Finance Bill


The Committee consisted of the following Members:

Chairs: Mr Jim Hood  , Mr Peter Bone 

Baldwin, Harriett (West Worcestershire) (Con) 

Barclay, Stephen (North East Cambridgeshire) (Con) 

Blenkinsop, Tom (Middlesbrough South and East Cleveland) (Lab) 

Burley, Mr Aidan (Cannock Chase) (Con) 

Elphicke, Charlie (Dover) (Con) 

Garnier, Mark (Wyre Forest) (Con) 

Gauke, Mr David (Exchequer Secretary to the Treasury)  

Gilmore, Sheila (Edinburgh East) (Lab) 

Gyimah, Mr Sam (East Surrey) (Con) 

Hamilton, Fabian (Leeds North East) (Lab) 

Hands, Greg (Chelsea and Fulham) (Con) 

Harrington, Richard (Watford) (Con) 

Hilling, Julie (Bolton West) (Lab) 

Hoban, Mr Mark (Financial Secretary to the Treasury)  

Jamieson, Cathy (Kilmarnock and Loudoun) (Lab/Co-op) 

Kirby, Simon (Brighton, Kemptown) (Con) 

Lavery, Ian (Wansbeck) (Lab) 

McKenzie, Mr Iain (Inverclyde) (Lab) 

McKinnell, Catherine (Newcastle upon Tyne North) (Lab) 

Malhotra, Seema (Feltham and Heston) (Lab/Co-op) 

Mann, John (Bassetlaw) (Lab) 

Mearns, Ian (Gateshead) (Lab) 

Mills, Nigel (Amber Valley) (Con) 

Morrice, Graeme (Livingston) (Lab) 

Morris, Grahame M. (Easington) (Lab) 

Pugh, John (Southport) (LD) 

Rees-Mogg, Jacob (North East Somerset) (Con) 

Reeves, Rachel (Leeds West) (Lab) 

Smith, Miss Chloe (Economic Secretary to the Treasury)  

Swales, Ian (Redcar) (LD) 

Syms, Mr Robert (Poole) (Con) 

Williams, Stephen (Bristol West) (LD) 

Williamson, Gavin (South Staffordshire) (Con) 

Wilson, Sammy (East Antrim) (DUP) 

Simon Patrick, James Rhys, Committee Clerk s

† attended the Committee

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Public Bill Committee 

Thursday 24 May 2012  

(Morning)  

[Mr Jim Hood in the Chair] 

Finance Bill

(Except clauses 1, 4, 8, 189 and 209, schedules 1, 23 and 33 and certain new clauses and new schedules)

9 am 

Clauses 11 and 12 ordered to stand part of the Bill.  

Clause 13 

Champions League final 2013 

Question proposed, That the clause stand part of the Bill. 

Cathy Jamieson (Kilmarnock and Loudoun) (Lab/Co-op):  I was waiting to see whether the Exchequer Secretary to the Treasury had something to say on the clause; I look forward to hearing what he says later. 

Before I proceed any further, I refer to the Register of Members’ Financial Interests, which will show that I am a member of the Killie Trust, the Kilmarnock football club supporters organisation. I heard a couple of moments ago that the Exchequer Secretary is an Ipswich supporter and that the Economic Secretary to the Treasury is a Norwich supporter, though they are sitting side by side. It will be interesting to see whether there are any divisions between them this morning, other than football divisions. Hopefully there will be no need to bring in the mounted police, as there sometimes is in my part of the world, where those with football allegiances can literally come to blows on some occasions. 

As a Kilmarnock supporter, I generally have little interest in champions league finals. The honour of playing in the final is not an honour that has been bestowed on my local team. They once played in the European cup—the forerunner to the champions league—in 1965, when they won the Scottish league. As they have won only two other major trophies since then, I could not be accused of following football simply to pick a winning team, although we have, of course, won the Scottish communities league cup this season. 

This weekend, following all the excitement of the champions league final last week, I will be virtually camped out in the constituency of my hon. Friend the Member for Livingston, as I will be attending the Scottish amateur cup final, in which Hurlford Thistle from my constituency are playing. On Sunday, I will attend the Scottish junior cup final, in which the local team whom I support, Auchinleck Talbot, will be playing. For those who are not au fait with Scottish junior football in the way that Mr Hood will be, it is not 22 girls or boys running around on the pitch; it is a fairly robust form of the sport, involving semi-professionals who have day jobs, but who have the opportunity to

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play in the evening or on Saturday afternoons. It is a great sport, and if anyone has not been along to see it in Scotland, they should come and visit. I would be more than happy to show them the highlights, and particularly the Ayrshire juniors. 

Returning to the champions league final, I had wondered whether the Minister would speak to the clause. It is the kind of clause that, in some years, might not seem all that controversial, as we all want to ensure that major sporting events come to the UK. However, in this time of austerity, and what with the notion that we should all be in it together, there needs to be some explanation and scrutiny of why highly paid footballers are not perceived to be paying their fair share. I know that similar arrangements were put in place in the past, particularly for the UEFA cup final, but at a time when families, businesses and everyone else are being squeezed and finding things difficult—though at the same time there are tax cuts for the highest-paid—many people will wonder whether the clause is right. I am sure that some of my hon. Friends will want to speak about this. I say that as I understand that UEFA has made the proposal a condition of hosting the 2013 champions league final. 

John Mann (Bassetlaw) (Lab):  Would my hon. Friend care to reflect on the fact that it may not be that UEFA has made that a condition of awarding the 2013 champions league final to the Football Association and Wembley, unlike in 2011? Therefore, we have greater options available to us today. 

Cathy Jamieson:  I hear what my hon. Friend says and that is exactly the point that I want to make, because we have been given to understand that the proposal is part of the conditions laid down by UEFA. 

Stephen Barclay (North East Cambridgeshire) (Con):  Will the hon. Lady give way? 

Cathy Jamieson:  I would like to finish this point, because it is important. I hope that the Minister will come in and give some clarification at this stage, so that we can continue to scrutinise the clause. 

It is important to understand whether the proposal was a condition, whether it was hinted at or whether it was suggested behind the scenes that the champions league final would be awarded if the condition was met. 

Stephen Barclay:  In order to display the consistency of her argument, will the hon. Lady reassure the Committee that the previous Labour Government never granted exceptions for similar sporting events? 

