Ticket Abuse

Kerry McCarthy Excerpts

Tuesday 21st January 2014 Westminster Hall

[Mrs Hodgson]

We have not already made up our mind—obviously that is the purpose of the inquiry—but we have already received evidence from the Metropolitan police that has proved that abuses are taking place. We are looking for solutions, as Ministers asked us to do when we met them. I hope that the inquiry will uncover solutions to some problems that have already been identified. We are not self-selecting, and if the hon. Gentleman wants to come to give evidence, we will be happy to hear from him.

The Minister and hon. Members are no doubt aware of where I come from on this issue. In 2010, I promoted a private Member’s Bill, the Sale of Tickets (Sporting and Cultural Events) Bill, which was debated on Second Reading on 21 January 2011. I will try not to repeat the speech I made that day, because it was around an hour in length, but many of the points I raised then are as true and as worthy of being made today. Other hon. Members who attended that debate are present today, and I hope that they do not use the same arguments—they might have come up with some new ones. Perhaps this debate will convince them to change their minds.

I am going to go through what has happened since that debate and what should happen in the future. It is worth restating first, however, why I embarked on this campaign all those years ago and what has sustained me, despite the continued stonewalling of the current Minister’s predecessors. My daughter is a second-generation Take That fan—I being the first generation—and I was alerted to this scandalous practice by her sense of great unfairness that she had not been able to acquire Take That tickets for us, despite being ready to buy them online the minute the tickets went on sale, only to see them moments later on other websites for many times the original price.

I looked into the practice further and found that neither my daughter nor Take That were alone. In fact, that day I found just the tip of the iceberg, because this happens week in, week out with music, comedy, sport and theatrical events up and down the country. The same situation affects not only Wembley arena gigs and international matches, but small and medium-capacity concerts in provincial towns and cities throughout the country. It even affects art exhibitions; someone would have been very lucky to pay face value to see the recent David Bowie exhibition at the Victoria and Albert museum at a convenient time or, similarly, the da Vinci exhibition at the National Gallery last year. The Chelsea flower show regularly makes the news when its tickets hit many times face value on secondary sites. The most recent example to hit the headlines and inspire columns and features about the secondary market was the Monty Python reunion, probably because lots of journalists and editors wanted to go themselves.

My daughter’s experience started me on this crusade, but I have kept fighting in the light of the experiences of countless other fans of all kinds of events who are disgusted by this practice. I thank all those people who have e-mailed and tweeted me over the past few years for their support.

This is not just an emotive issue, however, although that is often the case—bear in mind that famous line about football being not a matter of life and death, but more important than that. As I did my research and more people supported my campaign, I met more stakeholders in the live events industry and became increasingly aware of the real concern that this kind of parasitical practice is detrimental to our creative industries. It stands to reason that if someone is creaming off money from the sector without putting anything in, the industry will suffer. In the case of the creative and live events sector, it would make sense for the Government to do everything possible to protect and support it, given that it sustains more than 1 million jobs and accounts for a significant proportion of our exports to the rest of the world, especially with regard to music.

Tourism is important to the UK economy as well, and our creative industries are particularly important to tourism. How many tourists come to the UK to see a show in the west end, to attend one of our many excellent festivals or to see a gig at one of our growing network of regional stadiums, such as the Stadium of Light in Sunderland? According to a UK Music’s recent report “Music Tourism: Wish You Were Here”, music tourism is worth £2.2 billion to the economy, with each overseas tourist spending on average more than £650. Those tourists will not come over here to spend all that money in our service and retail sectors if they cannot get a ticket for a fair price.

In the same vein, domestic event goers with limited funds are not likely to go to other events, or to spend a great deal at or around an event for which they do have a ticket, if their ticket has cost them many times what it should have. Even worse, if people are priced out of going to a gig, game or comedy show, that could be the end of their relationship with the band, sport or comedian that they were planning to go and see, thus harming long-term sustainability. Ticket touting is bad for not only fans, but the live events business, which was why the fifth recommendation in the UK Music report was that the Government address the issue, including through legislation if necessary, to ensure that the sector keeps going from strength to strength.

