Wednesday 4th December 2024
(1 month, 1 week ago)
Lords ChamberFootball Governance Bill [HL] 2024-26 View all Football Governance Bill [HL] 2024-26 Debates Read Hansard Text Watch Debate Amendment Paper: HL Bill 41-III Third marshalled list for Committee - (3 Dec 2024)
Baroness Taylor of Bolton
Baroness Taylor of Bolton (Lab)
My Lords, Amendment 39 is grouped with Amendments 41, 46 and 48. This is a pretty straightforward amendment, simply seeking to change in the Bill the word “may” to “must”.
For context, the Bill as it stands says that a non-executive member of the board “may” be removed from office in certain circumstances. That is clearly appropriate and something that we should expect. Similarly, the Bill says that an executive member “may” be removed in certain circumstances. Again, that is something that we should expect and is totally appropriate.
However, the circumstances in which such a removal can take place are actually rather serious. They are laid out quite clearly as being when the person is
“guilty of serious misconduct … has a conflict of interest … has failed to comply with paragraph 6(4)”,
which is about information on conflicts of interest, and
“is unable, unfit or unwilling to carry out their functions”.
I think we would all agree that, whether we are talking about a non-executive or executive member of the board, we need to take such issues seriously.
That is why I ask the Minister why it is only “may” be removed and not “must” be removed, because these circumstances would seem to justify removal. If anybody falls foul of the items identified here, there really has to be a presumption that they will be removed, and so the word “must” might be more appropriate.
Lord Addington (LD)
My Lords, the difference between “may” and “must”—or may and shall—is a pretty old parliamentary debate, but the noble Baroness has something here. I read through the amendments and thought, “It’s pretty clear. How could they stay if they’d done these things?” It will be interesting to hear the Minister’s response. I know that “may” probably means “must” in certain circumstances, but if we could just have it clarified, we might get through this very quickly. It is very worth while having it clarified in this case.
Lord Hayward (Con)
My Lords, I understand the point that both the noble Lord, Lord Addington, and the noble Baroness, Lady Taylor, are making, but I am always hesitant to say that something “must” happen. I speak here as someone who spent many years as a personnel/human resources director, acting as the final stage of appeal in disciplinary matters. As the noble Lord implied, I know that there is a debate in legal fields, because nowadays lawyers generally do not like being bound by something that tells them that they “must” act in a certain way.
It does not seem to be appropriate to insert “must”. The noble Baroness said that there would be a presumption—and I think so too. As the noble Lord said, these are very serious offences, but until one is confronted by a set of circumstances, I hesitate to bind anybody to a certain decision. There may be special circumstances where one is found guilty of only one of the categories and circumstances, so I am not convinced that “must” should be inserted in place of “may”.
Lord Jackson of Peterborough (Con)
My Lords, I want partly to echo what my noble friend Lord Hayward said. Given that the individuals concerned will be non-executive directors of a de facto non-departmental public body, they would be covered by the existing code of conduct for non-departmental public bodies, which I think dates from June 2019. It may have been updated by the previous Government; I do not think that the current Government have looked at it. Equally, they are governed by the Nolan principles, with which we are all very familiar—I am as familiar as anyone else, having been a special adviser and currently being a non-executive director of two non-departmental public bodies.
My point is about the restrictive nature of this wording. This is quite an unusual situation, where the individuals responsible for bringing disciplinary issues to the attention of the appropriate authorities in the independent football regulator will have no leeway whatever under this legislation. If it passes the threshold of criminal activity in civil law, legal representatives—the judiciary, magistrates and others—would have no leeway on this. Therefore, you would circumscribe the existing internal procedures.
Those of us who have a role in non-departmental public bodies know that there is a proper process. You would have a verbal warning. I also have a master’s degree in human resource management and have been an HR manager in my time—there are almost as many of us in this place as there are lawyers.
Lord Jackson of Peterborough (Con)
Okay, maybe not. My point is that employment lawyers are very wary about something as definitive as this, which involves disciplinary procedures. The noble Lord, Lord Addington, made a very valid and fair point that, at the very least, we need to know the potential scenarios and circumstances that may arise. That would allow us, without any concern, to accept this in the Bill. At the moment, it is overly restrictive, and it could give rise to unfairness and onerous intervention directly by Ministers. On that basis, at the very least, we need to have more information about this before Report. Like my noble friend Lord Hayward, I feel deeply uncomfortable about having such prescriptive wording in primary legislation.
Lord Parkinson of Whitley Bay (Con)
My Lords, I am grateful for the thought that noble Lords have given to the amendments in this group and to the noble Baroness, Lady Taylor of Bolton, and the noble Lord, Lord Bassam of Brighton, for tabling them so that we can consider them. As the noble Lord, Lord Addington, rightly said, one of the first things that people do when they receive a new government Bill is to go through it and look for the “mays” and the “musts” and consider why they have been put there and what the counterargument would be if the other word were used.
I am grateful to my noble friends Lord Hayward and Lord Jackson of Peterborough, who have brought their professional and personal backgrounds and their qualifications to the scrutiny of this. Like them, I think that we must be careful of being too prescriptive here and of limiting the role of the professionals we are appointing, particularly as this is an independent regulator. We want it to act independently and have a bit of professional discretion. However, the noble Baroness and the noble Lord, Lord Bassam, have an important point that motivated them to bring the amendments, which would limit the discretionary ability of both the independent football regulator and its chief executive officer in cases of misconduct or where an individual is not able to perform his or her duties, whether they are a non-executive director, an executive director or a member of the expert panel.
Clearly, if this new regulator is to enjoy the support of fans and the businesses and clubs that it regulates, it must uphold and be seen to be upholding the very highest standards. It is good to pose the question of whether this discretionary power should be written in the Bill as it is. The discretionary power as written would allow the independent regulator the ability to keep an individual in place, even in cases where he or she is guilty of misconduct, has a conflict of interest, has failed to provide appropriate information to the chief executive or is unfit, unwilling or unable to carry out his or her functions. That is quite a serious list of reasons, so I can see why the noble Baroness, Lady Taylor, and the noble Lord, Lord Bassam, have posed this question to the Committee. While I share some of the scepticism that my noble friends have set out, I am more sympathetic than might be expected.
The Parliamentary Under-Secretary of State, Department for Culture, Media and Sport (Baroness Twycross) (Lab)
I thank my noble friend Lady Taylor of Bolton for introducing the amendments in this group. The Government acknowledge and understand the intent behind these amendments, which is to fortify the Bill’s provisions for dealing with conflicts of interest and unsuitable board and panel members.
It is essential that the regulator can deliver its regime, free from undue influence, vested interests and misconduct. I reassure my noble friends Lady Taylor of Bolton and Lord Bassam of Brighton, who is not in his place, that the Bill, supported by public law principles and non-legislative measures already in place, already sufficiently makes certain that the regulator will be free from conflicts of interest and misconduct.
Amendments 39 and 41 relate to the board. As with all public bodies, members of the regulator’s board will be subject to the Cabinet Office’s Code of Conduct for Board Members of Public Bodies, which the noble Lord, Lord Jackson of Peterborough, raised. I can also confirm that they will be subject to the Nolan principles. The code of conduct sets out clear requirements regarding the appropriate disclosure and management of conflicts of interest. This includes a responsibility on board members to openly and honestly declare any interests that could give rise to actual or perceived conflicts. Any breach of these requirements would be a breach of the member’s terms of appointment. Requirements on good conduct more broadly are also outlined in this document.
The Bill also places an additional onus on the appointer to check for conflicts that have not been otherwise declared at the point of making the appointment and on an ongoing basis from time to time. In addition, paragraph 16 of Schedule 2 requires members of the board to declare their interests in any matters which fall for consideration by the board, and for this declaration to be recorded.
I think I reflect the views of the noble Lord, Lord Hayward, when I say that, in the Government’s view, these amendments would represent an unacceptable constraint on the discretion of the chief executive and the Secretary of State to take the appropriate approach to managing issues with members of the board, such as conflicts of interest, on a case-by-case basis as circumstances dictate.
