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Mr. Anderson: I was not aware of that, but I am not surprised, because that is the culture in Scotland, and where I come from: that is how we attracted people. Football in the British isles is suffering today because of
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the demise of that and because big money is bringing in players from abroad and not encouraging junior footballers to come through. That is a big mistake for us all.

In my part of the world, we have junior football—it is junior in the sense of age groups—and it is booming. In Blaydon, we have a football team that attracts 270 players—boys and girls. People there are even in the process of setting up a disabled team, which is something that we would never even have thought about 30 years ago. The team operates out of a portakabin, and while the children are training and playing football, their grandmothers take it over and it becomes a social centre for them. People who do not know each other and would never have met but for their children’s interest in football get together. It is part of the community, and that is what it is all about. It becomes a social event.

We have campaigns going from that football club. We are running a big campaign to try to get the Health Department to pay for people who need to wear glasses when they take part in sport. We should surely encourage that. A local amateur football team in our area, Whickham FC, recently won the Durham senior challenge cup—their first win for 25 years, since they won the FA vase. They were the first second division team to win the cup, and they beat first division opponents to do it. They are an integral part of the community, and good news for the community.

Another team, Birtley Town juniors, have just been awarded a charter standard by the FA and quite a lot of money from both the FA and the local council, because they want the team to develop and go forward. They realise the integral part that football plays in our communities, much more than in the past when we had a more cohesive society. That is particularly true in the area where I come from, where there were miners’ welfares and people grew up, played, lived and worked together. A lot of that has been changed, but the football clubs have been maintained and are a key part of our society. We should do everything possible to keep them going. The development in football in the past few years is good news for the whole community.

We have to ask where the joined-up thinking is in the proposal, given that we want to encourage people to engage in sport. We know that 30 years ago people went to play football and then got drunk. That was part and parcel of the situation: it was a man’s thing. Football is no longer like that: it is a community event that involves people in a very different way.

My hon. Friend the Member for East Lothian said that if children are involved in sport they probably will not be involved in antisocial behaviour, or if they are, it will be for a much more limited time. That is a crucial part of why the police in our area are involved in encouraging sport. Something else that happens now, which would never have happened when I was a young man, is that boys and girls play football together. We now have people from different racial groups coming together, and there is interaction with people with disabilities. We talk and talk in this House about encouraging people to involve themselves in diversity. This is real diversity: it is real people getting together, doing real things together and realising that they are living on the same planet.

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When I played football, the engagement that we had with the local council was to ask how much rent we had to pay for a football field, and that was the end of it. Now there is real involvement with the development of community leisure facilities, environmental discussions and development as a whole. There is a plan to take over school fields in the area where I live, which has been strongly resisted by local people because it is all about building houses. The school fields should be maintained, used and developed for sporting facilities. The football clubs are right in there arguing that case and using links with organisations such as Sport England to ensure that their voices are listened to. To promote interest in sport, we should be talking about tax breaks, not tax burdens. We should be looking for incentives, not disincentives, and we should be finding support, not putting obstacles in the way. I understand the reality that PAYE must be paid, but I urge it on the Minister that if there is any way of relieving the burden on these clubs, it can only be for the good of the community.

9.54 am

Mr. Jim McGovern (Dundee, West) (Lab): I fear that with such a specific topic up for debate today, you may hear the same speech, or variations on it, several times, Mr. Chope. I apologise in advance if that is the case.

I start by congratulating my hon. Friend the Member for East Lothian (Anne Moffat) on securing this debate. I know that she takes an active local interest in this issue. She should be praised for the hard work she has done locally, and the fine way in which she laid out the arguments to start the debate.

As a comparatively newly elected MP, I imagine that I come fairly late to the issue. My colleagues from around Scotland, notably my hon. Friend the Member for Central Ayrshire (Mr. Donohoe), who unfortunately is not here today, have been campaigning on this issue since the Revenue announced its intention to change the rules for Scottish junior football about four years ago.

Despite this being a relatively long-standing issue, the debate is especially important and comes at an appropriate time. Junior football clubs across Scotland have just hung up their boots for the summer. The close season provides the opportunity for many of the unpaid volunteers who do such good work in those clubs to find the time and expertise to operate a PAYE system while trying to find ways to keep their clubs running with the extra burden that has been placed on them. The debate comes only a couple of months after tranche 2 of the Revenue’s programme to get PAYE established throughout Scottish junior football.

My constituency has five junior football clubs, all of which are part of a proud tradition within Dundee. Despite being the new kids on the block, Downfield FC are celebrating their centenary this year. Dundee Violet were formed in 1883, and are therefore the oldest club, closely followed by what must be the most successful club in the region, Lochee United, who managed to win 17 honours between 1977 and 1987. That feat has not been repeated in recent years, but it will not be easily forgotten. Indeed, last year Lochee managed to resurrect some of that fighting spirit and reached the final of the Scottish cup. My favourite team in Dundee, West—Lochee Harp—were formed in 1904, and Dundee North End make up Dundee, West’s complement.

