Tuesday 23rd April 2024
(7 months ago)
Commons ChamberFootball Governance Bill 2023-24 View all Football Governance Bill 2023-24 Debates Read Hansard Text Watch Debate
The Secretary of State for Culture, Media and Sport (Lucy Frazer)
I beg to move, That the Bill be read a Second time.
Football is part of our national life. Over the years, English football has become a universal language. Wherever you are, whatever country you are in, you are never far away from a fan of one of our great clubs. We are a global football powerhouse and our economy benefits: billions for the economy, investment in towns and cities across the country, and tens of thousands of jobs. Our premier league is world leading. And the strength of our national game goes far beyond the top tier. Hundreds of thousands of fans turn out every week and come together to support teams up and down the football pyramid. Football clubs are at the heart of our communities. Each and every Member will be able to testify to that. Each Member will also be able to testify to the fact that we have the best fans in the world.
Unfortunately, too many of those very same fans have been taken for granted. Too many fans have seen their team’s owners change club badges and colours without any fan input, or have seen their club sell its stadium and up sticks. Too many fans have watched on as their clubs tried to join closed-shop breakaway leagues against their wishes. And too many fans have seen their club struggle and even collapse under the weight of mismanagement and poor ownership. There have been 64 instances of clubs falling into administration since the Premier League was founded in 1992. Clearly, not all clubs are feeling the benefits of English football’s global success and something has to change.
We all want to see our national game prosper for generations to come, but if we want our clubs to thrive, fans have to be at their heart. If we want English football to remain a global success story, we have to ensure our pyramid is financially sustainable. I am proud to say that the Football Governance Bill will do exactly that.
Sir Jeremy Wright (Kenilworth and Southam) (Con)
I congratulate my right hon. and learned Friend on bringing forward this Bill. As she says, football goes all the way down the football pyramid—not just in terms of its quality, but in terms of the entertainment it offers. Does she agree that a classic example of that is the fantastic entertainment that Coventry City provided in the FA cup semi-final on Sunday? Despite the club temporarily not being part of the premier league, it is none the less clear not just to the Coventry City supporters in my constituency but to everyone that the financial health of clubs that are further down the football pyramid matters for the entertainment they can provide. Does she agree?
Lucy Frazer
My right hon. and learned Friend is absolutely right: that was a tremendous match. It shows the importance of the football pyramid, and how it delights and disappoints fans across the country to see clubs go up and down.
Mr Toby Perkins (Chesterfield) (Lab)
I thank the Government for bringing forward this overdue Bill. Chesterfield has seen the worst of football, with the former owner Darren Brown ending up in jail for his crimes against the club, which almost took it out of existence. Under the ownership of the Chesterfield FC Trust, Chesterfield are now back where they belong—in the football league—after becoming champions of the national league this year. Is it not the case that what our football clubs really need is to be run by people with a commitment to those clubs and a passion for them, rather than by people who are trying to make a quick bob?
Lucy Frazer
To address the point about the Bill being long overdue, the Labour party said for some time that it would do something about this issue but did absolutely nothing. Since I have been Secretary of State, we have had a White Paper and a response to it, and we have drafted a Bill at speed. We have introduced the Bill, and I am delighted that it is having its Second Reading today. I recognise that the Labour party supports the Bill, and I am very grateful for its collaboration. I am very pleased that Chesterfield are in a good place. We want to see ownership that works across the field.
Steve Brine (Winchester) (Con)
I am very proud that our Government are bringing forward this Bill. Others had opportunities to do so but did not, and it is very important. I shall support its Second Reading tonight, because it is important to protect the football pyramid. The Bill talks about guaranteeing that fans will be consulted on key decisions that impact on them, which it will do in one respect, but fans of teams lower down the pyramid will be affected by the decision last week to get rid of FA cup replays, which are a lifeline for many clubs by providing opportunities to get a big draw at Anfield, Old Trafford or even Tottenham Hotspur Stadium. Obviously this Bill will not touch on that, but does the Secretary of State have any comments on this issue?
Lucy Frazer
My hon. Friend is absolutely right, because those David and Goliath fixtures are part of the magic of football. I know that replays have been a welcome source of income for smaller clubs throughout the years. I spoke to the FA about this issue at Wembley on Saturday, but as he will know, these are decisions for the football authorities. This Bill will ensure that we have appropriate financial regulation in place.