Amendments 46 and 48 concern the expert panel. I reassure noble Lords that, in the Government’s view, the Bill already sufficiently makes certain that the regulator will be free from conflicts of interest. The Bill places an onus on the chief executive, as the appointer of panel members, to check for conflicts that have not otherwise been declared at the point of making the appointment and, as with other processes, on an ongoing basis from time to time. In addition, paragraph 29 of Schedule 2 requires members of the panel to declare their interests in any matters which fall for consideration at a meeting of a committee they are on, and for this declaration to be recorded. In our view, these amendments would put in place too much of a constraint on the discretion of the chief executive to take the appropriate approach to managing issues with panel members, such as conflicts of interest, on a case-by-case basis as the circumstances dictate.
All in all, we are confident that the Bill already contains comprehensive safeguards to ensure the suitability of board and panel members. Therefore, I would be grateful if my noble friend would withdraw her amendment.
Baroness Taylor of Bolton (Lab)
My Lords, I am grateful to the Minister for outlining the provisions that she thinks adequately cover this point. However, if discretion still exists on issues such as being guilty of serious misconduct, then I have a concern. I am not sure that there should be discretion in a case of a serious misconduct. Maybe the point she raised about conflicts of interest and that conflicting with other parts of the Bill covers it, but I have this fear that, if there is discretion, the chief executive of the independent football regulator might be put under pressure by others. That can be a serious concern in any organisation. In a sense, I think these amendments would protect people from having to use discretion. If somebody was found guilty of serious misconduct, that would elevate the issue again.
Lord Hayward (Con)
I am particularly interested in what the noble Baroness just said about the pressure being imposed on a chief executive. If, having looked at a case in detail and correctly in terms of procedure and the like, he then gives way to pressure from elsewhere —it may well be political pressure of one form or another—would you not call into question whether you have the right chief executive in the first place?
Baroness Taylor of Bolton (Lab)
Yes. That is why we need to protect the chief executive or anybody else by not giving them this kind of discretion, which might leave them open to any kind of pressure. I am not sure it would be political pressure; it is quite likely to be internal political pressure with a small “p”, rather than political in the way that we discuss things. I ask my noble friend to consider this a bit further because, given the categorisation, there is a potential problem. I know she has taken an interest in this so, on that basis, I will withdraw the amendment.
Member's explanatory statement
This amendment limits the number of members of the Expert Panel.
Lord Parkinson of Whitley Bay (Con)
My Lords, I rise to move Amendment 42 and to speak to Amendments 45, 47 and 49, which are grouped with it. I am grateful to my noble friend Lord Markham who has put his name to them. These amendments seek to provide greater guidance on the operation of the expert panel that will be established under the Bill to ensure that those who are involved in the panel and its work are limited in number, do not have any broadcast interests, are limited in pay and must exercise their functions transparently. These amendments reflect our commitment to ensuring robust, transparent and impartial governance for football to safeguard the integrity of the game. I will speak now to Amendments 42 and 45 and say a bit more about Amendments 47 and 49 in my winding speech.
Amendment 42 would limit the number of members on the expert panel to no more than 20. The Bill already specifies no fewer than six, but the amendment would insert the words “or more than twenty”. It is in our view a sensible and pragmatic measure. Governance structures function best when they strike a balance between having diversity of experience and opinion and having operational agility and efficiency. By setting this range between six and 20, we think we can help to ensure that the panel is large enough to encompass a breadth of expertise while avoiding the pitfalls of having an unwieldy and bureaucratic decision-making body.
We have heard about a lot of the similarities between this Bill and its predecessor that was looked at in another place in the previous Parliament, but this is another instance where the Government have decided to make some changes to the Bill. When I was going through it comparing the previous version to this one, this change perplexed me more than others. When the Bill before the previous Parliament was introduced by the Conservative Government, we capped the membership of the expert panel at 20. Will the Minister explain the policy rationale behind making this change to the Bill and removing the cap?
In football governance, clarity and focus are surely paramount, so this amendment that in effect takes us back to the previous Bill is, as noble Lords might expect, in keeping with Conservative values of efficient, streamlined and effective governance and will ensure that the expert panel is equipped to make sound decisions without succumbing to the inefficiencies of an excessively large committee. I hope these arguments will resonate with noble Lords whatever their political allegiances.
Amendment 45 echoes the debate we had previously on conflicts of interest relating to the chairman of the panel and would prohibit individuals with current media interests relating to football serving on the expert panel much in the same way as my Amendment 36, which we looked at earlier. I do not think we need to rehash the philosophical arguments behind that. I hope that the Minister will dwell a little on the need to make sure that we ensure impartiality for members of the expert panel just as much as we would for the chairman.
Football is a sport that attracts passionate commentary and debate, particularly across the media. While, as we heard previously, live perspectives are invaluable in their own right, the work of the expert panel must remain beyond reproach. Again, I worry slightly that people with active media roles could risk stumbling into conflicts of interest or, at the very least, the perception of them, which could undermine the important work of the panel and its credibility.
Lord Markham (Con)
I thank my noble friend for introducing these amendments, which are also in my name. As in previous groups, he set out some of our concerns, particularly where there are media interests involved—by media interests we are speaking very much about involvement with media rights and, as we discussed earlier, inside information and conflicts.
Amendment 49 is all about the transparency of the process. The real value of an expert panel is that there are a lot of complicated issues. If anything, the last three days have shown us that this is a highly complex area and that we would be asking the expert panel to opine on a large range of issues. The strength of that panel will be its breadth.
One area of particular concern to me is the example I gave before about clubs which are in what you might call the start-up phase—for example, Brighton, as they were a few years ago, when they invested heavily in players as part of a well-reasoned plan to get promoted. I am concerned that a regulator, with its sustainability hat on, might say that that is not very sustainable.
However, I would expect and hope that the expert panel had a range of views. While some may be more of the button-down accountant-type who would have concerns about that, I would hope that others would be of a more entrepreneurial nature and would understand what these aspiring clubs were trying to do, and so give that balanced view. To me, that is exactly what a good expert panel should be doing. On transparency, being able to hear those minority views and take them into consideration overall is an important dimension to all of this.
We have plenty of good examples of this. In the Monetary Policy Committee you have so-called hawks and doves, and a lot of information is often gained by not just the majority view in the vote but the dissenting voices. You see similar things in Supreme Court rulings, where you have minority opinions. It is about trying to bring that sort of richness to this, so that we have a range of expert views, which we will all benefit from. That was very much the thinking behind Amendment 49. I look forward to the Minister’s views.
Lord Hayward (Con)
My Lords, I will make one or two comments in relation to this group of amendments. First, Amendment 42 seeks to set an upper limit. I strongly support that, whatever the number happens to be. Many years ago—not that many—I drafted the changes in legislation in relation to parliamentary boundaries for the Commons. Over the years, we had seen a steady drifting up, with ever-more Members of Parliament, as the Boundary Commission decided to duck a decision here or a decision there. Ultimately, we set a figure for the total number of Members of Parliament. I will not go into detail as to whether I think the figure is right now, but I had watched it drift ever upwards.
The debate about this House has included very heavily the question of the numbers that there should be in it. I am a strong believer that there should be a limit, and that the limit should be very substantially below where it is now. The numbers have just drifted up and up, because some people have appointed too many people into this House. I am therefore in favour of having a limit on the panel, because I can see the risks of not having one. I do not mind whether it is 20, or whatever it may happen to be, but I am in favour of some upper limit on any public panel in these circumstances.
I am not going to comment on the next two amendments, on the basis that I have done so already in previous conversations, but I will refer to Amendment 49. I agree strongly with the principles outlined in it. We are talking about a public body here. We are saying that the football clubs, which are regulated and licensed, must be open to comment from their fans. If the football clubs must be open to comment and scrutiny from their fans then surely the regulator and the expert panels must also be open to that same public scrutiny. It is not acceptable for people who are on that sort of panel to hide behind an overall decision. It would therefore be important to go down this sort of route.
