Wednesday 29 February 2012
[Albert Owen in the Chair]
Trade Union Funding
Motion made, and Question proposed, That the sitting be now adjourned.—(Bill Wiggin.)
It is a pleasure to speak under your chairmanship, Mr Owen, and a privilege to introduce this debate. In doing so, may I, as someone who comes from a northern mill town, where my grandmother started weaving in the cotton mill as a young girl and lost much of her education as a result, acknowledge the historic role that trade unions have played in our country throughout the past century in improving and defending workers’ rights? They are worthy of our respect. I acknowledge too the important role that they still play today as a valuable part of our civic society in supporting and advocating workers’ rights and representation.
The debate is not about criticising the work to which I have referred, but about the promotion of transparency, accountability and fairness in the way in which such work is fulfilled—things that I hope we would all agree it is right to promote in public and civic life. It is about ensuring that the right balance is found between effective representation of trade union members and value for money for the taxpayer. Many of us believe that, at the moment, the balance disproportionately disadvantages the taxpayer.
I will give way and I am happy to take interventions, but perhaps, in the interests of transparency, the hon. Gentleman will first say which trade union he is a member of and how much money that union has given to his constituency Labour party in the past three years.
You would not allow me to do that, Mr Owen, on the basis that interventions must be brief, but I will write to the hon. Lady with all the information that she has requested, because I am proud to be a member of a number of trade unions. In the calculation that she has made in relation to transparency and the balance being wrong, how much weight has she put on the amount of work that unions do to help employers to have good industrial relations?
I have already recognised the positive work that trade unions do. We are simply saying that it is unfair that taxpayers should have to shoulder the burden of the cost of that work to the degree that they do, particularly when so many of those taxpayers and council tax payers have no connection with the work of those unions.
Will the hon. Lady not accept that the facts show that where a trade union is involved with an employer, fewer days are lost through illness and injury and there are fewer employment tribunal cases and that there are, therefore, cost savings to the human resources function and the organisation, which are clearly benefits to the employer? If that is the case, is it not right to accept that the employer should bear some of the cost of the work that union representatives do for their work colleagues and for their employer and their organisation?
We are saying that the cost is wholly disproportionate. Millions of pounds a year of taxpayers’ money are being used to fund this activity. I have said that much of the activity is worth while, but much of it veers towards being, if not is, political. During the past 13 years of the—
I shall continue, if I may, because I have hardly embarked on my speech and I know that many other hon. Members wish to contribute to the debate.
I have acknowledged the good work that trade unions do. My concerns about union funding and financial support stem from my time as a councillor in Warrington. In 2006, when Labour lost control of the council and a joint Conservative and Liberal administration took over, I was allocated a portfolio with the title “Value for Money”, later augmented to the finance portfolio as a whole. One action that I undertook was to review all the property assets of the council to see where efficiency savings could be made and where, at a time of increasing pressure on our services, better value for money could be delivered for our council tax payers. I am talking about money being allocated to front-line services. We analysed every building and piece of land that the council owned—that had never been done before—and drew up plans to ensure that their use and value was in the best interests of residents. The use of some buildings was increased. For some buildings, joint use was the way forward. Rents were reviewed where appropriate. Some properties were repaired. Others were released for sale, so that the funds on disposal could be utilised more effectively for the benefit of residents.
To my surprise, I discovered that one of the authority’s most prestigious properties, part of a wing of the town hall itself—undoubtedly the most prestigious listed building in the town, in the prime commercial letting area—was occupied rent free, and with services free, by local union representatives, at considerable cost to local council tax payers.
No, I shall continue with my speech, if I may. In the interests of transparency, which I mentioned earlier, I would have liked to obtain the definitive figures for that cost, but I was never able to do so. I did, on a number of occasions, ask that use of the asset be reviewed, but I could never get council officers even to consider reviewing the use of that asset in the same way as the use of every other property asset in the town was being reviewed, while all the time local community groups, charities, small business owners and others were seeing their charges for and use of property reviewed. The fact that property used by trade union representatives was exempt from that process struck me as simply unjust.
The value of the use of that asset—prime commercial property—when multiplied over many years, must have amounted to thousands of pounds. That money could have been used to keep down the costs of renting local community halls by youth groups, guides and scouts and mum and tots, and for other front-line services in a town where many residents are by no means affluent. I am sure that few, if any, council tax payers in Warrington knew that their money was being spent in that way, and that had they known and had they realised the amounts involved, they would have been as surprised as I was. It is interesting to note that if I, as Member of Parliament for Congleton, wanted to hold my surgery in the town hall, I would be required to pay a charge.
Therefore, when I heard about the Trade Union Reform Campaign, which was founded to reform the laws and funding arrangements relating to trade unions and so to create a more level playing field, I was pleased to support it and become a council member, together with many other hon. Members who are here today and will speak after me to raise concerns in addition to the one that I have highlighted—the use of council facilities. In supporting the campaign, I am pleased to note that we are in good company. My right hon. Friend the Prime Minister himself is backing the campaign and wrote in November—[Interruption.] He wrote in November to its chairman, my hon. Friend the Member for Cannock Chase (Mr Burley), to whom I pay tribute for standing up and spearheading this campaign. The Prime Minister wrote:
“I am pleased that you have decided to establish the Trade Union Reform Campaign…as I strongly believe the current level of public subsidy to the trade unions cannot be sustained, either morally or economically…at a time when across the private and public sectors people are having to take very difficult decisions in order to save money, it is difficult to justify some people in the public sector being paid not to do the job they are employed for, but instead to undertake full time trade union activities—much of which should be funded by the unions themselves. We need to question why the public is paying for so much, and whether this is sustainable going forward.”
That is what we are doing today. Hard-working taxpayers, particularly in these challenging economic times, deserve to see Government, at local and national level, stewarding people’s money responsibly and doing all that they can to maximise its use, so that as much as possible can go to the front line, for those most in need. I am talking about stewarding people’s money responsibly and ensuring transparency, accountability and fairness.
I do not want to pre-empt what others will say, but I do want to draw attention to the excellent contribution my hon. Friend the Member for Cannock Chase made in his Adjournment debate on 26 October 2011, when he gave many clear examples and staggering figures. He drew the attention of the House to the issue and to the need for reform based on the principle that the activities that people undertake on behalf of trade unions should be funded by those trade unions and not by the taxpayer. Why should taxpayers pay for that work?
People pay council tax to have their bins emptied and their streets cleaned. Councils across the country are making every effort to keep council tax frozen, and the Government are making every effort to pay off Labour’s deficit. At this time, more than ever, it is right that we ask the questions I have posed.
I applaud Swindon council, which has recently taken steps to review the issue. It has removed the shared job of two union representatives as part of a £15 million reduction. Councillors who met to finalise the council’s budget said they should not have to pay their staff to do union work in the current economic climate.
Colleagues who follow me will have many questions for the Minister, but I would be grateful if he would give us guidance on how town halls up and down the country can challenge union representatives’ use of facilities that would be better utilised for the benefit of the community. In the light of the excellent contribution my hon. Friend the Member for Cannock Chase made in his earlier debate, will the Minister also update us on the progress of Government action to deal with the concerns my hon. Friend raised? I had intended to repeat them, but I will not, because so many other Members want to speak.
I am proud to answer the question from the hon. Member for Congleton (Fiona Bruce): I am a member of the GMB union, and, yes, it has helped to fund my election campaigns. I hope it will do the same in the future, just as the businesses the hon. Lady supports are likely to support her directly or through some other medium.
The hon. Lady’s comments emphasised one of the major problems in our political system. When a party is elected, it rips up what the previous party did, and we can see the consequences of that in all sorts of areas. One section of the Tory party—it is much larger than it used to be—is focusing particularly on trade union rights. It thinks the only way we will sort out our economic and political system is by removing workers’ rights to health and safety protection at work because such things are all red tape. That is why the Tories have formed their Trade Union Reform Campaign, in the same way they formed the TaxPayers Alliance as a front and a seemingly independent organisation to get over their message and alter the debate on public finances.
I want to focus a little on how things should be. When we look at our economic competitors, it is clear that we are not at the races. Our manufacturing industry has virtually disappeared, although that is the fault of both the Labour and the Conservative parties, and I am not laying political blame. However, there are fundamental weaknesses in the way we approach industrial relations.
I was a Parliamentary Private Secretary—the lowest of the low—in the Department for Trade and Industry when Labour was elected in 1997, after 18 years out of office. One of the key issues on which we had manifesto commitments and which we wanted to tackle was the industrial relations system. Rather than taking the approach of the hon. Lady and most of her colleagues in the Conservative party, we decided to trust the trade unions and management. We asked the CBI and the TUC to go away and look at what we proposed in our manifesto programme, and then to go beyond it and look at a range of issues that we felt were a serious problem in our industrial relations system. There was not a lot of confidence that they would come back with a workable programme, but we were quite explicit: we told them to come back and tell us what they could agree about, what they did not agree about, but thought they could sort out, and what they positively disagreed about.
I remember sitting in the office of the Secretary of State, my right hon. Friend the Member for Derby South (Margaret Beckett), when the TUC and the CBI came back to report on what they had worked out. We were all astonished, because they had gone much further than we had anticipated. Both sides knew the industrial landscape and the workplace, and they knew how the system worked. They came back with a formula that eventually became the Employment Relations Act 1999. The focus of that Act was not, as the hon. Lady might suggest, about Labour buying off its union funders: it was a serious attempt to change the industrial landscape. One of the key issues was to try to get the courts out of industrial relations, and I think we succeeded enormously in that respect. I am very proud of what we did in that area.
One of the key areas of conflict was recognition. We introduced a process that enabled recognition to be properly worked through in the workplace or with support from ACAS. That meant that we had a rational debate, rather than both sides following their first instinct and rushing to the courts to try to force things through.
Within a few months of the Act—in fact, the process started before it was enacted—we had more than 1,000 new workplace agreements. Management decided to sit down with their workplace unions for the first time, and they started to enter agreements. There have been virtually no disputes since, although there have been one or two high-profile ones. In the main, however, the whole issue of industrial disputes over recognition has disappeared.
Sadly, we now have a new Government. Just this week, I met a group of trade union officials who represent the trade unions at QinetiQ, where the managing director, who has no experience of the defence industry or science, has decided that recognition will be removed from the workplace. That will be an area of conflict, and it is completely unnecessary. There was no proper consultation with unions: in fact, in that case, unions at the national level feel they have been deceived and lied to, and such comments are not made lightly in an industrial context.
I am totally in support of having unions, and it is a statutory right for unions to carry out their business unpaid in work time. However, I am worried, and I wonder whether the hon. Gentleman agrees in principle with union members being paid out of taxpayers’ money. That is the crux of the worry many people have.
A whole phalanx of my colleagues will come in on that issue, but I want to focus on the issue I have outlined. To answer the hon. Gentleman’s question, however, I see this arrangement as a facility for management. In my constituency, which does not have a Labour council at the moment, staff are paid to do this work because it is a door for management to knock on when there is a problem. Whenever there is a difficulty, the two sides can quickly get together, and the people who represent the work force can talk with some authority; they do not have to work at the coal face in another job and then have to be briefed on an issue that has come up somewhere in another department. These things happen in the private sector as much as in the public sector because they are good for management—they oil the wheels.
Does that point not sum up the fundamental flaw in the contributions of the hon. Members for Congleton (Fiona Bruce) and for Beckenham (Bob Stewart)? This is not about trade union facilities, but about the time given to fulfil industrial relation duties. The time used by trade union representatives is, in fact, tiny in relation to their own particular work, and the vast majority is used to ensure that the workplace works smoothly. That is where Tory Members are getting this very wrong.
My hon. Friend speaks with a lot of experience. He has worked with local authorities across Scotland, and I bow to his knowledge. It is easy to count the cost of wages. The Secretary of State for Communities and Local Government, who has an axe to grind, has all the resources to get the figures together; but there is no assessment of the benefit to management. That is the fundamental weakness in the case.
The pendulum is swinging. I have described how we approached industrial relations, and the figures for time lost at work through strike action in the past 15 years show a dramatic improvement, but that graph is likely to change substantially. I am deeply concerned about the approach of any Government who think that the only way to resolve problems in the workplace is to reduce workers’ rights and remove their health and safety rights. That is a particular issue for me. I was a very young Member of Parliament when the Piper Alpha disaster happened. It was a time of light regulation in the offshore oil industry, because the imperative was to get the oil ashore and recover the taxes that it paid the Exchequer. One hundred and sixty-seven men were killed, and I have spent a lot of my political life still in contact with the relatives and survivors. It is not something I want repeated. I have a simple rule: one man’s red tape is another man’s essential safety system.
The Conservative party was not always the way it is now. A week or so ago I read an obituary of Robert Carr, who died recently. Lord Carr had the onerous responsibility of taking the Industrial Relations Act 1971 through Parliament. That was flawed, and he made it clear later in life that much of it was not easily understood; I think that was how he put it. He had practical experience of manufacturing industry. His family had owned a metal works, which apparently provided metal for the airframes for, I think, the Wellington bomber, during the war. It was a quite substantial company. After his spell as Secretary of State he said that because of his time on the shop floor in his fathers’ factory he understood the importance of trade unions. That breed of Tory—people with practical experience of the workplace—seems to have gone. He understood the importance of trade union rights and was genuinely liberal about them.
There are more important issues involved. The way we deal with the workplace is extremely important. As I have said, we have virtually lost our manufacturing base. We have the car industry and a few other significant areas, but perhaps we should look at what happens in other countries—particularly Germany. After the war Germany recognised the importance of good relations between the work force and management. It established a system that German trade unions tell me is almost as revered as the NHS. The key thing is that the work force has a voice at every level.
I lost my seat in 1992 and at that time—another confession for the hon. Member for Congleton—I worked for the trade union movement. I was responsible for organising some conferences for what is now a part of Unite, but was then the Transport and General Workers Union. One conference was about the automotive industry, and I had the task of asking the head of BMW in the UK to speak at the conference. I had a meeting with him and he asked me what I wanted him to say—an unusual situation for me; usually it is a case of being told what someone wants to say. I just said, “Be union-friendly.” He said, “I can be very union-friendly. I strongly believe that no major company can now operate without the strong support of its work force and trade unions.” He was a member of the main board of BMW in Germany at the time.
That philosophy seems totally alien in our political system. The debates on trade unions that we have had in this House—the last one was on a ten-minute rule Bill on facilities for trade union members—are marked by two things: ignorance and anger. There is polarisation on both sides. That is bad for us, politics and the country.
Before I call Robert Halfon, I want to make an announcement on time limits. Because of the number of hon. Members who want to speak, including those who have given advance notice, I am, with the authority of the Chairman of Ways and Means, imposing a time limit of four minutes on Back-Bench speeches. The rules are exactly as in the House. Each of the first two interventions accepted will stop the clock and give the hon. Member who gives way an extra minute. We do not, as the Chamber does, have the mechanisms that enable hon. Members to know the time on the clock, so with the assistance of the Clerk we will ring the bell when there is a minute to go. An intervention made in the last minute entitles an hon. Member to added time.
I congratulate my hon. Friend the Member for Congleton (Fiona Bruce) on obtaining the debate. I am a member of Prospect trade union, and it does not give me any money for political campaigning, but I am publishing a pamphlet with Demos in the next couple of weeks, on relations between the unions and the Conservative party, and am deeply interested in the issue.
I want to make three points. First, I believe that it is wrong to lump all trade unions together. Secondly, as the hon. Member for Aberdeen North (Mr Doran) said, the Conservative party has a long history of co-operation with unions, on which we should build. Thirdly, we should do more to support the moderate majority of trade union members, most of whom are not political activists.
It is true that some trade unions get subsidies from the Government, as do banks. Yet many unions are, we should acknowledge, capitalist institutions, offering services that are intended directly to replace state provision, such as private health care. The market comparison website privatemedicalinsurance.co.uk shows that the Labour-affiliated union Unison has recently encouraged its members to join private health care schemes such as Medicash.
There are other examples. In 2001, The Daily Telegraph reported that 3.5 million trade unionists—more than half the TUC membership—now have some form of private health cover. That was 10 years ago. Since then the trade union movement has considerably professionalised and strengthened its private health care offer and other services, such as legal insurance. I suggest to my hon. Friends that we need to look at the reality of trade unions, not just the rhetoric of extreme militants.
Unions are still the largest membership associations in Britain. They are hugely more popular in membership terms than all the political parties combined.
My hon. Friend is making important points. The Conservative party has had a positive relationship with the trade unions, but is not transparency of funding and understanding what trade unions do the most important thing?
Yes, I accept exactly what my hon. Friend says; I am all in favour of transparency. However, TUC membership now stands at 58 unions, representing 6.5 million people—more than the population of Scotland. Of those 58 unions, just 15 are affiliated to Labour, leaving 43 that are non-affiliated. In addition, there are huge numbers of small staff associations. My point is that those 6.5 million are a complex network of people, and the vast majority of them will be moderate Britons, in all sectors of the economy, from all walks of life, and not militant activists.
I am proud that our party has a long history of co-operation with the trade unions, beginning in 1867, before the Labour party even existed. It was the Conservative Prime Minister the Earl of Derby who first sought to legalise trade unions in 1867. He said in the House of Lords at the time that
“the voices of Manchester, of Birmingham, of Leeds, and of all the other important centres of manufacturing industry were absolutely unheard.”—[Official Report, House of Lords, 22 July 1867; Vol. 188, c. 1775.]
He praised a trade union march in London, insisting to a hostile Liberal Opposition that the process was entirely legal.
I say these things not because I am not a proud Conservative: I come from the Thatcherite wing of the party, but even Mrs Thatcher was an active trade unionist. In 1950, she was elected president of the Dartford branch of one of the first organisations that she ever joined, the Conservative Trade Unionists. One of her first engagements as Leader of the Opposition was to address the CTU. She told them in 1975—it is well worth hearing this quotation—that
“the law should not only permit, but…it should assist, the trades unions to carry out their legitimate function of protecting their members.”
We all remember Mrs Thatcher for the wars against Arthur Scargill and so on, but she was supportive of trade union members and grass roots, although she was against militants. I am a firm Thatcherite on trade union reform.
My hon. Friend proves my point. In 1979, during the general election, trade union members held a mass rally at Wembley stadium under the banner “Trade unions for a Conservative victory”. That is the kind of future that I hope our Government will aspire to.
My conclusion is that we need to support the moderate majority of trade union members, most of whom are not political activists. In politics, language is everything. We should not be afraid to support grass-roots trade union members, to encourage people to join trade unions and—dare I say it?—to have, perhaps, the occasional beer and sandwich. We often discuss facility time, and, yes, we need to crack down where it is abused and say that it should not be used for party political activity. Nevertheless, some facility time is good. A local employer in my constituency, the bus company Arriva, says that facility time is incredibly beneficial. The politically neutral First Division Association, which has 20,000 members, uses facility time to relocate the families of civil servants who are serving overseas. While we crack down on the abuses, we should recognise that not all facility time is bad.
Whatever reform is pursued, our focus must be on what is right for union members. It may be worth returning to the original opt-in position for political levies, which was the status quo until 1945.
Finally, I will quote Richard Balfe, the former Labour MEP who came over to the Conservatives. He said:
“British politics has changed enormously in recent years. Labour has become a rich persons’ party and the Conservatives are reaching out to groups that in the past would not have been natural allies. We do not expect to convert the leadership of the trade union movement, but we do offer respect for the achievements of the movement and the possibility of a mutually beneficial dialogue.”
I say to the Government and my hon. Friends that, despite the rhetoric, let us not walk into the elephant trap set for us by Len McCluskey, Bob Crow and others.
It is a pleasure, Mr Owen, to serve under your chairmanship.
Can we just think about the people that we are talking about? They are public servants who represent millions of public servants, whose only role in life is to deliver quality services for the people we are fortunate to represent. These people are not the enemy within.
I agree with what the hon. Member for Harlow (Robert Halfon) said about the Tory party’s track record not being anti-union. The Tory party supported Solidarnosc in the early 1980s, but it did not support the shipyard workers in Sunderland when it destroyed the Sunderland shipyards. The Tories supported the Union of Democratic Mineworkers, but they did not support it while they were destroying the British coal industry. The Tories then forgot about them and put them on the dole along with the other 200,000 miners who lost their jobs because of the Tories’ policies. Only last week the Prime Minister had some trade unions into No. 10 to talk about the health reforms. The one thing those three examples have in common is that the Tories liked those groups as long as they were doing their bidding. When the unions are doing the bidding of their members, somehow they are no longer friends of the Tory party.
