Football Governance Bill

Mark Hendrick Excerpts

2nd reading
Tuesday 23rd April 2024 Commons Chamber

[Thangam Debbonaire]

I thank my right hon. Friend for that intervention. She rightly pays tribute to the hon. Member for Chatham and Aylesford, although Karen Carney has also made a substantial contribution in leading the Carney review. I read the review with interest—it was great—and I believe my right hon. Friend may be aware of it. It is certainly worth Members giving it a detailed read; it deserves all of our attention. I am really proud of the fact that the English women’s game is growing so strongly and so well, and that it is inspiring so many women and girls to get active and get fit. The work of the hon. Member for Chatham and Aylesford, combined with the Carney review, sets in train exactly what my right hon. Friend is looking for: strength in our women’s game, which deserves it and deserves our admiration. It is bringing in new audiences all the time, which I think is fantastic.

Thirty years ago, English Football League revenues were 75% of the Premier League’s; today they are just 6%. The gap then was £11 million; it is now £3 billion. It is not that that income is not distributed from the Premier League—it is. It is because increasing amounts are spent on parachute payments, which are made to clubs relegated from the premier league for up to three seasons. I respectfully remind the ministerial team that it was the Government’s own White Paper that recognised the scale of these payments and that they can have unintended consequences.

[Sir Mark Hendrick (Preston) (Lab/Co-op)]

My hon. Friend referred to parachute payments. Does she feel that the inclusion of the clause that prohibits the parachute payments as “relevant revenue” is already prejudging the outcome of the state of the game review? It is excluding them to start with, rather than leaving the question open until the review is done.

[Thangam Debbonaire]

My hon. Friend raises a really important point. It is so important that the state of the game report leads the way, and that the regulator is allowed to look at the evidence and have the scope to intervene where that is necessary. I fear that the Secretary of State may inadvertently have confused the issue in her earlier remarks, although I think she began to clarify it. I would be grateful if the Minister could further clarify it in his summing up, as there is some remaining confusion.

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[Sir Mark Hendrick (Preston) (Lab/Co-op)]

It is a pleasure to follow the Chair of the Committee, the hon. Member for Gosport (Dame Caroline Dinenage). Following the fan-led review by the hon. Member for Chatham and Aylesford (Dame Tracey Crouch) in 2021, I spoke in a Westminster Hall debate on a petition on this issue. I said in that debate, and I reiterate today, that the current disparity between the rich and poor and the selfish nature of the elite clubs need remedying. This Bill does not do justice to some of the issues that the hon. Member for Chatham and Aylesford raised in her report, particularly with regard to grassroots football, women’s football, anti-discrimination and equal opportunities, but I am sure that those issues will be covered by later legislation in due course.

Football in this country has become a story of the haves and have nots, and regulation is desperately needed to ensure the health and prosperity of the game at all levels, not just in the premier league. I therefore welcome the Bill, and support the creation of a single, independent football regulator. At a time when the game has become an international sporting juggernaut and a global commodity with revenues greater than ever before, the financial and long-term sustainability of the football pyramid has never been more at risk. Too many historic clubs are on a cliff edge, about to fall off it and face the fates of historic clubs like Bury, which has disappeared, and Bolton and Wigan, which have struggled since.

This is why new legislation is crucial. Fans need a greater voice in the running of their clubs, and there needs to be a better means test for owners and directors to ensure fiscal sustainability and to root out the financial mismanagement that has plagued too many clubs, through the actions of foreign investors or those of domestic owners who have done the same things. An independent football regulator should ensure that English football continues to serve the interests of regulated clubs, while also contributing to the economic and social wellbeing of the local communities associated with those clubs. However, a regulator should also be a watchdog, and a watchdog without any teeth will not be much of a regulator, which is why it is essential for this regulator to have the powers to do its job properly.

The financial gap between the Premier League and the English Football League has reached a critical point. Thirty years ago EFL revenues were 75% of the Premier League’s, but today the proportion is just 6%. The gap then was £11 million; it is now £3 billion. At this pace, the football pyramid is untenable and the financial gulf between the two leagues—and across all levels—continues to worsen, but there is no doubt that there is enough money in the collective pot to achieve sustainability at all levels if the game’s revenue is distributed in the right and fair way, coupled with proper governance and organisation.

