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In order to meet the requirements for Working Peer, Mr Michael Ashcroft has given his clear and unequivocal assurance that he will take up permanent residence in the United Kingdom again before the end of the calendar year
He would be introduced into the House of Lords only after taking up that residence. These undertakings have been endorsed by the Leader of the Conservative Party and conveyed to the Prime Ministerand to the Political Honours Scrutiny Committee.
I want to know the form of the undertaking and to whom that undertaking was givenit is nothing to do
with how much tax Lord Ashcroft pays or does not paybut the Cabinet Secretary has refused my request under the Freedom of Information Act 2000. The matter is now subject to an internal review, but I fully intend to take this matter to the Information Commissioner. I finish by emphasising that it is totally unacceptable for people to make the laws of the United Kingdom when they do not pay their taxes here.
The Parliamentary Under-Secretary of State for Justice (Bridget Prentice): I congratulate my hon. Friend the Member for Pendle (Mr. Prentice) on securing this debate. He has raised the question of the tax status of Members of the other place previously, including through early-day motions, and I am pleased to give the Governments view on the matter.
The Government agree with the intention underlying the Billthat Members of this House and the other place should pay taxes in the United Kingdom. That is an important way in which they demonstrate their connection with and commitment to our country. The public would find it odd if their elected representative in this House could, as a tax exile, vote on the provision of income tax but was not subject personally to that regime. I doubt that the electorate would consider that fair.
Mr. Grieve: How might the proposals impact on the Good Friday agreement and the terms of the peace settlement in Northern Ireland, in relation to the ability of citizens of the Irish Republic to stand for the United Kingdom Parliament while remaining resident in the Republic of Ireland? If my recollection is correct, that is specifically provided for and allowed for, and it might make it difficult for the hon. Gentleman to achieve his intention.
Bridget Prentice: The hon. Gentleman makes a good point, to which I was going to refer later in my speech, but I will address it now. He is correct that the Bill as drafted would have an anomaly in that a citizen of the Republic of Ireland could be disqualified from standing for the Northern Ireland Assembly. The same point might apply to Members of the European Parliament. In both those situations, people could be unfairly disqualified from standing. Although we support the idea behind the Bill in principle, I will ask my hon. Friend the Member for Pendle whether he would be open to amendments in Committeehe has indicated that he wouldto ensure that such candidates would not be unfairly prevented from standing for Parliament.
Philip Davies (Shipley) (Con): Would the principle that people who do not pay taxes here should not make our laws, prevent the European Commission ever making any laws that affect our country? Were that the basis on which the Bill was being brought forward, I would support it wholeheartedly.
The hon. Gentleman makes an ingenious intervention, and I am sure that he will have the opportunity to raise the issue again in the next
dozen or so days when we debate European matters. Ingenious as it is, however, it is not absolutely relevant to the question before us today.
The Bill has some potential technical problems, and the hon. Member for Beaconsfield (Mr. Grieve) has raised one. I want to mention some others. For example, only this week Her Majestys Revenue and Customs published proposed amendments to the residence and domicile tax rules. Those are still being consulted on, so I would be cautious about cross-referencing the Bill to any of the current tax residency rules, because of possible changes.
Mr. Grieve: To make the position clear, I understand the seriousness of purpose, and the merit, in the matters that the hon. Member for Pendle (Mr. Prentice) wishes to examine. But the issues are more than technical, because if we start providing exceptions as opposed to the blanket approach that he wants, that raises the question of what exceptions. We would then start a process of looking down the list that might lead to the justification of all sorts of exceptions, which might start to undermine his intention.
Bridget Prentice: Again, the hon. Gentleman makes a fair point. However, although the Government make some criticisms of the Bill, in a spirit of helpfulness we support its intention. There are good reasons for introducing legislation along such lines. With assurances from my hon. Friend the Member for Pendle that he would be prepared to accept amendments in Committee, I would be happy to endorse the principle behind the Bill.