I am proud to have been a member of a trade union for 43 years. I have been at the sharp end. Unlike most people here, I have not just read about this. I was an elected lay official for my union, released from work for 15 years by Newcastle city council to represent a membership of 7,000 and a work force of 16,000. My hon. Friend the Member for East Kilbride, Strathaven and Lesmahagow (Mr McCann), who spoke earlier about industrial relations, has got it absolutely right: we have lost sight of what industrial relations means. It is about developing a relationship with people and between management and the unions. Most of the time is spent avoiding problems. It is about building relationships, so that we can say, “Look, we need to go and see these people, because if we do not see them, things will go off the rails.”
There are huge examples. I spent many hours with home care workers, encouraging them to take redundancies or to take ill health retirement. That was a huge step for them, but they put their faith in me and that helped my authority in being able to respond to the cuts being imposed on them. I did thousands of disciplinaries and grievances. I was involved in appeals, social security appeals and industrial tribunals. If I had not been there doing that, those people would have been unrepresented. It is somehow being argued that taxpayers should not be doing this and that the unions should fund it all. If the unions fund it all, as the Tory party knows, no union in the world could have sub levels high enough to do that. It would also lose the hands-on experience of people who were working on the ground and at the coal face—I literally worked at the coal face—who try to make things better for the people they employ and the people they represent.
Where has this debate come from? We all know that this debate has not come from the employers, because I work closely with the public sector employers in Gateshead, such as the council, the college and the hospital—I see the chief executive on a regular basis—and not one of them has said to me, “Let’s get rid of facility time.” We have some strong, hard relationships. As we sit here today, the unions in Gateshead council are sitting with the management trying to work out how they make 350 people redundant with as little damage to the people and the service as possible.
It would appear that the truth is that the hon. Member for Congleton (Fiona Bruce), who led this debate, was not strong enough to control her officers, because her officers have control of whether members have time off. If the council and the officers do not agree that the trade unions have time off, it does not happen. If she was not strong enough to control her officers, that is a fault with her and her administration, not with those who represent the people on the ground.
We know where this has come from: it has come from the storm-troopers of the TaxPayers Alliance. If we are talking about storm-troopers, we all know what Hitler’s attitude was to trade unions: get them out of the way, lock them up and destroy them. I am sure that no Member would support anything that Hitler or the people he represented did, but that is the slippery slope that we are on with this debate.
The context of this debate is the reform of trade union funding. In the four minutes that I have, I want to touch on the areas of facility time, direct payments to unions and the political levy.
The Minister will be aware that I welcome the current review of facility time. At a time when public bodies are being asked to publish all spending over £500, it is shocking how little information is being made available about the tens of millions going to the trade union movement in various forms. As part of the Government’s review, I urge the Minister and the Government to introduce measures requiring public sector employers to publish in full detail the use of facility time in their organisation, the amount of time and, importantly for transparency, its purpose. It is essential, because we need to see why facility time is five times more prevalent in the civil service and three to four times more prevalent in the wider public sector than it is in the private sector. That is a stark difference.
Both the public and private sectors are bound by the same laws on facility time and both sectors have to grant paid time off for trade union activities, such as negotiating pay conditions, meeting employers and supporting members at disciplinary hearings. Important though those are—I think that we would all agree about that—why do trade union members in the public sector seem to receive so much more paid time off than their private sector equivalents? That has to be looked into and is where the point about transparency comes into play.
I will give an example. Unison has boasted recently in various documents that securing paid facility time for trade union activities, such as attending conferences and campaign meetings, is a vital part of its organising strategy. Its community service group guidance note on facility time states that
“a key task for you in negotiating a facility time agreement will be to get as many activities as possible covered by your paid facility time allowance. In other words, although you’re entitled to unpaid time off…why not try to get those activities covered by your paid time off?”
That comes back to the point on transparency.
I want to touch quickly on direct payments. We have already touched on local authorities and the amount of time for paid equivalents, full-time equivalents and part-time equivalents and how—I think the hon. Member for Blaydon (Mr Anderson) said this—that was down to the local authority. It is worth looking into the extent to which this is taking place across the country. Some weeks ago, I mentioned Camden council, which seemed to be giving a lot of resource to securing union facility time and putting its payment as a priority, while cutting front-line services. That is a major area.
Direct payments are another way the public purse supports trade union activity. The Union Learning Fund costs the taxpayer something like £22 million a year and supports the employment of about 170 trade union employees. More transparency is definitely required in relation to direct payments.
I will not give way, as I have to wrap up quickly. Regarding the political levy, it is worth noting that the membership forms for both the GMB and the Public and Commercial Services Union make no mention at all of the fact that their membership fee includes a contribution to a political party’s political funds. That is another area that requires more transparency. Those who sign up to join those unions should be informed that included in the price, they are signing up to give their money away to a political party.
I hope that the Minister will take these comments on board and let us know whether the Government can fast-track proposals in the report by Sir Christopher Kelly on party political finances to address these matters and empower union members to decide explicitly whether or not to opt in and pay their political levy, rather than having it taken from them without their knowledge.
Thank you, Mr Owen, for calling me to speak.
It is normal practice to congratulate the hon. Member who secures a debate in Westminster Hall. On this occasion I shall resist that temptation, because there is no doubt whatsoever that this is a politically driven debate, with the dark hand of the TaxPayers Alliance behind it—an organisation about which little is known, including how it is funded, so we know where it is coming from. It is also rather interesting that the Conservative MPs in Westminster Hall today are all from the new intake of the party’s MPs, which gives us an idea of where the new Conservative party is going.
I must say that I have not had one single constituent complain to me about trade union funding—not one—in the 10 years that I have been in Parliament. In terms of employment rights, we already have the most business-friendly employment rights in the whole of Europe. That is undisputed, and if people do not believe me let me quote Richard Lambert, the director general of the CBI in 2009, who said in a foreword:
“In today’s difficult economic climate, it is more important than ever that all resources available to the workplace are well deployed. Union reps constitute a major resource: there are approximately 200,000 workers who act as lay union representatives. We believe that modern representatives have a lot to give their fellow employees and to the organisations that employ them.”
Does the hon. Gentleman agree that, however he would analyse or describe the business-friendliness of the current Government, being business-friendly does not necessarily mean the opposite of being in favour of workers’ rights?
The hon. Gentleman is absolutely right and I am glad that he made that intervention.
There are some members of the Conservative party who live in the real world, none more so than the Minister for Further Education, Skills and Lifelong Learning, the hon. Member for South Holland and The Deepings (Mr Hayes), who said:
“I want to pay tribute to union learning reps, who have made so much difference to so many lives, and to such effect. Trade unions can play an invaluable and immeasurable role in improving skills in the workplace.”
That suggests that there are some Conservatives—apart from those in Westminster Hall today—who live in the real world.
For my sins, I have been a member of the Transport and General Workers Union and I am still a proud member of the Unite union. I am also proud to be the chair of the Unite parliamentary group, which meets regularly and takes up issues with whatever Government are in power. Before anyone asks about my funding, there is absolute transparency about my funding, including my funding from the trade union movement; it is all recorded in the books and is there for everyone to see.
In the short time that is left for me to speak today, I will focus on one of the major issues that trade unions are involved with, which is health and safety in the workplace. For my sins, I am also chair of the all-party group on health and safety, which deals with occupational health. We have just released a report that highlights the dangers from asbestos to children, teachers and other people who work in schools. There is not one single business in this country that would raise the issue of people dying of asbestos-related diseases, especially children who go to school and who are in danger of being contaminated by asbestos and suffering from such diseases. As a former shipyard worker, I have seen people die of mesothelioma, which is the most horrible death that anyone could ever see, yet employers are still churning out asbestos to the third world because it has been banned in this country. That is what trade unions are about; that is what their job is about. It is to ensure that people go to work safely and come home safely. It is unfortunate that the hon. Member for Beckenham (Bob Stewart) is no longer in the Chamber, because he is a former member of the armed forces and it is a little known fact that more people are killed in the workplace in the UK than British service personnel are killed in armed conflict.
I am conscious of the time, Mr Owen, and all I want to say in conclusion is that I have worked for many good companies, none more so than Thales, which is a very successful and progressive business. It sees every benefit in having trade unions in the workplace. In fact, it goes out of its way to ensure that people have the opportunity to join a trade union. The rhetoric from Conservative MPs today is different from what is happening in the real world and it is really disappointing to see that the Conservative party, which has some decent people in it, has been dragged down by the young Turks.
I will thank my hon. Friend the Member for Congleton (Fiona Bruce) for securing this debate.
I wanted to speak today because I am supportive of what trade unions do in representing the interests of their members, giving them a voice and standing up for their rights. Although the traditional view of the relationship between employers and trade unions has been that it is one of confrontation, that view is misleading; in most cases, employers and union representatives have a very constructive relationship.
Indeed, from the point of view of the employer many benefits come from unions. For example, trade unions can be a supportive and welcome presence in assisting with significant changes within a business and they also provide a forum for negotiation that often saves time and cost compared to dealing with employees on an individual level.
On a personal level, I am hopefully about to be elected as the new president of Conservatives at Work, which was formerly Conservative Trade Unionists. I pay tribute to Lord Taylor of Holbeach for all the work that he has done as the previous president. My colleague, my hon. Friend the Member for Harlow (Robert Halfon), is also very much involved with Conservatives at Work.
Conservatives at Work has played an important part in guiding the Conservative party in its work with trade unions, so I am involved in that and I have always remained supportive of the aims of trade unions. That said, I am uncomfortable with the idea of taxpayers’ money being used to fund union officials who are working in public sector roles, as was revealed in my own part of the world in June last year when it emerged that taxpayers are paying almost £200,000 towards the salaries of union officials at North Yorkshire county council while important local services were under threat, and indeed continue to be under threat.
On a wider level, it has been revealed that in 2010-11 public sector bodies spent £113 million on staff working on trade union activities.
I will push on, as I only have a couple of minutes to speak.
To clarify, £113 million of taxpayers’ money was spent. Broken down, an estimated £80 million was spent on paid staff time, with £33 million in direct payments, which was £7 million more in direct payments than in 2009-10. At a time when there is a lot of protest about cuts—due to the catastrophic financial position left by Labour, a party that I understand receives 90% of its funding from trade unions, although I stand to be corrected on that—it is not right that we have public sector workers who are being paid not to do the front-line service that they were employed to do. As the taxpayer is picking up the bill, the subscriptions that the unions raise from their members, which the man on the street would assume were being used to fund the union, can then be spent on other activities, such as campaigning or potentially keeping the Labour party afloat.
All of us on this side of the fence were thrilled at the Prime Minister’s recent public support for the campaign on union funding. He described the use of taxpayer funding to pay for trade union activity as unsustainable, both morally and economically, and I am pleased that we have the weight of the Government behind us.
I accept that under the Trade Union and Labour Relations (Consolidation) Act 1992, union officials have the statutory right to “reasonable time” off work, with pay, to attend to specified trade union duties, but let me say that again—it should be “reasonable time” off work.
I congratulate the hon. Member for Congleton (Fiona Bruce) on securing this debate. I thank her for saying that trade unions are a force for good, and that has also been mentioned in the speeches overall.
I am a member of Unite and of Unison. Unite has contributed to my election funding for many years, and I hope that that continues for many years to come. If it was not for the trade union movement, I would not be here as a Member of Parliament. I was brought up as a trade unionist and my politics came from involvement in trade unions. We need to consider the history of how political development took place, particularly in the Labour party and its relationship with trade unions.
Since becoming a Member of Parliament and being involved in trade union activity, I have also had the dubious pleasure of being the Minister with responsibility for employment and employment rights for three years. For me, the debate hits home. Had the debate been entitled “Review of facility time”, I might have understood the need for a discussion about the issues that affect our local authorities, although I would not have agreed with the need for a review. If we agree with the argument for doing away with facility time for public union officials, what do we do about human resources teams in local authorities? Do we get rid of them next? In reality, these people, from all sides, contribute to making sure that democracy and diplomacy in employment relations goes on.
In my view, there is no case for looking at political levies. The political levy ballot was first introduced in 1980 by the Thatcher Government. The hon. Member for Witham (Priti Patel)) let the cat out of the bag when she talked about the political levy and the transparency of the Union Learning Fund. Most employers—perhaps the hon. Lady would like to check—would agree that that fund is one of the finest things that we did in Government, because it provided the opportunity for working class people to engage in training and develop through higher education and beyond. It was welcomed by most employers, particularly the CBI.
So what is the motivation for today’s debate? I do not think it is about facility time. I think it is about that core issue in the minds of some Conservatives who believe that the relationship with the trade unions and the Labour party is too close, and they want to undo it. That should not be the driving force. We know that the figure of £113 million has come from the TaxPayers Alliance. It states that £80 million was for paid staff time and £33 million was in direct payments, which equates to staff costs of 2,840 full-time equivalent staff. However, those figures do not calculate the savings made by individual staff in the work that they do. A modern country should be looking for good industrial relation patterns.
When I was the Minister with responsibility for employment, I saw the need to ensure that we had genuine co-operation in the workplace, whether it was in the private or public sector, and to ensure that we could get productivity and develop as a competing nation in the world. There will always be difficulties and different aspirations between employers and employees, and that is why we need good human resources departments and good, strong trade union bargaining. I hope that Government Members will reflect on this and not make it a politically motivated campaign. I hope that they heed the words of the hon. Member for Harlow (Robert Halfon), because we need a constructive dialogue with trade unions. If there are issues and problems with buildings and suchlike, it is better to deal with them in a positive way rather than wage a political campaign that will undo the good relationship that exists between employers and employees.
Thank you for calling me in this debate, Mr Owen. I congratulate my hon. Friend the Member for Congleton (Fiona Bruce) on securing it. May I make it clear at the beginning that I am not proposing to end up getting into trade union bashing, because I recognise that the unions play an important role in industrial relations and in making sure that everybody works together. May I also correct a possible misinterpretation? I understand that the term “pilgrim” refers to a trade union official who goes out and campaigns. In Plymouth, being a Pilgrim means being a supporter of Plymouth Argyle football club. I am delighted to say that I was there to see them draw 0-0 against Dagenham & Redbridge at the weekend.
It is important to recognise that in my city in my constituency, 38% of people work in the public sector, so there is a great deal of interest in employment rights and how the trade unions work not only with the city council, but with a whole series of different organisations. They work with the health service, for instance, and with Babcock, which is a significant employer in helping to ensure that our Navy continues to operate properly.
From my perspective, I find it difficult to go out on the doorsteps and explain to people that, at a time when we are making cuts to front-line public services and when the local authority is making sure that it empties the dustbins and that the potholes in the roads are filled in, the trade unions should end up being treated as a special case. I hope that the Government will ensure that there is significantly more transparency in how the trade unions operate. Perhaps the local authority should make a decision once a year about whether it wants to continue to make the facilities available.
I think that the trade unions have done a significant job, and they have a significant part to play. Indeed, during the discussions on Post Office privatisation, I met with trade unions and I encouraged them to get involved in trying to sort out the problems inside the Post Office, and I encouraged them to make sure that they were able to buy shares in that service. That is something that we may need to look at.
My final point—I am aware that lots of people wish to speak—is that we need to look at the trade union levy and ensure that people can opt in rather than having to opt out. It has to be a positive choice that people make. If it is that way round, we can have a level playing field for everyone to operate in.
In the brief time that I have, I want to say that I believe that this is a callous attempt to attack the trade unions and trade union members in the workplace. Many of them are ordinary men and women simply seeking to do a valuable job. My hon. Friend the Member for Blaydon (Mr Anderson) —my very good friend and former mining colleague—said that he is not sure that anyone here has ulterior political motives: I am sorry to disagree, but I believe that that is the case.
I will not give way. It has been mentioned before that we want more transparency. Since the Tory Government took office, they have introduced a certification officer. We now have more legislation than any other democracy in the western world, and our trade unions are more restricted than anywhere else. My view is quite simple—there is a concerted attack on ordinary men and women. However, we should not be surprised. When any Government Member gets up and says, “My auntie used to work here, and my father was a miner”, we know that something is coming in the following sentence: kick the trade unions.
I disagree with several things that have been said. On 30 November, the day of the public sector strikes, the Prime Minister clearly stated in the House that he would review the facility time for trade unions. That was his reaction—to kick the trade unions for daring to have the audacity to speak up for their membership. However, it had been mentioned beforehand.
I will not give way. It had been mentioned at the Tory party conference by officials and Ministers who were proud to be trade union bashers and trade union kickers. That is why a lot of the new Tory MPs are thinking that this is the way to get a job in the party. They think, “Let’s start kicking the trade unions. That’s what we should be doing.”
I have been a trade union representative since the age of 16 or 17. I have been involved in both the private and public sector. By the way, the private sector represents about 40% of facility time, so it is not only public sector representatives who are paid for by taxpayers for facility time.
About the money that has been suggested is being paid by the taxpayer, in my experience, if I had any time off for facility time, I would have just received the wages that I would have received had I been at work. That is not even a saving. No one was put in my place, so there was no saving. It is misleading to suggest that there can be a huge saving in facility time, because, in the main, people are not replaced when they are doing facility time, and that is important.
I represented people in the mining industry. My facility time was about health and safety. What is more important than health and safety in the workplace? I visited people who had lost their husbands underground. They did not want to see the colliery manager or anyone from the management. They would ring up and say, “Mr Lavery, can you go and speak”—
It is a pleasure to serve under your chairmanship today, Mr Owen.
I, too, start by congratulating my hon. Friend the Member for Congleton (Fiona Bruce) on securing this important debate. The level of taxpayer funding of trade unions has clearly become a major political issue. As sunlight is the best disinfectant, it is important that such issues are debated honestly and openly in Parliament.
I am amazed at the churlish comments made by some Opposition Members in not congratulating my hon. Friend on securing the debate. The trade unions, over this Parliament, under a Conservative-led Government, will still receive more than £500 million of taxpayers’ money. I cannot think of any other issue that MPs feel should not be debated at all. We can argue about reforms to the national health service and the police, but when it comes to trade union funding, Opposition Members feel that it is somehow beyond the pale to even debate or discuss it. I can only think that they worry that when the public realise how much of their taxes go on funding the trade unions and not on front-line services, there will be a huge public outcry. They fear that the momentum for reform would be unstoppable.
No, I will not.
We, on the Government side of the House, feel that the public have a right to know where their taxes are going. That is why my hon. Friend the Member for Congleton has done such an important job this morning in securing the debate on behalf of hard-pressed British taxpayers.
As my hon. Friend said, there is now widespread public and parliamentary concern about paid time off for trade union activities and duties, an issue that has been acknowledged by the Minister for the Cabinet Office and the Minister for Local Government. They are both looking at reforming that practice, known as public sector facility time.
I understand that the Cabinet Office is about to launch a consultation into the extent—indeed abuse, as pointed out by my hon. Friend the Member for Witham (Priti Patel)—of so-called facility time. I would be grateful to the Minister if he could update us on when the consultation will take place, what its parameters will be, when it will be likely to conclude, and what the recommendations for reform might be.
The issue this morning is one of basic principle: is it appropriate for the taxpayer to subsidise trade unions at all, and if so, to what extent? In the brief time I have this morning, I want to deal with the issue of principle, because as far as I can tell, it has never been properly explained or defended in public.
I listened carefully to the response of the right hon. Member for Wentworth and Dearne (John Healey) to the ten-minute rule Bill tabled by my hon. Friend the Member for Hereford and South Herefordshire (Jesse Norman) on the issue. It was notable that in his response, at no point did the respected former Minister—I am sorry to see that he is no longer in the Chamber—defend or explain the principle of a public subsidy to trade unions. He opened his response by saying:
“This Bill attacks the most basic and most benign feature of trade union work—the day-to-day support for staff at work by their colleagues who are prepared to volunteer as trade union representatives.”—[Official Report, 11 January 2012; Vol. 538, c. 201.]
That rather missed the point, because we have no problem with colleagues who are prepared to volunteer as trade union representatives, just with colleagues who think they should be paid by the taxpayer to be trade union representatives. In fact, if I was a volunteer trade union rep, doing a worthy job for a few hours a week because I believed in helping colleagues, I would be rather annoyed to think that whereas I worked for free, other colleagues felt that they needed to be paid to do it; in fact, some feel that they need to be paid full-time to do it. Where is the fairness in that? Why do some trade union reps need to be paid while others do not?
Perhaps I could defend that by pointing to Germany. Not only does Germany have the most productive manufacturing and industrial sector, it has one of the highest levels of public subsidy, recognising that productivity, health and safety and the competitive nature of its industry benefit from having active union-work force engagement. There is the defence. How would the hon. Gentleman respond to that?
