a supermarket was closing, but that people generally have only one community club to support. Yes, there will be good times and there will be bad times—in Swindon’s case, there have been a few more bad times than good times of late, but that adds to the excitement—but it should always be about transparency for the fans and for suppliers, who work hard to do their bit to support their community clubs and often give generous deals. We cannot simply abandon them and create this unique rule that protects wealthy people within football. I say that as a huge football fan myself. We have to do right by the community, the fans and the suppliers.

[Mr Jim Cunningham]

I thank the hon. Gentleman for giving way. I agree with the hon. Member for Nuneaton (Mr Jones): whoever owns the club, they have been playing ducks and drakes with the fans in Coventry. The fans are vitally important, but they are playing a guessing game on whether they will go back to the stadium or whether there will be a new stadium and, if so, where it will be located. It is 20 questions all the time, and that is how contemptuous they are of the people and fans of Coventry, quite frankly.

[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.

[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.

[Mr Jim Cunningham]

The hon. Gentleman is making a very important point. If we go back 15 to 20 years—I cannot remember the exact date—an individual wanted to buy Manchester United. Everyone was led to believe that he was going to buy the club, but at the end of the day he could not put the deal together. He totally misled people for some months.

[Justin Tomlinson]

I believe the individual ended up at Carlisle, and the club had a chequered time under his stewardship. Time and again, we are seeing people coming in for various different reasons without the interests of those football clubs at heart. I understand the world of business, but these clubs are valuable community assets. The Government need to apply pressure to the Football League and the Premier League, because it is in their interest to get their houses in order.

--- Later in debate ---

[Mr Marcus Jones (Nuneaton) (Con)]

Thank you, Mr Streeter, for allowing me to make a short speech. I did not intend to speak when I entered the Chamber, but the issue that my hon. Friend the Member for Folkestone and Hythe (Damian Collins) raises is important and we should support his endeavour to get the law affecting football clubs changed.

I am a long-suffering fan of Coventry City football club, like probably thousands of my constituents, who are extremely depressed and disappointed about what is happening to their football club. All football supporters follow their clubs for different reasons, and all experience tremendous highs and lows. Most probably get more lows than highs—unless they support one of the glory teams or are one of what I used to call Alex’s armchair army, supporting a team that might be many miles from where they live. Regardless of football affiliation, we must recognise that football clubs are community-based assets. They are not like any other type of business. If, for example, the customers of a supermarket chain suddenly decided they did not like what it was offering, they would usually abandon it and go elsewhere. Football supporters, however, regardless of how bad their team is at times, stick with it and support the club through thick and thin—or thin and thinner, in the case of my team at the moment. We must realise that; the clubs are embedded in communities.

Transparency has been raised several times. The people who follow clubs week after week, spending money, as my hon. Friend the Member for North Swindon (Justin Tomlinson) said, on season tickets, shirts and all sorts of things to support their club, deserve some transparency. They deserve to be able to hold their club’s owners to account. As to Coventry City football club, we do not even know who owns it. Many of the constituents whom I speak to are mortified that they cannot even find out who is to blame for its present situation. We need more accountability. We should never allow people to take on a football club that is embedded in a community, and then for whatever reason use it as a toy, thinking they can abandon the community, lift the football club up like a moveable commodity, and take it elsewhere.

[Mr Jim Cunningham]

The hon. Gentleman makes an important point. When we talk about wages, salaries and ownership, we tend to forget that football started with individuals playing in the street. The moral of the story is that it started with the fans, who created the teams in the first place; yet the fans get kicked in the teeth all the time when things go wrong.

[Mr Jones]

The hon. Gentleman and I do not often see eye to eye, but we probably do in this instance. Coventry City were a factory team, and started in the 19th century as a group of people from the Singer factory, who came together to play football. From that a great club was formed, which has lasted more than 125 years. We need to make sure we can see that the people running football clubs are fit and proper people. The clubs are not just commodities that can be shifted from person to person and area to area. They are organisations that communities depend on, particularly in a financial sense. When Coventry City left Coventry, it left a huge hole in the city, and that has particularly affected the local economy.

I support my hon. Friend the Member for Folkestone and Hythe, who is doing a fabulous job of raising the issues. He deserves every support, and I hope that the Minister will show him that she is in touch with the issue and willing to take action on behalf of millions of football fans throughout the country.

--- Later in debate ---

[The Parliamentary Under-Secretary of State for Business, Innovation and Skills (Jenny Willott)]

I thank the hon. Member for Folkestone and Hythe (Damian Collins) for calling for this debate. He has shown his commitment to football issues over several years—issues that many hon. Members feel strongly about.

