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It is more than likely—in fact, I have been led to believe—that other clubs, which I will not name because they have not asked to be named, are also owed money for various transactions and are in a similar situation to Hearts. As you will see, Mr Betts, these are not insignificant sums, particularly given the parlous state of Scottish football as a whole. Scottish football faces several months of uncertainty and disruption while the financial affairs of Rangers are sorted out.

Before I set out what HMRC should be doing going forward, it is worth reflecting on its role in allowing the situation to occur in the first place. In recent months, every Member of the House will have been visited by the owners of local businesses, asking for assistance in working with HMRC to deal with short-term cash flow challenges. The sums involved are often not large. However, HMRC is not exactly known for adopting a sympathetic or flexible approach to assisting local companies with problems.

Indeed, the Minister will probably recall correspondence between him and me before Christmas about one of my local businesses, which despite many years without a single missed or late payment, had experienced a short-term problem and found HMRC to be unbending and—dare I say it?—uninterested in its problem. People can imagine the surprise felt by those businesses, many of which have contacted me in recent days, when we learned that HMRC had not received any payment from Rangers for pay-as-you-earn or, apparently, VAT since last May and that the sums for PAYE and VAT have now reached, according to the Scottish press, some £15 million.

I am not criticising HMRC per se for the decision not to require payment from Rangers. I do, however, believe that it is wrong that the club has been treated differently from not only any other club in the league, but thousands of small and medium-sized businesses in Scotland. There are serious questions that require proper answers, and I hope that the Minister can provide some of them today.

First, it is inconceivable to everyone, frankly, given the sums and the time period involved, that HMRC allowed this situation to develop unilaterally. Can the Minister confirm to the House whether any UK Ministers were aware of the size and severity of the non-payment by Rangers, and whether any discussions took place among UK Ministers and between Ministers and HMRC about possible courses of action? Will the Minister also confirm whether any representations have been received from the Scottish Government, either before or after Rangers went into administration, on the issue of its tax liabilities?

As I said, I do not criticise the decision of HMRC not to force payment of moneys due. However, I believe that given the knock-on effects on the other 11 clubs and the fact that the integrity of the Scottish premier league season itself is now at risk, HMRC must take proactive steps to support the other 11 clubs. In short, I would like HMRC to carry out the following actions, and I would be grateful for the Minister’s confirmation that HMRC will indeed do so. HMRC should now proactively contact the other 11 clubs to establish what financial liabilities they have as a result of Rangers going into administration. HMRC should then work constructively and sensitively with the clubs and the SPL to ensure that none of the other clubs is unable temporarily to meet their obligations to the taxpayer.

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To be clear, I believe that it is right and proper that by the end of the season, all 12 clubs should meet all their financial obligations to HMRC and the taxpayer, but they need to be given the breathing space to sort out the sorry mess created by Mr Craig Whyte. I urge the Government to ensure that all the other 11 clubs pay in full the sums owed to HMRC by the time of the last whistle at the end of the season, but that individual packages of payments can be tailored so that financial penalties are not incurred by them as a result of the actions of another—indeed, the largest—club.

I would be grateful if the Minister could also set out what contact he has had, if any, from the Scottish Government since Rangers went into administration to offer assistance to the clubs or to the SPL to meet their obligations. I would be grateful if the Minister could meet me in the coming days if there are any questions that he feels unable to answer in a public forum, so that we can further discuss the crisis in Scottish football.

2.54 pm

Damian Collins (Folkestone and Hythe) (Con): I just want to make a few comments on this important subject. I will not claim to share other hon. Members’ expertise in Scottish football. No doubt, other hon. Members, particularly from Scotland, will speak with a great deal of insight about the situation at Glasgow Rangers football club. However, I think that the hon. Member for Dunfermline and West Fife (Thomas Docherty), in opening the debate, touched on a number of important points that are relevant to football in Scotland and in England and relate to the financial administration of the game—in particular, the football first creditors rule.

There is no doubt that, in the case of Rangers, the losers are the fans of the club and other clubs and businesses to which it owes money. They are the people who have lost out as a result of what has happened. The failure of a club of its size has an impact in destabilising the structure of the league, so in some ways everyone involved in football in Scotland is affected, whether or not they are directly employed by or associated with Rangers football club. The hon. Gentleman set that out very clearly.

I think that there is a big issue to do with the football creditors rule. The caution that I would express about it in relation to Scotland is that it has had a damaging and destabilising effect on the game in England. It cannot be right that when a club fails and goes into administration, its creditors, if they are not within football, might get a penny in the pound. We might be talking about a local business that prints the club’s programmes or a local builder who had worked on its ground. When Leeds United went into administration, the West Yorkshire ambulance service got pennies in the pound or a penny in the pound. However, footballers who are owed salaries and football clubs in different parts of the country that are owed transfer money get their money in full.

The hon. Gentleman made a very good point about ticket sales—money that is supposed to pass directly from one club to the other. He highlighted that particularly well. It is unfair to other creditors of football clubs—community businesses working alongside a club, perhaps employing fans of that club—that they lose out massively.

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It would be a good thing for football if clubs had to take a stronger interest in each other’s financial performance when they entered into financial transactions with each other. A club would really have to think, when it sold a player to another football club, “Can this club afford to pay us?” At the moment, clubs know that that risk is guaranteed by the football first creditors rule, so they are more likely to sell players to clubs that cannot really afford them.

The type of discipline that I have described would be good. It might help to bring about something that is badly needed in football in England and Scotland—some deflationary pressure on players’ salaries and transfer fees. That is where the money is going. There has never been more money in football than there is today, yet there have never been so many football clubs failing financially.

Thomas Docherty: The hon. Gentleman has been a big champion of football reform. Does he not accept, though, that the sums of money in Scotland are very different from those in England? The reality is that two clubs in Scotland hold 90% of the revenue and, in effect, bully the other clubs in Scotland.

Damian Collins: The hon. Gentleman makes a very important point. The failure of Rangers in Scotland has a much bigger market-distorting impact on Scottish football than the failure of Leeds United, Portsmouth or another large club in the English premier league would have, so it is a much more acute problem. That is an area where greater transparency on financial performance and disclosure between clubs would help. However, that is not something that the clubs should be allowed to do on their own. They require help from the governing bodies and, where necessary, from HMRC as well, so that that can be properly policed. I agree that it would be very difficult for smaller clubs in Scottish football to start calling the shots with the old firm. That is a problem, but it is one where the competitions have a role to play.

Where clubs owe money to the taxman, that is a serious matter, as it is for any other business. The hon. Gentleman made that clear in his speech. Businesses in our constituencies—we have all had such experiences in the past year or two—have problems because they are in arrears; HMRC is coming after them for the money; and they ask for help. It is a very difficult situation to be in. Businesses understand that if they owe money to the taxman, it is a serious issue, so how is it that football clubs have been allowed to build up large debts?

When Leeds United went into administration, the taxpayers of the United Kingdom lost £6 million in unpaid taxes. Why was it allowed to get to that stage and to get that bad? HMRC should intervene, but the competition organisers should be keeping an eye on the tax payments and how up to date they are for their clubs. The premier league in England has made some progress with that. It even has a system where clubs can have television money or prize money withheld from them if they owe money to the taxman. That money might go straight to the taxman. The clubs have to understand that they have to pay their bills just like any other business.

It is unfair for the clubs to subsidise spending that they cannot afford by securitising their ticket sales, selling their future gate receipts, borrowing money from

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their banks until they cannot borrow any more, borrowing money from the local businesses that they engage with and owe money to and borrowing money from the taxman. They cannot keep on borrowing money at every opportunity until there is none left. That has to be stopped, and the tax authorities have a big role in doing so, with the support of the competition organisers. That is one of the reasons why the Culture, Media and Sport Committee, of which I am a member, has recommended that there should be a licensing scheme for football, so that the football authorities can keep an eye on the financial performance of clubs and ensure that they are not getting into too much debt.

There is also the introduction by UEFA of the financial fair play rules. In Scotland, just as in England, there will be many clubs playing in the top division that will have a chance of qualifying for European competitions—certainly the Europa league, if not the champions league—that will want that licence. They will understand that they have to be able to balance their books in the medium term. That will be an incentive to clubs to ensure that their financial performance is better in the long run. We should be putting our own house in order, however, and the competition organisers have a big role to play in ensuring that that happens.

There is a great role for HMRC in ensuring that tax liabilities are paid. There is a role in getting rid of the football first creditors rule.

Thomas Docherty: The hon. Gentleman is making a compelling argument, but perhaps I could tempt him to say something about clarity of ownership as well. Part of the issue with Leeds United in particular was the uncertainty over who owned which assets. Will he speak about that?

Damian Collins: The hon. Gentleman pre-empts the final thing that I wanted to touch on in my remarks and the subject of my ten-minute rule Bill, which I will introduce on 13 March and which is about the ownership of clubs and assets. It is an important area and one where HMRC could be prevailed upon to help. When Leeds United failed, there was uncertainty over who took over the club’s liabilities. It was taken over by a beneficial trust and the investors in that trust were never made known. There were allegations of a relationship perhaps between FSF, which took over control of the club, and some of the club’s other creditors. That was never known, because we never knew the identity of those investors. It would help football a lot if there was transparency over the ownership of clubs and clubs’ major assets, such as training grounds and stadiums, so that we can see who controls them and where the money comes from.

There have been allegations that certain people who represent the brass plaque of the ownership of the club are not the source of finance for the real ownership of the club. I do not understand how the fit and proper person test can be applied to a club’s ownership if no one knows who that person is in the first place. We do not know who owns Coventry City, who currently play in the second tier of English football. Until last summer, we did not know who the owners of Leeds United were either. That cannot be allowed to continue. Certainly, if clubs are failing and the taxman is losing millions of pounds in revenue, businesses and local communities

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are losing money because the clubs owe them money and the obscurity of the clubs’ ownership causes further concern and a lack of confidence, that needs to be resolved.

The ultimate way to resolve who owns football clubs—again, HMRC may be able to help us on this—is to understand the source of the finance. People might assume ownership or the ownership might be from a fund that is registered in Nevis and operated in Switzerland. Where does the money come from? HMRC has to look at that routinely. HMRC and football clubs’ banks have to be satisfied that football clubs are not being bought or injected with cash that may have come from uncertain or dubious sources, so that needs to be followed.

I feel that HMRC should launch a retrospective investigation to determine what the source of finance was for Leeds United and who owned the club, so that if there was any uncertainty about the club’s ownership and who was involved in putting in money to take it out of administration, that might be pursued. We have a right to know what happened in that case and the tax authorities may be the only body that can pursue that.