Cathy Jamieson:  I want to come on to a range of issues around sporting events in general. As I outlined this at the beginning, it may well be that on some occasions, people would see a lot of money coming in as a result of these events. I am not arguing against hosting the champions league final—it would be a great thing to do. Similarly, the Olympics will provide opportunities for a whole range of businesses and organisations, and the 2014 Glasgow Commonwealth games will of course be important for the economy there. 

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However, before I return to the point made by my hon. Friend the Member for Bassetlaw—I will give way to the Minister, should he choose to intervene—it is important to note that at a time when people are feeling the pinch and having their budgets squeezed, they will want an explanation and to understand the proposal. They will also want an assurance that the clause relates particularly to non-resident footballers. 

I mentioned earlier my local amateur and junior football teams, who could only dream of the kind of money that is involved in the champions league final. People from my constituency or elsewhere will be travelling on Saturday and Sunday to support their local teams. The bus on Saturday, for example, costs £7, and there is also the cost of the match ticket for the amateur cup final. That is simply outwith the affordability of some of the lowest-income families in my constituency. Similarly, on Sunday, many people will find the cost of travelling simply too difficult for them. They do not have people paying for them to go to cup finals, and are not given hospitality. They do not get any such opportunities. Many of these people are also running grass-roots sport and football activities in our communities daily, supporting the boys’ clubs and, increasingly, the girls’ football teams. I see the Minister nodding at that. Of course, Scotland has some great women footballers, but I will resist the temptation to divert into that area. It is important that the clause is scrutinised properly. 

The Committee has discussed the principles and morality of some people being exempted from taxation in particular circumstances while others are not, so it is important that, notwithstanding all the business and economic benefits that could potentially accrue, we understand how the decision was taken, what the discussions were and exactly what conditions were included. 

Ian Mearns (Gateshead) (Lab):  We have lost out, and had sporting occasions not come to the United Kingdom, because other Governments have given guarantees on taxation to authorities such as UEFA. Arsenal were bidding to host the UEFA cup final in 2010, but lost out to Germany, because the German Government gave UEFA tax assurances regarding the event. What interests me is that we treat different sports differently. I wonder why. 

Cathy Jamieson:  I thank my hon. Friend for making that point. It is important to understand why we lost out in 2010, and why the event has been allowed to go ahead this time. As other hon. Members have mentioned, the existing UK tax law in this area, as I understand it, was introduced after Her Majesty’s Revenue and Customs won a landmark case back in 2004 against the tennis star, Andre Agassi, allowing it to claim tax on a proportion of worldwide endorsement earnings. That is significant because it ties in not only the earnings from an appearance in a particular match—for example, the final—but any endorsement, or anything else, connected with it. I would be interested to hear the Minister’s views on that point. 

Of course, this aspect of tax legislation affects not only footballers, but sportspeople more widely, as I have said. It also potentially affects musicians, actors, and anyone else who appears in the UK in such contexts. My hon. Friend the Member for Gateshead is correct that in previous bids, the UK lost out. My understanding is that Wembley was discounted for the champions

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league final in 2010 after the UK failed to provide an assurance to UEFA that players competing in the final would not be taxed by the UK Government. I understand that at the time, the UEFA president, Michel Platini, confirmed that taxes were the reason why the bid was lost. UEFA maintained that footballers should be taxed in their country of residence, and to tax them separately in every country in which they played matches would be both unfair and unnecessarily complicated. 

Wembley won the bid to host the 2011 champions league final after the Government agreed to a tax exemption for non-resident players and officials, which was legislated for in section 63 of the Finance Act 2010. That was passed in what we describe as the wash-up before the Dissolution of the House prior to the 2010 general election. The measure was therefore probably not subject to a debate on the substantive principle—a debate of the kind that we have the opportunity for today. 

Ian Mearns:  It occurs to me that the question might become academic, because the proposals refer to players who are resident overseas, playing for overseas clubs. Of course, two British clubs might be competing in the champions league final at Wembley in 2014. 

Cathy Jamieson:  My hon. Friend makes a good point. In theory, of course, that is entirely possible, and we look forward to such a situation with interest. However, I will not say which side I would support if such a final took place. Suffice it to say that in my household, there are a couple of Kilmarnock supporters, but my son supports an English premiership team who play in red jerseys. I will leave it to hon. Members to decide which team will not be appearing in the champions league final. 

When Wembley won the bid for 2011, arguments in favour related to the potential economic impact. Some business people suggested that tax should be waived on player earnings in view of the much bigger picture and the feeling that the country as a whole would benefit from staging the final, especially in terms of income generation. There would be the so-called multiplier effect: new tourists would come, and people would return in the future. It was also felt that as a country we should be taking the potential for sport to grow our economy far more seriously, given the contribution that sport makes to the social, cultural and economic life of our country. At the time when the discussions were taking place, it was estimated that the benefit that would be around 2.5% of gross domestic product. 

9.15 am 

The point was also put forward that successfully staging sporting events such as the champions league final would not only improve the UK economy but give us the opportunity to present ourselves to the wider world, improve our standing, enhance the country’s self-esteem, and generate valuable revenue. Having seen the impact of major sporting events, I know that there is a strong case to be argued. 

None the less, it is important, as I said at the outset, to scrutinise the issue in detail, because people will want to understand the process by which the decision was

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taken. They will want to understand exactly what it means in practice and whether the same principle will be applied to other sporting events, should the opportunity arise. 

I want to ask the Exchequer Secretary about other sporting events, such as the 2014 Commonwealth games in Glasgow. On 26 January 2012, the Treasury announced that money earned by non-resident athletes in relation to a performance at the 2014 Commonwealth games would be exempt from taxation, but no further detail has been provided so far. I understand that specific legislation will be incorporated in next year’s Finance Bill, so it would be useful to have information from the Minister on how he intends to proceed with that. 

Of course, as has been pointed out, other sporting events do not involve the same tax exemption for non-residents that will be enjoyed by people competing in the champions league final, the Commonwealth games and the Olympics. For example, triple Olympic sprint champion Usain Bolt withdrew from the Crystal Palace diamond league meeting in 2010 because of the UK tax that he would have had to pay, and on that basis, apparently, he has not competed here since. 