Football is a fundamental aspect of British life. I married into a family of Evertonians. My children were wearing Everton babygros before they reached the age of one—the indoctrination started early—so they have absolutely no choice in the matter of whom to support. The financial health of football clubs is a hot topic on both the terraces and the sofas of Britain. Fans are perpetually nervous about which club will be the next to struggle or fail and endlessly discuss clubs’ costs and budgets. The Government appreciate the part that football clubs play at all levels across British society. They are a fundamental part of the social fabric of communities up and down the country.

None the less, the rules that govern corporate life cannot be selectively applied. Those who deal with a football club—its suppliers, its employees, the Crown—should have the same confidence that they will be paid as they would if they were dealing with any other business in any other industry. Insolvency is a risk—hopefully a low one—in all industries, including football. No honest person runs a business expecting it to fail, but when there is failure, it is important to have an insolvency process that is fair and transparent and, where possible, saves viable businesses; that applies as much to football as anything else. The UK’s insolvency framework was recently judged by the World Bank to be 7th best out of those of 189 nations; it came ahead of France, Germany and the United States.

The hon. Member for Folkestone and Hythe pointed out that quite a number of clubs have experienced financial difficulties in recent years. The majority of premier and Football League clubs that have become formally insolvent in the last 20 years have entered the insolvency procedure known as administration.

[Mr Jim Cunningham]

Does the Minister intend to answer my questions, and those of the hon. Member for Folkestone and Hythe (Damian Collins)? What are the contents of the legislation that is to be proposed by the Government? Will the Minister support the hon. Gentleman’s Bill? Alternatively, may we have a date for when the Government will introduce legislation? The situation has been going on for far too long—for about two years—and we have heard the evidence from Coventry, which is a good test case.

[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.

--- Later in debate ---

[Jenny Willott]

Changing the legislation would not necessarily have made any difference. The money that goes to pay the football creditors does not come out of the pot of assets that is used to pay the unsecured creditors. There is no evidence that if we changed the football creditors rule there would be more money available for the unsecured creditors. They would quite possibly still get exactly the same return on a pound. Clearly, in the case the hon. Gentleman cited, the return was extremely low, but I have seen no evidence to suggest that it could have been greater. It is not the same pot of money that is used to pay each group.

To put the matter in the context of insolvencies as a whole, in 2013 there were about 20,000 corporate insolvencies in England and Wales, of which around 2,400 were administrations. The Government feel that using primary legislation to outlaw a provision that is relatively infrequently used is disproportionate, particularly given that the industry is already trying to improve the underlying financial stability of clubs via the financial fair play rules. Other than those to which special regimes apply, all insolvencies are subject to the same legislation, the Insolvency Act 1986. It would be potentially confusing for users of that legislation if we modified it just for football insolvencies. No other industry is treated differently under general insolvency legislation, and the Government feel that there is no compelling reason why football club insolvencies should be.

Football is undoubtedly incredibly important for fans. I understand the frustration of fans whose clubs become insolvent through no fault of those in the stands or on the terraces. Given the emotional importance of football for fans, I understand how distressing it can be when a club goes into insolvency. However, as I said at the start, the rules that govern corporate life cannot be selectively applied—they apply across the board—and those who act as directors of football clubs should act properly in execution of their duties.

A number of hon. Members have highlighted concerns about directors. The law allows the Secretary of State to undertake civil proceedings against company directors who are found to have been culpable in the failure of a company. However, until a person has been disqualified, they are free to act as a director of any number of companies in the UK, irrespective of their track record or any criminal charges that may be pending, although someone who is personally bankrupt or subject to bankruptcy restrictions is prohibited from acting as a director.

Hon. Members have mentioned the owners and directors test, which places additional restrictions on clubs. I understand that those restrictions are increasingly based on intelligence, and that football authorities are co-operating to make the test as effective as possible.

Overseas convictions were mentioned. At the moment, there is nothing to prevent a person who has been convicted of offences in connection with a company overseas from acting as a director of a UK company. However, the “Transparency and Trust” discussion paper published last year included a proposal to enable the Secretary of State to bring disqualification proceedings in the UK against anybody convicted of a serious offence in connection with a company overseas. We will publish the Government response to that consultation soon. The issue is currently being considered.

We want the UK to be a trusted place for people to carry out business. Part of that is ensuring that directors of limited companies take responsibility for their actions and have regard to creditors and employees. The majority of directors do that effectively, but action can and will be taken against those who do not play by the rules. When a company enters formal insolvency, such as administration, the administrator has a duty to report on the conduct of all directors in office in the previous three years. The Insolvency Service, which acts on behalf of the Secretary of State, looks at all reports in which the administrator suggests that misconduct has occurred, and when it is in the public interest to investigate, it will do so.