Poor administration of football clubs creates a big debt to society, which communities around the country are paying. We should send a lesson out that we want greater transparency over ownership and greater transparency of finances between clubs and a more responsible attitude from clubs in their transactions with each other, to avoid the big impact that we feel at the time and that we see with Rangers currently of the cost of failure. That is the cost to fans, local businesses and the competitions in which they compete.

3.4 pm

Pete Wishart (Perth and North Perthshire) (SNP): I congratulate the hon. Member for Dunfermline and West Fife (Thomas Docherty) on securing this important debate. He will know that I have spent many a fine afternoon on the terraces of East End Park as a native of Dunfermline, supporting the mighty Pars. My affections have now transferred to the mighty Saintees of McDiarmid Park in Perth. I know that it is very much to the hon. Gentleman’s disappointment that almost the entire length of the Scottish premier league separates Dunfermline from St Johnstone just now.

The hon. Gentleman mentioned two other clubs in his contribution. It was a bit remiss of him, when talking about Cowdenbeath, not to give their nickname, which I am sure that you, Mr Betts, are bursting to know. They are known as the Blue Brazil, a nickname that could never be more deserved. I remember when my grandfather used to take me to watch the cup games against Cowdenbeath, being a native and resident of West Fife, where the league support was for Dunfermline. I went to Central Park to watch the cup games when Cowdenbeath were competing. That was a forlorn activity back in the 1970s, because on only a couple of occasions did Cowdenbeath manage to get past the second round. He also mentioned Brechin City, which used to be in my constituency, in north Tayside. What is notable and significant about Brechin City is that it is the only professional football ground with a beech hedge as its border. A lot of Scottish football fans liked to go along. There were the bridies at Forfar Athletic and the beech hedge at Brechin City.

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Enough of my tour around the football grounds of Scotland; let us get on to business. I think that everybody here is a football fan, but where on earth are the rest of my Scottish colleagues? There is only the hon. Member for Dunfermline and West Fife. We get so few opportunities to discuss Scottish issues, particularly important Scottish issues about football. We are all proud that we represent football clubs in our constituencies. I have St Johnstone, a fantastic team doing well in the premier league, but where are my Scottish colleagues this afternoon? It is not as if they get loads and loads of Scottish business in this House. Not one of them could be bothered to turn up today to discuss the biggest crisis that is facing our national game. That is a disgrace, which says a lot about my Scottish colleagues when it comes to debating these important issues.

We have never had a crisis like this one. It is totally unprecedented and how it will end is anyone’s guess, but the nature and the face of Scottish football will probably change dynamically because of what is going on.

Thomas Docherty: First, some colleagues have been detained at Select Committees this afternoon. Secondly, does he agree that many colleagues are nervous about discussing what has happened with Rangers, because it is difficult to have a rational, sensible debate about the Scottish game without many of our constituents taking umbrage at us?

Pete Wishart: I do not know that that is true. I know that there is a bit of interest in this debate: one only has to look across the corridor from here. That does not excuse anything, however. This is important and it is unfortunate that there are not more Scottish colleagues here to debate what is probably the biggest crisis that we have seen in our game. This deserves and requires proper debate and it is unfortunate that we will not have that today, because this crisis deserves to be dealt with as sensitively as possible.

I listened carefully and closely to the remarks of the hon. Member for Dunfermline and West Fife. Where I can go along some way with him is that there is a real desire for a solution to this problem. There has to be a solution, because it is almost inconceivable to imagine Scottish football without Glasgow Rangers. They have 130 years of history and tradition. They have huge support—some 50,000 home fans go to watch Glasgow Rangers at a home game every second week in the city of Glasgow. To have that taken out of our game would have a significant and deep impact on the ability of the SPL to continue to produce a platform that will engage and encourage people and ensure their support.

It is not just about ticket receipts. When Rangers come to St Johnstone, it is the biggest weekend that we have in Perth. It is not just the inflated gate that we get by playing one of the old firm; it is also some of the activity spin-offs for Perth. It is not just about the pubs on match day. Glasgow Rangers supporters may choose to take a day either side of the game—the Friday night or the Saturday evening—so our hotels and restaurants are busy. There are also the other activities that go on within the city. To lose that would be to lose a significant amount of income and economic activity, which would be very much missed.

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There is also the issue of television rights. As the hon. Member for Dunfermline and West Fife said, they involve a fraction of the sums for television rights in England, but they represent a massive income for the Scottish game. If there were no Rangers, what impact would that have on the television rights sold to ESPN, Sky and the BBC, which play a massive part in the incomes of so many other Scottish football clubs? We would also miss the drama and spectacle of old firm games, which are enjoyed and appreciated not only in Scotland and the rest of the United Kingdom, but throughout the world.

Thomas Docherty: Just for the sake of clarity, it might help to reiterate that if either half of the old firm is not in the SPL, the contract with the TV companies falls. It is therefore in the SPL’s interests to treat Rangers as a special case because of those knock-on effects.

Pete Wishart: I am glad the hon. Gentleman mentioned that. He is absolutely right that that is one possible consequence of losing Rangers. That is why we should do all we can to ensure the ongoing survival of Glasgow Rangers football club.

Damian Collins: Glasgow Rangers is too big to fail, and they will find a way of restructuring their debts and coming back, but does the hon. Gentleman share my concern that the real long-term losers will be small businesses and other football clubs?

Pete Wishart: The hon. Gentleman is spot on. There is, of course, talk and speculation about what happens if Rangers are unable to come out of administration. Indeed, the Scottish press, particularly the sporting press, have a fascination with the old firm, and we read about it almost every day. However, the hon. Gentleman is right that some of the small businesses that are expecting payment from the administrators will suffer a massive loss. That is a real issue, and I am grateful to him for bringing it up.

Football is our national game. All our football clubs play an enormous part in our economic activity and make a real contribution to our communities and constituencies. The Fraser of Allander Institute estimates that the old firm’s economic importance to Glasgow and the rest of the Scottish economy amounts to £190 million. More than 3,000 full-time jobs depend on SPL football, and £200 million is spent on related commercial activities in Glasgow alone. According to the Rangers annual report, the direct economic activity generated by the club is in the region of £56 million.

Most importantly, there is also the issue of what happens to the 331 people directly employed by Rangers. They must be absolutely paramount in our considerations, and I hope some solution is found so that they can continue to serve in their jobs.

This is not, however, just about clubs’ contribution to our economy, important and significant though it is. There is also the value professional clubs have for our communities, and the hon. Member for Dunfermline and West Fife mentioned that. We can all see the infrastructure that exists and the clubs our young people are encouraged to participate in. We know that our football clubs make an immense contribution to our communities. According to the SPL’s 2011 community

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report, 20,000 people participate in community projects weekly, and SPL clubs spent £8 million on community activity, which is no small sum.

There are also the fans in Scotland. I know the audience for SPL football has diminished, but 3.2 million people still attend SPL games each season, and a further 76 million watch them on ESPN, the BBC or Sky. Football is therefore a big business, which contributes much to our economy and our communities, and we must ensure that we respond to the current crisis with the sensitivity it deserves and requires. Scottish football is in a precarious state, and it remains a fragile product, so it can ill afford to lose one of its major protagonists.

Of course, this is not just about Rangers. Several of our clubs are teetering on the brink of financial collapse and ruin. I just wish they could all be like St Johnstone, which is run so perfectly and effectively by Geoff Brown, its chair. It never gets into debt, it always ensures it looks after its liabilities and it never has a problem with HMRC, but that is not the case with many of the clubs in the SPL. I am thinking not just about Rangers, but I will not mention the other clubs, because we all know which ones are experiencing real difficulties and pressures.

We have seen what happens when clubs cannot meet their responsibilities and liabilities. Dundee and Livingston went into administration. We have also seen one SPL club—Gretna—go to the wall in the past 10 years. It was not a particularly great example, and I doubt whether other clubs would like to replicate its business model.

These are tough times, and gates are falling. We have heard from the hon. Member for Folkestone and Hythe (Damian Collins) about the pressure of football wage inflation and how it must be brought under control. The hon. Member for Dunfermline and West Fife was of course right to mention that SPL football is totally different from the English premier league or first division, and only the wages in the old firm are similar. However, some clubs have tried to replicate what we have seen elsewhere and to buy success by buying expensive players. They have tried to compete with the old firm and they have got into all sorts of difficulties. That is probably one of the reasons why Dundee football club, in particular, experienced the difficulties that led to its going into administration. There is a demand all the time to buy more expensive players, because that is what the market dictates, and clubs are encouraged to fork out money. However, gates are falling, and there is any amount of competition from other activities for the time of constituents, who might otherwise go to watch football games.

We all accept that our football clubs must meet their financial obligations. Everybody in every business must pay their tax—it is as simple as that. They must pay it on time and they must ensure that any business plan is totally predicated on meeting their tax liabilities. However, I am sure I am not the only Member in the Chamber who will have put the case for businesses and individuals in his constituency who have got into trouble over their tax liabilities. I do not know how many letters I have sent to HMRC on behalf of small businesses and people who have got themselves into difficulties. It is absolutely right that people also make representations on behalf of Glasgow Rangers because of its significance

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to Scottish football and the number of jobs that depend on it, as well as its history and tradition, its success and its value to the SPL.

The club is in a mess. The hon. Gentleman mentioned the current regime, which has been a total disaster—we cannot call it anything other than that. Once Craig Whyte took over its debts, something was always going to happen. He did not have the money to ensure the club could get out of its difficulties. What he did with Ticketus was appalling, and there will now be an SFA investigation into the Ticketus deal. There will also be an investigation to see whether Craig Whyte is a fit and proper person to run a football club, and we will have to see the details. Again, it is the fans who suffer, and the people who work in the club have been the major recipients of all the bad news and all the doom and the gloom.

Right now, the administrator is responsible for running the club. In the next few days, Duff and Phelps expect to announce the first round of job losses, which will first impact on the playing staff. There are outstanding issues of payments to other clubs, and I have heard the representations from Dunfermline football club that it should be paid. The hon. Member for Dunfermline and West Fife is right that money should be paid to clubs that are owed it, and Rangers have no right whatever to retain it. However, the job losses show the real impact that going into administration has on people’s careers and jobs.

The hon. Gentleman talked about the Scottish Government’s role, and they stand ready to offer assistance to anyone affected by job losses. They have said they will do all they can to keep in contact with the administrator and to be available to provide support and assistance if there are job losses. In addition, there is the PACE—partnership action for continuing employment—programme in Glasgow, which has offered to provide any assistance it can if there are job losses. PACE has offered Duff and Phelps assistance almost daily to take things forward, and there have been several conversations to that effect. This is a developing and emerging situation, and Scottish Ministers and PACE are keeping their eye on it.