As it stands, the Premier League continues to rule the roost when it comes to English football, but some top-flight clubs have shown that they are incapable of self-regulation. We need only look at some recent financial breaches to see that the Premier League is nowadays not in a position to self-govern and regulate the sport when it struggles to keep its own house in order. Some have reaped the financial rewards without showing any concern or desire to preserve the health of the sport outside their own needs and ecosystem. Only an independent regulator will be able to provide proper oversight, regulate clubs’ behaviour, and intervene when necessary to ensure that they act responsibly.

The Bill also provides targeted backstop powers to allow the regulator to step in when it comes to the allocation of broadcasting revenue between the Premier League and the rest of the football pyramid, if needed. On the face of it that is fine, but clause 55 requires the “specified competition organisers”, the Premier League and the English Football League, to enter into a period of

“mediation in connection with the distribution of relevant revenue received”

by one of them, and if they are unable to reach agreement, the independent regulator

“may make an order as to the distribution of that revenue.”

However, in the Bill as drafted, that does not apply to certain circumstances in which the relevant revenue referred to in clause 55(2)(b) does not include parachute payments, which are defined as payments made directly to newly relegated clubs.

As was mentioned earlier, this cannot be fair, and it deliberately excludes the English Football League from making its case that the parachute payments are disadvantaging and distorting the revenues of championship clubs as a whole. The payments are not just a parachute meant for a soft landing; they are a ladder leading back to the premier league for most of the clubs that have already been relegated. That is clear from the current position of the championship division: Leicester City, Leeds United, Southampton and Norwich City occupy four of the top six spots. Incidentally, Norwich has been relegated from the premier league six times since its formation in 1992. This exposes the fact that the payments are a ladder back to the premier league, to the disadvantage of others elsewhere in the championship division.

Preston North End, my constituency club, which has its own place in history as a founding member of the football league, joins me in believing that a regulator is the only option to underpin both sustainability and competitiveness within the financial distribution of the football pyramid. As we speak, Preston are sitting in 10th place in the championship table. They have never played in the premier league—the only former top-flight first division champions never to have done so. They have a wage bill in the region of £16 million. How can they compete against the likes of Southampton—a club that was relegated in 2023 with a wage bill of approximately £88 million, which is six or seven times that of Preston North End?

As a lifelong football fan, I believe that this House not only has the opportunity but, more importantly, the obligation to create much needed reform in the game through a transformative Bill that safeguards all clubs for decades to come.

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[Tim Farron (Westmorland and Lonsdale) (LD)]

I declare an interest, as a lifelong Blackburn Rovers fan and a supporter of Kendal Town, who are in the North West Counties football league—I am beginning to fear that one day we might end up playing each other at this rate. To prove that football is more about uniting us than dividing us, I have, accidentally, worn claret and blue today, as a nod to our dear friends Burnley. [Laughter.]

I was at Grange Church of England Primary School last week, where a bright year 5 lad asked, “Tim, what sport do you enjoy the most?”. I nearly said football, but then I realised that I do not enjoy football at all; it makes me completely frustrated and miserable, but it does rule my life and occupy most of my waking moments. It is a hugely important thing, as it binds and creates communities, it creates shared experiences and it helps to build what it is to be English and to be British. So I am a thoroughly proud football fan. I love the game and want to stand in solidarity with all other football fans, even those of teams I do not approve of.

I pay tribute to the hon. Member for Chatham and Aylesford (Dame Tracey Crouch), who is back in her place, and the fan-led review, which has underpinned the Bill. My party and I welcome the principles behind it and the independent regulator. We acknowledge that football is integral to our culture and that the whole pyramid is vital to the game. Michael O'Neill, the chairman of Kendal Town—his is an unpaid role at a wonderful club that is doing incredibly well at the moment—has said that the

“top of the pyramid would not exist without the foundations”.

He is absolutely right about that, but the foundations include not just the clubs lower down the pyramid, but the youth game and the Westmorland County FA, and what it does for young people, supporting mental health, building resilience and teamwork, and creating community.

I am supportive of part 3 of the Bill, on licensing, although it is an important moment to do some redistribution, taking a proportionate share from each of the clubs to ensure that we fund the additional requirements of meeting the licensing. Part 4 of the Bill, as we have heard, is about owners and directors. I express my solidarity with the supporters of Reading—we think of Dai Yongge and what he has done to that club and community. Not yet so awful—but watch this space—is what has happened with Venky’s, who own the Rovers. Blackburn Rovers is a club in limbo and the question is whether or not we are a going concern, because of the owners’ plight in the Indian courts. We have to ask ourselves the extent to which part 4 will give the regulator power to deal with the Dai Yongges and Venkys of this world and make them put up, pay up or sell up. Nothing more underlines the powerlessness of the fans than situations such as those, and fans of Bury, Bolton, Hull City and Cardiff City would concur.