I am grateful for the hon. Gentleman’s intervention; at least he has had a go. I find it utterly counter-intuitive to claim that higher public services can somehow be delivered with public sector staff working for the union rather than in their jobs. There may be case studies of union reps doing valuable work, but equally, there are case studies of union reps working against the public interest, as has been exposed by MPs and the media, so I do not think the hon. Gentleman’s point holds.
In the minute that I have left, I want to point out a new statistic. The campaign that we formed, the Trade Union Reform Campaign, has pointed out that the TUC now receives three quarters of its funding from the public purse, runs a surplus of £40 million a year and is sitting on top of £1 billion of assets. The last time public sector organisations operated at that sort of profit was in the ’90s in the privatised utilities, which were struck with a windfall tax by the right hon. Member for Kirkcaldy and Cowdenbeath (Mr Brown) in ’97. We have to question now whether the trade unions should be subject to a similar windfall tax. They received £113 million last year and £80 million in paid time for staff. As I have said, under the Conservative-led Government, they will still get more than £500 million. It is right that we ask whether that money could be better spent on the front line. That sum buys a hell of a lot of nurses, doctors, teachers and police officers.
It is unfair for taxpayers to shoulder the burden. Trade unions should pay for representation in the public sector themselves, using their subscription income. An hon. Member said that that would somehow end trade unions. It will not; they can clearly afford to represent themselves, as we have seen with the huge sums that Unison has. Taxpayers should no longer be expected to fund the army of trade union representatives.
It is a pleasure to serve under your chairmanship, Mr Owen. I congratulate my hon. Friend the Member for Congleton (Fiona Bruce) on securing the debate. It is important that things are debated. However passionate the arguments on each side are, there is nothing wrong with having this debate.
I have been disillusioned this morning. I am certainly not speaking in the debate to bash the unions. I do not believe that my hon. Friend the Member for Selby and Ainsty (Nigel Adams) wanted to bash the unions either.
When people look back through Hansard, they will see that much praise has been given to the trade unions.
I was a member of Unite for 11 years. My money ended up being spent against my hon. Friend the Member for Pudsey (Stuart Andrew), but there we go. I cannot say that I was ever funded by Unite. I believed in the trade unions, and one of the most important things about them comes down to the shop stewards. I have seen some good shop stewards—members of the Labour party and elected councillors. I was a Conservative councillor, and the shop steward in the university where I worked was a Labour councillor, but we were able to work together. A lot of it comes down to the shop steward on the floor, and I have seen progress being made.
I am not here to bash the work of the unions at all. The problem I think we have—I put this challenge to Opposition Members—is that if at the next general election, Royal Bank of Scotland turned up and said, “We have decided to give £10 million to the Tory party to campaign,” there would be outcry from the Opposition Benches.
Yes, probably from ours as well; we would not be happy with it. That is an important point. There is some perception that we are union-bashing, but that is not true. I remember listening to the speech made by the leader of the Labour party at conference, just after he had been elected. He spoke about the dinner ladies who were told that they had to buy their uniforms and aprons. The trade unions got involved and made sure that they did not have to do that. That is important work by trade unions.
Everyone here likes to mouth off. We are the people who stand up and front up. We will stand up, debate and have an argument, but 95% of the people out there would sweat with fear at having to stand up right now to make arguments. That is why we need healthy, working trade unions.
However, there are some problems, and there is an easy way to overcome some of the perceptions about the funding between trade unions and the Labour party. It is simple: instead of having an opt-out of the political levy, let us have an opt-in. Someone would have to opt in each year, which then has to be audited. Where the pot of money from the opted-in political levy is spent can be decided by the trade union.
Does the hon. Gentleman not concede that it has already been tried? The Conservatives introduced the Trade Union Reform and Employment Rights Act 1993, which forced trade union members to re-sign up to their trade unions every three years—a further attack. Does he also concede that while he may believe in trade unions, the contributions from the hon. Members for Cannock Chase (Mr Burley) and for Witham (Priti Patel) demonstrate that they are on a completely different planet from the one he is on?
I would not say that my hon. Friends are on a different planet from me; their arguments just have a different emphasis. Many Government Members believe in trade unions, and find it demeaning to be compared to the Third Reich. It demeans the hon. Member for Blaydon (Mr Anderson), who said that we were going the same way as Hitler by trying to remove the trade unions. That devalues the debate today, which is about where the funding comes from.
Is my hon. Friend aware of the Warwick I and Warwick II agreements? To get the policies that they wanted from a Labour Government, the trade unions dictated the policies to be enacted by a Labour Government in return for union funding.
Thank you very much Mr Owen. We have seen in the past couple of minutes where my frustration has lain, with people saying, “Unions do this” or “Union bashing”. That is not what the debate is about; it is about funding and how public sector money is used. Politics is about perception, and if there is a perception that public money given to the unions is then given to the Labour party, the best way to solve that problem is to tinker with the rules and have an opt-in, so that people can say where they want the money to go. Then the unions can say, “We have this many people opted in and this pot of cash, and we have decided to give it to the Labour party.” No one would argue with that. We cannot argue with that.
There may need to be some reform. The balance needs to be redrawn for some of the public sector workers working full-time purely on union business, but that is a different debate. Please do not make this an argument about union bashing. That is offensive to many Conservative Members who believe in the work of trade unions. I am not here to speak for everybody on the Government Benches, but I know that a great many of my hon. Friends very much believe in the work of the trade unions. A great number of us have been members of trade unions and have worked in places where we have seen their work, but that does not mean that the situation is completely okay; there are aspects that need reform, but debate is the best way to examine that.
I congratulate the hon. Member for Congleton (Fiona Bruce) on securing the debate. She said that trade unions are a valuable part of our civic society and that they do hugely important work on behalf of many of their members, and I very much agree with that comment. She went on to make a series of other points from which she drew conclusions with which I am afraid I cannot agree.
I am slightly surprised that she and some Conservative Members should so obviously want to attack the interests of hard-working people—the home help, the teacher, the nurse, the learning assistant, the dustman, the cleaner. Those and many others who work in the private and, in particular given today’s debate, the public sectors are not paid huge salaries. They are part of the squeezed middle and are seeing their finances hit hard by the Government’s VAT rise, for example, and by high energy bills, which Ministers will not act on. Many of them are extremely worried about whether they will have a job in six months’ or a year’s time.
If the hon. Lady and some of her colleagues have their way, the right of such people to be properly represented will be taken away. Thousands of hard-working families will lose that most basic of rights—the right to be properly represented when they need it most. That point was made by my hon. Friends the Members for Blaydon (Mr Anderson) and for Wansbeck (Ian Lavery).
Virtually all the staff who would be affected most by the hon. Lady’s proposals do not earn huge salaries, yet they still demonstrate considerable commitment and hard work in delivering some of our most basic and important public services. The Prime Minister once spoke of compassionate conservatism. I ask the hon. Lady and her colleagues, how is it compassionate to take away from often low-paid, hard-working employees the opportunity to be properly and professionally represented when they need it most?
The hon. Gentleman referred to hard-working families. Does he not think that it is appalling that hard-working families’ taxes are funding people who should be working, but rather than doing their actual jobs, the taxpayer is paying them to be union officials pro rata?
With all due respect to the hon. Gentleman, I think that he has got completely the wrong end of the stick, as I will explain.
If an employee is facing sexual harassment, worried about safety in the workplace, about to lose their job or have their pay cut, and does not know where to turn when they have problems at work, trade union representatives—independent of their employers—offer a crucial place to turn. They are trained and experienced in handling such issues and in liaising with employers to resolve disputes and workplace problems before they escalate. They help to reduce the cost to the immediate employer and the social and human cost for the individuals concerned. They reduce costs to the employer and ultimately help to reduce the cost to the taxpayer, a point made by my hon. Friend the Member for Aberdeen North (Mr Doran).
Even if one accepts the figures in the TaxPayers Alliance report, which seems to have provided the context for the debate, union representatives amount to only 0.05% of the public sector work force, and, it must be said, they carry out a significant proportion of union duties in their own time. They have attracted a vast amount of Conservative MPs’ time. It is reasonable to wonder whether spending so much time on that issue is the best use of the House’s time. The national health service is in crisis, we have record levels of joblessness, the economy is in free fall, welfare to work schemes are falling apart, many charities and community groups are in a desperate search for funding and there are huge cuts to our armed forces. When all those issues deserve the attention of the House, it is a little surprising that Conservative Members want to focus on 0.05% of the work force.
As my hon. Friend the Member for Paisley and Renfrewshire North (Jim Sheridan) pointed out, interestingly, union representatives continue to enjoy the support of many business people, so much so that the former director general of the CBI, Sir Richard Lambert, described them as having
“a lot to give their fellow employees and the organisations that employ them.”
If such a senior figure from the business world was moved to endorse the role of union representatives, maybe Conservative Members should pause and consider whether the performance of organisations in the public sector benefits from union representatives paid for by the public sector, as my right hon. Friend the Member for Wentworth and Dearne (John Healey) and my hon. Friend the Member for East Kilbride, Strathaven and Lesmahagow (Mr McCann) said.
Research by the University of Hertfordshire examining the benefits of funding trade union facility time in the public sector suggests that the work of union representatives saves between £260 million and £701 million per annum. For every £1 spent on union facility time in the public sector therefore, between £2 and £5 is returned in accrued benefits. Many City institutions would be proud of that rate of return. I gently ask why the hon. Member for Congleton and her hon. Friends think that Britain can afford to waste such sums of money, because that is what would happen if her proposals were accepted.
The organisation that appears to have created the context for the debate, and indeed for other such debates, is the TaxPayers Alliance. Its report does not seem to be terribly well researched. It is certainly not up there with research from the Institute for Fiscal Studies or Barnardo’s and it certainly contains misunderstandings about how the Union Learning Fund works. When I was preparing for the debate, I was interested that the slightly calmer voice of the Minister for Further Education, Skills and Lifelong Learning praised the work of Unionlearn. The report refers to unions that do not exist and to organisations that are not unions, including School Leaders Scotland, the Retired Officers’ Association and, I am told, a credit union.
Not now, no.
Trade unions are heavily regulated, a point made by my hon. Friend the Member for Wansbeck. The right of employees in the public sector to be represented properly is a measure that not even Margaret Thatcher in her wildest moments wanted to abolish. I recognise that TaxPayers Alliance reports are to Conservative MPs what sweets are to little children: a temptation, a must-have, something to cry and shout about. Older heads, wiser heads—I hope Ministers—need to recognise that behind the sound and fury, trade unions play a quiet, useful and important role in helping our public services to run more smoothly. In the worst of times, when employees feel vulnerable and on their own, a trained and professional representative, a trade union representative, can play an important role in supporting them.
I am grateful to the hon. Member for Paisley and Renfrewshire North (Jim Sheridan) for recognising that my friend and colleague, the Minister for Further Education, Skills and Lifelong Learning, my hon. Friend the Member for South Holland and The Deepings (Mr Hayes), lives in the real world. Some have doubted that in the past, so it was very helpful of the hon. Member for Paisley and Renfrewshire North to confirm that truth. However, he was entirely wrong to not congratulate my hon. Friend the Member for Congleton (Fiona Bruce) on securing the debate. I do so, and congratulate her also on how she presented her concerns. She always speaks with a great deal of personal conviction that is often rooted in real experience, and she did so again today.
I was disappointed that so many Labour MPs appeared to come here to frame the debate as the Tories bashing the unions. That is not the language I heard at all. Hon. Member after hon. Member stood up to recognise the valuable role of the unions, as I do too. No one in the Chamber needs a lecture about the value of good industrial relations, or the cost of bad industrial relations, and various Opposition Members spoke powerfully about that. For the avoidance of any doubt, the Government are not proposing any change in statutory entitlement to paid time off to carry out union duties. I am grateful to my hon. Friend the Member for Harlow (Robert Halfon) for pointing out that that goes with the grain of Lady Thatcher’s position.
In the context of the public sector, there is legitimate concern about the level of contribution from the taxpayer, about the issue of balance, which was raised by my hon. Friend the Member for Congleton, and—critically—the issue of transparency, on which my hon. Friends the Members for Witham (Priti Patel), for Plymouth, Sutton and Devonport (Oliver Colvile) and for Selby and Ainsty (Nigel Adams) spoke strongly. That is what we are debating this morning.
I start with the law. We recognise clearly that the Government have a role in facilitating the conditions for a positive relationship, including balancing the needs of the employer with those of the employee. That is achieved largely through the Trade Union and Labour Relations (Consolidation) Act 1992. As the title indicates, the Act brought together a variety of legislation that had been introduced and amended during the previous 20 years—a much more turbulent industrial relations climate. The Act covers a wide variety of issues, including recognition of unions in the workplace, the responsibilities of the employer and union representatives and, of course, industrial action. The extent to which the Act addresses trade union funding is in the context of union keeping of financial records, use of membership subscriptions for political purposes and, in the context of this debate, paid time off to carry out essential duties.
I will make more progress before taking interventions.
Aside from one or two specific instances, the Act does not distinguish between the public and private sector. The statutory framework recognises that there will be essential business that underpins the union’s formal role and helps to facilitate good industrial relations in the work force. The Act therefore provides for time off to carry out that business. In doing so—this is important to the debate—it distinguishes between duties and activities. Duties are the essential tasks that union reps must carry out. They could include collective bargaining negotiations, formal engagement in statutory consultation on collective redundancies, accompanying an individual to a disciplinary hearing, and can also include health and safety responsibilities. Activities include attending union annual general meetings, executive committees and workplace meetings to discuss the outcome of negotiations.
There is a statutory entitlement to paid time off to carry out union duties, but there is no such entitlement for union activities. However, some employers, including in the public sector, extend paid time off to activities as well. There is no right to time off for trade union activities that consist of industrial action. The amount and frequency of time off, whether paid or unpaid, is for negotiation between the employer and the union and depends on what is reasonable, taking account of all the circumstances. There is no statutory minimum or maximum. That ensures the necessary flexibility to accommodate the wide variety of different work forces and different day-to-day circumstances within those work forces. By that I mean that what is reasonable today may not be reasonable tomorrow if the circumstances have changed.
An ACAS code of conduct underpins the legislation. The code is comprehensive and, among other things, emphasises the importance of clear procedures and record keeping, as well as general considerations in determining what is reasonable. They include the size of the organisation and number of workers, the need to maintain a service to the public, and the need to ensure effective representation and communication with workers with a range of needs.
As I said earlier, at the heart of the framework is the importance of good industrial relations in maintaining an effective organisation. A reasonable amount of paid time off offers value for money for customers of an organisation and users of their services. For example, it can minimise working time lost due to disputes and accidents at work.
Some hon. Members mentioned the union modernisation fund. The latest round of projects is currently winding up and will be completed by early 2012. No further rounds of the UMF are planned, and no further funds will be committed to it. It is important, however, for Government to ensure that public sector employers manage the paid time off they grant their union representatives effectively to deliver the benefits I have mentioned.
I was asked about the proposed consultation in relation to the civil service, which was announced at our party conference. In answer to my hon. Friend the Member for Cannock Chase (Mr Burley), we have already announced that we will be consulting with the civil service trade unions on the following areas: reduction in overall facility time across the civil service; ending or limiting the practice of 100% of civil service employees’ time being spent on trade union duties and activities; ending paid time off for trade union activities, as opposed to duties; and reporting, developing a common system for reporting and monitoring across the civil service. That is the framework of the consultation, which I am assured will start imminently.
We will seek to review and rebalance the amount of paid time off provided to undertake trade union duties. The current level of facilities time offered to trade unions across Departments is very generous, and is certainly significantly more than that allowed in the private sector, or indeed in the wider public sector. While recognising the importance of effective representation in the workplace, we firmly believe that trade union facility time arrangements in the civil service are in urgent need of modernisation to reflect modern working practices. The consultation is focused on the civil service, where my responsibility as a Minister in the Cabinet Office lies, however other colleagues who have responsibility for these matters in the wider public sector have been asked by the Prime Minister to review the position in their sectors.
It is a pleasure to serve under your chairmanship, Mr Owen. I am grateful to Mr Speaker for granting this important debate, because we are rapidly approaching 2016—a year that is demanding the Minister’s attention, given that security of energy supply, on which he is something of an expert, is increasing in importance.
I hope that this debate will feed into the wider discussion about the security of supply and be a useful contribution to the thinking on this issue. Given the three important issues that underpin that thinking—keeping the lights on, the diversity of energy sources and increasing the amount of renewable energy—I am pleased that hon. Members are here to listen to the debate.
The debate title is a testament to Britain’s growth in green technology and our status as a world leader in climate change awareness. However, as I will explain, for too long we have trailed behind countries such as Germany in the production of green energy, and we must take decisive action to secure support across the whole sector.
The reality is that attention within the renewables incentive debate has been centred on solar photovoltaic and wind energy. In the short term, river and wave energy may become a new focus. However, too little attention is paid to anaerobic digestion and other energy-from-waste technologies. The decoupling of the two subjects of waste management and energy production in the mind of the general public would be useful in overcoming hostility to the production of energy from waste.
I pay tribute to the excellent work done by my hon. Friend in this regard. Does she think that we need to expand on the excellent work of companies, such as ACM Environmental plc, which has converted waste into renewable energy in schools in Kent? Waste is converted on-site, rather than outside in other areas, and used to heat water, for example, at those schools.
My hon. Friend makes an excellent point. That is exactly what I shall focus on, albeit in Hampshire rather than Kent.
To date, the main focus of attention on energy from waste appears to have been on large-scale industrial production of waste-sourced energy. Advanced gasification is a key part of securing green energy and decreasing landfill: it is a carbon-lean process involving the efficient, high-temperature conversion of waste to base-load electricity. After the August 2010 announcement that energy from waste can be sold to the national grid, there is now real discussion about how local authorities in particular can secure income sources by selling green energy. For example, Air Products, a leading provider of industrial gases and environmental systems, has been granted permission for a 49 MW advanced gasification plant in Teesside, the building of which will begin next year. That development will create 700 jobs, divert up to 350,000 tonnes of waste from landfill and produce enough predictable, clean power for 50,000 homes. Air Products is precisely the sort of provider of clean energy that we should be encouraging to meet our renewables obligations.
Indeed; my hon. Friend is correct.
I should like to explore a number of issues facing the development of the renewable energy from waste industry outside the large industrial-scale plants that I have mentioned. I want to show how the current incentives are working and how we could adjust them to accelerate awareness and the development of the industry, particularly harnessing the potential for small-scale production, as well as production on an industrial scale.
I have called this debate because incentivising small-scale production could develop valuable employment opportunities, help small businesses and local communities generate their own green energy, grow UK exports and, most importantly, assist the Government to achieve secure, diverse and green energy.
As a country, we continue to produce too much waste and we need to promote better uses for our unwanted produce. Producing more energy from waste is therefore a win-win policy, but it needs to be carefully explained to the general public, as the subject is easy to misunderstand, especially when anaerobic digestion is not well communicated.
Anaerobic digestion is the process whereby biowaste from plant and animal material is converted by micro-organisms in the absence of air into biogas, which can in turn be used to generate green electricity and heat. Anaerobic digestion can help reduce fossil fuel consumption and greenhouse gas emissions—two essential goals in our fight against climate change. Almost any biowaste can be processed in that way, including food waste, energy-producing crops and crop residues, slurry and manure. The process can accept waste from our homes, supermarkets, industry and farms, ensuring that significantly less is sent to landfill.
I thank the hon. Lady for bringing this important matter to Westminster Hall. Does she feel that, to incentivise the use of waste material from farms, for example, the Government need to consider financial incentives, because although every farmer would wish to do that, financial restrictions might prevent them from doing so?
Not just financial incentives are needed; deregulation and, in some instances, making the planning process a lot simpler for agricultural enterprises are needed, too.
The National Farmers Union is a vociferous advocate of anaerobic digestion and argues that its use on farms reduces emissions of methane from manures and agricultural residues, improves air quality through the control and reduction of odours, such as ammonia, and leads to benefits to water quality from the improved management of nitrogen and other nutrients present in manures.
Another major advantage of anaerobic digestion as a renewable energy source is that the material left over at the end of the process—an odour-free digestate, rich in nutrients—can be used effectively as fertiliser. This could, and really should, become the standard fertiliser on the market. However, many domestic and business users do not understand the benefits derived from buying recycled products. A new petrochemical-derived fertiliser can cost a farmer between £200 and £400 per tonne, but the by-product from a micro-anaerobic digestion site is more likely to be of a consistent chemical and nutritional specification. Currently, the anaerobic digestion industry is struggling to sell recycled fertiliser, produced to resource action programme standards, at £5 to £6 per tonne. I would be grateful to the Minister if he expanded on how we can best explain the benefits of, and incentivise the consumption of, recycled fertiliser in farming and domestic gardening.
