Grand Committee
(1 day, 13 hours ago)
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Data (Use and Access) Bill [HL]
Wednesday 18th December 2024
(1 day, 13 hours ago)
Grand CommitteeRead Full debate Data (Use and Access) Bill [HL] 2024-26 View all Data (Use and Access) Bill [HL] 2024-26 Debates Read Hansard Text Read Debate Ministerial Extracts Amendment Paper: HL Bill 40-IV Fourth marshalled list for Grand Committee - (17 Dec 2024)
The Deputy Chairman of Committees (Baroness Pitkeathley) (Lab)
My Lords, as usual, if there is a Division in the Chamber while we are sitting, the Committee will adjourn as soon as the Division Bells are rung and resume after 10 minutes.
Clause 90: Duties of the Commissioner in carrying out functions
(a) a code prepared under section 124A, or(b) an amendment of such a code,that is specified or described in the regulations.”Member’s explanatory statement
New section 124B(11) of the Data Protection Act 2018 provides that the Information Commissioner’s duty to establish a panel to consider draft codes of practice may be disapplied or modified by regulations. This amendment ensures that regulations can make provision in relation to a particular code or amendment or a type of code or amendment.
Lord Clement-Jones
“Code on processing personal data in education where it concerns a child or pupil(1) The Information Commissioner must consult on, prepare and publish a Code of Practice on standards to be followed in relation to the collection, processing, publication and other dissemination of personal data concerning children and pupils in connection with the provision of education services in the United Kingdom, within the meaning of the Education Act 1996, the Education (Scotland) Act 1996, and the Education and Libraries (Northern Ireland) Order 1986; and on standards on the rights of those children as data subjects which are appropriate to children’s capacity and stage of education.(2) For the purposes of subsection (1), the rights of data subjects must include—(a) measures related to responsibilities of the controller, data protection by design and by default, and security of processing,(b) safeguards and suitable measures with regard to automated decision-making, including profiling and restrictions,(c) the rights of data subjects including to object to or restrict the processing of their personal data collected during their education, including any exemptions for research purposes, and(d) matters related to the understanding and exercising of rights relating to personal data and the provision of education services.”Member’s explanatory statement
This amendment requires the Commission to consult on, prepare and publish a Code of Practice on standards to be followed in relation to the collection, processing, publication and other dissemination of personal data concerning children and pupils in connection with the provision of education services in the UK.
Lord Clement-Jones (LD)
My Lords, unusually, I rise to move an amendment, Amendment 138. For the second time in Committee, I find myself heading a group when I know that the noble Baroness, Lady Kidron, will be much better qualified to introduce the subject. Indeed, she has an amendment, Amendment 141, which is far preferable in many ways to mine.
Amendment 138 is designed to ensure that the Information Commissioner produces a code of practice specific to children up to the age of 18 for the purposes of UK law and Convention 108, and pupils as defined by the Education Act 1996, who may be up to the age of 19 or, with special educational needs, up to 25 in the education sector. The charity Data, Tech & Black Communities put it this way in a recent letter to the noble Baroness, Lady Jones:
“We recently completed a community research project examining the use of EdTech in Birmingham schools. This project brought us into contact with over 100 people … including parents, school staff and community members. A key finding was the need to make it easier for those with stewardship responsibility for children’s data, to fulfil this duty. Even with current data protection rights, parents and guardians struggle to make inquiries (of schools, EdTech companies and even DfE) about the purpose behind the collection of some of their children’s data, clarity about how it is used (or re-used) or how long data will be retained for. ‘Opting out’ on behalf of their children can be just as challenging. All of which militates against nuanced decision-making about how best to protect children’s short and long-term interests … This is why we are in support of an ICO Code of Practice for Educational Settings that would enable school staff, parents and learners, the EdTech industry and researchers to responsibly collect, share and make use of children’s data in ways that support the latter’s agency over their ‘digital selves’ and more importantly, will support their flourishing”.
The duties of settings and data processers and rights appropriate to the stage of education and children’s capacity needs clarity and consistency. Staff need confidence to access and use data appropriately within the law. As the UNCRC’s General Comment No. 16 (2013) on State Obligations Regarding the Impact of the Business Sector on Children’s Rights set out over a decade ago,
“the realization of children’s rights is not an automatic consequence of economic growth and business enterprises can also negatively impact children’s rights”.
The educational setting is different from only commercial interactions or in regard to the data subjects being children. It is more complex because of the disempowered environment and its imbalance of power between the authority, the parents and the child. The additional condition is the fact that parents’ and children’s rights are interlinked, as exemplified in the right to education described in UDHR Article 26(3), which states:
“Parents have a prior right to choose the kind of education that shall be given to their children.”
A code is needed because the explicit safeguards are missing that the GDPR requires in several places but were left out of the UK Data Protection Act 2018 drafting. Clause 80 of the Bill—“Automated decision-making”—does not address the necessary safeguards of GDPR Article 23(1) for children. Furthermore, removing the protections of the balancing test under the recognised legitimate interest condition will create new risks. Clauses on additional further processing or changes to purpose limitation are inappropriately wide without child-specific safeguards. The volume, sensitivity and intrusiveness of identifying personal data collection in educational settings only increases, while the protections are only ever reduced.
Obligations specific to children’s data, especially
“solely automated decision-making and profiling”
and exceptions, need to be consistent with clear safeguards by design where they restrict fundamental freedoms. What does that mean for children in practice, where teachers are assumed to be the rights bearers in loco parentis? The need for compliance with human rights, security, health and safety, among other standards proportionate to the risks of data processing and respecting the UK Government’s accessibility requirements, should be self-evident and adopted in a code of practice, as recommended in the five rights in the Digital Futures Commission’s blueprint for educational data governance.
The Council of Europe Strategy for the Rights of the Child (2022-2027) and the UNCRC General Comment No. 25 on Children’s Rights and the Digital Environment make it clear that
“children have the right to be heard and participate in decisions affecting them”.
They recognise that
“capacity matters, in accordance with their age and maturity. In particular attention should be paid to empowering children in vulnerable situations, such as children with disabilities.”
Paragraph 75 recognises that surveillance in educational settings should not take place without the right to object and that teachers need training to keep up with technological developments.
Participation of young people themselves has not been invited in the development of this Bill and the views of young people have not been considered. However, a small sample of parent and pupil voices has been captured in the Responsible Technology Adoption Unit’s public engagement work together with the DfE in 2024. The findings back those of Defend Digital Me’s Survation poll in 2018 and show that parents do not know that the DfE already holds named pupil records without their knowledge or permission and that the data is given away to be reused by hundreds of commercial companies, the DWP, the Home Office and the police. It stated:
“There was widespread consensus that work and data should not be used without parents’ and/or pupils’ explicit agreement. Parents, in particular, stressed the need for clear and comprehensive information about pupil work and data use and any potential risks relating to data security and privacy breaches.”
A code of practice is needed to explain the law and make it work as intended for everyone. The aims of a code of practice for educational settings would be that adherence to a code creates a mechanism for controllers and processors to demonstrate compliance with the legislation or approve certification methods. It would give providers confidence in consistent and clear standards and would be good for the edtech sector. It would allow children, parents, school staff and systems administrators to build trust in safe, fair and transparent practice so that their rights are freely met by design and default.
Further, schools give children’s personal data to many commercial companies during a child’s education—not based on consent but assumed for the performance of a task carried out in the public interest. A code should clarify any boundaries of this lawful basis for commercial purposes, where it is an obligation on parents to provide the data and what this means for the child on reaching maturity or after leaving the educational setting.
Again, a code should help companies understand “data protection by design and default” in practice, and appropriate “significant legal effect”, the edges of “public interest” in data transfers to a third country, and how special categories of data affect children in schools. A code should also support children and families in understanding the effect of the responsibilities of controllers and processes for the execution or limitation of their own rights. It would set out the responsibilities of software platforms that profile users’ metadata to share with third parties, or of commercial apps signed up for in schools that offer adverts in use.
I hope that I have explained exactly why we believe that a code of conduct is required in educational settings. I beg to move.
Baroness Kidron (CB)
My Lords, I support and have added my name to Amendment 138 in the name of the noble Lord, Lord Clement-Jones. I will also speak to Amendment 141 in my name and those of the noble Lords, Lord Knight and Lord Russell, and the noble Baroness, Lady Harding.
Both these amendments propose a code of practice to address the use of children’s data in the context of education. Indeed, they have much in common. Having heard the noble Lord, Lord Clement-Jones, I have much in common with what he said. I associate myself entirely with his remarks and hope that mine will build on them. Both the amendments point to the same problem that children’s data is scandalously treated in our schools and educators need support; this is a persistent and known failure that both the DfE and the ICO have failed to confront over a period of some years.
Amendment 141 seeks to give a sense of exactly what an education code should cover. In doing so, it builds on the work of the aforementioned Digital Futures for Children centre at the LSE, which I chair, the work of Defend Digital Me, the excellent work of academics at UCL, and much of the work relating to education presented to the UN tech envoy in the course of drafting the UN global digital compact.
Subsection (1) of the proposed new clause would require the ICO to prepare a code of practice in connection with the provision of education. Subsection (2) sets out what the ICO would have to take into account, such as that education provision includes school management and safeguarding as well as learning; the different settings in which it takes place; the need for transparency and evidence of efficacy; and all the issues already mentioned, including profiling, transparency, safety, security, parental involvement and the provision of counselling services.
Subsection (3) would require the ICO to have regard to children’s entitlement to a higher standard of protection—which we are working so hard in Committee to protect—their rights under the UNCRC and their different ages and stages of development. Importantly, it also refers to the need and desire to support innovation in education and the need to ensure that the benefits derived from the use of UK children’s data accrue to the UK.
Subsection (4) lists those whom the commissioner would have to consult, and subsection (5) sets out when data processors and controllers would be subject to the code. Subsection (6) proposes a certification scheme for edtech services to demonstrate compliance with UK GDPR and the code. Subsection (7) would require edtech service and product providers to evidence compliance—importantly, transferring that responsibility from schools to providers. Subsection (8) simply defines the terms.
A code of practice is an enabler. It levels the playing field, sets terms for innovators, creates sandbox or research environments, protects children and supports schools. It offers a particularly attractive environment for developing the better digital world that we would all like to see, since schools are identifiable communities in which changes and outcomes could be measured.
Lord Knight of Weymouth (Lab)
My Lords, I was unsure whether to support Amendment 141, let alone speak to it, simply because I have a number of interests in this area and I should be clear about those. I chair Century-Tech Ltd, which is an AI edtech company; I am on the board of Educate Ventures Research Ltd, which offers advice to educators and schools on the use of AI in education; and I am a trustee of the Good Future Foundation, which does something similar.
I start by reminding the Committee of some of the benefits of technology and AI for education, so that there is a balance both in my speech and in the debate. Exciting practice is already taking place in the area of flipped learning, for example, where—putting issues of the digital divide to one side—in those classes and communities where there is good access to technology at home, the instructional element of learning can take place at home and school becomes a much more profoundly human endeavour, with teachers being able to save the time spent on the instructional element of teaching to bring that learning to life. I have some issues with AI in the world of tutoring in certain circumstances, but some of that can be very helpful in respect of flipped learning.
Project-based learning also becomes much more possible. That is very hard to teach but much more possible to teach by using AI tools to help link what is being learned in projects through to the curriculum. Teacher time can be saved and, by taking care of a lot of administrative tasks through AI, we can in turn make a significant contribution to the teacher retention crisis that is currently bedevilling our schools. There are novel assessment methods that can now be developed using AI, in particular making the traditional assessment method of the viva much more affordable and reliable. It is hard to use AI to cheat if you are being assessed orally.
Finally, an important element is preparation for work: if we want these young people to be able to leave school and thrive in a labour market where they must be able to collaborate effectively with machines, we need them to be able to experience that in a responsible and taught fashion in school.
However, dystopian issues can arise from an over- dependence on technology and from some of the potential impacts of using AI in education, too. I mentioned the digital divide—the 7.5 million families in this country are not connected to and confident to use the internet—and we discovered during Covid the device and data poverty that exists in this country. There is a possibility that poorer kids end up being taught by machines and not by human teachers at all. There is a danger that we do not shift our schools away from the slightly Victorian system that we have at the moment, which the noble Baroness, Lady Kidron, referenced at Second Reading. If we do not, we will end up with our children being outcompeted by machines. That overreliance on AI could also end up as privatisation by stealth because, if all the AI, technology and data are held by the private sector, and we are dependent on it, we will be beholden to the private sector however much we believe in the importance of the public good in our schools.
There are also problems of system design; I mentioned the Victorian system. I am hopeful that the curriculum and assessment review and the Children’s Wellbeing and Schools Bill that was published this week will help us. Whichever direction that review and those reforms take, we can be confident that edtech will respond. That is what it does; it responds to whatever regulation we pass, including in this Bill, over time and to whatever changes take place in the education system.
But tech needs data and it needs diversity of data. There is a danger that, if we close off access to data in this country, we will all end up using lots of AI that has been developed by using Chinese data, where they do not have the same misgivings about privacy, sharing each other’s data and acquiring data. We have to find a regime that works.
I do a bunch of work in international schooling as chair of COBIS—the Council of British International Schools—and I know of one large international school group, which I do not advise, that has done a deal with Microsoft around sharing all its pupil data, so that it can be used for Copilot. Obviously, Microsoft has a considerable interest in OpenAI, and we do not know exactly where that data is going. That points to some of the concerns that the noble Lord, Lord Clement-Jones, and the noble Baroness, Lady Kidron, have talked about.
During Covid, schools were strongly encouraged by the then Government to use either Google Classroom or Microsoft 365. Essentially, everyone was given a binary choice, and lots of data was therefore captured by those two large American corporations, which assisted them to develop further products. Any British alternative was, in essence, cut out, so we have good reason to be concerned in this area. That is why in the end I added my name and support to Amendment 141 in the name of the noble Baroness, Lady Kidron.
Children need privacy and they need digital rights. At the moment, those are exercised through parental consent for the use of these platforms and the capture of data, but I think it would be helpful to put that in a codified form, so that all those concerns have some sense of security about the regimes around which this works.
Ever since the abolition of Becta back in 2010, school leaders have been missing advice. Becta advice was used around the globe, as it was the authority on what works in technology and education. Sadly, the coalition got rid of it, and school leaders are now operating kind of blindfolded. We have 25,000 different school leaders buying technology, and very few of them really know what they are doing when faced with slick salespeople. Giving them some protection with a code would help their procurement.
The proof of the pudding will of course be in the eating—in the detail of the code—but I urge my noble friend the Minister to reflect carefully on the need for this, to talk to the DfE about it and to try to get some agreement. The DfE itself does not have the greatest track record on data and data protection. It has got into trouble with the ICO on more than one occasion.
My final cautionary tale, thanks to Defend Digital Me, is on the national pupil database, which was agreed in 2002 on the basis that children’s data would be kept private, protected and used only for research purposes—all the things that we are hearing in the debates on this Bill. Ten years later, that was all changed and 2,500 data- sharing arrangements followed that use that data, including for universal credit fraud detection. When parents allow their children’s data to be shared, they do not expect it to be used, down the line, to check universal credit entitlement. I do not think that was in the terms and conditions. There is an important issue here, and I hope that the Government are listening so that we make some progress.
Lord Russell of Liverpool (CB)
I shall speak very briefly, because the previous three speakers have covered the ground extremely well and made some extremely powerful arguments.
The noble Baroness, Lady Kidron, put her finger on it. The default position of departments such as the DfE, if they recognise there is a problem, is to issue guidance. Schools are drowning in guidance. If you talk to any headmaster or headmistress or the staff in charge of technology and trying to keep on top of it, they are drowning in guidance. They are basically flying blind when being asked to take some quite major decisions, whether it is about purchasing or the safeguards around usage or about measuring the effectiveness of some of the educational technology skills that are being acquired.
There is a significant difference between guidance and a clear and concrete code. We were talking the other day, on another group, about the need to have guardrails, boundaries and clarity. We need clarity for schools and for the educational technology companies themselves to know precisely what they can and cannot do. We come back again to the issue of the necessity of measuring outcomes, not just processes and inputs, because they are constantly changing. It is very important for the companies themselves to have clear guardrails.
The research to which the noble Baroness, Lady Kidron, referred, which is being done by a variety of organisations, found problems in the areas that we are talking about in this country, the United States, Iceland, Denmark, Sweden, the Netherlands, Germany and France—and that is just scratching the surface. Things are moving very quickly and AI is accelerating that even more. With a code you are drawing a line in the sand and declaring very clearly what you expect and do not expect, what is permissible and not permissible. Guidance is simply not sufficient.
Lord Kirkhope of Harrogate (Con)
My Lords, I make a brief intervention. I am not against these amendments —they are very useful in the context of the Bill. However, I am reflecting on the fact that, when we drafted GDPR, we took a six-year process and failed in the course of doing so to really accommodate AI, which keeps popping up every so often in this Bill. Every part of every amendment seems to have a new subsection referring to automative decisions or to AI generally.
Obviously, we are moving on to have legislation in due course on AI and I am sure that a number of pieces of legislation, including no doubt this one, will be able to be used as part of our overall package when we deal with the regulation of AI. However, although it is true that the UK GDPR gives, in theory, a higher standard of protection for children, it is important to consider that, in the context of AI, the protections that we need to have are going to have to be much greater—we know that. But if there is going to be a code of practice for children and educational areas, we need also to consider vulnerable and disabled people and other categories of people who are equally entitled to have, and particularly with regard to the AI elements need to have, some help. That is going to be very difficult. Most adults whom I know know less about AI than do children approaching the age of 18, who are much more knowledgeable. They are also more knowledgeable of the restrictions that will have to be put in place than are adults, who appear to be completely at sea and not even understanding what AI is about.
I make a precautionary point. We should be very careful, while we have AI dotted all the way through this, that when we specify a particular element—in this case, for children—we must be aware of the need to have protection in place for other groups, particularly in the context of this Bill and, indeed, future legislation.
Lord Lucas (Con)
My Lords, I very much support the thrust of these amendments and what the noble Lord, Lord Knight, said in support of and in addition to them. I declare an interest as a current user of the national pupil database.
The proper codification of safeguards would be a huge help. As the noble Baroness, Lady Kidron, said, it would give us a foundation on which to build. I hope that, if they are going to go in this direction, the Government will take an immediate opportunity to do so because what we have here, albeit much more disorganised, is a data resource equivalent to what we have for the National Health Service. If we used all the data on children that these systems generate, we would find it much easier to know what works and in what circumstances, as well as how to keep improving our education system.
The fact that this data is tucked away in little silos—it is not shared and is not something that can be used on a national basis—is a great pity. If we have a national code as to how this data is handled, we enable something like the use of educational data in the way that the NHS proposes to use health data. Safeguards are needed on that level but the Government have a huge opportunity; I very much hope that it is one they will take.
Viscount Camrose (Con)
I start by thanking all noble Lords who spoke; I enjoyed the vivid examples that were shared by so many of them. I particularly enjoyed the comment from the noble Lord, Lord Russell, about the huge gulf in difference between guidance, of which there is far too much, and a code that actually drives matters forward.
I will speak much more briefly because this ground has been well covered already. Both the noble Lord, Lord Clement-Jones, and the noble Baroness, Lady Kidron, seek to introduce codes of practice to protect the data of children in education services. Amendment 138 in the name of the noble Lord seeks to introduce a code on processing personal data in education. This includes consultation for the creation of such a code—a highly important element because the safety of this data, as well as its eventual usage, is of course paramount. Amendment 141 in the name of the noble Baroness, Lady Kidron, also seeks to set out a code of practice to provide heightened protections for children in education.
Those amendments are absolutely right to include consultation. It is a particularly important area of legislation. It is important that it does not restrict what schools can do with their data in order to improve the quality and productivity of their work. I was very appreciative of the words of the noble Lord, Lord Knight, when he sketched out some of the possibilities of what becomes educationally possible when these techs are wisely and safely used. With individual schools often responsible for the selection of technologies and their procurement, the landscape is—at the risk of understatement —often more complex than we would wish.
Alongside that, the importance of the AI Safety Institute’s role in consultation cannot be overstated. The way in which tech and AI have developed in recent years means that its expertise on how safely to provide AI to this particularly vulnerable group is invaluable.
I very much welcome the emphasis that these amendments place on protecting children’s data, particularly in the realm of education services. Schools are a safe place. That safety being jeopardised by the rapid evolution of technology that the law cannot keep pace with would, I think we can all agree, be unthinkable. As such, I hope that the Government will give careful consideration to the points raised as we move on to Report.
The Parliamentary Under-Secretary of State, Department for Business and Trade and Department for Science, Information and Technology (Baroness Jones of Whitchurch) (Lab)
My Lords, Amendment 138 tabled by the noble Lord, Lord Clement-Jones, and Amendment 141, tabled by the noble Baroness, Lady Kidron, and the noble Lord, Lord Knight, would both require the ICO to publish a code of practice for controllers and processors on the processing of personal data by educational technologies in schools.
I say at the outset that I welcome this debate and the contributions of noble Lords on this important issue. As various noble Lords have indicated, civil society organisations have also been contacting the Department for Science, Innovation and Technology and the Department for Education directly to highlight their concerns about this issue. It is a live issue.
I am grateful to my noble friend Lord Knight, who talked about some of the important and valuable contributions that technology can play in supporting children’s development and guiding teaching interventions. We have to get the balance right, but we understand and appreciate that schoolchildren, parents and schoolteachers must have the confidence to trust the way that services use children’s personal data. That is at the heart of this debate.
There is a lot of work going on, on this issue, some of which noble Lords have referred to. The Department for Education is already exploring ways to engage with the edtech market to reinforce the importance of evidence-based quality products and services in education. On my noble friend Lord Knight’s comments on AI, the Department for Education is developing a framework outlining safety expectations for AI products in education and creating resources for teachers and leaders on safe AI use.
I recognise why noble Lords consider that a dedicated ICO code of practice could help ensure that schools and edtech services are complying with data protection legislation. The Government are open-minded about exploring the merits of this further with the ICO, but it would be premature to include these requirements in the Bill. As I said, there is a great deal of work going on and the findings of the recent ICO audits of edtech service providers will help to inform whether a code of practice is necessary and what services should be in scope.
I hope that we will bear that in mind and engage on it. I would be happy to continue discussions with noble Lords, the ICO and colleagues at the Department for Education, outside of the Bill’s processes, about the possibility of future work on this, particularly as the Secretary of State has powers under the Data Protection Act 2018 to require the ICO to produce new statutory codes, as noble Lords know. Considering the explanation that I have given, I hope that the noble Lord, Lord Clement-Jones, will consider withdrawing his amendment at this stage.
Lord Clement-Jones (LD)
My Lords, I thank the Minister for her response and all speakers in this debate. On the speech from the noble Lord, Lord Knight, I entirely agree with the Minister and the noble Viscount, Lord Camrose, that it is important to remind ourselves about the benefits that can be achieved by AI in schools. The noble Lord set out a number of those. The noble Lord, Lord Russell, also reminded us that this is not a purely domestic issue; it is international across the board.
However, all noble Lords reminded us of the disbenefits and risks. In fact, the noble Lord, Lord Knight, used the word “dystopian”, which was quite interesting, although he gets very close to science fiction sometimes. He said that
“we have good reason to be concerned”,
particularly because of issues such as the national pupil database, where the original purpose may not have been fulfilled and was, in many ways, changed. He gave an example of procurement during Covid, where the choice was either Google or Microsoft—Coke or Pepsi. That is an issue across the board in competition law, as well.
There are real issues here. The noble Lord, Lord Russell, put it very well when he said that there is any number of pieces of guidance for schools but it is important to have a code of conduct. We are all, I think, on the same page in trying to find—in the words of the noble Baroness, Lady Kidron—a fairer and more equitable set of arrangements for children in schools. We need to navigate our way through this issue; of course, organisations such as Defend Digital Me and 5rights are seriously working on it.
Lord Holmes of Richmond
“Data use: definition of unauthorised access to computer programs or dataIn section 17 of the Computer Misuse Act 1990, at the end of subsection (5) insert—“(c) they do not reasonably believe that the person entitled to control access of the kind in question to the program or data would have consented to that access if they had known about the access and the circumstances of it, including the reasons for seeking it, and(d) they are not empowered by an enactment, by a rule of law, or by order of a court or tribunal to access of the kind in question to the program or data.””
Lord Holmes of Richmond (Con)
My Lords, it is a pleasure to take part in today’s Committee proceedings. In doing so, I declare my technology interests as set out in the register, not least as an adviser to Socially Recruited, an AI business. In moving Amendment 156A, I will also speak to Amendment 156B, and I thank the noble Lord, Lord Clement-Jones, for co-signing them.
We live in extraordinarily uncertain times, domestically and internationally. In many ways, it has always been thus. However, things are different and have accelerated, not least in the last two decades, because of the online environment and the digital selves that we find ourselves interacting with in a world that is ever changing moment by moment. These amendments seek to update an important statute that governs critical elements of how cybersecurity professionals in this nation seek to keep us all safe in these extraordinarily difficult times.
The Computer Misuse Act 1990 was introduced to defend telephony exchanges at a time when 0.5% of us were online. If that was the purpose of the Act—the statute when passed—that alone would suggest that it needs an update. Who among us would use our smartphone if we had had it for 34 years? Well, we could not—the iPhone has been around only since 2007. This whole world has changed profoundly in the last 20 years, never mind the last 34. It is not just that the Act needs to be updated because it falls short of how society and technology have changed in those intervening years; it needs, desperately and urgently, to be updated because it is currently putting every citizen in this nation at risk for want of being amended. This is the purpose of Amendments 156A and 156B.
The Computer Misuse Act 1990 is not only out of date but inadvertently criminalising the cybersecurity professionals we charge with the job of keeping us all safe. They oftentimes work, understandably, under the radar, behind not just closed but locked doors, doing such important work. Yet, for want of these amendments, they are doing that work, all too often, with at least one hand tied behind their back.
Let us take just two examples: vulnerability research and threat intelligence assessment and analysis. Both could find that cybersecurity professional falling foul of the provisions of the CMA 1990. Do not take my word for it: look to the 2024 annual report of the National Cyber Security Centre, which rightly and understandably highlights the increasing gap between the threats we face and its ability, and the ability of the cybersecurity professionals community, to meet those threats.
These amendments, in essence, perform one simple but critical task: to afford a legal defence for legitimate cybersecurity activities. That is all, but it would have such a profound impact for those whom we have asked to keep us safe and for the safety they can thus deliver to every citizen in our society.
Where is the Government’s work on updating the Computer Misuse Act 1990 in this respect? Will the Government take this opportunity to accept these amendments? Do they believe that these amendments would provide a materially positive benefit to our cybersecurity professionals and thus to our nation, and, if so, why would they not take this first opportunity to enact these amendments to this data Bill?
It is not time; it is well over time that these amendments become part of our law. If not now, when? If not these amendments, which amendments? If they do not accept these amendments, what will the Government say to all those people who will continue to be put in harm’s way for want of these protective provisions being passed? It is time to pass these amendments and give our cybersecurity professionals the tools they need. It is time, from the legislative perspective, to keep them safe so that they can do the self-same thing for all of us. It is time to cyber up. I beg to move.
Lord Clement-Jones (LD)
My Lords, I was delighted to see these amendments tabled by the noble Lord, Lord Holmes. He, the noble Lord, Lord Arbuthnot, and I, along with many other parliamentarians, have long argued for changes to the Computer Misuse Act. For context, the original Act was created largely in response to a famous incident in which professional hackers and a technology journalist broke into British Telecom’s Prestel system in the mid-1980s. The Bill received Royal Assent in June 1990, barely two months after Tim Berners-Lee and CERN made the world wide web publicly available for the first time. Who remembers Prestel? Perhaps this is the wrong House in which to ask that question.
As the noble Lord, Lord Holmes, explained, there is no statutory public interest defence in the Act. This omission creates a legal risk for cybersecurity researchers and professionals conducting legitimate activities in the public interest. The Post Office Horizon scandal demonstrated how critical independent computer system investigation is for uncovering systemic problems and highlighted the need for protected legal pathways for researchers and investigators to examine potentially flawed systems.
I am delighted that the noble Lord, Lord Vallance, is here for this set of amendments. His Pro-innovation Regulation of Technologies Review explicitly recommends incorporating such a defence to provide stronger legal protections for cybersecurity researchers and professionals engaged in threat intelligence research. This recommendation was rooted in the understanding that such a defence would have, it said,
“a catalytic effect on innovation”
within the UK’s cybersecurity sector, which possesses “considerable growth potential”.
Lord Kirkhope of Harrogate (Con)
My Lords, following on from what I said on earlier amendments, this is worse than what the noble Lord, Lord Clement-Jones, has just expressed. Indeed, I fully support the amendments of my noble friend Lord Holmes. However, this just demonstrates, yet again, that unless we pull ourselves together, with better smart legislation that moves faster, we will never ever catch up with developments in technology and AI. This has been demonstrated dramatically by these amendments. I express concerns that the Government move at a pace that government always moves at, but in this particular field it is not going to work. We are going to be disadvantaged and in serious trouble, unless we can move a bit faster.
Lord Arbuthnot of Edrom (Con)
My Lords, I rise briefly but strongly to support my noble friend Lord Holmes. The CyberUp campaign has been banging this drum for a long time now. I remember taking part in the debates in another place on the Computer Misuse Act 34 years ago. It was the time of dial-up modems, fax machines and bulletin boards. This is the time to act, and it is the opportunity to do so.
Lord Clement-Jones (LD)
My Lords, we ought to be mindful and congratulate the noble Lord on having been parliamentarian of the year as a result of his campaigning activities.
Lord Bethell (Con)
My Lords, I rise to make a brief but emphatic comment from the health constituency. We in the NHS have been victims of appalling cyber- hacking. The pathology labs in south London were hacked and that cost many lives. It is an example of where the world is going in the future unless we act promptly. The emphatic call for quick action so that government keeps up with world changes is really well made. I ask the Minister to reflect on that.
Viscount Camrose (Con)
My Lords, I, too, shall speak very briefly, which will save valuable minutes in which I can order my CyberUp Christmas mug.
Amendments 156A and 156B add to the definition of unauthorised access, so that it includes instances where a person who accesses data in the reasonable knowledge that the controller would not consent if they knew about the access or the reason for the access, and this person is not empowered to access by an enactment. Amendment 156B introduces defences to this new charge. Given the amount of valuable personal data held by controllers, as our lives have moved increasingly online—as many speakers in this debate have vividly brought out—there is absolutely clear merit not just in this idea but in the pace implied, which many noble Lords have called for. There is a need for real urgency here, and I look forward to hearing more detail from the Minister.
Baroness Jones of Whitchurch (Lab)
My Lords, I turn to Amendments 156A and 156B, tabled by the noble Lord, Lord Holmes. I understand the strength of feeling and the need to provide legal protections for legitimate cybersecurity activities. I agree with the noble Lord that the UK should have the right legislative framework to allow us to tackle the harms posed by cybercriminals. We have heard examples of some of those threats this afternoon.
I reassure the noble Lord that this Government are committed to ensuring that the Computer Misuse Act remains up to date and effective in tackling criminality. We will continue to work with the cybersecurity industry, the National Cyber Security Centre and law enforcement agencies to consider whether there are workable proposals on this. The noble Lord will know that this is a complex and ongoing issue being considered as part of the review of the Computer Misuse Act being carried out by the Home Office. We are considering improved defences by engaging extensively with the cybersecurity industry, law enforcement agencies, prosecutors and system owners. However, engagement to date has not produced a consensus on the issue, even within the industry, and that is holding us back at this moment—but we are absolutely determined to move forward with this and to reach a consensus on the way forward.
I think the noble Lord, Lord Clement-Jones, said in the previous debate that the amendments were premature, and here that is certainly the case. The specific amendments that the noble Lord has tabled are premature, because we need a stronger consensus on the way forward, notwithstanding all the good reasons that noble Lords have given for why it is important that we have updated legislation. With these concerns and reasons in mind, I hope that the noble Lord will feel able to withdraw his amendment.
Lord Holmes of Richmond (Con)
Could the Minister say a few words on some of those points of discourse and non-consensus, to give the Committee some flavour of the type of issues where there is no consensus as well as the extent of the gap between some of those perspectives?
Lord Clement-Jones (LD)
Just to follow up, have the Government formally responded to the original review from the noble Lord, Lord Vallance? That would be very helpful as well, in unpacking what were clearly extremely well-informed recommendations. It should, no doubt, be taken extremely seriously.
Baroness Jones of Whitchurch (Lab)
I can tell the noble Lord, Lord Holmes, that we published our analysis of the consultation responses to the previous Home Office investigation in November 2023, so all those mixed responses are on the record. It was therefore concluded by the Government that further work needed to be done on this. On my noble friend’s report, was there a government response?
Lord Vallance of Balham (Lab)
Yes, the Government accepted the recommendations in full.
Lord Clement-Jones (LD)
Before the Minister sits down or stands up or whatever the appropriate phrase should be, I very much hope that, since the previous Government gave that indication, this Government will take that as a spur to non-glacial progress. I hope that at least the speed might get up to a number of miles per hour before too long.
Lord Holmes of Richmond (Con)
My Lords, I thank all noble Lords who have taken part in this important debate and, indeed, the Minister for her thoughtful response. We find ourselves in a position of extraordinary good fortune when it comes to these and many other amendments, not least in the area of artificial intelligence. We had a first-class report from the then Sir Patrick Vallance as CSA. It is not often in life that in a short space of time one is afforded the opportunity in government of bringing much of that excellent work into being through statute, regulation, codes and other guidance. I await further steps in this area.
There can barely be, in many ways, a more serious and pressing issue to be addressed. For every day that we delay, harms are caused. Even if the Government were only to do this on their growth agenda, much spoken of, this would have an economic benefit to the United Kingdom. It would be good to meet the Minister between Committee and Report to see if anything further can be done but, from my perspective and others, we will certainly be returning to this incredibly important issue. I beg leave to withdraw the amendment.
Baroness Kidron
Member’s explanatory statement
This amendment removes the Secretary of State’s discretion on whether to lay regulations under Clause 123 and sets a time limit for laying them before Parliament.
Baroness Kidron (CB)
My Lords, I shall also speak to Amendment 198 in my name and register my support for the amendments in the name of the noble Lord, Lord Bethell, to which I have added my name. Independent research access is a very welcome addition to the Bill by the Government. It was a key recommendation of the pre-legislative scrutiny committee on the Online Safety Bill in 2021 and I know that I speak for many colleagues in the academic field, as well as many civil society organisations, who are delighted by its swift and definitive inclusion in the Bill.
The objective of these amendments is not to derail the Government’s plans, but rather to ensure that they happen and to make the regime work for children and the UK’s world-class academic institutions and stellar civil society organisations, ensuring that we can all do high-quality research about emergent threats to children and society more broadly.
Amendment 197 would ensure that the provisions in Clause 123 are acted on by removing the Government’s discretion as to whether or not they introduce regulations. It would also impose a deadline of 12 months for the Government to do so. I have said this before, but I have learnt the hard way that good intentions and warm words from the Dispatch Box are a poor substitute for clear provisions in law. A quick search of the Bill reveals that there are 119 uses of the word “must” and 262 uses of the word “may”. Clearly, they are being used to create different obligations or expectations. The Minister may say that this amendment is not needed and that, for all intents and purposes, we can take the word “may” as a “must” or a “will”, but I would prefer to see it in black and white. In fact, if the Government have reserved discretion on this point, I would like to understand exactly what that means for research.
Amendment 198 seeks to ensure that the regulations will enable independent researchers to research how online risks and harms impact different groups, especially vulnerable users including children. We have already discussed the fact that online harms are not experienced equally by users: those who are most vulnerable offline are often the most vulnerable online. In an earlier debate, I talked about the frustrations experienced when tech companies do not report data according to age groups. In failing to do so, it is possible to hide the reality that children are disproportionately impacted by certain risks and harms. This amendment would ensure that children and other vulnerable groups can be studied in isolation, rather than leaving independent researchers to pick through generalised datasets to uncover where harm is amplified and for whom.
I will leave the noble Lord, Lord Bethell, to explain his amendments, but I will just say why it is so important that we have a clear path to researcher access. It is fundamental to the success of the online safety regime.
Many will remember Frances Haugen, the Facebook whistleblower, who revealed the extent to which Meta knew, through its own detailed internal research, how harmful their platforms actually are to young people. Meta’s own research showed that:
“We make body image issues worse for one in three girls”.
Some 32% of teen girls said that, when they have felt bad about their bodies, Instagram has made them feel worse. Were it not for a whistleblower, this research would never have been made public.
After a series of evidence disclosures to US courts as a result of the legal action by attorneys-general at state level, we have heard whistleblowers suggest, in evidence given to the EU, that there will be a new culture in some Silicon Valley firms—no research and no emails. If you have something to say, you will have to say it in person so that it cannot be used against them in court. The irony of that is palpable given the struggle that we are having about user privacy, but it points to the need for our research regime to be water- tight. If the companies are not looking at the impact of their own services, we must. I hope that the Government continue their leadership on this issue and accept the amendments in the spirit that they are being put forward.
I have another point that I want the Minister to clarify. I apologise, because I raised this in a private meeting but I have forgotten the answer. Given the number of regulatory investigations, proceedings and civil litigations in which tech companies are engaged, I would like some comfort about the legal exemption in these clauses. I want to understand whether it applies only to advice from and between lawyers or exempts data that may negatively impact companies’ defence or surface evidence of safety failures or deficiencies. The best way that I have of explaining my concern is: if it is habitual for tech companies to cc a lawyer in all their communications on product safety, trust and safety, and so on, would that give them legal privilege?
Finally, I support the noble Lord, Lord Clement-Jones, in his desire for a definition of independent researchers. I would be interested to hear what the Minister has to say on that. I beg to move.
Lord Bethell (Con)
My Lords, I will speak to my Amendments 198A and 198C to 198F. I also support Amendments 197, 198 and 198B, to which I have added my name, all of which address the issue of data for researchers.
As was put very thoughtfully by the noble Baroness, Lady Kidron, platforms are not making decisions about their services with due regard to product safety or with independent oversight. Ofcom’s work enforcing the Online Safety Act will significantly shift towards accountability, in some part, but it makes no provision at the moment on researchers’ data access, despite civil society and academic researchers being at the forefront of highlighting online harms for a decade. The anecdotes that the noble Baroness just gave were a very powerful testimony to the importance of that. We are, in fact, flying completely blind, making policy and, in this Room, legislation without data, facts and insight about the performance and algorithms that we seek to address. Were it not for the whistleblowers, we would not have anything to go on and we cannot rely on whistleblowers to guide our hands.
Rectifying this admission is in the Bill, and I am enormously grateful to the Minister and to the role of my noble friend Lord Camrose for putting it in the Bill. It is particularly important, because the situation with data for researchers has deteriorated considerably, even in the last 18 months—with Meta shutting CrowdTangle and X restricting researchers’ access to its API. The noble Baroness, Lady Kidron, spoke about what the whistleblowers think, and they think that this is going to get a lot worse in the future.
I welcome the inclusion of these provisions in the Bill. They will be totally transformational to this sector, bringing a level of access to serious analysts and academics, so we can better understand the impact of the digital world, for both good and bad. A good example of the importance of robust research to inform policy-making was the Secretary of State’s recent announcement that the Government were launching a
“research project to explore the impact of social media on young people’s wellbeing and mental health”.—[Official Report, Commons, 20/11/24; col. 250.]
That project will not be very effective if the researchers cannot access the data, so I very much hope that these provisions will be enforced before they start spending money on that.
To be effective and to have the desired effect, we need to ensure that the data for researchers regime, as described in the Bill, is truly effective and cannot be easily brushed off. That is why the Government need to accept the amendments in this group: to bring some clarity and to close loopholes in the scheme as it is outlined in the Bill.
I will briefly summarise the provisions in the amendments in my name. First, we need to make researcher access regulations enforceable in the same way as other requirements in the Online Safety Act. The enforcement provisions in that Act were strengthened considerably as it passed through this House, and I believe that the measures for data for researchers need to be given the same rocket boosters. Amendment 198D will mean that regulated services will be required to adhere to the regime and give Ofcom the power to levy proper remedial action if regulated services are obfuscating or non-compliant.
Secondly, we need to ensure that any contractual provision of use, such as a platform’s terms of service, is unenforceable if it would prevent
“research into online safety matters”,
as defined in the regulations. This is an important loophole that needs to be closed. It will protect UK researchers carrying out public interest research from nefarious litigation over terms of service violations as platforms seek to obfuscate access to data. We have seen this practice in other areas.
Thirdly, we need to clarify that researchers carrying out applicable research into online safety matters in the UK will be able to access information under the regime, regardless of where they are located. This is a basic point. Amendment 198E would bring the regime in line with the Digital Services Act of the EU and allow the world’s best researchers to study potential harm to UK users.
Ensuring robust researcher access to data contributes to a great ecosystem of investigation and scrutiny that will help to enforce an effective application of the law, while also guarding against overreach in terms of moderating speech. It is time to back UK civil society and academic researchers to ensure that policy-making and regulatory enforcement is as informed as possible. That is why I ask the Minister to support these measures.
Lord Russell of Liverpool (CB)
My Lords, I will speak briefly. I added my name in support of Amendments 197 and 198, tabled by the noble Baroness, Lady Kidron. We do not need to rehearse the arguments as to why children are a distinct group who need to be looked at in a distinctive way, so I will not repeat those arguments.
I turn to the excellent points made in the amendments in the name of the noble Lord, Lord Bethell. Data access for researchers is fundamental. The problem with statutory bodies, regulators and departments of state is that they are not designed and set up to be experts in researching some of the more arcane areas in which these algorithms are developed. This is leading-edge stuff. The employees in these platforms—the people who are designing and tweaking these very clever algorithms—are coming from precisely the academic and research institutions that are best placed to go into those companies and find out what they are doing. In many cases, it is their own graduates and PhDs who are doing it. They are the best qualified people to look at what is going on, because they will understand what is going on. If somebody tries to obfuscate, they will see through them immediately, because they can understand that highly sophisticated language.
If we do not allow this, we will be in the deeply uncomfortable position of relying on brave people such as Frances Haugen to run the huge reputational, employability and financial risks of becoming a whistleblower. A whistleblower who takes on one of those huge platforms that has been employing them is a very brave person indeed. I would feel distinctly uncomfortable if I thought that we were trying to guard our citizens, and particularly our children, against what some of these algorithms are trying to do by relying on the good wishes and chances of a whistleblower showing us what was going on. I support all these amendments very strongly.
Lord Arbuthnot of Edrom (Con)
My Lords, I shall speak very briefly. I have a great deal of agreement with what the noble Baroness, Lady Kidron, the noble Lord, Lord Russell, and my noble friend Lord Bethell have said. I am rising to nitpick; I apologise for that, but I suppose that is what Committee is for.
The final line of proposed new subsection (da), to be inserted by Amendment 198, refers to
“different characteristics including gender, race, ethnicity, disability, sexuality, gender”.
On our first day in Committee, I raised the importance of the issue of sex, which is different from gender or sexuality. We need to make sure that we get the wording of this amendment, if it were to be accepted by the Government, absolutely right.
Lord Knight of Weymouth (Lab)
My Lords, I shall also speak extremely briefly, as one of the three veterans of the Joint Committee present in Committee today, to reinforce my support for these amendments. The Government should be congratulated on Clause 123. It is welcome to see this movement but we want to see this done quickly. We want to ensure that it is properly enforceable, that terms of service cannot be used to obstruct access to researchers, as the noble Lord, Lord Bethell, said, and that there is proper global access by researchers, because, of course, these are global tech companies and UK users need to be protected through transparency. It is notable that, in the government consultation on copyright and AI published yesterday, transparency is a core principle of what the Government are arguing for. It is this transparency that we need in this context, through independent researchers. I strongly commend these amendments to the Minister.
The Earl of Erroll (CB)
My Lords, I would like to just make one comment on this group. I entirely agree with everything that has been said and, in particular, with the amendments in the name of the noble Baroness, Lady Kidron, but the one that I want to single out—it is why I am bothering to stand up—is Amendment 197, which says that the Secretary of State “must” implement this measure.
I was heavily scarred back in 2017 by the Executive’s refusal to implement Part 3 of the Digital Economy Act in order to protect our children from pornography. Now, nearly eight years later, they are still not protected. It was never done properly, in my opinion, in the then Online Safety Bill either; it still has not been implemented. I think, therefore, that we need to have a “must” there. We have an Executive who are refusing to carry out the issue from Parliament in passing the legislation. We have a problem, but I think that we can amend it by putting “must” in the Bill. Then, we can hold the Executive to account.
Lord Clement-Jones (LD)
My Lords, the trouble with this House is that some have long memories. The noble Earl, Lord Erroll, reminded us all to look back, with real regret, at the Digital Economy Act and the failure to implement Part 3. I think that that was a misstep by the previous Government.
Like all of us, I warmly welcome the inclusion of data access provisions for researchers studying online safety matters in Clause 123 of the Bill. As we heard from the noble Baroness, Lady Kidron, and the noble Lord, Lord Knight, this was very much unfinished business from the Online Safety Act. However, I believe that, in order for the Bill to be effective and have the desired effect, the Government need to accept the amendments in the names of the noble Baroness, Lady Kidron, and the noble Lord, Lord Bethell. In terms of timeframe, the width of research possible, enforceability, contractual elements and location, they cover the bases extremely effectively.
The point was made extremely well by the noble Lords, Lord Bethell and Lord Russell, that we should not have to rely on brave whistleblowers such as Frances Haugen. We should be able to benefit from quality researchers, whether from academia or elsewhere, in order to carry out this important work.
My Amendment 198B is intended as a probing amendment about the definition of researchers under Clause 123, which has to be carefully drawn to allow for legitimate non-governmental organisations, academics and so on, but not so widely that it can be exploited by bad actors. For example, we do not want those who seek to identify potential exploits in a platform to use this by calling themselves “independent researchers” if they simply describe themselves as such. For instance, could Tommy Robinson seek to protect himself from liabilities in this way? After all, he called himself an “independent journalist” in another context when he clearly was not. I hope that when the Government come to draw up the regulations they will be mindful of the need to be very clear about what constitutes an independent or accredited researcher, or whatever phrase will be used in the context.
Viscount Camrose (Con)
My Lords, although I have no amendments in this group, I will comment on some of them. I might jump around the order, so please forgive me for that.
Amendment 197 would change Clause 123 so that the Secretary of State must, as soon as reasonably practicable and no later than 12 months after the Act is passed, make regulations requiring regulated services to provide information for the purposes of research into online safety. This is clearly sensible. It would ensure that valuable research into online safety may commence as soon as possible, which would benefit us all, as speakers have made abundantly clear. To that end, Amendment 198D, which would ensure that researcher access is enforceable in the same way as other requirements under the Online Safety Act, would ensure that researchers can access valuable information and carry out their beneficial research.
I am still left with some curiosity on some of these amendments, so I will indicate where I have specific questions to those who have tabled them and hope they will forgive me if I ask to have a word with them between now and Report, which would be very helpful. In that spirit, I turn to Amendment 198B, which would allow the Secretary of State to define the term “independent researcher”. I ask the noble Lord, Lord Clement-Jones, who tabled the amendment, whether he envisages the Secretary of State taking advice before making such regulations and, if so, from whom and in what mechanism. I recognise that it is a probing amendment, but I would be keen to understand more.
I am also keen to understand further from my noble friend Lord Bethell and the noble Baroness, Lady Kidron, why, under Amendment 198A, the Secretary of State would not be able to make regulations providing for independent research into the “enforcement of requirements” under these regulations. Again, I look forward to discussing that with them.
I have some concerns about Amendment 198, which would require service providers to give information pertaining to age, stage of development, gender, race, ethnicity, disability and sexuality to researchers. I understand the importance of this but my concern is that it would require the disclosure of special category data to those researchers. I express reservations, especially if the data pertains to children. Do we have the right safeguards in place to address the obviously heightened risks here?
Additionally, I have some concerns about the provisions suggested in Amendment 198E. Should we allow researchers from outside the United Kingdom to require access to information from regulated service providers? Could this result in data being transferred into jurisdictions where there are less stringent data protection laws?
Baroness Jones of Whitchurch (Lab)
My Lords, I thank noble Lords who have welcomed the provisions in the Bill. I very much appreciate that we have taken on board the concerns that were raised in the debates on the previous legislation. I thank the noble Baroness, Lady Kidron, and the noble Lords, Lord Bethell and Lord Clement-Jones, for their amendments.
I will speak first to Amendment 197, tabled by the noble Baroness, Lady Kidron, which would compel the Secretary of State to create a framework and to do so within 12 months of passage. I understand and share her desire to ensure that a framework allowing researchers access is installed and done promptly. This is precisely why we brought forward this provision. I reassure her that the department will consult on the framework as soon as possible after the publication of Ofcom’s report.
Turning to Amendments 198 and 198B, tabled by the noble Baroness, Lady Kidron, and the noble Lord, Lord Clement-Jones, respectively, Clause 123 provides the Secretary of State with the power to make regulations relating to researchers’ access to data. I can reassure noble Lords that it does not limit the regulations to the non-exhaustive list of examples provided. I agree that fair and proportionate criteria for who is considered a researcher are critical to the success of the future framework. I reassure noble Lords that in the provision as currently written the Secretary of State can include in the design of the framework the specific requirements that a person must meet to be considered a researcher.
Turning to Amendments 198A and 198D, tabled by the noble Lord, Lord Bethell, while I am sympathetic to his desire to provide a future framework with the robust enforcement powers of the OSA, I assure him that as the provision is written, the Secretary of State can already use the existing enforcement powers of the OSA to support a future framework. Furthermore, should the evidence suggest that additional or different measures would be more effective and appropriate, this provision allows the Secretary of State the flexibility to introduce them.
