Scottish Football (Tax Liabilities)

Debate between Thomas Docherty and Damian Collins

Wednesday 29th February 2012 Westminster Hall

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

I just want to make a few comments on this important subject. I will not claim to share other hon. Members’ expertise in Scottish football. No doubt, other hon. Members, particularly from Scotland, will speak with a great deal of insight about the situation at Glasgow Rangers football club. However, I think that the hon. Member for Dunfermline and West Fife (Thomas Docherty), in opening the debate, touched on a number of important points that are relevant to football in Scotland and in England and relate to the financial administration of the game—in particular, the football first creditors rule.

There is no doubt that, in the case of Rangers, the losers are the fans of the club and other clubs and businesses to which it owes money. They are the people who have lost out as a result of what has happened. The failure of a club of its size has an impact in destabilising the structure of the league, so in some ways everyone involved in football in Scotland is affected, whether or not they are directly employed by or associated with Rangers football club. The hon. Gentleman set that out very clearly.

I think that there is a big issue to do with the football creditors rule. The caution that I would express about it in relation to Scotland is that it has had a damaging and destabilising effect on the game in England. It cannot be right that when a club fails and goes into administration, its creditors, if they are not within football, might get a penny in the pound. We might be talking about a local business that prints the club’s programmes or a local builder who had worked on its ground. When Leeds United went into administration, the West Yorkshire ambulance service got pennies in the pound or a penny in the pound. However, footballers who are owed salaries and football clubs in different parts of the country that are owed transfer money get their money in full.

The hon. Gentleman made a very good point about ticket sales—money that is supposed to pass directly from one club to the other. He highlighted that particularly well. It is unfair to other creditors of football clubs—community businesses working alongside a club, perhaps employing fans of that club—that they lose out massively.

It would be a good thing for football if clubs had to take a stronger interest in each other’s financial performance when they entered into financial transactions with each other. A club would really have to think, when it sold a player to another football club, “Can this club afford to pay us?” At the moment, clubs know that that risk is guaranteed by the football first creditors rule, so they are more likely to sell players to clubs that cannot really afford them.

The type of discipline that I have described would be good. It might help to bring about something that is badly needed in football in England and Scotland—some deflationary pressure on players’ salaries and transfer fees. That is where the money is going. There has never been more money in football than there is today, yet there have never been so many football clubs failing financially.

[Thomas Docherty]

The hon. Gentleman has been a big champion of football reform. Does he not accept, though, that the sums of money in Scotland are very different from those in England? The reality is that two clubs in Scotland hold 90% of the revenue and, in effect, bully the other clubs in Scotland.

[Damian Collins]

The hon. Gentleman makes a very important point. The failure of Rangers in Scotland has a much bigger market-distorting impact on Scottish football than the failure of Leeds United, Portsmouth or another large club in the English premier league would have, so it is a much more acute problem. That is an area where greater transparency on financial performance and disclosure between clubs would help. However, that is not something that the clubs should be allowed to do on their own. They require help from the governing bodies and, where necessary, from HMRC as well, so that that can be properly policed. I agree that it would be very difficult for smaller clubs in Scottish football to start calling the shots with the old firm. That is a problem, but it is one where the competitions have a role to play.

Where clubs owe money to the taxman, that is a serious matter, as it is for any other business. The hon. Gentleman made that clear in his speech. Businesses in our constituencies—we have all had such experiences in the past year or two—have problems because they are in arrears; HMRC is coming after them for the money; and they ask for help. It is a very difficult situation to be in. Businesses understand that if they owe money to the taxman, it is a serious issue, so how is it that football clubs have been allowed to build up large debts?

When Leeds United went into administration, the taxpayers of the United Kingdom lost £6 million in unpaid taxes. Why was it allowed to get to that stage and to get that bad? HMRC should intervene, but the competition organisers should be keeping an eye on the tax payments and how up to date they are for their clubs. The premier league in England has made some progress with that. It even has a system where clubs can have television money or prize money withheld from them if they owe money to the taxman. That money might go straight to the taxman. The clubs have to understand that they have to pay their bills just like any other business.

