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British Cycling Federation (Grants)

Volume 285: debated on Thursday 21 November 1996

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Motion made, and Question proposed, That this House do now adjourn.— (Mr. Bates.]

7.15 pm

I thank those in authority for allowing me to introduce the debate.

As a member of Otley cycling club, which is affiliated to the British Cycling Federation, I probably ought to declare that I am indirectly a member of the federation.

Watching any skilled athlete engage in any sport is an uplifting experience. For me—as a person who is involved in cycling and has raced cycles for many years—to watch a racing cyclist in harmony with his or her machine is to observe the grace and power of an athlete made effective by a superb bicycle design and the scientific skills of aerodynamic engineers and metallurgists. In recent years, the televisual media have developed the skills and technology to be able to present cycle road racing live to millions of people throughout the world.

Many of us may recall that, when colour television became the norm, snooker and billiards suddenly became accessible to huge audiences. Commercial sponsorship rapidly followed, bringing large sums of money into the sport from the private sector. While cycling has always been able to attract some sponsorship, it is only the advent of technology capable of showing it live on television and to mass audiences that has recently enabled large-scale sponsorship to develop the sport further, and internationally.

It is a striking fact that, whereas elsewhere the sport of cycling is extremely well developed, in the United Kingdom—in spite of British cycling excellence over the years—it has languished in recent times. There have been some signs of revival, associated with particular individuals such as Chris Boardman, Yvonne McGregor and Graeme Obree, as well as the development associated with the velodrome in Manchester, which I am sure we all welcome. Nevertheless, the long-term membership of the primary cycling organisations, such as the Cyclists Touring Club and the BCF, remains static, notwithstanding the massive increase in bicycle sales associated in particular with the mountain bike boom.

There has been much debate in cycling circles about that disappointing performance, and especially about the way in which the sport has been managed by the BCF. I also understand that eyebrows have been raised outside this country, at the highest levels in the cycling world—in the Union Cycliste Internationale, for instance—about the way in which the BCF has managed the sport in this country. That must be worrying, as the UCI is the most important body in cycling.

International companies take a pan-European view of marketing. When they choose to develop sponsorship of a particular sport, they want the commercial potentialities of that sport throughout their target market to be fully developed. They therefore take a dim view of the fact that the United Kingdom market in cycle racing, in particular, is and has been so undeveloped.

Mr. Hein Verbruggen, president of the UCI, has made it known that, while he would like to ensure that major world-ranked races and other events will continue to be held in Great Britain, he is frustrated by the management of the BCF, which makes it increasingly unlikely that he will have an opportunity to present such events in the United Kingdom. On the Radio 5 programme "On the Line", he said:
"Great Britain is … a completely black spot in the international cycling market".
The programme, which was an excellent example of investigative journalism, conducted by the journalist Mr. Ian Bent, aired many concerns that are the subject of serious audit investigation at the BCF.

It has been suggested to me that at least one major international company, which brought millions of pounds into cycling and which originates within the English-speaking world, has left the sport, disappointed with the poor marketing of cycling, particularly in the UK. Worse still, Britain's multi-stage cycling tour, hitherto known as the Milk race, which again brought much private money into the sport, has ceased even to exist. In my eyes and in those of many of my colleagues whom I have met on bikes on and off the road over the years, the BCF board stands guilty of, at best, a lack of vision and a timorous failure to realise the full potential of this beautiful and undeveloped sport, despite the fact that it receives £500,000 a year of public money, in addition to the annual subscriptions of its private members.

From time to time, graver charges have been made about the manner in which BCF board members have managed the BCF's business affairs. In July, I tabled a question to the Minister responsible for sport revealing publicly, probably for the first time, that serious questions needed to be asked about the relationship between the BCF and private companies with close links with BCF board members. My questions were prompted by the turmoil in the BCF following the election of Mr. Tony Doyle, the former world cycling champion, as BCF president. He was subsequently removed in what can be described only as a coup by board members.