Part 5 deals with the duty on clubs and competition organisers. I am going to table an amendment, if I am permitted to do so, to bring back the replays in the FA cup and to restructure things so that all competing teams get an equal vote in deciding the organisation and rules of that cup. This situation is an outrage and nothing more underlines the arrogance and complacency of the Premier League than its thinking it can dictate to the rest of the league and the non-league how that glorious and almost ancient competition will be. If my amendment is successful, the Premier League might get away with one year of no replays, but we will get them back the year after when the whole of the footballing establishment actually gets a vote.

My main concern is on part 6—I will not go through every part of the Bill—and the powers of last resort. I am deeply concerned that we have only partial financial oversight. This is where football fans feel a sense of disappointment, and the Government have been a little weak in this regard. It feels like they have listened to the powerful few rather than the clubs, the fans or the volunteers. The financial powers seem to be restricted to simply being a mediator between the Premier League and the English Football League, and actually the Premier League and the championship when all said and done.

The right hon. Member for Ashford (Damian Green) has talked about some of the financial division, and let us look at the allocation. Of every £1,000 received in broadcast revenue, £882 goes to premier league clubs and £32 to championship clubs—that is about enough for Blackburn Rovers to buy another pair of goalkeeping gloves and, by golly, we could do with them. If you go down further, 15p goes to national league north clubs, and a fat zero to anything below the national league. If the pyramid is important, then the foundations are important. I want the regulator to have the power to make sure that the Premier League and the championship do not hog all the money, and that they distribute properly and effectively down the division.

I want to pay tribute to Kendal Town—the mighty Mintcakes, as we are known—because they speak for and represent so many other non-league clubs. Five hundred people a week watch the great team managed by Jimmy Marshall. Everybody at that club is a volunteer. What good could be done by a relatively small amount of redistribution of that money down to that level. Kendal Town have hosted 12 cup finals of various kinds at the Parkside Road ground this year. It costs them £8,000 to maintain that ground, and they get nothing for it. A fairer deal is absolutely essential, and, so far, this Bill is the weakest on that fair financial flow. It is important that the Government get that right beyond Second Reading.

At a time when the division between the divisions has never been greater, I think it is worth paying a bit of attention to the parachute payments. There is a widening not just in quality, but in resource between the premier league and the championship, between the championship and league one, between league one and league two, and between league two and the national league. That reduces competition, entrenches privilege and squashes ambition. One key driver—perhaps the key driver to this division, certainly at the top end of the tables—is the parachute payment, which is a completely unjustifiable disgrace. It is the greatest financial distortion in the game. This Bill ducks that distortion—every football fan has noticed that the Government have ducked that distortion. Therefore, people are deeply sceptical about whether the Government are serious about fairness in the game—

[Sir Mark Hendrick]

rose—

[Tim Farron]

I am happy to give way to a North Ender.

[Sir Mark Hendrick]

The Government have not only ducked this issue, but the Bill itself contains something explicit that precludes a discussion of parachute payments when it comes to the regulator’s powers.

[Tim Farron]

The hon. Gentleman makes an important point and I agree with him. That explicitly needs to be mentioned in the Bill, and we need to recognise that that is one way to allay the fears of those people who are sceptical about whether the Government are serious about this—as serious as the hon. Member for Chatham and Aylesford clearly is. Have the Government got the interest of the fans at heart? Will they do stuff that is difficult and challenging for those people at the top of the game, or will they have just listened to lobbyists rather than the fans?

In closing, Blackburn Rovers were owned by Jack Walker, the greatest owner of any football club ever. We say that we do not want billionaires in the game, but we will have people like that any day of the week—not just at Rovers, but anywhere else. He loved his club, loved his town and made a massive, massive difference. Today we are owned by Venky’s. It is alleged that, when it took on Blackburn Rovers, Venky’s believed that it was impossible to lose premier league status. It did not realise that a club could go down. Gutted though I am that we went down and got relegated, I am nevertheless glad that Venky’s were wrong: there should be movement between the divisions; there should be competition; and there should be fairness. Football is for the fans, not just for the powerful few. Let us make sure that this regulator, in its financial oversight, is able to ensure that there is genuine fairness from the top to the bottom.