I made an intervention on the noble Baroness, Lady Taylor. I do not think I misinterpreted what she said earlier—I apologise if I did, because she is not here at the moment. When I asked her about strong or weak chief executives, she expressed concern that the wrong chief executive might be in the position. If there is, and he is leading a weak panel, then people could hide behind it. I am strongly in favour of a public display of decision-making in that process.
I would not necessarily agree that the amendment has perfect wording. For example, in proposed new sub-paragraph (2)(d), whether or not you have “the reasons why” is another matter. However, one category that is not in here is the question of timescale, which has come up in other elements of our discussion. It must be right that, throughout the process of regulation, there should be timescales imposed. It is all too easy for people to drift on decisions, whatever they happen to be, and put them back and back.
We are talking here, as we have identified, about a very competitive industry, competing not only in the football world but in other worlds as well. To maintain the position of our competitive pre-eminence within that field, we need to ensure throughout that regulators abide by timescales. I therefore suggest that, on Report, not only in this amendment but elsewhere, there should be timescales involved, as well as the other classifications that are identified.
Lord Jackson of Peterborough (Con)
My Lords, I rise to support the three amendments in the name of my noble friend Lord Parkinson.
On Amendment 45, it is very important that we have Chinese walls around media interests and that we preclude, if possible, any potential conflict of interest. We are not talking about a corner shop; we are talking about very serious big business and huge amounts of money for broadcasting rights. The information that will be contained within this regulator and the expert panel is phenomenally important in terms of its commercial confidentiality. Therefore, it is appropriate to put in the Bill a protocol which precludes the possibility of any interference from those who have a vested interest in media, and particularly in the workings of the expert panel.
We can look at models across the world whereby you have to keep secret from many people confidential information that is market-sensitive and may affect stock and share prices. Some of the information in the United States’ Securities and Exchange Commission would fall into that category. This is not quite as lucrative, but it is very big business. Therefore, we need to protect individual clubs that do not have economic heft, and bigger clubs that may be affected by a leak of information or inappropriate use of information from the expert panel.
Amendment 47 strikes a balance on the ability to pay an expert the appropriate amount of money. You want someone who has accumulated knowledge, skills and experience of football on the expert panel, but you do not want to pay them more than, for instance, the Prime Minister is paid. You want to have a set amount, and I think it is appropriate to put it in the Bill, in primary legislation. We know that £91,346 is pretty much two and a half times the average salary. It is a decent amount of money for the services that will be provided by the members of the expert panel.
The amendment I support most strongly is Amendment 49 because, as Judge Louis Brandeis, a Supreme Court judge in 1913, said, daylight is the best disinfectant. That was not said by a British historian, as people think, but by a Supreme Court judge. He was absolutely right about this in all the ways government is conducted. This gets the balance right, because there will be Chinese walls between different functions within the independent football regulator. This is light-touch transparency. It would not divulge the intricate proceedings of the expert panel within the IFR, but it would allow people to make a value judgment on how key decisions had been reached and who had made them. There would be accountability and transparency, as you would know not only who was making a case but the reasons why they did not support a decision. It is right that we would not include detailed minutes of the deliberations of the expert panel, because that would not be in the interest of the game and good governance, but it would be important to understand how decisions were made.
If you put that together as a complementary mechanism, with parliamentary oversight and scrutiny of the independent football regulator as a whole, it is a very useful amendment for making sure there are key checks and balances. It would make sure that certain clubs are not dominating and certain other clubs are not being pushed out, and that everyone has an opportunity to have empirical evidence, data and proper facts put before the expert panel. Ultimately, the panel will be accountable, first, to the IFR, then to Parliament and then to the wider public, including the fans.
I am not saying that the IFR is exactly the same as the Securities and Exchange Commission, but, for those reasons, I think there is a framework here that can be used to make sure that we deliver a decent and effective IFR—but in a fair and equitable way that is open, transparent and, above all, accountable to the taxpayers and people of this country.
Lord Addington (LD)
My Lords, I will speak briefly. The middle two of these amendments are effectively a rehash of arguments we have already had—fair enough, so I will not comment on them. But, on the first one —about the numbers on the panel—and Amendment 49, what are the Government’s plans? Do they have any idea what would be a top number, or have they ever given this any consideration? That would be helpful to know—20 would seem to be a reasonable figure.
On the transparency of decision-making, the Government must have some idea, at the very least, about reporting, because it is almost impossible not to have some plan for reporting. If they have a standard or are thinking about one, it would help if we heard it now.
A couple of these amendments are well worth discussing, particularly the one on transparency. But I suspect that the Government have a plan for this—if they do not, they should have—and I look forward to being reassured by the Minister.
Lord Parkinson of Whitley Bay (Con)
My Lords, at the beginning, I said I would speak to my Amendments 47 and 49 in my winding-up speech, but I said what I wanted to say about them then, so I shall not elaborate on them now. I am grateful to my noble friends Lord Hayward and Lord Jackson of Peterborough in particular for their support, and obviously to my noble friend Lord Markham, who signed the amendments.
To pick up what my noble friend Lord Hayward said, this is not intended to be perfect wording—this is a probing amendment. He is absolutely right to refer to adding timescales as an important matter of consideration. My noble friend Lord Jackson gave another argument in our useful discussion about the dangers of having somebody with a current live media interest serving in different capacities in these roles. If they are privy to sensitive information about the leagues and clubs, which are multi-million pound businesses in many cases, a careless word or an evasive answer in an interview or on a TV show panel could give the game away—all too literally.
I simply reiterate the questions that I put to the Minister in my opening speech: whether she sees a role for a cap on salaries at all, and whether the Government intend to publish their expectations for remuneration, even if they do not set out a figure. We would be grateful to hear an explanation of the reason for the change between the last Bill and this one, on the removal of the upper limit.
Baroness Twycross (Lab)
I thank the noble Lord, Lord Parkinson of Whitley Bay, for tabling these amendments on the expert panel. The regulator’s independent expert panel will be responsible for making various important decisions across the regulator’s regime when and where it is appropriate. It is important that the panel has a range of expertise and experience to reflect this. The number of members of the expert panel is to be determined by the chief executive officer in response to the operational need. The Government do not want to restrain the effectiveness of the expert panel by introducing an arbitrary cap on the maximum number of its members. In our view, the regulator needs the flexibility to react in the event of high workload for the panel. The regulator would still need to deliver value for money, and has a regulatory principle encouraging this, so we do not believe that the CEO would appoint and maintain an unnecessarily large panel.
The Government acknowledge the intent behind Amendment 45 and other similar amendments to fortify the provisions in the Bill for dealing with conflicts of interest. It is essential that the regulator can deliver its regime free from undue influence and vested interests. I would like to reassure noble Lords that the Bill, supported by public law principles and non-legislative measures already in place, already sufficiently makes certain that the regulator will be free from conflicts of interest. For example, the Bill already places an onus on the chief executive officer to check for conflicts of interest at the point of making an appointment to the expert panel, and on an ongoing basis from time to time. In addition, the Bill sets out that the chief executive officer must ensure that the expert panel has the relevant range of skills, knowledge and experience.
It is possible that this amendment would limit the ability of the chief executive officer to do this, as it would restrict the pool of potential members of the expert panel. This, in turn, could hinder the IFR’s ability to fulfil its objectives. All in all, we are confident that these are comprehensive safeguards to examine and manage conflicts of interest appropriately. As noble Lords discussed earlier in relation to the composition of the board, we do not think it is appropriate to arbitrarily rule out specific sectors or sector interests.
I thank the noble Lord, Lord Parkinson of Whitley Bay, for Amendment 47. The Government very much appreciate the importance of ensuring that the regulator offers value for money. The regulator will be required to lay its annual accounts before Parliament and the Comptroller and Auditor-General for scrutiny. The regulator will also be subject to pay remit guidance in the same way as central government departments ensure that pay rises are justifiable. This will ensure value for money to taxpayers and operational flexibility for the regulator. Having a maximum salary in legislation would leave the regulator potentially unable to adapt to inflation and market changes. This could leave it without the expertise necessary to make critical decisions that allow the regulator to effectively deliver its remit.