Valerie Vaz (Walsall South) (Lab)
I am not going to mention my local football clubs—oh, all right, I will: Walsall football club and Darlaston Town 1874 FC, which is celebrating its 150th anniversary. The shape of the Bill at the minute is due to the Minister sitting next to the Secretary of State, the right hon. Member for Pudsey (Stuart Andrew), who has engaged with all Members. I pay tribute to him for including all of us. It is a pity that the Secretary of State is looking at the Bill in a party political way, because the Government have been in power for the last 14 years. Let us all pay tribute to the right hon. Member for Pudsey, who has done a fantastic job.
Lucy Frazer
In the next part of my speech, I am going to pay tribute to a large number of Members who have played a considerable part. My right hon. Friend the Member for Pudsey (Stuart Andrew) has done a tremendous amount, as have many Members from across the House, but I pay particular tribute to my hon. Friend the Member for Chatham and Aylesford (Dame Tracey Crouch), without whom we would not be in this position today.
I was responding to a point about the delay. Those on the Opposition Benches might criticise us for the delay, but the truth of the matter is that they cannot legitimately do so, because they had an opportunity to take action and failed to take it. That is why we have taken the action that we have.
I agree with the right hon. Member for Walsall South (Valerie Vaz) that we should recognise that many people have played a considerable part in bringing this Bill to fruition, because many people have championed these reforms. I would like to mention again my hon. Friend the Member for Chatham and Aylesford, who was recently awarded a damehood. Her voice and her work have been instrumental in getting us to where we are today. As well as being chair of the fan-led review, she has helped lay the foundation. She has worked very closely with me, and in particular with my right hon. Friend the Member for Pudsey, to make sure that this Bill is in the shape that it is as it comes before the House today.
My hon. Friend the Member for Gosport (Dame Caroline Dinenage), who is Chair of the Culture, Media and Sport Committee, has worked with us in Government throughout the development of this Bill. My hon. Friend the Member for Carlisle (John Stevenson) has been a powerful voice in this debate and pressed hard, along with other members of the Northern Research Group, to change the status quo. I would also like to recognise the hon. Member for Bristol West (Thangam Debbonaire), who is my opposite number, and the hon. Member for Barnsley East (Stephanie Peacock), both of whom have been engaged throughout. I know that they are supportive of the ambition behind introducing a new regulator.
Particular thanks should be extended to my hon. Friend the Member for Southend West (Anna Firth), the hon. Member for Reading East (Matt Rodda), my hon. Friends the Members for Hyndburn (Sara Britcliffe) and for Folkestone and Hythe (Damian Collins), my right hon. Friend the Member for Ashford (Damian Green), the hon. Member for Eltham (Clive Efford), the right hon. Member for Walsall South, the hon. Members for Sheffield South East (Mr Betts), for Liverpool, West Derby (Ian Byrne), for Nottingham East (Nadia Whittome) and for Gateshead (Ian Mearns), and many others in this House.
I also thank the relevant all-party parliamentary groups, the football authorities, the Football Supporters Association, the FA, the Premier League and the EFL. Everybody has played their part in making sure that this Bill is in the shape that it is as we bring it forward today. Everybody knows it takes a village to develop a Bill of this size and scope, and credit is due to parties across the House, across football, across academia and across business. Hundreds of people have given us their time and their insight to help get the regulator right, and for that I am extremely grateful.
As Members will know, the centrepiece of this Bill is a new, independent regulator with a clear and unambiguous purpose: to protect the game that we all love. The way to do that is by getting football’s house in order. To that end, the regulator will not interfere with matters on the pitch. Instead, it will be focused tightly on governance, finances, ownership and fans. It will help clubs to build their resilience, while preventing teams from falling into the wrong hands to begin with.
Paul Bristow (Peterborough) (Con)
The mighty Bristol Street Motors trophy winners, Peterborough United, contacted me today to express their support for this Bill, but they suggested that it is vital that the independent regulator has the powers and the ability to intervene on financial model arrangements. Can the Secretary of State guarantee that the independent regulator will have those powers?
Lucy Frazer
The regulator will have significant powers in relation to individual clubs and, when triggered by either the Premier League or the EFL, to the leagues themselves. It will have backstop powers in order to look at the pyramid as a whole.
Kirsten Oswald (East Renfrewshire) (SNP)
I am always delighted to hear conversations about football taking place here or anywhere else. The Secretary of State talks about clubs getting their house in order. Does she agree that an important part of that would involve clubs looking at who their shirt sponsors are? Does she agree that shirt sponsorship by disposable vape companies is wholly unacceptable, has no part in modern football, and sets a really bad example to all our children? We want them to love the game that matters so much to all of us.