If disqualification proceedings are highlighted as being necessary, once the Secretary of State has authorised them, the company director can either give an undertaking or be disqualified. If disqualified, a director can be banned for up to 15 years, depending on the seriousness of the misconduct. Over 100 directors are disqualified each month; the average period of disqualification is around six years, and over 10% of disqualifications are for more than 10 years. That is all a matter of public record, as details are held at Companies House.

Various football directors have been disqualified over the years. For example, in 2011 four directors of Luton Town football club were disqualified for a combined total of 19 years, a significant penalty. They were found to have breached Football Association and FIFA rules and caused the company to trade at risk to, and to the detriment of, HMRC.

Hon. Members raised issues about specific clubs. I am an MP for Cardiff, where the Bluebirds now wear red, and was previously a local councillor in Merton, when Wimbledon football club was having a number of local difficulties about where they were going to play, so I have witnessed at first hand the trauma that club ownership issues can cause to supporters. A number of Members have mentioned their concerns about Coventry City football club. The hon. Member for Coventry South raised the golden share, which I mentioned earlier. My understanding is that the Football League has learned from the case of Coventry City and has strengthened its checks on who holds the golden share in response.

[Mr Jim Cunningham]

It took a long time to get an answer from the Football League on that question. It was not clear-cut at the beginning; it took a considerable period of time.

[Jenny Willott]

That may well have been the case. I take the hon. Gentleman’s point. On club ownership and the identification of club owners, the football authorities are confident that they can identify club owners. The Football League has responded to the situation at Coventry City to ensure that that picture is not replicated elsewhere.

Oral Answers to Questions

Jim Cunningham Excerpts

Tuesday 11th March 2014 Commons Chamber

[Mr Gauke]

My hon. Friend makes an important point. We have to look across the board, and what we see is a Government who, in difficult circumstances, while taking difficult decisions to reduce the deficit, have made every effort to ensure that work pays. I am sure that we will continue to do so.

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

12. What comparative assessment he has made of trends in the annual rates of inflation and growth in average earnings since May 2010.

[The Exchequer Secretary to the Treasury (Mr David Gauke)]

The fall in living standards is a consequence of the economic crisis. In its latest forecast, the Office for Budget Responsibility expects real earnings to rise in 2014 and growth to strengthen in every year of the forecast. The only way to raise living standards is to stick to our long-term economic plan and to deliver a recovery that works for all.

[Mr Cunningham]

Despite this Government’s policies making the economic situation worse, the hard work of the skilled labour force and small businesses has started to lift the economy. Is the Minister aware that in the west midlands GDP per capita is 18% below the UK average and wages are well below the national average? Real wages fell by 5% from 2010 to 2013; wages are not rising and people in the west midlands are struggling to make ends meet. What are the Government doing about that? They should stop blaming the previous Government because it is their policies that caused this in the first place.

[Mr Gauke]

The reality is that the west midlands, as with other parts of the country, is growing strongly. Today’s figures show that manufacturing has grown by 3.3% over the past year, and that is particularly important for the west midlands. The reality is that we are moving into a period of growth, and that is encouraging. Further work needs to be done, but the truth is that this Government have succeeded in turning around the mess that we inherited.

Fairness and Inequality

Jim Cunningham Excerpts

Tuesday 11th February 2014 Commons Chamber

[Jonathan Edwards]

I am grateful to my right hon. Friend. He makes my point for me, and his knowledge on these matters is unsurpassed.

In 928, Hywel made a pilgrimage to Rome. On his return, he held a legal conference in my home country of Carmarthenshire, at Ty Gwyn ar Daf, his residence near Whitland on the Pembrokeshire borders, which led to the legal system practised in Wales before our country was regrettably conquered. His laws meant that those higher up the social spectrum paid more for their crimes—a reverse of the post-2008 financial crash situation in the UK, where the financial elite have got off scot free while the most disadvantaged in society are paying the price through the obliteration of the public services and support they depend on. The basic founding principle of the Hywel Dda laws was equality. Following the death of the head of a family, the estate was distributed equally between all male siblings, rather than passing under the sole control of the eldest, as under the English system.

My reason for taking the House on this historical journey through mediaeval Wales is to make the case that the Welsh political tradition, even going back more than 1,000 years, has been based on the principles of equality and fairness. Those principles were essential elements to the sort of society that Welsh political rulers wanted to build and enshrine in law. Owain Glyndwr was the last ruler of an independent Wales and the seventh most important person of the last millennium, according to a Times poll in 1999. He heralded the return to the laws of Hywel Dda as the founding principle of his independent Wales at the beginning of the 15th century.

Robert Owen, another great Welshman from the county of Powys, is recognised throughout the world as one of the founding pioneers of socialism. In the early 19th century, he contributed to the work of a Committee of this House that was investigating the Poor Law. He called for a society of complete equality, and set about trying to create one with the communities that he had established.