Many within the industry have had to adapt their business models to fit the market following what I would call the green light that the secondary market got from the previous Government—I am sorry to say—and the Culture, Media and Sport Committee back in 2008. Both said that the secondary market served a purpose for fans and that it could regulate itself.

[Kerry McCarthy (Bristol East) (Lab)]

I congratulate my hon. Friend on her work, about which I know that she is absolutely passionate. She highlights a point that is made over and over again by people who seek to defend the practice. Yes, there is a value to secondary ticketing when people want to offload tickets because they happen not to be able to make an event, or if people are able to snap up tickets at the last minute after thinking that they would not be able to attend. However, there is a big difference between those practices and the market manipulation that is taking place on a huge scale, and that is what my hon. Friend is talking about.

[Mrs Hodgson]

That is exactly the point that I want to expand on. We all agree that the secondary market can serve a purpose—if we have tickets to an event that we thought we could go to, but then find that we cannot attend because of a change in work patterns or whatever—but the exponential growth in online resale that we have seen since 2008, with major players coming from America to get a slice of the growing pie, proves my “green light” point. If the brakes were on before 2008, while we were waiting for the decisions, they were certainly smashed to pieces afterwards, and people in the industry have seen touts making more and more money from their work and investment without putting anything in. After all, when a ticket sells for double its face value, the tout makes more money than everyone involved in putting on the show.

People in the industry tried unsuccessfully to convince the Government and Parliament to do something about the situation. Having failed in that attempt, they decided—reluctantly, in my opinion—that if someone was going to make that money, it might as well be them. Some are doing so openly by selling premium packages or appointing a secondary website as an official partner, as Jessie J did recently. Some, however, are doing it through back channels because they do not want their fans to know that they are effectively being ripped off by the artiste they admire, as that would inevitably hurt their relationship.

The practice of allocating blocks of tickets directly to the secondary market was exposed by a “Dispatches” documentary in 2012, which I took part in. I hope the Minister watched it—I have a copy in my office that I can pass on to her if she did not. Such under the table dealing is a direct consequence of successive Governments failing to do anything to protect fans. At the very least we need to bring those dealings out into the open.

It is not as if there is no precedent for protecting fans, as we protected Olympic tickets from being exploited by touts. I am aware that doing so was a condition of being granted the games by the International Olympic Committee, but I would like to think that that would have happened anyway, given the national significance of the games and the obvious security considerations.

I note from the excellent Library debate pack—I put on record my thanks to our exceptional Library researchers for putting it together in such a short space of time—that the Scottish Parliament has passed legislation protecting tickets for the Commonwealth games, which is welcome. Colleagues will know that the unit set up to monitor Olympic touting and other crimes associated with the games, Operation Podium, also looked at the wider secondary market in the years it was in operation—from 2005 to 2013. It estimated that that market was worth £1 billion, and its initial findings resulted in the fine for touting Olympic tickets being quadrupled. I sat on the Public Bill Committee that considered the legislation that put that in place, and during our proceedings, a representative from the Metropolitan police told us that the people they were tracking who were trying to tout Olympic tickets were the same players who control most of the inventory on sale on a day-to-day basis. During our questioning, I nearly coaxed him into agreeing that action was needed to regulate the wider secondary market, but he stuck to his brief very professionally.

I might not have been successful on that occasion, but the recommendations in the report on ticket crime that Operation Podium published shortly before it was disbanded last year could not have been clearer. “Ticket Crime: Problem Profile” found:

“Due to the surreptitious way that large numbers of ‘primary’ tickets are diverted straight onto secondary ticket websites, members of the public have little choice but to try to source tickets on the secondary ticket market.”

Its findings led the unit to conclude:

“The lack of legislation outlawing the unauthorised resale of tickets and the absence of regulation of the primary and secondary ticket market encourages unscrupulous practices, a lack of transparency and fraud.”

The unit therefore recommended:

“Consideration must be given to introducing legislation to govern the unauthorised sale of event tickets. The lack of legislation in this area enables fraud and places the public at risk of economic crime…The primary and secondary ticket market require regulation to ensure transparency, allowing consumers to understand who they are buying from and affording them better protection from ticket crime.”