Lucy Frazer
I am sure that over the course of this debate many Members will raise issues of concern to them and their constituents. I emphasise that the Bill is about financial regulation, although I am very pleased that the Premier League has taken action on gambling advertising on the front of shirts, which is something we looked at very closely, and that the Government are taking action on vaping and smoking more broadly. The Bill is tightly defined and addresses financial regulation, and I am very pleased that we have introduced this legislation.
Dr Luke Evans (Bosworth) (Con)
The Secretary of State is exactly right about the financial aspects of this Bill, but we have to make sure that we get the balance right. We do not want to kill the golden goose that is the Premier League, and we want to make sure that we have growth in the sport, through the championship and the EFL. We have to consider the crowded calendar of European matches, too. Does she believe that the regulator will have the ability to chart that very fine line between UEFA, FIFA and her proposal? That is going to be pretty tough.
Lucy Frazer
We do not want to do anything that damages the world-leading Premier League, which is worth £7 billion. People across the world look to the Premier League, and we have worked very closely with the Premier League, the EFL and others to try to get the balance right. I have met the executives extensively during this period, and I have met all the clubs in the Premier League and the EFL to try to get the balance right. We are trying to get a light-touch regime that allows the leagues to do what they are already doing, but with a regulator. The Bill is all about financial regulation.
Bill Esterson (Sefton Central) (Lab)
The Secretary of State will understand that many of my constituents who support Everton are greatly concerned about the eight point deduction applied by the Premier League for breaches of its profit and financial sustainability rules. Nottingham Forest face a two point deduction for similar breaches, and other clubs have yet to face any sanction.
Can the Secretary of State reassure my constituents and many other football fans that her commitment to support the Premier League does not mean that the Bill will not have sufficient strength? Does she share my concern that my constituents and many others are worried about a lack of transparency, consistency and fairness in the case of Everton and other clubs? Will she give reassurance on that point?
Lucy Frazer
As I am making clear, the Bill is about financial regulation. I know that many fans are concerned about issues within the game itself. The Bill will not regulate how football is played, which is a matter for the footballing authorities. This is about ensuring that clubs up and down the pyramid are financially sustainable under a regulator. If no deal is agreed on distributions, the regulator can step in. This will protect the pyramid overall.
Clive Efford (Eltham) (Lab)
I am grateful to the Secretary of State for mentioning me earlier. Does she accept that one of the biggest drivers of financial stability is the parachute payments in the championship? Does she think it is a flaw that the Bill excludes parachute payments from the regulator’s powers?
Lucy Frazer
We understand that parachute payments have a role to play. There is provision in the Bill to deal with parachute payments, but that provision relates to the consideration on a club-by-club basis in the licensing regime itself.
James Wild (North West Norfolk) (Con)
When clubs like Norwich City are promoted to the Premier League, those parachute payments give them the confidence to invest, which drives competition in football. Are they not a good thing that we should be supporting?
Lucy Frazer
We believe that parachute payments have a role to play, although I know people have concerns about distortion. Under the Bill, if there is any issue relating to the finances of a particular club, particularly by reference to the parachute payments it might have received, the regulator has an ability to look at that within the licensing regime as a whole.
Mr Clive Betts (Sheffield South East) (Lab)
I have read the Bill, but I wonder whether the Secretary of State has read it. Under clause 55(2)(b), the regulator is not allowed to deal with
“revenue that the specified competition organiser distributes to a club by virtue of a team operated by the club being relegated from a competition organised by the specified competition organiser.”
In other words, parachute payments are deliberately excluded from the remit of the regulator. Why has that been done when it is one of the most distortive elements of the current arrangements?
Lucy Frazer
I have been very intimately involved in this Bill, having put together all the policy recommendations and had discussions with all the parties. I encourage the hon. Member to read all aspects of the Bill, not just the provisions in relation to the backstop, which he quoted. I know many Members feel that parachute payments are very important, so let me try to explain again.
I know that many stakeholders have concerns about the impact of parachute payments on financial stability, sustainability and resilience, and I know that parachute payments can play an important role in softening the financial blow of relegation at all levels of the football pyramid. Given the complexity of the issue, the regulator will need to undertake an holistic, evidence-based assessment of the system of financial distributions as part of its state of the game report, and this will include an assessment of parachute payments.
Parachute payments have been specifically excluded from the backstop mechanism to ensure that the two final proposals from the Premier League and the EFL are easily comparable. The impact of parachute payments on financial sustainability and resilience could be a relevant factor in both the decision to trigger the backstop and the final choice in relation to a proposal. More generally, the regulator can look at the impact of a parachute payment on a particular club when it comes to the licensing regime.