Turning next to Amendments 198C and 198E, tabled by the noble Lord, Lord Bethell, I understand the spirit of these amendments and note the importance of this issue, given the global nature of the online world. It is entirely reasonable to allow researchers who are not based in the UK to utilise our researcher access framework, as long as the subject of their research is the experience of UK users online. I reassure him that the provisions as drafted already allow the Secretary of State to make regulations permitting non-UK-based researchers to use the framework where appropriate. We plan to use the evidence gathered through our own means and through Ofcom’s report to set out who will be eligible to use the framework in the secondary legislation.
Finally, turning to Amendment 198F, I am aware of the concern that researchers have encountered blockages to conducting research and I am sympathetic to the intentions behind the amendment. We must ensure that researchers can use the future framework without fear of legal action or other consequences. I am conscious that the noble Baroness, Lady Kidron, asked me a specific question about legal exemptions and I will write to her to make that answer much clearer. I reassure noble Lords that the Government are considering the specific issues that the noble Lord raises. For these reasons, I ask that the amendments not be pressed while the Government consider these issues further and I am of course happy to engage with noble Lords in the meantime.
Baroness Kidron (CB)
My Lords, I thank the Minister and everyone who spoke. I do not think I heard an answer to the may/must issue and I think I need to say that just relying on Ofcom’s report to set the framework for the regime is not adequate, for two reasons. First, it is no news to the Committee that there is a considerable amount of disquiet about how the Online Safety Act has been reinterpreted without Parliament’s intention. During the passage of this Bill, we are trying to be really clear—we will win some and we will lose some—on the face of the Bill what Parliament’s intention is, so that the regulator really does what we agree, because that subject is currently quite contentious.
This is a new area and a lot of the issues that the Minister and, indeed, the noble Viscount, Lord Camrose, raised are here to be sorted out to make sure that we understand collectively what it will look like. Having said that, I would like the Government to have heard that we do not wish to rest on the actions of whistleblowers but we will be increasingly forced to do so if we do not have a good regime. We must understand the capacity of this sector to go to court. We are in court everywhere, all over the world; the sector has deep pockets.
Finally, I welcome the nitpicking of the noble Lord, Lord Arbuthnot. Long may he nitpick. We will make sure that he is content before Report. With that, I beg leave to withdraw the amendment.
Viscount Camrose
“Data risks from systemic competitors and hostile actors
Data risks from systemic competitors and hostile actors(1) The Secretary of State, in consultation with the Information Commissioner, must conduct a risk assessment on the data privacy risks associated with genomics and DNA companies that are headquartered in countries the government determines to be systemic competitors and hostile actors.(2) Within 12 months of the day on which this Act is passed, the Secretary of State must present a report on the risk assessment in subsection (1) to Parliament and consult the intelligence and security agencies on the findings, taking into account the need to not make public information critical to national defence or ongoing operations.(3) This risk assessment must evaluate—(a) the degree of access granted to foreign entities, particularly those linked to systemic competitors and hostile actors, to genomic and DNA data collected within the United Kingdom,(b) the potential for genomic and DNA data to be exfiltrated outside of the United Kingdom,(c) the potential misuse of United Kingdom genomic and DNA data for dual-use or nefarious purposes,(d) the potential for such data to be used in a manner that could compromise the privacy or security of United Kingdom citizens or undermine national security and strategic advantage.(4) The risk assessment must consider and include, but is not limited to—(a) an analysis of the data handling and storage practices of genomics companies that are based in countries designated as systemic competitors and hostile actors, (b) an independent audit, including digital and physical forensic examination, at any company site that could have access to United Kingdom genomics data, and(c) evidence of clear disclosure statements to consumers of products and services from genomics companies subject to data sharing requirements in the countries where they are headquartered.(5) This risk assessment must be conducted as frequently as deemed necessary by the Secretary of State or the Information Commissioner to address evolving threats and ensure continued protection of the genomics sector from entities controlled, directly or indirectly, by countries designated as systemic competitors and hostile actors.(6) The Secretary of State may issue directives or guidelines based on the findings of the risk assessment to ensure compliance by companies or personnel operating within the genomics sector in the United Kingdom, safeguarding against identified risks and vulnerabilities to data privacy.”Member’s explanatory statement
This amendment seeks to ensure sufficient scrutiny of emerging national security and data privacy risks related to advanced technology and areas of strategic interest for systemic competitors and hostile actors. It aims to inform the development of regulations or guidelines necessary to mitigate risks and protect the data privacy of UK citizens’ genomics data and the national interest. It seeks to ensure security experts can scrutinise malign entities and guide researchers, consumers, businesses, and public bodies.
Viscount Camrose (Con)
My Lords, the UK is a world leader in genomics research. This research will no doubt result in many benefits, particularly in the healthcare space. However, genomics data can be, and increasingly is, exploited for deeply concerning purposes, including geostrategic ones.
Western intelligence agencies are reportedly becoming increasingly concerned about China using genomic data and biotechnology for military purposes. The Chinese Government have made it clear that genomics plays a key part in the civilian-military doctrine. The 13th five-year plan for military-civil fusion calls for the cross-pollination of military and civilian technology such as biotechnology. This statement, taken in conjunction with reports that the Beijing Genomics Institute—the BGI—in collaboration with the People’s Liberation Army, is looking to make ethnically Han Chinese soldiers less susceptible to altitude sickness, makes for worrying reading. Genetically engineered soldiers appear to be moving out of fiction and towards reality.
The global genomics industry has grown substantially as a result of the Covid-19 pandemic and gene giant BGI Group and its affiliated MGI Tech have acquired large databases of DNA. Further, I note that BGI has widespread links to the Chinese state. It operates the Government’s key laboratories and national gene bank, itself a vast repository of DNA data drawn from all over the world. A Reuters investigation found that a prenatal test, NIFTY, sold by BGI to expectant mothers, gathered millions of women’s DNA data. This prenatal test was developed in collaboration with the Chinese military.
For these reasons, I think we must become far more protective of genomic data gathered from our population. While many researchers use genomic data to find cures for terrible diseases, many others, I am afraid, would use it to do us harm. To this end, I have tabled Amendment 199 to require the Secretary of State and the Information Commissioner to conduct frequent risk assessments on data privacy associated with genomics and DNA companies headquartered in countries that are systemic competitors or hostile actors. I believe this will go some way to preventing genomic data transfer out of the UK and to countries such as China that may use it for military purposes. I beg to move.
Lord Bethell (Con)
My Lords, I strongly support this amendment. As a former Minister, I was at the front line of genomic data and know how powerful it currently is and can be in the future. Having discussed this with the UK Biobank, I know that the issue of who stores and processes genomic data in the UK is a subject of huge and grave concern. I emphasise that the American Government have moved on this issue already and emphatically. There is the possibility that we will be left behind in global standards and will one day be an outlier if we do not close this important and strategically delicate loophole. For that reason, I strongly support this amendment.
The Earl of Erroll (CB)
My Lords, I was involved in an ethics committee that looked at genomics and cancer research some years ago, and this is very important. If research could be done on different genomic and racial types, it could be used against us adversely at some point. So there is a lot of sense in this.
Baroness Jones of Whitchurch (Lab)
My Lords, I thank the noble Viscount, Lord Camrose, for moving this amendment, which raises this important question about our genomics databases, and for the disturbing examples that he has drawn to our attention. He is right that the opportunities from harnessing genomic data come with very real risks. This is why the Government have continued the important work of the UK Biological Security Strategy of 2023, including by conducting a full risk assessment and providing updated guidance to reduce the risks from the misuse of sensitive data. We plan to brief the Joint Committee on the National Security Strategy on the findings of the risk assessment in the new year. Following that, I look forward to engaging with the noble Viscount on its outcome and on how we intend to take these issues forward. As he says, this is a vital issue, but in the meantime I hope he is prepared to withdraw his amendment.
Viscount Camrose (Con)
I thank the Minister for her answer, and I very much accept her offer of engagement. I will make a few further brief comments about the importance of this amendment, as we go forward. I hope that other noble Lords will consider it carefully before Report.
I will set out a few reasons why I believe this amendment can benefit both the Bill and this country. The first is its scope. The amendment will allow the Secretary of State and the Information Commissioner to assess data security risks across the entirety of the genomic sector, covering consumers, businesses, citizens and researchers who may be partnering with state-linked genomics companies.
The second reason is urgency. DNA is regularly described as the “new gold” and it represents our most permanent identifier, revealing physical and mental characteristics, family medical history and susceptibility to diseases. Once it has been accessed, the damage from potential misuse cannot be researched, and this places a premium on proactively scrutinising the potential risks to this data.
Thirdly, there are opportunities for global leadership. This amendment offers the UK an opportunity to take a world-leading role and become the first European country to take authoritative action to scrutinise data vulnerabilities in this area of critical technology. Scrutinising risks to UK genomic data security also provides a foundation to foster domestic genomics companies and solutions.
Fourthly, this amendment would align the UK with key security partners, particularly, as my noble friend Lord Bethell mentioned, the United States, which has already blacklisted certain genomics companies linked to China and taken steps to protect American citizens’ DNA from potential misuse.
The fifth and final reason is protection of citizens and consumers. This amendment would provide greater guidance and transparency to citizens and consumers whose DNA data is exposed to entities linked to systemic competitors. With all of that said, I thank noble Lords for their consideration and beg leave to withdraw my amendment.
Baroness Kidron
“Offence to use personal data or digital information to create digital models or files that facilitate the creation of AI- or computer-generated child sexual abuse material(1) A person commits an offence if they—(a) collect, scrape, possess, distribute or otherwise process personal data or digital information with the intention of using it, or attempting to use it, to create or train a digital model which enables the creation of AI- or computer-generated child sexual abuse material or priority illegal content;(b) use personal data or digital information to create, train or distribute or attempt to create, train or distribute a digital file or model that has been trained on child sexual abuse material or priority illegal content, or which enables the creation of AI- or computer-generated child sexual abuse material or priority illegal content;(c) collate, or attempt to collate, digital files or models based on personal data or digital information that, when combined, enable the creation of AI- or computer-generated child sexual abuse material or priority illegal content;(d) possess, or attempt to possess, a digital file or model based on personal data or digital information with the intention of using it to produce or gain access to AI- or computer-generated child sexual abuse material or priority illegal content.(2) For the purposes of this section, “AI- or computer-generated child sexual abuse material or priority illegal content” includes images, videos, audio including voice, chatbots, material generated by large language models, written text, computer files and avatars. (3) A person who commits an offence under subsection (1) is liable to the sentences set out in section 160 of the Criminal Justice Act 1988 (possession of indecent photograph of child) and section 6 of the Protection of Children Act 1978 (punishments) for the equivalent offences.(4) For the purposes of this section, “priority illegal content” is content that meets the definition of “priority illegal content” set out in section 59 of the Online Safety Act 2023.”Member's explanatory statement
It is illegal in the UK to possess or distribute child sexual abuse material including AI- or computer-generated child sexual abuse material. However, while the content is clearly covered by existing law, the mechanism that enables their creation – i.e. the files trained on or trained to create such material – is not. This amendment seeks to address that gap.
Baroness Kidron (CB)
My Lords, Amendment 203 is in my name and the names of the noble Lords, Lord Bethell, Lord Stevenson and Lord Clement-Jones. I thank noble Lords wholeheartedly for their support for this measure through two versions of this Bill. I believe that I speak for all signatories in recognising the support of a huge number of colleagues in both Houses and all parties who have expressed their support for this amendment.
It is my understanding that we are going to hear good news from the Dispatch Box. In the event that I am wrong, I shall have more to say once we have heard from the Minister. In the meantime, I want to explain what the problem is that the amendment seeks to solve.
It is illegal in the UK to possess or distribute child sexual abuse material, including AI-generated or computer-generated child sexual abuse material. The laws that the police use to enforce against CSAM are Section 1 of the Protection of Children Act 1978 and Section 160 of the Criminal Justice Act 1988, both of which create offences in respect of indecent photographs or pseudo-photographs of a child. AI content depicting child sexual abuse is illegal under these laws, but creating and distributing the software models needed to generate them is not, which means that those building and distributing software that allows paedophiles to generate bespoke child sexual abuse material have operated with impunity.
There are many services that allow anyone to take any public image and put it in a false situation. Although I have argued elsewhere that AI images should carry a mark of provenance, these services are not the subject of this amendment. This amendment is laser focused on criminalising AI models that are trained on or trained to create child sexual abuse material. They are specific, specialist and currently beyond the reach of the police. The models blend images of children—known children, stock photos, images scraped from social media, school websites or synthetic, fabricated AI depictions of children—with existing CSAM or pornography, and they allow paedophiles to generate bespoke CSAM scenarios of unimaginable depravity, as they are unmitigated by any restrictions that organise the reality of the world. If someone can think, type or say it, they can make it so.
Many of the generative models are distributed for free, but more specialist models are provided on subscription for less than £50 per month. This payment provides any child sexual offender with the ability to generate limitless—and I do mean limitless—child sexual abuse images. But while the police can take action against those who possess those images, they are unable to take action against those who make it possible to do so: the means of production.
A surprising number of people think that AI abuse is a victimless crime, and I want to make it clear that it is not. First, who would be comfortable with the image of their child or grandchild or their neighbour’s child being used in this way? Anyone, adult or child, can appear in AI-generated CSAM. I am not going to say how it can be done, because I do not want my words to be a set of instructions on the public record—but the reality is, any one of us, woman or man, though 99% are women, boy or girl, though it is mostly girls, is a potential victim. If your image is used in this way, you are a victim; if you are forced to watch or copy such imagery, you are a victim; and if you are a child whose real-life abuse is not caught because you are lost in a sea of AI-generated material, you are a victim. Then there is the normalisation of sexual violence against children, which poisons relationships—intimate, familial, across generations, genders and sexes. This is not a victimless crime.
Baroness Owen of Alderley Edge (Con)
My Lords, I rise today in support of Amendment 203 in the name of the noble Baroness, Lady Kidron. I declare an interest as a recent guest of Google at its Future Forum policy conference. I apologise for not being able to make Second Reading and for not being present for my last amendment; as a newer Peer, I am very new to this and still learning as I go. I am very grateful to the noble Baroness, Lady Kidron, for stepping in.
I commend the wording of the noble Baroness’s amendment, which tackles the full process of training these models, from the collection of data or images to use as training data, all the way through to possessing a model. With these apps easily downloadable on app stores, there is a lack of friction in the process. This means that we have seen horrific cases of children using these apps in schools across the world with devastating consequences. In summer, I met the father of a little girl who had been bullied in this way and sadly took her own life.
I am very grateful to the noble Baroness, Lady Kidron, for this thoughtful and comprehensive amendment, which seeks to future-proof with its inclusion of avatars. We have already seen these threats evolving in the metaverse. I encourage the Government to adopt this amendment so that we can begin to see an end to this abusive market.
I turn to my Amendment 211G. I am very grateful to the noble Lords, Lord Clement-Jones and Lord Browne of Ladyton, and the noble Baroness, Lady Kidron, for putting their names to it. Noble Lords may recognise it from my Private Member’s Bill on non-consensual sexually explicit images and videos. I will keep my remarks brief as many of your Lordships were present on Friday.
The amendment seeks to create offences for the non-consensual creation of sexually explicit content and to close the gaps in the Sexual Offences Act. It is, vitally, consent-based, meaning that victims do not have to suffer the trauma of proving the motivation of their perpetrator. It includes solicitation to prevent any creation laws being circumnavigated by asking those in other jurisdictions to create such content for you through the uploading of clothed images to forums. Finally, it includes forced deletion so that victims can clearly see their rights to have the content destroyed from any devices or cloud-based programmes and do not have to live in fear that their perpetrator is still in possession of their content.
This amendment is inspired by the lived experience of victim survivors. The Government have repeatedly said that they are looking for the most suitable legislative vehicle to fulfil their commitment to criminalise the creation of sexually explicit deepfakes. It seems they did not think my Private Member’s Bill was the right vehicle, but it is my firm belief that the most appropriate legislative vehicle is the one that gets there quickest. I am hopeful that the Government will be more receptive to an amendment to their legislation, given the need urgently to tackle this rapidly proliferating form of abuse.
Amendment 211H addresses the problem of sexually explicit audio, which the noble Baroness, Lady Gohir, spoke about so movingly in Friday’s debate. We have seen satirical voice cloning, such as of Gareth Southgate at the 2024 Euros. However, the most state-of-the-art systems now require around three seconds of voice audio data to create speech on a parity with a human. This could be data from a short phone call or a TikTok video. As we are reaching the point where less data is required to create high-quality audio, this now has the potential to be weaponised. There is a real risk that, if we do not future-proof against this while we have the opportunity, it could rapidly develop in the way that sexually explicit deepfake images have. We are already seeing signs of new sexually explicit audio online. Its ease of use combined with its accessibility could create a huge risk in future.
Henry Ajder, the researcher who pioneered the study of non-consensual deepfake image abuse, said:
“2024 has seen AI generated voice audio widely used in spreading political disinformation and new forms of fraud, but much less attention has been paid to its potential as a tool for digital sexual abuse”.
In his research in 2018, he observed several cases of online communities experimenting with voice-cloning capabilities, targeting celebrities to create non-consensual “synthetic phone sex” content. This Bill could be a key opportunity to future-proof against this problem before it becomes widespread.
Baroness Gohir (CB)
My Lords, I declare my interests as set out in the register, particularly as CEO of Muslim Women’s Network UK, which operates a national helpline. I also apologise for not being here at Second Reading, but I felt compelled to speak today after the noble Baroness, Lady Owen, put forward her amendments. Before I speak to them, I support all the amendments from the noble Baroness, Lady Kidron—everything she says is always very powerful.
The noble Baroness, Lady Owen, made her case powerfully today, as she did last week. I too spoke in that debate. We were disappointed across the House that the Government were not very supportive of the Bill, but they hinted that its amendments and recommendations could be integrated into another Bill. This Bill could be it.
I will focus my comments on audio recordings, which I raised last week. This element gets overlooked, because we tend to focus on sexually explicit images and video recordings. However, perpetrators will also record audio of sexual activities without consent and either share or threaten to share it. As the noble Baroness, Lady Owen, mentioned, people can create deepfakes very easily with new technologies. A person’s voice is recognisable to the people who know them, so this must be addressed and it can be in this Bill.
Perpetrators of intimate image and intimate audio abuse can instil fear, humiliate and make victims feel unsafe without even sharing, or threatening to share, it. They can manipulate and control their victims simply by making them aware that they have recorded or created these images and recordings.
The Muslim Women’s Network’s helpline has had women call to say that, when relationships have broken down, husbands and boyfriends have made secret audio recordings and then threatened them with those recordings. Sometimes, they have shared them online or with family members and friends. Just knowing that they possess these recordings makes these women feel very unsafe and live in fear. In some communities and cultures where people will be worried about honour-based abuse, women will be even more fearful of the repercussions of these audio recordings being shared.
Whether it is original audio or digitally created deepfake audio, the law needs to be amended to prevent this type of abuse. If the Labour Party and the Government are serious about halving abuse against women and girls, they must shut down every avenue of abuse and accept these amendments.
Lord Bethell (Con)
My Lords, I will speak in support of Amendment 203, which I have signed, and Amendments 211G and 211H in my noble friend Lady Owen’s name.
At Second Reading, the mood of the House was to consider and support the enormous opportunity that comes from AI and to acknowledge the dangers of overregulation that might, somehow, smother this massive opportunity. I endorse that sentiment. However, Amendment 203 addresses computer-generated child sexual abuse material, which I regard as a red line that we should not cross. If we leave this amendment out of the Bill and cannot tackle this one massive issue of CSAM generated by AI, we will leave the whole question of the integrity and purpose of AI vulnerable to misuse by criminals and perverts.
The scale of the issue is already enormous. The Internet Watch Foundation found 275,000 webpages containing child sexual abuse content. On just one forum, 20,000 AI-generated images were posted in a single month, over 3,000 of which depicted criminal acts of child sexual abuse. This is not a hypothetical problem or some kind of visioneering or dystopian imagination; it is happening right now. There are offices filled with people generating this material for their pleasure and for commercial reasons. That is why it is urgent that we move immediately.
Any of us who has heard the testimony of the many victims of sexual abuse will realise that the experience creates lasting anxiety and gut-wrenching trauma. These are not just pictures or videos; they often represent real harm to real people. That is why urgency is so important and this amendment is so critical.
Shockingly, the explosion of this kind of material is enabled by publicly available tools, as the noble Baroness, Lady Kidron, pointed out. The case of Hugh Nelson is a very good example. He was sentenced to 18 years in prison for creating AI videos of children being physically and sexually abused. The tool he used was Daz 3D, AI software that any of us could access from this Room. It is inconceivable that this technology remains unregulated while being weaponised by people such as Hugh Nelson to inflict huge harm. Currently, our law focuses on the possession and distribution of CSAM but fails to address the mechanisms of its creation. That is a loophole and why I support these amendments. I do so for three key reasons.
First, Amendment 203 would criminalise the creation, training and distribution of AI models that can create CSAM. That would mean that Daz and other sites like it must introduce safety-by-design measures to stop their use for creating illegal content. That is not to smother the great and bountiful explosion of beneficial AI; it is to create the most basic guard-rail that should be embedded in any of these dangerous tools.
Lord Knight of Weymouth (Lab)
My Lords, I support Amendment 203 and, in particular, Amendments 211G and 211H from the noble Baroness, Lady Owen. I have little to add to what I said on Friday. I confess to my noble friend the Minister that, in my speech on Friday, I asked whether this issue would be in scope for this Bill, so maybe I gave the noble Baroness the idea. I pay tribute to her agility in being able to act quickly to get this amendment in and include something on audio, following the speech of the noble Baroness, Lady Gohir.
I hope that the Minister has similar agility in being able to readjust the Government’s position on this. It is right that this was an urgent manifesto commitment from my party at the last election. It fits entirely with my right honourable friend the Home Secretary’s efforts around violence against women and girls. We should accept and grab this opportunity to deliver quickly by working with the noble Baroness, Lady Owen, and others between now and Report to bring forward an amendment to the Bill that the whole House will support enthusiastically.
Lord Clement-Jones (LD)
My Lords, we have had some powerful speeches in this group, not least from the noble Baronesses, Lady Kidron and Lady Owen, who drafted important amendments that respond to the escalating harms caused by AI-generated sexual abuse material relating to children and adults. The amendment from the noble Baroness, Lady Kidron, would make it an offence to use personal data or digital information to create digital models or files that facilitate the creation of AI or computer-generated child sexual abuse material. As she outlined and the noble Lord, Lord Bethell, confirmed, it specifically would become an offence to create, train or distribute generative AI models that enable the creation of computer-generated CSAM or priority legal content; to train AI models on CSAM or priority illegal content; or to possess AI models that produce CSAM or priority legal content.
This amendment responds to a growing problem, as we have heard, around computer-generated sexual abuse material and a gap in the law. There is a total lack of safeguards preventing bad actors creating sexual abuse imagery, and it is causing real harm. Sites enabling this abuse are offering tools to harm, humiliate, harass, coerce and cause reputational damage. Without robust legal frameworks, victims are left vulnerable while perpetrators operate with impunity.
The noble Lord, Lord Bethell, mentioned the Internet Watch Foundation. In its report of July, One Step Ahead, it reported on the alarming rise of AI-generated CSAM. In October 2023, in How AI is Being Abused to Create Child Sexual Abuse Imagery, it made recommendations to the Government regarding legislation to strengthen legal frameworks to better address the evolving landscape of AI-generated CSAM and enhance preventive measures against its creation and distribution. It specifically recommended:
“That the Government legislates to make it an offence to use personal data or digital information to create digital models or files that facilitate the creation of AI or computer-generated child sexual abuse material”.
The noble Baroness, Lady Kidron, tabled such an amendment to the previous Bill. As she said, she was successful in persuading the then Government to accept it; I very much hope that she will be as successful in persuading this Government to accept her amendment.
Amendments 211G and 211H in the name of the noble Baroness, Lady Owen, are a response to the extraordinary fact that one in 14 adults has experienced threats to share intimate images in England and Wales; that rises to one in seven among young women. Research from Internet Matters shows that 49% of young teenagers in the UK aged between 13 and 16—around 750,000 children—said that they were aware of a form of image-based abuse being perpetrated against another young person known to them.
We debated the first of the noble Baroness’s amendments, which is incorporated in her Bill, last Friday. I entirely agree with the noble Lord, Lord Knight; I did not find the Government’s response at all satisfactory. I hope that, in the short passage of time between then and now, they have had time to be at least a little agile, as he requested. UK law clearly does not effectively address non-consensual intimate images. It is currently illegal to share or threaten to share non-consensual intimate images, including deepfakes, but creating them is not yet illegal; this means that someone could create a deepfake image of another person without their consent and not face legal consequences as long as they do not share, or threaten to share, it.
This amendment is extremely welcome. It addresses the gap in the law by criminalising the creation of non-consensual intimate images, including deepfakes. It rightly targets deepfakes due to their rising prevalence and potential for harm, particularly towards women. Research shows that 98% of deepfake videos online are pornographic, with 99% featuring women and girls. This makes it an inherently sexist problem that is a new frontier of violence against women—words that I know the noble Baroness has used.
I also very much welcome the new amendment not contained in her Bill, responding to what the noble Baroness, Lady Gohir, said at its Second Reading last Friday about including audio deepfakes. The words “shut down every avenue”, which I think were used by the noble Baroness, Lady Gohir, are entirely apposite in these circumstances. Despite what the noble Lord, Lord Ponsonby, said on Friday, I hope that the Government will accept both these amendments and redeem their manifesto pledge to ban the creation of sexually explicit deepfakes, whether audio or video.
Viscount Camrose (Con)
My Lords, the current law does not sufficiently protect children from AI-driven CSAM because it is simply such a fast-moving issue. It is a sobering thought that, of all the many wonderful developments of AI that many of us have been predicting and speculating on for so long, CSAM is really driving the technology forward. What a depressing reflection that is.
Overall, AI is developing at an extraordinarily rapid pace and has come with a number of concerning consequences that are not all yet fully understood. However, it is understood that child sexual abuse is completely unacceptable in any and all contexts, and it is right that our law should be updated to reflect the dangers that have increased alongside AI development.
Amendment 203 seeks to create a specific offence for using personal data or digital information to create or facilitate the creation of computer-generated child sexual abuse material. Although legislation is in place to address possessing or distributing such horrendous material, we must prioritise the safety of children in this country and take the law a step further to prevent its creation. Our children must be kept safe and, subject to one reservation, which I will come to in a second, I support the amendment from the noble Baroness, Lady Kidron, to further protect them.
That reservation comes in proposed new subsection 1(c), which includes in the offence the act of collating files that, when combined, enable the creation of sexual abuse material. This is too broad. A great deal of the collation of such material can be conducted by innocent people using innocent materials that are then corrupted or given more poisonous aspects by further training, fine-tuning or combination with other materials by more malign actors. I hope there is a way we can refine this proposed new paragraph on that basis.
Unfortunately, adults can also be the targets of individuals who use AI to digitally generate non-consensual explicit images or audio files of an individual, using their likeness and personal data. I am really pleased that my noble friend Lady Owen tabled Amendments 211G and 211H to create offences for these unacceptable, cruel acts. I support these amendments unambiguously.
Baroness Jones of Whitchurch (Lab)
My Lords, I thank the noble Baroness, Lady Kidron, for her Amendment 203. It goes without saying that the Government treat all child sexual abuse material with the utmost seriousness. I can therefore confirm to her and the Committee that the Government will bring forward legislative measures to address the issue in this Session and that the Home Office will make an announcement on this early in the new year.
On Amendments 211G and 211H, tabled by the noble Baroness, Lady Owen, the Government share concerns that more needs to be done to protect women from deepfake image abuse. This is why the Government committed in their manifesto to criminalise the creation of sexually explicit deepfake images of adults. I reassure the noble Baroness and the whole Committee that we will deliver on our manifesto commitment in this Session. The Government are fully committed to protecting the victims of tech-enabled sexual abuse. Tackling intimate audio would be a new area of law, but we continue to keep that legislation under review.
I also say to the noble Baroness that there is already a process under Section 153 of the Sentencing Act 2020 for the court to deprive a convicted offender of property, including images that have been used for the purpose of committing or facilitating any criminal offence. As well as images, that includes computers and mobile phones that the offender either used to commit intimate image offences or intended to use for that purpose in future. For those reasons and the reassurances I have given today, I hope that noble Lords will feel able to withdraw or not press their amendments.
Baroness Kidron (CB)
My Lords, first, I thank the speakers for what were really powerful and largely unequivocal contributions.
I am grateful to the Minister. I was expecting something more a tiny bit expansive but I will take, on record, that we are going to make it a new offence for a person to make, adapt, possess, supply or offer to supply a CSA image generator, including any service, program or information in electronic form that is made, or adapted for use, to create or facilitate the creation of CSA material. I am expecting something that covers all that and I am expecting it shortly, as the Minister said. I again thank the Safeguarding Minister, Jess Phillips, for her tremendous efforts, as well as some of the civil servants who helped make it leap from one Government to the next. We can be content with that.
I feel less comfortable about the Minister’s answer to the noble Baroness, Lady Owen. We, women victims, experience the gaps in the law. If there are gaps in the law, it is our job, in this Committee and in the other place, to fix them. We all want the same thing; I know the Minister well enough to know that she wants the same thing. So I am going to push back and say that I will support the noble Baroness, Lady Owen, in trying to bring this measure back through this Bill. I believe that the mood of the Committee is with her so whatever mistakes there are on her patch will be fixed before Report, because this is not something that can wait. Kids and women are being hurt.
We all want to celebrate the digital world. I was an early adopter. I had one of those cameras on my computer before anyone else I knew did, so I could not speak to anyone; there was no one to talk to. We want this world to be good. We are not saying something different. On behalf of the noble Baroness, Lady Owen, who is nodding, let me just say that we will come back to this issue. I thank the Minister for her assurance on Amendment 203 and beg leave to withdraw.
Baroness Kidron
“Compliance with UK copyright law by operators of web crawlers and general-purpose AI models(1) The Secretary of State must by regulations make provisions clarifying the steps the operators of web crawlers and general-purpose artificial intelligence (AI) models must take to comply with United Kingdom copyright law, including the Copyright, Designs and Patents Act 1988.(2) The provisions made under subsection (1) must apply if the products and services of such operators are marketed in the United Kingdom.(3) The provisions made under subsection (1) must apply to the entire lifecycle of a general-purpose AI model, including but not limited to—(a) pre-training,(b) fine tuning, and(c) grounding and retrieval-augmented generation.(4) The Secretary of State must lay before Parliament a draft of the statutory instrument containing regulations under subsection (1) within six months of the day on which this Act is passed and the regulations are subject to the affirmative procedure.”Member’s explanatory statement
This amendment would require operators of internet scrapers and general-purpose AI models to comply with UK copyright law, and to abide by a set of procedures.
Baroness Kidron (CB)
My Lords, I am beginning to feel like the noble Lord, Lord Clement-Jones, but I reassure everyone that this is the last day of Committee.
I shall speak to the amendments in this group in my name and that of the noble Lords, Lord Stevenson—he is very sorry not to be in his place today—and Lord Clement-Jones, and my noble friend Lord Freyberg. I thank the News Media Association for its briefing and support. I also thank, for their wonderful and unlikely support, Sir Paul McCartney, Kate Mosse, Margaret Drabble and Richard Osman, alongside the many creative artists who have spoken, written and tweeted and are among the 37,000 people who signed a petition calling for swift action to protect their livelihoods.
I have already declared my interests for the Committee but I add, to be clear, that my husband is a writer of film, theatre and opera; and that, before I came to your Lordships’ House, I spent 30 years as a movie director. As such, I come from and live alongside a community for whom the unlicensed and illegal use of copyrighted content by generative AI developers is an existential issue. I am therefore proud to move and speak to amendments that would protect one of our most financially significant economic sectors, which contributes £126 billion in gross value added to UK GDP; employs 2.4 million people; and brings so much joy and understanding to the world.
Text and data mining without licence or permission is illegal in the UK, unless it is done specifically for research. This means that what we have witnessed over the past few years is intellectual property theft on a vast scale. Like many of the issues we have discussed in Committee, this wrongdoing has happened in plain sight of regulators and successive Governments. I am afraid that yesterday’s announcement of a consultation did not bring the relief the industry needs. As Saturday’s Times said,
“senior figures in the creative sector are scathing about the government plans”,
suggesting that the Secretary of State has drunk Silicon Valley’s “Kool-Aid” and that rights reservation is nonsense. An official at the technical briefing for the consultation said that
“rights reservation is a synonym for opt out”.
Should shopkeepers have to opt out of shoplifters? Should victims of violence have to opt out of attacks? Should those who use the internet for banking have to opt out of fraud? I could go on. I struggle to think of another situation where someone protected by law must proactively wrap it around themselves on an individual basis.
The value of our creative industries is not in question; nor is the devastation that they are experiencing as a result of non-payment of IP. A recent report from the International Confederation of Societies of Authors and Composers, which represents more than 5 million creators worldwide, said that AI developers and providers anticipate the market for GAI music and audiovisual content increasing from €3 billion to €64 billion by 2028 —much of it derived from the unlicensed reproduction of creators’ works, representing a transfer of economic value from creators to AI companies. Let there be no misunderstanding of the scale of the theft: we already know that the entire internet has been downloaded several times without the consent or financial participation of millions of copyright holders.
This transfer of economic value from writers, visual artists and composers across all formats and all genres to AI companies is not theoretical. It is straightforward: if you cannot get properly paid for your work, you cannot pay the rent or build a career. Nor should we be taken in by the “manufactured uncertainty” that Silicon Valley-funded gen AI firms and think tanks have sought to create around UK copyright law. Lobbyists and their mouthpieces, such as TechUK, speak of a lack of clarity—a narrative that may have led to Minister Chris Bryant claiming that the Government’s consultation was a “win-win”. However, I would like the Minister to explain where the uncertainty on who owns these copyrighted works lies. Also, where is the win for the creative industries in the government proposal, which in one fell swoop deprives artists of control and payment for their work—unless they actively wrap the law around them and say “no”—leaving them at the mercy of pirates and scrapers?
Last week, at a meeting in this House attended by a wide range of people, from individual artists to companies representing some of the biggest creative brands in the world, a judge from the copyright court said categorically that copyright lies with the creator. AI does not create alone; it depends on data and material then to create something else. A technological system that uses it without permission is theft. The call for a new copyright law is a tactic that delays the application of existing law while continuing to steal. Unlike the physical world, where the pursuit of a stolen masterpiece may eventually result in something of value being returned to its owner, in the digital world, once your IP is stolen, the value is absorbed and fragmented, hidden amid an infinite number of other data points and onward uses. If we continue to delay, much of the value of the creative industries’ rich dataset will be absorbed already.
The government consultation has been greeted with glee overnight by the CCIA, which lobbies for the biggest tech firms. After congratulating the Government at some length, it says that
“it will be critical to ensure that the transparency requirements are realistic and do not ask AI developers to compromise their work by giving away trade secrets and highly sensitive information that could jeopardise the safety and security of their models”.
In plain English, that means, “We have persuaded the Government to give up creatives’ copyright, and now the campaign begins to protect our own ‘sensitive business information’”. If that is not sufficiently clear to the Committee, that means they are, first, claiming their own IP while stealing others, while simultaneously pushing back at transparency, because they do not want an effective opt-out.
The government consultation does not even contain an option of retaining the current copyright framework and making it workable with transparency provisions—the provisions of the amendments in front of us. The Government have sold the creative industries down the river. Neither these amendments nor the creative community are anti-tech; on the contrary, they simply secure a path by which creatives participate in the world that they create. They ensure the continuous sustainable production of human-generated content into the future, for today’s artists and those of tomorrow. The amendments do not extend the fundamentals of the Copyright, Designs and Patents Act 1988, but they ensure that the law can be enforced on both AI developers and third parties that scrape on their behalf. They force transparency into the clandestine black box.
Amendment 204 requires the Secretary of State to set out the steps by which copyright law must be observed by web crawlers and others, making it clear that it applies during the entire lifecycle, from pretraining onwards, regardless of jurisdiction—and it must take place only with a licence or express permission.
Amendment 205 requires the Secretary of State to set out the steps by which web crawlers and general-purpose AI models are transparent. This includes but is not limited to providing a name for a crawler, identifying the legal entity responsible for it, a list of purposes for which it is engaged and what data it has passed on. It creates a transparent supply chain. Crucially, it requires operators of crawlers to disclose the businesses to which they sell the data they have scraped, making it more difficult for AI developers that purchase illegally scraped content to avoid compliance with UK copyright law, overturning current practice in which the operators of crawlers can obscure their own identity or ownership, making it difficult and time-consuming—potentially impossible—to combat illegal scraping.
Amendment 206 requires the Secretary of State to set out by regulation what information web crawlers and general-purpose models must disclose regarding copyrighted works—information such as URL, time and type of data collected and a requirement to inform the copyright holder. This level of granularity, which the tech companies are already pushing against, provides a route by which IP holders can choose or contest the ways in which their work is used, as well as provide a route for payment.
In sum, the amendments create a clear and simple process for identifying which copyright works are scraped, by whom, for what purpose and from which datasets. They provide a process by which existing law can be implemented.
I shall just mention a few more points before I finish. First, there is widespread concern that mashing up huge downloads of the internet, including the toxic, falsehoods and an increasing proportion of artificially generated or synthetic data, will cause it to degenerate or collapse, putting a block on the innovation that the Government and all of us want to see, as well as raising serious safety concerns about the information ecosystem. A dynamic licensing market would provide a continuous flow of identified human-created content from which AI can learn.
Secondly, the concept of a voluntary opt-out regime—or, as the Government prefer, rights reservation—is already dead. In the DPDI Bill, I and others put forward an amendment to make robots.txt part of the robots’ exclusion protocol opt-in. In plain English, that would have meant that the voluntary scheme in which any rights holder can put a note on their digital door saying “Don’t scrape” would have been reversed to be mandatory. Over the last few months, we have seen scrapers ignoring the agreed protocol, even when activated. I hope the Minister will explain why he thinks that creators should bear the burden and the scrapers should reap the benefit and whether the Government have done an impact assessment on how many rights holders will manage to opt out versus how many would opt in, given the choice.
Lord Freyberg (CB)
My Lords, I support Amendments 204, 205 and 206, to which I have attached my name. In doing so, I declare my interest as someone with a long-standing background in the visual arts and as an artist member of the Design and Artists Copyright Society.
These amendments, tabled and superbly moved by my noble friend and supported by the noble Lords, Lord Stevenson and Lord Clement-Jones, seek to address a deep crisis in the creative sector whereby millions upon millions of creative works have been used to train general-purpose or generative AI models without permission or pay. While access to data is a fundamental aspect of this Bill, which in many cases has positive and legitimate aims, the unauthorised scraping of copyright-protected artworks, news stories, books and so forth for the use of generative AI models has significant downstream impacts. It affects the creative sectors’ ability to grow economically, to maximise their valuable assets and to retain the authenticity that the public rely on.
AI companies have used artists’ works in the training, development and deployment of AI systems without consent, despite this being a requirement under UK copyright law. As has been said, the narrow exception to copyright for text and data mining for specific research purposes does not extend to AI models, which have indiscriminately scraped creative content such as images without permission, simply to build commercial products that allow users to generate their own versions of a Picasso or a David Hockney work.
This amendment would clarify the steps that operators of web crawlers and general-purpose AI models must take to comply with UK copyright law. It represents a significant step forward in resolving the legal challenges brought by rights holders against AI companies over their training practices. Despite high-profile cases arising in the USA and the UK over unauthorised uses of content by AI companies, the reality is that individual artists simply cannot access judicial redress, given the prohibitive cost of litigation.
DACS, which represents artists’ copyright, surveyed its members and found that they were not technophobic or against AI in principle but that their concerns lay with the legality and ethics of current AI operators. In fact, 84% of respondents would sign up for a licensing mechanism to be paid when their work is used by an AI with their consent. This amendment would clarify that remuneration is owed for AI companies’ use of artists’ works across the entire development life cycle, including during the pre-training and fine-tuning stages.
Licensing would additionally create the legal certainty needed for AI companies to develop their products in the UK, as the unlawful use of works creates a litigation risk which deters investment, especially from SMEs that cannot afford litigation. DACS has also been informed by its members that commissioning clients have requested artists not to use AI products in order to avoid liability issues around its input and output, demonstrating a lack of trust or uncertainty about using AI.
This amendment would additionally settle ongoing arguments around whether compliance with UK copyright law is required where AI training takes place in other jurisdictions. By affirming its applicability where AI products are marketed in the UK, the amendment would ensure that both UK-based artists and AI companies are not put at a competitive disadvantage due to international firms’ ability to conduct training in a different jurisdiction.
One of the barriers to licensing copyright is the lack of transparency over what works have been scraped by AI companies. The third amendment in this suite of proposals, Amendment 206, seeks to address this. It would require operators of web crawlers and general-purpose AI models to be transparent about the copyright works they have scraped.
Currently, artists and creators face significant challenges in protecting their intellectual property rights in the age of AI. While tools such as Spawning AI’s “Have I Been Trained?” attempt to help creators identify whether their work has been used in AI training datasets, these initiatives provide only surface-level information. Creators may learn that their work was included in training data, but they remain in the dark about crucial details—specifically, how their work was used and which companies used it. This deeper level of transparency is essential for artists to enforce their IP rights effectively. Unfortunately, the current documentation provided by AI companies, such as data cards and model cards, falls short of delivering this necessary transparency, leaving creators without the practical means to protect their work.
Amendment 206 addresses the well-known black box issue that currently plagues the AI market, by requiring the disclosure of information about the URLs accessed by internet scrapers, information that can be used to identify individual works, the timeframe of data collection and the type of data collected, among other things. The US Midjourney litigation is a prime example of why this is necessary for UK copyright enforcement. It was initiated only after a leak revealed the names of more than 16,000 non-consenting artists whose works were allegedly used to train the tool.
Creators, including artists, should not find themselves in a position where they must rely on leaks to defend their intellectual property rights. By requiring AI companies to regularly update their own records, detailing what works were used in the training process and providing this to rights holders on request, this amendment could also create a vital cultural shift towards accountability. This would represent an important step away from the “Move fast and break things” culture pervasive amongst the Silicon Valley-based AI companies at the forefront of AI development, and a step towards preserving the gold-standard British IP framework.
Lastly, I address Amendment 205, which requires operators of internet crawlers and general-purpose AI models to be transparent about the identity and purpose of their crawlers, and not penalise copyright holders who choose to deny scraping for AI by down ranking their content in, or removing their content from, a search engine. Operators of internet crawlers that scrape artistic works and other copyright-protected content can obscure their identity, making it difficult and time-consuming for individual artists and the entities that represent their copyright interests to identify these uses and seek redress for illegal scraping.
Inclusion in search-engine results is crucial for visual artists, who rely on the visibility these provide for their work to build their reputation and client base and generate sales. At present, web operators that choose to deny scraping by internet crawlers risk the downrating or even removal of their content from search engines, as the most commonly used tools cannot distinguish between do-not-train protocols added to a site. This amendment will ensure that artists who choose to deny scraping for AI training are not disadvantaged by current technical restrictions and lose out on the exposure generated by search engines.
Finally, I will say a few words about the Government’s consultation launched yesterday, because it exposes a deeply troubling approach to creators’ IP rights, as has already been said so eloquently by the noble Baroness. For months, we have been urged to trust the Government to find the right balance between creators’ rights and AI innovation, yet their concept of balance has now been revealed for what it truly is: an incredibly unfair trade-off that gives away the rights of hundreds of thousands of creators to AI firms in exchange for vague promises of transparency.
Their proposal is built on a fundamentally flawed premise—promoted by tech lobbyists—that there is a lack of clarity in existing copyright law. This is completely untrue: the use of copyrighted content by AI companies without a licence is theft on a mass scale, as has already been said, and there is no objective case for the new text and data-mining exception. What we find in this consultation is a cynical rebranding of the opt-out mechanism as a rights reservation system. While they are positioning this as beneficial for rights holders through potential licensing revenues, the reality is that this is not achievable, yet the Government intend to leave it to Ministers alone to determine what constitutes
“effective, accessible, and widely adopted”
protection measures.
This is deeply concerning, given that no truly feasible rights reservation system for AI has been implemented anywhere in the world. Rights holders have been unequivocal: opt-out mechanisms—whatever the name they are given—are fundamentally unworkable in practice. In today’s digital world, where content can be instantly shared by anyone, creators are left powerless to protect their work. This hits visual artists particularly hard, as they must make their work visible to earn a living.
The evidence from Europe serves as a stark warning: opt-out provisions have failed to protect creators’ rights, forcing the EU to introduce additional transparency requirements in the recent AI Act. Putting it bluntly, simply legalising unauthorised use of creative works cannot be the answer to mass-scale copyright infringement. This is precisely why our proposed measures are crucial: they will maintain the existing copyright framework whereby AI companies must seek licences, while providing meaningful transparency that enables copyright holders to track the use of their work and seek proper redress, rather than blindly repeating proven failures.
The Earl of Clancarty (CB)
My Lords, I speak in support of my noble friend Lady Kidron’s amendments. I declare an interest as a visual artist, and of course visual creators, as my noble friend Lord Freyberg has very well described, are as much affected by this as musicians, journalists and novelists. I am particularly grateful to the Design and Artists Copyright Society and the Authors’ Licensing and Collecting Society for their briefings.
A particular sentence in the excellent briefing for this debate by the News Media Association, referred to by my noble friend Lady Kidron, caught my eye:
“There is no ‘balance’ to be struck between creators’ copyrights and GAI innovation: IP rights are central to GAI innovation”.
This is a crucial point. One might say that data does not grow on a magic data tree. All data originates from somewhere, and that will include data produced creatively. One might also say that such authorship should be seen to precede any interests in use and access. It certainly should not be something tagged on to the end, as an afterthought. I appreciate that the Government will be looking at these things separately, but concerns of copyright should really be part of any Bill where data access is being legislated for. As an example, we are going to be discussing the smart fund a bit later in an amendment proposed by the noble Lord, Lord Bassam, but I can attest to how tricky it was getting that amendment into a Bill that should inherently be accommodating these interests.
Viscount Colville of Culross (CB)
My Lords I have been very impressed by the speeches of my noble friends Lady Kidron and Lord Freyberg, so I will be very brief. I declare in interest as a television producer who produces content. I hope that it has not been scraped up by AI machines, but who knows? I support the amendments in this group.
I know that AI is going to solve many problems in our economy and our society. However, in their chase for the holy grail of promoting AI, I join other noble Lords in asking the Government not to push our creative economy under the bus. It is largely made up of SMEs and single content producers, who do not have the money to pursue powerful AI companies to get paid for the use of their content in training their AI models. It is up to noble Lords to help shape regulations that protect our data and copyright laws and can be fully deployed in the defence of the creative economy.
I too have read the Government’s Copyright and Artificial Intelligence consultation paper, published yesterday. The foreword says:
“The proposals include a mechanism for rights holders to reserve their rights”,
which I, like my noble friend Lady Kidron and others, interpret as meaning that creators’ works can be used by AI developers unless they opt out and require licensing for the use of their work. The Government are following the EU example and going for the opt-out model. I think that the European Union is beginning to realise that it is very difficult to make that work, and it brings an unfairness to content producers. Surely, the presumption should be that AI web crawlers should get agreement before using content. The real problem is that content producers do not even know when their content has been used. Even the AI companies sometimes do not know what content has been used. Surely, the opt-out measure is like having your house raided and then asking the burglar what he has taken.
I call on the Minister to work with us to create an opt-in regime. Creators’ works should be used only when already licensed by the AI companies. The companies say they usually do not use content, only data points. Surely that is like saying to a photographer, “We’ve used 99% of the pixels in a picture but not the whole picture”. If even one pixel is used, the photographer needs to know and be compensated.
The small companies and single content producers of our country are the backbone of our economy, as other noble Lords have said. They are threatened by this technology, in which we have placed so much faith. I ask the Minister to respond favourably to Amendments 204, 205 and 206 to ensure that we have fairness between some of the biggest AI players in the world and the hard-pressed people who create content.
Lord Hampton (CB)
My Lords, I support Amendments 204, 205 and 206 in the names of my noble friends Lady Kidron and Lord Freyberg, and of the noble Lords, Lord Stevenson and Lord Clement-Jones, in what rapidly seems to be becoming the Cross-Bench creative club.
I spent 25 years as a professional photographer in London from the late 1980s. When I started, retouchers would retouch negatives and slides by hand, charging £500 an hour. Photoshop stopped that. Professional film labs such as Joe’s Basement and Metro would work 24 hours a day. Snappy Snaps and similar catered for the amateur market. Digital cameras stopped that. Many companies provided art prints, laminating and sundry items for professional portfolios. PDFs and websites stopped that. Many different forms of photography, particularly travel photography, were taken away when picture libraries cornered the market and drove down commissions to unsustainable levels. There were hundreds if not thousands of professional photographers in the country. The smartphone has virtually stopped that.
All these changes were evolution and the result of a world becoming more digitised, but AI web crawlers are different, illegally scraping images without consent or payment then potentially killing the trade of the victim by setting up in competition. This is a parasite, but not in the true sense, because a parasite is careful to keep its victims alive.
Lord Lucas (Con)
My Lords, I very much support these amendments. I declare an interest as an owner of written copyright in the Good Schools Guide and as a father of an illustrator. In both contexts, it is very important that we get intellectual property right, as I think the Government recognised in what they put out yesterday. However, I share the scepticism of those who have spoken as to whether the Government’s ideas can be made to work.