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In Perthshire, there are teams such as Jeanfield Swifts, Bankfoot, Kinnoull. Up in Angus, there are clubs such as Forfar Albion, Forfar West End, Brechin Vics, Arbroath Vics. Coming back down into Dundee, East, Carnoustie have been one of the most successful clubs in recent years, and were Scottish cup finalists a couple of years ago. Coming back into Dundee, there are Broughty Athletic and East Craigie. Unfortunately, my favourite team from Dundee, East—St. Joseph’s—went defunct a few years ago because of financial considerations. Moving across the Tay bridge into Fife and the constituency of the leader of the Liberal Democrats, the right hon. and learned Member for North-East Fife (Sir Menzies Campbell), teams include Tayport, who have been probably the most successful team in Scotland in recent years at junior level. I think they have won the Scottish cup three times in the past five seasons. Moving through Fife into the Chancellor’s constituency, there are clubs such as Lochgelly Albert, Lochore Welfare and Kelty Hearts.

Throughout the Tayside and Fife area, junior football clubs are at the heart of every community.

Mr. Devine: My hon. Friend makes a good point. The Chancellor was heavily involved in saving the Raith Rovers senior team, which he strongly supports, organising financial assistance and suchlike. It would be a bit silly and contradictory for him to save the senior team but let the junior teams go under.

Mr. McGovern: I thank my hon. Friend for that intervention. He makes a valid point. It would indeed be sad if the junior teams in the Chancellor’s constituency were to go to the wall because of tax considerations.

I could go on with my geographical tour of Scotland, but suffice it to say that across the Forth bridge there are more junior clubs in the constituencies of my right hon. and hon. Friends the Secretary of State for Trade and Industry, the Deputy Leader of the House, the Home Secretary, the Secretary of State for Scotland and for Transport, and the Secretary of State for Defence. Junior football clubs are at the heart of the community throughout Scotland, and play a vital part in those communities.

The clubs in Dundee, West boast crowds of somewhere between 50 and 100 for their home games, but beyond that they play a vital role in the communities in which they are based. Many of those clubs run youth teams. In Dundee, I can certainly attest to the contribution that they make to the fabric of the communities in which they are based. They have been there for over 100 years, and have overcome many adversities, but the new tax regime slowly being implemented seems to be posing one of the biggest threats yet. It would be a real shame if that threat finally became insurmountable for some of them.

There are many competing views as to why the Revenue started its actions back in 2002. Some believe that a hotshot taxman was reading the newspapers and noticed big sponsorships that had been achieved by a couple of teams, and figured that they deserved attention. Other people suspect that the Revenue was getting upset about the failure of some clubs to send in their informal tax returns and that it was therefore about time to revisit the whole system.

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Dr. Gibson: My hon. Friend touches on an interesting correlation between the success of Scots politicians in the English Parliament in reaching high places and the preponderance of junior clubs in their areas. Does he think that if the junior clubs were to disappear there would be fewer Scots in high places in the English Government?

Mr. McGovern: I could not possibly comment on that. This is the British Parliament and every MP is allowed to vote on every issue regardless of their constituency.

As I suggested, this issue stems from the decision of one player on a fairly large retainer from a bigger club who claimed that he did not have to sort out his tax receipts as his club should do it for him. Whatever the reason, it seems that big assumptions have been made on the experience of a very limited set of teams, which has led to a regrettable situation.

The new PAYE system, which many clubs are expected to introduce, replaces the informal returns system negotiated for junior football in the 1960s by Tam Dalyell, the former Member of Parliament for Linlithgow. That system allowed clubs simply to submit an informal return to the Inland Revenue each year, on which would be a full list of all the moneys that had been paid to players over the past year, allowing the Revenue to ensure that the players’ tax returns were correct and thus ensure that it collected all the tax that was due to it. It should be emphasised that the aim of the informal agreement was not for the clubs to avoid tax altogether, but to ease the burden on the junior football clubs and to place it on the individual players and the Revenue. I like to think that that was partially in recognition of the unique role that junior football plays in Scotland and the desire in the 1960s to help to maintain it.

Phase one of the PAYE introduction tended to affect clubs that had social clubs attached to them and were more or less of a size that they could handle a PAYE system without its destroying the club. After all, some of the social clubs already employed staff and therefore applied PAYE to them. It caused some problems, although not as many as have been caused by the second tranche of the reforms.

I want to discuss three key areas. First, I should like to emphasise my belief that junior football clubs are not “employers” as any reasonable person would understand the term, and should not be treated as such. Secondly, where the tax regulations have been introduced, it has been done in a manner that has promoted rather than reduced confusion, and they have often been perceived as incredibly unfair. Thirdly, I should like to address the effect that the new tax regime is having on the volunteers, who are crucial to the running of the clubs.