Thomas Docherty: Perhaps the hon. Gentleman can provide some clarity, because he speaks on sport for the Scottish National party. He will be aware of reports in this morning’s newspapers that the Scottish Government are apparently offering all the assistance they can to the Scottish open, and the assumption is that financial assistance may be forthcoming. Does the hon. Gentleman agree that if the Scottish Government are going to put money into the Scottish open, they should also see what financial assistance they can provide to the SPL?

Pete Wishart: The hon. Gentleman is right, and I am grateful for that assistance for the Scottish open. I am sure that he will be the first to recognise that the input that the Scottish Government have made to Scottish football is significant—the £25 million that was announced towards the national performance centre, for example, the £8 million through CashBack for Communities and the £4 million going into the refreshed youth action plan for the next four years. That shows the Scottish Government’s support for Scottish football and their commitment to ensuring that it will continue to develop in the next few years. That will be welcomed in football throughout Scotland.

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I want to mention a couple of initiatives. Unfortunately there was some appalling behaviour two weeks ago at Glasgow Rangers, in the home game against Kilmarnock, which shows that there is still a massive problem with sectarian chanting. I am delighted that for the first time the Scottish Government have put in place legislation to tackle that effectively. It was not supported by the rest of the parties in the Scottish Parliament, but at last something will be done to try to get rid of that curse from the national game.

Thomas Docherty: I regret the fact that at the end of a good speech the hon. Gentleman is trying to bring in party politics. I went to the Dunfermline and Rangers game as a guest of the police, early in the season; the procurator fiscal was there. The PF, the clubs and the police were clear about the fact that that legislation, which no one else in the Scottish Parliament supported, was unnecessary, and unworkable.

Pete Wishart: It is the police who have been telling the Scottish Government that the legislation is required. We have had that debate in the Scottish Parliament, and thank goodness that behaviour will at last be challenged effectively. I welcome the fact that the SNP Scottish Government are deciding to take on the issue head on, and trying to get that appalling scourge out of the Scottish game.

There are other issues in Scottish football, but the one that we are debating is the big one—the thing that we need to get tackled and sorted out. I hope that HMRC will work sensitively with the administrator, and that we will get a solution that will ensure that it will be paid what it is owed. The main thing is that HMRC should secure the outstanding liabilities that Glasgow Rangers has towards it. Let us hope that we get a solution that will allow Glasgow Rangers to come out of administration—a solution that will mean that as much as possible will be done to retain the staff who work on its behalf; that we will have a Scottish premier league worthy of that title and enjoyed by its supporters; and that we can go on ensuring that that product can be developed, and made entertaining and exciting for people not just in Scotland but worldwide.

3.22 pm

Owen Smith (Pontypridd) (Lab): I congratulate my hon. Friend the Member for Dunfermline and West Fife (Thomas Docherty) on securing an important debate, which has touched on a much wider set of issues than just Scottish football. It covered the importance of football, and football and sporting clubs, as cultural institutions within communities—institutions that help bind communities together. I thought that my hon. Friend’s remarks about Dunfermline, and in particular Cowdenbeath, were deeply informative. I confess I was not aware that Cowdenbeath were known as the Blue Brazil. I assume that that is to do with the shirts, and not the temperature in which they play north of the border; but it could be either, I guess.

Two broad sets of remarks have been made in the debate, and I want to frame mine against that context. I have already mentioned one of the areas covered: the importance of football clubs as cultural and community

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institutions that are integral parts of communities—aspects of communities that inspire pride, loyalty, aspiration and ambition in individuals, but which also act as standard bearers for those communities in the wider world. I do not think that anyone could deny that Rangers, Celtic—their great rival—and all the great clubs of Scotland have been standard bearers for Scotland in the world of sport and beyond.

Rangers, of course, are a great Scottish club, and the one that prompted today’s debate. We heard a bit of their 140-year history, and about the nine great championships that they won on the trot in Scotland, equalling, I believe, the Celtic record. I was not aware, until I started looking at this subject, that they are also the club that has won more national championships than any club in any national football league in the world. That is a measure of the club’s success. However, what we cannot understand by looking at the names inscribed on trophies and trophy walls in such clubs is the wider, deeper, historical, cultural and sporting significance of the club. Anyone who has been to Ibrox, as I have, as a great sports fan—though a Welshman, of course—knows the importance that the community attaches to it. It is right that we should be discussing the issue today, and framing our remarks in that context.

The other broad set of remarks on the sporting front was about the role of money in sport, and football in particular, as well as about ownership, the transparency of football club financing, and the sustainability of clubs in a world where money seems to be the prime driver, despite all those other—in many respects far more important— cultural, historical and community values associated with the role of the club. That is something that I, as a Welshman and a sports fan, feel is significant for a different code of football—rugby football. We have similar issues with the game in Wales. I agree with the hon. Member for Folkestone and Hythe (Damian Collins), who made some remarks about the necessity for greater transparency about finances. He also said some things, to which I hope the Minister will pay attention, about the role of HMRC and the Government in seeking greater transparency in finances, ownership structure and the potential pitfalls and difficulties that clubs may encounter, in rugby and of course football. Clubs are businesses, yes; but they are more than just businesses.

However, in that context of clubs as businesses the role of HMRC is simple. Its job is to collect the taxes that are due in the appropriate volume and at the appropriate time. It is not often that I or other hon. Members quote judges; perhaps judges would feel that we do not do so approvingly. However, Lord Justice Mummery, in a recent tax case at the Court of Appeal, said rather appositely that

“tax is a contribution towards the costs of providing community and other benefits for the purposes of life in a civil society”.

That is a phrase that would have fallen, perhaps not as eloquently, but certainly as easily, from my lips. Tax is important to the wider community just as those football clubs are.

It is in those two contexts that I place my remarks. Individuals and businesses, however humble or, in the case of Rangers, mighty they are, need to pay their taxes. Therefore it is a matter of great regret to me that Rangers have not paid the £9 million in taxes that HMRC has said is outstanding for PAYE and VAT.

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That is why Rangers have gone into administration, which we deeply regret. As I understand things, HMRC is also looking at whether there may have been instances of tax avoidance. I am sure that the Minister will take great care over that, given his and my deep and continuing concern about tax avoidance. I know, in particular, that HMRC is interested, in the Rangers context, in the use of employee benefit trusts. There are several investigations in progress about EBTs, and, as I understand the matter, their use for payment of individuals working for Rangers, including players, plays a part in the non-transparency of the financial affairs. I will not go into further detail because I cannot: we do not have the detail that would make further comment possible. However, I should like assurances that the Minister is making himself certain that he understands, to the extent that he can, given the arm’s length nature of HMRC, the detail and complexity of the issues involved. I also ask him to consider the wider cultural set of understandings and sensitivities that HMRC needs to bring to bear in this case.

One of the other issues that has clearly come out of this debate is the importance of local knowledge and local understanding—the rootedness of Rangers in the local community. Under the current Government, in particular, and under the last Government, there has been a reduction in numbers of local HMRC staff. That reduction is being sped up under the current Government, with 10,000 more HMRC staff due to go before the end of the spending period; it was announced in January that 4,000 or so staff would go. Given that reduction and the potential loss of local knowledge, is the Minister certain that those people in HMRC who are dealing with Rangers in Scotland will understand the cultural context and have the requisite sensitivity to appreciate both the financial nexus locally—the interconnectedness of clubs and businesses that surround Rangers, and of course the connection between Rangers and the wider Scottish professional football league, which, as we have heard from hon. Members, is a crucial connection—and the cultural significance of Rangers for the local community?

Given the Minister’s slightly arm’s-length relationship with Revenue and Customs, has he been briefed in detail about Rangers, to the extent that he can be briefed about the issue? Does he feel that he is fully on top of the issue? Does he understand—I am sure he must—the importance of Rangers to the wider community and the wider sporting fraternity in Scotland? Is he certain that the HMRC people dealing with Rangers have the requisite expertise?

In closing, I will say a few things about the issue that I think is at the root of many of the problems that we have in football; there may be particularities around Rangers connected with the takeover of the club by Craig Whyte and the way that the club’s business has been managed since May 2011, but Rangers are not a unique case. The root cause of the problems that football clubs, rugby clubs and other sporting institutions across the length and breadth of this land are facing is to do with the role of money and the commercialisation—the commodification—of sport, whereby players and clubs are bought, sold and traded in a global marketplace that Governments in this country and elsewhere seem to have little control over, and perhaps they also have too little insight into the financial machinations and the rationale for the changes that happen. But if those changes come about, especially if they come about as

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dramatically as they have done with Rangers, and if they lead to the potential loss of great institutions that are of such cultural and financial importance to their local communities, Governments need to think about the extent to which they must improve their insight into those sporting institutions and those businesses, and consider their particularities. I hope that the Minister will comment on that issue too.

Finally, I will make what is perhaps a personal point. I echo the plea made by the hon. Member for Folkestone and Hythe that we should look at alternative models of ownership for football clubs and that the Government should also become engaged in a discussion about those alternative models. In my capacity as a constituency MP, I have been working with Pontypridd rugby football club and other Welsh rugby clubs to look at FC United of Manchester, which is a fan-owned football club with extremely transparent structures and financial arrangements. Those sorts of arrangements may provide the key for the Government when they think about how to frame policy, not only at HMRC but more widely across government, that will help to ensure there is a greater degree of transparency in ownership, management and—crucially—sustainability for institutions that are not simply sporting institutions or businesses but, of course, a vital part of their local community.

Damian Collins: I am grateful to the hon. Gentleman for picking up on something that I said. I wanted to clarify that although there is a role for HMRC, before HMRC becomes involved there is a role for the competition organisers to act as whistleblowers and bring in the relevant authorities if they think there is a problem. The competition organisers should be the first port of call and then there should be recourse to a higher authority if they cannot sort out the problem themselves.

Owen Smith: Again, I agree with the hon. Gentleman on that point. Clearly, there is a role not only for the authorities but for the clubs themselves—indeed, for the sport itself—to think about both the sport’s sustainability in the long term and the extent to which money is quite often eroding the ability of local clubs to represent a local community, whether that community is in Leeds, Pontypridd or, as in the case of Rangers, Glasgow. These clubs were not created for professional or financial benefit; they were created as part of community representation.

HMRC needs to reflect on that point when it deals reasonably, sensibly and even-handedly with those clubs, as it professes to do with all of the individuals and institutions with which it works. We have all encountered instances of individuals feeling that HMRC is not dealing with them even-handedly. I am sure that the Minister will want to assure us in a moment that HMRC always deals even-handedly with institutions and individuals. However, in this instance—a case in the public eye that is of such enormous importance, not only to Glasgow but to Scottish life in general and indeed to the representation of the UK on a wider, even global stage—I am also sure that he will want to make certain that HMRC painstakingly looks at the wider financial and cultural disbenefits of Rangers ever collapsing, and ensure that in collecting the tax, as it must indeed do, it understands that it must also make sure that that situation does not happen.