Lucy Frazer
I will press on, as I have now answered five times on parachute payments.
We will achieve our goal through the new licensing regime, under which all clubs in the top five tiers of English men’s football will need a licence to operate as professional football clubs. The regulator will have powers to monitor and enforce requirements on financial regulation, club ownership, fan engagement and club heritage protection, as well as setting a corporate governance code of practice and having the power to prohibit clubs from joining breakaway competitions.
Dr Luke Evans
It is fantastic that the top five leagues will have to have a licence. Will the Secretary of State comment on the resources that will be necessary to put that in place for the season? This is a big undertaking, and considerable resources will be needed to monitor what is going on.
Madam Deputy Speaker (Dame Rosie Winterton)
Order. I know that some colleagues who are intervening might not be seeking to catch my eye later. I remind colleagues that if they do intervene, it is customary for them to stay for the entire speech.
Lucy Frazer
The Government are very conscious of the impact on clubs, which is why we are giving them time to prepare for the measures we are bringing into play.
On top of the new licensing system, the regulator will introduce a new strengthened owners and directors test to make sure that a club’s custodians are suitable, and to protect fans from irresponsible owners. This responds directly to growing concerns about financial mismanagement in football, particularly illicit finance, as well as to fans fighting back against owners at clubs like Blackpool and Charlton Athletic. The regulator will also bring in new, robust financial regulation to improve the financial resilience of clubs across the football pyramid.
As members of this House will be all too aware, a lack of financial resilience is one of the key risks to clubs’ futures. Giving the regulator powers to oversee financial plans and to step in to require clubs to beef up their financial resilience, where it has concerns, will prevent clubs from facing cliff-edge situations like we recently saw at Southend United. That will not mean that all clubs have to break even. We know that striving for success can come at a cost and that this ambition makes the game so exciting, so we welcome sustainable, sensible investment. What we cannot have is reckless overspending, irresponsible risk taking and inadequate funding. That is why the regulator will look at each club’s plans and how they are funded, and ensure that clubs have the resources to manage their risk taking. No longer can we have short-term actions jeopardising a club’s long-term sustainability.
Ashley Dalton (West Lancashire) (Lab)
The Secretary of State has mentioned fan engagement a couple of times. Fans increasingly feel as though they are not being listened to by their clubs. The fan-led review, which she has also referred to, made a series of recommendations in 2021 to give fans a real say in how their clubs are run. Will she be clear as to how the Bill will ensure that clubs are effectively and properly engaging with their fans and that fans’ voices are not being ignored?
Lucy Frazer
The Bill identifies a number of things that we know are important to fans, including heritage assets such as the colour of shirts, badges and the location of a club’s stadium. We know that those are the things fans care about. The Bill ensures a proportionate approach, because we know that engagement with different fans at different clubs, which have very different measures in place, will require us to take a proportionate, case-by-case approach. The regulator must ensure a level of engagement with fans, particularly on the issues that I am identifying, but we also want to ensure that it works for the clubs. Therefore, it will be for the regulator to ensure that a proportionate approach is taken.
I was about to go on to discuss that aspect, because we will be setting a minimum standard of fan engagement, and requiring clubs to seek the approval of their fans for changes to those things I mentioned in order to comply with the strong existing protection for club names. We know that most clubs have a strong relationship with their fans, consciously engaging them in decisions about the club’s heritage. However, there have been some notable exceptions, as we have seen at Cardiff City and Hull City, whose fans have had to battle to bring back or keep their club’s colours, badge and name.
As I said, the regulator will also protect fan interests with the requirement for clubs to seek its approval for any sale or relocation of their home ground. The stadium a club plays in is not only of significant value to fans; it can be the club’s most valuable asset, and it is only right that a club seeking to relocate has to demonstrate that such a move would not significantly harm the heritage of the club.
Damian Collins (Folkestone and Hythe) (Con)
The regulator is asked to balance the financial sustainability of the club with heritage concerns and to make an either/or decision, under its purposes. In that scenario, could the regulator decide to allow a club to move if it felt it was best for the club’s future sustainability, even if the fans objected?
Lucy Frazer
Yes, that is right; the regulator has to take into account the views of fans and look at the proposals. If it considers the proposals to be good, that change can take place.