Finally, I thank the noble Lord, Lord Parkinson of Whitley Bay, for tabling Amendment 49 on the transparency and accountability of the regulator. The Government very much agree that it is vital that the regulator is transparent and able to be held accountable by Parliament and others. Therefore, there are already a number of provisions in the Bill that ensure this. The exercise of the regulator’s functions will be reviewed in the regulator’s annual report. The Secretary of State and Parliament will be able to scrutinise these reports, which will be laid before Parliament. On the expert panel, the legislation already sets out a number of requirements to publish decisions and the reasons for them.
On this point, it is important for noble Lords to focus on the fact that transparency in decision-making is hugely important, but it is also really important that individual panel members can act without fear or favour, and that ultimately the regulator as a whole stands behind the decisions it makes. In my view and the view of the Government, it will also be necessary, in some instances, for details to remain private for commercial, personal or other sensitive reasons. For the reasons I have set out, I ask the noble Lord to withdraw his amendment.
Lord Parkinson of Whitley Bay (Con)
I am grateful to the Minister for her responses to the points raised here. I am a little perplexed by the answer she gave on operational need, and her dismissing the argument for having an upper limit to the panel. It is not a party-political point. I said earlier that I was perhaps most perplexed by this change from the previous Bill to the current iteration. This is not a partisan point; there must have been some further thinking by the Bill team that worked on both versions, but I am confused as to what operational needs might mean that a panel of 20 could not do it. I will take that away and reflect on it and, if she has anything further to say, I am sure that in one of the meetings we have or in a future letter she can set it out.
On the salary point, I take what the Minister says about not carving it in stone and being limited to inflation, but there are other ways around it, such as pegging it to an equivalent salary in an equivalent profession. There might be ways around doing it so that there is flexibility for salaries to increase as inflation demands without them spiralling in a way that could undermine the work of the panel. In dismissing all these amendments as a group, we could end up in a situation with a potentially infinite number of panel members being paid a potentially infinite sum of money, so we are keen to probe where the limits of good sense are. We might come back to this issue with a bit of further thought, but in the meantime I am grateful and I beg leave to withdraw my amendment.
Member’s explanatory statement
This amendment removes the Secretary of State’s power to provide the IFR with financial assistance.
Lord Jackson of Peterborough (Con)
My Lords, every time I see a new enabling power, I think it cannot get any more egregious, but this is probably the best of the best so far—or the worst of the worst, as my noble friend Lord Hayward says from a sedentary position.
Lord Hayward (Con)
My Lords, I will correct my noble friend on one point in his introductory speech. He talked about the cost burden falling on the taxpayer. This is a Bill where the burden does not fall on the taxpayer; it falls on the football clubs. At each step, however many there may be, depending on debates on hybridity and the rest, we must remember who will finish up paying for this. It is a group of football clubs, their fans, their staff and their players.
I raised the question in Committee:
“The Government need to be honest before this legislation passes, and to identify the probable burden for each of the small clubs”.—[Official Report, 2/12/24; col. 996.]
The Minister committed to write to me in response, and she has done so. Earlier, I intervened on my noble friend Lord Jackson and cited a particular instance, the head bullet point in the Minister’s response whose heading is:
“Exact cost of the Regulator”.
I did not ask for the exact cost; I asked for a probable cost. With respect to my noble friend Lady Brady, my target throughout this has been the small clubs—the Wycombes, the Wigans and those sorts of clubs. They are not as well resourced as those in the Premier League and do not have international competitions that they may or may not be in. It is crucial that the small clubs have some idea of what they are going to be asked for.
According to the letter, the impact assessment, to which I have referred previously,
“provides a reasonable estimate of these costs”.
If it is “a reasonable estimate”, it will probably be possible to work out reasonably what the costs to the small clubs are. The Minister has used the word “proportionate” on different occasions. The calculation could be done only on revenue, turnover or staff. It is improbable that it will be staff; it will therefore be revenue or turnover. If you have a fixed number of clubs and already know the revenue and turnover of each of them, you can work out what the costs will probably be. I will continue to press throughout Committee and Report until we get an indication of what the costs are. It is not as if they are not available.
I am sorry that the noble Baroness, Lady Taylor, is not here. On this occasion, I have done not a word count but a page count. The impact assessment is 76 pages long and, on a conservative assessment, 29 pages provide projections of costs and benefits. I could have extended it more substantially than 29 pages, but on a small conservative estimate there are whole pages of graphs with options and alternatives. The noble Lord, Lord Jackson, referred just now to £140 million. That is not the top option but the “reasonable estimate”, to use the words of the Minister. It could be much higher.
If there is an analysis of potential costs on 29 pages of the impact assessment, it is a very short step to do a calculation of the impact on each club. When I say it is a short step, it is in the impact assessment itself, but I am asking for the costs to the clubs. Page 58 starts progress down that route. It says:
“Costs to the National League (organising body)”.
In other words, it has already gone part of the way there. On the next page, we read:
“Costs to National League clubs”,
and there are several paragraphs thereafter. So, the Government have already gone down the route of looking at the potential costs not only to the National League but to National League clubs.
If the previous Government felt that it was possible to ask an opinion poll company, Ipsos MORI, which I cited the other day, to do research on potential regional benefits and contributions that people might perceive from having a regulator, it should be possible for this Government to do research on what people might pay—to come back to my point about the revenue and turnover of these clubs, all they have to do is turn to Deloitte. Is that a company that we have never heard of? No. Deloitte is cited in the impact assessment on different pages. It talks about Deloitte’s research into football clubs on the back page:
“Deloitte analysis of club finances”.
That is all that has to be done.
The Government are so keen to display their research in terms of finances and costs that they have not only produced an impact assessment but “impact assessment key points”. What is the first title? “Cost methodology”. We are talking about something which the Government have gone a long way down already in the necessary assessments.
I will not challenge the figures—I may do so on another occasion. Taking the figures that are available, it is a very short step for the Government to say, “This is what it will cost for clubs of these sizes to operate and pay for the levy”. But I would add one important caveat, and it may be one of the two reasons why the Government do not want to identify the sums involved.
Lord Markham (Con)
My Lords, I thank my noble friend Lord Jackson for his Amendment 50, which looks to protect the taxpayer. I particularly support my noble friend Lord Hayward’s as ever forensic analysis, which really focused on the burden to the smaller clubs. These things easily get out of control and, as my noble friend mentioned, £140 million in anyone’s book is a lot of money, and that is just the central case—it is not even the highest example.
I will speak to my two amendments in this group: Amendments 171 and 253. Amendment 171
“restricts discretionary licence conditions to include only internal financial controls”.
Interestingly, this was the drafting of the original Bill that was brought before the other place before the general election. We have heard many times in the Chamber how this Bill is substantially the same as the original one. However, this time round there is a key change in the wording: instead of “internal financial controls”, the word “financial” has been taken out, so now it is just “internal controls”. I think we would all agree that there is a world of difference between looking at the financial management of a club, which is something that we would understand, particularly with regard to the sustainability argument, and why that might be in the remit. Removing “financial” from that, all of a sudden, so you are just looking at the internal controls of a club, is obviously a massive moving of the goalposts, if I may say so.
In trying to understand the thinking behind it, I looked at the Explanatory Notes. In those, it mentions that, broadly speaking,
“Internal controls refer to the system of policies and processes established by the management of a club that allow it to continue operating in an effective, orderly and efficient manner”.
That may seem innocuous, but it goes once more to the whole issue of mission creep. The Bill does not define internal controls—and remember that we are talking about 116 clubs, and we are saying that a regulator is suddenly going to have powers to explore those internal controls.