The Minister’s predecessor, the right hon. Member for Faversham and Mid Kent (Hugh Robertson), told me repeatedly that if we provided evidence of market failure he would reconsider his position; I refer Members to Hansard, volume 551, column 997W from 25 October 2012, and volume 542, column 66WH from 13 March 2012. The latter refers to the long-awaited report from the Office of Fair Trading, which I hope we will see later this year.

Even given the damning report from Operation Podium, the Government have still refused to engage on how to protect fans. I hope that the new Minister will differ on that and agree with me and other colleagues that, when the police say that a market needs to be cleaned up because it is acting as a front for organised crime and fraud, we should probably listen to them.

If we needed confirmation that the secondary market is allowing fraud to be perpetrated, we got it in July last year, when it emerged through an investigation by Radio 4’s “You and Yours” programme, working with security expert Reg Walker, that thousands of counterfeit tickets had been sold through the major secondary market platforms. Those platforms tell people that tickets are guaranteed because sellers receive their money for a ticket only once the buyer has been to the event without incident. That would be the case if someone were to try to shift a few tickets for an event they could not attend or if they were small-time casual touts. However, the fraud could be perpetrated because the restriction does not apply to the big players, otherwise known as power sellers or brokers—although I would call them industrial touts.

The secondary platforms compete for inventory from those major players and the commissions from their sales, so they bend over backwards to win their business. That means preferential rates and premium services, and even the odd party, with drinks and networking opportunities; but importantly it also evidently means disbursing money paid for tickets before those tickets have been verified by the end user.

Unscrupulous individuals—they would be called “gangsters” or “organised criminal networks” in common parlance—were able to establish themselves as power sellers by selling large amounts of genuine stock, although we do not know from where they got it. When they then carpet-bombed the market with false tickets, they had ensured that they got their money within days of the sale. By the time the reported thousands of fans were knocked back from concerts by the likes of Beyoncé and One Direction, those criminals were long gone.

I am not saying that the four major secondary platforms that were stung by that fraud were complicit in any way, although my understanding is that they did not exactly run to the police about that criminal activity, probably because it would harm their reputation; it was an issue of damage limitation. However, the fact that their processes allowed the fraud to happen shows that the market is not foolproof—or gangster-proof—and desperately needs reform and transparency. I have heard it argued that if those websites did not exist, all those fans would be out of pocket, whereas now they will be reimbursed eventually, if they are tenacious. However, without those websites, with their aggressive marketing and their promise of safe transactions, the criminals or criminal organisations would not have been able to sell nearly as many counterfeit tickets in the first place.

The Minister will be well aware of the trouble that rugby union has had with the resale of tickets for high-profile games. Some have credited the Rugby Football Union with driving viagogo out of the country to the safety of Switzerland, after it won a High Court battle to be told the identities of people who had broken its terms and conditions by reselling tickets to high-profile games. Of course, it is only the company address that has moved abroad; the business retains an operation in London and trades here as before. However, we have to ask ourselves, why did viagogo run away if it has nothing to hide?

Like many national sport governing bodies, the RFU is conscious of the need continually to feed the grassroots and drive participation at every level of the game. That is not all altruistic; if the grassroots are neglected, every level of the game suffers very quickly—gate receipts fall and talent does not come through, meaning that our clubs and national teams are not as competitive. That then feeds back again, damaging interest in the sport.

For that reason, the RFU ensures that a significant number of tickets for high-profile games are distributed to the 2,000 or so rugby clubs across the country. Indeed, it even announced before Christmas that that would include at least one ticket per club for the rugby world cup final in 2015. The RFU knows that it could get much more for those tickets—indeed, for all the tournament tickets—on the open market, but that is simply not the point. It wants to ensure that not just wealthy individuals and corporate buyers can afford to see the best rugby teams and players in the world.

The RFU wanted the identity of those reselling tickets to be known to ensure that they contribute to the long-term fostering of grass-roots participation, instead of making some individual a nice wad of cash. That is why the RFU and England Rugby 2015 have continually asked the Government to legislate to protect tickets for the 2015 rugby world cup from being touted. It is disappointing that, so far, the Government have refused to do that.