I mentioned tennis earlier. Rafael Nadal announced that he would not play in the 2012 pre-Wimbledon Queen’s Club tennis tournament owing to UK tax demands. The Lawn Tennis Association’s chief executive, Roger Draper, lobbied the Government ahead of the 2012 Budget for tax exemptions for major tennis events, amid fears that the Association of Tennis Professionals world tour finals could leave London when its contract ends in 2013 unless UK tax laws are altered. 

Last year, in 2011, the former chief executive of the All England Lawn Tennis Club, Ian Ritchie, said: 

“What we want is some action. Nobody has any problem with taxation on prize money but, in individual sports, athletes are taxed on their global endorsement income when they come to this country.” 

Perhaps the Minister will tell us how that will be dealt with. Ian Ritchie went on to say: 

“If Lionel Messi comes here for a Champions League final he doesn't get taxed on his endorsement income but when Roger Federer or Rafa Nadal come here they do.” 

Again, we see anomalies there. It was described as a disincentive and as something that would impact on how players would make decisions. This is about not only football, tennis and athletics but golf, which is important in my part of the world, as it is elsewhere in the UK. Some golfers will not come and play in particular tournaments because of the regulations. 

Mr Aidan Burley (Cannock Chase) (Con):  The hon. Lady has not yet mentioned rugby union. Does she know whether this is an issue for the rugby union world cup, which is being hosted in this country in 2015? 

Cathy Jamieson:  The hon. Gentleman makes a good point. That is one of the questions that I dreaded being asked. I have to confess to being an out-and-out football supporter and not a follower of rugby union. I would not presume to comment on what is likely to happen in that event, but he raises a good point. I am not the Minister, but the Minister is here, and I am sure that he will answer that question in due course. 

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Ian Mearns:  The distinction that I see between the different sports is that a player in a tennis tournament would come here to play for a fortnight, but Lionel Messi comes for one evening. By and large, teams fly in on the morning of a game and fly out immediately afterwards. When Chelsea won in Munich last week, they were back in London later that night. We are talking about one night, as opposed to a tournament that can last a fortnight or, in the case of a world cup, possibly a month. It is a different scenario, from that perspective. 

Cathy Jamieson:  Again, my hon. Friend makes some valuable points, which I am sure the Minister will answer in due course. I return to my questions about the clause, which I hope the Minister has on his radar and will be able to answer. I would like to know the exact nature of the discussions that took place. Was the requirement to exempt non-resident players and officials from taxation a condition made by UEFA, or was it merely hinted that that would be a good thing to do? I would also like him to answer the questions about the Commonwealth games. 

What assessment has the Minister made of the tax receipts from all non-resident sportsmen and women competing in the UK in the past couple of years? That would enable us to see how much money might accrue to the Revenue. Has consideration been given, in any of the discussions with UEFA officials, to the impact of the income tax exemption on countries that would like to host a champions league final but cannot afford to offer such exemptions? 

To return to my earlier points about grass-roots football, many of our young people across the country see football stars as role models. Many of those football stars, even highly paid ones, spend time in their communities, support local charities and different organisations, and get involved in community coaching. That is not always the case, but many of them do. Would it not be worth considering some kind of legacy for grass-roots football or grass-roots sport from events such as the champions league final? 

Seema Malhotra (Feltham and Heston) (Lab/Co-op):  My hon. Friend raised an important point about sending the right message about sport overall, including by investing in sport for young people. I totally support her on the question of how we are treating grass-roots sport, and I would appreciate some feedback from the Minister about that. My other point relates to the implementation of UEFA’s requirement. Does my hon. Friend agree that it would be helpful to know whether the Minister has had any discussions with other countries about how the requirement is being implemented, to determine whether this is the best way of doing it, or whether there are other ways ? 

Cathy Jamieson:  I thank my hon. Friend for raising those points. It is important to have discussions with other countries, because one concern about football generally is that with the involvement of big business— I will not talk specifically about particular football clubs—things have got out of kilter. Football clubs that grew out of local communities and individual supporters are now being bought and sold as commodities, rather than genuinely involving the fans. That is why organisations

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such as Supporters Direct are so important, and why football supporters’ trusts must continue to receive support from Government to ensure that fan involvement is encouraged where possible. That also helps to ensure that local communities get some benefit from the involvement of their local teams. 

The point made about grass-roots sport is extremely important. At a time of austerity when everyone is feeling the pinch, many ordinary supporters, particularly if they have become unemployed, might find it difficult to put their hand in their pocket and buy the season ticket that they are used to having bought for the past 10 or 20 years. They might find that they can now only go to home matches and not away matches because going to the away matches is far too expensive. They may perhaps think that spectacles such as the champions league final are not for them, irrespective of what team they support. As I said, they may not receive hospitality and get their tickets paid for, or be able to get the transport and everything else that would allow them to follow and support their team. 

It is important that we at least look at providing some kind of legacy for grass-roots sport. If at all possible, let us try to give an opportunity to some of the young people out in our communities who are doing their best, perhaps week in, week out, and who are playing football for the love of the game—not necessarily because they see it as a future career that will make them millions, but simply because it is a good, enjoyable and fun thing to do. It is part of keeping them fit and healthy. 

A couple of seasons ago, I saw a number of disabled young people on the pitch of Kilmarnock football club at half time, playing before a crowd of supporters who were cheering them on, albeit not the same kind of crowd that we would get at a champions league final. It was an opportunity to build their confidence. 

We have an opportunity to investigate the issue further. A huge amount of money circulates around football, and it could potentially be brought into the economy as a result of hosting the champions league final. We have to ensure that the public are with us on the decision that is made, understand the decision and do not see it as a tax break without any consequences for people who are already extremely well off. We have to ensure that they understand exactly who will be covered by the clause. Will it be the players, the officials, the entourage who come with them, and the hangers-on? That is the term sometimes used in my part of the world to describe people who have some kind of tangential involvement in the process. They are the people who take a bit of the money out of the game at every stage. The public need to understand that. 

The public also need to understand whether the Government’s policy position is only about football. Is it about other world-class events? Is it about rugby union, tennis or golf? Will we take this to be a principled policy position? Or will we have to deal with the issue on an ad hoc basis and say, “We will do it this time, because we will be told we cannot have the final unless we do it,” rather than saying “This is the way we want to proceed”? 