Mr. Grieve: The hon. Member for Pendle has raised an important issue. In the past, we have considered such matters as whether donations can be made to political parties and whether individuals can stand for Parliament in the context of their status. The historic
Mrs. Nadine Dorries (Mid-Bedfordshire) (Con): I stand here today not only as Member of Parliament for Mid-Bedfordshire, but as the great-granddaughter of the founder of Everton football club. In those days it was a small community town football club known as St. Domingos. The principles of small football clubs were much as they are today: it was about community, young boys having a focus and a local club, and all that that entails. My great-grandfathers son went on to play football as a goalkeeper, and his grandson has been a member of the amateur Referees Association for most of his life.
I am here today to try to protect another club that was started at almost exactly the same time as my great-grandfather started Everton: Luton Town, one of the oldest clubs in English football, founded in 1885. It has been witness to a lively pastunfortunately it has been in administration three times in the last nine yearsbut my interest today lies with its future more than its past, and with what we can do to ensure that that future remains stable and long-lasting.
The club went into administration in November last year. The financial directors and controllers had realised that its liabilities and costs were becoming greater, and that administration was the only option. As a result, in accordance with Football League rules, the club lost 10 points. Experienced football insolvency expert Brendan Guilfoyle was one of the three administrators appointed. He has a sound track record of helping other clubs in the same position, including Leeds United. His rescue of Leeds from its first insolvency culminated in the clubs paying off its creditors. If anyone is to secure the future of Luton Town football club, Brendan Guilfoyle will certainly be one of those who do so, but what we need, and what we have, is the right combination of administrator, loyal and dedicated fan basesome of whom are here todayand, of course, Luton Town itself.
All the ingredients are in place to ensure that a good bid is presented, as indeed it has been, by a consortium known as Luton Town 2020. The name represents the bids objective, which is to secure the clubs long-term future. The consortium is led by a lifelong Luton fan and television presenter, Nick Owen. He has done a fantastic job so far in attracting the investment that the club needs, and we hope that it will be possible to inject £10 million into the rescue operation.
As I have said, the priority is to stabilise the club and ensure that it remains stable in the future, without a repeat of its unfortunate past. As a member of the Football League, the club must abide by the leagues rules, which is why 10 points were deducted when it went into administration. It will face more stringent penalties if, during the administration process, it fails to meet other regulations laid down by the league. For example, it must now meet an additional 16-point plan set by the league if it is to emerge from administration. It must establish a company voluntary arrangement, which must be approved by the Football League before any progress can be made. The Football League, in more ways than one, sets the rules of the game and compliance with the CVA is effectively non-negotiable.
For the record, an exceptional circumstance arrangement can be established and sometimes that is permissible, but the cost would mean that the club would lose a further 15 points on top of the 10 points that have already been deducted. That would mean removal from the Football League, which would be a disaster for the club because it would have an impact on gates and the price of players. It would destroy Luton Town football club and must be avoided.
Following discussions I have had recently with the administrators, 2020, supporters groups and others, it appears that we are very close to securing the CVA, which would meet the approval of the Football League. That is extremely encouraging and would give Luton Town the fresh start that it desperately needs. However, the club is facing an extreme dilemma. As Benjamin Franklin famously said:
But in this world nothing can be said to be certain, except death and taxes.
As the Minister may be aware, the club owes about £2.5 million in unpaid taxes to Her Majestys Revenue and Customs, which is equivalent to about 80 per cent. of the clubs total debt. The magnitude of the debt means that HMRC is likely to object to the CVA and effectively will veto the clubs best chance of a sustainable future. That is because, under the CVA, the administrator is allowed to pay football creditors, such as players and other clubs, and they are allowed to receive 100 per cent. of what they are owed. However, other creditors, such as HMRC, are likely to receive nearer to 25 per cent. of what they are due. Ultimately, that will leave the club practically insolvent.
