“I have already been given drafting authority by the Parliamentary Counsel, and my officials have started working up a draft Bill and supporting documentation, should football fail to deliver. This Bill will reflect the conclusions of your report.”

Damian Collins: Does the hon. Gentleman agree that it would be helpful if the Government produced the draft Bill and supporting documentation?

Mr Cunningham: That would be very helpful. If we saw what was in the draft Bill, we could decide whether we could support it, and I am not just talking about Opposition Members; the hon. Gentleman might disagree with some of the draft Bill, for example. There is a clear promise on the creditors rule, too. The Committee’s report stated that if the courts were to reject the challenge to the creditors rule by Her Majesty’s Revenue and Customs, the Government should introduce legislation to abolish it—the High Court has clearly upheld the challenge.

I conclude by saying to the Minister that football has failed to deliver, and it is now time for the Government to deliver. When will we see the promised Bill before Parliament? What more do the Government need before they decide to legislate?

3 pm

Penny Mordaunt (Portsmouth North) (Con): I apologise to colleagues in advance for being absent for the remainder of the debate. I wish to speak in the debate in the main Chamber on Ukraine.

I start by rebutting the claim, often made, that we politicians should butt out of discussing football because football is a business and it should not be in our remit to meddle in it. Leaving aside the rather unbusinesslike practices that my hon. Friend the Member for Folkestone and Hythe (Damian Collins) outlined, I make this comparison: if a supermarket—Tesco, say—folded in my constituency, I could comfort my constituents with the fact that they can buy their bread and milk from Sainsbury’s. I could provide no equivalent comfort to Portsmouth football club fans by pointing out that they can buy their season tickets from Southampton, a bit further along the coast. That is clearly nonsense, and it goes to the heart of what is special and unique about football clubs. They are more than just businesses. Football clubs bring tremendous economic value to an area, but they also carry tremendous social value.

I pay tribute to my hon. Friend for his work in raising the issue, his Bill—which I am happy to support—and his work on the Select Committee. I pay tribute to all the other members of the Committee, too, for their sterling work on raising this issue and on concentrating the Government’s mind on getting that result. My hon. Friend spoke eloquently on football’s finance and governance problems, so I will constrain my comments to putting on record some of the trials that faced

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Portsmouth football club, which, happily, recently managed to achieve the largest and fastest ever 100% community buy-out.

The club, which was established in 1898, has had no fewer than nine owners in the past 15 years. The supporters’ rescue bid was triggered in January 2012 as the club entered administration for the second time in two years, with debts of £100 million. A scheme was launched inviting fans to pledge a £1,000 investment in Pompey Supporters Trust, starting with a down payment of £100. Discussions were also held with high-net-worth individuals. The trust’s plan was to create a new legal entity, Portsmouth Community Football Club Ltd. The trust would invest in that new entity the share capital raised from its members. Alongside that, there would be direct investment by wealthier fans. The trust would be the majority shareholder in the new club, with community interests further protected by a shareholders’ agreement.

In October 2012, the Football League announced that the trust had won its support as the preferred bidder. By then, the trust had received pledges from more than 2,000 fans who had paid the initial £100 sum. Eleven presidents pledged a further £1.5 million, having already provided the administrator with £400,000 in cash to keep the club afloat. Obviously, they gave that cash without any guarantee that they would take over the club. The trust put together a £2.75 million loan from a local property developer and Pompey fan, secured against the future ownership of the stadium and backed by a £1.5 million loan from Portsmouth city council, which further completed the bid.

Chainrai, who was the default owner and who retained a £17 million charge on the stadium, refused the trust’s £3 million offer for the stadium. Eventually, despite prolonged legal battles and counter-offers, in April 2013 Chainrai accepted an out-of-court offer of £3 million for the stadium, along with a further £450,000 for the release of the floating charge against the club’s other assets.

I could talk at great length about the trials that we went through to secure that deal, but I will give three examples. Before an administrator was even appointed to kick off the process, a football administrator who thought they were going to be appointed was already in the club trying to strip assets. When we were putting together the business plan and trying to figure out and unravel the complex web of who owed what to whom, which resulted from having nine owners in 15 years, we could not see the football authorities’ rulebook, which would have let us know where the parachute payments should have gone and under what circumstances. It is hard enough for a trust to put together a business plan, but in those circumstances it was nearly impossible.

There was a lack of transparency, and I know that problem is adversely affecting Coventry City at the moment. At the eleventh hour, our bid was nearly knocked out by a coalition of people who arrived on the scene without having previously expressed an interest in taking over the club. They claimed that they were going to offer more for the club, which was clearly an attempt to knock our bid out of the competition. Those were dark days indeed, and a strong supporters’ trust bid was made fragile by the lack of a level playing field.

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Happily, the trust was successful, and it took a club such as Pompey to achieve it. Anyone who has played us knows the tenacity of our fans. They are troupers, and it was their faith, and the support of a few individuals who were prepared to risk a considerable amount, that meant that we were successful, that Pompey are still playing, and that the good guys won.

I see Portsmouth football club as a trailblazer, and I hope it is a catalyst for change. If we do not change, many of our much-loved clubs will not be around in the future. The ordeal was worth while, and the club is now making a profit. There has been considerable investment in the grounds, and I am happy to report that Portsmouth won their regional FA community club competition last Sunday.

The football authorities have moved somewhat, but they have not moved enough. In this House, we have to show the same resolve that Pompey fans showed during their battle and see through the reforms. I am happy to support this debate, and I am very happy to support my hon. Friend’s Bill. We must be resolute in getting a proper finance and governance structure for our national game.

3.8 pm

Justin Tomlinson (North Swindon) (Con): I apologise for arriving late, but I had to serve on a Delegated Legislation Committee. It is a great pleasure to support both this debate and the private Member’s Bill of my hon. Friend the Member for Folkestone and Hythe (Damian Collins).

I am an unabashedly huge football fan, and I have two brief points that are slightly too long for an intervention. My first point is on the Insolvency Act 1986. I represent North Swindon, and we have Swindon Town football club, which has entered administration twice and avoided it on many other occasions. We have had a number of owners, some good and some less good. The hon. Member for Coventry South (Mr Cunningham) mentioned St John Ambulance, and his point applies to Swindon, too. We had a number of good local businesses—genuine suppliers—that were left high and dry each time the club’s ownership changed. Various wealthy people managed to get away completely unscathed while those who were working hard to support our vital community football club were left with their fingers burned, which made it a lot harder for the town to continue trusting the new owners.

My second point is on transparency. We have heard about the situations in Portsmouth and Coventry, and the same applies to many football clubs across the country. As supporters, we simply do not know who is responsible for the football club and who is ultimately making the decision to spend more money than the club can viably sustain. I have previously called for every football club to have an elected fans representative on the board. Ultimately, we need business people who are good enough to raise sufficient money, but stupid enough to go and waste it chasing domestic success when running the club, and an elected fans representative would at least always ensure transparency.

My hon. Friend the Member for Portsmouth North (Penny Mordaunt) described people trying to work out who the administrator was, but the fans representative would provide a link inside the football club. The football

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clubs would benefit, because at the end of the day, we long-suffering supporters are the customers. We buy the season tickets, the replica shirts, the Christmas presents, the programmes and the pies at half time. Having that rep on the board would offer a link to those customers. The rep could suggest where things are going right and where there are further opportunities to grow, as well as perhaps being the front that liaises with the local community, building trust in and support for the club.

Jim Shannon (Strangford) (DUP): I also apologise for not arriving on time for the debate. I was also on a Delegated Legislation Committee and I took a little bit of time to get down here. I am pleased to have the chance to support this debate. I support Leicester City, and have done since I was a wee boy. We are looking forward to going back to the premier league, but we have had difficulties in the past. The loyalty of supporters and their contribution to their club, whether socially, physically, monetarily or in time—they might attend all the matches—are important. I totally support the hon. Gentleman’s point that the clubs should have within their administration some method whereby supporters clubs, or individuals on behalf of supporters clubs, can have an input into what happens.

Justin Tomlinson: I thank the hon. Gentleman for his comments, which I agree with. I see that representative being elected through the supporters trust network. We have had a number of Supporters Direct events in Parliament, and we have all seen at first hand the fantastic work that it does.

Damian Collins: My hon. Friend raised an interesting idea. Does he agree that there is a necessity for the public declaration of the ownership to be clear? That was not clear with Leeds United and when the chief executive gave evidence to the Select Committee, he said that he did not know who owned the club. That kind of situation cannot be allowed to continue.

Justin Tomlinson: That is the absolute minimum we need. Supporters and suppliers should have a right to know who the custodian of their community football club is. The fans representative could then give a day-to-day commentary where appropriate and link the supporters and the club. That would be a win-win, particularly for the Football League, in ensuring that fans are engaged with the football club. The hon. Gentleman is absolutely right that we need that public declaration.

Mr Marcus Jones (Nuneaton) (Con): Does my hon. Friend agree that there should be more transparency within the Football League? I and many of my constituents support Coventry City, and the Football League has been completely not transparent in allowing the club’s owners to move it to Northampton, without any proper plan to get it back where it belongs in Coventry.

Justin Tomlinson: I know that my hon. Friend has worked tirelessly to support the long-suffering fans of Coventry City. Long gone are the days of the 1987 FA cup final, when Coventry had a 3-2 win over Tottenham. Watching that on the television is one of my earlier memories. My brother went to Coventry university, and it was the only time he was interested in football. He was pleased by the result on the day.