I have probably spoken long enough to raise all the issues. [ Interruption. ] I hear a reaction from Government Members; no surprise there. They would say that. I can also hear Labour Members, who say that they want me

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to continue. I have been a football supporter for many years, and there are lots of issues about football that I have not yet touched on, but I will resist the temptation to go further, as I do not want to try your patience, Mr Hood. I also want to give colleagues the opportunity to speak about the champions league final, and importantly, I want to hear from the Minister and scrutinise his arguments. 

John Mann:  In due deference to my hon. Friend, I am carrying my honorary Kilmarnock reading glasses. I will be coming back to the Kilmarnock spring, because it is hugely important, in terms of some of the myths peddled by the football world about the champions league final. I must first say that it was remiss of me— I take personal responsibility for this, and I am sure my colleagues will agree—not to have tabled a clarifying amendment that would have put into the clause the following opening line: “We, the British Parliament, recognise the supremacy of pan-European organisations in determining British taxation rates”, because that is what those who support the clause are about to do. There is one other pan-European organisation, comparable to UEFA, that attempts sometimes to dictate what happens in this country. We will leave it to the European Scrutiny Committee chaired by the hon. Member for Stone (Mr Cash) to scrutinise that in greater detail. 

9.30 am 

Here we have the pan-European UEFA telling the British Parliament, through the British Government, what British taxation levels should be. We are entering a new era. One can anticipate Government Members accurately pointing to the fact that in the wash-up a precedent was set by a pro-European Government led by my right hon. Friend the Member for Kirkcaldy and Cowdenbeath (Mr Brown). That is what this Government are now asking Parliament and this Committee to emulate. 

It is important that hon. Members be prepared to report honourably to their constituency associations what they have done and the principle that they have set here. When they do, they will plead the economic interests of the country. However, a few questions need to be asked. There are questions about whether it is great to have major sporting events in this country, but when it comes to the one-off champions league final, historical empirical evidence suggests that it would always work to the disbenefit, not the benefit, of the British economy. I intend to prove that point, so that hon. Members can make a rational judgment on the clause. 

Let me go back to the origins of the travelling football supporter. The football world has sold the Government the premise that hosting the champions league final will attract football supporters, who will come and spend lots of money. The figures given suggest an average spend of £500 per supporter visiting Wembley. I assume that is predicated on the presumption that no English or British team will be in the final. 

Sheila Gilmore (Edinburgh East) (Lab):  I am following my hon. Friend’s argument with interest. However, I have to ask if he really believes that people do not travel, given that recently in Scotland the followers of two Edinburgh teams travelled all the way to Glasgow for a cup final that could have been played in Edinburgh.

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They were keen enough to travel that distance. Unfortunately, one team—supported by my husband—was thoroughly trashed. 

John Mann:  That is an interesting aside. One could look at the economics of whether that Hearts-versus-Hibs final would have generated more for the economy if it were held in Edinburgh rather than Glasgow. One would look at the net contribution—at transport and the purchasing of petrol or bus and train tickets and so on—but also at the higher likely spend on certain refreshments that would have resulted if the match had been in Edinburgh. There is a trade-off. 

I come back to my point, because it is important. European cup finals, as they were called, started in 1956. There were no travelling supporters; it just did not happen. In 1963, when AC Milan were playing Benfica at Wembley in the European cup final, there were not lots of travelling supporters. In the famous Hampden final between Real Madrid and Eintracht Frankfurt—the 7-3 victory, with Di Stéfano and the rest—it was the people of Scotland who witnessed the final, not travelling supporters. 

That tradition was broken in 1967, when two Scottish teams progressed well in European competitions. Kilmarnock football club reached their pinnacle in the semi-final of what was called the European fairs cup, and on 18 May they visited Elland Road in Leeds— I happened to be present as a young boy—and were soundly thrashed. Nevertheless, there were a number of travelling Kilmarnock supporters, but that was inter-British travel. 

When it came to the European cup final of 1967, however, Glasgow Celtic were playing in Lisbon. That was the first time that a British club had played in the European cup final, and the famous Lisbon Lions won 2-1. For the economy, that final was notable and significant because it was the first mass-movement of football supporters across borders. Supporters travelled by aeroplanes from Glasgow, and all over Scotland, to Lisbon for the final. [ Interruption. ] Yes, an estimated 70,000 to 80,000 people went, and the majority, although not all, came back. That tradition has been maintained, but it has not been maintained across Europe. 

Ian Mearns:  On that final, I remember that the reporter Ian Wooldridge wrote in one of the national papers about being stopped by a couple of hitchhikers as he drove north out of Lisbon to catch a ferry. He asked the two lads where they were going. He said he was going back towards Glasgow, but they said, “No, we want to go to Edinburgh,” and they would not get in the car. 

John Mann:  What can undoubtedly be said is that the supporters of Glasgow Celtic made a significant contribution to the Portuguese economy during their stay. 

Mr Iain McKenzie (Inverclyde) (Lab):  I want to remind my hon. Friend of a bit of the history of 1967, but before I do, as we are owning up to whom we support and our colours, I should probably prostrate myself before the Chair and the Government as a Glasgow Rangers supporter. In 1967, unusually, two British teams reached the finals of the premier European cup competitions: the cup winners’ cup and the European cup. 

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John Mann:  I thank my hon. Friend for that information. 

With a couple of other examples, I want to demonstrate how that trend was not Europe-wide. 1n 1971, Wembley hosted Ajax versus Panathinaikos in the European cup final. Ajax won the rather dreary match 1-0 or 2-0, as I recall, but my question for the Minister is this: what proportion of the crowd supporting Panathinaikos came from London? Significantly, the Greek fans greatly outnumbered the Dutch fans, but the Greek fans did not come from Greece. The media described the Panathinaikos fans in a rather arbitrary, tabloid style as the “Greek waiters come to Wembley.” Some 50,000 Greeks living in London went to Wembley to witness the final. They bought their ticket, but there was no net spend from people coming in, buying accommodation and staying a few days as tourists; they were domestic residents. Of course, London is the cosmopolitan capital of the world—when it comes to football, more so than anywhere. 

In subsequent finals, that trend has continued. Without question, the fans with the highest propensity to travel are Scottish and English club-football supporters. They travel in huge, phenomenal numbers to finals. 