Again, the Explanatory Notes say that those internal controls are looking to make sure that the club is being run
“in an effective, orderly and efficient”
way, and that they help a club to operate in such a way. First, is that the role of a regulator, to get involved in the internal controls of every club, as to whether it is running efficiently? Suddenly, we seem to have appointed a management consultant on steroids, who will be looking into the cost of each club and opining on it. Surely that is not the sort of thing we want to do for 116 clubs.
Then, what does that bring in? Why not the IT department of a club? I think we would all agree that digital information technology comes into the definition of the effective, orderly and efficient operation of a club. So, are we now asking the regulator to do that? Maybe we should be hiring Capgemini, IBM and whoever else to start to get into it.
Suddenly, we start to see this mission creep. Then, we realise that the other parts we are trying to bring in, on having protection for clubs and the taxpayer in Amendments 50 and 253, become all the more important. Not only have we now got the concern that this regulator will be looking into every nook and cranny of the internal controls of a club, but who will be footing the bill for all of this? There is a blank cheque that either the taxpayer or the clubs are going to have to foot. I think we would all agree that we probably do not want either of them to do it, but as this is set up here and now, the regulator has absolutely been given the remit to do that.
In my Amendment 253, I am trying to make sure that at least this does not fall on the taxpayer; I think we would all agree that we do not want that. I must admit that I do not feel particularly comfortable about that, because I do not want it falling on the small clubs—or any of the clubs for that matter—but I am absolutely sure that I definitely do not want the taxpayer to be funding a regulator to look into the internal controls of 116 clubs and whether they are effective. However, I do not think that we want the clubs to have to do that either.
It is a long-established principle that the regulator is paid. I am familiar from my old media days with Ofcom being funded by the broadcasters, and that has to be appropriate, because we do not want the taxpayer to do it. However, what sort of control do the clubs have over this? All of a sudden, the regulator says that it is going in and to look at every single nook and cranny of their internal control to opine on whether they are efficient and effective—and the really good news is that they are going to pay for all of it as well. Is that really what we want from a regulator? I do not think it is. We started off with a very small mission and, suddenly, the regulator is looking into the internal controls of 116 clubs. I really do not believe that this is what we want.
That is why, in my amendments, I am first trying to return the regulator back to internal financial controls, which we can see a role for. Secondly, I am making sure that this does not fall on the taxpayer. However, if this falls on the clubs, we need to think about how we can give them some sort of control to avoid them having to pay a blank cheque for all of this.
Lord Birt (CB)
Most of what the noble Lord said would be done during an audit. All of these companies will have audit, and almost everything he mentioned will be conducted by the auditors. Plainly, it would be completely duplicatory for that to be done twice over. The issue is whether the regulator would have access to the audit. I agree with the noble Lord about the need to avoid cost, and wherever the cost falls, audits—as I am sure he knows—are ever more expensive, because the obligations on auditors are increasing the whole time. There is a lot at stake here.
Lord Markham (Con)
This is another example of the benefit of getting different brains on the committee. I absolutely hope that that would be the case, but it is probably a question for the Minister to answer. It is definitely logical.
Lord Addington (LD)
My Lords, I will make some brief comments. As I read the Bill, the Secretary of State providing some finance might be necessary, particularly in starting up. One of the things we do not want is an underresourced regulator blundering around making mistakes. A bad regulator is the worst outcome you can have, and that is usually because it lacks resources. When the Minister responds, can she give us some idea about when the power to give extra money would be used? This being done badly would be the worst result.
When the noble Lord, Lord Markham, talked about regulation, I am afraid I kept thinking about Fulham and Al Fayed. Are your internal control structures right? Are you doing something wrong? The damage that could be done by bad organisation immediately catches in the back of my throat. The regulation will not be straightforwardly financial; it is also about reporting structures, the care of your workforce, et cetera. Surely that should be covered by the Bill. These are questions about where you draw the line. If we have a regulator, does it regulate the whole thing? I think it has to; it cannot be just financial. If these are socially important structures—this is what we keep coming back to—we have to look at this question.
The noble Lord, Lord Hayward, has a point about the costs involved. I hope that we will get an answer when the Minister responds—at least a rough ballpark figure—because it will clarify what we will do. Those of us who approved the idea of a regulator think that it has to be properly resourced and that it has to cover the whole thing. I hope that the Minister can give us a little more guidance about what will happen and what the Government’s thinking is at this point, because they should have an answer by now.
Baroness Brady (Con)
My Lords, my understanding from the Premier League is that the Government’s estimated cost of the regulator is £10 million a year, and the Premier League considers that to be very low. We have heard a lot about how the regulator has been based on banking regulation, but the FCA costs £762 million a year and Ofcom costs £127 million a year.
It is worth noting that there are two critical but unrealistic assumptions in the impact assessment. First, it assumes perfect compliance, and, secondly, it focuses solely on ongoing compliance costs, such as information-gathering and engagement with the regulator and supporters. It does not account for the potential costs associated with, for example, licence conditions enforcement action that may arise through the commitments procedures. I completely agree with the noble Lord, Lord Hayward.
In earlier debates in Committee, I read out what Mark Ives, the general manager of the National League, said:
“We are concerned about the costs … The expectation of how much it is going to cost clubs at a National League level is a huge concern—it may be a small amount of money, but it is a lot to the clubs”.
He went on to say that many clubs in the National League are run by volunteers. We should give the clubs an idea of what it will cost, so they can work that into the budget. Each club should know whether it will be fully funded and fully staffed, so it can do the right job.
We have heard throughout Committee that the powers will be extended. The more that the powers are extended then the more complicated the Bill will be, the more staff they will need and the more costs there will be. Each club has to pay that cost because it has to have a licence. The way that you discharge the cost of the regulator is to add it to the licence. All 116 clubs, even though they are not listed in the Bill, will need to obtain one of those licences to operate.
Cost is a huge concern. It appears from what has been said that the Premier League would be picking up the majority of that cost. There is a big difference in the Premier League between those at the very top and those at the very bottom; they have very different pressures on their finances. I can only endorse what my noble friend Lord Hayward said and urge the Minister to give us an indication.
Lord Mann (Lab)
I am curious. There have been a lot of detailed discussions over the last three years with the Premier League and with Premier League clubs—I was involved in many of them. The Premier League was suggesting—it was not the only one—that for people in the Premier League, and the Premier League as an institution, a model of self-regulation would be a lot better. It would be helpful to know what costing the Premier League has built into its model of self-regulation, as it was certainly thrown around as an alternative for quite some time.
Lord Moynihan of Chelsea (Con)
My Lords, I support all three amendments in this group, particularly Amendment 253. I am delighted to follow the noble Lords, Lord Jackson, Lord Markham and Lord Parkinson, in their advocation of these amendments. I declared my interests on Monday, but this evening I have a fairly massive conflict of interest. I do not believe that I am alone in the Chamber in having been forced not to watch Chelsea breach all the principles of equity by beating Southampton 5-1 as we sat here. The poignant thrust of this conflict would be if my football friends started telling me that my staying away from Chelsea matches is good luck for the team. Therefore, it is not without anguish that I stand before your Lordships.
I go back to my earlier warnings about the dangers of regulators. Such dangers are stark in the clauses that we seek to amend and in the amendments themselves. The questions that your Lordships have raised in the debate boil down to what it will cost overall. That is what clubs will be asking, and then they will be asking what it will cost them. The third question that will come to the mind of the clubs—except those luckless ones in the Premier League—is around what they are going to get. We will talk about that in a minute but, to go back to what it will cost overall, we have heard over and again that we have no idea. There are estimates, which are clearly—
Lord Mann (Lab)
I have met plenty of clubs that have given an estimate of the likely cost, including across the Premier League. There is no ambiguity around the kind of sum that many Premier League clubs are citing as to what they expect the cost to be.
Lord Moynihan of Chelsea (Con)
I thank the noble Lord for that intervention but the fact remains that they cannot know what it will cost because, for a start, we do not have any certainty about what clubs will be in the scheme. We have been told what it might start at, but the Minister has said that she will not—
Lord Mann (Lab)
There have been extraordinarily levels of dialogue between the Premier League and the Government over a long period on this. The suggestion that the Premier League does not have some idea of the likely potential cost and has not spoken to clubs in relation to that is simply nonsense. I have spoken to clubs which have given specific estimates of what they anticipate it will be. Whether that is accurate or not, the idea that those figures have not been discussed at length is something of a fantasy.