Many sites in the UK are producing biowaste. According to the Department for Environment, Food and Rural Affairs, the UK produces approximately 7 million tonnes of food waste and about 90 million tonnes of animal slurry and manure per year. With 23.6 million households and 41,000 farms, it is clear that the potential for green energy production is enormous.
The UK currently has 214 anaerobic digestion plants installed, of which 146 are sewage treatment sites. In comparison, Germany has approximately 9,000 farm-based sites and China has a simple, rural, domestic-scale approach to anaerobic digestion, which benefits millions of people. It is clear that the UK has far greater potential to make use of this technology. In light of Germany’s achievements in this field, the NFU’s commendable vision for 1,000 on-farm anaerobic digestion plants by 2020 seems quite modest.
There are almost unlimited possibilities for anaerobic digestion on a local scale. In my constituency, the patented technology of an innovative micro-anaerobic digestion technology provider, SEaB Energy, based on Southampton university science park, has produced a system that creates and generates power from waste inside a shipping container. Using that technology, the company has proved, both at the university science park and, locally, at Sparsholt agricultural college, that it is possible to implement micro-anaerobic digestion solutions. A number of other food producers, golf clubs and hotels are also exploring the benefits of using such technology across the UK.
All organisations create waste. SeAB is leading the way, through anaerobic digestion, in reducing our dependence on landfill by converting waste into valuable energy. I should welcome the Minister’s visiting and meeting the people who have developed this world-leading technology, so that he can see green energy in production.
There are several different options for anaerobic digestion, depending on the amount of energy required, and each has its own challenges. A centralised anaerobic digestion facility requires large quantities of biowaste to be collected and driven across the country, inevitably generating a strain on the existing road network and increasing the carbon footprint of the technology. It is also capital intensive, and the site-planning process can be lengthy.
By comparison, decentralised sites are arguably simpler to operate, quicker to build and easier to install and manage. Road haulage is largely eliminated and the waste producer benefits directly from using its own waste to generate its own green energy. I would be grateful to the Minister if he commented on how we can incentivise the many small waste producers, such as farmers, food growers, food packers, hotels, hospitals, schools or prisons—the list is almost endless—so that they can benefit from green energy throughout the country. In short, anaerobic digestion reduces the need for landfill, with the exciting possibility of creating sustainable communities with a consistent waste fuel power source.
The NFU is keen to ensure that smaller, farm-based biogas proposals are not disadvantaged by being labelled waste management. If we are to see the necessary growth in on-farm anaerobic digestion plants, it is important that they are subject to simple permits. I will be pleased to hear the Minister’s comments on that and on what work can be done with the Department for Communities and Local Government to ensure that light-touch regulation is encouraged among local planning authorities.
It is important to note that there is tremendous potential for the upgrading of biogas to biomethane for motor vehicle use as a tradeable low-carbon fuel or for direct injection into the natural gas distribution network. I understand that equipment for biogas upgrading is available from Germany, where such pipeline injection is growing, and in our constant search for fresh sources of car fuel, that is an extremely encouraging possibility.
Other sources of renewable fuel can be found in the waste stream, such as the conversion of used cooking oil into biodiesel, which is entirely sustainable and derived from a waste product. That would involve recycling almost 100 million litres of waste cooking oil each year, while helping the Government to exceed their greenhouse gas emission targets in transport by 8%. However, as highlighted by the recent report on environmental taxes by the Environmental Audit Committee, of which I am a member, the removal this March of the 20p per litre duty differential on such fuel will make it prohibitively expensive and high-blend users will have no choice but to return to fossil fuels. That will have a disastrous impact on the UK biodiesel industry, resulting in the loss of green jobs, as well as discouraging further investment in the development of new technologies in the energy-from-waste sector.
My hon. Friend makes an excellent point, and there is much to credit in his argument.
I strongly urge the Minister to continue to speak to his colleagues in the Treasury, because I fear that, without continued support, we will jeopardise the significant steps that have already been taken. The energy-from-waste sector is full of innovative and in many cases ingenious ideas. I am conscious that we need a wide variety of energy generation methods to meet demand. No one form of green energy provides the whole answer, and we need a range of solutions, both large and small.
In summary, there are a number of questions for the Minister. First, does he agree that there is real untapped potential for small-scale energy-from-waste production to contribute to the secure, diverse and green supply of energy? If so, can he outline clearly how the potential for small-scale production can be encouraged and incentivised? Secondly, what changes to legislation and regulation—in particular to that coming from the Treasury—would be a prerequisite for the vision of small-scale energy from waste production to become a reality? Thirdly, what can be done to rebalance the debate, to support the broader market development of sustainable fuels from waste, including micro-anaerobic digestion and to ensure that the necessary incentives are in place for the sector to thrive? I thank the Minister for taking the time to address the issues, and I look forward to hearing his response.
It is a privilege and a pleasure to serve under your chairmanship, Mr Owen. I thank my hon. Friend the Member for Romsey and Southampton North (Caroline Nokes) and congratulate her on securing the debate. She has given us an excellent summary of the benefits that such technologies can bring and a clear understanding of where she sees the barrier to their deployment. I want to go through where we see the opportunities and to say what we are doing to remove the barriers.
My hon. Friend has not been alone in the debate. I welcome the contributions of my hon. Friends the Members for Elmet and Rothwell (Alec Shelbrooke), for Redcar (Ian Swales) and for Gillingham and Rainham (Rehman Chishti) and of the hon. Member for Strangford (Jim Shannon), which all showed the understanding, depth of knowledge and interest in the issue that is present throughout the country.
I have already had the chance for a brief conversation with some of the people involved in SEaB. I am delighted with the opportunity to visit in the future and to see on the ground the work that they are doing in the constituency of my hon. Friend the Member for Romsey and Southampton North, but it is also important to put our discussion in the context of the wider energy debate, and that is how I wish to begin. She is absolutely right, however, to highlight the untapped potential of the sector, and part of our objective as a Government is to realise that potential in the most effective way that we can.
As my hon. Friend outlined, renewable energy has a vital role in our low-carbon future. By the end of the decade we must cut our carbon emissions by 35% on 1990 levels, and by the end of the next decade they must have halved. We also have the EU renewable energy target, which means that we must generate 15% of our energy from renewables by 2020. In order to meet that target, about 30% of our electricity and 12% of our heat will need to come from renewable sources. That is not only about meeting targets, because it is also the right thing to do, and we need to reduce our dependency on imported fossil fuels. Home-grown renewable energy can enhance our energy security and give us a greater degree of energy independence, helping to shield us from global fossil fuel price fluctuation, which seems to be in only one direction at the moment, as we see high prices for oil and gas. She also touched on the immense economic potential in renewable energy, and the sector could provide opportunities for up to 500,000 jobs.
In the Department of Energy and Climate Change, we have been working with the renewables sector to understand more effectively how much renewable energy can be deployed by 2020, and to identify the current constraints that must be addressed.
My hon. Friend is aware that what we have been seeking to do is to give local authorities more say in how they should manage their affairs, rather than a top-down, Government approach. For many of us with landfill or land-raise issues in our constituencies, it seems absurd to put food waste into such facilities. At the end of the day, however, we want the local authorities to be the driving force in resolving such issues. In his own case, Kent is a beacon authority in looking at how to manage its waste issues.
I thank the Minister for investing DECC money into an anaerobic digestion facility at the Centre for Process Innovation in my constituency. He is referring a lot to renewable energy, but does the way in which waste is treated under all our policies throughout the various Departments satisfy the renewable energy criteria and meet the simplicity requirements mentioned by my hon. Friend the Member for Romsey and Southampton North (Caroline Nokes)?
My hon. Friend raises an important issue. For the first time, we are now moving towards a clear, cross-Department strategy on waste. That means looking at the hierarchy and at where we reuse and recycle, but also seeing that as part of that process there is residual waste, and getting an energy source from that is better than putting it into landfill and land raise.
We seek to work with the devolved Administrations but, clearly, different rules apply in different parts of the United Kingdom, where the different Governments have responsibility for such matters. If we have central control in Westminster over different aspects, we have the influence, but we obviously wish to work with the devolved Administrations to ensure that the strategy is as holistic as possible. The more that we can remove the barriers and have an integrated and holistic approach, the more effectively we can attract investment into the sector.
We have identified eight technologies that we believe will bring us closest to delivering those 2020 targets cost-effectively and sustainably. They are onshore and offshore wind, marine energy, biomass heat and electricity, ground source and air source heat pumps, and renewable transport. Biomass heat and power includes energy from waste technologies, such as anaerobic digestion, waste combustion and the new, advanced technologies of gasification and pyrolysis. We believe that those eight technologies collectively are capable of delivering more than 90% of the renewable energy we need for 2020.
Instead of just having targets, we are determined to show how we meet our objectives. It is easy for Governments to have targets, but then to leave them to a future Government to explain why they were not met. We are determined to put in place a clear road map that shows what barriers exist, and how we intend to overcome them so that we can be more effectively held to account in the process.
Last year, we published the UK renewable energy road map, which shows where we are now on those eight technologies, how deployment may develop up to 2020, and the actions that will need to be taken now to overcome the barriers to deployment. Although our evidence shows that we can meet our target of 15% renewables by 2020, we are clear that we need a rapid increase in deployment. At the end of 2010, renewable energy accounted for 3.3% of UK energy consumption, so there is a significant way to go.
Renewable electricity and heat technologies are generally more expensive than fossil fuel generation, and require subsidy to boost deployment, just as every previous new energy technology has done. Support is available under the renewables obligation, the feed-in tariffs scheme, the renewable heat incentive, and the renewable transport fuel obligation.
The Minister talks about eight key technologies and delivering them affordably. I entirely agree with that, but will the road map be flexible enough to change if technologies advance with time? If one technology becomes more prevalent in delivering the green energy that we need, will changes be made to cover that ?
My hon. Friend makes a crucial point. We have set out in the road map the high, medium and low trajectories for each technology. A key element that may change is the cost of delivering them. For example, we are working with the industry on offshore wind to bring down the cost by 40% over this decade, and that is critical to the extent of its deployment. If the costs cannot be brought down, we must make choices on behalf of consumers to show that we are trying to deliver those renewable objectives at the least cost to consumers. Flexibility is an integral part of that process.
Despite the undoubted benefits of renewable energy, it must be cost-effective and affordable compared with low carbon alternatives. I acknowledge the valid point that my hon. Friend the Member for Romsey and Southampton North made in her introduction that the renewables industry and investors need stability to plan ahead. Uncertainty is often the greatest enemy of investment. I also appreciate that recent changes, particularly to the support for solar photovoltaic installations under the feed-in tariffs scheme, may have temporarily affected industry and investor confidence, although we are now seeing strong growth again in the number of PV installations. We are committed to delivering our goals in a way that minimises the impact on consumers’ bills.
In our measures to reform the support mechanisms, we have three objectives. They are designed to make the budget go as far as possible, and to maximise the number of people who can benefit from schemes. They will provide greater certainty for the industries concerned on the rates of return that they will receive up to 2020, and they will ensure value for money to consumers who pay the bills.
I understand that the scheduled banding review for the renewables obligation has caused some concern. Banding reviews ensure that as market conditions and innovation within sectors change and evolve—this point is directly in response to that made by my hon. Friend the Member for York Outer (Julian Sturdy)—developers continue to receive the appropriate level of support necessary to maintain investment. We have studied how much subsidy different technologies need. When new technologies need help to reach the market—for example, wave and tidal energy, which are emerging technologies—we have proposed increasing support, but when market costs have come down or will come down, we propose reducing the subsidy accordingly. That proposal will result in a lower impact on consumers’ bills than keeping the existing bandings, and will drive a higher level of deployment. Setting the bands for the period to 2017 also provides the industry with the certainty needed to make investment decisions now. The public consultation on the banding review has closed, and we will issue the Government’s response in the spring, confirming the banding levels moving forward. Legislation setting the new bands in law will come into effect on 1 April 2013.
I have mentioned the eight existing technologies that we have focused on in the UK’s renewable energy road map. Anaerobic digestion has, without doubt, an important role to play in both biomass heat and electricity generation. The United Kingdom produces about 100 million tonnes of food waste, manure, slurry and sewage sludge that is suitable for treatment by anaerobic digestion. When the coalition was formed in 2010, we stated our commitment to developing energy from waste through anaerobic digestion. I assure my hon. Friend the Member for Romsey and Southampton North and other hon. Members who have spoken that we remain absolutely committed to delivering on that commitment.
Last June, the Department for Environment, Food and Rural Affairs and the Department of Energy and Climate Change jointly published the anaerobic digestion strategy and action plan. It sets out our vision for anaerobic digestion, with an estimate of potential that could reach between 3 and 5 TW hours of electricity by 2020. Currently, there are only 172 MW of installed anaerobic digestion capacity in the UK, processing more than 5 million tonnes of material, and generating more than 1 TW hours per year. More is coming through the system. Just last week, Tamar Energy announced plans to develop 40 AD plants in the UK, with an installed capacity of 100 MW. In addition, we know of more than 100 plants that have received planning permission, and a further 80 that are going through the process.
It is clear that momentum is building and support for the technology is growing, but we recognise that significant barriers must be overcome for the sector to reach its potential. The anaerobic digestion strategy and action plan also sets out a joint Government and industry programme of work with 56 actions to tackle the key barriers to deployment. You will be grateful, Mr Owen, that I will not go through all those this morning. However, work is progressing on a range of actions, including disseminating information, particularly on regulatory controls; providing guidance on the costs and benefits of AD and best practice projects; developing skills and training for AD operators; building markets for digestate; and understanding the barriers to the use of biomethane as a transport fuel. Those pick up on most of the issues that my hon. Friend raised. An annual progress report on how we are moving to meet those actions will be published in the summer.
Our commitment to anaerobic digestion is also clear through the financial incentives that we offer. Anaerobic digestion is the only biomass technology supported under the feed-in tariffs scheme, which is aimed at smaller scale projects under 5 MW. Larger-scale projects are eligible for support under the renewables obligation. The renewable heat incentive supports biogas combustion below 200 kW thermal and the injection of biomethane at all scales into the national gas grid.
In addition, a £10 million loan fund is available from the Waste and Resources Action Programme to support the development of new AD capacity to divert 300,000 tonnes of food waste from landfill. WRAP is jointly administering, with the Technology Strategy Board, a fund designed to drive innovation in AD systems to bring down the cost of capital. Waste, including anaerobic digestion, is one sector likely to be eligible for initial intervention by the Green investment bank. In the meantime, a new team within the Department for Business, Innovation and Skills—UK Green Investments—has £100 million to invest in smaller green infrastructure projects, including AD, on a fully commercial basis. I hope that that reassures my hon. Friend that significant support is coming through, and that we have identified the issues.
I share my hon. Friend’s enthusiasm for smaller, more local plants. That is backed up by the study by consultants for the renewables obligation banding review that suggested that anaerobic digestion potential lies in stations with less than 5 MW of capacity. That ties in with our commitment to localism, which was raised during the debate, and is why, as part of the rural economy growth review, the Government have announced that they will promote the development of community-scale renewable energy projects in England through the establishment of a £15 million rural community renewable energy fund.
I also share my hon. Friend’s concern about the difficulties that anaerobic digestion operators experience in trying to sell their digestate as fertiliser. It is a valuable biofertiliser that can be used as a renewable source of critical plant nutrients, such as nitrogen and phosphorus. Although the UK has long-term experience with digested sewage, digestate derived from food wastes and other inputs is often regarded as novel by the market. There is a reluctance to accept it until evidence of its quality and benefits can be provided. The anaerobic digestion action plan contains a number of actions to build confidence, and I hope that my hon. Friend will continue to work with WRAP to ensure that the identified challenges are understood.
Scottish Football (Tax Liabilities)
[Mr Clive Betts in the Chair]
It is a pleasure, Mr Betts, to serve under your chairmanship for the second time during this Session. I have been asked to give the apologies of some hon. Friends who are detained in the Scottish Affairs Committee and the Treasury Committee. I am sure that many of them would otherwise have been here to discuss their take on what has happened in the Scottish game in recent weeks.
Hon. Members need no reminding of the importance that football clubs play in our communities north and south of the border. I am privileged to have two senior football clubs in West Fife. Dunfermline Athletic is in my constituency, and Cowdenbeath is some 800 metres over the border in the constituency of my right hon. Friend the Member for Kirkcaldy and Cowdenbeath (Mr Brown), the former Prime Minister. I want to say a little about the role of those clubs, and clubs like them, throughout Scotland and the rest of the United Kingdom.
On Saturday, I was lucky to be taken to Cowdenbeath’s home game against Brechin City football club as the guest of a local law practice, Stenhouse Husband & Irvine. While sitting with the club’s board of directors over lunch, I was able to talk about the state of the Scottish game as a whole, and the way in which clubs operate in the lower divisions. People give up their time and money to support clubs such as Cowdenbeath and Brechin City, and I was struck that they do so not for financial gain, or the glamour, or even the company of Members of Parliament, but because of their deep affection for the clubs in their communities, their love of football, and because they want to give something back to their home towns.
On Saturday afternoon, I had the opportunity to spend some time with the chairman of Cowdenbeath football club, Donald Finlay QC. You may not be familiar with that name, Mr Betts, but he is one of Scotland’s highest profile Queen’s Counsel, a former vice-chairman of Rangers football club, twice rector of the university of St Andrews, and someone who has enjoyed a colourful and entertaining history of involvement with Scottish football. While chatting to him on Saturday afternoon, I asked him why, having been involved with Rangers during their most successful period, highlights of which included narrowly missing out on a European cup, and achieving nine league titles in a row, he provided so much time and energy to support one of the lesser lights of Scottish football. I hope that Mr Finlay does not mind me sharing his answer. He said that he was Cowdenbeath born and bred, and was always proud of his home town. He simply wanted to put back a little into the community that he loves so much.
The second thing that struck me was that clubs in the lower leagues operate with far more fiscal responsibility than some of the clubs in the top two flights of Scottish football. Perhaps it is because those involved in the running of lower league clubs are local business men and lawyers that they have a healthier respect for a balance sheet, and recognise that a club’s expenditure must not exceed its income. It is undoubtedly a source of frustration to many smaller clubs that every month they must account for every penny while the so-called big boys of Scottish football are able to rack up debts of hundreds of thousands, if not millions of pounds, with no obvious means of repayment.
Thirdly, it is worth noting that those who work behind the scenes at our smaller clubs often do so for little or no recompense, and would normally have no expectation of receiving any praise or credit. For example, on Saturday, I discovered that the tannoy announcer at Cowdenbeath FC is Mr Jim Stark, who was editor of the Central Fife Times. Behind the scenes, one of the key cogs in the functioning of a successful match day is Mr Alex Haddow, chairman of the local community council. Without the tireless support of such individuals, and hundreds of other community heroes, clubs such as Cowdenbeath and Brechin City would not function. The strength of feeling in clubs further up the Scottish leagues is equally strong, and due to the full-time nature of their clubs, arguably their roots go even deeper into their local communities.
For the sake of probity, perhaps I should declare an interest at this stage. I am not only a Dunfermline Athletic season ticket holder, but my constituency office is located within the club. Dunfermline Athletic—or the Pars—like many other clubs, has invested heavily in supporting youth and grass-roots football. Indeed, the club offers classes for children from 18 months and through primary school to introduce them to the game, and to build their confidence and interpersonal skills. Those classes, with the support of their parents, help to develop children’s motor skills, and they provide a fun and safe environment so that children can integrate and develop their characters. The emphasis is, rightly, on fun and enjoyment, but it is a crucial role, for which clubs receive no financial recompense, and fills a vital role in society—some might say the big society, which the Minister is so keen on. Beyond primary school, football clubs, like those south of the border, have successful youth academies. Dunfermline’s under-14s and under-15s recently visited the city academy in Manchester, and were able to take part in a contest against players from the likes of Manchester City.
The financial situation in Scottish football clubs in recent years has been dwarfed by their counterparts in the English leagues. I shall provide some context for the finances of Scottish football. The television sponsorship deal in Scotland is only approximately 1% of that south of the border. Outside the old firm, players’ wages in the Scottish premier league are typically only £1,000 to £3,000 a week, which is a fraction of that paid to players in the premiership, the championship, or even league one. To put it simply, the annual wage of a Dunfermline player is less than the weekly salary of a Manchester City, Chelsea, or Manchester United squad player. None the less, clubs such as Dunfermline are expected to compete with the giants of Scottish football.