Under the new regulator, fans will no longer face the prospect of seeing their club signing up to ill-thought-out proposals, such as the European super league, which several Premier League clubs tried to join in 2021. The House was united in recognising that those proposals for the new competition were fundamentally uncompetitive and would have undermined the football pyramid, against the wishes of fans. This regulator will prevent that kind of closed-shop league from ever getting off the ground.
Andy Slaughter (Hammersmith) (Lab)
I respect what the Secretary of State is trying to do, but there is a huge inequality of arms between billionaire owners of clubs and fans’ organisations. I have been the MP for Queens Park Rangers for nearly 20 years, but my small borough also contains Chelsea and Fulham, and in my political lifetime all three of those clubs have faced either being folded up by greedy owners or losing their ground in perpetuity. I do not see what in the Bill is going to prevent that from happening in the future.
Lucy Frazer
All the measures in the Bill, cumulatively, will ensure that clubs are well managed and run; therefore, they will be there and will not go into financial insolvency and administration, which decimates communities. All the measures we have set out, be it the owners and directors test, or the measures to ensure that clubs have a financial plan, will ensure that clubs are properly run. We are introducing the Bill to ensure that the situation whereby we have had 64 administrations since the Premier League was founded in 1992 is not continued. We are not saying that clubs are never going to get into financial difficulty, but we are saying that we are going to put a strong framework in place to ensure that all constituents can be confident that their clubs will have a certain level to which their business is run—that they will be run well.
John Cryer (Leyton and Wanstead) (Lab)
Leyton Orient, in my constituency, with which the Secretary of State is familiar, now have owners who are genuinely dedicated to their welfare. Previously, they were owned by somebody on whom the fit and proper person test had no effect, and that person nearly destroyed the second oldest club in London. Is she confident that the Bill will ensure that such people will not get their hands on clubs such as Orient in the future?
Lucy Frazer
Yes. This Bill is all about ensuring that the owners and directors of clubs are fit and proper people, so that what happened to the hon. Gentleman’s club, which I was at just a few weeks ago, does not happen again.
Mr Robin Walker (Worcester) (Con)
I will support this legislation because many of the steps it takes are very necessary. I hope it will mean that Worcester City will never leave Worcester again. Much of what I am hearing about the need to protect the financial sustainability of clubs and leagues also applies in the smaller but still important world of rugby union. As the Secretary of State will know, and as the Under-Secretary of State for Culture, Media and Sport, my right hon. Friend the Member for Pudsey (Stuart Andrew), who is sitting next to her, knows very well, Worcester Warriors are currently without a place in professional rugby. If this legislation succeeds, will she consider applying it to other sports, or introducing legislation for other sports, where that is required to sustain opportunities in the professional game?
Lucy Frazer
As my hon. Friend knows, the Under-Secretary of State for Culture, Media and Sport, my right hon. Friend the Member for Pudsey (Stuart Andrew), and I have spent time looking at the issues in rugby, and continue to do so. We are setting out what we hope will be a strong financial framework for football. This is being watched closely by other countries that are looking into what they will do in football. Of course if other sports want to look into this, they can.
I move on to the backstop power. Obviously, broadcast revenue is a hugely important source of income for clubs up and down our top-tier football leagues, but the current distribution of revenue across the top five divisions is not sufficient, and football has not been able to come to a suitable new arrangement. Not only does that contribute to problems of financial sustainability, but it can have a destabilising effect on the sport. To avoid that in future, the regulator will have new, targeted backstop powers to help ensure a sufficient flow of money. However, those powers are intended only as a last resort, and can be triggered only if certain conditions are met. The backstop mechanism has been designed with the industry and leading experts to give football incentives to reach a timely compromise, thereby delivering the right outcomes while minimising costly regulatory involvement.
The final part of the regulator’s job is improving the corporate governance of clubs. We will establish a football club corporate governance code, and will require clubs to report regularly on their corporate governance, setting out how they have applied the code and why that is suitable for their circumstances.
Damian Collins
The language in the Bill reflects the language on corporate governance in the Companies Act 2006, but there “corporate governance” includes the relationship that a board of directors has with not only the component parts of the business, but the employees. Should it not be inherent in the Bill that the corporate governance code should suggest how clubs can maintain high player welfare standards?
Lucy Frazer
We looked closely at precedents elsewhere, particularly in regulatory fields, when forming the basis of the Bill. We have always been conscious that we are regulating in a commercial space, and that football clubs are businesses. The premier league is world leading. We are regulating because football clubs have failed to solve these issues themselves. What we do not want to do through this Bill is over-regulate, including in areas in which we would not be regulating but for this Bill. We are trying to strike the right balance. That is why the Bill, notwithstanding questions that have been put to me in this House, focuses on financial regulation. Importantly, it does not interfere with the game, or with how players are looked after. The leagues have a role to play, and they should be primarily responsible for running the game.