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3.36 pm

The Exchequer Secretary to the Treasury (Mr David Gauke): Thank you, Mr Betts, for calling me to speak. It is a very great pleasure to serve under your chairmanship this afternoon.

I congratulate the hon. Member for Dunfermline and West Fife (Thomas Docherty) on securing the debate. It has not been heavily attended, but it has been of good quality. It has also been wide ranging; we have heard a little about the history of Scottish football and we have had a bit of a geographical tour of a number of Scottish football clubs. We have heard about a number of issues relating to football in Scotland and we have also heard from my hon. Friends the Members for Portsmouth North (Penny Mordaunt) and for Folkestone and Hythe (Damian Collins) about issues relating to football in England.

There is no doubt that the issue brought into focus by the administration of Glasgow Rangers is a significant one. That administration is clearly crucial to football in Scotland and, as we have heard, football in Scotland is crucial to Scotland much more broadly, including to the various communities in which football clubs exist.

The importance of football to a local community is self-evident, first because it provides jobs and stimulus to that community. We have heard about the impact when Rangers play against St Johnstone in Perth and we all know how football can contribute to the feel-good factor if a team is successful. Any football supporter can testify to that, as well as testifying—to be fair—to the feel-bad factor when a side does badly. I speak as an Ipswich Town supporter who has experience of both the feel-good and the feel-bad factors.

Secondly, the football industry in the UK contributes significant sums to the Exchequer by way of PAYE, national insurance and VAT. The debate about football and taxation obviously tends to focus on sums that have not been paid, but it is worth pointing out that last year the contribution to the Exchequer from football amounted to well over £1 billion, and clearly that money is vital to the provision of public services.

Of course, football is always in the spotlight. Recently, there seem to have been as many column inches about football clubs in the business pages as on the back pages, and I am acutely aware of the wider impact that the administration of Glasgow Rangers football club will have on other football clubs and businesses. However, the difficulties of one business cannot mask the significant support that the Government and HMRC have provided to help and support businesses across the country, including football clubs, to grow and to meet their tax obligations, even when they encounter temporary difficulties.

Of course, the debate has demonstrated the particular and intense passion that is involved with the business of football, but I hope that the hon. Member for Dunfermline and West Fife will appreciate that, due to confidentiality obligations, I cannot share specific information about Rangers with him. I know that he will be disappointed with the constraints that exist for all of us, but it is important that HMRC protects customer confidentiality. However, I can comment on the importance that the Government place on supporting businesses, whatever their size or fame, and on the position of football debt generally, and particularly at this time, on the importance of ensuring that where public revenues are due, they are paid on time and in full.

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Thomas Docherty: While I appreciate the fact that the Minister cannot talk about the specific tax structure of Rangers, can he confirm whether UK Ministers, of whatever Department, were aware that Rangers had not paid since last May?

Mr Gauke: There are a couple of assumptions in the hon. Gentleman’s question. I was going to deal with those points later, but I will do so now. First, there is an assumption in his question that, as has been reported, Rangers has not paid PAYE since May. There is taxpayer confidentiality and there are limits to what can be said to Ministers, as well as what can be said publicly. All I can say is that HMRC has assured me that in cases of this kind, it gives debts very close attention at all times. I would therefore be very surprised indeed if there had been no ongoing discussions or action by HMRC to secure payment over that time period.

On the hon. Gentleman’s question about ministerial involvement—in his speech he raised the point about the involvement of Scottish Ministers as well—Ministers were kept informed of significant developments such as the timing of court proceedings, but HMRC did not seek or take advice from Ministers on how to handle matters that were entirely within HMRC’s responsibility. Equally, with regard to the Scottish Government, there were discussions. HMRC was entitled to inform the Scottish Minister, because there were issues relating to devolved powers, and it was right that the Scottish First Minister was informed. At his request, HMRC explained its general policy for customers who were having difficulties paying their tax debt, and it gave him an idea of the likely time scale of its initiating administration proceedings if tax debts were not paid. Although HMRC listened to representations that he wished to make, it neither sought nor took advice from him or other Scottish Ministers. I hope that provides some clarity.

Thomas Docherty: I am grateful to the Minister; he has been quite candid. He will probably be aware that the First Minister does not normally wait to be asked to give advice, so can he tell us what advice the First Minister offered without being asked?

Mr Gauke: I do not know what advice the Scottish First Minister provided, if indeed he provided any. I know that there were discussions informing him of the issues, as was appropriate; for example, whether there were going to be any public order issues that could be related to progress on this particular matter. There was nothing in any way improper about a discussion with the First Minister in broad terms. Similarly, I assume that the discussions with Ministers of the UK Government were not about specific tax information, but in the broadest of terms.

Owen Smith: I appreciate what the Minister has said about the limited nature of the advice that he has been given by HMRC, given the nature of his relationship with HMRC. Can he tell us whether he in turn has impressed on HMRC that it needs to think of the wider financial nexus around Rangers, and of course the cultural significance of the club? It is a business, but it is not just a business.

Mr Gauke: HMRC is well aware of the significance of Rangers football club and its importance in Scotland. I have no doubt that HMRC is aware of that sensitivity. I am sure the hon. Gentleman is not suggesting that

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Rangers should receive special treatment, but HMRC is aware of the importance of Rangers to Glasgow and to Scotland, and indeed to the UK more widely. I have no doubt about that.

I return to the issue of the support that businesses receive from HMRC, both generally and in respect of football. Of course, facing tough conditions, many businesses can stumble upon difficult times. That is why HMRC invests so much time and energy to support those businesses, whether they are start-ups or established large businesses, when they encounter difficulties.

I will focus on the support that is provided for the many thousands of businesses, large and small, through the time to pay arrangements, which allow them to spread the payment of their liabilities beyond the due date. That facility took on a more prominent role in November 2008 when the Business Payment Support Service was launched. Its purpose is to provide speedy access to quick decisions from HMRC for businesses facing short-term financial difficulties and who wish to discuss time to pay arrangements.

Many hundreds of thousands of businesses have accessed the service since its launch. The time to pay arrangements have helped hundreds of thousands of individual taxpayers and businesses suffering short-term financial difficulties. This has been particularly helpful during the past four years, given the economic challenges that the UK has faced. HMRC will continue to offer that support service where it is appropriate to do so, although I make it clear that the facility is not there to prop up an insolvent business whose existence is dependent on not paying the taxes for which it is liable. That is why HMRC will probe deeper when a business comes back repeatedly to seek time to pay. Such repeat requests can indicate a more deep-rooted financial difficulty, which can mean a time to pay arrangement is unlikely to be the appropriate outcome.

At a time when the public finances are as they are, it is crucial that businesses and individuals pay the tax that is due. That is a point that every speaker has made this afternoon. Businesses and individuals who do not pay their taxes are restricting growth and getting an unfair advantage over those who follow the rules. The Government are committed to levelling the playing field for the compliant majority. Even as HMRC puts in place services to support businesses, small and large, to realise that ambition, it also expects all businesses, be they football clubs or not, to be run effectively from a tax management point of view.

As reported in the media, it is true that in recent years some football clubs have had poor compliance records for the payment of tax liabilities. I am not talking about the payment of tax on profits; I am referring to the PAYE and national insurance that the clubs have deducted from their players and other employees and the VAT that they have charged their customers. Too often some football clubs have used those moneys, which were never theirs, to fund their business, because they have overstretched themselves in other areas. Many hon. Members will doubtless have views on why that situation has arisen, and why clubs so often apparently spend more than they can afford. I think all hon. Members will agree that it would not be right for taxpayers to fund such shortfalls.

However, things have begun to change. One practical way was when the previous chairman of the English football league, Lord Mawhinney, approached HMRC

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to explore how they—the football league authorities and HMRC—could work together to reduce the levels of tax debts in the football league.

From those initial discussions emerged a working arrangement that remains in place today. All English football league clubs consented to HMRC sharing information with the football league on their payment compliance in respect of PAYE and national insurance. Not only does any club that withholds those taxes face decisive action by HMRC, it will also encounter sanctions from the football league.

However, the issue is not always about sticks. The carrot is that eventually, all clubs will compete on an even basis. No club should benefit over another simply because it retains taxpayers’ money to fund its operation. That is an absurd proposition, with which I know hon. Members will disagree.

The decisive action taken by HMRC and collaboration with the football league authority has paid dividends. Similar arrangements are now in place with the Irish Football Association and the football conference, which is the tier immediately below the football league.

In addition, some months ago HMRC met the Scottish premier league and the Scottish football league authorities to explore whether similar arrangements could be put in place for the top four divisions of football in Scotland. Further discussions are scheduled soon on that proposal. HMRC will meet the Scottish leagues next week to monitor the payment of taxes, which addresses one of the specific points raised by the hon. Member for Dunfermline and West Fife.

Thomas Docherty: That was hugely informative and I am sure that it will be welcomed. If only we had heard it before now.

I have two specific questions. Will the Minister confirm that HMRC will contact all 11 other clubs to see what assistance they require as a result of the situation with Rangers? Also, can I tempt him to say a little about the potential introduction of a bond, which I know the Treasury has previously considered, to protect HMRC, so that if a club finds itself in administration, HMRC will have a guarantee that it will get some of its money back?

Mr Gauke: I will deal with the hon. Gentleman’s second point first, which he is absolutely right to raise. From April 2012, HMRC will be able to seek securities where PAYE is at risk. That mirrors existing powers for VAT, which are already in place. If a taxpayer does not pay the security, they will commit a criminal offence. There are, of course, safeguards to ensure that the power is not abused by HMRC—it is not to be used widely—but where there is concern about repeated failure, that is an additional tool available to HMRC. That, in itself, will have a deterrent effect, which I hope will be helpful in such circumstances.

Pete Wishart: The Minister has mentioned some of the sticks available to HMRC to secure its liabilities, but what about the carrots? What about incentivising the clubs that meet HMRC requirements on time? I mentioned the example of my football club, St Johnstone, which has never gone into the red. Does HMRC want clubs to behave and be able to balance their books on that basis?

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Mr Gauke: There would be a problem with HMRC rewarding clubs for paying their taxes; after all, it should be taken as a given that businesses pay their taxes. I return to my point on the work that is being done with the football league in England, with Lord Mawhinney, where football gets to grip with the issue, and works in conjunction with HMRC to ensure that clubs would face difficulties within the leagues if they fail to comply with their obligations. I would look at it that way.