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We keep coming back to the point on transparency. My hon. Friend the Member for Portsmouth North made the point that there would be alternatives if a supermarket was closing, but that people generally have only one community club to support. Yes, there will be good times and there will be bad times—in Swindon’s case, there have been a few more bad times than good times of late, but that adds to the excitement—but it should always be about transparency for the fans and for suppliers, who work hard to do their bit to support their community clubs and often give generous deals. We cannot simply abandon them and create this unique rule that protects wealthy people within football. I say that as a huge football fan myself. We have to do right by the community, the fans and the suppliers.

Mr Jim Cunningham: I thank the hon. Gentleman for giving way. I agree with the hon. Member for Nuneaton (Mr Jones): whoever owns the club, they have been playing ducks and drakes with the fans in Coventry. The fans are vitally important, but they are playing a guessing game on whether they will go back to the stadium or whether there will be a new stadium and, if so, where it will be located. It is 20 questions all the time, and that is how contemptuous they are of the people and fans of Coventry, quite frankly.

Justin Tomlinson: I agree wholeheartedly with that. What frustrates me, whether it is the Premier League or the Football League, is that it is in their interest that football clubs remain viable and continue to grow. It is a brand, and by and large it does work. The frustration was highlighted in the example given by my hon. Friend the Member for Portsmouth North. She said that at the eleventh hour—a huge amount of work had been done, the community had raised money and different people had pledged money—the goalposts seemed to be moved.

The Football League and the Premier League should have all the information registered and available, so that those seeking to step in to rescue, protect and save those valuable community assets are armed with the information that they need. In some cases, football clubs will disappear because it is just not meant to be, and some clubs will do better than they should, but that is just the nature of competitive sport. Where a set of owners have been reckless and the community wants to step up, whether that is through a new business owner or a community, fan-owned club, they should be able to have that information. The Football League and the Premier League should have it at their fingertips.

Damian Collins: My hon. Friend makes an important point. It is why it is important to have a proper fit and proper person test, administered by the Football Association, that can be done quickly. It can assess whether a new bid is worth pursuing or worth looking at, saying, “Is it from a fit and proper organisation or is it spurious?” If it is spurious, it should be set aside. It should not be down to the administrator to get the most money regardless of where it is coming from.

Justin Tomlinson: I agree with my hon. Friend. A whole review of the fit and proper test is needed, because my understanding is that while one of the tests is that a person must have a certain amount of money deposited in a bank account, they do not necessarily have to put that money into the club. I have seen that

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with Swindon Town. Wealthy people take over a club and have the potential to cover its liabilities, which would cover the suppliers, but that money is not necessarily used.

Mr Jim Cunningham: The hon. Gentleman is making a very important point. If we go back 15 to 20 years—I cannot remember the exact date—an individual wanted to buy Manchester United. Everyone was led to believe that he was going to buy the club, but at the end of the day he could not put the deal together. He totally misled people for some months.

Justin Tomlinson: I believe the individual ended up at Carlisle, and the club had a chequered time under his stewardship. Time and again, we are seeing people coming in for various different reasons without the interests of those football clubs at heart. I understand the world of business, but these clubs are valuable community assets. The Government need to apply pressure to the Football League and the Premier League, because it is in their interest to get their houses in order.

Jim Shannon: The hon. Gentleman is being gracious and kind in giving way again. We are referring to the English Football League. Will there be an opportunity for the Minister to look at what is happening in Scotland and the other leagues? I think of Rangers FC, which is an institution. I have supported the team since I was a young boy. The club has dipped in and out of administration and still has difficulties in the board room. The club is important: at its past three matches, 115,000 fans have come to support it. Does the hon. Gentleman feel that we have to look beyond the English league to the leagues in Scotland, Northern Ireland and Wales?

Justin Tomlinson: I absolutely agree. The issue affects football clubs across the country. In Scotland, there is the worrying experience with Hearts. As with Portsmouth, people are trying to do deals, but even the club cannot identify the owner.

Damian Collins: I just make the helpful point that many aspects of football are devolved. I originally wanted the debate to encompass Scotland, too, but I was advised that it could not.

Justin Tomlinson: I thank my hon. Friend for that.

In conclusion, there are huge amounts of good will towards sport and football, whether that comes from supporters or suppliers. We need to do whatever we can to ensure that they are equipped with knowledge, so that things can be remedied as quickly and swiftly as possible when they go wrong. That is absolutely vital for our local communities.

Mr Gary Streeter (in the Chair): An injury-time strike by Marcus Jones.

3.19 pm

Mr Marcus Jones (Nuneaton) (Con): Thank you, Mr Streeter, for allowing me to make a short speech. I did not intend to speak when I entered the Chamber,

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but the issue that my hon. Friend the Member for Folkestone and Hythe (Damian Collins) raises is important and we should support his endeavour to get the law affecting football clubs changed.

I am a long-suffering fan of Coventry City football club, like probably thousands of my constituents, who are extremely depressed and disappointed about what is happening to their football club. All football supporters follow their clubs for different reasons, and all experience tremendous highs and lows. Most probably get more lows than highs—unless they support one of the glory teams or are one of what I used to call Alex’s armchair army, supporting a team that might be many miles from where they live. Regardless of football affiliation, we must recognise that football clubs are community-based assets. They are not like any other type of business. If, for example, the customers of a supermarket chain suddenly decided they did not like what it was offering, they would usually abandon it and go elsewhere. Football supporters, however, regardless of how bad their team is at times, stick with it and support the club through thick and thin—or thin and thinner, in the case of my team at the moment. We must realise that; the clubs are embedded in communities.

Transparency has been raised several times. The people who follow clubs week after week, spending money, as my hon. Friend the Member for North Swindon (Justin Tomlinson) said, on season tickets, shirts and all sorts of things to support their club, deserve some transparency. They deserve to be able to hold their club’s owners to account. As to Coventry City football club, we do not even know who owns it. Many of the constituents whom I speak to are mortified that they cannot even find out who is to blame for its present situation. We need more accountability. We should never allow people to take on a football club that is embedded in a community, and then for whatever reason use it as a toy, thinking they can abandon the community, lift the football club up like a moveable commodity, and take it elsewhere.

Mr Jim Cunningham: The hon. Gentleman makes an important point. When we talk about wages, salaries and ownership, we tend to forget that football started with individuals playing in the street. The moral of the story is that it started with the fans, who created the teams in the first place; yet the fans get kicked in the teeth all the time when things go wrong.

Mr Jones: The hon. Gentleman and I do not often see eye to eye, but we probably do in this instance. Coventry City were a factory team, and started in the 19th century as a group of people from the Singer factory, who came together to play football. From that a great club was formed, which has lasted more than 125 years. We need to make sure we can see that the people running football clubs are fit and proper people. The clubs are not just commodities that can be shifted from person to person and area to area. They are organisations that communities depend on, particularly in a financial sense. When Coventry City left Coventry, it left a huge hole in the city, and that has particularly affected the local economy.

I support my hon. Friend the Member for Folkestone and Hythe, who is doing a fabulous job of raising the issues. He deserves every support, and I hope that the

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Minister will show him that she is in touch with the issue and willing to take action on behalf of millions of football fans throughout the country.

3.24 pm

Mr Iain Wright (Hartlepool) (Lab): It is a pleasure to serve under your chairmanship again, Mr Streeter. I thank my hon. Friend the Member for Coventry South (Mr Cunningham), and the hon. Members for Portsmouth North (Penny Mordaunt) and for North Swindon (Justin Tomlinson). There was also a good late substitution when the hon. Member for Nuneaton (Mr Jones) came on to the pitch. Most of all I thank the hon. Member for Folkestone and Hythe (Damian Collins) for securing the debate. The manner in which he advanced his excellent, eloquent argument was first class, and he set the tone for the rest of the debate. He closed his remarks by explaining that the issue is one that arguably affects all our communities. It certainly affects millions of football fans.

I was particularly pleased that my hon. Friend the Member for Wirral South (Alison McGovern) was here, because she is a fan of Liverpool football club, and Bill Shankly, one of this country’s greatest ever managers, famously said:

“Some people believe football is a matter of life and death, I am very disappointed with that attitude. I can assure you it is much, much more important than that.”

In many ways that is true, as we have heard today. Football makes a remarkable contribution to society. In my own patch, about a fifth of Hartlepool’s population travelled to Cardiff’s Millennium stadium to see Hartlepool United against Sheffield Wednesday in the league one play-off final in 2005, where we were cruelly robbed by an appalling refereeing decision. [Interruption.] It was a fabulous stadium.

Football provides a place with a sense of identity and belonging, and a recurring theme of the debate has been that clubs are much more than merely businesses. They are vital social institutions that bring and bind communities such as the people of Hartlepool together. There is a strong case for saying that in matters of business, governance, ownership, transparency about those matters and insolvency, the wider effects on society and communities should be considered.

It always strikes me as odd that, given football’s central importance to our society and communities, its finances are often precarious. Every year, Deloitte, a firm for which I used to work—I draw the House’s attention to my entry in the Register of Members’ Financial Interests—produces a review of football finance. The latest review showed that in the 2011-12 season, the total revenues of the 92 clubs in the top four divisions of English football exceeded £3 billion for the first time. However, the Premier League accounted for almost four fifths of that total. Lower down the leagues, it is a different story. In the 2011-12 season, the average revenue of a league one club was £5 million, with an average net loss of £2.4 million; and in league two revenue was £3.3 million, with an average net loss of £0.3 million.