The recent financial events at Rangers football club cannot be seen in isolation. Before I talk about the impact on other clubs of Rangers going into administration, it is worth recapping the saga at Ibrox. The origins of Rangers’ problems date back over two decades. In 1988, David Murray bought a majority shareholding in the club for approximately £6 million. Mr Murray invested heavily in building a team that could not only dominate the Scottish league, but compete with the best of Europe. Something that is often forgotten is that when Rangers, under Murray and Graeme Souness, were building their successful side, which would go on to win nine league titles in a row, English clubs were banned from competing in Europe, so Rangers were able to attract players from England who, to play in Europe, either had to move to Europe or travel north of the border to play for the old firm. The list of players at Rangers during the late ’80s and early ’90s was a “Who’s Who” of Bobby Robson’s England team. The names will be familiar to every English fan: Chris Woods, Terry Butcher, Trevor Sinclair, Gary Stevens, Trevor Steven, Ray Wilkins and Trevor Francis. They were great players in a great team.
Rangers were able to use their dominance and ongoing success to attract some of Europe’s best players, such as Brian Laudrup and Paul Gascoigne. Unfortunately for the club, their ambitions were never matched by their income, and in 2004 those debts peaked at a staggering £72 million. However, in the next few years, Rangers reduced their debt to some £30 million by the end of the decade, according to their annual accounts. In 2010, Mr Craig Whyte confirmed to the stock exchange that he was in talks with Rangers’ owners about a takeover. In 2011, Mr Whyte formally bought the club for a notional £1, having agreed to take on the club’s debts. He promised Rangers fans that he would be able to service those debts.
I congratulate the hon. Gentleman on securing this debate. He referred to the history and the debts racked up by Rangers, but does he agree that that is commonplace today? Manchester City and Chelsea have massive debts, far in excess of what Rangers ever racked up. The only difference is that they have someone to stand behind those debts. The phenomenon is not new, and sadly it has not gone away, but it is not unique to Rangers.
The right hon. Gentleman is correct. What is appalling about the Rangers situation, and has come to light in recent weeks, is that Mr Whyte did not have the money to service the debt. It has now transpired that in what I would regard as a most disgraceful act, Mr Whyte and cohorts borrowed money from Ticketus on the future sale of season tickets. In effect, Rangers fans paid for Mr Whyte’s ill-fated takeover; they are the losers, and I am sure that disgraceful situation will be recognised across the House.
I, too, congratulate the hon. Gentleman on securing the debate. He has raised an important issue about Craig Whyte and the apparently underhand way in which he acquired a controlling influence at Rangers football club. Does he agree that if football clubs could allow fans a greater degree of controlling influence, à la the Barcelona model or perhaps in the way alluded to earlier in respect of Cowdenbeath, it might move us away from the insidious controlling influences of multi-billionaires who appear to use football clubs as playthings?
The hon. Gentleman is absolutely right. I see that the hon. Member for Portsmouth North (Penny Mordaunt) is in the Chamber. She has championed that model for Portsmouth FC, so perhaps she will be tempted to contribute to the debate. There are some good examples of that model in Scotland. I referred earlier to Brechin City which, as hon. Members may know, had on its board Mr David Will, the FIFA vice-president for the British Isles, and a local lawyer, steeped in Brechin City. There are successful models of clubs, both large and small, where the shareholders are the fans. I hope that the Treasury will look at ways of trying to ensure that a fit and proper person test means not only that liars such as Mr Whyte are not put in charge of clubs, but that we can all have comfort in club finances for the future.
I congratulate the hon. Gentleman on securing the debate, which I am attending as a Pompey supporter, so I share his pain and that of other hon. Members. We too have been badly let down, but I hope that the supporters’ trust will soon have a financial stake in the club.
Does the hon. Gentleman agree that when Her Majesty’s Revenue and Customs deals with clubs in such situations, it is important that it considers the club as a distinct entity, and does not tar it with the sins of the whole football community going back over many years? That has been my experience of the way that HMRC dealt with Portsmouth, and I would like to put on the record my thanks to HMRC staff, and to the Minister for facilitating dialogue. I hope that Rangers and other clubs have similar success.
I am grateful to the hon. Lady for those comments. She has been a staunch champion of Pompey’s interests, and I know that she badgered the Minister on more than one occasion to ensure that the club got a fair hearing. She is right to say that each club needs to be considered on its own merits, and I will perhaps return to that point during my remarks.
Thanks to the Scottish press, which has been assiduous in trying to get to the truth of this sorry affair, it has been particularly disturbing to discover in recent weeks that HMRC has been engaged in a long-standing battle with Rangers over what the Treasury believes, and I believe, is a tax-avoidance scam instigated by David Murray. If Rangers lose this ongoing court case, it has been estimated that the club will owe HMRC somewhere in the region of £45 million in unpaid taxes from over the past decade.
On 9 January 2012, shares in Rangers were suspended from trading on the PLUS stock exchange for failure to submit audited accounts—alarm bells should have rung at that point. Mr Whyte, however, dismissed it as unimportant because he was by then, he argued, the dominant shareholder. On 5 February, Rangers were knocked out of the Scottish cup by Dundee United at Ibrox. On 11 February, Dunfermline hosted Rangers in the Scottish premier league. Finally, after months of speculation, on Monday 13 February, Rangers lodged their intention to enter administration at the Court of Session. Mr Whyte told reporters that, in his estimation, the club’s final tax bill could amount to £75 million—an astonishing amount. The following day, the club appointed Duff and Phelps as administrators. The SPL deducted 10 points from Rangers, which left them 14 points behind Celtic.
Rangers entering administration has not simply changed the dynamic of the title race but has had a devastating impact on three groups of people: first, the staff—both playing and non-playing—of Rangers FC; secondly, the companies that are owed money by Rangers as creditors; and thirdly, the other 11 members of the Scottish premier league, which is the group that I wish to raise with the Minister today.
No one should have anything other than sympathy for those who face losing their jobs at Ibrox, in particular those who work behind the scenes and are not millionaires, and who will not easily find employment in the current economic climate.
There are two distinct yet equally important categories of club. Two clubs in the SPL have claimed that they are owed money by Rangers for ticket sales, and I will explain their situation for the benefit of the House. Under the rules of the Scottish Football Association and the SPL, the total gate receipt for a league game belongs to the home club. It is standard operating practice for the away club to sell tickets for their end of the ground, but under the rules of the league, that money must be paid to the home team within seven days of the fixture taking place, minus any pre-agreed handling fee. The money is not the property of the away team, which is merely the handling agent.
For games in the Scottish cup, however, ticket sales for the whole ground are split equally between the two clubs, minus any operating costs, and the home team get to keep any proceeds from hospitality, refreshments, or programme sales. Under SFA rules, the two teams that have sold tickets do not have any right to count those ticket sales on their balance sheets, as they are merely holding agents and the money is to be put into the pool of gate receipts for the cup tie as a whole. In other words, the two clubs are merely acting as agents; it is not their money.
When Rangers entered administration, the club and its administrators, Duff and Phelps, refused point blank to hand either amount of money to Dundee United or Dunfermline, arguing that it should go into the pot of credited money. Let me be clear and send a message to Rangers’ administrators: that money does not belong—and has never belonged—to Rangers. Holding on to it is not only morally wrong, it is nothing short of theft.
What makes matters worse is that members of the Rangers board of directors were in the directors lounge at East End Park on the Saturday in question. They looked their counterparts in the eye, and told them that on Monday the money would be transferred to Dunfermline Athletic by BACS payment. It is utterly inconceivable that on that Saturday afternoon, the board of directors, which included Mr Ali Russell, did not know that on Monday afternoon they would be filing papers with the Court of Session. For the two clubs involved, despite the support of the SPL and the SFA, it will probably take months to recover the money to which they are legally and morally entitled from Duff and Phelps.
The second category of club involves any club in Scotland—or elsewhere—that has entered into financial transactions with Rangers, for example over the transfer of players. We know that at least one club, Heart of Midlothian, stated that it is owed close to £1 million for the transfer of a player to Rangers. It is in a more complicated situation—one that you will be familiar with, Mr Betts—concerning the rule of football first creditors. As I understand it, Scotland does not have the same rules as England about football first creditors, but that is an issue of ongoing legal dispute between the clubs, HMRC and the creditors.
It is more than likely—in fact, I have been led to believe—that other clubs, which I will not name because they have not asked to be named, are also owed money for various transactions and are in a similar situation to Hearts. As you will see, Mr Betts, these are not insignificant sums, particularly given the parlous state of Scottish football as a whole. Scottish football faces several months of uncertainty and disruption while the financial affairs of Rangers are sorted out.
Before I set out what HMRC should be doing going forward, it is worth reflecting on its role in allowing the situation to occur in the first place. In recent months, every Member of the House will have been visited by the owners of local businesses, asking for assistance in working with HMRC to deal with short-term cash flow challenges. The sums involved are often not large. However, HMRC is not exactly known for adopting a sympathetic or flexible approach to assisting local companies with problems.
Indeed, the Minister will probably recall correspondence between him and me before Christmas about one of my local businesses, which despite many years without a single missed or late payment, had experienced a short-term problem and found HMRC to be unbending and—dare I say it?—uninterested in its problem. People can imagine the surprise felt by those businesses, many of which have contacted me in recent days, when we learned that HMRC had not received any payment from Rangers for pay-as-you-earn or, apparently, VAT since last May and that the sums for PAYE and VAT have now reached, according to the Scottish press, some £15 million.
I am not criticising HMRC per se for the decision not to require payment from Rangers. I do, however, believe that it is wrong that the club has been treated differently from not only any other club in the league, but thousands of small and medium-sized businesses in Scotland. There are serious questions that require proper answers, and I hope that the Minister can provide some of them today.
First, it is inconceivable to everyone, frankly, given the sums and the time period involved, that HMRC allowed this situation to develop unilaterally. Can the Minister confirm to the House whether any UK Ministers were aware of the size and severity of the non-payment by Rangers, and whether any discussions took place among UK Ministers and between Ministers and HMRC about possible courses of action? Will the Minister also confirm whether any representations have been received from the Scottish Government, either before or after Rangers went into administration, on the issue of its tax liabilities?
As I said, I do not criticise the decision of HMRC not to force payment of moneys due. However, I believe that given the knock-on effects on the other 11 clubs and the fact that the integrity of the Scottish premier league season itself is now at risk, HMRC must take proactive steps to support the other 11 clubs. In short, I would like HMRC to carry out the following actions, and I would be grateful for the Minister’s confirmation that HMRC will indeed do so. HMRC should now proactively contact the other 11 clubs to establish what financial liabilities they have as a result of Rangers going into administration. HMRC should then work constructively and sensitively with the clubs and the SPL to ensure that none of the other clubs is unable temporarily to meet their obligations to the taxpayer.
To be clear, I believe that it is right and proper that by the end of the season, all 12 clubs should meet all their financial obligations to HMRC and the taxpayer, but they need to be given the breathing space to sort out the sorry mess created by Mr Craig Whyte. I urge the Government to ensure that all the other 11 clubs pay in full the sums owed to HMRC by the time of the last whistle at the end of the season, but that individual packages of payments can be tailored so that financial penalties are not incurred by them as a result of the actions of another—indeed, the largest—club.
I would be grateful if the Minister could also set out what contact he has had, if any, from the Scottish Government since Rangers went into administration to offer assistance to the clubs or to the SPL to meet their obligations. I would be grateful if the Minister could meet me in the coming days if there are any questions that he feels unable to answer in a public forum, so that we can further discuss the crisis in Scottish football.
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.
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.
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.
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?
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.
I congratulate the hon. Member for Dunfermline and West Fife (Thomas Docherty) on securing this important debate. He will know that I have spent many a fine afternoon on the terraces of East End Park as a native of Dunfermline, supporting the mighty Pars. My affections have now transferred to the mighty Saintees of McDiarmid Park in Perth. I know that it is very much to the hon. Gentleman’s disappointment that almost the entire length of the Scottish premier league separates Dunfermline from St Johnstone just now.
The hon. Gentleman mentioned two other clubs in his contribution. It was a bit remiss of him, when talking about Cowdenbeath, not to give their nickname, which I am sure that you, Mr Betts, are bursting to know. They are known as the Blue Brazil, a nickname that could never be more deserved. I remember when my grandfather used to take me to watch the cup games against Cowdenbeath, being a native and resident of West Fife, where the league support was for Dunfermline. I went to Central Park to watch the cup games when Cowdenbeath were competing. That was a forlorn activity back in the 1970s, because on only a couple of occasions did Cowdenbeath manage to get past the second round. He also mentioned Brechin City, which used to be in my constituency, in north Tayside. What is notable and significant about Brechin City is that it is the only professional football ground with a beech hedge as its border. A lot of Scottish football fans liked to go along. There were the bridies at Forfar Athletic and the beech hedge at Brechin City.
Enough of my tour around the football grounds of Scotland; let us get on to business. I think that everybody here is a football fan, but where on earth are the rest of my Scottish colleagues? There is only the hon. Member for Dunfermline and West Fife. We get so few opportunities to discuss Scottish issues, particularly important Scottish issues about football. We are all proud that we represent football clubs in our constituencies. I have St Johnstone, a fantastic team doing well in the premier league, but where are my Scottish colleagues this afternoon? It is not as if they get loads and loads of Scottish business in this House. Not one of them could be bothered to turn up today to discuss the biggest crisis that is facing our national game. That is a disgrace, which says a lot about my Scottish colleagues when it comes to debating these important issues.
We have never had a crisis like this one. It is totally unprecedented and how it will end is anyone’s guess, but the nature and the face of Scottish football will probably change dynamically because of what is going on.
First, some colleagues have been detained at Select Committees this afternoon. Secondly, does he agree that many colleagues are nervous about discussing what has happened with Rangers, because it is difficult to have a rational, sensible debate about the Scottish game without many of our constituents taking umbrage at us?
I do not know that that is true. I know that there is a bit of interest in this debate: one only has to look across the corridor from here. That does not excuse anything, however. This is important and it is unfortunate that there are not more Scottish colleagues here to debate what is probably the biggest crisis that we have seen in our game. This deserves and requires proper debate and it is unfortunate that we will not have that today, because this crisis deserves to be dealt with as sensitively as possible.
I listened carefully and closely to the remarks of the hon. Member for Dunfermline and West Fife. Where I can go along some way with him is that there is a real desire for a solution to this problem. There has to be a solution, because it is almost inconceivable to imagine Scottish football without Glasgow Rangers. They have 130 years of history and tradition. They have huge support—some 50,000 home fans go to watch Glasgow Rangers at a home game every second week in the city of Glasgow. To have that taken out of our game would have a significant and deep impact on the ability of the SPL to continue to produce a platform that will engage and encourage people and ensure their support.
It is not just about ticket receipts. When Rangers come to St Johnstone, it is the biggest weekend that we have in Perth. It is not just the inflated gate that we get by playing one of the old firm; it is also some of the activity spin-offs for Perth. It is not just about the pubs on match day. Glasgow Rangers supporters may choose to take a day either side of the game—the Friday night or the Saturday evening—so our hotels and restaurants are busy. There are also the other activities that go on within the city. To lose that would be to lose a significant amount of income and economic activity, which would be very much missed.
There is also the issue of television rights. As the hon. Member for Dunfermline and West Fife said, they involve a fraction of the sums for television rights in England, but they represent a massive income for the Scottish game. If there were no Rangers, what impact would that have on the television rights sold to ESPN, Sky and the BBC, which play a massive part in the incomes of so many other Scottish football clubs? We would also miss the drama and spectacle of old firm games, which are enjoyed and appreciated not only in Scotland and the rest of the United Kingdom, but throughout the world.
Just for the sake of clarity, it might help to reiterate that if either half of the old firm is not in the SPL, the contract with the TV companies falls. It is therefore in the SPL’s interests to treat Rangers as a special case because of those knock-on effects.
The hon. Gentleman is spot on. There is, of course, talk and speculation about what happens if Rangers are unable to come out of administration. Indeed, the Scottish press, particularly the sporting press, have a fascination with the old firm, and we read about it almost every day. However, the hon. Gentleman is right that some of the small businesses that are expecting payment from the administrators will suffer a massive loss. That is a real issue, and I am grateful to him for bringing it up.
Football is our national game. All our football clubs play an enormous part in our economic activity and make a real contribution to our communities and constituencies. The Fraser of Allander Institute estimates that the old firm’s economic importance to Glasgow and the rest of the Scottish economy amounts to £190 million. More than 3,000 full-time jobs depend on SPL football, and £200 million is spent on related commercial activities in Glasgow alone. According to the Rangers annual report, the direct economic activity generated by the club is in the region of £56 million.
Most importantly, there is also the issue of what happens to the 331 people directly employed by Rangers. They must be absolutely paramount in our considerations, and I hope some solution is found so that they can continue to serve in their jobs.
This is not, however, just about clubs’ contribution to our economy, important and significant though it is. There is also the value professional clubs have for our communities, and the hon. Member for Dunfermline and West Fife mentioned that. We can all see the infrastructure that exists and the clubs our young people are encouraged to participate in. We know that our football clubs make an immense contribution to our communities. According to the SPL’s 2011 community report, 20,000 people participate in community projects weekly, and SPL clubs spent £8 million on community activity, which is no small sum.
There are also the fans in Scotland. I know the audience for SPL football has diminished, but 3.2 million people still attend SPL games each season, and a further 76 million watch them on ESPN, the BBC or Sky. Football is therefore a big business, which contributes much to our economy and our communities, and we must ensure that we respond to the current crisis with the sensitivity it deserves and requires. Scottish football is in a precarious state, and it remains a fragile product, so it can ill afford to lose one of its major protagonists.
Of course, this is not just about Rangers. Several of our clubs are teetering on the brink of financial collapse and ruin. I just wish they could all be like St Johnstone, which is run so perfectly and effectively by Geoff Brown, its chair. It never gets into debt, it always ensures it looks after its liabilities and it never has a problem with HMRC, but that is not the case with many of the clubs in the SPL. I am thinking not just about Rangers, but I will not mention the other clubs, because we all know which ones are experiencing real difficulties and pressures.
We have seen what happens when clubs cannot meet their responsibilities and liabilities. Dundee and Livingston went into administration. We have also seen one SPL club—Gretna—go to the wall in the past 10 years. It was not a particularly great example, and I doubt whether other clubs would like to replicate its business model.
These are tough times, and gates are falling. We have heard from the hon. Member for Folkestone and Hythe (Damian Collins) about the pressure of football wage inflation and how it must be brought under control. The hon. Member for Dunfermline and West Fife was of course right to mention that SPL football is totally different from the English premier league or first division, and only the wages in the old firm are similar. However, some clubs have tried to replicate what we have seen elsewhere and to buy success by buying expensive players. They have tried to compete with the old firm and they have got into all sorts of difficulties. That is probably one of the reasons why Dundee football club, in particular, experienced the difficulties that led to its going into administration. There is a demand all the time to buy more expensive players, because that is what the market dictates, and clubs are encouraged to fork out money. However, gates are falling, and there is any amount of competition from other activities for the time of constituents, who might otherwise go to watch football games.
We all accept that our football clubs must meet their financial obligations. Everybody in every business must pay their tax—it is as simple as that. They must pay it on time and they must ensure that any business plan is totally predicated on meeting their tax liabilities. However, I am sure I am not the only Member in the Chamber who will have put the case for businesses and individuals in his constituency who have got into trouble over their tax liabilities. I do not know how many letters I have sent to HMRC on behalf of small businesses and people who have got themselves into difficulties. It is absolutely right that people also make representations on behalf of Glasgow Rangers because of its significance to Scottish football and the number of jobs that depend on it, as well as its history and tradition, its success and its value to the SPL.
The club is in a mess. The hon. Gentleman mentioned the current regime, which has been a total disaster—we cannot call it anything other than that. Once Craig Whyte took over its debts, something was always going to happen. He did not have the money to ensure the club could get out of its difficulties. What he did with Ticketus was appalling, and there will now be an SFA investigation into the Ticketus deal. There will also be an investigation to see whether Craig Whyte is a fit and proper person to run a football club, and we will have to see the details. Again, it is the fans who suffer, and the people who work in the club have been the major recipients of all the bad news and all the doom and the gloom.
Right now, the administrator is responsible for running the club. In the next few days, Duff and Phelps expect to announce the first round of job losses, which will first impact on the playing staff. There are outstanding issues of payments to other clubs, and I have heard the representations from Dunfermline football club that it should be paid. The hon. Member for Dunfermline and West Fife is right that money should be paid to clubs that are owed it, and Rangers have no right whatever to retain it. However, the job losses show the real impact that going into administration has on people’s careers and jobs.
The hon. Gentleman talked about the Scottish Government’s role, and they stand ready to offer assistance to anyone affected by job losses. They have said they will do all they can to keep in contact with the administrator and to be available to provide support and assistance if there are job losses. In addition, there is the PACE—partnership action for continuing employment—programme in Glasgow, which has offered to provide any assistance it can if there are job losses. PACE has offered Duff and Phelps assistance almost daily to take things forward, and there have been several conversations to that effect. This is a developing and emerging situation, and Scottish Ministers and PACE are keeping their eye on it.