Baroness Brady (Con)
I am sorry to intervene on the intervention, but I have not seen the noble Lord at any Premier League meetings; I have been to them all. I can assure him that we have never had a discussion about the potential costs, because we have never known what the potential costs are; no one has told them to us. We have looked at the impact assessment and that has given us a vague estimation, but to suggest that we have had a long, detailed discussion and debate, and that we understand and know what the costs are, is not correct.
Lord Moynihan of Chelsea (Con)
I thank the noble Baroness, Lady Brady, and the noble Lord, Lord Mann, for his intervention. He seemed to think I was talking about Premier League clubs. I was not. I was saying that the Minister had said that she did not want to specify in the Bill which clubs were going to be regulated, so the club does not know whether it will be regulated, and it certainly does not know how much it will cost it. The noble Lord might shake his head, but that is a fairly obvious point. We do not know who will pay. We also do not know what it will cost. I believe the noble Lord, Lord Hayward, talked about an estimate of £10 million—I beg your pardon; it was the noble Lord, Lord Markham.
Lord Hayward (Con)
If I might clarify for my noble friend: the noble Baroness, Lady Brady, referred to £10 million; I was quoting from the impact assessment, which says that £140 million over 10 years is the mid-point the Government are operating to.
Lord Moynihan of Chelsea (Con)
I beg the noble Baroness’s pardon for not attributing the £10 million figure to her. The fact is that we know that is ludicrous, because the cost of other regulators is way more than that.
I will make some headway. What will it cost overall? We do not know what the overall cost will be or what it will cost individual clubs. To talk a little bit more about that, imagine you are a local entrepreneur. There is a club in a little bit of trouble. They come to you and say, “You always wanted to own a football club. Why don’t you take over our club and then you can have one of those back-to-back league promotion successes that you’ve dreamed about and you’ll be famous in your community?”. You say, “Well, I’ve got a few bob. I don’t know how much, but yeah, okay, I’ll consider it”. It is one of those clubs that a noble Lord opposite talked about on Monday. I think the numbers cited were a turnover of £2 million and seven employees. You are invited to take over this club and bung in some of your money. You may not have a lot, but you may think you have enough. Then you say, “What’s going to happen?” My concern is that when you are told there is going to be a regulator that will tell you who to have on your board and all that, you will say, “Forget about that; as an entrepreneur, I don’t play that particular game”. But let us say you swallow that. Then you say, “How much is this regulator going to cost me?” The answer: “Dunno mate”. You ask, “Well, what could it be?” The answer: “Dunno”. So you turn your back and go off to sponsor the local cricket club or something like that. It does not work if you are not absolutely clear about what the cost will be.
Lord Markham (Con)
I ask the noble Lord this given his experience of consulting in a lot of entrepreneurial and start-up situations. I know that he has done lots of these types of moves. Clearly, when you invest in a start-up business or a club you will have business plans. They might be good or bad business plans, but they are normally based on an investment and an expansion. In this case, given that the regulator can say no to those business plans and that investment once it gets into it, I assume your investment proposition would suddenly be up a creek. I would like to hear the noble Lord’s opinion on what that will do to the investment proposition.
Lord Moynihan of Chelsea (Con)
The noble Lord, Lord Markham, makes a very good point. If some local worthies approach you and ask, “Will you invest in this club?” and you say, “Well, I’ve got to figure out what it’s going to cost me”, and they then say, “You’ve also got to figure out whether your plans are going to be acceptable to the regulator”, again, you would turn your back. Entrepreneurialism is the heartbeat of the economy, as several noble Lords have said in this debate over the past few days. This regulator proposal just turns entrepreneurs away from wanting to invest.
Lord Mann (Lab)
It would be helpful if the noble Lord could give examples of entrepreneurs wishing to invest in football who he has spoken to. I have spoken to a lot of entrepreneurs, including people who have invested smaller amounts in smaller clubs and larger amounts in Premier League clubs. They know exactly what they are anticipating and what they are going into. Of course, as part of their business plan, they are factoring that in. There is a figure, there is a concept, and investment has not gone down in the past 18 months. Indeed, further major investment in major clubs in English leagues is likely to happen soon. What is going wrong if they are all running away? Can he give a single example?
Lord Markham (Con)
I posed the question, and I can give an example of that. I have mentioned to noble Lords before that I have experience of the Brighton situation and know the board and the set-up there quite well. Brighton is a perfect example, and it is a shame that the noble Lord, Lord Bassam, is not in his place, because he is very familiar with it. It was a club without a stadium or good training facilities. An owner, Tony Bloom, came in and invested a lot of money in it, with a plan predicated on investing in players and doing a lot of analysis to get the best ones from around the world. It was absolutely a start-up scenario where he was heavily investing, and part of that was the concept of being able to yo-yo in terms of having parachute payments. He cited to me the example of West Bromwich Albion, which at that time had been promoted and relegated and promoted and relegated, but each time, because they had the parachute payment, they were able to become more sustainable.
Suddenly you get a situation whereby someone is thinking, “I want to do another Brighton like Tony Bloom, but I do not know what my cost base will be. I do not know whether the regulator is going to stop me going on with my plans because it thinks I am unsustainable or make me deposit a large sum of money as a financial buffer. I do not know whether my parachute payments, which are part of my plan, are then going to be taken away. Suddenly I’ve got a hell of a lot more risk involved”. I can only believe that that is going to dampen enthusiasm to invest in the first place. That is a very real example.
Lord Moynihan of Chelsea (Con)
I thank my noble friend. I apologise to the Committee for going over my allotted time, but I hope that it will appreciate that a great deal of that time was taken up not by me but by entirely welcome interruptions by other speakers.
In the interests of trying to move this on fast, I will stop talking about this issue of “What is it going to cost me?”, important though it is to have far more understanding of and far more limitations on the regulator’s ability to charge, and will move on to that of “What I will get?”. As soon as it becomes possible for a club to get money out of this arrangement, suddenly you have discussions about parachute payments and backstops; you have supplicants; you have lobby, lobby, lobby. It is called crony capitalism, state capture, rent-seeking. These are the dangers that you get when you involve the Government, and although we are calling it a regulator, this is a governmental action. It is essential that we limit the amount of money that that regulator has to play God with football in this country.
With those problems, it goes beyond just stopping the regulator spending beyond the levy amounts, as I understand Amendment 253 to say. We need to ensure that the levy amounts in the first place are suitably parsimonious and as little burdensome as possible to the clubs. I appreciate what the noble Lord, Lord Addington, had to say, but let us not be too free with other people’s money. I am sure it is not popular in all parts of this House to quote the great Baroness Thatcher, but she had the great remark, “You can spend other people’s money until pretty soon there isn’t any more”. Let us think about the impact.
Baroness Blake of Leeds (Lab)
I understand that the noble Lord received a number of interventions, but I think he is reaching the limit of his time. I would be grateful if he drew his comments to a close.
Lord Moynihan of Chelsea (Con)
I would almost have concluded in that space of time.
Once the method for determining the levy is agreed and the amounts are fixed, most surely the regulator should be prevented from spending any more than that. I thank noble Lords for their attention.
Lord Parkinson of Whitley Bay (Con)
My Lords, the noble Lord, Lord Mann, is right that we have had extensive discussion on the issue of cost, but if there has been lengthy dialogue on this point then it is because the answers have not been forthcoming in the way that the Committee has wanted.
I am particularly grateful to my noble friend Lord Hayward, who is doing an invaluable service not just for this Committee but for the smaller clubs on whose behalf he has spoken this evening, and in the way that he has gone through the impact assessment to try to get to the bottom of the cost implications for them in particular. I am glad that he will continue to keep at this important point, and I hope he gets some better and more detailed answers from the Minister as he does so.