I know the Minister will want to give clear evidence to the Committee of the relative net spends. I hope he can calculate the net spend for the UK economy if 50,000 people buy an air ticket to go to Lisbon, say. Unless I am missing something in my understanding of the taxation system, those people would pay in Britain in British pounds, and would pay the various taxes that are usually levied on charter planes, and even on Ryanair. We also see a huge number of private aeroplanes, from Farnborough and Luton—call it corporate hospitality—leaving the UK. 

Again, that net spend is in the UK, but if the situation is reversed and corporate visitors come in and fly out the same night, the odd pie that they might buy at Wembley would probably be the maximum spend. Does that in fact benefit the British economy? Scottish and English club football supporters have a hugely disproportionate propensity to travel. I could illustrate that for Committee members with 30, 40 or 50 examples of finals where that has been the case. The hon. Member for Wyre Forest would like me to, but I shall refrain from doing so, because Mr Hood would not be pleased by that level of micro detail. 

I have illustrated my point, but there is one important exception. I apologise to my hon. Friend the Member for Inverclyde, but I will give the example of when Glasgow Rangers football club was in the then UEFA cup final in Manchester. A group of travelling supporters—a vast number—came to Manchester, where they certainly contributed to the licensed trade. Was there, however, a net benefit to the taxpayers of Manchester? We must consider the level of police involvement, the number of police cells filled and the number of court days taken up as a result of the excesses of a very small but boisterous minority of travelling supporters. 

Arguments can be made on the basis of all sorts of social issues, but I am arguing purely on economics. That is appropriate as a member of the Finance Bill Committee and an elected member of the Treasury Committee—as is the hon. Member for Wyre Forest, who I can see is listening intently and being persuaded by my arguments. There was an overall disbenefit to the taxpayers of Manchester from hosting such an event.

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The Minister will be preparing the precise figures, but it therefore seems to me that there will be a disbenefit from our hosting a European final. That is not necessarily an argument against our hosting such events. However, doing so is predicated on the myth that there is a huge spend into the British economy, which seems to me to be wholly wrong. 

The argument in relation to the Olympics is different. The Olympics will bring in 206 countries, and therefore the complexity would be huge. In essence, the Olympics will literally impose a village that will visit for a significant period. That is a different kind of event, and the complexity of applying taxation laws in that case would create disproportionate disbenefits in relation to the amount of Revenue time needed to make any tax calculations. That would be a different proposition from a one-day event for which people will fly in and fly out. 

9.45 am 

There needs to be some honesty, at least. Over the years, English and Scottish teams have had more success than any other country in reaching finals: Britain has had more finalists in European football in total. The vast majority of those finals have been abroad. That increases our tax revenue in relation to flights and gives buoyancy to the airline industry. Associated travel industries also benefit, because many of our football supporters will travel via or stay overnight in London to get to Lisbon or wherever—the more obscure the venue, the more likely that is to happen. However, when people are flying in for a one-day event such as this, the likelihood is that it will not be economically beneficial. 

Finally, there is a danger that we must resist: we must not be dictated to by pan-European conglomerates such as UEFA or world conglomerates such as FIFA, the UN of football—we all know about FIFA’s problems. We do not want those people to tell us what we are going to do. Perhaps it is as well for this to spread, because if tennis players wanted to work here for half the year at various tournaments but were not prepared to pay our taxes, I think we should say, “Don’t bother coming.” If they do not want to come to Wimbledon or the British Open, or if test match teams do not want to play at Lord’s, I say to them: “Don’t come, because others will come in your place.” That is what will happen. 

Jacob Rees-Mogg  rose—  

John Mann:  I give way to the pan-European supporter. 

Jacob Rees-Mogg:  The hon. Gentleman may be interested to hear that when the West Indies were told they could not have a test at Lord’s this year, they were extremely upset about it. They insisted that they did play, and eventually, the MCC gave way and they got their test match, as requested. 

John Mann:  I thank the hon. Gentleman for his detailed knowledge of the sport of cricket. That is a fantastic example by the West Indies cricket team of making no demands on the British taxpayer. It is the honour, the glory, of playing at Lord’s against England that motivates them—no wonder they performed so well and almost beat us. It is fair that they are paid properly, but they are also playing for the glory, and that is what sport should be about. 

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We should not go down the slippery slope of kowtowing to the accountants, advisers and agents who tell their sports stars that they should not come to this country. In particular, we should not let UEFA—this French-run organisation under Michel Platini—dictate to the British Government and British taxpayer that Europe should determine our tax rates. We should be very cautious about allowing Europe to dictate those rates, but that is what the clause will do. 

Ian Lavery (Wansbeck) (Lab):  There is a difficult balance to be struck. I am not sure about the clause, but we must look at it. As politicians, we must be able to explain why we are giving superstar footballers tax breaks while ordinary people, many of whom are volunteers at the grass roots of sport, do not have the minimum wage. Whatever we decide about the clause, we must be confident that we are doing the right thing for the UK. 

The balance is difficult. There are superstars of the champions league and its team officials—I am not sure how far the measure extends—but there are also hundreds of thousands of hard-working amateurs, who volunteer in all types of sports, midweek and at the weekends, and footballers who are not superstars, but turn up and make sport a tremendous pleasure for people of all classes. It is really an issue of taxation versus economic benefits. We must get it right, because if the argument is that we will bring more money into the economy than we will receive through taxes, we must be extra-transparent and explain to everyone that we will actually make money. However, that still does not address the problem of why superstars should get tax breaks when people all the way down the sporting ladder—not just those volunteers—do not get that facility from the Treasury. 

I want to comment on clause 13 in the context of the 2013 champions league final, which, as everyone knows, will be held at Wembley stadium. Wembley stadium is a fantastic facility. It is absolutely brilliant, and I keep telling my constituents how good it is, because I am lucky enough to have been there. The vast majority of people whom I represent cannot afford to come to London and go to Wembley. That is the reality. It is a fantastic facility here in London. Another question, which I will probably come on to later, is who will actually feel any economic benefit? Is it again London-centric? Will people north of Watford get any benefits? 