Clearly in an ideal world, in which none of us live, everybody would be paid in full, but 2020, which is the best option for securing the long-term future of the club, does not have access to the funds needed to extend 100 per cent. payment to everybodyto all the creditors. If HMRC continues to insist on such an arrangement, 2020s bid, which is the only feasible one on the table, will fail completely. The irony is that the taxman will receive nothing if the club becomes insolvent rather than the 25 per cent. he would receive if he went into reasonable negotiations with the club. Although I understand the reasons for HMRCs stance, I fear that intransigence and a lack of ability to negotiate on its part could prove a fatal blow to the club.
I want to take the opportunity to urge the Minister to make representations to ensure that HMRC takes a more flexible approach to the clubs outstanding payments. It is more than just a club; it is not just a case of negotiation between HMRC and the administrators. It is about the lifeblood of an important part of Luton and Bedfordshire. Many of my constituents support Luton Town football club, and football is a beautiful game. It is not just a beautiful game for Liverpool, Manchester United and the clubs in the big super-leagues; it is a beautiful game for the little boys who go home from school at night, put on their boots, go out into the street and pretend they are scoring a goal for the Hatters. It is a beautiful game for any small town that has its own club, which becomes such a vital part of the community.
Just this week in this Chamber, we had a debate on obesity and the danger it is proving to todays children. The Government have sent out guidelines this week on how we need to encourage our children to move away
from their PCs and to get out and engage in more sports. The club is situated in one of the poorest areas of the country and it is vital that a football club should exist in Luton that children can walk to. The club should be there to inspire children and to run youth training schemes and youth leagues so that it is part of the wider Bedfordshire community. I cannot say enough what a loss to Luton and Bedfordshire it would be if HMRC did not negotiate, the bid failed and Luton Town football club ceased to exist tomorrow.
The issue is not just about Luton Town; it is about other clubs. Many clubs across the UK all too often find themselves in a similar position to the one that Luton Town finds itself in today. If we want our kids to get out from in front of their PCs, let us make sure that local football clubs exist. Let us make sure that they are there to be an inspiration and to make sure that football is not just about those who have the big bucks and can afford to go to the big games and travel to the big matches. Football should be accessible to everyone, particularly in a town such as Luton, which is one of the poorest areas of the country.
There is another reason why I support the bid: the 2020 consortium is committed to ensuring that Luton Town football club fits snugly as close to Luton as possible. It recognises the importance of its being accessible to Luton fans. It is considering the feasibility of three options for re-siting the club at junction 10, so that Luton Town football fans could still travel to the club without great cost. It is also considering rebuilding the club in the Kenilworth road area, right in the heart of Luton. As far as I am concerned, that is where the football club should be. I agree that Kenilworth Road stadium should be rebuilt. Its rebuilding, and the resulting influx of capital to the area, would be fantastic for Luton. People in Bedfordshire who have always travelled to Luton town to watch the Hatters will still do so; there would be no great change there.
I am sympathetic to the bid, because those in the consortium take an objective view on what is right for the town, the club and the fans. The bid will not go ahead unless HMRC considers the issues more reasonably. It is not in anyones interests for the club to fall and to go into insolvency or liquidation. That would not benefit any club in the UK, or the fans or the people of Luton. I hope that the Minister will seriously consider arranging a meeting with HMRC, and bringing the parties together to talk. Perhaps he could arrange and facilitate a meeting between HMRC and the Minister with responsibility for sport, the hon. Member for Bradford, South (Mr. Sutcliffe), so that they can discuss the best way forward and the best way to help the consortium.
If the consortium trying to bring Luton out of administration meets the mandatory Football League obligations by paying all football creditors in full, and other creditors a reasonable percentage of the money owed, why should HMRC object? I would like an answer on that specific point from the Minister, if possible. Why would HMRC object, given that otherwise, the outcome would be a reduction in income for the Treasury?
If the consortium is forced to reduce its offer to football creditors, the Football League will object and refuse to reallocate Lutons membership of the league, meaning that the club will be unable to play league
football, and could be forced out of business altogether. I would like the Minister to say what the 2020 consortium should do. It is stuck between a rock, or HMRC, and a hard place, or the Football League. What does he think that the consortium should do to get itself out of that position? It is stuck between one set of measures that will take it into liquidation, and which would mean that the club will fall, and another. There seems to be no way for the club to steer itself out of the problem.