My local club, Hartlepool United, has had its fair share of flirtations with insolvency, although not in recent years, thankfully. We are infamous for a record number of re-elections to the Football League, and in the 1980s there was a time when we owed £52,000 to the

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Inland Revenue and a six-figure sum to other creditors. We were days away, in 1983, from being wound up, and the bailiffs took the goal posts, goal nets and grass cutter to pay the debt—not that we noticed much, because that year we finished third bottom, with a goal difference of minus 30. The only people below us, funnily enough, were Hereford United. It is funny how things go. We were actually wound up in the High Court in 1992-93 but the town’s club was saved by a great man—Harold Hornsey—and that helped to put Hartlepool United on a much better, sound financial footing.

Jim Shannon: Even though a club may be small, it makes a contribution to its town or city, and to society, and gives people pride even when it is not playing as well as it might or as well as people would like. Those are important factors for communities, and we should not take away from that. Perhaps a club will never become a Manchester United, Liverpool or Rangers, but it can always be an Ards football club, or a Hartlepool United. Those things are important to society.

Mr Wright: I must disagree with the hon. Gentleman. In my lifetime, Hartlepool United will become a Manchester United or a Liverpool, and I will live to see us lift the champions league trophy, so the hon. Gentleman is wrong in that respect. He is right, however, about the vital contribution that clubs make to local businesses. Hartlepool borough council recently undertook an assessment of Hartlepool United’s economic impact on local businesses and, astonishingly, the club provides something like £5 million to Hartlepool’s economy.

The figures I have quoted show how inherently uncertain is the business model on which much of football is based. The hon. Member for Folkestone and Hythe said that 46% of clubs have been through a formal insolvency procedure since 1992. No other sector of the economy has had that level of insolvency, which highlights—this was one of the hon. Gentleman’s most articulate points—the possibility of reckless spending. Entry into the premier league—the most exciting and followed league on Earth—could mean as much as £50 million to a club. It is the glittering prize to which all supporters and owners aspire, but it leads to reckless gambles in the transfer market, which could undermine the financial viability and long-term security of a club. Some argue that the football creditors rule prevents clubs from spending money on players whom it cannot afford, but we have heard today that that is far from the case. The football creditors rule means that there is no inherent brake on transfer spending or on—as the hon. Gentleman said—the shared risk of a club not being paid for the transfer of a player, because football creditors are paid in full at the expense of other unsecured creditors.

Damian Collins: I agree with the hon. Gentleman’s point. Does he agree that, without the creditors rule, clubs would have to be much more open about their financial status, because that would be a prerequisite of clubs wanting to enter into transactions with them?

Mr Wright: That is a fair point. The insolvency rule specifically, as well as the hon. Gentleman’s wider point about governance and transparency, would be better for the game. He also suggested replacing the football

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creditors rule with some form of sinking fund, and I would be interested to hear whether the Minister is working with the Football League, the Football Association and others to examine such a proposal.

The rule can often act as a drag on a club returning to speedy financial health. I am pleased that the hon. Member for Portsmouth North was here earlier, because Portsmouth football club is now owned by the fans, but still has a significant liability of some £7 million owed to ex-players, which the supporters, because of the football creditors rule, must pay in full. That cannot be a good way of getting the club back to financial health. The need to curb the tendency to overspend makes the financial fair play rules, which cap the salaries of league one and league two clubs against a percentage of their turnover, so important, but are the rules the full answer? What will the Minister do to ensure that they are complied with and enforced?

The essence of today’s debate, which has been articulated by many hon. Members, is this: why should we have the football creditors rule if it means that clubs and players are paid in full ahead of all other creditors when a club enters insolvency? This quote from former Sunderland chairman, Niall Quinn, has been mentioned before, but it is worth repeating, because it sums up the problems of the game. He said:

“The fan in the street meets the guy who printed the programmes who didn’t get paid and he sees the player driving out in the big car who was paid, and I think that’s damaging.”

As mentioned by several hon. Gentlemen, there seems to have been a marked shift in tone and emphasis since the Government response to the original Culture, Media and Sport Committee report in 2011, which stated:

“We have sympathy for those who described the consequences of the rule as ‘morally indefensible’.”

“Morally indefensible” is an extremely strong phrase, and the Government sympathise with the position, from which I can infer that the Government wanted to see an end to the rule and wanted to move, through legislation if necessary, as quickly as possible. After the follow-up investigation by the Select Committee, however, the Government response in April 2013 stated that the Government hope that financial fair play rules will

“negate the need for football to rely on the Football Creditors Rule in cases of club insolvencies. However, we will monitor the effect this self-regulation has on the financial discipline and solvency of clubs, and, if necessary, will re-consider whether legislation is needed to address this issue.”

The tone is markedly different. The hon. Member for Hereford and South Herefordshire (Jesse Norman) also referred to a written parliamentary question from last month, in response to which the Under-Secretary of State for Culture, Media and Sport, the hon. Member for Maidstone and The Weald (Mrs Grant),said:

“The Financial Fair Play rules now introduced across football which, combined with compliance checks that the FA and league administrators carry out on participating clubs, aim to improve financial management and stability across the leagues…Legislation remains an option if the football authorities do not demonstrate that they can reform their own governance of the game…The Government’s position on the football creditors rule is clear.”—[Official Report, 27 February 2014; Vol. 576, c. 495W.]

As we have heard time and again in today’s debate, the position is far from clear. The Government seem to be shying away from the necessary heavy tackle. What are

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the criteria for legislation to be brought forward? What is the time scale on such legislation? How long do clubs have to demonstrate reform of governance and financial management before the Government act?

There is a wider point here about insolvency policy in general. The Opposition are keen to improve the insolvency regime, so that the public and investors have greater confidence that delinquent directors who are unfit to run a company are pursued efficiently and effectively, which is not the case under this Government. In 2012, just a fifth of reports passed to the Insolvency Service by insolvency professionals resulted in a disqualification court order or an undertaking, compared with 45% 10 years ago. Why has there been such a drop? Why are the Government allowing unfit directors to walk away from their responsibilities? What are the Government going to do about it? Last week, we tabled an amendment to the Deregulation Bill to scrap the need for insolvency practitioners to submit certain forms in hard copy and allow them to do so online, as a means of streamlining the process and ensuring that insolvency policy can be brought up to speed. Will the Minister accept that?

I thank all hon. Members for contributing to today’s debate, which has been incredibly important. We have seen a cross-party approach to this important matter, and I hope that the Minister will provide what hon. Members are calling for: greater clarity and a plan to address the wider point about an insolvency policy that is allowing delinquent directors to get off scot-free both in football and elsewhere.

3.37 pm

The Parliamentary Under-Secretary of State for Business, Innovation and Skills (Jenny Willott): I thank the hon. Member for Folkestone and Hythe (Damian Collins) for calling for this debate. He has shown his commitment to football issues over several years—issues that many hon. Members feel strongly about.

Football is a fundamental aspect of British life. I married into a family of Evertonians. My children were wearing Everton babygros before they reached the age of one—the indoctrination started early—so they have absolutely no choice in the matter of whom to support. The financial health of football clubs is a hot topic on both the terraces and the sofas of Britain. Fans are perpetually nervous about which club will be the next to struggle or fail and endlessly discuss clubs’ costs and budgets. The Government appreciate the part that football clubs play at all levels across British society. They are a fundamental part of the social fabric of communities up and down the country.

None the less, the rules that govern corporate life cannot be selectively applied. Those who deal with a football club—its suppliers, its employees, the Crown—should have the same confidence that they will be paid as they would if they were dealing with any other business in any other industry. Insolvency is a risk—hopefully a low one—in all industries, including football. No honest person runs a business expecting it to fail, but when there is failure, it is important to have an insolvency process that is fair and transparent and, where possible, saves viable businesses; that applies as much to football as anything else. The UK’s insolvency framework was recently judged by the World Bank to be 7th best out of those of 189 nations; it came ahead of France, Germany and the United States.

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The hon. Member for Folkestone and Hythe pointed out that quite a number of clubs have experienced financial difficulties in recent years. The majority of premier and Football League clubs that have become formally insolvent in the last 20 years have entered the insolvency procedure known as administration.

Mr Jim Cunningham: Does the Minister intend to answer my questions, and those of the hon. Member for Folkestone and Hythe (Damian Collins)? What are the contents of the legislation that is to be proposed by the Government? Will the Minister support the hon. Gentleman’s Bill? Alternatively, may we have a date for when the Government will introduce legislation? The situation has been going on for far too long—for about two years—and we have heard the evidence from Coventry, which is a good test case.

Jenny Willott: If the hon. Gentleman gave me some time, I might be able to answer some of his questions.

Most clubs that have entered insolvency have gone into administration. The primary objective of an administrator is to rescue the company wherever possible. If the business can keep going, that is the best outcome for employees and other stakeholders. Administration is therefore a rescue procedure and, judged on that criterion alone, football administrators have been successful. In spite of the number of clubs facing difficulty, as highlighted by a number of hon. Members today, no Football League club has gone out of business mid-season since the demise of Aldershot in 1992.