Ian Mearns:  My hon. Friend is exactly right about people from the regions not being able to afford to travel to London for finals. Only a fortnight ago, Dunston UTS, a club from Gateshead, travelled to Wembley for the FA vase final and played West Auckland Town AFC—two north-east teams. Unfortunately, the crowd was only 5,500 people, who had travelled from the north-east to watch two non-league teams at Wembley. I spoke to many ordinary fans who would have loved to have been there to watch that game but simply could not afford it in these straitened times. 

Ian Lavery:  That highlights and supports my view. I was one of the sponsors of the early-day motion in support of the northern league and of Dunston UTS and West Auckland Town AFC. The FA vase final was a credit to football and a fantastic spectacle, but as I said only a few minutes earlier, many people just cannot afford to attend such games. They watch. They help.

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They are there on Saturday mornings. They do everything that they can to ensure that such clubs continue. In many ways, they are the very fabric of the clubs. 

The clause states: 

“No liability to income tax arises in respect of any income from the 2013 Champions League final that arises to a person who is— 

(a) an employee or contractor of an overseas team that competes in the final, and

(b) non-UK resident at the time of the final.”

That exemption would satisfy UEFA’s requirement that countries hosting the champions league final do not levy domestic tax on non-residential players and team officials involved in the final. That mirrors a similar provision that was put in place through a change in the Finance Act for the 2011 champions league final, which was also played at Wembley. I understand that similar exemptions will be in place for the London Olympics later this year and perhaps the Commonwealth games in Glasgow in 2014. 

At the same time, I am aware of major sporting events where tax exemptions have not been applied and where top sportsmen and women have not participated as a consequence. The triple Olympic gold-medal-winning sprinter, Usain Bolt, refused to attend the diamond league meeting at Crystal Palace in 2010, because he had to pay his taxes. Listen, I have to pay my taxes. Everyone in this room has to pay their taxes. If he did not want to come, that is fine, but there is also the argument that we want to attract the world’s best paid sportsmen into the country—that is the balance. 

Ian Ritchie, the former chief executive of the All England Club—I have to say that I am not a member; I believe it is a racket—announced a problem when he said: 

“If Lionel Messi comes here for a Champions League final he doesn't get taxed on his endorsement income but when Roger Federer or Rafa Nadal come here they do.” 

That is a huge disparity and there appears to be this huge imbalance. My hon. Friend the Member for Bassetlaw outlined it eloquently. Who decides the tax regime for this country for the likes of the Olympic games or the champions league? Is it UEFA or FIFA? Is it the Treasury or the Government? Is it Europe? What do they use to determine it? Who are these superstars and their team officials and, what is more important, what gives them the right to decide? That is the crux of the matter: who gives these organisations the right? Some of these superstars are on £250,000 a week. That is nearly as much as those on the Government Benches—not all of them, but some of them. Some of these superstars are making more in a week, or more in a game, than many people in our constituencies make in a lifetime, and the clause is looking to give them tax relief. Goodness grief, tax relief! It is amazing. 

Again I say that of course we want the players to come to this country, so that our people can see the best players on the pitch at the fantastic facility of Wembley. There cannot be any doubt that the hosting of the event in 2013 will be tremendous. It has been estimated that the final in 2011 made approximately £45 million for the local economy. By that, I mean the London economy. I cannot remember anybody coming to Northumberland to a bed and breakfast who said that they were stopping off to get to Wembley the next day to see the match. I can remember many people who would have loved to

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have got to the match who could not, because they could not afford it or, what’s more, get a ticket, because only the élite and politicians can get tickets. We have got to consider all those issues when we are looking to give tax breaks to superstar footballers and nobody else. I was delighted by the way that the champions league final was again awarded to London. I keep saying the UK, but it is not the UK. It is the London Olympic games; it is not the UK Olympic games. 

Mr Burley:  The hon. Gentleman is making some powerful arguments about having the same regime for all sports players across different sports. I would, however, take issue with where his argument has gone recently. He has been saying that somehow the London economy is completely separate from the Newcastle economy, which is separate from the west midlands economy. Will he not accept that if the London economy is doing well, that benefits the whole country, including Newcastle, because if people are paying their taxes in London, some of that tax money will be paying for hospitals in Newcastle? It is dangerous to go round saying that because London is doing well, other parts of the country are not doing well. 

10 am 

Ian Lavery:  I thank the hon. Gentleman for that intervention. Obviously there are huge debates and discussions to be had about whether he is right or whether I am right. I think that we could agree on some minor issues in relation to that, but the economic data for constituencies in the north-east and Scotland, compared with London and the south-east, shows that there are, in a double-dip recession, stark differences. There is a huge north-south divide. I agree, however, that London has important economic issues. 

Mr McKenzie:  The argument today is about superstars in super-organisations who are holding countries to ransom over their tax, by saying, “If I do not run or compete, the event is downgraded.” UEFA is suggesting that if such people are not exempted, holding the championship will matter less, and there will be less interest from the public, the media and so on, which is absolute nonsense. How far do we go down a road where athletes declare, “If you test me, I won’t come and run”? If they are prepared to run or participate in sport in this country, and more importantly, they want to sell their merchandise, they should be prepared to pay the tax. 

Ian Lavery:  That is right. It supports what I have been saying, and some points that I will come on to. 

At this stage, it is probably right that I should declare my interest as an avid Newcastle United supporter, which is why I am terribly interested in the champions league. In relation to the economies of the north-east, and those of London and the south-east, it would be helpful, as a nation, if the champions league final or other European finals could be played at the fantastic stadiums in the north-east. The likes of St. James’s park would be filled 25 times over if people were given the opportunity, with the right ticket prices for people who can only dream of getting on the train to come down to Wembley stadium, the fantastic facility that they see on television. 

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It would be great if the country could recognise the fact that such large sporting events should be shared. This summer in Newcastle, we have two or three ladies’ games at St James’s park, which will be fantastic and oversubscribed, and there are other games, too. I am talking, however, about finals that everybody can benefit from, whether they are superstars or play for a local team. To return to a point raised earlier, such an event happening there would definitely boost the north-east’s economy. There is room for discussion, therefore, to ensure that everybody and the economy as a whole benefit, and not only London and the south-east. 