It is really important that we get this straight. For those of us operating at the small end of the scale, IP is under continual threat from established media. I write maybe 10 or a dozen letters a year to large media outfits reminding them of the borders, the latest to the Catholic Herald—it appears not even the 10 commandments have force on them. But what AI can do is a huge measure more difficult to deal with. I can absolutely see, by talking to Copilot, that it has gone through my paywall and absorbed the contents of the Good Schools Guide, but who am I supposed to go at for this? Who has actually done the trespassing? Who is responsible for it? Where is the ownership? It is difficult to enforce copyright, even by writing a polite letter to someone saying, “Please don’t do this”. The Government appear to propose a system of polite letters saying, “Oh dear, it looks as if you might have borrowed my copyright. Please, can you give it back?”
This is not practically enforceable, and it will not result in people who care about IP locating their businesses here. Quite clearly, we do not have ownership of the big AI systems, and it is unlikely that we will have ownership of them—all that will be overseas. What we can do is create IP. If we produce a system where we do not defend the IP that we produce, then fairly rapidly, those IP creators who are capable of being mobile will go elsewhere to places that will defend their IP. It is something that a Government who are interested in growth really ought to be interested in defending. I hope that we will see some real progress in the course of the Bill going through the House.
Lord Clement-Jones (LD)
My Lords, I declare my AI interests as set out in the register. I will speak in support of Amendments 204, 205 and 206, which have been spoken to so inspiringly by the noble Baroness, Lady Kidron, and so well by the noble Lords, Lord Freyberg, Lord Lucas and Lord Hampton, the noble Earl, Lord Clancarty, and the noble Viscount, Lord Colville. Each demonstrated different facets of the issue.
I co-chair the All-Party Group on AI and chaired the AI Select Committee a few years ago. I wrote a book earlier this year on AI regulation, which had a namecheck from the noble Baroness, Lady Jones, at Question Time, which I was very grateful for. Before that, I had a career as an IP lawyer, defending copyright and creativity, and in this House, I have been my party’s creative industries spokesperson. The question of IP and the training of generative AI models is a key issue for me.
This is the case not just in the UK but around the world. Getty and the New York Times are suing in the United States, as are many writers, artists and musicians. It was at the root of the Hollywood actors’ and writers’ strikes last year. It is one thing to use the tech—many of us are AI enthusiasts—but it is another to be at the mercy of it.
Close to home, the FT has pointed out, using the index published by the creator of an unlicensed dataset called Books3, published online, that it is possible to identify that over 85 books written by 33 Members of the House of Lords have been pirated to train AI models from household names, such as Meta, Microsoft and Bloomberg. Although it is absolutely clear that we know that the use of copyrighted works to train AI models is contrary to UK copyright law, the laws around the transparency of these activities have not caught up. As we have heard, as well as using pirated e-books in their training data, AI developers scrape the internet for valuable professional journalism and other media, in breach of both the terms of service of websites and copyright law, to train commercial AI models. At present, developers can do this without declaring their identity, or they may use IP scraped to appear in a search index for the completely different commercial purpose of training AI models.
How can rights owners opt out of something that they do not know about? AI developers will often scrape websites or access other pirated material before they launch an LLM in public. This means that there is no way for IP owners to opt out of their material being taken before its inclusion in these models. Once used to train these models, the commercial value, as we have heard, has already been extracted from IP scraped without permission, with no way to delete data from these models.
The next wave of AI models responds to user queries by browsing the web to extract valuable news and information from professional news websites. This is known as retrieval-augmented generation—RAG. Without payment for extracting this commercial value, AI agents built by companies such as Perplexity, Google and Meta will, in effect, free-ride on the professional hard work of journalists, authors and creators. At present, such crawlers are hard to block. There is no market failure; there are well-established licensing solutions. There is no uncertainty around the existing law; the UK is absolutely clear that commercial organisations, including gen AI developers, must license the data that they use to train their large language models.
Here, as the Government’s intentions become clearer, the political, business and creative temperature is rising. Just this week, we have seen the creation of a new campaign, the Creative Rights in AI Coalition—CRAIC —across the creative and news industries and, recently, Ed Newton-Rex reached more than 30,000 signatories from among creators and creative organisations.
Lord Faulks (Non-Afl)
The noble Lord has enormous experience in these areas and will be particularly aware of the legal difficulties in enforcing rights. Given what he said, with which I entirely agree—indeed, I agree with all the speakers in supporting these amendments—and given the extraordinary expense of litigating to enforce rights, how does he envisage there being an adequate system to allow those who have had their data scraped in the way that he describes to obtain redress or, rather, suitable remedies?
Lord Clement-Jones (LD)
I thank the noble Lord for that. He is anticipating a paragraph in my notes, which says that, although it is not set out in the amendments, robust enforcement of these provisions will be critical to their success. This includes oversight from an expert regulator that is empowered to issue significant penalties, including fines for non-compliance. There is a little extra work to do there, and I would very much like to see the Intellectual Property Office gain some teeth.
I am going to close. We are nearly at the witching hour, but it is clear that AI developers are seeking to use their lobbying clout—the noble Baroness, Lady Kidron, mentioned the Kool-Aid—to persuade the Government that new copyright law is required. Instead, this amendment would clarify that UK copyright law applies to gen AI developers. The creative industries, and noble Lords from across the House as their supporters, will rally around these amendments and vigorously oppose government plans for a new text and data- mining exception.
Lord Faulks (Non-Afl)
My Lords, I have very little to add because I entirely support all these amendments. I am always concerned when I see the words “lack of clarity” in a context like this. The basic principle of copyright law, whereby one provides a licence and is paid for that licence by agreement, has been well established. There is no need for any further clarity in this context, as in earlier contexts of copyright law.
I should declare an interest as the chairman of IPSO, the regulator of 95% of the printed news media and its online versions. I have been impressed by the News Media Association’s briefings. It has identified important issues. I am extremely concerned about what appears to have been a considerable amount of lobbying by big tech in this area. It reminds me of what took place when your Lordships’ House considered the Digital Markets, Competition and Consumers Bill. A low point for me was when we were told that it would be very difficult to establish a proper system otherwise Google’s human rights would be somehow infringed. It is extremely important that this so-called balance does not mean that those who create original material protected by the copyright Acts have their rights violated in order to satisfy the interests of big tech.
The Earl of Effingham (Con)
My Lords, my noble friend Lord Camrose apologises to the Committee but he has had to leave early for unavoidable family reasons. Needless to say, he will read Hansard carefully.
It is our belief that a society that fails to value products of the mind will never be an innovative society. We are fortunate to live in that innovative society now and we must fight to ensure it remains one. Data scraping and AI crawlers pose both novel and substantial challenges to copyright protection laws and mechanisms. His Majesty’s Official Opposition are pleased that these amendments have been brought forward to address those challenges, which differ from those posed by traditional search engine crawlers.
Generally speaking, in creating laws about data we have been able to follow a north star of replicating online the values and behaviours we take for granted offline. This was of real service to us in the Online Safety Act, for example. In many ways, however, that breaks down when we come to AI and copyright. Offline, we are happy to accept that an artist, author, musician or inventor has been influenced by existing works in their field. Indeed, we sometimes celebrate that fact, and we have a strong intuitive sense of when influence has crossed the line into copying. This means that we can form an intuitive assessment of whether a copyright has been breached offline based on what creators produce, not what content they have consumed, which we expect to be extensive. With an AI crawler, that intuition and model break down. There are simply too many variables and too much information. We have no choice but to go after the inputs.
With that in mind, it would be helpful to set out the differences between traditional search engine crawlers and AI crawlers. Indexing crawlers used by the search engines we are all familiar with store information in their indexes. This then determines the results of the search. However, AI crawlers generally fall into two categories. The training crawlers scrape the web, collecting data used to train large language models. Live retrieval crawlers pull in live data from the web and incorporate it into chatbot responses.
Historically, the robots exclusion protocol—the plain text file identified as robots.txt—has been embedded into website domains, specifying to crawlers what data they can and cannot access in part or all of the domain. This has been used for the past 30 years to protect information or IP from indexing crawlers. Although the robots exclusion protocol has worked relatively well for many years, in some ways it is not fit for the web as it exists today—especially when dealing with AI crawlers.
To exclude crawlers from websites, we must be able to identify them. This was, for the most part, workable in the early days of the internet when there were relatively few search engines and, correspondingly, few indexing crawlers. However, given the rapidly increasing number of AI services, with their corresponding crawlers trawling the web, it becomes impossible to exclude them all. To make matters worse, some AI crawlers operate in relative secrecy. Their names, which can be viewed through domain holder access logs, reveal little of their purpose.
Furthermore, the robots exclusion protocol is not an enforceable agreement; it is more like a polite request. Based on that, a crawler can simply ignore a robots.txt file and scrape the data anyway. It is also worth noting that even if a crawler acknowledges and obeys a robots.txt file, the data may be inadvertently scraped from a third-party source who has lifted the data of intellectual property either manually or using a crawler that does not obey the robots.txt files. That can then be made available without the protection of the robots exclusion protocol. This raises an unsettling question: how do we protect intellectual property and data more generally from these AI crawlers, whose developers decline the voluntary limitations placed on them?
At this point, I turn to the amendments. Amendment 204 is a great initial step toward requiring crawler operators to respect UK copyright law. However, this provision would apply only to products and services of such operators that are marketed in the United Kingdom. What about those from outside the UK? Indeed, as my noble friend Lord Camrose has often argued, any AI lab that does not want to follow our laws can infringe the same copyright with impunity in another jurisdiction. Unless and until we address the offshoring problem, we continue to have real concerns as to the enforceability of any regulations we implement here.
I will address the individual subsections in Amendment 205. Proposed new subsection (1) would require crawlers to reveal their identity, including their name, who is responsible for them, their purpose, who receives their scraped data, and a point of contact. This is an excellent idea, although we are again concerned about enforceability due to offshoring. Proposed new subsection (2) requires this information to be easily accessible. We are sure this would be beneficial, but our concerns remain about infringements in other jurisdictions.
Requiring the deployment of crawlers with distinct purposes in proposed new subsection (3) is an excellent idea as it would allow data controllers to choose what data can be trawled and for what purpose, to the extent possible using the robots exclusion protocol. We do, however, have concerns about proposed new subsection (4). We are not sure how it would be possible for the exclusion of an AI crawler not to impact the findability of content. We assume this could be achieved only if we mandated the continued use of indexing crawlers.
As for Amendment 206, requiring crawler operators to regularly disclose the information scraped from copyrighted sources and make it accessible to copyright holders on their request is an interesting suggestion. We would be curious to hear how this would work in practice, particularly given the vast scale—some of those models crawl billions of documents, generating trillions of tokens. Where would that data be published? Given the scale of data-scraping, how would copyright holders know where to look for this information? If the operator was based outside the UK, how would disclosure be enforced? Our view is that watermarking technology can come to the rescue, dependent of course on an internationally accepted technical standard for machine-readable watermarks that contain licensing information.
The Minister of State, Department for Science, Innovation and Technology (Lord Vallance of Balham) (Lab)
As someone who has spent my life creating IP, protecting IP and sometimes giving IP away, I welcome this debate. I am extremely grateful to the noble Baroness, Lady Kidron, for a very thoughtful set of proposals. The fact that many noble Lords have spoken in this debate shows that the rapid development of AI has clearly raised concerns about how to protect the creative industries. The Government take this very seriously. As the noble Lord, Lord Lucas, pointed out, we need to get it right, which is why we have launched a very wide-ranging consultation on a package of interventions to address copyright and AI issues. It is an important first step in an area where the existing situation is clearly not working and we run the risk of many long-lasting court cases, which will not help the situation in which we find ourselves.
We are committed both to supporting human-centred creativity and to the potential of AI to unlock new horizons. Many in the creative industries use AI very widely already. Our goal is to support AI innovation in the UK while maintaining robust protection for creators and our vibrant creative industry. In response to a point that the noble Baroness, Lady Kidron, raised earlier, option 1 in the consultation refers to existing copyright law and asks for views about maintaining and increasing it. The consultation sets out the Government’s objectives for this area and proposes a range of measures on which we are seeking views. Specifically, it aims to support rights-holders to continue to exercise control over the use of their content and their ability to seek remuneration for this. As many noble Lords have pointed out, that has to be made easy and technically feasible. It also promotes greater trust and transparency and proposes mechanisms by which you can see who is looking at the data and what they are doing with it.
Finally, it aims to support the development of world-leading AI models in the UK by ensuring that access can be appropriately wide but, of course, lawful and with the approval of those it is got from. This includes the subjects of the noble Baroness’s amendments. The consultation seeks views on technological measures that can provide greater control over access to and use of the online material, as well as transparency measures that help copyright owners understand whether their work is being used by AI developers. Again, this needs to be made easy. Various technologies are coming along which can do that, including, as has been said, the watermarking approach.
Much of this needs to be wrapped into an approach to standards. It is important that this is done in a way that is reproducible and reliable. Through this consultation, we will address some of these issues and seek to continue to get input from stakeholders on all of them. We will also work towards internationally interoperable solutions, as raised by many noble Lords, including the noble Lord, Lord Freyberg, and the noble Earl, Lord Effingham.
I agree with the noble Baroness, Lady Kidron, that a vibrant and effective licensing approach—a system that works well and provides access and rights—is important. She asked about an impact assessment. I do not have the information with me now, but I will write. I look forward to updating her on this work in due course and, in the meantime, hope that she is content to withdraw her amendment.
Baroness Kidron (CB)
Does the Minister recognise the characterisation of noble Lords who have said that this is theft? Currently, we have a law and copyright is being taken without consent or remuneration. Does he agree with them that this is what the creative industries and, I presume, some of his community are experiencing?
Lord Vallance of Balham (Lab)
At the moment we have a system where it is unclear what the rights are and how they are being protected, and therefore things are being done which people are unable to get compensation for. We can see that in the court cases going on at the moment. There is uncertainty which needs to be resolved.
Baroness Kidron (CB)
I thank the Minister for his answer and welcome him very much to the Dispatch Box—I have not yet had the pleasure of speaking with him in a debate. I hope he saw the shaking heads when he answered my question about theft and this lack of clarity. If you say “Write me the opening chapter of a Stephen King novel”, and the AI can do it, you can bet your bottom dollar that it has absorbed a Stephen King novel. We know that a lot of this material is in there and that it is not being paid for. That goes for issues big and small.
I understand that it is late and we have more to do—I have more to say on other issues—but I want to reiterate three points. First, creative people are not anti-tech; they just want control over the things they create. AI is a creation on top of a creation, and creative people want to be paid for their efforts and to be in control of them. I am not sure whether I can mention it, because it was in a private meeting, but a brand that many people in most countries will have heard of said: “We need to protect our brand. We mean something. An approximation of us is not us. It is not just the money; it is also the control”.
I also make the point that, earlier this week, Canal+ had its IPO on the London Stock Exchange. I heard the CEO answer the question, “Why is it that Canal+ decided to come and do its IPO in the UK when everybody else is scarpering elsewhere?”, by saying a lot of very warm-hearted things about Paddington Bear, then, “Because you have very good copyright laws”. That is what they said. I just want to mention that.
Finally, I am grateful to the Minister for saying that there is the option of staying with the status quo; I will look at that and try to understand it clearly. However, when he writes about the issue that I raised in terms of opting in or opting out—I am grateful to him for doing so—I would also like an answer about where the Government think the money is going to go. What is the secondary value of the AI companies, which are largely headquartered in the US? Where will the IP, which those companies have already said they want to protect—they did so in their response to the Government’s consultation; I said that it in my speech, for anyone who was not listening—go? I would like the Government to say what their plans are, if we lose the £1.6 billion and the 2.4 million jobs, to replace that money and those jobs, as well as their incredible soft power.
With that, I beg leave to withdraw the amendment.
Baroness Kidron
“Reliability of computer-based evidence(1) Electronic evidence produced by or derived from a computer, device or computer system (separately or together “system”) is admissible as evidence in any proceedings— (a) where that electronic evidence and the reliability of the system that produced it or from which it is derived are not challenged;(b) where the court is satisfied that the reliability of the system cannot reasonably be challenged;(c) where the court is satisfied that the electronic evidence is derived from a reliable system.(2) Rules of Court must provide that electronic evidence sought to be relied upon by a party in any proceedings may be challenged by another party as to its admissibility.(3) For the purposes of subsection (1)(b), Rules of Court must provide for the circumstances in which the Court may be satisfied that the admissibility of electronic evidence cannot reasonably be challenged.(4) When determining whether a system is reliable for the purposes of subsection (1)(c) the matters that may be taken into account include—(a) any instructions or rules of the system that apply to its operation;(b) any measures taken to secure the integrity of data held on the system;(c) any measures taken to prevent unauthorised access to and use of the system;(d) the security of the hardware and software used by the system;(e) any measures taken to monitor and assess the reliability of the system by the system controller or operator including steps taken to fix errors or address unexpected outcomes including the regularity of and extent of any audit of the system by an independent body;(f) any assessment of the reliability of the system made by a body with supervisory or regulatory functions;(g) the provisions of any scheme or industry standard that apply in relation to the system.(5) For the purposes of this section—“computer” means any device capable of performing mathematical or logical instructions;“device” means any apparatus or tool operating alone or connected to other apparatus or tools, that processes information or data in electronic form;“electronic evidence” means evidence derived from data contained in or produced by any device the functioning of which depends on a software program or from data stored on a computer, device or computer system or communicated over a networked computer system.”Member’s explanatory statement
This amendment overturns the current legal assumption that evidence from computers is always reliable which has contributed to miscarriages of justice including the Horizon Scandal. It enables courts to ask questions of those submitting computer evidence about its reliability.
Baroness Kidron (CB)
My Lords, it is a privilege to introduce Amendment 207. I thank the noble Lords, Lord Arbuthnot and Lord Clement-Jones, and the right reverend Prelate the Bishop of St Albans, who is unfortunately unwell but wanted me to express his support.
I make it clear that, although I may use the Horizon scandal as an example, this amendment is neither focused on nor exclusive to the miscarriage of justice, malevolence and incompetence related to that scandal. It is far broader than that so, when the Minister replies, I really hope that he or she—I am not sure which yet—will not talk about the criminality of the Post Office, as previously, but rather concentrate on the law that contributed to allowing a miscarriage of justice at that scale. That is what this amendment seeks to address.
I explained during debates on the DPDI Bill that, since 1999, courts have applied
“a common law presumption, in both criminal and civil proceedings, of the proper functioning of machines—that is to say”,
the information from the computer can be presumed to be reliable. I went on to say:
“In principle, there is a low threshold for rebutting this presumption but, in practice … a person challenging evidence derived from a computer will typically have no””.—[Official Report, 24/4/24; col. GC 573.]
knowledge of the circumstance in which the system in question was operated so cannot possibly demonstrate that it failed. As Paul Marshall, the barrister who represented some of the postmasters, explains, this puts the onus on the defendant to explain to the jury the problems they encountered when all they could actually do was point to the shortfalls they had experienced—in the Horizon case, that the cash received did not match the balancing figure on the computer screen. They did not have access to the system or the record of its past failures, and they had no knowledge of what the vulnerabilities were. They only knew that it did not work.
The reality is that anyone who knows the first thing about programming or computer science knows that there are bugs in the system. Indeed, any one of us who has agreed to an update for an app or computer software understands that bug fixing is a common aspect of program maintenance. When I discussed this amendment with a computer scientist of some standing, he offered the opinion that there are likely to be 50 bugs per 1,000 lines of code; many complex systems run to tens of millions of lines of code.
Perhaps the most convincing thing of all is looking at software contracts. For the past 20 years at least, a contract is likely to contain words to this effect: “No warranty is provided that the operation of the software will be uninterrupted or error free, or that all software errors will be corrected”. This same clause applies in contracts when we say yes to a new Apple upgrade when we sign a EULA—an end-user licence agreement. In plain English, for two decades at least, those who provide software have insisted that computer information is not to be considered reliable. That is written into their commercial agreements, so the fact that computer information is not reliable is agreed by those who know about computer information.
Lord Arbuthnot of Edrom (Con)
My Lords, I declare my interest as a member of the Horizon Compensation Advisory Board. When, on 24 April this year, the noble Baroness, Lady Kidron, proposed an amendment to remove the presumption about the reliability of computer evidence, the noble Baroness who is now the Minister added her name to it—oh the perils of moving from opposition to government.
My noble friend Lord Camrose—the Minister at the time—in a sympathetic speech, resisted that amendment on the basis, first, that there were shocking failures of professional duty in the Post Office case. This was quite true, but they were facilitated by the existence of the presumption. His second reason was that taking us back to the law of 1999, as the noble Baroness, Lady Kidron, eloquently set out just now, would risk undermining prosecutions because we would need to get certificates of accuracy in cases such as breathalysers and those involving emails. There may have been something in that, so the noble Baroness has proposed an amendment that is designed to get round that second point.
I suspect that the Minister will resist this amendment too, but for reasons that I hope she will set out clearly, because we may then decide to move a different amendment on Report. We are making all the running on this—or at least the noble Baroness, Lady Kidron, is, with my full support and, I know, that of the noble Lord, Lord Clement-Jones. I take a moment out of this Committee to pay tribute to their work ethic in this Committee, which has been quite phenomenal.
The Government do not seem to have the issue quite as close to the top of their priorities as we suggest. Without repeating all that I said on 24 April, I will summarise it as follows. Paul Marshall, the barrister, has pointed out that computer evidence is hearsay, with all the limitations that that implies. Modern computer programs are too large to be exhaustively tested. If computer programs are inherently unreliable, it is wrong to have a presumption that they are reliable. That issue will grow with the growth of artificial intelligence.
The presumption that computer evidence is reliable leads either to such things as we saw occur in the Post Office scandal, with the Post Office essentially taunting the sub-postmasters, saying, “If you can’t show us what is wrong with the computer evidence, we don’t have to show you that evidence”—a shocking case of Catch-22; or to lawyers and courts voluntarily abandoning the presumption and denigrating all computer evidence, whether or not it deserves to be denigrated. That might lead, for example, to some defendants being acquitted when the evidence would require that they be convicted. We are trying to help the Government find a way through a problem that they recognise and assert exists. Will they please give us some help in return? This is both serious and urgent. Just saying that it is very difficult does not begin the process of putting it right.
Lord Tarassenko (CB)
My Lords, I will speak briefly in support of this amendment. Anyone who has written computer code, and I plead guilty, knows that large software systems are never bug-free. These bugs can arise because of software design errors, human errors in coding or unexpected software interactions for some input data. Every computer scientist or software engineer will readily acknowledge that computer systems have a latent propensity to function incorrectly.
As the noble Baroness, Lady Kidron, has already said, we all regularly experience the phenomenon of bug fixing when we download updates to software products in everyday use—for example, Office 365. These updates include not only new features but patches to fix bugs which have become apparent only in the current version of the software. The legal presumption of the proper functioning of “mechanical instruments” that courts in England and Wales have been applying to computers since 1999 has been shown by the Post Office Horizon IT inquiry to be deeply flawed. The more complex the program, the more likely the occurrences of incorrect functioning, even with modular design. The program at the heart of Fujitsu’s Horizon IT system had tens of millions of lines of code.
The unwillingness of the courts to accept that the Horizon IT system developed for the Post Office was unreliable and lacking in robustness—until the key judgment, which has already been mentioned, by Mr Justice Fraser in 2019—is one of the main reasons why more than 900 sub-postmasters were wrongly prosecuted. The error logs of any computer system make it possible to identify unexpected states in the computer software and hence erroneous system behaviour. Error logs for the Horizon IT system were disclosed only in response to a direction from the court in early 2019. At that point, the records from Fujitsu’s browser-based incident management system revealed 218,000 different error records for the Horizon system.
For 18 years prior to 2019, the Post Office did not disclose any error log data, documents which are routinely maintained and kept for any computer system of any size and complexity. Existing disclosure arrangements in legal proceedings do not work effectively for computer software, and this amendment concerning the electronic evidence produced by or derived from a computer system seeks to address this issue. The Post Office Horizon IT inquiry finished hearing evidence yesterday, having catalogued a human tragedy of unparalleled scale, one of the most widespread miscarriages of justice in the UK. Whether it is by means of this amendment or otherwise, wrongful prosecutions on the basis that computers always operate properly cannot continue any longer.
The Earl of Erroll (CB)
My Lords, if I may just interject, I have seen this happen not just in the Horizon scandal. Several years ago, the banks were saying that you could not possibly find out someone’s PIN and were therefore refusing to refund people who had had stuff stolen from them. It was not until the late Professor Ross Anderson, of the computer science department at Cambridge University, proved that they had been deliberately misidentifying to the courts which counter they should have been looking at, as to what was being read, and explained exactly how you could get the thing to default back to a different set of counters, that the banks eventually had to give way. But they went on lying to the courts for a long time. I am afraid that this is something that keeps happening again and again, and an amendment like this is essential for future justice for innocent people.
Lord Clement-Jones (LD)
My Lords, it is a pity that this debate is taking place so late. I thank the noble Lord, Lord Arbuthnot, for his kind remarks, but my work ethic feels under considerable pressure at this time of night.
All I will say is that this is a much better amendment than the one that the noble Baroness, Lady Kidron, put forward for the Data Protection and Digital Information Bill, and I very strongly support it. Not only is this horrifying in the context of the past Horizon cases, but I read a report about the Capture software, which is likely to have created shortfalls that led to sub-postmasters being prosecuted as well. This is an ongoing issue. The Criminal Cases Review Commission is reviewing five Post Office convictions in which the Capture IT system could be a factor, so we cannot say that this is about just Horizon, as there are the many other cases that the noble Baroness cited.
We need to change this common law presumption even more in the face of a world in which AI use, with all its flaws and hallucinations, is becoming ever present, and we need to do it urgently.
The Earl of Effingham (Con)
My Lords, I thank the noble Baroness, Lady Kidron, for tabling her amendment. We understand its great intentions, which we believe are to prevent another scandal similar to that of Horizon and to protect innocent people from having to endure what thousands of postmasters have undergone and suffered.
However, while this amendment would make it easier to challenge evidence derived from, or produced by, a computer or computer system, we are concerned that, should it become law, this amendment could be misused by defendants to challenge good evidence. Our fear is that, in determining the reliability of such evidence, we may create a battle of the expert witnesses. This will not only substantially slow down trials but result in higher costs. Litigation is already expensive, and we would aim not to introduce additional costs to an already costly process unless absolutely necessary.
From our perspective, the underlying problem in the Horizon scandal was not that computer systems were critically wrong or that people were wrong, but that the two in combination drove the terrible outcomes that we have unfortunately seen. For many industries, regulations require firms to conduct formal systems validation, with serious repercussions and penalties should companies fail to do so. It seems to us that the disciplines of systems validation, if required for other industries, would be both a powerful protection and considerably less disruptive than potentially far-reaching changes to the law.
Baroness Jones of Whitchurch (Lab)
My Lords, I thank the noble Baroness and the noble Lord, Lord Arbuthnot, for Amendment 207 and for raising this important topic. The noble Baroness and other noble Lords are right that this issue goes far wider than Horizon. We could debate what went wrong with Horizon, but the issues before us today are much wider than that.
The Government are agreed that we must prevent future miscarriages of justice. We fully understand the intention behind the amendment and the significance of the issue. We are actively considering this matter and will announce next steps in the new year. I reassure noble Lords that we are on the case with this issue.
In the meantime, as this amendment brings into scope evidence presented in every type of court proceeding and would have a detrimental effect on the courts and prosecution—potentially leading to unnecessary delays and, more importantly, further distress to victims—I must ask the noble Baroness whether she is content to withdraw it at this stage. I ask that on the basis that this is an ongoing discussion that we are happy to have with her.
Baroness Kidron (CB)
I thank the Minister, in particular for understanding that this goes way beyond Horizon. I would be very interested to be involved in those conversations, not because I have the great truth but because I have access to people with the great truth on this issue. In the conversations I have had, there has been so much pushing back. A bit like with our previous group, it would have been better to have been in the conversation before the consultation was announced than after. On that basis, I beg leave to withdraw the amendment.
Baroness Kidron
“Sovereign data assets(1) The Secretary of State may by regulations define data sets held by public bodies and arm’s length institutions and other data sets that are held in the public interest as sovereign data assets (defined in subsection (6)).(2) In selecting data sets which may be designated as sovereign data assets, the Secretary of State must—(a) have regard to—(i) the security and privacy of United Kingdom data subjects;(ii) the ongoing value of the data assets;(iii) the rights of United Kingdom intellectual property holders;(iv) ongoing adherence to the values, laws and international obligations of the United Kingdom;(v) the requirement for public sector employees, researchers, companies and organisations headquartered in the United Kingdom to have preferential terms of access;(vi) the need for data to be stored in the United Kingdom, preferably in data centres in the United Kingdom;(vii) the need to design Application Programming Interfaces (APIs) as bridges between each sovereign data asset and the client software of the authorized licence holders;(b) consult with—(i) academics with expertise in the field;(ii) the AI Safety Institute;(iii) those with responsibility for large public data sets;(iv) data subjects;(v) the Information Commissioner.(3) The Secretary of State must establish a transparent licensing system, fully reflecting the security and privacy of data held on United Kingdom subjects, for use in providing access to sovereign data assets.(4) The Secretary of State must report annually to Parliament on the ongoing value of the sovereign data assets, in terms of—(a) their value to future users of the data;(b) the financial return expected when payment is made for the use of such data in such products and services as may be expected to be developed.(5) The National Audit Office must review the licensing system established by the Secretary of State under subsection (3) and report annually to Parliament as to its effectiveness in securing the ongoing security of the sovereign data assets.(6) In this section—“sovereign data asset” means—(a) data held by public bodies and arm’s length institutions of government;(b) data sets held by third parties that volunteer data to form, or contribute to, a public asset.(7) Regulations under this section are to be made by statutory instrument.(8) A statutory instrument containing regulations under this section may not be made unless a draft of the instrument has been laid before and approved by a resolution of each House of Parliament.” Member’s explanatory statement
The UK has a number of unique publicly-held data assets, from NHS data to geospatial data and the BBC’s multimedia data. This amendment would create a special status for data held in the public interest, and a licensing scheme for providing access to them, which upholds UK laws and values, and ensure a fair return of financial benefits to the UK.
Baroness Kidron (CB)
My Lords, the good news is that this is the last time I shall speak this evening. Amendment 211 seeks to ensure that the value of our publicly held large datasets is realised for the benefit of UK citizens.
Proposed new subsection (1) gives the Secretary of State the power to designate datasets held by public bodies, arm’s-length institutions or other sets held in the public interest as sovereign data assets.
Proposed new subsection (2) lists a number of requirements that the Secretary of State must have regard to when making a designation. Factors include the security and privacy of UK citizens, the ongoing value of the data assets, the rights of IP holders, the values, laws and international obligations of the UK, the requirement to give preferential access to UK-headquartered companies, organisations and the public sector, the requirement for data to be stored in the UK and the design of application programming interfaces facilitating access to the assets by authorised licence holders. It also sets out stakeholders whom the Secretary of State must consult when considering what datasets to designate as sovereign data assets. We heard in a previous debate that education data might be a good candidate.
Proposed new subsection (3) requires the setting up of a transparent licensing system. Proposed new subsection (4) requires those managing sovereign data assets to report annually on their value and anticipated return to UK subjects. This would include, for example, licence payments, profit share agreements and “in kind” returns, such as access to products or services built using sovereign data assets. Proposed new subsection (5) gives an oversight role to the National Audit Office, proposed new subsection (6) provides a definition, and proposed new subsections (7) and (8) specify that regulations made under the clause are subject to parliamentary approval.
When I raised this issue at Second Reading, the Minister answered positively, in that she felt that what I was suggesting was embodied in the plans for a national data library:
“The national data library will unlock the value of public data assets. It will provide simple, secure and ethical access to our key public data assets for researchers, policymakers and businesses, including those at the frontier of AI development, and make it easier to find, discover and make connections across those … databases. It will sit at the heart of an ambitious programme of reform that delivers the incentives, investment and leadership needed to secure the full benefits for people and the economy”.—[Official Report, 19/11/24; col. 196.]
That is a very valid and positive picture. My comments build on it, because since Second Reading, I have sought details about the national data library. It seems that plans are nascent and the level of funding, as I understand it, seems to match neither the ambition set out by the Minister nor what many experts think is necessary. One of my concerns—it will not surprise the Committee to hear, as it has come up a couple of times on previous groups—is that it appears to be a mechanism for facilitating access, rather than understanding, realising and protecting the value of these public data assets.
In the meantime, announcements of access to public data keep coming. We have worries about Palantir and the drip-feed of deals with OpenAI and Google, the latest of which was in the Health Services Journal, which said:
“The national Federated Data Platform will be used to train AI models for future use by the NHS, according to NHS England’s chief data and analytics officer”.
That sounds great, but the article went on to question the basis and the wrap-around. This is the question.
We in this House already understand the implications of an “adopt now, ask questions later”, approach. For example, as reported recently in Computer Weekly, Microsoft has now admitted to Scottish policing bodies that it cannot guarantee the sovereignty of UK policing data hosted on its hyperscale public cloud infrastructure. That is a huge problem for Police Scotland and one that is very likely to be mirrored across all sorts of government departments, in a technology that is central to so many departments. The proposed amendments offer a route to ask questions as you adopt technology, not after you have lost control.
The Deputy Chairman of Committees (Lord Russell of Liverpool) (CB)
My Lords, before we proceed, I draw to the attention of the Committee that we have a hard stop at 8.45 pm and we have committed to try to finish the Bill this evening. Could noble Lords please speak quickly and, if possible, concisely?
Lord Tarassenko (CB)
My Lords, I support my noble friend Lady Kidron’s Amendment 211, to which I have put my name. I speak not as a technophobe but as a card-carrying technophile. I declare an interest as, for the past 15 years, I have been involved in the development of algorithms to analyse NHS data, mostly from acute NHS trusts. This is possible under current regulations, because all the research projects have received medical research ethics approval, and I hold an honorary contract with the local NHS trust.
This amendment is, in effect, designed to scale up existing provisions and make sure that they are applied to public sector data sources such as NHS data. By classifying such data as sovereign data assets, it would be possible to make it available not only to individual researchers but to industry—UK-based SMEs and pharmaceutical and big tech companies—under controlled conditions. One of these conditions, as indicated by proposed new subsection (6), is to require a business model where income is generated for the relevant UK government department from access fees paid by authorised licence holders. Each government department should ensure that the public sector data it transfers to the national data library is classified as a sovereign data asset, which can then be accessed securely through APIs acting
“as bridges between each sovereign data asset and the client software of the authorized licence holders”.
In the time available, I will consider the Department of Health and Social Care. The report of the Sudlow review, Uniting the UK’s Health Data: A Huge Opportunity for Society, published last month, sets out what could be achieved though linking multiple NHS data sources. The Academy of Medical Sciences has fully endorsed the report:
“The Sudlow recommendations can make the UK’s health data a truly national asset, improving both patient care and driving economic development”.
There is little difference, if any, between health data being “a truly national asset” and “a sovereign asset”.
Generative AI has the potential to extract clinical value from linked datasets in the various secure data environments within the NHS and to deliver a step change in patient care. It also has the potential to deliver economic value, as the application of AI models to these rich, multimodal datasets will lead to innovative software products being developed for early diagnosis and personalised treatment.
However, it seems that the rush to generate economic value is preceding the establishment of a transparent licensing system, as in proposed new subsection (3), and the setting up of a coherent business model, as in proposed new subsection (6). As my noble friend Lady Kidron pointed out, the provisions in this amendment are urgently needed, especially as the chief data and analytics officer at NHS England is reported as having said, at a recent event organised by the Health Service Journal and IBM, that the national federated data platform will soon be used to train different types of AI model. The two models mentioned in the speech were OpenAI’s proprietary ChatGPT model and Google’s medical AI, which is based on its proprietary large language model, Gemini. So, the patient data in the national federated data platform being built by Palantir, which is a US company, is, in effect, being made available to fine-tune large language models pretrained by OpenAI and Google—two big US tech companies.
As a recent editorial in the British Medical Journal argued:
“This risks leaving the NHS vulnerable to exploitation by private technology companies whose offers to ‘assist’ with infrastructure development could result in loss of control over valuable public assets”.
It is vital for the health of the UK public sector that there is no loss of control resulting from premature agreements with big tech companies. These US companies seek privileged access to highly valuable assets which consist of personal data collected from UK citizens. The Government must, as a high priority, determine the rules for access to these sovereign data assets along the lines outlined in this amendment. I urge the Minister to take on board both the aims and the practicalities of this amendment before any damaging loss of control.
Lord Freyberg (CB)
My Lords, I support Amendment 211 moved by my noble friend Lady Kidron, which builds on earlier contributions in this place made by the noble Lords, Lord Mitchell, Lord Stevenson, Lord Clement-Jones, and myself, as long ago as 2018, about the need to maximise the social, economic and environmental value that may be derived from personal data of national significance and, in particular, data controlled by our NHS.
The proposed definition of “sovereign data assets” is, in some sense, broad. However, the intent to recognise, protect and maximise their value in the public interest is readily inferred. The call for a transparent licensing regime to provide access to such assets and the mention of preferential access for individuals and organisations headquartered in the UK also make good sense, as the overarching aim is to build and maintain public trust in third-party data usage.
Crucially, I fully support provisions that would require the Secretary of State to report on the value and anticipated financial return from sovereign data assets. Identifying a public body that considered itself able or willing to guarantee value for money proved challenging when this topic was last explored. For too long, past Governments have dithered and delayed over the introduction of provisions that explicitly recognise the need to account for and safeguard the investment made by taxpayers in data held by public and arm’s-length institutions and associated data infrastructure—something that we do as a matter of course where the tangible assets that the National Audit Office monitors and reports on are concerned.
In recent weeks, the Chancellor of the Exchequer has emphasised the importance of recovering public funds “lost” during the Covid-19 pandemic. Yet this focus raises important questions about other potential revenue streams that were overlooked, particularly regarding NHS data assets. In 2019, Ernst & Young estimated that a curated NHS dataset could generate up to £5 billion annually for the UK while also delivering £4.6 billion in yearly patient benefits through improved data infrastructure. This begs the question: who is tracking whether these substantial economic and healthcare opportunities are being realised? Who is ensuring that these projected benefits—both financial and clinical—are actually flowing back into our healthcare system?
As we enter the age of AI, public discourse often fixates on potential risks while overlooking a crucial opportunity—namely, the rapidly increasing value of publicly controlled data and its potential to drive innovation and insights. This raises two crucial questions. First, how might we capitalise on the upside of this technological revolution to maximise the benefits on behalf of the public? Secondly, and more specifically, how will Parliament effectively scrutinise any eventual trade deal entered into with, for example, the United States of America, which might focus on a more limited digital chapter, in the absence of either an accepted valuation methodology or a transparent licensing system for use in providing access to valuable UK data assets?
Will the public, faced with a significant tax burden to improve public services and repeated reminders of the potential for data and technology to transform our NHS, trust the Government if they enable valuable digital assets to be stripped today only to be turned tomorrow into cutting-edge treatments that we can ill afford to purchase and that benefit companies paying taxes overseas? To my mind, there remains a very real risk that the UK, as my noble friend Lady Kidron, rightly stated, will inadvertently give away potentially valuable digital assets without there being appropriate safeguards in place. I therefore welcome the intent of Amendment 211 to put that right in the public interest.
Lord Lucas (Con)
My Lords, having a system such as this would really focus the public sector on how we can generate more datasets. As I said earlier, education is an obvious one, but so is mobile phone data. All these companies have their licences. If a condition of the licence was that the data on how people move around the UK became a public asset, that would be hugely beneficial to policy formation. If we really understood how, why and when people move, we would make much better decisions. We could save ourselves huge amounts of money. We really ought to have this as a deep focus of government policy.
Lord Clement-Jones (LD)
My Lords, I have far too little time to do justice to this subject. We on these Benches welcome this amendment. It is entirely consistent with the sovereign health fund proposed by Future Care Capital and, indeed, with the proposals from the Tony Blair Institute for Global Change on a similar concept called the national data trust. Indeed, this concept formed part of our Liberal Democrat manifesto at the last general election, so of course I support the amendment.
It would be very useful to hear more about the national data library, including on its purpose and operation, as the noble Baroness, Lady Kidron, said. I entirely agree with her that there is a great need for a sovereign cloud service or services. Indeed, the inability to guarantee that data on the cloud is held in this country is a real issue that has not yet been properly addressed.
The Earl of Effingham (Con)
My Lords, I thank the noble Baroness, Lady Kidron, for moving this amendment. As she rightly identified, the UK has a number of publicly held data assets, many of which contain extremely valuable information. This data—I flag, by way of an example, NHS data specifically—could be extremely valuable to certain organisations, such as pharmaceutical companies.
We are drawn to the idea of licensing such data—indeed, we believe that we could charge an extremely good price—but we have a number of concerns. Most notably, what additional safeguards would be required, given its sensitivity? What would be the limits and extent of the licensing agreement? Would this status close off other routes to monetising the data? Would other public sector bodies be able to use the data for free? Can this not already be done without the amendment?
Although His Majesty’s Official Opposition of course recognise the wish to ensure that the UK taxpayer gets a fair return on our information assets held by public bodies and arm’s-length organisations, and we certainly agree that we need to look at licensing, we are not yet sure that this amendment is either necessary or sufficient. We once again thank the noble Baroness, Lady Kidron, for moving it. We look forward to hearing both her and the Minister’s thoughts on the matter.
Baroness Jones of Whitchurch (Lab)
My Lords, I am grateful to the noble Baroness, Lady Kidron, for her amendment. I agree with her that the public sector has a wealth of data assets that could be used to help our society achieve our missions and contribute to economic growth.
As well as my previous comments on the national data library, the Government’s recent Green Paper, Invest 2035: The UK’s Modern Industrial Strategy, makes it clear that we consider data access part of the modern business environment, so improving data access is integral to the UK’s approach to growth. However, we also recognise the value of our data assets as part of this approach. At the same time, it is critical that we use our data assets in a trustworthy and ethical way, as the noble Baroness, Lady Kidron, and the noble Lord, Lord Tarassenko, said, so we must tackle these issues carefully.
This is an active area of policy development for the Government, and we need to get it right. I must therefore ask the noble Baroness to withdraw her amendment. However, she started and provoked a debate that will, I hope, carry on; we would be happy to engage in that debate going forward.
Baroness Kidron (CB)
I thank all speakers, in particular my noble friend Lord Tarassenko for his perspective. I am very happy to discuss this matter and let the Official Opposition know that this is a route to something more substantive to which they can agree. I beg leave to withdraw my amendment.
The Deputy Chairman of Committees (Lord Russell of Liverpool) (CB)
My Lords, before we move on to the next group, I again remind noble Lords that we have in fact only two groups to get through because Amendment 212 will not be moved. We have about 25 minutes to get through those two groups.
Amendment 211B
Lord Holmes of Richmond
“Consultation: data centre power usageOn the day on which this Act is passed, the Secretary of State must launch a consultation on the implications of the provisions in this Act for the power usage and energy efficiency of data centres.”
Lord Holmes of Richmond (Con)
My Lords, it is a pleasure to introduce this group of amendments. I have a 35-minute speech prepared. In moving Amendment 211B, I shall speak also to Amendments 211C to 211E. The reason for this group of amendments is to try to get an increased focus on the range of issues they touch on.
I turn to Amendment 211B first. It seems at least curious to have a data Bill without talking about data centres in terms of their power usage, their environmental impact and the Government’s view of the current PUE standard. Is it of a standard that they think gives the right measure of confidence to consumers and citizens across the country, in terms of how data centres are being operated and their impacts?
Similarly, on Amendment 211C, not enough consideration is given to supply chains. I am not suggesting that they are the most exciting subject but you have to go only one or two steps back in any supply chain to get into deep depths of opacity. With this amendment, I am seeking to gain more clarity on data supply chains and the role of data across all supply chains. Through the combination of data and AI, we could potentially enable a transformation of our supply chain in real time. That would give us so much more flexibility to try for economic benefits and environmental benefits. I look forward to the Minister’s response.
I now move on to Amendment 211D. It is always a pleasure to bring AI into a Bill that really does not want to have AI in it. I am interested in the whole question of data input and output, not least with large language models. I am also interested in the Government’s view on how this interacts with the 1988 copyright Act. There may be some mileage in looking into some standards and approaches in this area, which would potentially go some way towards conditions of market access. We have some excellent examples to look at in other sectors of our economy and society, as set out in the amendment; I would welcome the Minister’s views on that.
I am happy that this group ends with Amendment 211E on the subject of public trust. In many ways, it is the golden thread that should run through everything when we talk about data; I wanted it to be the golden thread that ran through my AI regulation Bill. I always say that Clause 6 is the most important clause in that Bill because it goes to the question of public engagement and trust. Without that level of public engagement and trust, it does not matter how good the technologies are, how good the frameworks are or how good the chat around the data is. It might be golden but, if the public do not believe in it, they are not going to come and be part of it. The most likely consequence of this is that they will not be able to avail themselves of the benefits but they will almost certainly be saddled with the burdens. What these technologies enable is nothing short of a transformation of that discourse between citizen and state, with the potential to reimagine completely the social contract for the benefit of all.
Public engagement and public trust are the golden thread and the fuel for how we gain those economic, social and psychological benefits from the data. I will be very interested in the Minister’s response on what more could be done by the Government, because previous consultations, not least around some of these technologies, have been somewhat short of what we could achieve. With that #brevity and #our data, I beg to move.
Lord Clement-Jones (LD)
My Lords, I shall be #even shorter. Data centres and their energy consumption are important issues. I agree that at a suitable moment—probably not now—it would be very interesting to hear the Government’s views on that. Reports from UK parliamentary committees and the Government have consistently emphasised the critical importance of maintaining public trust in data use and AI, but sometimes, the actions of the Government seem to go contrary to that. I support the noble Lord, Lord Holmes, in his call for essentially realising the benefits of AI while making sure that we maintain public trust.
The Earl of Effingham (Con)
My Lords, I thank my noble friend Lord Holmes of Richmond for tabling this amendment. As we all appreciate, taking stock of the effects of legislation is critical, as it allows us to see what has worked and what has not. Amendment 221B would require the Secretary of State to launch a consultation into the implications of the provisions of the Bill on the power usage and energy efficiency of data centres. His Majesty’s Official Opposition have no objection to the amendment’s aims but we wonder to what extent it is actually possible. By what means or benchmark can we identify whether a spike in energy usage is specifically due to a provision from this legislation, rather than as a result of some other factor? I should be most grateful if my noble friend could provide further detail on this matter in his closing speech.
Regarding Amendment 211C, we understand that much could be learned from a review of all data regulations and standards pertaining to the supply chains for financial, trade, and legal documents and products, although we wonder if this needs to happen the moment this Bill passes. Could this review not happen at any stage? By all means, let us do it sooner rather than later, but is it necessary to set a date in statute?
Moving on to Amendment 221D, we should certainly look to regulate the AI large language model sector to ensure that there are standards for the input and output of data for LLMs. However, this must be done in a way that does not stifle growth in this emerging industry.
Finally, we have some concerns about Amendment 211E. A national consultation on the use of individuals’ data is perhaps just too broad.
Baroness Jones of Whitchurch (Lab)
My Lords, I am grateful to the noble Lord, Lord Holmes, for tabling Amendment 221B and his other amendments in this group, which are on a range of varied and important issues. Given the hour, I hope he will be content if I promise to write to him on each of these issues and in the meantime, I ask him to withdraw the amendment.
Lord Holmes of Richmond (Con)
I thank all noble Lords who participated: I will not go through them by name. I thank the Minister for her response and would very much welcome a letter. I am happy to meet her on all these subjects but, for now, I beg leave to withdraw the amendment.
Lord Lucas (Con)
“Local Environmental Records Centres (“LERCs”)(1) Any planning application involving biodiversity net gain must include a data search report from the relevant Local Environmental Records Centre (LERC), and all data from biodiversity surveys conducted in connection with the application must be contributed free of charge to the LERC in record-centre-ready format.(2) All government departments and governmental organisations, local and national, that collect biodiversity data for whatever reason, must contribute it free of charge to the relevant LERCs in record-centre-ready format, and must include relevant LERC data in formulating policy and operational plans.”Member’s explanatory statement
This amendment ensures that all the biodiversity data collected by or in connection with government is collected in Local Environmental Records Centres, so records are as good as possible, and that that data is then used by or in connection with government so that data is put to the best possible use.
Lord Lucas (Con)
My Lords, environmental data, specifically such things as biodiversity data, is a key component to getting policy in this area right. To do so, we need to make sure that all the good data we are generating around the UK gets into our storage system, and that the best possible and most complete data is used whenever we make decisions.
We currently run that through a system of local environmental records centres that are independent and not for profit. Since that is the system we have, it ought to be run right. At the moment, we are failing to capture a lot of quality data because the data is not coming in from the planning system, or from other similar functions, in the way that it should. We are not consistently using that data in planning as we should. Natural England, which ought to be intimately linked into this system, has stepped away from it for budgetary reasons. The environment is important to us. If the Government are serious about that, we have to get our data collection and use system right. I beg to move.
Lord Clement-Jones (LD)
My Lords, listening to the noble Lord, Lord Lucas, is often an education, and today is no exception. I had no idea what local environmental records centres were, so I shall be very interested to hear what the Minister has to say in response.
The Earl of Effingham (Con)
My Lords, I thank my noble friend Lord Lucas for tabling Amendment 211F and all noble Lords for their brief contributions to this group.
Amendment 211F ensures that all the biodiversity data collected by or in connection with government is collected in local environment records centres to ensure that records are as good as possible. That data is then used by or in connection with government, so it is put to the best possible use.
The importance of sufficient and high-quality record collection cannot and must not be understated. With this in mind, His Majesty’s Official Opposition support the sentiment of the amendment in my noble friend’s name. These Benches will always champion matters related to biodiversity and nature recovery. In fact, many of my noble friends have raised concerns about biodiversity in Committee debates in your Lordships’ House on the Crown Estate Bill, the Water (Special Measures) Bill and the Great British Energy Bill. Indeed, they have tabled amendments that ensure that matters related to biodiversity appear at the forefront of draft legislation.
