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31 Jan 2003 : Column 1140—continued

11.28 am

Andy Burnham (Leigh): A Bill has to be a good one to keep me from Leigh on a Friday, and I am delighted to be able to say that the Bill before us is one such Bill.

Supporters trusts have been mentioned during the debate. I have an interest in that I am the chair of Supporters Direct, the Government-backed initiative to promote supporters trusts. The fact that the past two years have seen two prominent Bills that are relevant to the mutual sector provides clear evidence that the sector is on the march again. It is only a matter of time until many more people recognise that mutual ownership has answers to some of today's problems, whereas other, corporate forms have failed communities and people. Nowhere is that analysis illustrated more starkly than in professional football.

The welcome proposal in the Bill of an asset lock has great relevance to the beautiful game. Today, football is bringing the concept of mutual ownership to people who might never have tasted its benefits before. Hon. Members should reflect on the fact that, in the past four years, 50,000 people, many of them young men who had taken little interest in the democratic process hitherto, have become members of supporters trusts. They are now experiencing at first hand what mutualism is all about.

There are now 80 not-for-profit democratic supporters trusts in England and Scotland, all of which are industrial and provident societies, owning varying percentages of the league clubs with which they are associated. In the most celebrated cases—Lincoln City, Chesterfield and the new AFC Wimbledon—the supporters trust owns the club outright. It is my view and my hope that, if passed, the Bill will strengthen and protect these trusts.

The prolific growth of mutualism in football is a direct consequence of the way in which the private ownership model—the company model—has been shown to fail supporters and communities throughout the country. Today, professional football in England and Scotland is in financial crisis, and some of the game's oldest names—York City, Port Vale, Bradford City, Tranmere Rovers—stand on the brink of extinction.

Each club is a proud and cherished community institution. I stress the word "club", because they all had typical mutual beginnings—factory teams, church teams, boys clubs. However, as football became more popular and players began to be paid, the clubs set up as companies to limit the liabilities of their directors. At the time, the Football Association recognised the potentially devastating conflict of that, and introduced rules to prevent asset-stripping of grounds and the leaching of money out of the game by payments to directors. Sadly, its fears have been proved well-founded in recent years and the finances of many once-proud clubs have been plundered for private gain.

Let me mention two case studies that show why the Bill is relevant to football and why the asset lock proposals could be of great benefit to football supporters.

York City, a club mentioned by the hon. Member for Twickenham (Dr. Cable) and a great name in English football, is today in administration, on the brink of extinction. Two weeks ago, the York City Supporters

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Trust, a mutual society that Supporters Direct helped to create, had to pump £90,000 into the club just to keep it going over the next few weeks, for no share return whatever. It is in this parlous state because of the actions of its former chairman, Douglas Craig, whose activities were brilliantly exposed in The Independent by columnist David Conn. Unbeknown to the fans, he transferred the ownership of Bootham Crescent, the club's main asset and traditional home, to a holding company called Bootham Crescent Holdings, specifically to bypass FA rules. Craig—I hate to inject a partisan note into the debate—formerly a Tory councillor, stands to profit personally to the tune of £3.5 million if a bid to build houses on Bootham Crescent is approved, having bought his shares for not much more than £120,000 in the early 1990s. By contrast, the club is crippled with a range of debts and now fears that every match will be its last.

York City is an organisation nurtured and cherished by its community. One of its stands—the David Longhurst stand—was built in memory of a player who died on the pitch during a game, and was built with money donated by the fans and ordinary people. Now it will be bulldozed for houses.

The case of Wimbledon football club is a different example. It highlights the strengths of the community benefit society model and the appalling weaknesses of the private company model when it comes to safeguarding a community organisation such as a football club. The key word is democracy. Whatever anyone in football says, supporters see these clubs not as businesses but as public bodies—public property. It has been widely reported that the club's chairman, Charles Koppel, plans to remove Wimbledon FC from south London to Milton Keynes, 100 per cent. against the wishes of the fans, who have not been consulted on whether they think that it is a good idea. Those two examples illustrate why mutual solutions have, by necessity, gained currency among football supporters.