Valerie Vaz
Do the regulators have sufficient power to intervene if some of the owners are servicing debts in other areas of their company?
Lucy Frazer
The regulator will have strong powers to look at owners and directors tests, and at financial plans. They will have powers that are designed to ensure the financial sustainability of football. The question that would arise, I suspect, in the right hon. Member’s case is whether that issue was interfering with a particular football club.
Kevin Brennan (Cardiff West) (Lab)
The Secretary of State is being very generous with her time. I thank her for mentioning Cardiff City. I hope to catch Madam Deputy Speaker’s eye later and talk some more about them.
One reason why the Government regulate in the commercial space and in business is to promote competition. In the White Paper, the Government said that the scale of parachute payments can distort competition in the championship and encourage greater financial risk-taking by clubs not in receipt of them. If the regulator has no power in this sphere, how will we ensure that the pyramid is a reality, rather than it becoming ever more difficult to climb?
Lucy Frazer
I recognise the concerns raised about parachute payments and the distortion of competition. On the backstop powers, parachute payments have been included because of the way that the backstop mechanism works; two offers are made by the Premier League or by the English Football League. However, that is not to say that parachute payments are completely ignored. The regulator will look at the state of the game in a holistic way. Also, it is not to say that if the parachute payments affect the running and finances of a club, the regulator has no ability to look at those payments.
Robin Millar (Aberconwy) (Con)
The Secretary of State said something very important about looking at precedents for regulation in other areas. Certainly, one reason why I am in the Chamber today is my love of the game; although I recognise that there are financial matters that need regulation, that is not the whole of the issue. My concern, and that of many of my constituents, is about the matter being treated simplistically, as if there was just one set of financially related problems, without consideration for community ties, the involvement of fans and so on. When she looked at other examples, did she find anything that managed to crack that nut, or that captured that nuance?
Lucy Frazer
There does not need to be a nuance. The whole point of this legislation is to protect fans, communities and clubs. At the heart of that is making sure that clubs are financially sustainable. None the less, in the legislation, we also have measures to ensure fan engagement on the things that fans care deeply about—the heritage, for example. I cannot overstate the point that although we want to protect the premier league, which is an important, world-leading asset, we also want to protect fans and communities, and that is what this legislation is all about. Taken together, the new measures and the carefully considered remit of the regulator will help us to safeguard clubs, protect the interests of our fans and avoid unnecessary and excessive regulation.
The vast majority of our clubs are run well and live within their means. I am confident that those clubs and their owners will recognise that the Bill, and the new regulator, will allow us to put football on a solid basis for years to come. The Bill will preserve and enhance all the things that we love about our national game, and I commend it to the House.
Thangam Debbonaire
The hon. Gentleman seems to be saying that it is a subjective test. I was asking whether there are any objective tests, because I think that is important in terms of fairness. Where are they objective, where are they subjective? Concepts such as competency can be interpreted both objectively and subjectively, and I would appreciate the Minister’s clarification of what he views as the Government’s position.
Mr Robin Walker
One issue we came across in the huge difficulties that Worcester Warriors went through was that it had a director who was approved on the basis that he had been approved by the footballing authorities. He was approved because he was a practising solicitor, but it turned out he was a disbarred practising solicitor. Is it vital that a regulator has the ability to check information given to it, so that even if people provide misleading information to a regulator, it has the ability to intervene and strike those people off as appropriate directors where necessary?
Thangam Debbonaire
The hon. Gentleman explains exactly why it is so important that the owners and directors test will work. That is why I am addressing these remarks to the Government—it is, after all, their Bill. I would like to know substantially more from the Minister in answer to the questions that I and others have raised.
Fan engagement is crucial and we back fans having a greater say in how their clubs are run. Therefore it is right that the Bill requires that if a club proposes changes to club crests or colours, it has taken reasonable steps to ensure that those changes are supported by a majority of fans. Fan engagement should not be reduced to a box-ticking exercise, and neither should it be one size fits all. Engagement must be meaningful and appropriate, and suitable for each club.