With that in mind, I am grateful to my noble friend Lord Lucas for introducing provisions, via Amendment 211F, which would require any planning application involving biodiversity net gain to include a data search report from the relevant local environmental records centre. I trust that the Minister has listened to the concerns raised collaboratively in the debate on this brief group. We must recognise the importance of good data collection and ensure that such data is used in the best possible way.
Baroness Jones of Whitchurch (Lab)
My Lords, I thank the noble Lord, Lord Lucas, for his Amendment 211F. I absolutely agree that local environmental records centres provide an important service. I reassure noble Lords that the Government’s digital planning programme is developing data standards and tools to increase the availability, accessibility and usability of planning data. This will transform people’s experience of planning and housing, including through local environmental records centres. On that basis, I must ask the noble Lord whether he is prepared to withdraw his amendment.
Lord Lucas (Con)
My Lords, I am grateful for that extensive answer from the Minister. If I have anything that I hope that she might add, I will write to her afterwards.
My heart is always in the cause of making sure that the Government get their business done on time every time, and that we finish Committee stages when they ask, as doubtless they will discover with some of the other Bills they have in this Session. For now, I beg leave to withdraw my amendment.
“(5A) The power conferred by section 63(3) of the Immigration, Asylum and Nationality Act 2006 may be exercised so as to extend to the Bailiwick of Guernsey or the Isle of Man any amendment made by section 55 of this Act of any part of that Act (with or without modification or adaptation).(5B) The power conferred by section 76(6) of the Immigration Act 2014 may be exercised so as to extend to the Bailiwick of Guernsey or the Isle of Man any amendment made by section 55 of this Act of any part of that Act (with or without modifications). (5C) The power conferred by section 95(5) of the Immigration Act 2016 may be exercised so as to extend to the Bailiwick of Guernsey or the Isle of Man any amendment made by section 55 of this Act of any part of that Act (with or without modifications).”Member's explanatory statement
The immigration legislation amended by Clause 55 may be extended to the Channel Islands or the Isle of Man. This amendment provides that the amendments made by Clause 55 may be extended to the Bailiwick of Guernsey or the Isle of Man.
“(5A) The power conferred by section 239(7) of the Online Safety Act 2023 may be exercised so as to extend to the Bailiwick of Guernsey or the Isle of Man any amendment or repeal made by this Act of any part of that Act (with or without modifications).”Member's explanatory statement
This amendment provides that amendments of the Online Safety Act 2023 made by the Bill (see Clauses 122 and 123) may, like the other provisions of that Act, be extended to the Bailiwick of Guernsey or the Isle of Man.
The Deputy Chairman of Committees (Lord Russell of Liverpool) (CB)
That concludes the Committee’s proceedings on the Bill. I thank all noble Lords who have participated for being so co-operative.
House of Lords
Hammersmith Bridge
(1 day, 13 hours ago)
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Lord Harries of Pentregarth
To ask His Majesty’s Government what action they are taking to re-open Hammersmith Bridge to motor traffic.
The Minister of State, Department for Transport (Lord Hendy of Richmond Hill) (Lab)
My Lords, my department is working with the London Borough of Hammersmith and Fulham and Transport for London on the closure of Hammersmith Bridge to traffic. The Government have provided the borough with almost £13 million of funding to date, and my honourable friend the Minister for Local Transport will reconvene the Hammersmith Bridge taskforce in the new year.
Lord Harries of Pentregarth (CB)
I thank the Minister. It is good news that the taskforce is meeting on 30 January, but of course it does raise the question of why it has not met for more than three years. Hammersmith Bridge is a major entry point into London, and hundreds of thousands of commuters have been very badly inconvenienced for more than five years. During that time, Notre Dame was gutted by fire and rebuilt.
The other bit of good news is that this is a project to be considered in the spring spending review. Will the Minister use all his extensive experience and efforts to ensure that this project is adopted? At the moment, it is a stain on our national reputation as a country with the capacity and the will to get things done.
Lord Hendy of Richmond Hill (Lab)
The noble and right reverend Lord would not expect me to account for the time elapsed since the taskforce last met and July. It is now going to meet, and the good news is that the stabilisation work, which has been beset by delays and cost increases due to skill scarcity and inflation, should be finished by April 2025. The bridge is an iconic structure—perhaps not as iconic as Notre Dame, but it is certainly useful locally. It was built in 1887 from wrought iron; it has been bombed twice by the IRA, has not been properly maintained for decades, and nearly fell down five years ago.
Some noble Lords know that I can drive a public service vehicle. I must be the only person here who has driven one over Hammersmith Bridge in traffic, and I can tell noble Lords that the forward motion of the bus was accompanied by the lateral motion of the bridge —and the vertical motion of the bridge. It is the only time driving a bus I have nearly felt seasick.
Baroness Blower (Lab)
My Lords, as a resident of Hammersmith and Fulham I would like to say that, although there has been some inconvenience, there has also been much better air quality. I am interested in what the Minister has to say about the possibility of an electric shuttle service running across the bridge, to enable those who are unable to walk across it to cross with relative ease. That would be much better for the air quality for those of us in Barnes and Hammersmith and Fulham, and could be done reasonably quickly.
Lord Hendy of Richmond Hill (Lab)
It is a matter for the London Borough of Hammersmith and Fulham, and indeed for the neighbouring borough on the south side, of which I declare that I am a resident, to decide what they want to do with the bridge. The stabilisation work has stopped it from literally collapsing, but the capacity of the bridge to take traffic as well as pedestrians and cyclists will cost a lot more money, and the boroughs will have to work with Transport for London to decide how the bridge is going to be used. The other really important feature of the bridge is that at least once a year it is absolutely full of pedestrians. Therefore, a job that does not allow it to bear the weight of pedestrians for the boat race and other things will not be very satisfactory. However, it is for the boroughs to decide how to deal with that.
Baroness Pidgeon (LD)
My Lords, this is a sorry saga. The impact of the closure is significant for south-west London, particularly the London Borough of Richmond upon Thames. When will a full economic and environmental evaluation be carried out on the effect of the bridge’s closure for this whole area?
Lord Hendy of Richmond Hill (Lab)
As I say, it is primarily for the London Borough of Hammersmith and Fulham, which has the good fortune—or bad luck—to own this structure, and for the London Borough of Richmond upon Thames on the south side to decide between them what they want to do with this bridge in the future, bearing in mind the engineering evaluation about what the structure is capable of doing. It was designed and built for horse-drawn traffic; it has never been particularly strong. Therefore, the boroughs need to work with Transport for London to work out to what use it might be put. I agree that there needs to be an economic evaluation of the effects of whatever happens permanently, but first they need to work out what the bridge is capable of doing after it has been stabilised.
Baroness Vere of Norbiton (Con)
My Lords, I was the chair of the Hammersmith Bridge taskforce, alongside the current Transport Secretary, who was also a member. I said that the taskforce would reconvene whenever a project came forward from Hammersmith and Fulham. We have heard from the noble Baroness, Lady Blower, who says that there is some doubt as to whether it really should be reopened from the Hammersmith and Fulham side. I have sensed all along that this is why Hammersmith and Fulham council has been dragging its feet. The Liberal Democrats also cannot claim glory in this. because they are remarkably silent from the south of the river. Can the Minister tell the House whether full, complete and costed proposals have been forthcoming from Hammersmith and Fulham council?
Lord Hendy of Richmond Hill (Lab)
We know what the range of costs for a future renovation of the bridge should be. They are very significant—at least a quarter of a billion pounds. I cannot currently say how detailed that is, but I know that it is the order of magnitude of what would need to be done to move further than just stabilisation, which will be completed, as I say. It must have been quite a burden to both chair and be in those meetings, and I am interested to hear about that. I hope that my honourable friend the Minister for Local Transport, when he reconvenes the taskforce, quickly brings the meeting to a clear understanding of what the bridge is to be used for in the future, and therefore what needs to be done to it in the long term.
Lord Moylan (Con)
My Lords, the Greater London Authority Act explicitly transferred the responsibility previously held by the Government Office for London to fund capital transport projects by the boroughs to the Mayor of London. It is undoubtedly the Mayor of London’s responsibility to provide funding for this. Does the Minister not agree that what we are seeing here is a failure by two Labour-run authorities that, at the expense of members of the public, are engaged in a competition to show who can be more anti-motorist?
Lord Hendy of Richmond Hill (Lab)
I will say two things to the noble Lord. First, the bridge has got into its current state over decades, which have seen various changes of control by the owners, the London Borough of Hammersmith and Fulham. Secondly, he will know better than most that the level of settlement afforded to the Mayor of London for transport purposes by the previous Government was frankly derisory, and therefore the current Mayor of London has not been able to allocate money to all the things he would like to. We need to establish what the use of the bridge will be in future, which is a matter for the two boroughs. In other circumstances the noble Lord would defend fiercely the right of local authorities in London to decide what to do with their local roads. That has to be established. From that, it can be worked out what to do with the bridge, how much it will cost, how long it will take and, incidentally, who should pay for it.
Lord Aberdare (CB)
My Lords, I declare my interest as a Barnes resident. Hammersmith Bridge is a key Thames crossing point for motor traffic in London. Its closure for over five years has greatly increased traffic congestion, delays and pollution around neighbouring bridges in Kew, Chiswick and Putney. Even the idea of a community pedicab service across the bridge has apparently been shelved—although much good it would do for motorists. What reassurance can the Minister give that he will ensure there is at least a plan in place for reopening the bridge to motor traffic before the actual reopening of the far-larger Baltimore harbour bridge, scheduled for 2028? How will he clarify who is responsible for such a plan and how it will be funded?
Lord Hendy of Richmond Hill (Lab)
I am very clear that the bridge is owned by the London Borough of Hammersmith and Fulham. It is that borough’s job as the highway authority for the local road network, together with Richmond upon Thames on the other side, to decide how this bridge should be used. The mayor has responsibility for transport in London; he is part of this discussion, and the department is too, but those boroughs have to decide. They have to look at both how long it has taken and how much it has cost to stabilise the bridge, and decide what that structure is capable of doing in the future. It has never been able to take heavy vehicles of any description and, as I said, latterly it was pretty unsuitable for vehicles of seven and three-quarter tonnes. The boroughs need to decide on that, because the cost of doing it and the time it will take to finish depends on it. It is their collective job to do it, and that is why the taskforce will be reconvened.
Housing: Permitted Development Rights
(1 day, 13 hours ago)
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Lord Crisp
To ask His Majesty’s Government what is their policy on creating additional housing units through permitted development rights.
The Parliamentary Under-Secretary of State, Ministry of Housing, Communities and Local Government (Baroness Taylor of Stevenage) (Lab)
I thank the noble Lord, Lord Crisp, for his Question and for all the work he has done on healthy homes. Under nationally set permitted development rights, a wide range of commercial and other buildings are able to change use without the need for a planning application. The Government acknowledge the concerns that exist about the quality of residential units created through permitted development rights, particularly office-to-residential conversions. We will continue to keep permitted development rights under review, and we are grateful to the National Housing Federation and the TCPA for highlighting some of the issues arising from poor-quality PD schemes.
Lord Crisp (CB)
I thank the noble Baroness for that response and for the fact that this is being kept under review. I was also pleased to hear from a government spokesman last week that there is to be
“no trade-off between supply and quality”
in respect of housing. However, as the noble Baroness said, PDR has a poor record. Some very good conversions are made but a large number suffer from safety and other problems. I want to ask two questions. How will the noble Baroness ensure that that poor track record is not just continued into the future? Also, in reviewing it, will she meet some of the people who have already done so and come to conclusions about it to ensure that there is indeed no trade-off between housing supply and quality?
Baroness Taylor of Stevenage (Lab)
My Lords, the Government’s aim in the delivery of the 1.5 million homes is to deliver good quality, well-designed, sustainable homes and places that everyone can be proud of. I have already met both the TCPA and the National Housing Federation, which have been campaigning on this. I am very aware of some of the poor practice that has occurred, and we will continue to advocate for the principles of good design, as set out in the National Design Guide and the National Model Design Code. As I say, we keep permitted development under review.
Lord Young of Cookham (Con)
My Lords, it must make sense to use redundant buildings to provide good-quality accommodation for those in need, but is there not a loophole in the current fire safety regulations? These apply when a commercial building is converted into flats but not when industrial buildings or storage units are. Should we not use the Renters’ Rights Bill to close this loophole?
Baroness Taylor of Stevenage (Lab)
My Lords, the Planning Gateway One fire safety requirements apply to applications for planning permission for relevant buildings. To apply some of the principles to permitted development, there was a prior approval on fire safety impacts in 2021 that applies to class MA: commercial, business and services to residential. It is not, however, as detailed as the requirements for a planning application. For example, it does not require the completion of a fire safety form. We need to continue to look at these issues and to make sure that permitted development is completely safe from fire.
Baroness Ritchie of Downpatrick (Lab)
My Lords, I congratulate the Government and my noble friend the Minister on the ambitious housing targets to meet housing need. What assessment has been made of mixed funding models using private, public, and banking and hedge fund sources to construct those houses in order to provide for the great housing need throughout the country?
Baroness Taylor of Stevenage (Lab)
My noble friend makes an excellent point about funding for affordable housing. Even in a very tight budget round, the Government have allocated an additional £500 million towards affordable housing, which brings the total up to around £3 billion altogether. But we need to consider all sources of funding. I spoke to a housing investment forum in the City of London just a few weeks ago, and there is great interest in this area; and of course, we still need to look at pension funds further for local investment to drive the housing market.
Baroness Thornhill (LD)
My Lords, surely it is the Government’s mission to create decent homes and not the slums of the future, and I am at a loss to know why the Government are procrastinating on this. Surely it is time to insist on full planning permission for the larger schemes, or at least to revert to the regulations that were in place before 2012.
Baroness Taylor of Stevenage (Lab)
I take the noble Baroness’s point; we need to keep this continually under review. Some of the permitted development homes have been of fair quality and have provided homes for people. But we need to continue to press that all new homes delivered through permitted development rights must provide adequate light, meet nationally described space standards and be decent, fit and safe for the people who live in them. We will continue to do that. Where there are bigger schemes, equally, they must meet those requirements.
Lord Ravensdale (CB)
My Lords, I declare my interest as listed in the register. Running through the creation of additional housing are upcoming policy decisions on regulating embodied carbon. Can the Minister update the House on the research under way in her department, when it will report and when the associated consultation will be published?
Baroness Taylor of Stevenage (Lab)
I am grateful to the noble Lord, and for his time in meeting with me to discuss embodied carbon. We have been talking to the construction industry and to developers across the board, and there are some complex issues involved. I know the noble Lord is doing work with stakeholders as well, and I look forward to working with him further in the new year. I believe we have a meeting scheduled for early in 2025 to discuss this further.
Lord Jamieson (Con)
My Lords, I declare my interest as a councillor in central Bedfordshire. To deliver the housing this country needs, we need to ensure that planning permissions and allocations are being built out in a timely manner. Yesterday, I asked the Minister whether the Government will provide local councils with adequate powers to ensure that allocated and permissioned sites actually get built, and she responded that there is a whole section on sanctions in the report. Can the Minister tell me which section that is in the NPPF, as I could find in it no meaningful additional tools being provided to councils to ensure build-out?
Baroness Taylor of Stevenage (Lab)
I thank the noble Lord and apologise for misleading him yesterday: it is not in the NPPF but in the accompanying notes. There are powers that local government can use, including completion orders and so on, to encourage developers to build out when necessary. I will provide him with a detailed written response about all the powers that are available to local government to do that.
The Lord Bishop of St Albans
My Lords, can the Minister tell us what steps her department is taking to ensure that enough of the homes being built under the PDR are affordable for local people in rural areas?
Baroness Taylor of Stevenage (Lab)
I thank the right reverend Prelate for that question. PDR tends to apply where there are brownfield sites to be developed because they are conversions, usually, from existing buildings. There has been a change to introduce that principle for agricultural buildings as well. I will try to get back to him with a specific answer on whether the department knows how much take-up there has been of that provision. We have made provision in the new national planning policy framework for ensuring that planning policies and decisions are responsive to local circumstances in rural areas and support housing developments that reflect local needs. That is a more general requirement. I will get back to him on whether the agricultural permitted development has had any traction.
Lord Taylor of Goss Moor (LD)
My Lords, I refer the Minister to the issue of rural businesses—shops, in many villages, that are a vital part of the vibrancy of those communities and services—which are being converted through PDR without permission and against the will of local communities. Shops are not protected beyond one within a kilometre.
Baroness Taylor of Stevenage (Lab)
It is very important that we focus on the facilities in local areas, but this is a commercial market and where shops are not able to achieve the market they need, permitted development regulations will occur. In reviewing the PDRs, that is one of the issues we need to focus on—whether any further protections are necessary, particularly for assets such as rural assets.
Lord Blunkett (Lab)
Referring back to the original Question asked by the noble Lord, Lord Crisp, can my noble friend confirm that the code will include noise insulation as well as other measures that are crucial to good health, on the grounds that noise nuisance can be deeply detrimental to the well-being of individuals and lead to much anti-social behaviour?
Baroness Taylor of Stevenage (Lab)
There are a wide range of issues that we need to think about in terms of permitted development, and noise nuisance is one of them. All new homes are required to meet current building regulations, including on fire safety, irrespective of the route to planning permission. However, some building regulations differ or do not apply where homes are delivered through material change of use rather than new build. That applies whether homes are delivered through permitted development or following an application for planning permission. All these issues—noise, fire safety and so on—need to be considered in the light of permitted development regulations.
Independent Office for Police Conduct
(1 day, 13 hours ago)
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Lord Lexden
To ask His Majesty’s Government what assessment they have made of the work of the Independent Office for Police Conduct.
The Minister of State, Home Office (Lord Hanson of Flint) (Lab)
An independent watchdog is vital in ensuring the effective oversight of police complaints and investigating the most serious and sensitive cases involving the police. The Independent Office for Police Conduct is accountable to the Home Office and Parliament for the delivery of its statutory and non-statutory duties. It was independently reviewed in 2023-24 as part of the public bodies review programme. The Government are currently considering the recommendations.
Lord Lexden (Con)
My Lords, why, after 18 months, is there no sign of the outcome of this organisation’s gross misconduct proceedings against Mr Steve Rodhouse? Inexplicably, he was made director-general of operations at the National Crime Agency after leading the disastrous Operation Midland, which inflicted immense distress on two distinguished Members of your Lordships’ House—Lord Bramall and Lord Brittan—and many others. Mr Rodhouse is the only officer to be called to account over this catastrophic police operation. As it goes about its leisurely work, does this organisation have any conception of the feelings of Lady Brittan and others who have suffered as a result of Mr Rodhouse’s misconduct? Incidentally, it has not stopped him recently receiving a £10,000 pay rise. Finally, does it come as any surprise that having found Mr Rodhouse guilty on a separate misconduct charge of jeopardising police operations against organised crime, the IOPC kept its decision secret until the Daily Mail revealed it?
Lord Hanson of Flint (Lab)
As ever, I try to be helpful to the noble Lord on these matters, but he will know that there is an ongoing IOPC investigation into the police officer he has mentioned. I am not able from this Dispatch Box to give advice or commentary on that investigation until such time as it is complete.
Baroness Chakrabarti (Lab)
My Lords, I hope that I speak for the whole House in paying tribute to the noble Lord, Lord Lexden, for his campaigning in this area. Year-on-year, we see Bill after Bill to give greater powers over the public to the police, but not so many Bills to deal with police discipline. What plans do His Majesty’s Government have to put that right soon?
Lord Hanson of Flint (Lab)
My noble friend will know that in the King’s Speech there was a proposal to establish greater accountability for the police, improve standards and review the work of the College of Policing. That will be brought before this House in due course and within this Session of Parliament.
Lord Davies of Gower (Con)
My Lords, can the Minister elaborate on what steps the Government are taking to ensure that the appointments system for senior roles within the Independent Office for Police Conduct is transparent, robust and free from any perception of bias, so as to maintain the much-needed public confidence in its impartiality?
Lord Hanson of Flint (Lab)
The Independent Office for Police Conduct is accountable to Ministers, as it was when the Opposition were in Government. There has been a recommendation from a review of the Cabinet Office’s public bodies review programme. That review was published in March 2024, when the noble Lord’s Government were in office. It looked at the whole question of the IOPC’s governance, accountability, efficiency and efficacy. There were 93 recommendations in that report, 73 of which have been accepted by the IOPC. The remaining recommendations were in his Government’s in-tray. They are now being reviewed and will be implemented shortly by this Government. Included in them is the method by which the IOPC is accountable to Ministers and therefore to this House and the House of Commons.
Lord Kennedy of Southwark (Lab Co-op)
We will hear from the Lib Dem Benches next.
Baroness Doocey (LD)
My Lords, over the last year, the IOPC has made a range of recommendations to the police about things such as strip-searching children and suspicionless stop and search. All the recommendations have been accepted by the police. Who is responsible for making sure that the recommendations that were accepted will be implemented? Will the Government publish the information so that we can all be sure that when recommendations are accepted, they are carried out in practice? As the Minister will know, this is not always the case. A lot of recommendations are accepted and then totally ignored.
Lord Hanson of Flint (Lab)
It is the responsibility of police chiefs, police and crime commissioners, and mayors in areas where the mayors are responsible, such as the Mayor of Greater Manchester, the Mayor of London and others, to implement recommendations made by the IOPC. I assure the noble Baroness that, ultimately, the buck stops here.
Lord Mackenzie of Framwellgate (Non-Afl)
My Lords, can the Minister confirm that one of the principal complaints about the IOPC from the police service itself is the length of time that investigations take? Clearly, this is causing some concern.
Lord Hanson of Flint (Lab)
I am grateful to the noble Lord for his question. It is absolutely vital—this goes back to the point made by the noble Lord, Lord Lexden—that investigations are done speedily and on time, are publicly accountable, and that their recommendations are implemented. It is no secret to this House that the Government intend to produce a police White Paper in the new year that will cover a range of issues, including the standards mentioned by the noble Baroness, Lady Doocey. The recommendations made about the IOPC, and how the Government will respond to them, will be included in that.
Baroness Blackwood of North Oxford (Con)
My Lords, a situation has arisen in Devon and Cornwall where not one but two chief constables have been suspended on full pay, pending investigation. I understand that the police and crime commissioner has made an application for a special grant in order to cover the costs of full pay for three chief constables. As we have just heard, the IOPC can take some time in its investigations. What approach does the Minister intend to take in this and similar situations in the future?
Lord Hanson of Flint (Lab)
I am grateful to the noble Baroness for her question. I must be honest, I do not have that information in front of me but I will report back to the police Minister. A police grant was published yesterday and is open for consultation. I am not aware of the particular request from the police and crime commissioner but I will follow up with my colleague and write to the noble Baroness with the detail of whether and how it is being progressed. Self-evidently, having three salaries for a chief constable is not a good use of public money.
Baroness Meacher (CB)
My Lords, having worked at the Police Complaints Authority for a number of years, I was impressed evermore by the extraordinary behaviour of the police officers who showed incredible restraint in the face of endless rudeness and offensiveness on the part of various members of the public. I wonder if the Minister has had similar experience of the police.
Lord Hanson of Flint (Lab)
As a Minister, my dealings with the police on a day-to-day basis are varied. I have found the police to be professional, forward-looking and aware of the need for accountability because they are exercising strong powers on behalf of the public at large. The purpose of the IOPC, its accountability to Ministers and the framework that we as Ministers set, is about making sure the police retain the confidence of the public they serve and maintain their security. Without that security and confidence, the police cannot operate in an effective way in policing our communities. That is part of the reason why the forthcoming White Paper will look at how we can improve standards, the management of standards and the level of accountability.
Lord Deben (Con)
The whole House owes a great debt of gratitude to the noble Lord, Lord Lexden, for his constant concern about these very big issues. But the thing that really matters to ordinary people to keep confidence in the police is, for example, the police answering complaints. That does not happen with the Metropolitan Police. If you send a complaint by email there seems to be no means of reply. The police ought surely always to be seen to be obeying the law that others obey. Every day, along the road from here, a long line of police cars are parked on double yellow lines. I do not mind it being designated as a police place, but on yellow lines, where ordinary motorists cannot stop, people just say that it is the police, again, not doing as police should do, which is to obey the law that everyone else has to obey.
Lord Hanson of Flint (Lab)
One of the proposals that the Government are bringing forward, which I hope will help the noble Lord, is the investment in 13,000 community police officers. As part of that community and neighbourhood policing offer, there will be in each council ward a named police officer who is the local liaison point. I absolutely take the noble Lord’s point; the level of response when a complaint is made is important. As for the operational issue of parking in front of this place, I will take that away but, ultimately, it is about the security of this building. There is a range of issues there which I think the noble Lord needs to look at. But I understand his point, and I will reflect on that.
Pension Review: Phase 2
(1 day, 13 hours ago)
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Lord Davies of Brixton
To ask His Majesty’s Government whether they have paused phase 2 of their pension review, and if so, why.
The Parliamentary Under-Secretary of State, Department for Work and Pensions (Baroness Sherlock) (Lab)
My Lords, this Government are committed to enabling tomorrow’s pensioners to have security in retirement, which is why we announced the landmark pensions review days after coming into office in July. The first phase will boost investment and economic growth, with two consultations live since November, and we are committed to a second phase focused on retirement adequacy, of which we will provide further details in due course.
Lord Davies of Brixton (Lab)
I very much welcome my noble friend the Minister’s reply, but of course she will be aware of how this works. Last weekend there was a series of stories in the national press, from the FT to the Sun, suggesting that the second phase had been put on hold, presumably to provide some assurance to those who are concerned about the high costs of employment. The problem is that without an urgent definition of an adequate pension on a clear and evidence-based basis, much of the debate that we can have on pensions is facile and empty of content. You cannot know which way to go unless you know where you are going. Does the Minister agree?
Baroness Sherlock (Lab)
I think I can agree with the last statement firmly. I will try to avoid being facile and empty of content; I cannot make permanent promises, but I will do my best. I understand the point my noble friend is making, but I can perhaps offer him some reassurance. The pensions review is going to be conducted in two phases, and it matters that they are structured in the right way. The first phase, which was launched by the Chancellor in July, is aiming to boost investment, so it offers a win-win. It will boost investment for the country and provide better saver outcomes, alongside economic growth.
Phase 1 launched two significant consultations: one about DC schemes and the other about the Local Government Pension Scheme. It is right that we focus on delivering the first phase before moving on to phase 2. But the second phase, my noble friend will be glad to know, will focus on pensions adequacy and further measures to improve outcomes for pensioners. I take his point about the need to be clear about what adequacy means, and I will take that back. The scope of the second phase will be announced in due course, but I will take that comment back to my colleagues as that is being developed.
Baroness McIntosh of Pickering (Con)
My Lords, will the Minister confirm that the pensions review will cover the ombudsman’s recommendations for WASPI women, on which subject I declare an interest?
Baroness Sherlock (Lab)
I fully accept that the noble Baroness may not be alone in this place in that declaration of interest. The ombudsman’s review is something to which the Government have already made their response. It was published yesterday, and I repeated a Statement in the House that was made by my right honourable friend the Secretary of State.
As noble Lords will be aware, the Government looked very carefully at the evidence that was provided to and by the ombudsman, and we concluded that while we accept the specific case of maladministration by allowing a 28-month delay in sending out personalised letters to women born in the 1950s, the Government could not accept that that created the impact the ombudsman had described and therefore could not accept the recommendation on injustice and remedy. I am also very aware of the widespread concern among many women who had hoped to retire at 60 and found that they could not, which is a mixture of the decision back in 1995 to equalise the state pension age and the decision of the coalition Government in 2011 to accelerate those changes. That was not a subject of the ombudsman’s review, and nor is it the subject of the pensions review.
Lord Palmer of Childs Hill (LD)
My Lords, the Minister talks about the two stages of the pensions review, which is very important. Can she confirm that the modelling by the Government Actuary—and I stress that—shows that the measures in stage 1 of the pensions review will, at best, only slightly improve member outcomes? Those are his words, not mine. Can she give me some reassurance that stage 2 will be given the priority it deserves? Can we get a timescale for when we will get to stage 2? I know the Minister cares about pensioners, and this review is necessary.
Baroness Sherlock (Lab)
I thank the noble Lord. We share that; we both care about pensioners. This Government are absolutely committed to making sure that outcomes for pensioners from private pension savings are as good as they can be. Both phases matter. It matters absolutely that we get the pensions market working properly the first time around. The noble Lord will be aware that measures have been announced for the pensions Bill, but there are live consultations on a range of measures that can enhance both growth for the UK and outcomes for savers.
It really matters. We want to end up, as our proposal suggests, with fewer, but better and bigger, pension schemes. All the international evidence suggests that consolidation and scale produce better results for savers. That, in the end, is what will drive private pension incomes. If we can get the market working well, we can try to get people saving as much into it as they need to.
Viscount Younger of Leckie (Con)
My Lords, I congratulate the noble Baroness on her promotion. I understand that stage 2 of the review, if it does go ahead, focusing on pensions adequacy, might recommend that pensions contributions increase from 8% to 12%, meaning that employees would continue to contribute 3%, but with employers increasing their contributions from 5% to 9%, which is a very heavy burden, especially on hard-pressed small businesses. In addition, for employees opting out of auto-enrolment, which is their right, the recommendation might be that employers would still pay their side of the contribution. Why did the Chancellor not think holistically about all the costs that businesses have to bear in employing staff when she made the decision in her Budget to raise the national insurance contributions?
Baroness Sherlock (Lab)
My Lords, I thank the noble Viscount for his kind words. I am very grateful; it is very gracious of him. He is asking me to comment on speculation about something that might be recommended in the phase 2 review, which has not started yet, so I hope he will bear with me. We think that getting this the right way around really matters. Phase 1 is about trying to get the market working as well as it should, both the DC side and the consultation on the Local Government Pension Scheme. If we can get the market functioning well and drive more scale and consolidation, looking at what they are doing in Canada and Australia, we can then have a better-functioning market and better returns. At that point in stage 2, we can look at matters of adequacy and at what money is going into it.
Lord Sikka (Lab)
My Lords, we live in a country where 50% of the population own less than 5% of wealth and the poorest 10% own just 0.02%. What plans do the Government have to improve the share of wealth of a substantial part of the population to enable them to save for a private pension? Surely such things cannot be left to the market.
Baroness Sherlock (Lab)
I think that might be slightly above my pay grade. The Government want to make sure that everybody can save an appropriate amount for retirement. For that to work, one of the starting points is that people have to earn enough in their working lives to be able to have an option of saving anything. The measures that the Government have taken, in our plans for jobs and in looking at what we are doing with the national living wage and to try to drive good work, are about trying to drive economic growth, get more people into good jobs and help them to stay there and to grow in their careers. The work has been done around the Get Britain Working White Paper. All the plans around that are trying to get people to develop in their working life and to be more productive to drive economic growth. That is a win-win. It is good for the country and good for individuals and their families.
Lord Kennedy of Southwark (Lab Co-op)
My Lords, it is time to hear from the Green Benches now.
Baroness Bennett of Manor Castle (GP)
Returning to the case of the WASPI women and the Government’s ruling against them, can the Minister tell me whether the fact that the Government have overruled the evidence-based decision of the Parliamentary and Health Service Ombudsman is likely to be open to legal challenge? If there is a legal challenge, will the fact that the Labour Party campaigned for WASPI women during the election campaign have an impact on the case?
Baroness Sherlock (Lab)
My Lords, I think anything is open to legal challenge if one can find a lawyer to take a case. There have been legal challenges in the past on this decision. If there are again challenges, the Government will present their case. The noble Baroness mentioned that the ombudsman looked at the evidence —so did the Government. We looked very carefully at the evidence. One of the things we have been doing for the past six months is going through line by line every piece of evidence that the ombudsman offered, looking at the evidence we have and what we understand, and we reached evidence-driven conclusions. That is the basis on which we made the decision.
I recognise that it is not a decision that everybody is happy with. I recognise that there will be women born in the 1950s who are disappointed. But I am also convinced that most of the disappointment and, indeed, much of the campaigning and noise were actually about the change in the state pension age and its timing, rather than the very narrow decision that the ombudsman took. The ombudsman said that it was simply about the way DWP communicated with people about the state pension age. The ombudsman found that between 1995 and 2004 the communications were absolutely fine. There was a 28-month period when, although other communications were out there, such as campaigns, employer campaigns et cetera, those letters should have been sent earlier. We have accepted that, and if any legal case comes we will present our case in court, as we always do.
National Insurance Contributions (Secondary Class 1 Contributions) Bill
Wednesday 18th December 2024
(1 day, 13 hours ago)
Lords ChamberRead Full debate National Insurance Contributions (Secondary Class 1 Contributions) Bill 2024-26 View all National Insurance Contributions (Secondary Class 1 Contributions) Bill 2024-26 Debates Read Hansard Text Amendment Paper: Committee of the whole House Amendments as at 17 December 2024 - (17 Dec 2024)
Liaison Committee
(1 day, 13 hours ago)
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The Senior Deputy Speaker
That the Report from the Select Committee New committee activity in 2025 (3rd Report, HL Paper 56) be agreed to.
The Senior Deputy Speaker (Lord Gardiner of Kimble)
My Lords, at the start of this year, the House appointed four special inquiry committees on, respectively, the Modern Slavery Act 2015, preterm birth, statutory inquiries, and food, diet and obesity. All those committees have now published their reports. I give my considerable thanks to all Members who contributed to those inquiries and indeed to all our committee work during the year, particularly in light of the timetable changes due to the general election. I take this opportunity to place on record my considerable thanks—and, I believe, those on behalf of the House—to all officials who have supported the work of your Lordships’ Select Committees this year.
I turn to the proposed special inquiry committees for next year. The Liaison Committee received 45 high- quality suggestions from noble Lords, a record number of proposals, which illustrates well the range of interests and expertise across your Lordships’ House. All the proposals have been published on the committee’s website.
As ever, the Liaison Committee faced a difficult task. We assessed the proposals against our published criteria, which are that the committee should make best use of the knowledge and experience of Members, complement the work of existing Select Committees, including Commons departmental Select Committees, address areas of policy that cross departmental boundaries and be capable of being completed within 10 months. We also took into account wider factors, such as the overall balance of topics selected and work being undertaken by other committees and within government.
As our report sets out, we decided to propose four special inquiry committees on: home-based working, social mobility policy, UK engagement with space, and the Autism Act 2009. As is often the case, the proposed committee includes one post-legislative scrutiny topic and three general special inquiry topics. I hope noble Lords agree that the committee’s recommendations cover a wide range of subjects that will make a significant contribution to debate and policy-making and will make excellent use of Members’ backgrounds and expertise. I beg to move.
Recognition of Professional Qualifications and Implementation of International Recognition Agreements (Amendment) (Extension to Switzerland etc.) Regulations 2024
Lord Leong
That the draft regulations laid before the House on 22 May, 31 October and 4 November be approved. Considered in Grand Committee on 17 December.
Financial Services and Markets Act 2000 (Designated Activities) (Supervision and Enforcement) Regulations 2024
(1 day, 13 hours ago)
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Lord Livermore
That the draft regulations and orders laid before the House on 6 and 11 November be approved.
Relevant document: 9th Report from the Secondary Legislation Scrutiny Committee. Considered in Grand Committee on 17 December.
Football Governance Bill [HL]
Wednesday 18th December 2024
(1 day, 13 hours ago)
Lords ChamberRead Full debate Football Governance Bill [HL] 2024-26 View all Football Governance Bill [HL] 2024-26 Debates Read Hansard Text Amendment Paper: HL Bill 41-VI(a) Amendments for Committee (Supplementary to the Sixth Marshalled List) - (17 Dec 2024)
Lord Markham
Member's explanatory statement
This amendment removes the ability of the IFR to restrict a club’s overall expenditure.
Lord Markham (Con)
My Lords, I shall speak also to Amendment 173A in the name of my noble friend Lord Moynihan and Amendment 173B in the name of my noble friend Lord Hayward.
The amendments in this first group carry on from our discussion on the licensing regime on the previous day of Committee. The amendments rightly deserve their own group since they relate to the specific financial conditions that clubs will be required to abide by as part of their licensing conditions. My Amendment 172, which is in the name also of my noble friend Lord Parkinson, would remove Clause 22(3)(c). That provision permits the regulator to restrict the overall expenditure of a regulated club. We do not believe the regulator should be able to attach a discretionary licence condition which places an overarching restriction on a club’s expenditure. This is surely an overreach of the regulator’s financial powers. The point has been made on many occasions, not least by the Minister, that the aim of this Bill is to ensure the financial sustainability and resilience of football clubs. How would telling a club how much money it may spend aid it in achieving that goal?
The key thing here is not expenditure but profit. Spending £50 million on a player might sound like a lot, but if that player is worth £60 million, I think we would all call that good business. An expenditure cap could stop that happening. If the goal is financial sustainability, surely the focus needs to be on profit or cash, not on expenditure. It is almost like a manager of a football club saying, “Look, it’s not just good enough that you go out and win today. We want you to score in the first half, then the other team can equalise and then we need you to score the winner in the last couple of minutes of the game”. It is trying to micromanage and overengineer. No one can ever do that.
Lord Moynihan (Con)
My Lords, I rise to speak to Amendment 173A standing in my name on the Order Paper. Here, we are referring to Clause 32, and it is the Secretary of State who will be taking a power beyond this Bill, not even by positive resolution but by using a much lighter negative resolution procedure, to determine the time period for the approval of new owners and offices. I quote from the Government’s memorandum to the Delegated Powers and Regulatory Reform Committee, which states that
“the contents of the IFR’s suitability tests may likely change, compared to when the Bill is introduced … Once the contents of the IFR’s tests are set in statute, the Government will be better placed to set the time window in regulations”.
This is, after all, an important clause which addresses the scope of powers to attach or vary discretionary licence conditions. I would have thought that the consultation period should be very specific and placed on the face of the Bill. There is a risk here that the regulator may not consult the clubs in the leagues and just hurry the process through, which I am sure is not the intention, but why on earth not put it on the face of the Bill—not only which clubs and leagues are affected—which is not part of the Bill, as we have previously debated?
The very least the Government can do on this occasion is amend this clause, given the scale of these powers, and change the scope of the manifold discretionary licence conditions that the Government, not the regulators, are imposing on football clubs here. They must consult them. It seems eminently sensible that they should consult them, and I would have thought that the Minister would be the first to say that they will consult them. If they will, I cannot understand why we would not put that in the Bill.
My amendment says simply that, before submitting a request under subsection (6), the regulator must consult, first, the clubs; secondly, “each specified competition organiser”; and, thirdly, such other persons as the regulator considers appropriate. The consultation, as it stands, is not specific enough and risks the regulator not consulting the clubs and leagues on this issue. I really do believe that there would be every intention for the regulator to do so, so let us just clarify that in the Bill so that there is no danger that the regulator would avoid that possibility. I hope my amendment gains the approval of the Minister when she comes to wind up.
Baroness Evans of Bowes Park (Con)
My Lords, I speak in support of Amendment 173B, tabled by my noble friend Lord Hayward, who I hope feels better soon. It introduces a number of key principles for the governance of capital buffer requirements that the IFR could potentially impose. This amendment fills an important gap in the Bill. I am also supportive of other amendments encouraging the IFR to adopt an outcome-focused approach, allowing the leagues to develop detailed financial rules within the overall statutory framework, as this will help to preserve the competitive balance with the design of common rules for all clubs. I am sure that the Minister will agree that this approach reflects the light-touch model that she has been describing.
As we heard in our debate on Monday, the Bill allows for a more interventionist approach for the IFR with individual clubs, through its discretionary licence conditions. In these cases, it is important that some clear parameters are set out in the Bill to ensure that any capital buffer requirements that may be developed are workable, proportionate and reflective of football’s realities.
Football clubs operate in vastly different financial contexts, even within the same pyramid. At one end, a relatively modest capital buffer of, say, enough to cover six months of operating costs might have saved a club such as Bury, for instance. But, at the other end, the challenges faced by Premier League clubs are of an entirely different scale. For a Premier League club relegated to the Championship, or indeed a club expecting but then failing to qualify for the Champions League, I understand that the financial shock can amount to as much as £90 million to £100 million.
Crucially, the way these clubs manage such risks is fundamentally different from clubs in lower leagues. At this level, as we have heard, clubs do not rely on cash reserves alone. Instead, they utilise a range of financial tools, including player trading, which is a core part of football’s economic model, as well as secured credit facilities—often backed by guaranteed revenues—and parachute payments, which I know we will discuss later and which help with the transition on relegation.
Without explicit reference in the Bill, there is a danger that the IFR might impose overly rigid liquidity requirements that would privilege clubs with access to unlimited working capital—I am thinking, for instance, of those backed by sovereign wealth funds—while unfairly disadvantaging others. This amendment would ensure that capital buffers reflect the real-world financial tools that clubs use to manage risk, including non-cash assets, as I have just described.
The single most important liquid asset for football clubs towards the top of the pyramid is their players. As I am sure my noble friend Lady Brady can tell us, player trading is often one of the first mechanisms that they turn to when managing financial shocks—yet the Bill provides no clarity on how the IFR will treat these assets. Even when player liquidity is recognised, valuation of these assets is critical. Under current UEFA financial fair play rules, players developed through academies are often valued at zero, for instance, based on book value, rather than their actual market worth. The purpose of UEFA’s rules is different, but, if copied by the IFR for the purposes of capital buffers, for instance, this could penalise clubs such as Crystal Palace, Southampton, West Ham or Arsenal, which have brought through many talents into their first teams in recent years.
This amendment therefore seeks to ensure that the IFR adopts sophisticated valuation methodology, including proper independent valuation of players and, in particular, a proper recognition of the value of academy players. Without these safeguards, the IFR risks undervaluing clubs’ most significant assets, forcing them to meet capital buffer requirements that are, in practice, unnecessary.
We have heard many times in this Committee that the competitive balance is the lifeblood of football, but poorly designed capital buffer requirements could easily and accidentally disrupt this balance. We must avoid this outcome, so I hope that even if the Minister is unable to accept the level of specificity in Amendment 173B, she will recognise that this area of the Bill is a source of anxiety for clubs. I hope she will agree that the principles within this amendment are important and that it is the Government’s intention that the IFR pursues a tailored approach, informed by guidance, that will protect the competitive balance and investability of the English game.
Lord Pannick (CB)
My Lords, I declare again my interest as counsel for Manchester City Football Club in recent disciplinary proceedings brought by the Premier League. I offer my support to Amendment 173A from the noble Lord, Lord Moynihan. We discussed the principle of consultation on Monday evening. I repeat that, in my view, consultation with clubs and specified competition organisers is vital to ensure that they have confidence in the operations of the regulator. It is also vital to ensure that the regulator is operating, as he or she would want to do, in a fair manner. I very much hope that the Minister will give consideration to that and bring an amendment back on Report, in relation to Amendment 173A and earlier provisions of the Bill.
I am far less keen, I regret to say, on Amendment 172 from the noble Lord, Lord Markham, which seeks, as I understand it, to remove from the Bill the discretionary licence condition relating to restricting the clubs’ overall expenditure. I suggest that it is important to see the limits of that power of the regulator, because Clause 22(4) provides that this discretionary licence condition
“may not impose restrictions on expenditure of a particular kind or a particular transaction”.
As I understand it—the Minister will say whether or not this is correct—the regulator would therefore not have the power, using the example given by the noble Lord, Lord Markham, to say, “You can’t buy a particular player for £50 million”, as that would be outside the scope of Clause 22.
It is not difficult to see that there may be circumstances —one hopes that they would be very rare indeed—where the regulator takes the view that its objective under Clause 6
“to protect and promote the financial soundness of regulated clubs”,
which is what it is there for, would be damaged if it did not have a power to restrict in exceptional circumstances a club’s overall expenditure.
Lord Addington (LD)
My Lords, I am beginning to wish I had jumped up before the noble Lord, Lord Pannick, because I have come to a similar conclusion.
For every success story in football, if you look you will find a failure. It is often the case when people come forward and buy themselves the dream team, then something goes wrong. You will find that especially in the lower levels. There are stories of those clubs, with Bury et cetera copping out, that have more expenditure going out on wages than they have coming in from revenue. If the regulator does not have the power to stop that speculative spending in certain circumstances, it is being denied a basic power over one of the biggest problems that has led to instability, particularly in the lower parts of the game. After some of the discussions we had on this, I really cannot see how we can support the lead amendment here and still have the central thrust of the Bill.
How will the regulator assess the slightly strange finances of investing in people who are always one trip away from being worth nothing? One accident on a training field and your principal asset is worth nothing. How is that taken into account and balanced, which would require a level of expertise? Does the Minister have examples of where information will be gathered to make a sensible assessment on this?
On speculative purchases, we have heard about deals with agents, et cetera, on other parts of this Bill; it is important to bear in mind how these are done. If the Minister has information on how that information will be gathered and those assessments made, I would be very interested to hear it.
Lord Moynihan of Chelsea (Con)
My Lords, I hope the Minister will bear in mind that the repeated statements “For every winner there is a loser”, “The Premier League is in terrible danger” or “Football is in terrible danger” just ignore the fact that football is tremendously successful in this country. If for every winner there is a loser, there would have been no progress in the last 20 years. There has been progress and enormous success. We now have the greatest football league in the world. The statement that “Your biggest asset is only one accident on a training ground away from being worth nothing” completely ignores the fact that all football assets—all players—are insured. If, God forbid, your best player was injured irrevocably on the training ground, you would receive an enormous insurance payment, so it is just not true. The actual commercial realities of what is going on in football in this country seem to be completely mis-stated so often in this Chamber. I hope that the Minister will take heed of the tremendous success that private enterprise, unfettered by an onerous regulator, has created in the world of football in our country.
Lord Markham (Con)
I will sum up on a couple of new points. I always welcome comments from the noble Lord, Lord Pannick, because his forensic brain is really helpful in making sure we get to the bottom of what we are talking about. I have only just had a chance to look up Clause 22(4); this is about the regulator’s ability to restrict expenditure. It says that the regulator
“may not impose restrictions on expenditure of a particular kind or a particular transaction”.
That can be open-ended, unless the particular kind or particular transactions are defined somewhere; they could refer to anything. I do not know if the Lord, Lord Pannick, is aware of what they refer to, but perhaps the Minister could follow up on that, either now or in writing.
The Parliamentary Under-Secretary of State, Department for Culture, Media and Sport (Baroness Twycross) (Lab)
I thank the noble Lords, Lord Markham, Lord Moynihan and Lord Hayward, for tabling these amendments, and the noble Lords, Lord Markham and Lord Parkinson of Whitley Bay, for giving notice of their intention to oppose the question that Clause 22 stand part of the Bill. Like other noble Lords, I wish the noble Lord, Lord Hayward, a swift recovery and hope to see him back for the next day of consideration by this Committee.
I will start with Amendment 172 in the name of the noble Lord, Lord Markham. It is vital that the regulator has the appropriate tools to address systemic financial risks that might arise. Indeed, in recent years clubs have faced a number of systemic risks, such as during the Covid-19 pandemic, when many clubs faced financial difficulties, some of which are still felt by clubs today.
The ability to restrict clubs’ overall expenditure may be the most appropriate and effective tool in certain circumstances. The noble Lord, Lord Markham, asked about limiting expenditure, which is already used within football. Some leagues already have rules limiting expenditure on wages and limits on permissive losses. I reassure him that the regulator is further constrained when taking action here. First, we have made it absolutely clear that the regulator has the ability only to restrict overall expenditure. It cannot place restrictions around specific transactions or types of transactions, to micromanage spending in that way.
Furthermore, the regulatory principles enshrined in the Bill in Clause 8 include the principle that the regulator should act proportionately. We would expect this to be reflected in any discretionary licence condition that the regulator sets. Restricting overall expenditure might be the most proportionate and least interventionist or burdensome response to these risks. Without this tool, it might have to apply a different response that may be more restrictive or less effective.
I turn to Amendment 173A in the name of the noble Lord, Lord Moynihan, to which the noble Lords, Lord Pannick and Lord Addington, also spoke. While we appreciate the intent, we are confident that clubs and competition organisers would already be captured under the current wording in the Bill, of persons the regulator “considers appropriate”. As I have outlined in previous debates, the Government do not believe it is necessary or appropriate to put an exhaustive list of stakeholders in the Bill. I appreciate that the noble Lord, Lord Moynihan, has a different view, but we feel that the regulator will be best placed to determine which persons are appropriate to consult depending on the decision in question. However, I look forward to further discussions with him on this point.
The regulator is required to consult anyone it considers appropriate. Failing to do so would be a breach of its statutory obligations and could result in legal challenge—
Lord Moynihan (Con)
I was not for a minute suggesting that there should be an exhaustive list that should be consulted; I was simply highlighting three very specific groups of people who should be consulted, which I think the Minister agrees with. There should be no doubt in the minds of the Committee that if you simply list clubs and competition organisers and then say “such other persons as the regulator considers appropriate”, you capture everything she has just said and make it very clear that the regulator will approach and consult clubs and competition organisers—which is the whole purpose behind this clause and surely one that has her full support. Why not simply clarify it in a very simple additional nine words?
Baroness Twycross (Lab)
I hear what the noble Lord says and look forward to further discussions with him on that point, but we feel that the regulator will be best placed to determine which persons are appropriate to consult.
Lord Pannick (CB)
I am sorry to keep on at the Minister about this, but can she really think of any circumstances in which it would be appropriate for the regulator not to consult the competition organisers and the clubs in this context? If the answer to that is “Of course not”, let us put it in the Bill and make it clear.
Baroness Twycross (Lab)
I recognise the strength of feeling on this point and look forward to discussing this further as we proceed through the Bill’s progress in this House.
