Taxation (Cross-border Trade) Bill

Debate between Jim Cunningham and Damian Collins

2nd reading: House of Commons
Monday 8th January 2018 Commons Chamber

[Damian Collins]

Absolutely, and that is the spirit in which the comments made by the vast array of trade organisations and businesses that are seeking to engage in the process should be interpreted. They are giving us notice of the issues that they believe we need to get right for their sectors. That does not mean that there is a concern that we will not get those things right, but they are right to flag up the things that we have to get right.

I was particularly pleased to hear the Financial Secretary say in his opening remarks that the Government intend to establish a system of frictionless trade at our major ports and other major places of trade with the EU. That is very important for my constituency in Kent, just as it is incredibly important for Northern Ireland. We need to ensure that trade can flow freely.

Ministers from the Department for International Trade will be working hard not only to put in place good trade deals that continue the free trade agreements we currently have with other countries as a consequence of our membership of the EU, but to negotiate trade agreements with other countries around the world. Such agreements will be incredibly important for our future success, but there is something about trade that is rather inevitable: countries tend to trade a lot with other countries to which they are near, because the cost of such trade is obviously far lower. There is a reason why we trade more with Belgium than with Brazil—although I wish we could trade more with Brazil—and that is that Belgium is very nearby. The cross-channel routes and the routes across the border in Northern Ireland are fundamental for our economic success. That is where frictionless trade really matters so that people can move their goods quickly and speedily. In many businesses, particularly those that work in food or with cut flowers and other perishable goods, the quick, “just in time” movement of goods is vital. Businesses on both sides of those borders will be affected equally.

I was pleased to hear my hon. Friend the Member for Morecambe and Lunesdale (David Morris) talk about the initiative he will be undertaking with the hon. Member for North Antrim (Ian Paisley) to bring a Wrightbus down to London. I visited the Wrightbus factory in Ballymena, where the company makes a fantastic product that has become an icon of the London streets. Although the Wrightbus Boris buses do not operate on continental Europe, I urge my hon. Friend and the hon. Gentleman to continue their journey down to my constituency and through the channel tunnel, because it is so important to maintain the flows of trade not only between the countries of the UK but between the UK and continental Europe. A third of the trade of Warrenpoint port in Northern Ireland runs from the Republic of Ireland to Northern Ireland, into mainland UK and on to continental Europe. We need to keep trade running frictionlessly through all those points.

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

People could not disagree with a lot of what the hon. Gentleman is saying, but in the real world at some point we are going to face tariffs, whether it is outside his constituency, on continental Europe or around the rest of the world. If we want a clue about that, we should look at the recent actions of Donald Trump’s Administration in relation to Bombardier. Food supply chains could also be threatened.

[Damian Collins]

The hon. Gentleman makes an important point. Manufacturing is such an important part of the economy of Coventry, where his constituency is. Tariffs are important. Of course, we want a free trading environment among the countries with which we trade, not only in Europe but around the world. I looked back at one of Margaret Thatcher’s speeches—I am sure the hon. Gentleman is just as keen a student of those speeches as I am—to see how she made the case for the single market to businesses before it was created. She rightly highlighted that, although trade without tariffs is obviously important, what is much more important is getting rid of artificial barriers to trade, such as the restriction of goods from markets because they are not seen to comply with certain standards or the creation of artificial delays that can make trade in goods that need to be moved quickly uneconomic. It is just as important to get trading agreements and the flow of trade right as it is to get the tariff situation right.

Football Association Governance

Debate between Jim Cunningham and Damian Collins

Thursday 9th February 2017 Commons Chamber

[Damian Collins]

The right hon. Gentleman makes an incredibly important point. I will come on to deal with the issue of diversity. Some would say that if the FA Council itself was a more diverse body that more truly reflected the modern world and the modern game, more progress would be made on supporting diversity, including encouraging and supporting more former players from minority ethnic backgrounds into coaching, and through the coaching system into the management of professional clubs. We would all want to see that.

Our constituents who are supporters of their clubs make continual representations about the effect of bad governance on the teams that they love—teams that have been driven into administration through financial mismanagement.