My noble friend mentioned a letter that the Minister had sent him. Again, she has been kind in responding in writing to individual points that noble Lords have raised, but I ask her to share those letters with the whole Committee when the team sends them through. I think they are coming through to the individual noble Lords who have raised those points but they are not always being shared, and it would be a benefit to the whole Committee if we could all see those letters when they come. However, I am grateful to her, as I know those noble Lords are, for the speed with which she is responding in writing to the points that they have raised.
I am grateful to my noble friends Lord Jackson of Peterborough and Lord Markham for tabling their amendments in this very important group, which concerns the state funding of the regulator. That is a big issue that is worthy of debate, and I support the way that they have drafted them. I put my name to my noble friend Lord Markham’s Amendments 171 and 253, but I am happy to associate myself with my noble friend Lord Jackson of Peterborough’s Amendment 50 as well, which was the one that began this group.
My noble friend’s amendment seeks to strip away the broad powers that could be granted to the Secretary of State to provide financial assistance to the independent football regulator as she sees fit, subject to conditions deemed appropriate by her. Amendment 50 from my noble friend is an important amendment in seeking to safeguard the integrity and independence of the independent football regulator. We would like to think that one of the core purposes of the new regulator is to serve as a neutral body overseeing the governance and financial management of football clubs in this country. By granting the Secretary of State the power to provide it with financial assistance, there is a real and present risk that the independent football regulator’s independence could be compromised.
As with any independent regulator, it is crucial that the independent football regulator operates free from any external pressures, particularly from the Government. The role of the regulator should be to assess the game on its own merits without any concern about political influence or the priorities of the Government of the day. If we were to allow the Government to fund the regulator, we would be introducing the potential for at least the appearance of government influence over the regulator’s work and its activities.
Even if that influence were not overt or immediate, the mere existence of government funding could lead to the perception, and possibly the reality, that the regulator would become beholden to future Governments. That is a danger we must seek to avoid, as it would erode the public’s trust in the new regulator, undermine its effectiveness and hamper its impartiality. The Government have rightly made much of the changes they have made to the Bill in order to guarantee the independence of the regulator in the eyes of international bodies that have paid attention to the Bill, so I am sure that is something they want to avoid in this instance as well.
I hope the Minister will agree that the provision as it stands is concerning in the way that it gives the Government the power to impose conditions on how the regulator uses its funds. The consequences of that are worth considering. The Government could impose restrictions or directives on the work of the regulator, such as mandating certain areas of focus or influencing the scope of its investigations. It could lead to the independent football regulator neglecting crucial issues or, even worse, aligning its work with the agenda of the Government of the day. That sort of shift would diminish the regulator’s ability to act in the best interests of football clubs, players, fans and the broader football ecosystem which the Government and all of us are mindful of protecting.
The existence of that sort of conditional funding could set a dangerous precedent for other regulatory bodies. If government assistance became contingent on adhering to political agendas or priorities, then the independence of other regulatory bodies could be called into question, further eroding public trust in oversight.
I would like also to support my noble friend Lord Markham’s amendments in this group, Amendments 171 and 253. Amendment 171 restricts discretionary licence conditions to include only “internal financial controls”. In Clause 22, the Government allow discretionary licence conditions to relate to “internal controls”. It is important that, in a Bill such as this, the Government recognise the details of the Bill and make clear that the provision refers to financial controls as opposed to solely internal ones.
As my noble friend set out, “internal controls” is broad and open to wide interpretation. Without his amendment, the regulator could potentially impose conditions that extend beyond the presumably intended focus on financial oversight. That surely creates a risk of the sort of regulatory overreach that the Committee has been very concerned about, whereby the regulator might intervene or interfere in areas unrelated to the core objectives of this Bill, such as operational decisions or non-financial activities within football clubs.
If we were to insert “financial” as my noble friend suggests, we would ensure that the discretionary licence conditions relating to internal controls are focused exclusively on financial governance. This refinement would make the regulator’s powers more precise, ensuring that its interventions are effective, proportionate and fully aligned with its mandate to oversee the financial health of football clubs. We have heard, repeatedly and rightly, that the financial sustainability of English football is what the Government are most concerned about and what has led to the Bill that is before the Committee.
The non-financial resources threshold requirement as outlined in the Bill is designed to ensure that clubs have adequate resources, financial and otherwise, to operate sustainably, but the specific mention of internal controls as part of this framework needs to be carefully defined to prevent unintended consequences. Without this amendment, the regulator could use its powers to impose conditions on internal controls that have little or no connection to financial matters. That could include operational areas such as staff management, logistical decisions or club culture, none of which falls under the regulator’s core responsibility to ensure financial sustainability.
By explicitly tying internal controls to financial matters, my noble friend’s amendment reinforces the Bill’s focus on financial governance, while respecting the operational independence of football clubs. They are of course complex organisations operating in—
Lord Watson of Invergowrie (Lab)
I thank the noble Lord for giving way. I have bit my tongue for the last hour as I have watched the charade from the Benches opposite, all using up their entire allocation while interrupting each other, repeating themselves and slapping each other on the back. This is meant to be a debate. I raise it when the noble Lord is standing up not because I disagree with the fact that they are serious about what they are arguing. But had Mr Sunak waited until November and not called his election in July, the noble Lord, Lord Parkinson, would have been here with the same Bill in front of him, other than the issues that we heard have been changed so far—not the issues that we have been discussing for the last two hours or so. They would have been exactly the same. He would have been defending that Bill and now there is confected displeasure, if not outrage, with the way that the Bill is. Is that not hypocrisy?
Lord Parkinson of Whitley Bay (Con)
I am happy to use the time before the Committee to return to this issue but, as my noble friends behind me have said repeatedly, and as I have agreed to each time they have, I know that they would have been raising these points with me had I been at the Dispatch Box opposite. I know that because they were already raising them with me when I had the privilege of being the Minister, and I would be in the position of seeking to persuade them of the merits of the Bill. But I have also been clear, from Second Reading and all the way through, that we want to see this regulator established. We want to see it doing its work and doing so effectively, but we also see before us a Bill that is different, because of the election that was called and the result that happened.
We are interrogating particularly closely the changes that the Government have made to the Bill, of which there are many, and we have more concerns on these Benches, from my colleagues behind me, than we did before the election about the way we do it. As I have said before, the result of the election also puts us in a position on this side of the House to fulfil the duty that the noble Lord, Lord Kennedy, and the noble Baronesses, Lady Twycross and Lady Blake, dutifully fulfilled before the election: of making sure that government legislation is properly scrutinised. I make no apology for the fact that—
Baroness Twycross (Lab)
I have never filibustered a Bill to which my party had committed in a manifesto and to which all parties had committed. While the noble Lord is correct that I would scrutinise legislation when I was sitting on those Benches, I have never sought to filibuster a Bill to which my party had committed and which my party had laid before Parliament, intending to filibuster it to the point of getting us stuck in treacle.
Lord Parkinson of Whitley Bay (Con)
My Lords, I much regret the tone that the noble Baroness has adopted and what she says. That is not what we are doing. I sat here and bit my tongue, like the noble Lord, Lord Watson of Invergowrie, when I saw the Government Chief Whip asking one of his Back-Benchers not to move an amendment in order to try to proceed.
One of the great strengths of this House is the way in which we go through Bills in detail. We unearth issues, as we did in the debate on the group that we started today’s debate in Committee with. Neither I, as the prospective Minister in this House for the Bill in the last Parliament, nor the Minister opposite me was aware of the issues about hybridity until we got into the weeds of the Bill as we have in this Committee. That is the strength of the work of this House. I do not call that filibustering; I call it legislative scrutiny and, as we look at the workings of this House and the way it does that, we should do that with great pride.
I do not want to be distracted from the matter at hand by points that have been raised opposite. I want to address the amendments in this group so that we can carry out that duty. I associate myself with the amendments that my noble friends have tabled. I was speaking about my noble friend Lord Markham’s Amendment 171, and I agree with it.