The first point made by the hon. Member for Dunfermline and West Fife in his intervention was about whether HMRC will proactively contact the 11 other clubs in the Scottish premier league. Rangers going into administration is a huge event, not just for Rangers, but for all the other clubs in the Scottish premier league and some other clubs as well. HMRC is conscious of that and will—I am assured—listen sympathetically to any approach where that event causes serious short-term financial difficulties. The onus is on other clubs to get in contact with HMRC if they have a difficulty. The debt lines are open seven days a week, and there is no reason to delay discussions with HMRC, which I know will be happy to engage with clubs if they have particular issues. It is for the clubs to contact HMRC, rather than for HMRC to initiate communications. I hope that I have adequately addressed the issues about HMRC’s involvement, within the constraints that I and HMRC have in relation to taxpayer confidentiality, and about what communications there have been between Ministers of the UK and Scottish Governments.

Regarding HMRC’s capability in terms of the local issues, I am assured and confident that it is deploying the right skills and the right amount of urgency to the investigation of avoidance schemes. I am also confident that HMRC has the right skills to understand fully local factors. The hon. Member for Pontypridd raised a point about reductions of local staff in HMRC, which he described as having increased and accelerated under this Government. We have debated that point once or twice in recent days, including in television studios. In 2005, the number of HMRC staff, following the merger, was around 96,000. When this Government came into office, it was 66,000. By the end of the spending review, it is likely to be around 56,000. It is difficult to argue that there has been an acceleration in job reduction under this Government, and I will happily debate how and why we have been making changes in employment on another occasion. We are strengthening the capability for tackling evasion.

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Owen Smith: Will the Minister give way?

Mr Gauke: I have provoked the hon. Gentleman. Before we go too far off the topic, I will let him come in.

Owen Smith: I want to confirm that the Minister is saying that there will be 10,000 further jobs going under this Government over the spending period, as well as the 4,000 job losses announced in January.

Mr Gauke: The working assumption is as I have said, and as is in the public domain. The hon. Gentleman will be aware that there is redeployment within that, so that there are additional staff dealing with tax evasion. There is capability to reduce the number of staff working in processing, where the use of new technology can substantially reduce the need for manual work.

I cannot comment on the case of Rangers specifically, but I assure the hon. Member for Dunfermline and West Fife that HMRC is working with the administrators, alongside other creditors, to reach the best solution for the public purse and the club. We have heard how Rangers going out of business would be a disaster for Scottish football. The purpose of administration is to save the club and to ensure that creditors get as much as possible.

Damian Collins: On a point of principle, does my hon. Friend agree that it is wrong, when a football club goes into administration, for HMRC and other creditors to get paid only after all football debts have been settled?

Mr Gauke: As we have heard in the debate, that is a matter more for the English arrangement. There is currently a court case on the issue. I have a lot of sympathy with my hon. Friend’s view. There seems to be unfairness, and as I said, there is litigation on the matter.

The debate has been valuable, and I thank the hon. Member for Dunfermline and West Fife for securing it and raising the issues. There are constraints on what I can say, both publicly and privately, although I will always be happy to have a discussion with the hon. Gentleman. However, the constraints of taxpayer confidentially apply to me as much as anyone else, so I am not given all the information. The debate has been useful, and I thank the House for allowing us to hold it.

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Daniel Morgan

4 pm

Mr Tom Watson (West Bromwich East) (Lab): It is nearly 25 years—10 March 1987—since the son of Isabel and the brother of Alastair, Daniel Morgan, was brutally killed by five blows of an axe to the head. The last blow was probably struck when he was on the ground, because the hilt was embedded in his skull. Alastair is here today representing his family to hear the Minister’s response to the family’s call for a judge-led inquiry into the five failed investigations into Daniel’s murder. All they ask is justice for Daniel.

The five failed inquiries have cost the taxpayer nearly £30 million. I believe that had the murder been investigated adequately a quarter of a century ago, Daniel’s killer would have been brought to justice. John Yates said:

“This case is one of the most deplorable episodes in the entire history of the Metropolitan Police Service.”

He went on to say that Daniel’s family had “been treated disgracefully.” I suspect that the Minister will not be able to grant a judge-led inquiry today, but I hope that he will at least keep an open mind, as the Home Secretary has not yet decided whether to grant such an inquiry, which my hon. Friend the Member for Islington South and Finsbury (Emily Thornberry) has also been campaigning for on behalf of her constituents.

I ask the Minister for one thing: please agree to ask his officials and the Metropolitan police a number of searching questions before he and the Home Secretary make their decision. I will put those questions to him at the end of my contribution. Daniel’s family categorically do not want another investigation by the Metropolitan police—they have lost trust. Before I raise specific questions for the Minister, I will run through the events that have led to the five failed investigations.

Investigation No. 1 was severely compromised by police corruption. For 20 years the Met failed to admit that, despite the repeated pleas of the Morgan family. Indeed, it was not until 2005 that the Met’s then commissioner, Sir Ian Blair, admitted that the first inquiry involving Detective Superintendent Sidney Fillery had been compromised. If that admission had come earlier, the subsequent inquiries might not also have failed.

As part of the first investigation, it is now known that DS Sid Fillery—a member of the original murder squad—failed to reveal to his superiors that he had very close links with Jonathan Rees when he became part of the inquiry. I am told that Fillery took a statement from Rees, but it did not include details that both he and Rees had met Daniel at the Golden Lion pub the night before the murder, nor did it include details of a robbery of Belmont Car Auctions a year earlier. Had those details emerged at the time, they would have revealed that those incidents brought both men into direct conflict with Daniel.

The Belmont Car Auctions story was significant because Jonathan Rees and Daniel had previously agreed that they would not deal with cash-in-transit work. Daniel is known to have been angry when Jonathan Rees took on the job of looking after the takings from the auctions, saying it would, “backfire on them.” Rees, who was contracted to carry cash to the bank after a series of auctions, alleged that the bank night-safe had been

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interfered with, and therefore took the money to his home in March 1986. He alleges that he was attacked outside his house by two masked men who took the £18,000 from him. Belmont Car Auctions then sued Southern Investigations, which resulted in Daniel having to raise £10,000 very quickly for security to the court.

We know that two days before the murder Daniel told a witness, Brian Crush, that he believed that Rees and Fillery had set up the robbery and taken the money themselves. Daniel also told a witness that he was dealing with police corruption and that he did not know whom in the Met he could trust with the information.

It is important that the Minister understands at the outset why the omissions of the meeting at the Golden Lion pub and the auction robbery were so critical to the first investigation being compromised. My source has told me that omissions in the statement gathered by Fillery initially prevented attention being drawn towards Jonathan Rees and, indeed, Fillery himself. Alastair Morgan, Daniel’s brother, has also told me how he raised his own suspicions with Fillery about Rees’s possible involvement with the Belmont Car Auctions robbery as a possible motive for the murder. Alastair had not known that Fillery had actually recommended Rees to the auction company at the time.

Alastair now believes that it was a mistake to trust Fillery. He tells me that, for example, his information to Fillery later led to a phone call to his sister-in-law in which the family were told directly by Fillery that Alastair should get out of London because he was interfering in the investigation. When Fillery was removed from the team, the investigation quickly focused on those whom the Met believed to be responsible. Fillery, Rees, the two Vian brothers and two other police officers who were closely associated with Southern Investigations were arrested. However, no charges were brought and all six men were released.

At the inquest in April 1998, Kevin Lennon, who worked as a bookkeeper at Southern Investigations, gave evidence that implicated Rees in Daniel’s murder. The Guardian newspaper reported that, in evidence to the hearing, Kevin Lennon said Rees wanted Morgan dead after a row. Lennon said:

“John Rees explained that, when or after Daniel Morgan had been killed, he would be replaced by a friend of his who was a serving policeman, Detective Sergeant Sid Fillery.”

Lennon also told the inquest that Rees had said to him:

“I’ve got the perfect solution for Daniel’s murder. My mates at Catford nick are going to arrange it.”

Lennon added:

“He (Rees) went on to explain to me that if they didn’t do it themselves the police would arrange for some person over whom they had some criminal charge pending to carry out Daniel’s murder”.

In the weeks before his murder, Daniel Morgan had repeatedly expressed concerns over corrupt police officers in south London. The Morgan family also believe that Daniel was about to reveal evidence of corruption.

In the aftermath of the murder and just as predicted by the evidence of Kevin Lennon seven months before at the inquest in 1988, Fillery took early retirement with an enhanced sick pension. Alastair Morgan has also told me how, at the inquest, members of the Met

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disputed the fact he had ever spoken with Fillery directly as part of the investigation. He believes that they were trying to cover up for Fillery.

Investigation No. 2—an outside inquiry—ordered by the then commissioner, Sir Peter Imbert, following a complaint by the family, was carried out by Hampshire police. It made no attempt whatsoever to address the allegations that Fillery had tried to get Daniel’s brother, Alastair, out of London after he had pointed to Rees as a prime suspect in the murder. Had the inquiry done so, it might have found that what Alastair said tallied with the allegations previously made by Kevin Lennon at the inquest in 1988. The inquiry’s terms of reference were to investigate

“all aspects of police involvement arising from the death of Daniel Morgan”.

Unknown to Daniel’s family, the remit of the inquiry was secretly changed at a high-level meeting at Scotland Yard in December 1988. The family further believe that the second investigation did not address the statements made at the inquest by serving police officers in which they denied that Alastair Morgan had ever raised his suspicions about Rees with Fillery, directly, as part of investigation No. 1.

In addition, Mr Morgan is frustrated that he offered to provide Hampshire police with a statement after an initial interview, but they refused it—indeed, no further statement was taken until 2000. The inquiry later reported to the Police Complaints Authority that there was

“no evidence whatsoever of police involvement in the murder”

and that the original inquiry had been good.

Understandably, the Morgan family kept up their campaign for justice. In November 1997, they met Sir Paul Condon who promised to review the case—nothing happened until late 1998 when, under the leadership of John Stevens and Roy Clark, the Met launched a third investigation into the murder. That was done without the knowledge of the Morgan family and in secrecy—not including the family was a mistake and the secrecy of the inquiry has deeply troubled them. The secrecy today is still a major issue for the family with the Met. I hope that the Minister understands that he must ask why the family were not kept informed.

As part of investigation No. 3, a covert bug was placed in the office of Southern Investigations. I will return to that later. Yet investigation No. 3 arguably missed its chance to use trigger events to gather further evidence on the murder. After Rees went to jail, the Morgan family had another meeting with Roy Clark. Clark initially said that they would do another investigation. The family ruled that out, as they wanted disclosure of the Hampshire report first. First Clark and then Andy Hayman refused to disclose the report to the family. It was not until the family were forced to go to the High Court that they succeeded. The Morgans should not have had to do that.

In the interim, the Met conducted a fourth inquiry, led by Detective Chief Superintendent David Cook. However, the fourth investigation, which the family described as the first honest investigation into the murder, gathered insufficient evidence to prosecute Rees, Fillery

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and three other men for the murder. My right hon. Friend the Member for Salford and Eccles (Hazel Blears) then refused the family’s request for a judicial inquiry.