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

I am not going to rehearse all the arguments about Coventry City football club, but there should be some form of regulation. After all, the Football League is the only organisation that I know of that does not have certain rules in a way that relates to Parliament. Would the hon. Gentleman consider having Coventry’s owners, Sisu, in front of his Committee to find out exactly what is going on? There are all sorts of problems at Coventry—as I said, I am not going to rehearse them—and we really now have to get to the bottom of this.

[Damian Collins]

The hon. Gentleman has been a doughty champion of the fans of Coventry City football club and the people of Coventry regarding the maladministration of their club. It is tragic that a club that was in the top flight for so long has been run into the ground as it has been. The football administrators have stood back and watched that happen, and it cannot be allowed to continue. I believe my hon. Friend the Member for Daventry (Chris Heaton-Harris) has been acting as an intermediary, and I support him in his work. The Committee has spoken about that issue strongly in the past, and it may do so in the future. We speak up for supporters whose clubs are being run into the ground.

As a parent, I see what some grassroots football facilities are like, and we have had representations about that. At this time of the year, too many boys and girls are playing on heavily waterlogged pitches and at training grounds or in parks where there are no changing facilities and no amenities at all. They look at the great wealth within the game and ask how that can be true. Although we welcome the fact that the FA facilities fund invests £22 million—a lot of money for a lot of sports—in facilities, that is a tiny amount of money in football. Twenty-two million pounds would not buy a quarter share in Paul Pogba. Given the huge wealth that exists in football, we all believe it could do a lot more.

Financial scandals have affected the game, and we are concerned that they have not been properly investigated. Lord Stevens led a review into allegations of scandals and misappropriated payments in the football transfer market, and he was unable to sign off on 17 of the transfers that he investigated to say that no suspicious payments had been made. Some of those transfers then involved a future England manager. People will ask, “Why aren’t these things being properly investigated? What is wrong with the administration of financial conduct and ethics in football?

Coventry City Football Club

Debate between Jim Cunningham and Damian Collins

Tuesday 11th October 2016 Westminster Hall

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

I beg to move,

That this House has considered the future of Coventry Football Club.

We have known each other a very long time, Mr Gapes, but I think this is probably the first time that I have taken part in a debate that you have chaired—if I am wrong, I am not far off being right. I take this opportunity to thank Mr Speaker, who, over the years, has been very good in granting a number of debates on the future of Coventry City football club. The people of Coventry and the fans very much appreciate that he has been able to do that.

I welcome the Minister to her place. I have known her for quite a long time, too, but this is the first time that we have participated in a debate together. I hope that at the end of the debate she will have some constructive comments to make. Some weeks ago, I wrote to her about the problems at Coventry City football club, and in her response she gave us a little bit of hope, as she said she hoped to have something positive to tell us at the end of this debate.

Coventry City football club faces an uncertain future, and the ongoing saga has spanned many years. I have met Ministers in the past, along with my Coventry colleague from past Parliaments, Bob Ainsworth, and my hon. Friend the Member for Coventry North West (Mr Robinson). I have asked questions in the House and tabled early-day motions. I recognise that there are differing views about what has happened to Coventry City football club, but at the end of the day the club is ultimately responsible for its own future.

Hon. Members will remember the recent damaging rent dispute between the football club’s owners, Sisu, and Arena Coventry Ltd, which operates the Ricoh arena. That dispute led to the football club playing its home games in Northampton, more than 30 miles away, which was, to say the least, expensive and inconvenient for the fans. Since then, the Ricoh arena has been sold to Wasps rugby club, and amidst all that, Sisu continues to take legal action. I do not propose to discuss that legal action today, as it is sub judice and a different matter, but it has helped neither the situation nor the relationship between the fans and the club—so much so that dialogue now seems impossible.

Big questions remain. The deal that sees Coventry City play at the Ricoh arena expires at the end of the 2017-18 season, and talks to reach a new agreement have broken down. A long-term solution for home matches remains far away, and the threat of the club once again moving out of the city remains. The football club’s academy is under threat. The club has approved a proposal for the training centre to be redeveloped for housing. We have to ask ourselves what Sisu’s future intentions for Coventry City football club are. What possible plan could Sisu have for the club’s future?