The new president had declared that he wanted to increase the transparency of the BCF board's operations, to make the board more accountable to the membership and to secure the further development of our sport in the UK. For whatever reason, after a short period, Mr. Doyle ceased to be president. A process was begun that may eventually conclude with litigation and substantial legal costs falling on the BCF. I understand that, in November last year and in March this year, Mr. Doyle raised with Mr. Derek Casey his concerns about the way in which the BCF board operated. As you probably know, Mr. Deputy Speaker, Mr. Casey is chief executive of the Sports Council, a primary funder of the BCF.

A number of events appeared to take place subsequent to my questions, which appeared on the Order Paper in July. It appears that at least one of the companies that was supplying goods and services to the BCF and that was associated with a particular board member subsequently changed the terms of its contract.

I wrote to the BCF and to Mr. Doyle asking that they authorise representatives to meet to seek a settlement of their differences out of court, thereby avoiding expensive legal fees falling on the membership. Such a settlement has not yet been achieved.

Consequent on my questions, the Sports Council appears to have begun an internal audit of the BCF's affairs. I have a copy of that audit. The Sports Council should have acted earlier in relation to the matter, given the fact that it has custody of £500,000 of public funds, which it has continued to pay on a quarterly basis to the BCF, even though the Sports Council was aware of the seriousness of the allegations and the turmoil in the organisation.

The internal audit reveals a grave state of affairs in relation to the manner in which the BCF has been and is being managed. The audit reveals, first, concerns about the financial position of the BCF, British Cycling Promotions Ltd. and the velodrome, which is the jewel in the crown of British cycling. A substantial deficit in the current year is projected. Secondly, the audit reveals inadequately structured management accounts, with what is described as a major weakness in the accounts in relation to forecasting income and expenditure. Thirdly, the audit finds inadequate financial accountability and control.

Fourthly, the audit refers, worryingly, to actual, potential or perceived conflicts of interest involving some board members—some companies are supplying goods and services to the BCF; the principals of those companies have been BCF board members for years. Fifthly, the audit reveals internal conflict in the board. Sixthly, it asserts that board members have become involved in handling operational matters to a detailed extent. Overall, the audit report concludes that the board
"is failing to operate properly and effectively as an Executive Body".

In my many years in public life, this is probably the most damning audit report that I have ever read. Moreover, the published balance sheet shows an artificially low rate of depreciation on fixed assets. I am informed that the provision for stock on the balance sheet allegedly contains many obsolete items that no longer have any inherent value. A falsely optimistic picture of the BCF's health has been described in the balance sheet.

Mr. Deputy Speaker, you might think that, given the scale of public funding that I have described, the damning nature of the audit report, the allegations in the radio programme, questions in the House and the prolonged organisational turmoil in the BCF, the Sports Council might have acted sooner. If you were to come to that conclusion, I would share your view.

I am not happy either with the way in which the Sports Council delivered the results of the audit to BCF members. At the annual general meeting a few weeks ago, where it was known to the Sports Council that many of these matters would be debated and that the board was to be re-elected, the Sports Council's representatives provided copies of the damaging audit report in advance of the annual general meeting to board members, who were clearly culpable.

I understand that the acting BCF chairman of the meeting was aware of the contents of the report, yet chose not to reveal any of its details until the end of the clay, after the board elections and after the debates on related matters. The chairman did not act with full transparency in ordering the agenda in that way. Given the extraordinary nature of the allegations and the fact that the people who had been accused by the audit report had read it in advance, the Sports Council's representatives had a duty, which they shirked, to bring the report to the attention of delegates before the election of the board and before the debates. The Sports Council failed lamentably in the matter. Subsequent to the annual general meeting, there has been a further session of the BCF's new managing committee. I am surprised, to put it mildly, that the Sports Council did not ensure that it had a representative at the meeting to monitor the BCF's deliberations, with an eye to ensuring that the BCF, at last, complies with the Sports Council's recommendations. I have expressed my view privately to the chief executive of the Sports Council, Mr. Casey, but I remain dissatisfied with his reason for that failure.

