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Westminster Hall

Thursday 9 February 2012

[Mr Dai Havard in the Chair]

Football Governance

[Relevant documents: Seventh Report of the Culture, Media and Sport Committee, Session 2010-12, HC 792, and the Government Response, Cm 8207.]

Motion made, and Question proposed ,That the sitting be now adjourned.—(Greg Hands.)

2.30 pm

Mr Dai Havard (in the Chair): For the benefit of people in the Public Gallery and everyone else, I should make it clear that today’s debate is about the Select Committee’s report entitled “Football Governance”, which makes recommendations to the Government, and the Government have responded. Both documents are available for hon. Members. I hope that we have a constructive discussion. I call the Chair of the Culture, Media and Sport Committee to introduce the debate.

Mr John Whittingdale (Maldon) (Con): It is a pleasure to speak under your chairmanship, Mr Havard, and to have the opportunity to discuss the Select Committee’s report on football governance. This was a substantial inquiry by the Committee. It is worth remembering why the Committee decided that this was an important issue that deserved examination. There were two reasons, the first of which was the clear commitment given by both the parties that now form the coalition Government. It was clear that action needed to be taken, particularly to assist and encourage supporters to have greater involvement in the ownership and running of football clubs. That commitment appears plainly in the coalition agreement, although it was perhaps slightly less clear on precisely how it should be delivered. The Committee thought that it might be in a position to help the Government by taking evidence, examining that question and making recommendations.

However, this was not just about supporter involvement, although that is a very important element. It rapidly became apparent to us that there was quite significant concern among hon. Members on both sides of the House about the general state of our national game. A debate in this Chamber was extremely well attended by hon. Members, many of whom spoke up about the difficulties facing their local football clubs. There was widespread concern that something was wrong with the game. Perhaps that was best summed up by my hon. Friend the Minister, who famously described football as the “worst-governed sport” in England. I have to say that in the course of the Committee’s inquiry, we did not find much evidence to contradict what he said. However, we also found much to admire and praise about English football. There is no question but that it arouses huge passions up and down the country.

As I said, this was a substantial inquiry. We received more than 100 submissions of evidence. We held eight oral evidence sessions, to hear from every component part of the game. The Committee went on a number of

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visits. We went to Manchester City football club to see the huge investment that has taken place under its new owners. They have taken the club from the bottom levels to the top levels of the premier league. We went to Arsenal to see the Emirates stadium and to meet the management there. We held oral evidence sessions at Wembley stadium and Burnley football club. We also went to Germany. Looking at Germany’s model of licensing football clubs was a particularly influential part of our inquiry. It made quite an impact on the Committee.

I will not go through the whole report in detail, because many hon. Members are present and want to contribute and I hope that most of them have already read the report and are familiar with our findings.

Paul Farrelly (Newcastle-under-Lyme) (Lab): Will the hon. Gentleman give way before he goes into the report?

Mr Whittingdale: I will of course give way to my colleague on the Committee.

Paul Farrelly: I apologise that I cannot stay for the whole debate because of constituency engagements. Does the Chairman of the Select Committee agree that the centrepiece of the report is the recommendation that the Football Association reassert its role as the sport’s ultimate governing body—in particular, through a licensing system, which he has just mentioned, and a modern, effective form of governance that would not allow, for example, the FA to be bounced into a naive renegotiation of the England manager’s contract as it was?

Mr Whittingdale: The hon. Gentleman—he is really a friend on the Committee—encapsulates the report in a couple of sentences very well. I am almost tempted to say that he has done my job for me and finished my speech. Yes, there is no question but that we felt that at the heart of the reforms that were necessary was the game’s governance structure: ultimately, the FA. I will go on to talk about that in more detail. I did not intend to talk at great length about the management of the England football team, although that is obviously a matter of great interest and debate today. I heard the Minister’s remarks during Culture, Media and Sport questions a few hours ago, and I entirely agreed with him. I am sure that the matter will crop up again during the debate.

Before I move to the report’s main recommendations, I want to pay tribute to three people. The first two were our expert advisers: Christine Oughton and Rick Parry, who provided enormously helpful experience and wise advice to the Committee. We relied a lot on their input throughout our inquiry.

The third person to whom I should pay tribute, particularly in a debate on football governance, is our late colleague on the Committee, Alan Keen. [Hon. Members: “Hear, hear.”] Alan was the senior member of the Committee. He was a member of it before I became Chairman. Football was his passion. He chaired the all-party group on football. He was very—I am tempted to say keen—eager that we should embark on this inquiry. It was a great sadness to us that, because of his illness, he was not able to play as great a part in the

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inquiry as he would have liked. He is certainly greatly missed. It is only right in a debate on football that we pay tribute to him.

Some people asked why the Committee was looking at football at all, because it is a huge success in many respects. The Premier League is probably the most successful in the world. It has an average attendance of 350,000 people each weekend and about 92% occupancy. The second league—the Football League—gets average attendances of 375,000. Some £2 billion of revenue comes into the Premier League. There is no question but that the top English clubs are watched not just throughout this country, but in almost every country in the world. It is hard to go into a bar in any country and not see a screen in the corner showing the premier league. To that extent, it is hugely successful. There were those who said, “In that case, why are you bothering to spend this time looking at it? Why don’t you go off and look at other things?” But we found that there was widespread concern about the underlying state of the game. That was felt right across football and among followers of football.

Despite the huge revenues that come in, very few clubs trade profitably. The main reason for that is the extraordinary amount of money paid out on players’ salaries. The consequence is that debt has become an enormous problem throughout the game. Debt kept coming up as one of the principal issues causing concern. More than half of Football League clubs have gone into administration at some stage since 1992, and all operate on very narrow margins. The net debt of the Premier League clubs is £2.6 billion. Some people would say that that in itself may not be a problem. Indeed, there will be clubs that operate with quite significant debt, but as long as they can service that debt and trade, it is not necessarily something that need be addressed immediately. However, there is no question but that the debt is a major issue. We were told by the chairman of the Football League, for instance, that it was the issue that kept him awake at night.

There is also concern about ownership, which is not wholly dissociated from the question of debt. That, too, was something that we considered. As the hon. Member for Newcastle-under-Lyme (Paul Farrelly) suggested, we decided that if we were to address the problem, the most important thing that needed to be tackled was governance. Therefore, we wanted to establish, right from the start—this may seem self-evident, but it was not necessarily self-evident—that the FA is the ruling body of football. The FA therefore needs to be reformed if we are to get this right.

Some years ago, Lord Burns produced an extremely good report, which made a number of recommendations for reform. When we heard from him, some of his recommendations had been accepted. They included the incorporation of the FA chairman and chief executive on to the FA board, but they were still waiting to bring on the two independent non-executive directors. Progress, I believe, has been made since then.

Terry Burns told us that, if anything, he felt that he had been too timid and that he would have liked to have gone further in involving non-executive directors. Indeed, we heard from one former chief executive of the FA that he wanted an entirely independent, non-executive

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FA board. We felt that that was not wholly realistic. We were also clear that, as in most corporate structures, the board needed to be relatively streamlined to be effective.

After some debate, we decided to recommend that the right size for the FA board was 10, and that it should include the chairman and chief executive of the FA, the two non-executives and two more of the FA executive directors—in particular, the director of football development. Alongside them, we decided that there should be two representatives of the professional game—presumably one from the Premier League and one from the Football League—and two representatives of the national game. Although we understood the reasons why others, such as supporters, players and managers, wanted representations, we felt that that could make the board unwieldy. Therefore, we felt that we had come up with the right composition.

At the same time, we also felt that there needed to be reform of the FA council, which is an extraordinary and enormous body. It dates back many years to include representatives from Oxford and Cambridge, the three separate services and the public schools, but very few representatives of players and people who actually watch football. We therefore felt that that was something that needed to be addressed. We were also slightly concerned that the meetings started at 11 o’clock and finished at lunchtime and that some of the members of the FA council seemed to have been there for 50 years or more. We felt that there was a need to address the composition of the council, the tenure of its membership and the form of its meetings. We felt very strongly that the council should be a parliament and not an executive decision-making body.

Once those governance reforms are in place, we will be able to move forward to tackle some of the underlying difficulties affecting the game. I have talked about debt, so the next is financial management. We welcomed the introduction of UEFA’s new financial fair play rules, which will affect those clubs that have ambitions to play in European matches. We felt that the principles underlying the financial fair play rules were absolutely right; they commanded a lot of support and should be applied throughout football.

One aspect of the financial management of clubs that caused considerable concern to the Committee was the football creditors’ rule. I have absolutely no doubt that my hon. Friend the Member for Folkestone and Hythe (Damian Collins) may talk about that a little more, because he particularly pursued that issue during our discussions. Although we could see the reasons why that rule was in place, we felt that it was unfair on creditors, as they were often small firms in local communities that had supported the local team. If that team gets into difficulty and goes into administration, they have to go to the back of the queue after all the football creditors before having their debts paid. We felt that that was unfair, and I am sure that my hon. Friend will say more about that.

One aspect that I have taken a long-standing interest in and that still creates significant potential difficulties is the ruling of the European Court on broadcasting rights and territorial sales, the full implications of which we are still waiting to see. It could have a very damaging effect and it is of concern not just to certain broadcasters, but to a large number of people involved in football.

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As for how we enforce the financial fair play rules and the other necessary changes, we were impressed by what we saw in Germany. Germany has a licensing model and we saw how it was used to ensure that the clubs do not trade beyond their means for long periods. We saw how they were required to follow certain rules specified by the Bundesliga. We decided that if we were to achieve our changes, we needed a national licensing scheme. The best body to administer that is clearly the FA. Therefore, the other main thrust of our recommendations was that we should move to a licensing scheme under the FA, which should address issues such as the financial management of the game, the sale of stadiums, investment in youth development and all the other areas where, understandably, concerns have been raised. It could also address ownership.

Foreign ownership in the game is not necessarily a bad thing. After we saw what Sheikh Mansour had done in Manchester City, we could understand why the fans had great banners up saying, “Long live Sheikh Mansour”. However, there are others who are less committed to the development of clubs. We also felt that the fit and proper person test, which is necessary, had not always been as effective as it might have been. Indeed, we debated long and hard about what someone had to do to fail the fit and proper person test in English football.

Mark Field (Cities of London and Westminster) (Con): My hon. Friend is talking sense on the fit and proper person test, which seems to be honoured more in its breach. Going back to overseas ownership, does he feel that there should be a different regime for football clubs compared with the rest of the UK economy? If so, how does he see that operating?

Mr Whittingdale: The truth is there will be different regimes governing the ownership of football clubs. For this particular aspect, a slightly different regime should apply. I am not against the principle of foreign ownership. Just as I do not have a kneejerk response to foreign ownership in football, the same is true of the wider economy. To some extent, there are special factors, but I am not opposed to overseas ownership per se.

Let me pay one word of tribute. When the Committee visited Burnley FC, we were well entertained by the chairman of the club, Barry Kilby. In many ways, he represents all that is best about local ownership. He was a business man who had been successful in his community and had put back a huge amount into Burnley FC. His passion for the club was undoubted. Therefore, a strong local owner can bring great benefits.

Paul Farrelly: Will the Committee Chairman extend the same compliments to Peter Coates, who is chairman of Stoke City? The Chairman may be aware that I have been supporter of the club since I was five years old.

Mr Whittingdale: I am very happy to pay the same tribute to Peter Coates. As an aside, let me say that the rest of the Committee used to enjoy having a sweepstake on how long it would take the hon. Gentleman to mention Stoke City during our deliberations. I am glad that he has done so today.

The issue that I want to finish on is the one that we set out to address, which is that of supporter ownership and involvement. It is a crucial factor, and the Government

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are right to say that it should be encouraged. It is unrealistic to say that the top Premier League clubs are likely to be owned by their supporters, but there are some clubs lower down that are already supporter owned and more should be done to help supporters’ trusts that want to become owners. For example, there was some concern about the way the Financial Services and Markets Act 2000 operates. It causes difficulties for supporters, and we thought that the Government might address that. We thought that when supporters’ trusts have minority stakes, there might be some merit in giving them protection, so that if a club is acquired and the 90% threshold reached, they are not necessarily forced to give up their ownership to the new owner. There are several areas where we would like clubs if not formally to give a role to supporters, to involve them much more in decision making and with information.

One club that we visited, and whose supporters are extremely involved through the fanshare scheme, is Arsenal. When the Minister appeared before us, I raised the fact that Arsenal’s new owner had not then given a public commitment to support the fanshare scheme. My understanding is that he has still not done that, and I think the Minister said that he might encourage him to do so. That is an example of an active supporters’ organisation and how it can play a valuable role if the club ownership recognises it.