It is unfair for the clubs to subsidise spending that they cannot afford by securitising their ticket sales, selling their future gate receipts, borrowing money from their banks until they cannot borrow any more, borrowing money from the local businesses that they engage with and owe money to and borrowing money from the taxman. They cannot keep on borrowing money at every opportunity until there is none left. That has to be stopped, and the tax authorities have a big role in doing so, with the support of the competition organisers. That is one of the reasons why the Culture, Media and Sport Committee, of which I am a member, has recommended that there should be a licensing scheme for football, so that the football authorities can keep an eye on the financial performance of clubs and ensure that they are not getting into too much debt.

There is also the introduction by UEFA of the financial fair play rules. In Scotland, just as in England, there will be many clubs playing in the top division that will have a chance of qualifying for European competitions—certainly the Europa league, if not the champions league—that will want that licence. They will understand that they have to be able to balance their books in the medium term. That will be an incentive to clubs to ensure that their financial performance is better in the long run. We should be putting our own house in order, however, and the competition organisers have a big role to play in ensuring that that happens.

There is a great role for HMRC in ensuring that tax liabilities are paid. There is a role in getting rid of the football first creditors rule.

[Thomas Docherty]

The hon. Gentleman is making a compelling argument, but perhaps I could tempt him to say something about clarity of ownership as well. Part of the issue with Leeds United in particular was the uncertainty over who owned which assets. Will he speak about that?

[Damian Collins]

The hon. Gentleman pre-empts the final thing that I wanted to touch on in my remarks and the subject of my ten-minute rule Bill, which I will introduce on 13 March and which is about the ownership of clubs and assets. It is an important area and one where HMRC could be prevailed upon to help. When Leeds United failed, there was uncertainty over who took over the club’s liabilities. It was taken over by a beneficial trust and the investors in that trust were never made known. There were allegations of a relationship perhaps between FSF, which took over control of the club, and some of the club’s other creditors. That was never known, because we never knew the identity of those investors. It would help football a lot if there was transparency over the ownership of clubs and clubs’ major assets, such as training grounds and stadiums, so that we can see who controls them and where the money comes from.

There have been allegations that certain people who represent the brass plaque of the ownership of the club are not the source of finance for the real ownership of the club. I do not understand how the fit and proper person test can be applied to a club’s ownership if no one knows who that person is in the first place. We do not know who owns Coventry City, who currently play in the second tier of English football. Until last summer, we did not know who the owners of Leeds United were either. That cannot be allowed to continue. Certainly, if clubs are failing and the taxman is losing millions of pounds in revenue, businesses and local communities are losing money because the clubs owe them money and the obscurity of the clubs’ ownership causes further concern and a lack of confidence, that needs to be resolved.

The ultimate way to resolve who owns football clubs—again, HMRC may be able to help us on this—is to understand the source of the finance. People might assume ownership or the ownership might be from a fund that is registered in Nevis and operated in Switzerland. Where does the money come from? HMRC has to look at that routinely. HMRC and football clubs’ banks have to be satisfied that football clubs are not being bought or injected with cash that may have come from uncertain or dubious sources, so that needs to be followed.

I feel that HMRC should launch a retrospective investigation to determine what the source of finance was for Leeds United and who owned the club, so that if there was any uncertainty about the club’s ownership and who was involved in putting in money to take it out of administration, that might be pursued. We have a right to know what happened in that case and the tax authorities may be the only body that can pursue that.

Poor administration of football clubs creates a big debt to society, which communities around the country are paying. We should send a lesson out that we want greater transparency over ownership and greater transparency of finances between clubs and a more responsible attitude from clubs in their transactions with each other, to avoid the big impact that we feel at the time and that we see with Rangers currently of the cost of failure. That is the cost to fans, local businesses and the competitions in which they compete.