In 2006, a fifth investigation began under Assistant Commissioner John Yates. That happened out of the blue after Alastair Morgan had initially approached the Metropolitan Police Authority chairman, Len Duvall. He had ordered the commissioner to present his own report on the case before that. The family were initially deeply sceptical of the new Yates investigation. Devastatingly, after five years, the case collapsed last year. The Morgan family’s solicitors have said that this was

“under the weight of previous corruption”.

The accused, Jonathan Rees, Fillery and the Vian brothers were ultimately acquitted because the defence would not have had access to all the documents in the case. The Metropolitan police repeatedly mislaid crates of evidence, owing to the sheer number of documents the case had generated. Mr Justice Maddison also ruled that the supergrass witnesses had been mishandled.

I now turn to the situation that the family find themselves in now. Since the collapse of the prosecution, the Met has publicly admitted corruption in the first inquiry. The family believe this corruption had an impact on the second, third, fourth and fifth inquiries. However, what the family did not know during any of the five investigations is the extent to which the relationship between News International, private investigators and the police had an impact on the conduct of the inquiry.

Jonathan Rees and Sid Fillery were at the corrupt nexus of private investigators, police officers and journalists at News of the World. Through the hacking scandal, we now know that Southern Investigations became the hub of a web of police and media contacts involving the illegal theft and disclosure of information obtained through Rees and Fillery’s corrupted contacts. Southern Investigations sold information to many newspapers during the 1990s, but we think exclusively to News International after Rees was released from jail in 2005.

The main conduit at News International was Alex Marunchak, chief crime reporter for the News of the World and later the paper’s Irish editor. I want to focus the Minister’s attention on Marunchak in particular. Rees and Marunchak had a relationship that was so close that they both registered companies at the same address in Thornton Heath. Abbeycover, established by Rees and his colleague from News International, Greg Miskiw, was registered at the same address as Southern Investigations, run by Rees and Fillery. Rees’s confirmed links with Marunchak take the murder of Daniel Morgan to a new level.

It is important to remember that, in the days before the murder, Daniel’s family believe that he was on the verge of exposing huge police corruption. That was confirmed by Brian Madagan, Daniel’s former employer, in a statement in May 1987, in which he said that he believed Daniel was about to sell a story to a newspaper. In a second, later statement, Madagan said he believed that paper to be the News of the World and the contact to be Alex Marunchak who, until recently, still worked for the paper. BBC Radio 4’s “Report” programme also confirmed that it has seen evidence suggesting that, a week before the murder, Daniel was about to take a story exposing police corruption to Mr Marunchak and

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was promised a payment of £40,000. We also know, from the investigative reporting of Nick Davies at

The Guardian

, that Southern Investigations paid the debts of Alex Marunchak.

As part of the third failed investigation, Operation Nigeria was launched. It included the surveillance of Southern Investigations between May and September 1999 and was run by the Metropolitan police’s anti-corruption squad, CIB3. It placed a bug in the offices of Southern Investigations that yielded evidence that convicted Rees for a serious and unrelated crime. Police surveillance shows frequent contact between Rees and Marunchak. I understand that the tapes made by the recording by the bug have not all been transcribed; if they were, they would yield more collusion, perhaps criminal in nature, between News International and Jonathan Rees. I hope the Minister will ask the police if that process is under way.

When Rees came out of jail, he was re-hired by the News of the World, then edited by Andy Coulson. Rees also founded a company called Pure Energy, in which Marunchak was involved. The police hold evidence to suggest that Rees discussed the use of Trojan devices with his associate, Sid Fillery. He was an associate of Philip Campbell Smith, who received a custodial sentence on Monday for a crime related to blagging. Campbell Smith is a former Army intelligence officer. I will say no more on Campbell Smith, because I do not want to prejudice the Operation Tuleta inquiry. However, I hope that I have demonstrated to the Minister a close association between Rees and Marunchak.

This is why I think that the Metropolitan police cannot be used in any further investigations: yesterday, the Leveson inquiry heard a startling revelation that Alex Marunchak—a close business associate of Jonathan Rees, then the prime suspect in a murder case—chose to put DCI David Cook and his family under close covert surveillance. The person who was investigating a murder was put under close surveillance by a close business associate of the man he was investigating. That was raised with Rebekah Brooks in 2002, the then editor of the News of the World. I would like the Minister to imagine what his response would have been to that information. A journalist employee tried to undermine the murder investigation of his close associate. Rupert Murdoch claims that News International takes a zero-tolerance approach to wrongdoing. However, far from launching a wide-scale inquiry to investigate wrongdoing, Rebekah Brooks promoted Alex Marunchak to the editor’s job at the News of the World in Ireland.

It gets worse. Last year, Mr Cook’s then wife, Jacqui Hames, discovered that her records appeared in the evidence file of Glenn Mulcaire. The records show information that she believes could only have been obtained from her private police records. While DCI Cook was investigating a murder, his colleagues in another part of the Met were in receipt of evidence that a close associate of his suspect was illegally targeting him. Did Andy Hayman, the then head of the hacking inquiry, who also happened to be in charge of the fourth investigation into Daniel’s murder, ensure that his colleague was informed about this? No. When Andy Hayman retired early from the Met, he became a paid contributor for News International—that is not right. For months, Scotland Yard took no action. Why not? Why was it not willing to pursue what appears to be a

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clear attempt to interfere with the murder inquiry of Daniel Morgan?

The Guardian

has reported that the reason why no action was taken by Scotland Yard was not to embarrass the Met with newspapers.

It gets worse. I would like the Minster to request to see all the intelligence reports submitted about Alex Marunchak. I believe the Met is sitting on an intelligence report from late 2002 that claims a police contact overheard Marunchak claim he was paying the relatives of police officers in Cambridgeshire for information about the Soham murders. As far as we know, those allegations have not been investigated. I do not know whether the intelligence reports are accurate, but I do know that Alex Marunchak was involved in writing stories about how the Manchester United tops of those young girls were found. I also believe that at least one of the Soham parents appears in the evidence file of Glenn Mulcaire. The Met police failed to investigate both leads when reported in 2002 and 2006. I think that Rupert Murdoch owes the Morgan family an apology, and I do not think that he has made his last apology to the grieving parents of murdered children.

Daniel’s family will never see his murderer brought to justice—corruption at the Metropolitan police has ensured that—but the Minister has it in his power to see that they get an explanation of the failure. He can only do that if the next investigation has their confidence. They seek a judge-led inquiry into the police’s handling of the murder, because they have lost confidence in the police. In the circumstances, wouldn’t anyone?

4.21 pm

The Minister for Policing and Criminal Justice (Nick Herbert): I congratulate the hon. Member for West Bromwich East (Mr Watson) on securing this debate. I am aware of his interest in this matter and the interest of other hon. Members, including the hon. Member for Islington South and Finsbury (Emily Thornberry).

The Home Secretary and the Government believe that this is a matter of the utmost seriousness, concerning an horrific murder exacerbated by a failure to see those responsible held to account. The Home Secretary is taking a personal and active interest in this issue. She met Daniel Morgan’s family and representatives in December last year and listened carefully to what the family had to say to her. She committed to reflect on what she had heard at that meeting and to look into the matters further. At the time, she also made it clear that we do not rule out anything when considering the next steps. She has since spoken to Bernard Hogan-Howe, the Metropolitan Police Commissioner.

There is no doubt that the case of the murder of Daniel Morgan has not been handled properly by the authorities over the years. Although no murder investigation is ever really closed without the perpetrators being brought to justice, the fact is that 25 years on Daniel’s murderer remains unconvicted. There has been a failed trial and justice has not been done, or seen to be done. Tim Godwin, as acting commissioner at the time, has apologised for the repeated failure by the Metropolitan Police Service and accepted that

“corruption had played such a significant part in failing to bring those responsible to justice.”

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I am sure that hon. Members will agree that none of us can ever begin to comprehend the suffering that the Morgan family has endured over the past years. Our sympathies are with them.

Whatever happens now, the Government, the police and the authorities must do all we can, not just to bring the murderers of Daniel Morgan to justice, if at all possible, but—crucially—to ensure that the wider issues to do with police corruption are identified and addressed. The Metropolitan Police Commissioner has given his personal assurance to the Home Secretary that he is committed to achieving these ends. That is why he has appointed Assistant Commissioner Cressida Dick personally to oversee all aspects of the Morgan case. She is, as hon. Members will be aware, a senior police officer who is currently the assistant commissioner of specialist operations, and she comes to the case and the issues it raises with fresh eyes. It is important to note that she has no previous involvement with the case.

The MPS has also started looking at a full forensic review, which, as hon. Members will recall, was an important factor in the successful prosecutions in the Stephen Lawrence case. The MPS is considering seeking advice from independent counsel on what options are available to it to enable successful prosecutions, in light of the failed trial last year.

Ongoing investigations are relevant, including Operation Weeting and Operation Tuleta, being led by Deputy Assistant Commissioner Sue Akers of the MPS, who, following her evidence to the Home Affairs Committee in July last year, again gave a clear account to the Leveson inquiry earlier this week. Both Operation Weeting, which is looking at the interception of mobile phone messages by journalists and their associates, and Operation Tuleta, which is considering the numerous historical operations that have some bearing on this matter, are ongoing. We must let those investigations run their course, as they have a bearing on the issues raised in the Morgan case. For example, Deputy Assistant Commissioner Akers will be looking at the circumstances surrounding the surveillance by News of the World journalists of David Cook, the former senior investigating officer in the murder inquiry. I take seriously these allegations, repeated in the evidence of Jacqui Hames to the Leveson inquiry yesterday.

I appreciate the concerns of Daniel Morgan’s family about further investigation by the police. However, I do not believe that the police service is incapable of investigating itself. The investigations led by DAC Akers have led to the arrests of police officers. There are many examples of corrupt and criminal officers having been removed from their force and brought to justice. In addition, the Independent Police Complaints Commission is a robust, independent body that can always oversee on referral or call in any such investigation. So there are strong checks and balances over the police in such matters, too.

Hon. Members will note that the Home Secretary has recently appointed Dame Anne Owers as the new chair of the IPCC. Dame Anne, former chief inspector of prisons, has a formidable public reputation, not only as an expert in criminal justice matters, but for her integrity and independence from the Government.