At the heart of the issue lies the question of how a football club should be run, and for whom. This season has seen disappointment on the field—just a single win in the first 11 league games—and the manager has recently quit. Off the field, there is further unrest. The man in charge of resolving the future use of the Ricoh arena by the club, the managing director, has stepped down. A petition started by the Coventry Telegraph calling for Sisu to sell up has amassed nearly 20,000 signatories. That petition has my support and that of my hon. Friends the Members for Coventry North East (Colleen Fletcher) and for Coventry North West. Just imagine if the club was succeeding and that number of fans attended home games.

I believe that every football club should work for the community that it represents, the community whose name it bears—in this case, Coventry City. That is the name on the shirt. The community is so tied to the club that the council recently renamed a road after the famous Jimmy Hill. A football club should not be viewed as a way to make a quick buck by faceless and unaccountable owners. The club, the community asset, has been mismanaged by a select few for their own benefit. Decisions have been made in the interests of the parent company, and the football club has been sidelined and relegated to second place behind the business interests of a hedge fund. The Football Association and the Football League must explain how such a company can pass the fit and proper person test and then proceed to run a club into the ground. It has no stadium, no manager and its academy is under threat. By every conceivable measure, the club is heading backwards. The existing regulations have clearly failed.

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

I congratulate the hon. Gentleman on raising this issue, on which we strongly agree. He makes a really powerful point. One of the tragedies of Coventry City is that it demonstrates the weakness of the owners and directors test—the fit and proper person test—and the weakness of the FA or the league in making any sort of proper intervention in such a club. Does he agree that that shows the need for proper transparency of ownership and a greater number of independent directors on the boards of clubs, who could represent the city and the fans?

[Mr Cunningham]

I thank the hon. Gentleman for his comments and pay tribute to him, because over the years he and I have done quite a bit of work in this area. I particularly thank him for the support he has given to the Coventry football supporters. The FA and the Football League have been highly critical of FIFA, but they should start by putting their own house in order—I fully agree with him about that. As I have the opportunity, I will mention that I hope he might also consider that the Select Committee on Culture, Media and Sport, on which he sits, might want to have a look at this issue.

[Damian Collins]

To give a plug, the Committee will be interviewing the chairman and the director of governance of the FA on Monday next week.

[Mr Cunningham]

I thank the hon. Gentleman. I am sure he will raise the issue of Coventry.

There are potential solutions that would make the club work for the community again. Other clubs have shown us that giving fans an increased say can work. AFC Wimbledon is owned by the fans and the team was promoted last season, and Portsmouth is owned by its fans and is now turning a profit. I am not saying that is the only model to follow, but workable community solutions that put the fans first exist and should be considered. However, any solution is closed off unless Sisu decides to engage in a dialogue in good faith.

This morning I met representatives of the fans, who gave me a document that could form a basis for bringing both sides together to try and resolve the dispute—the Minister might want to look at it. They note in the document that the supporters expect a number of things from the owners of the club, which include a commitment to the football club, decent investment on and off the pitch, honest communication and engagement with the fans, fans being given a stake in the club, respect for the club’s traditions, a good relationship with the wider community and an offer of a quality matchday experience for all the fans. Those are reasonable requests and are in line with some of the points I have made this morning, but such solutions are closed off unless Sisu decides either to engage in a dialogue in good faith or to sell up, move on and leave its toxic legacy behind.

The future of the football club hangs in the balance. Having watched the club together on the terraces for decades, we now stand to see it fall away—to see it all lost—because of the poor choices of a hedge fund. It was all completely avoidable. At the end of the day, it is the fans and the community that lose out and suffer. Look at other clubs across the UK: when a club succeeds, the city and the area surrounding it succeed too. Football can provide a sense of identity, community and pride.