Perhaps the hon. Gentleman can provide some clarity, because he speaks on sport for the Scottish National party. He will be aware of reports in this morning’s newspapers that the Scottish Government are apparently offering all the assistance they can to the Scottish open, and the assumption is that financial assistance may be forthcoming. Does the hon. Gentleman agree that if the Scottish Government are going to put money into the Scottish open, they should also see what financial assistance they can provide to the SPL?
The hon. Gentleman is right, and I am grateful for that assistance for the Scottish open. I am sure that he will be the first to recognise that the input that the Scottish Government have made to Scottish football is significant—the £25 million that was announced towards the national performance centre, for example, the £8 million through CashBack for Communities and the £4 million going into the refreshed youth action plan for the next four years. That shows the Scottish Government’s support for Scottish football and their commitment to ensuring that it will continue to develop in the next few years. That will be welcomed in football throughout Scotland.
I want to mention a couple of initiatives. Unfortunately there was some appalling behaviour two weeks ago at Glasgow Rangers, in the home game against Kilmarnock, which shows that there is still a massive problem with sectarian chanting. I am delighted that for the first time the Scottish Government have put in place legislation to tackle that effectively. It was not supported by the rest of the parties in the Scottish Parliament, but at last something will be done to try to get rid of that curse from the national game.
I regret the fact that at the end of a good speech the hon. Gentleman is trying to bring in party politics. I went to the Dunfermline and Rangers game as a guest of the police, early in the season; the procurator fiscal was there. The PF, the clubs and the police were clear about the fact that that legislation, which no one else in the Scottish Parliament supported, was unnecessary, and unworkable.
It is the police who have been telling the Scottish Government that the legislation is required. We have had that debate in the Scottish Parliament, and thank goodness that behaviour will at last be challenged effectively. I welcome the fact that the SNP Scottish Government are deciding to take on the issue head on, and trying to get that appalling scourge out of the Scottish game.
There are other issues in Scottish football, but the one that we are debating is the big one—the thing that we need to get tackled and sorted out. I hope that HMRC will work sensitively with the administrator, and that we will get a solution that will ensure that it will be paid what it is owed. The main thing is that HMRC should secure the outstanding liabilities that Glasgow Rangers has towards it. Let us hope that we get a solution that will allow Glasgow Rangers to come out of administration—a solution that will mean that as much as possible will be done to retain the staff who work on its behalf; that we will have a Scottish premier league worthy of that title and enjoyed by its supporters; and that we can go on ensuring that that product can be developed, and made entertaining and exciting for people not just in Scotland but worldwide.
I congratulate my hon. Friend the Member for Dunfermline and West Fife (Thomas Docherty) on securing an important debate, which has touched on a much wider set of issues than just Scottish football. It covered the importance of football, and football and sporting clubs, as cultural institutions within communities—institutions that help bind communities together. I thought that my hon. Friend’s remarks about Dunfermline, and in particular Cowdenbeath, were deeply informative. I confess I was not aware that Cowdenbeath were known as the Blue Brazil. I assume that that is to do with the shirts, and not the temperature in which they play north of the border; but it could be either, I guess.
Two broad sets of remarks have been made in the debate, and I want to frame mine against that context. I have already mentioned one of the areas covered: the importance of football clubs as cultural and community institutions that are integral parts of communities—aspects of communities that inspire pride, loyalty, aspiration and ambition in individuals, but which also act as standard bearers for those communities in the wider world. I do not think that anyone could deny that Rangers, Celtic—their great rival—and all the great clubs of Scotland have been standard bearers for Scotland in the world of sport and beyond.
Rangers, of course, are a great Scottish club, and the one that prompted today’s debate. We heard a bit of their 140-year history, and about the nine great championships that they won on the trot in Scotland, equalling, I believe, the Celtic record. I was not aware, until I started looking at this subject, that they are also the club that has won more national championships than any club in any national football league in the world. That is a measure of the club’s success. However, what we cannot understand by looking at the names inscribed on trophies and trophy walls in such clubs is the wider, deeper, historical, cultural and sporting significance of the club. Anyone who has been to Ibrox, as I have, as a great sports fan—though a Welshman, of course—knows the importance that the community attaches to it. It is right that we should be discussing the issue today, and framing our remarks in that context.
The other broad set of remarks on the sporting front was about the role of money in sport, and football in particular, as well as about ownership, the transparency of football club financing, and the sustainability of clubs in a world where money seems to be the prime driver, despite all those other—in many respects far more important— cultural, historical and community values associated with the role of the club. That is something that I, as a Welshman and a sports fan, feel is significant for a different code of football—rugby football. We have similar issues with the game in Wales. I agree with the hon. Member for Folkestone and Hythe (Damian Collins), who made some remarks about the necessity for greater transparency about finances. He also said some things, to which I hope the Minister will pay attention, about the role of HMRC and the Government in seeking greater transparency in finances, ownership structure and the potential pitfalls and difficulties that clubs may encounter, in rugby and of course football. Clubs are businesses, yes; but they are more than just businesses.
However, in that context of clubs as businesses the role of HMRC is simple. Its job is to collect the taxes that are due in the appropriate volume and at the appropriate time. It is not often that I or other hon. Members quote judges; perhaps judges would feel that we do not do so approvingly. However, Lord Justice Mummery, in a recent tax case at the Court of Appeal, said rather appositely that
“tax is a contribution towards the costs of providing community and other benefits for the purposes of life in a civil society”.
That is a phrase that would have fallen, perhaps not as eloquently, but certainly as easily, from my lips. Tax is important to the wider community just as those football clubs are.
It is in those two contexts that I place my remarks. Individuals and businesses, however humble or, in the case of Rangers, mighty they are, need to pay their taxes. Therefore it is a matter of great regret to me that Rangers have not paid the £9 million in taxes that HMRC has said is outstanding for PAYE and VAT. That is why Rangers have gone into administration, which we deeply regret. As I understand things, HMRC is also looking at whether there may have been instances of tax avoidance. I am sure that the Minister will take great care over that, given his and my deep and continuing concern about tax avoidance. I know, in particular, that HMRC is interested, in the Rangers context, in the use of employee benefit trusts. There are several investigations in progress about EBTs, and, as I understand the matter, their use for payment of individuals working for Rangers, including players, plays a part in the non-transparency of the financial affairs. I will not go into further detail because I cannot: we do not have the detail that would make further comment possible. However, I should like assurances that the Minister is making himself certain that he understands, to the extent that he can, given the arm’s length nature of HMRC, the detail and complexity of the issues involved. I also ask him to consider the wider cultural set of understandings and sensitivities that HMRC needs to bring to bear in this case.
One of the other issues that has clearly come out of this debate is the importance of local knowledge and local understanding—the rootedness of Rangers in the local community. Under the current Government, in particular, and under the last Government, there has been a reduction in numbers of local HMRC staff. That reduction is being sped up under the current Government, with 10,000 more HMRC staff due to go before the end of the spending period; it was announced in January that 4,000 or so staff would go. Given that reduction and the potential loss of local knowledge, is the Minister certain that those people in HMRC who are dealing with Rangers in Scotland will understand the cultural context and have the requisite sensitivity to appreciate both the financial nexus locally—the interconnectedness of clubs and businesses that surround Rangers, and of course the connection between Rangers and the wider Scottish professional football league, which, as we have heard from hon. Members, is a crucial connection—and the cultural significance of Rangers for the local community?
Given the Minister’s slightly arm’s-length relationship with Revenue and Customs, has he been briefed in detail about Rangers, to the extent that he can be briefed about the issue? Does he feel that he is fully on top of the issue? Does he understand—I am sure he must—the importance of Rangers to the wider community and the wider sporting fraternity in Scotland? Is he certain that the HMRC people dealing with Rangers have the requisite expertise?
In closing, I will say a few things about the issue that I think is at the root of many of the problems that we have in football; there may be particularities around Rangers connected with the takeover of the club by Craig Whyte and the way that the club’s business has been managed since May 2011, but Rangers are not a unique case. The root cause of the problems that football clubs, rugby clubs and other sporting institutions across the length and breadth of this land are facing is to do with the role of money and the commercialisation—the commodification—of sport, whereby players and clubs are bought, sold and traded in a global marketplace that Governments in this country and elsewhere seem to have little control over, and perhaps they also have too little insight into the financial machinations and the rationale for the changes that happen. But if those changes come about, especially if they come about as dramatically as they have done with Rangers, and if they lead to the potential loss of great institutions that are of such cultural and financial importance to their local communities, Governments need to think about the extent to which they must improve their insight into those sporting institutions and those businesses, and consider their particularities. I hope that the Minister will comment on that issue too.
Finally, I will make what is perhaps a personal point. I echo the plea made by the hon. Member for Folkestone and Hythe that we should look at alternative models of ownership for football clubs and that the Government should also become engaged in a discussion about those alternative models. In my capacity as a constituency MP, I have been working with Pontypridd rugby football club and other Welsh rugby clubs to look at FC United of Manchester, which is a fan-owned football club with extremely transparent structures and financial arrangements. Those sorts of arrangements may provide the key for the Government when they think about how to frame policy, not only at HMRC but more widely across government, that will help to ensure there is a greater degree of transparency in ownership, management and—crucially—sustainability for institutions that are not simply sporting institutions or businesses but, of course, a vital part of their local community.
I am grateful to the hon. Gentleman for picking up on something that I said. I wanted to clarify that although there is a role for HMRC, before HMRC becomes involved there is a role for the competition organisers to act as whistleblowers and bring in the relevant authorities if they think there is a problem. The competition organisers should be the first port of call and then there should be recourse to a higher authority if they cannot sort out the problem themselves.
Again, I agree with the hon. Gentleman on that point. Clearly, there is a role not only for the authorities but for the clubs themselves—indeed, for the sport itself—to think about both the sport’s sustainability in the long term and the extent to which money is quite often eroding the ability of local clubs to represent a local community, whether that community is in Leeds, Pontypridd or, as in the case of Rangers, Glasgow. These clubs were not created for professional or financial benefit; they were created as part of community representation.
HMRC needs to reflect on that point when it deals reasonably, sensibly and even-handedly with those clubs, as it professes to do with all of the individuals and institutions with which it works. We have all encountered instances of individuals feeling that HMRC is not dealing with them even-handedly. I am sure that the Minister will want to assure us in a moment that HMRC always deals even-handedly with institutions and individuals. However, in this instance—a case in the public eye that is of such enormous importance, not only to Glasgow but to Scottish life in general and indeed to the representation of the UK on a wider, even global stage—I am also sure that he will want to make certain that HMRC painstakingly looks at the wider financial and cultural disbenefits of Rangers ever collapsing, and ensure that in collecting the tax, as it must indeed do, it understands that it must also make sure that that situation does not happen.
Thank you, Mr Betts, for calling me to speak. It is a very great pleasure to serve under your chairmanship this afternoon.
I congratulate the hon. Member for Dunfermline and West Fife (Thomas Docherty) on securing the debate. It has not been heavily attended, but it has been of good quality. It has also been wide ranging; we have heard a little about the history of Scottish football and we have had a bit of a geographical tour of a number of Scottish football clubs. We have heard about a number of issues relating to football in Scotland and we have also heard from my hon. Friends the Members for Portsmouth North (Penny Mordaunt) and for Folkestone and Hythe (Damian Collins) about issues relating to football in England.
There is no doubt that the issue brought into focus by the administration of Glasgow Rangers is a significant one. That administration is clearly crucial to football in Scotland and, as we have heard, football in Scotland is crucial to Scotland much more broadly, including to the various communities in which football clubs exist.
The importance of football to a local community is self-evident, first because it provides jobs and stimulus to that community. We have heard about the impact when Rangers play against St Johnstone in Perth and we all know how football can contribute to the feel-good factor if a team is successful. Any football supporter can testify to that, as well as testifying—to be fair—to the feel-bad factor when a side does badly. I speak as an Ipswich Town supporter who has experience of both the feel-good and the feel-bad factors.
Secondly, the football industry in the UK contributes significant sums to the Exchequer by way of PAYE, national insurance and VAT. The debate about football and taxation obviously tends to focus on sums that have not been paid, but it is worth pointing out that last year the contribution to the Exchequer from football amounted to well over £1 billion, and clearly that money is vital to the provision of public services.
Of course, football is always in the spotlight. Recently, there seem to have been as many column inches about football clubs in the business pages as on the back pages, and I am acutely aware of the wider impact that the administration of Glasgow Rangers football club will have on other football clubs and businesses. However, the difficulties of one business cannot mask the significant support that the Government and HMRC have provided to help and support businesses across the country, including football clubs, to grow and to meet their tax obligations, even when they encounter temporary difficulties.
Of course, the debate has demonstrated the particular and intense passion that is involved with the business of football, but I hope that the hon. Member for Dunfermline and West Fife will appreciate that, due to confidentiality obligations, I cannot share specific information about Rangers with him. I know that he will be disappointed with the constraints that exist for all of us, but it is important that HMRC protects customer confidentiality. However, I can comment on the importance that the Government place on supporting businesses, whatever their size or fame, and on the position of football debt generally, and particularly at this time, on the importance of ensuring that where public revenues are due, they are paid on time and in full.
There are a couple of assumptions in the hon. Gentleman’s question. I was going to deal with those points later, but I will do so now. First, there is an assumption in his question that, as has been reported, Rangers has not paid PAYE since May. There is taxpayer confidentiality and there are limits to what can be said to Ministers, as well as what can be said publicly. All I can say is that HMRC has assured me that in cases of this kind, it gives debts very close attention at all times. I would therefore be very surprised indeed if there had been no ongoing discussions or action by HMRC to secure payment over that time period.
On the hon. Gentleman’s question about ministerial involvement—in his speech he raised the point about the involvement of Scottish Ministers as well—Ministers were kept informed of significant developments such as the timing of court proceedings, but HMRC did not seek or take advice from Ministers on how to handle matters that were entirely within HMRC’s responsibility. Equally, with regard to the Scottish Government, there were discussions. HMRC was entitled to inform the Scottish Minister, because there were issues relating to devolved powers, and it was right that the Scottish First Minister was informed. At his request, HMRC explained its general policy for customers who were having difficulties paying their tax debt, and it gave him an idea of the likely time scale of its initiating administration proceedings if tax debts were not paid. Although HMRC listened to representations that he wished to make, it neither sought nor took advice from him or other Scottish Ministers. I hope that provides some clarity.
I do not know what advice the Scottish First Minister provided, if indeed he provided any. I know that there were discussions informing him of the issues, as was appropriate; for example, whether there were going to be any public order issues that could be related to progress on this particular matter. There was nothing in any way improper about a discussion with the First Minister in broad terms. Similarly, I assume that the discussions with Ministers of the UK Government were not about specific tax information, but in the broadest of terms.
I appreciate what the Minister has said about the limited nature of the advice that he has been given by HMRC, given the nature of his relationship with HMRC. Can he tell us whether he in turn has impressed on HMRC that it needs to think of the wider financial nexus around Rangers, and of course the cultural significance of the club? It is a business, but it is not just a business.
HMRC is well aware of the significance of Rangers football club and its importance in Scotland. I have no doubt that HMRC is aware of that sensitivity. I am sure the hon. Gentleman is not suggesting that Rangers should receive special treatment, but HMRC is aware of the importance of Rangers to Glasgow and to Scotland, and indeed to the UK more widely. I have no doubt about that.
I return to the issue of the support that businesses receive from HMRC, both generally and in respect of football. Of course, facing tough conditions, many businesses can stumble upon difficult times. That is why HMRC invests so much time and energy to support those businesses, whether they are start-ups or established large businesses, when they encounter difficulties.
I will focus on the support that is provided for the many thousands of businesses, large and small, through the time to pay arrangements, which allow them to spread the payment of their liabilities beyond the due date. That facility took on a more prominent role in November 2008 when the Business Payment Support Service was launched. Its purpose is to provide speedy access to quick decisions from HMRC for businesses facing short-term financial difficulties and who wish to discuss time to pay arrangements.
Many hundreds of thousands of businesses have accessed the service since its launch. The time to pay arrangements have helped hundreds of thousands of individual taxpayers and businesses suffering short-term financial difficulties. This has been particularly helpful during the past four years, given the economic challenges that the UK has faced. HMRC will continue to offer that support service where it is appropriate to do so, although I make it clear that the facility is not there to prop up an insolvent business whose existence is dependent on not paying the taxes for which it is liable. That is why HMRC will probe deeper when a business comes back repeatedly to seek time to pay. Such repeat requests can indicate a more deep-rooted financial difficulty, which can mean a time to pay arrangement is unlikely to be the appropriate outcome.
At a time when the public finances are as they are, it is crucial that businesses and individuals pay the tax that is due. That is a point that every speaker has made this afternoon. Businesses and individuals who do not pay their taxes are restricting growth and getting an unfair advantage over those who follow the rules. The Government are committed to levelling the playing field for the compliant majority. Even as HMRC puts in place services to support businesses, small and large, to realise that ambition, it also expects all businesses, be they football clubs or not, to be run effectively from a tax management point of view.
As reported in the media, it is true that in recent years some football clubs have had poor compliance records for the payment of tax liabilities. I am not talking about the payment of tax on profits; I am referring to the PAYE and national insurance that the clubs have deducted from their players and other employees and the VAT that they have charged their customers. Too often some football clubs have used those moneys, which were never theirs, to fund their business, because they have overstretched themselves in other areas. Many hon. Members will doubtless have views on why that situation has arisen, and why clubs so often apparently spend more than they can afford. I think all hon. Members will agree that it would not be right for taxpayers to fund such shortfalls.
However, things have begun to change. One practical way was when the previous chairman of the English football league, Lord Mawhinney, approached HMRC to explore how they—the football league authorities and HMRC—could work together to reduce the levels of tax debts in the football league.
From those initial discussions emerged a working arrangement that remains in place today. All English football league clubs consented to HMRC sharing information with the football league on their payment compliance in respect of PAYE and national insurance. Not only does any club that withholds those taxes face decisive action by HMRC, it will also encounter sanctions from the football league.
However, the issue is not always about sticks. The carrot is that eventually, all clubs will compete on an even basis. No club should benefit over another simply because it retains taxpayers’ money to fund its operation. That is an absurd proposition, with which I know hon. Members will disagree.
The decisive action taken by HMRC and collaboration with the football league authority has paid dividends. Similar arrangements are now in place with the Irish Football Association and the football conference, which is the tier immediately below the football league.
In addition, some months ago HMRC met the Scottish premier league and the Scottish football league authorities to explore whether similar arrangements could be put in place for the top four divisions of football in Scotland. Further discussions are scheduled soon on that proposal. HMRC will meet the Scottish leagues next week to monitor the payment of taxes, which addresses one of the specific points raised by the hon. Member for Dunfermline and West Fife.
That was hugely informative and I am sure that it will be welcomed. If only we had heard it before now.
I have two specific questions. Will the Minister confirm that HMRC will contact all 11 other clubs to see what assistance they require as a result of the situation with Rangers? Also, can I tempt him to say a little about the potential introduction of a bond, which I know the Treasury has previously considered, to protect HMRC, so that if a club finds itself in administration, HMRC will have a guarantee that it will get some of its money back?
I will deal with the hon. Gentleman’s second point first, which he is absolutely right to raise. From April 2012, HMRC will be able to seek securities where PAYE is at risk. That mirrors existing powers for VAT, which are already in place. If a taxpayer does not pay the security, they will commit a criminal offence. There are, of course, safeguards to ensure that the power is not abused by HMRC—it is not to be used widely—but where there is concern about repeated failure, that is an additional tool available to HMRC. That, in itself, will have a deterrent effect, which I hope will be helpful in such circumstances.
The Minister has mentioned some of the sticks available to HMRC to secure its liabilities, but what about the carrots? What about incentivising the clubs that meet HMRC requirements on time? I mentioned the example of my football club, St Johnstone, which has never gone into the red. Does HMRC want clubs to behave and be able to balance their books on that basis?
There would be a problem with HMRC rewarding clubs for paying their taxes; after all, it should be taken as a given that businesses pay their taxes. I return to my point on the work that is being done with the football league in England, with Lord Mawhinney, where football gets to grip with the issue, and works in conjunction with HMRC to ensure that clubs would face difficulties within the leagues if they fail to comply with their obligations. I would look at it that way.