Smaller Musical Genres: Scotland

Mark Hendrick Excerpts

Tuesday 31st January 2023 Westminster Hall

[Sir Mark Hendrick (in the Chair)]

I will call Pete Wishart to move the motion, and then the Minister to respond. As is the convention for 30-minute debates, there will not be an opportunity for the Member in charge to wind up because the debate is too short. I will not call any Members to make speeches other than Mr Wishart and the Minister, so other Members can make interventions only.

[Pete Wishart (Perth and North Perthshire) (SNP)]

I beg to move,

That this House has considered Government support for smaller musical genres in Scotland.

I look forward to serving under you in the Chair, Sir Mark, in this afternoon’s short but hopefully important debate. I refer to my entry in the Register of Members’ Financial Interests.

When I was thinking about how to open this debate, I thought I would start with something profound and interesting—perhaps that music is the sustenance and nourishment of the soul. It is the one thing we turn to when we feel happy, and when we are trying to escape or evade any feelings of melancholy. It is what we turn to when we have that special occasion or anniversary, during time with friends, and when going out in the evening. Music is absolutely everywhere, and it has a multiplicity of genres. Music is a great chronicler. It takes you back to that time in your life, that special experience, that moment. It is almost instant recall: a song comes on, and we remember exactly where we were and what we were feeling in that moment. Everybody has a favourite song, or several favourite songs.

Then I thought that as the debate is about musical genres, I could perhaps look at the sheer infinity of music available, and the multiplicity of genres everywhere around the world—at how those 12 available notes have fired human imagination, and how we have managed to sequence and organise them in so many different and profound ways to create a huge catalogue of wonderful works of artistry—songs, compositions and beautiful sounds.

After all that, I thought I would open this debate with what is probably the most profound thing that anyone has ever said about music—what Eric Morecambe said to André Previn as he grabbed his lapels: “I’m playing all the right notes, but not necessarily in the right order.” That sums it up for me: not necessarily in the right order. Music takes us where the imagination dictates and determines. Music is only semi-constructed sonorous chaos, and that is the way it should be.

I have probably bored you before, Sir Mark, by telling you about my life in music. I had 16 wonderful years in the music industry, playing keyboards with Runrig. We were lucky and had great success, but I come from what is probably the smallest of the small genres: I played in a Gaelic folk-rock band. When I started out, we were probably the only Gaelic folk-rock band in existence. We were never going to get played on commercial radio, or on Radio 1—there was not great demand for Gaelic songs about medieval clan battles on Skye, or cuddy fishing in the Minch—so it was to the specialist radio stations and programmes that we turned for some sort of support.

The support was there on Radio Scotland, in the guise of the people who championed us and backed us—people such as Iain Anderson, Tom Ferrie and Robbie Shepherd, all providing a fantastic service. That gave us a break, and an audience to build. It helped to develop and shape our career. More than anything else, it gave us hope; here were our songs being performed on Radio Scotland. The songs of this Gaelic folk-rock band—it was never going to be the trendiest band in the world—were being played, and that was so important to us. We went on to become one of the top rock bands in Scotland, selling millions of albums worldwide and sustaining a great touring career. That is what it is all about. That is what small, specialist radio programmes and stations can provide. They give opportunity, but more than anything else, they give hope.

Why this debate, and why today? Because of the simply appalling decision by the BBC and BBC Scotland to cancel “Jazz Nights”, “Pipeline” and “Classics Unwrapped”. These are indispensable specialist programmes that serve a distinct and particular audience—programmes that do not really exist anywhere else, and that the audience turn to for the services that they want, and aspire to be on.

I do not think I have ever seen anything like the overwhelmingly negative response to the decision to axe these three important programmes. It has united the whole of Scotland’s musical community in condemnation. Already, three distinct petitions exist to have the programmes restored and put in the right places, so that they continue to be a feature of BBC Scotland’s scheduling. In the last few minutes I have heard that they have collected a combined 20,997 signatures, such is the interest, and the desire to save these programmes.