Administrators are governed by statute. Their primary focus is on rescuing the company, but the survival of the company or business will always be balanced against the interests of the creditors. Put simply, an administrator cannot save the company if that is not in the interests of the creditors. As was highlighted by the hon. Members for North Swindon (Justin Tomlinson) and for Portsmouth North (Penny Mordaunt), generally, rescuing a football club is in the broad interests of the creditors and the fans. That is because the alternative to a rescue out of administration is liquidation, in which a club’s assets are turned into cash, its affairs are wound up and any remaining funds are distributed to creditors.

On liquidation, football players’ contracts are void and they receive what is known as a free transfer, which means that no transfer fee need be paid to the liquidated club. That is clearly not in the interests of creditors, as the players’ contracts are an important asset of the club, being worth significant amounts of money. As hon. Members have said, including the hon. Member for Coventry South (Mr Cunningham), the Football League is in essence a members’ club, with all the clubs having a share in it, sometimes known as the golden share. To continue membership of this club and to retain the share, members must abide by the rules. Among the rules is the Football League’s insolvency policy.

One aspect of that insolvency policy, as we have discussed today, is the football creditors rule, under which all football creditors must be paid in full if a club is to remain a member of the Football League. The list of football creditors is long, so it would be slightly tedious to read out, but it includes players, the staff of the club, the leagues, the Football Association and other clubs, as was mentioned by a number of hon. Members. Other than in exceptional circumstances, if

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the football creditors rule is not followed, the club will lose its share in the Football League. Without the share, the club cannot take part in league matches and will in effect cease to trade. If a football club is in administration, the loss of the share will almost inevitably result in liquidation, which, as I said, voids all player contracts. If that happens, the football club is in effect dead, which is disastrous for all classes of creditor, because there is no value in a club that has been kicked out of the league and has no players.

Damian Collins: What the Minister says is correct, but that is down to the rules of the Football League. We could amend insolvency law to give the administrator the power to compensate all unsecured creditors equally and fairly, and it would then be a matter for the Football League to decide what it did with the club after the administration.

Jenny Willott: The administrators are regulated professionals and are obliged by law to perform their functions in the interests of the company’s creditors as a whole. They are complying with insolvency law. The administrators are not bound by the Football League’s rules on football creditors; they are required by law to treat all unsecured creditors equally. Those are the rules under which administrators operate, but it is clearly in the interests of a potential purchaser to abide by the Football League’s rules and to ensure that football creditors are paid in full, to be able to keep the club operating. It is usually in the best interests of administrators to sell to someone who will do that to keep the business operating and keep the club playing as part of the league. If the purchaser does not do that, there is a significant risk that the Football League will not allow the club to compete, and the purchaser would then own a worthless club.

Damian Collins: I question that, on behalf of non-football creditors. Under insolvency, they might get less than 1p for every pound that they are owed. What interest of theirs does the process serve? They are in effect watching football creditors being compensated fully, but are themselves walking away with what in any other administration would be considered practically nothing.

Jenny Willott: It is important to remember that the money being used to pay the football creditors is not drawn from the assets being used to fund the other unsecured creditors. It is not the same pot of money.

Damian Collins: The Minister makes an important point, but this is where legislation might be necessary, because the football authorities will withhold money that is due to the club at the end of the season to carry out, in effect, their own administration process by settling football debts that the club cannot manage. We should make it a requirement that administrators have access to those funds that are due to the club at the end of the season, so that they can be factored into the administration of the club.

Jenny Willott: This was looked at fairly recently by the High Court, which decided that those funds did not count as assets of the club. The assets of the club have to be divided up in accordance with insolvency law, under which the administrator has to look at all the

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unsecured creditors. I completely understand what the hon. Gentleman is saying, but following the High Court ruling, I believe that those funds do not count as assets of the club.

Damian Collins: Under the Football League rules, those funds are not necessarily due until the club completes the season. If the administrator were free to carry on the administration until the end of the season, I do not see why the administrator could not reasonably draw on those funds as well.

Jenny Willott: The hon. Gentleman makes an interesting point, but I have to confess that I do not know the answer. If it is okay with him, I will write to him after the debate to clarify that point.

When a football club is sold, which takes it out of insolvency, the purchaser generally funds the payment of the football creditors, or other funds that do not belong to the club are used. A different pot of money is therefore paying for the football creditors. That is one of the reasons why the football creditors rule does not breach existing insolvency law. Were the funds to come from the same pot, it would breach the law, because it would be treating different unsecured creditors differently. Nevertheless, today and on a number of occasions in the past, it has been suggested that the football creditors rule should be abolished through legislation. The hon. Member for Folkestone and Hythe has made that point today.

The number of Football League club insolvencies has declined significantly in recent seasons. In the 2003-04 season alone, six clubs became insolvent. Five years ago, there were around three or four failures per season. Happily, however, there have been no football insolvencies at all so far this season and only two in the season before that, and in one of those there were no football creditors, so the situation seems to be improving slightly. Insolvency is not the cause of a football business’s problems; it is a symptom arising from an underlying lack of financial stability.

The hon. Member for Hartlepool (Mr Wright) and other hon. Members mentioned financial fair play; the football authorities have made significant moves in recent years to put clubs on a stronger financial footing. They have introduced an early warning system for tax debts, salary caps and an agreement on financial fair play rules, which will ensure that clubs do not spend more than they earn. Those measures are possibly already having a beneficial impact in increasing financial stability, which will lead to a decrease in the number of insolvencies.

Jim Shannon: I intervened earlier to ask hon. Members what talks the Minister has had with other Administrations, because the Scottish Football Association is separate, and sport is devolved to the Northern Ireland Assembly and the Welsh Assembly. I am not trying to be nasty, but I want details on any discussions that the Minister has had with the devolved Administrations on these problems, which are very apparent in other regions of the United Kingdom of Great Britain and Northern Ireland.

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Jenny Willott: The issues that the hon. Gentleman is raising are more connected to the administration of the game of football as a whole than to insolvency. I have not discussed those issues with counterparts in other Administrations, but Ministers in the Department for Culture, Media and Sport may have done. I am happy to write to him to clarify that point; I do not know the answer to his question off the top of my head.

It is important that we encourage the football authorities to continue with the financial fair play rules, to ensure that football has a solid financial base on which to operate. If there are no insolvencies, the football creditors rule does not come into play, so we get around the problem.

Damian Collins: I do not think that it is fair to say that if there are no insolvencies, we should not look at getting rid of the football creditors rule. In her opening remarks the Minister said that the rules of corporate life cannot be selectively applied, but that is what is happening. It should not; it should stop.

Jenny Willott: Insolvency law is applied equally to football clubs and any other businesses facing insolvency.

Damian Collins: The Minister says that, but there is no other sector of industry in this country that has a rule whereby it treats one group of unsecured creditors—its friends—differently from another group. I know that this has been tested in the High Court and is legal, so clubs can do it. The purpose of the debate is to question whether it should be legal, or whether we should stop it.

Jenny Willott: I appreciate what the hon. Gentleman is highlighting. I have sympathy for the views he is expressing.

Mr Iain Wright: To back up what the hon. Member for Folkestone and Hythe (Damian Collins) says with a specific example, Plymouth Argyle FC went into administration in 2011. Its football creditors were paid in full, but the unsecured creditors received a dividend of 0.77p in the pound—less than a penny. That cannot be a fair means of making sure a business can become viable. Will the Minister change legislation to change that?

Jenny Willott: Changing the legislation would not necessarily have made any difference. The money that goes to pay the football creditors does not come out of the pot of assets that is used to pay the unsecured creditors. There is no evidence that if we changed the football creditors rule there would be more money available for the unsecured creditors. They would quite possibly still get exactly the same return on a pound. Clearly, in the case the hon. Gentleman cited, the return was extremely low, but I have seen no evidence to suggest that it could have been greater. It is not the same pot of money that is used to pay each group.

To put the matter in the context of insolvencies as a whole, in 2013 there were about 20,000 corporate insolvencies in England and Wales, of which around 2,400 were administrations. The Government feel that using primary legislation to outlaw a provision that is relatively infrequently used is disproportionate, particularly given that the industry is already trying to improve the

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underlying financial stability of clubs via the financial fair play rules. Other than those to which special regimes apply, all insolvencies are subject to the same legislation, the Insolvency Act 1986. It would be potentially confusing for users of that legislation if we modified it just for football insolvencies. No other industry is treated differently under general insolvency legislation, and the Government feel that there is no compelling reason why football club insolvencies should be.

Football is undoubtedly incredibly important for fans. I understand the frustration of fans whose clubs become insolvent through no fault of those in the stands or on the terraces. Given the emotional importance of football for fans, I understand how distressing it can be when a club goes into insolvency. However, as I said at the start, the rules that govern corporate life cannot be selectively applied—they apply across the board—and those who act as directors of football clubs should act properly in execution of their duties.

A number of hon. Members have highlighted concerns about directors. The law allows the Secretary of State to undertake civil proceedings against company directors who are found to have been culpable in the failure of a company. However, until a person has been disqualified, they are free to act as a director of any number of companies in the UK, irrespective of their track record or any criminal charges that may be pending, although someone who is personally bankrupt or subject to bankruptcy restrictions is prohibited from acting as a director.

Hon. Members have mentioned the owners and directors test, which places additional restrictions on clubs. I understand that those restrictions are increasingly based on intelligence, and that football authorities are co-operating to make the test as effective as possible.