Seema Malhotra:  Does my hon. Friend agree that, as we consider the attraction of sporting events and the need to support them, we should have a very clear view about what we are doing to support sport and sporting events coming to the UK, as opposed to, on balance, supporting the tax interests of individuals? In the mix, we should also look at the impact of ticket pricing for major sporting events. Tickets priced at £150 are too high for families, and that must be part of considerations about how games are funded and supported by UEFA. 

Ian Lavery:  Yes. I thank my hon. Friend for her intervention, because that point is so important. Looking at price structures up and down the country, the further north people go, the cheaper the prices are for top games. 

It is ironic that my hon. Friend raised that point when we consider Chelsea, for example. I congratulate them on a tremendous performance in the final—although they got absolutely hammered in the game, they won out in the end with true British spirit, and I was supporting them on the night. Teams such as Chelsea, however, have completely different bandings depending on which team they are playing. If it is Newcastle, who traditionally take 5,000 or 6,000 supporters, in the end it costs about £65. However, if Middlesbrough are attending, a team that probably take a taxi-load of supporters, the price is a lot less. Even though we live in Newcastle, we get penalised for coming to the likes of Chelsea, Tottenham and Arsenal, because we bring a lot of support to a final. There is a huge problem with pricing structures and getting families to go; people cannot afford to take a family to a football match any more. 

Simon Kirby (Brighton, Kemptown) (Con):  If the hon. Gentleman wishes to come to see Whitehawk football club, champions of the Ryman south league, £5 is all that he needs to pay, and under-18s can go for free. There are alternatives out there who play good football, in the south. 

Ian Lavery:  I thank the hon. Gentleman for that, because I am now coming on to grass-roots sport. I am sure he is not suggesting that those with no money should have access only to a lower grade of football. That is not what he meant, is it? 

Simon Kirby:  Not at all. 

Charlie Elphicke (Dover) (Con):  I do not think that that is what my hon. Friend meant at all. Community football in smaller clubs is important. Dover Athletic

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football club in my constituency, of whom I am a passionate and strong supporter, has been doing well. It is part of the cement that holds together all our communities. They should be celebrated just as much, if not more than all the big-money clubs. 

Ian Lavery:  I wholeheartedly agree with the hon. Gentleman. I was probably being slightly, if not totally, facetious to the hon. Member for Brighton, Kemptown. 

I want to mention grass-roots sport, because it is the backbone of the country. That is why we should get back to the clause. That is exactly why we need to be confident, as politicians, that we can explain why the superstars are making fortunes when grass-roots athletics and weightlifting clubs—I was going to say tennis and golf clubs, but perhaps not—are suffering because of the recession and because many grant and revenue streams are being focused mainly, and have been for a number of years, on the Olympic park and the Olympics. They are suffering greatly. 

Seema Malhotra:  I wholeheartedly support the points that my hon. Friend and others have made about football in their community. Hounslow United and Feltham youth football clubs in my constituency are testament to the contribution that football makes to the community. Parents are passionate about creating opportunities for young people in the area. The clubs are run by many who give up their spare time against the odds; they are fighting against the odds to maintain them. Sometimes they bring their own toilet seats in for the toilets. They are running on a very small budget, fund-raising every penny. We need to ensure that we can maintain those clubs. 

Ian Lavery:  I thank my hon. Friend the Member for Feltham and Heston for that intervention. She has highlighted an important point, one which is probably generally agreed by the whole Committee. 

Cathy Jamieson:  Before my hon. Friend moves off that point about grass-roots sport, is he aware that the local club that I mentioned in my opening speech, Hurlford Thistle, is asking local businesses to sponsor each player at £100 a time, so that it can cover the costs to be able to participate properly in the final? That is the kind of thing that is happening at local level. 

Ian Lavery:  If anyone wants to intervene to mention their own personal athletics and football clubs, please do so. We can get them on the record. 

 

Graeme Morrice (Livingston) (Lab):  Could I just mention Livingston FC? 

Ian Lavery:  Yes. 

Fabian Hamilton (Leeds North East) (Lab):  I would like to mention Farsley Celtic, and Pudsey Juniors, where my son used to play. The more important point, following on from what the hon. Member for Dover and my hon. Friend the Member for Feltham and Heston said, is that surely these are the clubs that need tax breaks, because they are finding it increasingly

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difficult to provide the football clubs and pitches for young people who are desperate to play. That is what we need to look at. 

Ian Lavery:  That is important. 

Richard Harrington (Watford) (Con):  Will the hon. Gentleman give way? 

Ian Lavery:  Which club? 

Richard Harrington:  The hon. Gentleman will be delighted to hear that I have no intention of mentioning a football club, except of course Watford, which is the most wonderful football club in the whole country. I would like to take up the point made by the hon. Member for Leeds North East about tax breaks for small clubs. To the best of my knowledge none of them makes any profit, so they do not pay any tax. What tax breaks could they possibly have? 

Ian Lavery:  Just before the hon. Member for North East Somerset gets up to mention his cricket club, should we perhaps get the football clubs out of the way? 

Richard Harrington:  I think the hon. Gentleman forgot to mention the possibility of tax breaks for croquet clubs. 

Ian Lavery:  It is terribly remiss of me not to mention croquet clubs. I really have not been to many, and I am not sure what the rules are. 

Sheila Gilmore:  My hon. Friend might be surprised to learn that there is a croquet club in my constituency. 

Ian Lavery:  I thank my hon. Friend. Is there anything else, other than curling? 

Stephen Williams (Bristol West) (LD):  While mentioning in passing that Bristol Rovers play in my constituency, I will say that before I came to this place I was a tax consultant. One of my specialisms was football taxation, believe it or not, and there are tax concessions for football clubs, including small football clubs. The Football Foundation receives a slice of revenue from, I believe, the pools levy, which, as a result of the Taylor report, is specifically hypothecated for stadium improvements. That disproportionately benefits clubs in lower leagues. That is some information for everyone on the Committee. 

Ian Lavery:  I thank the hon. Gentleman. May I relate some personal experience as chairman of the local football club in Ashington? I was on parliamentary duties in China as part of the Energy and Climate Change Committee during the February recess. When we came back from China there was a notice from the taxman, which said that if we did not pay a tax bill of £14,000 the club would be closed down. The club is in the northern league first division, so it is hardly the likes of what we will see at Wembley next season. It is not correct to say that none of the grass-roots teams needs to pay tax, because in many teams a lot of volunteers raise a lot of money to try to help the clubs succeed. 