The head of jazz at the Royal Conservatoire of Scotland, Tommy Smith, has co-ordinated an open letter, which I think he has sent to the Minister, as well as Ministers in the Scottish Government. The letter is signed by the cream of Scotland’s cultural voice—people such as Nicola Benedetti, who is responsible for the delivery of the Edinburgh festival; Sir James MacMillan, one of Scotland’s prime composers; our national Makar; Scottish Opera; and of course various luminaries from the jazz world. All have voiced their concern about what will happen if these programmes are taken off air.

The letter rightly notes that this decision comes at an extremely difficult time for all parts of the cultural and creative industries. I do not think I need say that to the Minister, because she is more than aware of the distinct challenges that everybody in the cultural sector is experiencing. The pressure on the music industry is acute. I think what that letter said is that we must do everything we can to protect the infrastructure that supports our fragile but world-leading Scottish cultural ecosystem. More than that, what comes across in the letter is passion—passion for the music that these programmes support; passion from those who assemble the programmes and put them together; and passion from the broadcasters who present them, and from the audiences who lap them up and love every minute. Nicola Benedetti from the Edinburgh festival, one of the signatories, said:

“Axing these programmes is to perform a heartbreaking disservice to the irreplaceable role they have played in the lives of musicians and music lovers across the country and all parts of society.”

She is spot on.

This chorus of disapproval underlines just how much support there is in our small nation. It is a nation that excels way beyond what might be expected, given the number of people in it, in every sphere of cultural activity—a nation that is internationally renowned, and a brand that is known. We feel this is important. There is a real sense that we in Scotland will do everything we can to defend and protect our cultural output, and ensure that we recognise the distinctive flavour of all its different parts.

--- Later in debate ---

[Pete Wishart]

My hon. Friend is absolutely correct in her assessment and description of the wonderful work that goes on in the Royal Conservatoire of Scotland. It has fantastic staff. I have not had an opportunity to visit for a while, so I will put that on my list now; I will definitely go and see it. John Wallace, a distinguished former leader of the conservatoire, asked what the point of cutting all these programmes is. He is right to ask. We must ensure that young artists get to hear themselves on the radio.

When we want to hear these genres of music, we naturally turn to the BBC. The BBC remains the dominant force in UK broadcasting because of its distinctive funding arrangement, and because the licence fee allows it to do things that no other operator can. We turn to it when trying to find the things that we want. Even with all the increased competition over the years, the BBC still accounts for 47% of radio consumption. That privileged position makes it especially important that BBC radio provides programmes that are distinctive and of public value. The BBC has statutory responsibilities and obligations to do so, and Ofcom is there to ensure that the BBC fulfils them. The BBC has a clear commitment to ensure that all genres of music are played, and to serve an audience beyond the mainstream. That is what the BBC is supposed to do. Instead, there has been a reduction in important public value obligations, and a loss of distinctiveness.

Ofcom is consulting, and is expected to produce its final proposals in a few months’ time, and a new operating licence comes into effect from April. The Department for Digital, Culture, Media and Sport is also having its mid-term review of the BBC, and of course we are all expecting the White Paper with great anticipation. The Minister and I discussed that at length when she appeared before the Scottish Affairs Committee. There are lots of things going on. With all this activity and all these reviews, I plead with her not to lose sight of the prime objective of serving all audiences and ensuring that everyone has something that they can listen to. It is so tempting to play to the mainstream only—to appeal to the mass audience. We should ensure that everyone is served.

Let us look at the BBC’s obligations and responsibilities as outlined by Ofcom. It says that the BBC should ensure a

“range of programming is provided”

across all its services. Specifically on radio services, Ofcom says:

“the BBC should ensure its portfolio of stations offer the broadest variety of output and that the range of musical output on its popular radio services is broader than that of comparable providers”.

The BBC’s decision to cut jazz, classical and piping programming will vastly reduce its fulfilment of that commitment, and the way that it represents and platforms some of Scotland’s most dynamic and emerging music scenes. It is clearly a breach of what is set out in the charter and in regulation. I hope that the Minister will remind BBC Scotland of its obligations and responsibilities.

In response to the chorus of disapproval, the BBC has got in touch with all of us about the subject. My hon. Friend the Member for Glasgow Central (Alison Thewliss) met the BBC last Friday, I believe, and heard some of its alternative proposals. None of what has been suggested comes close to beating it on satisfaction grounds or to making up for the loss of these programmes. The BBC seems to be proposing a series of amalgamations where it takes these programmes off-spectrum, puts them online and diverts people to other services. That is simply not good enough. It does not even start to address what is being lost.