The first point made by the hon. Member for Dunfermline and West Fife in his intervention was about whether HMRC will proactively contact the 11 other clubs in the Scottish premier league. Rangers going into administration is a huge event, not just for Rangers, but for all the other clubs in the Scottish premier league and some other clubs as well. HMRC is conscious of that and will—I am assured—listen sympathetically to any approach where that event causes serious short-term financial difficulties. The onus is on other clubs to get in contact with HMRC if they have a difficulty. The debt lines are open seven days a week, and there is no reason to delay discussions with HMRC, which I know will be happy to engage with clubs if they have particular issues. It is for the clubs to contact HMRC, rather than for HMRC to initiate communications. I hope that I have adequately addressed the issues about HMRC’s involvement, within the constraints that I and HMRC have in relation to taxpayer confidentiality, and about what communications there have been between Ministers of the UK and Scottish Governments.
Regarding HMRC’s capability in terms of the local issues, I am assured and confident that it is deploying the right skills and the right amount of urgency to the investigation of avoidance schemes. I am also confident that HMRC has the right skills to understand fully local factors. The hon. Member for Pontypridd raised a point about reductions of local staff in HMRC, which he described as having increased and accelerated under this Government. We have debated that point once or twice in recent days, including in television studios. In 2005, the number of HMRC staff, following the merger, was around 96,000. When this Government came into office, it was 66,000. By the end of the spending review, it is likely to be around 56,000. It is difficult to argue that there has been an acceleration in job reduction under this Government, and I will happily debate how and why we have been making changes in employment on another occasion. We are strengthening the capability for tackling evasion.
The working assumption is as I have said, and as is in the public domain. The hon. Gentleman will be aware that there is redeployment within that, so that there are additional staff dealing with tax evasion. There is capability to reduce the number of staff working in processing, where the use of new technology can substantially reduce the need for manual work.
I cannot comment on the case of Rangers specifically, but I assure the hon. Member for Dunfermline and West Fife that HMRC is working with the administrators, alongside other creditors, to reach the best solution for the public purse and the club. We have heard how Rangers going out of business would be a disaster for Scottish football. The purpose of administration is to save the club and to ensure that creditors get as much as possible.
As we have heard in the debate, that is a matter more for the English arrangement. There is currently a court case on the issue. I have a lot of sympathy with my hon. Friend’s view. There seems to be unfairness, and as I said, there is litigation on the matter.
The debate has been valuable, and I thank the hon. Member for Dunfermline and West Fife for securing it and raising the issues. There are constraints on what I can say, both publicly and privately, although I will always be happy to have a discussion with the hon. Gentleman. However, the constraints of taxpayer confidentially apply to me as much as anyone else, so I am not given all the information. The debate has been useful, and I thank the House for allowing us to hold it.
It is nearly 25 years—10 March 1987—since the son of Isabel and the brother of Alastair, Daniel Morgan, was brutally killed by five blows of an axe to the head. The last blow was probably struck when he was on the ground, because the hilt was embedded in his skull. Alastair is here today representing his family to hear the Minister’s response to the family’s call for a judge-led inquiry into the five failed investigations into Daniel’s murder. All they ask is justice for Daniel.
The five failed inquiries have cost the taxpayer nearly £30 million. I believe that had the murder been investigated adequately a quarter of a century ago, Daniel’s killer would have been brought to justice. John Yates said:
“This case is one of the most deplorable episodes in the entire history of the Metropolitan Police Service.”
He went on to say that Daniel’s family had “been treated disgracefully.” I suspect that the Minister will not be able to grant a judge-led inquiry today, but I hope that he will at least keep an open mind, as the Home Secretary has not yet decided whether to grant such an inquiry, which my hon. Friend the Member for Islington South and Finsbury (Emily Thornberry) has also been campaigning for on behalf of her constituents.
I ask the Minister for one thing: please agree to ask his officials and the Metropolitan police a number of searching questions before he and the Home Secretary make their decision. I will put those questions to him at the end of my contribution. Daniel’s family categorically do not want another investigation by the Metropolitan police—they have lost trust. Before I raise specific questions for the Minister, I will run through the events that have led to the five failed investigations.
Investigation No. 1 was severely compromised by police corruption. For 20 years the Met failed to admit that, despite the repeated pleas of the Morgan family. Indeed, it was not until 2005 that the Met’s then commissioner, Sir Ian Blair, admitted that the first inquiry involving Detective Superintendent Sidney Fillery had been compromised. If that admission had come earlier, the subsequent inquiries might not also have failed.
As part of the first investigation, it is now known that DS Sid Fillery—a member of the original murder squad—failed to reveal to his superiors that he had very close links with Jonathan Rees when he became part of the inquiry. I am told that Fillery took a statement from Rees, but it did not include details that both he and Rees had met Daniel at the Golden Lion pub the night before the murder, nor did it include details of a robbery of Belmont Car Auctions a year earlier. Had those details emerged at the time, they would have revealed that those incidents brought both men into direct conflict with Daniel.
The Belmont Car Auctions story was significant because Jonathan Rees and Daniel had previously agreed that they would not deal with cash-in-transit work. Daniel is known to have been angry when Jonathan Rees took on the job of looking after the takings from the auctions, saying it would, “backfire on them.” Rees, who was contracted to carry cash to the bank after a series of auctions, alleged that the bank night-safe had been interfered with, and therefore took the money to his home in March 1986. He alleges that he was attacked outside his house by two masked men who took the £18,000 from him. Belmont Car Auctions then sued Southern Investigations, which resulted in Daniel having to raise £10,000 very quickly for security to the court.
We know that two days before the murder Daniel told a witness, Brian Crush, that he believed that Rees and Fillery had set up the robbery and taken the money themselves. Daniel also told a witness that he was dealing with police corruption and that he did not know whom in the Met he could trust with the information.
It is important that the Minister understands at the outset why the omissions of the meeting at the Golden Lion pub and the auction robbery were so critical to the first investigation being compromised. My source has told me that omissions in the statement gathered by Fillery initially prevented attention being drawn towards Jonathan Rees and, indeed, Fillery himself. Alastair Morgan, Daniel’s brother, has also told me how he raised his own suspicions with Fillery about Rees’s possible involvement with the Belmont Car Auctions robbery as a possible motive for the murder. Alastair had not known that Fillery had actually recommended Rees to the auction company at the time.
Alastair now believes that it was a mistake to trust Fillery. He tells me that, for example, his information to Fillery later led to a phone call to his sister-in-law in which the family were told directly by Fillery that Alastair should get out of London because he was interfering in the investigation. When Fillery was removed from the team, the investigation quickly focused on those whom the Met believed to be responsible. Fillery, Rees, the two Vian brothers and two other police officers who were closely associated with Southern Investigations were arrested. However, no charges were brought and all six men were released.
At the inquest in April 1998, Kevin Lennon, who worked as a bookkeeper at Southern Investigations, gave evidence that implicated Rees in Daniel’s murder. The Guardian newspaper reported that, in evidence to the hearing, Kevin Lennon said Rees wanted Morgan dead after a row. Lennon said:
“John Rees explained that, when or after Daniel Morgan had been killed, he would be replaced by a friend of his who was a serving policeman, Detective Sergeant Sid Fillery.”
Lennon also told the inquest that Rees had said to him:
“I’ve got the perfect solution for Daniel’s murder. My mates at Catford nick are going to arrange it.”
“He (Rees) went on to explain to me that if they didn’t do it themselves the police would arrange for some person over whom they had some criminal charge pending to carry out Daniel’s murder”.
In the weeks before his murder, Daniel Morgan had repeatedly expressed concerns over corrupt police officers in south London. The Morgan family also believe that Daniel was about to reveal evidence of corruption.
In the aftermath of the murder and just as predicted by the evidence of Kevin Lennon seven months before at the inquest in 1988, Fillery took early retirement with an enhanced sick pension. Alastair Morgan has also told me how, at the inquest, members of the Met disputed the fact he had ever spoken with Fillery directly as part of the investigation. He believes that they were trying to cover up for Fillery.
Investigation No. 2—an outside inquiry—ordered by the then commissioner, Sir Peter Imbert, following a complaint by the family, was carried out by Hampshire police. It made no attempt whatsoever to address the allegations that Fillery had tried to get Daniel’s brother, Alastair, out of London after he had pointed to Rees as a prime suspect in the murder. Had the inquiry done so, it might have found that what Alastair said tallied with the allegations previously made by Kevin Lennon at the inquest in 1988. The inquiry’s terms of reference were to investigate
“all aspects of police involvement arising from the death of Daniel Morgan”.
Unknown to Daniel’s family, the remit of the inquiry was secretly changed at a high-level meeting at Scotland Yard in December 1988. The family further believe that the second investigation did not address the statements made at the inquest by serving police officers in which they denied that Alastair Morgan had ever raised his suspicions about Rees with Fillery, directly, as part of investigation No. 1.
In addition, Mr Morgan is frustrated that he offered to provide Hampshire police with a statement after an initial interview, but they refused it—indeed, no further statement was taken until 2000. The inquiry later reported to the Police Complaints Authority that there was
“no evidence whatsoever of police involvement in the murder”
and that the original inquiry had been good.
Understandably, the Morgan family kept up their campaign for justice. In November 1997, they met Sir Paul Condon who promised to review the case—nothing happened until late 1998 when, under the leadership of John Stevens and Roy Clark, the Met launched a third investigation into the murder. That was done without the knowledge of the Morgan family and in secrecy—not including the family was a mistake and the secrecy of the inquiry has deeply troubled them. The secrecy today is still a major issue for the family with the Met. I hope that the Minister understands that he must ask why the family were not kept informed.
As part of investigation No. 3, a covert bug was placed in the office of Southern Investigations. I will return to that later. Yet investigation No. 3 arguably missed its chance to use trigger events to gather further evidence on the murder. After Rees went to jail, the Morgan family had another meeting with Roy Clark. Clark initially said that they would do another investigation. The family ruled that out, as they wanted disclosure of the Hampshire report first. First Clark and then Andy Hayman refused to disclose the report to the family. It was not until the family were forced to go to the High Court that they succeeded. The Morgans should not have had to do that.
In the interim, the Met conducted a fourth inquiry, led by Detective Chief Superintendent David Cook. However, the fourth investigation, which the family described as the first honest investigation into the murder, gathered insufficient evidence to prosecute Rees, Fillery and three other men for the murder. My right hon. Friend the Member for Salford and Eccles (Hazel Blears) then refused the family’s request for a judicial inquiry.
In 2006, a fifth investigation began under Assistant Commissioner John Yates. That happened out of the blue after Alastair Morgan had initially approached the Metropolitan Police Authority chairman, Len Duvall. He had ordered the commissioner to present his own report on the case before that. The family were initially deeply sceptical of the new Yates investigation. Devastatingly, after five years, the case collapsed last year. The Morgan family’s solicitors have said that this was
“under the weight of previous corruption”.
The accused, Jonathan Rees, Fillery and the Vian brothers were ultimately acquitted because the defence would not have had access to all the documents in the case. The Metropolitan police repeatedly mislaid crates of evidence, owing to the sheer number of documents the case had generated. Mr Justice Maddison also ruled that the supergrass witnesses had been mishandled.
I now turn to the situation that the family find themselves in now. Since the collapse of the prosecution, the Met has publicly admitted corruption in the first inquiry. The family believe this corruption had an impact on the second, third, fourth and fifth inquiries. However, what the family did not know during any of the five investigations is the extent to which the relationship between News International, private investigators and the police had an impact on the conduct of the inquiry.
Jonathan Rees and Sid Fillery were at the corrupt nexus of private investigators, police officers and journalists at News of the World. Through the hacking scandal, we now know that Southern Investigations became the hub of a web of police and media contacts involving the illegal theft and disclosure of information obtained through Rees and Fillery’s corrupted contacts. Southern Investigations sold information to many newspapers during the 1990s, but we think exclusively to News International after Rees was released from jail in 2005.
The main conduit at News International was Alex Marunchak, chief crime reporter for the News of the World and later the paper’s Irish editor. I want to focus the Minister’s attention on Marunchak in particular. Rees and Marunchak had a relationship that was so close that they both registered companies at the same address in Thornton Heath. Abbeycover, established by Rees and his colleague from News International, Greg Miskiw, was registered at the same address as Southern Investigations, run by Rees and Fillery. Rees’s confirmed links with Marunchak take the murder of Daniel Morgan to a new level.
It is important to remember that, in the days before the murder, Daniel’s family believe that he was on the verge of exposing huge police corruption. That was confirmed by Brian Madagan, Daniel’s former employer, in a statement in May 1987, in which he said that he believed Daniel was about to sell a story to a newspaper. In a second, later statement, Madagan said he believed that paper to be the News of the World and the contact to be Alex Marunchak who, until recently, still worked for the paper. BBC Radio 4’s “Report” programme also confirmed that it has seen evidence suggesting that, a week before the murder, Daniel was about to take a story exposing police corruption to Mr Marunchak and was promised a payment of £40,000. We also know, from the investigative reporting of Nick Davies at The Guardian, that Southern Investigations paid the debts of Alex Marunchak.
As part of the third failed investigation, Operation Nigeria was launched. It included the surveillance of Southern Investigations between May and September 1999 and was run by the Metropolitan police’s anti-corruption squad, CIB3. It placed a bug in the offices of Southern Investigations that yielded evidence that convicted Rees for a serious and unrelated crime. Police surveillance shows frequent contact between Rees and Marunchak. I understand that the tapes made by the recording by the bug have not all been transcribed; if they were, they would yield more collusion, perhaps criminal in nature, between News International and Jonathan Rees. I hope the Minister will ask the police if that process is under way.
When Rees came out of jail, he was re-hired by the News of the World, then edited by Andy Coulson. Rees also founded a company called Pure Energy, in which Marunchak was involved. The police hold evidence to suggest that Rees discussed the use of Trojan devices with his associate, Sid Fillery. He was an associate of Philip Campbell Smith, who received a custodial sentence on Monday for a crime related to blagging. Campbell Smith is a former Army intelligence officer. I will say no more on Campbell Smith, because I do not want to prejudice the Operation Tuleta inquiry. However, I hope that I have demonstrated to the Minister a close association between Rees and Marunchak.
This is why I think that the Metropolitan police cannot be used in any further investigations: yesterday, the Leveson inquiry heard a startling revelation that Alex Marunchak—a close business associate of Jonathan Rees, then the prime suspect in a murder case—chose to put DCI David Cook and his family under close covert surveillance. The person who was investigating a murder was put under close surveillance by a close business associate of the man he was investigating. That was raised with Rebekah Brooks in 2002, the then editor of the News of the World. I would like the Minister to imagine what his response would have been to that information. A journalist employee tried to undermine the murder investigation of his close associate. Rupert Murdoch claims that News International takes a zero-tolerance approach to wrongdoing. However, far from launching a wide-scale inquiry to investigate wrongdoing, Rebekah Brooks promoted Alex Marunchak to the editor’s job at the News of the World in Ireland.
It gets worse. Last year, Mr Cook’s then wife, Jacqui Hames, discovered that her records appeared in the evidence file of Glenn Mulcaire. The records show information that she believes could only have been obtained from her private police records. While DCI Cook was investigating a murder, his colleagues in another part of the Met were in receipt of evidence that a close associate of his suspect was illegally targeting him. Did Andy Hayman, the then head of the hacking inquiry, who also happened to be in charge of the fourth investigation into Daniel’s murder, ensure that his colleague was informed about this? No. When Andy Hayman retired early from the Met, he became a paid contributor for News International—that is not right. For months, Scotland Yard took no action. Why not? Why was it not willing to pursue what appears to be a clear attempt to interfere with the murder inquiry of Daniel Morgan? The Guardian has reported that the reason why no action was taken by Scotland Yard was not to embarrass the Met with newspapers.
It gets worse. I would like the Minster to request to see all the intelligence reports submitted about Alex Marunchak. I believe the Met is sitting on an intelligence report from late 2002 that claims a police contact overheard Marunchak claim he was paying the relatives of police officers in Cambridgeshire for information about the Soham murders. As far as we know, those allegations have not been investigated. I do not know whether the intelligence reports are accurate, but I do know that Alex Marunchak was involved in writing stories about how the Manchester United tops of those young girls were found. I also believe that at least one of the Soham parents appears in the evidence file of Glenn Mulcaire. The Met police failed to investigate both leads when reported in 2002 and 2006. I think that Rupert Murdoch owes the Morgan family an apology, and I do not think that he has made his last apology to the grieving parents of murdered children.
Daniel’s family will never see his murderer brought to justice—corruption at the Metropolitan police has ensured that—but the Minister has it in his power to see that they get an explanation of the failure. He can only do that if the next investigation has their confidence. They seek a judge-led inquiry into the police’s handling of the murder, because they have lost confidence in the police. In the circumstances, wouldn’t anyone?
I congratulate the hon. Member for West Bromwich East (Mr Watson) on securing this debate. I am aware of his interest in this matter and the interest of other hon. Members, including the hon. Member for Islington South and Finsbury (Emily Thornberry).
The Home Secretary and the Government believe that this is a matter of the utmost seriousness, concerning an horrific murder exacerbated by a failure to see those responsible held to account. The Home Secretary is taking a personal and active interest in this issue. She met Daniel Morgan’s family and representatives in December last year and listened carefully to what the family had to say to her. She committed to reflect on what she had heard at that meeting and to look into the matters further. At the time, she also made it clear that we do not rule out anything when considering the next steps. She has since spoken to Bernard Hogan-Howe, the Metropolitan Police Commissioner.
There is no doubt that the case of the murder of Daniel Morgan has not been handled properly by the authorities over the years. Although no murder investigation is ever really closed without the perpetrators being brought to justice, the fact is that 25 years on Daniel’s murderer remains unconvicted. There has been a failed trial and justice has not been done, or seen to be done. Tim Godwin, as acting commissioner at the time, has apologised for the repeated failure by the Metropolitan Police Service and accepted that
“corruption had played such a significant part in failing to bring those responsible to justice.”
I am sure that hon. Members will agree that none of us can ever begin to comprehend the suffering that the Morgan family has endured over the past years. Our sympathies are with them.
Whatever happens now, the Government, the police and the authorities must do all we can, not just to bring the murderers of Daniel Morgan to justice, if at all possible, but—crucially—to ensure that the wider issues to do with police corruption are identified and addressed. The Metropolitan Police Commissioner has given his personal assurance to the Home Secretary that he is committed to achieving these ends. That is why he has appointed Assistant Commissioner Cressida Dick personally to oversee all aspects of the Morgan case. She is, as hon. Members will be aware, a senior police officer who is currently the assistant commissioner of specialist operations, and she comes to the case and the issues it raises with fresh eyes. It is important to note that she has no previous involvement with the case.
The MPS has also started looking at a full forensic review, which, as hon. Members will recall, was an important factor in the successful prosecutions in the Stephen Lawrence case. The MPS is considering seeking advice from independent counsel on what options are available to it to enable successful prosecutions, in light of the failed trial last year.
Ongoing investigations are relevant, including Operation Weeting and Operation Tuleta, being led by Deputy Assistant Commissioner Sue Akers of the MPS, who, following her evidence to the Home Affairs Committee in July last year, again gave a clear account to the Leveson inquiry earlier this week. Both Operation Weeting, which is looking at the interception of mobile phone messages by journalists and their associates, and Operation Tuleta, which is considering the numerous historical operations that have some bearing on this matter, are ongoing. We must let those investigations run their course, as they have a bearing on the issues raised in the Morgan case. For example, Deputy Assistant Commissioner Akers will be looking at the circumstances surrounding the surveillance by News of the World journalists of David Cook, the former senior investigating officer in the murder inquiry. I take seriously these allegations, repeated in the evidence of Jacqui Hames to the Leveson inquiry yesterday.
I appreciate the concerns of Daniel Morgan’s family about further investigation by the police. However, I do not believe that the police service is incapable of investigating itself. The investigations led by DAC Akers have led to the arrests of police officers. There are many examples of corrupt and criminal officers having been removed from their force and brought to justice. In addition, the Independent Police Complaints Commission is a robust, independent body that can always oversee on referral or call in any such investigation. So there are strong checks and balances over the police in such matters, too.
Hon. Members will note that the Home Secretary has recently appointed Dame Anne Owers as the new chair of the IPCC. Dame Anne, former chief inspector of prisons, has a formidable public reputation, not only as an expert in criminal justice matters, but for her integrity and independence from the Government.
The MPS and the Crown Prosecution Service are jointly reviewing the reasons for the collapse of last year’s trial of five suspects relating to this case. This review is focusing specifically on the methodology, decisions and tactics adopted by the prosecution team, including any omissions in relation to disclosure and the use of the assisting offender provisions in the Serious Organised Crime and Police Act 2005. I realise that this review will not answer all the issues that might be raised in a judicial inquiry, which remains the Morgan family’s preferred outcome. However, it might have a bearing on how we could frame any judicial inquiry, should that be the way forward. It would also help the MPS and the CPS consider what options would be available to them, were they to look to prosecute those responsible in future. This report has been much delayed, partly because the MPS and the CPS have been considering the forensics aspects, but I understand that it will be completed shortly. The MPS has offered to brief the family and their representatives on the findings.
