SPORTS EQUIPMENT (PROFIT MARGINS) (Hansard, 4 February 1977)

§ Mr. Roy Hughes (Newport)

I have sought this debate on sports equipment because of the profit margins on these items. I speak as one who has been interested in sport for many years. My object is to focus attention on the undesirable practices of certain sports equipment manufacturers. The most unpleasant aspect is that children are being exploited.

One of the principal offenders appears to be the Leicester firm of Cook and Hurst, the chairman of which is Mr. Bert Patrick and their trade name is "Admiral". The attitude of that firm is arrogant.

In addition, a huge German company named Adidas has its base in Wilmslow, Cheshire and its trade name is "Umbro" which was formerly a local concern named Humphrey Brothers. The third firm is called Bukta, which operates from Stockport, Cheshire.

To illustrate my case I shall cite the situation involving the Admiral firm, which has entered into a deal with the English Football Association. The English football team now has "Admiral" emblazoned on its track suits. The firm of Cook and Hurst says that it has exclusive rights to use the English lion emblem on its products. It relies for that on the Copyright Act 1968 and its predecessors. That is an abuse of those Acts, which were intended for such items as jewellery and motor car accessories.

In return for this privilege, money is put into the coffers of the English Football Association. The company is able to exploit the market in trendy children's football gear. The price of its products is excessive. It is about double that of similar products without the emblem. It is as if the biblical incantation "suffer little children" had been taken literally.

The deal with the English Football Association seems to have been based on an initial payment, with increments on 1017 sales, which would, of course, be related to the success of the English football team in various international football tournaments. Fortunately, though, Mr. Don Revie's team did not live up to expectations, so Admiral turned its attention to Wales, and I am glad to say that the Principality has been experiencing a long-overdue success in international competition.

A deal was apparently made with the Welsh FA. It caused considerable consternation amongst Welsh sports dealers. Many boycotted the original launching of the scheme. I do not wish to be critical of the Welsh FA attitude in this respect. It has been on its beam ends for a long time, and my good friend, Mr. Trevor Morris, the Secretary of the Welsh FA, has worked very hard in trying to keep Welsh international soccer going during a very difficult time. The only pity is that the Welsh FA has found it necessary to enter into such an agreement as I have related.

It is also to be noted that the scheme has been extended to certain prominent clubs. Manchester United is perhaps the outstanding example. What follows from that is that star-struck youngsters who wish to wear the colours of their favourite teams are having to pay through the nose for the pleasure.

Admiral has tried to claim that the quality of its product is superior to others on the market, but, as I understand it, that is not borne out by the facts, because the polyester cotton used is similar to that used by other sports equipment manufacturers. Nevertheless, I repeat that the price of Admiral products is exorbitant—sometimes more than double that for similar products without the emblems, and so on, to which I have referred.

The wife of a prominent citizen in my constituency of Newport phoned me to say that the shirt, shorts and socks for her 10-year old son with this Admiral emblem, and so on, cost no less than £9. Quite naturally, parents are disgusted with this practice, and their concern is shared by many sports dealers. They know full well that apart from this royalty premium similar products could be sold, and far more cheaply.

1018 I could refer also to the built-in obsolescence factor, as one might describe it. From time to time this trendy sportswear design is slightly modified, so that the father who buys a Manchester United outfit for his young son is told three months later that that outfit is out of date, because there are now some additional stars, or a strip down the sleeve, or some other change, and the boy, having seen his favourite team on television, wants the modified outfit. One can imagine the family disturbance that occurs over such an event.

Another feature of this agreement is that teams are asked to try to parade in track suits for so many minutes before the kick-off of a match, and the word "Admiral" is emblazoned on both sides of the track suit. They are hoping to achieve thousands of pounds worth of free television advertising. An attempt was made with regard to the Cup Final not so long ago. The BBC rightly objected to this practice because it offended against its rules on advertising.