My appeal to the BBC is to listen to people on the frontline, such as those at the meeting with my hon. Friend. They are the ones who know the genres, how they work and operate and what they require in order to survive, sustain and develop. Is there anything the Minister could do to encourage the BBC to engage positively with them? The BBC has engaged positively in the past, and I know that the people at BBC Scotland are good guys. I believe they have the best interests of our nation at heart. They want to serve these audiences, but they just need encouragement to do the right thing and make sure the services are safe.

This is a hard time to be a musician. I would have hated to be a musician during this period. I was one in the ’80s and ’90s, which were days of bounty. It is an entirely different regime now. Streaming accounts mean that musicians earn very little from their recorded work. Then there are the effects of the pandemic and a cost of living crisis. I think I saw a survey showing that over 90% of musicians are now concerned about the impact of the cost of living crisis on their ability to perform. There was a report yesterday about the loss of venues and clubs, which is restricting live performance.

We have had the impact of Brexit. Europe is practically closed to new artists with all the different paperwork that is required. This is not a good time. We do not need these difficulties to be compounded with the loss of an opportunity to be played on the radio. We may not get all the right notes in the right order, as specified by our good friend the great late Eric Morecambe, but I hope we can bring some support to the sector and encourage people to think again and look at the damage this might bring to the sector. I hope the Minister will do all she can to ensure that people are aware of the responsibilities and obligations and think again about the damage.

[Sir Mark Hendrick (in the Chair)]

Just before I bring the Minister in, there is the possibility of a Division fairly shortly, but I will apply any injury time from the vote to the debate.

Football Governance

Mark Hendrick Excerpts

Monday 14th June 2021 Westminster Hall

[Sir Mark Hendrick (Preston) (Lab/Co-op) [V]]

The state of our national game has been a story of rich man, poor man, with the very rich clubs with billionaire owners seeking to make themselves even more revenue. We have seen that with Project Big Picture and the European super league. At the same time, much-valued and cherished local clubs such as Bury, Bolton and Wigan have not survived, or are struggling to survive. The major organisations in England—the Premier League, the Football Association, and the English Football League—are becoming both unable and unwilling to act responsibly in the interests of the wider game of football, and of supporters and their communities. It is therefore important to review the ownership structures and mechanisms of football clubs in this country so that they can be made to act responsibly, and to look at the governance of football clubs going forward so that they can be obliged to behave responsibly and conduct themselves in a manner that satisfies all the stakeholders in the game.

There are also a wide variety of levels of effective engagement and communication between clubs and their supporters throughout the various leagues in England. This can be improved in a number of ways, such as by allowing fans on to club boards and examining new methods of allowing fans to take some ownership of the club they support. In addition, carrying out comparisons between the organisation of leagues in other countries and those in this country could yield some answers. The often-cited 50+1 model in the German Bundesliga may not be implementable in England—although the Prime Minister has threatened that—but there may well be other ways of increasing fan influence over club decision making that fall short of that model. There is also some discussion about the ownership of golden shares, which could give some special ownership rights or privileges to fans, enabling them to bring additional influence to bear on decision making.

There is a view that foreign owners should be treated differently for a variety of reasons, some relating to human rights and some political. Those views could be put under the remit of the football regulator and taken into consideration when the licensing process takes effect. However, in my view, where clubs have been shown to have conducted themselves responsibly over the years, there should be no attempt to not grant a licence when the owners of the club are not responsible for the behaviour of the Government or regime of the country in which they reside, or from which they come. The review should not be an excuse to bash foreign owners who have made investments in, and brought tremendous footballing talent to, this country.

There is no doubt in my mind about the need for a regulator who can exercise his or her powers through such a licensing system. Too often, clubs have not taken their responsibilities seriously, or indeed have not accepted that they have them. Their financial responsibilities have been made clear, but clubs should have additional responsibilities in how they engage with fans, and social responsibilities to ensure that players and fans do not engage in behaviour that would bring the game into disrepute. By that, I do not just mean violence or hooliganism: I believe in taking a firm stance on issues such as racism and homophobia. In my view, the regulator should have the power to do what individual football clubs, the Premier League, the FA and the English Football League have failed to do over the years, which is to properly regulate and police the game so that clubs have responsibilities as well as rights. That approach is far preferable to commentators, fans, and even Government Ministers giving their views from the sidelines, and nothing changing in the process.