Will the Minister update me on any discussions that have taken place between her, Sisu and the FA? Will she intervene where appropriate? If she feels it is unacceptable for her to intervene herself, will she appoint somebody of repute to bring both sides together to try to resolve the dispute? Pressure must be put on Sisu to engage with other parties and the wider community, including the fans, with the Minister arbitrating if necessary. She should also consider appointing somebody of good repute—it could be a judge—to arbitrate.

Football Clubs (Insolvency)

Debate between Jim Cunningham and Damian Collins

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?

Leveson Inquiry

Debate between Jim Cunningham and Damian Collins

Monday 3rd December 2012 Commons Chamber

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

It is a pleasure to follow the hon. Member for Bridgend (Mrs Moon), who has told harrowing tales from her constituency.

There is agreement across the House that the Press Complaints Commission has failed and that there has to be something better. The dispute is not about whether things should carry on as they are, but about how things should change. Many Members have referred to the failure of the self-regulatory model for the press, but I question that. I do not think that we have a self-regulatory model. The PCC is not a regulator. Lord Leveson addresses that point in the summary of his findings:

“The fundamental problem is that the PCC, despite having held itself out as a regulator, and thereby raising expectations, is not actually a regulator at all. In reality it is a complaints handling body.”

That means that there is still an opportunity to look seriously at what real independent self-regulation would mean. The industry has a window of opportunity to do that and to present it to the House in a credible way.

There is no requirement that all newspapers, even national newspapers, are members of the PCC; it does not have the power to fine people for breaches of its code; and, crucially, as other Members have said, it has no powers of investigation. I believe that that is at the heart of the series of crises that have affected the newspaper industry for far too long. We saw that particularly strongly in the investigation by the Investigation Commissioner, Operation Motorman, which looked at the practices of the press in illegally accessing personal and confidential information, including through phone hacking. That information was published in 2006, with an update report in 2007. It suggested that 305 journalists, from a variety of national newspapers, had been in receipt of information that had been obtained illegally. Nothing was done about that.

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

I know that the hon. Gentleman takes a deep interest in this subject. Why does he think that no action was taken in relation to the Information Commissioner’s report? That has always puzzled me.

[Damian Collins]

That is a very good point which Lord Leveson tries to address in his report. It ends up being a game of no one being responsible. The PCC is not an investigative body, so it stood back and said, “Where’s the beef? Where’s the evidence to prove your allegations?” The Information Commissioner does not have the right to launch any further investigations or prosecutions, so no one was held responsible. That is why the new body has to have the power to seize such a report, go into the relevant organisations and investigate the matter.

There was no lack of information about criminality or information being obtained illegally; the failure was that no one acted on that information. The Information Commissioner’s report was largely ignored, as was the 2010 report by the Culture, Media and Sport Committee, which also suggested that there was widespread knowledge of illegal practices within the media.

The police knew in 2002 that the News of the World had hacked Milly Dowler’s phone. We know from information that was produced for the Culture, Media and Sport Committee in this Parliament that Surrey police discussed that with executives at the News of the World at the time. It was illegal, so why did the police not prosecute them or take action against them? Nothing was done about it. Evidence produced by the Select Committee’s inquiry demonstrates that senior executives and legal managers within News International understood that phone hacking was widespread and not related to a single reporter. Again, nothing was done about it.

The questions that were asked in that case are similar to those asked in the debate between the PCC and the Information Commissioner: “Where is the real evidence? What should we do?” There was no incentive or reason to do anything and there was no external pressure to push for a conclusion. That is why it is crucial to have an independent body with powers of investigation in the media and the power to fine.

I believe that the police got off lightly in the Leveson report. Lord Leveson skirts over the issue in the summary. One part reads a bit like the “Yes Minister” irregular verb game: “I give off-the-record briefings; you leak; he has been prosecuted under the Data Protection Act 1998.” Lord Leveson suggests helpfully that off-the-record briefings should be redefined as “non-reportable” briefings to clear up the distinction. On leaks, he suggests that police officers should perhaps have less access to the police’s computer system. That is woefully inadequate. A number of people raised the concern that if one called the police in certain situations, the News of the World turned up before the police. There was a ready trade in information between them. Lord Leveson does not go into that in anywhere near enough detail.