Wales was, of course, the incubator of the industrial revolution, and the working-class uprisings of Merthyr in 1831 and the Chartists later in the same decade were driven by that Welsh aspiration for a more equal society, in which the working classes had a fair share of the proceeds of wealth generated by their toil. As the central element of his proclamation “The Red Dragon and the Red Flag”, Keir Hardie, a proud Scotsman who became the first-ever Independent Labour party Member of Parliament, declared clearly—probably after having given up faith in this place—that the way in which to create a more fair and equal society in Wales was to advance the cause of Welsh home rule.

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

There are many inequalities in present-day society, but one of the biggest burdens at present is borne by women. The Government have made tax adjustments of £14 billion, and £11 billion of that has been taken from women. Does the hon. Gentleman agree that women are the hardest hit, whether we are talking about crèche charges or about nursery charges?

[Jonathan Edwards]

I do not disagree with that at all. Some of my colleagues may wish later to expand on what the hon. Gentleman has said

Pub Companies

Jim Cunningham Excerpts

Tuesday 21st January 2014 Commons Chamber

[Andrew Griffiths (Burton) (Con)]

Thank you, Madam Deputy Speaker, for allowing me to take part in this important debate. I have been struggling to juggle the task of opening a new business in my constituency with my membership of the Care Bill Committee, so I am grateful to you for giving me the opportunity to speak—which I do as the Member of Parliament for Burton, which is the home of brewing and of two important pub companies.

Given that I am the last Back-Bench speaker in the debate, it is unfortunate that it should fall to me to represent the voice of doom, but I must urge the House to think about the unintended consequences of what it calls for today. I listened intently to the very reasoned speech of my hon. Friend the Member for Tewkesbury (Mr Robertson), who uttered those words that strike fear into anyone who has been involved in the brewing and pub industry over the years: the Beer Orders. This is the single biggest factor that any Minister considering legislating in this area should consider. It is because of the Beer Orders and because of ill-thought-out legislation that we find ourselves in our present position, and I urge the House not to repeat those mistakes.

All Members who have taken part in today’s debate have done so for the same reason. They want to see a healthy and successful pub industry, and they want our pubs to thrive and to succeed. However, I believe that the unintended consequences of the proposed regulations will cause many more pubs to close.

It is important for the House to understand exactly what we are talking about when we refer to a free-of-tie option and to market rents. Let me cite the example of a pub company in my constituency, a brewery called Marston’s. It owns a number of pubs, which would be regulated under the proposed legislation. It has been operating for many years, and is a reputable business with a long and proud history. That brewery might have owned a pub for 30, 40 or 50 years, and run it extremely successfully. The tenant might retire or decide to do something else, and a new tenant might take over. Within months, that new tenant—despite having seen all the pub books and despite having had the business case assessed by his lawyer, his business adviser, his bank manager, and Uncle Tom Cobley and all, and despite knowing exactly what rent he would pay and what he would pay for beer—might decide that he wanted to become free of tie.

What is now being proposed is not only that the Government should tell Marston’s what it can charge for beer and rent in a property that it may have owned for 50 or 60 years, but that we should then allow that tenant, paying a rent set by the Government, to sell beer that is not Marston’s. We can see the unintended consequences of successful pubs, well run by brewers, no longer selling the beer on which they were built.

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

The hon. Gentleman has led a debate in the House on the same issue in the past, and it has still not been resolved. The situation he is describing actually happened between working men’s clubs and breweries. A number of clubs ran up a lot of debt that they owed to the brewers, and were then forced to sell their beer. How can we solve that problem? Many people in Coventry are concerned about pub closures.

--- Later in debate ---

[Ian Murray (Edinburgh South) (Lab)]

First, may I welcome the Under-Secretary of State for Business, Innovation and Skills, the hon. Member for Cardiff Central (Jenny Willott), to her post? She has taken over the role from the hon. Member for East Dunbartonshire (Jo Swinson) whom we congratulate on the birth of her son, Andrew, and we pass on our regards to the hon. Member for Chippenham (Duncan Hames), who participated in the early part of this debate.

We have had yet another constructive debate on pub companies and their relationship with their tenants, but I cannot help but feel a significant sense of déjà vu. As my hon. Friend the Member for Chesterfield (Toby Perkins) said in opening the debate, it would not be January without his staying off the alcohol for a month—I could flippantly say that he keeps off paying for it for the other 11 months of the year—and without our having a debate on pubcos. This is the third such Opposition day debate—that is, this Opposition are using our own parliamentary time to continue to raise this important issue and keep the pressure on the Government, stressing that they are doing too little, too late and too slowly.