Telecommunications Infrastructure (Leasehold Property) Bill

Mark Hendrick Excerpts

Report stage & 3rd reading & 3rd reading: House of Commons & Report stage: House of Commons
Tuesday 10th March 2020 Commons Chamber

[Sir Mark Hendrick (Preston) (Lab/Co-op)]

Will my hon. Friend give way?

[Chi Onwurah]

I will just finish addressing the previous point and then come back to my hon. Friend.

The point made by the right hon. Member for Haltemprice and Howden (Mr Davis) regarding the financial viability of the sector as a whole is incredibly important. If players in the sector—operators or vendors—fail, there will be an impact on the network and therefore on our security as it is part of our critical national infrastructure. The Huawei business model appears to be dependent on having really deep pockets, which means that it can undercut other vendors in tender processes.

[Chi Onwurah]

May I just finish this point?

There are two consequences of Huawei undercutting other vendors: market share, and the dependence of operators on Huawei as a vendor. The networks that Huawei offers or builds are genuinely vendor-specific and operator-specific, which increases dependence hugely. I recognise the point made by the right hon. Member for Haltemprice and Howden, and I think it is important for national security as well as for our economic security.

[Sir Mark Hendrick]

As the shadow Minister will be aware, the Government made an announcement on 28 January that they were going to give a very limited role to Huawei in the development of the infrastructure. They have also taken advice from GCHQ and the NCSC about the level of involvement that Huawei should have. Why does she disagree with that? [Interruption.]

[Mr Ellwood]

On a point of order, Madam Deputy Speaker. Colleagues in a sedentary position have reminded me that there is a declaration of interest to be made, so I humbly ask the hon. Gentleman if he would state his relationship with Huawei.

[Sir Mark Hendrick]

rose—

[Madam Deputy Speaker (Dame Rosie Winterton)]

Order. A point of order should go through the Chair. It is either an intervention or a point of order; it cannot be both.

[Madam Deputy Speaker]

I thank the right hon. Gentleman for his point of order. I hope that Members will not interrupt the debate with too many points of order. I am sure that the hon. Member for Preston (Sir Mark Hendrick) is clear that if there were any need to make a declaration, I would expect him to do so.

[Sir Mark Hendrick]

Yes, I was about to do so, Madam Deputy Speaker. I have consulted the Speaker’s Office—as it will confirm—and checked this point, and I wish to declare a visit to the Huawei factory 10 years ago.

--- Later in debate ---

[Madam Deputy Speaker]

I thank the hon. Gentleman for that point of order. As I have said, I am sure that the hon. Member for Preston will make any declarations necessary, and I hope that he has sought advice on the issue.

[Sir Mark Hendrick]

I have written to every Member in this House inviting them to the reception next week, but it is not a declarable interest.

If there are no more points of order, may I just ask the shadow Minister why she does not feel that it is appropriate to take the outlined course of action, given the evidence from GCHQ and the NCSC about Huawei’s limited role and the management of risk?

[Chi Onwurah]

My hon. Friend raises a really important point. It is worth clarifying that we support the position of the NCSC and I have said that the risks can be managed, but the fact is that we see no evidence that the risks are being managed. They are not being managed in the way in which the NCSC has said that they can, should and need to be managed. There is no evidence of that, and that is the key reason for amendment 4.

Amendment 1, in the name of the right hon. Member for Chingford and Woodford Green (Sir Iain Duncan Smith), is similar in some ways to our amendment. The House will not be surprised to learn that I disagree passionately with him and many of his hon. Friends about many very important issues, but we have a shared concern for our national technological capability and our national security. Labour’s amendment 4 differs from his amendment in two ways. First, our amendment would apply with immediate effect, whereas amendment 1 would apply from 2023. Secondly, our amendment would only apply to newly deployed infrastructure, whereas amendment 1 —as I understand it—would apply universally, to all telecommunications network deployment.

I differ from some Government Members on the nature and level of the threat from Huawei. As I said, I follow the guidance of the National Cyber Security Centre, but the problem is that we have no indication that the Government are following that guidance. There is no legislation. There is no plan for legislation. There is no detail on the nature of the regulator. We understand that it is proposed that Ofcom would take up these regulatory powers, but what are the powers, and what are the resources at a time when Ofcom is also being asked to regulate not only the BBC but the internet? What are the resources, what are the powers and what are the enforcement mechanisms?