Amendment 173B is in the name of the noble Lord, Lord Hayward, and the noble Baroness, Lady Evans of Bowes Park, spoke to it in his absence. Its intention is to place procedural requirements around the regulator’s use of capital buffers as part of a liquidity requirement. First, I reassure noble Lords that the model of financial regulation is about making clubs more financially resilient.
The noble Lord, Lord Markham, raised an issue that has been discussed previously in this Committee, where owners tragically die and the issues this can cause clubs, which is that clubs will have to submit detailed financial plans, including contingency plans. This could include what the club would do in the event of a financial shock such as the sudden loss of an owner.
If the regulator has concerns about the level of financial risk exhibited in a range of scenarios, it can place discretionary licence conditions on clubs in limited areas. That does not necessarily mean that owners will have to put funding in up front. If the regulator does reach for liquidity requirements, there are already safeguards. Indeed, the amendment seeks to require the regulator to have regard to a number of considerations, but in each case the Bill already requires this.
When assessing whether to attach the discretionary licence conditions needed to meet the appropriate financial resources threshold condition, the regulator will already be fully informed of the club’s financial position because clubs have to submit a financial plan, which would already include detail of any existing liquidity buffers. Consideration of proportionality and existing financial rules is covered by the regulatory principles in Clause 8(c) and (d). Again, consideration of the impact on competitiveness and investment is covered by the regulator’s duties in Clause 7(2). Therefore, this is all already accounted for.
Lord Markham (Con)
I thank the Minister for her response and thank noble Lords for all the contributions to the debate on this amendment.
On Amendment 172 and the expenditure cap, the Minister referred to league rules on permitted losses, and that is exactly the point I am trying to make: permitted losses are different from expenditure. I completely get why you might have rules trying to prevent permitted losses, but with permitted expenditure you can spend a lot and still make a profit, and that is a good thing. Maybe we can explore further whether Clause 22(4) allows clubs, despite everything, to still spend money on players. As per the example I gave earlier, I am not quite sure that it does, but again, it would be good to consult or work on that later.
On Amendment 173A, tabled by my noble friend Lord Moynihan, as pointed out by the noble Lord, Lord Pannick, I do not think any of us could envisage the regulator not consulting the clubs and the competitions, so it seems sensible to have that in the Bill. Again, I hope the Minister will be able to look at that.
On Amendment 173B and my noble friend Lord Hayward’s point about capital buffers, this really is an area of huge concern. The Minister said, “Well, if you’re reliant on an owner, maybe they need to provide more examples of how they could cater for that financial shock if they were to die”. The trouble is, as with so many clubs at that stage, that was exactly the Brighton and Brentford model—they were reliant at that stage on the owners bankrolling them behind what was a very sensible plan. But if, God forbid, something had happened to them during that stage, clearly, they would have gone, and if they had been asked to put aside some money as a buffer against that, that would have made their plan much harder to achieve. I know it is the view of both clubs that they may well never have embarked on those plans in the first place, because it was tough enough to begin with, and having to set some money aside makes the hurdle even higher. So again, I would appreciate it if we could return to that issue.
The last point about this clause overall, which goes right to the point the noble Lord, Lord Addington, made, is that there is a fundamental difference here. He said that for every success there is a failure, and that we have to stop that speculative spending. With Brighton and Brentford, it absolutely was speculative spending. With any team that invests in players ahead of their revenue, that is speculative spending. That is the excitement of the league and of the game: there are no guarantees of success behind any of that. But if we seek to restrict that, we are seeking to restrict the whole competitive element of the game we love: football.
The reality is that we cannot point to many failures; I think there have been two since the war. I do not want any failures, but are we really trying to prevent any club trying to embark on those success stories— I hope we are seeing it again now with Wrexham, who have come very far—because we want to protect against any failures whatsoever? That is the fundamental difference we are talking about here.
We have seen examples of asset stripping, and I absolutely agree that we want to guard against it. But owners wanting to put in a lot of money in order to really get behind a club, invest in players and gain promotion—to me, that is the fundamental spirit of the game we all love. I therefore hope that we will be able to return to that issue, but at this stage I beg leave to withdraw the amendment.
Lord Bassam of Brighton
(c) respects and promotes the protection of human rights and prevents modern slavery (as set out in section (Human rights and modern slavery considerations)).”Member's explanatory statement
This amendment requires an individual to respect and promote the protection of human rights and prevent modern slavery in order to meet the individual ownership fitness criteria.
Lord Bassam of Brighton (Lab)
My Lords, our Benches at the back here have three amendments in this group. They cover modern slavery, human rights and slave ownership. The purpose behind the amendments is to flesh out from my noble friend the Minister how the independent football regulator may approach some of these issues.
As we have heard on a number of occasions during debates on the Bill, football clubs are more than just businesses. They are community institutions; they have values, and they have provided some of the best examples of taking on social issues over the last few decades. We are trying to establish whether there should be a test that mandates having robust human rights due diligence and the ways in which owners can be held to account and prevent harm. State ownership and those two issues are inevitably bound up. We will recall from the ownership debates that circulated around Newcastle United when it was taken over some years ago the considerable concern expressed.
In updating the individual ownership fitness criteria to include reference to human rights and modern slavery, we have taken account of Amnesty International’s proposed amendments to the previous Premier League test. The United Nations Guiding Principles on Business and Human Rights, which the UK was the first country in the world officially to implement through a national action plan, requires all states and businesses to prevent, address and remedy human rights abuses where they occur.
It is our contention in putting these amendments forward that we need to have a view on state ownership but also on the role that the IFR may play in trying to establish thresholds and principles around such issues as modern slavery and human rights, because these things are important. They are important to football fans; they are important to the moral and guiding principles behind our businesses, and, more generally, we should use the opportunity of having a regulator for football that has a view on these issues when it comes to judging the merits—or otherwise—of those who seek to own important institutions such as football clubs. I beg to move.
Lord Jackson of Peterborough (Con)
My Lords, there is no doubt that the amendment means well. It is laudable that we encourage football clubs and the football community to take seriously these important issues around human rights and modern slavery. My concern is about the wording, because I believe that the inclusion of such an amendment in the Bill in respect of the appropriateness of an owner will give rise to unnecessary litigation. Let us remember that the amendment does not distinguish between an individual and a football club. If it were to do so, it would be more sustainable in terms of developing policies around human rights and combating modern slavery. However, it does not do that. It is nebulous in its wording, and I think the drafting would cause grave difficulty because it references individuals—the owner, in essence—meaning that there will be problems down the line in how the amendment is interpreted.
It is a value judgment as to whether an individual respects human rights. What does that actually mean in primary legislation? How do you measure it? What is its objectivity? What does success look like in terms of respect? The wording is very loose and would be very difficult—
Lord Bassam of Brighton (Lab)
Our wording mirrors the wording in Clause 28, which says:
“A person may not become an owner of a particular regulated club unless”,
so I do not think that the wording is the point here.
Lord Jackson of Peterborough (Con)
I understand the point that the noble Lord makes, but I am reading the amendment that he has tabled. The third word is “promotes”. What does that mean in terms of an objective criterion for how an individual would promote human rights, and for how he or she would protect the human rights of those involved in football and the club that they were involved with? The amendment is an example of potential regulatory overreach. Seeking to enforce it would be a straightforward prima facie case of ultra vires actions, because it would be unenforceable.
Having said that, I have great sympathy with the noble Lord’s Amendment 200 on state ownership of football clubs. We will have a good debate on that. However, on Amendment 178, the noble Lord is gilding the lily. Although he has good intentions, it is not a workable amendment. It would damage the interests of football clubs and be difficult for the regulator properly to enforce.
Baroness Butler-Sloss (CB)
My Lords, I support Amendment 178. Indeed, I have come in specifically to speak on the issue of modern slavery and I declare an interest as a co-chair of the modern slavery parliamentary group and vice-chair of the Human Trafficking Foundation.
I profoundly disagree with what the previous noble Lord said about individual ownership fitness criteria in relation to modern slavery. Under the Modern Slavery Act 2015—Section 56, I think—it is wrong to have a supply chain that operates on the exploitation of those who provide the goods for a company. So, if you have an individual owning a company who makes his money on the exploitation of people in the supply chain, it should not be all that difficult to discover it. That is absolutely where the regulator should be promoting modern slavery issues when he looks at the individual fitness of a person who wants to take over a club.
I see the point on human rights, although we have the Human Rights Act and it is fairly clear under that Act what the rights are of various people that might be impinged by an individual who did not have appropriate fitness criteria. I can see—
Lord Jackson of Peterborough (Con)
I thank the noble and learned Baroness for most generously giving way. If we have statutory sanctions already in place to deal with this behaviour, whether it is the Human Rights Act or the Modern Slavery Act, surely she is proving my case that this is regulatory overreach. My point is that we do not need further legislation when it is already covered by the existing legislation.
Baroness Butler-Sloss (CB)
I do not want to deal with human rights. I have come here to deal with modern slavery. I disagree with the noble Lord. The problem is that Section 56 is voluntary and not mandatory. Consequently, companies are not obliged to follow what happens. In a 2019 review led by Lord Field of Birkenhead, of which I was a part, we picked up the fact that it was not mandatory. Consequently, if the regulator does not have to think about modern slavery, he would not have to look to see whether or not an individual taking over a club is making his money in a wholly inappropriate and extremely wicked way. Because it is not mandatory, it is important that someone else looks at it. If it were mandatory, I would entirely agree with the noble Lord.
Lord Pannick (CB)
Is it the case that the reason it is not mandatory is that Parliament did not think it should be? Therefore, the question is: why should it be imposed in this context and not generally?
Baroness Butler-Sloss (CB)
Section 56 says that it is utterly wrong to have companies that make money by exploiting people down the chain—consequently, it is wrong. But, for reasons I do not know but can guess, the last Government, who put in place this very good bit of legislation, presumably did not want to offend businesses. I understand that there are problems in making it mandatory but, if somebody is making money that they are going to put into a football club by exploiting other people down the chain, that is something we should not want our clubs to be involved in.
Lord Scriven (LD)
My Lords, I was unable to join your Lordships at Second Reading and have decided to add my name, and speak, only to amendments on areas where I have relevant knowledge. I speak as somebody who has for a number of years been a co-chair of the All-Party Parliamentary Group on Democracy and Human Rights in the Gulf, and also led the first ever debate on sportswashing in your Lordships’ House in March of this year. Therefore, I will speak in favour of the amendments I have added my name to—Amendment 185 and in particular Amendment 193 from my noble friend Lord McNally, who cannot be here in his place today. I also strongly support Amendment 200 on state entities.
It is interesting listening to the noble Lord, Lord Jackson of Peterborough, and other noble Lords talk about human rights and the Human Rights Act. Let us be clear. What the regulator will be doing here is having a statutory responsibility for ensuring that a takeover of a club takes into consideration human rights issues. Under the Human Rights Act an individual can bring a case based on their feeling that their human rights have been undermined. If you are in Saudi Arabia, Qatar or the UAE, you cannot bring that case as an individual whose human rights have been undermined, particularly when it comes to a state entity potentially taking over a football club. That is what these amendments are about. Rather than just financial issues, when it comes to a takeover of a club, as a statutory point of principle human rights should be looked at by the regulator independently to decide whether a potential director is a fit and proper person to be able to take over and manage an English football club. That is what this debate is about.
It is interesting that certain issues in the Bill are specific, such as money laundering, so the Government have accepted that the regulator can look at specific issues. These amendments ask that another area specified in the Bill should be human rights abuses carried out not just in the UK but elsewhere in the world, particularly when it is a state entity or an individual linked to a state entity. The reason why this is important is that the concept of sportswashing, where sports clubs are bought particularly to try to influence soft power, is really taking hold. The previous Government understood that when it came to taking over media in this country. There was an issue to do with how state-entity organisations, including their potential human rights abuses, actually stopped takeover of the media.
I am sure that the Minister, when it comes to arguing the Government’s case if they are not minded to do this, will look at the Global Human Rights Sanctions Regulations 2020 as the cloak of respectability, where the powers already exist for this to be looked at. Well, let us be clear. These were introduced with the aim of holding individuals and entities accountable for human rights abuses. However, these regulations are not proving efficient in stopping foreign Government entities from owning Premier League clubs, or any league club. The Newcastle deal, where the Saudi Public Investment Fund took over Newcastle, happened 15 months after these regulations came into force.
These regulations target individuals and specific entities, not entire Governments or sovereign wealth funds. This is a critical loophole which we can see in the case of Saudi Arabia’s Public Investment Fund, which now owns Newcastle United and operates a state-controlled entity that presents itself as independent of government. As a result, it evades direct scrutiny under the sanctions framework. There is also a lack of transparency with these regulations, because decisions about who we sanction are not clear and are at the whim of an individual Minister. That is why I believe there should be the provisions in the Bill laid down in Amendment 200 and the other amendments which I put my name to.
The Global Human Rights Sanctions Regulations lack the reach and enforcement power to prevent foreign state entities linked to human rights abuses owning English Premier League clubs. That is why these amendments are required. Otherwise, I believe that our national game, football, will potentially remain a platform for authoritarian regimes or individuals who have committed human rights abuses and will be used as a sportswashing exercise that will tarnish their own reputations and image and not defend our national game.
Baroness Grey-Thompson (CB)
My Lords, in speaking to Amendments 178, 185 and 199, I draw attention to my interests in the register. I thank my noble and learned friend Lady Butler-Sloss for her contribution to the debate this afternoon.
Among the detail of what a regulator may or may not look like, we spent some time noting para football and how it can change and improve lives, and almost change the world. I would imagine that modern slavery is something that we would want to try to impact. Major games, such as the Olympics and the Paralympics, have made strong commitments in this area, as well as around trafficking. Their success is up for debate, but surely football and sport should try to leave the world a better place, and so I believe that these amendments are important.
Briefly, Amendment 199 is about the ownership of clubs. We have debated Reading and Aston Villa at length. This amendment merely seeks to strengthen the owners’ and directors’ test.
Lord Pannick (CB)
My Lords, I think a very strong case has been made this afternoon by the noble Lords, Lord Bassam and Lord Scriven, the noble and learned Baroness, Lady Butler-Sloss, and my noble friend Lady Grey-Thompson to require the regulator to assess whether a prospective owner of a football club respects and promotes the protection of human rights and prevents modern slavery.
I am very sympathetic to the principle. I am just concerned about the practicality. Is it really practical to expect that the regulator is going to have the expertise, time or ability to conduct a general assessment of whether a particular person—who may, for all I know, be based abroad—is generally respecting human rights and preventing modern slavery? This is going to take an enormous amount of time and money, and I fear that it would distract the regulator from the more day-to-day, prosaic functions that Parliament will be asking it to perform. I would be pleased to hear from the noble Lord, Lord Bassam, how this is going to work in practice, because I am very sceptical.
Lord Scriven (LD)
Does the noble Lord accept that it already takes place for certain individuals and entities with regard to the regulations that I pointed out, and that the Government already have a system in place to do this for takeovers? The issue is that there are gaps, which is why it needs to be in this Bill, particularly around football and state entities.
Lord Pannick (CB)
I entirely accept that there are detailed regulations, in particular in relation to money laundering, but that is a far more specific area, where there is a government system and a whole army of people with expertise to assess those matters. The question is whether we wish to make it a function of the independent football regulator to have a whole department that is concerned with this. I see the force of the principle, but I remain sceptical about it in practice.
Lord Moynihan (Con)
My Lords, this is one of the best debates we have had in Committee to date. I am equally sympathetic to the points made by the noble and learned Baroness, Lady Butler-Sloss, and the interventions of the noble Lord, Lord Scriven, and the concern about the practicality of this, but none of that is covered in Amendment 200, which is in this group.
Let us just assume, hypothetically, that a state-owned entity acquiring a football club in England has an excellent human rights record and no problems with modern slavery. Under Amendment 200, it would be banned from owning a club in England because it is state-controlled. All the points that have been made are relevant and important, but Amendment 200, in the name of the noble Lord, Lord Bassam, is very specific and states that:
“No state-controlled club may be granted an operating licence”.
There is no reference to human rights abuses or to any of the important issues regarding the supply chain, which have been mentioned. It simply states that a foreign-owned, state-controlled company cannot own an English football club. If we pass this amendment, immediately we would then have to divest the Abu Dhabi United Group of its majority ownership of Manchester City and Saudi Arabia’s Public Investment Fund of its ownership of Newcastle United, to mention but two cases.
How have the Premier League and UEFA addressed this to date? They have focused on the word “control”. When the Premier League addressed the Newcastle ownership test, it received “legally binding guarantees” that the state of Saudi Arabia would not have control over Newcastle United in the event of any deal. However, the Bill goes much further. It grants powers to the regulator that are not just about control. An individual has to be considered who has
“a higher degree of influence”
over the ownership of a club. The control test that UEFA and the Premier League currently use, which is a tough test that takes up a lot of time and energy, is overridden by a requirement in this legislation—for the first time in sport—to test whether an individual has a higher degree of influence. There can be no doubt that the Crown Prince of Saudi Arabia, as chair of the PIF, has a very high degree of influence over that board —he appoints it. Indeed, a Minister from that board has been appointed to be chairman of Newcastle.
If we go forward and accept Amendment 200 as it stands, what would we be saying to football, to Newcastle, to the Qataris—who might want to acquire a company, which there has been much speculation about, not least in this Committee—and to Abu Dhabi in relation to Man City? It would drive a coach and horses through the current ownership of the Premier League. It would be a very serious decision by the Government to take state control over who owns the football clubs in this country.
I say that because it comes down to the degree of state influence that is behind the regulator. The Government have said:
“Regarding the scope of the tests, we recognise the trade-offs involved, and are aware of the range of corporate structures behind clubs”,
and they specifically mention here sovereign wealth funds. They go on to say:
“We are designing the legal scope of the tests with these challenges in mind”.
They call them challenges, to be faced down at the request of government. We would have an open back door in the Bill if we accepted the amendment in the name of the noble Lord, Lord Bassam, straying into foreign policy in a way that we do not currently do. We have plenty of legislation elsewhere on the statute book allowing the Government to intervene if they felt they needed to in a certain circumstance.
The Government have therefore further confirmed the scope of the regulator. To me, it is incredibly important that the regulator is not given so many powers as to require it to have direct influence. I lost an amendment on Monday night, when I asked for that at least to be defined and for consultation to go out to find out what “significant influence” means in this context. I think that is extremely important.
I have a question for the Minister. I cannot find an answer as a result of the debates we have had so far, but football needs an answer and probably needs it now. Is it the Government’s position that the Crown Prince, Mohammed bin Salman, should be able to own Newcastle United under the definition of ownership in the Bill? It is a very simple question, with a yes or no answer. If yes, why have Ministers deliberately constructed a Bill that will quickly put him through the ownership test of significant influence, and why did the Minister confirm on Monday that she wanted incumbent Heads of State to be tested? If no then surely the Government should say so, and we should have that as part of an open debate.
I hope that, if that question is answered this evening, there will be no doubt in future about what the Government intend, not least following the Prime Minister’s visit to Saudi Arabia last week and his offer to go to a football match with the Crown Prince. It is only reasonable for Saudi Arabia and the Crown Prince to know whether he is expected to divest himself of the interest in Newcastle United or not.
Lord Addington (LD)
My Lords, I welcome my noble friend Lord Scriven to this debate and congratulate him on making those points. When it comes to the modern slavery amendments—to take on the point from the noble Lord, Lord Pannick—if other people are looking at this, surely the regulator should be able to take their opinion. Surely that would be a reasonable step. If the Bill does not allow that, I am sure we could do that quite easily.
On state ownership, I put my name to Amendment 200 because I thought that at the very least we deserved an answer. The previous Government’s Back-Benchers did not like the Telegraph under control and, let us face it, more people have heard of Newcastle United than they have the Telegraph.
This is an important point. Are we happy with a cultural asset being in the hands of a foreign power, regardless of the fact that we have a reasonably good relationship with it on most things? It is not all things, as we do not like certain things about it. That is a real question, and the Minister is being asked a series of real questions. I hope that at the end of this we will know whether these points are worth pursuing at other stages of the Bill. These questions really should be answered, and I look forward to the Minister’s response.
Lord Parkinson of Whitley Bay (Con)
My Lords, we have indeed touched on the matter of foreign ownership elsewhere in the Committee’s discussions. I am very glad we have had the opportunity to have a proper debate on it this afternoon, and I agree with my noble friend Lord Moynihan that it has been a very good one.
Of course, there are, and have long been, a number of clubs in English football with some element of foreign ownership, whether through individuals or investment vehicles. Many of them have been very generous funders of the sport and in certain cases have turned clubs around for the better, with huge benefits to their communities. But there is a fine line to tread here between maintaining that inward investment and openness to the world, and preventing malign interference.
I am glad that the noble Lord, Lord Scriven, has been able to join the Committee today. I enjoyed the debate he brought on sportswashing, to which I responded. We touched on some of these matters, and my view when speaking from the Dispatch Box opposite, which I still share, is that there is a distinction to be made between news organisations, which provide information to the populus, and sports organisations. As my noble friend Lord Moynihan has pointed out on previous groups, sport has always succeeded in rising above politics and has often been a forum in which people can raise complicated issues and foster dialogue between countries that may not be able to talk about things directly quite so easily.
The amendments in the names of the noble Lord, Lord Bassam, and the noble Baroness, Lady Taylor of Bolton, address modern slavery once again. I am conscious that we had Amendment 153 on modern slavery from the noble Lord, Lord Mann, in that rather strange miscellaneous group the other day, so I will not repeat what I said about the issue then. But I am interested in and broadly supportive of the issues they are raising and very glad to have heard the contribution of the noble and learned Baroness, Lady Butler-Sloss, who has done such important work in this area. I am glad we have been able to return to the issue of modern slavery and let other noble Lords add their voices to what we said when we were debating Amendment 153 on Monday.
As someone from Tyneside, I must add my concern about the implications of Amendment 200 from the noble Lord, Lord Bassam, which, among other things, would prevent clubs being owned by sovereign wealth funds. I think he accepts that if we were to accept his Amendment 200 the way he has worded it—he alluded to the Public Investment Fund of the Kingdom of Saudi Arabia’s investment in Newcastle United—it would have the consequence that Newcastle might not be granted an operating licence and so would have to withdraw from the Premier League. I have to say that he would not be very popular on Tyneside if that were the case.
It would be very helpful to have some clarity from the Minister about how the regulator will deal with clubs that currently have foreign owners or foreign sovereign wealth fund investment, and how it might approach prospective owners from abroad in the future. Like others, I would be very keen to hear her answer to the questions that my noble friend Lord Moynihan has raised and repeated so powerfully today.
During the course of this Committee, the Prime Minister has visited the Kingdom of Saudi Arabia. He was there just before it was announced as the host of the 2034 World Cup. He has invited the Crown Prince to come and watch a football match here in the UK when he next has the opportunity to visit. I would be interested to hear whether they discussed football and some of the issues we have discussed today, or indeed the thorny question of whether the Bill would bring the Crown Prince and the Public Investment Fund of Saudi Arabia into scope in the way that my noble friend Lord Moynihan has suggested.
Baroness Twycross (Lab)
I thank my noble friends Lord Bassam of Brighton and Lady Taylor of Bolton, as well as the noble Lords, Lord McNally and Lord Scriven, and the noble Baroness, Lady Grey-Thompson, for the amendments in this group. It has been a really thoughtful discussion around issues of note.
I particularly welcomed the opportunity to hear from a number of noble Lords who have not spoken previously on the Bill but who have contributed their expertise, including the noble and learned Baroness, Lady Butler-Sloss, and the noble Lord, Lord Scriven. Their expertise led to a thoughtful debate. A number of noble Lords had interesting alternative perspectives as well. That included the perspective of the noble Lord, Lord Pannick. It is right that we discuss these significant issues as we discuss what the role of the regulator should be.
On Amendments 178, 185 and 193, it is absolutely right that clubs have suitable owners. That is why the new statutory owners’ and directors’ test is a key focus of the regulatory regime. A core part of this is the fitness test, which these amendments seek to expand. The individual ownership fitness test criteria are based on precedents specifically relevant to whether somebody is suitable to be an owner of a football club.
I would like to reassure my noble friend that much of what the amendments seek to achieve is already delivered within the current drafting. If an individual has had legal—whether civil or criminal—regulatory or disciplinary action of any kind brought against them, and that action has a bearing on their honesty or integrity, the regular must take that into account. This could then be used to find them unsuitable under the tests in this legislation.
The noble and learned Baroness, Lady Butler-Sloss, spoke specifically on modern slavery in relation to current legislation. I welcome the comments from the noble Lord, Lord Pannick, around keeping the regulator focused on issues that it can deal with effectively. Offences under the Modern Slavery Act are included in Schedule 1 to the Serious Crime Act, so the regulator will have to consider them in particular when determining whether an owner meets the fitness criteria.
If there are concerns about what is covered in the Modern Slavery Act, there are more appropriate places to discuss this, perhaps outside the Committee. I would be very happy to talk to noble Lords and the noble and learned Baroness outside the Committee to give them some reassurance on the points they have raised.
Any human rights violations that have given rise to legal, regulatory or disciplinary action against the owner in any forum can be considered, and so are egregious actions committed outside the UK that would have been criminal if carried out here. I assure noble Lords that these are things the regulator would—
Lord Scriven (LD)
There is a specific issue with the Gulf states. If people are potentially put to death for being gay in a state, would that debar a state entity or an individual in that Government from owning an English club? It is a clear question.
Baroness Twycross (Lab)
I am going to come on to state ownership later in my speech, if the noble Lord would be happy to wait.
Lord Scriven (LD)
No, I would like an answer to this specific question, because the Minister gave a specific commitment with regard to what is in the Bill. I put a specific question based on what could happen, and on the laws of the land of a Gulf state. I wish to know: if that takes place, would someone who is related to that state through a state entity not be able to own a Premier League club in this country?
Baroness Twycross (Lab)
I would be grateful if the noble Lord allowed me to take away that specific example. I will write to him and to the Committee and place a letter in the Library, so that they have a detailed response on that point.
These are all issues that the regulator will take very seriously. Where the amendments before us today go further than existing drafting, this introduces elements that we do not believe are necessarily relevant to an owner’s suitability. They would require the regulator to make a subjective and potentially speculative judgment on whether the individual has engaged in any activity that would risk bringing the game into disrepute. Where a potential dispute relates to things like criminal history, the regulator will already have to consider these things. But “disrepute” is a vague term; could it arise through an owner’s conduct in their personal life, or their political views? In the Government’s view, it would put the regulator in quite a difficult position, making a value judgment on what constitutes disrepute, which would undermine the principle of a reasoned, evidence-based test.
Turning to Amendment 199 in the name of the noble Baroness, Lady Grey-Thompson, the test is supported by the regulator’s information-gathering powers to ensure its determination is evidence-based. These powers will help the regulator tackle unco-operative individuals or organisations that do not provide the information. However, let me be clear: if the regulator does not have enough evidence to make its determination, the individual will be found unsuitable.
I understand the noble Baroness’s concerns about restrictions on an owner’s funds. I want to reassure her that the test requires an owner to submit financial plans and demonstrate sufficient financial resources to run the club. As part of this, we expect that the regulator will consider things such as the liquidity of those resources and their availability to actually be used to fund the club. The regulator will also need to be satisfied that the owner does not have wealth connected to illicit finance. To do this, it can conduct enhanced due diligence on the owner’s source of wealth. This would identify any links to criminality, corruption and money-laundering. We believe, therefore, that the intent of the noble Baroness’s amendment is delivered in the current drafting of the Bill. I hope she takes reassurance from this, but I am happy to meet her to discuss this if my explanation has not satisfied her.
I turn to amendment 200 from my noble friend Lord Bassam of Brighton, which the noble Lord, Lord Moynihan, also spoke to. This Government are not making a judgment on different forms of ownership. We recognise that good ownership can take many forms, and it is investment from responsible owners that has been a driving factor in the success of English football. Banning any one particular kind of ownership would not, in our view, be in keeping with the flexible and proportionate approach to regulation we are proposing. I believe that this approach has broad support across the Committee. Prospective owners with state backing will be assessed against the same set of criteria as any other prospective owner, on a case-by-case basis. I hope that answers the question about Newcastle from the noble Lord, Lord Parkinson.
Lord Moynihan (Con)
I apologise for intervening on the Minister’s speech, but I did ask a very specific question, which I think she has answered but I would be grateful if she could make it clear to the Committee. Through the higher degree of influence test, which we have debated and understand, and which is unique to this regulatory framework, will the Crown Prince of Saudi Arabia be subject to an ownership test—yes or no?
Baroness Twycross (Lab)
Any owner, with state backing or otherwise, will be assessed against the same set of criteria as any other prospective owner, on a case-by-case basis.
Baroness Twycross (Lab)
Yes. Prospective owners with state backing will be assessed against the same set of criteria and, by requiring new owners to undergo the regulator’s test, we better mitigate against harm to clubs by preventing unsuitable custodians ever becoming owners. Giving the regulator the power to test incumbent owners where there are concerns about their suitability ensures that any unsuitable owners can be removed.
The noble Lord, Lord Scriven, raised a comparison with the legal position on media organisations. Although football clubs up and down the country are vital community assets, they are not the cornerstone of our democracy that free media is. Investment from responsible owners has been a driving factor in the success of English football, which is why we are putting in place a stable regulatory environment that will continue to attract investors with a long-term prudent approach to growing football clubs as important community assets. What is important, in our view, is that owners are suitable, and the approach to testing owners set out in the Bill ensures just that.
This has been a hugely useful debate and, although I will have to come back on a number of points, I hope my response has provided some reassurance. But, for the reasons I have given, I would be grateful if my noble friends and other noble Lords would not press their amendments.
Lord Bassam of Brighton (Lab)
My Lords, I will of course happily withdraw the amendment in my name and that of my noble friend Lady Taylor and the noble Baroness, Lady Grey-Thompson. I have a few points to make in response. Generally, this has been a useful and valuable debate. We have had reassuring clarity from the Minister on the issues of concern.
The noble Lord, Lord Pannick, asked a practical question about how this would work. There is already an issue, in a sense, for the regulator to deal with. Under Clause 28(2)(a)(iv), the regulator will have to look for—and will certainly want to know—the source of funding. I can only assume that that is because we do not want the funding of our football clubs to be in any way under suspicion and/or linked to criminal activity, particularly human rights abuses and modern slavery. In Clause 28(2)(b), there is a fairly wide power for the independent football regulator to require information. Clearly, there are practical questions in carrying out inquiries and investigations into the source of funding that owners will offer up, but this is just one of those issues that will undoubtedly be tested over time.
I disagree with the noble Lord, Lord Jackson of Peterborough, that putting amendments forward like this is tantamount to regulatory overreach. If we were not concerned about issues such as modern slavery and human rights abuses, we would be selling the world of football short.
Lord Jackson of Peterborough (Con)
Surely the noble Lord will concede something. Proposed new paragraph (f) in Amendment 185, which he signed, mentions
“whether A has been complicit in … non-crime hate incidents”.
We are talking about the ownership of a football club. What does complicit in a non-crime hate incident even mean in the context of a strategy to deal with human rights and potentially preventing someone, via primary legislation, owning a football club?
Lord Bassam of Brighton (Lab)
I would hope that we would be concerned by things like hate incidents—those are important considerations. I certainly do not want my football club to be associated in any way with that, and I know the club itself does not. I am sure that goes for most clubs up and down the country.
I am grateful to the noble Lord, Lord Scriven, the noble and learned Baroness, Lady, Butler-Sloss, and the Lib Dem Front Bench for their support. I take most of the comments made by the noble Lord, Lord Moynihan, as being broadly positive, in terms of what we were trying to achieve with this little group. The issues are important, and I assure the noble Lord, Lord Parkinson, that I have no great desire to become massively unpopular with Newcastle United fans. I am probably a bit unpopular because Brighton seem to beat them regularly anyway.
Lord Bassam of Brighton (Lab)
But clearly, we should we look at these issues. State ownership is an issue we should keep under careful consideration. The Minister has said that all forms of ownership will be scrutinised in a similarly robust way, and we should be satisfied with that. So, having heard what was said, I am happy to withdraw my amendment.
Lord Markham
Lord Markham (Con)
My Lords, I hope that Amendment 180 will be much simpler, because is a bit niche and, dare I say it, anoraky in nature, for which I apologise. It would amend Clause 27 by removing subsection (7).
This subsection states that where a prospective owner or officer does not inform the regulator of their intention to become an owner or an officer
“as soon as reasonably practicable”,
that person must inform the regulator as soon as it is reasonably practicable. We probably understand the issue there. Not to mince my words, it is a slight tongue- twister. It is a bit confusing and nonsensical. In essence, it says that if someone has not told the regulator in the period when they were meant to, they must do so later
“as soon as reasonably practicable”.
I hope that this provision is a fairly simple one to tidy up. Again, I think we all understand the good intentions here, but I would be grateful if the Minister could clear that up. I will leave it to my noble friend Lord Moynihan to raise his amendments.
Lord Moynihan (Con)
My Lords, I will be equally brief in proposing my Amendments 187ZA and 187ZB. The drafting of the Bill states that if the regulator takes too long to determine applications for new owners and officers, then the applicants are treated as not suitable under Clause 32(5), through absolutely no fault of their own. This is not aligned with practice in other regulated sectors. It could have an impact on that person wider than purely their involvement in the club and be detrimental to clubs that have only one potential new owner, who is deemed unsuitable purely because the regulator ran out of time.
The change that I propose to Clause 32(5) would reverse the consequence of excessive delay, addressing the inherent unfairness in the current drafting. This is aligned with how statutory time limits on mergers work, for example. If the CMA fails to make a decision within a specified timeline, the merger is automatically allowed. These are clarifying amendments; I very much hope that the Government will see benefit in improving the legislation by accepting them.
Baroness Brady (Con)
My Lords, I refer the Committee to my interests as detailed in the register. I support Amendments 187ZA and 187ZB, tabled by my noble friend Lord Moynihan, which propose a sensible and very necessary adjustment to the presumptions under- pinning the ownership test.
These amendments address an important issue in the Bill, ensuring that the ownership process is fair, reasonable and aligned with best practices in other regulated sectors. As my noble friend has said, as it stands, Clause 32(5) means that if the independent football regulator fails to determine an application for a new owner or officer within a set timeframe, the applicant will be automatically treated as unsuitable. This is a really problematic approach. It assumes that any delay is the fault of the applicant or reflective of their unsuitability when, in reality, delays can occur for many good reasons. Quite often, they are entirely outside the applicant’s control or, indeed, the control of the selling club.
Simple cases can, of course, be done quickly, but acquisitions of football clubs can be complex undertakings. Applications for ownership done well involve a detailed examination of financial records, governance structures and regulatory compliance. Imposing arbitrary deadlines does not speed things up; it just risks poor decisions being taken on very consequential issues without all the facts. Indeed, taking time to get it right is in the best interests of all involved: the club, the fans and the broader football ecosystem. To penalise an applicant simply because the IFR runs out of time is neither fair nor proportionate.
The Premier League allocates significant resources to operate its own owners’ and directors’ tests. I have spoken to it about this issue and, of course, so has DCMS. It has told me that the league sees no benefit whatever in arbitrary deadlines and has explicitly told the Government that unless this is staffed and resourced intensively, the IFR will almost definitely hit the deadline in a range of cases. Of course, this will be compounded by the fact that the Premier League will be running its own process without a statutory deadline, meaning the IFR would be ruling people to be unsuitable for no good reason while the league would still be performing its test. This is a recipe for chaos and, I am afraid to say, litigation.
This presumption of unfitness if a statutory deadline is not met could have significant unintended consequences. Let us imagine a scenario where a club is on the brink of critical ownership transfer—perhaps its survival depends on transferring the ownership—and the only prospective buyer is deemed unsuitable purely because the IFR failed to meet its deadline. In the last Committee debate, the Minister said:
“Although the risk of clubs going into administration will be greatly reduced, it may still happen”.—[Official Report, 16/12/24; col. 54.]
For a club to go into administration because the regulator has not met its deadline would be unfair, and catastrophic for its supporters. Even if it did not result in immediate administration, it could leave the club in limbo, unable to secure necessary investment and potentially sliding into financial difficulty or worse.
This issue is not confined to the immediate impact on clubs. There are also wider reputational and practical implications for prospective owners and officers. Being deemed “unsuitable” by default could carry consequences far beyond football, affecting their credibility and standing in other sectors. That is not how a fair and just regulatory process should operate.
The amendments before us propose a simple but important correction. By reversing the presumption, they would ensure that applicants were not unfairly penalised for delays that were outside their control. Instead, if the IFR fails to make a determination within the specified timeline, the applicant would be treated as suitable by default. As my noble friend Lord Moynihan said, that is much more aligned with practices in other regulated sectors. For example, in merger control, if the Competition and Markets Authority fails to make a decision within the statutory time limit, the merger is automatically allowed. That ensures that the time limits are meaningful but that regulatory delay does not create unnecessary barriers or unfair outcomes.
It is important to emphasise that this amendment does not undermine the integrity of the ownership test. The IFR will still be able to make a determination based on the suitability of the applicant, but it will no longer have the ability, in effect, to penalise applicants or clubs because of its own delays. It would, in truth, be far better not have a timeframe at all, for the reasons I have outlined. However, if there is to be one, we must reverse the presumption and place incentives in the right place.
I hope the Minister will recognise the value of these amendments, and the much greater fairness and reduced risk they would bring to the process. It is a small but crucial change that will help ensure the ownership process operates in way that is both reasonable and just. I urge the Government to give the amendments the consideration they warrant.
Lord Pannick (CB)
My Lords, I support the noble Lord, Lord Moynihan, and the noble Baroness, Lady Brady, in this matter. It cannot possibly be fair to have a regulatory system in which, if the regulator does not perform and reach a decision within the specified time, for reasons that are not the responsibility of the applicant, the application fails. That is plainly unjust and, as the noble Baroness, Lady Brady, says, it is contradictory to the approach adopted in competition law, where the regulator has short time limits and must comply with them. The alternative is to have a more open-ended system, whereby the regulator can take more time if it is necessary to do so in exceptional circumstances.
Baroness Blake of Leeds (Lab)
My Lords, I start by thanking the noble Lords, Lord Markham and Lord Moynihan, for tabling these amendments. I will start with Amendment 180, in the name of the noble Lord, Lord Markham. The regulator needs to know who a club’s prospective new owners and officers are before they can buy or join the club, so they can be tested.
Although clubs, owners and officers are required to pre-notify the regulator, there may be occasions where someone becomes an owner or officer of a club without having first notified the regulator. In these circumstances, it is vital that the regulator is notified after the event—precisely what this amendment would remove. That is because, if the regulator is not aware that someone has become an owner or officer, the regulator will not know to test them. This risks clubs having unsuitable owners or officers in place.
I turn now to Amendments 187ZA and 187ZB, in the name of the noble Lord, Lord Moynihan. I will not deviate to talk about Leeds United at this point, although we always find reasons to do so in our general conversations. I am grateful for his comments and for those of the noble Baroness, Lady Brady, and the noble Lord, Lord Pannick. Clearly, I think we come down to the issue of timely decision-making on the suitability of new owners and officers, and we recognise that this is important for clubs’ financial sustainability.
It is a fact that, without deadlines, we have seen league determinations drag on, unable to reach a decision. That is why the regulator will be subject to a statutory deadline when it tests the suitability of prospective new owners and officers.
We believe that Amendment 187ZA would undermine the regulator’s tests. It would require the regulator to deem an owner or officer suitable to take up a position at a club if the deadline had been met, and the regulator had otherwise been unable to make a determination. This means that it would have to approve an applicant it did not know was suitable.
Amendment 187ZB would then allow that owner or officer to remain at the club until such point as the regulator found them unsuitable. This creates very concerning outcomes. If the end of the time limit resulted in an automatic pass, this could incentivise prospective applicants to stall and withhold information. More worryingly, as I set out, it would also mean that new entrants were approved even if the regulator was not confident that they were suitable—which is something that we simply cannot have.
This risks owners and officers who should never have been allowed to take up positions at clubs in the first place to potentially do considerable harm to clubs, which is why the statutory deadline must result in an automatic negative determination if reached, because this is the only way to ensure that suitable owners and officers become custodians. If the end of the time limit resulted in an automatic affirmative determination, this would incentivise prospective applicants to stall, as I have already outlined. It would also mean that new entrants would be approved if the regulator was not confident, and I hope that noble Lords will understand that this is not an acceptable position to be in. That is why—
Lord Pannick (CB)
Does the Minister accept that the current wording of the clause means that the application fails even if the delay is due entirely to the incompetence of the regulator or the failure of the regulator to have an efficient system for dealing with applications? Surely that cannot be right.
Baroness Blake of Leeds (Lab)
I understand the noble Lord’s comment but I really believe we are covering our tracks in this. We are improving the situation where the regulator works to avoid the situations that he outlined. I will add that this also provides certainty to the industry and, most importantly, it will incentivise the prospective person to promptly provide information to the regulator to allow it to make its determination. With those comments, I hope that noble Lords will not press their amendments.
Lord Markham (Con)
I thank noble Lords for this debate and the Minister for her response. While my amendment was anoraky by nature, I think we would all agree that the other amendments tabled by my noble friend Lord Moynihan are quite serious. As the noble Lord, Lord Pannick, mentioned, this is something that happens in all other regulatory environments, and other regulators manage to cater for that in exactly the same situation.
What my noble friend Lord Moynihan is suggesting is not, if the deadline has passed, that an owner is deemed suitable for ever. They will be deemed suitable only until the regulator is able to get round and opine. It would be a pretty silly thing to do for an owner to drag their feet and be awkward, for them to be allowed to do it only to be removed a few months later. That would be a big waste of money for them, and it would be completely illogical for an owner to try to game the system in that way.
So I am afraid that do not quite understand, and I think other noble Lords share in this. I ask the Minister to go back and think more on that, because it has got to be the right case. As the noble Lord, Lord Pannick, pointed out, in a situation where the regulator is not able to pass judgement through their own incompetence, it is the owner, who might be perfectly suitable, who loses out. So I would be grateful if we could consider that further—but at this point I am happy to withdraw.
“(1A) In making a determination under section 28 or 34, the IFR must also have regard to the foreign and trade policy objectives of His Majesty’s Government in the United Kingdom.”
Lord Parkinson of Whitley Bay (Con)
My Lords, in moving Amendment 190 I will speak to my further amendments in this group, Amendments 191, 195 and 198. I will also speak to Amendment 204, which is in the name of my noble friend Lord Markham, to which I have added my name as well.
The amendments in this group focus on the criteria that the regulator will take into consideration when determining the suitability of a potential owner of a regulated club. My Amendment 190 is intended as a probing amendment, to tease out the reasonings behind the Government’s removal of what was Clause 37(2) in the previous version of the Bill. While the wording of this amendment is exactly the same as that of the subsection that was taken out when the present Government introduced their version, I want to be clear that I am not necessarily arguing that I want to see it reinserted. My intention here is to use this opportunity to understand why the Government took it out, and to ask the Minister a few questions for the sake of the Committee to elaborate on the Government’s position.
The Government have said that the previous requirement for the regulator to have regard to the foreign and trade policy objectives of the United Kingdom and its Government was one of the main concerns that UEFA had with the previous version of the Bill, and that removing the provision has pacified it. But has it fully pacified UEFA? We have not yet had sight of the letter from UEFA to the Secretary of State, which the Committee has heard about a number of times. My noble friend Lady Brady sent her own correspondence to the noble Baroness, Lady Twycross, on 2 December, asking her to publish that letter and to place a copy in the Library so that the Committee can see it, but I do not believe my noble friend has yet received a response. It would be very helpful for the whole Committee to be able to see that letter, so we can be reassured about what exactly UEFA has said in that regard.
At present, it is not clear whether this provision was the only part of the previous Bill with which UEFA was not content or whether there are further parts of the Bill currently before us with which it is still unhappy. It would be useful to know how strong UEFA’s opposition was to the old provision on trade policy and so on. Did the Government remove it because UEFA threatened to exclude England from European competitions if, and only if, it remained in the Bill, or was UEFA’s opposition weaker and focused on other aspects of the Bill? I would be grateful if the Minister could elaborate on that for the Committee, and I hope that my noble friend Lady Brady will receive a response before Report.
My Amendment 191 would insert the word “relevant” to Clause 37(2)(c). This requires the regulator to consider whether a prospective owner or officer has been party to any civil proceedings in a court of law. The intent of including “relevant” here is to give a more precise wording, and indeed a bit of leeway. Our concern is that the current wording permits a wide range of court proceedings to be considered by the regulator—for example, divorce or child custody would surely be a civil proceeding. Making this simple change would focus the scope on civil proceedings which are directly related to somebody’s ability as an officer or owner of a regulated club.
I seek through Amendment 195 to prevent the regulator amending the considerations relevant to owner and officer determinations. This follows the theme that we have carried through this Committee of ensuring maximum clarity for clubs which are going to be regulated, and ensuring that the powers granted to the regulator by Parliament are not expanded in future. To allow that would be to grant the regulator a blank cheque to demand more and more requirements as it wishes.
The last amendment in my name in this group is Amendment 198, which would remove the provision stating that the regulator may not refuse ownership of a regulated club because of a prospective owner’s connection with the Government of a particular territory. I am sure we can all think of particular countries or territories at present which would indeed be grounds for immediate disqualification—this perhaps flows from the debate we had on group 2. For instance, at present, connection with the Government of the Russian Federation would surely be an open-and-shut case—would the Minister not agree? We want to ensure that the regulator is independent of our own Government, of course, but I do not see why the regulator should be prohibited in law from considering factors such as this in the determinations that it makes.
Amendment 204, in the name of my noble friend Lord Markham, prevents the regulator prohibiting multi-club ownership models. There are currently a large number of Premier League and English Football League clubs which are owned by individuals or consortia that own other clubs. There has been some controversy in this area, I gather, but we should be alive to the benefits of the model—one of which is a reduction in financial risk. It gives the ultimate owner of a club greater protection from one of their clubs being relegated or suffering a slump in revenue. Because there is a common owner, other clubs in the multi-club model can act as a buffer to absorb losses in one of the other clubs. There is, consequently, less risk of that owner facing difficulties and having to sell the club or, even worse, that club going into administration. Multi-club ownership models can absorb financial risk, thereby aiding the regulator to achieve the goals we want to see it achieve in regard to financial stability Surely the regulator should not prohibit this. I beg to move.
Baroness Brady (Con)
My Lords, I support Amendment 191, which seeks to add the word “relevant” to Clause 37(2)(c). This would be an important adjustment that would bring additional clarity and guidance to the IFR, as it develops its ownership test. The clause currently requires the independent football regulator to consider
“whether the individual is or has been a party to proceedings (other than criminal proceedings) in any court or tribunal”.
This is a strikingly broad provision. It would allow any civil proceedings, regardless of their nature or relevance, to count against someone in an ownership determination; it may even be that the individual in question seeking ownership has brought the civil action or tribunal that, as a result, is likely to disqualify them from owning a football club. It is a very concerning approach. Amendment 191 would provide a much-needed safeguard against unintended and disproportionate outcomes.
Let me take this opportunity to ask the Minister again the question I asked earlier in Committee—it is quite a fundamental question. Is the ownership test provided for in this Bill going to be subjective or objective? That was not made clear by the Minister when I asked the question before, so I would really like clarity—surely it cannot be both. Without this clarity, we risk creating an ownership framework that is open to arbitrary and inconsistent application, which would undermine investor confidence and, ultimately, the credibility of the regulator.
This concern is particularly acute when we consider the clause as it stands. Most successful businesspeople who have lived rich and varied commercial lives will have been involved in civil proceedings at some point, somewhere in the world. These could range from contractual disputes to regulatory disagreements or employment tribunals, and very often instances where they were not at fault whatever but had to defend their interests or bring such cases themselves. Are we seriously suggesting that such proceedings should disqualify them from passing an ownership test?
This is not a hypothetical concern. Civil proceedings can be entirely routine and, in many industries, reflect the complexity of modern business rather than any moral or professional failing. The absence of the word “relevant” means that such cases could be treated as a disqualifying factor, even when they have no bearing whatever on the individual's ability to responsibly own or direct a football club. This is not aligned with practice in any other regulatory sectors and will create an entirely unnecessary barrier to investment.
Clarity on the scope and purpose of the ownership test is essential for not just the regulator but the entire football ecosystem, including investors, leagues and clubs. Noble Lords have already highlighted serious issues with the current drafting, not least the lack of definition of “significant influence”. On the very unclear situation of Newcastle United, the Minister confirmed that the Crown Prince would be subject to the owners’ test, and the issue of significant influence would mean that this is the case. At least that situation was clarified and he knows where he stands.
Amendment 191 provides an opportunity to address at least one aspect of this mixture of problems by narrowing the scope of Clause 37(2) to focus only on what is genuinely relevant. This small change would provide greater clarity, fairness and confidence for all stakeholders in football. I encourage the Minister to reflect on this issue and the broader issues around this element of the Bill. As we move towards Report, it would be helpful to hear how the Government intend to address the now quite numerous concerns about the scope and application of the ownership test in the Bill.
Baroness Taylor of Bolton (Lab)
My Lords, I will say a few words about one of the amendments, but first want to follow up on what the noble Lord, Lord Parkinson, was saying about multi-club ownership. He was suggesting that multi-club ownership could alleviate risk. I see the point that he was making, but we have to be clear that it can also generate risk. This is an ongoing conversation that many people in football are having. We have to consider its prevalence and the fact that it is increasing, but there are questions about how it could distort competition and lead to complications with loan deals or the sale of players. This is a big question that will loom over us in the future. It is not just a one-way issue, as perhaps the noble Lord was suggesting.