It is important that we should continue to re-emphasise the contribution that pubs make to our local economies and local communities. Each pub employs an average of 10 people, often young people who find it particularly hard to find work in other sectors. They provide skills in customer service, management and training. My hon. Friend the Member for Huddersfield (Mr Sheerman) is no longer in his place but he talked about training, which allows me to mention the Montpelier group in Edinburgh, which set up its own training academy for people who work in its pubs and restaurants. It deserves great commendation for the work it does on that in Edinburgh.

The role of the licensee is very difficult, as I should know—I was a licensee of a hotel and two licensed premises before becoming an MP. It is the combination of pubcos and decisions by Governments of all political persuasions that has pushed prices up for the consumer, which has subsequently undermined the competitiveness of these organisations and, indeed, other activities. We need to look at what can be done by Government.

[Mr Jim Cunningham]

I hope my hon. Friend will cover the new idea of local people buying their own pubs and setting up community pubs. Some football clubs are doing that as well. What does he think about that as a way forward?

[Ian Murray]

I think it is fantastic that communities are able to bid for pubs. It is happening in Scotland as well, under the Scottish Parliament. Indeed, I have a small vested interest in that, because I am leading a consortium of fans looking to buy Heart of Midlothian football club. Community ownership—or at least having the opportunity to go into community ownership—is the way forward for lots of industries that have a tie to the local community.

The combination of high rents and tied barrelage costs means that a pubco tenant must sell a pint at a price level that allows some reasonable profit margin. That level is well above what non-tied premises can charge, which makes the pubco tenants uncompetitive and pushes up the price for the consumer. As the hon. Member for Tewkesbury (Mr Robertson) mentioned, barrelage costs can be 50% higher in tied premises than in non-tied premises, which can distort the market in terms of how much tied premises need to charge the customer. Add to that an increase in VAT to 20% and we have a cocktail of disaster for the publican.

Banking

Jim Cunningham Excerpts

Wednesday 15th January 2014 Commons Chamber

[Chris Leslie]

There is a touch of revisionism from Government Members, but perhaps that is a bit generous; their attempt to rewrite history is breathtaking. I have no doubt that when the Minister speaks my hon. Friends will hear a complacent desire just to move on from banking reform and a desperation to make party political points about the history of the banking crisis. They will try, with all their might, to pretend that it was Labour’s spending on schools and hospitals that caused a global recession in dozens of countries worldwide, but my hon. Friends will not hear from him about how the banks must still be made to pay for their egregious and scandalous abuses and over-leveraged trades in sub-prime mortgage securities.

All sense that the banks must be held accountable for the state we are in has been airbrushed from the Government’s narrative, because they want to blame their political opponents rather than upset their corporate friends. Perhaps the Minister likes to turn a blind eye, in the knowledge that it really was the banks that were responsible for the global financial crisis, or perhaps he has now genuinely convinced himself that it was primarily the fault of Governments and that the banks were only a little bit to blame. Either way, they have the wrong analysis, which explains why they have the wrong policies. By failing to tackle the root causes of recent economic devastation and the deficit that built up as a result, they are maintaining the risk that banks could once again turn to the taxpayer to bail them out, should they fail again. Never again must the taxpayer pick up the losses for the reckless behaviour of banks, and never again must our economy and public services be thrown into such turmoil because of the negligence and monumental greed of banking executives and traders.

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

I apologise for arriving late, Mr Speaker. I am sure my hon. Friend would agree that in the last Parliament the Conservative party, in opposition, only ever complained about red tape. Did he notice that for the first time today the Prime Minister talked about the recession not being the fault of the Labour party?

[Chris Leslie]

This is why this Government’s narrative is beginning to crumble around the edges. Most people realise that the banking sector was totally dysfunctional and causing great difficulties. Of course we need better policing throughout the international community and by the regulators, but if we are to rehabilitate the banking sector, we cannot shy away from the tough decisions needed to change its structures and behaviour. There are still too many areas in which the Government have left banking reform unfinished.

National Minimum Wage

Jim Cunningham Excerpts

Wednesday 15th January 2014 Commons Chamber

[Rachel Reeves]

I thank my hon. Friend for that intervention. Trade unions, including the Union of Construction, Allied Trades and Technicians, of which he is a member, did a huge amount of campaigning for the introduction of the minimum wage and campaign today to ensure that more people are paid a living wage. I will say a little more about what we are willing do in government to ensure that more people are paid a living wage above the national minimum.

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

The freeze in council tax, which was mentioned earlier, looks good on the surface, but councils are not being compensated for it, and they are stacking up a problem for two or three years down the road, when there will be massive cuts to services.

[Rachel Reeves]

My hon. Friend is absolutely right. Many councils, including mine in Leeds and his in Coventry, have been hard hit by the cuts to the local authority grant, which are affecting some of the services that the most vulnerable people rely on.