I should have expected that the annual general meeting, which was conducted after a year of organisational turmoil, would be a model of propriety, but no. Three matters concern me. First, the chairman allowed board members who had not been re-elected to continue to exercise their votes after they had been removed from office, votes which they held ex officio by virtue only of the fact that they had been directors. Secondly, the governing board of the BCF was not elected according to its constitution; rather, an interim committee was established, which stands outside the BCF's constitution. Thirdly, there is currently no elected president or chairman of the BCF.

Those three matters put the current BCF outside its constitution. Clearly, that must throw considerable doubt on the authority of people who are now nominally in charge of the BCF to receive and spend public money. That matter must be addressed immediately, because the Sports Council is due to pay a further quarterly instalment of about £125,000 to the federation on 15 December. Lawyers share my doubts about the constitutional position of the BCF.

I have been reluctant to air many of these matters in public because of the danger of bringing a sport that I love, and in which I have participated for a long time, into further disrepute. I have felt it necessary to do so because those matters cannot be swept under the carpet any more. My confidence in the Sports Council as a giver of grants and a monitoring institution has been severely dented. Questions must now be asked about the accountability of the Sports Council to the public and Parliament, especially when its so-called annual report has not been published since 1993. It is a bizarre, almost Monty Pythonesque situation when an annual report does not appear yearly, notwithstanding the fact that the Sports Council is happy to spend £47.5 million of taxpayers' money every year. It does so without, apparently, giving an account of itself other than that provided in its published accounts every year.

I understand that a meeting will be held shortly between the Sports Council and the BCF. The Government, through the Minister responsible for sport, should intervene to ensure that the Sports Council secures the following objectives. First, the true, up-to-date financial position of the BCF should be established. Secondly, the BCF should be brought back into line with its constitution, which should also be updated so that the federation ceases to be an unincorporated association, which therefore has no legal existence. Thirdly, a professional chief executive with appropriate experience should be appointed to take on day-to-day management functions, to carry the sport forward. Finally, independent solicitors, approved by the Sports Council, should be brought in to make recommendations on how to resolve the current long-standing damaging dispute, with the objective of minimising further legal costs.

I am particularly troubled because, if the Sports Council has been dilatory in its dealings on cycling, especially when it is spending £500,000 every year on the sport, I fear that there may be other areas in which that same dilatoriness is apparent. Given that the Sports Council has failed to produce its annual report for the past three years, it is time that the Minister responsible for sport agreed to the request of my hon. Friend the Member for Stalybridge and Hyde (Mr. Pendry) for a report of some kind, if not an annual report, to be published by the Sports Council forthwith. I seek a guarantee from the Minister that that report can be debated and questions asked so that the Sports Council is made answerable to the House.

I thank the House for the opportunity to raise these matters.

7.32 pm

I am grateful to the hon. Member for Hemsworth (Mr. Trickett) for allowing me to contribute briefly to the debate. May I say to the House from the Government side that I believe that, by raising certain matters, the hon. Gentleman has done a service not only to the House and to sport in general but to cycling in particular?

The hon. Gentleman is aware that in recent months I have taken an active interest in the British Cycling Federation, and the jewel in the crown of British cycling, the Manchester velodrome. It cost a great deal of money and is an absolutely superb facility. As the hon. Gentleman is well aware, however, sadly, it has been grotesquely under-used.

The hon. Gentleman's allegations about the administration of the sport by those on the board of the BCF are entirely accurate. I believe that those who have been administering it are guilty of maladministration, neglect and abuse of their position. As the hon. Gentleman has said, there is a flagrant conflict of interest in respect of the companies that are providing services and equipment to the federation and leading, long-serving members of its board.