Fixed-term Parliaments Bill

Debate between Thomas Docherty and Damian Collins

Tuesday 18th January 2011 Commons Chamber

[Thomas Docherty]

The hon. Gentleman makes a completely sensible point that goes to the heart of some of our arguments tonight. I will give a specific example, because there has been some discussion of the fact that none of those cases was the direct result of a no-confidence vote. I remind the House that in 1940 the Government of the then Prime Minister, Neville Chamberlain, fell on what is largely accepted to have effectively been a vote of no confidence. It was a no-confidence vote by any other name. As the Parliamentary Secretary and the Deputy Leader of the House have accepted, under their proposals there could be a no-confidence motion that is not officially stamped as such. As you will know, Mr Deputy Speaker, in 1940 the House did not prorogue. There was simply a change of Administration, and a short time later a coalition Government were formed involving all three parties. In the immediate aftermath of the fall of the Chamberlain Government, there was no coalition, and nor was the House prorogued.

[Damian Collins]

The hon. Gentleman is referring to the vote that followed the Norway debate, which the then Government won. However, they chose to change their leadership anyway as a result of the pressure of the vote. If circumstances were repeated and that was considered to be a confidence motion, it would not lead to the fall of the Government unless they chose to go.

[Thomas Docherty]

The hon. Gentleman highlights a crucial element, and as my hon. Friend the Member for Foyle mentioned earlier—the hon. Gentleman will correct me if I am wrong—that was an Adjournment debate and was not even a formal resolution. That shows exactly the problem with the Bill as it is worded. It accepts the principle that there is no requirement for a formal vote of no confidence, but it does not accept those nuances that are part of the argument that, even if a Government win but do not meet a threshold that they have set beforehand, they have in effect fallen.

I can think of another example from our devolved Administrations. It was clear in 2001 that the then First Minister of Scotland, Henry McLeish, had lost the confidence of the Scottish Parliament and of his party. On the morning of the no-confidence debate he resigned as First Minister. That did not lead to the proroguing of the Scottish Parliament. It was an unprecedented event in the short history of the Scottish Parliament, but it survived. I hope that the Minister will, even at this late stage, take on board the fact that, as far as Oppositions ever are, we are seeking to be helpful to the Government, and certainly to the House, by providing some technical amendments to tidy up the Bill.

The hon. Member for North Warwickshire (Dan Byles) referred to France and the United States. I was not aware that he was such a Francophile, but perhaps that is the result of the new coalition spirit. My understanding—I am happy to be corrected—is that the French President has the power to dismiss the Prime Minister summarily, but I suspect that the hon. Gentleman is not advocating that we adopt the same position in this country.

As the Minister knows, I am something of a bore on the subject of the United States’ constitution. When the founding fathers of the United States were considering the peculiarities of their arrangements in the constitutional convention, one thing they desperately tried to avoid was over-lengthy terms of office. That is why they have elections every two years in their states. Votes for Congress, the Senate and the Presidency are staggered. Although I accept that the hon. Member for North Warwickshire is trying gallantly to defend the Minister’s position, I fear that it is not a straightforward example to apply in this case. I have spoken in favour of the amendments, but I am conscious that the Prime Minister will be rushing to the House and that the Minister wishes to reply, so I will end my comments.

Postal Services Bill

Debate between Thomas Docherty and Damian Collins

Wednesday 27th October 2010 Commons Chamber

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

Following the remarks of the hon. Member for Angus (Mr Weir) much earlier in the debate, I begin by pointing out that in some ways the Bill is too good to be true. He raised concerns that people in rural areas, especially in Scotland, would no longer have a universal service if the Bill is passed. However, the answer is that of course they will. People who live in built-up areas will continue to subsidise the post of people who live in rural and distant areas. People who live in constituencies in the south-east of England, such as mine in Folkestone and Hythe, will continue, relatively, to subsidise people who live in remote areas, because we all believe in universal postal provision, and that is included in the Bill.

Our concerns are that Royal Mail will run out of money to sustain its current universal six-days-a-week service unless its pension deficit is solved and, crucially, the business is transformed. That view is not unique to Government Members; it was expressed by the former Secretary of State, Lord Mandelson, when the previous Postal Services Bill was introduced in the House of Lords last year. There is a degree of common ground. It is a question of how we go forward in a way that gives value to customers of Royal Mail and the Post Office, and the taxpayers who must pick up the liability for the Royal Mail pension pot. Under the provisions of the Bill, the taxpayer will take on a considerable liability, so it is right that in return we should consider how the Royal Mail business can be transformed and work better.