Meanwhile, people across the country are concerned. Constituents have written to me to ask if their data has to flow over high-risk infrastructure. They may be objecting on security grounds or, equally, on their understanding of the human rights and employment rights record of Huawei in China, but either way they do not understand the Government’s lack of action.

In tabling this amendment, we are not only, as it were, bringing problems to the Government—we are also offering solutions. I have made detailed proposals for potential ways in which we can diversify our telecoms supply chain: an industrial strategy for the telecommunications sector based around a five-point plan involving standards, research and development, a new catapult centre, working with the Department for International Development and with Commonwealth and emerging markets, and support for non-5G wireless technologies. All of this is to enable innovation around networks, business models and more.

The good news is that in tech you are never so far behind that you cannot leapfrog existing technology. The bad news is that it takes investment and strategic vision—qualities, I am afraid, that this Government appear to lack. Huawei is a test of both. Last week, in the Westminster Hall debate secured by the right hon. Member for Chingford and Woodford Green, I put 10 questions to the Minister, which he was unable to answer. I will not repeat them here, but—[Interruption.] The Minister appears surprised from a sedentary position. I did not receive an answer to my 10 questions. I could repeat them here, but I have written to him to give him the opportunity to encourage the Secretary of State to do so later. Truly, it astounds me that a Government who are, for ideological regions, apparently reluctant to take initiatives on UK state intervention seem so reluctant to set out how they are going to prevent Chinese state intervention in our industry and our economy.

Amendment 5 is related in that it seeks to ensure that operators who roll out infrastructure as a result of this Bill have clear and published plans in place to remove vendors who are designated high risk and a national security concern. Clearly—I think there has been some consensus on this in the debate—it is for the Government to bring forward the promised plans to manage the presence of high-risk vendors in the network. However, in the absence of such plans, the amendment places a duty of transparency on the operators to publicly report on their use of high-risk vendors and their plans to meet the target of 35% set out by the National Cyber Security Centre.

Amendment 3, which was also tabled in Committee, is critical and relevant to some of the earlier debate regarding the record of the Labour Government. We believe that we can go much further in broadband market competition. During my six years at Ofcom, it was established beyond doubt that telecoms infrastructure competition drives investment, innovation and choice. In relation to the previous debate on high-risk vendors, had we had greater competition, we would have had greater choice and would not be in the position of being dependent on two, or possibly three, suppliers. Under Labour, first generation—

--- Later in debate ---

[Sir Iain Duncan Smith]

I agree with my right hon. Friend, and I was going to come to those points.

As I saying, if we look at this strategy, we see that when this all began, there were something like 12 companies in this marketplace. One by one, they have disappeared. Why have they disappeared? They simply cannot compete with Huawei’s pricing. These telecoms companies—telcos, as we call them—have bit by bit found themselves going to the cheapest bidder, providing the technology is as good as the others. By the way, it is certainly not an argument that Huawei has better technology; there is no evidence of that whatsoever. In fact, I think Dr Ian Levy said a year ago that he thought Huawei’s security issues were a shambles, and that is correct. Huawei does not somehow have extra brilliant technology. What it does have, however, is money, which allows it to bid down.

The hon. Member for Newcastle upon Tyne Central said that she is a believer in free markets. She will know that the free market relies on companies being able, when they sell their goods, to make enough money to reinvest and improve the quality of their goods. That is how a proper rules-based market works, but not with a company like this, which is able to strip that away. One by one, these companies have gone, not because of market failure but because it has been a policy position of the Chinese Government using Huawei to dominate this market over nearly two decades.

[Sir Mark Hendrick]

Will the right hon. Gentleman give way?

[Sir Iain Duncan Smith]

I will give way to the hon. Gentleman, but not for long.

[Sir Mark Hendrick]

I thank the right hon. Gentleman for giving way. In America, the break-up of the Bell Telephone Company led to the creation of the “Baby Bells”. Companies are changing all the time. Telecommunications companies across Europe are changing and restructuring all the time. This is no different.

[Sir Iain Duncan Smith]

With respect to the hon. Gentleman, I have no idea what he was intervening over. There is a free market, and when a free market operates we have competition because companies are set up to solve problems and sell their goods. When a company has unlimited funds and can undercut the others, there is no money for them, they cannot operate and they will go out of business. It is fairly logical for anybody who understands the free market.