That matter was drawn to my attention by one of my constituents, Mr. John Kennedy, who has recently taken an active, positive and constructive interest in cycling. He has sought to promote cycling in the United Kingdom and to utilise to a much greater extent that jewel in the crown, the Manchester cycling velodrome. As a result of meetings I had with Mr. Kennedy at his office and home in Macclesfield, I arranged a meeting with the Minister responsible for sport, who is to respond to the debate. The Minister gave generously of his time to me and to my constituent, and the officials present were seized of the problems that face the sport of cycling. Those problems have been articulated and promoted accurately and absolutely down the line by the hon. Member for Hemsworth. He has not sought to decorate or exaggerate those problems; he has expressed accurately the concerns felt by many in that sport.

My hon. Friend the Minister gave me certain undertakings that the concerns that had been expressed and the information that had been provided would be fully investigated. I await his response with great interest. I have no doubt that a large sum of British taxpayers' money—000,000—channelled, as the hon. Gentleman has said, through the Sports Council to the BCF over a number of years, has been misused, wasted and squandered. Some of the bills that piled up were totally unnecessary and resulted from a conflict of interest and total maladministration of the affairs of the BCF.

I seek an assurance from my hon. Friend the Minister that those who have been responsible for the maladministration, neglect and squandering and waste of public money will no longer be permitted to be part of the BCF and its board. I share the views expressed by the hon. Member for Hemsworth about the way in which the recent annual general meeting was handled. It would have been appropriate for the audit report on what has been happening in the BCF to be presented before the board elections to all those attending the AGM.

I am very interested in cycling. I want the expensive jewel in the crown, the Manchester velodrome, to be properly and fully used. I should like to see it fall down from over-use instead of deteriorating and running down from under-use as has happened recently. A number of competitions could have been held there.

The hon. Member for Hemsworth referred to the international cycling body. My constituent has had regular contact with its president, who has expressed to my constituent and to the hon. Gentleman his deep concern about what has happened and about the fact that that has prejudiced making the United Kingdom the location for major cycling events, especially international ones.

My constituent is interested in fostering the participation of young people who want to cycle. He wants a youth challenge international competition to be organised at the Manchester velodrome. I wish him success, and I shall give him every support and encouragement. When he has sought to work with existing members of the board, however, he has been frustrated from every angle and at every door and corner. That is not how senior representatives of the sport should operate. They should encourage people who are keen to provide sponsorship, administration, organisation and enthusiasm.

The hon. Member for Hemsworth has performed a great service for the sport by raising this issue in such a measured and constructive manner. I think that my comments may have gone a bit further than his. He spoke with great moderation, because of his involvement in the industry and his interest and concern for it.

I appreciate the time that the Minister responsible for sport gave me, and the concern that he and his officials clearly felt about the information that my constituents and I, and the hon. Member for Hemsworth, have presented to his Department over the past months. I hope that his reply to this debate will be helpful. If it is, the hon. Member for Hemsworth and I will have helped to guarantee a good and successful future for cycling in the United Kingdom.

7.40 pm

I thank the hon. Member for Hemsworth (Mr. Trickett) for raising this important issue today, for the way in which he did it and for bringing to my attention some of his concerns about the sport of cycling, the operation of the British Cycling Federation, and the use of the Manchester velodrome. I know that he has a keen interest in cycling, and I take his concerns very seriously.

Those concerns were first drawn to my attention last July, when I met my hon. Friend the Member for Macclesfield (Mr. Winterton) and one of his constituents. I pay tribute to the typically energetic way in which he has pursued this matter and to his powerful and well-argued speech in this debate. At the meeting, his constituent made serious allegations of financial impropriety against the British Cycling Federation. He also claimed that, due particularly to the federation's policy, the Manchester velodrome was being under-used.

Also in July, the hon. Member for Hemsworth—as he rightly reminded us—raised with my Department four issues about financial concerns and the federation's use of the Sports Council's grant in aid, and about the future of the Manchester velodrome.

As the House is aware, the Government provide support to individual governing bodies of sport through their sponsorship of the Sports Council, which is an independent body set up by royal charter. It is for the council, within an overall policy framework set by the Government, to dispense the resources at its disposal, according to its own detailed policies and priorities, to ensure that those are applied effectively and efficiently and to ensure that value for money is obtained from the public investment made.