Mr Nigel Dodds (Belfast North) (DUP): I am grateful to the hon. Gentleman’s Committee for the work that it has done in this area. The recommendation for a fan liaison officer is a good idea. Supporters up and down the land are crying out for that. Can the Chairman of the Committee offer any hope that that might be made to happen?

Mr Whittingdale: I think that that is a matter more for my hon. Friend the Minister than for me, but I certainly agree that it is something to be encouraged, and that fan liaison officers can play a valuable role. I am sure that my hon. Friend will touch on that.

I thank the Minister for the Government’s extremely positive response to the report. He could not have done more to make it clear that they want its recommendations to be implemented. I think he and I take the same view that it is not desirable for the Government to legislate, but that the matter is so important that if that is what must happen, it will happen. I hope that we will not come to that, and he may be able to say a little more about the state of discussions. He made it clear today that the deadline of 29 February is still in place, and I hope that all those involved in football who may be listening this afternoon will be spurred on to ensure that the sort of reforms that we think are necessary are achieved by that deadline.

Mr Dai Havard (in the Chair): Order. Given the number of hon. Members who wish to speak and the time constraint, Members should estimate to speak for 10 minutes, and plan do so for eight minutes.

2.52 pm

Steve Rotheram (Liverpool, Walton) (Lab): That is a tall order, Mr Havard. It is a pleasure to serve under your chairmanship this afternoon. I was not a member of the Select Committee at the time of the inquiry into

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football governance, but it is reasonable to argue from the tone of the Committee’s report and the Government’s response that the topic has been debated in a good spirit, and I wish to continue that. I am in the unique and fortunate position of being the only Member of Parliament to have two premier league football clubs in my constituency—Everton and Liverpool. I cut my parliamentary teeth leading a well-attended Westminster Hall debate on this very issue way back in September 2010.

Before I begin my speech in earnest, I want to take the opportunity to echo the comments by the Chair of the Select Committee about Alan Keen, and to send my condolences and, I am sure, those of right hon. and hon. Members on both sides of the Chamber to the families of the 75 supporters who were killed recently at a football stadium in Egypt. No matter which club we support, we are all part of the wider football family, and that loss is a football tragedy as well as a human one.

Football is one of our country’s undoubted successes, and we are the home of the beautiful game. We are also the home of the best and most competitive leagues in the world. Children from around the globe are dreaming about the chance to play football at Wembley, the Emirates stadium, Stamford Bridge, Goodison Park, Anfield, and perhaps even Old Trafford. Wealthy tycoons are dreaming of the Premier League promised land. They are attracted to English football as a way of investing their money and seeing the best players in the world play for their clubs to an extent not seen in other countries.

Despite the merits of other leagues such as the Bundesliga, La Liga, Ligue Une and Serie A, it is the premier league, and even the championship, that attracts international investors, because they continue to offer the best that football has. Roman Abramovich and Sheikh Mansour bin Zayed al Nahyan are the only two owners with an unlimited pot of money, and who are capable of injecting copious amounts into their respective clubs. Today, some clubs, such as Tottenham, are plcs and listed on the stock market. Others, such as Manchester United, Chelsea, Liverpool, Blackburn and Sunderland, are owned by professional sport investors. Others seem to be owned for the prestige—for example, Fulham, which is owned by Mohammed al Fayed. My hon. Friend the Member for Rutherglen and Hamilton West (Tom Greatrex) may speak about that.

However, some takeovers reinforce the point that football clubs are simply economic entities to be bought and sold like any other commodity, which completely neglects the broader social impact that clubs have in their local communities and beyond. The result for many clubs in recent times has been to chart a course that is perilously close to the brink. Portsmouth, which I think we will also hear about, ran up debts totalling £119 million, and it is still far from fiscal safety. Southend United and Cardiff City recently managed to pay their debts just before the taxman’s axe was wielded. Several other clubs have suffered administration, such as Southampton, Darlington, Crystal Palace, Wimbledon, Hornchurch and Scarborough. Leeds United, which was probably the biggest victim of all, was allowed to play in the Football League despite no one knowing who owned the club.

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In 2009, the all-party group on football found that the group most under-represented in the game was those who should have the most say—the fans. One of the biggest problems with football governance is that at most levels of the game those who pay for it are excluded from the decision-making structures in clubs, leagues and even governing bodies. In pursuit of a global phenomenon, which we have achieved with the Premier League, we failed properly to regulate our national obsession.

I do not pretend that there is a simple answer, but a major problem that needs to be addressed is the fit-and-proper-person test, to which the Chair of the Select Committee has referred. It is an absolute sham. If it were not, the majority of aforementioned clubs would never have been in the position they were because of owners who abused the system and played fast and loose with football clubs that are the pillars of communities across Britain.

Mark Field: All too often, clubs in appalling financial difficulty grasp at the nearest straw like a drowning man. There may be only one individual who can save the club, but they may not pass the fit-and-proper-person test in a meaningful way. However, if the choice is that person or the club going bust, one understands why the former choice is made, albeit one that leads to other difficulties further down the line. How does the hon. Gentleman envisage getting round that problem if the alternative is for a club to go bankrupt and to spiral out of the league, as has happened to several former league clubs in recent years?

Steve Rotheram: That is exactly the point, and I am sure that my hon. Friend the Member for Hyndburn (Graham Jones) will talk about his beloved football club, and the fact that that happens too often for the problem not to be tackled. That is exactly what the Select Committee set out to do—to consider what recommendations we could suggest on a non-party- political basis to ensure that the football authorities have to take cognisance of such issues, and include football fans in the governance of their football teams.

We cannot pretend that one size fits all, because it does not. We need a proactive approach to redress the imbalance in football governance, an imbalance that has seen some owners and directors of football clubs using them like playthings that can be thrown aside when they become bored, while the fans—the lifeblood of any club—are pushed further and further away from the decision-making process. A more inclusive approach would probably not be universally popular among football’s elite. Indeed, I spoke to one senior representative of a football club who said that he did not want the lunatics to run the asylum. I am a bit fed up with seeing fans given the rough end of the stick. They are treated by some club owners as an irritant or a problem, yet they are expected to be part of the solution when those errant owners disappear, leaving the club in financial crisis.

Supporters Direct is leading a new initiative that I think deserves more focus. It builds on the ideas and recommendations made by the Committee and on the Government’s response regarding the implementation of a new licensing framework that is impartial and independent of the reformed FA board. I welcome the changes to the FA at board level.

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It is crucial that impartiality is maintained because that will ensure total transparency, which, we will all agree, has been missing from the FA for some time. We must, however, give credit where it is due, and there have been welcome introductions since David Bernstein’s appointment. I hope, however, that the chairman of the FA will not rest on his laurels, and that he will do something about the current ludicrous situation that allows football managers to profit from the sale of players. Regardless of what has happened over the past 24 hours, that immorality remains, and if ever there were a conflict of interest, that is it.

There are two dimensions to the licensing framework proposed by Supporters Direct:

“Promotion of financial and social responsibility, and balancing of the supporting, commercial and social objectives of clubs.”

and

“To ensure that clubs and their assets are protected for current and future generations.”

Supporters Direct has stated:

“The framework for supporter and community engagement should provide rights for supporters on behalf of the community subject to conditions…Rights would be granted to a ‘Fit and Proper Supporters’ Trust’ for engagement with their clubs.”

Engagement would increase according to the degree of development of the “fit and proper” supporters’ trust. If such a measure were implemented, it would give fans a voice at the top table.

I believe that football fans would use the opportunity to nominate a trusted supporter to make informed decisions—it is the big society writ large. I am aware of some football clubs that would hold an election and offer season ticket holders, as well as club members, the opportunity to vote for a candidate on the basis of a quasi-manifesto set of pledges.

Supporters Direct has stated:

“The co-operative ownership of football clubs via supporters’ trusts thus offers huge benefits not only to the way that the game is run, but also to local communities.”

Although I recognise that there will always be a tension between financial and social returns, the football world is starting to realise that a greater balance needs to be struck. We are starting to see a yearning for the greater involvement of supporters in football governance not only in the UK, but across Europe.

Another proposal is for the reformed FA board to consider ways to increase the number of ex-footballers in boardrooms. Such a move would appease the grumblings of many fans who believe that directors are not “football people” but are out-of-touch businessmen. That is currently the case at Blackburn Rovers, a club that is rich in history and has fantastic loyal support.

Despite becoming a global phenomenon with a worldwide audience, football is not immune to external forces outside the control of its internal market. Lessons must be drawn from disasters such as the global financial crash. All bubbles have the potential to burst. Football needs a regulatory framework and a governance structure that is as transparent as reasonably practicable.

I am confident that there is the political will in the Chamber and the Department for Culture, Media and Sport to make progress. I hope that that continues, and that the Minister will take on board the strength of feeling on this issue.

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3.4 pm

Mr Don Foster (Bath) (LD): It is a pleasure to serve under your chairmanship, Mr Havard. I know that many hon. Members wish to speak, so I will try to be brief. I welcome equally the report by the Culture, Media and Sport Committee and the Government response. We should pay tribute to my hon. Friend the Minister. He has been robust in his criticism of football’s governance arrangements, and he has insisted on a response to those criticisms by the end of the month. I know he is confident that he will get a reply, and perhaps when he responds to the debate he will say what sort of content he expects that reply to contain.

We all accept that the English game is played to a very high standard, and we know that 8 million fans have already watched premiership games this season. Six premiership teams have taken part in the past 10 finals of the European championships, and we have fantastic football in this country. We cannot, however, say the same things about what takes place inside the boardroom, or the governance of the game, that we say about the quality of the playing. All too often, fans have to worry about issues such as debt and ownership, rather than performance on the pitch. Fans are losing out because of the ridiculously high price of a premiership season ticket, or because many of our top-flight clubs still do not have adequate facilities for disabled fans. Fans and clubs that want to introduce safe standing do not have the opportunity to do so, and many of the clubs that are lower in the league are in difficulty because they are obliged to adhere to ludicrously inappropriate rules such as those on transfer windows.

There is much to sort out. The predominant areas of concern expressed by the Committee were, quite rightly, those of money and governance.

Paul Farrelly: The right hon. Gentleman will appreciate the central role that football plays in communities because he is the Member for Bath, where rugby has a similar role. Does he agree that one key task for a governance regime in football is that of fostering a game where the finances are sustainable? People involved in the premiership, such as David Gill of Manchester United and Peter Coates of Stoke City, have broadly welcomed the thrust of the Committee’s report. It would therefore be surprising and disappointing if the FA, which has acted so decisively over the England captain and manager, did not welcome the reassertion of its role, and the means by which to do that.

Mr Foster: I hope the hon. Gentleman proves to be right and we will hear about the response on that issue that the Minister will receive. He is right to mention his concern for the sustainability of finance in football. As we heard from the Chair of the Committee, although debt has been declining, in the premiership it still stands at £2.6 billion. Some 68% of its income is being spent on players, rather than on other important things.

If we compare the premiership with the rest of European football, we discover that the English premiership has more than 50% of the debt held by all the leading clubs in Europe. Last season, the championship declared its highest ever debt at £133 million, and we know that it is spending about £4 for every £3 that it generates. That is not sustainable. It is vital to welcome UEFA’s proposals,

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and they will be implemented even though they will not affect all the clubs in this country. That is why the licensing proposals are so critical.

UEFA’s proposals are key. A report by Deloitte published today reflects much of what it said in its 2011 report, and points out that although there have been a lot of false dawns, the UEFA proposals may provide the key to moving forward and to financial sustainability. As it said in its 2011 report, however,

“the more things change, the more they stay the same. While football’s revenue performance has been spectacular, sustainably managing its costs remains football’s primary business challenge.”

That is a key issue that the Select Committee’s report and the UEFA proposals seek to address, which I welcome.

I also very much welcome the proposals from the Select Committee on governance of the game. It is right that the FA be the leading body for football in this country, and it must take charge of many of the deliberations that take place in the 14 different committees. It is ludicrous that so many of them report not to the board, but to the council. The key people making the decisions are therefore at a distance from the considerations of those various committees. The Select Committee was quite right to suggest that the board must be slimmed down. We should all welcome the moves to bring non-executives on to the board, but clearly more must be done to move forward and slim down.

Reform of the FA council itself is equally important. The Chair of the Select Committee has already made it clear how inappropriate the current arrangements are. I was interested in what Malcolm Clarke, the chairman of the Football Supporters’ Federation, said:

“It is impossible in a body of 118 people to have a critical challenge to the board about what it’s doing, partly because the decisions are long since passed and partly because of the sheer format of a body of that size.”