Overseas convictions were mentioned. At the moment, there is nothing to prevent a person who has been convicted of offences in connection with a company overseas from acting as a director of a UK company. However, the “Transparency and Trust” discussion paper published last year included a proposal to enable the Secretary of State to bring disqualification proceedings in the UK against anybody convicted of a serious offence in connection with a company overseas. We will publish the Government response to that consultation soon. The issue is currently being considered.

We want the UK to be a trusted place for people to carry out business. Part of that is ensuring that directors of limited companies take responsibility for their actions and have regard to creditors and employees. The majority of directors do that effectively, but action can and will be taken against those who do not play by the rules. When a company enters formal insolvency, such as administration, the administrator has a duty to report on the conduct of all directors in office in the previous three years. The Insolvency Service, which acts on behalf of the Secretary of State, looks at all reports in which the administrator suggests that misconduct has occurred, and when it is in the public interest to investigate, it will do so.

If disqualification proceedings are highlighted as being necessary, once the Secretary of State has authorised them, the company director can either give an undertaking or be disqualified. If disqualified, a director can be banned for up to 15 years, depending on the seriousness

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of the misconduct. Over 100 directors are disqualified each month; the average period of disqualification is around six years, and over 10% of disqualifications are for more than 10 years. That is all a matter of public record, as details are held at Companies House.

Various football directors have been disqualified over the years. For example, in 2011 four directors of Luton Town football club were disqualified for a combined total of 19 years, a significant penalty. They were found to have breached Football Association and FIFA rules and caused the company to trade at risk to, and to the detriment of, HMRC.

Hon. Members raised issues about specific clubs. I am an MP for Cardiff, where the Bluebirds now wear red, and was previously a local councillor in Merton, when Wimbledon football club was having a number of local difficulties about where they were going to play, so I have witnessed at first hand the trauma that club ownership issues can cause to supporters. A number of Members have mentioned their concerns about Coventry City football club. The hon. Member for Coventry South raised the golden share, which I mentioned earlier. My understanding is that the Football League has learned from the case of Coventry City and has strengthened its checks on who holds the golden share in response.

Mr Jim Cunningham: It took a long time to get an answer from the Football League on that question. It was not clear-cut at the beginning; it took a considerable period of time.

Jenny Willott: That may well have been the case. I take the hon. Gentleman’s point. On club ownership and the identification of club owners, the football authorities are confident that they can identify club owners. The Football League has responded to the situation at Coventry City to ensure that that picture is not replicated elsewhere.

Mr Marcus Jones rose—

Jenny Willott: I will not give way, I am afraid, as I have about one minute left. Portsmouth football club is a strong example of a supporter-owned club. The Culture, Media and Sport Committee recommended that the DCMS set up an expert group to consider supporter ownership within the sport. That is now happening, and the experience of Portsmouth FC will be invaluable in shaping considerations on that issue.

This is an extremely emotive issue. Members demonstrated in their contributions how strongly people feel about football. I appreciate that Members will be disappointed that I will not commit today to changing the law in this area. DCMS Ministers have meetings with the football authorities about a variety of issues and have discussed the football creditors rule in the past. However, there has been a significant reduction in insolvencies following the introduction of the financial fair play rules, with no cases this season. We want to encourage responsible spending in football to avoid the pain, both financial and emotional, of insolvency. That is a better way for those working in or supplying a football club, as well as being in the best interests of supporters. If that does not work, the issue will merit further examination, but I hope other hon. Members remain as optimistic as I am about the situation.

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Whitchurch Playing Fields

4 pm

Bob Blackman (Harrow East) (Con): It is a pleasure to serve under your chairmanship, Mr Streeter. I wish to raise an issue regarding Whitchurch playing fields—which are, as I will describe, unique—and general issues for the Department for Education in the longer run.

The Whitchurch playing fields are very much a beloved local resource in my constituency, being 25 acres of grass land, enclosed by Abercorn road, Old Church lane, Wemborough road and the aptly named Marsh lane in Stanmore. They are a wide open space, with trails for dog walkers and a pavilion, which has been subject to vandalism, graffiti and severe fire damage over recent years.

The fields are used by 35 local schools for sports purposes, including Whitchurch First school, which is on the site itself. They are also used by youth groups, community organisations, religious groups and football clubs on a regular but, unfortunately, informal basis at present.

Just to give some background, the site was originally called the Carreras sports field and was owned by the Carreras cigarette factory as a place for employees to exercise and for general use. It was subject to a compulsory purchase order by what was then Middlesex county council in 1960, to be used specifically as school playing fields. The usage of the playing fields has a long precedent, and that is why residents and local groups are fighting extremely hard to protect them.

It is important to state up front that the issue is not about maintaining a green space for sentimental reasons; this is not nimbyism—far from it. Campaigners are open to appropriate suggestions about the future of the site, but they are wary of shady deals behind closed doors that prevent local groups, particularly local schools, from using the fields as they have done for decades.

The Conservative administration in Harrow between 2006 and 2010 looked at the possibility of using a group of sports clubs or a consortium to run the playing fields, but dropped the idea, owing to a number of concerns raised by residents. In 2010, Harrow council fell under Labour control and then, after an acrimonious split, independent Labour control. That was when all the trouble began.

The Labour-run council decided to progress a private consortium, known as the Whitchurch consortium, made up of Blake Hall Club, Runwood Homes and Cavendish Rowe, which stepped in with proposals to spend millions on rehabilitating the pavilion and building a sports and leisure complex on the site, which they said could be used by local schools. Everything was promised, including the earth and the kitchen sink. We were to expect improvements to the playing fields’ surface; a new sports pavilion with changing rooms and showers; a café and a bar; as well as numerous football and cricket pitches. The nearest school, Whitchurch First, was duped into offering support for the proposal, lured in by the brand-new sports facilities and a clean-up of the dangerous pavilion structure that adjoins the car park on its part of the site.

However, the Labour-run council completely failed in its duty to look past any of the smoke and mirrors and made some very questionable arrangements. For a

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start, the lease was given at a peppercorn rent, which, after a long battle was fought under freedom of information laws, turned out to be zero—absolutely nothing. Effectively, Harrow council was giving away those 25 acres of communal land to a private consortium for free.

The original bidding process was short lived and resulted in only two bids, one of which was later withdrawn. Even worse, the lease term for the development was changed to 99 years, with no stipulations given to ensure that the site would be used entirely for sports for the benefit of local schools and people.

The numbers do not add up. There is no way the consortium could use their investment in the site as it currently stands. It can be no coincidence that the head of the consortium is a private property developer. The fields are a large site with immense value for housing. Given the 99-year lease, how long after the sports facilities are built will it be before the site is earmarked for residential or business development to get a return on the investment? Beyond those concerns, residents also fear that the bar would be open all hours of the day and night, and that the sports centre would be used for large-scale events, with consequent traffic and noise.

I wrote to the auditor last year about the conduct of Harrow council in its dealings with the consortium. In its reply, the auditor reminded the council that it had to make

“all decisions about this land on a lawful and proper basis and after taking appropriate advice.”

In particular, the council’s attention was drawn to the advisability of

“carrying out a valuation prior to any disposal of the land, and to the need to ensure their tender processes are fair and transparent.”

The profiles of the people leading the consortium are somewhat questionable. One member, Mr Ramesh Nadarajah, is director of two Lancaster Gate-based firms: Cavendish Rowe and Cavendish Investments. Cavendish Rowe is an estate agent, with specific interest in the W2 London postcode. It describes itself as

“prime central London property specialists dealing in investments, sales and acquisitions”,

and says that it is

“fluent in understanding the value of each specific area. Our unique knowledge of London allows us to make fast decisions and act quickly on opportunities offered to us.”

Another of the groups involved in the consortium is Runwood Homes, a residential care service provider with no link to the Harrow area. The company has courted controversy, with some of its homes failing to meet adequate standards of care for service users while delivering seven-figure dividends to director George Sanders and his family. In 2009, Mr Sanders was involved in a case with Castle Point borough council, regarding his close friendship with a member of the council, Bill Sharp, and subsequent improper influence of planning officers by Councillor Sharp when dealing with an application made in 2007 by Runwood Homes plc, which resulted in Councillor Sharp’s suspension from the council.

The final company in the consortium, Blake Hall Club, is now referred to as Wanstead Sports Club LLP. The club was fined in 2012 for breach of its licence conditions, failing to prevent excessive noise and antisocial

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behaviour. The local licensing sub-committee in that area was critical of the club in a further report as recently as last year.

I am yet to be made aware of any connection linking that sports club, or any of the developers, with Whitchurch playing fields, let alone the wider Harrow area. That hardly suggests a group of stakeholders with a clear commitment to community ventures in Harrow.

Whitchurch residents discovered only by chance that the playing fields had been signed over to development, without even the slightest attempt at consultation, in 2011. Local residents Melanie and Stephen Lewis put in an application to have the site recognised as a village green, which I supported; even if it failed, it would delay things enough for the proposals by the consortium to receive far greater scrutiny. As it happens, the village green bid was rejected by Harrow council’s licensing committee at the end of last year, leaving the fate of the fields open for debate once again.

The deal that was struck was a bad one for local schools and community groups, which have always used the fields on an as-need basis, and there has yet to be an issue. The consortium proposed to allow only 1,000 hours’ use a year, 9 am to 5 pm weekdays in term time, with no word on whether that would be collectively or per school. The changing rooms would be made available free of charge only to a small number of schools in the local area—Stanburn and Whitchurch—and only community schools, so any academies would not be allowed access. Indeed, if those schools applied to become academies, they would be barred as well. All other local schools would have to pay for use—half price up to 200 hours a year but full price after that. Again, academy status would render them all ineligible for discounts.