The MPS and the Crown Prosecution Service are jointly reviewing the reasons for the collapse of last year’s trial of five suspects relating to this case. This

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review is focusing specifically on the methodology, decisions and tactics adopted by the prosecution team, including any omissions in relation to disclosure and the use of the assisting offender provisions in the Serious Organised Crime and Police Act 2005. I realise that this review will not answer all the issues that might be raised in a judicial inquiry, which remains the Morgan family’s preferred outcome. However, it might have a bearing on how we could frame any judicial inquiry, should that be the way forward. It would also help the MPS and the CPS consider what options would be available to them, were they to look to prosecute those responsible in future. This report has been much delayed, partly because the MPS and the CPS have been considering the forensics aspects, but I understand that it will be completed shortly. The MPS has offered to brief the family and their representatives on the findings.

Jacqui Hames’s evidence to the Leveson inquiry has brought these issues into even sharper focus this week. That inquiry has now turned from considering press practices alone to focusing on the relationship between the press and the police, whether those relations were inappropriate or indeed corrupt, and what bearing they might have on how the police conducted their investigations into phone hacking.

The detailed investigation of specific cases, such as the Morgan case, might be considered to be more a matter for this second part of the inquiry, although it is clearly a matter for Lord Justice Leveson himself to decide how far he wants to investigate specific cases, such as this part of the inquiry.

Given all this ongoing work, it is important to consider what options are now available to identify and address police corruption and bring those responsible for Daniel’s murder to justice. As I have mentioned, the Morgan family has called for a judicial inquiry and this call has been endorsed by the Metropolitan Police Authority. However, such an inquiry is unlikely to be quick—a key concern for Daniel Morgan’s mother—and it cannot directly lead to prosecutions. Any such prosecutions based on what the inquiry may unearth would need to follow further police investigations. I recognise that this would satisfy the Morgan family’s demands and we are considering carefully whether this is the right way forward. The Home Secretary and I have not ruled out ordering a judicial inquiry at this stage. The Home Secretary wrote to the Morgan family’s solicitors yesterday and will do so again shortly with her decision on the way forward.

Any decision will need to take into account whether the MPS might invite another police force to conduct a police investigation, particularly focusing on the allegations of corruption in this case. There may yet be value in this course, involving officers with no connection to the MPS investigating allegations of police corruption, because even now aspects of the alleged corruption have not been properly investigated. The MPS has not ruled out this option.

Were such an investigation to proceed, any judicial inquiry would be limited in what work it could do alongside these investigations. An alternative might be for the Government to ask a Queen’s counsel to supervise the investigation of the corruption aspects of the Morgan case, again by an outside force, involving police officers with no connection to the MPS. This option would most likely be quicker, with a QC providing the integrity and independence required.

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In conclusion, I reiterate the Government’s commitment to seeing that all that can be done is done to bring justice for Daniel Morgan and his family. Similarly, the MPS is also fully committed to seeing that justice is done. The Home Secretary continues to take a personal and active interest in this matter. The hon. Gentleman asked that we remain open-minded about this matter. I assure him that we do. I am committed, as he is, to making sure that we get to the bottom of this matter, in one way or another.

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South West Marine Energy Park

4.30 pm

George Eustice (Camborne and Redruth) (Con): It is a pleasure to serve under your chairmanship for this debate, Mr Betts.

Looking back through some of my notes, I was reminded that a little more than a year ago, on 15 February 2011, we were last in this Chamber to discuss marine energy in the south-west, in particular in Cornwall. I am pleased that quite a lot of progress has been made over the past 12 months. In my speech last year, I referred to the renewable obligations certificate and how in Cornwall we needed to be given five ROCs, as Scotland has, and I am delighted that the Government have made some strong moves in that direction. We talked about the importance of focusing on and joining up the infrastructure in the south-west, and the decision to have a marine energy park in the south-west brings some of those ambitions to fruition. We talked about the importance of funding to bridge the risk and potential for wave-power projects, and a number of device developers have benefited from some Government support to establish their devices.

A great deal has been achieved, therefore, although I was reminded that it has happened not only in the past 12 months. In the summer of 2009, we talked about the potential for a marine energy park in Cornwall, when the Minister of State, Department of Energy and Climate Change, my hon. Friend the Member for Bexhill and Battle (Gregory Barker), then the shadow Minister, first came down to Cornwall, to the Tremough university campus. I was talking to someone in Cornwall recently who said, “Are you doing this then? When you said that, we thought it was only a story. We didn’t think it was actually going to be done.” So it is good to see that, in this Parliament, the Minister is delivering what he said, and we welcome that.

My constituency is home to the Wave Hub project, which is the central element of the new marine energy park. It is the first test facility of its type in the world, and it enables us to test commercial-scale arrays of marine energy devices. The smaller FaBTest project in Falmouth bay is linked, and the two facilities are at the heart of the marine energy park, so I have a direct interest in seeing it work. The facilities are supported by a strong supply chain in Devon and Cornwall, a strong university at Plymouth, which does a lot on marine biology, and the academics at the university of Exeter and the Camborne school of mines down at Tremough, which is doing a tremendous amount of work on researching moorings and other issues.

Since our debate a year ago, two device developers have signed agreements to plug into the Wave Hub facility off Hayle: Ocean Power Technologies, with Government support, is developing a device that we hope will deploy next year; and later this year a new entrant, Ocean Energy, hopes to deploy its device.

Before I move on to the main thrust of my comments, I want to talk about the marine renewables deployment fund and its importance. The Minister has already suggested that he anticipates that about half the £20 million set aside by the Department to encourage green energy will go to wave power. In response to a recent question that I asked, he said that he expected a significant sum

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to come down towards my part of the world, which I welcome. I understand the reluctance to commit in a rigid way, because the Department wants to keep its options open. With a number of people asking what the marine energy park delivers, however, an important principle to establish is that projects in such a park should at least be given some priority treatment in attracting funds to develop the deployment of marine devices. Wave Hub still has two berths left on its device, and we are anxious to attract additional device developers.

Another area that will be equally if not more important to the success of the marine energy park is removing some of the barriers that currently confront developers. That has always been one of the key issues that we wanted to see dealt with in a marine energy park. How can we simplify the consenting process? How can we make consultation less onerous than, frankly, it is? In doing so, we need to consult closely with the Minister’s colleagues in the Department for Environment, Food and Rural Affairs, because a lot of the decision making is by the Marine Management Organisation. The Crown Estate also has quite a big role to play. I want to argue that we should learn lessons from other countries in the world—in particular, Norway, which has a fantastic track record in adopting a pragmatic approach to device developers and not standing in their way. A few comparisons of what we do for marine device developers in the UK and the approach in Norway might be useful.

First, on the application process, in the UK a developer has to apply to the MMO for all construction, all alteration or any improvement of any works affecting the sea bed. That includes all renewable energy projects, unless they are huge and much larger than what we would be talking about in marine energy at this stage. Compare that with Norway, where simply the local municipal authority or, in some cases, the regional coastal authority makes such decisions.

On leases, in the UK developers need to get a lease for the sea bed for any fixed structures, including any anchors, even before they can deploy a test device. Leases are always needed from the Crown Estate, and they are negotiated on commercial terms. Compare that with Norway, which has no specific need for a sea bed lease—in particular, for small test devices—and a much more pragmatic approach is taken. Devices with temporary anchorage or deployment are deemed to have a low-risk impact, so there is no need for a sea bed lease, which is a considerable cost saving.

Dr Sarah Wollaston (Totnes) (Con): Does my hon. Friend accept the importance of the marine energy park to companies in our west country constituencies, certainly in my constituency? The Searaser device, invented by Alvin Smith who lives in Dartmouth, is being developed locally, so there are huge implications for him. He is pleased to have a marine energy park that he can use for sea trials.

George Eustice: I certainly agree. I hope to achieve in the debate some progress on what we want the marine energy park to deliver. My hon. Friend is right that such marine energy developers are taking considerable risks. They are pioneers of the industry and are expected to invest large sums of money in development. The least

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that the Government and their agencies can do is to get on and make things as easy as possible for them as they develop those pioneering ideas. I completely agree with her point.

Jim Shannon (Strangford) (DUP): I thank the hon. Gentleman for bringing the matter before the House today. In my constituency of Strangford—in particular, with SeaGen at Portaferry—there have been successful trials of harnessing wave and tidal movement at the narrows of Strangford lough. Does he agree that there could be an exchange of information from different regions in the United Kingdom? In this case, what we have learned in Northern Ireland might be of advantage to those in England.

George Eustice: Indeed. The more we join up such academic research, the better. I know that EMEC—the European Marine Energy Centre—in Scotland worked closely with our academics at Tremough. I would be delighted to see us also working with academics in Northern Ireland, to ensure that we learn the lessons that they have learned.

Another area in which there is a big difference between Norway and the United Kingdom is consultation, which is onerous in the UK. The process in the UK is clearly defined, first a pre-screening consultation with the MMO and then a formal environmental assessment, which is the screening and scoping element. After that there is all the documentation preparation, with a series of environmental statements, and only then the formal application, which is followed by a whole bout of consultation, feedback and mediations to adjust things. Only then can there be a licence determination, after which there is a wait for the licence to be issued, which may cause problems and take time. Then, there are management returns and monitoring reports, and finally the process of decommissioning and proving compliance. The consultation procedure is very complicated.

Let us compare the procedure with that in Norway, which takes a much more pragmatic approach. The handling authority may choose to consult with other bodies, such as fisheries organisations or harbour authorities, but the consultation is loose, pragmatic and sensible. Typically, it takes no more than four weeks. On the environmental assessment here, the MMO must decide in every case whether there should be an assessment, whereas in Norway there are formal environmental assessments only for pre-defined and designated environmentally sensitive areas. In all other cases, self-assessment is generally the guiding principle. Here, the Crown Estate frequently insists on onerous requirements for insurance for decommissioning, but there are no such formal requirements in Norway. There are no application fees in Norway, where the process is completely free because it has maintained a light-touch system.

What happens here in the United Kingdom? Two hours of free pre-application advice is the most that is available, and after that advice is charged at £80 a hour to device developers. An application typically costs from £7,200, which is a huge additional cost. There is also a time implication. In the UK, an application to deploy might typically take nine months, compared with just one month, or three months at the outside, in Norway.

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We can learn a lot from Norway. Clearly, we have different structures here. We have the MMO, with which we must work. I want to spend a few minutes reflecting on how to incorporate into our approach some of the lessons from Norway. First, could we not require the test facility operator to be responsible for deploying test devices within its test facility? The important point is that there is a lot of duplication. Wave Hub and FaBTest have had to go through the onerous screening, scoping and consultation processes. If someone wants to deploy a device on that test facility, they must go through the same process again. There is a lot of duplication, and giving authority to test facility operators would be the equivalent in Norway of giving harbourmasters greater control.