Autumn Statement (Coventry)

Jim Cunningham Excerpts

Tuesday 7th January 2014 Westminster Hall

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

This is one of the few times I have had the honour of serving under your chairmanship, Mr Crausby. I will start by looking at the background to why I asked for this debate.

The Chancellor said he would eliminate the deficit by 2015, but we heard yesterday that he is going to have to make a further £25 billion of cuts. At the same time, the Government have presided over a cost of living crisis that is affecting ordinary families right across Coventry. Families are on average £1,600 a year worse off. The purchasing power of their wages is down by 5%. Energy prices have rocketed, adding £300 a year to the average family bill. Train fares have increased by up to 6% and bus fares have increased by 2.5%.

Food prices have also increased. The bedroom tax has penalised many in the social housing sector, while rents in the private sector are at an all time high. The benefit cap is also making life difficult for children in Coventry, in particular those in care—the Government are making things harder for around 287 children who have already had a tough start in life.

All that has culminated in large numbers of people relying on food banks across the city, with 67 families receiving food vouchers from the Coventry citizens advice bureau in November alone. Nationally, Citizens Advice expects to allocate over 100,000 vouchers this year.

Cuts could mean that pensioner benefits, such as the winter fuel allowance, could be cut back. As a result of spending cuts, other pensioner benefits are also at risk. Centro, the west midlands transport agency, has to cut £14 million from its budget over the next two years, which will mean reducing pensioner benefits to the statutory minimum.

Benefits for the disabled are also at risk in the transport budget, with Centro having to consult on removing up to a third of ring-and-ride services. Many of my constituents are also facing long delays in receiving their benefits and problems with Atos, which seems to be forcing ill and vulnerable people off benefits and back to work.

Since the Government came to power, the cost of child care has gone up by 30% while wages have been cut by 5%. Moving on to the situation regarding women, tax adjustments made last year raised £14 billion, of which women contributed £11 billion. Given the £11 billion in tax that was inflicted on women and the cost of child care, women are hardest hit by this Government. More women than ever before are on low wages. More women than ever before cannot get a job. More women than ever before are bearing the brunt of cost of living increases.

I turn to the settlement for Coventry. Core funding has been cut by £45 million since 2010. Coventry will face a further £19 million funding cut in 2014-15, which is a 10.6% cut. In 2015-16, the provisional settlement indicates that Coventry will face a 15.2% cut. Government figures regarding Coventry’s spending power do not make sense as they ignore inflation and include funding from council tax and new burdens placed on the council. The council tax base is being eroded; council tax has not increased as a result of the freeze grant, which is storing up problems for the future.

I turn to the impact on children’s services and education. There will be a significant impact on youth services and social care services to support education and the well-being of children, and schools’ basic need grant has been reduced to zero. That may be a mistake by the Government that needs clarifying urgently, because it puts in jeopardy plans to expand our local schools. If what I have said is correct, plans to expand primary schools to meet the demographic changes will have to be cancelled.

[Mr Bob Ainsworth (Coventry North East) (Lab)]

In our casework and surgeries, we are all seeing the effects of what my hon. Friend is outlining. If we couple that huge increase in need, which is apparent to Members of Parliament and is impacting on the services provided by the local authority, with the deep cuts that have taken place and will continue to take place, is there not a substantial magnifying effect of the gap between needs and the ability to provide for those needs?

[Mr Cunningham]

I totally agree with my right hon. Friend. I come back to something that Nicholas Ridley said many years ago—about 25 years ago. He foresaw a time when local councillors would meet once a year and give contracts out to the private sector. If we look at the strategy of this Government and of previous Conservative Governments, we see that they have slowly but surely taken powers away from local authorities. They do so in a number of ways, in particular by slowly but surely cutting budgets and forcing services out to the private sector, and yet the private sector does not always know best.

Also, we have a big issue regarding pensioners, in particular caring for them, that started under the previous Conservative Government and the matter has never been resolved, as far as I can remember. We are still debating changes that should have happened 25 years ago. Instead, 25 years ago local authorities were forced to hand over—or sell, if people want to put it that way—old people’s homes to the private sector. Five or seven years down the road, however, after the private sector had made a profit, the homes closed down. That, too, created a shortage of beds, but more importantly it forced the prices up for care for elderly people.

The whole strategy can be seen. I have always said that this Government think in generations: what the previous Conservative Government leave off, the next Conservative Government pick up. At the end of the day, in local government we will have only one or two little services, while the rest is in the private sector. Mr Ridley’s prophecy is becoming true.