I want to say a couple of words about Amendment 201. Clause 37 says very clearly that in determining whether it considers that an individual has the requisite honesty et cetera, the regulator should have regard to whether the individual has been convicted of a serious criminal offence. Amendment 201, in my name and that of my noble friend Lord Bassam, goes somewhat further and says:
“No individual with an unspent serious criminal conviction, whether or not in England and Wales, shall be permitted to own a controlling stake in, or serve as a director for, any regulated club”.
That is a clear statement of intent about the serious nature of some of the issues that have arisen about specific clubs in recent times. I ask the Minister to tighten up on this, take the prospect of owners with serious convictions very seriously and say that it should be a bar to ownership and not simply something that has to be taken into account.
Lord Moynihan (Con)
My Lords, I too will speak to Amendment 204 on multi-club ownership, as the noble Baroness, Lady Taylor, has made some important points and it would be helpful for the Committee to understand the position of the Government. It can alleviate risk. It is also highly complex and can make it very difficult, in terms of due diligence, for the regulator to look at an English club under this legislation without taking into account the financial exposure that a multi-club owner could have in another country with other clubs.
This is a growing trend; it is not new. A significant number of Premier League clubs and six EFL Championship clubs form part of a wider multi-club model, a structure first explored exclusively in Europe by ENIC, now the majority shareholder of Tottenham Hotspur. The rationale underpinning multi-club ownership aspirations, which underlines just how complex the situation can be, ranges from player recruitment and development efficiencies to knowledge sharing, resource synergies and brand penetration.
Furthermore, accruing interest in clubs that compete in the continent’s top leagues—those that hold higher bands and therefore score more points in the governing body endorsement system—is seen as a means for Premier League and EFL clubs to access a more eligible foreign pool of players. Having interests in multiple clubs is not a phenomenon unique to the UK; it pervades the European game. UEFA reports that clubs with cross-ownership relations account for more than a third of the top division in each of Belgium, France and Italy, in addition to England. Integrity of competition, reconciling the model with football’s rulebook, has become a complex issue for UEFA. At the centre of sport is competition, so if the same person, either a natural or a legally based entity, was to have control or influence over two rivals, there would be a risk to the integrity of competition whenever those rivals competed.
To mitigate that risk, football’s governing bodies have introduced rules to preserve the independence and integrity of competition between its clubs. At a domestic level, approximately two-thirds of European national football associations have rules directly limiting or restricting multi-club ownership. The famous article 5 of the regulations of the UEFA Champions League, on the integrity of the UEFA club competitions, stems from the governing body’s concern, which started back in the late 1990s. Article 5 regulates common ownership by prohibiting the same individual or legal entity having control or influence over more than one club playing in the same UEFA club competition. That notably includes the ability to exercise, by any means, a decisive influence on the decision-making of the club concerned.
With that brief explanation on top of the important points made by the noble Baroness, Lady Taylor, I would be very grateful if the Minister could confirm that she is completely comfortable with article 5 and will instruct the regulators not to impose any conflicting regulations in this area.
Baroness Blake of Leeds (Lab)
My Lords, I thank the noble Lords, Lord Parkinson of Whitley Bay, Lord Addington, Lord Markham and Lord McNally, who I am sorry to hear is not available today, and particularly my noble friend Lady Taylor of Bolton, for the amendments in this group.
Starting with Amendment 190 from the noble Lord, Lord Parkinson, I do not agree that the foreign and trade policy objectives of the Government have any bearing on suitability. Suitability should be based purely on an impartial assessment of the individual’s fitness, whether they have a source of wealth connected to serious criminal conduct, and their financial plans and resources.
Lord Parkinson of Whitley Bay (Con)
I am sorry to intervene so early, but the noble Baroness has said something quite stark. The policy of the United Kingdom is very clear in relation to the Russian Federation at the moment. Roman Abramovich was sanctioned because of the UK’s very clear position and the ownership of Chelsea was changed for a brief period. The Department for Culture, Media and Sport owned it on behalf of the nation and oversaw the sale. I understand the Government’s stated reasons for taking this out of the Bill, but should the regulator not be able to take into account the foreign policy issues of the day on something as important as this?
Baroness Blake of Leeds (Lab)
The noble Lord has pre-empted the further comments that I was going on to make. I can address this here. Clearly, in the example that is given regarding Russia, anyone connected to a state that is subject to sanctions would not pass the test. That is a straightforward way of picking up some of the concerns that he has raised.
The intention with all this is to ensure that the test can be applied consistently and remain fair, transparent, robust and focused on whether an individual is suitable to own a football club. Furthermore, the Government have been clear that the independence of the regulator is vital. That is the point I want to stress here and that is why the Government have removed the requirement for the regulator to have regard to His Majesty’s Government’s foreign and trade policy objectives when assessing an owner’s suitability, which is the precise requirement this amendment seeks to include.
Turning to Amendment 191, I thank the noble Lord, Lord Parkinson, and assure him that the intent of his amendment is already achieved in the Bill as drafted. The Bill sets out a number of matters the regulator must take into account when considering an owner or officer’s fitness as part of the owners’ and directors’ test. One of these is whether the owner or officer has been party to civil proceedings. As with all public bodies, the regulator must take into account all relevant matters and must disregard irrelevant matters when it comes to making decisions. That means that the things listed in Clause 37(2) will affect the regulator’s decision only if they are relevant in a specific case. That picks up on the issue of relevance.
In other words, the regulator must treat these things as potentially relevant to its decision, but it must consider the specific facts and context in every case. The noble Baroness, Lady Brady, also picked up on the issue of relevance. For example, the regulator will not be concerned with whether an owner or officer has contested a speeding ticket. However, it will be concerned if a civil court has found that an owner or officer has acted in a seriously dishonest way or if they have a track record of civil cases that cast significant doubt on their integrity. The test is designed to allow the regulator to make a holistic evidence-based assessment of suitability, taking the context into account, as I have mentioned previously.
I turn to Amendment 192, tabled by the noble Lord, Lord Addington, and Amendment 201 in the name of my noble friend Lady Taylor of Bolton. On the latter, I completely agree that an unspent serious criminal conviction is likely to affect whether an individual is suitable to be a club’s custodian. That is why the regulator is already required to take any criminal convictions into account when assessing an owner or officer’s suitability —it does not have a choice: it has to. I reassure my noble friend that we take her comments seriously and are grateful for the way in which she expressed them today.
The Bill does not set out exhaustive details on every element of the fitness test as to what constitutes a pass or fail. Instead, it allows the regulator to make a holistic assessment, which, crucially, is able to take into account any context and relevance. We believe this approach is key. If someone’s criminal history makes them unsuitable, the regulator can fail them on that basis. By comparison, the binary nature of the league’s current tests leads to a less sophisticated assessment of suitability. That is why this test takes a different approach. I reassure noble Lords that the Bill as drafted already requires the regulator to consider any unspent serious criminal convictions, and we fully expect the regulator to treat these as very significant factors in its assessment.
I turn now to Amendments 195 and 198 in the name of the noble Lord, Lord Parkinson—
Lord Goddard of Stockport (LD)
Can the Minister help me? She said she would comment on the amendments. What are her comments on Amendment 192, tabled by my noble friend Lord Addington, which would require the Bill’s propriety test to include equality, diversity and inclusion? We had a long and wide-ranging discussion on that the other night, and the Government made it clear that they supported including equality, diversity and inclusion in the Bill. I would like some clarity. The propriety test seems fixated on criminal charges and litigation.
Baroness Blake of Leeds (Lab)
I am sorry that we have not had a fuller discussion on that, but I thank the noble Lord, Lord Addington, for his amendment and I agree that equality, diversity and inclusion are significant factors which the regulator has a duty to highlight. Equality, diversity and inclusion are not named criteria in the fitness test, and I do not believe they should be. If an individual has behaved in a seriously discriminatory and harmful way that rises to the level of a criminal offence, and which results in a civil lawsuit or regulatory or disciplinary action, the existing test will capture this. We believe that this is the appropriate threshold. It would not be proportionate to require the regulator to assess individuals’ commitment to equality, diversity and inclusion.
I will return to the point the noble Lord, Lord Parkinson, made regarding a blank cheque, and pick up on his Amendments 195 and 198. The Bill sets out a list of matters the regulator must consider when assessing an owner or officer’s honesty and integrity as part of the fitness test. Those are the relevant matters when assessing an individual’s honesty and integrity, and they are based heavily on precedent—namely, the Financial Conduct Authority’s fit and proper person test. However, as we have discussed before, football is a changing industry and the regulator must be able to adapt to this. Matters may emerge in the future that are crucial to assessing an individual’s fitness.
The purpose of the owners’ and directors’ test is to ensure that clubs have suitable custodians. That is why it is vital that the regulator be able to consider other matters. This sort of discretion is well precedented; indeed, the FCA has more discretion when conducting its fit and proper tests. However, we want to make it explicitly clear that it would not be appropriate for the regulator to add any matters which would allow it to determine an individual’s suitability solely based on their connection with a Government. That should not be what determines whether an individual is suitable or not.
Turning to Amendment 204 from the noble Lord, Lord Parkinson, nothing in the Bill prohibits an owner owning more than one club. I thank the noble Lord, Lord Moynihan, for his comments on this issue. Concerns about multi-club ownership are to do with conflicts of interest and competition, which is why the leagues and UEFA have rules about multi-club ownership. Clubs competing in these competitions will be required to abide by any applicable rules.
Turning finally to Amendment 202, from the noble Lord, Lord McNally, I agree that it is crucial that clubs be protected from unsuitable officers, which is why the Bill gives the regulator the powers to disqualify any unsuitable officer from being an officer at any regulated club, up to and including for life. That, I am sure noble Lords will agree, is a very strong tool that has powerful ramifications. It means that all clubs will be better protected from unsuitable officers, but it should be used carefully.
There are scenarios where the regulator must find an officer unsuitable—for example, if an officer lacks the requisite qualification, experience or training to take up that specific officer role at the club—but it should not automatically follow that they are deemed unsuitable for any officer role at the club. Indeed, there may be other officer roles that they are suitable and qualified for, but this amendment would ban that. It would mean that the regulator would have to disqualify them from being an officer anywhere. This we cannot and should not accept. That is why it is important that the regulator has the power to disqualify unsuitable officers but is not always required to do so. For the reasons I have set out, I hope the noble Lord will be able to withdraw his amendment.
Lord Pannick (CB)
Could the noble Baroness say something about the UEFA letter which expresses its views on the Bill? Will she assure the Committee that a copy of this letter will speedily be sent to the noble Baroness, Lady Brady, and a copy put in the Library so that we know what it says?
Baroness Blake of Leeds (Lab)
My understanding is that we will not be sending it, but I am sure there will be further clarification on this point.
Lord Pannick (CB)
Can I ask why? This is a letter from the sports regulatory body that governs European football. Surely the Committee is entitled to know what its views are on the substance of the Bill we are debating.
Baroness Blake of Leeds (Lab)
We have already covered this point. We are talking about a private letter to the Government. That is my understanding of the situation. I do not feel qualified to comment further at this stage.
Lord Parkinson of Whitley Bay (Con)
It is a private letter that has convinced the Government to change the Bill in the way that we are debating here, so I hope the noble Baroness will take that away and hear the repeated request from the Committee to see this letter. It has persuaded them to take out the provision that I am probing with my Amendment 190 and every time we return to this matter, the Committee gets a bit more confused about why the Government have done it and what may or may not be in that letter. I appreciate what she says but I would be grateful if she could let us see it.
I apologise for intervening so early. What the noble Baroness said subsequently was very helpful. Also, the example I gave was not a helpful one because Roman Abramovich was sanctioned and if a person becomes sanctioned, as the noble Baroness went on to say, that individual would indeed be covered. To give her another, necessarily hypothetical example, if an unsanctioned citizen of the Russian Federation, connected to the Russian Government and supportive of their illegal war in Ukraine, wished to become an owner of a football club in this country, the combination of taking out this provision about allowing the regulator to have regard to the foreign policy objectives of the Government of the United Kingdom and the refusal to accept my Amendment 198, which covers links to foreign Governments, means that the regulator would not be able to prevent that person—a Russian citizen connected to the Government of the Russian Federation—becoming an owner of a club? Does she not think that is an unfortunate consequence of the changes the Government have made to the Bill because of this UEFA letter which we have not seen?
Baroness Blake of Leeds (Lab)
With regard to the UEFA letter, I refer noble Lords back to the comments that my noble friend Lady Twycross made previously. To clarify, we did not in fact say that the letter was the reason for changing the Bill; we said that UEFA’s views more generally were the reason for change. With that, I think I can leave that there. I also want to make the point again that anyone subject to sanctions would not pass the test.
Lord Parkinson of Whitley Bay (Con)
But somebody who is not subject to sanctions but who is connected to a Government whom the UK is in dispute with would not be covered because of the removal of this provision from the Bill. I am happy if the noble Baroness wants to write on this, but this is an important matter because this is a change to the Bill. I understand the Government’s stated reasons for changing it—we do not want to see football teams in this country unable to take part in international tournaments and we want to make sure that the regulator is independent of government—but I worry that by making the change in the way that we have and by not adding in the additional safeguard such as the one I am proposing through my Amendment 198, we open ourselves to a situation where somebody connected with a foreign Government cannot be taken into account by the regulator. If she is happy to commit to write on that, we would be grateful.
Lord Addington (LD)
We have gone through this several times. If there could at least be some private way in which those people involved in this could see this letter, it would be of assistance, because this is becoming a hardy perennial that is getting in the way of progress.
Baroness Taylor of Bolton (Lab)
I think everybody is thinking about the previous examples we have been given, but would not the example that the noble Lord, Lord Parkinson, just gave us of the non-sanctioned Russian individual be covered by the other considerations and the holistic attitude that my noble friend the Minister was telling us was the basis of the approach of the regulator?
Baroness Blake of Leeds (Lab)
I thank my noble friend for her helpful comments. I am not able to comment further at this moment. I think the detail is probably beyond this discussion and I recognise the comments about going round and over things again.
Lord Parkinson of Whitley Bay (Con)
I am grateful to the noble Baroness but it would be helpful if we could have something in writing on this. As I say, I gave a poor example in the case of Roman Abramovich, but the hypothetical example is one that I would be grateful for an answer to. That would be appreciated. But I am grateful to her for what she said and the reassurances she gave on some of the other amendments that I have tabled in this group on civil offences and so on. I take on board the points that the noble Baroness, Lady Taylor, raised about multi-club ownership. I recognise that this is a live and lively debate in the sport. What we were trying to test with Amendment 204 was that the regulator should not be restricted on that basis alone. But with gratitude to the noble Baroness and eagerly awaiting the letter that will follow, I beg leave to withdraw my amendment.
Lord Parkinson of Whitley Bay (Con)
My Lords, I will speak only briefly to Amendment 206 as it is quite simple. It seeks to prevent clubs which are relegated to a competition which is not regulated by the new independent football regulator being subject to the prohibitions of Clause 45.
Currently, any club that is relegated will have to continue to abide by these rules for a period of 10 years. Clause 45 has a similar provision applying the rules in that clause to relegated clubs for five years. It seems unfair that a club that is relegated to a league or competition below the scope of the new regulatory regime should have to abide by the rules set out in the Bill for such a long period. Surely a fairer approach would be either to shorten the period or, as my amendment suggests, to remove it altogether.
Clubs that no longer operate a team in a regulated league will, by virtue of their relegation, receive lower incomes and potentially lose players. The financial situation they face will not be commensurate with the duties placed on them by the Bill, and retaining these long time periods seems to render the principle of specifying competitions, as the Bill does elsewhere, less meaningful. Why specify certain competitions if clubs playing in leagues that are not specified would still be subject to duties in the Bill? I beg to move.
Lord Addington (LD)
My Lords, we need an answer about why these things are carried on for so long, because there are administrative burdens. If we want these clubs to survive and come back, we could probably make a case for two things. One would be an intermediate regulator, which I do not think would be terribly popular with certain sections of this Committee, and the other is deciding when you can come out of this, because there are duties that are probably an appropriate burden for a professional structure. A good few clubs have gone in and out of this structure, but there is a certain level at which you are not receiving income, you are not receiving support and you have become a part-time asset to the community. Surely there is some point at which there is a cut-off. A better definition of the Government’s thinking on this might be helpful.
Baroness Taylor of Bolton (Lab)
My Lords, I just want to say a word about Amendment 207. It talks about a club that is not a regulated club but bears a very similar resemblance to one that is in things such as the name, the shirt colours and things of that type—almost an imitation of another club in order to get some support, finance or whatever. It may seem that this is highly unlikely, but I have a nightmare scenario where the super leagues that are being proposed do not take off, and therefore people try to create an artificial super league by, for example, having a team called “Manchester Blues” or “Liverpool Reds” getting into competitions with clubs abroad as an imitation of the super league that has been proposed and rejected. I want some assurance that should that nightmare scenario come about, there is some provision for being strict about what can and cannot happen.
Baroness Twycross (Lab)
My Lords, before I speak to this group, I want to be clear about who the regulator will test and clarify an earlier point I made. I will ensure that all noble Lords who participated in the second group have their attention drawn to this clarification and apologise if I caused any confusion.
Schedule 1 to the Bill sets out details on who meets the definition of an owner. The Secretary of State will also set out guidance on one of the criteria for ownership, “significant influence or control”. An incumbent individual simply meeting the definition, including if they exert significant influence or control, does not mean that the regulator is required or obliged to test them. It may test an incumbent owner if there are grounds for concern about their suitability. The criteria for suitability are clearly set out in the Bill. This applies to any type of owner, be it a state owner or otherwise.
The key point I must stress—it goes for Newcastle United or any other club, although as someone who lived for a number of years in Newcastle I am particularly keen to reassure Geordies—is that the regulator will be operationally independent of government. It is not for the Government to prejudge the regulator’s assessment of who meets the definition of owner, whether there is concern about a particular owner or the outcome if the regulator tests a particular owner.
Finally, I want to reassure your Lordships’ Committee that this Government are unashamedly pro-investment, which will drive our growth mission. We want good, long-term investors into the UK, and foreign investment is key to this. I hope that noble Lords find this clarification helpful.
Lord Moynihan (Con)
I thank the Minister for that. I think it is self-evident from her comments that once you remove the foreign and trade policy objective and put in place the significant influence test, you have a massive problem in the Bill. That massive problem is that it is self-evident, as has been discussed many times during the proceedings, that the Crown Prince—as chair of and in control of the PIF, with significant influence over it—would automatically come within the scope of significant influence as defined so far in debate on a number of occasions. I have no problem with that, and I do not think that the noble Baroness, Lady Taylor, has any problem with that. If that is the case, so be it, and let us be honest about it. If it is not the case, “significant influence” is meaningless, and we should come back to it on Report and simply delete “significant influence”, which, incidentally, goes far further than any other regulator in Europe.
We have control tests that are applied by UEFA, by the Premier League and across football. We do not have this significant influence test, and that is what is causing the problem. You remove the foreign and trade policy objectives and apply a significant influence test. The Minister was very clear in response to me on Monday that the Crown Prince would be absolutely full and central in any clear interpretation of that test. For the first time, she has put the definition of significant influence into the long grass as she said that it would come back in secondary legislation, that the Government do not actually know what it means and that she cannot give an answer to that in Committee or when we return on Report. But it is critical, because it comes to the very hub of political influence: what is the status of the Crown Prince? What is the status of Abu Dhabi? What would be the status of the Qataris if they wanted to buy a club in the Premier League, or indeed in any other league? My recommendation is that, given the uncertainty in the response that the Minister has just given and the absolute clarity on Monday evening and earlier this afternoon on the yes/no answer, we leave it for the time being and return on Report and analyse this in depth.
Baroness Twycross (Lab)
I felt I was clear, but I accept that the noble Lord has a different view. I look forward to ongoing discussions with him before and on Report. My comments related to a previous group, so I apologise to noble Lords who were not there to hear the context of my comments.
I will now move on to my remarks on this group, which—
Lord Moynihan (Con)
I shall just say this, as it is so central to our proceedings this evening. Just for the record, on Monday evening the Minister said:
“Finally, on the amendment from the noble Lord, Lord Moynihan, the whole point of the owners’ and directors’ test, which has been carefully designed, is to ensure that club custodians are suitable for assessing an owner’s fitness—this is absolutely crucial. It is right that any owner passes the tests set out in the Bill, so it would not be fair, appropriate or responsible to exempt certain types of owners from testing … This amendment intends that owners with diplomatic status or who are Heads of State, Government Ministers or high-ranking officials of foreign Governments would not be tested”.
That was in response to my probing amendment. She went on:
“I do not need to tell noble Lords about some of the people this could exempt from testing. That means that the regulator could not consider any personal finances or criminal history, no matter how egregious. Instead, it would have to ignore these matters, so the regulator could be letting unsuitable owners in”.—[Official Report, 16/12/24; col. 140.]
In other words, all those people I have just mentioned are subject to the tests set out in the Bill, and that would include anybody who was chair of a sovereign wealth fund that had invested in football in this country. That is what we will return to on Report. I do not think it is appropriate to lengthen the discussion this evening, as it has been well aired, but it is fundamental to removing that clause from the legislation in terms of opening up a can of worms now for the Government in identifying exactly what the suitable ownership test means.
Baroness Twycross (Lab)
Like other noble Lords, I want to move on, but I shall repeat two sentences that I referred to earlier. Simply because an incumbent individual meets the definition, including if they exert significant influence or control, does not mean that the regulator is required to test them. It may test an incumbent owner if there are grounds for concern about their suitability. Now I think we should move on. I do not feel that is a can of worms, but I appreciate that the noble Lord has an alternative view.
Moving to the group under discussion, I thank the noble Lord, Lord Parkinson of Whitley Bay, and my noble friend Lady Taylor of Bolton for speaking to the amendments. On Amendment 206, in the name of the noble Lord, Lord Parkinson, the aim of the clause, as he knows, is to stop the possibility of clubs leaving to join a closed-shop breakaway competition, as several clubs attempted with the European Super League in 2021. While I appreciate the aim of the noble Lord’s amendment, the clause has been carefully drafted to ensure that there is no possibility of circumvention. That is why the duty also captures formerly regulated clubs, so an owner cannot remove a club from the specified competitions in favour of joining a new break- away competition.
It is unlikely that clubs in the sixth tier of English football or beyond will attempt to join a prohibited competition, so we do not think the risk that the amendment aims to cater for is a material one. What is more, if these clubs sought to join a competition that had been prohibited by the regulator, that would undermine the heritage and history of the club and should also be condemned—so it is no bad thing that the duty would capture them as well.
On Amendment 207, in the name of my noble friend Lord Bassam of Brighton, which my noble friend Lady Taylor spoke to, I acknowledge the intent to protect the clause from any risk of circumvention. However, we do not believe it is necessary to extend the scope of the clause to the new clubs or entities that are created to take on the identity and players of a formerly regulated club in order to participate in prohibited competitions. We believe this is a remote risk. Even if a club could convince its players to do this, convince its fan base to follow them and work through the legalities, the FA’s existing requirements around the registration of clubs and players would offer sufficient protection. For the reasons I have set out, I hope noble Lords will not press their amendments.
Lord Parkinson of Whitley Bay (Con)
I am grateful to the Minister for her answers to the amendments in this group and for the clarification she gave on the comments on a previous group. I take what she says about breakaway clubs, but the point is for how long the provisions will still apply to clubs that drop out below the bottom level of this regulation through relegation, and why it lasts for so long. She has spoken before, rightly, about making sure that this is a proportionate regime. If you are a club that has been relegated to such a low tier and are unlikely to come back in, it feels like a very long time to have to continue to comply. That is the point that I was probing there. I might take that away and think about it further. If she has anything further to add on reflection, I would be very happy to receive that in a letter or pick it up in the discussions that we will have between now and Report—but that was part of the thinking there.
The noble Lord, Lord Addington, is right: the suggestion of another or an intermediate regulator would not be popular in all parts of this Committee, so I will let that issue rest.
My noble friend Lord Moynihan’s suggestion on the question of influence and foreign ownership is one that is perhaps better for us to talk about in our discussions between Committee and Report. I cannot be the only Geordie who is a bit confused and concerned about the implications for Newcastle United and I look forward to speaking to the Minister about that. But, for now, I beg leave to withdraw the amendment.
Baroness Taylor of Bolton
Member’s explanatory statement
This amendment expands the duty to notify the IFR of a potential disposal of a home ground to include a potential disposal of any specified properties.
Baroness Taylor of Bolton (Lab)
My Lords, Amendment 219 relates to Clause 46 and the question of the disposal of home grounds, and the kinds of approvals that are going to be required. I have just three points to make. First, are the words “home ground” sufficient? We suggest that we should say “specified properties”. This relates very much to what I was saying the other night about assets of community value. I said that when my own club, Bolton Wanderers, made its ground an asset of community value, it covered not just the ground itself, the pitch and the stands but the concourse. We have to talk about whether it should cover a training ground and even advertising hoardings, car parks and the fan zone. If we simply say “home ground”, will that cover an item such as a fan zone? That is why the amendment I have tabled suggests that we should have specified properties. They may be different in the case of different clubs, but a home ground is more than just what is on the pitch or even within the boundaries of the stadium. That is something that I hope the Minister will consider.
My second point is that this should relate to the assets of a club being used as security for a loan by the owner. There is clearly potential danger there if the loan is called in but the owner does not have the wherewithal to cough up the money that he has borrowed. Could that situation jeopardise the heritage of a club if it is vulnerable because it has been given as security? That is a valid consideration.
The third point is the need to make sure that fans are fully consulted and engaged in any discussion about the disposal of the specified properties. Often, when we are talking about which properties might be involved, it is the fans themselves, especially if there is a fan zone, who have a clear vested interest. We have talked on the Bill about moving five miles. In any circumstances, the fans have to be involved and, therefore, I hope the Government will consider the amendments that we have tabled.
Lord Goddard of Stockport (LD)
I support the noble Baroness, Lady Taylor of Bolton, and the noble Lord, Lord Bassam of Brighton, because I have walked this tightrope. When I was leader of Stockport Council, we had to financially advise and support Stockport County on several occasions. In the end, in 2013, we acquired the freehold and leased it back to the new owner of Stockport County, Mark Stott, for 250 years. That enabled him to get investment in and get the football club moving back into the league and climbing the divisions. That is where we start from: the position of the club and its value as a loan against something.
If we can get local authorities and other people to get hold of the freeholds, that will save Toys-R-Us from being built on certain football grounds on the south coast and give the clubs real opportunities to move forward. So we should support the amendments. We should also probably be thinking about how we can strengthen that in future. There is more involvement in the community value and the asset to a town and area of a football club, so we could be a bit more imaginative about how we protect that, rather than just arguing over how we should cover a loan against the ground.
Lord Parkinson of Whitley Bay (Con)
My Lords, I will say a few quick words about my amendment in this group. I am grateful to the noble Baroness, Lady Taylor, and the noble Lord, Lord Bassam, and other noble Lords for their amendments in this group. My Amendment 236 would introduce a new duty encouraging clubs to consult the Office for Place before making any decisions regarding their home ground or the construction of a new one.
I know that the Government have proposed to wind up the Office for Place, but I wanted to draw attention to its work, and in particular the excellent work of its interim chairman, Nicholas Boys Smith, and the board and staff who were working in Stoke-on-Trent. I think a lot of us share the disappointment, because we saw the Housing Minister after the election tell the BBC that the Office for Place would be kept. But, following the Budget, I understand that the Government are proposing not to keep it. I did think it could play an important role here, as it has in so many other areas of public policy.
My amendment offers a clear benefit in terms of promoting meaningful engagement and ensuring that football clubs consider the broader social and cultural impacts of their decisions. That is a theme that noble Lords touched on when introducing their amendments in this group. I think we all want to see clubs take a more holistic and responsible approach when planning changes to their home grounds, helping to preserve the heritage of these much-loved sites while ensuring that development is in the best interests of both the club and the community in which it is rooted.
In light of the need for more thoughtful and inclusive decision-making, my amendment tries to strike the right balance between promoting consultation with an expert body, fostering collaboration and ensuring that long-term planning for home grounds is done responsibly. I appreciate the points that noble Lords raised in their amendments and look forward to the noble Baroness’s response to them all.
Lord Harlech (Con)
My Lords, I rise briefly to support the amendments from the noble Baroness, Lady Taylor of Bolton. They sound very reasonable to me. We need to avoid the situation of groundless clubs. Coventry City come to mind. They had some very awkward years and some equally awkward ground sharing. We want to avoid groundless clubs and ground-sharing clubs. Avoiding stadiums being used as security for loans taken out by owners is incredibly helpful. I very much hope that the Minister will support that.
I also support the amendment from my noble friend Lord Parkinson of Whitley Bay. I declare that I am a member of Historic Houses and tend to bang the drum a little about heritage and aesthetics. To give a personal example, my local team are Shrewsbury Town. They had this amazing stadium, Gay Meadow, on the banks of the River Severn. They had a chap or chapette in a coracle who would go out into the river when the ball was kicked into it. Like many other clubs during the 1990s and 2000s, they moved to a sort of identikit shopping centre stadium. I guess it has some practical advantages, but it is pretty soulless and is like so many other stadiums. So I hope the Government can listen and take this into account. We have some amazing stadiums in this country. If we are going to get a club to move, let us move them to a better home, not a worse one.
Lord Watson of Invergowrie (Lab)
My Lords, I would like to say a few words in support of my noble friends Lady Taylor and Lord Bassam, some of whose amendments I have signed. I also want to pick up on the point that the noble Lord, Lord Harlech, has just made. He mentioned Coventry, who moved to Northampton, which is about 35 miles away and obviously not at all convenient for fans. My noble friend Lord Bassam’s club, Brighton, moved to Gillingham, which is, what, 70 miles away?
Lord Watson of Invergowrie (Lab)
Some 72 miles and a few chains, I am sure.
Even a club such as Bristol Rovers, who were obliged to move to Bath, which is only about 15 miles away, had to play there for 10 years until their new stadium was built—and even then, I think they ended up sharing with a rugby club.
Amendments 227 and 233 are really “the AFC Wimbledon amendments”, because they refer to that club in which I have an interest, which I have stated on a number of occasions in consideration of this Bill. On the figure of five miles, it may not surprise noble Lords to know that, when Wimbledon FC were obliged to move because their ground had been sold from underneath them, they went to Crystal Palace, which is about six and a half miles away. It still was not convenient for a lot of the fans.
It has been said that, when Wimbledon moved to Crystal Palace, the crowds increased. Factually, that is correct—and I see the noble Lord, Lord Moynihan, nodding—but they increased because there was a far greater ability for visiting fans to go to Crystal Palace. It was not at all unusual for Wimbledon FC to play home games where their own fans were very much in the minority. So that was not a benefit—okay, in financial terms for the club it was, but it is not a system that anybody would advocate.
My final point is to reinforce Amendment 234, about taking reasonable steps to ensure that the club’s fans do not consider arrangements for any change to be unsatisfactory. That should be a very basic consideration. I think it is in the Bill, but it is helpful to have that stated quite clearly and I hope that my noble friend will take that on board and, if she is not able to accept it today, which I would not expect, that we might come back to this to get something more solid on Report.
Baroness Twycross (Lab)
I thank my noble friends Lord Bassam of Brighton and Lady Taylor of Bolton and the noble Lord, Lord Parkinson of Whitley Bay, for tabling these amendments regarding home grounds. The noble Lords, Lord Harlech and Lord Goddard, gave powerful examples of why home grounds matter and what they mean to fans, as did my noble friend Lord Watson of Invergowrie, particularly in relation to relocation. As somebody who grew up within hearing distance of Oxford United’s Manor Ground, I can empathise with the feelings of fans when grounds move —although inevitably they do sometimes, and often successfully.
I will talk first to Amendments 219 to 223, 227 to 230 and 233 and 234 in the names of my noble friends Lord Bassam of Brighton and Lady Taylor of Bolton. Starting with Amendments 219 to 222 and Amendment 230, home grounds are clearly often the most important asset of a club and that is why this legislation has carved out specific protections to safeguard against risky financial decisions or sales of the ground. This does not mean that other assets such as training grounds or office space are not also important to the club, but there is a specific consideration necessary for the home ground. I reassure my noble friends that there are protections in the Bill to safeguard against owners stripping a club of its assets or making reckless mortgage decisions against clubs. They include the enhanced owners’ and directors’ test, which will look to ensure that owners are prepared to be appropriate custodians of their club and its assets.
The regulator will also have oversight of the financial plans and balance sheets of the regulated clubs, ensuring that the club is not putting itself in a risky position unnecessarily. We would expect that this would include what assets remain in the club’s ownership and any plans to dispose of them. If it were to become evident that an owner was looking to asset strip the club or deliberately worsen its financial position, the licensing regime gives the regulator power to place licensing conditions on the club. The regulator could also take enforcement action if those conditions are breached or if the financial plan that the club has submitted has not been followed.
I turn to Amendment 227. I will not repeat the same points made previously as they are both similar to other amendments in this group. However, on the second sub-paragraph proposed by this amendment, with changes to the ownership or use of the home ground as collateral, the potential adverse outcomes are entirely financial. They do not impact the heritage of the club, nor would they necessarily relate to a relocation. If there is reasonable prospect of a change leading to relocation, Clause 48 sets out the parameters for any home ground relocation. The regulator would need to be satisfied that the move does not undermine the financial sustainability of the club or significantly harm the heritage of the club. This means that the regulator will be able to look at things such as location.
However, the Government have deliberately not set a fixed distance or considerations. This is to further allow for a bespoke approach to be taken at all clubs to make sure that the impact of a relocation can be mitigated if one is deemed necessary. Amendment 223 seeks to expand the scope of the duty to gain the regulator’s approval to include all substantial changes to specify properties or the club’s home ground. Given the addition of the specified properties, this amendment could include any significant changes to property, such as a hotel owned by the club. This is a significant expansion of scope and could be onerous and resource intensive on the regulator. In such a case as a hotel, the amendment could feasibly lead to a full consultation and approval process for substantial changes such as building an extension. This would not be an appropriate or efficient use of the regulator’s time or resources.
Instead, such substantial changes to either the home ground or other assets can be addressed via other areas in the Bill. For example, we expect all clubs to consult and have regard to the views of fans on the specified relevant matters. This includes home grounds and business priorities, among other issues. We would also expect any substantial changes to the home ground or other assets to be captured by the club’s financial plans. The regulator will therefore be able to have oversight and react to any concerns.
Baroness Taylor of Bolton (Lab)
My Lords, I have listened very carefully to what the Minister said. I am very grateful to her for saying that she will consider some aspects further, because I think there is an issue here, especially in how we define a home ground. We may want to return to this at a later stage. In the meantime, it proves why every club should have its grounds designated as an asset of community value; we then would have the protection that we are seeking in this amendment. I am grateful to the Minister for what she has said and for saying she will consider parts of this again. On that basis, I am happy to beg leave to withdraw my amendment.
Lord Wood of Anfield
“48 Duty on competition organiser not to arrange matches away from home grounds(1) A specified competition organiser must notify the IFR where the organiser considers that there is a reasonable prospect of the organiser entering into arrangements whereby a match between two teams operated by regulated clubs might be played at a ground that is not the home ground of either team.(2) A notification under subsection (1) must be given as soon as reasonably practicable after the organiser considers the duty under that subsection to have arisen.(3) The organiser must obtain the approval of the IFR before it enters into the arrangements mentioned in subsection (1).(4) The IFR must grant approval for the organiser entering into those arrangements if the IFR is satisfied that the arrangements—(a) would not harm the financial sustainability of the competition or of English football,(b) would not cause significant harm to the heritage of the competition or of English football, and (c) have the approval of UK-based supporters including those of the clubs involved.(5) The IFR may not grant approval in any other circumstances.(6) The IFR must, as soon as reasonably practicable after the organiser has sought approval, decide whether to grant approval under subsection (4).(7) The IFR must notify the organiser of its decision to grant, or not to grant, that approval and give reasons for its decision.(8) In this section “home ground”, in relation to a regulated club, has the meaning given by section 46(10)(a).”
Lord Wood of Anfield (Lab)
My Lords, I will be brief, partly because dinner is fast approaching and partly because this is an amendment to probe the Minister’s response to a good existing clause, Clause 48. This clause is about preventing home matches being relocated. The amendment is to probe whether the provision is sufficient to meet widespread fan concerns about possible exceptions.
There is increasing discussion about domestic football games being moved overseas. We have seen statements from the chairman of my own team, Liverpool, and broadcasters such as NBC are talking about relocating Premier League games abroad. The FIFA working group is reviewing its policies to allow this. There are all sorts of stories, rumours and plans afoot to possibly allow Latin American domestic games to be played in the United States. There is historical evidence showing that the Premier League once proposed an additional 39th game to the season, which would not be played at the ground of a Premier League club. We also see countries such as Saudia Arabia that have intervened—let us put it that way—in sports properties, buying them and moving them around, for golf and boxing. There is reason to think that this is not a very remote possibility.
The Bill sets out to prevent clubs relocating matches away from home stadia without the approval of the regulator. I hope that enjoys widespread support; it is welcome and important. The point of my amendment is to probe the idea that the clause is not quite as watertight as it should be. The concern is that the current wording is based on the relocation of matches which are already designated as home matches. What happens if the competition organiser allocates games directly, before the season’s fixtures are issued, to Riyadh, Los Angeles, Singapore, Paris or wherever? They could claim that no home game is being relocated and say, for example, that weeks 10 and 20 are weeks in which games are played elsewhere. What if the 39th game proposal, so widely reviled by fans, is revived? That is not about the relocation of a home game; it is an extra game.
The new clause addresses this by placing a requirement on the regulated competition organisers to seek approval from the regulator before moving a domestic game overseas. That way, there is no longer a need to define what a home game is to bring it in scope, and it ensures that as part of the assessment of this request to relocate a game, the regulator must specifically consult UK-based fans of the clubs involved in the relocation. Importantly, this does not rule out the relocation of a game; it requires any additional fixture that is part of a competition to be subject to consultation in the way specified in the Bill.
I would welcome the Minister’s observations on this amendment and her assessment of two questions. First, what happens if the competition organiser allocates games directly to an overseas location? How will the existing clause protect against that? Secondly, what happens if the competition organiser creates a new format, such as another 39th game that cannot easily be defined as a home game? The amendment tries to cover those extra, niche cases. With that in mind, I beg to move.
Lord Addington (LD)
My Lords, I am assuming that this is a probing amendment. Other sports—not British sports—do this, such as American football. Is it the Government’s intention that the regulator will make sure that such games are played at home? If the Minister can say that that is the intention, we are all comparatively happy; if not, we have a real problem.
Lord Harlech (Con)
My Lords, I rise in support of the amendment from the noble Lord, Lord Wood of Anfield. If all football fans were surveyed—more than the 20,000 to 30,000 that responded to Dame Tracey Crouch’s report—this would be one of the issues they cared about most. I hope the noble Lord, Lord Mann, will not mind me putting words in his mouth, but if he were here, I think he would say in his Yorkshire tones, “Home should mean home.” The Government must do everything they can to ensure that.
Baroness Twycross (Lab)
I thank my noble friend Lord Wood of Anfield for tabling Amendment 235. Clause 48 has been designed to prevent clubs unilaterally moving their home ground with no regard for the vital role it plays in the club’s history and identity, as well as its financial position. In essence, it is intended to capture instances such as Wimbledon’s move to Milton Keynes and is a really important protection in the legislation. The Government believe that this protection must remain in the Bill to enable the regulator to deliver its key objectives and ensure that home grounds have the appropriate safeguards in place. This amendment, however, seeks to address a slightly different but related issue of competition organisers relocating matches elsewhere. Many of the current instances of this are, for example, play-off matches at Wembley, which have become a key part of English football heritage in and of themselves.
However, I am aware that my noble friend wants this amendment to address situations in which a match could be moved outside England and Wales. Noble Lords will be aware that FIFA is currently reviewing its position on overseas league matches. I do recognise the point the noble Lord, Lord Harlech, made—although I would not presume to paraphrase my noble friend Lord Mann—and how significant this would be for supporters. FIFA has committed to looking at how it might impact supporters, as well as players and a number of other valuable considerations. While the industry is still considering its position on this matter, and many clubs have spoken against the proposals, we do not think the regulator should have a specific power to directly address this. However, the regulator will ensure that clubs consult fans on any changes to match days, including moving the location. The Government will remain in conversation with the relevant governing bodies on this developing issue.
I am happy to continue conversations with noble Lords who have a specific interest in this issue before we get to Report. But for the reasons I have laid out, I must ask my noble friend to withdraw his amendment.
Lord Wood of Anfield (Lab)
I thank the Minister for that reply. I also thank her—I did not before—and her officials for the generous way she has spared time not just for me but for lots of other Members of this House over the last few weeks. It is really appreciated.
I understand what the Minister says, and I also understand that FIFA is currently revising its proposals. We have spent a lot of time worrying about provoking FIFA, and I understand why there is sensitivity there. The requirement to consult fans on moving matches assumes that there is already a scheduled match that needs to be moved. My amendment is about two problems that there are in fact technical ways around. So, that issue is still a live one. There will be more discussion about this, and I know the Minister is going to be as generous with her time as she has been already, so with that in mind—
Lord Bassam of Brighton (Lab)
I urge the Minister to give this some more thought, because it is a pertinent and powerful core issue, and we should all be grateful to the noble Lord, Lord Wood of Anfield, for raising it. As the noble Lord, Lord Harlech, said, fans worry about these things; they do not want to see “home” meaning something completely different. That is why we should have something in the Bill on this topic.
Lord Wood of Anfield (Lab)
I thank the noble Lord, Lord Bassam, very much. My two teams are Liverpool and Tonbridge Angels of the National League South. One is an internationally competitive team—and the other is Tonbridge Angels; but place is crucial to both teams. If you are a fan of Liverpool from Los Angeles or Singapore, the place of Anfield and the locality and the community relationship are absolutely part of what it is you support. Home and away fixtures are a routine part of how the Premier League competition is conducted. That is why this is essential, not just to large clubs but to small clubs across the country.
Lord Goddard of Stockport (LD)
This issue has arisen before. The FA Cup is the oldest cup competition in the world, yet one club that held the title did not enter it the following season in order to play a match in the world championships in South America. Does the Minister think the regulator would have the power to prevent that happening in future? It is the kind of thing regulators should be looking at.
Lord Wood of Anfield (Lab)
I am grateful to the noble Lord. That is a very live issue as well, but I do not want to expand my amendment to that.
I am conscious of the time, so with those caveats, and with thanks to colleagues who have intervened, I beg leave to withdraw my amendment.
Lord Bassam of Brighton
(f) the amount which the IFR estimates is necessary to fund appropriately for that period the Central Fund established pursuant to Section (Central Fund).”Member’s explanatory statement
This amendment adds another factor which must be considered (namely the amount required to fund the Central Fund - see amendment 254) when determining the amount of the levy.
Lord Bassam of Brighton (Lab)
My Lords, we can probably dispose of this one relatively quickly. All that we seek is some reassurance, on the record, that the levy raised by the IFR will not overburden smaller clubs. We are trying to get some assurance that the levy will be relative to the income of the clubs and that any other levy that the IFR might want to raise for a central fund of any sort would also closely reflect the ability of the clubs concerned to fund that. It has to be relative to their income, strength and viability. That is the purpose of the amendments in this group, and I am keen to get that on the record.
Lord Maude of Horsham (Con)
My Lords, I have some concerns about what the noble Lord advocates in this amendment. He advocates setting up a central fund in one of his other amendments, and the purpose of that is not clear, unless it is to provide a mechanism, in effect, for redistributing the levy funding the operation of the regulator, presumably from bigger and better-off clubs to smaller clubs. That will dilute the incentive that should exist for the regulator to constrain its size, cost and degree of interventionism because of the effect on smaller clubs.
This comes back to the sense that the rich, big or better-off clubs are somehow there to be plucked in terms of the redistribution of funds down through the pyramid—already, 16% of the revenues of the Premier League goes down into clubs through the pyramid. My concern throughout the consideration of the Bill has been that, if the regulator is set up in too large a manner and exercises its powers as regulators have an inbuilt tendency to do—they increase their scope and degree of intervention—that will have a cost.
A primary aim of the Bill and of setting up the regulator is to “improve” the distribution of money down through the pyramid, but the more the regulator does, the larger it is and the greater the extent of its activity, the less there is to distribute. If it is not strictly controlled, it will become self-defeating. If the purpose of the central fund that the noble Lord advocates is, in effect, to increase that degree of redistribution from bigger clubs to smaller clubs, as it seems to be, the effect would be to exacerbate the concerns that a number of us will have about the direction of travel and the inevitable tendency for a regulator of this kind to increase its scope, size, interventionism and, inevitably, cost.
I have given notice of my desire to oppose that Clause 53 stands part of the Bill, on the basis that the power to impose a levy will damage football. If the Government are so concerned to have this regulator, they should raise the money for it themselves and not have the regulator able, in a very uncontrolled way, to impose a levy—potentially very large amounts of money, as the impact assessment makes clear—on the very activity of the sport that we love, inflicting damage on it that would run counter to the intention of the Bill.
Lord Bassam of Brighton (Lab)
My Lords, I will try to put the noble Lord’s mind at rest. Most regulators are financed by the industries that they regulate, and the noble Lord knows that; he knows a lot about regulation. Given that there may be, from time to time, a need to strengthen the capacity of clubs lower down in the pyramid to operate, comply with regulations and all the rest of it, it is not unreasonable for the IFR to have the ability and capacity to exercise a levy.
The Premier League is generating considerably large sums of money and, although the distribution down the pyramid looks extremely generous in raw number terms, it is worth being reminded that some 92% of the revenue generated ends up being maintained by the Premier League and those five clubs in the Championship that receive parachute payments and the rest. There is a lot of money here, and we need to make sure that the regulator has the capacity to intervene in a way that is entirely fair. Later amendments deal with some of this issue, but we should have that at the front of our minds when we consider this.
Lord Parkinson of Whitley Bay (Con)
My Lords, we look forward to hearing what the Minister says about the amendments in this group, although I think, as my friend Lord Maude of Horsham pointed out, we are all listening with different hopes and expectations about what she may say.
Briefly, my Amendment 256 in this group specifies that the regulator must consult the Chancellor of the Exchequer rather than His Majesty’s Treasury in the abstract. It seeks to ensure a clearer line of accountability and strengthen the governance structure for decisions relating to the levy. The Chancellor might well delegate this responsibility, but she should be accountable in law and the Bill ought to point to her as the Minister at the head of that department and not anyone else at the Treasury. I look forward to the noble Baroness’s responses to the amendments in this group.
Lord Addington (LD)
My Lords, very briefly, it is probably important to remember that a lot of this is about making sure that we preserve our football league. If a different Government had not intervened, we would have a European Super League and the Premier League would not be there. That is what happened.
We must remember that the preservation of those top five leagues is intrinsic to the Bill. If we want that to carry on, some money will occasionally have to be raised to support their structure so that it is more stable. The noble Lord’s amendment is reasonable. There may be a reasonable answer about why it does not have to go in, but I agree with the concept.
Lord Maude of Horsham (Con)
What the noble Lord says is simply not the case. When the European Super League was proposed, what stopped it from happening and what made the clubs drop it like a red-hot potato was the fact that the fans reacted with fury. Admittedly, the rather populist Prime Minister of the time responded to the fan fury by uttering threats, but it was not the politicians, the Government, your Lordships’ House, the other place or a fantasy regulator who stopped it; it was the fans who stopped it, and we should have absolutely no illusion about that.
Lord Addington (LD)
My Lords, that might be the noble Lord’s interpretation, but, ultimately, it is government that makes law.
Lord Markham (Con)
My Lords, just to be clear for the record, no law was passed in this instance. In a matter of days the clubs quickly withdrew from the competition because, as my noble friend mentioned, it went down like a lead balloon and fans were up in arms. The Government were nowhere near it. That was a perfect example of where the clubs and the fans regulated themselves.
Lord Moynihan of Chelsea (Con)
My Lords, I have a very strong recollection of this because I wrote an article the day after the proposal came, which was published, like many articles at the time, and I remember that the very next day the proposal was withdrawn. It had nothing to do with the Government. By the way, I was not a politician at the time; some would say I am not one now, but it had nothing to do with Governments or Parliaments.
Lord Bach (Lab)
My Lords, this is the first time I have spoken in Committee. I am rather late to it but I spoke at Second Reading. On this matter of history, it is not usual that I come out in support of a previous Conservative Prime Minister, but the truth is that once the fans showed their feelings—I agree that they did—the then Prime Minister, within a short number of hours or certainly days, quickly came up and took over the issue, as it were, on behalf of his Government. That was well done and, along with the fans’ disagreement, it had a profound effect on the clubs, some more reluctantly than others, which withdrew from that mad scheme.
Lord Shamash (Lab)
My Lords, I specifically remember this as it involved Manchester United. It is propitious that the noble Lord, Lord Johnson, has arrived as it was his brother, the then Prime Minister, who said “I would drop a legislative bomb on this proposal”. Do your Lordships remember the language? That is precisely what happened and it killed it dead.
Baroness Blake of Leeds (Lab)
We have interventions on interventions here and we should move on.
Baroness Twycross (Lab)
My Lords, before we have any further interventions, I thank my noble friends Lord Bassam of Brighton and Lady Taylor of Bolton, as well as the noble Lord, Lord Parkinson of Whitley Bay, for their amendments. I also thank the noble Lord, Lord Maude of Horsham, for his contribution on this group, which sparked a lively debate, and for giving notice of his intention to oppose the Question that Clause 53 stand part of the Bill. It is useful to remember why we are here, but my comments will focus on the amendments in this group. It is imperative that the regulator can raise the funds necessary to deliver its regulatory functions, so I thank my noble friends and the noble Lords who have raised this important issue.