Like other executive non-departmental public bodies, the Great Britain Sports Council, and particularly its chief executive, Mr. Derek Casey, is responsible for ensuring that all public funds in the council's charge are subject to financial propriety and regularity, and that they are applied only to the objects and powers of the Sports Council, as authorised by Parliament. In its use of public funds, the Sports Council must comply with the requirements of Government accounting and other standards of good administrative practice set by the Government.

The hon. Member for Hemsworth quite rightly raised the issue of reports. The Sports Council has not produced reports recently because of the restructuring that is currently under way. The Great Britain Sports Council is about to depart for ever, and the new English sports council and the new United Kingdom sports council will take its place. A new report will be published in January 1997. As he knows, however, annual accounts have already been laid before the House.

In meeting its responsibilities, and to ensure the proper accountability and propriety of the sums expended, the Sports Council awards grants to governing bodies and other sports organisations towards the cost of defined programmes that are relevant to the Sports Council's policy objectives. Conditions are attached to each grant, and may vary according to the nature of the activity supported. Among the standard conditions that apply is the need for the grant recipient to provide a concise—but detailed—annual report and forward plan covering each programme activity. The reports should focus on the extent to which the predetermined developmental and financial targets have been met, and form the basis of a formal annual review undertaken by officers of the Sports Council.

The Sports Council's liaison officers also regularly monitor the progress made by governing bodies in achieving the objectives set out in their forward plans, and have regular meetings with officials of the governing bodies to discuss progress, developments and other matters that arise. Liaison officers also have the right to attend meetings of the committees of the governing body. No further payments are made when compliance with the conditions is not met and no satisfactory explanation is forthcoming, and the remainder of the grant on offer is withdrawn.

At my meeting the other day with Mr. Casey, the chief executive of the Sports Council, he said that the reason why Mr. Dermott Collins, the cycling officer of the Sports Council, had not attended the most recent meeting of the BCF's governing committee was that he feared that the Sports Council would begin to act as shadow director of the BCF. Does the Minister agree that such a suggestion is bizarre, for several reasons? First, the Sports Council is providing half a million pounds. Secondly, the Minister himself has said that sports officers have a right to attend the meetings. Given the failure to monitor properly the organisation, would not it be appropriate for the Minister to speak to the chief executive of the Sports Council and to ensure that the grant is used properly by the BCF?

At the same meeting, Mr. Casey said that he would not pay the next grant, which is due on 15 December, unless changes are made. Is the Minister aware of any action being taken by the Sports Council to bring matters into order?

I hear what the hon. Gentleman says. They are serious matters, and I will draw to Mr. Casey's attention not only the comments made by the hon. Gentleman in his speech but those in his intervention. I will undertake to ensure that a proper reply is sent to the hon. Gentleman.

As I have advised the House and the hon. Member for Hemsworth on previous occasions, all sports governing bodies in receipt of Sports Council grants are also required to have their annual accounts audited and to supply a copy of those audited accounts to the Sports Council. Additionally, the Comptroller and Auditor General may conduct more detailed audits. The Sports Council also has the right to conduct more detailed audits, and the Sports Council's management audit programme includes a review of the operations of a sample of governing bodies in receipt of Sports Council grants. That applies to the British Cycling Federation.

As a result of the very serious allegations and concerns raised by hon. Members about the British Cycling Federation, I have asked the Sports Council to provide me with a full report on the situation. The Sports Council's internal auditors have now conducted an investigation into the affairs of the British Cycling Federation, and it has revealed that financial accountability and control are not as strong as they should be for an organisation with responsibility for spending public—or membership—funds.

The chief executive of the Sports Council has recently written to the board members of the British Cycling Federation, drawing their attention to these shortcomings and making recommendations to address those concerns. The recommendations include the employment of a qualified management accountant, whose immediate role would be to review the financial position of the federation, British Cycling Promotions Ltd. and Manchester Velodrome Ltd., with a view to making recommendations to remedy the weaknesses identified.