That echoes very much what the Chair of the Select Committee said, and it is crucial.

Rule 34 should be looked at again. The report fails to say very much about that and the remarks of the Chair of the Select Committee were perhaps slightly lacking for not mentioning it. Rule 34 makes it clear that football should be run like a not-for-profit company, with sport and football put before profit, and sadly I do not see that operating in spirit or to the letter.

Finally, licensing is critical. If we wish for a financially sustainable game, the UEFA rules will not cover all the clubs that concern us. The licensing proposal that the Select Committee and others have suggested is the way forward to ensure that similar rules on “fit and proper persons”, sustainability of finance and so on can be enshrined in a way that covers all the clubs in the game. I am particularly drawn, as the hon. Member for Liverpool, Walton (Steve Rotheram) is, to the recommendations of Supporters Direct on club licensing, which deserve to be looked at seriously.

My right hon. Friend the Deputy Prime Minister recently advocated the great benefits of the John Lewis model of running companies and employee share ownership, but with employee share ownership comes employee participation in governance. It seems vital that those who are key funders of the game have a much

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greater involvement in the governance of the game that they help to fund. There are real benefits to a stakeholder model of corporate governance, which is why Supporters Direct goes through the all the key things in its proposals, but also talks about how supporters can play a key role in the governance of individual clubs as part of the licensing proposal.

I said that I would try to be quick and I hope that I have been. This is an important report, but what will matter most is not what is in it or the Government’s response, but, critically, what the FA does with it. It must now get a grip on the governance and the finances of this crucial part of the culture of this country. So far, it has failed us. Let us hope that this time it will do something about it.

Mr Dai Havard (in the Chair): Ten minutes with an intervention. Exemplary, Mr, Foster.

3.14 pm

Tom Greatrex (Rutherglen and Hamilton West) (Lab/Co-op): I will endeavour to do as well as the right hon. Member for Bath (Mr Foster) in keeping to time.

I declare an interest as a founder of the Fulham Supporters Trust, which was long before I ended up in this place. I have knowledge and awareness of the issue from being involved in and running that trust, with a huge amount of support and guidance from Supporters Direct, which is a superb organisation that should valued. I hope that when the football authorities respond to the Minister, they will properly have taken into account its proposals on licensing, which my hon. Friend the Member for Liverpool, Walton (Steve Rotheram) dealt with in some detail—I will not repeat them. I unashamedly stand here to talk about the interests of supporters. Whatever the future licensing regime, it is imperative that it involves and incorporates the views of supporters, who are in many cases the lifeblood of the clubs in which they are involved.

I congratulate the Chair of the Select Committee, the hon. Member for Maldon (Mr Whittingdale), and the other Committee members on the report; it is fantastic. He is obviously chairing a very high-profile Committee, which has lots of other issues to deal with. The report is at least as important as—if not more important than—anything else that the Committee has done this Parliament. It is crucial that we deal with the issue, and I join the hon. Gentleman in paying tribute to Alan Keen. I knew him for a long time before I entered the House; I used to see him when Fulham played Middlesbrough, and he was unfailingly cheerful even after we had beaten them. His work for the all-party group on football in years gone by helped to develop the awareness in Parliament of some of the issues in football ownership that have led us to where we are now, so it is absolutely right that those tributes have been paid.

There have been ownership issues at many clubs. I was thinking earlier that we could go through a list and find very few that have not had concerns about ownership to deal with at some point, but it is striking that, with very few exceptions, most have survived. I contend that in many cases they have managed to do so due to the involvement of supporters, not all the way through in running the clubs, but because they have got involved when everyone else has walked away. We see that again

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and again through football history. The most prominent early example of that is probably Charlton Athletic in the early to mid-1980s, when they were effectively left homeless and nomadic. It was the fans’ involvement in the Valley party and everything else that eventually got them back to the Valley and into a sustainable position where they became a very renowned community club, as they still are, even though they have fallen a couple of divisions on the field.

Tom Blenkinsop (Middlesbrough South and East Cleveland) (Lab): Another club in a similar situation in 1986 was, of course, Middlesbrough, which was fortunate enough to have a very wealthy supporter in Steve Gibson, a local fan and local businessman, who is highly regarded across all the English football leagues. Has my hon. Friend looked at paragraphs 43 and 44 of the Government’s response to the report? There are quite a number of points of consensus across both sides of the House on Supporters Direct’s proposals, but the real issue is whether Supporters Direct has adequate funding to ensure that there is a network to help supporters’ trusts in future.

Tom Greatrex: My hon. Friend makes an important point. I have raised it with the Minister in relation to Supporters Direct’s previous funding difficulties. It does a huge amount of valuable work and we should be able to come up with a way to enable it to continue its work supporting and guiding supporters’ trusts, often when clubs are in crisis and trusts are seeking to maintain them at very difficult times.

Mark Field: Although I accept that an engaged supporters’ base that can play an integral role in ongoing development is fantastic for any football club, does the hon. Gentleman recognise that it is not entirely a panacea for all problems? There have been examples of supporters’ trusts that have not worked terribly well—Stockport County, for example. Without the requisite expertise on top of the enthusiasm of a supporters’ base, it can often go horribly awry.

Tom Greatrex: The hon. Gentleman is perhaps in danger of straying into the territory of Ron Noades a few years ago, who said, “Fans can’t do it and probably aren’t able to do it.” I am not saying that fans should be running clubs 100%. The Chair of the Select Committee is right to say that we would not have every club completely run by supporters, but if fans are involved, they can often help to stop making the mistakes that led to the position that Stockport were in. They were in that position because of mismanagement before the supporters’ trust was able to take over. In that case, it was very difficult for the supporters’ trust to be able to rescue them. If we look at other examples, Exeter and Brentford have managed to help turn things round. My hon. Friend the Member for Mitcham and Morden (Siobhain McDonagh) will no doubt wish to speak about AFC Wimbledon, where they started from scratch. We should never underestimate the ability of football fans from all walks of life, who have a club in common, to get together and make things happen.

The main point that I want to make about football fan involvement in the running of clubs is that it should not happen at the point of crisis. It should not be when everyone else walks away, or when owners have mucked it up and decided that they have had enough and walk away.

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Graham Jones (Hyndburn) (Lab): My hon. Friend is making a powerful argument on behalf of supporters. It can be seen in its purest form with FC United of Manchester, a club that started from nothing. It is building a multi-million pound stadium and gets regular decent attendances.

Tom Greatrex: My hon. Friend mentions another good example, of which there are many. FC United formed a club on the basis of issues around ownership of Manchester United and the takeover by the Glazer family. It would be much better if supporters were involved not at the point of crisis—not when everyone else walks away —but on a sustained basis. We have seen such examples. The Chair of the Select Committee mentioned Manchester City. In Scotland, the owner of Heart of Midlothian effectively persuaded fans to give up their shareholding and give it all over to him, because he had a great plan that was going to be the salvation of the club. Now look at the position they are in. That has happened on more than one occasion. The sustained involvement of fans will be much more valuable to the interest of clubs in the medium and long term, despite the difficulties and the misjudgments that different owners may make.

The other point that I want to make—again, it was in the Supporters Direct proposal, which is important—is about grounds. In many cases, football grounds and stadiums have strong links with the communities that the clubs serve and with the clubs themselves. Too often in the past we have seen situations in which teams end up, through different ownership structures, being separated from the grounds or moving out of their grounds for other reasons, and that creates all sorts of problems. As a Fulham supporter, I know about that. At various times we have come close to losing our ground, largely because the potential value of the ground’s real estate is higher than the value of running the club. That is due to an accident of geography—where the ground is.

There was a period in the mid-1980s when Fulham, Queens Park Rangers and Chelsea were owned by a property development company whose interest was not anything to do with the three football clubs, but to do with the potential value for development on those sites. At one point we were going to merge with QPR, but that got stopped. In 2001, the current owners of the club that was referred to earlier thought it would be a great idea for Fulham to move out and have a new ground near White City. In the end, that did not happen, partly because of the views of supporters who were able to persuade the club that its judgment was wrong. However, I am pleased to say that that position has changed and we are now on the same side as the club. Supporters are back at Craven Cottage and will hopefully be there for many years to come.

We need protection in the football licensing set-up that stipulates a club cannot leave a ground unless it has somewhere else to go.

Andrew Bingham (High Peak) (Con): What does the hon. Gentleman think about those lower down the football pyramid in the lower league level? I am thinking of a team such as Witton Albion, which he is probably not familiar with. They sold their ground, and as part of the sale they got a brand-new ground, which was a great facility that could be used by the community. What does he think about that? I take his point on the higher levels, but what about the lower levels?

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Tom Greatrex: The hon. Gentleman has anticipated my next point. If a club has somewhere to go and has plans in place, that is fine. There are plenty of examples of clubs that have moved and got new grounds. I am reminded of Manchester City and Bolton. I am concerned about clubs that are left high and dry without a ground. Not being allowed to leave a ground without somewhere else to go would be an important protection. When clubs are separated from their grounds, it causes huge difficulty.

I am conscious of the time. I have not managed to do as well as the right hon. Member for Bath. I will conclude by saying that I think the Committee’s report is superb and it should be congratulated. I also want to compliment the Minister. Whenever I have asked him about these issues, he has always been forthright in his opinions and in his views on football governance. He is absolutely right. I hope that the response that he gets from the football authorities at the end of this month will be good and comprehensive and that it deals with the issues. If not, I hope that he has the courage to go back to the football authorities and say that that is not good. I hope that we get the right system in place for the future of football in this country.

Mr Dai Havard (in the Chair): My only disappointment, Mr Greatrex, is that you did not mention Merthyr Town, which is my club. It is now a community club. It has gone through many of the same things. Welsh clubs who play in the English league have an interest.

3.26 pm

Penny Mordaunt (Portsmouth North) (Con): My apologies to hon. Members. In addition to being the home of Fratton Park, Portsmouth is home to the surface fleet, and I am due to speak in the debate on Somalia.

I thank the Select Committee for an excellent report. Its conclusions are sound and its arrival timely. Portsmouth football club has been poorly served by its successive owners, and it is a prime example of why we need reform in football. It has been badly abused, but it is worth saving. Much has been said about the social value of the club.

I want to thank all hon. Members who have been helpful and supportive towards Portsmouth. At this time, we do not know what the future holds, but the grim situation is checked with a mass of good will, and the professional approach that the supporters’ trust and the fans are taking in response. Our club has a future, and for the first time it has a well-run supporters’ trust that is keen to have a financial stake as well as a governance foothold in the club.

At the end of last year, I sat down with members of the trust and listened to their frustrations. Despite being able to lever considerable funds, they could not get access to the financial information of the club or see the administrator. On my quick and dirty maths, they were being asked to demonstrate that they had access to funds five times the amount that the club was worth before they could even start a dialogue. They have managed to talk to the administrator, but they are still not being taken seriously. The administrator has even gone to Portsmouth city council, which we all know does not have deep pockets, to ask for help, yet they are ignoring the community, which can demonstrate that it has considerable funds. That illustrates the considerable culture shift that is needed, and that I hope the report will help.

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Given that it is in everyone’s interests that Portsmouth is sold to new owners—ideally, in my book, to a coalition of businesses and supporters who are genuinely interested in Pompey—it is a frustration to me that the dialogue that would make that outcome more likely is being frustrated. Today, I hope we can send a clear message to all those who hold sway over a club’s future, especially administrators and Her Majesty’s Revenue and Customs, that this Parliament wants everything that can be done to ensure that the businesses survive. We would want that for any business, and I am sure that many of us in this Chamber have gone in to bat for businesses and individuals to sort out their tax affairs. We should not shy away from doing the same for football clubs. I also argue that these businesses are a special case. The point that I made to the Prime Minister last week was that if a supermarket folds, someone can go and buy their carrots elsewhere. If Portsmouth goes under, the fans will not be content with buying their season tickets from another club.

We also need to recognise the social value of clubs. The Portsmouth study centre is an award-winning education facility and it was a pilot site for the national citizenship programme. Its health outreach programmes are also exceptional in a city that has poor health and education outcomes. Add to this the community cohesion, the bridge it creates between generations and the sense of place and identity that it brings and we soon realise the impact that its absence will have.

There is, however, reason for optimism. I congratulate Pompey fans on recently forming the Portsmouth Supporters Trust, and on the unity they have shown in pushing for a greater role in the governance of their beloved club. I have been struck by their professionalism—ably supported by the wonderful Supporters Direct— their knowledge and how they have conducted themselves. There should be no concerns about their ability to respect confidentiality and develop a bid, and reassuringly they are considering several scenarios on how they can contribute to Portsmouth’s survival, including a community buy-out. Time and a level playing field are needed if the fans are to contribute, and I am sure that the report will go a long way to creating the latter. The report contains both practical measures for a more pragmatic approach to such a crisis, and measures to prevent one from happening in the first place.