Community groups would also be hard done by. Stanmore Baptist church, which adjoins the site, would have to cancel all but one event a year, and Age UK Harrow restricted to a mere 100 hours a year before having to pay its way.

It is true that something has to be done on the site. Some 60,000 square metres of the fields are on a flood plain—hence the name of the road, Marsh lane. The site provides necessary drainage—estimated as equivalent to 28 Olympic swimming pools—and any overdevelopment could damage existing properties in the surrounding area. The pavilion is a material consideration as well, as it will cost money to remove or save. The playing fields need more maintenance than they are currently receiving, so some strategy would be welcome.

I believe that the answer is now in evidence. The Avanti Schools Trust has identified the playing fields as a potential site for the desperately needed Avanti House secondary school. The existing Avanti House school is the only state-funded Hindu school in the country, offering all-through education, with both primary and secondary provision. The primary school, operating under the name Krishna Avanti primary school, is based on Camrose avenue in Edgware, on a site developed by the Conservative administration of the council.

The school, however, has had several difficulties during its formative years. The secondary school has struggled to settle at a permanent site. Having been transferred from the Teachers’ Centre in Harrow, it is now in Stanmore on the site of a former private school, which cannot be expanded any further. The fields are less

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than two miles from that main school site, so they are perfectly placed for the school’s expansion to accommodate 1,260 students at full capacity. That is a popular solution, which I praise the current Conservative administration for identifying and pursuing. Local residents back the idea as a means to provide more school places locally, which are desperately needed in the area.

If allowed, that alternative development would preserve the use of the fields for school sports for many years to come, not only for the immediate schools, but for all local schools, and it would provide an alternative green space. Currently, the schools have to face an over-strict booking system and the prospect of paying through the nose to use fields that should be free by right.

Other areas have used funding from a private consortium to create sports complexes for use by schools, but this is a unique position. Nowhere else in the country has the sheer number of schools needing to use an open space like this. There is simply no way that a booking system will be able to accommodate them all. It is a fundamental reality that provision for school sports locally would be harmed by the consortium’s proposals, and there is no way around that.

Crucially, when the application for village green status was being considered, papers were discovered that listed the site as school playing fields and therefore protected them from any redevelopment. The Department for Education’s permission is therefore required for any proposal that would have an impact on school sports locally.

I have secured this debate because it is vital that the playing fields are preserved for the use of all the schools that need them. I also believe that the site should be put into the hands of the Avanti Schools Trust, on the condition that the majority of the fields continue to be used, as they are now, for local sports, schools and local communities.

The Minister’s Department has begun a feasibility study into whether the Avanti House secondary school solution is a genuine prospect. If accepted, that would lead to a planning application being submitted soon and a school on the site by 2016. The Avanti Schools Trust is already a strong presence in our area, which has a very significant Hindu community, and it has proved itself trustworthy as a developer and as an excellent provider of quality education.

By contrast, the Whitchurch consortium is now threatening to sue the council if it does not get its way with the site. It claims loss of income and the cost of work carried out, which is ridiculous, given the peppercorn rent that it obtained in the original deal. Frankly, it has no interest whatever in doing what is best for our community. All it wants to do is make a profit, and it will threaten and bully as much as it can to get its end product. Is it any wonder that local residents are concerned?

The Minister was kind enough to attend a meeting with local councillors and campaigners at the end of last year and to elaborate on what would happen with the site. I fully understand that matters related to planning permission, noise pollution and so on do not come into the role of the Department for Education or that of the School Playing Fields Advisory Panel, but there is a duty to ensure that proper consultation takes place before the council can agree to any development on land that has been classified as having school playing

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fields status. It is very clear that no consultation took place in relation to the consortium’s plans in this case, which should render its application invalid. I call on the Minister to ensure that it is proven that any development would enhance school sports provision locally.

I understand that it is a matter of oversight, and it is not for the Minister to block applications based on local opinion, history, or on other things—even on what I think about the issue. It is about securing the future of the playing fields for their intended purpose. I believe the objections I have raised must cause concern to the Department for Education.

I shall end with a few questions for the Minister, which I hope he will answer in his speech. The feasibility study is currently being carried out for the Department and is likely to lead to the use of only a portion of the site by the Avanti Schools Trust. Will the Minister take steps to ensure protection from further attempts by private groups to land grab the rest of it, given the site’s status as school playing fields? Will the Minister confirm that the Department has not received any other applications to change the status of the fields—from school playing fields to private playing fields or for them to be used in any other ways that I described—from private consortiums, developers or any other interested parties?

Will the Minister offer any advice in relation to the issue of the playing fields being on a flood plain? Will the Department or the Avanti Schools Trust bear any responsibility for its drainage, particularly given the educational status and strategic nature of the site?

Finally, if the consortium were to gain control over any part of the playing fields, what protection can be given for use by schools that have opted for academy status? As I have demonstrated, the plans that the consortium currently envisages distinctly disadvantage those schools from using the land. Thank you for your forbearance in listening to me, Mr Streeter, and I look forward to the Minister’s response.

4.16 pm

The Minister for Schools (Mr David Laws): It is a pleasure to serve under your chairmanship, Mr Streeter. I congratulate my hon. Friend the Member for Harrow East (Bob Blackman) on securing the debate on behalf of his constituents, and thank him for the support he has consistently given to the Avanti House free school, which, as he knows, is one of the largest free schools in England. I have carefully noted the comments he has made about the consortium and the concerns that he and many of his constituents have. We discussed those concerns in the meeting we held at the end of last year. The debate provides us with an opportunity to consider the possibility of building a new school on Whitchurch playing fields in this suburban area of Harrow, and to touch on a number of the other associated issues and concerns that he raised during his speech.

I know how concerned my hon. Friend is about the possible development of the site. It was just over three months ago, in December last year, that I met him and a number of his constituents to discuss those concerns. In that meeting, we looked at the possible development by a consortium and what that would mean for other users

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of the site, especially the local schools. I understand why he is concerned about some of the potential implications.

Today, we are talking about the site being considered for building a new school. Harrow is one of the many local authorities in London and beyond with pressure on school places, as my hon. Friend well knows. The population of the area is growing and we need to meet the potential future shortage of places in both primary and secondary schools. Harrow predicts that in 2021, it will have a shortfall of 700 places for 11-year-olds, so a large expansion programme of school places is already under way in the area. Avanti House will help significantly in meeting that potential deficit in school places, with 180 places created in each academic year within the school.

As my hon. Friend knows, the school only opened in 2012, but it is already extremely popular with local parents. When it reaches capacity in 2018, it will be providing almost 1,700 much needed new places. Indeed, it will most likely be the second largest free school in England at that point. The local authority supports the school, and its sister school, Krishna Avanti, is very popular, too—so much so that it is doubling in size to provide places to meet the local demand. Naturally, parents wish to send their parents to schools with a strong history of providing a good quality education.

Avanti House school is unique in Harrow, as it is the only secondary school with a Hindu ethos. That borough obviously has a large Asian population, and the arrival of a Hindu school will mean increased choice for the residents and reflect the borough’s existing diversity.

As my hon. Friend knows, it has been hugely challenging to find a suitable site large enough to accommodate the entire school. I know that he has been very constructively engaged in trying to find a solution on behalf of his constituents. The problem is faced by a number of new schools, especially those opening in areas such as Harrow and, indeed, right across London. Buildings and land in our capital city are scarce and, in a growing economy, are being sold for increasing sums of money, so they are also expensive to procure.

Avanti House opened in temporary accommodation, spread over two sites, and the secondary phase has already had to relocate once since opening. The search for a site for Avanti House has been a long one. It started in 2011, and many sites both in Harrow and in neighbouring local authority areas have been considered and surveyed. All have so far proven unworkable, for a variety of reasons. We look at a wide range of land and building options for free schools, from office blocks to jobcentres to warehouses, as well as reusing any spare education facilities. A permanent site has now been secured for the primary phase, but a permanent site for the secondary phase has up until now not been secured.

Naturally, and as my hon. Friend knows, we were encouraged when late last year the leader of Harrow council put forward Whitchurch playing fields as a possible option for the Education Funding Agency to consider. I must stress that the project is currently in the feasibility stage. We are carrying out surveys to see whether it is possible and practicable to locate the school on the site. That work will identify any critical issues that may affect development. Obviously, issues such as the floodplain on part of the site will need to be very carefully considered. The review is not due to be

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completed until next month, and only then can we be sure whether the site is appropriate, so I must emphasise again that the site is currently under consideration. It is not yet secured or confirmed, as my hon. Friend knows. What I can say, as he has said, is that its location is very well placed for the communities that it would serve and for the school’s sister primary school, Krishna Avanti.

It is acknowledged by the local authority and community users that the Whitchurch site is currently not in the best condition. That was made worse by the pavilion burning down a number of years ago and by the loss of changing facilities. It is poorly lit and needs levelling and better drainage, so that it is of a good standard to play on and safe. Not surprisingly, because of that, the playing fields are used at the moment on a much reduced basis, but there are still users. Local schools make regular use of the area and have done so for a number of years, as my hon. Friend has said.

