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Motion made, and Question put forthwith, pursuant to Standing Order No. 118(6) (Standing Committees on Delegated Legislation),

Representation of the People

Question agreed to.

Value Added Tax


29 Apr 1999 : Column 590

Football (Offences and Disorder) Bill [Money]

Queen's recommendation having been signified--

Motion made, and Question proposed,

7.25 pm

Mr. David Maclean (Penrith and The Border): I feel that, in the case of all Bills, when a money motion has been tabled, the Minister should say a few words about the financial effects, and should tell the House whether the Government anticipate any changes since the publication of the explanatory notes. I do not intend to delay the House for long, but I feel that we should be told about the financial consequences of Bills, even Bills that have received cross-party support as this Bill has.

I note that, according to the Government's estimate, the total additional administrative expenditure will amount to £100,000 per annum. I believe that that is to pay for the extra civil servants who will be required to administer international football banning orders--[Interruption.]

Mr. Deputy Speaker (Sir Alan Haselhurst): Order. I am sorry to interrupt the right hon. Gentleman, but I must call the House to order. This item of business is as worthy of consideration as any other.

Mr. Maclean: Thank you for your protection, Mr. Deputy Speaker.

The Government also calculate that the requirement to report to police stations, and the requirement for the submission of passports, will result in some additional costs, but they say in their explanatory notes that they expect those costs to be minimal. I go along with their forecast, but it would be helpful to hear how much the Government expect the figure to be, if they have a figure in mind. What is "minimal"? Is it less than £10,000, or less than £50,000?

I would also like to know the effects of the banning orders. There will be slight additional costs for the Crown Prosecution Service and the courts. Again, the Government say that the costs are likely to be minimal, but it would be helpful to know whether "minimal" means less than £100,000, less than £50,000 or less than £10,000. Of course I do not expect to be given a precise figure; it would be unreasonable to ask for one.

I apologise to the Minister and to my hon. Friends if I am wrong about this, but I seem to remember that, when we debated the Bill, a number of Members on both sides of the House spoke of the importance of locking up more of these hooligans. They said that the Bill would catch some people who are not being caught now, and the House was in quite a gung-ho mood about the number of people who would be locked up. Perhaps that was extreme, or optimistic, language; perhaps only some, or indeed none, of those people will actually be locked up. What I need to know from the Minister is this: is it possible that more people will be imprisoned as a result of the Bill? If so, we shall face different costs.

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I have no objection to putting more people in prison. I espoused that policy, quite strongly, when I was a Minister. Indeed, I am pleased to say that I helped to contribute to the increased number of people in prison. There has been a record fall in crime--a record since the war--and I am proud that that is continuing. However, if a few more vicious hooligans are put in prison, we shall face greatly increased costs. I know that prison costs are often exaggerated, but it could mean £50,000 per criminal, or a minimum of £30,000 in the case of lower-category offenders.

If the Government have more detailed figures, we would like clarification of the financial effects of the Bill as set out in the explanatory notes. We also want to know whether the Government expect to incur extra imprisonment costs, tagging costs or any other costs relating to the sentencing and storage of the additional number of criminals who may be convicted.

7.29 pm

The Parliamentary Under-Secretary of State for the Home Department (Kate Hoey): The right hon. Member for Penrith and The Border (Mr. Maclean) has rightly raised some points about the Bill, which I hope can be dealt with quickly. The Bill originated as a private Member's Bill tabled by the hon. Member for West Chelmsford (Mr. Burns), a member of the right hon. Gentleman's party. It has had its Second Reading, when it received broad support from both sides of the House, and we hope that it will go into Committee next Wednesday. It cannot go further unless this money motion is passed, and I hope that hon. Members will support it.

The Bill is intended to deal more effectively with the threat of disorder from those convicted of football-related offences. Banning orders are issued on the instruction of the court following application by the prosecutor on behalf of the police. Additional costs are involved, but they will be absorbed in the criminal justice system. As the right hon. Gentleman well knows, the Prison Service always manages to accommodate extra costs arising from the decisions of the court.

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It is worth pointing out that any increased costs incurred by the Crown Prosecution Service would be as a result of preparing a greater number of applications. Those costs are expected to be minimal. We shall go into more detail on what minimal means. As a former Home Office Minister, the right hon. Gentleman should know what minimal means in the overall civil service jargon.

It is anticipated that the restrictions order authority will require an additional four full-time members and one part-time member of staff to deal with the administrative work. The authority's expenses will be met by the Secretary of State under section 21(8) of the Football Spectators Act 1989. The additional administrative costs are anticipated to be approximately £100,000 per annum.

Mr. Edward Leigh (Gainsborough): Will the Minister give way?

Kate Hoey: I shall give way to the hon. Gentleman, because I am well aware that if I do not, he will probably make a speech. I know that we have 45 minutes, but I think that hon. Members on both sides probably do not want this debate to take 45 minutes.