Hon. Members have spoken about all aspects of the Bill; I shall touch on only a couple of them. Going back to the remarks made by the hon. Member for Angus (Mr Weir) and my hon. Friend the Member for Argyll and Bute (Mr Reid) earlier in the debate, clauses 35 and 37 provide that if Ofcom considers that the efficiency of the universal system can be better delivered with additional suppliers coming in to support that service, it will have the opportunity to advise the Secretary of State accordingly. That can only strengthen the quality of the universal provision. A number of hon. Members on the Government Benches would not see that as a bad thing.

[Thomas Docherty (Dunfermline and West Fife) (Lab)]

Does the hon. Gentleman accept that one of the great lessons of the privatised utilities is that none of the regulators have had sufficient teeth to stand up for the interests of consumers? Why should the regulator in this case be any different?

[Damian Collins]

I can speak only from my own experience, having previously worked in the advertising industry, where we encountered the wrath of Ofcom. It seemed only too ready to stand up for the rights of consumers, and I have every confidence that it will do so in the case of postal services too.

Opposition Members have asked repeatedly what guarantees there are. What guarantees have there been for the Post Office and Royal Mail over the past 13 years, when we have seen thousands of post offices closed? The hon. Member for Hampstead and Kilburn (Glenda Jackson) gave an impassioned speech about the removal of post office services and sub-post offices from her constituency. We would all concur with that, and we would all share the view that they play a vital role in the community, but the previous system made no guarantees to those post offices. We have seen a slow withering of the post office network on the vine, a slow reduction in the support for post offices, and their closure. We cannot go on like that.

I am interested in the provisions of clauses 26 and 27, which give authority to postal service providers and get rid of the current licensing regime. The Secretary of State believes that that will be more efficient and cheaper for businesses. I would be encouraged if the same mechanism allowed new providers to come in. During the debate, hon. Members have asked how new sub-post offices can open and how postal providers can come into the market.

In my constituency—other hon. Members may have had the same experience—to try to fight the pressure for branch closures, independent businesses fought hard to keep those post offices open. The Enbrook Valley post office in my constituency is a sub-post office run by an independent retailer. He had to fight hard to maintain that provision. He wanted to put a business case together to keep that post office working, and with the support of the local community and money raised by the local community, he did just that. I would like to see more of that, and the process made easier through the Bill.

I am interested in the work of organisations such as Pub is the Hub, which try to turn pubs into multifaceted businesses, particularly in rural communities, where the post office can play a part too. In a village in my constituency—Elham, where I live—when the post office closed, provision was transferred to a counter operating in the King’s Arms pub. Never before had it been realised that there was such demand for picking up books of stamps at lunchtime. There may well be more business models like that which we could encourage, through a mechanism that encourages new providers to come into the post office branch network market.

I agree that it is right that the post office network should not be privatised as part of the provisions of the Bill. However, that does not mean that there should be stasis around the post office network, with nothing changing. Although we welcome the money that the Secretary of State announced today to support the network, that does not mean that there cannot be innovation in provision and an attempt to attract new providers. I look forward to debating the Bill, especially clauses 26 and 27, and listening to the debate as it progresses through Parliament. May it offer some opportunity for new providers to come in, and for the Secretary of State to encourage and support that.

Energy Efficiency

Debate between Thomas Docherty and Damian Collins

Wednesday 30th June 2010 Commons Chamber

[Thomas Docherty]

Indeed, Sheffield, Hallam is not a Labour marginal; however, given the cuts that this Government are introducing, I suspect that it will be by the next election.

[Damian Collins]

The hon. Gentleman said that the money was a loan, but there was only an offer of a loan—an offer that the previous Government did not have the money to honour. That is the point that my hon. Friend the Member for Bournemouth East (Mr Ellwood) was making.

[Thomas Docherty]

Perhaps we will just have to say that I think that the hon. Gentleman is wrong on this one. The reality of the coalition is that there are lots of warm words, as we saw from the Minister’s eloquent opening statement, but when it comes to the substance and the detail of how money will be levered in, they are doing things on a wing and a prayer, with their fingers crossed.