I know that Pompey fans would want me to mention the appalling fit and proper person test, which has so badly let them down.

Paul Farrelly: I am making brief interventions in lieu of a speech. I am sorry, Mr Chairman.

Mr Dai Havard (in the Chair): You will get pinged if necessary, Mr Farrelly.

Paul Farrelly: Does the hon. Lady agree that Portsmouth is the most recent case in point in which a licensing model that applied a rigorous “fit and proper” test would have produced a wholly different outcome? The Football Association could use its licensing power to encourage not only the formation of supporters’ trusts, but their access to administrators, by making it clear that it is most likely to favour bids that involve registered supporter organisations.

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Penny Mordaunt: I absolutely agree. It is an amazement to Portsmouth fans, who after just 10 minutes on Google have discovered that someone should not be anywhere near their club, that somehow that person is allowed to become an owner of it.

The other issue that the fans would want me to mention is the creditors rule. I shall not steal the thunder of my hon. Friend the Member for Folkestone and Hythe (Damian Collins), but I will pay tribute to the staff at Portsmouth football club, who have done a lot of work in repairing the damage that was done by the rule the last time they were in this situation. They have worked very hard to rebuild both trust and the support of local businesses and charities.

We must all keep the pressure on for reform. I am pleased that tomorrow morning Her Majesty’s Revenue and Customs will be back around the table with Portsmouth football club, but I sincerely hope that we get a result from the dialogue. If it fails, the supporters’ trust and all in our city will rally behind a community buy-out, and I would welcome the Minister’s views on that and his support. I take this opportunity to praise his involvement. We all agree that he is a genuine champion for the reforms, and I welcome the Government’s response to the Committee’s report.

Finally, I want to say that Portsmouth will survive. We all know that a club’s true and unique value lies in its fans; the question is how. Whatever course of action the trust and the fans take will be greatly strengthened by the report’s proposals and strong message. We must, therefore, all get on with implementing the report’s recommendations.

3.33 pm

Siobhain McDonagh (Mitcham and Morden) (Lab): My contribution to the debate is from the viewpoint of a fan of one of the clubs that has been most adversely affected by poor football governance over the past quarter of a century. Some 24 years ago, a team that had been in the Football League for only 11 years beat probably the best team in Europe—[ Interruption. ] It’s not going to get any better, is it? The Dons of Wimbledon beat the mighty Liverpool in one of the FA cup final’s greatest giant-killings. In the words of the great John Motson:

“The Crazy Gang have beaten the Culture Club.”

My dad, a proud Wimbledon season ticket holder, and my sister, who is known to many Labour Members, were there. That weekend was one of the happiest of their lives. When we attended the civic reception the following Sunday, my dad embarrassingly took his autograph book along and got the signature of every member of the team. Because of my line of work and that of my sister, my dad has had the opportunity to meet many great famous people, but that was the first and last time he took along his autograph book.

Clubs such as Wimbledon have enormous meaning to people—not just to my dad and my family, but to the whole community I live in. As we now know, however, great joy was eventually to turn to great anger and frustration. Just three years after that win, the club left its home at Plough Lane in 1991 and never returned. The owner, Sam Hammam, persuaded Merton council that Plough Lane was unsuitable for top-flight football, which required all-seater stadiums, and that he should

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be allowed to leave while a new stadium was found. As a former Merton councillor, my biggest regret is that we accepted his word. Wimbledon began a ground share with Crystal Palace at Selhurst Park in Croydon and never returned.

I like to think that if proper licensing of football clubs had been in place then, supporters would have had a greater say over the move, and that that would have made all the difference. Instead of returning, Sam Hammam sold the club, and Plough Lane was turned into blocks of flats. Worse still, in 2001 the club’s new owners announced that they wanted to move to Milton Keynes. Despite opposition from fans of not only Wimbledon, but virtually every football team in the country, and from many MPs and even the Football Association, which blocked the move twice, in May 2002 an independent commission gave the move the green light. That decision was the end of the road for our Dons, but it could have been prevented with proper licensing of football clubs and genuine supporter involvement on the boards.

The case of Wimbledon is relevant not only because we want to prevent such a thing from happening again, but because we can learn from what happened next, and use our experience of the aftermath to learn how communities can be enriched by genuinely inclusive, supporter-run football clubs. What happened next is the remarkable story of AFC Wimbledon. When it was agreed that Wimbledon could move all the way to Milton Keynes, most fans, including my dad, simply stopped supporting the club. As a result, it went into administration even before it had moved up the M1. Supporters could have reacted with anger alone—justified anger—but instead they did something remarkable. A group of fans met and decided to set up their own team, owned by the fans and rooted in the local community—a club of which they could be proud. In June 2002 they held open trials on Wimbledon common, and cobbled together a team in just a few weeks. They quickly found somewhere to play—Kingsmeadow, just over the Merton border in Kingston—and persuaded the Combined Counties Football League to let them enter its competition.

What has followed has been astonishing. The ground has been packed for virtually every home match, and after five promotions in nine years the team has made it all the way to the Football League, playing good football, the right way, and winning the Fair Play award year after year. The club is owned by the Dons Trust, a supporters’ group, which has pledged to retain at least 75% control of the ownership, and it has been the model of a good community football club. It has a genuine commitment to community sport, and the chief executive, Erik Samuelson, is nothing short of fantastic. Until recently, his pre-match ritual was not living the high life in the boardroom, but directing cars in the car park. He is typical of fans who paint the ground, sell programmes and do all the other essentials.

The review of governance will not only stop clubs going the way of Wimbledon, but be an opportunity to ensure there are more clubs like AFC Wimbledon. We need to ensure that it is not possible for clubs to just up sticks and leave the communities that support them, and we must make it clear that the future has to be based on genuine relationships between clubs and the communities in which they operate. The Supporters Direct formal licensing model would have prevented

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Sam Hammam and his successors from ruining our community’s club, and new rules to give rights to supporters on behalf of the community will strengthen clubs such as AFC Wimbledon and encourage more to behave like it. I therefore support the proposals for a fit and proper supporters’ trust to engage with each club. In my view, the trusts should have basic rights to information, including financial information, and rights to meet club executives. It should be mandatory that any fundamental change to a club, such as the sale of its ground or a move to a different part of the country, must first have the agreement of the fit and proper supporters’ trust. I also hope that we can prevent clubs from assimilating other clubs’ identities.

I hope that all Members with an interest in not just football but the power of community will want to join me in saying how proud we are of AFC Wimbledon, and how pleased we are that the club has risen to the Football League. This is an opportunity to say: let us support the model of clubs such as AFC Wimbledon, and prevent clubs from collapsing, as Wimbledon did.

3.39 pm

Mark Lancaster (Milton Keynes North) (Con): Perhaps it is appropriate that I, as a Member of Parliament for Milton Keynes, have the opportunity to follow the hon. Member for Mitcham and Morden (Siobhain McDonagh). I shall be brief.

I commend the hon. Lady on the passion that she showed for AFC Wimbledon. Certainly, I would hate to see this debate descend into a rivalry between two clubs. Perhaps one thing that we can agree on is that whatever the process, we now have two thriving football clubs out of it, and perhaps we should focus on that.

In the brief time available, I want to focus on three things. First, I want to put on record the timeline of the move. Much of what the hon. Lady has said is correct, but she has failed to mention a few gaps, which I think should go on the record. Secondly, I want to celebrate the economic success that Milton Keynes Dons has brought to Milton Keynes. Finally, I fear that I have some bad news for the hon. Lady, as I will explain why her campaign to drop the word “Dons” is set to fail.

The hon. Lady was quite right: the last game that Wimbledon played at Plough Lane was in May 1991, and the club was moved as a result of the Taylor report. That was the last time the club played in Wimbledon, some 21 years ago. I cannot comment on Sam Hammam—I do not know the man—but I take the hon. Lady’s word for what happened in that period.

In July 2001, the Wimbledon board confirmed that it would pursue the relocation to Milton Keynes, 10 years after the club left Wimbledon. In August 2001, Wimbledon wrote to the Football League to seek permission to relocate to Milton Keynes, but the league rejected the request. Interestingly, at the time, Merton council, of which I believe the hon. Lady was a member, produced a report equating the task of finding a home for the club in the borough as

“achieving the impossible in a densely built up urban area”.

In April 2002, the Football League received a further letter from Wimbledon, and on 27 May 2002, the Dons Trust was formed to develop an alternative club—that

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was before the announcement to move to Milton Keynes was made. On 28 May 2002, the independent Football Association commission met and said:

“Our decision is that, in light of its exceptional circumstances, WFC should be given approval to relocate to Milton Keynes…We do not believe, with all due respect, that the Club’s links with the community around the Plough Lane site or in Merton are so profound, or the roots go so deep, that they will not survive a necessary transplant to ensure WFC’s survival. What is unusual about WFC fans is that they do not seem to come from a single geographical area. Indeed, the vast majority of WFC fans do not live in Merton or Wimbledon. 20% of current season ticket holders live in Merton and 10% in Wimbledon. We do not accept that WFC will die if the Club relocates”—

of course, we have seen evidence of that. The commission continued:

“The Club has been in Croydon for 11 years (almost half its Football League history). There is no stadium which is a focus for the community in Merton, and has not been for 11 years.”

Mark Field: People will remember that Arsenal, although now based in north London, started its life in Woolwich, south of the river. Queens Park Rangers obviously was not based in Shepherd’s Bush for quite some time. I am afraid that the logic of that argument is that it gives a green light to any would-be owner to think, “I will relocate for a few years, and then we can franchise the club to a different part of the UK entirely.”

Mark Lancaster: There is a strong parallel. In 1913 the owners of Arsenal, Henry Norris and William Hall, moved the club away from Woolwich Arsenal and in the following year dropped the word “Woolwich” from the name to just “Arsenal”.

In June 2002, AFC Wimbledon was formally established by the Dons Trust, and I congratulate AFC Wimbledon on its success in the past 10 years. However, as a result, crowds fell at Wimbledon from an average of 6,961 to just 2,787, placing Wimbledon FC into even further financial difficulties.

In June 2003, Wimbledon went into administration. The administrator decided that the only possibility to keep the club alive was to pursue the relocation to Milton Keynes. In the same month, Milton Keynes council stepped in and supported the community element of Wimbledon FC by employing staff who had been made redundant by the administrators and paying their salaries. The London borough of Merton made no attempt to continue the community side of club. In September 2003, the first game in Milton Keynes at the Hockey stadium against Burnley was played; I was there.

The administrator moved Wimbledon to Milton Keynes. No approach was made by supporters of Wimbledon to take the club over, and no support was given by the London borough of Merton to Wimbledon FC.

Siobhain McDonagh: I hope that my contribution was in no way unpleasant or anti. I congratulate MK Dons on its fantastic success at the moment, with its great young manager and its great chairman, Pete Winkelman. My point was about what had happened in our local area and how people felt about it. It does not in any way indicate a suggestion that I do not want the MK Dons to do well, although I might like them to change their name; “MK City” might be a better name, as it would fully represent the city—the town is likely to become a city—and the area.

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Mark Lancaster: I accept the hon. Lady’s point, but unfortunately I will seek to disappoint her on the issue with the name; we will get to that shortly. Equally, I am not seeking to offend anyone. We simply have two successful clubs now, and perhaps we should focus on the future.

Mark Field: Will my hon. Friend give way?

Mark Lancaster: I will not, because that is not fair on other hon. Members, and I have given way to my hon. Friend once already.

In July 2004, Inter MK brought Wimbledon out of administration and the name was changed to “Milton Keynes Dons FC”. That was approved by the Football League without any comment. The community staff transferred to Milton Keynes Dons from Milton Keynes council after the support from the council. Since then, we have had a fantastic new stadium, which next year will achieve elite status from the Union of European Football Associations at championship level. We have had great success at the club, winning the Johnstone’s Paint trophy and the league two title. Only today, MK Dons has been unveiled as the Coca-Cola community club of the year for the south-east.

The move has been successful, and the club is of enormous importance to the community. The introduction of professional football has supported huge economic activity, with active public policy support and partnership but no public money. We have seen inward regeneration investment of £250 million. Some 3,500 full-time jobs have been created around the site of Stadium mk. More than £10 million has been invested into the local transport and other civic infrastructure.