Secondly, can we simplify the consultation process within the test areas, given that they have been through huge amounts of consultation and screening? Let us remove the need for the screening and scoping stage because, again, it duplicates work that has already been done. The estimates suggest that, if just that element were removed, three months would be chopped off the application time. If the Norwegian authorities can agree the deployment of these devices in just a month, or three months at the outside, let us set a more stretching and challenging time scale for the MMO. Let us not allow it to sit on projects, letting them stew for months on end, and allowing matters to drag on for nine months. Let us tell it that we expect it to deliver within a month or two months.

Finally, we must enable the MMO to exercise more judgment, particularly on minor alterations to deployment. Sometimes, when a device developer is ready to deploy, it may decide that it needs to change a small aspect of its deployment. At the moment, it must go back to square one and go through the complicated consultation procedure again. The MMO must then consult with other people again, even when that is unnecessary because the suggested change is quite small. The ability to close out consent conditions would be more sensible, and the MMO could exercise judgment without necessarily having to return to the statutory consultees over and again.

Those are technical points, but if we are to make the marine energy park work, a key component is dismantling the barriers that stand in the way of marine energy developers. They take tremendous risks to pioneer an industry. Sometimes, they invest tens of millions of pounds to develop the technology. The very least that the Government can do is to make sure that Government-controlled agencies get off people’s backs and allow them to get ahead and to make a success of the industry.

4.45 pm

The Minister of State, Department of Energy and Climate Change (Gregory Barker): I congratulate my hon. Friend the Member for Camborne and Redruth (George Eustice) on yet again securing a debate. He is an extraordinary champion of marine power in the south-west. It is no discourtesy to any of his colleagues in the region to say that he has undoubtedly been the most tenacious champion over a number years, and preceding his time in the House, in encouraging the formation of marine energy parks, and driving in the Conservative party an ambitious transformational approach to harnessing the power of the sea. He previously secured a Westminster Hall debate on funding for wave

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power, and his constituency is home to the ground-breaking Wave Hub testing facility for wave energy devices, which remains an important vital component of the South West Marine Energy Park.

I commend my hon. Friend the Member for Totnes (Dr Wollaston) for her comments and interest, and the real and growing interest in her constituency. I also commend the hon. Member for Strangford (Jim Shannon) for his comments; I look forward to visiting Northern Ireland to see for myself the huge potential for marine energy, and some of the exciting developments there.

Jim Shannon: The Assembly in Northern Ireland, which has devolved responsibility for this matter, has just concluded legislation on marine technology, so it might be possible to take advantage of that, because people will be eager to tell the Minister what we have done.

Gregory Barker: I look forward to opening the post. During the next few minutes I will endeavour to answer in detail the points that my hon. Friend the Member for Camborne and Redruth made. He gave a serious critique of the progress we are making, and the progress that we could make if we improved further the marine energy park and the processes underlying it. If I am unable to give an immediate response, I will write to him, and I will study and reflect on his important points and examples. He is an important voice on this agenda, and I assure him that we take it seriously.

Alongside the other UK marine energy testing facilities at EMEC in the Orkneys, and the marine drive train testing facility that is opening in the spring at the National Renewable Energy Centre—NaREC—in the north-east of England, Wave Hub helps to give Britain a unique offer to this emerging sector not just in the British Isles, but globally. Here in the UK, we continue to be a global focus for an important long-term global industry. It is vital to maintain that competitive advantage, given the significant and increasing interest in other parts of the world. I am constantly looking at how to push forward that agenda in partnership with the industry.

Combining the world-beating testing infrastructure that we have in the UK, particularly in the south-west, with world-class academic expertise, and the funding stream for marine energy, which I will talk about briefly, the coalition has created in the UK the most attractive environment for developing marine energy. It is still a nascent industry, but we believe that it is now the most encouraging environment anywhere in the world, and I am very proud of that.

Before I say anything about today’s topic, let me use this opportunity to welcome the report from the Select Committee on Energy and Climate Change on “The Future of Marine Renewables in the UK”, which was published last week. It underlines the great potential benefits that development of a thriving marine energy sector can bring to the UK, and recognises the coalition’s work to support development of the sector. When I spoke to the Committee last year, I underlined the Government’s determination to grow a thriving marine sector, building on Britain’s wealth of experience and expertise. We will carefully review the report and respond to its recommendations in due course.

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I appreciate the concerns voiced by my hon. Friend. He has been a champion of this agenda in the past and it is right to listen to his concerns and take them seriously. I assure him that the Government are fully committed to maximising the benefits that the wave and tidal sectors can deliver. That commitment is explicitly underlined in the coalition agreement, and I am committed to ensuring that it is delivered.

I want to know if there are inefficiencies in the system, and I always look with interest at other models from abroad, or at best practice wherever it is found, to see how that can help to improve the design of our emerging marine economy. That is why I established the marine energy programme board, which brings together the Government, regulators and the marine energy sector. The programme is a vehicle to drive through ambitious changes that will enable marine energy to prosper, including by streamlining the leasing and licensing processes. The network of marine energy parks that we are creating around the UK will be another vital tool for driving home success on the ground.

Last month, I was delighted to be invited to visit the south-west and launch the first marine energy park, which received widespread positive coverage in the press. As hon. Members may know, marine energy parks are central to the Government’s goal to transform prospects for the sector, and they are something that I championed both in government and opposition.

Although wave and tidal technologies are very different, the clustering of activities through marine energy parks can help to drive the required innovation and growth in the sector, in a way that is not dissimilar to what clustering in silicon valley did, and continues to do, for the IT industry. Last year, I challenged the south-west to develop the UK’s first marine energy park. The expertise in the south-west, and the region’s commitment to developing wave and tidal energy, meant that it was among the first to successfully create such a park. I commend the south-west, and in particular its MPs who have been driving the agenda, on the dedication and willingness that has been shown in delivering this outstanding work, and on everything that has been done to turn the vision into reality. It is gratifying to see that the south-west is already using the marine energy park as a way of fostering co-operation and collaboration between sector players in a co-ordinated action to maximise opportunities open to the region, whether by encouraging investment or by maximising access to funds at Westminster or even European level.

I touched earlier on the marine energy programme. Working with key industry and Government stakeholders on the programme board, we can focus on the real issues facing the sector and show the leadership that is needed to tackle the barriers that impede development, and drive the sector forward. I am not complacent about the need to remove more barriers and create a glide path to deployment, which is why I take my hon. Friend’s points so seriously.

One of the first major tasks to which the marine energy programme board contributed was the review of the renewables obligation banding. The evidence that members of the board fed into the review through the board’s finance working group was invaluable, and led to the consultation proposal for enhanced levels of

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revenue support for wave and tidal stream to five renewables obligation certificates per megawatt, subject to a 30MW project cap.

The consultation on the proposed banding is now closed, and although I am obviously unable to prejudge the final outcome of the review, the work will stand us in good stead when reaching the right decision about the level of ROCs needed to take the sector through to early commercial-scale deployment. The Government’s response to the consultation will be published in spring.

Our work with the sector through the programme board has demonstrated that as well as revenue support, the sector needs capital investment if it is to move towards commercialisation. I therefore announced last June that following the success of the £22 million marine renewables proving fund, the Department of Energy and Climate Change has also allocated up to £20 million for the development of pre-commercial wave and tidal arrays. I remind hon. Members that that funding represents a significant proportion of the overall DECC innovation funding allocated for the spending period at a time of severe retrenchment and austerity, so it is a good outcome for the sector.

My officials have been working with the sector on designing the marine energy array demonstrator fund, or MEAD. The overall framework of the scheme is nearing completion, and we envisage that it will be open for applications this spring. More recently, there has been a welcome announcement of additional funding from the Scottish Government. It is important, however, that that funding complements the support already put in place by DECC, the Energy Technologies Institute, the Technology Strategy Board and others, as well as the opportunities presented by the EU new entrants reserve. My officials are working with their Scottish Government counterparts to ensure that funding is complementary, used effectively, and offers best value for money. However, the success of the industry does not rest solely on financial support.

We have also made progress on planning and consents—a point close to my hon. Friend’s heart. In particular, DECC completed the offshore energy strategic environmental assessment for wave and tidal energy in English and Welsh waters last year. The SEA complements the existing work for Scotland, Northern Ireland and the Severn estuary, and opens up suitable sites across the UK for consideration concerning the potential deployment of marine energy devices.

My hon. Friend raised concerns about the Crown Estate, and I will take them on board when I further consider his remarks. We should not, however, overlook the work that the Crown Estate is doing with the sector to enable commercial-scale deployment. At the end of last year, the Crown Estate launched a tidal stream leasing round in Northern Ireland, which followed the success of the world’s first commercial-scale wave and tidal leasing round, in which the Crown Estate leased 11 sites in Scotland’s Pentland firth and Orkney waters, which could extend to 1.6 GW of capacity.

Work is already under way to consider how the practicalities of sea-bed leasing can be best approached. Later this year, the Crown Estate plans to run a consultation with industry on future wave and tidal leasing, which will be informed by work that it is undertaking to clarify the size and distribution of wave and tidal energy resources across the UK. Leasing for small test deployments

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is currently dealt with case by case through a newly set up fast-track process. Such deployments should not be subjected to the same complexity of process as larger, commercial-scale deployment, and I would be keen to hear whether that is the experience of stakeholders.

On licensing and planning, we need to build on the work that has already started in Scotland to ensure that a coherent and efficient system of planning and consenting is adopted across the UK. I have asked the Marine Management Organisation, and Marine Scotland, to work with the sector to look at ways of ensuring that the licensing process is as efficient as possible, while maintaining the necessary level of protection for the environment.

The Department for Environment, Food and Rural Affairs is reviewing the implementation of the birds and habitats directives, which are important environmental directives that affect the renewable energy sector. The views of the offshore renewables sector are being fed into the review, so that the right balance between efficient deployment of marine energy and the safeguarding of our marine habitat can be struck. I will, however, take on board my hon. Friend’s comments about Norway.

George Eustice: At the start of my speech I noted that the issue also involves DEFRA. Would the Minister be

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willing to meet the chief executive of Wave Hub, the Under-Secretary of State for Environment, Food and Rural Affairs (Richard Benyon) and me to thrash out the detail of some of these problems, which he could then feed into the programme board?

Gregory Barker: That sounds like an excellent idea. Obviously, I cannot commit my hon. Friend the Under-Secretary of State to that, but he is an amenable chap and I am sure that, subject to our diaries, we can work something out.

We have achieved a lot since our last debate on wave energy, but I recognise that there is much more to be done and we do not intend to rest on our laurels. Over the coming months, the Government will continue to work on a number of priority areas. It is important to ensure a place for marine energy within electricity market reform proposals, and the next meeting of the marine energy programme board will be in Scotland in the summer. There is a lot more to do, but the Government have a lot of ambition. I am grateful to my hon. Friend for his continued enthusiasm and support for this exciting agenda.

Question put and agreed to.

4.59 pm

Sitting adjourned.