Baroness Twycross (Lab)
My Lords, I thank the noble Lords, Lord Jackson of Peterborough and Lord Markham, for these amendments. Before I go through them and respond to the debate, I stress that I will make sure that all letters that have been sent to Members in the course of the Bill so far are placed in the Library as soon as possible, if that has not already taken place.
Ensuring that there are appropriate financial processes and limits in place for the regulator is extremely important, and I welcome this opportunity to discuss the matter in more detail. Amendment 50, in the name of the noble Lord, Lord Jackson of Peterborough, would entirely remove the ability of the Secretary of State to provide the regulator with financial assistance where appropriate. The Government acknowledge that the intent behind this amendment is to ensure that the regulator provides value for money for football fans, Parliament and the wider football industry. The regulator will be levy funded, and its regulatory principles include using its resources in the most efficient, expedient and economic way—this is what we expect.
The noble Lord, Lord Hayward, asked about costs to smaller clubs. It will be for the regulator to determine the methodology for the levy. However, the Bill requires it to take into consideration the financial resources of a club and the league a club plays in when determining how to distribute the levy charge across clubs. This should ensure a proportionate levy, where no club, big or small, will be asked to pay more than what is fair and affordable. I appreciate, however, that the noble Lord has not yet been satisfied by my response to this, and I look forward to discussing it with him in further detail when we meet.
Lord Hayward (Con)
I thank the noble Baroness for the offer to meet. Can I clarify that her implication is that all clubs in a division will be charged the same fee? I am not absolutely clear from what she said whether there will be a varied fee for different clubs in the same division, and this is not clear in the impact assessment either.
Baroness Twycross (Lab)
It is for each league a club plays in, but, as the noble Baroness, Lady Brady, made clear, there would be differences between the resources available to each club within a league. It is intended to make sure that each club has a proportionate levy placed on it, as well as taking into account which league a club might be playing in. So it is intended to be proportionate overall but also proportionate to the resources of an individual club.
The regulator’s budgets will be approved annually, and it will produce an annual report that will be laid before Parliament. However, on the points raised by the noble Lord, Lord Addington, exceptional and unforeseen adverse events may mean that it is necessary for the Secretary of State to provide financial assistance to the regulator. Paragraph 36 of Schedule 2 allows for this when considered appropriate. It also allows for the Secretary of State to cover any shortfall during the period between establishing the regulator and the levy being fully in effect—that was noted during the debate.
The noble Lord, Lord Jackson, asked how much the independent football regulator will cost and questioned whether the taxpayer would have to pay. To answer his question fully, I stress again that the regulator will be levy funded. However, there will be a period before clubs are licensed, and before the levy can be charged, when the Secretary of State will provide funding. These initial costs can all be recouped by the Exchequer once the regulator’s levy is up and running. We cannot know the exact cost of the regulator until the legislation has been passed and the organisational design has been finalised by the chair and the board. The noble Baroness, Lady Brady, noted that some of the additional potential purposes that noble Lords have discussed in relation to the regulator could scale up or scale down some of those costs, so it is not possible to have an exact figure at this stage.
On a power allowing the Secretary of State to cover any shortfall, there is an equivalent power for the Secretary of State to provide financial assistance to, for example, the Small Business Commissioner in the Enterprise Act 2016. Entirely removing the ability of the Secretary of State to provide this financial assistance could mean that the regulator is unable to continue to operate and fulfil its objectives, which would have significant knock-on impacts on the game.
On Amendment 171, in the name of the noble Lord, Lord Markham, it is important that clubs have appropriate non-financial resources in place. This will ensure that clubs are able to make good decisions about running the club, as well as meet relevant rules and regulations and report their finances accurately. The regulator will be able to attach discretionary licence conditions relating to non-financial resources in three areas: risk management, financial reporting and internal controls—and only in these three business-critical areas.
The term “internal controls” is explained in the Explanatory Notes. It refers to the system of policies and processes that a club has that allow it to operate in an effective, orderly and efficient manner. This includes controls to ensure complete, accurate reporting, compliance with rules and regulations, and financial management.
To confirm the assumption of the noble Lord, Lord Birt, on the matter of not duplicating with regard to audit, we would assume that existing audits would be used as part of this process.
These are all areas crucial to ensuring financial sustainability, and that is exactly why the regulator needs to be able to attach discretionary licence conditions relating to these areas to ensure that clubs do in fact have appropriate non-financial resources. It would not be appropriate to limit the regulator unnecessarily here to internal financial controls only. The regulator can attach licence conditions only if they advance one or more of its operational objectives. I reassure noble Lords that the regulator will not have free rein here; financial sustainability will still be at the heart of any licence conditions.
Finally, I thank the noble Lord, Lord Markham, for his Amendment 253. The Government completely agree that the regulator should not be able to borrow money. That is why it is already prevented from doing so in paragraph 35(2) of Schedule 2. There is no need for this restriction to be duplicated elsewhere in the Bill. Additionally, the regulator would currently use penalty receipts to fund litigation costs. The noble Lord’s amendment would prevent this. It would mean that litigation costs would have to be passed on to all clubs through the levy, as opposed—
Lord Hayward (Con)
Sorry, I was just waiting for the Minister to conclude her paragraph. Can I just ask her to clarify the intervention made by the noble Lord, Lord Mann? He said—I am paraphrasing and am happy if he corrects my phraseology—quite clearly to the Committee that figures have been given to clubs as to what they were likely to pay. Is that correct, or is the noble Baroness, Lady Brady, correct, having been present at all the meetings with the Ministers, that no figures have been given to any clubs?
Lord Mann (Lab)
Figures have been given by the Premier League to clubs and clubs have been happy to cite those figures.
Baroness Twycross (Lab)
To respond to that point, my understanding of what my noble friend Lord Mann said was that it related to the Premier League giving information to the clubs, rather than explicit information being given by the Government.
Lord Hayward (Con)
In which case, can the noble Lord, Lord Mann, provide the Committee with the details of the figures and the dates when they were provided?
Baroness Twycross (Lab)
I am not sure whether it is my responsibility as a Minister to ensure that that happens.
Baroness Twycross (Lab)
Perhaps noble Lords would allow me to continue, as it has been quite a long evening. I am getting close to the end of my response to the debate on this group.
I turn to the issue of litigation costs being passed on to all clubs through the levy, as opposed to being taken from financial penalties of non-compliant clubs. It does not seem fair or proportionate, particularly for those clubs that have complied with regulations, for the costs incurred as a result of those that have not complied to be charged to all clubs. For the reasons I have set out, I therefore hope that noble Lords will not press their amendments.
Lord Jackson of Peterborough (Con)
My Lords, just to concede the point from my noble friend Lord Hayward, he is absolutely right about the cost being accumulated and passed on to clubs. I did not make it clear that, effectively, the point I was making was that this is an open-ended financial commitment for the IFR, rather than another way of ignoring the cost on the clubs. The point I was making is that it is axiomatic that, if you have a clause that says there is unlimited cash available to a body, it will take advantage of that and there will be carte blanche.
At this late hour, I just leave your Lordships with my observation of Parkinson’s law—not my noble friend Lord Parkinson of Whitley Bay but C Northcote Parkinson. He wrote an essay in 1955 for the Economist, saying that
“work expands so as to fill the time available for its completion”—
or, in public services and government, the number of people grows regardless of the work to be done. The point I am making is that if you give an unlimited blank cheque to this body, you are encouraging mission creep and encouraging that body to move into ultra vires areas, not just regarding transitional costs but on a long-term basis in the Bill. For that reason, we need to come back to this and maybe redraft the Bill.
Incidentally, I found the Minister’s answer quite helpful and informative, for which I thank her. I know that it has been a long evening. We have had an eruption from mount Watson—the noble Lord, Lord Watson of Invergowrie—and all I would say is that it is a constitutional principle that no Parliament can be bound by its predecessor. We are in a new Parliament with a new Government and a new piece of legislation, and we are doing our job of scrutiny and oversight. With that in mind, I beg leave to withdraw the amendment.