In addition to MK Dons matches at all levels, there have been special events in the new stadium, including two England under-21 internationals, two full internationals involving the England’s women’s international team, three Heineken cup rugby union games, including a semi-final, an Aviva premiership rugby game, and even a JLS pop concert, which I confess I did not go to. It has been a success story.

While the hon. Member for Mitcham and Morden rightly praised the community work of AFC Wimbledon and elicited support from the Minister in her Adjournment debate, it is worth noting that the community work of MK Dons has been established over a shorter time frame to an even greater success—this is no disrespect to AFC Wimbledon—engaging some 55,000 people directly, including the piloting of the Government’s national citizenship service programme, the championing of apprenticeships in MK and a disability scheme that offers support to more than 250 people with a disability. As I have already mentioned, only today we have been announced as the community club of the south-east.

I shall briefly touch on the hon. Lady’s campaign to drop the word “Dons” from the name. The overwhelming majority of MK Dons fans want the club to retain its name. It is now part of our history, as can be seen from the Johnstone’s cup and the league two championship. When the Queen came to open our stadium, it was there as the MK Dons stadium, and at no point was there ever an agreement not to use the word “Dons” in our title.

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I have already mentioned that, subsequent to the move of the club to Milton Keynes in 2003, the patrimony of Wimbledon was transferred to the London borough of Merton in 2006 after the signing of an accord. The accord was an arrangement between the MK Dons FC, the MK Dons Supporters Association and the Wimbledon Independent Supporters Association. Its purpose was to transfer the honours obtained by the original club to the London borough of Merton, not, it must be said, to AFC Wimbledon. However, during the negotiations, the MK Dons agreed that the trademarks related to the old Wimbledon, such as the badge and the term “Crazy Gang”, could be passed on to AFC Wimbledon by the London borough of Merton in return for dropping the call from the Wimbledon contingent that MK Dons should drop the “Dons” element of the club’s name. Indeed, apart from the accord itself, an e-mail dated 10 September 2006 from Ross Maclagan, the Wimbledon Independent Supporters Association secretary, confirms that.

Although I am sure that this is not the case, there is a feeling among some in Milton Keynes that we are attempting to renegotiate the accord signed in 2006. I must therefore say to the hon. Member for Mitcham and Morden that the feeling in Milton Keynes, given the signing of the accord, is that we will be keeping the name MK Dons.

3.50 pm

Graham Jones (Hyndburn) (Lab): It is a pleasure to serve under your stewardship for the first time, Mr Havard. I declare an interest as a season ticket holder at Blackburn Rovers, where I have been attending regularly since 1978. Blackburn’s proud 137-year history and status as a founding member of the Football League are under significant threat due to the risks of poor foreign ownership. The club is in a sorry state, finding itself in the firestorm of the foreign ownership debate. I hope that lessons can be learned from my contribution.

Over the past 14 months, the club’s proud history has received little respect from its new Indian owners, Venky’s London Ltd. I must apologise at this stage; I was supposed to be joined by my right hon. Friend the Member for Blackburn (Mr Straw), who wanted to concur with a lot of what I am going to say. I would like that noted on the record.

The club’s sale by the Jack Walker Trust to the Indian company Venky’s in November 2010 has been followed by a series of damaging headlines, shock resignations, instability and regression of the club’s fortunes on and off the field. More recently, elements within and connected to the club have engaged in a damaging PR campaign against supporters that has been confrontational and, in my view, has highlighted significant failings of the owners, the manager and his expansive role and associated parties. They are at the centre of the shambles that is currently Blackburn Rovers, a club held up and respected by the football industry as an example of one of the best-run clubs in the premier league. Weekly protests, a plummeting league position, huge losses, dubious transfers, escalating agents’ fees and—more pertinently, and against league rules—the suggested involvement of agents in the running of the club have all undermined its authority and management.

I put on record the comments of Alex Ferguson, who seemed to echo that final point about the role of agents in football clubs. The role of the board of directors is

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now unclear, and their authority is now negligible or, at worst, undesirable. That is far removed from the mirage painted by the new owners: a Shangri-La of increasing transfer budgets, Champions League football and the promised continuation of a stable and well-run club.

The situation at Blackburn Rovers opens up a new set of questions about football governance, transparency, the fit and proper person test and the undermining of the Premier League itself. What concerns me and many supporters is the role of Jerome Anderson, a leading football agent, and of Steve Kean, manager and, more significantly, Anderson’s client in the running of the club under the Venky’s governance arrangements.

Following Rothschild’s failed attempt to sell the club, Mr Anderson was brought in to find a new buyer, and found Venky’s. After that takeover, he became an adviser for Venky’s at Blackburn Rovers. In his own words, that involved sleeping and eating at the training ground and advising and helping during the transfer window of 2011. I remind the House that rule H8b of the football agents regulations governs the behaviour of agents and their organisations and prohibits them from having an interest in a club, which includes

“being in a position or having any association that may enable the exercise of a material financial, commercial, administrative, managerial or any other influence over the affairs of the Club whether directly or indirectly and whether formally or informally.”

It could not be clearer.

Anderson has stated on his own website and reported on the Sky Sports website:

“In January 2011 I was requested by the owners to assist the club during that transfer window…At the conclusion of the January 2011 transfer window I ceased to assist Blackburn Rovers Football Club in any capacity and I can confirm that I have not had any role or influence in their transfer policy or any other business of the club whatsoever since that date.”

I wish to draw Members’ attention to a leaked letter signed by the former and respected chairman John Williams, currently employed by Manchester City, his equally able assistant Tom Finn and the finance director of Blackburn Rovers. The letter says:

“Finally, our Football Secretary”

at Blackburn Rovers

“has, this morning, been instructed by SEM”—

the company with which Jerome Anderson is involved—

“to issue a mandate to a third party without any reference or approval from the Board. We are not familiar with the player concerned nor is he one that has been mentioned to us by the Manager. Could you please, therefore, clarify the role of SEM in our transfer policy?”

That letter was sent to the owners last January. I will draw further on its contents later.

Those decisions have led to the resignation of an experienced and highly regarded set of administrators, risking the club’s ability to manage its own affairs. Notable and of grave concern is an agent’s admission that he has been involved in decision making within the club, that that has allegedly involved instructions to the club’s directors to make payments to third parties, and that the manager connected to that agent and given overall responsibility for all affairs at the club—on and off the field and above the board—has a conflict of interest.

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Mr Dai Havard (in the Chair): Order. May I advise the Gentleman? I need to be careful about privilege. I understand what he is saying, but I am listening carefully. Quoting from published material is fine, and I note the word “allegedly”. If he carries on with caution, I am happy, but I am listening carefully.

Graham Jones: Thank you for that advice, Mr Havard. I respect your latitude. The letter has been published in several national newspapers and online, just for clarity.

Mr Dai Havard (in the Chair): It must be true, then.

Graham Jones: It is more than alleged; I think it is probably true, as nobody has come out and disputed it.

Clearly, there is a significant risk that Blackburn Rovers will regress rapidly while its owners have little understanding of football and the whole management of the first team and club administration rests with an individual as unqualified and inexperienced as Steve Kean. Mrs Desai, the club’s apparent owner and quasi-decision maker, confirmed in the Lancashire Telegraphthat Mr Williams did not get on with manager Steve Kean:

“I know that he did not get along with Steve (Kean) and he had struggled to accept Jerome (Anderson)’s role at the club.”

Ian Battersby, a well-known supporter and local businessman, flew out to meet Venky’s in Pune, India. Blackburn Rovers football club is just one of 170 subsidiaries in the Venky’s group. Each has a business head who reports directly to the Venky’s board. In the case of the Rovers, that appears to be Steve Kean. Ian Battersby said:

“The notion of a board executing the owners’ plans on a day-to-day basis is a complete anathema to them and many of our problems flow from that…We have a sporting director who nobody would know if they were sat next to him, and that’s a high-profile job allegedly responsible for player recruitment. We have a deputy chief executive—but no chief executive—whose effectiveness is, in the circumstances in which he operates, negligible.”

I place on record the manager’s statement that he had an irrevocable confrontation with the outgoing manager and that important questions persist about his involvement, as a client of Jerome Anderson, in a coup to oust the former manager, Sam Allardyce, bypassing the board of directors. None of that serves the club well.

Questions remain whether proper due diligence took place and whether Mr Anderson or his associates had a predetermined managerial change in mind and were interested not in the club’s assets and liabilities, but in first-team managerial contracts. The FA must look into it. What we do know is that the current board tasked with the responsibility of managing the club seems powerless to act in the best interests of the club. Serious questions now have to be asked about the owners’ ability to manage an English premier league club; their awareness of Premier League rules; their future intentions for the club; whether foreign business practices bring the club into disrepute; and whether such practices should be prohibited within the framework of the Football Association Premier League’s fit and proper persons test.

Recent financial accounts have resulted in further destabilisation of the club, and newspaper reports have claimed that the club’s bank, Barclays, has initiated steps to protect its liabilities. Recent club accounts detail losses accrued up to June 2011 of £18.6 million; the previous

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year’s loss was only £1 million. The club’s value while it is in the English premier league is approximately £40 million. According to newspaper reports, Barclays is protecting its liabilities in the club by reducing credit facilities and discouraging asset sales of high-value players. In other words, the bank is determining transfer policy. That practice is not new. John Williams stated a year ago in his letter to the owners of the club:

“Brian Foreman from Barclays Bank is attending the Liverpool game tomorrow and has asked for a catch up meeting with us before the match. He will inevitably ask about our plans for the transfer window and at the present time not only are the Board unaware of these but it has been made clear that we will not have any input into the strategy. This is unacceptable and not in the best interests of the club.”

Why were Blackburn Rovers purchased by Venky’s? Were they purchased to promote football or to promote chicken burgers? Worryingly, during this period, fees paid to agents have risen approximately threefold. The £475,000 transfer of Ruben Rochina carried an additional agent payment of £1.65 million, which was during Jerome Anderson’s admitted involvement. Despite an alleged defensive injury crisis, an out-of-contract 28-year-old, Bruno Ribeiro—described by the manager as the next Denis Irwin—who had no caps and little top-flight Brazilian experience, was given a three-year contract and has yet to make a single appearance in the team or on the bench. Myles Anderson, who is Jerome Anderson’s son, was brought in despite having made only one appearance in the Scottish league. David Goodwillie, who is, to quote the manager, “the next Wayne Rooney,” was brought in from Scotland.

What has been destructive in this spiralling vortex is a smear campaign by the manager, his agent and other clients, which is aimed at ordinary Blackburn Rovers fans who seek only constructive dialogue with the club on the subject. To my knowledge, there have been no arrests or public disorder during the protests, which have always been conducted with the full consent of the police and dialogue with the club. The protests were suspended for seven matches to facilitate positive discussions, but those discussions have not taken place. Three pre-arranged meetings between the manager and organisers have been cancelled by the manager or by the club, the authority over which lies with the manager.

The Premier League is culpable in allowing the current trend of foreign ownership to continue without suitable safeguards; we have heard about Liverpool, Manchester United and Portsmouth. I welcome the comments of the Select Committee Chair that one can drive a coach and horses through the fit and proper persons test. That is clearly the case. This is coming from a completely different angle from Manchester United and Liverpool, and it should open our eyes to how we deal with football governance matters. As Mr Battersby, the Blackburn businessman, states:

“We hear an awful lot about the sham that is ‘fit and proper’…This is a major industry we are talking about here—it’s worth billions globally and there has to be something akin to licensing of owners. How can someone wing their way into the UK, take ownership of a club and within 12 months destroy a community? The warnings of Portsmouth, Notts County and now Blackburn must be heeded.

If the same had happened at Jaguar or similar, there would have been outrage in the House of Commons and yet we sit and watch this happening. In essence, the Premier League are watching one of their member clubs get savaged and haven’t batted an eyelid. It is nonsense.”

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Venky’s management of Blackburn Rovers has raised a number of broader questions about the corporate governance of premier league clubs. The FA must look beyond its current ownership rules at arrangements for licensing prospective owners. Those arrangements must include, as Mr Battersby recommends, stricter compliance over financial strength and track record; the quality and strength of the management team; experience of delivery in the sector; the feasibility of the business plan and strategy; and corporate governance. There would need to be provision for the submission of quarterly or half-yearly accounts in addition to the annual ones. The fit and proper persons test in this case has failed. Dialogue with supporters has failed, because the owners have resisted all communication and have neutralised the board’s involvement.

I conclude with another remark from Mr Battersby:

“137 years of football heritage has been decimated inside 12 months. It is like watching a slow motion car crash.”