I move on to the impact. Support for Age UK and other local charities will reduce by 22%; there are significant reductions to housing-related support; the housing-with-care scheme in Coventry at Jack Ball house and George Rowley house has ceased; a range of day centres and the in-house, short-term home support service have closed; and charities will no longer get the business rate support that they once had, even though that is meant to be something to do with the Prime Minister’s big society.

If we cut the public sector—the social sector, in particular—we can hand things over to the private sector, or the voluntary sector, but if we hand it over to the voluntary sector, the Government inflict cuts on the voluntary sector. It is an endless cycle of viciousness. If the Government want to get some credibility in local government—even Conservative councils are concerned about what the Government are doing—they need to get a grip and have a good look at what they are doing.

Finally, there is the impact on benefits, such as the local welfare provision grant, which will also end this month—£1.4 million for Coventry, providing emergency funding to those in direct need.

[Mark Pawsey (Rugby) (Con)]

Many of my constituents in places such as Binley Woods, Bulkington and Brinklow see Coventry as their major city, so what happens in Coventry is important to them. I notice, however, that the hon. Gentleman is not merely restricting himself to the autumn statement; he is having a rather broadsided blast at lots of things that the Government are doing. Does he agree, however, that the steps the Chancellor took in the autumn statement to reduce the burden of business rates on small businesses is beneficial to the prosperity of Coventry, as was the freezing of fuel duty, which means that fuel is now 20p less than it would have been had Labour been in power? Are those things not beneficial to his constituents and mine?

[Mr Cunningham]

I expected the hon. Gentleman to come in on that. That should have been done three and a half years ago, and not left until now. He mentioned that I have had a wide-ranging debate on a lot of subjects, but the Government have had three or four Budgets since coming to power, and each one has had an effect on the areas that I have outlined.

As I said, the Government have to look seriously at the burdens that they are inflicting on local government and, more importantly, on the public. Up to 1,000 more jobs in Coventry, or 1,800 over the past three or four years, will go as a result of the Government’s so-called rebalancing of the economy.

--- Later in debate ---

[The Economic Secretary to the Treasury (Nicky Morgan)]

It is a pleasure to serve under your chairmanship this afternoon, Mr Crausby. I congratulate the hon. Member for Coventry South (Mr Cunningham) on securing this debate, and the hon. Member for Coventry North West (Mr Robinson) on his speech. I shall try to address the points hon. Members have raised. Although I appreciate that this is not always the style of the House, it would have been helpful if an indication of specific questions had been given in advance, so that I could have come with specific answers. If I do not answer the specific points raised by the Member for Coventry North West, I shall write to him with further information.

I should say that the subject for this afternoon’s debate was the effect on Coventry of the autumn statement. The points that have been raised are partial and do not fairly reflect the impact on the city of Coventry and the surrounding areas of Warwickshire of the Chancellor’s autumn statement. Hon. Members have focused on local authority funding as the main reason for the debate, but the whole point was that local government funding was excluded from the autumn statement and 2013 Budget reductions to help local authorities to freeze their council tax for 2014-15 and 2015-16. In fact, it is central Government Departments that are going to have to make further spending reductions as a result of the autumn statement, not local government.

The hon. Member for Coventry South started by talking about a cost of living crisis. The best way to deal with the fall in living standards is to deal with the economic crisis left to us by the previous Government. The hon. Gentleman is shaking his head, but he cannot possibly ignore the fact that the economy at the end of last year was 7% smaller than in 2008. That will have an impact on every household budget and every business in this country. My right hon. Friend the Chancellor has made enormous progress, as heralded in 2010, in putting our economy back on track. That should be welcomed by all hon. Members on both sides of the House.

[Mr Jim Cunningham]

I do not know whether the hon. Lady was in the House when the Chancellor was the shadow Chancellor and used to tell us that there was too much red tape. The actual economic crisis was worldwide and started in America with Lehman Brothers. She should not rewrite history.

[Nicky Morgan]

I thank the hon. Gentleman for that intervention. There was certainly an issue with the banks that had to be bailed out. I was not in the House when that happened; his colleague, the former Chancellor of the Exchequer, the right hon. Member for Edinburgh South West (Mr Darling), made the decision to do so—rightly, in my opinion—but the point is this: from the early 2000s, the then Chancellor, the right hon. Member for Kirkcaldy and Cowdenbeath (Mr Brown), was running a deficit budget, which means that a huge gap now needs to be plugged. The previous Government consistently spent more than they raised, which means that the achievement of this Government in cutting the deficit by a third—indeed, the Office for Budget Responsibility is forecasting that the deficit will be halved by next year—is an enormous one and should be welcomed by all people in this country.