Will the Minister answering the debate join forces with the hon. Member for Bradford, South, if he still is Minister with responsibility for sport? On Wednesday, I was told that a Treasury Minister would respond to this debate. On Thursday, it was to be someone who would deal with the business side of the issue. The Minister present today is the Under-Secretary of State for Business, Enterprise and Regulatory Reform. I am not sure who the Minister for sport is at present, but if it still is the hon. Member for Bradford, SouthI am not even sure whether he is still a Ministerwill the Minister join forces with him and arrange a meeting between the football authorities, the Treasury and the consortium, so that they can reach an understanding that will allow them to deal more sensitively with clubs that find themselves in the same predicament as Luton Town?
Let us set up a framework, so that when another club finds itself in the same position, it knows what to do and where to go. The situation is impossible. Fans want to save the club, and administrators and local people want to do the best for it, but it seems as though everybody else is against the club surviving. Will the Minister facilitate such a framework? We need to know where clubs in such a position can go. The same thing has happened in Leeds. I have also been contacted by Labour Members whose local football clubs have been in the same situation. We need a framework within which small clubs can operate. Football is not just about the championship, or the premiership. It is not just about the super-clubs with the big money; it is about the small clubs, too. That is where the passion for football starts.
The 2020 consortium has established a reasonable and fair offer for the Treasurythe best offer on the table. The consortium would pay off many of the clubs debts and has pledged to prioritise financial stability. I wish that other such organisations considered long-term stability when companies went into administration. Luton Town football club is bringing forward the best deal that anybody could hope for; that is why it seems all the more ironic that HMRC is refusing to negotiaterefusing may be too strong, but it certainly seems intransigent about negotiating at the moment. The offer is the best on the table to pay off debts and pledge financial stability so that the club can survive. Stability will ensure that the Treasury sees an ongoing income. If the club fails, the Treasury will get no money at all, or just 25 per cent., but a successful club will bring ongoing income to the Treasury. That makes it all the more ironic and ridiculous that the club should face closureif it closes, it will provide no income at all to the Treasury.
Will the Minister answer this specific question? Will he make representations to HMRC to ensure that the
2020 offer is accepted and the club can survive? Surely he agrees that the clubs long-term survival is paramount to all. Football is fundamentally a grass-roots sport; it is about little boys playing in the street who believe in their minds that they are playing for the Hatters when they get home from school. It is about people who walk to the match on a Saturday afternoon and about local communities and towns. Luton is one of the poorest towns in the country and it is important that Luton people have access to their football club.
The Hatters are a great team with a great past. After I attend constituency engagements on Saturdays, I frequently switch on the radio to find out what happened to the Hatters in the afternoon. Bedfordshire people either support the Hatters or their super-club and the Hatters as well. The club has a great past; will the Minister try to ensure that it has a great future as well?
The Parliamentary Under-Secretary of State for Business, Enterprise and Regulatory Reform (Mr. Gareth Thomas): I congratulate the hon. Member for Mid-Bedfordshire (Mrs. Dorries) on securing this debate and on the way she has reflected the no doubt considerable passions in her constituency about the subject. I recognise that other Members with significant numbers of Luton Town supporters in their constituencies will share some of her concerns. There are two small football clubs in my constituencythe excellent Harrow Borough and Wealdstone football clubsso I recognise that Luton Towns origins and the excellent work that it does in its community, which the hon. Lady has described, have helped to generate considerable enthusiasm for the Hatters and considerable concern about the clubs current circumstances.
For the hon. Ladys benefit, and that of the House more generally, I should say a little about the law on administration and the legal environment in which Her Majestys Revenue and Customs and other creditors are engaging at the moment. The availability of managed exit routes from the market for companies in financial trouble is an essential aspect of any mature economy. In this country, we have an insolvency regime that balances the needs of creditors with those of the insolvent company or individual. Underpinning that regime is a targeted enforcement process, which ensures that those who have been reckless or dishonest are dealt with appropriately and that their ability to damage the interests of creditors is restricted.
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