[Sir Roger Gale in the Chair]

4.5 pm

Damian Collins (Folkestone and Hythe) (Con): It is a pleasure to serve under your chairmanship, Sir Roger, in this important debate. We have heard a lot from both sides of the Chamber about the report and about people’s experiences of their local football clubs. It is clear that when football and football clubs fail, fans bear the cost, which is why we take the matter so seriously. Because football plays such a fundamental role in society—football in Britain is an expression of the country in which we live—it is right that Parliament take a view on some of the issues that are highlighted in the report. Those issues affect the whole of society and not simply the administration of a football club or a football competition.

Mark Field: I can understand why many in the footballing fraternity might think it is not necessarily Parliament’s place to opine in the way that we are doing. Not only do we have an interest on behalf of our constituents, but we have a fundamental financial interest. The British footballing industry was on its knees during the mid-1980s after a series of disasters, hooliganism and, ultimately, the Bradford City fire, which led to the Taylor report. A huge amount of public money has gone, and continues to go, into the game. That is one of the reasons why it is appropriate for Parliament to have a say on the matter.

Damian Collins: I agree with my hon. Friend. When we have foreign ownership and we do not know who the owners are; when we have a largely unregulated transfer market bringing billions of pounds into and out of the country, which is largely unknown and uncontrolled at its source; and when communities bear the cost of the financial failure of a football club and taxpayers bear the loss through unpaid tax bills, Parliament should take an interest. We do not seek to take away someone’s right to run their football club badly. That is beyond the control of Parliament. The report of the Culture, Media and Sport Committee and the debate have thrown up legitimate public interest concerns, however. The events of the past seven days demonstrate that the Football Association has an obligation to be the moral guardian of the game in this country, not simply the administrator of football.

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I am sure that hon. Members support teams in their constituencies at all levels. I am a lifelong supporter of Manchester United, but one of the most exciting football matches I have ever watched was when Hythe Town beat Staines Town last season to qualify for the first round proper of the FA cup for the first time in its history. That was the first time in more than 50 years that a side from the Kent league had qualified. That is a single competition in which a club in the Kent league can compete alongside clubs that are competing in the Champions League. When multiple clubs are playing in multiple formats and competitions, there must be a single governing body that can have some oversight over the whole of football in this country. That can only be the Football Association, which is the guardian of the game in all competitions.

I praise the chairman of the Football Association, David Bernstein, for taking a stand on the John Terry affair. David Bernstein rightly accepted that the captain of the England football team has a position in public life in the country, and millions of sport fans look up to him as a role model. If his position is put into question by a criminal charge that has been made against him, although he is not guilty of that charge, while doubt remains about his role it is not appropriate for him to be captain of the England football team. If the manager of the England football team, Mr Capello, could not accept that ruling, it was right for him to stand aside. Although we might not have wished for the outcome of the past seven days—the removal of the captain and the manager—the course of events was inevitable. It was right for the Football Association to take a moral lead on the case, and I commend it for doing so. There are real financial concerns about the administration of football and clubs in this country, and a real concern about the lack of powerful oversight and intervention. There are many areas of concern, and hon. Members have touched on a good number. I will limit my remarks to three issues—club ownership, the football creditors rule, and player ownership and the player transfer market.

During our inquiry the fact that Leeds United was owned by a trust whose investors were not known was highlighted, together with the fact that Mr Ken Bates was employed by that trust to be chairman of the club, but did not know who the owners—the investors in that trust—were. No one in football in this country believes that Ken Bates did not always control that club. There is no other way in which he could suddenly have completed the purchase of it within days, without any kind of tendering process, and assumed ownership. He blamed the political obsession of the Select Committee, which was simply standing up for the legitimate interest of Leeds United fans to know who owned their club, for its interest in Leeds United. Many hon. Members have spoken about the role of the fit and proper person test. How can that test be applied if we do not know who the person is? That has been a recurrent problem for the football authorities, and shows that the test, which should function as a guardian, works only if the person who is being investigated is the owner, and if that can be proved beyond reasonable doubt.

Graham Jones: On that note, does the hon. Gentleman think that somehow the fit and proper person test could include stupidity?

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Damian Collins: The test is designed to make it possible to understand whether someone is a capable administrator, without criminal convictions, but also whether they have no conflicts of interest in the game, such as stakes in other football clubs that might give them a biased view in competition and an unbalanced view in the operation of the transfer market. “Dispatches” on Channel 4 highlighted the case of investors in the far east seeking to invest in British football clubs and taking multiple stakes in them by using different businessmen and personas to make the investments, beyond the football authorities’ ability to track them. That undercover report was an important piece of work, and it highlights some of the issues and the test’s failures.

Mr Foster: The hon. Gentleman constantly refers to the fit and proper persons test. Does not that draw attention both to the concern of many hon. Members that football clubs are often in the hands of an individual and to the merits of greater supporter involvement, which would spread the load and the responsibility and would be a more sensible way forward?

Damian Collins: I completely agree with my right hon. Friend that it is a good thing for supporters to have that interest, but if they do not control the club, and the controlling interest lies with another party, they should have the right to understand who that is, and the source of the finance. That is crucial. I made some inquiries of the Football League about the ownership of Coventry City. It transpired that it is owned by an investment trust—a private equity firm. It is not known who the investors in that trust are. The Football League had to concede to me that to this day it does not know who owns the club.

Tom Blenkinsop: The hon. Gentleman is making an excellent point and a valid argument. I want to praise the Government, who talk in points 40 to 42 of their response about allowing supporters to have representatives on club boards, but there would be a trigger point. What type of trigger point would he see as tenable, in allowing more clarity and transparency in club boards by allowing the fans in?

Damian Collins: The hon. Gentleman makes a good point. I shall come on to my views on the solution to the problem, but many clubs in Coventry City’s position will have a management company—a holding company that runs the club—and a supporters’ trust may have a seat on that board. However, that is just a holding company. The ownership of the club is somewhere else completely, and that management company may not know who the owner is. It may deal with a businessman who represents the owners, but it may not know who the owners are.

I recently had conversations with a businessman who was involved in running Sheffield Wednesday from the moment it went into administration through to the period when it was taken over by Milan Mandaric. He described a series of potential investors coming forward, some of whom used fake names and identities. When non-disclosure agreements were signed, it turned out that the principal investors were based in the far east and were not who they originally seemed to be. The impression is created of a murky world where no one is quite who they say they are. People running clubs in this

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country who seek to sell them to a foreign investor to raise funds for the club may not know who they are dealing with.

When I wrote to the Football League about Coventry City, I had a reply from Nick Craig, the director of legal affairs, who made a telling point:

“We have for some time expressed our concerns as regards investment vehicles (often offshore) and the issue of the lack of transparency surrounding ownership of them. Indeed we have previously sought assistance from DCMS and HMRC in that respect but to no avail. We are left in a position where we can regulate and seek to require clubs to comply but are reliant on self-declaration with no official means of independent verification.

That the proliferation of offshore investment trusts means we will never always be 100% certain in all cases but we continually assess the appropriateness of our rules in a changing environment.”

There is not very much comfort there for any football fans concerned, because the Football League is saying that if a company is registered offshore and it buys a British football club, it does not have the authority or power to know who owns the club.

The Select Committee report contained a request to the Government for a retrospective examination of the Leeds United case. That would require powers beyond those of the football authorities to inquire what was the source of the finance to purchase the club out of administration, how much Ken Bates paid for it and where the money went, so that we could determine who controlled the club’s source of finance, even if it was impossible to determine who the owners were. The source of finance will take us to the owner of the club.

Graham Jones: The hon. Gentleman is generous in giving way, and makes an excellent point, which I want to add to, as well as supporting the Minister’s position. What would the hon. Gentleman say about a club such as Blackburn, however? The board exists, but it is being bypassed; the manager is directly responsible and flies out every month to Pune in India to run the football club. What would happen if the supporters’ trust sat on the Blackburn Rovers board? It now has no role within the club. Is that an issue that concerns the hon. Gentleman? How would he deal with it?

Damian Collins: I am grateful for that comment, but I will make that the last intervention that I take, if the House does not mind, as I want to make a few other points. I said at the beginning of my speech that I do not think it is the role of the House or the Government to stop people running a football club badly. It would be difficult to legislate that a club now in private ownership should be majority owned and controlled by the supporters, even if the supporters might want that. As the report says, the Government should—they have stated in their response that they will look at this—make it as easy as possible for supporters’ trusts to be set up, so that such representation exists, where the club wants that.

As to ownership, I do not have a problem with clubs being owned by foreign investors. If people want to spend their money on football in this country to improve facilities and the quality of competition, that should be welcomed. However, there should be a clear register of any individual, with any investment in a football club, no matter how small, and that information should be available. I would push for it to be publicly available, but it should at least be available to the football authorities. In response to what the Football League said to me

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about Coventry City, if a football body—the Football League, the Premier League or whatever it is—cannot be satisfied about who the owner of a club is, it should stop that club competing in its competition. It should not necessarily be for the football authorities to chase round the world trying to find the owner of a club. If the club cannot demonstrate it to the satisfaction of the competition, it should not be allowed to take part.

A way to carry out that policy would be to request clubs, perhaps as part of the licensing scheme, to allow the football authorities to inquire of their bank what the source of funding is, and who the club’s owners are. The bank should make that information available, and if it cannot or does not, the matter should be passed to the Financial Services Authority. The ownership of clubs is not just a matter of football competition. If money is being channelled in by businessmen whose identity is not known, that should be a matter for the tax and financial authorities, as it would be in any other business.

I want to make a couple of points about the football creditors rule, which other hon. Members have touched on. As the chairman of the Football League said when I questioned him in the Select Committee, there is no moral case to justify the fact that, when a football club goes into administration, the local printer who prints the match programmes or the local building firm that does ground maintenance should get 1p in the pound for its debts, while a football club at the other end of the country or a multi-millionaire footballer get their football debts paid in full. That is wrong. The taxpayer loses too, because owed tax is not covered by the football creditors rule. That is the subject of a court case between HMRC and the football authorities. If that is not resolved, it should be a matter for legislation, and the House should resolve it. There is no moral case for that state of affairs, and we should move on.

On player ownership and player transfers, concerns have been raised that third-party ownership of players, although outlawed in this country, is still part of the game. A magazine, Tipsbladet, in Denmark, published an article this week that raises concerns about third-party ownership. Players are channelled through clubs in Denmark and, ultimately, on to the premier league. Funds that seek to own and control players have a financial interest in moving those players between clubs. That financial interest is greater than the interests of the player, or the club he may go on to on an intermediary basis.

Bloomberg’s news website also raised a concern last week about what it called “letterbox companies”, which are set up for a matter of days to loan money to a football club to purchase a player, and are then closed down almost straight away. It highlighted a case with Porto, in Portugal, where companies set up in this country had loaned money—non-bank lending—to FC Porto to buy players. Those companies were then shut down straight away, making it almost impossible for the authorities to identify where that money had come from.

The flow of money in football is an issue of the utmost importance, and one that we touched on in our report. The football authorities have to get to grips with the matter. The Government should consider it in their response to our report, and in their consideration of the response of the football authorities at the end of the month.

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4.20 pm

Mark Field (Cities of London and Westminster) (Con): I congratulate my hon. Friend the Member for Maldon (Mr Whittingdale) and his Committee on producing such a detailed and comprehensive report on the state of governance in our national game. I am the vice-chair of the all-party parliamentary football group, and I associate myself with the comments of other hon. Members about our late friend Alan Keen and all the work that he did.

I am a lifelong football fan, and in the past 20 years since the foundation of the Premier League, English football has undergone a massive transformation. Rather than continually attacking FIFA—I am glad that we have not really spoken too much about the national game, but there has a campaign against FIFA, particularly in the aftermath in December of the Football Association’s failure to secure the World cup, either in 2018 or 2022—we need to examine seriously the governance of the domestic game. There should now be a pledge from both the Football Association and the Premier League to put their houses in order urgently. True fans of the national game have become increasingly dismayed—as we have heard from hon. Members—at the cynical culture of illegal payments, opaque ownership and disregard for the grass roots of the game in recent years, as global TV money has dominated.

As has been said, half, perhaps slightly more, of all premier league clubs are now foreign-owned, and an increasing number of sides in the championship are attracting wealthy investors from overseas. However, as the report points out, a majority of clubs are still owned by a local business man on a philanthropic basis. Foreign ownership itself is not a problem if we have a robust fit and proper person test. Many will recall that Manchester City has not had an easy path in this regard. In 2007, they were bought by the disgraced former Thai Prime Minister, Thaksin Shinawatra. As we heard from my hon. Friend the Member for Portsmouth North (Penny Mordaunt), Portsmouth had no fewer than four owners in a single season before entering administration in 2009-10. Manchester United and Liverpool have both been subject to highly leveraged buy-outs from US owners. That model is highly risky and is not supported by the vast majority of fans or, indeed, by the Premier League.