--- Later in debate ---

[Nicky Morgan]

I will be brief because we expect further Divisions, but I want to finish the points that I was making, particularly in relation to council funding. The hon. Member for Coventry North West talked about not trading figures, but as he referred to some figures in the debate, I will tell him that, for Coventry city council in 2013-14, the spending power per household —per dwelling—will be £2,323, which is £107 more than the England average of £2,216. In relation to welfare payments, I think he was referring to the discretionary housing payment, which residents can apply for in relation to the spare room subsidy. My figures show that in the first six months of the scheme, Coventry city council allocated only 20% of that budget to households that had asked for help, so I hope he asks the city council why some of the funding remains unspent.

[Mr Jim Cunningham]

We have the cabinet member responsible for the city council’s finance here in the room, so he will be making a note of that.

[Nicky Morgan]

I thank the hon. Gentleman very much indeed. Let me finish with some good news, which I did feel was lacking from his speech.

We have already talked, thanks to the intervention from my hon. Friend the Member for Rugby (Mark Pawsey), about the announcements in the Chancellor’s autumn statement on business rates, which will benefit 174,000 properties in the west midlands. Thirty-seven per cent. of properties will see their business rates either frozen or falling, which is extremely welcome news. We are making it cheaper for businesses in Coventry to employ young people by abolishing employer national insurance contributions for under-21-year-olds. That will help 123,000 people in the west midlands under the age of 21.

I mentioned the good news announced yesterday that the software firm Phocas is to move its global headquarters to Coventry. Its work force will increase by one quarter. In China, Geely, which had recently acquired the London Taxi Company, announced that it was to quadruple its work force, creating 500 jobs in Coventry. In the hon. Gentleman’s constituency, food manufacturer Mission Foods has announced 50 new jobs as part of an expansion of its factory in Coventry. I understand that the hon. Gentleman used to work for Rolls-Royce. He will know the extremely good news about the success of that company. I am pleased to say that the east midlands, through the facility in Derby, shares that success.

On 12 December, my right hon. Friend the Prime Minister announced the agreement of a bespoke city deal for Coventry and Warwickshire. I know that that is the result of an enormous amount of hard work by Warwickshire Members of Parliament, including my hon. Friends the Members for Nuneaton (Mr Jones) and for Rugby. The city deal recognises the fact that the west midlands and Coventry and Warwickshire are a key engine of growth for the United Kingdom. Part of that success is the advanced manufacturing and engineering sector, including the automotive sector, but further growth in that sector is being impeded by a series of barriers, including insufficient business support advice, access to finance and the non-availability of individuals with appropriate skills. The city deal rightly seeks to tackle those key barriers.

The Coventry and Warwickshire local enterprise partnership predicts that the deal will include the delivery of more than 15,000 jobs in the wider economy, of which 8,800 will be in the advanced manufacturing and engineering sector. A range of innovative business support programmes will support further growth in the advanced manufacturing and engineering sector and a new flagship clearing house centre, where key business support agencies are co-located in one building.

[Mr Jim Cunningham]

Over the years, the local MPs have pushed for a lot of the companies that she has mentioned—for example, Jaguar Land Rover—in the midlands and particularly in Coventry. A city deal would push for that as much as anyone else, so we are not totally negative. We have played a part in some of the things the Minister has outlined.

[Nicky Morgan]

I am very glad to end the debate in a spirit of positivity. I thank the hon. Gentleman. He is quite right. All hon. Members, from both sides of the House, come together to support their local areas. That is why I felt that his speech missed the importance of the west midlands and the successes that are being achieved there. I am sure that neither he nor any MP would want to talk down their constituency or city. I am pleased to see that, as we approach the end of the debate, we are getting there.

Before I finish, let me talk about education funding, which was referred to by the hon. Member for Coventry North West. I have just been handed some figures, which show that Coventry’s capital allocation for 2014 to 2017 is £6.25 million. That is funding for new school places. In relation to the pupil premium, the extra in 2013-14 is £13 million and in 2014-15 it is £17 million. I will write with more detail to both hon. Gentlemen who referred to the figures, but I wanted to get that on the record.

I thank the hon. Member for Coventry South for organising the debate, for bringing this matter to the attention of the House and for enabling me to highlight some of the positive impacts that the autumn statement has had on Coventry, the west midlands and the United Kingdom.

Question put and agreed to.

Cost of Living

Jim Cunningham Excerpts

Wednesday 27th November 2013 Commons Chamber

[Chris Leslie]

The hon. Lady makes her point. Unfortunately, a lot of Conservatives like to pretend that they are giving with one hand, yet they are taking away so much more with the other—not just the tax rises that they pretend never happened but the unremitting rise in the costs that people face daily.

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

My hon. Friend is right to say that the Government give with one hand and take with another. Does he agree that of the £14 billion of tax adjustments last year, £11 billion was inflicted on women and their cost of living?