Jacqui Hames’s evidence to the Leveson inquiry has brought these issues into even sharper focus this week. That inquiry has now turned from considering press practices alone to focusing on the relationship between the press and the police, whether those relations were inappropriate or indeed corrupt, and what bearing they might have on how the police conducted their investigations into phone hacking.
The detailed investigation of specific cases, such as the Morgan case, might be considered to be more a matter for this second part of the inquiry, although it is clearly a matter for Lord Justice Leveson himself to decide how far he wants to investigate specific cases, such as this part of the inquiry.
Given all this ongoing work, it is important to consider what options are now available to identify and address police corruption and bring those responsible for Daniel’s murder to justice. As I have mentioned, the Morgan family has called for a judicial inquiry and this call has been endorsed by the Metropolitan Police Authority. However, such an inquiry is unlikely to be quick—a key concern for Daniel Morgan’s mother—and it cannot directly lead to prosecutions. Any such prosecutions based on what the inquiry may unearth would need to follow further police investigations. I recognise that this would satisfy the Morgan family’s demands and we are considering carefully whether this is the right way forward. The Home Secretary and I have not ruled out ordering a judicial inquiry at this stage. The Home Secretary wrote to the Morgan family’s solicitors yesterday and will do so again shortly with her decision on the way forward.
Any decision will need to take into account whether the MPS might invite another police force to conduct a police investigation, particularly focusing on the allegations of corruption in this case. There may yet be value in this course, involving officers with no connection to the MPS investigating allegations of police corruption, because even now aspects of the alleged corruption have not been properly investigated. The MPS has not ruled out this option.
Were such an investigation to proceed, any judicial inquiry would be limited in what work it could do alongside these investigations. An alternative might be for the Government to ask a Queen’s counsel to supervise the investigation of the corruption aspects of the Morgan case, again by an outside force, involving police officers with no connection to the MPS. This option would most likely be quicker, with a QC providing the integrity and independence required.
In conclusion, I reiterate the Government’s commitment to seeing that all that can be done is done to bring justice for Daniel Morgan and his family. Similarly, the MPS is also fully committed to seeing that justice is done. The Home Secretary continues to take a personal and active interest in this matter. The hon. Gentleman asked that we remain open-minded about this matter. I assure him that we do. I am committed, as he is, to making sure that we get to the bottom of this matter, in one way or another.
South West Marine Energy Park
It is a pleasure to serve under your chairmanship for this debate, Mr Betts.
Looking back through some of my notes, I was reminded that a little more than a year ago, on 15 February 2011, we were last in this Chamber to discuss marine energy in the south-west, in particular in Cornwall. I am pleased that quite a lot of progress has been made over the past 12 months. In my speech last year, I referred to the renewable obligations certificate and how in Cornwall we needed to be given five ROCs, as Scotland has, and I am delighted that the Government have made some strong moves in that direction. We talked about the importance of focusing on and joining up the infrastructure in the south-west, and the decision to have a marine energy park in the south-west brings some of those ambitions to fruition. We talked about the importance of funding to bridge the risk and potential for wave-power projects, and a number of device developers have benefited from some Government support to establish their devices.
A great deal has been achieved, therefore, although I was reminded that it has happened not only in the past 12 months. In the summer of 2009, we talked about the potential for a marine energy park in Cornwall, when the Minister of State, Department of Energy and Climate Change, my hon. Friend the Member for Bexhill and Battle (Gregory Barker), then the shadow Minister, first came down to Cornwall, to the Tremough university campus. I was talking to someone in Cornwall recently who said, “Are you doing this then? When you said that, we thought it was only a story. We didn’t think it was actually going to be done.” So it is good to see that, in this Parliament, the Minister is delivering what he said, and we welcome that.
My constituency is home to the Wave Hub project, which is the central element of the new marine energy park. It is the first test facility of its type in the world, and it enables us to test commercial-scale arrays of marine energy devices. The smaller FaBTest project in Falmouth bay is linked, and the two facilities are at the heart of the marine energy park, so I have a direct interest in seeing it work. The facilities are supported by a strong supply chain in Devon and Cornwall, a strong university at Plymouth, which does a lot on marine biology, and the academics at the university of Exeter and the Camborne school of mines down at Tremough, which is doing a tremendous amount of work on researching moorings and other issues.
Since our debate a year ago, two device developers have signed agreements to plug into the Wave Hub facility off Hayle: Ocean Power Technologies, with Government support, is developing a device that we hope will deploy next year; and later this year a new entrant, Ocean Energy, hopes to deploy its device.
Before I move on to the main thrust of my comments, I want to talk about the marine renewables deployment fund and its importance. The Minister has already suggested that he anticipates that about half the £20 million set aside by the Department to encourage green energy will go to wave power. In response to a recent question that I asked, he said that he expected a significant sum to come down towards my part of the world, which I welcome. I understand the reluctance to commit in a rigid way, because the Department wants to keep its options open. With a number of people asking what the marine energy park delivers, however, an important principle to establish is that projects in such a park should at least be given some priority treatment in attracting funds to develop the deployment of marine devices. Wave Hub still has two berths left on its device, and we are anxious to attract additional device developers.
Another area that will be equally if not more important to the success of the marine energy park is removing some of the barriers that currently confront developers. That has always been one of the key issues that we wanted to see dealt with in a marine energy park. How can we simplify the consenting process? How can we make consultation less onerous than, frankly, it is? In doing so, we need to consult closely with the Minister’s colleagues in the Department for Environment, Food and Rural Affairs, because a lot of the decision making is by the Marine Management Organisation. The Crown Estate also has quite a big role to play. I want to argue that we should learn lessons from other countries in the world—in particular, Norway, which has a fantastic track record in adopting a pragmatic approach to device developers and not standing in their way. A few comparisons of what we do for marine device developers in the UK and the approach in Norway might be useful.
First, on the application process, in the UK a developer has to apply to the MMO for all construction, all alteration or any improvement of any works affecting the sea bed. That includes all renewable energy projects, unless they are huge and much larger than what we would be talking about in marine energy at this stage. Compare that with Norway, where simply the local municipal authority or, in some cases, the regional coastal authority makes such decisions.
On leases, in the UK developers need to get a lease for the sea bed for any fixed structures, including any anchors, even before they can deploy a test device. Leases are always needed from the Crown Estate, and they are negotiated on commercial terms. Compare that with Norway, which has no specific need for a sea bed lease—in particular, for small test devices—and a much more pragmatic approach is taken. Devices with temporary anchorage or deployment are deemed to have a low-risk impact, so there is no need for a sea bed lease, which is a considerable cost saving.
Does my hon. Friend accept the importance of the marine energy park to companies in our west country constituencies, certainly in my constituency? The Searaser device, invented by Alvin Smith who lives in Dartmouth, is being developed locally, so there are huge implications for him. He is pleased to have a marine energy park that he can use for sea trials.
I certainly agree. I hope to achieve in the debate some progress on what we want the marine energy park to deliver. My hon. Friend is right that such marine energy developers are taking considerable risks. They are pioneers of the industry and are expected to invest large sums of money in development. The least that the Government and their agencies can do is to get on and make things as easy as possible for them as they develop those pioneering ideas. I completely agree with her point.
I thank the hon. Gentleman for bringing the matter before the House today. In my constituency of Strangford—in particular, with SeaGen at Portaferry—there have been successful trials of harnessing wave and tidal movement at the narrows of Strangford lough. Does he agree that there could be an exchange of information from different regions in the United Kingdom? In this case, what we have learned in Northern Ireland might be of advantage to those in England.
Indeed. The more we join up such academic research, the better. I know that EMEC—the European Marine Energy Centre—in Scotland worked closely with our academics at Tremough. I would be delighted to see us also working with academics in Northern Ireland, to ensure that we learn the lessons that they have learned.
Another area in which there is a big difference between Norway and the United Kingdom is consultation, which is onerous in the UK. The process in the UK is clearly defined, first a pre-screening consultation with the MMO and then a formal environmental assessment, which is the screening and scoping element. After that there is all the documentation preparation, with a series of environmental statements, and only then the formal application, which is followed by a whole bout of consultation, feedback and mediations to adjust things. Only then can there be a licence determination, after which there is a wait for the licence to be issued, which may cause problems and take time. Then, there are management returns and monitoring reports, and finally the process of decommissioning and proving compliance. The consultation procedure is very complicated.
Let us compare the procedure with that in Norway, which takes a much more pragmatic approach. The handling authority may choose to consult with other bodies, such as fisheries organisations or harbour authorities, but the consultation is loose, pragmatic and sensible. Typically, it takes no more than four weeks. On the environmental assessment here, the MMO must decide in every case whether there should be an assessment, whereas in Norway there are formal environmental assessments only for pre-defined and designated environmentally sensitive areas. In all other cases, self-assessment is generally the guiding principle. Here, the Crown Estate frequently insists on onerous requirements for insurance for decommissioning, but there are no such formal requirements in Norway. There are no application fees in Norway, where the process is completely free because it has maintained a light-touch system.
What happens here in the United Kingdom? Two hours of free pre-application advice is the most that is available, and after that advice is charged at £80 a hour to device developers. An application typically costs from £7,200, which is a huge additional cost. There is also a time implication. In the UK, an application to deploy might typically take nine months, compared with just one month, or three months at the outside, in Norway.
We can learn a lot from Norway. Clearly, we have different structures here. We have the MMO, with which we must work. I want to spend a few minutes reflecting on how to incorporate into our approach some of the lessons from Norway. First, could we not require the test facility operator to be responsible for deploying test devices within its test facility? The important point is that there is a lot of duplication. Wave Hub and FaBTest have had to go through the onerous screening, scoping and consultation processes. If someone wants to deploy a device on that test facility, they must go through the same process again. There is a lot of duplication, and giving authority to test facility operators would be the equivalent in Norway of giving harbourmasters greater control.
Secondly, can we simplify the consultation process within the test areas, given that they have been through huge amounts of consultation and screening? Let us remove the need for the screening and scoping stage because, again, it duplicates work that has already been done. The estimates suggest that, if just that element were removed, three months would be chopped off the application time. If the Norwegian authorities can agree the deployment of these devices in just a month, or three months at the outside, let us set a more stretching and challenging time scale for the MMO. Let us not allow it to sit on projects, letting them stew for months on end, and allowing matters to drag on for nine months. Let us tell it that we expect it to deliver within a month or two months.
Finally, we must enable the MMO to exercise more judgment, particularly on minor alterations to deployment. Sometimes, when a device developer is ready to deploy, it may decide that it needs to change a small aspect of its deployment. At the moment, it must go back to square one and go through the complicated consultation procedure again. The MMO must then consult with other people again, even when that is unnecessary because the suggested change is quite small. The ability to close out consent conditions would be more sensible, and the MMO could exercise judgment without necessarily having to return to the statutory consultees over and again.
Those are technical points, but if we are to make the marine energy park work, a key component is dismantling the barriers that stand in the way of marine energy developers. They take tremendous risks to pioneer an industry. Sometimes, they invest tens of millions of pounds to develop the technology. The very least that the Government can do is to make sure that Government-controlled agencies get off people’s backs and allow them to get ahead and to make a success of the industry.
I congratulate my hon. Friend the Member for Camborne and Redruth (George Eustice) on yet again securing a debate. He is an extraordinary champion of marine power in the south-west. It is no discourtesy to any of his colleagues in the region to say that he has undoubtedly been the most tenacious champion over a number years, and preceding his time in the House, in encouraging the formation of marine energy parks, and driving in the Conservative party an ambitious transformational approach to harnessing the power of the sea. He previously secured a Westminster Hall debate on funding for wave power, and his constituency is home to the ground-breaking Wave Hub testing facility for wave energy devices, which remains an important vital component of the South West Marine Energy Park.
I commend my hon. Friend the Member for Totnes (Dr Wollaston) for her comments and interest, and the real and growing interest in her constituency. I also commend the hon. Member for Strangford (Jim Shannon) for his comments; I look forward to visiting Northern Ireland to see for myself the huge potential for marine energy, and some of the exciting developments there.
The Assembly in Northern Ireland, which has devolved responsibility for this matter, has just concluded legislation on marine technology, so it might be possible to take advantage of that, because people will be eager to tell the Minister what we have done.
I look forward to opening the post. During the next few minutes I will endeavour to answer in detail the points that my hon. Friend the Member for Camborne and Redruth made. He gave a serious critique of the progress we are making, and the progress that we could make if we improved further the marine energy park and the processes underlying it. If I am unable to give an immediate response, I will write to him, and I will study and reflect on his important points and examples. He is an important voice on this agenda, and I assure him that we take it seriously.
Alongside the other UK marine energy testing facilities at EMEC in the Orkneys, and the marine drive train testing facility that is opening in the spring at the National Renewable Energy Centre—NaREC—in the north-east of England, Wave Hub helps to give Britain a unique offer to this emerging sector not just in the British Isles, but globally. Here in the UK, we continue to be a global focus for an important long-term global industry. It is vital to maintain that competitive advantage, given the significant and increasing interest in other parts of the world. I am constantly looking at how to push forward that agenda in partnership with the industry.
Combining the world-beating testing infrastructure that we have in the UK, particularly in the south-west, with world-class academic expertise, and the funding stream for marine energy, which I will talk about briefly, the coalition has created in the UK the most attractive environment for developing marine energy. It is still a nascent industry, but we believe that it is now the most encouraging environment anywhere in the world, and I am very proud of that.
Before I say anything about today’s topic, let me use this opportunity to welcome the report from the Select Committee on Energy and Climate Change on “The Future of Marine Renewables in the UK”, which was published last week. It underlines the great potential benefits that development of a thriving marine energy sector can bring to the UK, and recognises the coalition’s work to support development of the sector. When I spoke to the Committee last year, I underlined the Government’s determination to grow a thriving marine sector, building on Britain’s wealth of experience and expertise. We will carefully review the report and respond to its recommendations in due course.
I appreciate the concerns voiced by my hon. Friend. He has been a champion of this agenda in the past and it is right to listen to his concerns and take them seriously. I assure him that the Government are fully committed to maximising the benefits that the wave and tidal sectors can deliver. That commitment is explicitly underlined in the coalition agreement, and I am committed to ensuring that it is delivered.
I want to know if there are inefficiencies in the system, and I always look with interest at other models from abroad, or at best practice wherever it is found, to see how that can help to improve the design of our emerging marine economy. That is why I established the marine energy programme board, which brings together the Government, regulators and the marine energy sector. The programme is a vehicle to drive through ambitious changes that will enable marine energy to prosper, including by streamlining the leasing and licensing processes. The network of marine energy parks that we are creating around the UK will be another vital tool for driving home success on the ground.
Last month, I was delighted to be invited to visit the south-west and launch the first marine energy park, which received widespread positive coverage in the press. As hon. Members may know, marine energy parks are central to the Government’s goal to transform prospects for the sector, and they are something that I championed both in government and opposition.
Although wave and tidal technologies are very different, the clustering of activities through marine energy parks can help to drive the required innovation and growth in the sector, in a way that is not dissimilar to what clustering in silicon valley did, and continues to do, for the IT industry. Last year, I challenged the south-west to develop the UK’s first marine energy park. The expertise in the south-west, and the region’s commitment to developing wave and tidal energy, meant that it was among the first to successfully create such a park. I commend the south-west, and in particular its MPs who have been driving the agenda, on the dedication and willingness that has been shown in delivering this outstanding work, and on everything that has been done to turn the vision into reality. It is gratifying to see that the south-west is already using the marine energy park as a way of fostering co-operation and collaboration between sector players in a co-ordinated action to maximise opportunities open to the region, whether by encouraging investment or by maximising access to funds at Westminster or even European level.
I touched earlier on the marine energy programme. Working with key industry and Government stakeholders on the programme board, we can focus on the real issues facing the sector and show the leadership that is needed to tackle the barriers that impede development, and drive the sector forward. I am not complacent about the need to remove more barriers and create a glide path to deployment, which is why I take my hon. Friend’s points so seriously.
One of the first major tasks to which the marine energy programme board contributed was the review of the renewables obligation banding. The evidence that members of the board fed into the review through the board’s finance working group was invaluable, and led to the consultation proposal for enhanced levels of revenue support for wave and tidal stream to five renewables obligation certificates per megawatt, subject to a 30MW project cap.
The consultation on the proposed banding is now closed, and although I am obviously unable to prejudge the final outcome of the review, the work will stand us in good stead when reaching the right decision about the level of ROCs needed to take the sector through to early commercial-scale deployment. The Government’s response to the consultation will be published in spring.
Our work with the sector through the programme board has demonstrated that as well as revenue support, the sector needs capital investment if it is to move towards commercialisation. I therefore announced last June that following the success of the £22 million marine renewables proving fund, the Department of Energy and Climate Change has also allocated up to £20 million for the development of pre-commercial wave and tidal arrays. I remind hon. Members that that funding represents a significant proportion of the overall DECC innovation funding allocated for the spending period at a time of severe retrenchment and austerity, so it is a good outcome for the sector.
My officials have been working with the sector on designing the marine energy array demonstrator fund, or MEAD. The overall framework of the scheme is nearing completion, and we envisage that it will be open for applications this spring. More recently, there has been a welcome announcement of additional funding from the Scottish Government. It is important, however, that that funding complements the support already put in place by DECC, the Energy Technologies Institute, the Technology Strategy Board and others, as well as the opportunities presented by the EU new entrants reserve. My officials are working with their Scottish Government counterparts to ensure that funding is complementary, used effectively, and offers best value for money. However, the success of the industry does not rest solely on financial support.
We have also made progress on planning and consents—a point close to my hon. Friend’s heart. In particular, DECC completed the offshore energy strategic environmental assessment for wave and tidal energy in English and Welsh waters last year. The SEA complements the existing work for Scotland, Northern Ireland and the Severn estuary, and opens up suitable sites across the UK for consideration concerning the potential deployment of marine energy devices.
My hon. Friend raised concerns about the Crown Estate, and I will take them on board when I further consider his remarks. We should not, however, overlook the work that the Crown Estate is doing with the sector to enable commercial-scale deployment. At the end of last year, the Crown Estate launched a tidal stream leasing round in Northern Ireland, which followed the success of the world’s first commercial-scale wave and tidal leasing round, in which the Crown Estate leased 11 sites in Scotland’s Pentland firth and Orkney waters, which could extend to 1.6 GW of capacity.
Work is already under way to consider how the practicalities of sea-bed leasing can be best approached. Later this year, the Crown Estate plans to run a consultation with industry on future wave and tidal leasing, which will be informed by work that it is undertaking to clarify the size and distribution of wave and tidal energy resources across the UK. Leasing for small test deployments is currently dealt with case by case through a newly set up fast-track process. Such deployments should not be subjected to the same complexity of process as larger, commercial-scale deployment, and I would be keen to hear whether that is the experience of stakeholders.
On licensing and planning, we need to build on the work that has already started in Scotland to ensure that a coherent and efficient system of planning and consenting is adopted across the UK. I have asked the Marine Management Organisation, and Marine Scotland, to work with the sector to look at ways of ensuring that the licensing process is as efficient as possible, while maintaining the necessary level of protection for the environment.
The Department for Environment, Food and Rural Affairs is reviewing the implementation of the birds and habitats directives, which are important environmental directives that affect the renewable energy sector. The views of the offshore renewables sector are being fed into the review, so that the right balance between efficient deployment of marine energy and the safeguarding of our marine habitat can be struck. I will, however, take on board my hon. Friend’s comments about Norway.
At the start of my speech I noted that the issue also involves DEFRA. Would the Minister be willing to meet the chief executive of Wave Hub, the Under-Secretary of State for Environment, Food and Rural Affairs (Richard Benyon) and me to thrash out the detail of some of these problems, which he could then feed into the programme board?
That sounds like an excellent idea. Obviously, I cannot commit my hon. Friend the Under-Secretary of State to that, but he is an amenable chap and I am sure that, subject to our diaries, we can work something out.
We have achieved a lot since our last debate on wave energy, but I recognise that there is much more to be done and we do not intend to rest on our laurels. Over the coming months, the Government will continue to work on a number of priority areas. It is important to ensure a place for marine energy within electricity market reform proposals, and the next meeting of the marine energy programme board will be in Scotland in the summer. There is a lot more to do, but the Government have a lot of ambition. I am grateful to my hon. Friend for his continued enthusiasm and support for this exciting agenda.
Question put and agreed to.