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I met with this taxman, and I will never forget him; he was like Columbo. He came in and sat down, and he told me that he was going to close the club—this was only three months ago—within five days. I told him he could come in and take whatever he wanted but that I would not give him the cheque that I had in my inside pocket. Then I told him that I was a Member of Parliament, and he went bright puce. We agreed that there was a problem, but it was not the club’s problem; it was the Inland Revenue’s problem. We wanted to pay our dues, and we paid the money. 

The silly thing about the situation was that I said, “I want to make sure that you get this money”—£14,000, or whatever it was—“by the end of the week,” and he said, “Sorry, I am not allowed to take it. It has gone too far.” I said, “I’m a little bit confused. This is the first week I’ve heard of it, and I want you to have the money in your bank account within 10 days. I want a result,” but he said, “It’s gone too far.” That is a situation that faces a lot of ordinary working-class sports facilities and sporting ventures. Whether it be croquet, football, cricket or whatever, it is an horrendous situation. 

10.15 am 

We need to look at ways and means of ensuring that the finance generated by the Olympic and Paralympic games, the champions league and all of the tremendous sporting spectacles is trickled down to grass-roots sports to ensure that they continue. That is mainly where we get our young athletes, boxers, superstar footballers and cricketers. I could not mention a superstar croquet player, but I will google that later. 

Charlie Elphicke:  As we are touching on croquet, football and the thwack of leather on willow, so enjoyed by my hon. Friend the Member for North East Somerset, I would add the importance of other sports less widely pursued and known about, such as cross-channel swimming and other endurance sports. That is practised between Dover and the French coast. People swim for 24 hours to cross and do a great job. 

Ian Lavery:  The hon. Gentleman is right. Although we are having a few jokes this morning, he is right that a lot of minority sports are also extremely important. The fact that a sport is a minority sport makes it all the more difficult for people to develop in that sport and for the sport itself to develop. One major hurdle is finance. That is why I say it is important for finance to trickle down to sports such as those mentioned. 

I mentioned that I am a Newcastle United supporter and chairman of Ashington community football club. We have in the community 20 junior teams of eight-year-olds to 12-year-olds. We also have under-18, under-19, reserve and first teams. We are hoping to get a disabled team. It is fantastic to see disabled people using our facilities to play football. They are not élite but they enjoy it more than the superstars who play only for money. We have to ensure that those disabled people are looked after, because they do not have a great lot in life. If we can ensure that, instead of giving tax breaks, money trickles down to such people to encourage them into sport, that would be fantastic. We also have a number of tremendously successful ladies’ teams. 

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I return to what has been said by members of all parties regarding volunteers. Those are the people who really care about the community; they are the backbone. We survive on the tireless work and commitment provided by volunteers who ensure that we can continue in business. 

Seema Malhotra:  My hon. Friend raises an important point about needing to sustain the flow of young people into sport. What is his view on women’s sport and the importance of supporting it? Recent research by the Women’s Sport and Fitness Foundation suggested that 50% of secondary school girls are put off sport by their experience of sport at school. We need to look at that channel in supporting sport as a whole, through whatever means people might access it. 

Ian Lavery:  That is very important and a debate in its own right: how to encourage people—boys or girls—of all ages into sport at school or away from it. There is talk about the obesity problem in schools and the need to encourage young people to participate in sport in and away from school. That can be done only with finance. I repeat, that is why we have a difficult argument here. How do we explain, with confidence, to grass-roots people and volunteers why we should give a tax break to multi-millionaires when many people in grass-roots sport are suffering? 

I mentioned the Ashington community football club. Everyone else has mentioned their team. It is to their great credit, by the way, that people stand up for their local side. We have Morpeth, Bedlington and a number of other teams in my community. They play in the world’s second oldest league, the northern league, which covers Durham, Tyneside, Cumberland and North Yorkshire. The second oldest league in the world is managed, basically, by volunteers. Again, it is not only about the northern league. There are other clubs for rugby, cricket, boxing, athletics and, for the first time that I can remember in my community, we have just seen the formulation of a rugby league team. The Miners rugby league team was recently established in the town. Traditionally, we have had rugby union. We struggled for many years. I think Gateshead Thunder is probably still the only big club in the area. 

Last week I held a surgery in the Hirst welfare centre, which is suffering greatly as a result of the lack of revenue from previous revenue streams available for such centres. I watched young men and women and young boys and girls weightlifting. At my centre, of which I am the chair, we have international champions,

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national champions and regional champions, but when it comes to international events, we struggle greatly to be able to afford for them to travel to the events. 

Mr McKenzie:  The cost of travelling to events to take part is a great burden on our clubs in various sports across the country. For many of our clubs and amateur clubs, regardless of which sport, simply staying alive at the moment is a problem. They are constantly and perpetually trying to raise funds to keep sport alive in their community, and trying to attracting young people into that sport as well. They are finding it more and more difficult. As Opposition Members have said numerous times, money out there is tight and people are spending less on activities such as sport. Clubs are finding it difficult to raise funds as it becomes more and more demanding. 

My own council in Inverclyde has taken up the challenge. We recognise the benefits of young people being involved in sport and, goodness knows, in the west of Scotland we recognise the health benefits of keeping them involved in sport. We have put in place a sum of money— 

The Chair:  Order. The hon. Gentleman’s intervention is a bit too long. 

Ian Lavery:  I thank my hon. Friend. I wholeheartedly agree and echo his sentiments. The clubs share a common factor: they exist only because of the work of the volunteers who constantly struggle to raise money for grass-roots sports. We must recognise the local communities, without whom we would all struggle. 

In my constituency, Ashington—the town where I have lived all my life—has a great, proud history of sportsmen. Many of them came from the pits. Like you, Mr Hood, Jackie Milburn used to work underground in very difficult conditions. He used to play for Newcastle United on Saturdays. We have Bobby and Jackie Charlton. Of course, the hon. Member for North East Somerset will be delighted to know that we have a good friend of mine, Steve Harmison, about whom it was suggested he was once the fastest and best bowler in the world, and a tremendous credit. Stephen came from an ordinary league. 

10.25 am 

The Chair adjourned the Committee without Question put (Standing Order No. 88).  

Adjourned till this day at One o’clock.  

Prepared 25th May 2012