Mr. Leigh: The promoter of the Bill told the House on Second Reading that he intended to table a provision at a later stage to allow the Government to order the surrender of passports of those as yet not convicted of an offence. Does the Minister think that any extra costs could arise as a result of that provision if it were included in the Bill? What will she do about a money resolution when that provision is introduced?

Kate Hoey: As the hon. Gentleman well knows, that has not yet been finally decided, but a decision will be made before next Wednesday. I am sure that the hon. Member for West Chelmsford will make that decision. If that provision were to be included in the Bill, some additional costs would be involved. At the moment it is not in the Bill, so it is not affected by this money motion.

I hope that my explanation is satisfactory, and that the right hon. Member for Penrith and The Border is satisfied. This measure will be given full consideration in Committee, and I ask hon. Members to support it tonight.

Question put and agreed to.

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Vaux Brewery

Motion made, and Question proposed, That this House do now adjourn.--[Mr. Robert Ainsworth.]

7.33 pm

Mr. Chris Mullin (Sunderland, South): This is an unhappy tale: a parable for the fate that has overtaken so much of our manufacturing industry during the past 30 years. It is about a clash of cultures. On the one hand is a long-established, respected company managed by successive generations of the same family, who take the old-fashioned view that their responsibilities extend to their work force and to the public interest as well as to their shareholders. On the other hand are the City institutions, which acknowledge only an obligation to make for themselves and their clients the fastest buck in the shortest possible time, regardless of other considerations.

The struggle at Vaux brewery has been a long one. It was a boardroom battle worthy of a television soap, during which the company has lost its chief executive, its finance director and, eventually, its long-serving chairman. The ending is an unhappy one, because the barbarians have triumphed.

My main purpose tonight is not to influence events--it is probably too late for that. Instead, I intend to place on record a summary of the facts, and to draw attention to a number of issues that arise from what has happened at Vaux, on which I invite the Government to comment. Before doing so, I must pass on the apologies of myhon. Friend the Member for Sunderland, North (Mr. Etherington), in whose constituency the brewery is based. He is unavoidably detained elsewhere. However, I welcome a number of my hon. Friends from the region.

Vaux is one of north-east England's oldest and most respected companies. The brewery employs about 600 people in Sunderland, many of whom are my constituents, and more than 100 in Sheffield. Some years ago, the company successfully diversified into hotels. Before long, its Swallow hotel chain became the mainstay of the group. It is one of the few major companies whose head office remains in the north-east, although for how long remains to be seen.

Vaux has a loyal work force and, at the brewery, a management who are on first-name terms with most of their employees. Industrial relations are good; profits steady, if not spectacular; dividends have increased in each of the 27 years in which Sir Paul Nicholson was chairman. Today, earnings and dividends are more than 10 times higher than they were when Sir Paul took over, in 1971. So let no one say that it is a failing company. As Britain's brewing industry increasingly came under the sway of four big companies, however, Vaux came under pressure from the City to get out of brewing and concentrate instead on hotels.

In June 1998, soon after his 60th birthday, Sir Paul Nicholson stepped down as chief executive, although he stayed on as chairman. A new chief executive, Martin Grant, formally of Allied Domecq, was chosen to replace him. I have met Mr. Grant. He has done enormous damage, but he is charming and plausible, and it is always disappointing that one's demons do not conform to the stereotype.

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From the outset, the signs were ominous. Mr. Grant made it clear that he would not be moving to the north-east, despite the fact that Swallow's headquarters is based there. Within a short time of taking over, he advised the company that it should get out of brewing. The board reluctantly agreed. It did, however, express a preference for the company's brewing interests to be sold as a going concern.

At that point, a ray of hope appeared. A management team, led by Frank Nicholson--the joint managing director, and brother of Sir Paul--made a bid for the breweries and certain of the pubs owned by Vaux. Sir Paul very properly took a back seat, in order not to be seen to favour his brother's interests. The management buy-out should have been the solution that satisfied everyone.

Initially, the main fear in Sunderland was that the management would be outbid by one of the four breweries, closed and asset stripped. However, on20 November 1998--the deadline--we found to our pleasant surprise that none of the big four had made a bid for the entire company, which appeared to leave the field clear for the management buy-out. We had reckoned, however, without Mr. Grant. It soon became clear that Mr. Grant was determined to resist the management buy-out and opt instead for a scorched-earth policy.

In January, Mr. Grant submitted a paper to the board arguing that Vaux was worth £24 million more closed down and asset-stripped than were it to be sold as a going concern. His figures were clearly preposterous, and his advice was rejected. On 15 January, the board opted instead to open negotiations with Frank Nicholson and his management team.