The women’s game is not explicitly mentioned in the Bill, but we would all agree that it has had a stellar few years. It is growing quickly, bringing new crowds to stadiums, and introducing lots of girls to the joys of physical activity. I am determined to see the women’s game grow even more. I have already mentioned that proportionality is a key principle that must be considered during the passage of this Bill. Having listened to what representatives of the women’s have to say, I do not think it wise to introduce regulation to the women’s game before it is ready or unless it is necessary. It is right that there are powers in the Bill to introduce regulation to a league designated by the Secretary of State that could, if necessary in future, include the women’s game. I will be monitoring that closely, in collaboration with representatives from women’s football.
The governance of English football is in a position of uncertainty, and on this Government’s watch that uncertainty has been allowed to carry on far too long. That has been, and continues to be, to the detriment of clubs and their finances. After the passage of this long-awaited Bill and the establishment of the regulator, I hope that football will be able to enter a new period of governance stability. As the Bill progresses, that is what Members across the House should be aiming for, and what fans across the country deserve.
The Parliamentary Under-Secretary of State for Culture, Media and Sport (Stuart Andrew)
I thank all Members for their thoughtful and wide-ranging contributions, and I am grateful for learning about the first black professional footballer, Arthur Wharton, from my hon. Friend the Member for Darlington (Peter Gibson). I am pleased to hear the broad support for what the Government are proposing, and I am grateful for it. I am also grateful for the continued engagement with colleagues as we have prepared for the Bill.
My right hon. and learned Friend the Secretary of State rightly pointed out the successes of English football, and the contribution it makes to our economy and the pride of our nation, but it is important to remember why we are here today. My very first meeting when I was appointed as Minister was with fans’ groups. I heard at first hand their experiences of when it all goes horribly wrong—even to the point of having to boycott their own club for five years, in one instance. The fans felt unheard. We know that clubs are more than just football clubs. When they go into administration and are run down, the fans are obviously in despair, but that also has a significant impact on the wider community because they are more than football clubs; they are community assets.
That is why we committed to the fan-led review. Like everyone else, I want to put on record my thanks to my hon. Friend the Member for Chatham and Aylesford (Dame Tracey Crouch) and to the people who helped her, including Kevin Miles from the Football Supporters’ Association. The review was the foundation for the White Paper, and now we have the Bill today. I thank all those who engaged with us for all they have done: the FA, the Premier League, the EFL, the National League, the FSA and the Select Committee. I also want to put my particular thanks on the record to the officials in the Department. I cannot tell the House how many hours they have put in; they have been first rate and I thank them a great deal.
I want to focus, in the short time I have left, on some of the points that were raised. Many issues were raised and I will try to get through as many of them as I can, but I am happy to engage with colleagues afterwards if need be. When constructing the Bill, we have been careful to ensure that it is carefully drafted, considered and proportionate, and that it provides an advocacy-first approach; and that there is focus on the clubs where it is needed, and we make sure it is proportionate to their place in the pyramid.
A number of Members raised the owners and directors test. Too many clubs have been brought to the brink with unsuitable owners taking over, stripping them of assets and refusing to adequately fund them. That is why we are bringing in strong statutory tests to help prevent unsuitable owners at the point of entry, before they can do harm to clubs. Prospective individuals will be prohibited from becoming club owners unless the regulator has determined beforehand that they are suitable. They must pass a fitness test, which means: they have the requisite honesty and integrity; are financially sound; have passed the source of wealth test to ensure that their wealth is not connected to illicit finance; and have a plan and the resources to run the club.
Even once an owner is in place at a club, the regulator will still be able to make sure that they continue to be suitable. If it has grounds for concern about their suitability, it can test them on their fitness and their source of wealth. If it finds them unsuitable, they will have to sell the club. To prevent further harm being done to the club during the sale process, the regulator will have the powers to limit the owner’s involvement in the club, and if the unsuitable owner ultimately refuses to sell the club, the regulator will have the powers to step in and force a sale as a last resort. Strengthened tests and robust powers to remove unsuitable owners will mean that fans have the suitable owners that they deserve.
Hon. Members asked about what would happen if a club’s owners were forced to divest. Let me be clear: we hope that such a circumstance will be incredibly rare. The regulator’s objective is to promote clubs’ financial sustainability, and it will introduce tests on governance and financial oversight, which will greatly reduce the likelihood of financial distress and make football more resilient in the long term. For example, we will ensure that the regulator is able to look at a liquidity buffer, which could provide the club with time to seek a new owner, and the regulator will have the power to test an incumbent owner where it has grounds for concern about their suitability.
Almost every Member mentioned the backstop, and I repeat that we want football to come up with a deal itself; it is the best option, and this delay serves no one. We need to remember that we are talking about a commercial arrangement—businesses giving businesses money—which is why we believe it is best that football does it, but we recognise that there is no deal at the moment. That is precisely why we have put provisions in the Bill for a backstop—something to fall back on—so that they can consider the relevant revenues.