When we met last time, I was able to explain to my hon. Friend that, because the site had been used in that way, the land had a designation as school playing fields, affording it a level of protection from disposal. He will recall that school playing fields are protected from unjustified disposal by section 77 of the School Standards and Framework Act 1998. The consent of the Secretary of State is required for any disposal or change of use of school playing field land. The application to dispose to a consortium would have been considered by the School Playing Fields Advisory Panel. However, the new free school proposal, if it goes forward, would not be considered by the advisory panel, because in effect we would be changing the use of playing field land for educational purposes by placing school buildings on part of it, rather than disposing of it altogether. As I understand it, the current proposal is essentially that the whole site would potentially be put in the hands of the Avanti Schools trust. I can also say to him that, in relation to one of the questions he asked at the end of his speech, we are not currently aware of any other applications being submitted for change of use of the site.

Sites such as Whitchurch playing fields are to be valued, cherished and made the most of. Increasing the use of scarce resources must be a priority. Therefore all school facilities should be community facilities, used out of hours by the wider community, too. This is a very significantly sized site, as my hon. Friend will know

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better than anyone. It is 10.5 hectares, which is possibly easier to visualise if described as 400 tennis courts or 14 football pitches. That gives plenty of scope for any school site—for the redevelopment of buildings on the site and for the ongoing use of land for sports, both for the school and for other schools in the area.

Should the site prove suitable, discussions will be progressed with the local authority, and consultation with the local community will take place. Thanks to the safeguards that we put in place in the Academies Act 2010, academy trusts must consult on the free school proposal and the Secretary of State must consider the impact that the proposal will have on schools and other institutions. All that is of course without considering the statutory consultation that would be required in relation to planning for such a project.

In relation to one of the other questions asked by my hon. Friend, we are acutely aware that a number of other schools, as he said very clearly, have been using these playing fields for sporting purposes over the years. We would want to ensure that that use continued in the future and that those protections and that availability was there for academy schools as well as the maintained schools in the area.

I am pleased that the desire to set up free schools across the country continues apace and that many more young people will have increased opportunities for high-quality education. However, we are also very aware of the challenge of finding sites for development. That is a challenge right across London and across many key parts of the country where we have basic need pressures. Those difficulties have been particularly evident in Harrow.

I again thank my hon. Friend for his tireless work helping with the site search for Avanti House school, and I congratulate and thank the local authority for its very proactive support in searching for a site. I am also grateful to him for raising the concerns of the other local schools and for making clear how much they value the use of Whitchurch playing fields. If this site does prove viable for Avanti House, that will continue to be the case in the future.

Mr Gary Streeter (in the Chair): Order. Both protagonists for the next debate are with us. We are a few minutes early, which is fine. We will move on to the next debate.

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Bost Project (Afghanistan)

4.27 pm

Steve McCabe (Birmingham, Selly Oak) (Lab): I am grateful for the opportunity to raise my concerns regarding the Bost agri-park and airfield project. I would not normally seek an Adjournment debate on such an issue, but since January 2013 I have been seeking answers through parliamentary questions on the role of the Department for International Development in this project: how much it cost the taxpayer, what went wrong and what lessons have been learned. I feel as if I have hit a brick wall and have had to prise out any information that I have received from the Secretary of State and her officials. That culminated in a question to the Secretary of State on the Floor of the House on 5 March this year, when she told me that this project was all the fault of the previous Administration and that the biggest waste of money was the £5,000 that she claims it has cost to answer my parliamentary questions. If it really costs in excess of £140 to cut and paste previous answers, perhaps the biggest efficiency saving in DFID might come from the Secretary of State and her Ministers reviewing their approach to answering questions from Members of this House. That is simply not good enough, so today I want to probe whether the public are being kept in the dark over this scheme, and how exactly their money was used. I hope that the Minister will be more forthcoming than others in the Department have been to date.

In January 2013, I discovered that the project was abandoned after a considerable amount of expenditure from DFID, but that a consultant’s report—the Coffey report—had been prepared on the project in July 2010. I asked whether the report was available, which Minister had received it and which Minister had authorised the project. I was told that it was not available and that it had been received not by the Minister but by an official, because at the time officials had the delegated authority to approve expenditure of up to £40 million. The Secretary of State told me that it had been received by DFID’s senior representative in the Helmand provincial reconstruction team and that a DFID deputy director had authorised the project.

Since the Secretary of State would not let me see the Coffey report, I made a freedom of information request to see a report that had been prepared by the Mott MacDonald consultancy firm. I was told that the information was being withheld because individuals have the right to the protection of their personal information, although I am not sure what personal information there could be in a report that is essentially an impact assessment of the project’s viability. It is not right to disguise the key decision makers from public view. I was also told that the public authority has the right to refuse to disclose information containing unfinished material. However, by the time I submitted the FOI request, DFID had already closed down the project.

I reverted to asking parliamentary questions. I asked whether DFID had considered any independent or external reports on the viability of the project, and if it had, whether they might be placed in the Library. By that time, I was aware of the earlier involvement of USAID, and that there were at least three reports querying the viability of the project. I asked whether

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there had been discussions with US counterparts on the project prior to DFID’s taking it over, and whether the minutes of those discussions were available. The Secretary of State confirmed that DFID worked closely with USAID on a range of projects, including Bost, but refused to make the details available.

To satisfy myself that aid money had not simply been squandered, on 11 September 2013 I asked how much money in total had been spent on the project and what the original budget was. The reply was that in 2009 a total of £8.42 million had been spent on the project and that the money had come partly through the Helmand growth fund and partly through other budgets for which DFID was responsible. There was no reply about the size of the overall budget, but I was told that in 2010 Ministers reached the conclusion that the programme did not represent value for money for the taxpayer, and it was discontinued. The Secretary of State confirmed that £200,000 had been spent on improving local capacity and training costs, including sending Afghan nationals to training workshops in Dubai.

Another cost was the need for fluent Pashto speakers, and I was naturally curious to know how many were employed and at what cost. In a typically helpful answer, the Secretary of State told me that DFID Afghanistan employs local staff and fluent Pashto speakers on all projects as appropriate. I mention that because the Coffey International consultancy group’s 2010 report for DFID specifically recommended hiring a fluent Pashto speaker to negotiate with locals on the issue of leaseholding, which it saw as a major problem with the main economic proposals in the plan.

Given that I knew that Ministers had closed the project after assessing that it would not provide value for money, I asked which Minister had overall responsibility and therefore presumably had made the decision. The Secretary of State replied that the programme had not been approved by a Minister, but that she had personally decided to pull the plug after her visit to Afghanistan in December 2012—two years after the date on which she previously claimed DFID had ended the project.

I thought it might be helpful to try another FOI request, so I asked to see the economic appraisal of the project produced by the Upper Quartile consultancy firm, dated 2010. I was told that DFID did indeed hold information relevant to my request but that it was being withheld on the grounds that it was unfinished material. That was February 2014—at least two or four years after DFID halted the project, depending on which parliamentary answer one relies on.

Although I could not establish exactly when the project ended, what advice Ministers relied on when they made the decision or how much had been spent, I thought it might be worth while trying to work out how much other agencies had contributed, so I asked who had paid for the road-building programme. Helpful as ever, the Secretary of State told me that it had been funded by both the US and the UK. It has been suggested that several million pounds was spent on roads and access to the park. That appears to have involved laying roads, digging them up and relaying them. A journalist was told by locals that many of the roads had been dug and relaid so many times that they could not accommodate the transport used by the local people and that some of the access areas were too small to allow vehicles on to the site.

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It seemed obvious that the Department was being less than helpful. I was not asking about national security, issues affecting the safety of our troops or negotiations with the Taliban, but a project on which a considerable amount of British taxpayers’ money was spent by our aid Department. It appears the project was originally intended to assist local traders and businessmen in the Lashkar Gar region, perhaps to divert them from growing poppies. It was envisaged that they could be encouraged to grow crops and develop other products on a safe site with a reliable source of energy and easy access, and then transport their produce to other parts of Afghanistan from the airfield—hardly earth-shattering stuff. But not enough homework was done and not enough attention was paid to concerns before lots of our taxpayers’ money was spent. Apparently, virtually no work was done to identify potential numbers of interested parties who might lease or buy plots of land on the agri-park, a key feature of the plan. As it turned out, people in the region had little knowledge of the concept of leasehold and were hostile to the idea.

I know from the report prepared by the Coffey consultancy group that DFID was told:

“The Bost Park represents a high risk investment that has a high risk of financial failure.”

When I asked about the return on the investment, I was told that the completion of phase 1 enabled three commercial flights per week to Bost airfield, connecting Helmand to the rest of the country and cutting journey times between Kabul and Helmand from two days to a one-and-a-half-hour flight. Naturally, I wondered whether there was evidence that local businesses were using the flights, but when I asked about that, the Secretary of State replied once more that the project had been approved by an official in 2009 who approved projects of less than £40 million, and that she had discontinued it in 2012. I also found out something new: having ended DFID’s involvement, she had handed the completed park designs over to the Afghan authorities.

I also discovered that the first commercial flight to Bost airfield was actually in June 2009, but that although the Department did not hold any information on businesses using such flights, it could confirm that the airfield was not used for any air freight. The Coffey report stated that the consultants were sceptical that local businesses would use the airfield because of the high cost of air freight and the low return local farmers would receive for produce such as flour and maize.