Another aspect of the problem to which I wish to draw attention concerns amateur clubs. They find the practice costly and discouraging. For example, if their kit is modelled on that of a fashionable club, say Manchester United, after they have signed an agreement with Admiral the price of the equipment doubles. These amateur clubs, relying as they do on purely voluntary players and committee men, have to pay through the nose for this product.

The second principal fear of amateur clubs is that other sports equipment manufacturers will have to follow the example of firms like Admiral and join in this practice. If prices go up and up for all products, amateur clubs in turn will not be able to pay the bills for their equipment and many of them could go out of existence.

The chairman of the Admiral company, Cook and Hurst, Mr. Bert Patrick, is on record as saying that his company puts money back into sport. One is not denying that. Mr. Ted Croker, Secretary of the English Football Association, says that the money ultimately goes back to schoolboys because the Football Association pays teachers to train them. One should look at the other side of the coin as well. The money may be going 1019 to pay exorbitant wages and bonuses to a limited nucleus of first-class soccer players. On the other hand, the whole practice of extracting money in this way from boys and amateur clubs is pretty despicable.

The first principal point that I wanted to make was that the Minister should ask the Price Commission to look into this whole practice and thoroughly investigate it. That is now overdue. The second principal point I wanted to make concerns copyright. Can the Minister ascertain whether the 1968 Act covers the practices that I have outlined? If that is the case, can steps be taken possibly to amend that Act to prevent such an abuse? I feel that in doing so the Government would be providing a public service as well as reducing prices, particularly in the difficult inflationary period in which we are now living.

I am the chairman of the all-party Sports Group. With my opposite number, the hon. Member for Dumfries (Mr. Monro), our committee met representatives from about 20 different sports last Thursday. Among other things, those delegates protested against the amount of tax being levied on entrance fees to sporting events. We know that entertainment tax was abolished in 1958. Four years ago, however, we had the introduction of that evil Common Market tax, VAT. I know that the Minister will take a different view, but I feel that this tax is essentially alien to British traditions. It is certainly quite a burden on sport at present.

I understand that the standard charge was 10 per cent. until 29th July 1974 and 8 per cent. thereafter. According to Her Majesty's Customs and Excise the revenue from admission to football matches has netted an estimated £2 million a year to the Treasury since the tax was introduced. From this, one could say that a Minister from the Treasury should be replying to the debate rather than the Under-Secretary of State for Prices and Consumer Protection. It is the Treasury that is the villain in this case.

Why should our top and respected sports bodies have to go cap in hand to commercial concerns in this deplorable way? The whole practice carried on by Admiral and other firms is degrading to sport. I find the truculent attitude of this 1020 firm nauseating, particularly when kids are exploited.

Further tax concessions on entrance fees to sporting events are required. Eventually VAT should be zero-rated and the money channelled back into sport, where it really belongs. There would then be no need for our sporting bodies to engage in the practices that I have outlined.

In conclusion, I would say that sport needs to be encouraged. It is good for the health of the nation. The more people who participate, particularly young people, the better. The more young people participated in sport, the more we would see a decrease in vandalism in our community. Major sporting events provide relaxation and entertainment for many thousands of people. Sport is also very important in relation to international prestige. No member of the Government needs to be reminded that we need all the prestige we can muster at present.

§ The Under-Secretary of State for Prices and Consumer Protection (Mr. Robert Maclennan)

I am extremely grateful to my hon. Friend the Member for Newport (Mr. Hughes) for raising this subject. His well-known interest in sport and in the predicament of the less-well-off members of our community makes him doubly qualified to speak on this important subject. What he has said has reflected a widespread public concern about the prices of some sports equipment. Today's debate has been very helpful in highlighting particular aspects of the problem that may well be at the root of this concern.