The Sports Council is, however, satisfied that despite the administrative difficulties experienced by the British Cycling Federation, the council's continued investment of £370,000 for the annual development programme to December 1996 represents value for money. The sport is working hard to establish the proper structures necessary to harness the considerable potential that exists and to promote itself more positively to participants, the media and sponsors. In recognition of this, the Sports Council announced in May this year that cycling, among 21 other sports, will be eligible to receive the enhanced service that it is to provide to those activities which have significant development potential and are of particular relevance to the new focus of the Sports Council: young people and the development of excellence.

At the competitive level, Britain already has riders such as Chris Boardman and Graeme Obree, who are among the best in the world. At grass roots level, the British Cycling Federation has begun to focus on attracting more young people into the sport, with a major recruitment initiative being developed. Funding is also providing additional coaching and training opportunities, made possible by the Manchester velodrome.

As I have already mentioned, the hon. Member for Hemsworth has previously raised questions with me about the way in which sports governing bodies, and the British Cycling Federation in particular, let contracts to suppliers of goods and services. I hope that the hon. Gentleman was reassured by the answers that I gave him on 24 July, which I have repeated to the House today, providing information about the practices of the Sports Council in controlling and monitoring the use of public funds.

I hope that I was similarly able to reassure the hon. Member for Hemsworth about his concerns for the future of the Manchester velodrome in the light of the threat of legal action between the federation and its former president, and about the protection of public funds in respect of any legal proceedings. The Manchester velodrome is operated by a separate legal entity—Manchester Velodrome Ltd. This company is a wholly owned subsidiary of the British Cycling Federation. The Sports Council has entered into a formal agreement with Manchester Velodrome Ltd. which requires the operational and accounting records of the company to be kept separate from the records of any other activities of the British Cycling Federation, its associated companies and any related organisations. Also, all transactions between these parties are to be on a full commercial basis. In addition, the Sports Council has formally advised the British Cycling Federation that the grant that it receives cannot be used to pay any legal expenses or costs associated with the legal proceedings between the federation and its former president.

I am sure that the British Cycling Federation will be taking a keen interest in tonight's debate, and I shall certainly be drawing the Sport Council's attention to what has been said in this place. I shall also be seeking the Sports Council's reassurance that any further grant in aid payments to the federation will be on the basis that the Sports Council is fully satisfied that the federation is taking appropriate action to implement the various recommendations made. The recommendations set out in the Sports Council's letter to the British Cycling Federation were discussed at the federation's annual general meeting on 2 November. There are already signs that the British Cycling Federation is taking positive action to address the concerns. The federation has now formed a new management committee, comprising four members of the previous board and seven new members. The management committee has indicated that it will carry out a complete review of all the federation's activities. It has also indicated that a key priority is to reassure the Sports Council that the British Cycling Federation is now in the hands of a competent, experienced, committed, and democratically elected group of people who are determined to take a firm grip of the situation. The Sports Council is due to meet the new management committee shortly to take those matters further forward.

I am sure that the federation will now be keen to get its house in order and make a fresh start—the more so because of the vast sums of revenue support that the Government have now made available for sport through the changes in the national lottery directions. It is in the interest of all governing bodies to run their affairs efficiently and effectively and, in particular, to satisfy the Sports Council that they are not only committed to the development of their own sport, from grass roots through to elite level, but that they have the proper financial management systems and controls in place to handle the public funding that they receive.

The National Cycling Centre has taken time to establish itself and begin to fulfil its potential. The minor design faults have been, or are being, addressed. Attendances at events have steadily grown and the cycling track is now used by riders of every level, from elite sportsmen to local schools.

A measure of the status that the velodrome now has can be gauged from the recent world-class successes of Chris Boardman who, in winning the individual pursuit title at the world track championships in August, twice broke the world record that had been set in Atlanta a month earlier. He then went on to break the world one-hour record eight days later at the same venue.

I will expect the Sports Council to continue to monitor the position closely to ensure that proper accountability and control of public funds are maintained.

Question put and agreed to.

Adjourned accordingly at six minutes to Eight o'clock.