A supporters trust is initially a vehicle to raise cash to save a club, but if it builds influence and ownership in the long term it can save the club for future generations, protect the assets and exert direct democratic control over how the club is run. Douglas Craig is certainly not the first person to asset-strip a football club for personal gain, and he will not be the last. The private ownership model has left clubs too unaccountable and too lightly regulated—easy meat for the unscrupulous to ransack and bleed dry.

If, back at the origins of the game, clubs had set up as mutual organisations, as other professional sports clubs did—my hon. Friend the Member for Harrow, West (Mr. Thomas) mentioned that—many of these problems might have been avoided, but they were not and we are where we are. Nevertheless, I hope that, in the early part of this century, football will belatedly go down the mutual path.

Supporters Direct has been behind the spread of supporters trusts. We shall soon be looking to engage directly with clubs to see whether we can develop a full community mutual model for football that will bring financial incentives for going down that route and ensure that all proceeds are reinvested in the club. Some would say that that is not the big league; cynics say that football league clubs have been not-for-profit for many years. I would not comment on that; suffice it to say that,

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at the moment, football league rules prevent a mutual organisation from owning a football club, and I hope that the right hon. Member for North-West Cambridgeshire (Sir Brian Mawhinney), the new chairman of the Football League, who is not present today, might consider that and allow mutual organisations to own football league clubs. It is in that way, if the measures in the Bill become law, that football assets throughout this land will be protected against the abuse and asset-stripping that we have witnessed in recent years. It will help to preserve a diverse and extended football league across all the towns of this country.

If that day comes when we see mutualism in football, the great attraction of the Bill for football fans will be that the profiteering motive will be entirely removed from the equation. For supporters trusts it holds out the enticing prospect that if they can take control of their club they can effectively save it for this generation and generations to come. It is unlikely, but perhaps one day a few football grounds may ring to the chant of, "There's only one Mark Todd".

11.35 am

The Financial Secretary to the Treasury (Ruth Kelly): I should like to start by thanking my hon. Friend the Member for South Derbyshire (Mr. Todd) for introducing the Bill so eloquently. He set out the issues clearly and in depth, and demonstrated a thorough understanding of them. There have also been interesting and important contributions from several of my hon. Friends, particularly my hon. Friend the Member for Harrow, West (Mr. Thomas), who has led the way in this matter, and also from my hon. Friends the Members for West Bromwich, West (Mr. Bailey), for Liverpool, Riverside (Mrs. Ellman), for Sheffield, Heeley (Ms Munn) and for Leigh (Andy Burnham).

The Government are clearly committed to the mutual sector, but we are keen to ensure that the industrial and provident society is seen as a modern and flexible corporate form within that sector, while retaining the unique and distinctive qualities that mark it out as a mutual organisation. That is why we gave our support to the private Member's Bill introduced last year by my hon. Friend the Member for Harrow, West, and I congratulate him on his achievements in ensuring that it reached the statute book.

In addition, last September the strategy unit completed "Private Action, Public Benefit"—its review of legislation for the charity and not-for-profit sector. It proposed wide-ranging reforms, including proposals to modernise the industrial and provident society legal framework. Those recommendations have been the subject of a public consultation, which has now finished. We are currently examining the responses received and considering options for taking forward the agenda, but I emphasise to the hon. Member for Eddisbury (Mr. O'Brien) that the Bill does not pre-empt reforms that the Government may otherwise have made, somewhat further along the path, as the initial responses from the consultation are very positive towards modernisation of the sector.

The Government certainly welcome this new opportunity to update industrial and provident society legislation. I am very sympathetic to the changes and the

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reforms that it is trying deliver, because they are consistent with our aim to support and modernise industrial and provident society legislation, and to strengthen such societies' contribution to social enterprise. I am therefore pleased to say that, in principle, the Government can support the objectives behind the Bill.

However—[Interruption.] There is always a "however." We believe that the Bill will require amendment to ensure that those objectives are genuinely achieved. I have had constructive discussions with my hon. Friend the Member for South Derbyshire on the nature of these amendments, and I hope that we shall shortly be able to agree where changes might be made, so that the Government can give their full support to the Bill.

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