One thing is clear—the problem is a very complex one. It touches on many issues, such as the sponsorship of sport, which are not necessarily in themselves problems about prices. I do not claim to be an expert on the intricacies of sponsorship. From the inquiries I have made, however, there appears to be a close connection between the practice of some sporting personalities going about as walking advertisements for particular firms, and the cost to parents of kitting out their children. Colour television comes into the story too. Faced constantly with the sight of his heroes in the latest strip, it is not surprising that young Johnny begs his parents to buy him a football jersey in the identical colours.

1021 It is easy to say that parents are not forced to buy these things; that they can provide Johnny with perfectly serviceable sports gear at less cost; that they should take a firm line. Perhaps this is so, if little Johnny is one of the privileged children whose parents have the means to grant him many of his other wishes. But it is not so easy for parents of limited means, who often worry because they feel that they cannot give their children all that they would like to give. They may be especially sensitive to the argument that "All the other boys have them". Many parents, too, are anxious not to do anything which they think might damp their children's enthusiasm for active sport. They are, therefore, likely to be particularly vulnerable to commercial pressures exercised through their children.

The Daily Mail has performed a useful service in highlighting this practice. If I may venture a personal opinion, it seems that the accoutrements that these young people are urged to imitate are more appropriate to the ballet dancer than the football player. I hope that the practice of buying these expensive strips becomes unfashionable as quickly as did the fashion for hoola hoops some years ago. If that fashion was physically damaging, this practice is hitting people's pockets in a most unpleasing way.

My hon. Friend has referred to the practices of one firm in particular. It is true that these practices are not limited to this country. I understand that some British firms pay to use a name originating in another country. The Director General of Fair Trading has a responsibility for keeping under review practices which adversely affect the economic interests of consumers in the United Kingdom. I have no doubt that he will take note of what my hon. Friend has said today.

My hon. Friend also asked about the registration of the firm's designs under the Copyright Act. This is a matter which does not fall within my departmental responsibility. I have noted the point, and when I have taken it up with my right hon. Friend the Secretary of State for Trade I shall write to my hon. Friend as soon as possible.

Sponsorship of sport takes many forms, and I am well aware that there 1022 are a number of sides to the question. Some would say that many sports would not have been able to survive without the sponsorship money that has transformed the finances of motor racing, cycling, cricket and many other sporting activities. But, of course, it is the consumers who pay in the end. One effect of sponsorship is that the people who pay are not in every case the same people who take part in, or enjoy watching, the game they are helping to finance. They may pay through the prices of many goods whose manufacturers are involved in sponsorship. This is a wide-ranging matter and one which presents problems which cannot be solved in a simple way.

My hon. Friend has sought to cut through all this—I understand his thinking and I have some sympathy with it, perhaps contrary to his suggestion—by saying that we should tackle the problem by examining how we can otherwise finance sport and particularly by looking at the impact upon sport of VAT. He has admitted that this latter point is a matter for the Treasury. Football is taxed in the same way as a great deal of other discretionary consumer expenditure such as theatre tickets, camera and hi-fi equipment and so on. Many necessities such as adult clothing, furniture, cleaning materials, pots and pans are also taxed in the same way.

Because VAT is a broad-based tax, reliefs are consequently necessarily strictly limited. I have no doubt that what my hon. Friend has said will be noted by the responsible Minister.

My hon. Friend has asked specifically for a reference to the Price Commission. I think that what has been said today shows that we are faced with a complex problem in which the prices of sports equipment form only a part, although an important part for many parents and, indeed, for many young people who wish to continue in active sports after they leave school and are faced with having to buy their own equipment.

My right hon. Friend the Secretary of State is considering a number of further subjects for reference to the Price Commission and intends to include problems of the kind raised this afternoon, subject to some further study of the best channels for investigating the very complex issues which have been revealed.

1023 I conclude by congratulating my hon. Friend on focusing so sharply on the problem of purchasing which affects many people and which rightly has given rise to considerable annoyance and a sense of unfair exploitation by the firms involved. I am sure that my hon. Friend has helped to elucidate the issues, and 1024 hope that further study may produce satisfactory solutions which will eliminate the problem.