Turning first to Amendments 250 and 254 in the name of my noble friend Lord Bassam, I want to reassure him that the existing drafting in Clause 53(3) is comprehensive, in the Government’s view, and provides the necessary mechanism for raising these funds. Clause 53(3) also acts as an important constraint on what the regulator can charge clubs for. We believe that the amendment would risk bypassing this safeguard. We also want to be clear that, under the existing drafting, any such central fund could not be used as a form of lifeboat fund to prop up clubs in distress. It is the Government’s opinion that a zero-failure regulator, as implied, would create moral hazard and encourage the very risk-taking that the regulator is trying to address.
On Amendment 252 in the name of my noble friend Lady Taylor of Bolton, the Government acknowledge the importance of any charges on clubs being transparent and proportionate, and offering value for money. These values should be at the heart of any public body. This must be achieved while maintaining the regulator’s operational independence and flexibility, which is why it would not be appropriate to prescribe an exact methodology in legislation for charging the levy. Doing so would remove the regulator’s ability to explore other, possibly more effective and proportionate, methods of charging. The Bill already requires the regulator to have regard to clubs’ financial resources and position in the pyramid. I am confident that this will be sufficient to ensure that the levy is fair and proportionate. I hope this will give my noble friends reassurance that these costs will not be burdensome to clubs.
Amendment 256 in the name of the noble Lord, Lord Parkinson of Whitley Bay, would require the regulator to consult with the Chancellor of the Exchequer specifically, as opposed to the Treasury, when making, amending or replacing levy rules. Consulting with the Treasury on levy rules is standard practice for a regulator, and this approach has been agreed with the department. The Chancellor, as head of the Treasury, will have full oversight of the Treasury’s response to the consultation. The Chancellor is accountable for the decisions of the Treasury and any consultation with the Treasury is likely to have the approval of the Chancellor. Therefore, the Government’s view is that the existing requirement to consult with the Treasury is sufficient to ensure value for money.
Finally, on whether Clause 53 should stand part of the Bill, this clause will allow the regulator to charge a levy to licensed clubs that covers the regulator’s running costs. This follows the precedent of other regulators such as the FCA, the CMA and Ofcom.
Baroness Brady (Con)
I thank the Minister for allowing an intervention. Has there been any further development on the cost of the regulator? I know that we have asked the question on numerous occasions, but we have not had a reply. It would be very good for clubs to know what the Government expect the regulator to cost. The Minister mentioned the FCA; that costs £762 million a year. I hope it will not be that much.
Baroness Twycross (Lab)
I was going to come on to that. I anticipated that if the noble Lord, Lord Hayward, was here, he would ask me that question. If I can carry on through my speech, with the noble Baroness’s permission, I will address that later in my remarks.
We think it only fair that industry should cover the cost, as opposed to taxpayers. Football is a wealthy industry, and the cost of regulation would represent just a tiny fraction of its annual revenue of over £6 billion. However, this legislation puts robust checks and balances on the regulator. It will be limited to raising funds to meet a set of tightly defined costs that are necessary for regulatory activity only. The regulator will not have a blank cheque; it will be subject to numerous safeguards, including annual auditing by the National Audit Office, and its annual accounts will be laid before Parliament. This will provide the necessary transparency and scrutiny to deliver value for money.
Clause 53 also requires the regulator to have regard to a club’s individual financial position and the league it plays in when setting the levy charges that a club must pay. This should ensure a proportionate approach where no club, big or small, is asked to pay more than what is fair and affordable. As noble Lords are aware, the regulator will be the one that decides on the methodology and, ultimately, the cost of the levy.
I understand, however, that there is a clear desire, as expressed by the noble Baroness, Lady Brady, the noble Lord, Lord Hayward, and other Members of your Lordships’ Committee, to have a much better understanding of how the costs may be borne at different levels of the game. I will endeavour to provide more clarity on this issue. Therefore, after further discussions with the shadow regulator, I will write to noble Lords to provide further clarity on costs ahead of Report. I will also place a copy of this letter in the Libraries of both Houses and would be happy to meet noble Lords or take any questions.
This is a complex issue and we cannot fetter the discretion of the regulator. The letter, when it comes, cannot therefore be considered a definite estimation of costs. It will merely be illustrative, in an attempt to be helpful to this Committee and provide your Lordships’ House—and the clubs that will be regulated—with some clarity and reassurance before we get to Report.
For the reasons I have set out, I am unable to accept the amendments in this group. I therefore hope that noble Lords will not press them.
Lord Bassam of Brighton (Lab)
My Lords, I am more than happy to withdraw my amendment and grateful to the Minister for the assurances that she has given about the levy. I just say to colleagues on the Opposition Benches: it is worth reminding ourselves that we are talking about the regulation of only 116 different football entities. This is a small regulator, at the end of the day, so we should not be overly worried about its eventual costs. I think the costs will be, in relative terms, small—nothing at all by comparison with the FCA. Some of the clubs regulated, such as Gateshead, employ only three staff. If you are an Ebbsfleet staffer, you are one of just six, whereas Arsenal employs more than 500 full-time backroom staff. That is why we need to be certain that the levy raised is proportionate to the size of the club. Proportionality should be at the core of the regulator’s consideration when setting its levy. Having said that, I beg leave to withdraw the amendment.
Qualifications Reform Review
(1 day, 13 hours ago)
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Baroness Barran (Con)
My Lords, I thank the Minister for the Statement, which, she will be aware, has been broadly welcomed by the sector. There has been considerable uncertainty while the Government put the previous Government’s decisions on hold, particularly as the terms of reference of the review have not been published. The decisions bring some short-term certainty to the sector, but they raise longer-term questions.
A significant number of qualifications have been extended to 2027, so before very long there will be more hesitancy among providers about what happens beyond that. The Minister understands far better than I how much the sector needs certainty. I would be grateful if she could set out the Government’s vision for the technical education landscape. If she is not able to do that today, perhaps she can give a sense of when the Government will be ready to do that.
The Statement talks about keeping a mix of T-levels and other qualifications, but it is not clear—if I have missed something, maybe the Minister can clarify for the benefit of the House—what the Government see as the end point in their aspirations. It would be really helpful to have a sense of that. The Minister is acutely aware of the concerns across the House regarding the IfATE Bill and the risk that momentum is lost on delivering the skills strategy, which the Government rightly talks about as a key priority. I hope very much that, in considering this issue, she will take seriously the concerns raised all around the House, including on her own Benches.
In the Statement, the Secretary of State talks about keeping funding for engineering and manufacturing qualifications that had previously been identified for defunding, and keeping those qualifications until 2027. Can the Minister add anything more about the Government’s plans for new qualifications in these areas, which are obviously critical for our economic growth?
Finally, there are real concerns among providers about the recent increase in employers’ national insurance and the negative impact that that may have on colleges, which risks negating the very welcome £300 million uplift in funding which the Government announced. Can the Minister give the House an estimate of the impact of those changes?
Lord Storey (LD)
On these Benches, we very much welcome this Statement. We got a flavour of what was to come when the Minister, in a recent opinion piece in Further Education Week, struck a more conciliatory tone and indicated that the Labour Government now see a bigger role for applied general and other qualifications, alongside A-levels and T-levels.
We on these Benches have consistently opposed the scrapping of BTECs. While there is always some value in rationalising qualifications from time to time, forcing students into a choice between A-levels and T-levels will narrow the choices of the students at a time when we need a range of ways for them to gain the transferable skills needed in future careers. BTECs are popular with students, respected by employers and provide a well-established route to higher education or employment, so it is hard to understand why the Government wanted to scrap most of them and force young people to choose between studying A-levels or T-levels from the age of 16. We are concerned that removing the option of BTEC qualifications will adversely affect poorer students in particular.
I have two questions for the Minister. First, a particular difficulty for schools and colleges has been uncertainty. It is impossible to plan for a course, have the right staff on hand and have timetables planned if you are unsure whether a course will actually run. For many students, this is very unsettling. Will the Government undertake to provide certainty for colleges, schools and pupils? Secondly, we can all recognise the teething problems that T-levels have had, with low student satisfaction, complex assessments and major work experience requirements. What will the Government be doing to tackle these issues moving forward?
The Minister of State, Department for Education (Baroness Smith of Malvern) (Lab)
I thank noble Lords for their response to the Statement. As the noble Baroness, Lady Barran, says, we have been clear, in making this Statement, that we are providing certainty for colleges and sixth forms up to 2027, which was certainly one of the sector’s requests.
The noble Baroness asked about the future vision for technical education and the skills system, which I have been able to expound at some length in the consideration of the IfATE Bill. Fundamentally, our view is that skills are essential to this Government, particularly given their mission-led approach. The skills system has a crucial role to play in training the workforce needed to deliver our missions of greening the energy system, rebuilding the health service and delivering safer streets, and is a core component of growing the economy and ensuring that everybody has opportunities to succeed throughout their lives.
We are in the process of developing a comprehensive strategy for post-16 education and skills, to break down barriers to opportunities, support the development of a skilled workforce and drive economic growth through our industrial strategy. At the Association of Colleges conference at the beginning of November, I was able to outline some of the key principles that will apply to that strategy. I hope that we will be in a position to publish more information about the principles and vision of the strategy soon, and then work collaboratively with noble Lords, and, importantly, the sector, to bring forward the details of that.
One of the reasons for providing certainty on qualifications to 2027 is to enable the Government’s curriculum and assessment review to carry out its work, and to do so in a way that will inform further consideration of ensuring that the qualification options for level 3 students—those between 16 and 19—deliver on the fundamental need for appropriate choice and high-quality qualifications, with support from employers and others to ensure that the qualifications, particularly in the technical and vocational area, deliver the skills needed to grow the economy.
I am looking forward to Report stage of the IfATE Bill after our Christmas break, when we will all come back refreshed and ready to re-engage in this important legislation. I have been reflecting hard on the points made by noble Lords in Committee about clarity on the role of Skills England, and the ability for noble Lords to see more clearly how the functions transferred to the Secretary of State to be invested in Skills England will be implemented. I look forward to sharing those views and bringing forward what I hope will be helpful changes to provide assurance to noble Lords when that Bill comes back.
The noble Baroness asked in particular about engineering and manufacturing. It is probably worth while saying that one of the new ways that we have approached the qualifications review is to take a route-by-route look at the options available to students. The reason for the decision to keep the applied qualifications in engineering and manufacturing is precisely that the occupational standards in this area—where employers play a crucial role in identifying what those are—are in the process of being updated. We want to make further decisions and invite reform to qualifications in the light of those improved and updated occupational standards when they emerge.
On national insurance contributions, the Chancellor announced at the Budget that public bodies will receive support to help with the costs of the employer national insurance contribution increase, and we will set out in due course what support will be available to colleges.
In addition to asking about certainty, the noble Lord, Lord Storey, asked about T-levels. As we made clear in the Statement, T-levels are high-quality qualifications, and we want to extend the opportunity they provide to as many young people as possible. We acknowledge that T-levels are large programmes of study and cannot always meet the needs of all learners who want to study in the occupations that they cover, which is the argument for leaving alternatives. However, where a student wants to study a large qualification equivalent to three A-levels’ worth of study in the routes that T-levels cover, T-levels should be the qualification that is offered to them.
We have already taken specific action on one key issue with respect to T-levels, the industrial placements, which are enormously popular with students. When I talk to T-level students, I find that they are enormously enthusiastic about the opportunity to carry out a 45-day placement, but to grow T-levels, we need to ensure that those placements are in place. That is why we have introduced flexibilities around the way in which the placements can be offered, to enable the continued growth of T-levels.
In certain T-levels, of which digital is a good example, the awarding bodies are now looking at the assessment within the T-level to ensure that, while it remains the rigorous qualification that it should be, it is more manageable for those providing it and for students, while enabling students to demonstrate what they have learnt.
I thank noble Lords opposite for their questions. I hope that we now have a period of certainty where students will be able to benefit from the choice of a range of qualifications, with an assurance that this Government will continue to ensure that they will be as high-quality as possible in order to support students’ opportunities throughout life and to meet the need for skills to help us grow the economy.
Baroness Morris of Yardley (Lab)
I also welcome the Statement and thank the Minister for the way in which she has carried out this review. It has been open- minded and consultative, and I know that not only colleagues in the House but, beyond that, those across the sector have appreciated it. That gives us a very good foundation on which to work, so I thank her for that.
I take the point about the 2027 date, which the noble Baroness, Lady Barran, raised. I absolutely see the rationale for rolling it into the curriculum review, so that they are not seen as separate and competing but part of a whole. That is just one of those things, and it is manageable.
I want to raise two points, if the Minister could respond to them. First, of course, we are talking about qualifications and learning in an area that is never set in stone. I seek some reassurance that, as we move forward and review the qualifications, we do not slip into looking only at content but that we always bear in mind that we are looking for a variety of teaching and learning styles to give children real choice over what they want to do.
The second point is about work experience. I take the point about the importance of work experience for T-levels, but they are not the only qualification for which it is important. It is important for BTECs, and, as the Government said, they hope it will be important for key stage 4 as well. Does the Minister have any reflections, or might she be able to come back to us in the future to let us know how we can manage that interface between the world of work and the world of education, so that all children get equal access and opportunities to do work experience where it is appropriate?
Baroness Smith of Malvern (Lab)
I thank my noble friend for those comments. I suspect that she—like me—has taught these qualifications. I introduced a general vocational qualification into a high school where I taught, so I very much take her point about the different teaching and learning styles from which students can benefit. I know she agrees that we must ensure that we do not lower the quality of qualifications for students who perhaps need different teaching and learning styles. We continue to review to ensure that qualifications are of a high standard.
From my experience of visiting colleges offering T-levels, I have to say that there are some very innovative approaches to the ways in which they are delivered. That is why there has been a steady growth in the number of young people undertaking T-levels. Of course, we have introduced three new areas this year, and there will be another new one next year.
I also take my noble friend’s point about extensive engagement. The process of the review involved consulting more than 250 individuals, including principals of FE and sixth form colleges, senior and curriculum leaders, teachers and subject specialists in FE, employer representative bodies, industry leaders, awarding organisations, mayoral combined authorities and other government departments. That is one reason why it has received broad support: it was, in essence, co-designed with those who will be responsible for delivering the qualifications process.
On the point about work experience, my noble friend is of course right that while industry placements are a key element of T-levels, they also play an important role both post and pre-16. That is where we need to ensure that placements maintain rigour, are of quality and enable employers to step forward to do that. That is what we have sought to achieve with the flexibilities we have introduced into T-levels.
We need to continue working with employers by providing reassurance and the flexibility necessary to enable them to offer a range of placements. That is one of the things we do with our T-level and apprenticeship ambassadors, who work with employers to encourage them to offer the sorts of placements that will be beneficial for students in whatever course they are taking—whether it is one of those placements or work experience. We will continue to do that.
Lord Willetts (Con)
My Lords, I welcome this Statement. T-levels are a very useful part of the qualifications landscape, but it was never realistic to think that T-levels and A-levels between them could somehow dominate all the options available for 16 to 18 year-olds. Many former Ministers on both sides of this House took that view—I see my noble friend Lord Johnson sitting beside me. Although they are not present, I would like to say that it was good to work with the noble Lords, Lord Blunkett, Lord Baker and Lord Adonis, in arguing for a pause. It is welcome that we have now secured a rather better future, at least for some time, for BTECs.
I am sure the Minister will be aware of the recent report from the independent Education Policy Institute, which said that
“T levels are currently unsuitable for many Level 3 learners”.
That message from independent research is one that we all need to take to heart. I have two specific questions for the Minister. First, will she confirm that T-levels cannot do everything, alongside A-levels? They are a very useful qualification for a route to a post as a technician, but it is not clear that they can do everything, and so BTECs and NVQs have a lasting role in the vocational qualification landscape. On eliminating uncertainty, which my noble friend Lady Barran raised, a statement recognising that T-Levels cannot do it all would be very welcome.
My second question concerns the cost of T-levels. It has always been noticeable that in the DfE there is no money in some areas but in other areas money pours out to fund new initiatives. The Minister referred to the value of the 45-day placements. However, can she tell the House how much the funding of these 45-day placements is costing? Given that spreading access to work experience is so important, does she have any concerns that this very substantial funding for one specific way of accessing work experience is having the effect of diminishing opportunities for work experience for other students not on the T-level route?
Baroness Smith of Malvern (Lab)
The noble Lord is right that, when faced with a positive phalanx—I do not know what the collective noun is for former Education Ministers—it is probably wise to realise that there is some wisdom there. That has been demonstrated by the results of the review that we have undertaken.
I agree with the noble Lord that T-levels and A-levels would be an insufficient option on their own for all students. To reiterate, where T-levels exist in a route, they are the most appropriate large qualification. One of the other things that we have done is to remove the previously proposed rules of combination, which would have prevented colleges building appropriate courses for their students, in consultation with those students and others. That will provide more flexibility.
I will write to the noble Lord specifically about the cost of T-level placements, but it is right when introducing a new qualification that, as we have done, there is an uplift in revenue funding for T-level students, as well as some capital provision. Any new qualification will need a period of time to scale itself to a position where the normal level of revenue funding would be adequate to deliver it.
Lord Watson of Invergowrie (Lab)
My Lords, I too very much welcome the Government’s Statement. I say that on behalf of my noble friends Lord Blunkett, Lady Blower and Lord Knight, who, together with the noble Baroness, Lady Morris, have been campaigning for some time, as my noble friend the Minister knows, to halt the process instigated by the previous Government, who were ditching in a reckless manner far too many other qualifications in favour of T-levels. I am glad to see that it is a Labour Government who have supported BTEC and AGQ students in a way that will not constrain the rollout of T-Levels but will open up more pathways for learners.
I found it rather ironic to hear the noble Baroness, Lady Barran, say that this Statement has been broadly welcomed by the sector. That is not something that could have been said about the proposals she made when she was in government. This goes right back to the time of the skills Bill, as noble Lords on the opposite Benches will recall. We did think that we had had some assurances from the Minister, which subsequently did not materialise, to our considerable annoyance. Many of the applied general qualifications in BTECs, the ending of which was proposed, will now be extended. Those of us who have campaigned to defend rather than defund those qualifications will take some solace from that and welcome the actions of the Government.
The Government’s curriculum and assessment review, led by Becky Francis, is under way and will report shortly. Can my noble friend the Minister say a bit about the way in which the level 3 qualifications set out in the Statement will dovetail with the curriculum and assessment review next year?
Baroness Smith of Malvern (Lab)
I thank my noble friend. He is right that there is something very arresting for a new Member of the House of Lords and a returned Education Minister to attend a meeting with my noble friends Lord Blunkett, Lady Morris, Lady Blower and Lord Knight, all of whom are very expert in this area. I am glad that he thinks I at least listened and understood what they said to me.
My noble friend is right that of the qualifications that we started looking at, of which about 460 were due for defunding by 2026, about 200 had very low enrolments: 100 or fewer students. We have largely managed to remove those from the qualifications landscape. It is probably still the case that that landscape is overly complex for students to be able to work their way through, but we kept 157 of the qualifications that were previously proposed to be defunded.
On the point about the curriculum and assessment review, as I touched on earlier, that review has within its remit the consideration of the assessment routes for 16 to 19 year-olds, and—responding to a point made by the noble Lord, Lord Willetts, which perhaps I did not address previously—a particular emphasis on ensuring that our curriculum and assessment routes enable everybody to succeed, including those who are disadvantaged and those with special educational needs and disabilities. For that reason, it will focus carefully on bringing forward recommendations about what the assessment route should look like for students post 16, and we will reflect on those and use them as the basis for further decisions about how to ensure that our qualifications for 16 to 19 year-olds are suitably rigorous, suitably accessible and provide appropriate choice for students.
Lord Johnson of Marylebone (Con)
My Lords, like others on all sides of the House, I very much welcome the Government’s rapid work to lift much of the uncertainty over the defunding of applied general qualifications. It would be hugely beneficial if the Government went a little further and were absolutely explicit that this is not just a stay of execution until 2027 but that there is a long-term place for these qualifications in our education system. That is my first point. The second point is: can the Minister show similar rapid work in lifting the uncertainty over how the growth and skills levy will interact with the lifelong learning entitlement, and if not now, say when the Government will do so?
Baroness Smith of Malvern (Lab)
I do not think it is appropriate for anybody—I do not think the noble Lord would have done it—to say that there would never be any development or new qualifications introduced into the 16 to 19 landscape or that there should ever be any ending of any qualification. So the qualifications landscape should not be set in stone. However, I can repeat, as I said to his noble friend, that the Government do not envisage a qualifications landscape in which there is only a choice of T-levels or A-levels. That is one of the reasons why the work of the curriculum and assessment review in setting out its views on what should remain in order to provide appropriate routes for young people will be the basis for any future decisions made there. It is my view that there will always need to be qualifications that are neither A-levels or T-levels, but they need to be of sufficiently high quality to ensure that we are not selling short the young people who take that route.
No sooner have we solved one problem than the noble Lord quite rightly pushes us to get on to the next one. Skills England is currently consulting on some of the current flexibilities that we will be introducing to develop the growth and skills levy, and of course we are also working hard on the implementation of the lifelong learning entitlement. I hope it will not be too long before we will be able to say more about both of those and, as the noble Lord also suggested, how they will link together. But I will just have a little break over Christmas before we come back to do that, and I hope all noble Lords also have a very restful break when it comes.
Football Governance Bill [HL]
Wednesday 18th December 2024
(1 day, 13 hours ago)
Lords ChamberRead Full debate Football Governance Bill [HL] 2024-26 View all Football Governance Bill [HL] 2024-26 Debates Read Hansard Text Watch Debate Amendment Paper: HL Bill 41-VI(a) Amendments for Committee (Supplementary to the Sixth Marshalled List) - (17 Dec 2024)
Lord Markham
“(c) any interest charged under paragraph (b) may not exceed the rate of inflation, as measured by the Retail Price Index, plus 2 per cent.”Member's explanatory statement
This amendment limits the rate of interest the Regulator may charge on unpaid levies.
Lord Markham (Con)
My Lords, I rise to move Amendment 251 in my name and to speak to Amendments 257 and 258 from my noble friend Lord Parkinson.
Amendment 251 seeks to place a limit on the rate of interest the regulator may charge on any unpaid levies. I think all noble Lords have agreed that we want to keep the regulator fees and cost burden on clubs as low as possible, so having a reasonable rate of interest seems helpful. The proposal is that we take the formula the Government currently use for tuition fees, and which is proposed for the tobacco levy, which is the RPI rate plus 2%. I am not absolutely wedded to that figure, but we believe there should be a figure we can all agree on.
Amendment 257 from my noble friend Lord Parkinson would remove the provision whereby the regulator does not have to consult on changing the levy if it considers the change to be minor. We understand the intent behind that provision, but all sorts of discussions could then be got into about what is minor and what is not, so it is probably easier just to establish that it be properly consulted on if there is a change.
Amendment 258 is pretty straightforward. It seeks to establish that if the regulator plans to change the levy rules, it gives six months’ notice before the chargeable period begins. We have said a number of times that we want clubs to improve their financial budgeting and planning, and this would help them to do that. With those simple changes, I beg to move.
The Parliamentary Under-Secretary of State, Department for Culture, Media and Sport (Baroness Twycross) (Lab)
I thank the noble Lords, Lord Markham and Lord Parkinson of Whitley Bay, for their amendments concerning the levy. On Amendment 251 from the noble Lord, Lord Markham, setting the rate of interest charged on non-payment of the levy is an operational decision for the regulator, which needs the flexibility to charge interest at a rate that deters non-payment. A rate that is too low could increase the incentive for non-payment and jeopardise the regulator’s ability to carry out its functions. The level of interest charged would be subject to the same consultation requirements as the levy itself. This will ensure a firm but fair level of interest.
Amendment 257, in the name of the noble Lord, Lord Parkinson of Whitley Bay, would require the regulator to consult every regulated club and others such as the Secretary of State and the Treasury on minor changes to the levy rules. These would be immaterial amendments or replacements to levy rules, such as correcting mistakes. Going out to gather the views of all clubs feels like it would be a disproportionate burden on clubs and on the regulator. For material changes, the Bill already requires the regulator to consult as appropriate. No club, especially those in the National League, wants the administrative burden of unnecessary consultation.
Finally, on Amendment 258 in the name of the noble Lord, Lord Markham, requiring the regulator to publish its levy charge six months before the chargeable period would create an operational challenge. The regulator would have to estimate a levy charge having only half a year’s costs to base it on. This could lead to inaccurate levy charges, which could see the regulator underfunded or clubs needlessly burdened. The current requirement of charges being publicised as soon as reasonably practicable strikes the right balance, we feel, between adequate notice for clubs and operational flexibility for the regulator to ensure an accurate and appropriate levy charge.
I therefore hope that the noble Lord will withdraw his amendment.
Lord Markham (Con)
I thank the Minister for her reply. As I say, these are not major things, but I must admit, I am a little surprised. The Government rightly see fit to set interest rates on all sorts of other things they deal with, such as student loans, tobacco and vapes, so it seems strange that they do not have a view on what should be an appropriate rate for the regulator to charge. I am not aware of that happening in other parts of the government network.
On the final amendment, this is about the regulator behaving responsibly if it is going to change things. Here, there seems to be a pattern. We had a debate earlier about what happens if the regulator does not approve someone as being fit and proper within the right time period. Again, the Government were saying the regulator might not be able to do it, so that person is automatically deemed not fit and proper. All noble Lords would probably agree that we need the regulator to be a bit more on its game than this. We should be a bit tougher and say that there is no reason why it cannot work out its rules on a change to the levy and give clubs six months’ notice. If the regulator is asking clubs to be financially disciplined, it should be doing the same.
I pose those as things for the Minister to consider but at this point, I will happily withdraw my amendment.
Lord Bassam of Brighton
Member's explanatory statement
This amendment is one of a series of amendments which mean that it is not only a specified competition organiser which can trigger the mediation process regarding the distribution of revenue.
Lord Bassam of Brighton (Lab)
My Lords, this is the first of a number of amendments in a very large group—enormous, in fact—but they all have at their core an impact on the way in which the independent football regulator could make financial distribution decisions.
I will run through some of the more important ones briefly. Amendment 260 would mean that it is not only a specified competition organiser that can trigger the mediation process. Amendment 261 would provide for competition organisers to obtain consent before determining the distribution of revenue and would require the IFR to be satisfied that the distribution proposals comply with its general principles which are contained in Section 62(2).
Amendment 267 would oblige the Secretary of State to consult people who represent the views of regulated clubs and the views of fans of regulated clubs before making regulations which specify the source or description of relevant revenue. Amendment 268 would amend the definition of distribution agreement. Amendment 269 is also part of this series and would mean that it is not only a specified competition organiser which can trigger the mediation process regarding the distribution of revenue.
Amendment 276 seeks to provide that a competition organiser can apply to the IFR to trigger the resolution process if there has been a change to rather than any reduction in the revenue received by a competition organiser. Amendment 284 would require any notification that a competition organiser gives to trigger the resolution process regarding distribution revenues. Amendment 293 would insert an amendment to trigger the resolution process. Amendment 318 would narrow the circumstances in which the independent football regulator may revoke a distribution order where the competition organisers have agreed a distribution agreement to circumstances where that distribution order complies with Section 62(1)(a) or (b) or Section 62(4)(a) on the principles in general set out in that section.
Why are these amendments necessary? It is principally because we require a degree of flexibility for the regulator. We want to ensure that the regulator can trigger a mediation process and impose its own deal if the parties fail to reach agreement by mediation. Currently, it seems to me that the regulator will be presented with a binary choice, and neither of those choices might be perfect.
At the moment, the deal is primarily controlled by the Premier League. Overall, 88% of broadcast revenue goes to the Premier League and 7% of the remainder goes to clubs who get parachute payments, meaning that the remaining 5% is split between the next 138 clubs in the pyramid. I accept the case that has been powerfully made by the noble Baroness, Lady Brady, that the Premier League is a great league, that it produces incredible and impressive revenues and that those revenues have worked to solidify the excellence of the league and improve the quality of the clubs, the entertainment on offer and the players who are available to it.
However, it seems to me that we ignore at our peril the rest of the pyramid. Currently, for every £1,000 that goes to a Premier League club, just £313 goes to a Championship club and, if you take it down to a National League South club, it gets just 14p. Yet, if you look at the attendance figures, 45% of football fans, roughly speaking, go to a Premier League match and the remaining 55% go to games in the Championship, League One, League Two, National League, National League North and National League South, so there is a case for better distribution. I am not saying what that distribution should be—that is obviously a matter for which the regulator will be responsible—but the regulator needs to be able to make that decision based on the best possible circumstances. So these amendments are designed to facilitate that and to allow the regulator to act freely, working with football industry bodies and ensuring that they have the best possible information.
That is why my amendments seek to generate some flexibility and why a distribution deal must pass parameters set by the regulator, so that the gap between the various levels of football can perhaps be narrowed. It was never intended to be as wide as it is today. Initially, the gap between the Premier League and the Championship level was a lot narrower, and then again between the Championship and Leagues One and Two. It is the important development of football TV rights that has allowed the Premier League to become as rich as it has and to pay the wages that it can pay. International comparisons put the Premier League way ahead of any similar leading leagues.
We have a strange situation where some 64 clubs in the top four divisions have gone into administration since the start of the Premier League. That is clearly an unhealthy situation and a better distribution deal that is properly regulated would begin to address some of the gaps and some of the disparities. That is the spirit behind these amendments.
Baroness Evans of Bowes Park (Con)
The noble Lord will be well aware that the EFL has just signed a very great deal with Sky, with revenue coming in, and I do not believe that that money is distributed down the pyramid either. One hopes that the Championship and the EFL will continue to improve and get better deals. Does his amendment include the fact that perhaps that league needs to start looking to distribute and that if its income starts to increase, as we all hope it will do—we have heard that it is the sixth-richest league anyway—it is not just the Premier League that needs to be involved in this but the EFL itself? At the moment, it does not distribute any of the income from the money that it gets in from broadcasting. Perhaps it needs to look at distributing some of its income down the leagues as much as the Premier League does.
Lord Bassam of Brighton (Lab)
My Lords, the noble Baroness makes a compelling point. It is the case that the EFL is dominated by the Championship clubs. The noble Baroness is absolutely right that the EFL has secured a beneficial deal. It is not for me, her or anyone else in this Committee to say what the right sum of money is. I am merely pointing out that the distribution has changed over time. The available money for distribution has grown as the game has become more successful as a product unique to England and Wales, and it is for the IFR to get the distribution right. The point that the noble Baroness makes is that we should not be arguing the case for either the EFL or the Premier League; we should be arguing the case for football, because it is all of football that we want to see benefit, so that the pyramid truly acts as a pyramid and acts well in strengthening the national game.
Lord Markham (Con)
My Lords, before I address the amendments in this group, I want to echo the comments made by the noble Lord, Lord Bassam. With 44 amendments in this group, it really is hard to get your head around them all. Although they are given the broad title of “Regulatory powers”, I do not think that is conducive to good debate.
Lord Bassam of Brighton (Lab)
Many of the amendments are consequential. I have highlighted the main points for the benefit of the Committee and that was my objective so that it would get the message.
Lord Markham (Con)
I appreciate the noble Lord’s efforts to do that. It was not specific to this group. There have been a number of examples which have been unwieldy, to say the least.
I turn to Amendments 260, 269 and 293 in the name of the noble Baroness, Lady Taylor. They alter the backstop method to enable the regulator to trigger the resolution process. The current drafting permits only the competition organisers to trigger it. That is quite a profound change, if you think about it. To date, we have been saying that the regulator should step in only as a last resort if the competitions cannot reach an agreement among themselves. What we are saying here is that the regulator can step in—I guess, in theory even if the competition organisers have agreed—if it feels for some reason it is not quite happy with the agreement. That seems quite a shift away from the principles we were talking about earlier. Our concern would be that we are suddenly setting up a role for a quite muscular regulator which can interfere maybe not at breakfast, lunch and tea but quite a bit of the time, to say the least.
Amendment 276 in the name of the noble Lord, Lord Bassam, states that the leagues can trigger the resolution process if there has been a change to revenue received by other leagues, as mentioned. Again, I think we could get into situations where a five-year deal has been put in place and a league is suddenly trying to reopen the deal. I am delighted that the Championship has a good Sky deal. Do we think that gives cause to reopen the deal? That would be a concern there. I am always a great believer that a deal is a deal is a deal. You live by that deal for that time and when it comes up again, that is the time to negotiate. Amendment 264 from the noble Baroness, Lady Taylor, and the noble Lord, Lord Bassam, again makes provision for multiple competition organisers to trigger the backstop and mediation process.
In all of these, there is a general concern that instead of the backstop being the backstop, as it is called, it becomes almost the first stop and the first resort. It goes to the concern that noble Lords have mentioned many times that while we start with the principle of a light-touch regulator, very quickly we get into a scenario of a pretty heavy-touch, muscular regulator. That would be our concern.
Amendment 261 provides that competition organisers must obtain the regulator’s consent before entering into a distribution agreement. Again, this adds another level of complexity. If the competitions have agreed between them, why do they need to get the consent of the regulator? It goes far beyond the original intentions of the backstop per the Dame Tracey Crouch report, in which she referred to it as the nuclear option, and how that would be the only case it would come up in. Instead, through these amendments, we would be setting up a lot of situations in which it would be the first resort.
While I understand that the intentions of the noble Lord, Lord Bassam, are noble—as ever—I feel that this is another circumstance of mission creep and unintended consequences, where we would end up with a very muscular regulator. Those are our concerns.
Lord Addington (LD)
My Lords, I am not very bothered by having a muscular regulator; I want an efficient one that gets things done and looks after the lower clubs. There is a disagreement between us that has been there all through this Committee.
I regard the series of amendments from the noble Lord, Lord Bassam, as a smorgasbord from which we should select something that is actually going to get us to have a look at what is going on. There are lots of options and I have put my name to one of them. Making sure that we get the regulator right and get money going down to preserve something we regard as good is the primary objective. It is not just to take money off the Premier League; it is to make sure that the structures below survive.
If the Government think these amendments are not the right way to progress, hearing why from the Minister would be sensible. Nobody is quite happy with the backstop power in the regulation structure at the moment. Everybody is a little bit upset about it. People who were happy are now not happy. The Premier League and EFL are having great fun not talking to each other or disagreeing. I have no real objection to a slightly more muscular approach. I do not think it is a light touch that is required; it should be efficient.
Baroness Brady (Con)
My Lords, the amendments in this group cover a wide range of issues relating to the backstop. While I understand the intentions behind many of these amendments, I fear that they collectively risk making an already contentious and divisive mechanism even more complex and counterproductive.
I respect that Ministers believe they have designed a balanced mechanism that places incentives in the right place, but I think what we will come to unpack is that that is wholly mistaken. I believe this Committee will see that this backstop has not and will not incentivise industry-led agreements, which is supposedly its overreaching policy purpose. I believe we will see that it will not result in a balanced, pragmatic solution that will be good for football.
It will instead drive posturing, game playing and the development of extreme and damaging solutions. We will see that this backstop is legally untested and uncertain, and it could sink football and the regulator into a legal and political quagmire that could drag on for years. Worst of all, we will see that this backstop has already poisoned, and will continue to poison, the well of football bodies’ relationships, when we all need to work together for our continued collective success.
I will briefly address some of the amendments in this group. The proposal to expand the scope of the backstop to include multiple parties all at once—for example, the National League, or potentially the FA and, even in the future, the women’s game—is concerning. This risks creating division where none currently exists. The Premier League, far from being at odds with these stakeholders, has made intensive and carefully considered efforts to support them, just as it has with the EFL.
Just a few months ago, the Premier League announced a £12.6 million package for the National League system over three years, a substantial increase on previous arrangements. For the women’s game, the Premier League has provided significant financial assistance, including a £20 million interest-free loan to help the new Women’s Professional Leagues Limited in its formative years.
These are examples of proactive, voluntary agreements that demonstrate collaboration rather than conflict. This set of amendments would encourage all stakeholders to start competing, simultaneously claiming the Premier League’s revenues, fracturing relationships and introducing adversarial dynamics where none currently exist.
This is not the way to build a sustainable and co-operative football ecosystem. Indeed, I will make a prediction: it is far more likely that the National League will seek to trigger the backstop in relation to the EFL, which does not provide any financial support to the leagues below it. The idea of the IFR triggering the backstop mechanism independently is particularly troubling. The purpose of the backstop, as described in the Bill, is to act as a last resort when the parties fail to reach an agreement; it is not supposed to be a front- stop. Allowing the IFR to bypass this voluntary process would undermine its very purpose and disincentivise genuine negotiation.
The idea that any change—not even a reduction—in revenue received by one party could automatically trigger the backstop is, frankly, unworkable. Revenue distributions in football are dynamic and fluctuate according to complex interrelationships. The amounts change every year, almost always upwards. A mechanism that automatically treats any change as a potential trigger would, with the greatest of respect to the noble Lord, Lord Bassam, be absurd. It would trigger perpetual uncertainty, which is the last thing that football needs.
Finally, and more positively, the suggestion that the IFR could impose its own settlement deserves careful scrutiny. I have tabled my own, slightly different amendments to that effect, which will be debated in a later group. I fully agree with noble Lords that the binary mechanism in the Bill is unworkable for football. However, with respect, I am not sure that this particular amendment would place incentives in the right place. To allow the IFR to impose its own settlement only where both parties’ proposals are inconsistent with the IFR’s objectives would allow parties to offer unrealistic proposals. It would mean they could anchor with a very extreme demand, knowing that the IFR would be forced to step in and create a compromise. This would further entrench division.
What is striking about the amendments in this group is that they demonstrate a fundamental dissatisfaction with the mechanism in the Bill from all sides of the House, as well as the main competition parties involved. The Premier League has raised serious concerns about the divisive nature of the backstop, while the EFL has, I believe, inspired the amendments in this group. It too sees significant flaws in the process as designed. This really should give the Government significant pause for thought.
Let us not forget that English football’s success has been built on collaboration and solidarity. UEFA has made this very point about the deficiencies of the current Bill’s mechanism. A backstop requires thoughtful, proportionate regulation that respects the autonomy of its stakeholders. These amendments, and indeed the existing backstop mechanism, would disrupt that delicate balance. I urge the Government to reflect carefully on whether the backstop as designed is fit for purpose. It should be fostering co-operation, not driving division. If that requires revisiting the mechanism, we should do so without hesitation. Football’s future really does depend on getting this right.
Lord Maude of Horsham (Con)
My Lords, I want to pick up one particular word that my noble friend Lady Brady raised: divisive. There is no doubt that this Bill has turned what was intended to be a backstop—a last resort or nuclear option, however it was described—into something that can be used pre-emptively. Some of the amendments proposed tonight—which would make it more aggressive and interventionist, and more able to be used pre-emptively—have behind them the sense that this is bound to be aggressive, antagonistic and adversarial. I want to contest that.
The truth is that, wherever a club is in the pyramid of English football, it has an interest in the whole pyramid being strong. There is no benefit to the Premier League in keeping lots more money to itself and weakening the rest of the pyramid, because it depends on the pyramid; its strength is drawn from all the way through the pyramid. It is really important that we try to take ourselves away from the sense that there is a finite pie of limited size and so we should work out how to enable different parts of it to get more for themselves.
English football—the whole pyramid—has seen tremendous growth. It had the huge challenges of the pandemic, but it survived and came out strong. As we have repeatedly said, the Premier League is not just the most successful football league in the world but the most successful sporting league in the world. The Championship is the sixth most successful and richest league in Europe. It is strong and it will grow more, but it will not do so if the whole mindset behind how this is constructed just puts one set of interests against another. The aim should be to ask how we grow the pyramid further and encourage the different parts of it to work together and see the mutual benefit, to make two plus two add up to five, rather than—as I fear the danger is in how this is constructed—add up to three. I urge the Government to take this away and look again at how it is constructed.
Lord Goodman of Wycombe (Con)
My Lords, it is relatively late in the evening and we have debated a lot of clauses and amendments, but I agree with my noble friend Lord Maude that this debate is at the heart of the Bill, at least as far as the Premier League, the Football League and the clubs themselves are concerned, I suspect. What will really get them going in relation to the Bill is not, for better or worse, net zero, diversity or any of those things but the money; it is what happens to the money and the success or failure of their clubs.
When the Minister responds, she will make the best case she can for what is in the Bill—for the backstop—and I understand that. However, when we finish Committee and go on to Report, and when eventually the Bill passes, the debate will not be over; it is just beginning. Once the Bill is passed, as I assume it will be, my noble friend Lady Brady will continue to make her case broadly for the present arrangements and the noble Lord, Lord Bassam, will be back to make his case for what my noble friend Lord Markham called the front-stop, while the Government will defend the backstop—and so the debate will go on.
One of the lobby groups that has an interest in the Bill said of it that the debate is over. I found that a remarkable statement, given that this House presumably has a duty to scrutinise legislation and the Bill has not even been down to the other place yet. My point at this stage is that the debate is not over. It will not be over in Committee, on Report or after Third Reading; it will just be beginning. I ask noble Lords to bear this in mind when we come back, later in Committee, to consider clauses that seek to review the Bill as a whole.
Baroness Twycross (Lab)
I thank my noble friends Lady Taylor of Bolton and Lord Bassam of Brighton for their amendments on this important topic. I thank my noble friend for outlining why distributions are so important to the football pyramid. I will aim to take the amendments in a sensible order, with logical grouping where possible. In appreciating comments on the size of the group, I note that there is a logic to this, as outlined by my noble friend, and I say to the noble Lord, Lord Markham, that I do not think we have skimped on debate during Committee—though I agree with the noble Lord, Lord Goodman, both that the hour is getting late and that it does not feel like the debate has finished or will finish any time soon.
I acknowledge the probing intent of the amendments and it is really helpful to have this debate. I know that subsequent groups will go into this a bit more as well. I agree with the noble Lord, Lord Addington, that it is important that we do our absolute best to work through the issues that noble Lords have raised and to get the regulator right, which was the point that he made.
I reassure my noble friends that we agree on the importance of regulatory intervention on distributions— I appreciate that not all noble Lords have exactly the same view of this. Amendments 260, 269, 270, 293, 295 and 288 would broaden the powers that the regulator has to intervene by allowing it to trigger the back- stop process. I understand the intention behind the amendments, but we must maintain the backstop process as a last resort, to be triggered by the leagues only if they cannot come to an agreement themselves.
Baroness Evans of Bowes Park (Con)
The noble Baroness keeps saying that, and I understand that it is what we hoped was going to happen, but I do not think that anyone in this Committee believes that it will be a last resort. From the briefings that all noble Lords—including, I am sure, the Minister—have had from all sides, we know that the backstop is likely to be triggered very early on by the regulator. I really hope the Minister can move from what we hoped might be the position to where I think we are, whether we like it or not, and look at these processes on the basis of what is likely to happen. This could be one of the first things that the regulator has to deal with.
We have heard concerns about the nature of the conversations and the way that those might set up leagues against one another. I know that the Minister would hope that it was a last resort, as I think we all did, but I urge her to accept that if we are being genuinely honest—and other noble Lords may have heard differently from the various leagues we have all been speaking to—it seems to be a view that this is likely to happen. It would be much more helpful for our discussions if we could stop saying, “It’s a last resort”, and accept that it is very likely to happen quicker than we all wanted.
Baroness Twycross (Lab)
I appreciate that the noble Baroness, Lady Evans, may take a different view and I completely understand people’s concerns that it will be a front-stop—as a spoiler alert, and with apologies to my noble friend, I am not going to accept these amendments; we will come to that in a moment. However, we genuinely think that the model we have established is very similar, apart from the possible inclusion of the parachute payment—for want of a better word; it is not the phrase used in the Bill, but that escapes me for a moment—should the “state of the game” report suggest to the regulator that it needs to allow that to be taken into account.
My view is that the model we have presented should incentivise the leagues and the parties to come to an agreement themselves, and that opportunity to do so does not go away once the regulator is established. That is the design of the model and an essential part of it, as it was in the previous iteration of the Bill, so this is absolutely intended as a backstop process. We can go on to debate that in later groups as well as in this group. I am happy to do that and to meet people individually to go through why we think this will be a backstop and not a front-stop whereby the minute the regulator sets off in motion, everybody will claim that they want to have the backstop triggered.
However, there are things that the regulator will need to take into account if somebody asks for the backstop process to be triggered. It is not the necessarily the case that the regulator would have to accept that that process was set in motion. The whole model is designed around the principle of trying to get people to come to an agreement themselves. It is really important to ensure—
Baroness Brady (Con)
I thank the Minister for giving way. If she was right, we would have a deal in place by now. This has been the model for two years, so it is definitely a barrier to conversations. There is a view that whatever the Premier League agrees with the Football League, that, in effect, becomes its insurance policy. It then triggers the backstop and goes straight to the regulator, knowing that it will never get less than it has been offered and could get more. We will be in a perpetually revolving door of triggering mechanisms that will never give any club any certainty of its income, which will be very dangerous and very bad for football.
Baroness Twycross (Lab)
It is important for us to go through how the regulator’s backstop powers and power of last resort would work. I appreciate that the noble Baroness is entirely right that an agreement has not come into place, and that might be—or might not be—because of people waiting to see what form the regulator takes and the exact iteration of the wide range of views we have heard tonight and on previous occasions.
If, under the Government’s intended model for the backstop, the relevant leagues cannot reach an agreement, they can apply to trigger the backstop—the noble Baroness is quite right on that. If certain high thresholds are met, of which the regulator must be satisfied, the backstop can be triggered, but let me go through what would happen first: the relevant leagues would enter a period of mediation and, if there was still no agreement, they would move to a final proposal stage.
Baroness Brady (Con)
I thank the Minister for allowing me to intervene. Rick Parry went before the Select Committee and said he would trigger the backstop in any event—even if he got more money from the Premier League in the meantime—because there is no risk to the EFL in the backstop.
Baroness Twycross (Lab)
I am not going to comment on what people did or did not say in that committee meeting at this point. The backstop would be applied only if certain high thresholds were met. The regulator will be an independent regulator and it will have strict measures to meet—high thresholds which it must be satisfied of if the backstop is to be triggered. If there is still no agreement, the parties will move to a final proposal stage and, at that point, the regulator would convene an independent expert panel and invite final proposals from both relevant leagues with accompanying analysis, and the independent expert panel would choose the most appropriate proposal. This model incentivises both parties to compromise, as unreasonable proposals would not be chosen.
The whole model, which is almost identical in every detail to how the previous Government were planning to do this, is intended—
Baroness Evans of Bowes Park (Con)
The Minister keeps coming back to the previous model. I think most of us here thought the previous model was nuts, and we still think it is nuts. We never discussed this in the House, so to keep saying that is quite insulting to quite a lot of us who always thought this was a bad idea. We are trying to engage with the Minister now about why we think it is a bad idea, and we would really like her to talk about the detail rather than keep saying, “Well, it was your Government”. Honestly, I would never have voted for this beforehand and, in my ex-position, that would have probably been quite a bad thing, but I am sorry, I would not have done so. I would like the Minister to focus on what we are talking about rather than keep using those issues to deflect from getting into the detail.
Baroness Twycross (Lab)
I am not sure how many times I have said that this evening, but it is really not very many. I am trying to establish that this model has been worked on and discussed for some time. I appreciate that noble Lords in this House did not get the opportunity to discuss it under the previous Government. It is a model that has been worked through, with examples from different organisations. It encourages compromise and tries to get people to reach a deal that everybody can work through and which meets the criteria of the regulator.
Lord Moynihan (Con)
A model which creates tension does not get it right. We have already heard from Rick Parry that he would trigger it immediately. This is a model that does not work. We are trying to say to the Minister that Committee is an opportunity to take it away and rethink it. It really does not stack up to be a successful model for the future of English football.
Baroness Twycross (Lab)
Simply because one individual says that they would want to trigger it does not mean that the regulator would view the condition as being met.
Lord Maude of Horsham (Con)
With respect to the Minister, it was not just a random individual; it was a really significant player in the whole scheme of what we are talking about here.
Baroness Twycross (Lab)
I appreciate the noble Lord’s point, but if the EFL triggers the backstop or makes a proposal in bad faith, it could end up worse off if the Premier League’s proposal is more reasonable, so this does not encourage the EFL or Premier League to be confrontation or divisive. I am sure we will come back to this at a later stage, probably this evening, but definitely when we come back in the new year on Report.
I am really happy to sit down with noble Lords and talk this through, but I will continue to use my speaking notes for some time and then, I hope, give some reassurance that we are considering this carefully. I am always happy to meet with noble Lords, as is the team that has been working on this. As noble Lords are aware, a number of the officials working on this have been doing so right the way through from the fan-led review, so this is a really good example of the consistency of advice both to this Government and the previous Government, notwithstanding the fact that not everybody here liked the Bill’s previous iteration.
To return to my speaking notes—although I am fairly sure I have got slightly out of order now—we think that this approach encourages future collaboration. We might need to agree to disagree on that point and come back to that debate.
Baroness Brady (Con)
The Minister says that she believes that the mechanism will deliver collaboration. For my benefit, please could she name a single example of a binding final offer process working in UK regulatory terms, and its use in the UK to deliver the outcomes she is talking about?
Baroness Twycross (Lab)
The Competition and Markets Authority has used it.
The process proposed by this group of amendments, excluding Amendment 260, would allow the regulator to intervene at its discretion and would require it to take into account the potential use of any revenue distributed. It is the Government’s view that this is regulatory overreach and a fundamental change to the intent of the process as drafted.
The other amendments from my noble friends Lord Bassam and Lady Taylor seek to change the structure of the backstop process from a two-party mediation and final proposal/order process to one that could apply to any number of relevant parties. I understand the overall intent of these amendments and have chosen to address them as a group to ensure that that intent is understood comprehensively, and that the Government’s position is in turn communicated coherently.