Dame Tracey Crouch
Does my right hon. Friend agree with my interpretation of clause 55, which is that international broadcast income is included in the relevant revenue for redistribution? That is currently not the case for solidarity payments. If it is the case, has this issue come up in his discussions with the Premier League?
Stuart Andrew
My hon. Friend raises an interesting point. I have had dozens of meetings with the Premier League, but as far as I can recall, I do not think that it has raised carving out international broadcast revenue in those discussions, which have always revolved around the net media revenues and the aggregate revenue received by both the Premier League and the EFL; she raises a very interesting point.
Some say that the regulator should be able to trigger the backstop right at the outset. Frankly, that would just be a frontstop, and it may hinder a deal being struck by football itself, but the Bill provides that if there is no deal because one has not been offered or one side cannot sign it because it is not a good deal, that side can ask the regulator to trigger the backstop.
Members have mentioned parachute payments, and I am always happy to meet colleagues to discuss and look at that matter further, particularly in Committee. I am also happy to organise a briefing, if that would be helpful, because it is quite a complex issue. Parachute payments play an important role in the sustainability of the system by softening the financial blow of relegation, and removing them could have adverse effects. Look at Bradford City: when they were relegated from the premier league in 2001, there were no parachute payments, and the following season they went into administration.
Stuart Andrew
I literally have two minutes. I have offered a briefing, and we can have this debate afterwards.
We realise that parachute payments can have a distortive impact, particularly in the championship, which is why the regulator has the power to address any structural or systemic issues through its licensing regime. Any distortion created by parachute payments also has the potential to be addressed through distribution to non-parachute payment clubs; that is exactly what the regulator will be able to look at as part of the backstop. Leading experts have advised us to keep the backstop targeted and simple, which we have done, and to design it so that it may never need to be triggered, which we have also done. As such, we do not think it is appropriate to include parachute payments in the backstop, nor we do think it is necessary to do so, as we have ensured that the regulator will be able to address any distortive effects that they cause via the licensing regime.
I am running out of time to answer more questions. This is a landmark Bill for football. It has been carefully designed to celebrate the sport’s success and encourage investment, but it is about providing stability for clubs, sustaining the pyramid and putting fans at the heart. We recognise that there are many successes, but it is important that we tackle the issues. The IFR will be focused on football, focused on financial stability and focused on fans.
I close by playing on the iconic words of 1966. Too many fans have seen their club on the brink, and they think it’s all over. Well, it’s not now.
Question put and agreed to.
Bill accordingly read a Second time.
Football Governance Bill (Programme)
Motion made, and Question put forthwith (Standing Order No. 83A(7)), That the following provisions shall apply to the Football Governance Bill:
Committal
(1) The Bill shall be committed to a Public Bill Committee.
Proceedings in Public Bill Committee
(2) Proceedings in the Public Bill Committee shall (so far as not previously concluded) be brought to a conclusion on Thursday 6 June 2024.
(3) The Public Bill Committee shall have leave to sit twice on the first day on which it meets.
Consideration and Third Reading
(4) Proceedings on Consideration shall (so far as not previously concluded) be brought to a conclusion one hour before the moment of interruption on the day on which those proceedings are commenced.
(5) Proceedings on Third Reading shall (so far as not previously concluded) be brought to a conclusion at the moment of interruption on that day.
(6) Standing Order No. 83B (Programming committees) shall not apply to proceedings on Consideration and Third Reading.
Other proceedings
(7) Any other proceedings on the Bill may be programmed.—(Joy Morrissey.)
Question agreed to.
Football Governance Bill (Money)
King’s recommendation signified.
Motion made, and Question put forthwith (Standing Order No. 52(1)(a)),
That, for the purposes of any Act resulting from the Football Governance Bill, it is expedient to authorise the payment out of money provided by Parliament of any expenditure incurred under or by virtue of the Act by the Secretary of State.—(Stuart Andrew.)
Question agreed to.
Football Governance Bill (Ways and Means)
Motion made, and Question put forthwith (Standing Order No. 52(1)(a)),
That, for the purposes of any Act resulting from the Football Governance Bill, it is expedient to authorise:
(1) the charging of a levy by the Independent Football Regulator in connection with the exercise of its functions under the Act; and
(2) the payment of sums into the Consolidated Fund.—(Stuart Andrew.)
Question agreed to.