The first problem is simply the mistaken belief that the clubs are employers. Under the strict letter of the law—I am talking about the Income and Corporation Taxes Act 1988—it is entirely possible that junior football clubs that pay their staff “emoluments”, which to most of us means bonuses, should operate a PAYE system in the payment of them. I can therefore see why, under the strict letter of the law, the Revenue has decided to take the position it is taking. However, it has
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a long history of working out special exemptions for certain areas in order to make an inflexible tax system just a little more flexible—in fact, that is exactly how the original arrangement came about. These exemptions and arrangements are designed to promote fairness in the tax system and to ensure that the burden of taxation and PAYE does not fall disproportionately on some people.

The clubs do not operate as normal employers would and therefore should not be treated as employers by the tax system. I cannot think of another “employer” in which the entire board running the company—if we are to call clubs that now—get paid nothing at all and give up all their time for free. That does not sound like an employer to me. In fact, the more we examine the clubs and how they operate, the more they sound like exactly what they are: a collection of people who care about their local community and their local football team enough to give up many hours to support the clubs and their community. We are talking about a bunch of dedicated people who do not gain financially from their enterprise and who are not necessarily cut out to be finance directors or managing directors.

Recently, I received an email from a secretary at one of the junior football clubs in the constituency of my hon. Friend the Member for Midlothian (Mr. Hamilton)—unfortunately, he cannot be here today—who summed things up well:

In addition to that, we need to be honest when we consider the sort of wages that are paid to the players at junior football clubs. I spoke to different clubs, and I was constantly struck by the low level of the payments that were causing all this trouble. Admittedly some players were given signing-on fees ranging from £250 to £1,000, but that aside, the so-called “wages” were small sums such as £5 or £10 for training sessions and away games. Again, it does not sound as if we are talking about the sort of employer that the Revenue would usually go after; in fact, it does not sound to me like an employer at all.

Mr. Devine: As my hon. Friend will know from his background as a trade union official, employers will sometimes be involved in cases where people are made compulsorily redundant or are unfairly dismissed. Has he known of a case of a junior football player going to a tribunal for unfair dismissal?

Mr. McGovern: I thank my hon. Friend for that intervention. I am unaware of any player going to a tribunal but I am sure that a few would regard themselves as being unfairly dismissed; in football terms, that is called a “free transfer”. [Hon. Members: “On your bike”] Yes.

The decision to classify the teams as employers has other knock-on effects that are proving even more worrying for the game: For example, some clubs are being told that as they are now classified as employers they might have to start paying the minimum wage to their players. That, of course, stretches the law to whole new limits of absurdity. For example, I spoke to one
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club that was drawn in a Scottish junior cup game at the other end of the country. Such a journey could be from Ayrshire to Inverness and might take nearly five hours by bus. Another four hours at the stadium for the match and another five hours getting back home might be involved. If the club paid every player the minimum wage, the players would need to be paid more than £75, as opposed to the £5 or £10 that most players get for an away game.

If that were to happen, in the words of Tom Johnston, secretary of the Scottish Junior Football Association:

I know that that is not the Government’s aim and I hope that they will be able to use good judgment to prevent such unintended consequences.

Jim Sheridan: My hon. Friend talks about the cost and the tax. Does that include the potential cost of national insurance?

Mr. McGovern: I understand that it would: it would include the national minimum wage, PAYE and national insurance contributions. I think that that is why Tom Johnston says that it would drive an awful lot of clubs to the wall. I do not believe that the clubs are “employers” in the common-sense definition of the word and therefore I simply do not believe that they should be treated as such.

The second issue that I want to raise is the implementation of the new rules. I did some calling round and sent out speculative emails to clubs about the problems that they had been facing in dealing with the new tax rules. The clubs had been given a vast array of recommendations, many of which did not correspond with what had been told to other clubs or even to other players at the same club. Some clubs had been told that they could provide each individual player with a £500 tax allowance, because the players provided their own boots and shin pads and washed their own shirts at home. However, even within one of the clubs where that happened some players had their application for that dispensation rejected by the Revenue, which left the club and the players rather confused.

Anne Moffat: Would my hon. Friend be surprised to hear something from the meeting that I had between Midlothian and East Lothian clubs: when they were looking for these tax exemptions, the issue of shin pads came up and the tax inspector said that they could not possibly have an allowance reduction on shin pads because they could be used for a purpose other than shoving them down a player’s socks?

Mr. McGovern: I thank my hon. Friend for that intervention, which shows why the players and the clubs are confused. I am certainly confused and intrigued about what other purpose a shin guard might have; perhaps someone would enlighten me later.

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