Mr. Grant, however, did not accept defeat. He and the finance director, Mr. Neal Gossage, went behind the backs of the board and bad-mouthed the proposed management buy-out to City institutions with major holdings in Vaux. On 8 February, they were summoned by the board and sacked; but the damage was done.

Following the departure of Messrs Grant and Gossage, a spate of hostile stories began to appear in City pages. In March, the advisers appointed by the company reported back to the board, and it became clear that they were split. One of them was prepared to recommend the management buy-out, but the other declined to, arguing that an extra £15 million--3 or 4 per cent. of the group's market value--could be squeezed out of the assets if they were sold off piecemeal.

I should say that this figure is extremely controversial, and varies according to who one talks to. Specifically, it appears to be based on generous assumptions about the value of the site and the costs of clearing it. Sir Paul Nicholson believes the gap to be nearer £2 million or £3 million. The board, however, by a majority rejected the management bid, and has since rejected a revised offer. Scorched earth is now the most likely outcome.

On 27 March, Sir Paul resigned in disgust. He said:

Goodness knows, we in Sunderland have seen our share of redundancies in recent years, and redundancy is always painful. But what makes Vaux different from just about all the others in my experience is that it is not a loss-making company. The market for its product had not

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dried up; on the contrary--I cannot stress this too strongly--it is still a profitable company, for which a reasonable offer was on the table.

What has happened is wilful vandalism. More than 700 people are about to lose their jobs, and a respected trade name is about to disappear, in the hope--that is all that it is--of adding a few pence to the share price on the basis of some extremely controversial assumptions about the likely value of the assets once everything has been dismantled.

Before we start blaming the shareholders, let me explain that there are many Swallow shareholders in Sunderland and elsewhere who are as disgusted as everyone else with what is being done in their names. The problem is that they are outnumbered by the huge block votes wielded by a handful of City institutions, one or two of which, I am sorry to say, control the pension funds of employees, who, if only they had a say, would not approve of what is being done in their name. For the record, I shall name those primarily responsible for this debacle. They are Mercury Asset Management, the Bankers' Trust and Hermes Pensions Management Ltd.--formerly the Post Office pension fund.

As I said at the outset, my principal purpose tonight is to place on record those unfortunate events, which provide a classic example of the unacceptable face of capitalism. A viable company that has traded successfully for 150 years, and for which a realistic offer is on the table, is about to be destroyed by a handful of irresponsible City institutions. Of course, muggins--the taxpayer--will be responsible for the bill for clearing up the mess that will be left behind.

I pay tribute to Frank Nicholson for the heroic efforts that he and his colleagues have made to save the business. Rarely have I come across a business man so highly regarded by those who work for him. I pay tribute too, to Sir Paul Nicholson. As group chairman and brother of Frank, he has obviously been restricted in what he could say and do, but he has left no one in any doubt publicly or privately about where he stands.

I also thank my right hon. Friend the Secretary of State, who has taken a close interest in the matter from the outset. It is a measure of the seriousness with which he takes the issue that he has chosen to reply in person to tonight's debate.

The Government have done all that could reasonably have been expected to save Vaux. From the outset, they have made it clear that a generous offer of regional selective assistance was available to help the management buy-out succeed. I would be grateful if my right hon. Friend would confirm tonight that the offer is still on the table, in the unlikely event of any new buyer coming forward.

I finish by drawing my right hon. Friend's attention to several wider issues that arise from the affair. First, it has become clear that all the major brewers are in the habit of subsidising the price of their beers to the general market by charging their own estate--that is, the pubs that they own--a premium price. It is perfectly possible, therefore, that the big four might be in a position to put small breweries such as Vaux out of business using what is surely an unfair trading practice. That is a matter in

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which the Office of Fair Trading may wish to take an interest. I drew it to the attention of the director general some months ago.

Secondly, it is a matter of record that the irresponsible obsession of City institutions with making the fastest buck in the shortest possible time has infected British business with a culture of short-termism, which has proved deeply damaging to our manufacturing sector. What plans does the Secretary of State, no doubt in consultation withthe Chancellor, have for addressing the culture of short-termism in the City?

Thirdly, it is also a matter of record that pension funds do not always operate in a manner of which their members would necessarily approve, or in those members' best interests. Is the Secretary of State satisfied that pension funds are sufficiently accountable to their members?

Fourthly, I would be grateful if my right hon. Friend would say something about the assistance available from the Government to help to retrain and re-employ the people who will lose their jobs.

I address my final remarks to the board of Vaux--the Swallow Group, as it is now called. Its members will be aware that what has happened to Vaux has caused outrage in Sunderland, not least among many small shareholders. They will also be aware that the calculations on which they have based their decision to close the brewery have been challenged, not least by Sir Paul Nicholson, who was company chairman for 27 years. I put it to them that, at the very least, they owe their employees and the people of Sunderland a detailed explanation. That could best be done by calling an extraordinary general meeting of shareholders, and I invite them to do so.

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