To clarify, the Premier League, the English Football League and the National League can all apply to trigger the backstop process. Any of the specified competition organisers can submit an application to trigger the process, and simultaneous instances of the backstop process could be triggered to cover the relationships between each of the leagues. The process is inherently designed as a two-party process. Fundamentally, distribution agreements are agreed between two individual leagues and the process is designed to facilitate these agreements. As the final offer process is set up and designed between two parties to facilitate a decision between two proposals on the basis of relevant principles, it would not be effective for the regulator to engage in this process with more than two parties. This is also, in part, why it would not be appropriate for the regulator to make a third offer. Without the incentive of the two-proposal process, parties are likely to stay at polarised positions, rather than find areas for compromise. However, when the two proposals submitted are the only choices, the pragmatic decision is to submit the most reasonable proposal possible. This is the incentive we wish to create.
I now turn to Amendments 292, 296 and 314, tabled by my noble friends Lord Bassam and Lady Taylor of Bolton. While there is a slight difference between “special” and “compelling”, we are satisfied that the bar is set sufficiently high with the use of “special”, which is the more usual terminology in these sorts of provisions. There is likely to be no tangible difference in outcomes, and therefore these amendments would be minor, insignificant changes to the wording of the Bill. As such, the Government believe the current drafting is sufficient. This is also the case for Amendment 264. While we understand the intent behind this amendment, we are content that the current drafting in the Bill sufficiently captures all revenue relevant for consideration during the backstop process. The proposed drafting change would not capture any revenue sources not already captured by the existing wording.
I turn now to Amendments 261, 262, 276 and 315. Amendment 276 seeks to significantly broaden one of the conditions by which the backstop process could be triggered. Condition 2 is specifically designed to be triggered by a material reduction in relevant revenue, as this poses a significant threat to the financial sustainability of the pyramid. Amendment 315 would, if the distribution process was ended due to incomplete or inconsistent proposals, require the regulator to issue a distribution order based on its expert panel’s own proposal, rather than ending the process. This would prevent the regulator ending the final proposal stage without an order, even if both leagues have chosen not to submit proposals.
These amendments, and the others referenced, would increase the likelihood of an enforced rather than an agreed solution. The Government’s preference is for an industry-led solution. It is our view that the regulator should have a role in facilitating the final proposal process only where no agreement can be reached on distribution, and that the process should be the least interventionist it can be while remaining effective. This approach encourages future collaboration and prevents the leagues relying too heavily on the regulator in the future.
I turn now to Amendments 284 and 286. While I agree that the state of the game report is a usual source of information to be considered as part of the distribution agreement process, it is our position that these amendments are unnecessarily prescriptive. As it stands, the Bill does not make specific reference to the report being included as a potential question for consideration. However, the existing drafting does not in any way exclude consideration of the state of the game report, and the regulator must have regard to it as part of its general duties. I would expect the state of the game report to be considered by both the leagues applying to trigger the backstop process, and the regulator, given its relevance. However, to include this expectation beyond what is already set out in primary legislation would be inflexible.
Turning to Amendment 267, while the Government understand the broader intention to involve fans in as many areas of the Bill as possible, it would not be appropriate for the regulator to be mandated to consult a group which is neither directly financially involved nor a governing body. This is not to say that fans should not make their views known to the regulator, and there will be many instances, such as in the state of the game consultation, where we expect the regulator to be able to consider a number of perspectives. This includes the views of fans on the financial situation in English football. Furthermore, the proposed drafting requiring consultation with representatives of regulated clubs is duplicative, given that the Bill as drafted already requires the consultation of the leagues.
Finally, Amendment 319 seeks to remove the provision that explicitly outlines that leagues can come to an alternative agreement at any time in the backstop process. The ability of leagues to come to an agreement independently has been protected in the legislation itself intentionally, to highlight that an industry-led solution is both preferred and encouraged. We believe this explicit protection will encourage the leagues to reconsider at every step of the process whether regulatory intervention is necessary, ideally bringing them closer to an independent agreement that works for all of football.
I hope that my responses have reassured my noble friends and other noble Lords that the Government’s approach is appropriate and provides the necessary protections, and that my noble friends will not press their amendments.
Lord Bassam of Brighton (Lab)
My Lords, the noble Lord, Lord Markham, rumbled me early on in his comments when he worked out that these were probing amendments; that is what they were intended to be. The group is disparate—I did not author it; it was what we were handed. It has been useful because it has enabled me to hear from the Minister how she sees the regulatory arrangements working as far as distribution is concerned, and the extent of the regulator’s flexibility.
I did not make this observation in my opening remarks but I think—the Minister covered this point—that the “state of the game” report will be critical when the regulator gets to grips with the distribution. The distribution of the revenues will be most important, because that is designed to make the game sustainable, to make sure that clubs do not go into administration, that we do not have clubs paying more than they actually earn in revenues, and so that clubs do not get to the point where they cannot properly trade. That is the most important thing for me.
Although I appreciate that my amendments would appear to some to be a bit of regulatory overkill, I think the point was made that we need to make sure that the regulator can do its job properly. The Premier League should not be at all threatened by the powers that the regulator has. Given the amount of money there is in the game and the continuing success of the Premier League—and, for that matter, the Championship —the regulator should be able to get our national game to the point where it is much more financially in balance and there are not the big gaps and distortions in revenue distribution throughout the pyramid.
I thank the Minister for what she said. Obviously, I shall study it very carefully. I think it unlikely that I shall return to these issues on Report, but obviously I will look at it very carefully before we come to that point. I beg leave to withdraw the amendment.
Lord Markham
“(2) In this Part, revenue received by a specified competition organiser is “relevant revenue” if—(a) it is revenue received as a result of the sale or acquisition of rights to exploit the broadcasting of football matches included in a competition organised by the specified competition organiser, and(b) it is not 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.”Member’s explanatory statement
The amendment prohibits parachute payments from being included in the distributions of revenue resolution procedure.
Lord Markham (Con)
Amendment 263 is in my name and that of my noble friend Lord Parkinson. Going on from the last debate, it talks about probably one of the most important elements in the whole make-up of the financial payment system: parachute payments. The amendment seeks to remove from the regulator the powers to impact or change those parachute payments.
The reason for that is that parachute payments are a very common feature—I understand that just about all European leagues have parachute payments—and that is for a very simple reason. Any club that gets promoted is automatically in a situation where financially, it has a lot less money than other clubs in the Premier League or whichever higher division it is—parachute payments happen right the way through the pyramid—and they need to invest. They need to do that if they are to have any opportunity, any chance, to compete. If they do not invest, it is pretty likely that they will get relegated again straightaway, and any games that they take part in will be pretty uncompetitive and not very interesting to watch. But how do you get them to invest when they know that there is a decent chance that they will get relegated straightaway and go back to a situation where they have a lot less income?
Of course, as I say, the common mechanism that all the leagues across Europe seek to put in place is the safety net of a parachute payment, so that clubs know that for a period of time—three years—they have that safety net, particularly in years one or two, because in the third year it falls away quite quickly from that.
However, it is not just as a key measure for promoted clubs. Right now, if you are a Wolves fan and you are sitting second from bottom, what do you want them to do? You want them to sack their manager—they have done that; it cost them quite a bit to do that in terms of pay-offs and attracting a new manager—and you want them to invest in the January transfer window to get more players, to give them a chance of staying up for the rest of the season. That is the absolutely normal thing that you would expect them to do.
That is what you want the whole Premier League to be doing: you want the teams to be really fighting to survive and competing in every game. That is what makes the game so interesting to watch. A lot of the fun towards the end of the season, when you know—maybe not this season—that Man City is going to win it again, or whatever, it gets really interesting around the bottom of the league. Why is it interesting? It is because those clubs still invest. So Wolves will no doubt invest in this window and a lot of the bottom clubs, which might be looking over their shoulder, worried about relegation, will invest. They will do that because they have the safety net of the parachute payments.
Baroness Brady (Con)
My Lords, I support Amendment 263 in the name of my noble friend Lord Markham, which seeks to exclude parachute payments—the financial lifeline provided to relegated clubs—from the definition of “relevant revenue” under the backstop. This amendment is essential to addressing the profound risk created by the current drafting of the Bill.
Parachute payments are not just a feature of football finance, they are a key part of the scaffolding that delivers the competitiveness, the investability and the financial sustainability of the English football ecosystem. Without them, relegation would become a financial free-for-all—a cliff edge that would devastate many clubs and their communities. Parachute payments are designed to manage the significant financial shock of relegation, where clubs can lose enormous amounts of revenue almost overnight, yet their overheads stay the same.
I speak from some personal experience here. At West Ham United, we have known the daunting realities of relegation. Without parachute payments, the response in 2011 would have been wholesale disinvestment, a disorderly fire sale of players, job cuts, and a complete halt to critical investments in infrastructure. That is exactly how clubs start to spiral. Parachute payments do not come close to eliminating the pain of relegation but they provide some breathing space to make difficult but measured adjustments.
Yet this Bill places the very existence of parachute payments on the table, making them a part of the binary backstop process that pits two competing visions of football finance against one another. This is an intolerable risk. The EFL has been explicit that its proposal in this process would be for massive reductions in parachute payments, based on the argument that the financial gap between the Premier League and the Championship should be closed. But this argument fundamentally misunderstands the problem. The central issue here is not the gap itself, which reflects the commercial realities of two very different leagues, but whether clubs can transition effectively between those levels, between those two leagues.
Here the evidence is clear. Parachute payments work. If they did not exist, you would simply have to invent them. Crucially, parachute payments do not lock up promotion opportunities. Look no further than the examples of Luton Town and Ipswich Town from each of the last two years. Well-run, innovative clubs have every chance of success in the Championship, which is a highly competitive and appealing league.
Parachutes are not a significant distortion but a significant stabiliser, providing clubs with the tools to manage transition responsibly and sustainably. The EFL’s proposal is essentially to level down the Premier League to meet the Championship; to stretch out the bottom half of the Premier League. But that would destroy the top-to-bottom competitiveness that makes the Premier League the most watched and admired league in the world. Enabling such a proposal, as this Bill now does, expressly privileges the Championship over the Premier League. That is an astonishing position to take. It risks reducing the quality of the game at the top of the pyramid and undermining the ability of clubs to compete both domestically and internationally.
Let us also consider the impact on investment. Investors are rational. They are drawn to football because of its structures, parachute payments central among them, that provide clear pathways for responsible investment and sustainable growth. Without parachute payments, the Championship clubs become less investable. Why would anyone seriously invest in a club that cannot make the financial journey to the Premier League without risking complete collapse on relegation? The logic of the previous Bill was that, if there are challenges with parachute payments—challenges that the Government’s state of the game review may or may not identify—these can be addressed through increased solidarity payments. The exclusion of parachute payments in the previous Bill meant that the very existence of parachute payments was not placed at risk. It recognised the critical value of parachute payments to protect their role in managing these vital transitions. But now parachute payments are suddenly on the table. It is a hugely significant change of policy.
I know that the Minister would prefer that I should refrain from pointing this out, but the process by which this expanded backstop mechanism has been introduced has been alarmingly inadequate. As we know, the Secretary of State held just one 30-minute meeting with seven hand-picked Premier League clubs between July and October. The backstop was one of the many things that were discussed at the meeting, but at no time during the meeting were we given any warning that this decision was even being considered, let alone added to the Bill. Those seven clubs wrote to the Secretary of State following the meeting, which was five or six months ago, and we still have not had a reply. We also know that UEFA explicitly advised Ministers to reconsider the previous mechanism before parachute payments were even included. But, instead of narrowing the scope, the Government have significantly broadened it. I ask again: why? Parachute payments do not create financial irresponsibility. They are its enemy. They do not distort competitiveness; they enable it.
If you are Championship club newly promoted into the Premier League, you need to know that you can invest in your team to give you any chance to be competitive and to stay there. Clubs invest when they are promoted only because they know that they can rely on the parachute payment to cover some of the investments they have made in order to be competitive in the Premier league. Those investments are almost always in transfer fees and players’ wages. Clubs need that parachute to cover those things if they are relegated. If you do not have a parachute payment to soften the blow, you know that you cannot make the necessary investment in your team and in transfer fees when you get into the Premier League to try to stay there. You know your team will not be competitive enough, because you know that, if you are relegated without a parachute payment, you will face the real risk of administration.
Parachute payments help soften the blow. Without them, you cannot cut your overheads in any way, because there is no cause to terminate players’ contracts—that is part of the PFA agreement. So this means that, if you get promoted into the Premier League knowing you cannot contribute to the competitiveness of the Premier League—the idea that on any day any club can beat any other—you are going to affect the competitiveness and the global appeal of the Premier League, as my noble friend Lord Markham said, but, most of all, you are going to damage your own club.
Parachute payments do not reward failure. They allow clubs to recover, rebuild and stay financially sustainable. Frankly, I think that is the whole purpose of Bill. So I urge the Government to reconsider and to protect the stability of the football ecosystem, protect the ability of clubs to manage the transition between leagues responsibly, and protect the investment in both the Premier League and the Championship, which make English football the global success story that it is today.
Lord Maude of Horsham (Con)
My Lords, it is a pleasure to follow my noble friend Lady Brady, who speaks with passion and deep expertise. I support this amendment.
I suspect I am not the only football supporter sitting in your Lordships’ House who had never heard of parachute payments until I started to get my head around the Bill. It took me a little time to get my head around the concept. I have listened very carefully to, and interrogated, the arguments for it, and understand them. The essence seems to me that it is simply a fact—an irrefutable fact and not readily to be changed—that there is a huge gulf in the financial rewards that come to a club in the Premier League compared with one that is in the Championship. One might regret that, but the only way you could possibly change it would be, as my noble friend said, by levelling down and reducing the competitive tension that there is in the Premier League.
The arguments that my noble friends Lord Markham and Lady Brady made about how parachute payments can narrow the gulf between Premier League and Championship are powerful and compelling. But the truth is that, without the ability for clubs that have been promoted to invest to become competitive, you would not have the competitive tension within the Premier League that is part of what makes it so successful. We have said repeatedly, but it bears repeating, that the Premier League is the goose that lays the golden eggs that reward the rest of the pyramid. If we damage that, we inflict damage not just on the Premier League but on the whole of English football, and that is what we have to be incredibly careful of.
There is a high degree of mobility within the Premier League. I say this with regret as a supporter of a club that is always regarded as in the top six but is languishing —temporarily, I hasten to say—in 10th. It is, as we know, the hope that kills you, not the despair. Nottingham Forest were promoted two or three seasons ago and are now fourth in the Premier League, in a Champions League spot—there is strong mobility. Could they have done that without the confidence to be able to invest and to grow the team and the players? This is part of the magic of it, and to suggest that this is somehow a game and a racket and that it should be put in jeopardy is not to understand the magic of a degree of competitiveness that exists in English football all the way through the pyramid.
This is something that the clubs and leagues have themselves come up with, and it is something that works. The idea—frankly, this thought applies to quite a lot of what the Bill is about—that what has worked and been proven to work will somehow suddenly be improved by the introduction of a state regulator might turn out to be true, but all the evidence of history suggests that it will not.
Baroness Evans of Bowes Park (Con)
I support Amendment 263 and declare an interest as a supporter of Norwich City, who, over a number of seasons, endured the pain of relegation and then the joy of promotion on a regular basis. So, unlike my noble friend Lord Maude, I am well aware of the benefits of parachute payments, although unfortunately not for a few seasons now.
As we have heard, parachute payments are a critical foundation for the competitiveness of the Premier League. They help clubs manage the financial impact relegation from the Premier League can cause and give a degree of stability at a time of significant challenge to allow them to adjust to their new financial and footballing reality. That is true of all clubs. Well-run clubs like Norwich City could not have survived, even with the benevolent owners they had, without the benefit of a parachute payment. A parachute payment does not, however, in any way ensure that clubs continually go up to the Premier League, as, unfortunately, the last few seasons for Norwich City have shown.
I am sure a number of noble Lords will have seen the letter from Cliff Crown, chairman of Brentford FC, who said:
“For Brentford FC the parachute payment model provided an essential safety net, enabling us to invest in the team and infrastructure when we secured promotion. This support was pivotal in ensuring we could compete effectively and establish ourselves in the Premier League.”.
Like other noble Lords, I am concerned that the Bill as it stands may inadvertently incentivise bottom-half Premier League clubs and Championship clubs seeking promotion to significantly curb their investment over time, given the greater risk relegation would undoubtedly present. As my noble friend Lady Brady said, relegation would become a real financial cliff edge that would see clubs lose enormous amounts of revenue overnight, while having to continue to cover the costs predicated on their involvement in the Premier League. If that were to happen, the competitiveness of the Premier League would be severely weakened, and I believe the Championship would be significantly weakened too, undermining the very attributes that attract the revenues that sustain the game.
I urge the Minister to look again at this issue and to carefully consider the concerns raised in our discussions today. In particular, if she has not already done so, I urge her to talk to the clubs whose first-hand experience of the stabilising effects of parachute payments surely must be central to any discussion of this issue. I really hope that their experience will not be dismissed out of hand.
Baroness Twycross (Lab)
I thank the noble Lord, Lord Markham, for this amendment and all noble Lords who have taken part with a degree of passion that shows their commitment to the game and to the legislative scrutiny process.
First, I acknowledge that all noble Lords—I include myself in this—agree that parachute payments are a significant part of football’s financial landscape. I reassure noble Lords that the Government recognise that they play an important role in supporting the survival of relegated clubs. I agree with the noble Baroness, Lady Brady, that they can provide a lifeline. However, the regulator needs to be able to consider all relevant revenue sources as part of the backstop process to get an accurate picture of the proposal’s impact on financial sustainability. That is why parachute payments have not been excluded in this Bill’s definition of relevant revenue.
We believe that allowing the regulator to make a more informed decision, rather than restricting what it can consider, will only help to achieve the best possible outcome for the future of the game. Notably, parachute payments will be reviewed as part of the process only if the regulator deems them a relevant consideration. The current drafting does not require that parachute payments be considered; it allows them to be so only if they are deemed relevant by the regulator. So, if it agrees with the point made by the noble Lord, Lord Markham, based on the state of the game report, it will act accordingly. What that means in practice—
Baroness Evans of Bowes Park (Con)
The Minister talks about the state of the game report, which I completely agree is going to be extremely important, but the fact of the matter is that the backstop could be triggered before the state of the game report is published. From what I remember, it is quite a long time before it needs to be published. It could be that both leagues—the EFL and the Premier League, or whoever—will trigger the backstop before that, so parachute payments will be included. Unfortunately, the state of the game report may have no impact whatever on an initial decision by the regulator. The timescales simply do not work. I am not expecting a particular answer today, as the Minister can well say that she is not in charge of the regulator, but it is important to note that the timing of these things does not necessarily tie up, so unfortunately, reassurances like that are not really reassurances.
Baroness Twycross (Lab)
Clearly, it does not need to wait for the state of the game report to decide whether they are relevant. The approach we have adopted in the Bill means in practice that if the regulator has clear evidence, whether from a different source or from the state of the game report, that parachute payments are causing sustainability issues to the wider pyramid, it will now be able to address them. In our view, this was a potentially serious gap in the legislation that we feel has now been rectified. I stress “potential”.
Baroness Brady (Con)
What the Minister said would be fine if the regulator was making a balanced determination, but because the Government have created a binary process whereby one proposal can be accepted, it could choose to abolish them. The Government have created that risk, and it is an intolerable risk.
Baroness Twycross (Lab)
We went through in quite a lot of detail how the backstop mechanism would be triggered. I know we have more to come, as the noble Lord, Lord Maude, said, but in my view, it is not unreasonable for the regulator to be able to consider them. However, the regulator does not need to consider them.
On the point raised by the noble Baroness, Lady Brady —clubs and planning, and how they can deal with their financial future if parachute payments could change as part of the backstop process—while the Government understand the desire to ensure that regulated clubs have as much time to adjust to change as possible, we acknowledge that significant time has already passed without a financial distribution agreement. Ensuring a timely and satisfactory agreement is in the interests of football and the wider public. The backstop process is a built-in transition period specifying that parachute payments cannot be reduced within one year of the distribution order coming into effect.
We understand concerns around the future of clubs that may already have factored parachute payments into their forward-looking financial planning before a potential order that could lower payments had been issued. We would expect the leagues to maintain effective communication with clubs throughout the backstop process, which, alongside the built-in transitory provision, will mean that clubs should have ample time to adjust if parachute payments are deemed in scope. There will not be any sudden reduction in payments without warning. I feel that that should provide some reassurance to noble Lords and to the clubs.
On the definition of relevant revenue, football is a fast-paced industry, so it would be erroneous to assume that the definition of relevant revenue might not need to change. If broadcast revenue ceases to be the primary source of revenue stream in the game, the definition would need to be amended to ensure the process remained a viable regulatory intervention. Furthermore, there are already significant safeguards in place to ensure that this power is not used incorrectly. For example, consultation with the regulator, the Football Association and specified competition organisations is required before the power can be utilised.
With noble Lords’ indulgence, I want to say a bit about the consultation process. On a number of occasions it has been stated in your Lordships’ House that there has been insufficient consultation. Particularly in response to a point raised by the noble Baroness, Lady Brady, I want to put on the record that this Football Governance Bill is the culmination of years of work, including a huge amount of consultation. During that time, there has been extensive regular engagement with key stakeholders, including clubs that will be subject to the regulation. All clubs have been provided with a number of formal opportunities to share their views, particularly as part of the fan-led review and the formal consultation process on the football governance White Paper, where all 116 clubs in the top five leagues at the time were invited to give their views on the proposals. Over that period, DCMS Ministers and officials have had many hundreds of meetings with clubs, leagues, fan groups and other stakeholders from across football, and we continue to engage with the industry now, so this number is constantly growing.
Clubs have had five years to write to or meet DCMS to make their position known. No club that has requested a meeting has not had one. Indeed, some Premier League clubs were recently invited to meet officials and turned down the invitation, which I stress is their right. We have met and continue to meet a range of clubs, at all levels of the football pyramid, that will be subject to regulation.
The leagues have a role to play here. We would expect them to support their clubs in their understanding of the development of the regime and in their engagement with the Government, as well as to keep their clubs updated on any engagement that the leagues have had with the Government. Indeed, this is what has been explicitly asked of us at times by some of the leagues. Richard Masters, the CEO of the Premier League, Rick Parry, chair of the EFL, and Kevin Miles, CEO of the Football Supporters’ Association, have all praised the Government’s constructive approach to engagement with the clubs and the leagues.
This is not the end of the process or of the consultation. There are still lots of opportunities for clubs to have their say as the legislation passes through Parliament and work continues to establish the regulator. Even once the regulator is established, its approach will be advocacy first, aiming to work constructively with clubs on an ongoing basis to resolve issues wherever it can.
I have asked for an answer to the noble Baroness’s question about the response to the letter, and I will have to revert to her after the debate. Given the lateness of the evening, I have not been able to get a response on that.
Baroness Brady (Con)
Is that the letter I sent on 2 December about UEFA or the letter that the seven clubs sent to the Secretary of State to which she is going to reply? Maybe the Minister can tell me that afterwards.
It is a statement of fact that the Secretary of State has met only seven clubs for half an hour. I am not talking about other officials. I have to say that there was zero consultation on including parachute payments in the Bill. There may have been other meetings, but between the two Bills that was a significant change that has caused lots of difficult conversations within the leagues.
The Minister said that there was no deal in place. There is a deal; it has been in place between the Premier League and the EFL since 2018, and it has a three-year notice period—just so she knows.
Baroness Twycross (Lab)
I will have to get back to the noble Baroness on the letter she said was sent by the Premier League following that meeting. Officials have not been able to get in touch with the correspondence team given the lateness of the evening, but we will endeavour to chase that up tomorrow.
I am aware that there is a deal in place. One of the issues raised during the debate this evening has been the inability to reach a new deal. I hope that, at some point soon, the various parties will come to an agreement without us having to trigger the backstop. My main point was that simply referring to one meeting maybe gave the wrong impression of the extent of the consultation. I have spoken to officials who themselves have had more than 100 meetings with the Premier League. To me, that sounds like ongoing dialogue rather than consultation. However, we may need to pick that up outside this Committee.
Lord Jackson of Peterborough (Con)
In the spirit of trying to be helpful, and given that Clause 56 is a Henry VIII clause, would the Minister look favourably, potentially on Report, at bringing forward a government amendment which tightens up the wording of Clause 56(2)? Very strong feelings have been enunciated today by my noble friends around parachute payments. It is incumbent on the Minister to acknowledge that and perhaps come back on Report with government amendments that reflect that.
Baroness Twycross (Lab)
The noble Lord may not be surprised to know that I am not going to commit to doing that. We believe that the model in the Bill is the correct one. I am happy to meet the noble Lord and others to discuss this before Report, However, on the basis of the arguments I have made this evening, I urge the noble Lord, Lord Markham, to withdraw his amendment.
Lord Markham (Con)
I thank all noble Lords for their contributions. We can all agree that everyone spoke with passion on this point. We are passionate because we know it really matters.
I am grateful to the Minister for her acknowledgement of the importance of parachute payments. They really are critical. I echo the point made by my noble friend Lady Brady that, since parachute payments were brought into this, my understanding is that there has been only a 30-minute meeting with the clubs, where this was barely brought up. I urge the Minister to consult more with the clubs.
Baroness Twycross (Lab)
I asked officials to draw up the words that I said on consultation because, night after night, group after group, it has been said to me that there has been insufficient consultation on the Bill. I went back and asked whether I could stand up and say that there has been sufficient consultation on the Bill. What consultation happened? When has it happened? How has it happened? Who has it been with? I am confident there has been a huge amount of consultation on the Bill and I will continue to state that when I am asked. I will follow up things that people feel have not been followed up, but any club that wanted to have a meeting has had one, and some have said they did not want one. I will sit down and allow the noble Lord to finish, but I am not going to accept that there has not been sufficient consultation.
Baroness Brady (Con)
I am sorry to intervene, but I want to say again that on the specific issue of parachute payments there was no consultation with either the Premier League officials or the Premier League clubs that attended that meeting before this went into the Bill. I am not saying that there was not consultation on other areas, but this is a significant change to the Bill that had zero consultation with the Premier League or Premier League officials.
Lord Markham (Con)
It may be that it should be a matter of fact and we can find out one way or the other. The question is: how much consultation has happened specifically on the parachute payments? Obviously, they have been a recent introduction. My understanding from my noble friend is that there was just that 30-minute meeting, at which this was barely raised. I would be grateful if the Minister could ask her officials directly.
Baroness Twycross (Lab)
I will intervene again, and I thank the noble Lord for giving way. Labour tabled an amendment on this in opposition, so I am surprised that there seems to be so much surprise that the Government have now put this in the legislation. I accept that perhaps it was not noted at the time.
Baroness Evans of Bowes Park (Con)
The Minister will also know that Labour tabled a lot of amendments, many of which we are also now pushing, but are told they are not going to be considered. So, yes, but equally perhaps the Minister might like to look through all the amendments tabled by her colleagues in the Labour Party in the other House and see whether she is now prepared to accept them all.
Lord Markham (Con)
I hope we can move constructively on this point. I welcome the Minister’s undertaking to give clubs as much time as they request. I appreciate the amount of time the Minister has given all of us in all this. It feels that that may be a point worth taking forward, particularly on parachute payments.
To my mind, the biggest proof on all of this is the fact that 51 of the 92 clubs in the whole pyramid have been in the Premier League at some point. That is way over half. That speaks to how fluid the system is and how much it is working. Over half the clubs have spent some time in the Premier League. To me that speaks volumes. That is the biggest concern I have. We have a system that works; we have competition throughout the pyramid. The real fear from all my noble friends who have spoken on this, and why we speak with such passion, is the fact that we endanger all of that. I will withdraw my amendment.
Lord Markham (Con)
This goes to the principle of the redistribution amendments in the group. We have had two debates on this; I hope this will be the hat trick, so to speak, because it is talking about the general principle of whether the regulator should be involved in the redistribution of revenue. This goes to the whole of Part 6—Clauses 56 to 60—and stands in my name and that of my noble friend Lord Parkinson.
As noble Lords have heard me say before, what it comes down to is that no other regulator—and I am still ready to stand corrected—is given powers to take money from one part of the system and give it to another. The FCA cannot take money from Barclays and give it to NatWest; Ofwat cannot take it from Severn Trent to go to Thames; Ofcom cannot move money from ITV to Channel 4. No other regulator can do that. It is unheard of. But that is what we are proposing here.
Lord Markham (Con)
No, I do not agree that is the point of the Bill. That is the fundamental difference. I would totally agree that there are certain protections about the European super league, about moving home grounds, as in the case of MK Dons, and about fit and proper owner tests. I would agree they are very good roles for a regulator to play. What I do not agree with is giving a regulator unparallelled power to take money from one part of the sector and give it to another.
What are we trying to do here? Is the English Football League impoverished? Does it have so little money it cannot run itself? We know the answer to that is no. It recently had a very good Sky deal. The Championship is the sixth-richest league in the world. That point has been made before. We are saying that Belgium, the Netherlands and Portugal, which are very good footballing nations, and all the other leagues in the world apart from the top six, all manage to live on less money than the Championship. But we are saying we need to fix that. That is what I do not understand. We are trying to say we will give unparallelled power to try to fix a situation that has had unparallelled success and makes the Championship the sixth-richest league in the world. We cannot argue that is because clubs do not have enough money to be viable in that. If that was the case in the Championship, how do the Portuguese league, the Belgian league, the Netherlands league and all the other leagues cope? This is not an area I believe the regulator should be intervening in. There is no market failure there.
What I have heard noble Lords speak about a lot is fairness or narrowing the gap. Well, I am sorry, but competition and sport are not about fairness, not about trying to narrow the gap or level down. We are not trying to equalise. The whole point of sport is that it is the most competitive thing out there. There is nothing more competitive than a game of sport. That is the whole lesson. It is not about trying to equalise. It is about winning and losing. What football has done is create that very successfully, with great fluidity. As I mentioned in the last debate, over half of clubs at some stage have succeeded in getting into the Premier League. This is something that is working. I do not see any evidence of market failure. So why are we asking the regulator to get involved in all this?
I truly believe we will endanger the whole game and the whole income. Noble Lords have heard me say before: let us maximise the size of the cake before we argue how we distribute it. I fear here that by trying to equalise and level down, all we will do is make the games less interesting, the league less competitive, which will mean fewer people watching, less TV rights money and the result being less money to distribute. That is why I do not believe this is the role of the regulator to take, and this is why I feel strongly that all those clauses that seek to give this unprecedented power should be removed.
Lord Maude of Horsham (Con)
My Lords, I find my noble friend’s arguments very persuasive, and I will ask just one question. I do not know what the answer is, so others who know much more about this will correct me if I am wrong. My understanding is that no one made the Premier League make the already unprecedentedly large distribution from it down to the EFL. There was no regulator or Prime Minister threatening legislation that forced that to happen. It was because the Premier League saw it as in its interest to have a strong pyramid. It did not see this as “us against them”; it wanted competition within the pyramid but not between the segments and the different layers. I therefore question the idea that you somehow have to force a better distribution when it is plainly in the Premier League’s interest—and the way it has historically behaved illustrates that it understands that it is—to commit, through a voluntary agreed distribution, to the money trickling and cascading down through the pyramid. That illustrates that this is not necessary.
The danger is that the money that is creamed off by the regulator to sustain it—and is drained off from the clubs to comply with its demands—will mean that there is less to distribute. That money is already efficiently and pretty fairly distributed by agreement, so I am persuaded by my noble friend’s arguments that this part of the Bill is not only unnecessary but potentially very harmful.
Baroness Brady (Con)
My Lords, I rise to speak to Amendments 271, 307 and 316 in this group. My noble friend Lord Maude is right: the Premier League’s distribution outside our ecosystem is the highest amount of money of any other sporting competition in the world, and no regulator has forced the Premier League to do that.
My amendments seek to embed principles into the backstop mechanism. My aim in doing so is to ensure that it operates in a way that is proportionate, legally defensible and fit for purpose. At the heart of the amendments lies a simple but critical idea: any intervention by the IFR on this issue must be guided by clear, fair and transparent principles.
The backstop mechanism in its current form lacks sufficient criteria to direct the IFR in exercising its powers. It dictates that the IFR must choose the proposal that is “more consistent” with its principles. But what are those principles? The first is to “advance the IFR’s objectives”, and we have already discussed at great length how nebulous those objectives are. The second is not to place any “undue burden” on the parties’ commercial interests. The third is to ensure that relegated clubs have a one-year transition for any changes to parachute payments. That is it. There is no other guidance for the regulator in making this enormous and binary choice. This is quite incredible, and it creates huge risks, not only for the clubs and the leagues but, more importantly, for the very integrity of the regulatory process itself.
Let me begin with a fundamental principle of protecting property and contractual rights. It is vital to understand that the revenues subject to redistribution under the backstop are not collective funds but revenues generated solely by the Premier League and the Premier League clubs. So the backstop is not a neutral act; it is interference in the property rights of Premier League clubs only.
Under Article 1 of Protocol 1 in the Human Rights Act—A1P1—any interference with those rights must therefore be justified on clear and compelling public policy grounds, and adhere to principles of proportionality and necessity. There are concerns that this crude mechanism, with so few transparent criteria, is legally challengeable under A1P1, even more so now as a result of parachute payments being included, and that is not a good thing; it is in everybody’s interests for this backstop to be legally defensible. But without robust principles to guide the IFR’s decision-making, any determination risks being challenged, leaving the IFR open to judicial review and the entire system mired in uncertainty and delay.
A1P1 case law also emphasises the principle that less intrusive measures must be considered before more significant interventions are imposed, so this is also enshrined in my proposed amendment. The backstop mechanism, as drafted, establishes a binary process that compels the IFR to choose between two competing proposals, but it provides no framework for the IFR to tend towards the least intrusive option, particularly in relation to respecting the Premier League’s property rights as the sole funder of financial redistribution. That is a very dangerous oversight.
Without explicit guidance to the IFR that it should tend towards the least intrusive measure, particularly in its treatment of Premier League revenues, there is a real risk that the backstop could lead to legal overreach. Including this principle in the Bill would provide the IFR with a clear steer, reflect the unique role of the Premier League as the funder of any distribution order and ensure that the mechanism operated in a way that respected property rights.
The principle of good faith is another cornerstone of these amendments. The binary nature of the backstop mechanism incentivises brinkmanship rather than genuine negotiation. These amendments seek to create a framework that rewards constructive engagement and discourages posturing. Without this principle, the backstop risks becoming a tool for division rather than collaboration.
Another critical safeguard in the amendments is the requirement that any backstop decision must not force clubs into breaching their own league’s or UEFA’s existing financial rules and covenants, including profit and sustainability rules or the IFR’s own licence. A sudden and drastic redistribution could reduce Premier League clubs’ revenues, which in turn could destabilise their own business plans, which in turn leads them to breach the profitability and sustainability rules in their own leagues. That would lead to fines, sanctions or even points deductions for Premier League clubs. It would be a remarkable irony if a mechanism intended to promote sustainability instead penalised clubs for failing to meet their own financial obligations.
Finally, let me address the amendment tabled by my noble friend Lord Maude, which would ensure that the backstop could not be used as a first resort. The IFR must first regulate clubs in the EFL to ensure that they are financially responsible and not conveniently reach for the Premier League’s revenues before it has even sought to impose those controls. If the IFR cannot deliver sustainability through its own regulatory tools, what confidence can we have in its ability to manage a redistributive mechanism fairly or effectively? My noble friend’s amendment rightly prioritises the use of all other tools before triggering the backstop.
These amendments would provide the IFR with the steers that it will desperately need to navigate one of the most consequential issues in football. Without these amendments, or something very similar, the backstop risks sinking into a legal and political quagmire. We should all be aligned in preventing that outcome, so I hope the Minister will listen carefully and sympathetically to these arguments.
Baroness Twycross (Lab)
I thank the noble Baroness, Lady Brady, and the noble Lord, Lord Maude of Horsham, for these amendments, and the noble Lord, Lord Parkinson of Whitley Bay, for giving notice of his intention to oppose that Clauses 56 to 60 stand part of the Bill.
I will start with Amendments 271 and 316, from the noble Baroness, Lady Brady. I thank her for clearly stating some of her core concerns about the backstop process through these amendments and hope to reassure her that the existing drafting of the Bill already addresses her concerns without the need for this additional clause. First, I will cover her concern regarding the explanation of suitable alternative regulatory solutions when I address subsequent amendments. On her other concerns, current drafting of the Bill already requires the regulator to trigger the process only if its ability to advance its objectives would be threatened if it did not. Final proposals are already required to advance the regulator’s objective of ensuring financial sustainability and resilience. They also have to ensure that they do not place an undue burden on the commercial interests of either league. We have been mindful of property rights when designing the backstop, which is why the process can be triggered only in specific circumstances and why, even when the high threshold for triggering the process is met, commercial interests must still be considered. We consider this to be a suitably high bar to ensure that the regulator takes adequate consideration of regulated clubs’ property rights and commercial interests.
I understand that the noble Baroness is especially concerned about the issuing of a distribution order that may force clubs into non-compliance with the league’s own internal rules. We would expect the regulator’s decisions to be internally consistent in terms of advancing its objectives, so we cannot see a scenario where the regulator would issue a distribution order that required a club to become non-compliant with its licence conditions. However, there may need to be some adaptation by regulated clubs and competition organisers to renew the regulatory landscape.
If a distribution order issued to ensure the financial sustainability of football put a club at risk of breaching a league’s rules, we would expect competition organisers to work with the club in question and the regulator to understand the decision and its impact. Just as we may expect adaptation by clubs transitioning from unregulated to regulated, we may also expect to see the adaptation of competition organisers.
The amendment implies a scenario where a distribution order results in clubs becoming non-compliant with existing financial regulations. The regulator is already required, as part of its decision on whether to trigger the process, to consider whether the lack of arrangement has arisen as a result of bad faith. Therefore, we are confident that the existing drafting of the backstop proposal process is sufficient to ensure that the regulator already considers the factors outlined in this amendment.
I turn to Amendment 307. While I understand the desire to ensure the proposals chosen at the final proposal stage of the backstop process meet the objectives of the regulator, I believe that the existing drafting already suitably addresses this concern. Final proposals are already required to advance the financial sustainability and resilience of the football pyramid, under existing Clause 62(2)(a). I do not think that the proposed change in wording would lead to significant altered proposals or subsequent distribution orders; therefore, I do not consider that the change is necessary.
I turn to Amendment 288A, from the noble Lord, Lord Maude of Horsham. I understand the desire to ensure that the backstop process is triggered only as a last resort, as this is how the process has been designed and is intended to be used. However, one of the existing conditions that must be met for the regulator to trigger the process in response to an application is that its ability to deliver at least one of its objectives would be jeopardised if the backstop was not triggered. We would expect that, as part of the assessment under this condition, the regulator would review whether existing financial regulations and other regulatory tools could be utilised to better effect instead.
While in service of the same goal, the wording of this amendment is unnecessarily restrictive, requiring the regulator to exhaust all possible other regulatory approaches, and it adds a regulatory burden by requiring the consideration of an expansive array of approaches without prioritisation. This forces the regulator to spend additional time and resources considering options unlikely to resolve the conflict in question. We believe that the current wording already allows the regulator to make its own considered assessment of relevant options before triggering the process.
I now turn to the clause stand part debates and will respond to the noble Lord, Lord Markham. Part 6, of which Clause 56 is the first clause, relates to financial distributions and the backstop mechanism in its totality. I understand the desire on both sides to apply appropriate scrutiny to a part of the Bill that could significantly impact the future financial landscape of football. I hope that, throughout the debate on the backstop process on this and future Committee days, I will be able to demonstrate that the approach taken in Part 6 is the most proportionate and effective approach possible.
These backstop powers have been introduced to help ensure that an agreement can be reached between the leagues in regard to the distribution of revenues from the selling of TV broadcast rights. An agreement of this nature is vital to ensure the future financial sustainability of the football pyramid. The process has been designed to incentivise reasonableness, encourage industry solutions and tackle any bargaining imbalance between leagues. The design of the process is a final offer mechanism, a process that has been shown to incentivise negotiation. It achieves this by removing the ability of the negotiating parties to rely on the third party, in this case the regulator, to design a solution for them. We do not want football to become reliant on the regulator to decide its agreements.
Lord Moynihan (Con)
I have listened very carefully to the debate and to what the Minister has said. I understand that UEFA asked the Government to carefully reconsider the backstop mechanism, since when it has become much wider in scope and more likely to lead to the most extreme outcomes. I wonder whether she has discussed it with UEFA. Can the Minister update the Committee on the outcome of those discussions?
Baroness Twycross (Lab)
I have had no direct meetings with UEFA, but the Minister for Sport in the other place has. I cannot confirm what was said in the meeting, but I will endeavour to establish whether this was part of the discussion. What did or did not happen at that meeting has not been part of my conversations with people, but I will endeavour to find out. I suspect I will not get an answer to the noble Lord tonight.
Lord Moynihan (Con)
Will the Minister kindly write to the Committee? This is very important indeed. The backstop has been introduced into the Bill and UEFA has expressed very serious concerns about it. Unless this can be resolved, it could threaten the existence of English clubs playing in UEFA competitions. I hope that this has been high on the agenda of discussions between UEFA and the Government. Having listened carefully to what the Minister has said, all I ask is that she write to the Committee, or early in January inform the Committee, on how UEFA has responded to this significant expansion of the effect of the backstop, which it was originally very concerned about.
Baroness Twycross (Lab)
To be clear, I do not speak for UEFA. It is an international organisation that is able to speak for itself. I am not aware that UEFA raised issues about the backstop specifically in the meeting with the Minister for Sport, but I will endeavour to find out. I understand from the expression of the noble Lord, Lord Moynihan, that he may have more information about UEFA’s concerns than I do. However, without expecting this to be an ongoing dialogue, I will endeavour to establish the information that he requested.
Lord Moynihan (Con)
I asked whether it was raised in the letter from UEFA, which sadly the Committee cannot because it is private correspondence, but it is right at the heart of this legislation. If it was raised in the letter, or in subsequent correspondence, would my friend the Minister kindly confirm that to the Committee? It would help us in our deliberations moving forward.
Baroness Twycross (Lab)
UEFA raised no concerns about the backstop in its most recent meetings with DCMS and the Minister for Sport, including those held since the Bill has been introduced. I hope that reassures the noble Lord on this point. As I say, I do not speak, will not speak and cannot speak for UEFA; I speak for the Government.
Ultimately, the clause is about creating transparency, which sets the tone for the rest of the backstop process. Clause 59 introduces high statutory thresholds that must be met in order for the backstop to be triggered. In particular, it sets out that the regulator must have reasonable grounds to suspect that its ability to advance at least one of its objectives would be jeopardised if the backstop was not triggered. As stated, an implicit part of this consideration would include an assessment of whether other regulatory tools could be utilised to better effect instead.
The regulator can consider what the distributed revenues will be used for and, if the basis for the backstop application is that there is no distribution agreement in place, whether this has arisen as a result of bad faith. This helps to incentivise the leagues to try to reach an agreement in good faith before turning to the regulator, and ensures that the backstop is used only where absolutely necessary. The regulator must make its decision within 28 days, although it can extend this by a further 28 days if absolutely necessary. Once the regulator has made its decision, it must notify the relevant leagues of its decision to ensure transparency throughout the process.
As we have made clear, the Government’s strong preference is for a football-led solution to issues around financial distributions. As such, the mediation stage outlined in Clause 60 grants the relevant leagues an opportunity to reach an agreement before the regulator delivers a solution as part of the final proposal stage. The mediation stage has been designed to facilitate meaningful negotiation and compromise between the parties. To this end, it encourages the leagues to appoint a mediator they both agree on, but ensures that the regulator will appoint somebody with the appropriate skills and experience if they cannot. The leagues can end the mediation process for multiple reasons, most notably if an alternative agreement is reached. However, the mediator can also end the process if it is not producing meaningful good-faith negotiations or if it reaches the 28-day deadline.
I thank noble Lords for their amendments and the well-natured debate on this important part of the Bill. I hope my reasons have reassured noble Lords and that they will not press their amendments. I ask that these clauses stand part of the Bill.
Lord Markham (Con)
I thank noble Lords for their contribution to this debate, and again I thank the Minister for her response. I noticed that she went into the detail of the backstop mechanism but I did not hear in that the more fundamental point about why she believes that the regulator needs to be bestowed these unparalleled powers to redistribute income where there are no examples of market failure. In fact, there are the examples of the very healthy Premier League and Championship, which are respectively the first and sixth richest leagues in the world—and all the result, as my noble friends pointed out, of a voluntary agreement and distribution between them all.
However, the whole prospect of the backstop happening is creating the reverse. As I understand it, those negotiations have stopped. Of course, it is entirely rational from the EFL’s point of view to stop them, because why reach an agreement when suddenly you are going to have more negotiating leverage because you have a regulator which will come in? So, again, it is perfectly rational behaviour on the part of the EFL to reach the best agreement it can with the Premier League but then instead of finally agreeing with it, appeal to the regulator in case it can get more because it has already banked what it has got from the Premier League and there is only an upside to doing that. So I am afraid that I believe this whole mechanism will actually create more friction and more disputes, rather than less, and will mean that it is less likely to reach a voluntary agreement. In addition, as I mentioned before, I still have not heard why we feel that the regulator needs these powers in the first place when we have a successful situation in place already.
As a result of that, I believe that these powers will endanger the whole size of the cake that is available for distribution. It will endanger the success and the revenue gained from that, which will result in a loss to everyone. We will definitely return to this on Report but at this stage I beg leave to withdraw.
Baroness Brady
Baroness Brady (Con)
My Lords, Amendments 280 and 281 in my name seek to reinsert the ability for the Premier League and the EFL to agree distribution arrangements for longer than five years without triggering the automatic availability of the backstop mechanism. These amendments are essential to restoring common sense, legal certainty, aligned incentives and, crucially, to restoring trust between football’s governing bodies.
When I first read the revised Bill, I thought I must be mistaken. “Surely”, I thought, “no Government would propose that two consenting parties mutually agreeing a long-term financial arrangement should be actively disincentivised from doing so by the automatic availability of a dispute mechanism”—and yet, astonishingly, here we are. Removing the freedom of football stakeholders to agree arrangements for more than five years by mutual consent cannot possibly be about fairness, transparency or sustainability. This is purely a device enabled by an active decision of the Government to turn the backstop into a ratchet. It ensures that no long-term agreement between the Premier League and the EFL, no matter how mutually beneficial, can ever provide genuine stability or be truly relied upon.
Lord Parkinson of Whitley Bay (Con)
My Lords, I rise to speak to Amendments 280 and 281, which my noble friend Lady Brady has set out admirably. She established the case for her amendments very well and raised a number of points that I hope the Minister will answer.
These amendments work in tandem to allow competition organisers to contract out of the backstop. Under this amendment, leagues would be able to agree a period for which a distribution agreement would last. Of course, they may not reach such a deal. In that case, the applicable period would be five years—the period that is currently the default in the Bill. Allowing leagues to have a greater flexibility to negotiate the length of time for which an agreement has to be in place before it can be renegotiated would establish better principles in the backstop. Surely, we should not preclude leagues from acting cordially, if they are able to, and agreeing a period for distributions. I fear that the Bill, as the Government have presented it, might discourage constructive working relationships where they may arise.
I am conscious that this is the last opportunity I will have to intervene on this final group before the Christmas Recess and I want to thank noble Lords across the Committee for the hard work they have put in. I know that noble friends on my side of the House are missing Christmas parties and wedding anniversaries this evening, and noble Lords across the House have been doing similar. Everyone is here because they care very deeply about the future of football—even if, like football fans, they disagree volubly on some of the details.
In particular I thank the Minister, who has responded to pretty much every group. Today was the first day that she did not, and even then she had only a brief time off the pitch. She has taken many interventions, she has been generous with her time outside the Chamber as well and she has written us a number of letters. I know we have asked her a few more questions and she will be writing to us further, but, in the meantime, I wish her and all noble Lords across the Committee a very merry Christmas and express my thanks to everyone for their work in scrutinising the Bill.
Baroness Twycross (Lab)
I thank the noble Baroness, Lady Brady, for her amendments and for her introduction to what was, thankfully, at this time of the night, with apologies, a very short debate—so far.
These amendments are intended to allow leagues to reach an agreement to extend the time that must pass before the backstop can be triggered. While I entirely understand the desire for negotiations to be a league-led process, the timeframe outlined in the Bill has been chosen to ensure that the regulator can intervene in cases where an agreement has not been reached for a significant period. We believe that it is the correct amount of time to get a good view of how potential agreements have affected sustainability, while ensuring that a new agreement is reached in a timely manner. Crucially, many noble Lords have talked about certainty in the regime. We consider that five years provides enough certainty to all parties.
Finally, we have concerns that allowing industry to come to a different timeframe could lead to an element of coercion towards much longer agreements, nulling the presence of the power. The Government’s view is that the five-year timeframe is critical to the effective functioning of the backstop as a regulatory intervention.
For the reasons I have set out, I am unable to accept the amendments and hope that the noble Baroness will withdraw Amendment 280. But, first, I also wish all noble Lords a very happy Recess. I genuinely look forward to continuing the debate in the new year and thank the noble Lord, Lord Parkinson, for his kind words.
Baroness Brady (Con)
My Lords, I thank the Minister for her response and for engaging with the points raised in this debate. However, it will not surprise her that I remain completely unconvinced.
This decision does not deliver certainty: quite the opposite. It enshrines short-term thinking and locks football in a perpetual cycle of instability, with both sides forever negotiating under the shadow of the backstop. As I said, it is a recipe not for certainty but for fractiousness and mistrust.
The Minister also referenced the nature of football’s landscape as the reason to limit agreements, but I am not sure that can be right. I urge her to think again. This new backstop is the Government’s gamble that the Premier League has achieved escape velocity and can absorb anything that even its own Government can throw at it. However, the Premier League is not a cow to be milked. It is a national treasure to be protected. English football deserves much better. I am sure that we will be discussing this issue again on Report, but, for now, I beg leave to withdraw my amendment.