The Secretary of State’s first answer on finance told me that in 2009 a total of £8.42 million was spent on the project. She said in a subsequent answer that £8.8 million was spent prior to 2010, and in a further answer in November 2013 that £4.56 million had been spent between 2009 and 2013. That seems slightly curious if DFID involvement ended in 2010, or even 2012. It appears that, at the very least, £12.76 million has been spent by faceless bureaucrats on a scheme that did not succeed in stimulating local business, leasing or selling plots of land on the agri-park, or transporting goods via flights from the airfield. The Coffey report suggests that there are many additional costs—including salaries, land acquisition, environmental facilities, waste disposal and training—that are not part of the original estimates.

We know that there are a lot of corrupt officials in Afghanistan. The Secretary of State has shown her irritation at being asked to explain the events I have

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outlined. We are now on the third Secretary of State since the issue started, and I am extremely irritated that the Secretary of State claims to have wasted £5,000 on bland, repetitive, cut-and-paste, often non-answers that seek to obscure rather than reveal the truth about the project.

I am a supporter of aid, but my constituents and I have a right to know what our money is being spent on. There is a funny smell about the Bost agricultural park and airfield project, and nothing that the Secretary of State has done so far has helped to clear it up.

4.44 pm

The Parliamentary Under-Secretary of State for International Development (Lynne Featherstone): It is a pleasure to serve under your chairmanship this afternoon, Mr Streeter. I am glad to attend this debate and discuss DFID’s involvement in the Bost airfield and agricultural business park project.

I will repeat some of the information that the hon. Member for Birmingham, Selly Oak (Steve McCabe) has already been given and is dissatisfied with, but I hope that the timeline I give him will help to explain why and when decisions were made. He knows that the Bost airfield and agricultural business park project was approved in 2009, under the previous Government, and that Ministers did not authorise the project. At that time, Ministers had delegated authority for routine project spending to officials, up to a maximum value of £40 million. However, approval for the project followed a commitment in March 2009 by the then Secretary of State for International Development to provide £32 million for infrastructure in Helmand over the following four years.

The hon. Gentleman will be aware that DFID was present in Helmand as part of the British-led provincial reconstruction team in Lashkar Gah, the joint civilian-military team working to support the local Afghan government to bring governance and development to the province, alongside the security delivered by NATO and Afghan troops. I am sure the hon. Gentleman would agree that a simple military solution is never the answer; there will always be political considerations, and development and jobs are also required.

The Bost airfield and agricultural business park was approved as part of the provincial reconstruction team’s development plan for Helmand. Both major components of the project—the business park and the airfield—were designed to bolster Helmand’s economy by supporting local businesses and providing secure facilities. Helmand is not the easiest environment in which to work, and the situation was extremely fragile when the project was being planned. The provision of secure facilities was designed to allow local businesses to operate and to increase access to markets and commercial opportunities, which in turn would provide much needed jobs and economic growth for the province.

DFID also agreed to improve infrastructure and provide essential facilities at Bost airfield to connect Helmand businesses to the wider Afghan economy. That included building a fire station, a police station and five security towers, to make the airfield secure and fully operational, as well as an access road and car park. DFID officials met with local businesses to discuss the business park in 2009, in advance of the project being

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approved. That included regular consultation with the Helmand Business Association—now the Helmand National Investors Association—which represents local businesses. The group confirmed local demand for facilities of the kind planned.

DFID’s financial analysis showed that UK funding would result in a positive return for our investment—at that point. DFID therefore agreed to fund the Bost project in partnership with the Afghanistan Investment Support Agency, which agreed to take on a range of commitments, including finding a regular power supplier, land ownership issues—as the hon. Gentleman has mentioned—and environmental clearance for the park.

In 2011, following some delays in project implementation by our Afghan partners, DFID’s new financial analysis showed a potential negative rate of return on the agricultural business park. DFID’s team in Afghanistan took action based on that evidence. The project was redesigned, separating the business park and the airfield to ensure that progress on the airfield would not be hampered by the problems and setbacks with the business park. It was also agreed that the business park project would be taken forward in phases, meaning that funding could be withdrawn if it became clear that further investment would not be sustainable.

In 2012, DFID—

Steve McCabe: Will the Minister give way?

Lynne Featherstone: I will, although I might lose my thread.

Steve McCabe: My question is very simple. The Minister said earlier that she could give a ballpark figure of £32 million for the project. Can she tell us how much has been spent on the various phases, reshuffles and re-designations? How much British taxpayers’ money has been spent overall?

Lynne Featherstone: As I go through, I will set out the sums involved, but the critical point is what sum was not spent because of the non-continuation of the business park, which cost £3.1 million. As the hon. Gentleman rightly said, the plans were then handed over to the Afghan authorities so that the work would not be wasted and the whole thing could be rescheduled. That was not achievable within the original conception, which is why the plan was cancelled. Rather than waste a further £6 million, the Secretary of State decided to stop the project at that point, hand over the plans and let the project continue at a pace that would be more achievable by the Afghan authorities, without involving the British Government or the British taxpayer in further expense.

In 2012, DFID gave our in-country partners a fixed deadline to deliver the commitments that they had previously agreed in relation to the business park. Towards the end of 2012, it became apparent that our Afghan partners would not meet those commitments; they simply were not forthcoming. It was clear, therefore, that the business park could not be completed within the original time frame and that further UK investment in the work would be poor value for money.

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On the £32 million, I want to clarify that it was not £32 million for Bost; £32 million was the total commitment to infrastructure in Helmand. Project approval followed the commitment by the then International Development Secretary.

Towards the end of 2012, as I said, it became apparent that the commitments would not be delivered, the business park would not be completed in time and more UK money would be at risk if we pursued it further. The Secretary of State agreed to cancel further investment in the business park in January 2013, to prevent any further waste of taxpayers’ money. However, the completed park designs were handed over to the Afghan authorities to enable them to pursue the project over a revised time frame. Personally, my view is that that was a sensible way to deal with an unfortunate situation, while saying that the project was still a good idea. However, it had to be deliverable in time and on budget, and that is now up to the Afghan authorities.

On the monitoring of projects, Afghanistan is an inherently risky country, as I am sure the hon. Gentleman understands. Development projects, particularly those in insecure and conflict-ridden areas such as Helmand, will always include an element of risk. He might have got hold of a copy of the report to which he referred—as he quoted from it, I think that my assumption is probably correct. As I understand it, the report was unfinished and high-risk, as one would expect for Helmand. That is acknowledged explicitly in the Government’s building stability overseas strategy, which endorses

“taking risks…in order to secure transformational results”.

As a DFID Minister, I am always saying to DFID officials, “I want to know as much as I can about a risk, but I don’t want you not to suggest taking risks if we are to get transformational results.”

Steve McCabe: I accept that there is an element of risk, certainly for the money, but now that DFID’s involvement in the project has finished, what is the purpose of keeping all the reports hidden from Members of this House? Would it not be better for us to understand the thinking and the decision-making processes? What is the Minister protecting now?

Lynne Featherstone: I am not protecting anything. It is not our practice to publish either unfinished reports or internal reports. I am sure that the hon. Gentleman understands that what is most appropriate is to have checks in place to monitor projects and ensure that they are proceeding as planned. That is what we do with UK taxpayers’ money: we put in milestones so we can check that we are not going off-track. We must ensure that things proceed as planned and take action when that is not the case.

In that respect, the Bost project is a good example of DFID acting on the basis of changing circumstances in Afghanistan. If we saw a project that was beginning to fail, and did not stop it, we would be criticised for not terminating it even though it was not going to provide the return that we expected.

Work continued on the successful upgrades to Bost airfield and was completed in November 2013. There are now two return flights each week from Kabul to Bost, as the hon. Gentleman said, cutting the journey time from two days to one and a half hours.

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In recent weeks, the hon. Gentleman has asked a lot of questions. Consequently, I have asked a lot of questions about why he has been asking a lot of questions. As I was responding to this debate, I wanted to understand the basis of the issue. Nothing has been covered up; it was simply that the project was not achievable on the proposed timeline, and the partners involved were not delivering. By separating out the two projects, we ensured that the good part of the project could be finished. He has said that it is a cover-up, but I reject that. There is no cover-up—simply a project, or half a project, that was not going to deliver.

As the hon. Gentleman knows, most of the answers have been set out in departmental responses to his questions. [Interruption.] I am answering one of the questions that he asked. When we responded to his questions in October 2013, a total of £8.42 million had been spent on the Bost airfield and agricultural business park programme, of which, as I said, £3.1 million had been invested in the business park side of the project. The business park was not completed because commitments given by DFID by Afghan partners were not fulfilled. I am sure that he would want us to have Afghan partners. Part of the work that we do on development is growing local business and local capacity.

It was not possible to complete the business park as planned or in a way that would provide value for

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money for UK taxpayers. As I have said, that part of the programme was cancelled once that became clear. DFID Ministers have taken steps to increase their oversight of programmes approved by the Department—to be frank, we are always doing that. Under the previous Government, Ministers did not approve anything under £40 million. I know, because I now have to go through all the business cases under £40 million with a fine-toothed comb, that Ministers now approve all spending on projects over £5 million.

In conclusion, we have been clear about how much money was spent on the project; how the decision was arrived at; why the decision was made to cancel further funding; the role of Ministers and officials in making those decisions; and what has happened subsequently. That has all been set out in parliamentary answers. I am sorry that the hon. Gentleman thinks that something remains unrevealed after all that I have said. As far as I am aware, we have been completely open and honest about all our decisions and the money that was spent. I hope that he finds those answers sufficient.

Question put and agreed to.

4.58 pm

Sitting adjourned.