There is a risk of chronic overreaching by clubs. I fear that the reckoning—the same can be said for much of the rest of the economy—is yet to come. Under all types of ownership model, this has led to a massive inflation in the cost of running a football club, which has usually impacted most profoundly on loyal, long-standing fans who find themselves priced out.

Asset stripping is highly detrimental. The separation of a football club from the ownership of their ground often spells long-term financial disaster. We have heard that that was the genesis of many of the problems for Wimbledon in 1991. My hon. Friend the Member for Milton Keynes North (Mark Lancaster) is not here, but one of the lessons of the phenomenal success of AFC Wimbledon is that the franchising model need not necessarily be one to which we should aspire. It took eight long years—in the scheme of things, quite a short period—for Wimbledon to move their way right back up that pyramid into the Football League. If there are to be such instances as Milton Keynes—a new town

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with a large population that is not traditionally served by a nearby football club—I hope that that will be a lesson for the future. Outside the Football League, Darlington have high-profile problems, having fallen into administration only this season. They are now subject to a bid for a community takeover.

It must be acknowledged, as other hon. Members have, that on occasion the football authorities are faced with the choice between allowing a bad owner to complete a takeover, or a club simply no longer existing. Football League clubs tend not to disappear, with the exception of Aldershot 20 years ago. However, often when they lose league status oblivion follows very quickly—one thinks of Maidstone United, Scarborough and Rushden & Diamonds. With that in mind, the Football League, rather than the Premier League, has led the way in recent years in improving the good governance of football in this country. Many measures that began in the Football League have since been adopted across English professional game.

A number of hon. Members have mentioned the owners and directors test, so I will not go over old ground. On players’ wages and the issue of debt, average wage spending per club at the advent of the premier league in 1992-93 was £4.5 million, which was 44% of turnover. That has since risen in the past 20 years to an average of £1.3 billion—68% of turnover. Deloitte and Touche suggests that 60% would be a prudent number. Wage spending is at its most corrosive in the championship, where it amounts to 88% of average club turnover. Championship clubs together made an operating loss of £133 million in 2009-10, and their aggregate debt hit £875 million in summer 2010—£36 million for each club.

Premier league clubs generally make an operating profit until financing and player trading costs are taken into the account. By contrast, each division in the Football League—championship, league one and league two—has collectively lost money. In total, debt across the 92 clubs stands at a £3.5 billion. Those staggering numbers really do put in doubt the future sustainability of our game outside the premier league, with all its wealth in its current format. Football League clubs are a vital pillar in all our communities and they play a vital role in developing young players, not just for our national team, in a professional and competitive environment.

One problem is parachute payments, which make getting into the premiership such a strong financial inducement. The pressure on clubs to succeed is perpetuated by parachute payments, which are paid over a four-year period after a club is relegated from the premier league and are worth £48 million in total. The justification is that it provides insurance to promoted clubs to allow them to be competitive in the premier league. The downside is that clubs have to be in the premiership only one in every five years to have such untold wealth coming their way. It therefore provides a perverse incentive, providing artificial support and allowing clubs to spend money that they have absolutely no hope of raising naturally. That distorts and undermines the integrity of the championship and, by extension, the rest of the football pyramid. There is no provision forcing clubs to use parachute payments to honour existing player contracts, for example, or to pay down debt. They can instead be used, and often are used, to finance the purchase of new players in a winner-takes-all gamble to win promotion.

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On financial sustainability, currently, all clubs must include divisional pay clauses in player contracts that indicate what the player would be paid in each division, if he were to play in them, in each term of his contract. A salary cost management protocol was introduced as long ago as 2003 for league two, limiting club spending on player wages to 60% of turnover. That limit was reduced to 55% this season. Clubs provide budgetary information to the league, which is updated as the season progresses. Any player registrations that take clubs beyond the threshold are refused. The protocol has proven successful, with the vast majority of clubs in the division spending less than 45% of turnover on players’ wages. League two’s operating losses fell from £9 million to £8 million in 2009-10. I am very pleased that league one clubs are shadowing the protocol this season, with a 75% limit of turnover in place, although at this juncture there are no sanctions for clubs. Next season, the threshold will reduce to 65% with firm sanctions in place. The limit will fall again in future years.

I understand that the Football League is in discussions with clubs in the championship regarding the introduction of UEFA-style financial fair play measures based on a kind of break-even model. That is much needed if championship clubs are to bear the brunt of some of the premier league-induced wage inflation without the requisite TV money to absorb it.

Damian Collins: My hon. Friend mentioned the UEFA scheme. Does he share my concern that a report published by FIFPro this week, based on a study of players in the former Soviet republics in eastern Europe, showed that the salaries of 40% of the players it surveyed were paid not by the clubs that they play for, but by another party?

Mark Field: Yes, I share many of those concerns. I suspect, I am afraid, that at some level, even within our own professional game, there are similar problems.

Other hon. Members want to speak, but I hope that I have a few moments to say a little about sporting sanctions, which have caused considerable angst within the footballing community. The Football League pioneered the use of sporting sanctions, with a mandatory 10-point penalty applied to any club that enters administration. I strongly support the sanction, because it protects the integrity of the competitions by ensuring that clubs do not gain a competitive advantage, not just by going through insolvency, but through overspending in the years before that.

I understand why many fans are upset by the sanctions, particularly fans of clubs such as Luton Town and Plymouth Argyle, which have dropped rapidly through the divisions as a result of not just a 10-point penalty, but often more punitive penalties. In a sense, the new owners and loyal, much put-upon supporters find themselves left to pick up the pieces, although they are not responsible for many of those past misdemeanours.

We have not discussed agents’ fees to any great degree today, and there is also the issue of publication. The abolition of the minimum wage 51 years ago and the Bosman ruling, fundamentally, in 1995 have so massively tilted the power away from clubs to the players. It has gone from one terrible extreme of indentured play to the other, where the players have the whip hand. They have so much power that their agents can now extort

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huge fees. Although it is easy for the footballing fraternity —the FA, the premier league and even the Football League—to accuse agents of being at the core of all these problems, they often have a symbiotic relationship with agents, some of whom may be on their side, as the hon. Member for Hyndburn (Graham Jones) said specifically in relation to Blackburn Rovers, although that applies within many other clubs as well.

I am keenly aware that other hon. Members want to speak. Payments to HMRC have already been discussed by other hon. Members. On FA governance, as we know, the Football Association was created in an Olympian, Victorian age. In fairness to Oxford university, it won the FA cup a few times in the 1880s, which is probably why it still has representation to this day, but clearly this is not a sensible body to go forward as a 21st-century model for running our national game.

Given the commercial explosion over the past couple of decades following the emergence of the Premier League, which I have mentioned, one has to wonder how the FA in its current form can have any influence. In many ways, the Premier League has, again, been complicit in this and has colluded and been happy to allow the FA to take quite a lot of flack for elements of the governance concerns that we have addressed today.

The FA will need to change its culture to understand that it alone is there to enforce the rules and policy agreed by the whole game. The overall direction of football in this country should now have significant input from the Premier League and the Football League—not as a takeover, but as a partnership. Just think how much more successful even a relatively traditional FA could be with more input from the acknowledged day-to-day leaders in the leading tiers of global club football. A change in the culture will see the FA participate alongside the rest of the football family in creating policy with more of a focus on oversight, which is close to all our hearts.

Hon. Members have mentioned having more independent directors. Such directors would have an important role in examining the game’s policies at a board level. More power should be handed to them and to expert executives who will initiate the policies.

The Government are keen to avoid having an independent regulator for our domestic national game. Football must accept that, if many of these proposals are not acted upon, working together with footballing organisations, an independent regulator may be a sanction. I am interested to hear what the Minister has to say about that. This subject has probably been a headache for him, knowing that he is, in truth, much more of a professed player of cricket and rugby—more than just a fan—but I suspect that football takes up a huge amount of his time.

This report will play an important role as a stepping-stone to ensuring that the national game, which all hon. Members have close to our hearts, will thrive in the years to come.

4.38 pm

Dr Thérèse Coffey (Suffolk Coastal) (Con): It is a pleasure to serve under your chairmanship, Sir Roger, and that of Mr Havard, the previous Chair, who probably prefers the oval ball, but accepts that the round ball game—the beautiful game—touches all four nations of the United Kingdom. I am delighted that three of those nations have been represented in the debate at some point.

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I thank other Committee members. For a football fan, this was a fabulous inquiry. The hon. Member for Liverpool, Walton (Steve Rotheram) was a bit gutted not to be on the Committee at the time. However, he should take credit for having been part of the main inspiration for the inquiry in that seminal debate in Westminster Hall some time ago. I hope that he is proud now to be part of the Committee that was able to put the report to the House for consideration.

There is no question but that football is probably our most successful export. I appreciate that Sepp Blatter thinks that the Chinese invented football, but I firmly believe that it is the English version of the game that has gone around the world. Indeed, we seem to be importers of talent nowadays, but our game is no worse for that. The extent of professional football here goes far beyond anything we saw in Germany, in terms of the number of teams and the quality of football, as the right hon. Member for Bath (Mr Foster) mentioned. That is reflected in the fact that we have had such success in European competitions.

Success perhaps eludes the three lions. Of course, we all hope to put that right in 2012 in Poland and Ukraine, and in Brazil in 2014. But as I will mention later, that is one reason why the Committee felt that it was important to do something about football governance.

I will try not to repeat too many things that my hon. Friend the Member for Folkestone and Hythe (Damian Collins) said and I will try to develop a few different points, but I echo his tribute to David Bernstein. I ought to say that I am parliamentary fellow to the FA at the moment, so this is not being done in an attempt to get free tickets for any game, or anything.

I was looking at the evidence from 29 March 2011, when the Committee visited Wembley stadium to take evidence from the FA. At that time I brought up the issue of governance and Fabio Capello’s contract. All I can say is that David Bernstein’s responses that day gave me confidence, as did his actions, in respect of exactly what happened with the captaincy of England—and in the situation in the past 24 hours.

David Bernstein has persuaded the council, the shareholders and other board members to bring on two new independent non-executive directors. That has happened and already they are making a contribution to the board. Give credit where it is due, despite the fact that he is a Manchester City fan. As we all know, we can be very tribal in the main Chamber, but we are all here for the greater good of football.

Steve Rotheram: Does the hon. Lady agree that the FA still needs to do more to become fully inclusive? An FA board needs to reflect all society and include, for instance, people from different socio-economic and cultural backgrounds and minority ethnic groups and perhaps even women.

Dr Coffey: Of course, one of the new independent directors is a woman, which was a little bit of a surprise, but I was delighted that a lady with a pedigree at Millwall is already making a contribution at the highest level of the game. Kelly Simmons is in charge of the national game and does a great job working with communities.

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A lot has been said about the ownership of football clubs and financial fair play. I was keen to ensure that the model of a significant owner was not condemned as a particularly bad thing. I say that because that is one reason why we are able to have so many clubs throughout the country. I do not want to come across as patronising, because I was born in Wigan and grew up in Liverpool and have always believed that it was working man’s philanthropy. Others ensure that their theatre keeps going or donate to the Royal Opera House and there is no greater thing than to keep a local football team going. I do not pretend to be an Ipswich fan. I always want them to do well. But whether it is Marcus Evans at Ipswich Town or the infamous Delia Smith, saying, “Come on, let’s be having you,” up at Norwich, it is important that people invest in something that is critical to their community.

Everyone is worried that the huge amounts of money coming in have skewed the field somewhat, and financial fair play will go a long way towards addressing that. I am impressed that the owners of Manchester City have basically put equity into their finance, as opposed to loans—that is a good thing—and it has to some extent shaken up the premier league. However, when the rules are introduced we must ensure that there are no loopholes, which we saw in Germany, when okay money has not been invested—a €100 million sponsorship deal for a particular team was the way of getting money in, and it went straight through to the profit and loss.

Damian Collins: My hon. Friend is making an important point. She is referring to the loan made by Gazprom to Schalke. Such informal financial arrangements might, potentially, confer some influence over the running of the club, which people could find concerning.

Dr Coffey: That might well be true, but I do not pretend to speak on behalf of Schalke. There are, however, some interesting, tidying things to be done, which financial fair play needs to take account of.