I hope that when the World cup comes around, our streets will not be littered with counterfeit tickets bought innocently from people who were selling them all over the place, or because they were available from unofficial outlets and fans could not tell the difference from legitimate tickets. The World cup organisers must do as much as they can to limit the number of tickets that fall into the hands of touts and to educate consumers about the official resale mechanism through which they will be guaranteed genuine tickets, as happened for the Olympics.

I am sure the Minister will be aware that touts cannot be blocked completely. She will be aware, from the last Department for Communities and Local Government questions, that if someone is desperate to secure a ticket now for the World cup final, they could do so today, on at least one of the secondary websites, for around 10 times the face value of one of the lowest priced seats. Some of the posh seats in the west lower tier would set them back almost £18,000 a pair, and that is despite the tickets not yet having gone on sale to the public; that will not happen for a further eight months. The touts obviously know that they will be able to obtain tickets, so they are selling them in advance at huge profits.

Does the Minister recognise that the situation is a direct consequence of her Department’s choosing not to get involved? The problem does not apply only to rugby; the governing bodies and major event holders in cricket and tennis have been at pains to try to enforce the non-resale clauses that they put on their tickets, for much the same reason. Alienating fans with ordinary means from prestigious events means risking the loss of their continued involvement with and patronage of the sport.

Top-flight football is the one sport in which there has historically been some protection for fans, but legislation introduced in 1994 to tackle hooliganism is increasingly being circumvented by people doing deals and accepting money from the secondary websites to authorise them to resell their tickets. That loophole must obviously be closed immediately, and there are growing calls from fans—including Spurs fans, as reported in local papers yesterday—in favour of that happening.

The websites are always at pains to point out that it is individuals, not them, who are selling the tickets. In that case, is it all right for someone to buy a season ticket for a premiership club, never to attend a match, and to make a fortune reselling their 19 home tickets on an “authorised” secondary market, when it would be illegal for a genuine fan who cannot go to one match to sell a single ticket at face value to their mate?

I asked in a written question a few months ago what conversations the Department had had with the football world about this issue, and the answer was “none”. I hope that the issue is now on the Minister’s radar, that she will give us her opinion on the practice and that she will have conversations with the football world. Does she think what is happening is in the spirit of the original legislation and will she close the loophole?

When the hon. Member for Hove secured a short Westminster Hall debate on this issue back in March 2012, the hon. Member for Chatham and Aylesford (Tracey Crouch) intervened on him and perfectly distilled the problems in the market. She asked:

“Does my hon. Friend agree that we should be putting the fan, not the salesman, at the centre of the ticketing process for live music and other events?”— [Official Report, 13 March 2012; Vol. 542, c. 59WH.]

That is exactly what we should be doing. We should put our constituents first, closely followed by the legitimate and important businesses that employ them and generate wealth for the UK. We should put last those who seek only to exploit. We can do that by legislating to make the secondary market more transparent and making people who profit from it more accountable to both the end consumer and those who own the intellectual property, on the back of which they are getting rich.

The all-party group will hear evidence on the best way of doing that. The intention is to table new clauses to the Consumer Rights Bill when it comes before the House later in the year. I will not prejudge the results of that process and the ideas that it will no doubt turn up. However, I suggest that the following is the minimum the Government can do to shut me and others up. Websites facilitating the unauthorised resale of event tickets should be made to reimburse a buyer for all costs incurred when tickets purchased through their service are found to be fraudulent. That should include all fees involved in purchasing the ticket, travel to and from the venue, and any accommodation and subsistence costs when evidence can be provided.

--- Later in debate ---

[Philip Davies (Shipley) (Con)]

It is a pleasure to serve under your chairmanship, Mr Crausby, and to follow the hon. Member for Washington and Sunderland West (Mrs Hodgson). I admire her persistence; she comes back time after time on the same issue, but I am afraid that time after time she is wrong about it.

I also commend the hon. Lady’s ingenuity. This matter, as she rightly said, has been extensively considered by the Culture, Media and Sport Committee, on which I serve. We found that the secondary market was perfectly legitimate and worked, on the whole, in the best interests of the consumer. The Office of Fair Trading has looked into the subject as well; it also found that the market worked in the best interests of the consumer.

The hon. Lady has decided to set up her own inquiry, from which she can at least guarantee the answer she wants. I commend her for doing that, because none of the objective looks at this issue have ever fallen on her side of the argument. I also commend her for persuading the shadow Minister, her hon. Friend the Member for Eltham (Clive Efford), that this is another populist bandwagon on which he must jump. It seems that there is not one he is not prepared to jump on at the moment. He has added this one to the list.

The premise that the hon. Lady starts from is false. She believes that, by definition, all ticket touting and all reselling of tickets must be done at a profit, but ticket touts can make a loss—some 50% of the tickets sold on viagogo are sold at face value or below. When she and, I hope, the Minister go back over the Select Committee reports and the Office of Fair Trading reports, they will note the excellent contribution to our Select Committee inquiry made by the right hon. Member for Barking (Margaret Hodge), who gave evidence as a Government Minister. We all know she does a fantastic job as Chair of the Public Accounts Committee. She was robust in her defence of the secondary market and explained the reasons why we should not intervene and why it works in the best interests of consumers. I hope everyone will look over the evidence that she gave.

I see my hon. Friend the Member for Hove (Mike Weatherley) in his place, and I have no doubt he will be looking to trouble the scorers as well. He speaks consistently about intellectual property rights for event promoters, but I take a different view. My belief is straightforward: if someone sells something to somebody, they have sold it on for that person to do as they wish with it. It happens all the time in the world of retail, which is where I came from.

When I was at Asda, we sold products, people bought them and whatever they did with the products was up to them. We used to get lots of letters from people saying that our Asda-branded whatever had been spotted being sold in a corner shop down the road. Our view was that that was fine, because it was their product. If they wanted to sell it on at a higher price than they paid, that was fine, because that is how the free market operates.

My advice is that if someone does not want a person to sell a product on, they should not sell it to that person in the first place. The first rule of the free market is that if a product is sold to someone, the product belongs to them and they can do with it as they please. That happens in all walks of life. People buy stamps off other people as an investment and hope that one day they can sell the stamps on to someone else at a profit. People do it with gold. I am sure that the former Prime Minister, the right hon. Member for Kirkcaldy and Cowdenbeath (Mr Brown), would have loved, when he sold the gold off at a ridiculously low price, to have said, “By the way, you cannot sell it on again at a price higher than what I have sold it to you at.” All that would have done was emphasise what a ridiculous mistake he made in the first place.

[Kerry McCarthy]

In a way, I am reluctant to intervene on the hon. Gentleman, because I know that is simply rising to his bait, but the difference surely is that in his examples—they are faintly ridiculous—the secondary market does not in any way, shape or form distort the primary market. The sort of secondary market that my hon. Friend the Member for Washington and Sunderland West (Mrs Hodgson) is talking about completely and utterly distorts the primary market. The hon. Gentleman says that people can walk into Asda and buy whatever they like at the price that is charged to everyone, but they cannot do that with ticket prices these days.

[Philip Davies]

I do not agree with the hon. Lady. For example, when a new designer handbag comes on to the market and gets a lot of hype, there are massive queues in department stores of people hoping to buy one of the first 25 to go on sale. When new gadgets come out at Christmas time, there are massive queues of people hoping to be one of the few to get the few in stock.

The same happens with toys. I remember that a few years ago there was a massive craving for Buzz Lightyear toys and people queued up to get one. We all knew that the first 20 or 30 people, or however many could buy one, would resell the toys at a massively inflated price, in much the same way as happens with tickets. That is exactly what happened. Is anyone suggesting that the Government should intervene in the law to stop people reselling their Buzz Lightyears or their designer handbags, or whatever goes on sale in department stores with a lot of hype, at a higher price? If they do not want the Government to intervene to stop that—Lord help us if people want us to intervene in the market in that way—I do not see why they would want the Government to intervene with tickets. I do not see how tickets are a different commodity from designer handbags, toys or anything else.