The involvement of supporters was part of the coalition agreement. Before the previous election, the three main political parties each had an element on how to get supporters more involved. Supporters Direct has been working hard to see how supporters can get involved. I support its bronze-level approach of ensuring that every team has a liaison officer or a trust, so that there is appropriate interaction with the club. To be honest, supporters having a veto on the sale of assets is a little unrealistic, although many will take advantage of the Localism Act 2011 and designate certain places as community assets, which might be a useful step. We have also seen fans getting together and buying their club—most recently in Wrexham, where a lot of my family live and where I fought the election in 2005. That is something to be welcomed, to keep it afloat.

Some interesting points have been made. Someone wrote to me from Arsenal, concerned about the illiquid market, although there is a supporters’ trust and a “fanshare” scheme. I cannot necessarily come up with a solution, and it might just be the nature of trying to raise finance in these times. Indeed, Spurs was taken off the stock market last month, because of the restrictions on how to get additional investment into the club. Something that the Government can easily do, therefore, which I am sure the Minister will confirm, is to amend

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the Financial Services and Markets Act 2000. Supporters’ trusts could then come together, whether through industrial and provident societies or community interest companies, and get over those silly bureaucratic hurdles, which were not meant for such community organisations.

Other colleagues have already talked about licensing. I must admit that the whole concept seems contrary to classic English law. Under the Napoleonic civil code, on which most continental law is based, people are permitted to do something—that is how the legal basis operates—whereas our basis is that people can do anything they like unless we legislate to say that they cannot. Licensing would change that, and at first I was a little unsure about it, but eventually I was persuaded that it is the right thing to do to provide stability in the football family. The Premier League and the Football League have already moved considerably to try to address some such points in their terms of practice, whether paying PAYE and national insurance on time or ensuring enough liquidity to operate for the next 12 months. The formality that we saw in the German league probably is appropriate and should put fans’ minds at rest.

We are interested, however, in the future and in the money that sometimes struggles to get down to the grass roots. The 50:50 rule has already been mentioned, and my understanding is that the national board are happy to leave it at that—I suggest leaving that option open. The investment that has been put into St George’s Park is fantastic. I was lucky enough to go up there only this week to see it. I cannot believe that it will open in September—perhaps I am too used to debating Network Rail and things taking a year and an eternity to be done. That is a genuine vision of how to put in place the coaching that we desperately need. Again looking across to Germany, after it had a disaster in Euro 2000, it set about a 10-year plan, which has proved rewarding. I pay tribute to David Sheepshanks, a former member of the FA board. He happens to be a constituent of mine, but credit is due to him for taking that vision along and making it a reality. Long may that continue.

Coming on to the structure of the FA, as has been explained we have the FA council, the shareholders and the board. Credit is due again for the two non-executives, which is quite a change of view by Mr Roger Burden, who back in March last year was yet to be persuaded of the case for two independent directors. I am pleased that he changed his mind and with the vote in favour. The right hon. Member for Bath has already mentioned the committee structure. Our recommendation is imperative: that all committees should report to the board, rather than to a mixture of the board and the council, simply because we end up with the board effectively not being able to run the FA even though it has been given that direction by the council. That change is imperative, and I hope that the FA council will take it firmly on board.

Coming on to other things such as the proposal for term limits, I understand that many felt that that was an attack on people who are very good for football. To be blunt, such people have been there in all weathers, painting the lines, coaching the young kids and running the teams, out there in the freezing cold, and they will be thinking, “Why is a bunch of MPs telling us that we can’t stay on our council?” It is not about that. Absolutely, those people deserve full recognition; I have been out with Suffolk FA and local community clubs, and football would not survive without them.

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If only the professional game were involved, we would not have that same emotional connection. However, given the role of the council, changeover of people is appropriate for governance. The reason we came up with 10 years was simply that the chairmanship of a Select Committee in this place is two terms of five-year Parliaments. That is where it came from—[ Interruption. ] We talked about it, didn’t we? We thought about how to ensure changes of governance as well as continuity, helping the organisation to look at itself. I understand fully that many people rightly deserve a little reward once they have been serving the FA for some time as a volunteer, and that should continue, but fresh blood is also useful. Likewise, older or longer-standing Members of the House hopefully recognise the value of change at an election, when we get new Members.

On that note, although we have had some interesting discussion, such as a spat—dare I say it—about Milton Keynes or Wimbledon, the debate shows the strong emotion that we have about our beautiful game, our national game. I hope that football fans at the FA recognise the opportunity to put our game on an even better footing. Long may the celebrations continue for Euro 2012.

Several hon. Members rose

Sir Roger Gale (in the Chair): Order. I will call Mr Bingham next, then the two Front-Bench spokesmen. I understand that Mr Whittingdale may wish to make a few closing comments. As they say, do the math, please.

4.48 pm

Andrew Bingham (High Peak) (Con): I shall attempt to be as brief as possible. As ever when speaking last in such debates, a lot of things I wanted to say have already been said.

Football has seen great changes over the past 20 or 30 years: the advent of the premier league; the European championships in England in 1996, which I remember invigorating the nation with football; the Bosman ruling; pay-per-view television; and subscription television. Those changes have revolutionised the game. There has been an explosion in transfer fees, players’ wages, admission costs and corporate hospitality. The beautiful game of yesteryear has very much become the commercial leviathan of today.

The days when the chairmen used to count the gate receipts around a table after the match are long gone; they now deal in reaping the best sponsorship deals, the sale of shirts, negotiating image rights or perhaps preparing the prawn sandwiches so beloved by Roy Keane over at Old Trafford—the list goes on. I may be appearing to paint a rosy picture of halcyon days, with baggy shorts, flat caps, Stanley Matthews galloping down the line—I am a little disappointed that the hon. Member for Newcastle-under-Lyme (Paul Farrelly) is no longer present to intervene about Stoke City—or George Best swerving around defenders.

I am not implying that things are not what they were—the game has been improved immeasurably in the past few years. It is a faster game, it is wider and with a more inclusive audience. Indeed, even Mrs Bingham has been known to go to the odd game in the past.

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We have not talked about the growth of ladies’ football—there has been phenomenal growth up and down the country. In addition, modern football stadiums are much better than the ones that we used to have. Even someone of my tender years remembers the old football grounds. People were jammed into them, and they had inadequate toilet facilities and so on. I remember going to the last game at the old Wembley stadium and thinking how old and archaic it looked compared with the new and modern grounds.

[Interruption.]

I cannot comment on Bath City. I have to admit that I have never been to Bath.

The point that I am trying to make is that football has changed immeasurably from what it used to be. Apart from the basic rules of the game—give or take tweaks to the offside rule and one or two other things—it is a completely different business from what it used to be. Many of the changes have been for the better, but the question that I ask is whether they have brought it closer to the football fan, the man in the street, the supporter. It is still the beautiful game, but is it still the people’s game? Some may say that it is not, but it is still our national sport. As we have heard, it is watched by thousands of people each week, yet the distance between the players and clubs and the fans seems to have grown larger than ever.

The Select Committee report is a fabulous piece of work. I wish that I were a member of the Select Committee, because being involved in this inquiry would have been a labour of love for me. The report makes many recommendations, but one that caught my eye was the one in which it urged more involvement by clubs with supporters, through trusts or consortiums. The Government have agreed with that. Indeed, the Government response is equally good: they state their belief that football clubs are stronger when they have supporters

“at the heart of the club”.

I agree with that.

I would not seek to draw like-for-like comparisons between non-league football and the heady heights of the premier league. A club such as Manchester United cannot replicate the homely atmosphere of somewhere such as Buxton football club in my constituency, but I do look at local non-league clubs and the way they work. I am a particular fan of non-league football, sad as that may be. I used to be on the committee at Buxton. I think that I have been watching the team since 1971. The team plays at what is reputed to be the highest football ground in England—I can promise that it is one of the coldest, particularly at this time of year.

We also have New Mills football club and Glossop North End. Glossop is one of the oldest football clubs in the country. It is a former member of the first division. If Sir Roger will permit me a little self-indulgence—I do have an eye on the clock—I will tell hon. Members that it was formerly chaired by Sir Samuel Hill-Wood, one of my predecessors as Member of Parliament for High Peak. To this day, his family are still involved in football. His grandson is Peter Hill-Wood, the chairman of Arsenal. His grandfather left Glossop when they were relegated, and came down to Arsenal. Arsenal’s fortunes went one way—and Glossop’s have not quite gone the same way as Arsenal.

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All those clubs have people at their heart. Many people work in a voluntary capacity, but they are also at board level. We have heard hon. Members today talk about people sweeping car parks, selling programmes and so on. That supporter involvement creates a strong club with a happy atmosphere. When Glossop reached the final of the FA vase in 2009, the whole town was gripped by it. When the team came back on an open-top bus, it was just like Manchester United coming back from Wembley—the whole town came out. Unfortunately, we did not win the cup—we lost—but even going down to the final we had the Glossop special. Who remembers the old football special trains? We had a huge train going from Glossop. I had been on the train for two hours and I was further from Wembley than I was when I started. The whole atmosphere grabbed the town.

That is the power of football when it embraces the supporters and makes them feel that they have a stake in and are part of their club. We do not say that football supporters should completely own every club; we are talking about involvement. By necessity, non-league clubs are leading the way. They are showing the premier league and the other big clubs what can be done. I understand that it is impossible to recreate that at the big clubs, but if the supporters had some representation on the boards, they would feel that their voice was being heard. They would have a say in the direction of their club. Above all, they would have that sense of ownership of the club. The pride that people feel in their local club would be fostered in the big clubs.

I have been as brief as possible. I congratulate the members of the Select Committee. This is a great report, and I thoroughly enjoyed reading it. We in the House read many reports. With some of them, the pages do not turn quite as quickly as they did with this one—it is a thumping good read. I support the recommendation for more supporter involvement in clubs. I urge the FA to take on board the report’s recommendations and to get on with it, but please, can we get an England manager by next week first?

Sir Roger Gale (in the Chair): I am grateful to the hon. Gentleman for his forbearance.

4.54 pm

Clive Efford (Eltham) (Lab): I congratulate the Select Committee on the report. I join the Chair of the Committee in the tribute that he paid to our friend and former colleague, Alan Keen. I believe that our former colleague David Cairns was also involved in the inquiry when it started, although sadly he passed away before the report was written.

This is an extensive and detailed report on the future governance of football. It would have been better if we could have had this debate in the full knowledge of the response of the Football Association, but given what has gone on over the last couple of weeks in football, it has given us an opportunity at least to pass some comment on what has been going on. For my part, I pay tribute to the Football Association for showing strong leadership on these issues and particularly on the issue of racism in football. Its leadership has been exemplary. The international football bodies could learn from the way the FA has dealt with that issue. It has acted in the best interests of football, and I sincerely wish it all the best in selecting the best replacement as England manager.

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If that means that the FA has to take time in doing it and allow people to finish current contracts, it should be given that time to do what is in the best interests of the England football team.

This report and debate give us an opportunity at least to set out the will of Parliament to the Football Association ahead of its response to the report. They allow us to say what we feel about football governance and what we think the FA should respond to. We all have a responsibility to face up to the many challenges that the report highlights. That applies to us all, from the FA at the top, through its executive and the council, to the county FAs. I say to the people in those particular bodies that they have to look to themselves to review the vested interests highlighted in the report, because unless all of us together, as one community of people who love football, are prepared to take on the issue of change in the governance of football, the changes that we need will not come about. It will also require the other governing bodies, the Premier League, the Football League, club chairmen, managers, players, the dreaded agents and, of course, the fans. All of us together have an opportunity to set out a course that will resolve the problems that face our national game. We can begin to work together to take on the tough choices over the future of governance and finance to democratise our game and bring it closer to the fans.

Football is our national game because it is played in every community the length and breadth of the country. Football teams are part of the communities in which they are based, whether it is Manchester United, at the very top of the game—it is one of the biggest and most highly recognised clubs in the world—or Darlington, in the conference league, which is struggling to survive on what is, frankly, a pittance compared with what is paid to a premier league agent, player or manager or the receipts that those clubs get from TV rights. Darlington was saved from complete closure only by a couple of fans, who at the last minute were able to raise £50,000 to buy more time to save the club. Without them, there would be no club to save.

I spoke to my hon. Friend the Member for Darlington (Mrs Chapman) yesterday about the fight to save Darlington football club. The reason why she is not here speaking on behalf of her local community is that she has had to return to Darlington to try to bring together all the different parts of her community that are fighting to save Darlington football club. I urge everyone here to get behind her and the local community—those people who bought that extra time to try to save Darlington football club. Everyone needs to work together in the best interests of the club. Something that we can do here today with the debate and the response to the Select Committee’s excellent report is to put the case for change that will prevent a situation like the one that has affected Darlington football club from arising again.